Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 11, 2020
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Rate of GST - sale of Micafungin sodium by the DTA unit of the applicant - the product being supplied by the applicant can not be directly administered as injection. The concessional rate of GST is applicable only to the product Micafungin Sodium which is ready for administering by way of injection. In the instant case the applicant supplies bulk drug Micafungin Sodium to their customers and hence the said drug becomes raw material to the said customers.
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Computation of aggregate turnover for the purpose of GST registration - Interest income, though exempted, are to be included in the aggregate turnover - Partner’s salary, received as partner, from applicant’s partnership firm is not to be included - Salary received as non-executive Director from a Private Limited Company is to be included even if GST is paid on RCM by the company - Maturity amount of LIC, dividend on shares etc. not to be included.
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Levy of KGST/ CGST - Various activities of temple - Collection of seva charges - collection of special darshan charges - The same is exempt from CGST and KGST as they are not covered under supply and also exempt.
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Levy of KGST/ CGST - Various activities of temple - Sales of prasadam - sale of laddoos, kallu sakkare, Thirtha Prasada, Cloth bags, and other articles - if goods other than prasadam are sold, they would be liable to tax at appropriate rates applicable to those goods.
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Benefit of exemption from GST - E-book or not - assessee/dealer which publishes law journals in print and sells the same content that is in books in an electronic form in DVD’s/CD’s with a software to search and read it in computers and hand held devices - If it was an electronic version of the print journals, the DVD would have machine readable files in any format such as .doc, .txt, .pdf or any other readable files and not the executable file ( setup application) which it has.
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Classification of goods - UHT Sterilized Flavoured Milk - whether classifiable under Chapter 4-tariff Heading 0402 which covers ‘Milk containing added sugar or other sweetening matter’ or under Tariff Heading 0404 which covers ‘Other’, i.e. ‘products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included? - classifiable under CTH 22029930
Income Tax
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Clarification in respect of residency under section 6 of the Income-tax Act, 1961 - Circular
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Disallowance u/s 43B - provision of leave encashment - Supreme Court in the case of, Exide industries, has merely directed the assessee for payment of tax - However, the binding force of the decision of the Kolkata High Court still stands and therefore, respectfully following the same, we direct the ld AO to delete the above disallowance.
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Disallowance u/s 54B - LTCG - Proof of agriculture activity on land transferred - the assessee had cultivated the agriculture crops during the period of 2 years immediately preceding the date of transfer and incurred the loss after meeting of all the expenditure incurred during the agricultural activities and debit the loss directly to capital account. Therefore, the agricultural income was not shown in the return of income - Deduction allowed.
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Disallowance of expenditure towards development of property - no supporting bills of expenditure were provided - CIT(A) has allowed on ad hoc basis only 40% of the expenditure so claimed was genuine and incurred for developing the property - No justification in the order of the ld. CIT(A) for sustaining disallowance of 40% against the 50% disallowance made by the A.O., therefore, the A.O. is directed to allow full expenditure so incurred by the assessee.
Customs
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Request for Amendments and Waiver of Late Fee Charges in the Bills of Entry through e-mail procedure as facilitation during outbreak of COVID-19 - reg. (Amendment/Modification in Public Notice No. 35/2020) - Trade Notice
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Clarification with respect to submission of Pre-shipment Inspection Certificate (PSIC)– - Trade Notice
IBC
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Approval of Resolution Plan which is lesser than liquidation value - No provision in the Code or Regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
SEBI
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SECURITIES AND EXCHANGE BOARD OF INDIA (PAYMENT OF FEES) (AMENDMENT) REGULATIONS, 2020 - Notification
Central Excise
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Excisability/dutiability/marketibility - by-product - captive consumption - just because, the respondent were purchasing carbondioxide from other suppliers, it cannot be presumed that the carbondioxide generated in their unit was of the same character and properties as the gas being purchased from outside and hence, would be marketable.
Case Laws:
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GST
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2020 (5) TMI 222
Rate of GST - sale of Micafungin sodium by the DTA unit of the applicant - Serial No.114 of Entry No.180 of the Notification No.1/ 2017-Central Tax (Rate) dated 28.06.2017 - taxable at the rate of 5% or not? - HELD THAT:- The phrase Micafungin Sodium for Injection very clearly specifies the manner of administering Micafungin Sodium in the body - The applicant, during the personal hearing, with regard to possibility of administering Micafungin Sodium by any way other than injection, have not put anything on record but have stated that they take a certificate/ undertaking from their customers that they would use it only for injections. It is an admitted fact that the product being supplied by the applicant can not be directly administered as injection. The concessional rate of GST is applicable only to the product Micafungin Sodium which is ready for administering by way of injection. In the instant case the applicant supplies bulk drug Micafungin Sodium to their customers and hence the said drug becomes raw material to the said customers. The applicant contends that their bulk drug is essential for `Micafungin Sodium for injection and hence their bulk drug gets covered under the entry for concessional rate of GST. The entry would have been `Micafungin Sodium , had the intention of the Government been to extend the benefit of concessional rate to the bulk drugs/raw material. Therefore 5% GST is not applicable to the bulk drug Micafungin Sodium, in terms of SI.No.114 of List I to Entry No.180 of Schedule I to the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017.
