Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 15, 2023
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Condonation of delay in filing appeal - In the present case, in four months, around 121 days come, and the appeal was filed on 121st day. The appellate authority should have entered into the merit of the application whether it disclosed sufficient cause for not filing the appeal within the period of three months instead of entering into merit of the application to find out whether the appellant, petitioner herein had sufficient cause which preventing him from presenting the appeal within a period of three months, the appeal has been summarily dismissed only on the ground that it was beyond 120 days, and not within 120 days. - HC
Income Tax
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Validity of Reopening of assessment u/s 147 - notice against company amalgamated/ non-existing - The company post amalgamation having ceased to exist, the jurisdictional requirement of service of notice as envisaged under section 148 of the Act could never have been fulfilled rendering the proceedings unsustainable in law. - HC
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Income deemed to accrue or arise in India - reimbursement of cost - once the payment made for the usage of the database does not fall within the ambit of Royalty, recovery of costs by the assessee from the associated enterprises for the usage of the database cannot also result in Royalty in the hands of the assessee. - AT
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Assessment u/s 153A - unabated assessments - the assessments of the assessment years falling within the period of above said six years which are not pending, i.e., which have attained finality shall not abate. Assessments of such assessment years are called “unabated/completed/finalized” assessments. - if the search action did not bring out any incriminating material, then the AO cannot disturb the completed assessments and he has to simply reiterate the earlier total income in the present assessment order. - AT
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Assessment of trust as Association of Persons (AOP) - family trust - rate of tax - maximum marginal rate or slab rates - Assessee family trust has only income from other sources and there is no business income to the trust. - Shares of beneficiaries of trust are determined - A.O directed to redetermine the assessee family trust tax liability giving basic exemption and slab benefit. - AT
Indian Laws
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Jurisdiction of the referral court at pre-referral stage - arbitration agreement - If the dispute/issue with respect to the existence and validity of an arbitration agreement is not conclusively and finally decided by the referral court while exercising the pre-referral jurisdiction under Section 11(6) and it is left to the arbitral tribunal, it will be contrary to Section 11(6A) of the Arbitration Act. - SC
IBC
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Condonation of delay - time limit for filing appeal - Cloud9 Apartment Owner Association challenged the admission of application for Initiation of CIRP - the limitation to file an appeal before this Tribunal is only upto 45 days out of which the period of fifteen days can be used by the Appellant for the purpose of extension of period of limitation on assigning sufficient cause to the satisfaction of the Appellate Authority for condonation of delay. - Application dismissed - AT
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Initiation of CIRP - existence of debt and dispute or not - Proof of delivery of goods - Present is a case where Demand Notice was not even replied by the Corporate Debtor and the plea raised in the Reply by the Corporate Debtor regarding non-supply of goods has been held to be dishonest plea and moonshine plea hence the judgement of this Tribunal in above case does not come to any help to the Appellant. - NCLT rightly admitted the aplication - AT
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Initiation of CIRP - existence of debt and dispute or not - acknowledgement of debts - amount due to the Operational Creditor has been shown as ‘Trade Payable’ in the balance sheet - Appellant cannot take any benefit of Criminal Proceedings initiated by the Appellant by filing an Application under Section 156 of the Cr. PC which proceedings were initiated subsequent to receipt of Demand Notice. - AT
PMLA
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Challange to the bail granted by the HC - Money Laundering - scheduled offence - The High Court has neither considered the rigour of Section 45 of the PML Act, 2002 nor has considered the seriousness of the offences alleged against accused for the scheduled offences under the PML Act, 2002 and the High Court has not at all considered the fact that the investigation by the Enforcement Directorate for the scheduled offences under the PML Act, 2002 is still going on - Bailed orders quahed - HC directed to consider the bail applications afresh - SC
Service Tax
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Levy / waiver of penalty - looking into the fact that the main cable operator M/s SIFY had discharged Service Tax on the entire amount collected from the customers, there are reasons to believe that there were sufficient reasons for the appellant in not discharging the applicable Service Tax. Looking into the conduct of the appellants in depositing the tax with interest and 25% penalty the provisions of Section 80 are invited and the benefits of Section 80 can be extended to the appellants. - AT
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Denial of CENVAT Credit - Input services - commission paid by the respondent to collection agents for collection of dues of post-paid plans from the subscribers - services having relation with the business of providing of output service would be covered by the definition of input service - credit allowed - AT
Central Excise
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Refund claim - amount deposited under protest or not - mark of protest in the cenvat credit account - Having considered, the Supplementary Instructions, Chapter 13 of CBECs Excise Manual, which provides the procedure to be followed, it is found that it seems to be substantially complied with as the Cenvat account do mentions that, “central excise duty debited against the amount received as State VAT subsidy under protest”. The same cannot be ignored - Period of limitation not applicable - AT
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Remission of Duty - goods destroyed by fire in factory - Rule 21 - In the present case the entire case has been made out against the appellant for failure to get a proper order for remission - taking into account all facts that the goods have been destroyed in fire, remission could have been ordered at the time of adjudication of this case. - Demand of duty set aside - AT
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Liability of Excise Duty - Spent earth arising during the course of manufacture of refined vegetable oil - When based on the process it was found that the process of generation of spent earth is not such which falls under the definition of manufacture given in section 2 (f) the amendment of section 2 (d) will not have any effect. Therefore, the revenue’s contention on the amendment of 2 (d) is not of any help to them. - AT
Case Laws:
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GST
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2023 (5) TMI 561
Seeking grant of Anticipatory Bail - fraudulent claiming of input credit - HELD THAT:- This Court is of the opinion that the petitioner requires to be enlarged on anticipatory bail. SLP allowed.
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2023 (5) TMI 560
Seeking grant of bail - availment of fraudulent input tax credit - huge tax evasion by way of making false claim of input tax credit in 455 companies, all over the country - HELD THAT:- On going through the material available on record, contents of F.I.R., other relevant documents, gravity of offence as well as facts and circumstances of the case, it is evident that during the course of investigation Rs.1.12 lakh is found in the account of wife of the applicant by the main accused, Sanjay Yadav. It is also evident that said Sanjay Yadav, has already been enlarged on bail. In such circumstances, it is opined that the applicant is entitled to be released on bail. Let applicant - Mohd. Rashid Siddiqui - be released on bail in aforesaid Case Crime, on his furnishing personal bond of Rs.1,00,000/- and two reliable sureties of Rs.1,00,000 each to the satisfaction of the court concerned subject to the conditions imposed - application allowed.
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2023 (5) TMI 559
Condonation of delay in filing appeal - appeal dismissed on the ground that it was beyond maximum period, as prescribed under the statute i.e. four months - HELD THAT:- Bare reading of the provisions of Section 107 of the Act, 2017 reflects that it is not 120 days, but it is four months and, therefore, it would depend upon the date on which date the adjudicating authority passes the order. The four months may be of 121 days or 122 days, as the case may be. In the present case, in four months, around 121 days come, and the appeal was filed on 121st day. The appellate authority should have entered into the merit of the application whether it disclosed sufficient cause for not filing the appeal within the period of three months instead of entering into merit of the application to find out whether the appellant, petitioner herein had sufficient cause which preventing him from presenting the appeal within a period of three months, the appeal has been summarily dismissed only on the ground that it was beyond 120 days, and not within 120 days. The appeal is restored to its original number, and the appellate Authority is directed to proceed with the appeal, and decide the same on merit, expeditiously, in accordance with law - petition allowed.
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Income Tax
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2023 (5) TMI 558
Disallowance of business loss and unabsorbed depreciation of amalgamated company (Dolphin Laboratories) - Scheme of amalgamation conceived - cut off date OR appointed date OR date of amalgamation - HELD THAT:- High Court has heavily relied upon the earlier decision of the High Court in the case of IRM Limited [ 2016 (7) TMI 972 - GUJARAT HIGH COURT] which was rendered after following the decision of this Court in Marshall Sons Co. (India) Ltd. [ 1996 (11) TMI 6 - SUPREME COURT] as held once the scheme is sanctioned, the same would relate back to the appointed date of amalgamation. Revenue is not in a position to point out any contrary decision of this Court taking a contrary view than the view taken in the case of Marshall Sons Co. (India) Ltd. (supra). No interference of this Court in High court decision - SLP dismissed.
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2023 (5) TMI 557
TP adjustment - Comparable selection - functional similarity between the Assessee and Li and Fung - HC confirmed lack of functional similarity between Li Fung India and the Assessee HELD THAT:- No interference of this Court is called for. The Special Leave Petition stands dismissed.
