Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 12, 2022
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Condonation of delay in filing appeal - Cancellation of GST registration - the total period during which the appeal ought to have been preferred was four months from the date of cancellation of registration dated 19.06.2019. However, despite lapse of four months, the appeal was not preferred by the appellant/petitioner, nor even in the memo of appeal, sufficient reasons for not filing the appeal in time were disclosed. There was unexplained delay of 1 ˝ years in filing the appeal - the respondent No.4 has not committed any error while dismissing the appeal preferred by the present petitioner - HC
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Maintainability of application - in any case the definition of advance ruling does not permit making of an application in relation to the supply of services already undertaken for a long period of two years in pursuance of an agreement which had expired long before the making of the application seeking advance ruling - the questions involving claim of extension of the two years contract agreement for supply of service for further period of one and a half years, creation of such an extension document at a stage far later than the date of filing application seeking advance ruling and non-existence of evidence showing submission of such an extension letter to the AAR lose their relevance - AAAR
Income Tax
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Addition made on account of deemed rent - unsold units (Flats) in the hands of builder at the year end - property is used as stock-in-trade - the deemed rent concept cannot be applied or invoked in case of property which is stock-in-trade of the business of the assessee and the addition made by the Assessing Officer on account of deemed rent cannot be sustained as rightly held by the learned CIT(A). - AT
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Reopening of assessment u/s 147 - accommodation entry receipts - As regards merits of the case Assessing Officer has issued notice which had remained uncompliance with. The assessee’s plea of the assessee having no onus to prove the creditworthiness of the party is not sustainable - AT
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Revision u/s 263 by CIT - CIT has duly examined the nature of expenses. The expenses are related to medical grants and other grants and J&K flood affected employees - CIT is correct in holding that these expenses cannot be said to be expense wholly and exclusively incurred for the purpose of earning income on dividend and interest income from banks. Provision u/s. 57(iii) are duly applicable on the facts of the case. - Revision order confirmed - AT
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Rejection of books of accounts - substantially increase in the expenses - he books of accounts and the financial result of appellant have already been examined and accepted that the APA. Nothing came into noticed to which it can be assumed that the finding of the CIT(A) is incorrect. The facts are not distinguishable at this stage. - No additions - AT
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Disallowance of business expenses u/s. 37 - No business carried out by assessee - By no stretch of imagination, it can be held that, if there is no business receipt during the year, assessee should wind up the infrastructure and start all over again when the business receipts start following. CIT(A) reliance upon his own earlier order do not change of facts and circumstances that there is temporary lull - claim of assessee allowed - AT
Indian Laws
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Dishonor of Cheque - vicarious criminal liability of a partner - partnership firm is not an accused tried for the primary/substantive offence - The provisions of Section 141 impose vicarious liability by deeming fiction which presupposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-section (1) or (2) would not be liable and convicted as vicariously liable. - SC
IBC
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Initiation of CIRP - Pre-Existing Disputes - This Tribunal is of the considered view that there is a Pre-Existing Dispute and the aforenoted correspondence establishes that a dispute truly exists in fact between the Parties, which is not a patently feeble legal argument or an assertion of facts, unsupported by evidence. - NCLT rightly rejected the application - AT
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CIRP - Seeking directions to be issued to the Directors of the Corporate Debtor/the Appellants herein to make good the losses caused on account of the fraudulent transactions entered into by them - The debts written off to defraud the Creditors, the cash transaction post their resignation evidencing their financial control in the affairs of the ‘Corporate Debtor’, clearly establish that they are ‘fraudulent transactions’ done with a wilful intention of financial gain at the cost of negatively effecting the Creditors - AT
Service Tax
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Wrongful availment of CENVAT Credit or not - inclusive of service tax contract - appellant shall be entitled to take Cenvat Credit on the amount of service tax paid by the contractor. Since the service tax has already been paid on the gross value /the total value, appellant cannot be denied availment of credit proportionate to the said value till the occasion arises for refund of the said service tax on the ground that the gross value on which the service tax was paid was inclusive of VAT. - AT
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Levy of service tax - consideration received on account of ‘notice pay’ from the employees - the amount received as compensation by the appellants cannot be equated with the term ‘consideration’ inasmuch as the latter is received for performance under the contract; whereas, the former is received, if the other party fails to perform as per the contractual norms. - AT
Case Laws:
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GST
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2022 (5) TMI 458
Blocking of ITC - investigation being carried out with regard to fake invoices - HELD THAT:- Prima facie investigations will have to be individualized and particulars will have to be given vis- -vis each assessee. At the moment, there is no such material on record. The matter requires examination; especially in view of the fact that the ITC in the case of petitioner no.2 has remained blocked for more than the prescribed period under Rule 86A(3), which is, one year - Issue notice.
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2022 (5) TMI 457
Right to respond to the show cause notice - non-availment of opportunity of a personal hearing which was granted - HELD THAT:- The petitioner appears to be aggrieved by the fact that the only reason he has been called upon to pay the aforementioned amount by way of tax, interest and penalty is on account of purported discrepancy in the E-Way Bill and the goods in movement order . Mr Satyakam says that he will examine the record, and, accordingly, respond to the query raised by the Court on the next date of hearing - List the matter on 27.07.2022.
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2022 (5) TMI 456
Refund of service tax - business support - market research - petitioner says that the appeal was preferred only for services rendered by the petitioner in the form of market research - HELD THAT:- It is the contention of the learned counsel for the petitioner that the petitioner fulfilled the criteria for export services vis- -vis services rendered qua market research, contrary to what has been held by the authority below - It is, therefore, counsel for the petitioner s contention that the provisions of Section 2(6)(iii) of the Integrated Goods and Services Tax (IGST) Act, 2017 are fulfilled. Issue notice - List the matter on 08.09.2022.
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2022 (5) TMI 455
Refund sanction - out of 126 invoices on the basis of which refund claim is filed, only 2 vehicles were selected for scrutiny - Dispute in two vehicles which carried the goods from the petitioner s factory premises - compliance of Section 16 of the CGST Act, 2017 or not - HELD THAT:- Since the registration numbers of these vehicles were not found on the e-vahan portal, a red flag was raised - Concededly, the petitioner has filed the requisite documents to demonstrate that the vehicles are in existence - It appears that registration certificates and copies of insurance policies were also placed before the reviewing/appellate authority. Ms Sushila Narang, who appears on behalf of the respondents/revenue, are directed to place the relevant provisions of GST Act 2017/Rules which required the petitioner to file registration certificates and Insurance policies, along with the invoices; as noted above the remaining invoices in this case are 124 in number - Apart from relying upon Section 16 of the GST Act, 2017, Ms Narang has not able to satisfy qua this aspect - What is also curious is that if satisfaction was reached vis- -vis two invoices, Input Tax Credit (ITC) has been denied even vis- -vis these two invoices. The matter requires examination - List the matter on 23.08.2022.