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2020 (5) TMI 221
Computation of aggregate turnover for the purpose of GST registration - Supply or not - sources of income - Interest income received from different sources - Partner s salary, received as partner, from applicant s partnership firm - Salary received as Director from a Private Limited Company - Rental income on Commercial Property - Rental income on Residential Property - Reverse charge mechanism. Interest income received from different sources - HELD THAT:- The interest earned by the applicant, out of the deposits/loans/advances extended, amounts to consideration and is exempted. Therefore in the instant case extending the deposits/loans/advances by the applicant is nothing but exempted service and the actual amounts of deposits/loans/advances become the value of the service. Thus these amounts are to be included in the aggregate turnover for registration, under the provisions of GST Act. Partner s salary, received as partner, from applicant s partnership firm - HELD THAT:- The applicant has not furnished any documents relevant to the issue, such as copy of agreement, appointment order etc., so as to decide whether the applicant is an employee of the partnership firm or not. In case. if the applicant is a working partner and is getting salary then the said salary is neither supply of goods nor supply of service in terms of clause 1 of Schedule III of CGST Act 2017. Further, in case if the applicant is in receipt of the amount towards his share of profit from the said partnership firm, then also the said income is not under the purview of GST as the share of profit is nothing but application of money and hence the said salary is not required to be included in the aggregate turnover for registration under the provisions of GST Act. Salary received as Director from a Private Limited Company - HELD THAT:- The remuneration received by the applicant as Executive Director is not includable in the aggregate turnover, as it is the value of the services supplied by the applicant being an employee. Further if the applicant receives the remuneration as a Non-Executive Director, such remuneration is liable to tax under reverse charge mechanism under section 9 (3) of the CGST Act 2017, in the hands of the company, under entry no. 6 of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017. Thus the value of the said services of the applicant being a Non-Executive Director are includable in the aggregate turnover, as it is the value of the taxable services supplied by the applicant, though the tax is discharged by the private limited company, under reverse charge mechanism. Rental income on Commercial Property - HELD THAT:- The transaction of rental/lease of commercial property amounts to supply; applicant receives periodical income towards the impugned supply of service 86 the same is in the course or furtherance of business and hence the said transaction amounts to supply in terms of Section 7(1)(a) of the CGST Act 2017. Thus it is a taxable supply of service having SAC 997212 and therefore the value of such supply is to be included in the aggregate turnover, for registration. Rental income on Residential Property - HELD THAT:- Services by way of renting of residential dwelling for use as residence, classified under SAC 997211 are exempted from the tax (GST) in terms of entry number 12 of the Notification No. 12/2017 dated 28.06.2017. Thus the impugned supply of service of renting of residential property becomes an exempted supply. Aggregate Turnover includes the value of the exempted supplies also. Therefore the income received by the applicant towards rent of residential property is to be included in the aggregate turnover. Receipt of income out of maturity proceeds of life insurance policies, dividend on shares and capital gain/loss on sale of shares - HELD THAT:- In the instant case the dividend on shares, capital gains/losses on sale of shares are relevant to the shares (securities) and the income earned in this relation is nothing but application of money. Therefore this income earned out of shares, which are excluded from the definition of goods or services, also gets excluded from the said definition old goods / services. Therefore they are not relevant to the aggregate turnover and hence are not required to be added to the aggregate turnover for registration under the provisions of GST Act. Receipt of income out of maturity proceeds of life insurance policies - HELD THAT:- The insurance premium of policies is taxable under GST, being the consideration for the services provided by the insurance companies. Therefore on completion of the said contract / maturity of the policy, there would not be any service involved between the policy holder and the insurance company. Therefore the amounts received on maturity of the insurance policies are not relevant to the aggregate turnover and hence are not required to be added to the aggregate turnover for registration under the provisions of GST Act. Thus, the incomes received towards (i) salary/remuneration as a Non-Executive Director of a private limited company, (ii) renting of commercial property and (iii) renting of residential property and (iv) the values of amounts extended as deposits/loans/advances out of which interest is being received are to be included in the aggregate turnover, for registration - the income received from renting of residential property is to be included in the aggregate turnover, though it is an exempted supply.
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2020 (5) TMI 220
Levy of KGST/ CGST - Various activities of temple - floatation of tender for collection of vehicle entry fees, which is an access to temple premises - Sales of prasadam - sale of laddoos, kallu sakkare, Thirtha Prasada, Cloth bags, and other articles - lease through auction of 100 shops - e-procurement auction for the service of tonsuring the heads of the devotees -16 Cottages/ rooms with 242 rooms which are given on rent and collects vasathi nidhi kanike - seva fees and Utsava Fees which are in the nature of religious activities - Special Darshan Fees for darshan of Malai Mahadeshwara Swamy - right to collect service charges - rent collected for running Kalyana Mantapa at M.M.Hills - tenders for collection of Vahana Pooja in front of the temple - vehicle entry fees - tenders for similar such activities in future. Auctioning for collection of vehicle entry fees - auctioning of service of tonsuring the heads of devotees - Auctioning of right to collect service charges - auctioning of the right to collect charges for vahana pooja - HELD THAT:- These are supply of services falling under SAC 9997 and are covered under the entry no.35 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 and are liable to CGST at the rate of 9%. Similarly, they are also liable to tax at 9% under KGST under entry no.35 of Notification (11/2017) No. FD 48 CSL 2017 dated 29.06.2017. Sales of prasadam by the applicant - HELD THAT:- The sale is exempt from tax as per entry no. 98 of the Notification No.2/2017 - Central Tax (Rate) dated 28.06.2017 and entry no.98 of Notification (02/2017) No. FD 48 CSL 2017 dated 29.06.2017. But if goods other than prasadam are sold, they would be liable to tax at appropriate rates applicable to those goods. Renting of commercial shops - HELD THAT:- The services are exempt if the rental value is less than ₹ 10,000-00 per month per shop as they are covered under the entry no. 13 of the Notification No.12 /2017- Central Tax (Rate) dated 28.06.2017 and entry no.13 of the Notification (12/2017) No. FD 48 CSL 2017 dated 29.06.2017. But if the rent per shop is more than ₹ 10,000-00 per month, the same would be liable to tax at 9% CGST under SAC 9972 under entry no.16 of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 and at 9% KGST under entry no.16 of Notification (11/2017) No. FD 48 CSL 2017 dated 29.06.2017. Providing of services of accommodation to pilgrims - HELD THAT:- The services of accommodation to pilgrims where the charges are less than ₹ 1000 per day per room, the same is exempt vide Notification No.12/2017 - Central Tax (Rate) dated 28.06.2017 and Notification (12/2017) No. FD 48 CSL 2017 dated 29.06.2017. Collection of seva charges - collection of special darshan charges - HELD THAT:- The same is exempt from CGST and KGST as they are not covered under supply and also exempt as they are covered under entry no 13(a) of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 and Notification (12/2017) No.FD 48 CSL 2017 dated 29.06.2017 respectively. Renting out Kalyanamandapams - HELD THAT:- The same is exempt from CGST and KGST, if the rental is less than ₹ 10000-00 per day, as per entry no 13(b) of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 and Notification (12/2017) No.FD 48 CSL 2017 dated 29.06.2017 respectively. Collecting of entry fees providing access to the temple - HELD THAT:- The same is liable to tax at 9% under CGST Act and at 9% under KGST Act, as per entry 11(ii) of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 and Notification (11/2017) No. FD 48 CSL 2017 dated 29.06.2017. Future tendering of the right to collect charges and provide services - HELD THAT:- The same is liable to tax at 9% under CGST Act and at 9% under KGST Act as per entry no.35 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 and Notification (11/2017) No. FD 48 CSL 2017 dated 29.06.2017.