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2023 (5) TMI 556
Sale of the chemical unit of the assessee company - itemised sale OR slump sale - addition under section 50B read with section 2(42C) and explanation 1 to section 2(19AA) - HELD THAT:- Having examined the agreement to sale, we do not find this a case of Slump Sale. Recording the aforesaid, the special leave petition is dismissed.
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2023 (5) TMI 555
Capital gain - Nature of land sold - capital asset or agricultural land - whether lands sold by the assessee are non-agricultural lands and fall within the definition of capital assets u/s 2(14)(iii) and therefore attract tax on the Capital gains? - HADA is not a body within the meaning of clauses (a) and (b) of Section 2 (14) (iii) of the Act and as affirmed the sale of said land did not form part of capital gain - HELD THAT:- No good ground to interfere with the impugned judgment and order passed by the High Court. Accordingly, the Special Leave Petition is dismissed.
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2023 (5) TMI 554
Reopening of assessment u/s 147 - Reasons to believe - Allowability of Expenditure on account of freebies incurred in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2022 is not admissible u/s 37(1) - As per HC reasons for reopening, there is not even a whisper as to what was not disclosed - HELD THAT:- The impugned order(s) does not call for interference. The special leave petition is accordingly dismissed.
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2023 (5) TMI 553
Reopening of assessment u/s 147 - net loss of cancellation of forward contract - HC held when the primary facts necessary for assessment are fully and truly disclosed, the AO is not entitled on change of opinion to commence proceedings for reassessment - HELD THAT:- We are not inclined to interfere with the judgment(s) and order(s) passed by the High Court. Special Leave Petition is dismissed. All pending applications are disposed of.
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2023 (5) TMI 552
Scope of assessment u/s 153A - completed/unabated assessments - proof of incriminating material as found during search - HELD THAT:- As decided in ABHISAR BUILDWELL P. LTD. [ 2023 (4) TMI 1056 - SUPREME COURT] in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns and in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. Appeals disposed of.
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2023 (5) TMI 551
Validity of assessment - main grievance of the petitioner is that there has been a complete violation of principles of natural justice - thirty (30) days time granted to file a return ignored by AO - HELD THAT:- The record shows that the petitioner was issued notices of even date i.e., 09.03.2023, concerning Assessment Years (AYs) 2013-14 to 2019-20. A perusal of the said notices would show that the petitioner had been granted time to file its return(s) within thirty (30) days from the date of the service of the notices.In the interregnum AO also served on the petitioner notices dated 20.03.2023, issued under Section 142(1), whereby several pieces of information were sought. The petitioner responded to the same via reply dated 22.03.2023. In the reply, the petitioner put forth before the AO that the information sought could not be furnished within the timeframe granted, which was two (2) days i.e., by 11:00 A.M on 22.03.2023.Therefore, the petitioner had sought accommodation of thirty (30) days to file a reply. What is important is that the petitioner brought to the notice of the AO the fact that via notices dated 09.03.2023, thirty (30) days had been granted to file a return, which would have expired only on 08.04.2023. AO, however, disregarded this request made by the petitioner and proceeded to pass the impugned assessment orders dated 28.03.2023, concerning the aforementioned AYs i.e., AY 2013-2014 to AY 2019-20. AO did not adhere to the timeline given in the notice dated 09.03.2023. Accordingly, the impugned assessment orders which are dated 28.03.2023 concerning the aforementioned AYs are set aside.
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2023 (5) TMI 550
Faceless Assessment - violation of principles of natural justice and in non-compliance of procedure enshrined in clause (vii) and (viii) of sub-section (6) to Section 144-B - grievance of the petitioner before this Court is that his case was fixed for 21.03.2023 at 11 AM through VC but due to non-availability of the petitioner s counsel, a request to re-schedule the VC was submitted at 7 AM on 21.03.2023 but the petitioner did not receive any response from respondent No. 1 and the request showed as Open on the e-filing portal of the petitioner and Respondent No. 1 closed the e-submission facility in the account of the petitioner on 21.03.2023 - HELD THAT:- Petitioner raised a grievance on e-filing portal on 21.03.2023 and resolution to this grievance was provided on 23.03.2023. This information was even forwarded by respondent No. 1 to the concerned Assessment Unit on 24.03.2023 (P-5). However, without affording opportunity of hearing to the petitioner, the impugned order and notices have been issued. In compliance of order dated 12.04.2023, a reply dated 20.04.2023 has been filed by the respondents admitting the fact that information with respect to request of personal hearing was forwarded by respondent No. 1 to the concerned assessment unit on 21.03.2023. Without going into the merits of the case, the present petition is allowed.
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2023 (5) TMI 549
Secondment costs incurred by the respondent/assessee - no dispute raised that in the earlier AYs secondment costs were allowed - HELD THAT:- There was, to our minds, no rationale in the AO allowing 50% of the cost and disallowing the remaining costs; what is sauce for the goose is sauce for the gander. The approach of the AO bordered on whimsicality. While we are conscious that the principle of res judicata has no place in the Income Tax regime, the principle of consistency, which is equally weighty, has been applied by the court where circumstances are pari materia with the facts obtaining in the period in issue. Accordingly, we find no reason to interfere with the impugned order passed by the Tribunal.
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2023 (5) TMI 548
Application u/s 197 - lower withholding tax certificate - petitioner sought issuance of the said certificate at NIL rate - HELD THAT:- The issue which the petitioner has raised in the instant writ petition was also raised by the petitioner in another writ petition concerning FY 2021-22 [ 2023 (3) TMI 824 - DELHI HIGH COURT] . This writ petition was listed on our board today. We have allowed the said writ petition via a detailed order, and remitted the matter to the concerned officer for a fresh decision on the petitioner s application preferred under Section 197 of the Act. Accordingly, the impugned certificate in this case, which is dated 31.08.2022, and the order, which is marked as Annexure-H are set aside. The concerned officer is directed to re-examine the petitioner s application. Since the FY in issue is coming to an end on 31.03.2023, the concerned officer will carry out the re-examination exercise within ten days from the date of receipt of a copy of the judgement.
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2023 (5) TMI 547
Validity of Reopening of assessment u/s 147 - notice against company amalgamated/ non-existing - HELD THAT:- The legality of a notice issued against a non-existing company is no longer res-integra and has been held to be clearly untenable in view of the Apex Court judgment in Saraswati Industrial Syndicate Ltd. [ 1990 (9) TMI 1 - SUPREME COURT] . In the case of Spice Entertainment Ltd. [ 2011 (8) TMI 544 - DELHI HIGH COURT] a Division Bench of the Delhi High Court held that once the factum of amalgamation of a company had been brought to the notice of the Assessing Officer, despite which the proceedings are continued and an order of assessment passed in the name of a non-existing company, the order of assessment would not merely be a procedural defect but would render it void. It was also held that participation in the proceedings by the amalgamated company would have no effect since there could be no estoppel against law. Not only had Morgan Construction amalgamated with the petitioner but the factum of such amalgamation had been intimated to the Assessing Officer on 17th September 2012. The company post amalgamation having ceased to exist, the jurisdictional requirement of service of notice as envisaged under section 148 of the Act could never have been fulfilled rendering the proceedings unsustainable in law. Decided in favour of assessee.
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2023 (5) TMI 546
Refund wrongly credited in the account respondent No. 4 and maintained with the respondent No. 2 Bank in the current account of the petitioner maintained with the respondent No. 3 Bank - HELD THAT:-The prayer made by the petitioner cannot be acceded to as a learned Single Judge of this Court vide order dated 11th November, 2020 [ 2020 (11) TMI 1104 - DELHI HIGH COURT] has on similar averments held that the petitioner s petition lack bona fide and raises highly disputed questions of facts. Further, as the order of learned Single Judge has attained finality, this Court is of the view that the petitioner should have taken steps to agitate its claim before the appropriate forum/civil court. WP dismissed.