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2022 (5) TMI 454
Seeking refund of excess tax paid - deficiency were not pointed out within the statutory period of 15 days - non-communication of deficiency memo to the present petitioner - HELD THAT:- The rival parties are at consensus that if the petitioner makes a fresh application for refund of excess tax paid by the present petitioner, the same shall be dealt with in accordance with law afresh. Hence, in view of the consensus arrived at between the parties, the order impugned dated 22.11.2019 contained in Annexure P/1 is quashed. The petitioner is granted liberty to move an application afresh for refund of excess tax within a period of 30 days from the date of receipt of certified copy of this order - Petition disposed off.
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2022 (5) TMI 453
Maintainability of appeal - condonation of delay in filing appeal - Cancellation of GST registration of petitioner - HELD THAT:- Perusal of the records shows that the order of cacellation of registration was passed way back on 19.06.2019 and the appeal was preferred by the petitioner on 30.01.2021. Thus, the appeal was preferred almost after one and half years from the date of order of cancellation of registration - Section 107 (1) of GST Act provides that an appeal can be preferred within a period of three (3) months from the date of the order, while Section 107 (4) of the Act stipulates that the Appellate Authority, if satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period of limitation of 3 months, allow it to be presented within a further period of one month. Thus, the total period during which the appeal ought to have been preferred was four months from the date of cancellation of registration dated 19.06.2019. However, despite lapse of four months, the appeal was not preferred by the appellant/petitioner, nor even in the memo of appeal, sufficient reasons for not filing the appeal in time were disclosed. There was unexplained delay of 1 years in filing the appeal - the respondent No.4 has not committed any error while dismissing the appeal preferred by the present petitioner - Petition dismissed.
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2022 (5) TMI 452
Cancellation of GST registration of petitioner - application for fresh registration under Section 25 of the CGST Act, 2017 - HELD THAT:- Mr. Chandra says that since, in any event, there is no outstanding tax liability, as depicted in the order dated 06.12.2019 i.e., the order concerning cancellation of registration, the petitioner will take steps for fresh registration, having regard to the statement made by Mr. Ramachandran - the petitioner will have the liberty to apply for fresh GST registration, as per the extant regime contained in the CGST Act and the Rules framed thereunder. Petittion disposed off.
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2022 (5) TMI 451
Maintainability of petition - availability of alternative remedy of appeal - Input Tax Credit - reversal of ITC on the ground that the petitioner's claim for input tax credit for the purchase from the sellers who are no more sellers or not registered with the authorities concerned, and therefore on that basis the input tax credit could not have been claimed - violation of principles of natural justice or not - HELD THAT:- This aspect, whether the claim made by the petitioner that the input tax credit is a correct one or it is a wrong claim as decided by the Revenue, ie., the Assessing Officer, is necessarily a matter on merits and factual matrix, which has to be gone into only by the appellate authority before whom the petitioner dealer can very well file an appeal under Section 107 of the GST Act - Here in the case in hand, no violation of principles of natural justice is noticed, as the respondent Revenue had issued notice in DRC01A to the registered place of business of the petitioner and in fact, on receipt of the notice, the petitioner has given a reply and produced the documents on 30.12.2021. This case cannot be construed as if that the impugned orders have been passed in violation of the principles of natural justice or it is infirm due to want of jurisdiction or violation of the statutory provision - If none of these circumstances is available, no writ petition can be entertained as there is a statutory appeal remedy which is efficacious one also. Without exhausting the same since the petitioner has straight away approached this Court by filing this writ petition, this writ petition cannot be entertained. Petition dismissed.
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2022 (5) TMI 450
Maintainability of application - Contract / Agreement in question is more than 2 years old - Exemption from GST - services of labour work of construction of residential houses under Chief Minister's Awas Yojana - covered under exemption entry at SI. No 10 of the Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017 - HELD THAT:- The definition of advance ruling, when seen in the context of the issue involved in the instant appeal, provides that questions seeking an advance ruling can relate to either supply of goods or supply of services or both by the applicant. In the instant case, the question concerns supply of services only by the applicant (appellant herein). However, as per the definition, the supply of goods or supply of services or both is qualified by two phrases viz. being undertaken or proposed to be undertaken by the applicant. The above phrases will be analysed a little later after examination of the factual position of the case based on the submissions of the appellant is completed. From perusal of the copies of certificates of extension of registration which have been attached to the appeal at pages 23 to 27, we observe that the same are a bunch' of three documents, one of them being a letter dated 29.09.2021 from the appellant addressed to the AAR with reference to the personal hearing held on 27.09.2021 submitting that the subject work under the said contract is still continuing and the period of completion of the said work stands extended upto 16.10.2022. It is further observed that the another document attached to the appeal is an undated letter of extension of contractor agreement signed by M/s Sanwaliya Buildcreation LLP which states that the duration of the contract with M/s Shri Vinayak Buildcon which was for a period of 24 months from 01.04.2019 to 31.03.2021 will now remain upto October 2022 as the builder has got extension from RERA upto 16th October 2022 - the other documents relevant to the instant document have to be seen in order to ascertain the date of coming into existence of the instant document. The supply of services by the appellant to the builder in the instant case commenced from 01.04.2019. The agreement dated 13.12.2019, duly notarised and signed by both the builder and the instant appellant being the supplier of service to the builder, specifically mentions that supply of services under the agreement by way of construction at the site started on 01.04.2019. The agreement further provides that the duration of the contract for completion of the said project by the second party i.e. the appellant herein, under the agreement shall be for a period of 24 months i.e. from 01.04.2019 to 31.03.2021 - the appellant did not file any application seeking advance ruling on the question of applicability of exemption in terms of Notification No. 12/2017-CT(R), dated 28.06.2017 to the services proposed to be provided by him to the builder, either before or at the time of commencement of the supply of service on 01.04,2019. Thereafter also no application seeking advance ruling was filed by them even on the date of signing the written agreement on 13.12.2019 or during the entire period of currency of the agreement which finally came to an end on 31.03.2021 while the appellant continued to provide services under the agreement. An application seeking advance ruling as defined under clause (a) of section 95 of the CGST Act, 2017 on any question as provided under sub-section (2) of section 97 of the CGST Act, 2017 could have been made in relation to the supply of services either proposed to be undertaken or being undertaken by the appellant but in any case the definition of advance ruling does not permit making of an application in relation to the supply of services already undertaken for a long period of two years in pursuance of an agreement which had expired long before the making of the application seeking advance ruling - the questions involving claim of extension of the two years contract agreement for supply of service for further period of one and a half years, creation of such an extension document at a stage far later than the date of filing application seeking advance ruling and non-existence of evidence showing submission of such an extension letter to the AAR lose their relevance and, therefore, the same need no further examination. Appeal dismissed.