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2020 (5) TMI 219
Benefit of exemption from GST - E-book or not - assessee/dealer which publishes law journals in print and sells the same content that is in books in an electronic form in DVD s/CD s with a software to search and read it in computers and hand held devices - Eligibility for benefit of notification dated 26.07.2018 - adjustment of liability with ITC on the sale of DVD/pen drive which contains printed version of law citations - adjustment of liability with ITC on sale of e-book of printed version of law citation - reversal of balance of ITC after adjustment accrued on the purchase of paper and other material while filing GSTR 9 - scope of Advance Ruling application. Eligibility of benefit of notification dated 26.07.2018 in respect of E-book - HELD THAT:- In the case at hand, the applicant has stated that the printed law journals/books/periodicals are sold in electronic form of DVDs/CDs with a Dongle as a security lock with proprietary software, the updates for which are supplied online when the customer connects to internet. The initial supply is with a subscription for a period of 1 year, the renewal of which do not require any more supply of DVDs/ CDs but done on payment of subscription for the further period - It is seen that the software gives the user option to search various Acts, case laws on Criminal Law, Cr.P.C., I.P.C., Evidence Act, etc hitherto published in the journal. The software is updated with new content, updates of cases when connected to internet. Thus, it is seen that the DVD in effect contain software which requires an End User License Agreement to be accepted by the user. The DVD is not an electronic version of the print journals. If it was an electronic version of the print journals, the DVD would have machine readable files in any format such as .doc, .txt, .pdf or any other readable files and not the executable file ( setup application) which it has. The Dongle acts as a key and has some software installed on it which allows the application to be used and updates installed. When the applicant supplies the DVDs/CDs with Dongle, the supply consists of (1) supply of DVDs/CDs and Dongle and (2) The Law Weekly Desktop Software application loaded onto the DVD/CD and proprietary software the Dongle. The software comes with End User Licence with weekly updates online during the period of subscription. Thus the supply of DVDs/CDs dangle with access for an initial subscription period is a composite supply involving supply of DVD/CD Dongle and the loaded software (Goods) along with license to use the same for a limited period (service) - thus, the supply of DVD/CD Dangle loaded with The Law weekly Desktop Software is an optical media loaded with software and the licence to use the software during the subscription period is a supply of service made along with the principal supply of goods in the said Composite Supply . The DVD/CD Dongle being Storage Devices containing the software is the principal supply. The supply of DVD/CDs with the loaded The Law Weekly Desktop Software along with its end user license by the applicant is a supply of goods classifiable under CTH 85238020. Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 provides the applicable rates for various services. As per the Explanation given in the above entry, `e-books are electronic version of a printed book falling under the tariff item 4901 and supplied online which can be read on a computer or a hand held device, while in the case at hand, the contents supplied in the form of DVD/CD is a software which is used to access content containing the judgments of various fora, case laws Acts, etc which provides for searching using a particular case number/period/act/court or a combination of the above - The DVD/CDs do not contain electronic versions of the journals but an executable software application and therefore do not fall under the explanation of e-book given in the said entry. The supply involves access to an on-line database hosted on the website of the applicant. Thus, it is evident that the above are not e-books but supply of access to an online database online text based information [SAC 9984311 and therefore the entry at Sl.No. 22 of the Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 is not applicable to the case at hand. Adjustment of liabilities against ITC - HELD THAT:- The Act limits the Advance Ruling Authority to decide the issues earmarked for it under Section 97 (2) and no other issue can be decided by the Advance Ruling Authority - these issue relates to utilization of credit availed by the applicant and that of reversal of credit availed, which do not fall under any of the category specified under Section 97(2) of the Act and therefore are not within the ambit of this authority.
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2020 (5) TMI 218
Maintainability of application - question raised in the application is already pending before the Jurisdictional Authority - Auction of agricultural produce (cotton) conducted by the Namakkal Agricultural Producers Co-operative Marketing Society - Purchase or Sale involved in the process or not - reverse charge mechanism in the capacity of being an auctioneer - levy of service tax on receipt of Commission, Godown rent, Interest, in respect of service provided to agricultural produce - levy of tax on reverse charge basis on merchants (Registered person) who directly purchase cotton from the agriculturist through auction conducted by the society. HELD THAT:- As per the first proviso to Section 98(2) of CGST/TNGST Act 2017 the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act - In the case at hand, it is established that on the issues raised by the applicant before this authority, the Central Tax authorities have initiated proceedings and the same is pending before the Jurisdictional authority at the time of filing of this application - The applicant has also accepted this fact during the personal hearing, though they have not mentioned the same in the application (S1.No. 17). The application is not admitted and rejected under first proviso to Section 98 (2) of the CGST/TNGST Act 2017, as the issues on which Advance Ruling is sought by the applicant is already pending before the appropriate authority.