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2023 (5) TMI 545
Disallowance of Long Term Capital Loss - HELD THAT:- We find that CIT(A) while upholding the order has given a finding that assessee could not reconcile the investment in equity shares as claimed by it and as shown to have been purchased by it. CIT(A) has further given a finding that assessee has also failed to furnish evidence in support of year of acquisition of shares as well as value of shares in the year of acquisition. Before us, also assessee has not placed any material on record to controvert the findings of lower authorities. In such a situation, considering the fact that CIT(A) for the reasons noted in the order and reproduced herein above, we find no reason to interfere with the order of CIT(A) thus the ground of assessee is dismissed. Disallowance of interest on Inter Corporate Deposits - AO noticing maximum outstanding interest free debt worked out the interest @ 13% (being the interest paid on Inter Corporate Deposits) and worked out the interest at Rs.6,41,542/- being not for the purposes of business and disallowed the same - HELD THAT:- CIT(A) while upholding the order of AO has given a finding that no details were furnished by assessee about the amount the money being lent except stating that debts are regular business debts given to Escorts Finance Ltd. CIT(A) has further noted that assessee had also failed to establish that assessee had substantial interest free funds from which interest free advances were given. Before us, also assessee has not placed any material on record to demonstrate any fallacy in the findings of CIT(A) nor has placed any material on record to demonstrate that the amount which is stated to have been lent to Escorts Finance Ltd. is a regular business debts and lent out in earlier years. Considering the totality of the facts, we find no reason to interfere with the order of CIT(A) and thus the ground of assessee is dismissed.
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2023 (5) TMI 544
Income deemed to accrue or arise in India - Addition in respect of project administration costs as Fees for Included Services ( FIS ) under the India-US Double Taxation Avoidance Agreement ( DTAA ) - HELD THAT:- In the present case, the assessee is a tax resident of the United States of America and therefore is entitled to the benefit of the India-US DTAA. The assessee s associated enterprise in India, i.e. GSSPL decided to expand its premises by setting up a new campus in Bangalore, and in this connection, GSSPL entered into an agreement with a developer for the development of a new campus. With effect from 01/04/2012, the assessee entered into Campus Project Services Agreement with GSSPL, whereby the assessee agreed to render the following Campus Project Services to GSSPL. Whether the income received by the assessee falls within the ambit of FTS/FIS ? - As it is relevant to examine the services rendered by the assessee in respect of which said income is received and whether the said service satisfies the conditions laid down under the provisions of the Act/DTAA. We are of the considered view that merely because the assessee has accepted the amount to be in nature of FTS/FIS, the other payment for Campus Project Services cannot be treated as FTS/FIS without the examination of each and every service, particularly when the details pertaining to same are available on record. Adoption of such a broad brush approach without examination of each and every service rendered by the assessee can also lead to a situation where overall the services may appear to be not falling within the ambit of FTS/FIS but a standalone examination of each service may lead to a different conclusion. Since the assessee is a tax resident of the United States of America and is entitled to the benefit of India-US DTAA, therefore before proceeding further it is relevant to examine the relevant provisions of the DTAA for deciding the issue at hand. In the present case, apart from merely using the terminology made available , the Revenue has not brought any instance on record where GSSPL was shown to have used such information without depending upon the assessee. The fact that the assessee continued to receive payment for similar services, on a recurring basis, under the Campus Project Services Agreement in the subsequent assessment years also justifies the claim of the assessee that no technical knowledge, experience, skill, or know-how has been made available to GSSPL. Even if we examine the aforesaid services, in respect of which the assessee received a total payment we find that the same pertains to document handling and printing charges; assistance and support in estimating, scheduling, cost engineering and related control functions; review of kitchen design; review of acoustical design; review of security consultants, parking area, security recommendations; preparation of work schedule; project administration services; procurement services; project pre-development management; project management services, administrative assistance and construction management services; legal services and telecommunications services, which can neither be said to be made available to the recipient nor can consist of development and transfer of any technical plan or a technical design. Therefore, we are of the considered opinion that the aforesaid services do not fall within the ambit of FIS as per Article 12(4) of the India-US DTAA and thus the amount received by the assessee is not taxable under Article 12(4) of the India-US DTAA. As a result, grounds no.1-2 raised in assessee s appeal are allowed. Addition on account of market data charges as Royalty under Article 12 of the India-US DTAA - HELD THAT:- We find that the term Royalty as defined in the India-US DTAA is worded similarly to India-Swiss DTAA, which was under consideration in the aforesaid decision. From the record, it is evident that the payment is in respect of usage of the database of the third-party vendors, which was later on recovered by the assessee from the associated enterprises. Therefore, once the payment made for the usage of the database does not fall within the ambit of Royalty, recovery of costs by the assessee from the associated enterprises for the usage of the database cannot also result in Royalty in the hands of the assessee. In any case, in the present case, it has not been disputed by the Revenue that the payment received by the assessee is in the nature of reimbursement of cost and therefore we are of the considered opinion that the same cannot be chargeable to tax. Thus, in view of the aforesaid findings, we direct the AO to delete the addition in respect of the recovery of market data charges. As a result, ground No. 3 raised in assessee s appeal is allowed.
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2023 (5) TMI 543
Addition u/s. 36(1)(vii) - assessee has claimed deduction of bad debts u/s. 36(1)(vii) without actually writing off the debts are irrecoverable in the individual loan accounts of the debtors concerned - HELD THAT:- Similar issue has also been decided by the coordinate Bench of the Tribunal in the case of Bank of Baroda v. Addl. CIT, LTU [ 2023 (4) TMI 1169 - ITAT BANGALORE] in favour of the assessee. DR has submitted that the Hon ble Apex court has admitted the SLP filed by the revenue but the status of the same could not be furnished by the ld. DR, accordingly, we are bound by the order of the Jurisdictional High Court till the date of passing of the final order by the Hon ble Supreme Court. Accordingly respectfully following the above decisions, we direct the AO to delete the addition made u/s. 36(1)(vii). This ground for AYs 2011-12 and 2012-13 is allowed. Disallowance of deduction u/s. 36(1)(viia) - whether for computing the aggregate average advances made by rural branches, as per Rule 6ABA, only the fresh advances made during the month, or the outstanding loans at the end of each month, should be considered? - HELD THAT:- We notice that the Hon ble Karnataka High Court in the case of CIT, LTU v. Canara Bank [ 2023 (1) TMI 243 - KARNATAKA HIGH COURT] held that amounts of advances as outstanding at the last day of each month would be a fluctuating figure depending on the outstanding as increased or reduced respectively by advances made and repayments received. The assessee might provided for bad and doubtful debts but the deduction would only be allowed at the percentage of aggregate average advance, computation of which is prescribed by rule 6ABA. We find from the amended direction made by the Tribunal that such direction is in terms of rule 6ABA. The ITO has made the computation of aggregate monthly advances taking loans and advances made during only the previous year relevant to assessment year 2009-10 as confirmed by CIT(A). The Tribunal amended such direction, in our view, correctly applying the rule. Applicability of the provisions of section 115JB to the Appellant Bank - HELD THAT:- As decided in assessee own case [ 2022 (3) TMI 134 - ITAT BANGALORE] We notice that the provisions of sec.51 of the Act specifically states that only certain provisions of BR Act are applicable to Corresponding new bank . We noticed earlier that the Ld CIT(A) has proceeded to decide this issue by observing that all provisions of BR Act are applicable to the Company. We notice that the Ld CIT(A) did not consider the effect of provisions of sec.51 of the BR Act upon the assessee. Hence the decision taken by him under the impression that all the provisions of BR Act are applicable to the assessee is faulted one. In our view the Ld CIT(A) should considered the effect of provisions of sec. 51 of BR Act and accordingly he should have appreciated the contentions of the assessee on the definition of banking company , provisions of sec.211(2) of the Companies Act etc. Since these aspects go to the root of the issue, in our view, this issue needs to be examined at the end of Ld CIT(A) afresh
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2023 (5) TMI 542
Income deemed to accrue or arise in India - taxability of royalty' - subscription fees taxable as royalty in India - issue arising is recurring in nature - HELD THAT:- This Tribunal in the latest judgement for A.Y.2017-18 [ 2022 (10) TMI 1171 - ITAT MUMBAI] uphold the plea of the assessee and delete the impugned addition in respect of subscription fees received by the assessee - Decided in favour of assessee.
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2023 (5) TMI 541
Disallowance of interest u/s 36(1) (iii) - advancing interest free loans to certain parties - grievance of the revenue is that the interest income received on the loans advanced is less than the interest paid on its borrowing, thereby leading to disallowance of excess interest paid in the sum - DR argued that assessee, being a non-finance company (NBFC), the main source of income itself is only interest income, hence the assessee could not take shelter of availability of interest free funds theory as it is expected to earn interest income on every lending and the same should be more than the interest paid on its borrowings - HELD THAT:- This action of the revenue is not justified in the eyes of law. Once the borrowing is utilised for the purpose of business by the assessee, the interest paid on such borrowing would be squarely eligible for deduction u/s. 36(1)(iii) of the Act, irrespective of the fact whether assessee had received interest at lower rate than its borrowing rate or received nil interest. This aspect is very well settled by the decision of Hon ble Supreme Court in the case of Reliance Industries Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and S.A Builders Ltd. [ 2006 (12) TMI 82 - SUPREME COURT ] In any case, the issue in dispute squarely covered by the decision of this Tribunal in assessee s own case for the assessment year 2014-15[ 2018 (8) TMI 2116 - ITAT DELHI] - Decided in favour of assessee.
