TMI Tax Updates - e-Newsletter
April 25, 2020

Case Laws in this Newsletter:

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

Articles

1. Section 271AAD – Fair Interpretation and applicability

   By: Hemant Gupta

2. PROVISIONS OF CHARITABLE TRUST AS AMENDED BY FINANCE ACT, 2020

   By: ROHIT KAPOOR

3. SEBI Relaxations from ICDR Regulations, 2018 in respect of Rights Issue

   By: CSLalit Rajput

4. COMPANIES (AUDITOR’S REPORT) ORDER, 2020 (CARO 2020)

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. CCI approves acquisition of majority shareholding in B.M.M Ispat Limited by JSW Projects Limited.

2. Invitation for Public Comments on Draft Valuers Bill, 2020

Notifications

GST - States

1. F.12(46)FD/Tax/2017-Pt.-V-164 - dated 7-4-2020 - Rajasthan SGST

Amendment in Notification No. F.12(46)FD/ Tax/ 2017-Pt.-V-147, dated the 31st December, 2018

2. F.12(46)FD/Tax/2017-Pt.V-154 - dated 30-3-2020 - Rajasthan SGST

Rajasthan Goods and Services Tax (Third Amendment) Rules, 2020.

3. F.12(46)FD/Tax/2017-Pt.V-153 - dated 30-3-2020 - Rajasthan SGST

Supersession Notification No. F.12(46)FD/Tax/2017-Pt-V-107, dated the 20th December, 2019

4. F.12(46)FD/Tax/2017-Pt.V-152 - dated 30-3-2020 - Rajasthan SGST

Supersession Notification No. F.12(46)FD/Tax/2017-Pt-V-105, dated the 20th December, 2019

5. F.12(46)/FD/Tax/2017-Pt.-V-147 - dated 23-3-2020 - Rajasthan SGST

Reconciliation statement in form GSTR - 9C for airlines

6. F.12(46)/FD/Tax/2017-Pt.-V-146 - dated 23-3-2020 - Rajasthan SGST

Regarding reimbursement of State Tax due and deposited to hotels and tour operators.

Money Laundering

7. G.S.R. 262(E). - dated 23-4-2020 - PMLA

Notifies the reporting entities undertake Aadhaar authentication service of the Unique Identification Authority of India

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/DOP/CIR/P/2020/72 - dated 24-4-2020

Relaxation in timelines for compliance with regulatory requirements by Depository and depository participants.

IBC

2. IBBI/RVO/033/2020 - dated 23-4-2020

Governance Structure of the Registered Valuers Organisation

3. IBBI/IPA/031/2020 - dated 20-3-2020

Pre-registration Educational Course under the IBBI (Insolvency Professional) Regulations, 2016.

4. IBBI/RVO/032/2020 - dated 20-3-2020

Educational Course and Continuing Education under the Companies (Registered Valuers and Valuation) Rules, 2017

GST - States

5. GST CIRCULAR NO.04/2020 - dated 4-4-2020

Clarification in respect of issues under GST law for companies under Insolvency and Bankruptcy Code, 2016

6. GST CIRCULAR NO.05/2020 - F.17(134-Pt.-II) ACCT/GST/2017/5606 - dated 4-4-2020

Clarification on refund related issues.

7. F.17(131-Pt.-II)ACCT/GST/2017/ 5464 - dated 25-2-2020

Amendment in Order no. F.16(21) Tax/ Juris(GST)/CCT/2017/ 104 dated 09.05.2019

8. F.17(131-Pt.-II)ACCT/GST/2017/ 5453 - dated 25-2-2020

Amendment in Notification No. F.17 (150) ACCT/ GST/2018/ 3995 dated 16.11.2018

9. F.17(131-Pt.-II)ACCT/GST/2017/5442 - dated 25-2-2020

ASSIGN THE FUNCTIONS TO BE PERFORMED UNDER RGST ACT 2017 BY A PROPER OFFICER

Highlights / Catch Notes

GST

• Hostel accommodation services with daily rates Rs. 300-500 or monthly Rs. 6,900-12,500 per bed qualify for GST exemption.

  Case-Laws - AAR : Classification of supply - Benefit of exemption / Rate of GST - Hostel accommodation - The daily accommodation services ranging from ₹ 300 to 500 per bed are eligible for exemption - The monthly accommodation service ranging from ₹ 6,900 to ₹ 12,500 per bed is eligible for exemption - AAR
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• Leasing Satellite Transponders Taxed the Same as Supplying Them Under Current Tax Rules.

  Case-Laws - AAR : Classification of services - Leasing of Satellite Transponder - the rate of tax applicable on the service of leasing of the satellite transponders shall be the same as the rate of tax as applicable on the supply of the satellite transponders. - AAR
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• Transponders on Communication Satellites Integral to Space Segment, Not Classified Under Heading 85256092.

  Case-Laws - AAR : Classification of goods - the transponder is a key payload of communication satellite and hence cannot form part of ground segment but is essentially a part of space segment and more specifically the main part to the communication satellite without which the communication satellite becomes defunct. Therefore transponders located on the communication satellite are not covered under the Heading 85256092. - AAR
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• Rajasthan-based business not required to register for GST in Karnataka for contract work due to principal location rule.

  Case-Laws - AAR : Requirement of separate registration - Execution of contract in different state - The applicant has only one principle place of business, for which registration has been obtained and does not have any other fixed establishment other than the principle place of business, as admitted by the applicant. Therefore the location of the supplier is nothing but the principle place of business which is in Rajasthan. Thus there is no requirement for a separate registration in Karnataka for execution of the contract. - AAR
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• Lease of Hotel-Like Rooms Not Exempt from Tax, AAR Rules; Not Classified as Residential Dwelling Under Exemption.

  Case-Laws - AAR : Group of lessors - Renting of residential premises - They are like hotel rooms and the entire leased premises has 42 rooms, which can by no imagination be termed as a residential dwelling - The lease services does not fall under the exemption “Services by way of renting of residential dwelling for use as residence” - AAR
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• Subsidies to Farmers Excluded from Taxable Supply Valuation Under CGST Act Section 15(2)(e.

  Case-Laws - AAR : Valuation of taxable supply - inclusion of subsidy amount granted to the farmer - It has no bearing on the price and hence on the value of supply made by the applicant to the farmer and is not covered under section 15(2)(e) of the CGST Act, 2017. - There is no question of excluding the amount of assistance or subsidy received from the transaction value or value of taxable supply. - AAR
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• Claiming Input Tax Credit on Old Jewellery Purchases Under GST Act Section 16 Affects Marginal Scheme Eligibility.