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2020 (5) TMI 217
Maintainability of application - question raised in the application is already pending before the Jurisdictional Authority - Auction of agricultural produce (cotton) conducted by the Rasipuram Agricultural Producers Co-operative Marketing Society - Purchase or Sale involved in the process or not - reverse charge mechanism in the capacity of being an auctioneer - levy of service tax on receipt of Commission, Godown rent, Interest, in respect of service provided to agricultural produce - levy of tax on reverse charge basis on merchants (Registered person) who directly purchase cotton from the agriculturist through auction conducted by the society. HELD THAT:- As per the first proviso to Section 98(2) of CGST/TNGST Act 2017 the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act - In the case at hand, it is established that on the issues raised by the applicant before this authority, the Central Tax authorities have initiated proceedings and the same is pending before the Jurisdictional authority at the time of filing of this application - The applicant has also accepted this fact during the personal hearing, though they have not mentioned the same in the application (S1.No. 17). The application is not admitted and rejected under first proviso to Section 98 (2) of the CGST/TNGST Act 2017, as the issues on which Advance Ruling is sought by the applicant is already pending before the appropriate authority.
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2020 (5) TMI 216
Maintainability of application - question raised in the application is already pending before the Jurisdictional Authority - Auction of agricultural produce (cotton) conducted by the Tiruchengode Agricultural Producers Co-operative Marketing Society - Purchase or Sale involved in the process or not - reverse charge mechanism in the capacity of being an auctioneer - levy of service tax on receipt of Commission, Godown rent, Interest, in respect of service provided to agricultural produce - levy of tax on reverse charge basis on merchants (Registered person) who directly purchase cotton from the agriculturist through auction conducted by the society. HELD THAT:- As per the first proviso to Section 98(2) of CGST/TNGST Act 2017 the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act - In the case at hand, it is established that on the issues raised by the applicant before this authority, the Central Tax authorities have initiated proceedings and the same is pending before the Jurisdictional authority at the time of filing of this application - The applicant has also accepted this fact during the personal hearing, though they have not mentioned the same in the application (S1.No. 17). The application is not admitted and rejected under first proviso to Section 98 (2) of the CGST/TNGST Act 2017, as the issues on which Advance Ruling is sought by the applicant is already pending before the appropriate authority.
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2020 (5) TMI 215
Permission for withdrawal of application - classification of services - composite supply of Works Contract - activities of construction carried out by the Applicant for its customer under the Construction Agreement - classifiable under Heading 9997, and chargeable to CGST @ 9% under S.No. 35 of Notification No. 11/2017-CT(Rate), dated 28.06.2017 or not? HELD THAT:- The applicant has taken a commercial call to not pursue the proposed business project in TamilNadu, Therefore, they prayed that the Hon ble Authority permit the applicant to withdraw the subject application filed in this matter. The application filed by the Applicant seeking Advance Ruling is disposed as withdrawn.
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2020 (5) TMI 214
Classification of goods - UHT Sterilized Flavoured Milk - whether classifiable under Chapter 4-tariff Heading 0402 which covers Milk containing added sugar or other sweetening matter or under Tariff Heading 0404 which covers Other , i.e. products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included? - HELD THAT:- The applicants manufacture/procure and supply UHT Sterilised Flavoured Milk and market it under the brand name Britannia Winkin Cow Thick Shake . The product is made in multiple flavours -strawberry(strawbericious), Mango(mangolicious), Vanilla(vanillicious) and chocolate(chocolicious)(hereinafter referred to as the Products ) - The manufacturing process involves heating (UHT sterilization) and cooling of milk, to which the constituents are added at different points of the heating/cooling process, filtered and de-aerated/homogenised and thereafter packaged. From the constituents of the product in hand furnished by the applicant, it is seen that the product consists of Standardised/Toned milk (87to 89%) without removal of Fat content thereon, which is sweetened with around 101)/0 of sugar to which stabilizers, flavours, etc are added and is supplied in tetrapacks after necessary processes. The products are marketed as Thick shakes and is ready for consumption as stated by the applicant - Comparing the product and those covered under CTH 0402/0404, it is evident that the product in hand consisting of milk flavoured with vanilla/ strawberry/mango/cocoa powder being ready for consumption beverages based on Milk is specifically excluded under CTH 0402, as seen from the Explanatory notes to HSN of the said chapter and hence not classifiable under CTH 0402; Also the product being not Whey , the plausible CTH will be 0404 90 only and there again the Explanatory notes clearly states that this heading includes products which lack one or more natural milk constituents, to which natural milk constituents are added, whereas in the case at hand, the product do not lack any natural milk constituents nor any natural milk constituents is added to the product - thus, the product is not classifiable under either CTH 0402 or 0404. Other non-alcoholic beverages, not including fruit or vegetable juice of heading 20.09 are covered under 2202.99 - Other and as per the explanation at (B) (2), the group covers beverages ready for consumption such as those with a basis of milk. The word beverage , though not defined under CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product flavoured milk can be consumed as it is and hence is a beverage with a basis of milk - Therefore, the product is appropriately classifiable under CTH 22029930. The applicant has relied on the General Rules of Interpretation of Tariff and has contended that the product is classifiable under Chapter 4 of the Customs Tariff made applicable to GST applying Rule 3 of the Interpretation Rules - As per the above Rule, classification is to be determined based on the terms of the heading and any related Section/Chapter Note. CTH 22029930 specifically covers Beverages containing milk and the explanation notes clarifies that those beverages with a basis of milk are covered under this CTH. Rule 2 and other rules of Interpretation are to be applied only when the goods are classifiable under more than one heading and cannot be classified on application of Rule 1 of GIR - In the case at hand there is a specific heading for the product and therefore, there is no necessity to traverse further and apply the other rules and reject the claim of the applicant. The applicant has relied on the FSSAI regulations and has claimed that the product is a milk and to be classified under CTH 04 - the classification as available in the Customs Tariff is aligned with the International convention based on Harmonised system of Nomenclature. The product is specifically covered under a specified heading. Thus, UHT Sterilized Flavoured Milk marketed under the brand name Britannia Winkin Cow Thick Shake by the applicant is not classifiable under the Tariff heading 0402 /0404 but classifiable under CTH 22029930.