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2022 (5) TMI 423
Calling upon debtors of writ applicant to make paument of dues towards the contract - attachment of bank accounts finished goods lying in the godown - HELD THAT:- There should not be any difficulty in allowing the writ applicant to supply the finished goods so that the payment towards the same can be received in the bank accounts. However, there is a problem in this regard as today, the GST registration of the writ applicant has already been cancelled. The writ applicant has moved an application for revocation of the order cancelling the registration. No decision has been taken on such application. It will be in the fitness of things if an appropriate decision is taken as regards the application filed by the writ applicant seeking revocation of the cancellation order. Here also, the payment can be secured because ultimately, all the companies referred to above will be crediting the amount in the bank accounts. Statutory wages and dues - HELD THAT:- There are larger issues involved in this writ application which may have to be gone into while hearing this matter finally. However, prima facie, some relief is granted to the writ applicant. Mr. Bairagar is required to immediately speak to the authority concerned and try to arrive at some consensus so that an appropriate order can be passed on 02.05.2022 - Post this matter on 02.05.2022.
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Income Tax
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2022 (5) TMI 459
Addition made on account of on-money received by the assessee - on-money was received by the assessee in the year under consideration as found from the relevant documents seized during the course of search, it is observed that the said on-money was received by the assessee in respect of flats sold not in the year under consideration but in other years - HELD THAT:- Entire receipts or on-money representing undisclosed sales proceeds of the flats cannot be the income of the assessee and only the income embedded in such on-money can be taxed as the undisclosed income of the assessee. He also relied on the observations made by the AO himself that it was difficult to comprehend how the assessee could meet the cost of construction when he was selling flats on huge discounts, meaning thereby that the construction cost was met by the assessee even from the on-money representing unaccounted sales proceeds of the flats. Profit element embedded in the on-money - As regards the net profit rate of 20% adopted by the learned CIT(A) to estimate the profit element embedded in the on-money, it is observed that the same was arrived at by the learned CIT(A) by relying on the decision of Hon ble Gujarat High Court in the case of Jay Builder[ 2012 (12) TMI 1194 - GUJARAT HIGH COURT] wherein the decision of ITAT adopting the net profit rate of 15% to estimate the income embedded in on-money was upheld by their Lordships. Keeping in view the said decision of the Hon ble jurisdictional High Court and having regard to all the facts of the case, we are of the view that the net profit rate of 20% adopted by the learned CIT(A) to estimate the income of the assessee embedded in on-money of Rs.3,03,50,000/- is fair reasonable and there is noting brought on record by the learned DR to dispute the same. We, therefore, find no infirmity in the order of the learned CIT(A) restricting the addition of Rs.3,03,50,000/- made by the Assessing Officer on account of on-money to Rs.60,70,000/- and upholding the same, we dismiss Ground No.1 of the Revenue s appeal. Addition made on account of deemed rent - unsold units (Flats) in the hands of builder at the year end - property is used as stock-in-trade - Income from house property or income from business -HELD THAT:- As observed that this issue is squarely covered in favour of the assessee by various judicial pronouncements relied upon by the learned Counsel for the assessee. In one of such decisions rendered in the case of Neha Builders Pvt. Ltd. [ 2006 (8) TMI 105 - GUJARAT HIGH COURT] as held by the Hon ble Gujarat High Court that if property is used as stock-in-trade, then it would become and partake character of stock and any income derived from stock would be income from business and not income from house property . As rightly contended by the assessee, it therefore follows that the deemed rent concept cannot be applied or invoked in case of property which is stock-in-trade of the business of the assessee and the addition made by the Assessing Officer on account of deemed rent cannot be sustained as rightly held by the learned CIT(A). We, therefore, uphold the impugned order of the learned CIT(A) on this issue and dismiss Ground No.2 of the Revenue s appeal.
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2022 (5) TMI 449
Validity of National faceless orders - ex-parte orders - Violation of principles of natural justice - Petitioner states that the Respondent on 29 th March, 2022 passed the impugned order under Section 147 read with Sections 144 and 144B of the Act without taking the written submission of the Petitioner on record - HELD THAT:- It is settled law that a writ petition is maintainable if the principles of natural justice have been violated. In the present instance, since, the petitioner, due to technical glitch, has not been able to file his response/written submission, the impugned order dated 29th March, 2022 is set aside. However, the Respondent is directed to re-file its reply dated 24th March, 2022 with the National Faceless Appeal Centre [NFAC] within a week. The Respondent is directed to pass a fresh assessment order within six weeks thereafter in accordance with law.
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2022 (5) TMI 448
Unexplained cash credits u/s.68 - As argued substantial amount of this was gift received from father and brother of the assessee - as prayed ne more opportunity of hearing be provided to present his case before the learned CIT (Appeals) - HELD THAT:- We remit the issue back to the file of CIT (Appeals) for consideration afresh after examining the assessee's submissions and documents. We direct the learned CIT (Appeals) to examine afresh and the issue to be decided as per law. The assessee is also directed to submit all the relevant documents before the learned CIT (Appeals) for examination and co-operate with the authorities for early disposal of the case and not to seek unnecessary adjournments without valid reason. It is ordered accordingly. This ground of appeal is allowed for statistical purposes.
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2022 (5) TMI 447
Rectification of mistake u/s 154 - levying interest u/s. 234B - AR has substantiated that the interest calculation u/s 234B is excessive as the AO has charged the interest u/s 154, though the tax demand was prior to the passing of rectification petition but the AO has levied the interest u/s 234B of the Act after the date of 154 order - HELD THAT:- Considering assessee submission that AO has erred in charging interest from first day of assessment year which the passing of rectification order u/s 154 and the ld. AR also substantiated with the chart referring the dates on which the payments have been made and further submitted that an opportunity to provide for substantiate before the lower authorities, the Ld. DR has no specific objection, circumstances and details we are of the opinion that the matter has to be reworked accordingly we restore the entire disputed issue to the file of the AO for limited purpose along with evidences in the course of hearing to verify, examine and pass the order on merits and allow the grounds of appeal of the assessee for statistical purposes.
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2022 (5) TMI 446
Validity of Assessment u/s 153A - incriminating material in regard to the assessee found in the search or not? - HELD THAT:- Hon'ble Supreme Court of India in the case of CIT vs. Singhad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] has held that incriminating material in regard to the assessee has to pertain to the assessment years in question. Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawala [ 2015 (9) TMI 80 - DELHI HIGH COURT] has held that if no incriminating material was found during the course of search in respect of the issue, no addition in respect of that issue can be made to the assessment u/s. 153A and 153C of the Act. Thus, the bench is of considered opinion that Ld. Tax Authorities below were not justified in making assessment, not based upon incriminating material mentioned in the satisfaction note and thus acted beyond jurisdiction and scope of Section 153C/143(3) of the Act. That being so, the assessment order deserves to be quashed and the remaining grounds as raised in appeal need not be examined further. Consequently, the appeal of the assessee is allowed,
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2022 (5) TMI 445
Penalty u/s 271(1)(c) - estimation of income on bogus purchases - HELD THAT:- When the addition is on estimated basis, penalty u/s 271(1)(c) of the Act cannot be levied on such adhoc estimated income. The disallowance of purchases on ad-hoc/estimated basis does not tantamount to furnishing inaccurate particulars of income under the provisions of Section 271(1) (c) - A.O. has not doubted the sales and made disallowance of bogus purchases and we rely on the ratio of the Honorable Jurisdictional High Court in the case of M/s Nikunj Eximp Enterprises [ 2014 (7) TMI 559 - BOMBAY HIGH COURT] . AO made an addition based on the information received from Sales tax department Maharashtra. We are of the opinion that once the revenue accepts that penalty is levied on the basis of information from the outside agency/ department, the penalty is not sustained. The Ld. DR could not controvert the findings of the CIT(A) with any new cogent evidences or information to take different view. Accordingly, we are not inclined to interfere with the order of the Ld.CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue .
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2022 (5) TMI 444
Late payment of PF - Payment within grace period of five days - HELD THAT:- EPFO has literally withdrawn the grace period of five days with effect from February 2016, whereas the assessment year involved herein is AY 2018-19. Therefore, following the jurisdictional High Court's judgment in the case of Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] and the circular issued by the Head Office of EPFO (supra), the question of grace period does not applicable to the assessee, since the assessment year involved is AY 2018-19 and he accordingly addition made by the CPC be confirmed. Thus we hold that the disallowance made by the CPC under Section 36(1)(va) of the Act towards late payment of PF is sustainable in the eyes of law; and, we, therefore, reject these grounds of appeal raised by the assessee.
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2022 (5) TMI 443
Disallowance of belated payment of employee's contribution towards ESI/PF - HELD THAT:- This issue is covered in favour of the assessee by the judgment CIT Vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] as also the judgment in the case M/s Pro Interactive Services (India) Pvt. Ltd. [ 2018 (9) TMI 2009 - DELHI HIGH COURT] wherein held hat the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of employee's provident fund (EPD) and employee s State Insurance Scheme (ESI) as deemed income of employer under section 2(24)(x) - Decided in favour of assessee.
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2022 (5) TMI 442
Reopening of assessment u/s 147 - accommodation entry receipts - information received from the Investigation Wing that the assessee is allegedly one of the beneficiaries of having accommodation entries from a bogus concern operated by Shri Praveen Kumar Jain and group concerns - onus to substantiate your claim of the transaction - HELD THAT:- CIT(A) is correct in upholding the reopening. The Assessing Officer was in possession of tangible material which had live link with the prima facie belief that income has escaped assessment in as much as assessee was obtaining bogus accommodation entry. As regards merits of the case Assessing Officer has issued notice which had remained uncompliance with. The assessee s plea of the assessee having no onus to prove the creditworthiness of the party is not sustainable on the touchstone of Hon'ble Bombay High Court Goa Bench decision in CIT Vs. Sadiq Sheikh [ 2020 (10) TMI 1028 - BOMBAY HIGH COURT] - Decided against assessee.
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2022 (5) TMI 441
Validity of reopening of assessment - bogus purchases - as argued no notice under section 143(2) of the Act was served on the assessee - appeal of the assessee was decided by the learned CIT(A) on merits of the case, however, the assessee could not represent before him - HELD THAT:- CIT(A) has given finding that notice under section 143(2) of the Act has been issued by the learned Assessing Officer but there is no finding whether it has been served on assessee or not. Further, there is no finding that though purchases have been shown by the assessee in its books of account but whether thoe have been in included in the sales, which is not disputed by ld AO . Further there is no reference of any quantitative details maintained by the assessee. Therefore, in the interest of justice, we set aside this appeal back to the file of the learned CIT(A) with a direction to the assessee to raise all these contentions before the Commissioner of Income-tax (Appeals). The assessee is directed to submit within 90 days from the date of this order all these details as well as written submissions placed before us. The learned CIT(A) after granting opportunity of hearing may decide the issue on the merits of the case. Accordingly, all the grounds of appeal are allowed for statistical purposes.
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2022 (5) TMI 440
Revision u/s 263 by CIT - assessee has claimed expenses on income from dividend and interest on FD in Banks - HELD THAT:- There is no res-judicata applicable to income tax proceeding. Hence, if in earlier years something has not been examined and allowed as such, it cannot act as estoppel for the revenue on the issue. As regards the assessee s plea that AO has examined the issue and has given notice on the matter and thereafter taken a view, we are of the considered opinion that we cannot agree with the above proposition as there is no whisper in the order of the AO in this regard. It is settled law that if the AO just keeps the assessee s papers on record without any application of mind on the same, the same cannot act as estopple for the ld.CIT to exercise power u/s. 263. CIT has duly examined the nature of expenses. The expenses are related to medical grants and other grants and J K flood affected employees - CIT is correct in holding that these expenses cannot be said to be expense wholly and exclusively incurred for the purpose of earning income on dividend and interest income from banks. Provision u/s. 57(iii) are duly applicable on the facts of the case. Though AO has not made any observation, whatsoever, even for arguments sake if it is accepted that AO had adopted a view, the same is patently in contravention of the sanguine provision of law in this regard. So it cannot be said that AO has adopted one of the possible views. CIT has also given a finding that for AY 2017-18 facts are similar and in this case, assessee opted for VSV Scheme to settle the dispute. Subsequent year also, the assessee did not claim these expenses and filed return of income disclosing total income under other sources. We find that above findings have not been disputed by the assessee. The crux of the assessee s submission that since in the past this wrong system had not been objected, the same should be allowed to be continued is thus rejected. Furthermore, the system adopted by the assessee is in contravention of laws and as we have noted the fact that assessee itself has subsequently discontinued this system of claiming the expenses which are totally unrelated to the earning of interest income and exempt dividend income - Decided against assessee.
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2022 (5) TMI 439
Rejection of books of accounts - substantially increase in the expenses - CIT-A deleting the addition on account of estimated income and other income in addition to the returned income - HELD THAT:- The appellant is a wholly owned subsidiary of a US entity and its books of accounts are duly audited. In the assessment year 2013-14 2014-15, the AO accepted the books results of the appellant in the assessment u/s 143(3) of the Act. The only reason which has been given by AO that there was substantially increase in the expenses, is not itself sufficient to reject the claim of the assessee. No specific reason of any kind was recorded. There is nothing on the file to which it can be assumed that on which grounds the books of account are not acceptable. CIT(A) asked the remand report from the AO but there was no plausible explanation to reject the claim of the assessee. The appellant had entered into an Advance Pricing Agreement (APA) with the Central Board of Direct Taxes for its transactions with associate Enterprises and this year is one of the rollback year in the APA already signed. The books of accounts and the financial result of appellant have already been examined and accepted that the APA. Nothing came into noticed to which it can be assumed that the finding of the CIT(A) is incorrect. The facts are not distinguishable at this stage. The finding no plausible explanation to interfere with the finding of the CIT(A), we are of the view that the finding of the CIT(A) is quite correct which is not liable to be interfered with at this appellate stage - Decided against revenue.
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2022 (5) TMI 438
Disallowance of business expenses u/s. 37 - No business carried out by assessee - assessee's submission that there was a temporary lull during the period and assessee had to incur basic expenditures to retain and carry the business infrastructure - HELD THAT:- It is amply clear from the facts on record, that there was a temporary lull during this period. In the earlier years, assessee has done business and in subsequent years also business receipts are there. In these circumstances, when there is a temporary lull, assessee cannot be denied the basic expenditure, which were required to carry on and retain the business infrastructure. By no stretch of imagination, it can be held that, if there is no business receipt during the year, assessee should wind up the infrastructure and start all over again when the business receipts start following. CIT(A) reliance upon his own earlier order do not change of facts and circumstances that there is temporary lull. It has not been disputed by revenue authorities that receipts from the business have started in 2017-18. Hence, assessee;s plea of temporary lull is justified. - Decided in favour of assessee.