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2023 (5) TMI 540
Income deemed to accrue or arise in India - taxability of Management Service Fees received by the assessee - Royalty receipt - assessee is a company incorporated in the Netherlands and is an international dredging contractor and has executed several contracts in India - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case in Van Oord Dredging and Marine Contractors BV vs ADIT [ 2016 (11) TMI 1249 - ITAT MUMBAI ] , decided the similar issue in favour of the assessee and held that none of the services provided by the assessee in terms of the Service Agreement dated 01/04/2004 falls within the scope and ambit of Royalty as defined in Article 12(4) of the India Netherlands DTAA. The coordinate bench of the Tribunal also held that since the allocation of costs represents the actual expenditure, there cannot be any reason to hold that reimbursement of the cost can be reckoned as payment towards Royalty . The issue arising in the present appeal is recurring in nature and has been decided by the coordinate bench of the Tribunal in the preceding assessment years. Decided in favour of assessee. Short grant of credit of TDS - This issue is restored to the file of the AO with the direction to grant TDS credit, in accordance with the law, after conducting the necessary verification. As a result, grounds no.9-10 raised in assessee s appeal are allowed for statistical purposes. Levy of interest u/s 234A - As we deem it appropriate to remand this issue to the file of the Assessing Officer for de novo adjudication after the necessary examination of the fact whether the return of income was filed by the assessee within the prescribed time under the Act. Accordingly, ground no.11, raised in assessee s appeal is allowed for statistical purposes.
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2023 (5) TMI 539
Assessment u/s 153A - unabated assessments - incriminating material as found during the course of search proceedings or not? - HELD THAT:- We find that there is no dispute with regard to the facts that the Assessments relating to AY 2014-15, 2015-16, 2016-17 2017-18 fall under the category of unabated assessments . There is also no dispute that the department did not unearth any incriminating material relating to the additions of bogus purchases, bogus job works labour charges, subcontracts payments, unexplained cash credits of loans and interest on loans and hence the AO, in the absence of any incriminating material relating to the above said additions, could not have made any addition in unabated assessment years. In support of the above said proposition, we rely upon the decision rendered in the case of Continental Corporation (Nhava Sheva) Ltd [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] and Gurinder Singh Bawa [ 2015 (10) TMI 1761 - BOMBAY HIGH COURT] wherein held that the unabated assessments (finalized assessments) cannot be touched by resorting to the provisions of sec.153A unless some incriminating materials relating to the said assessments, which are contrary to and/or not disclosed during regular assessment proceedings, are found. Whereas the provisions of sec.153A of the Act provide for issuing of notice u/s 153A of the Act for six assessment years immediately preceding the year of search and thereafter, the AO shall assess or reassess the total income for the above said six years. This section further provides that all pending assessment or re-assessment pending as on the date of search shall abate. Hence the assessments of the assessment years falling within the period of above said six years which are not pending, i.e., which have attained finality shall not abate. Assessments of such assessment years are called unabated/completed/finalized assessments. The question as to whether the AO is entitled to interfere with such kinds of unabated/completed/ finalized assessments or not without there being any incriminating material found during the course of search, was examined in the case of All Cargo Logistics Ltd [ 2012 (7) TMI 222 - ITAT MUMBAI(SB)] wherein it was held that the AO could interfere with the unabated/completed/finalized assessments only if the incriminating materials found during the course of search warrant such interference, meaning thereby, if the search action did not bring out any incriminating material, then the AO cannot disturb the completed assessments and he has to simply reiterate the earlier total income in the present assessment order. We also rely on the decision rendered by Hon ble Delhi High Court in the case of CIT Vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] wherein identical view was expressed. We considering the facts and judicial decisions as discussed above are of the view that the CIT(A) has passed a reasoned and conclusive order. We do not find any infirmity in the order of the CIT(A) in quashing the assessment order and uphold the same and dismiss the grounds of appeal of the revenue.
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2023 (5) TMI 538
Disallowance of additional depreciation u/s 32(1)(iia) - assessee to claim additional depreciation in subsequent year or years - HELD THAT:- The Hon ble Tribunal [ 2019 (12) TMI 1299 - ITAT MUMBAI] held that on a literal reading of section 32(1)(iia), the additional depreciation is restricted to one time deduction and there is no explicit provision entitling the assessee to claim additional depreciation in subsequent year or years, when the additional depreciation was allowed in the year, when plant and machinery has been put to use. Therefore, we are of the considered view that it is illogical and irrational to presume so, when the legislation intention is to allow one time additional depreciation u/s 32(1)(iia) in a previous year in which plant and machinery is installed and put to use. CIT(A) after considering relevant facts has rightly noted that there is no error in the findings recorded by the ld. AO in disallowances of additional deprecation on plant and machinery for second year. Therefore, we are of the considered view that the findings recorded by the Ld.CIT(A), while confirming additions made by the Ld. AO towards of additional depreciation in subsequent years is in accordance with law as enumerated under the provision of section 32(1)(iia) - Decided against assessee. Disallowance U/sec 14A r.w.r 8(D)(2)(ii) (iii) - HELD THAT:- As per decision of HDFC Bank Ltd [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] and the disallowance u/s 14A r.w.r 8(D)(2)(iii) has to computed considering only investments which yield exempt income as held in the case of ACT Vs Vireet Investment Pvt Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] Special Bench held that only those investments which yield exempted income are considered for computing the average value of investments in respect of computing the disallowance under rule 8D(2)(iii) of the IT Rules. AR demonstrated the details/chart of dividend income and investments in the mutual funds in the dividend yielding schemes. Thus find that the submissions of the Ld.AR are to be considered and direct the Assessing officer to recompute the disallowance u/s 14A r.w.r 8D(2)(ii) (iii) as per the ratio of the decisions discussed above and allow this ground of appeal for statistical purposes. TP Adjustment - bench marking the interest rate @7.11% as against @5.25% and @6.25% adopted by the assessee and TPO, in respect of interest on advance to AE and investment in cumulative preference shares - HELD THAT:- Welpsun Pipes Inc invested entire funds in the bonds of Arkansas CIT Government bonds at rate of @5.25% for availing fiscal benefit and on the Internal comparables, the AE has raised additional funds @4 to @4.25% further the TPO has added 3% as risk spread to @3.25% p.a being average cost of assessee s funds in form of ECB and FCCB. Whereas the assessee s objective was not to enter into any financial arrangement but to merely facilitate factor for Welpsun Pipe Inc as also no financial burden was incurred. The assessee has recovered the interest paid on borrowings and also earned a margin. Further interest paid on loan taken by Welpsun Pipe Inc. is less than @5.25% which is based on the Libor. the contentions of the Ld. AR has to be accepted. We found that the assessee has advanced loan at 5.25% and considering the factors, principles and evidences further addition on interest rate cannot be accepted and accordingly direct the TPO to exclude the increase component and allow this ground of appeal in favour of the assessee. Disallowance u/s 14A and added to book profits u/s 115JB - HELD THAT:- The Hon ble Supreme Court in the case of Apollo Tyres Ltd [ 2002 (5) TMI 5 - SUPREME COURT] held that powers of the AO to adjustments which are authorized under Sec. 115J/115B of the Act, the provisions of Sec. 14A cannot be imported while computing book profit u/s 115JB of the Act. We fallow the ratio of the judicial decisions and direct the AO to exclude the disallowance U/sec 14A of the Act in computing the book profits U/sec 115JB of the Act and allow the ground of appeal. Receipt on account of excise duty benefits and sales tax incentives treated as capital receipt and reduction of capital value of backward area incentives from value of assets - HELD THAT:- As decided in assessee's own case [ 2019 (12) TMI 1299 - ITAT MUMBAI] we are of the considered view that there is no error in the findings recorded by the Ld.CIT(A), while deleting additions made by us Ld. AO towards sales tax incentives and excise duty benefits received by the assessee. Hence, we are inclined to uphold the findings of Ld.CIT(A) and reject ground taken by the revenue. Depreciation on fixed assets u/s 40(a)(ia) r.w.s37(1) of the Act in respect of capitalization of professions fees, expenditure, FCCB premium and FCCB expenditure - HELD THAT:- As in own case[ 2021 (7) TMI 1410 - ITAT, MUMBAI] expenditure was incurred for the A.Y 2005-06 and depreciation was allowed by the A.O. therefore for A.Y. 2007-08 is only consequential year of allowing the depreciation and the expenses falling U/sec 40(a)(ia) of the Act. Accordingly we follow the judicial decisions and dismiss the grounds of appeal of the revenue. TP Adjustment - Corporate guarantee fees charged @ 1.5% by the assessee to its AE considered as ALP - HELD THAT:- AR supported the order of the CIT(A) on this issue and contended that the assessee has given a corporate guarantee to AE and which does not involve any cost and no bearing on profits. Further the income or loss or assets of the AE are outside the purview of the international transaction. The Ld. AR has relied on the judicial decisions and the assessee has accepted the charge @ 1.5%. Contra, the Ld. DR could not controvert the findings of the Ld. CIT(A) on this disputed issue with any new cogent material or information to take a different view, accordingly we uphold the decision of the CIT(A) and dismiss the ground of appeal of the revenue. Unexplained investment in office property invoking the provisions of section 69B - Benefit of telescoping - Whether Appellant has explained the nature and source of cash payment satisfactorily and as such no part of payments remained unexplained? - HELD THAT:- As per the information, the cash has been generated in the hands of the group company and there is no investigation by the AO or nothing was brought on record to substantiate that the claim has been not utilized in the hands of the group company. Therefore considering the doctrine of the telescoping of the funds available for the purchase of property and the ratio of judicial decisions, we direct the AO to consider the amount has been generated in the hands of the group company as mentioned and also the cash balances were available. Accordingly, we direct the AO to allow the benefit of telescoping as discussed and allow the ground of appeal.
