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TMI Tax Updates - e-Newsletter April 6, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Unjust enrichment of revenue by collection of interest from both receiver and supplier under GST law RECENT DEVELOPMENTS IN GST News Shri Piyush Goyal begins 5-day visit to Australia, days after inking India-Australia Economic Cooperation and Trade Agreement (ECTA) CCI penalises firms found guilty of bid rigging and cartelization in Indian Railways tenders More than ₹ 30,160 crore loans sanctioned to over 1,33,995 accounts under Stand-Up India Scheme in 6 years Notifications Customs S.O. 1604 (E) - dated 4-4-2022 - Cus (NT) Corrigendum - Notification No. 29/2022-Customs (N.T.) dated the 31st March, 2022 S.O. 1603 (E) - dated 4-4-2022 - Cus (NT) Corrigendum - Notification No. 28/2022-Customs (N.T.) dated the 31st March, 2022 S.O. 1602 (E) - dated 4-4-2022 - Cus (NT) Corrigendum - Notification No. 27/2022-Customs (N.T.) dated the 31st March, 2022 S.O. 1601 (E) - dated 4-4-2022 - Cus (NT) Corrigendum - Notification No. 26/2022-Customs (N.T.) dated the 31st March, 2022 S.O. 1600 (E) - dated 4-4-2022 - Cus (NT) Corrigendum - Notification No. 25/2022-Customs (N.T.) dated the 31st March, 2022 S.O. 1599 (E) - dated 4-4-2022 - Cus (NT) Corrigendum - Notification No. 24/2022-Customs (N.T.) dated the 31st March, 2022 S.O. 1598 (E) - dated 4-4-2022 - Cus (NT) Corrigendum - Notification No. 21/2022-Customs (N.T.) dated the 31st March, 2022 GST - States (03/2022) FD 07 CSL 2022 - dated 31-3-2022 - Karnataka SGST Seeks to amend Notification (07/2019) No. FD 47 CSL 2017, dated the 14th March, 2019 (02/2022) FD 20 CSL 2022 - dated 31-3-2022 - Karnataka SGST Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC (02/2022) FD 07 CSL 2022 - dated 31-3-2022 - Karnataka SGST Seeks to amend Notification (05/2019) No. FD 48 CSL 2017, dated the 7th March , 2019 (01/2022) FD 20 CSL 2022 - dated 31-3-2022 - Karnataka SGST Seeks to amend Notification (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (01/2022) FD 07 CSL 2022 - dated 3-3-2022 - Karnataka SGST Seeks to amend Notification (07/2020) No. FD 03 CSL 2020(e), dated the 27th March, 2020 Income Tax 25/2022 - dated 4-4-2022 - IT Central Government notifies the countries “notified country” for the purposes of the section 89A of IT 1961 Circulars / Instructions / Orders SEBI SEBI/HO/CFD/DIL2/CIR/P/2022/45 - dated 5-4-2022 Revision of UPI limits in Public Issue of Equity Shares and convertibles Highlights / Catch Notes GST Levy of penalty u/s 129(3) of the CGST Act, 2017 - petitioner has generated E-way bill by declaring the consignee as its additional place of business - intent to evade tax, present or not - Considering the fact that there is only a technical breach committed by the petitioner and there is no intention to evade tax, the impugned order is quashed and this writ petition is allowed by directing the respondent to release the vehicle and the consignment to the petitioner, if the same has not been released already. - HC Visit to Get Source Income Tax Unexplained deposits - Amount found deposited in the joint account of assessee as well as his wife in the savings bank account - Even if it is presumed that the deposits made in the Axis Bank which has not been disclosed to the department was taken as correct still the entire amount cannot be taxed as done by the lower authorities. Therefore, taking into consideration of the fact that the assessee is into the contractual business which has not been disputed by the AO/Ld. CIT(A), for the ends of justice the presumptive tax @ 8% of the total amount is confirmed and the balance amount is directed to be deleted. - AT Visit to Get Source Revision u/s 263 by CIT - claim of exemption u/s 54B towards long term capital gain on sale of land when no such claim u/s 54B - Scope of the amendment made in section 263 w.e.f. 01.06.2015. - the intention of the legislature could not have been to enable the Ld. PCIT to find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law, since such an interpretation will lead to unending litigation and there would not be any point of finality in the legal proceedings. The opinion of the Ld. PCIT referred to in section 263 of the Act has to be understood as legal and judicious opinion and not arbitrary opinion. - AT Visit to Get Source Deduction u/s 10AA - exclusion from export turnover on account of sales to other SEZ/EOU units - it is an undisputed fact that the sale consideration is released in convertible foreign exchange and assessee also claimed exemption u/s.10AA of the Act as the ultimate objective of this provision is promotion of exports from India and accordingly, such sales are considered as export sales for the purpose of claiming exemption under this section. - AT Visit to Get Source Penalty u/s 271E - assessee has repaid loan in cash during the year under consideration in violation of Section 269T - The assessee is since deceased and thus the authenticity of the transaction cannot vouched. Under these mitigating circumstances, we find that plausible cause exists to question the propriety of allegations. The assessee thus deserves to be exonerated from the clutches of Section 269T r.w. Section 271E of the Act. - AT Visit to Get Source Deduction u/s 54 - LTCG invested in buying two residential units - the assessee would only entitle to the benefit of section 54, 1) if the assessee invested the LTCG amount for buying one residential house or 2) if the assessee purchased one residential house which was made after merger of two residential units already amalgamated and were in existence as one residential unit - However the assessee is not entitled to benefit of LTCG invested in buying two residential units and thereafter converting the said two residential units as one. - AT Visit to Get Source Customs Conversion of shipping bills from free to Advance License shipping bills - the request for conversion was to the schemes involving same level of examination and hence, the conversion of shipping bills are to be permitted as per Para 3 of Circular No. 36/2010. - the denial of benefit is clearly unacceptable and not in terms of the spirits of Section 149 - AT Visit to Get Source Levy of penalty u/s 114 of the Customs Act - appellant is a freight forwarder - export of non-basmati rice - prohibited goods or not - admittedly in the course of various statements recorded on different dates from this appellant he has admitted the modus operandi and have stated in detail the modus operandi as well as the amount of remuneration he was getting from the Exporter, which leads to the conclusion that he had connived with the Exporter in the export of prohibited goods for money. - Levy of penalty confirmed at reduced amount - AT Visit to Get Source Smuggling - foreign currency - illicit export of currency - beneficial owners - The actual owner of the foreign currency having been identified, the concept of ‘beneficial owner’ does not arise. The Commissioner (Appeals), therefore, was not justified in reversing the finding recorded by the Additional Commissioner that the concept of ‘beneficial owner’ would not arise in the facts and circumstances of the case. - AT Visit to Get Source Indian Laws Dishonor of Cheque - Plaint was filed that Cheque was issued as security and misused by the defendant - Jurisdiction of Revisional Court in rejecting the plaint - In the instant case, on a reading paragraph 13 of the plaint, it is evident that cheque issued had been dishonoured and defendant no.1 had issued notice under Section 138 of N.I. Act on 10th June, 2009, to the plaintiff and its Managing Director replied to the same through their advocate on 23rd June, 2009. Therefore, it is evident that the plaintiff by seeking the aforesaid reliefs is in substance frustrating the right of defendant no.1 to take steps under the provisions of N.I. Act for releasing the amount of cheque issued by the plaintiff to defendant no.1 by filing a civil suit and/or by initiating a criminal prosecution - Plaint was rightly rejected - HC has erroneously set aside the order of the revisional court without appreciating the facts and circumstances of the case- SC Visit to Get Source IBC Substantive consolidation of the Corporate Debtor into a single proceedings solely for the purpose of CIRP in accordance with the provisions of the Code - the second Respondent is already undergoing Liquidation Process since the last two years and this Tribunal is of the earnest view that the clock cannot be set back at this stage. - Mere common shareholding does not give any substantial grounds to the Appellant herein to seek substantive consolidation based on the facts and circumstances of the attendant case on hand. - AT Visit to Get Source Maintainability of application - initiation of CIRP - Having regard to the terms and conditions of the Memorandum of Understanding and the Joint Venture Agreement entered into between the parties, this Tribunal is of the considered view that the amount invested in the ‘Joint Venture Project’ by the Appellant herein in his capacity as a ‘Promotor’ and ‘Investor’ does not fall within the ambit of the definition of ‘Financial Debt’ as defined under Section 5(8) of the Code - AT Visit to Get Source Service Tax Validity of SCN - Time Limitation - it is open for the petitioners to reply to the show cause notices and meet out the allegations contained in the show cause notices, taking advantage of the benefit given by the Parliament, vide Section 102 of the Finance Act, 2016 read with Notification 9/2016-ST, dated 01.03.2016. Similarly, it is open for the petitioners to establish that part of the demand was time barred in terms of Section 73 of the Finance Act read with Rule 7 of Service Tax Rules, 1994. The petitioners are also not without any remedy. - HC Visit to Get Source VAT Creation of charge over the property versus Attachment of property - Right of Government to recover tax dues - In the case on hand, it could be said that the day the assessment order came to be passed determining the liability of the writ applicant under the provisions of the GVAT Act, a charge over the immovable assets of the writ applicant could be said to have been created in favour of the State by operation of law, as envisaged under Section 48 of the GVAT Act - HC Visit to Get Source Partial disallowance of Input Tax Credit (ITC) - It is well settled that in a taxing statute there is no room for intendment - Further, the finding that scrap batteries could only have been used for processing or manufacturing is also incorrect, inasmuch as, a dealer such as the Petitioner is also free to trade in the said scrap batteries, i.e., sale and re-sale. It is incorrect to presume that scrap batteries can only be used for processing or manufacturing. If the interpretation of the Ld. Tribunal is accepted, then several traders would be debarred from eligible ITC since all products are ultimately processed or manufactured. The word ‘trader’ would itself lose its meaning. - HC Visit to Get Source Attachment on personal properties of director and brother of director - in interpreting a taxing statute, the equitable considerations are entirely out of place. The reasons of morality and fairness can have no application to bring a citizen who is not within the four corners of the taxing statute within its fold so as to make him liable to payment of tax. The entire approach of the department that as it is not in a position to recover anything from the company, it can run after the Director of the company and attach his personal properties. - Either the authorities concerned have no idea about the scope and true purport of Section 44 of the GVAT Act or they just pretend to be ignorant of the correct interpretation of Section 44 of the GVAT Act. - HC Visit to Get Source Case Laws: GST 2022 (4) TMI 242 Freezing of petitioner's account - proceedings under Section 74 of the Central Goods and Services Tax Act, 2017, no longer pending - HELD THAT:- The impugned order dated 26.03.2021, which has been issued, concededly, under Section 83 of the CGST Act, cannot remain efficacious, beyond the period of one year commencing from the date of the order. The impugned order dated 26.03.2021 has lost its efficacy, and, therefore, the attachment should stand lifted - Petition disposed off. 2022 (4) TMI 241 Levy of penalty u/s 129(3) of the CGST Act, 2017 - petitioner has generated E-way bill by declaring the consignee as its additional place of business - intent to evade tax, present or not - HELD THAT:- No doubt, the authorities acting under the Act were justified in detaining the goods inasmuch as there is a wrong declaration in the E-way bill. However, the facts indicate that the consignor and the consignee are one and the same entity, namely, Head Office and the Branch Office. In this case, the petitioner has a new place of business, but had not altered the GST Registration. However, steps have been taken to ex post facto include the new place of business altering the GST Registration. The registration certificate has also been amended. Considering the fact that there is only a technical breach committed by the petitioner and there is no intention to evade tax, the impugned order is quashed and this writ petition is allowed by directing the respondent to release the vehicle and the consignment to the petitioner, if the same has not been released already. Petition disposed off. 2022 (4) TMI 194 Maintainability of petition - parallel proceedings - matter already decided - HELD THAT:- Since the orders have already been passed, it is not found necessary to entertain this petition. Petition dismissed. Income Tax 2022 (4) TMI 243 Deduction u/s 80 IC - initial assessment year - whether assessment year 2005-06 is the initial assessment year or 2006-07 is the initial assessment year was in question for the purposes of