  Case-Laws - AAR : Valuation - Input Tax Credit - Purchase and sale of second hand goods being old jewellery - the applicant can claim the input tax credit on such purchases if he is eligible to claim under section 16 of the GST Act, 2017 and in that case, he would become ineligible to apply marginal scheme for supplies of such second hand goods. - AAR
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Income Tax

• Option Agreement Receipt Not Taxable as House Property Income; Considered Under Other Income Sources Instead.

  Case-Laws - AT : Correct head of income - Receipt by way of an option agreement cannot be assessed under the head income from house property. Once said receipt is not assessable under the head income from house property, and then obviously, it has to be considered under any other head of income, including income from other sources - AT
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• Educational Activities Qualify for Tax Exemption u/s 2(15) of the Income Tax Act; Rejection Grounds Dismissed.

  Case-Laws - AT : Exemption u/s 11 - basic aims and objects of the assessee company are to provide educational, intellectual, physical and spiritual development of an individual, family, community and the nation by initiating, undertaking and supporting various projects and programs, which in our considered view, falls within the definition of education as prescribed u/s 2(15) of the Act, hence this ground of rejection is not tenable. - AT
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• No Penalty u/s 271(1)(c) If Authorities Accept Additional Income Disclosed After Search and Survey.

  Case-Laws - AT : Levy of penalty u/s 271(l)(c) - additional income disclosed due to search and survey at the premises - wherein the returned income has been accepted, penalty cannot be imposed - AT
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Indian Laws

• Court Upholds Strict Interpretation of NDPS Act; Rejects Exclusion of Neutral Substances in Drug Quantity Calculation.

  Case-Laws - SC : The provisions of NDPS Act are required to be interpreted keeping in mind the object and purpose of NDPS Act; impact on the society as a whole and the Act is required to be interpreted literally and not liberally which may ultimately frustrate the object, purpose and preamble of the Act. Therefore, the interpretation of the relevant provisions of the statute canvassed on behalf of the accused and the intervener that quantity of neutral substance (s) is not to be taken into consideration and it is only actual content of the weight of the offending drug, which is relevant for the purpose of determining whether it would constitute “small quantity or commercial quantity”, cannot be accepted. - SC
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IBC

• Adjudicating Authority Must Follow CoC's Liquidation Decision for Corporate Debtor u/ss 33(1), 33(2), and 34(1) IBC 2016.

  Case-Laws - Tri : Liquidation of Corporate Debtor - sections 33(1), 33(2) and 34(1) of the IB Code, 2016 - this Adjudicating Authority cannot question the wisdom of the CoC and their recommendation for liquidation of the Corporate Debtor Company. - Tri
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PMLA

• Aadhaar Authentication Mandatory for Reporting Entities to Combat Money Laundering in Financial Transactions.

  Notifications : Notifies the reporting entities undertake Aadhaar authentication service of the Unique Identification Authority of India - Notification
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Service Tax

• Secured Creditors' Claims Take Priority Over Service Tax Dues u/s 31-B and Section 26E Since September 2016.

  Case-Laws - HC : Adjustment of Income tax Refund - Recovery of outstanding secured debts - recovery of service tax - priority of claims - n view of Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 and sec.26E of the SARFAESI Act,2002 w.e.f.1.9.2016 the claims of secured creditors such as the petitioner Bank have priority over the claims of the respondents 1-3 for service tax dues. - HC
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Central Excise

• CENVAT Credit Approved for Construction Services in Pond Excavation and Storage Tank Renovation u/r 2(a)(A) Eligibility.

  Case-Laws - AT : CENVAT Credit - input services - constructions services used in excavation of ponds etc. - credit pertains to renovation/repair services - some part belongs to repair and maintenance and some part towards the construction of new storage tank/pond. As storage tank is an eligible capital asset under Rule 2 (a)(A), the appellant is eligible for cenvat credit - AT
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VAT

• High Court Rules: Non-Presentation of Books During Survey Insufficient for Best Judgement Assessment Rejection in VAT/Sales Tax.

  Case-Laws - HC : Best Judgement Assessment - rejection of books of accounts - Though the Tribunal has recorded that the books of accounts were duly presented when the show cause notice was given to the assessee, and no discrepancy was found in the same, but non-presentation of the books of accounts at the time of survey cannot be the sole reason for rejection of the books of accounts. - HC
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Case Laws:

• GST

• 2020 (4) TMI 695
  Classification of supply - Benefit of exemption / Rate of GST - Hostel accommodation - Exemptions under N/N. 12/2017 - Central Tax (Rate) vide entry 14 - whether hostel accommodation is treated at par with accommodation of hotels, inns, guest houses, etc., and accordingly chargeable at different GST rates based on the daily tariff per unit? - HELD THAT:- The supply of services by a hotel, inns, guest houses, clubs or campsite or any other commercial place, by whatever name called, for residential purposes would be exempted if the declared tariff of a unit of accommodation is below Rs. 1,000 per day or equivalent, as per entry no.14 of the Notification No.12/2017 -Central Tax (Rate) dated 28.06.2017. If it exceeds Rs. 1.000-00 per day or equivalent then the services become taxable as per entry no.7 of the Notification No.11/2017 - Central Tax (Rate) dated 28.06.2017. Proposed Tariff - HELD THAT:- The monthly rent charged is Rs. 12,500-00 at maximum and the daily tariff would amount to Rs. 416-00, which is less than Rs. 1000-00 per day. Further, even when given on daily basis, it is seen that the maximum amount charged is Rs. 500-00 per day which is below Rs. 1000-00 per day. Hence the tariff amount per unit of accommodation is less than Rs. 1000-00 per day. Hence the service provided is where the tariff is below Rs. 1,000-00 per day or equivalent - Further, the entry no.14 of Notification No.12/2017-Central Tax (Rate) is analysed and it says all services of SAC 9963 provided by such a supplier having a declared tariff of less than Rs. 1000-00 per day or equivalent would be exempt. Further since in this supply, all the supplies are made as a package with the accommodation service being the principal service, the entire supply would be treated as a composite supply of accommodation service as per section 8 of the CGST Act, 2017. Hence, the proposed supply of services in question by the applicant would not be liable to tax as per entry no.14 of the Notification No.12/2017 -Central Tax (Rate) dated 28.06.2017 as amended from time to time. Provision of other services in addition to the facilities that are in addition to the compulsory services provided and charge the clients for the same - whether these amount to providing of services under a separate contract and as per the facilities provided, as these services are independent of the accommodation services provided? - HELD THAT:- The Group 9963 of the Service Accounting Codes as annexed to Notification No.11/2027-Central Tax (Rate) relates those services which are coming under Food, Edible preparations, alcoholic and non-alcoholic beverages serving services, and if the additional services provided by the applicant belong to the Group 9963, then the turnover of these services will also be exempt as they are covered under the entry 14 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. But those services which are supplied independently to the clients which do not belong to the Group 9963 are liable to tax at appropriate rates, provided that the applicant is liable for registration - If the applicant charges additional charges for extra facilities opted by the inhabitants in addition to the facilities that are currently included in the tariff received by the inhabitants but the overall price would be less than the present exemption limit of Rs. 1,000-00 per day per unit, then the same is liable to tax at the rates applicable to them as they are independent supplies, if they do not belong to the Group 9963. If they belong to the Group 9963, then the same are exempt as per entry no.14 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.