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Income Tax
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2020 (5) TMI 213
Rectification u/s 254 - Investment in mines - HELD THAT:- Order has been passed by the Tribunal after appreciation of all material on record including statement recorded during the course u/s 132(4) which carries the evidentiary value, the retraction made after made during the course of assessment proceedings after a considerable lapse of time which was not accepted, the post search statement, the contents of the agreement found at the premises of the assessee during the course of search. The assessee has contested the said findings of the Tribunal before the Hon ble High Court and the same has been further examined by the Hon ble High Court and no finding has been recorded by the Hon ble High Court in terms of any perversity in the order so passed by the Tribunal which has been passed after considering the material available on record. The Hon ble High Court has also held that The Court is also of the view that the initial burden of showing that the transaction had not taken place and statement made earlier was wholly incorrect or that the documents recovered did not support the findings, was not dislodged. We therefore find that the findings of facts of the Tribunal have been affirmed by the Hon ble High Court and in such circumstances, there is no basis for entertaining the present Misc. Application so filed by the assessee u/s 254(2). Misc. Applications so filed by the respective assessees are hereby dismissed
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2020 (5) TMI 212
Deduction u/s 80P - assessee has not given segment wise details of income earned by it from the core activity of the assessee cooperative society as well as from the non-core activity - HELD THAT:- Some of the income during the year under consideration has been earned by the assessee from the activity of selling the commodities like Sugar, Kerosene, Wheat etc. under the Public Distribution Scheme of Rajasthan Govt. These activities are not the core activity of the assessee society and the income from these activities would not be eligible for deduction u/s 80P. Core activity of the assessee society which includes credit facilities to its Members and supply of fertilizers and other materials used in the agricultural activity to the members, the same is eligible for deduction u/s 80P - interest earned by the assessee from the deposits with another cooperative banks is also eligible for deduction u/s 80P but the interest earned from the saving bank account kept with schedule bank or non-cooperative bank is again a matter of dispute, so far as the eligibility of deduction u/s 80P of the Act is concerned. In the absence of these segmentwise details and income from different activities bifurcating into the category of core activity and ancillary activity to the core activity as well as non-core activity, it is not possible to consider the claim of deduction u/s 80P - set aside this issue to the record of the AO to verify the segmentwise details of income from core activities of the assessee as well as non-core activity to be filed by the assessee and then allow the claim of the assessee u/s 80P of the Act in respect of income from the core activity of the assessee. Appeal of the assessee is allowed for Statistical purposes.
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2020 (5) TMI 211
TP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- Main function performed by assessee, is in respect of R D functions, wherein assessee focuses on developing existing technologies for direct customer application. Assessee has been characterised to be working on a risk mitigated environment on a contract basis strictly providing services, as per needs/requirements of associated enterprise, thus companies functionally dissimilar with that of assessee need to deselected from final list.
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2020 (5) TMI 210
Levy of late fees u/s 234E - processing the statement of tax deducted at source u/s 200A - scope of amendment was brought in w.e.f. 01.06.2015 in the provisions of section 200A - HELD THAT:- As relying on State Bank of India, Genda Chowk [ 2018 (11) TMI 1714 - ITAT INDORE ] and M/s. Madhya Pradesh Power Transmission Ltd. [ 2018 (12) TMI 1323 - ITAT INDORE ] Fee u/s 234E of the Act was levied in the statements processed u/s 200A of the Act before 01.06.2015 i.e. before the amendment brought into effect from 01.06.2015 in section 200A of the Act thereby enabling the revenue authorities to raise demand in respect of levy of fees u/s 234E. Ld. CIT(A) erred in confirming the levy of late fees u/s 234E of the Act by the assessing officer. Accordingly findings of ld. CIT(A) in all these appeals are reversed and revenue is directed to delete the levy of fees u/s 234E - Decided in favour of the assessee.
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2020 (5) TMI 209
Revision u/s 263 - Addition u/s 68 - HELD THAT:- Action/view taken by the AO after enquiry made by him as per the direction of the Ld. Pr. CIT in the set aside proceedings dated 10.06.2016 pursuant to which the AO has reassessed the assessee after inquiry and accepted the share capital and premium collected by assessee is a plausible view and cannot be held to be unsustainable view in facts or law, therefore, the impugned action of the Ld. Pr. CIT to interfere with the reassessment order of the AO, is without jurisdiction and liable to be quashed. We are of the considered opinion that AO s action (reassessment) pursuant to the first revisional order of Ld. Pr. CIT dated 10.06.2016, to accept the share capital and premium as a possible view in facts and law as per the ratio laid by the Hon ble Supreme Court in Malabar Industrial Co. Ltd. Vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] . AO s action/reassessment order cannot be termed as erroneous and prejudicial to the interest of the Revenue. Therefore, the condition precedent for usurping revisional jurisdiction u/s. 263 of the Act is absent and, therefore, the Ld. Pr. CIT lacked jurisdiction to assume second time revisional jurisdiction u/s. 263 of the Act. Appeal of the assessee is allowed
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2020 (5) TMI 208
Depreciation on rigs on hire - @60% OR @15% - assessee is not a mineral oil concern‟ as it is supplying equipment on hire to all other mineral oil concern and is giving it on hire and not using for its business purpose - HELD THAT:- Respectfully following the decision of the coordinate bench [ 2019 (4) TMI 765 - ITAT DELHI] as well as [ 2018 (12) TMI 1634 - ITAT DELHI] in assessee/s own case, we direct the ld AO to grant depreciation on this asset @60%. Accordingly, ground No. 1 of the appeal of the ld AO is dismissed. Disallowance u/s 14A read with Rule 8D - HELD THAT:- CIT (A) is correct that the ld AO has failed to record satisfaction about the correctness of the claim of the assessee that it has not incurred any expenditure to earn the exempt income. It is also true that the assessee has not received any exempt income during the year. Thus in absence of exempt income, relying on the decision in case of Cheminvest Ltd Vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein, it has been held that there should be actual receipt of exempt income and section 14A will not apply if no exempt income is received during the relevant previous year. In view of this, we confirm the order of the ld CIT (A) and direct the ld AO to delete the disallowance u/s 14A of the Act. Ground No. 2 of the appeal is dismissed. Addition on account of balances lying in sundry creditors account - HELD THAT:- As submitted that with respect to the most of the creditors the confirmation has been received and submitted before the ld CIT (A). In case of all other creditors the specific bank account of the assessee was also produced this shows that the payments are made through account payee cheques. With respect to the one party wherein, it has been shown that certain amounts with respect to the above parties have also written back which have been offered for taxation. For all other creditors the assessee has submitted the PAN as well as ledger accounts from the books of assessee for the subsequent years. In view of the above overwhelming evidence produced by the assessee which could not be controverted by the ld DR we find no infirmity in the order of the ld CIT(A) in deleting the addition as there is neither cessation of the liability nor the creditors are found to be non existing. In the result ground No. 3 of the appeal is dismissed. Disallowance u/s 43B - HELD THAT:- Assessee has made a provision of leave encashment and the same does not fall u/s 43B (f) relying on the decision of Exide industries Vs. Union of India [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] - As carefully considered rival contentions and find that in case of CIT Vs. Exide Industries Ltd [ 2009 (5) TMI 894 - SC ORDER] has held that the assessee shall pay the tax as if section 43B(f) is on the statue and would be entitled to make a claim in its return of income. Therefore, it is apparent that the Hon'ble Supreme Court has merely directed the assessee for payment of tax. However, the binding force of the decision of the Kolkata High Court still stands and therefore, respectfully following the same, we direct the AO to delete the above disallowance. Accordingly, cross objections filed by the assessee is allowed. In the result, cross objection of the assessee is allowed.