allowing deduction u/s 80 IC? - HELD THAT:- Tribunal while disposing of the appeal of the assessee for the assessment year 2010-11 held that the initial year for claiming benefit u/s 80IC of the Act is 2006-07 and going by that assessment year 2010-11 is 5th year. Thus, we hold that the initial year for the purposes of claiming deduction under Section 80 IC of the Act is 2006-07 and not 2005-06. Consequently, the assessment year 2011-12 will be the 6th year and 2012-13 will be the 7th year. Accordingly, we direct the Assessing Officer to consider the initial year as 2006-07 and the assessment years under consideration i.e. 2011-12 and 2012-13 shall be 6th and 7th year respectively for the purpose of allowing deduction under Section 80 IC. Deduction u/s 80 IC on AMC charges, duty draw back, interest on FDRs, other interest and interest on refund - HELD THAT:- On perusal of the order of the Tribunal in assessee s own case for assessment years 2006-07 and 2007-08, we find that the Tribunal held that AMC charges is income derived from business of the assessee entitled for deduction u/s 80 IC - We direct the AO to allow deduction under Section 80 IC in respect of AMC charges received by the assessee. In so far as the duty draw-back, interest on FDR, other interest are concerned, these incomes are not derived from business of the assessee. Hence, we hold that these incomes are not entitled for deduction under Section 80 IC of the Act. 2022 (4) TMI 240 Reopening of assessment u/s 147 - deduction u/s 80P - HELD THAT:- In view of the change in scenario, the respondents / co-operative societies are inclined to appear before the assessing officer, by submitting their explanations and seek the reason for issuance of the notices under Section 148 of the Act and thereafter, act upon in the manner known to law. We are not inclined to interfere with the order impugned herein. However, the appellant shall submit the reasons for reopening the assessment under section 148 of the Act, within a period of two weeks from the date of receipt of a copy of this judgment. On receipt of the same, the respondents / cooperative societies shall file their objections to the notices issued u/s 148, within a period of four weeks. 2022 (4) TMI 239 Validity of assessment u/s 144B - violation of the principles of natural justice - no show cause notice issued with draft assessment order - HELD THAT:- It is by now well settled that the issuance of a show cause notice along with the draft assessment order is sine qua non before passing an order under Section 144B. Undisputedly, in the case on hand, no show cause notice came to be issued along with draft assessment order and in such circumstances, the final order of assessment could be said to be without jurisdiction. We are of the view that the matter should be remitted to the Assessing Officer for de novo proceedings. Writ application succeeds and is hereby allowed. The impugned assessment order dated 30.07.2021 for the A.Y. 2018-19 is hereby quashed and set aside. The matter is remitted to the Assessing Officer. Assessing Officer shall issue a show cause notice with the draft assessment order so that the writ applicant can respond to the same by an appropriate reply. Let this entire exercise be undertaken at the earliest and a fresh assessment order be passed after giving due opportunity of hearing to the writ applicant. 2022 (4) TMI 238 Reopening of assessment u/s 147 - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021- identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Validity of re-assessment notice issued under the erstwhile section147/148 after 1.4.2001 without following the mandate of new section 148A - Validity of the re-assessment proceedings initiated against the individual petitioners, after 01.04.2021, having resort to the provisions of the Income Tax Act, 1961 as they existed, read with the provisions of Act No. 38 of 2020 and the notifications issued thereunder - HELD THAT:- As decided in VELLORE INSTITUTE OF TECHNOLOGY VERSUS CENTRAL BOARD OF DIRECT TAXES, THE ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTIONS) [ 2022 (2) TMI 923 - MADRAS HIGH COURT] while accepting the challenge to the reassessment notices under Section 148 of the Act of 1961, we hold that the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 must be read as applicable to the reassessment proceedings as on 31.3.2021 in view of the judgments of the different High Courts reassessment notices under Section 148 of the Act of 1961 served on the petitioners on or after 1.4.2021 are set aside having been issued in reference to the unamended provisions and the Explanations are to be read as applicable to reassessment proceedings if initiated on or prior to 31.3.2021, but it would be with liberty to the assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act of 1961, as amended by the Finance Act, 2021, after making all the compliances as required by law, if limitation for it survives. 2022 (4) TMI 237 Validity of reassessment u/s 147 - credit balance in assessee s bank account - HELD THAT:- As per the assessee, this amount was out of maturity of fixed deposit. This explanation of the assessee was accepted by the AO in the assessment order - on further inquiry, AO found that the assessee had incurred expense in cash on account of salary paid, however, no proof was furnished. Admittedly, in this case, no addition was made on the issue qua the assessment was re-opened. The assessee has relied upon the judgement in the case of Pr.CIT vs Lark Chemicals Pvt. Ltd. [ 2018 (10) TMI 382 - SC ORDER] .Hon ble Supreme Court dismissed the SLP filed by the Revenue. Therefore, the decision of the Division Bench of the Tribunal rendered in the case of Lark Chemicals Pvt. Ltd. vs CIT [ 2015 (2) TMI 1334 - ITAT MUMBAI] attained the finality. Assessing Officer is hereby directed to delete this addition. Thus, grounds raised by the assessee are allowed. 2022 (4) TMI 236 Unexplained deposits - Amount found deposited in the joint account of assessee as well as his wife in the savings bank account of Axis Bank - according to the assessee, this amount was trade receipt from sale of seasonal vegetables of the business of his wife and not that of his - HELD THAT:- Even if it is presumed that the assessee or his wife has not disclosed this bank account in the Axis Bank to the department, still the total deposit in the joint account cannot be treated as the undisclosed income of the assessee because as find that there was regular withdrawal after the deposits. Assessee is executing contract works as well as he is into the business of selling seasonal vegetable products; and in such a factual scenario, when it is evident that there was several deposits and simultaneous withdrawals, the entire deposit of amount cannot be brought to tax as income of the assessee. In this case, in the Axis Bank account in question, find that there is regular inflow of money and regular outgo of money which gives credence to the explanation of the assessee or his wife that they are into trading activity (seasonal agriculture products) Even if it is presumed that the deposits made in the Axis Bank which has not been disclosed to the department was taken as correct still the entire amount cannot be taxed as done by the lower authorities. Therefore, taking into consideration of the fact that the assessee is into the contractual business which has not been disputed by the AO/Ld. CIT(A), for the ends of justice the presumptive tax @ 8% of the total amount is confirmed and the balance amount is directed to be deleted. Appeal of the assessee is partly allowed. 2022 (4) TMI 235 Addition on money receipts - During the course of search in the office premises of the assessee books and documents were seized - whether the amount being 50% share of Shri S. Asokan, the assessee, is explained or unexplained? - HELD THAT:- Admittedly, these are found during the course of search from the documents seized. It is revealed that the plots are sold at the rate of ₹ 175 per sq.ft., and selling area is 23909 sq.ft., sold to Shri K.P. Palani Brothers in the financial year 2009-10 relevant to this assessment year 2010-11. We noted that the AO has rightly made addition in the hands of the assessee based on evidences gathered during the course of search which are not rebutted by the assessee. Hence, we confirm the orders of lower authorities on this issue and this issue of assessee s appeal is dismissed. Addition of rate difference of sale value between the developer and the land owners - HELD THAT:- This extent of land of 29744 sq.ft., was sold by assessee to Shri M.N. Palani in assessment year 2008-09 i.e., Plot Nos. 1 to 13 Shop No.1. The fact regarding sale by assessee to Shri M.N. Palani is recorded in the seized documents but there is no mention of repurchase by assessee of the same land. The AO has just made inference and nothing else. As the AO has drawn inference only and there is no iota of evidence having assessee repurchased the land from Shri M.N. Palani, no addition on the basis of conjecture and surmises be made. Hence, we delete the addition and reverse the orders of lower authorities on this issue and allow this issue of assessee s appeal 2022 (4) TMI 234 Revision u/s 263 by CIT - claim of exemption u/s 54B towards long term capital gain on sale of land when no such claim u/s 54B - Scope of the amendment made in section 263 w.e.f. 01.06.2015. This amendment relates to Explanation 2 inserted in section 263 of the Act. HELD THAT:- The order of the AO may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the AO to decide whether the order was erroneous. This is not permissible. An order is erroneous, unless the CIT holds and records reason why it is erroneous - CIT must after recording reasons, hold that order is erroneous. The jurisdictional pre-condition stipulated is that CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It was further observed by the Hon ble High Court DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] that the material, which the CIT can rely up on includes not only the records as it stands at the time when the order in question was passed by the AO but also records as it stands at the time of the examination by the CIT. Nothing prohibits CIT from collecting and relying new/additional material which evidence to show and state that the order of the AO is erroneous. We find that Ld. PCIT in the present case has not carried out any enquiry of his own and has merely set aside the assessment to the file of the AO to re-examine the issue of claim of deduction u/s 54B towards LTCG on sale of agriculture land since no agriculture income has been reflected in the return of income by the assessee. Therefore, it is contrary to the guidelines as mandated in the Hon'ble Delhi High Court decision in the case of ITO v. DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] Therefore, the consideration arrived at by the Ld. PCIT invoking provisions of section 263 of the Act on the issue recorded by him is not justified and cannot be sustained under the facts and circumstances of the present case. The co-ordinate bench of Mumbai ITAT has dealt with Explanation 2 as inserted by the Finance Act, 2015 in the case of Narayan Tatu Rane v. Income Tax Officer [ 2016 (5) TMI 1162 - ITAT MUMBAI] to hold that the said Explanation cannot be said to have overridden the law as interpreted by the Hon'ble Delhi High Court in DG Housing Projects Ltd ( supra ), according to which the Ld. PCIT has to conduct an enquiry and verification to establish and show that the assessment order is unsustainable in law. The co-ordinate bench of Mumbai ITAT ( supra ) has further held that the intention of the legislature could not have been to enable the Ld. PCIT to find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law, since such an interpretation will lead to unending litigation and there would not be any point of finality in the legal proceedings. The opinion of the Ld. PCIT referred to in section 263 of the Act has to be understood as legal and judicious opinion and not arbitrary opinion. On the issue considered by the Ld. PCIT in the impugned order, no action u/s 263 of the Act is justifiable which cannot be sustained under the facts and circumstances of the present case and judicial precedents dealt herein above. We, therefore, quash the impugned order u/s 263 of the Act and allow the grounds raised by the assessee. 2022 (4) TMI 233 Disallowing exemptions claimed u/s.10A in regard to export proceeds brought into India after a period of six months from the end of the previous year - CIT(A) confirmed the action of the AO stating that one of the primary condition which needs to be satisfied to avail the exemption u/s.10A includes bringing into India the proceeds of export sales in convertible foreign exchange within six months from the end of previous year or within such further period allowed - HELD THAT:- for the relevant assessment year no timeline has been referred for realization of export proceeds as per RBI guidelines for SEZ units but the RBI Circular Nos.28 91 are applicable and hence, the benefit u/s.10A of the Act should not be denied to the assessee on the ground that there is no realization of export proceeds within six months from the end of previous year. We are of the view that the assessee is entitled for exemption for an amount which was pending realized as at the end of six months from the year end, subject to verification by the AO whether the export proceeds pending realization has been realized within one year from the year end. This can be verified by the AO at the time of giving appeal effect to the order of the Tribunal. This issue of assessee s appeal is allowed as indicated above and the appeal of the assessee is allowed for statistical purpose. Disallowance made in regard to violation of provisions of section 40A(7) and sections 43A 43B - HELD THAT:- We noted that the AO while framing assessment has not reduced the telecommunication expenses from the total turnover of the assessee while reducing the same from the export turnover for the purpose of computation of deduction u/s.10A - CIT(A) excluded telecommunication expenses from export turnover as well as total turnover while computing eligible deduction u/s.10A of the Act. We noted that this issue is squarely covered by the decision in the case of CIT vs. GEM Plus Jewellery India Ltd.. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] and Sak Soft Ltd[ 2009 (3) TMI 243 - ITAT MADRAS-D] - Both the decisions categorically state that in case any item is reduced from the export turnover, the same has to be reduced from total turnover. Hence, we confirm the order of CIT(A) and dismiss this ground of Revenue s appeal. Deduction u/s 10A - CIT(A) allowing 100% of deduction u/s.10A and according to Revenue, the assessee is eligible for claim of deduction to the extent of 50% as the actual date of commencement of production was after 01.04.2003 - HELD THAT:- As decided in own case X [ 2015 (1) TMI 52 - ITAT CHENNAI] provisions of s.10A(1A) restricting the deduction to 50% of the profit applies to such undertakings where commercial production was commenced on or after 1.4.2003 in any SEZ in terms of s.10A/1A) - In the case of the appellant the assertions made with regard to commencement of production /manufacture is verifiable from the records as listed in para 6.2. Accordingly the assumption made by the AO is erroneous and not supported by facts. Therefore the plea of the appellant that it is eligible for such deduction for a period of 10 years from the commencement of commercial production in the year 1999-2000 relevant to A.Y.2000-2001 is upheld. The AO is directed to amend the order allowing the claim u/s 10A accordingly. This issue is allowed. Deduction u/s 10AA - exclusion from export turnover on account of sales to other SEZ/EOU units - HELD THAT:- it is an undisputed fact that the sale consideration is released in convertible foreign exchange and assessee also claimed exemption u/s.10AA of the Act as the ultimate objective of this provision is promotion of exports from India and accordingly, such sales are considered as export sales for the purpose of claiming exemption under this section. As this issue is squarely covered by the decision of Hon ble Jurisdictional High Court in the case of Preludesys India Ltd., [ 2020 (10) TMI 564 - MADRAS HIGH COURT] , were are of the view that the assessee is entitled for claim of deduction. Disallowance of provision for marked to market losses. - HELD THAT: - We noted that the assessee has given some details in chart for the provisions made for market to market losses adjustment made for assessment years 2009-10 2010-11, which are illustrative only. We noted that this issue has been dealt with by Hon ble Supreme Court in the case of Rotork Controls India P. Ltd., vs. CIT [ 2009 (5) TMI 16 - SUPREME COURT] wherein the Hon ble Supreme Court explained that a provision is a liability which can be measured only by using a substantial degree of estimation. We noted that the assessee even now could not produce before us how the provision is made based on historical trend and a reliable estimate as held - Hence, we find that the claim made by the assessee is without any basis and the CIT(A) has rightly upheld the action of the AO. We dismiss this issue of assessee s appeal. 2022 (4) TMI 232 Revision u/s 263 - capital gain on sale of leasehold rights - HELD THAT:- From the various details furnished by the assessee, we find the assessee applied for purchase of plot on 30th March, 1996 and an amount was paid on 30th March, 1996. Further payment was made on 26th May, 1998 and the land was allotted to the assessee on 2nd January, 2004 but physical possession of land was given on 22.11.2015. The assessee acquired the leasehold rights by the lease deed on 4th February, 2016 and the sale of leasehold rights or agreement to sell was entered on 16th February, 2016. Therefore, these events, in our opinion, clearly show that the assessee has fully acquired the leasehold rights in the plot in the F.Y. 2003-04 and the assessee has also made complete payments for acquiring the plot rights in FY 2004-05. The assessee, after taking a conservative view computed the indexed cost of acquisition for F.Y. 2004-05, i.e., the year in which complete payments for acquiring the leasehold rights was made and the assessee having sold such rights after holding for more than 36 months, computed the long-term capital gains in terms of the provisions of section 2(29A) of the Act. We find, in the case of CIT vs. Frick India Limited [ 2014 (9) TMI 394 - DELHI HIGH COURT] has held that the expression 'held by the Assessee' means the date from which the assessee acquired right to hold the asset In the present case, the assessee was allotted a plot of land under a reallocation scheme by the President of India on 02.01.2004 and the leasehold rights have been sold on 16.02.2016. The assessee has made complete payment for acquiring these rights before the end of F.Y. 2004-05. Therefore, the said decision, in our opinion is distinguishable and not applicable to the facts of the present case. In view of the above discussion, we are of the considered opinion that the order passed by the AO may be prejudicial to the interest of the Revenue, but cannot be held to be erroneous. It is the settled proposition of law that for invoking the provisions of section 263 of the IT Act, the twin conditions, namely, (a) the order must be erroneous and (b) it must be prejudicial to the interest of the Revenue must be satisfied as held by the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT[ 2000 (2) TMI 10 - SUPREME COURT ] Since we have already held in the preceding paragraph that the AO has conducted proper enquiry and has taken a plausible view, therefore, the order cannot be held to be erroneous, therefore, in absence of fulfillment of twin conditions, ld. PCIT is not justified in invoking the jurisdiction u/s 263 of the IT Act, 1961. We, therefore, quash the section 263 proceedings initiated by ld. PCIT and the grounds raised by the assessee are allowed. 2022 (4) TMI 231 Assessment u/s 153C - Addition u/s.68 on account of loans received - proof of incriminating materials/documents belonging to the assessee - HELD THAT:- As in the case of the assessee before us no incriminating materials/documents belonging to the assessee were found during the course of search conducted on 23.02.2006 at the premises of Shri. Ramesh Kedia and others, therefore, the Assessing Officer had wrongly assumed jurisdiction and framed assessment in the hands of the assessee u/s.143(3) r.w.s 153C. We are unable to uphold the assessment framed by the Assessing Officer u/s.143(3) r.w.s.153C of the Act for want of jurisdiction on his part. We, thus, quash the assessment for want of jurisdiction on the part of the Assessing Officer. - Decided in favour of assessee. 2022 (4) TMI 230 Estimation of income - Bogus purchases - HELD THAT:- In the present case, the purchases were held to be bogus as the same were made from open/grey market, sales have been accepted by the AO and the CIT(A) has, returned a finding that the Assessee has been able to explain the source of expenditure from his bank account statement, purchase invoices and payments made through cheques. In view of the above, we see no reasons to take any other view of the matter than the view so taken by the Co-ordinate Benches of the Tribunal. We hold that in the facts of the present case entire amount purchases cannot be brought to tax. CIT(A) has confirmed addition to the extent 10% of bogus purchases which is in addition to profits already offered by the Assessee to tax. We see no infirmity in the order passed by CIT(A) and decline to interfere in the matter. - Decided against revenue. 2022 (4) TMI 229 Reopening of assessment u/s 147 - Validity of reason to believe - proof of independent application of mind - HELD THAT:- It is established principle of law that if a particular authority has been designated to record his/her satisfaction on a particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be independent and not borrowed or dictated satisfaction. Admittedly in this case, the AO while recording reasons for selection of the case on the basis of AIR information observed that the Assessee has deposited cash in his S.B. Account during the F.Y. 2008-09 and therefore issued a verification letter dated 30.10.2015 to the Assessee who failed to respond the same, therefore inference was drawn by the AO that the source of deposit in saving bank account remained unexplained as the Assessee has not filed return of income for the A.Y. 2009-10. As the AO except issuing verification letter to the Assessee, has not made proper efforts to find out the veracity and authenticity of information and any corroborative evidence/material thereto and without connecting tangible material and the formation of the reasons to believe for escapement of income but only acted on the information while forming belief qua escapement of the income and initiation of proceedings u/s 147/148 we are of the considered opinion that the reasons recorded in the instant case are insufficient, vague and based on un-substantive reasoning, uncorroborated material and lack of evidence and hence tantamount to be based on borrowed satisfaction and accordingly does not sound valid reasons in the eyes of law, for reopening of the case. Re-opening of the assessment proceedings u/s 147 of the Act by the AO and affirmation by the Ld. Commissioner was totally unjustified and therefore deserve quashing, hence ordered accordingly. Appeal of assessee allowed. 2022 (4) TMI 228 Penalty u/s 271E - assessee has repaid loan in cash during the year under consideration in violation of Section 269T - HELD THAT:- On perusal of the loose paper no.98, we find that no such amount of ₹ 2 lac is borne out in the loose paper, insofar as Financial Year 2010-11 relevant to Assessment Year 2011-12 in question is concern. We also find traction in the plea of the assessee that the loose paper in the instant case are neither signed by the deceased-assessee nor prepared by him and also simultaneously vague and non-descript. The loose paper was purportedly prepared by some nephew of the assessee who was neither identified nor cross-examined. The loose paper no.98 also does not spell out as to with whom the alleged cash transactions as entered into the loose paper has been carried out, i.e., the corresponding party to the transaction is not known. The assessee is since deceased and thus the authenticity of the transaction cannot vouched. Under these mitigating circumstances, we find that plausible cause exists to question the propriety of allegations. The assessee thus deserves to be exonerated from the clutches of Section 269T r.w. Section 271E of the Act. The order of the CIT(A) is accordingly set aside and the order of the AO reversed. The penalty imposed under Section 271E stands cancelled. Penalty allegedly received in cash by way of loans or deposits in contravention of Section 269SS r.w. Section 271D - HELD THAT:- While recording the reasons for reopening of the assessment, it is noticed that, as per paragraph 7 of the assessment order under Section 143(3) r.w. Section 147 AO himself has held that no addition is required to be made on the basis of document no.9 As the loan was received by the assessee on 12.09.2009, i.e., in the Financial Year 2009-10. Thus, the imposition of penalty on alleged cash loan arising out of loose paper no.98 does not arise in Assessment Year 2011-12 in question. Adverting to loose paper giving rise to imposition of penalty it is self-evident from the calculation of the interest shown in the loose paper that the alleged cash loan was not received in the Financial Year 2010-11 in question but the alleged cash loan relates back to Financial Year 2008-09 relevant to Assessment Year 2009-10. The calculation of interest vouches that the loan of ₹ 15 lac in question was received about 21 month back, i.e., in July 2008, if such loose papers are to be believed at its face value. On this ground alone, the jurisdiction of the Revenue to imposition of penalty under Section 271D r.w. Section 296SS is ousted, insofar as Assessment Year 2011-12 in question is concerned. We therefore find prima facie merit in the plea on behalf of the assessee for its exoneration from the clutches of Section 271D of the Act. Appeal of the assessee is allowed. 2022 (4) TMI 227 Deduction u/s 35(1)(iv) for the expenses incurred on engineering and design charges - Disallowance of amount being profit on sale of research and development stating that scientific research was done on behalf of Ford and reimbursement was made by it, and there was no element of profit in it, therefore, the entire amount was required to be offered to tax by the assessee - CIT(A) has dismissed the appeal of the assessee stating that the amount offered for tax was not supported with the relevant document - HELD THAT:- As observed that A.O has also stated that the contention of the assessee that amount has already been offered for tax not supported with relevant documents. We find that in the paper book the assessee has placed various documents and details stating that expenses incurred by the assessee in design and development of the auto components activity has been capitalized as engineering and development cost in the books of account in the past years and claimed deduction u/s 35(1)(iv) as capital expenditure incurred on scientific research. After taking into consideration the submission and material placed in the paper book we are of the considered view that it is appropriate to restore this issue to the fact of the A.O for deciding a de novo after examination/verification of the relevant document and detail filed by the assessee in support of its claim after affording adequate opportunity to the assessee. This ground of appeal of the assessee is allowed for statistical purposes. 