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2022 (5) TMI 422
Non disclosure of transactions in return of income connected with the Social Co-operative Bank Ltd. - Out of the three bank accounts, according to the writ applicant, one of the bank accounts maintained with the Social Co-operative Bank Ltd. is that of the HUF and the HUF is being assessed independently - HELD THAT:- We would like to know from both, the assessee as well as the Revenue, whether all the transactions for the relevant Assessment Year 2018-19 were with respect to only this particular bank or there are any other accounts also of the writ applicant with other banks. We request Mr. Bhatt, the learned Senior Counsel, to seek appropriate instructions in this matter and revert to us on 02.05.2022. Post this matter on 02.05.2022 - One set of the entire paper book shall be furnished to Mr. Bhatt at the earliest.
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2022 (5) TMI 421
Reopening of assessment u/s 147 - revenue rejecting the objections taken by petitioner on the matter concerning issue of notice under Section 148 - respondent no. 4 has passed the impugned order held Hon'ble Allahabad High Court has quashed such notices issued u/s 148 on or after 01.04.2021. But the Department has filed SLP before Hon'ble Supreme Court on this issue. Therefore, till the outcome of the issue pending before Hon'ble Court, it cannot be said that the notice is not valid - HELD THAT:- As the aforequoted observation made by the respondent no. 4 in the impugned order dated 19.3.2022, prima facie, appears to be highly contemptuous, whimsical and against all settled principles of propriety and law. Apart from above, the impugned order, prima facie, appears to be misleading inasmuch as in the impugned order, the respondent no. 4 has deliberately not disclosed 'sent time stamp' reports which is always available with the department. That apart, as per reports being filed before this Court by means of counter affidavits and to be precise in Writ Tax appeal there is 'Income Tax Business Application Technical Team' which used to give the date and time of (i) generation of notice, (ii) digital signing in ITBA by AO, and (iii) triggering of e-mail. These details are also totally lacking in the impugned order. Under the circumstances, we direct the respondent no. 4 to file a personal affidavit of an officer of the Centre not below the rank of Additional Commissioner of Income Tax to explain the things as noted above and file copies of 'sent time stamp' and reports of Income Tax Business Application Technical Team, within three days. Put up as a fresh case on 21.4.2022 at 10:00 AM.
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2022 (5) TMI 420
Reopening of assessment u/s 147 - Period of limitation to initiate reopening - notice issued time barred - HELD THAT:- In view of the facts admitted by the respondents in the short counter affidavit that the date and time of triggering of email automatedly by ITBA technical servers is at 01/04/2021 05:30:08 a.m., the impugned notice under Section 148 of the Income Tax Act, 1961 dated 31.03.2021 is without jurisdiction, inasmuch as it has been issued by the respondents on 01.04.2021, i.e., after expiry of the limitation for issuing notice. The controversy involved in this petition is concluded by our judgment in Daujee Abhushan Bhandar Pvt. Ltd. vs. Union of India 2 Ors. [ 2022 (3) TMI 784 - ALLAHABAD HIGH COURT] - Reassessment notice set aside - WP allowed.
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2022 (5) TMI 419
Validity of reopening of assessment u/s 147 - Period of limitation to initiate reopening - notice issued time barred - HELD THAT:- As the notice under Section 148 of the Income Tax Act, 1961 was issued by the respondent no. 2 to the petitioner on 01.04.2021 at 05:30:08 AM which was delivered on the same date at 05:30:11 AM. Limitation available to the respondents to issue notice under Section 148 of the Act, 1961 for the assessment year 2013-14 was available only till 31.3.2021.In view of the aforesaid, we direct the respondents to file a counter affidavit within two days annexing therewith all the relevant papers showing issue of notice as well as copy of the order-sheet either physical or online. Put up as a fresh case on 7.4.2022 at 10:00 AM. As an interim measure, it is provided that all further and consequential proceedings pursuant to the impugned notice under Section 148 of the Act, 1961 shall remain stayed until further orders of the Court.
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Corporate Laws
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2022 (5) TMI 437
Seeking sanction of Scheme 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 regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (5) TMI 436
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- A perusal of the order of the Adjudicating Authority given on 06.09.2021 it is found that in the order a statement is recorded which is ascribed to the Ld. Counsel for the Appellant that the Corporate Debtor had appeared on 11.03.2020 and thereafter has appeared intermittently but did not file reply. The orders of the Adjudicating Authority given on various dates of hearings show that the Corporate Debtor did not appear on any date after 11.03.2020 nor was given an opportunity to file a reply. In fact, on all dates of hearing after 11.03.2020 the matter was renotified, except on 01.12.2020, when the Petitioner was directed to file an affidavit of service. From a perusal of record submitted, it is not clear if such a service was effected and whether the affidavit of service was filed by the Petitioner. The allegations of dispute vide his reply dated 15.01.2020 to the Section 8 Demand Notice raised by the Corporate Debtor can be looked into after getting a proper reply to Section 9 application from the Corporate Debtor. Therefore, the compliance of order dated 06.09.2021 to make the corporate debtor aware that case had been proceeded ex-parte against him and an opportunity to make representation to file a reply assumes significance and criticality in adjudicating Section 9 application. The Adjudicating Authority gave an opportunity to the Corporate Debtor against whom the matter was proceeded ex-parte to appear before the Adjudicating Authority and present his case vide order dated 06.09.2021, but there is no record submitted by the parties to show that in compliance of the order dated 06.09.2021 the order was served on the Corporate Debtor. In the light of such deficiency, and also the issues raised by the Ld. Counsel for the Appellant that there was pre-existing dispute mentioned in his reply to the demand notice dated 15.01.2020, and also that in case the Corporate Debtor had been provided sufficient opportunity to reply to the Section 9 application he would have brought these facts before the Adjudicating Authority, it is opined that the Adjudicating Authority has committed an error in proceeding ex-parte against the Corporate Debtor and not communicating order dated 06.09.2021 to him. It would serve the ends of the justice if the Corporate Debtor is provided an opportunity to submit his reply in Section 9 Application - the case is remanded to the Adjudicating Authority for giving a notice to the Corporate Debtor and affording him opportunity to submit a reply and thereafter pass appropriate orders after due consideration in the Section 9 application filed by the Operational Creditor - application allowed by way of remand.