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2023 (5) TMI 537
Maintainability of revenue appeal before ITAT on low tax effect - addition u/s 68 for Bogus LTCG - unexplained expenditure of payment of commission u/s. 69 - CIT-A deleted the addition - AR pointed out that the CBDT issued Circular No. 23 of 2019 on 06.09.2019 stating therein that notwithstanding anything contained in any circular issued u/s 268A specifying mandatory limits for filing of departmental appeals before ITAT, etc. appeals may be filed on merits as an exception to the said circular, where Board, by way of special order direct filing of appeal on merits in cases involved in organized tax evasion activity - HELD THAT:- We have gone through the decision in Surendra Shantilal Peety s case[ 2022 (5) TMI 116 - BOMBAY HIGH COURT] , we find that the issue as to whether CBDT Circular No.23 of 2019 dated 06.09.2019 and Office Memorandum dated 16.09.2019 had any retrospective effect came up for consideration before the Hon'ble Gujarat High Court in Pr.CIT vs. Anand Natwarlal Sharda [ 2021 (6) TMI 1065 - GUJARAT HIGH COURT] held that the said Circular read with Office Memorandum could not be construed to have retrospective effect with which the Hon'ble Bombay High Court was in respectful agreement. Finding force in the submissions of the Ld. AR, we hold that the appeal of the Revenue is not maintainable on account of low tax effect as the CBDT Circular No. 23 of 2019 dated 06.09.2019 read with Office Memorandum dated 16.09.2019 is not applicable to the case of the assessee. We, therefore, refrain from deciding the appeal on merits.
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2023 (5) TMI 536
Revision u/s 263 - non-deduction of the tax at source in respect of finance charges or interest paid by the assessee to finance companies warranting, thus, disallowance u/s. 40(a)(ia) - non-verification of the assessee s claim of wages, on which no provident fund stands contributed, including with the EPFO, so that the claim was apparently incorrect. HELD THAT:- The assessee has before the revisionary authority claimed to have engaged workers on daily wage basis. Apart from the fact that the same is only a manner of remuneration, the same amounts to contractual labour, on which, again, both ESI EPF are applicable.The matter, as it appears, is no longer res integra, and the assessee s argument, in law, inapplicable. As already noted a complete absence of verification by the AO of the assessee s claims, i.e., even as to there being no continuous employment for 60 days, which is stated for the provisions of the EPF Act to be applicable. Why, there is even no confirmation by him of the said provisions. Even if the labour is contractual, hired direct or through the contractors, the same, as afore-noted, may attract EPF ESI Acts, besides such payment being subject to tax deduction at source u/ss. 194C/194J, and which has a bearing on the deductibility of the expenditure through sec. 40(a)(ia). We are conscious and, accordingly, clarify that the ground of non-payment of EPF (or even ESI) on wages is relevant only insofar as, and to the extent, it is indicative of the said expenditure being not genuine, or incurred wholly and exclusively for business purposes. This is as it could well be that the assessee having incurred the said expenditure, has though violated the provisions of the ESI and/or EPF Act on either the whole or a part of the labour expenditure, in which either case, no part of the said expenditure, claimed u/s. 37(1), where genuine, could be disallowed. Nonverification apart, the assessee s reply, ostensibly based on facts , that no part of the expenditure attracts EPF as it has engaged only casual labour on daily wage basis, reinforces the doubts about the genuineness of the expenditure, providing further relevance, as it were, thereto. This is also apart from the relevance of the said ground being, as afore-noted, not in dispute inasmuch as the same formed the basis of reassessment, which proceedings have since attained finality. The absence of any verification and, concomitant finding, i.e., qua genuineness of the (entire) expenditure, incurred in cash, by the assessing authority lends further relevance to the said ground, and which is also the reason for our having discussed the matter in some detail. Reference be drawn to the decision in Gee Vee Enterprises [ 1974 (10) TMI 29 - DELHI HIGH COURT] . We may therefore not be construed as having issued any finding/s, much less determined the matter, but only that, on the face of it, the claim of expenditure by the assessee cannot be accepted, while the same has been so without conducting even a preliminary verification, as with reference to the labour details and the applicable provisions of the EPF Act. That is, our purview and finding is that the matter requires proper verification, justifying the revision on the lines made. Nothing more and, nothing less. The matter shall be examined by the AO in its entirety, including the conduct of business in the past, as well as with reference to the specific issues, if any, facing construction industry, and for which reference could also be made by him to the enterprises in the organised sector; construction, it may be noted, has since been granted the status of an Industry. The onus to establish it s claims, needless to add, is on the assessee. Assessee s appeal is dismissed.
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2023 (5) TMI 535
Correct head of income - Deemed rent from unsold units lying in closing stock - annual rental value on unsold flats built by assessee engaged in construction business - assessed under the head Business Income or Income from House Property - HELD THAT:- As per assessee s own case which are on record [ 2018 (9) TMI 1621 - ITAT PUNE ] held notional annual rental value on unsold flats held as stock-in-trade by the assessee engaged in construction and development activities as Business Income . Thus no addition is maintainable on account of deemed rent on unsold flats which were treated as stock-in-trade by the assessee. Thus, the grounds raised by the assessee are allowed.
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2023 (5) TMI 534
Assessment of trust as Association of Persons (AOP) - family trust - rate of tax - maximum marginal rate or slab rates - in absence of details of section 12A registration, income of the assessee was made taxable under the category of AOP/BOI and tax was charged without giving basic exemption and slab benefits - HELD THAT:- As observed Assessee trust is the only trust formed Smt. Lajwanti Manchanda,Assessee trust is a family trust in the form of AOP/BOI for the benefit of Smt. Lajwanti Manchanda s son and grand children. Assessee family trust has only income from other sources and there is no business income to the trust. - Shares of beneficiaries of trust are determined and chart for A.Y 2016-17 to 2019- 20 filed by the assessee clearly shows that conditions as prescribed in various provisions of the Act to claim basic exemption and slab benefit are being fulfilled by the assessee family trust. As per legal positions in favour of assessee it is hereby directed to the A.O for redetermination of assessee family trust tax liability giving basic exemption and slab benefit. It is directed to the assessee also to appear and co-operate before the A.O in terms of filing requisite information and explanations required to verify the claim raised by him. Appeal filed by the assessee is allowed for statistical purposes.