2022 (4) TMI 226 Gain arising out of car parking spaces - LTCG or STCG - HELD THAT:- In the agreement entered into by the assessee with the builders, M/s Dosti Corporation makes it clear that the sparking space No.176 was attached to the flat and therefore, for all purposes, it is part and parcel of the flat in question. So there is no question of treating the parking space No.176 independent of the flat and as a natural corollary, capital gain on sale of flat is long term capital gain which equally applies to the parking space No.176 also. So treating the parking space as distinct from the flat so as to treat the capital gain on sale as short term capital gain is totally unjustified. Objection of the assessing officer that the partnership firm in which the assessee is a partner has, has instead of debiting the account of the assessee, shown the amount under the head Car Parking Space at Sewree A/c has been explained by the assessee that it was an accounting mistake which was subsequently rectified in FY 2012-13 Therefore, respectfully following the judgment in the case of The Nav Nirman Cooperative Group Housing Society Ltd vs A.K. Murarka Ors. [ 2010 (10) TMI 1233 - DELHI HIGH COURT] we hold that the capital gain arose on sale of parking space No.176 is a long term capital gain in the form of improvement of asset. Other two car parking areas - We find that the assessing officer has recorded a clear finding that the assessee himself has accounted the assets in different entities; therefore, the assets are independent of the flat and is distinguishable from the cost of improvement. Further, the parking spaces can be sold and purchased to and from the members of the society independently - as per the books of the firm in which the assessee is a partner, the car parking spaces were transferred to the assessee in the financial year 2012-13 only. Therefore, in our considered opinion, the capital gain arising from the sale of these two car parking spaces is only Short Term Capital Gain . In this view of the matter, we have to necessarily uphold the finding of the CIT(A) that the parking spaces are independently identifiable asset on different dates, the capital gain arose from sale of these two parking spaces is Short Term Capital Gain . AO has rightly assessed the gain as Short term capital gain in the case of other two parking spaces. This ground of appeal is partly allowed. Once the gain arising out of car parking spaces is held as Short Term Capital Gain, then the amount being consideration attributable to the car parking spaces be reduced from the sale consideration of the flat for computing long term capital gain - We find merit in the argument of the assessee. The assessing officer is directed to exclude the amount pertaining to; two other parking spaces from the sale value of the asset for computation of long term capital gain. Ground 2 of the assessee is allowed. 2022 (4) TMI 225 Validity of assessment - non issuance of notice u/s 143(2) - HELD THAT:- DR could not file any case records before us about the Assessing Officer having issued the corresponding section 143(2) notice to the assessee. We make it clear that the instant issue stands of non issuance of such a notice settled by the hon'ble apex court in Laxmandas Khandewal [ 2019 (8) TMI 660 - SUPREME COURT] that the same is very much mandatory condition for framing of a valid assessment. We thus find no substance in Revenue's vehement contention seeking to revive the impugned assessment in foregoing terms. The Revenue's instant sole substantive ground as well stand rejected. 2022 (4) TMI 224 Assessment of trust - Carry forward and set off of excess deficit pertaining to earlier years against the income of the current year - whether the deficit of earlier years can be set off against income of the current assessment year or not? - CIT-A allowed the claim - HELD THAT:- This issue has been decided in favour of the assessee by various High Courts including the jurisdictional High Court in the case of DIT Vs. Raghuvanshi Charitable Trust [ 2010 (7) TMI 158 - DELHI HIGH COURT ] Thus the claim of the assessee for set off of earlier years deficit against current year's income. We see no infirmity in the order passed by the ld. CIT (Appeals). Thus, the grounds raised by the Revenue are rejected. 2022 (4) TMI 223 Employees' contribution to PF and ESI - Delayed payment - scope of amendment to section 36(1)(va) and 43B - HELD THAT:- An identical issue was considered by the Tribunal in the case of The Continental Restaurant Cafe Co. v. ITO [ 2021 (10) TMI 843 - ITAT BANGALORE] held that amendment to section 36(1)(va) and 43B of the I.T. Act by Finance Act, 2021 will not have application for the relevant assessment year, namely A.Y. 2019-2020 - grant deduction in respect of employees' contribution to PF and ESI since the assessee has made payment before the due date of filing of the return of income u/s. 139(1) Hon'ble jurisdictional High Court in case of Essae Taroka (P.) Ltd. [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] and Spectrum Consultants India (P.) Ltd. [ 2013 (7) TMI 414 - KARNATAKA HIGH COURT] has affirmed the above view. In view of the judicial pronouncements cited supra, we hold that the amendment to section 36(1)(va) and 43B of the I.T. Act will not have application for the relevant assessment year, namely assessment year 2019-2020. Accordingly, we direct the A.O. to grant deduction in respect of employees' contribution to PF and ESI since the assessee has made the payment before the due date of filing of return u/s. 139(1) of the I.T. Act. It is ordered accordingly. 2022 (4) TMI 222 Addition of FSA charges on the ground that the same relates to prior period item - HELD THAT:- As pursuant to the bills issued in the financial year 2012-13 and referred to in the demand were payable in instalments and to that extent, the liability is crystallized. The expenditure is genuine. However, how many instalments were paid and to what extend the assessee is entitled to claim as expenditure is a fact to be verified at the end of the AO. Suffice it to say that insofar as such payments were considered, the liability was crystallized only during the financial year 2012-13 pursuant to which the payments were made by the assessee and claimed as expenditure during the A.Y. 2013-14. With this view of the matter, we are of the considered opinion that inasmuch as the bills were issued in the financial year 2012-13 and as a result of litigation, the APSPDCL raised the demand on 7.11.2015 for payments of dues up to 06.08.2016 in instalments and the assessee paid such instalments, they are entitled to claim such payments in the A.Y. 2013-14. Observing thus, we restore the issue to the file of the learned Assessing Officer for verification of the amounts paid during the financial year 2012-13 and to grant relief. Grounds 2 3 of this appeal are accordingly allowed for statistical purposes. Additions u/s. 2(24)(x) r.w.s. 36(1)(va) - HELD THAT:- Considering the hardships pleaded by the assessee and also in view of the fact that no rights are crystallized in the parties by such lapse of the assessee, we are of the opinion that the technicalities should not be allowed to overrun the delivery of substantial justice and this case deserves a lenient view. We accordingly set aside ground No. 4 of this appeal to the file of the learned CIT(A) for adjudication on merits. Ground No. 4 accordingly allowed for statistical purposes. 2022 (4) TMI 221 Allowability of section 54F - consequential capital gains arising from the joint development agreement - HELD THAT:- Assessee's joint development agreement involving receipt of developed area as sale consideration has already been held eligible for section 54F deduction in hon'ble jurisdictional high court's decision in CIT Vs. Syed Ali Adil [ 2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT ]. Appeal of assessee allowed. 2022 (4) TMI 220 Deduction u/s 54 - LTCG invested in buying two residential units - HELD THAT:- Assessee has invested in two residential flats within one year of the sale of the property. As per the requirement of section 54, the Long Term Capital Gain (LTCG) arising on account of transfer of Long Term Capital Assets is not chargeable to the income, if the assessee purchases one residential house in India. Importantly and relevant date for the purpose of section 54 is the date of investment in residential house. To put in other words it is the duty of revenue to find out whether the assessee had invested in one house or many houses after earning the LTCG. If on enquiry or otherwise it came to the notice of the revenue that investment was made by the assessee in the two residential house than the benefit of 54 cannot be extended to whole amount invested in both the houses and is required to be restricted to one house alone. The subsequent conversion of two houses or amalgamation of two residential houses into one residential house is immaterial. In the present case, admittedly, as clear from the allotment letters, two residential houses with two separate entrances and Kitchens were purchased by the assessee respectively on 13.01.2015 and 24.01.2015 though were situated adjacent to each other. In our considered opinion, the assessee would only entitle to the benefit of section 54, 1) if the assessee invested the LTCG amount for buying one residential house or 2) if the assessee purchased one residential house which was made after merger of two residential units already amalgamated and were in existence as one residential unit . However the assessee is not entitled to benefit of LTCG invested in buying two residential units and thereafter converting the said two residential units as one. In the present case on facts, if we look into approved plans there are two separate flats with two separate kitchens and two separate entrances and therefore, at the time of purchased of the properties, they were two different residential houses and therefore, it cannot be accepted that the assessee had invested in one single residential house. Further, we may also refer the letter filed by the assessee, reproduced by the AO at page-6 of the assessment order issued by the Builder wherein it is categorically mentioned that the said flats are two different units as per the plans sanctioned by the concerned authorities, however, you may combine the said units as a single one flats to be used as single residential house by removing the common wall between the said units which structurally position of such to obtain a requisite approvals from the concerned authorities . As the assessee failed to file any approval/sanctioned plan from the local municipal authority, it cannot be said that the assessee had purchased one single unit at the time of purchasing the property. Further, the letter placed on record clearly shows that the permission to convert in one single unit was given subject to obtaining the requisite approval/permission from the concerned authorities. In the absence of any supporting documents authorizing amalgamation of two flats, the adverse inference is required to be drawn against the assessee. We do not find any merit in the appeal of the assessee, as the assessee has invested in more than one houses, and therefore, the appeal is bereft of any merit and accordingly, the same is liable to be dismissed. Customs 2022 (4) TMI 219 Obtaining No Objection Certificate (NOC) from the State Government - denotification of SEZ units - Rule 74 of the Central Special Economic Zone Rules, 2006 - HELD THAT:- For the purpose of grant of NOC, the State Government wants the writ applicant to abide by the order dated 31st January, 2022 passed by the Joint State Tax Commissioner, Division-VI, Vadodara, Page-95, Annexure- P, wherein the Government wants the writ applicant to make good an amount of ₹ 1049.47 Crore towards VAT/GST up to 31st March, 2021. The computation of the tax liability as carried out by the Joint State Tax Commissioner, vide its order dated 31st January, 2022 has something to do with the order/communication dated 26th August, 2021 between the Addl. State Tax Officer (Administration) and Joint Industries Commissioner (Infra), Gandhinagar. The request of Mr. Joshi as on date is two fold; first the business exigencies demand that his client exits the SEZ at the earliest and, therefore, at least a provisional NOC may be granted by the Government reserving liberty for the Government to determine the liability in accordance with law. It is pointed out that the writ applicant is incurring an approximate loss of ₹ 770 Crore annually and, in such circumstances, it needs to exit the SEZ at the earliest. The argument of Mr. Joshi, on merits, is that Rule 74 has no application in the present case. Time is granted as prayed for by Mr. Trivedi to enable him to seek appropriate instructions in the matter, more particularly, whether the State is inclined to grant provisional NOC so that the writ applicant gets some relief from the huge loss which it is suffering as on date. If the State Government deems fit to grant a provisional NOC, it will always be subject to their rights and contentions so far as the claim of the requisite amount towards the VAT/GST is concerned. If the Government is able to find out a viable solution by grant of provisional NOC, it may provide some relief to the writ applicant. Post the matter on 13th April, 2022 on top of the board. 