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• 2020 (4) TMI 694
  Classification of services - Leasing of Satellite Transponder - covered under SAC 997319 as per HSN Code 8803-parts goods of Heading 8802 (Satellites) from the date of commencement of the service-Leasing of Satellite Transponder or not - rate of GST @ 5% or not - Notification No. 08/2017-Integrated Tax (Rate) dated 28.06.2017 - HELD THAT:- In the instant case satellite transponders had been leased out. Therefore the rate of tax applicable on the service of leasing of the satellite transponders shall be the same as the rate of tax as applicable on the supply of the satellite transponders. Classification of goods - determination of the rate of tax on supply of service of leasing of satellite transponders - HELD THAT:- The transponder essentially is a repeater which receives the signal transmitted from earth station on the uplink, amplifies the signal, converts to a dissimilar frequency and retransmits the same on the downlink. Therefore the essential / significant features of amplification and frequency conversion are done by the key payload of the communication satellite i.e. the transponder. Therefore the transponder becomes an integral part of the communication satellite, without which the communication satellite becomes defunct. In the instant case the transponder is a key payload of communication satellite and hence cannot form part of ground segment but is essentially a part of space segment and more specifically the main part to the communication satellite without which the communication satellite becomes defunct. Therefore transponders located on the communication satellite are not covered under the Heading 85256092. Communication Satellite Transponders are appropriately classifiable under Tariff Heading 8803, more specifically under 8803 90 00 - Transponders, being parts of communication satellites, are covered under 8803 90 00 and any leasing of such transponders would be covered under the Entry No.17 of Notification No. 11/2017 - Central Tax (Rate) dated 28th June 2017 at the rate applicable as on the supply of like goods involving the transfer of title in goods. Admittedly the transponders are goods and any transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration is covered under the clause (viii) of Entry No. 17 of the said Notification. Thus, the applicant is into supply of Leasing of Transponder service only. Therefore it is pertinent to mention here that in case if the applicant is into any other supply, in addition to the instant supply, then the ruling in this case will not be applicable. In such cases, the supply need to be examined whether it amounts to composite supply or mixed supply and accordingly the rate of tax need to be determined.

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• 2020 (4) TMI 693
  Requirement of separate registration - Execution of contract in different state - whether agreement would suffice as address proof since nothing else is with the assesse and service recipient will not provide any other proof? - What documents would be required with transporter to transit/ ship material at Karnataka site from dealer/ supplier of Rajasthan and in case of dealer/ supplier is of Karnataka. Advance ruling may kindly be issued in case of registration is required or not required in both the situation? Whether separate registration is required to execute the aforesaid contract in Karnataka State or not? - HELD THAT:- Section 22 of the CGST Act 2017 is relevant to registration and stipulates that every supplier shall be liable to be registered in the state from where the said supplier makes the taxable supply of goods or services or both, subject to the threshold limit of the aggregate turnover in a financial year - In the instant case, the applicant intends to supply goods or services or both from their principle place of business, which is located in Rajasthan. The applicant has only one principle place of business, for which registration has been obtained and does not have any other fixed establishment other than the principle place of business, as admitted by the applicant. Therefore the location of the supplier is nothing but the principle place of business which is in Rajasthan. Thus there is no requirement for a separate registration in Karnataka for execution of the contract. If registration is not required in Karnataka state and if we purchase goods from dealer of Rajasthan and want to ship goods directly from the premises of dealer of Rajasthan to township at Karnataka then whether CGST SGST would be charged from us or IGST by the dealer of Rajasthan? - If registration is not required in Karnataka state and if we purchase goods from dealer of Karnataka to use the goods at township at Karnataka then whether IGST would be charged from us or CGST SGST by the dealer of Karnataka? - HELD THAT:- In this situation the supplier i.e. dealer is situated in Karnataka the recipient of goods i.e. the applicant, is situated in the state of Rajasthan and hence the impugned supply becomes inter-state supply, in terms of Section 7(1) of the IGST Act 2017. Further the said supply gets covered under Bill to - Ship to transaction, in terms of Section 10(1)(b) of the IGST Act 2017. Thus IGST has to be charged by the dealer in the relevant invoice. However, the applicant also has to charge IGST in their invoice addressed to M/s. Karnataka Cement Project (a unit of Shree Cement Ltd.,). What documents would be required with transporter to transit/ ship material at Karnataka site from dealer/ supplier of Rajasthan and in case of dealer/ supplier is of Karnataka. Advance ruling may kindly be issued in case of registration is required or not required in both the situation? - HELD THAT:- The impugned question does not gets covered under the issue/s on which the advance ruling can be sought under CGST Act 2017, in terms of Section 97 (2) of the said Act. Therefore no ruling is given to this question.