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Corporate Laws
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2023 (5) TMI 533
Change of categorization - declaring/ retaining the status of the JIICL as Green entity only - HELD THAT:- The categorization of the IL FS Entities was noticed by this Tribunal in its order dated 11.02.2019 and 19.09.2019. the categorization was noticed and recorded on the basis of affidavit filed before this Tribunal. The order passed by this Tribunal does not indicate that the categorization could be changed by the Entities themselves, without any reference to the Tribunal. When the Entities are categorized in Green , the object is that the Entity should continue to discharge its all obligations, including the obligation to Lenders and the Entities should be incentivize by all including the Lenders to continue the categorization as a Green . If the entity is given liberty to change its categorization from Green to Red , there will be no obligation on the Entity to carry on its categorization as Green . The Entity itself, which is categorized as Green cannot be permitted to change its categorization unilaterally. It was open for Respondent No.1 or any such Entity to bring necessary material before the Tribunal and asking leave of the Tribunal to re-categorize the Entity. The Resolution Consultant having already recommended and the New Board in its meeting dated 24.03.2023 having already decided to grant conditional approval of re-categorization of JRPICL to Green , subject to receipt of additional annuities of INR 58 Crores in March 2023, we are satisfied that JRPICL has to be treated as a Green Entity. Insofar as the financial liability as referred to on the basis of arbitral award is concerned, suffice it to notice that the note itself mentions that arbitral award is under process of challenge. The arbitral award being under process of challenge, that cannot be any ground to refuse categorization of JRPICL as Green . Liberty granted to Respondent No.1 to seek leave of this Tribunal for re-categorization in event any liability falls on the JRPICL on the basis of arbitral award and it is unable to discharge its liabilities - application allowed.
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Insolvency & Bankruptcy
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2023 (5) TMI 532
Adoption of reverse CIRP by the Appellate Tribunal - limiting the CIRP and constitution of CoC to only one project of corporate debtor, i.e., Eco Village-II - It has been contended on behalf of the appellants that the Appellate Tribunal does not have power under IBC to allow project-wise CIRP and does not have power to accept a resolution plan presented by the promoter without giving opportunity to the CoC to study the commercial viability of the plan - HELD THAT:- The element of balance of convenience shall have its own significance. On one hand is the position that the Appellate Tribunal has adopted a particular course (which it had adopted in another matter too) while observing that the project-wise resolution may be started as a test to find out the success of such resolution. The result of the directions of the impugned order dated 10.06.2022 is that except Eco Village-II project, all other projects of the corporate debtor are to be kept as ongoing projects and the construction of all other projects is to be continued under the supervision of the IRP with the ex-management, its employees and workmen. Infusion of funds by the promoter in different projects is to be treated as interim finance, regarding which total account is to be maintained by IRP. If at the present stage, on the submissions of the appellants, CoC is ordered to be constituted for the corporate debtor as a whole in displacement of the directions of the Appellate Tribunal, it is likely to affect those ongoing projects and thereby cause immense hardship to the home buyers while throwing every project into a state of uncertainty. The other projects are being continued by the IRP and efforts are being made for infusion of funds with the active assistance of the ex-management but without creating any additional right in the ex-management. In our view, greater inconvenience is likely to be caused by passing any interim order of constitution of CoC in relation to the corporate debtor as a whole; and may cause irreparable injury to the home buyers. In this view of the matter, we are not inclined to alter the directions in the order impugned as regards the projects other than Eco Village-II. In relation to Eco Village-II project, since CoC was ordered to be constituted by the Appellate Tribunal in the impugned order dated 10.06.2022, we are not interfering with those directions too but, in our view, any process beyond voting on the resolution plan should not be undertaken without specific orders of this Court - these appeals may be listed for final hearing at the admission stage in the second week of July, 2023.
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2023 (5) TMI 531
Condonation of delay - time limit for filing appeal - Cloud9 Apartment Owner Association challenged the admission of application for Initiation of CIRP - HELD THAT:- The remedy of appeal is a creation of statute. Section 61 of the Code deals with the appeal and the Appellate Authority - It is provided in Section 61(1) of the Code that if any person is aggrieved by the order of the Adjudicating Authority, he may prefer an appeal to this Tribunal. Section 61(2) of the Code provides that every such appeal provided under Section 61(1) shall be filed within thirty days before this Tribunal and proviso to Section 61(2) says that the period of 30 days allowed to file the appeal can further be extended to 15 days and not thereafter. Meaning thereby, the limitation to file an appeal before this Tribunal is only upto 45 days out of which the period of fifteen days can be used by the Appellant for the purpose of extension of period of limitation on assigning sufficient cause to the satisfaction of the Appellate Authority for condonation of delay. In the present case, admittedly within the period of 30 days and even the extended period of 15 days i.e. 45 days no appeal was filed rather the Writ Petition was filed before the Hon ble High Court in which the aforesaid order has been passed. Application dismissed.
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2023 (5) TMI 530
Initiation of CIRP - Operational Creditors - existence of debt and dispute or not - proof of service of Section 8 Notice - burden of proof lies on the Operational Creditor proving delivery of goods or not - whether the Petition has been duly signed and verified by the competent person? - HELD THAT:- The said issue was analyzed and finding was returned by the Adjudicating Authority that petition which was filed by Mr. Debabrata Basu on behalf of the Operational Creditor who was territory sales manager, East Zone was fully competent. The submission which has been pressed by the Learned Counsel for the Appellant is that the Operational Creditor did not file any proof of delivery of goods along with Section 9 Application where it was onus on the Operational Creditor to bring on record the proof of delivery of goods. Learned Counsel for the Appellant however does not raise any argument regarding non-service of Section 8 Notice, looking to the fact that although Operational Creditor did not file any proof of service of Section 8 notice along with Section 9 Application but supplementary affidavit was filed before the Adjudicating Authority bringing on record the proof of service of Section 8 Notice. It is very relevant to notice that at no point of time prior to filing reply to Section 9 Application, corporate debtor issued any such letter or complaint informing the Operational Creditor about non-delivery of goods. The tax invoice which was noticed above clearly contains the details of vehicles with their numbers by which goods were delivered. The fact is that at no point of time, the Corporate Debtor even raised a little finger about non-delivery of goods. In Demand Notice as well as Section 9 Application, there was categorical pleadings of the Operational Creditor that there is no dispute or demur with regard to goods supplied. The statement was made due to attending facts and circumstances when after supply of goods no issue regarding supply or delivery was raised - Present is a case where Demand Notice was not even replied by the Corporate Debtor and the plea raised in the Reply by the Corporate Debtor regarding non-supply of goods has been held to be dishonest plea and moonshine plea hence the judgement of this Tribunal in above case does not come to any help to the Appellant. The Adjudicating Authority did not commit any error in admitting Section 9 Application. Debt and Default being fully proved and all defences raised by the Corporate Debtor were groundless, no error has been committed by the Adjudicating Authority admitting Section 9 Application - there are no merit in the appeal. Appeal dismissed.
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2023 (5) TMI 529
Rejection of application for withdrawal of application (for closing the CIRP under 12A of IBC) - HELD THAT:- Present is the case where CoC has already been constituted and the Resolution Plan were under consideration by the CoC. The application filed by the Appellant cannot be treated to be an application for settlement u/s 12A - Any proposal for re-structuring cannot be treated to be the proposal u/s 12A, hence, we do not find any error in rejecting the application filed by the Appellant. Moreover, there is no consent by 90% of CoC in favour of 12A proposal of the Appellant. There are no error in the order of the Adjudicating Authority, the appeal is dismissed.
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2023 (5) TMI 528
Initiation of CIRP - existence of debt and dispute or not - acknowledgement of debts - amount due to the Operational Creditor has been shown as Trade Payable in the balance sheet - Complaint raised by the appellant for fraud and cheating against the respondents / creditors - NCLT admitted the application - HELD THAT:- The Settlement Agreement is signed by the Appellant which is a fact not denied. The settlement agreement contains an acknowledgement of liability by the Appellant towards the Operational Creditor for which adjustment of liability of Rs. 40 Lakhs have been mentioned in the agreement. The Adjudicating Authority has rightly relied on Settlement Agreement to come to the conclusion that debt of operational creditor has been acknowledged by the Appellant, Director of the Corporate Debtor. Appellant cannot take any benefit of Criminal Proceedings initiated by the Appellant by filing an Application under Section 156 of the Cr. PC which proceedings were initiated subsequent to receipt of Demand Notice. Application under Section 9 was to be considered and decided on the basis of material which was brought by the Operational Creditor with regard to its debt and default and the Adjudicating Authority being satisfied that there is debt which remained unpaid, no error has been committed by the Adjudicating Authority in admitting Section 9 Application. There are no error in the order of the Adjudicating Authority admitting Section 9 Application. There is no merit in the Appeal, the Appeal is dismissed.