2022 (4) TMI 218 Classification of imported goods - GTL Light Paraffin or Light Diesel Oil - Conduct of retest of the goods-in-question in accordance with the Customs Circular No.30/2017 dated 18.07.2017 - Foreign Flag Vessel - dispute with regard to the product - HELD THAT:- The grievance redressed by Mr. Soparkar, is that the Laboratory at Vadodara, carried out the test trying to determine whether the samples are LDO or not. The correct approach of any laboratory should be to verify whether the sample is GTL Light Paraffin or not. When the samples are dispatched tomorrow to the CRCL, Delhi, for retest, it should be dispatched with a letter requesting the CRCL, Delhi, to verify whether the samples are of GTL Light Paraffin or it is Light Diesel Oil - Post this matter for further hearing on 21.04.2022 on top of the Board. 2022 (4) TMI 217 Conversion of shipping bills from free to Advance License shipping bills - whether the authorities below were justified in denying the benefit of conversion of shipping bills into advance license Shipping Bills as requested by the appellant? - requirements of Section 149 of the Customs Act, 1962, stands satisfied or not - Board Circular No. 36/2010 dated 23/09/2010 and Circular No. 6/2002-Cus. dated 23/01/2002 - HELD THAT:- The decision of the Hon ble Delhi High Court in the case of M/S. TERRA FILMS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS [ 2011 (4) TMI 13 - DELHI HIGH COURT] was referred by the very same High Court in a later decision in KEDIA (AGENCIES) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS [ 2017 (1) TMI 203 - DELHI HIGH COURT] wherein the Hon ble High Court has deviated from its earlier decision. Section 149 which provides for amendment of documents, which makes it clear that the amendment is permissible but the same is subject to Sections 30 and 41 ibid. There is also no doubt that none of these Sections prescribes any time limit but it is only the circular which is prescribing such time limit. Further, both the above Circulars referred to in the impugned order prescribe scale of physical examination under Para 2.1, as per which physical examination is to be undertaken at the port of export; under Para 2.1 (B) for export under Free Shipping Bills, no scale of examination is prescribed except where there is a specific intelligence. Under Para 2.1 (C) for exports under Duty Drawback DEPB Scheme, the scale of examination is between 2 to 10% for exports made to a non sensitive location, depending upon the FOB value of goods; under Para 2.1 (D) the scale of examination is again between 2 to 10% for exports made under EPCG/DEEC schemes. It is therefore clear from the above circulars itself that the amendment to a shipping bill after the goods are exported shall be on the basis of documentary evidence which was inexistence at the time of export of goods, such request for conversion is made within 3 months from the let export order, the examination report and other endorsement proves the fact of export and that the exported product is clearly covered under relevant SION/DEPB/Drawback as the case may be, the exporter has fulfilled all other conditions of export promotion scheme to which conversion was sought. Para 3 of Circular No. 36/2010 makes it clear that the Commissioner may allow conversion of shipping bills where the level of examination is same. When this is applied to the case on hand, the level under Para 2.1 (C) for exports under Drawback DEPB Scheme covering MEIS is same as the level of examination under Para 2.1 (D) where exports made under EPCG/DEEC schemes covering advance licenses, which implies that the request for conversion was to the schemes involving same level of examination and hence, the conversion of shipping bills are to be permitted as per Para 3 of Circular No. 36/2010. The denial of benefit is clearly unacceptable and not in terms of the spirits of Section 149 ibid - Appeal allowed - decided in favor of appellant. 2022 (4) TMI 216 Seeking provisional release of goods - no notice issued for seizure of goods - quantum of security - Section 110A of the Customs Act, 1962 - HELD THAT:- This appeal is against an order fixing the terms of provisional release of goods sought by the appellant. The value of goods is ₹ 1,91,91,322.23 and the approximate differential duty comes to ₹ 20,65,915/-. The competent authority has fixed the terms of provisional release as a bond equal to goods and bank guarantee equal to 2.5% times the duty amount. The competent authority has relied on circular no. 35 of 2017-Cus dated 16.08.2017 - It is apparent that in terms of clause i, ii and iii of para 2.2. of the said Circular, the Bank Guarantee should include the differential duty, the amount of fine that may be levied in lieu of confiscation under Section 125 of the Customs Act, 1962 and the amount of penalties that may be levied under Customs Act, 1962. The said Circular gives discretion to the Competent Authority to increase or decrease the amount of security deposit depending on facts of the case. In the instant case the Competent Authority has fixed the security amount as 2.5 times the duty amount. From the defense presented by the appellant, it has not been denied that the goods seized were imported goods. The grounds of appeal do not contest the quantification of duty on merits as there is no specific arguments in the appeal memorandum or in the written submissions filed by the appellant except some general statements. No notice issued for seizure of goods - HELD THAT:- The seizure was made on 13.10.2020 and the said seizure order is not subject matter of challenged in the present proceedings. The entire appeal of the appellant before the lower authorities as well as Tribunal is only for the relaxation in the terms of Provisional release, there has not been any challenge to seizure before lower authorities. Validity of quantum of security fixed by the lower authorities - HELD THAT:- In the instant case, the goods were cleared from the Customs area and were lying in the premises of the appellant. Part of the goods were further processed. Moreover, from the entire quantity detained by the Revenue, 75% of the same was found to be of Indian Origin and for the rest the Revenue is yet to issue the Show Cause Notice - the amount of security of 2.5 times the differential duty is excessive, the same is reduced to the amount equal to differential duty quantified in the order. The bond amount will continue to remain equal to the value of the goods. Appeal allowed in part. 2022 (4) TMI 215 Condonation of delay in filing appeal - appeal filed beyond the period of limitation contemplated under section 128 of the Customs Act, 1962 - HELD THAT:- It would seen from provisions of Section 128, that an appeal can be filed before the Commissioner (Appeals) within sixty days from the date of communication to him of such decision or order. However, the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days. Thus, at best the delay of thirty days beyond the stipulated limit of sixty days in filing the appeal by can be condoned, provided of course that the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period of sixty days. This issue came up for decision before the Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] . The Supreme Court examined the provisions of section 35 of the Central Excise Act, 1944, which are para materia to the provisions of section 128 of the Customs Act and observed that the delay can be condoned in accordance with the language of the Statute which confers power on the Appellate Authority to entertain the appeal by condoning the delay only up to 30 days after expiry of 60 days, which is the normal period for preferring the appeal. It is for this reason that the Supreme Court observed that the Commissioner and the High Court were justified in holding that there was no power to condone the delay after the expiry of 30 days period and that the provisions of the Limitation Act would not be applicable. A Division Bench of the Tribunal in M/S DIAMOND CONSTRUCTION, M/S SAI SHREE CONSTRUCTION VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX [ 2019 (2) TMI 1822 - CESTAT NEW DELHI] , in which the provisions of section 85 (3A) of the Finance Act 1994 relating to appeals to the Commissioner of Central Excise (Appeals) came up for consideration, after placing reliance upon the decision of the Supreme Court in Singh Enterprises, observed that the discretion of the Commissioner to condone the delay is circumscribed by the conditions set out in the proviso and any delay beyond that period cannot be condoned. In the present case, it is not in dispute that the order dated 08.01.2014 was received by the appellant on 09.01.2015. The appeal was required to be filed within a period of 60 days from this date and the Commissioner (Appeals) had the power to condone any delay of 30 further days provided the appellant could satisfy, the Commissioner (Appeals) that the appellant was prevented by sufficient cause from presenting the appeal within stipulated period - The Commissioner (Appeals) was, therefore, justified in dismissing the appeal for this reason. Appeal dismissed. 2022 (4) TMI 214 Levy of penalty u/s 114 of the Customs Act - appellant is a freight forwarder - export of non-basmati rice - prohibited goods or not - submissions made in the reply to show cause notice were not considered by the adjudicating authority - evidentiary value of retracted statements - whether case can be foisted on the basis of the statements of co-accused - recovery of incriminating evidences during search or not - recovery of fabricated documents/ passport/ stamps of government officials - charges can be levelled solely and only on the basis of uncorroborated statements of co-accused or not - HELD THAT:- It is not the case of demand of duty from this appellant under Section 28(4) of Customs Act. Accordingly, the issue of jurisdiction is not involved and the show cause notice have been rightly issued on the allegation of violating the provisions of the Customs Act including bringing of the prohibited goods in the customs area, for export, by resorting to mis-declaration. From a conjoint reading of the statements of this appellant alongwith the statement of Sh. Sinder Pal, Sh. Rakesh Kumar and Others, it is evident that this appellant have knowingly connived for money with Sh. Sinder Pal and Sh. Abhishek Gupta and others, in the export of prohibited goods, non-basmati rice, by resorting to mis-declaration and fraud. Further, admittedly in the course of various statements recorded on different dates from this appellant he has admitted the modus operandi and have stated in detail the modus operandi as well as the amount of remuneration he was getting from Sh. Sinder Pal, which leads to the conclusion that he had connived with Sh. Sinder Pal and Sh. Abhishek Gupta in the export of prohibited goods for money. The penalty imposed upon him but in the facts and circumstances reduce the penalty from ₹ 8 lakhs to ₹ 4 lakhs. So far the retraction is concerned before the Court of Duty Magistrate, the same is not of much consequence as the appellant have admitted the misdoing in his various statements recorded on various dates and such statements are supported by co-accused and also corroborated with the live consignment for export, intercepted, and forgery noticed by the Customs Officers to which the appellant has also admitted. The appeal is allowed in part. 2022 (4) TMI 213 Smuggling - Gold bars - Existence of sufficient evidences or not - retraction of statements on which reliance placed upon - Tribunal having power to grant stay or not - Confiscation - penalties - HELD THAT:- In the instant case, the Department could not adduce any evidence to prove that the gold was of smuggled in nature. Once, Shri Rajendra Sethiya has staked his claim on the impugned gold and has submitted documents to establish the same; it was incumbent upon the Department to disprove the same with the documentary evidence or cogent investigation. The Department attempts to disprove the claim of Shri Rajendra Sethiya on the basis of arguments that his cars did not pass to certain toll plaza, his tower location did not indicate that he travelled to Bhilai on the particular date and his transaction with Saheli Gems and Jewelers Private Limited, Bhilai was the first one and there too it was on credit. It is found that these claims would not stand to scrutiny of law as no further evidence to disprove the claim has been adduced. It is not uncommon in the trade that a particular person or firm enters into a trade with another person or firm for the first time. For the same reason, it cannot be said that the transaction is not involve genuine purchase. Sale of credit also is common in business. What is to be seen that whether the transaction was genuine, factual or only a fabricated one. It is found that money has been paid to M/s Saheli Jewelers though the later date which is again not an uncommon practice in the trade. The transactions of money though completed at a later date cannot be dismissed as fake without further investigation into the facts as to whether the transfer of money has really taken place or not. No such investigation has found to be taken place. Again the transaction is attempted to be discarded citing the Toll report and tower location etc. as these evidences cannot be taken as a conclusive evidence as there are various possibilities as discussed by the learned Adjudicating Authority. No further investigation on this issue has taken place by questioning the persons concerned and the case is attempted to be built up of logical arguments which, is found to be incorrect. Also, it is found that the seizure was not in Customs area but was on a train at Tatanagar. The intercepted person was brought to DRI office in Patna and seizure and other proceedings have taken place in Patna. Therefore, it was incumbent upon the Department to prove that the impugned gold is of foreign origin and that too a smuggled one. Therefore, it is found that the only semblance of evidence available with the Department is the retracted statement of Shri Sonu Jal and conjectures based cell tower location and toll plaza records. In the instant case, the Adjudicating Authority has examined the facts and circumstances of the case and came to the conclusion that the statement of Shri Sonu Jal cannot be relied upon in view of the absence of cogent corroborative evidence. It has been since placed on record that said Shri Sonu Jal is no more and he passed away on 18.10.2020 as per the death certificate issued by the Registrar, Birth and Death, Municipal Corporation, Raipur. Under the circumstances, it is found that the findings of the learned Adjudicating Authority are legal and proper and as such the impugned order does not require to be interfered with. Thus, there are no merit in the appeals filed by the Department and it is held that for the reasons discussed, the same are not maintainable and are liable to be dismissed. Appeal dismissed - decided against Revenue. 