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• 2020 (4) TMI 692
  Group of lessors - Renting of residential premises - Exemption prescribed under entry number 13 of notification no. 9/2017- integrated tax (rate) dated. 28 th June, 2017 - Levy of GST while issuing the invoice for the lease service to M/s. Dtwelve Spaces Pvt. ltd. - HELD THAT:- It is clear that the applicant is not providing the service in individual capacity to the lessee, but as a part of the group of lessors. The applicant has not provided any details of registration or constitution of the group, whether they have entered into a partnership or association etc. and hence the taxability of the transaction needs to be examined in this background. Entry 13, Heading 9963 or Heading 9972, is related to renting of residential dwelling for use as residence - The contract of the applicant group with the Company is verified and found that what is given is an immovable property consisting of only rooms with attache toilets as per the Layout of the leased premises annexed to the Lease agreement and does not fit into the meaning of a dwelling which means a house. They are like hotel rooms and the entire leased premises has 42 rooms, which can by no imagination be termed as a residential dwelling. The exemption prescribed under entry no. 13 of N/N. 9/2017 - Integrated tax (Rate) dated 28th June 2017 cannot be sought and the lessors (as an entity) have to charge GST while issuing the invoice for the lease services to M/s. DTwelve Spaces Pvt. Ltd, provided they are registered under the GST Act - The lease services does not fall under the exemption Services by way of renting of residential dwelling for use as residence as listed in entry 13 of Notification No. 9/2017 - Integrated tax (Rate) dated 28th June 2017.

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• 2020 (4) TMI 691
  Valuation of taxable supply - inclusion of subsidy amount granted to the farmer - or to the supplier on behalf of the farmer - by Horticulture / Agriculture / Sericulture Department of Government of Karnataka under PMKSY scheme or any other Central / State Government approved schemes - refund of input tax credit accumulation. HELD THAT:- The receipt of any amount received by the farmer from the Government Department has no bearing on the price or value of the supply of goods and/or services by the applicant. The Bank or Government Department makes payment to the applicant only on behalf of the farmer. As per sub-section (1) of section 15, it is very clear that the value of supply is the transaction value and the transaction value is defined as the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient are not related and the price is the sole consideration for the supply - In the pertinent case, it is clearly evident that the applicant and the farmer are not related persons and the price is payable by the farmer irrespective of the fact that he receives assistance from the government department or not or whether the Bank makes the payment or not. The consideration of the contract is not fixed taking into the account the amount receivable by the farmer as financial assistance and the entire amount is invoiced. Hence price is the sole consideration for supply and the entire invoice value would be the transaction price. Subsidy - HELD THAT:- the amount receivable or received from the Government is received by the farmer and this amount may be received by him directly in option 1 or by the Bank in case of option 2 or by the applicant in option 3 - the method of receipt of payment has no bearing on the price of the supply and also the receipt of payment by the applicant from the Bank or the Government Department (on the authorization of the farmer concerned) is on the account of the farmer only. Hence the price is independent of the assistance amount and hence would not be covered under clause (e) of sub-section (2) of section 15 of the CGST Act.

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• 2020 (4) TMI 690
  Valuation - Input Tax Credit - Purchase and sale of second hand goods being old jewellery - applicability of sub-rule (5) of rule 32 of Central Goods and Services Tax Rules, 2017 - purchases made from the dealer from whom marginal scheme if applicable - purchases used / second hand gold jewellery from individuals who are not dealers under the GST and at the time of sale there is no change in the form/ nature of goods? HELD THAT:- In the instant case, the supplier, i.e. the applicant is effecting the supply of second-hand jewellery which is taxable under the GST Act as it is covered under entry no. 13 of Schedule V to the Notification No. 01/2017-Central Tax (Rate) dated 28th June, 2017 which is taxable at 1.5% under the CGST Act and similarly taxable under the KGST Act, 2017 also at 1.5%. Hence the supplier satisfies the condition that the supply made by him must be a taxable supply. The supplier must be a person dealing in buying and selling of second-hand goods. It is seen that the applicant has admitted that he is purchasing used gold jewellery from individuals and selling the same, after cleaning and polishing them. He must not avail any input tax credit on the purchase of such goods. The goods so purchased must be supplied as such and if at all any process is involved, that must not change the nature of the product - it is clear that, subject to the condition of invoicing them as second hand jewellery , the applicant satisfies the second condition also. The valuation of the supply of second hand jewellery may be made as prescribed in sub-rule (5) of rule 32 of the Central Goods and Services Tax Rules, 2017. Whether ITC is allowed to be claimed if purchases are made from the dealer whom marginal scheme is applicable? - HELD THAT:- The applicant, if he purchases the second hand goods from other registered persons, then the applicant can claim the input tax credit on such purchases if he is eligible to claim under section 16 of the GST Act, 2017 and in that case, he would become ineligible to apply marginal scheme for supplies of such second hand goods.

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• 2020 (4) TMI 689
  Permission for withdrawal of application - Classification of supply - supply of service or not - letting out the residential dwelling to a firm - HELD THAT:- The application filed by the Applicant for advance ruling is disposed off as withdrawn.

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• 2020 (4) TMI 688
  Grant of Bail - offence punishable under Section 409, 467, 468, 120-B and 427 of the IPC - fabricated and forged invoices without supplying the material - absence of E-Way Bill - HELD THAT:- Considering the fact that the applicant is in custody since 28.11.2019 and in the present scenario conclusion of trial is likely to take time and also taking note of the submission of counsel for the applicant in respect of the condition relating to deposit of the amount, it is directed that the applicant-Lalit Kumar Gandhi will be released on bail subject to complying with the following conditions:- Applicant will furnishing a personal bond of Rs. 1 Lac and two local sureties of the like amount to the satisfaction of the Trial Court for his appearance as and when directed - The applicant will deposit Rs. 50 Lacs with the trial Court, which will be kept by the trial Court in the Fixed Deposit in a nationalised Bank and he will also furnish solvent security with the trial Court for the remaining amount of Rs. 1,72,50,000/-.

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• Income Tax

• 2020 (4) TMI 686
  Deduction u/s 80P - CIT(A) rejected the objections raised by the assessee and passed orders u/s 154 disallowing the claim of the assessee u/s 80P(2) - HELD THAT:- CIT(A) had initially allowed the appeals of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed orders u/s 154 wherein the claim of deduction u/s 80P was denied, by relying on the judgment of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] The CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety. The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the AO to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) - Appeal filed by the assessee allowed for statistical purposes.