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PMLA
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2023 (5) TMI 527
Challange to the bail granted by the HC - Money Laundering - scheduled offence - It is submitted that while enlarging respective respondent No. 1 accused on bail the High Court has not properly appreciated Section 45 of the PML Act, 2002 - HELD THAT:- At the outset, it is required to be noted that respective respondent No. 1 accused are facing the investigation by the Enforcement Directorate for the scheduled offences and for the offences of money laundering under Section 3 of the PML Act punishable under Section 4 of the said Act. An enquiry/investigation is still going on by the Enforcement Directorate for the scheduled offences in connection with FIR No. 12/2019. Once, the enquiry/investigation against respective respondent No. 1 is going on for the offences under the PML Act, 2002, the rigour of Section 45 of the PML Act, 2002 is required to be considered. From the impugned judgment(s) and order(s) passed by the High Court, it appears that what is weighed with the High Court is that chargesheet has been filed against respective respondent No. 1 accused and therefore, the investigation is completed. However, the High Court has failed to notice and appreciate that the investigation with respect to the scheduled offences under the PML Act, 2002 by the Enforcement Directorate is still going on. Merely because, for the predicated offences the chargesheet might have been filed it cannot be a ground to release the accused on bail in connection with the scheduled offences under the PML Act, 2002. Investigation for the predicated offences and the investigation by the Enforcement Directorate for the scheduled offences under the PML Act are different and distinct. Therefore, the High Court has taken into consideration the irrelevant consideration. The investigation by the Enforcement Directorate for the scheduled offences under the PML Act, 2002 is till going on. The High Court has neither considered the rigour of Section 45 of the PML Act, 2002 nor has considered the seriousness of the offences alleged against accused for the scheduled offences under the PML Act, 2002 and the High Court has not at all considered the fact that the investigation by the Enforcement Directorate for the scheduled offences under the PML Act, 2002 is still going on and therefore, the impugned orders passed by the High Court enlarging respective respondent No. 1 on bail are unsustainable and the matters are required to be remitted back to the High Court for afresh decision on the bail applications. Appeal allowed.
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Service Tax
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2023 (5) TMI 526
Levy of service tax - works contract service - composite contract - rendering of taxable services in relation to commercial or industrial construction and in relation to construction of complex - HELD THAT:- The question whether the composite contracts were taxable under the service tax prior to 01.06.2007 is no longer res integra. The Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] had referred to taxable services covered under Clause (g),(zzd), (zzh), (zzq) and (zzzh) of Section 65(105) of the Act and authoritatively held that the said taxable services referred only to service contracts simpliciter and not to composite works contracts. Admittedly, the challenge raised by the petitioner to the validity of Section 65(105)(zzzq) and (zzzh) of the Act is squarely covered by the decision of the Supreme Court in Commissioner, Central Excise and Customs, Kerala v. Larsen and Toubro Limited. - In view of the law laid down by the Supreme Court in Commissioner, Central Excise and Customs, Kerala v. Larsen and Toubro Limited, the impugned order, which proceeds on the basis that composite contracts involving transfer of goods as well as services were covered under the taxable services under Section 65(105)(zzzq) and (zzzh) of the Act, cannot be sustained. Matter remanded to the Adjudicating Authority to adjudicate the show cause notices afresh - petition allowed by way of remand.
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2023 (5) TMI 525
Levy of Service Tax - Works Contract Service - whether the petitioner is liable to pay service tax, in addition to the tax paid by the petitioner, in respect of the said contracts? - HELD THAT:- The question whether the composite contracts were taxable under the service tax prior to 01.06.2007, is no longer res integra. The Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ] had referred to taxable services covered under Sub-clause (g),(zzd), (zzh), (zzq) and (zzzh) of Section 65(105) of the Act and authoritatively held that the said taxable services referred only to service contracts simpliciter and not to composite works contracts. Admittedly, the challenge raised by the petitioner to the validity of Sub-clause (zzq) and (zzzh) of Section 65(105) of the Act, is squarely covered by the decision of the Supreme Court in Commissioner, Central Excise and Customs, Kerala v. Larsen and Toubro Limited - In view of the law laid down by the Supreme Court in Commissioner, Central Excise and Customs, Kerala v. Larsen and Toubro Limited, the impugned order-in-original dated 30.11.2012, which proceeds on the basis that composite contracts involving transfer of goods as well as services were covered under the taxable services under Sub-clause (zzq) and (zzzh) of Section 65(105) of the Act, cannot be sustained. Matter remanded to the Adjudicating Authority to adjudicate the show cause notices afresh - petition allowed by way of remand.
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2023 (5) TMI 524
Levy / waiver of penalty - duty liability along with interest and also 25% of the penalty paid on receipt of the communication of the Original Authority - requirement to pay the balance penalty - HELD THAT:- The Hon ble High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. PANNU PROPERTY DEALERS, LUDHIANA [ 2010 (7) TMI 255 - PUNJAB AND HARYANA HIGH COURT] did not categorically hold that the imposition of penalty under Section 76 and Section 78 separately is not mutually exclusive prior to 10.05.2008, Hon ble High Court has certainly held that the Appellate Authority was within its right to hold that the penalty is mutually exclusive and in the spirit of the amendment. While the amount involved in the above case was Rs.51,026/-, the amount involved in the instant case is about half that amount. Therefore, in deference to the jurisdictional High Court s order, we find that penalty under Section 76 and 78 can be seen to be mutually exclusive even before the amendment. In the facts and circumstances of the case and looking into the fast changes that were coming in the Service Tax law during the relevant period, it can be concluded that the appellant being a small operator had no wherewithal to keep track of the law and thus, the applicability of the Service Tax to him, more so looking into the fact that the main cable operator M/s SIFY had discharged Service Tax on the entire amount collected from the customers, there are reasons to believe that there were sufficient reasons for the appellant in not discharging the applicable Service Tax. Looking into the conduct of the appellants in depositing the tax with interest and 25% penalty the provisions of Section 80 are invited and the benefits of Section 80 can be extended to the appellants. The appeal is partly allowed by setting aside the penalties imposed.
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2023 (5) TMI 523
Valuation - inclusion of reimbursement of expenses - expenditure incurred towards hotel stay, school tuition fees for the disputed period considering the same as part of the consideration paid for import of manpower services - period April 2015 to June 2017 - HELD THAT:- The issue of payment of service tax on secondment has been settled by the Supreme Court in the case of C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [ 2022 (5) TMI 967 - SUPREME COURT] . The issue is whether reimbursable expenses are includible in the gross value for levy of service tax. The issue is no longer res integra. The Hon ble High Court of Delhi in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] held that reimbursements of amounts it received cannot be charged to service tax. This issue with regard to non-payment of service tax on the reimbursable expenses travelled upto Hon ble Apex Court wherein it got settled by the decision in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] The Apex Court has held as per Section 67 (un-amended prior to 1st May, 2006) or after its amendment with effect from 1st May, 2006, the only possible interpretation of the said Section 67 is that for the valuation of taxable services for charging service tax, the gross amount charged for providing such taxable services only has to be taken into consideration. Any other amount which is not for providing such taxable service cannot be the part of the said value. It was clarified that the value of service tax cannot be anything more or less than consideration paid as quid pro quo for rendering such services. Accordingly, it was held that Section 67 of Finance Act, 1994 do not allow inclusion of reimbursable expenses in valuation of service rules. Appeal allowed.
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2023 (5) TMI 522
Levy of Service Tax - banking and other financial services - services to the employers in relation to asset management of Employees Provident Fund, Employees Deposit Linked Insurance Scheme and Employees Pension Scheme - HELD THAT:- In the case of the appellant for the period 01.04.2004 to 31.03.2009, the order dated 01.07.2010 passed by the Commissioner was assailed by the appellant before the Tribunal and the Tribunal, by order dated 13.04.2017, set aside the order passed by the Commissioner and allowed the appeal. In view of the decision of the Tribunal, with which there are no reason to disagree, the demand confirmed for the period from 01.04.2009 to 30.06.2012 deserves to be set aside. For the period from 01.07.2012 to 31.03.2014, the Commissioner, Siliguri by a detailed order dated 03.09.2019, in the case of the appellant for the period 01.07.2012 to 31.03.2014, discharged the show cause notice that was issued for demanding service tax on the amount collected by the appellant towards administrative charges and inspection charges. The Commissioner, Delhi in the order dated 02.03.2023, while adjudicating the two show cause notices issued for the period 2014-2015 and 2015-2016, has also discharged the show cause notice after relying upon the decision of the Tribunal and the Board Circular dated 23.08.2007. Appeal allowed.