2022 (4) TMI 212 Maintainability of application - Smuggling - foreign currency - illicit export of currency - actual owners versus beneficial owners - Levy of penalty under Section 114(i) of the Customs Act, 1962 read with Section 13 of the Foreign Exchange Management Act, 1999 on beneficial owners - HELD THAT:- The facts alleged by the appellant in the memo of appeal have to be tested in the light of the statements recorded under section 108 of the Customs Act. The statement made by Amit Bali needs to be examined first. In the statement recorded on 20.08.2018, when asked whether the said recovered currency belonged to him, Amit Bali stated that the recovered currency belonged to the appellant and was handed over to him (Amit Bali) by Hemant Dahiya to look after the expenses of the appellant. He further stated that the bag from which the currency was recovered belonged to him. It is this statement wherein Amit Bali stated that the recovered currency belong to the appellant that the concept of beneficial owner has been drawn, though it needs to be noted that at the same time Amit Bali had stated that the currency was handed over to him by Hemant Dahiya who is one of the Director of SEMPL - It is clear that Amit Bali had clarified that the foreign currency that he was carrying in his hand baggage actually belonged to SEMPL and was to be utilized for the event organised by SEMPL for HMC. The Commissioner (Appeals) placed much emphasis on the earlier statement made by Amit Bali that the foreign currency belonged to the appellant without appreciating the subsequent statements made by Amit Bali. The appellant, in his statement recorded on 20.08.2018, stated that he had meetings with business clients at London, after which he was scheduled to go to Baltimore for business meetings. He further stated that Amit Bali assisted him during his business travel and that he was not aware that Amit Bali was carrying foreign currency - statements made under section 108 of the Customs Act give credence to the factual averments made by the appellant regarding the contractual arrangement between HMC and SEMPL and the fact that the foreign currency did not belong to the appellant and in fact belonged to SEMPL, which currency was in the possession of Amit Bali for meeting the expenses to be undertaken. It also transpires that SEMPL would raise invoices for such expenses together with its service charge and thereafter payments were made by HMC. The actual owner of the foreign currency having been identified, the concept of beneficial owner does not arise. The Commissioner (Appeals), therefore, was not justified in reversing the finding recorded by the Additional Commissioner that the concept of beneficial owner would not arise in the facts and circumstances of the case. The issue as to whether an appeal would be maintainable or not before the Tribunal came up for examination before the Tribunal in COMMR. OF CUSTOMS, KOLKATA VERSUS VINOD KR. SHAW [ 2002 (12) TMI 390 - CEGAT, KOLKATA ]. The revenue had filed an application for rectification of mistake in the final order dated 15.05.2002 passed by the Tribunal for the reason that the Tribunal had no jurisdiction to decide a matter relating to confiscation of currency seized in view of the provisions of section 129A (1) of the Customs Act - It was decided in the case that I agree with the appellants contention that the provisions of Section 2(22) of the Customs Act which defines the goods makes a clear distinction between the baggage and currency. If the Indian Currency is included in the expression baggage , there was no need to define the currency separately. I also find force in the appellants contention that the charges against the appellants are under the provisions of Section 113(d) i.e. for misdeclaration. As such, I hold that the Tribunal was having jurisdiction to decide the matter. No merits are found in the Revenue s application and miscellaneous application is accordingly rejected. There are no force in the contention advanced by the learned authorised representative appearing for the department that this appeal would not be maintainable before this Tribunal - the appellant is not a beneficial owner defined under section 2(3A) of the Customs Act, the order dated 30.07.2021 passed by the Commissioner (Appeals) that imposes penalty and fine upon the appellant treating the appellant as a beneficial owner , cannot be sustained. Appeal allowed - decided in favor of appellant. Corporate Laws 2022 (4) TMI 211 Sanction of Scheme of Amalgamation - Section 230 read with Section 232 of the Companies Act, 2013 - HELD THAT:- Upon perusing the records and documents in the instant proceedings and considering the submissions, it is concluded all necessary requirements have been complied with. The scheme of Amalgamation is sanctioned, subject to directions complied with. Application allowed. 2022 (4) TMI 210 Sanction of Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Upon perusing the records and documents in the instant proceedings and considering the submissions, it is concluded all necessary requirements have been complied with. The scheme of Amalgamation is sanctioned, subject to directions complied with. Application allowed. 2022 (4) TMI 209 Sanction of Scheme of Arrangement by way of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with respect to convening/holding or dispensing with the meetings of the Shareholders, Secured and Unsecured Creditors as well as issue of notices including by way of paper publication, has been prescribed, which needs to be complied with. The scheme is approved - application allowed. Insolvency & Bankruptcy 2022 (4) TMI 208 Seeking approval of the Resolution Plan - Section 31 of I B Code - HELD THAT:- This Tribunal has a very limited jurisdiction to interfere except if there is any substantial evidence to establish that there was any material irregularity or if there was anything contrary to the law time being in force. The review is to be seen within the four corners of Section 30(2) of the Code only. Moreover, it is seen from the record that the Adjudicating Authority has approved the Resolution Plan way back on 10/07/2019 and the Resolution Plan has also been implemented and we do not wish at this belated stage to set the clock back, apart from holding that the Appellant cannot seek mandamus for directing the CoC to revisit its commercial wisdom at such a belated stage. This Appeal is dismissed. 2022 (4) TMI 207 Substantive consolidation of the Corporate Debtor into a single proceedings solely for the purpose of CIRP in accordance with the provisions of the Code - Consolidation of all assets and liabilities of the Corporate Debtor - whether the Adjudicating Authority was justified in rejecting the substantial consolidation prayed for? - HELD THAT:- Unless there is any material irregularity or that the Resolution Plan does not meet the essential requisites under Section 30(2) of the Code, the Learned Adjudicating Authority has very limited jurisdiction regarding the approval of the Resolution Plan . When R-2 R-3 are already under Liquidation, the question of consolidation, when Adjudicating Authority has such limited jurisdiction is not executable. In the instant case, the Resolution Plan has not yet been approved on account of the Order of this Tribunal directing the Adjudicating Authority not to pass any Order with respect to approval/rejection of the Resolution Plan. Respondents 4 to 6 cannot be brought under the Resolution Process of the Code for the simple reason that there is no material on record to establish any default being committed by the said Respondents under the Code - the second Respondent is already undergoing Liquidation Process since the last two years and this Tribunal is of the earnest view that the clock cannot be set back at this stage. Mere common shareholding does not give any substantial grounds to the Appellant herein to seek substantive consolidation based on the facts and circumstances of the attendant case on hand. Having regard to the fact that all the Respondent Companies are in different stages of CIRP/Liquidation under the Code having different dates of default , separate causes of action, and unrelated business activities, this Tribunal is of the earnest view that the Adjudicating Authority has rightly passed the Impugned Order - Appeal dismissed. 2022 (4) TMI 206 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Appellant invested in the Real Estate Joint Venture Project in the capacity of a Promoter - Financial Creditors or not - existence of debt and dispute or not - Section 5(7) of the IBC - HELD THAT:- The Appellant is classified as a Promoter who seeks to develop the said Plot and construct the studio apartment, club, jogging track, shops, dormitory, children park on the said plot and has entrusted the Project to the Respondent who is arrayed as the Developer in the said Memorandum of Understanding. In fact, the Joint Venture Project in the name and style of Valley View Apartments Project was to be launched and promoted in the name of Appellant herein. Clause 15 of the Memorandum of Understanding specifies that promoter shall be entitled to raise loans in its own name from banks/financial institutions for the project. There shall be no liability on the Developer for re-payment of the loans or interest. A careful perusal of the Memorandum of Understanding and also the Joint Venture Agreement entered into between the parties on 28.09.2011 and 27.02.2012 respectively shows that the relationship between the Appellant and Respondent is that of land owner and developer and furthermore viewed from any angle the amount invested by the Appellant towards the completion of the Project cannot be termed to be a Financial Debt as defined under Section 5(8) of the Code. Having regard to the nature of the transactions between the Appellant and the Respondent this Tribunal is of the earnest view that the Appellant does not fall within the definition of term Allottee . Having regard to the terms and conditions of the Memorandum of Understanding and the Joint Venture Agreement entered into between the parties, this Tribunal is of the considered view that the amount invested in the Joint Venture Project by the Appellant herein in his capacity as a Promotor and Investor does not fall within the ambit of the definition of Financial Debt as defined under Section 5(8) of the Code - Appeal dismissed. 2022 (4) TMI 205 Maintainability of application - termination of sub-leases - Company under liquidation under IBC - Whether the Tribunal has jurisdiction to decide the issues pertaining to the subleases or not - validity/effect of deemed termination was never given effect - restraint from alienating the property during the pendency of the Application - HELD THAT:- The Counsel for the Respondent contends that this Application is not maintainable since, it is filed for the same reliefs under I.A. No. 17/2020. It is true that I.A. No. 17/2020 is filed for the same reliefs during the CIRP period and an interim order was obtained to maintain status-quo. Later, the Corporate Debtor was ordered for Liquidation hence, considering that I.A. No. 17/2020 has become infructuous and since the RP against whom the application is filed ceased to be RP and since the role of the RP has changed into that of the Liquidator on the Corporate Debtor being taken for liquidation, this LA got to be filed with the same relief - I.A. No. 17/2020 is not yet decided hence, this application is not hit by the principles of res-judicata. To meet the procedural requirement this I.A. came to be filed. Since, a status-quo order is made in I.A. No. 17/2020, at request of the Applicant the same is kept alive. Hence, this point is answered by holding that this application is maintainable. Whether the subleases under the Sublease Agreements dated 06.03.2013 and 18.03.2014 are not terminated and whether they are still in force? - HELD THAT:- When there is no dispute that part of the leased land is taken over by the Respondent, the Applicant cannot be heard to contend that the termination of lease was not affected. That part of the land which is not taken possession is allegedly retained with the Corporate Debtor due to its equipment being kept in the said land. But technically the possession stands with the Respondent since, the termination letter was acted upon and part of the land was given possession to the Respondents. Moreover the letter dated 08.11.2019 clearly specifies that the subleases were terminated. The letter was issued only with a request to clear the outstanding amounts. Hence, the subject of the letter qualifies the subleases as terminated. The request for clearing the outstanding amounts cannot be interpreted to mean that there is a waiver on the part of the Respondent. More so when part of the land was taken over by the Respondents. There