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2020 (5) TMI 205
Exemption u/s 54F - Taxing capital gain under the head business income and not giving benefit of exemption u/s 54F - as contended that the assessee was having property since last 20 years, the same held as investment therefore, eligible to claim benefit of long term capital gains and utilization of capital gains for purchase of house u/s 54F - HELD THAT:- Land was purchased by the assessee since long back as capita asset and was continuously hold by it for 20 years in case of Fateh Royal Residency and for 4-5 years in case of Fateh Hills as capital asset. There was no intention of assessee to trade for the land so purchased, contrary it was used for agricultural purposes continuously till the year of sale. Agricultural income so earned were offered in the return of income of respective years and accepted by the deptt. Similarly, the Fateh Hills property was acquired long back in the year 2010-11 as capital asset and was so held as capital asset in the balance sheet. Merely conversion of the agricultural land into non-agricultural land will not give rise to the taxable event until it is actually sold. Thus, the assessee has sold the capital asset held for long term, accordingly, gain arising from sale was eligible for deduction u/s 54F of the Act. Accordingly, we direct the A.O. to treat the property on sale of land as capital gains and given the benefit of exemption claimed by the assessee U/s 54F. Disallowance of expenditure towards development of property - A.O. has allowed 50% of the expenditure by stating that no supporting bills of expenditure were provided to him - HELD THAT:- It is clear from the findings of the ld. CIT(A) that he has totally discarded the observed of the A.O. for non-production of documentary evidence in support of the expenditure. However, in respect of giving this fact, the ld. CIT(A) has allowed on ad hoc basis only 40% of the expenditure so claimed was genuine and incurred for developing the property, therefore, eligible to be allowed as a deduction while computing capital gains on sale of this property amounting to ₹ 43,90,029/-. No justification in the order of the ld. CIT(A) for sustaining disallowance of 40% against the 50% disallowance made by the A.O., therefore, the A.O. is directed to allow full expenditure so incurred by the assessee. - Decided in favour of assessee.
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2020 (5) TMI 204
Disallowance u/s 54B - LTCG - Proof of agriculture activity on land transferred - onus to prove that the utilization of subjected capital asset for agriculture activity in last two years from the sale of said capital asset - in the event of, the condition of utilization of capital asset being land for agriculture purpose by the assessee or his parent, HUF remain unproved - HELD THAT:- Agriculture income certificate issued by the revenue department of the State of Telangana has been got issued in favour of the assessee by applying online and the format in which it is issued is as per the concerned state s prescribed rules and regulations. We have so considered the submission of the assessee to the effect that the assessee had cultivated the agriculture crops during the period of 2 years immediately preceding the date of transfer and incurred the loss after meeting of all the expenditure incurred during the agricultural activities and debit the loss directly to capital account. Therefore, the agricultural income was not shown in the return of income for the A.Y. 2014-15 and 2015-16. Provisions of Section 54B of the Act, we allow this ground raised by the assessee and set aside the order passed by the revenue authorities and direct the A.O. to allow exemption u/s 54B . - Decided in favour of assessee.
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2020 (5) TMI 203
Rectification of mistake u/s 254 - maintainability of appeal due to Low tax effect - HELD THAT:- CBDT Circular no. 23 of 2019 should be read along with special order of the CBDT dated 16.09.2019 in respect of appeals filed pursuant to such special order and shall thus apply to all appeals filed on or after 16.09.2019 by the Revenue where the tax effect may be low but the appeal can still be filed by the Revenue on merits. In the instant case, the appeal of the Revenue was filed on 22.05.2019 and therefore, the present appeal was not filed pursuant to such a special order of the CBDT dated 16.09.2019 and thus, the matter doesn t fall in any exception as so prescribed by the CBDT in its earlier circular dated 8.8.2019 and the special order doesn t apply in the instant case and the appeal has thus rightly been dismissed by the Bench on account of low tax effect in light of CBDT s circular dated 8.8.2019. In any case, both CBDT Circular no. 23 of 2019 and special order dated 16.09.2019 were not in existence and thus not part of the record at the time when the matter was heard on 20.08.2019 or at the time of passing of order by the Tribunal on 21.08.2019 and therefore, non-consideration of such Circular and the special order so passed by the CBDT is not a mistake apparent from record which can be rectified within the narrow compass of section 254(2) of the Act.