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• 2020 (4) TMI 685
  Correct head of income - compensation received as per the option agreement - income from house property or income from other sources - HELD THAT:- If any income is assessable under the head income from house property, it should be out of property let out or deemed to be let out for the relevant period. In this case, the property is neither let out nor vacant. Receipt by way of an option agreement cannot be assessed under the head income from house property. Once said receipt is not assessable under the head income from house property, and then obviously, it has to be considered under any other head of income, including income from other sources. In this case, the assessee has offered compensation received in pursuance of option agreement under the head from other sources Amount received by the assessee is in the nature of a compensation for not letting out property to any third party for a specified period. The meaning thereby is that by entering into an option agreement, the assessee had renounced its right to market unit No.1 and 2 for a period of 9 months from the date of the option agreement and, because of covenent by way of an option agreement with the party and hence, any amount received in pursuance of said agreement is in the nature of compensation which is assessable under the head income from other sources as rightly considered by the assessee. AO, as well as the ld.CIT (A) was incorrect in coming to the conclusion that the property is deemed to be let out and income from said property needs to be computed u/s 22 - direct the Ld. AO to delete additions made towards income from house property as against, the income offered by the assessee under the head income from other sources. - Decided in favour of assessee.

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• 2020 (4) TMI 684
  Unexplained investment in gold - Purchase of gold outside the books of accounts - gold has been received on challan, but expressed his inability to produce challans after gap of 4 years - CIT (A) has admitted additional evidence under Rule 46A(1)(b) of Income-Tax Rules, 1962 and deleted the addition - HELD THAT:- CIT (A) has called for a remand report from the AO on these additional evidences and allowed admission thereof. Thus, we are of the view that these additional evidences were very much necessary for admission under Rule 46A (1)(b) of Income-Tax Rules, 1962. We find that the CIT (A) has forwarded the same to the AO. CIT (A) observed that the AO made enquiry from M/s. Shri Guru Jewellers, who replied confirming that it had issued 7 kg of gold bar of purity 0.995 vide delivery challans and 6 Kg of gold bar of purity 0.995 to M/s. Raja Co. and submitted copy of challan, copy of account statement of M/s. Raja Co., ITR of Shri Guru Jeweler, PAN Card, as required by the AO. Thus, the AO himself accepted the identity and proof of having transaction with M/s. Shri Guru Jeweler. Assessee had purchased gold stock of 13 kg vide delivery challans no. DC3 and DC4 dated 01.04.2011, out whichsales of 7596.58 grams were made during 01.04.2011 to 04.04.2011. Therefore, after considering all facts, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. Decided against revenue.

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• 2020 (4) TMI 683
  Exemption u/s 11 - Application u/s 12AA(1)(b)(ii) rejected - Charitable activities/object - applicant company submitted the reply stating that Sanjhi Sikhiya Foundation is a charitable educational Entity working towards improvement of the educational paraphernalia of the Government School - As per CIT-E contention of the assessee is not acceptable as mere gaining of knowledge of skill does not qualify for the label education in the sense of the term explained by the Apex Court in the case of Sole Trustee Lok Sikshan Sansthan[ 1975 (8) TMI 1 - SUPREME COURT] AND non-filing of financial account and bank statement which resulted into non-corroboration of genuineness of the activities - HELD THAT:- Objects of the society - As per amendment in section 2(15) of the Act, Yoga has also been included as a part of education which is also one of the object of the assessee in the instant case. If we see minutely the aims and objects of the assessee-company, then it can be inferred that the basic aims and objects of the assessee company are to provide educational, intellectual, physical and spiritual development of an individual, family, community and the nation by initiating, undertaking and supporting various projects and programs, which in our considered view, falls within the definition of education as prescribed u/s 2(15) of the Act, hence this ground of rejection is not tenable. Non-filing of financial account and bank statement - assessee company has been formed and registered with the Registrar of Company on dated 11th September, 2018 and as per claim of the assessee/applicant, it has started its operation from the month of April, 2019 only, therefore it is a fact that the assessee-society is at the initial stage and hence the activities of the society cannot be expected to be at high pedestal at the initial stage. The jurisdictional bench in the case of Care Share Welfare Society Vs CIT(Exemptions). [ 2019 (9) TMI 459 - ITAT AMRITSAR] has held that where the assessee is at initial stage, then the question of genuineness did not arise. Assessee-company has filed various documents with regard to the carrying out many activities before us and the certification of the said document depicts that the assessee did not submit the details of the activities and works done by the assessee-company before the Ld. CIT(E). Hence in our considered view the activities of the assessee-company are required to be examined by the Ld. CIT(E) in its right perspective therefore respectively following the aforesaid judgment of the jurisdictional bench, we are inclined to set aside the instant ground of rejection and remit back to the file of the Ld. CIT(E) for decision afresh . Appeal filed by the assessee stands allowed for statistical purposes.

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• 2020 (4) TMI 682
  Levy of penalty u/s 271(l)(c) - additional income disclosed due to search and survey at the premises - additional income disclosed in returns filed u/s 153A - contention is that no search and survey has taken place at the premises of the assessee and assessee has voluntarily disclosed the income of the department - HELD THAT:- In a recent decision of Supreme Court in the case of Rajkumar Gulab Badgujar [ 2019 (9) TMI 360 - SC ORDER] wherein it is held that wherein the returned income has been accepted u/s 153C and therefore, it is held that in such case, penalty cannot be imposed. Also decided in PARAG V. CHUGH VERSUS THE DCIT, CI RCLE 1, BARODA. [ 2019 (10) TMI 1240 - ITAT AHMEDABAD] - Decided in favour of assessee.

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• 2020 (4) TMI 681
  Levy of penalty u/s 271(1)(c) - defective/illegal notice - whether for concealment of particulars of income or furnishing of inaccurate particulars of income is illegal? - HELD THAT:- Penalty so imposed and sustained on the basis of such defective notice issued u/s 271(l)(c) which did not specify the particular limb of sec. 271(l)(c) i.e. whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income, is illegal and that in view of ratio laid down in the case of Manjunath Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and followed in the cases of Shri Sachin Arora Others [ 2018 (3) TMI 1026 - ITAT AGRA]. - Decided in favour of assessee.