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2022 (5) TMI 435
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational Creditors - whether there were any Pre-Existing Disputes between the Corporate Debtor and the Appellant herein/Operational Creditor and whether the Adjudicating Authority was justified in dismissing the Section 9 Application? - HELD THAT:- It is clear that the Corporate Debtor was undergoing financial crunch on account of which the end user M/s. IOCL has undertaken to make the payment to the tune of Rs.42,41,947.64/- against completion of erection of the racking system and the balance would be released after the completion of the job in totality, with due certification by the Corporate Debtor. It is the case of the Corporate Debtor that this communication signifies that it is the end user IOCL which has undertaken to pay the amounts for and on behalf of the Corporate Debtor and hence no liability can be fastened upon them. The material on record evidences that on 03/05/2018, a Comfort Letter was requested to be issued by the Appellant to IOCL against the Purchase Order for the supply of instalment of Multitier Racks for Heavy Duty Shelving. The correspondence dated 16/08/2018 between the Appellant and IOCL further strengthens the argument of the Respondent that the payment would be realized by IOCL after complete erection of system and the balance after completion of entire racking system - It is the case of the Respondent/Corporate Debtor that even for the Review Meeting the Corporate Debtor was not present and it was held between IOCL and EIL and the Appellant herein. The Minutes too do not record the presence of the Corporate Debtor . From the aforenoted communication, this Tribunal is of the considered view that the payments were to be made, as per the Comfort Letter, by IOCL to the Appellant herein. Whether there is any Pre-Existing Dispute existing between the parties prior to the issuance of the Notice mandated under Section 8 of the Code? - HELD THAT:- The definition of the word dispute, is in fact, illustrative, the Corporate Debtor is not left with the only option of showing the existence of dispute by way of a pending Suit or Arbitration but can exercise its right to show that goods and/or services supplied were substandard and deficient in quality - The dispute between the parties is on account of the shortcomings observed in the quality of the racking materials supplied to IOCL. The letter dated 30/11/2018 addressed to the Appellant specifies that there are discrepancies and the test certificates of all plates/materials is absent. This Tribunal is of the considered view that there is a Pre-Existing Dispute and the aforenoted correspondence establishes that a dispute truly exists in fact between the Parties, which is not a patently feeble legal argument or an assertion of facts, unsupported by evidence. There is no illegality of infirmity in the Order of the Adjudicating Authority - Appeal dismissed.
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2022 (5) TMI 434
Termination of Leave and License Agreement - refund of security deposit to the Respondent after deducting the license fee payable - HELD THAT:- It is clearly stipulated that if the amount is not paid within 30 days, the Appellant will have the right to terminate the Leave and License Agreement. Thus, the Appellant by the notice reserved their right to terminate the Leave and License Agreement and by the said Notice has not expressly terminated the Leave and License Agreement. Further Notice dated 28.11.2019, by which the Respondent was asked to vacate the premises by 31.12.2019 can also not be said to be the notice terminating the License Agreement. Learned Counsel for the Respondent has relied on Clause 19.5 to submits that since Notice dated 30.04.2019 gave a cure period of 30 days to the Respondent to deposit the payment which having not been done, there shall be automatic termination of Leave and License Agreement. In the present case, from the facts and materials on record, it is clear that at no point of time, the Respondent handed over possession of the premises to the Appellant or asked the Appellant to take possession of the premises - Admittedly, the monthly rent of the premises is Rs.28 Lakhs and odd. No amount has been paid towards the license fee after March, 2019 on the ground that security amount of Rs.82 lakhs and odd is payable by the Appellant. The Respondent is continuing in the premises occupying the same for last more than three years whereas the security lying with the Appellant at best is avail to cover the license fee for about three months only. The Respondent has no right or entitlement to continue in the premises on the ground that security deposit has not yet been refunded without giving any opportunity to the licensor to determine whether as to any security is refundable or not. When we read Clauses 21.1, 21.2 and 21.3 conjointly, it is clear that the licensee is under obligation to handover the possession within 30 days of the date of termination and licensor has time of 30 days thereafter to refund the security deposit. When the licensee has not handed over possession, there is no occasion to determine whether any amount is to be given back to the licensee or not. Present is a case where the Resolution Professional has continued in the possession of the premises and exposed the Corporate Debtor for liabilities to pay license fees during the CIRP period which could be CIRP costs. The mere fact that CIRP has triggered and Moratorium has been imposed does not absolved the Corporate Debtor to pay for premises and facilities which is being enjoyed by the Corporate Debtor during the CIRP period. Sufficient ground has been made out by the Appellant in this Application to treat the license fees of the premises to be treated as CIRP costs - the Resolution Plan with regard to Corporate Debtor has been approved by the Adjudicating Authority by order dated 22.06.2021. By approval of the Resolution Plan, the CIRP period has come to an end and after 21.06.2021 still the premises are in occupation of the monitoring professional. No direction in this Appeal can be given for payment of leave and license fees to the Appellant during the CIRP period even though we are satisfied that the Appellant was entitled for determination that monthly fees payable to the Appellant under the Service Agreement should have been treated as part of the CIRP costs - the impugned order dated 18.03.2021 is set aside. It is held that no monthly fees shall be payable to the Appellant during the CIRP period - Respondent is directed to handover the vacant possession of the premises within 15 days from today - appeal disposed off.
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2022 (5) TMI 433
Seeking directions to be issued to the Directors of the Corporate Debtor/the Appellants herein to make good the losses caused on account of the fraudulent transactions entered into by them - Seeking reference of the matter to IBBI in view of the provisions under Sections 236 of the Code - HELD THAT:- Section 18(1)(a) of I B Code clearly specifies that the IRP shall collect all information relating to the assets, finances and operations of the Corporate Debtor . Section 18(9) to perform other duties as specified by the Board. In fact, in this case the appointment of the IRP was not ratified in the first CoC and he continued to function as IRP. Viewed from the provisions under the Code, in the event of suspicion of any fraudulent transaction, it cannot be said that the IRP did not have the power to collect information and furnish a detailed analysis to the Adjudicating Authority. The contention of the Learned Counsel for the Appellant that the Appellants herein did not operate the Bank Account or were not involved in any Bank Transaction, post their resignation, is untenable. These Bank Transactions post resignation, squarely fall within the ambit of Section 66(1) i.e., it is found that the business of the Corporate Debtor has been carried on with an intent to defraud Creditors . Amounts written off as bad debts only because they could not be recovered - HELD THAT:- A perusal of the scanned copy of the Bank Statement evidences that the Adjudicating Authority has rightly concluded that there are no reasons given for how an amount of Rs.42,33,304/- has been settled for a mere payment of Rs.3 Lakhs/-. This fraudulent transaction took place during the time the Appellants were Directors of the Corporate Debtor and squarely falls within the ambit of Section 66 of the Code. The debts written off to defraud the Creditors, the cash transaction post their resignation evidencing their financial control in the affairs of the Corporate Debtor , clearly establish that they are fraudulent transactions done with a wilful intention of financial gain at the cost of negatively effecting the Creditors - Appeal dismissed.