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2020 (5) TMI 202
Deduction u/s 80IC - profits to the extent of 2% of sales (excluding sale of insulated copper wire) are not eligible for deduction - Excessive estimation of profit - HELD THAT:- A.O. only on the basis of presumption made the disallowance by observing that the assessee might have inflated net profit rate by not paying the technical know how fee and declaring the higher net profit rate. However he ignored this explanation of the assessee that increase in the higher rate for the year under consideration was due to low expenses on account of interest and lesser amount of depreciation. Assessee also explained that one of the partner namely Shri Mohinder Sethi was experienced and that no expense on account of royalty / technical know how had been incurred by the assessee. The assessee that neither in the preceding year nor in the succeeding year such disallowance has been made in the similar circumstances has not been rebutted. Therefore, we are of the view that the impugned disallowance made by the A.O. and sustained by the CIT(A) was not justified, accordingly the same is deleted. Amount charged in excess from sister / related concern - HELD THAT:- A.O. without pointing out any specific difference in the rates made the addition by taking the average rate although the variation was only 0.64% even the explanation of the assessee that different rates were prevailing at different point of time when sales were made to the outsider was not considered. Addition made by the A.O. and sustained by the Ld. CIT(A) was not justified, accordingly, the same is deleted. - Decided in favour of assessee.
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2020 (5) TMI 201
Characterization of income - Unexplained investment u/s 69/69A or business income - HELD THAT:-Income duly declared in the ITR filed u/s 139 which includes ₹ 475,000/ under appeal before the Bench. However, the only dispute is with regard to treating the same as unexplained money or unexplained investment u/s 69/69A by lower authorities and accordingly taxing the same under special rates of income or regular business income as offered by assessee. The provisions of Section 69 or 69A are not applicable in the facts of the case as far as the question of income from property transaction is concerned, which is in the nature of nature of business income as assessee is duly engaged in the business of real estate only. Even otherwise, the provisions of section 69 or 69A are applicable in case of unrecorded transaction or investment, whose nature and source is not explained. However, in the present case, the assessee has duly explained the nature and source of the transaction as well duly declared the same in its return of income. CIT(A) did not appreciate the submission made by assessee during assessment as well as appellate proceedings, which establishes that there is no case of any unexplained investment, money or income, as nature and source of the income is reflected and explained in the ITR filed, Balance sheet and profit loss account, itself, therefore, question of any income from any undisclosed source does not arise. We direct the A.O. to treat the income of ₹ 4.75 lacs as income from business. Addition u/s 69 - addition relying upon the statements recorded under section 132(4) - HELD THAT:- assessee in its question to answer no. 13 stated that amount of cash short noticed were withdrawn from banks and savings out of income offered for tax and has been used for construction. This explanation even if considered to be true also explains the availability of source of funds. Thus, the source of construction was out of the declared income/sources and there was no additional or unexplained investment as no evidences relating to additional construction investment were found during search. There is no addition in the impugned assessment order on account of short cash found rather during assessment proceedings, the AO took entirely different stand of making impugned addition of ₹ 1 Crore for alleged investment of ₹ 1 crore by taking incorrect inference from the statement of the assessee recorded during search. No document/paper were found by the department in relation to alleged amount of ₹ 1 Crore used in construction activities which is unexplained. Furthermore the assessee has never admitted that he has incurred construction expenses out of books as alleged in the assessment order. It is also clear from the order of the A.O. and the ld. CIT(A) that they have never asked for any valuation report. Even otherwise, once there are no adverse findings in relation to the details of cost incurred in relation to construction provided, there is no necessity of valuation. Thus, very basis of impugned addition confirmed by Ld. CIT(A) is not justified. There is no adverse finding pointed out by the AO which establishes that there was no source of such investment, further no defects/mistakes were pointed out regarding the supporting evidences submitted by the assessee. Assessee made statement during the search and surrendered ₹ 100,00,000/ which is without any basis due to incomplete records, mistaken facts and believes. The department has not found any single evidence in relation to amount spent more than amount declared in construction activities before the A.O. and produced books of accounts before the AO, therefore, no adverse inference can be drawn in this regard. In view of the above discussion, we direct the A.O. to delete the addition so made. Assessment u/s 153A - deduction of interest expenditure disallowed - HELD THAT:- A.O. has accepted the additional interest income offered without any seized documents during the course of search in the return filed u/s 153 A in para 5 of the assessment order but not allowed the legitimate deduction towards interest expenses wrongly short claimed while filing ITR u/s 139. The A.O. has rejected the claim of interest on unsecured loan with contention in Para no 5.3 at page no 3 of the order. We modify the orders of the lower authorit ies and direct the A.O. to restrict addition only to the extent of dif ference between the interest income offered and the interest expenses claimed. We direct accordingly.
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Corporate Laws
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2020 (5) TMI 198
Registering the transfer of shares - issuance of original share certificates in the name of the Appellant - rectification in the Register of Members - HELD THAT:- The individual who has purchased the shares is trying hard from 1998 to get the shares transferred and what has been raised by the NCLT that the matter to be adjudicated by appropriate Civil Court. Now NCLT is appropriate court and NCLAT is the appropriate Appellate Authority. This reflect the attitude of the Respondent No.1 by not intimating to the Appellant at least to provide the document if they have not received instead of approaching various courts and putting mental agony and hardship to the Appellant. The Appellant has provided the details of certificate numbers, registered folio of all these shares and the company should have responded immediately in 1998 if they have not received those shares. No action was taken by the company for few years and suddenly went into litigation in various courts - All this suggest that the individual has sent the shares for transfer. The Respondent No.1 is directed to transfer the shares to Appellant after taking requisite declaration, indemnity bond and relevant papers and thereafter to issue shares with consequential benefit in accordance with law - appeal disposed off.