is no dispute that the letter of termination is prior to the CIRP period and before the admission of the Application under Section 9 of IBC and before the operation of the moratorium under Section 14. The Petitioner admittedly paid part of the rents during the pendency of this Application. The contention based on the said fact is that the acceptance of rents by the Respondents would amount to waiver as per Section 114 of Transfer of Property Act - But the rent as stipulated in the agreement is admittedly not tendered, the rent towards the infrastructure is an issue in I.A. No. 21/2021 and the same is not paid yet. Even according to section 114 of Transfer of Property Act, the rent, when it is paid together with interest thereon and his full cost of the suit, would keep the lease alive. In this case no interest was paid on the arrears of rent. Apart from the rent being unpaid as per the agreement, even according to what is mentioned in the written submissions the dues as mentioned in the notice of the termination dated 22.02.2019, also included all other dues which are purportedly levied on the basis of unregistered MoU under the guise of infrastructure development charges and is challenged in I.A. No. 21/2021 and is accordingly sub-judice. Hence unless it is proved that the arrears of the rent is paid in accordance with the Section 114 of the Transfer of Property Act, it cannot be held that, no order can be passed relieving the petitioner against the forfeiture. The Order of this Bench dated 19.06.2021 would also show that the Bench considered that the dues pertained not only to the rent but also other dues. Hence, this point is answered by holding that the subleases in question are terminated and are not in force by the date of this application. Whether this Tribunal has jurisdiction to decide the issues pertaining to the subleases? - HELD THAT:- The possession of the land under leases is already taken over by the Respondent. Section 25 of IBC is also considered where under the Resolution Professional is obligated to represent and act on behalf of the Corporate Debtor with third parties and exercise the rights for the benefit of the Corporate Debtor in judicial and quasi-judicial and arbitration proceedings. It was held that wherever the Corporate Debtor has to exercise the rights in judicial, quasi-judicial proceedings the Resolution Professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). It was also held that in the light of the statutory scheme as culled out from various provisions of the IBC, 2016 it is clear that wherever the Corporate Debtor has to exercise a right that falls outside the purview of IBC, 2016, especially in the realm of the public law, they cannot, through the Resolution Professional take a bypass and go before NCLT for enforcement of such a right - if the Corporate Debtor is still in possession of the property of the 3rd party his possession can be safeguarded by preventing the 3rd party from dispossessing. But if, the possession of the property is no longer with the Corporate Debtor Section 14 would not come to the rescue of the Corporate Debtor. Hence, it can be concluded that this Tribunal would have limited jurisdiction in respect of leases and if, the Corporate Debtor is in possession of the property under lease the jurisdiction of the Tribunal will extend only to safeguard the Corporate Debtor's interest by seeing that it is not dispossessed during the existence of the moratorium and nothing more. The application is dismissed. 2022 (4) TMI 204 Liquidation of Corporate Debtor - Section 33 of IBC, 2016 - HELD THAT:- The mandate of 66% voting share under Section 33(2) of the IBC, 2016, stands satisfied - It is also seen from the records that the Applicant herein has accorded the written consent, Form AA to act as the Liquidator of the Corporate Debtor and further the Applicant has also placed on record the Authorization for Assignment (AFA) issued by the Insolvency Professional Agency of Institute of Cost Accountants of India. The liquidator is ordered to be liquidated - application allowed. Service Tax 2022 (4) TMI 203 Validity of assessment order - ex-parte order - opportunity of personal hearing not provided - contravention to the revised guidelines, issued by the Central Board of Indirect Taxes and Customs (Judicial Cell), dated 21.08.2020 - violation of principles of natural justice - HELD THAT:- It is the contention of the petitioner that the issue raised vis- -vis the subject assessment years [AYs] i.e., AYs 2013-2014, 2014-2015 and 2015-2016, is no different from that which arises from the demand-cum-show cause notice dated 23.04.2014, issued for the period spanning between 2008-2009 and 2012-2013. According to the petitioner, the adjudication carried out qua the demand- cum-show-cause notice dated 23.04.2014 resulted in the dropping of the entire amount of demand, save and except an amount equivalent to ₹ 91,91,814/-. The petitioner avers that an order-in-original in that behalf was passed on 19.06.2015. Against the said order, cross-appeals have been filed, which, according to the petitioner, are pending before Customs Excise and Service Tax Appellate Tribunal (CESTAT). List the matter on 04.04.2022. 2022 (4) TMI 202 Validity of SCN - Time Limitation - allegation is that the impugned SCN are beyond the statutory period of limitation prescribed under Section 73 of the Finance Act, 1994 - services rendered by Government Contractors, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation and alteration of works specified - applicability of Mega Exemption Notification No.25/2012-ST, dated 20.06.2012 - HELD THAT:- A reading of the chart indicates that only a part of the demand would be statutorily time barred, as it is beyond five years period from the last date for filing of the returns. Bearing the above, the entire demand proposed in the show cause notice cannot be said to be time barred. To that extent, the Writ Petitions filed challenging the impugned proceedings cannot be sustained. It is open for the petitioners to establish the same before the respondents by explaining the provisions of Section 73 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994. The other challenge on the ground that the show cause notices are time barred is concerned, it is noticed that the petitioners have neither obtained registration nor filed returns. Therefore, it cannot be said that the petitioners were not guilty of suppression of facts - HELD THAT:- The show cause notices issued by the respondents based on the information gathered from the counterpart from the Income Tax Department, cannot be said to be time barred. Had the petitioners obtained registration and filed returns stating that they were not liable to pay tax, even if they wrongly claimed that they were not liable to pay tax, it would have been open to the petitioners to show their bona fide that they are not liable to pay the tax and therefore, no case was made out for no suppression of facts. Exemption was withdrawn and re-introduced with certain conditions. The exemption is confined to a specific category of contracts entered before 01.03.2015. Therefore, it is open for the petitioners to reply to the show cause notices and meet out the allegations contained in the show cause notices, taking advantage of the benefit given by the Parliament, vide Section 102 of the Finance Act, 2016 read with Notification 9/2016-ST, dated 01.03.2016. Similarly, it is open for the petitioners to establish that part of the demand was time barred in terms of Section 73 of the Finance Act read with Rule 7 of Service Tax Rules, 1994. The petitioners are also not without any remedy. It is open for the petitioners to make representations to the respective Departments of the Government to reimburse the tax by applying the principle contained in Section 64-A of the Sale of Goods Act, 1930. The respective petitioners are therefore directed to give detailed replies to the respective show cause notices and participate in the adjudicatory mechanism provided under the Finance Act, 1994. The petitioners shall file replies within a period of 45 days from the date of receipt of a copy of this order - Petition disposed off. 2022 (4) TMI 201 100% EOU - Rebate claim - rejection of rebate for the reasons that the appellant s claim was time-barred - rejection also on the ground that some of the services on which CENVAT credit was claimed did not have nexus with the output services exported - rejection also on the ground that no declaration as required under Notification 12/2005 ibid. was filed and that request for considering the claim under Notification No. 5/2006-CE (NT) dated 14/03/2006 was beyond the scope of show-cause notice - time limitation - HELD THAT:- The rejection on the ground that the claim for rebate could not be considered afresh under Notification No. 5/2006 ibid. as submitted by the learned Senior Advocate, has already been addressed to in the appellant s own case. It is found that for an earlier period, vide Order-in-Original No. 81/2008 dated 07/07/2008 the adjudicating authority himself had allowed the appellant s similar claim under Notification No. 5/2006 ibid. when the initial application was under Notification 12/2005 ibid. and the adjudicating authority had granted partial refund. The matter had travelled up to the Tribunal and this Bench of the Tribunal vide its Final Order 21260/2016 dated 16/07/2014 had affirmed the above order of the original authority. The order of that Bench has become final without there being any further appeal. It is thus clear that when the Revenue has itself granted relief which was thereafter approved by a higher appellate authority, Revenue cannot take different stands for different years, which would amount to inconsistency - the rejection of conversion of refund claim into rebate is bad in law and unsustainable. Time Limitation - HELD THAT:- The reason for rejection namely, time bar, is also not sustainable since it is clear from the records that the appellant s claim was within a period of one year from the end of the relevant quarter, which view has been expressed by the learned Larger Bench of the Tribunal in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] . The appeal is allowed. 2022 (4) TMI 200 CENVAT Credit - whether appellants have utilized excess credit i.e. more than the limit prescribed under Rule 3(5) of Service Tax Credit Rules, 2002 (for the period April, 2004 to August, 2004) and Rule 6(3) of the Cenvat Credit Rules, 2004 during the period September, 2004 to September, 2007? - HELD THAT:- There are material contradictions in the order of the Adjudicating Authority and the same also have been repeated in the impugned orders. On the one hand it has been recorded that the credit register was not produced but at the same time it has also been recorded that although both the register is produced but it is self attested and not attested by any Chartered Accountant therefore it cannot be looked into. At some place in the order of the lower authority it is also recorded that although the appellant has produced the register before them but since they failed to produce it at the time of investigations, therefore, it cannot be looked into during Adjudicating proceedings. According to me, the aforesaid view of the Adjudicating Authority is not correct. Not only that, the Adjudicating Authority also recorded the findings that the major portion of the demand is from September, 2004 to March, 2005 (it has been wrongly mentioned as March, 2004 in the order) whereas the assessee has given copies of input tax register from April, 2005, which is completely wrong as the letter dated 17/02/2009 by the appellant to the department specifically mentioned about submission of copies of records maintained by them for the period June, 2003 to January, 2004 and April, 2004 to March, 2005. The orders of the Authorities below are liable to be set aside and the matter needs to be remanded for de novo adjudication. Admittedly the appellant has also not raised the ground about the applicability of the circular dated 21/11/2008 issued by CBEC before the authorities below, although it is very material, as according to learned Counsel prior to 01/04/2008 restriction was only for utilization of credit and not for taking of credit per se and therefore even if service tax is paid by utilizing credit in excess of restrictions prescribed under Rule 3(5) or Rule 6(3) it cannot be demanded again. Appeal remanded to the Adjudicating Authority for de novo adjudication for deciding all the issues afresh including the issue of limitation after giving a proper opportunity of hearing to the appellants - appeal allowed by way of remand. Appeal allowed by way of remand. Central Excise 2022 (4) TMI 199 Denial of benefit of exemption under N/N. 42/2001-CE (NT) dated 26.06.2001 - denial of benefit on the ground that the N/N. 50/2008-CE (NT) dated 31.12.2008 introducing amendment that Rule 6 (6) of CCR 2004 would apply for clearances made to Developers of SEZ would apply only after 31.12.2008 - demand of 10% value of exempted goods cleared during the period 06.04.2006 to 19.06.2008 to Developers / Co-Developers in the SEZ along with interest and also for imposing penalties - HELD THAT:- The very same issue has been considered by the Hon ble jurisdictional High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE CHENNAI II COMMISSIONERATE VERSUS M/S. S.P. FABRICATORS PVT LTD., THE CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [ 2018 (10) TMI 1474 - MADRAS HIGH COURT ] has analysed the very same issue and held that amendment brought by way of Notification No.50/2008-CE (NT) dated 31.12.2008 is retrospective in operation. Thus, the demand cannot sustain - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (4) TMI 198 Creation of charge over the property versus Attachment of property - Right of Government to recover tax dues - Validity of assessment order - stay on recovery of the charge which has been created over the property owned by the writ applicant - HELD THAT:- The words by operation of law are more extensive than the words by law and a charge created by operation of law includes a charge directly created by the provisions of an Act (like Section 48 of the GVAT Act) as well as other charges created indirectly as a legal consequence of certain conditions. The expression operation of law only means working of the law - A charge, is a right to receive a certain sum of money. If a dealer registered under the GVAT Act incurs any liability towards payment of tax, then the State has a right to receive a certain sum of money as crystallized in the form of liability. This recovery of the money from the property can be by attaching the assets of the defaulting dealer, and thereafter, putting those to auction. This type of recovery would be governed by the provisions of Section 46 of the GVAT Act. In the case on hand, it could be said that the day the assessment order came to be passed determining the liability of the writ applicant under the provisions of the GVAT Act, a charge over the immovable assets of the writ applicant could be said to have been created in favour of the State by operation of law, as envisaged under Section 48 of the GVAT Act - What could be said to have been done as on date is just to make one and all aware that by operation of law, as envisaged under Section 48 of the GVAT Act, there is a charge of the State Government over the immovable properties owned by the writ applicant, as described above. How would all come to know about the same. It is for this reason that an entry is ordinarily made in the revenue records. There is a fine distinction between attachment of property and a charge over the property by operation of law - Application dismissed. 