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• 2020 (4) TMI 680
  Reopening of assessment u/s 147 - Addition of assessee s share on account of profit generated from sale of property - HELD THAT:- A perusal of the above order reveals that the Ld. CIT(A) while quashing the assessment u/s 147 of the Act has followed the decision of the ITAT in the case of co-owner of the assessee in ITO Vs. Ms. Malika Mundrey Saini [ 2017 (11) TMI 1893 - ITAT CHANDIGARH] having similar facts and circumstances. The Ld. DR could not bring any distinction in the facts and law applicable for this case which may justify our interference in the order of the CIT(A). - Decided against revenue

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• Insolvency & Bankruptcy

• 2020 (4) TMI 679
  Maintainability of application - initiation of CIRP - Recovery of debt - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Respondent has paid the principal amount of all three Agreements in question in two instalments viz Rs. 3,00,00,000/- on 1-1-2019 and Rs. 1,13,34,068/- on 20-6-2019. Admittedly, there is no interest mentioned in the Agreements in question. However, the Petitioners added interest too unilaterally. Another material blunder committed in making claim in the instant Petition is that though buy back price mentioned in the Agreement for Residential Apartment bearing 6 D was mentioned as Rs. 1,62,36,928/, it was wrongly claimed Rs. 4,81,92,000/which is the price fixed for second option. There is no mention of interest either in the Agreements or Agreement to sale and Development Agreement - There is no rationale in fixing buy back price and it appears to be fixed in lump sum and therefore, it can be offered to the Respondent in lump sum. In the absence of any document produced in support of first Option, the claim in question justified so as to take it as legally liable to pay. Therefore, the Petitioners failed to prove that they are entitled to recover Debt in question, in terms of Agreements in question. Whether the instant Petition is filed with an intention to recover alleged outstanding amount after receiving principle amount in question in full or to initiate CIRP on justified grounds? - whether the Respondent is insolvent/solvent Company; whether the Petitioners approached the Tribunal with clean hands with bona fide intention? - HELD THAT:- The Petitioners have admittedly received Principle amount in full with no element of interest mentioned in the Agreements in question. And the instant Petition is filed under the guise of provisions of Code, with an intention to recover the difference between principle amount and buy back payments as referred to in Agreements in question and also unilaterally imposing condition of interest for failure to pay difference of amount. It is settled position of law that provisions of Code cannot be invoked as a substitute for debt enforcement or recovery-proceedings. The Proceedings contemplated under the provisions of Code are summary in nature and disputed questions of facts and law cannot be gone into those proceedings as several disputed questions of facts and law. Wherein even Debt in question is not established. Therefore, other remedies available to the Petitioners as per Agreements in question and also as per law like initiating suit for specific performance or to file suit to get decree for recovery of alleged outstanding amount by adducing appropriate evidence and documents etc. The Petitioners has failed to establish the claim as made in the Company Petition, so as to constitute default to initiate CIRP in respect of the Respondent and thus it is liable to be rejected by reserving liberty to the Petitioners to invoke appropriate civil remedy - Petition dismissed.

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• 2020 (4) TMI 678
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - dishonor of cheque - section 138 of NI Act - HELD THAT:- In the instant case, the documents produced by the operational creditor clearly establish the debt and there is default on the part of the Corporate Debtor in payment of the operational debt - On perusal of the records it is also found that the corporate debtor has never raised any dispute on issuance of notice u/s. 8 of the I B Code nor have ever raised any dispute prior to the issuance of notice. The respondent has defaulted the debt and has admitted the operational debt - This adjudicating authority is of the considered view that operational debt is due to the Applicant and it fulfilled the requirement of I B Code. That, service is complete and no dispute has been raised by the respondent at any point of time. That, Applicant is an Operational Creditor within the meaning of section 5 sub-section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force. It is evident that the corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under section 9(5)(1) of the Code - petition admitted - moratorium declared.

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• 2020 (4) TMI 677
  Arbitral award - Enforcing of the Award passed by the Learned Arbitrator - section 14 (1) (a) of the I B Code, 2016 - main crux of the submissions/contentions on behalf of the Learned IRP seems to be that by virtue of the reliefs as sought for, the Applicant is trying to enforce the Award passed by the Learned Arbitrator which cannot be done taking into consideration the provisions of section 14 (1) (a) of the I B Code, 2016. HELD THAT:- As per clause 5 (e) (x), the payment to be effected by the Corporate Debtor to the Applicant on the date fixed as per the schedule of payments, the rights provided for clause (d) in favour of the Corporate Debtor will come into operation. So, the rights of the Corporate Debtor in relation to what has been mentioned in clause 5 (d) comes to the effect only after the payment which is required to be made by the Corporate Debtor to the Applicant. That is, the right that can be exercised in relation to the property which is subject matter to the dispute as between the parties and several agreements which has been entered into from time to time and Power of Attorney in relation to which the Award has been passed - the Corporate Debtor cannot also include in its assets any of the assets owned by the 3rd party in possession of the Corporate Debtor held under Trust or under contractual arrangements including bailment. From the reading of the above provisions as well as taking in tandem from the Award passed by the Learned Arbitrator, it is seen that even though the Corporate Debtor might have a legal right of beneficial interest in relation to the assets which according to the Ld. IRP to be treated as the stock-in-trade, but, however, subject to the conditions as imposed by the Learned Arbitrator and as against which no material has been brought forth by the IRP as to whether the same is under challenge under section 34 of the Arbitration and Conciliation Act, 1996 as amended and as to whether any stay has been granted in relation to the enforcement of the same. By virtue of reading section 14 (1) (b) restricts on the part of the Corporate Debtor in transferring or otherwise dealing with the property including its own during the period of CIR Process. No evidence has been placed by the IRP that the assets which are sought to be alienated are stock-in-trade with adequate evidence and not to be treated as an asset. In any case in relation to accounting parlance Stock-in-Trade is also part of Current Assets of the Corporate Debtor and cannot be divorced from it - taking into consideration the provisions of the I B Code, 2016, in relation to the property which is the subject matter of Arbitration Award as well as in the interest of justice, a status quo order is granted and the IRP is directed not to deal with the said property.

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• 2020 (4) TMI 676
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - invocation of Section 9 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- In view of the Corporate Debtor s failure to reduce or liquidate its liability, the present petition has been filed in the required format praying for initiation of the Corporate Insolvency Resolution Process of the Corporate Debtor. Affidavit in compliance under section 9(3)(b) and 9(3)(c) of Code are on record to corroborate his case - The Corporate Debtor has been duly served by Courier Service. None was present on behalf of the Corporate Debtor hence they were proceeded ex-parte vide order dated 02-09-2019. Considering the circumstances, the prayer of the Operational Creditor merits consideration. Petition admitted - moratorium declared.