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Service Tax
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2022 (5) TMI 432
Seeking to issue a discharge certificate in form SVLDRS-4 - it is claimed that the requisite liability of more than 50 per cent of the tax dues as per the said scheme has already been paid by the petitioner - HELD THAT:- The reason cited by the respondent through the order dated 22.02.2022 that, manual process can be undertaken only pursuant to the order passed in this regard by the court of Law. The said reason cited by the respondents which is impugned herein dated 22.02.2022 is totally unsustainable as it is an internal issue of the Designated Committee under the Scheme to go for an alternative mechanism to do it either manually or otherwise. Therefore, for such process, they need not wait for an order from this Court. Nevertheless, since the order dated 22.02.2022 has been passed citing the said reason, which is under challenge in this writ petition, this Court has necessarily to show its indulgence and accordingly this Court is inclined to dispose of this writ petition - the impugned order dated 22.02.2022 is set aside and a direction is given to the Designated Committee to manually process the request of the petitioner dated 07.02.2022 and issue a Discharge Certificate and needful as indicated above shall be undertaken within four weeks from the date of receipt of a copy of this order - Petition disposed off.
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2022 (5) TMI 431
Wrongful availment of CENVAT Credit - inclusive of service tax contract - Construction of residential complex service - amount on which the Service tax has been charged was inclusive of VAT or not? - recovery of interest - levy of penalty - HELD THAT:- In view of the admitted facts when read in the light of Rule 3 of Cenvat Credit Rules, it becomes clear that once the service tax has been paid by the contractor and the invoices mentioning the said amount of service tax have been issued to the appellant, the appellant was very much entitled to have credit of the service tax paid. The appellant has availed Cenvat credit of service tax charged on the invoices. The impugned show cause notice as reflected in table one 18 such invoices with the total amount of each invoices in the last column of said table. Further perusal shows that the said total / gross value of each invoice includes the value of free issue material at such rate as were provided by the appellant himself (Relied upon invoices as RUD 3 i.e. invoice No. 149 dated 20.3.2015). In the said invoices, service tax @ 4.80% has been charged on the gross value which is nothing but the sum total of steel and cement received by the contractor M/s. Ramavat Energy Pvt Ltd. from the appellant. Based upon the total value of the cement received vide 18 invoices of table No. 1 that the total amount of Rs.3,60,14,605/- has been worked out for cement - Credit availed by the appellant on the total amount of cement issued to the contractor freely by him is Rs.2,55,405/-. Similar are the findings with respect to all other items provided free to the appellant by the contractor and similar are the observations with respect to all 18 number of invoices. The contract price paid to the contractor by the appellant was @ Rs.4.78 per sq ft (26.29 lakh for construction of 5.50 sq ft. The said amount mentioned to have been inclusive of works contact tax / VAT. There is nothing on record to show that from the gross value of the invoices which appears to have been inclusive of VAT, there has been any deduction of the said amount of VAT - the service tax has been deducted based upon the said gross value and the Cenvat Credit has been availed by the appellant on the said amount of service tax. Reverting to Rule 2A of Service Tax (Determination of Value) Rules, 2006 as has been reproduced in Show Cause Notice as well as in the Order-in-Appeal, it is clear that the value of concerned service portion in execution of works contract shall be the gross amount charged for the works contract less the value of property in goods transferred in execution of said works contract. The explanation thereof makes it clear that the gross amount shall not include VAT. It has already been held that appellant shall be entitled to take Cenvat Credit on the amount of service tax paid by the contractor. Since the service tax has already been paid on the gross value /the total value, appellant cannot be denied availment of credit proportionate to the said value till the occasion arises for refund of the said service tax on the ground that the gross value on which the service tax was paid was inclusive of VAT. It is not the case of Department that excess Service Tax paid by the contractor has been refunded or has paid applied by the payee for the refund - the Commissioner (Appeals) has wrongly denied the entitlement of the appellant for claiming the Cenvat Credit on the service tax paid by his contractor. The order accordingly is held liable to be set aside. However discretion is given to the department to recalculate if refund of excess service tax paid is to be processed and in that situation, differential credit availed can be recovered from the appellant. Recovery of Interest - Levy of penalty - HELD THAT:- Hon ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-II VERSUS PEARL INSULATION LTD. [ 2012 (11) TMI 912 - KARNATAKA HIGH COURT] and in case of THE COMMISSIONER OF CENTRAL EXCISE, MADURAI VERSUS M/S. STRATEGIC ENGINEERING (P) LTD. [ 2014 (11) TMI 89 - MADRAS HIGH COURT] has held that provision of Rule 14 of Cenvat Credit Rules, 2004 for recovery of interest on said Cenvat Credit i.e. the credit availed on excess amount of service tax paid will not be attracted. Hence the Revenue s stand for recovery of interest under said Rule and imposition of penalty can not succeed. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 430
Quantum of reversal of CENVAT Credit - common input services for taxable as well as exempt services - input service procured in common for providing output service during 2013-14 and 2014-15 that was excluded from levy of tax and for providing cargo handling agency service on which liability was being duly discharged - HELD THAT:- The issue of the denominator to be adopted for computation of proportionate reversal of CENVAT credit has now been settled as also the retrospective applicability of the amended provision in several decisions and no justification is adduced for not following the said decisions. The impugned order has arrived at an incorrect computation. Accordingly, the computation is set aside and matter remanded back to the original authority for a fresh decision that is in consonance with law as judicially determined - Appeal allowed by way of remand.
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2022 (5) TMI 429
Levy of service tax - import of service - Business Auxiliary Services - appellant had entered into a Sales Commission Agreement for operational responsibility regarding sales management, key account responsibility, creditor handling, business development and marketing of the appellants product - service received from the parent company located abroad - reverse charge mechanism - period from 01/01/2005 to 15/06/2005 - HELD THAT:- The learned adjudicating authority has confirmed the service tax demand under the taxable category of BAS, holding that the appellant should be liable to pay service tax for the period from 01/01/2005 to 15/06/2005 as a recipient of such service, received from the parent company located abroad, under reverse charge mechanism. For demanding service tax amount, the impugned order has referred to Rule 2(1)(d)(iv) ibid. The issue in dispute came up for consideration before the Hon ble Bombay High Court, in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [ 2008 (12) TMI 41 - BOMBAY HIGH COURT] , wherein it was held that provisions of Rule 2(1)(d)(iv) ibid cannot create any tax liability which is not authorized by law and that before insertion of Section 66A with effect from 18/04/2006, there was no authority to levy service tax on import of service. It has further been held that Explanation below Section 65(105) ibid did not give any authority to levy service tax on import of service. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellant - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 428
CENVAT Credit - it is alleged that the appellant were charging and collecting service tax from their clients but the same was not deposited properly and timely - separate registrations for their branch offices situated in their different parts of India, not obtained - demand of service tax with interest and penalty - HELD THAT:- The facts on records is that the investigation against the Appellant was initiated by the department on the ground that the Appellant charging and collecting service tax from their clients but the same is not deposited properly and timely. The case of the department is that appellant out of total service tax of Rs. 1,24,96,001/- produced the evidences of deposit of service tax of Rs. 75,31,939/- only, thus failed to deposit service tax of Rs. 49,64,062/-. In the present matter Appellant neither provided any evidences before the adjudicating authority/Commissioner (Appeals) nor before this tribunal to show that they have paid the disputed service tax. Therefore, the demand of Service Tax confirmed by the original authority and upheld by the Commissioner (Appeals) is legally correct. CENVAT Credit - HELD THAT:- The appellant could not produce any evidence or documents on the basis of which credit of Rs. 6478/- was taken. Accordingly, the demand is sustainable. There are no infirmity with the impugned order - appeal dismissed - decided against appellant.