2022 (4) TMI 197 Interpretation of statute - Section 18(8) (ix) of the JVAT Act - Partial disallowance of Input Tax Credit - petitioner could not produce Form JVAT-404 - period 2012 -2013 - HELD THAT:- From bare perusal provisions of Section 18(8) (ix) of the JVAT Act, it manifest that Section 18(8)(ix) of the JVAT Act is only applicable in case when some manufacturing activity is undertaken by the dealer - In the present case, admittedly, no manufacturing activity is carried out by the Petitioner in the State of Jharkhand. It is only a trader and hence Section 18(8)(ix) cannot be applied in the case of the Petitioner. The categorical averments made in paragraph 22, 29 30 of the writ application to the extent that petitioner is not a manufacturer has not been denied by the respondent authority. Further, the fact that the Petitioner is not a manufacturer is also admitted in the assessment order, appellate order and the revisional order. The unimpeachable evidence in this regard is the registration certificate of the Petitioner. For the Respondent authorities, to apply Section 18(8)(ix) of the JVAT Act in the case of the petitioner; the burden was on them to establish that the Petitioner was engaged in manufacturing activity in the State of Jharkhand. However, such burden was not discharged by them. Moreover, it has not been alleged that the Petitioner is a manufacturer in the State of Jharkhand - It is well settled that in a taxing statute there is no room for intendment - Further, the finding that scrap batteries could only have been used for processing or manufacturing is also incorrect, inasmuch as, a dealer such as the Petitioner is also free to trade in the said scrap batteries, i.e., sale and re-sale. It is incorrect to presume that scrap batteries can only be used for processing or manufacturing. If the interpretation of the Ld. Tribunal is accepted, then several traders would be debarred from eligible ITC since all products are ultimately processed or manufactured. The word trader would itself lose its meaning. It is held that Section 18(8) (ix) of the JVAT Act is not applicable in the case of this Petitioner. Consequently, the instant Writ Petition is allowed 2022 (4) TMI 196 Attachment on personal properties of director and brother of director - validity of attachment for discharge of the liability incurred by the writ-applicant no.1 company - debtor-creditor relationship - Vera Samadhan Yojana, 2019 - HELD THAT:- The plain reading of Section 44 of the GVAT Act would indicate that it provides a machinery for the VAT department to collect tax arrears from the debtors of the assessees (dealers). It is in substance the familiar garnishee proceedings under the Civil Procedure Code. The basic foundation would appear to be the substance of a relationship of a debtor and creditor, between the garnishee and the assessee - Under clauses (a) and (b) of sub-section (1) of Section 44 of the GVAT Act, the Commissioner is empowered to issue notice requiring any person from whom any amount of money is due or may become due or who subsequently holds money on account of such dealer in respect of the arrears of tax, penalty or interest under the GVAT Act. A plain and simple reading of the aforesaid provisions will suggest that the power under the same is to be exercised when there is a person who has debtor-creditor relationship with the dealer and from whom his money is due or may become due to him or the person who holds or may subsequently hold money for or on account of such dealer. Indisputably, in the case on hand, the company and the writ-applicants nos.2 and 3 respectively do not have any debtor-creditor relationship. Under sub-section (5) of Section 44 of the GVAT Act, a person to whom a notice under this sub-section is sent has a right to object to the notice by a statement that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee and then nothing contained in this sub-section would require such person to pay any money or part thereof, as the case may be - In the case on hand, no notice was sent to the writ-applicants nos.2 and 3 respectively in the manner prescribed and straightway the respondent no.1 proceeded to attach the personal properties of the two writ-applicants. Had the notice been sent to the writ-applicants nos.2 and 3 respectively as contemplated under sub-section (5) of Section 44 of the GVAT Act, both would have had the liberty to file their objections denying their liability to pay the amount as they did not owe the money to the assessee in default. Thus, in interpreting a taxing statute, the equitable considerations are entirely out of place. The reasons of morality and fairness can have no application to bring a citizen who is not within the four corners of the taxing statute within its fold so as to make him liable to payment of tax. The entire approach of the department that as it is not in a position to recover anything from the company, it can run after the Director of the company and attach his personal properties. The writ applicant No.3 has even otherwise no legal connection with the company. He just happens to be the brother of the writ applicant No.2 - thus, Section 44 of the GVAT Act is being misused to the maximum. Either the authorities concerned have no idea about the scope and true purport of Section 44 of the GVAT Act or they just pretend to be ignorant of the correct interpretation of Section 44 of the GVAT Act. The order of attachment in the case of both, the writ-applicant no.2 and the writ-applicant no.3, is hereby quashed and set-aside - application allowed. Indian Laws 2022 (4) TMI 195 Dishonor of Cheque - Plaint was filed that Cheque was issued as security and misused by the defendant - Jurisdiction of Revisional Court in rejecting the plaint - Whether the High Court was justified in setting aside the order passed by the revisional court in C.R.P. No.5 of 2012 and thereby remanding the matter to the said court for reconsideration on the premise that the revisional court had exceeded its jurisdiction in rejecting the plaint? - HELD THAT:- The revisional court considered the revision and allowed the application filed under Order VII Rule 11 of CPC which had the effect of finally disposing of the suit. It is against the said order that the plaintiff filed the writ petition before the High Court which was allowed and the matter was remanded to the revisional court for fresh consideration with an observation that the revisional court may, in turn, remand the matter to the trial court if necessary. This was on the premise that the revisional court had exceeded the jurisdiction vested in it by acting illegally in allowing the application filed under Order VII Rule 11 of CPC. The High Court was not right in observing that the revisional court had exceeded its jurisdiction and it could not have allowed the application filed under Order VII Rule 11 of CPC and thereby reversed the order of the trial court and finally disposed of the suit. In fact, the High Court has failed to appreciate the second proviso to Section 115 of CPC (Orissa amendment) in its true perspective. The revisional court, being the High Court or the District Court, as the case may be, can reverse an order which would finally dispose of the suit or other proceeding - the High Court was not justified in setting aside the said order and remanding the matter to the revisional court (District Court) to consider afresh, the application filed by defendant no.1/appellant herein under Order VII Rule 11 of CPC seeking rejection of the plaint. Whether, the revisional court (District Court) was justified in allowing the application filed under Order VII Rule 11 of CPC and thereby rejecting the plaint filed by the plaintiff/respondent no.1 herein? - HELD THAT:- In Sopan Sukhdeo Sable and Ors. vs. Assistant Charity Commissioner and Others [ 2004 (1) TMI 726 - SUPREME COURT ], it was held that Rule 11 of Order VII lays down an independent remedy made available to the defendant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate any stage when the objections can be raised, and also does not say in express terms about the filing of a written statement. It was held that the word shall is used to clearly imply that a duty is cast on the Court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities provided in the four clauses of Rule 11, even without intervention of the defendant. On a reading of the plaint, in the instant case it is noted that it discloses a cause of action inasmuch as the MoU dated 17th January, 2009, entered into between the plaintiff and defendant no.1 in the presence of defendant no.2 and the acts done pursuant to the said MoU is the basis for the grievance of the plaintiff. According to the plaintiff, a cheque for ₹ 56 lakhs was issued by him in favour of defendant no.1 and handed over to Sri Dilip Das, Advocate defendant no.2 as security with an understanding that the said cheque will not be handed over by defendant no.2 to defendant no.1 unless defendant no.1 fulfils its undertaking and carries out the responsibility of saving the licence to plot No. RS4, issued in favour of the plaintiff by the Paradeep Port Trust Authority, from being cancelled. As a result, the plaintiff would continue to remain as the licensee of the Paradeep Port Trust Authority visavis the said plot - defendant no.1 is duty bound to return the cheque to the plaintiff but, on the other hand, the defendants are trying to harass the plaintiff by presenting the cheque and hence certain reliefs were sought in the suit. The relief of declaration was sought to the effect that the cheque handed over by the plaintiff to defendant no.2 was as a security; that the cheque had been illegally handed over by defendant no.2 to defendant no.1 in violation of the terms and conditions of the MoU dated 17th January, 2009 and that the plaintiff is neither liable to deliver 3876 MT of iron ore fines to defendant no.1 nor to pay an amount of ₹ 56 lakhs since defendant no.1 had failed to save the licence of plaintiff s plot from cancellation by the Paradeep Port Trust Authority. In the instant case, on a reading paragraph 13 of the plaint, it is evident that cheque issued had been dishonoured and defendant no.1 had issued notice under Section 138 of N.I. Act on 10th June, 2009, to the plaintiff and its Managing Director replied to the same through their advocate on 23rd June, 2009. Therefore, it is evident that the plaintiff by seeking the aforesaid reliefs is in substance frustrating the right of defendant no.1 to take steps under the provisions of N.I. Act for releasing the amount of cheque issued by the plaintiff to defendant no.1 for a sum of ₹ 56 lakhs by filing a civil suit and/or by initiating a criminal prosecution. In other words, by seeking such a declaration that the cheque was issued as a security and that the same was illegally handed over by defendant no.2 to defendant no.1 in violation of the terms and conditions of the MoU, the plaintiff in substance is making an attempt to frustrate proceedings being initiated under Section 138 of the N.I. Act or for recovery of the amount by filing a civil suit. While the plaintiff has certain grievances arising from the MoU, against the defendants which may give rise to seek appropriate remedies in law, the aforesaid three declaratory reliefs sought in the plaint are barred by law. Hence, the plaint is liable to be rejected in exercise of jurisdiction under Order VII Rule 11 CPC - the revisional court was justified in rejecting the plaint but the High Court has erroneously set aside the order of the revisional court without appreciating the facts and circumstances of the case and has simply remanded the matter to the revisional court to reconsider the revision afresh on the premise that the revisional court did not have the jurisdiction to reject the plaint under Section 115 of the CPC. Appeal allowed - decided in favor of appellant.
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