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• 2020 (4) TMI 675
  Liquidation of Corporate Debtor - sections 33(1), 33(2) and 34(1) of the IB Code, 2016 - HELD THAT:- RP in response to calling of Expression of Interest from the potential resolution applicants, received only one expression from M/s. GSEC Ltd. and the same was not to the expectation of the CoC and therefore, CoC rejected the resolution plan. However, before rejecting the resolution plan submitted by M/s. GSEC Ltd., sufficient opportunities were provided to M/s. GSEC Ltd. to present their case - It is further observed by this Adjudicating Authority that had the resolution applicant i.e. M/s. GSEC Ltd. any grievances against the CoC, the resolution applicant would have preferred IA against the decision of the CoC. Whereas in the instant case, the IA is preferred by the suspended board of director of the Corporate Debtor Company. Further, this Adjudicating Authority cannot question the wisdom of the CoC and their recommendation for liquidation of the Corporate Debtor Company. This Adjudicating Authority is of a considered view that there shall be an order of liquidation in respect of the Corporate Debtor Company Ardor Global Private Limited and direct the Liquidator to issue a public announcement stating that Corporate Debtor Company is in liquidation - Application allowed.

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• Service Tax

• 2020 (4) TMI 687
  Adjustment of Income tax Refund - Recovery of outstanding secured debts - recovery of service tax - priority of claims - creation of such on the assets - invocation of Section 87 of the Finance Act,1994 - HELD THAT:- The 6th respondent owed amounts to the petitioner for loans borrowed by it, Service Tax dues to respondents 1-3 and Provident Fund dues to the 5th respondent. The 6th respondent supports the claim of respondents 1-3. Section 31-B and Section 26-E of the Recovery of Debts and Bankruptcy Act,1993 give priority to claims of secured creditors like the petitioner Bank over the dues of the State such as Service Tax dues/ Income Tax dues and the non-obstante clause therein overrides the provisions of the Finance Act,1994. However, Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 and Sec.26E of the SARFAESI Act,2002 were introduced in the respective statutes only on 1.9.2016 by Act 44 of 2016 - thus, after introduction of Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 and Sec.26-E of the SARFAESI Act,2002 w.e.f. 1.9.2016, the claim of the petitioner Bank would prevail over that of the respondents 1-3. Having regard to the clear language contained in Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 giving priority to rights of secured creditors (to realise secured debts due and payable to them by sale of assets over which security interest is created) over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority, the law has undergone a sea change; and in view of Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 and sec.26E of the SARFAESI Act,2002 w.e.f.1.9.2016 the claims of secured creditors such as the petitioner Bank have priority over the claims of the respondents 1-3 for service tax dues. The claim of the respondents 1-3 that they are entitled to the Income Tax refund amount credited to the 6th respondent s Bank account with the petitioner Bank and that the petitioner cannot claim it, is rejected - the impugned notice under Sec.87 of the Finance Act,1994 issued by the 3rd respondent cannot be sustained in law. Whether the 5th respondent s claim prevails over the claim of the petitioner? - HELD THAT:- While subsection (2) of Sec.11 of the said enactment contains a nonobstante clause creating a first charge to claims for Provident Fund dues over all other debts, we have already seen that there is also a non obstante clause in Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 and Sec.26-E of the SARFAESI Act, 2002 - The former statute is one of 1952 while the other two were enacted in 1993 and 2002 respectively. It is settled law that if there is conflict between two special Acts and both contain non obstante clauses, the said clause in the later Act will prevail. Even the 5th respondent s claim for the Income Tax refund amount credited to the 6th respondent s Bank account with the petitioner Bank cannot prevail over petitioner s claim for the same by way of adjustment to it s dues - the petitioner Bank is entitled to appropriate the sum of Rs. 35,75,95,400/- deposited towards Income Tax refund by the 4th respondent in the Bank account of the 6th respondent with the petitioner s branch at CCG Branch at Hyderabad towards dues owed to petitioner by the 6th respondent - Petition allowed.

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• Central Excise

• 2020 (4) TMI 674
  CENVAT Credit - input services - Clearing Service - Life Insurance Services (For Employee) - and Mandap Keeper Service etc. - HELD THAT:- The issue decided in case of PANASONIC ENERGY INDIA CO. LTD. VERSUS C.C.E. S.T. -VADODARA-II [ 2017 (9) TMI 1876 - CESTAT AHMEDABAD ] where on identical services, it was held that respective services have been held to be Input service as defined under Rule 2(l) of CCR, 2004 in various services, and accordingly, the service tax paid on these services is admissible to credit. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2020 (4) TMI 673
  CENVAT Credit - input services - constructions services used in excavation of ponds etc. during the period 2011-2012 to 2013 to 2014 - HELD THAT:- It is evident from the invoices that the same is towards the receipt of the services in the nature of labour for handling of stores. It is also evident that the service provider is registered with the Department and have charged service tax on the invoices, which have been undisputedly paid by the appellant - it has been consistent view of the courts and also of the CBEC in its various circulars that, for any error on the part of the service provider, in the nature of mistake under the correct head, no adverse inference can be taken on the service receiver - credit allowed. Renovation/repair services - HELD THAT:- Credit pertains to renovation/repair services provided by M/s.Nagada Infratech Pvt. Ltd., Nagada and M/s.Fabrication, Nagda and some part belongs to repair and maintenance and some part towards the construction of new storage tank/pond. As storage tank is an eligible capital asset under Rule 2 (a)(A), the appellant is eligible for cenvat credit - credit allowed. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (4) TMI 672
  Best Judgement Assessment - rejection of books of accounts - whether the authorities were justified in rejecting the account books of the assessee for assessment year 2008-09 on the basis of survey report dated 28/07/09 and 04/08/09 is not pertain to the above assessment period and to pass the best judgement assessment? - HELD THAT:- In the instant case, it seems that the books of accounts were tallied and there is no mention of any deficiency in the books of accounts, but they have been rejected solely on the ground that the same were not found in the premises during the survey. The tribunal has also not considered any other reason for accepting the rejection of books of accounts which, in my opinion, is based on apprehension, rather than due consideration of the facts of the present case. It is also borne from the record that for the financial year 2008-09 tax invoice No. 467 dated 05.02.2009 relating to 63.225 metric tons of Coal was found where the coal was sold at the rate of Rs. 3750/- per MT. It has also been observed that during the same period other traders have sold coal at the rate of Rs. 6200/-per MT while the brick kiln is at the Ghaziabad and appellants have purchased coal for Rs. 5800/- to Rs. 6400/-. The Tribunal has not given any independent finding for accepting the order of the assessing officer in rejecting the books of accounts, but has only said that the same has also been upheld by the First Appellate Authority and no interference is required without taking into consideration the grounds taken by the assessee. It was the duty of the Tribunal, which is the final fact finding authority, to have considered the grounds raised by the assessee and to have returned a finding after considering the same - Though the Tribunal has recorded that the books of accounts were duly presented when the show cause notice was given to the assessee, and no discrepancy was found in the same, but non-presentation of the books of accounts at the time of survey cannot be the sole reason for rejection of the books of accounts. The matter is remanded to it for fresh adjudication expeditiously, say within a period of six months from the date a certified copy of this order - matter allowed by way of remand.