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Insolvency & Bankruptcy
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2020 (5) TMI 207
Approval of Resolution Plan which is lesser than liquidation value - matter remitted to the NCLT after a finding that under Section 30(2) of the Insolvency and Bankruptcy Code together with the principle of maximization of assets of the corporate debtor, a resolution plan which is lesser than liquidation value cannot be accepted. HELD THAT:- This judgment has to be set aside in view of decision in the case of Maharashtra Seamless Limited vs. Padmanabhan Venkatesh Ors. [ 2020 (1) TMI 903 - SUPREME COURT ] in which this Court has categorically held that No provision in the Code or Regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The judgment of the NCLAT is set aside - appeal allowed.
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2020 (5) TMI 197
Maintainability of application - initiation of CIRP - time limitation - Corporate Debtor failed make payment of its outstanding dues - existence of debt and dispute or not - HELD THAT:- Admittedly the present application being filed on 19-11-2018, which is well beyond the stipulated time period of three years, the present petition as filed by the Petitioner is barred by limitation and hence liable to be rejected. The debt which is being claimed to be in default from the Corporate Debtor is barred by limitation - Petition dismissed.
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2020 (5) TMI 196
Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - Existence of debt and dispute or not - Time Limitation - HELD THAT:- The Corporate Debtor has not filed communications to the Operational Creditor raising any dispute with regard to poor quality of sacks/packing bags used for supply of the material. The alleged dispute is raised for the first time after filing of the Petition against Corporate Debtor. Time Limitation - Allegation that the claim is barred by limitation on the ground that last transaction was on 11-6-2016 and payment was also made on 23-5-2015. The Petition is barred by limitation which was filed on 24-7-2019 - HELD THAT:- Of course it is the duty of Operational Creditor to file receipts raised for making payments to the Corporate Debtor. However, the limitation starts from the expiry of period given in the purchase order. We have seen the purchase order and invoice attached to written submissions cum rejoinder. 60 days' time is given for payment. The last invoice is on 11-6-2016. The payment under the invoice is within 60 days. Therefore, limitation to start after expiry of 60 days. The petition is filed on 24-7-2019 is therefore, within the period of limitation. Demand notice was not issued and served on the Corporate Debtor. The petition is in order and is liable to be admitted - application admitted - moratorium declared.
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2020 (5) TMI 195
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and prior dispute or not - HELD THAT:- It is true operational creditor entered into service agreement with the corporate debtor. The operational creditor to render customer care services to the customers of corporate debtor. The main contention of corporate debtor that the services rendered by the operational creditor are not satisfactory and there are several deficiencies in the services of operational creditor. The contention of the corporate debtor that customers expressed total dissatisfaction of the services rendered by the operational creditor. The corporate debtor has relied on the reviews of the customers which are shown at page Nos. 75 to 82 of the counter. It is true, information from the customers found in these mails shows that they are totally dissatisfied with the services of the operational creditor. It is undisputed fact that service agreement dated October 30, 2015 was cancelled and termination notice was issued on April 19, 2018 and termination would come into effect from May 19, 2018. Thus, one months' notice was issued prior to termination. The termination of service agreement was prior to demand notice dated June 17, 2018. In the termination notice, the corporate debtor specifically stated that the services rendered by the operational creditor are not satisfactory - The termination will be with effect from May 19, 2018. There is no dispute about issuing of termination notice. The termination notice goes to show that there was prior dispute in the sense corporate debtor was not satisfied with the customer care services extended to the customers of corporate debtor. The termination notice was prior to the issue of demand notice. Thus, the dispute was raised prior to demand notice. Further the corporate debtor also filed opinion expressed by the customers with regard to the customer care services as such when there is a pre-existing dispute the present petition cannot be admitted. Thus, corporate debtor established a pre-existing dispute - Petition dismissed.
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Service Tax
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2020 (5) TMI 200
Refund of service tax paid - Club or Association Service - period from January, 2013 to July, 2014 - HELD THAT:- Relying on the Hon ble Supreme Court s ruling in STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT ] , it is held that there was no difference in the provisions of service tax levy in respect of Club and Association Service for the period prior to 01.07.2012 and subsequent to 01.07.2012. Therefore, the appellant are entitled for the said claim of refund. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (5) TMI 199
Excisability/dutiability/marketibility - by-product - captive consumption - Carbon dioxide generated during the process of fermentation of beer, and used inhouse for carbonation of beer - HELD THAT:- The issue herein is squarely covered by the precedent decision of Division Bench of this Tribunal in the appellant s own case COMMISSIONER OF CENTRAL EXCISE-LUDHIANA VERSUS M/S UNITED BREWERIES LTD. [2015 (6) TMI 262 - CESTAT NEW DELHI] where it was held that just because, the respondent were purchasing carbondioxide from other suppliers, it cannot be presumed that the carbondioxide generated in their unit was of the same character and properties as the gas being purchased from outside and hence, would be marketable. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (5) TMI 206
Release of seized vehicle - allegation that the vehicle was carrying five plastic drums of illicit adulterated liquor - Confiscation under Section 72 of CEA - option to pay the fine in lieu of the confiscation - knowledge with the owner that the owner knew that his vehicle was likely to be used for transporting illicit material - HELD THAT:- The record does not reveal that any point of time, the petitioner was given any opportunity to get his vehicle released in lieu of fine etc. Further the Court finds that the authorities had not arrived at any finding that the owner knew or had reason to believe that the vehicle was likely to be used for transporting illicit material. Further, this Court is also of the view that no useful purpose would be served by seizing the vehicle and keeping it in the Police Station for a very long time. Reliance can be placed in the case of SUNDERBHAI AMBALAL DESAI VERSUS STATE OF GUJARAT [ 2002 (10) TMI 773 - SUPREME COURT ] where it was held that whatever be the situation, it is of no use to keep such-seized vehicles at the police stations for a long period. It is for the Magistrate to pass appropriate orders immediately by taking appropriate bond and guarantee as well as security for return of the said vehicles, if required at any point of time. This can be done pending hearing of applications for return of such vehicles. The vehicle is directed to be released - petition allowed.
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