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2022 (5) TMI 427
Levy of service tax - consideration received on account of notice pay from the employees - declared service or not - appellants herein had collected certain amount as Notice Period Pay or Bond Enforcement Amount from their employees, who want to quit the job without notice - HELD THAT:- The term notice pay mentioned in the employment contract cannot be considered as a service, more specifically as the taxable service inasmuch as neither of the parties to the contract have provided any service to each other. Thus, the phrase service defined in Section 65B (44) ibid and declared service , as defined in Section 65B (22) are not applicable for consideration of such activity as a service for the purpose of levy of service tax. Further, the amount received as compensation by the appellants cannot be equated with the term consideration inasmuch as the latter is received for performance under the contract; whereas, the former is received, if the other party fails to perform as per the contractual norms. The Hon ble Madras High Court in the case of GE T D INDIA LIMITED (FORMERLY ALSTOM T D INDIA LIMITED) VERSUS DEPUTY COMMISSIONER OF CENTRAL EXCISE [ 2020 (1) TMI 1096 - MADRAS HIGH COURT] has held that in absence of rendition of any taxable service, the amount received as consideration cannot be termed as taxable service for the purpose of levy of service tax thereon. It is also found that by relying upon the above judgment of Hon ble Madras High Court, this Tribunal in the case of C.S.T. -SERVICE TAX AHMEDABAD VERSUS INTAS PHARMACEUTICALS [ 2021 (6) TMI 906 - CESTAT AHMEDABAD] and M/S RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, CUSTOMS AND CENTRAL EXCISE, JODHPUR I [ 2022 (1) TMI 909 - CESTAT NEW DELHI] has held that any compensation paid by the employee to the employer for resigning from the service without giving the requisite notice, would not be termed as consideration for the contract of employment and as such, would not fall within the preview of taxable service. There are no merits in the impugned order, insofar as it has upheld confirmation of adjudged demands on the appellants - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 426
Levy of Service Tax - Goods Transport Agency Service - price per trip fixed with the transporter is less than Rs. 750/- per trip - eligibility for exemption from service tax under Notification No. 34/2004- ST dated 03.12.2004 - reverse charge mechanism - levy of penalty - invocation of extended period of limitation - HELD THAT:- On a plain reading of the notification, it is seen that what has been exempted is the gross amount charged on consignments transported in a goods carriage upto Rs. 1500/-. In the given case of the Appellant, the gross amount charged by the transporter per trip is Rs. 150/- which is clearly within the upper limit of exemption of Rs. 1500/. The said issue is no longer res integra in terms of the decision of the Tribunal in the case of CHHATTISGARH DISTILLERIES LTD. VERSUS COMMISSIONER OF C. EX., RAIPUR [ 2017 (11) TMI 344 - CESTAT NEW DELHI] where it was held that it appears that the exemption of Rs. 1500/- is available to a single transaction but when the transactions are consolidate with the same parties, the said exemption is not available on the subsequent vouchers. In the given case also though each trip cost has been determined as Rs.150/trip, however, the total invoice raised by the transporter is much higher for all the trips concerned. Thus, the order of the Ld. Commissioner (Appeals) is upheld and the appeal filed by the Appellant on merits, is rejected. Levy of penalty - HELD THAT:- Since the issue pertained to interpretation of the exemption notification, the powers under Section 80 of the Act is exercised to set aside the penalties as levied by the Commissioner (Appeals) under Section 78 of the Act. Extended period of limitation - HELD THAT:- The second Show Cause Notice was issued on 21/06/2013 invoking extended period of limitation - the said Show Cause Notice is barred by limitation. However as per the learned Departmental Representative, some portion of the demand is within the normal period of limitation and for the limited purposes to verify the same, the matter remanded to the Ld. Adjudicating authority. Appeal allowed by way of remand.
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2022 (5) TMI 425
Eligibility of exemption from service tax - activity of construction of residential and commercial complex - case of appellant is that the department has been inconsistent in deciding the issue raised in the Show Cause Notices - HELD THAT:- As submitted by the Ld. Counsel the orders are inconsistent inasmuch as the same issue is allowed for a certain period and disallowed for some other period. On a query by the Bench, the Ld. Counsel submits that the legal position on the issue passed negatively is not changed. Therefore, department is not free to hold a different view on the same issues for different periods. It is also found that wherever the authorities have allowed the claim of appellants, department have not appealed against the same and therefore the issues allowed for that period attained finality. In the interest of justice, the matter should go back to the original authority to pass suitable orders in a consistent manner not interfering with the benefit already extended to the appellants - Appeal allowed by way of remand.
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Indian Laws
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2022 (5) TMI 424
Dishonor of Cheque - vicarious criminal liability of a partner - acquittal of the accused - whether a partner can be convicted and held to be vicariously liable when the partnership firm is not an accused tried for the primary/substantive offence - Section 138 readwith Section 141 of the Negotiable Instruments Act, 1881 - HELD THAT:- It is an admitted case of the respondent Bank that the appellant had not issued any of the three cheques, which had been dishonoured, in his personal capacity or otherwise as a partner. In the absence of any evidence led by the prosecution to show and establish that the appellant was in charge of and responsible for the conduct of the affairs of the firm, an expression interpreted by this Court in GIRDHARI LAL GUPTA VERSUS D.H. MEHTA AND ANR. [ 1970 (8) TMI 83 - SUPREME COURT] to mean a person in overall control of the day-to-day business of the company or the firm , the conviction of the appellant has to be set aside. The appellant may have civil liability and may also be liable under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, vicarious liability in the criminal law in terms of Section 141 of the NI Act cannot be fastened because of the civil liability. Vicarious liability under sub-section (1) to Section 141 of the NI Act can be pinned when the person is in overall control of the dayto- day business of the company or firm. Vicarious liability under sub-section (2) to Section 141 of the NI Act can arise because of the director, manager, secretary, or other officer's personal conduct, functional or transactional role, notwithstanding that the person was not in overall control of the day-to-day business of the company when the offence was committed. The provisions of Section 141 impose vicarious liability by deeming fiction which presupposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-section (1) or (2) would not be liable and convicted as vicariously liable. Section 141 of the NI Act extends vicarious criminal liability to officers associated with the company or firm when one of the twin requirements of Section 141 has been satisfied, which person(s) then, by deeming fiction, is made vicariously liable and punished. However, such vicarious liability arises only when the company or firm commits the offence as the primary offender. The impugned judgment of the High Court confirming the conviction and order of sentence passed by the Sessions Court, and the order of conviction passed by the Judicial Magistrate First Class are set aside. Bail bonds, if any, executed by the appellant shall be cancelled. The appellant is acquitted - Appeal allowed.
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