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• Indian Laws

• 2020 (4) TMI 671
  Mixing of Drugs - psychotropic substance - allegation that narcotic drug or psychotropic substance is found mixed with one or more neutral substance/s, for the purposes of imposition of punishment - validity of notification dated 18.11.2009 issued by the Central Government in exercise of the powers conferred by Clauses (viia) and (xxiiia) of Section 2 of the NDPS Act. It is submitted that the Central Government has no power to make any amendment in Act No. 9 of 2001 and make the whole of the quantity of the allegedly recovered material from the offender as the small, commercial or non-commercial quantity , by directing the inclusion of the neutral substance in it. Therefore, the notification dated 18.11.2009 is liable to be declared ultra vires and be struck down. Whether the NDPS Act envisages mixture of narcotic drugs and seized material / substance should be considered as a preparation in totality or on the basis of actual drug content of the specific narcotic drugs? HELD THAT:- This Court in the case of E. MICHEAL RAJ VERSUS INTELLIGENCE OFFICER, NARCOTIC CONTROL BUREAU [ 2008 (3) TMI 674 - SUPREME COURT] indicates that what was seized in E.Micheal Raj (Supra) was 4 kgs of Heroin, which would fall in Entry 56 of the Notification dated 19.10.2001. As per the Notification dated 19.10.2001 in case of Heroin 5gms is a small quantity and 250 gm is a commercial quantity. However, this Court considered the substance seized Heroin as Opium derivative and hence a manufactured drug and therefore, treating the seized drug as opium derivative, this Court held the seized material as small quantity and awarded punishment accordingly. While holding that in the mixture of a narcotic drug or psychotropic substance with one or more neutral substance, the quantity of neutral substance is not to be taken into consideration and it is only the actual content by weight of the narcotic drug which is relevant for the purposes of determining whether it would constitute small quantity or commercial quantity , this Court has not at all considered the relevant entry in the Notification dated 19.10.2001 - what was seized was heroin which falls in Entry 56. What was seized was not opium and / or opium derivative. There is no specific finding even given by this Court that it would fall under Entry 239 namely any mixture or preparation that of with or without the neutral material. Therefore, the case of mixture of narcotic drugs or psychotropic substance was not at all in direct consideration of this Court. Considering the statement of objects and reasons and the preamble of the NDPS Act and the relevant provisions of the NDPS Act, it seems that it was never the intention of the legislature to exclude the quantity of neutral substance and to consider only the actual content by weight of offending drug which is relevant for the purpose of determining whether it would constitute small quantity or commercial quantity - For the purpose of determination of the small quantity or commercial quantity , in case of entry 239 the entire weight of the mixture / drug by whatever named called weight of neutral material is also required to be considered subject to what is stated hereinabove. If the view taken by this Court in the case of E. Micheal Raj is accepted, in that case, it would be adding something to the relevant provisions of the statute which is not there and/or it was never intended by the legislature. The provisions of NDPS Act are required to be interpreted keeping in mind the object and purpose of NDPS Act; impact on the society as a whole and the Act is required to be interpreted literally and not liberally which may ultimately frustrate the object, purpose and preamble of the Act. Therefore, the interpretation of the relevant provisions of the statute canvassed on behalf of the accused and the intervener that quantity of neutral substance (s) is not to be taken into consideration and it is only actual content of the weight of the offending drug, which is relevant for the purpose of determining whether it would constitute small quantity or commercial quantity , cannot be accepted. Validity of Notification No. 2942(E) dated 18.11.2009 - HELD THAT:- Notification dated 19.10.2001 specifies the small quantity and commercial quantity with respect to respective narcotic drugs and psychotropic substances. As observed, by abundant caution and to make it further clear Note 4 has been added. Therefore, it cannot be said to be ultra vires to Scheme and relevant provisions of the NDPS Act, as contended on behalf of the accused and intervener - Therefore, challenge to the impugned Notification dated 18.11.2009 adding Note 5 of the clause to the Notification S.O.1055(E) dated 19.10.2001 fails. Application disposed off.

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• 2020 (4) TMI 670
  Grant of Bail - investment made for personal gain - malafide intent - huge scam/loss of employees funds - allegations in sum and substance are that the accused in furtherance of criminal conspiracy with malafide intention for personal gain and in violation of the relevant provisions of law, have invested huge amount of two funds i.e. Uttar Pradesh Power Sector Employees General Provident Fund and Uttar Pradesh Power Corporation Limited Contributory Provident Fund in DHFL, a company incorporated under the Companies Act - notification dated 2nd March, 2015 issued by Ministry of Finance. HELD THAT:- The accused-applicant was Director (Finance) and the trustee who was to operate the account of the trust with secretary of the Trusts. He was the person who recommended for investment in the DHFL.The investments were made on 16th March, 2017 without there being any authorisation of the Board of Trustees, but to justify the investment forged minutes of meeting allegedly held on 24th March, 2017 were prepared on which signature of the Chairman, Mr Sanjay Agrawal were forged. Statement of Abhinav Gupta s/o Praveen Kumar Gupta has prima facie disclosed that the brokerage amount of Rs. 30 crores was given by DHFL for making investment and this brokerage amount was divided among three accused - The economic crime of such scale and magnitute are carefully and meticulously planned and executed. It is well settled that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. While granting bail, the court has to keep in mind the nature of accusations, magnitude and gravity of offence and nature of evidence in support of the accusations. The present case involves a scam of huge magnitude involving money of 42000 employees of the Three Electricity Corporations who had invested it with a hope that they would get good return on it at the time they would need money. Trust has been breached in criminal conspiracy by the accused which has resulted huge loss to the two Trusts resultantly to the employees. The accused is an influential person - The money trail is yet to be completely discovered and, therefore, at this stage, the accused-applicant cannot be released on bail. Considering the allegation and the evidence available on record and the fact that a deep rooted conspiracy involved in the present case, it is not found appropriate to release the accused applicant on bail at this stage and thus, his bail application is also rejected - application dismissed.

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