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2023 (5) TMI 521
Levy of service tax - business auxiliary service - renting of immovable property service - business support service to doctors by providing facilities and administrative support - period from April 01, 2013 to March 31, 2015 - HELD THAT:- Paragraphs 5, 6, 9 and 11 of the first decision rendered by the Tribunal in M/S SIR GANGA RAM HOSPITAL, BOMBAY HOSPITAL MEDICAL RESEARCH CENTRE, APPOLLO HOSPITALS, M/S MAX HEALTH CARE INSTITUTE LTD VERSUS CCE DELHI-I, CCE ST INDORE, CCE ST RAIPUR, CST NEW DELHI AND CST DELHI VERSUS M/S INDRAPRASTHA MEDICAL CORPORATION LTD [ 2017 (12) TMI 509 - CESTAT NEW DELHI] relate to the period before and after July 01, 2012. The Tribunal, after a consideration of the conditions prescribed in the agreement, held that the arrangement was for joint benefit of both the parties with shared obligations, responsibilities and benefits and, therefore, no service was provided by the hospital to the doctors. The Commissioner (Appeals) was justified in setting aside the order passed by the Additional Commissioner - Appeal of Revenue dismissed.
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2023 (5) TMI 520
Denial of CENVAT Credit - Input services - commission paid by the respondent to collection agents for collection of dues of post-paid plans from the subscribers - HELD THAT:- Rule 2(l) of the 2004 Rules defines input service to mean any service used by a provider of output service for providing output service and includes services relating to sales promotion. The Explanation that was added to rule 2(l) on 03.02.2016 provides that for the purpose of clause 2(l), sales promotion includes services by way of sale of dutiable goods on commission basis. The view taken by the Commissioner (Appeals) that the Explanation inserted in rule 2(l) of the 2004 Rules on 03.02.2016 would have retrospective effect is correct. The Calcutta High Court in PRINCIPAL COMMISSIONER OF CENTRAL EXCISE, KOLKATA IV VERSUS M/S. HIMADRI SPECIALITY CHEMICAL LIMITED [ 2022 (9) TMI 1213 - CALCUTTA HIGH COURT] held that the Explanation inserted on 03.02.2016 to the definition of input service under rule 2(l) of the 2004 Rules would have restospective effect. This apart, what needs to be noticed is that the view taken by the Joint Commissioner that since the activities in respect of collection /recovery of post-paid plan outstanding dues had been undertaken after completion of the provision of taxable output services they would not be covered in the main part or the inclusive part of the definition of input service is not correct. Rule 2(l) of the 2004 Rules provides that the input service must be used for providing output service. The provider of output service, therefore, shall be eligible to avail CENVAT Credit on all those services which are used for providing output services without which the provision of the said output service would become impossible or commercially inexpedient. What, therefore, follows is that services having relation with the business of providing of output service would be covered by the definition of input service. Thus, it has to be held that the respondent was entitled to avail CENVAT Credit of service tax discharged on the commission paid by the respondent to collection agents for collection of dues of post-paid plans from the subscribers. Appeal of Revenue dismissed.
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2023 (5) TMI 519
Condonation of delay in filing appeal - sufficient reason for delay provided or not - appeal dismissed for the reason that the appeal was filed not only beyond the statutory period of 3 months contemplated under section 85 (3) of Finance Act 1994 - appeal was filed beyond the further period of three months that was available to the appellant under the first proviso to sub-section (3) of section 85 of the Finance Act - power of Commissioner (Appeals) to condone the delay - HELD THAT:- A perusal of sub-section (3) of Section 85, as it stood prior to 20.05.2012, clearly indicates that an appeal shall be presented within three months from the date of receipt of the order of the adjudicating authority in relation to service tax, interest or penalty. It further provides that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months. The discretion of the Commissioner to condone the delay is therefore, circumscribed by the condition set out in proviso and the delay can be condoned only if the appeal is presented within a further period of three months after the expiry of the statutory period of three months, provided of course, he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within a period of three months. The provision of section 35 of the Central Excise Act, 1944 relating to appeals before Commissioner (Appeals) had come up for consideration before the Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] - The provisions of section 35 of the Central Excise Act, 1944 are pari materia with section 85(3A) of the Finance Act. The Supreme Court held that the period upto which the prayer for condonation can be accepted is limited by the proviso to sub-section (1) of section 35 of the Act and the position is crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of thirty days after the expiry period of sixty days. In other words, the appellate authority can entertain the appeal by condoning the delay only upto 30 days beyond the normal period for preferring the appeal, which is 60 days. In the present case, the appeal was filed not only beyond the statutory limit of three months but even beyond the extended permissible period of three months. The Commissioner ( Appeals ) was therefore, justified in dismissing the appeal on the ground of limitation - appeal dismissed.
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Central Excise
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2023 (5) TMI 518
Liability of Central Excise Duty - appellants were job workers of M/s Nilkamal Limited - requirement of appellant to pay duty on the sales price of M/s Nilkamal Limited at their depots - HELD THAT:- There is nothing in the contract to show that the appellants have manufactured the goods on behalf of M/s Nilkamal Limited despite the facts that the entire manufactured goods were sold to M/s Nilkamal Limited. Moreover, the goods are not manufactured from any inputs or goods supplied by the principal manufacturer i.e. M/s Nilkamal Limited. The appellants might have used the raw material as per the specifications supplied by M/s Nilkamal Limited. This fact alone will not satisfy the contention that the inputs for the manufacturing of the goods are supplied by the principal manufacturer. The crux of the definition of job worker is in the use of inputs supplied by the principal manufacturer. It is a common understanding that a job worker is the one who works upon the goods supplied directly or indirectly by the principal manufacturer. This fact is totally missing in this case; neither from the terms of contract nor from the show cause notices, it is inferred that the goods are supplied by M/s Nilkamal Limited; therefore, the appellants do not fit into the definition of job worker even for the purpose of Rule 10A. The Commissioner of CGST CE, Nagpur-I vide order dated 31.10.2018 has dropped substantial amounts of demand on this issue. Appeal allowed.
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2023 (5) TMI 517
CENVAT Credit - manufacture of dutiable and exempted goods as required under Rule 6(2) ibid (exempted product i.e. bagasse, generated during the manufacturing of sugar/molasses) - non-maintenance of separate records - amendment of Section 2(d) of Central Excise Act, 1944 w.e.f. 10.5.2008 - period in issue is from 1.3.2010 to 30.9.2010 - HELD THAT:- It is nowhere disputed by the department that bagasse were not emerged as a waste/residue of sugarcane. In the light of the facts involved herein, we are of the considered view that the issue involved in the instant Appeal is not more res integra in view of the law laid down by the Hon ble Supreme Court in the matter of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT ] in which the Hon ble Supreme Court has considered both the periods i.e. the periods before and after the insertion of explanation in Section 2(d) ibid, which has been heavily relied upon by the authorities below in fastening the duty liability on the appellant herein. The Hon ble Supreme Court has held that bagasse being an agricultural waste or residue, there could be no manufacturing activity. On the basis of the amendment to Section 2(d), the department has taken out one circular No. 904/24/2009-CX, dated 28.10.2009 in line with the amendment in Section 2(d) ibid, which was also relied upon by the authorities below in confirming the demand. But after the judgment of the Hon ble Supreme Court in the matter of DSCL Sugar Ltd. another circular No. 1027/15/2016-CX, dated 25.4.2016 has been issued by the department stating that since the period covered in the aforesaid decision of the Hon ble Supreme Court applies to both period i.e. before and after the insertion of explanation in section 2(d) ibid therefore the circular dated 28.10.2009 becomes non est and are rescinded. Since the law laid down by the Hon ble Supreme Court constitutes declaration of the law within the meaning of Article 141 of the Constitution of India which would be binding on all Court and Tribunals, therefore following the aforesaid decision of the Hon ble Supreme Court, the issue involved herein decided in favour of the Appellant - Appeal allowed.
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2023 (5) TMI 516
Refund claim - demand arising on the ground of retrospective amendment of Notification 33/99-CE dated 08/07/99 through section 153 of the Finance Act 2003 - HELD THAT:- The said retrospective amendment was upheld by the Hon ble Guahati High Court vide its Order dated 21/09/2006.The above said amendment envisaged that CENVAT Credit availed shall be payable retrospectively within a period of 30 days from the day the Finance Bill received the assent of the Hon ble President and in the event of non payment of duty, 15% interest shall be payable from the date immediately after the expiry of the period of 30 days. Accordingly, the impugned order confirmed the demand of 5,34,865/- being the CENVAT credit lying unutilized as on 28/02/2003. The demand in this case has gone beyond 22/12/2002 and sought recovery of CENVAT Credit lying unutilzed as on 28/02/2003. They cited the decision of this Bench in the case of Hunwal Tea Estate Vs Commissioner of central excise, Dibrugarh [ 2018 (7) TMI 1356 - CESTAT KOLKATA ] where under the same facts and circumstances, the Tribunal set aside the demand and allowed their appeal. The aforesaid decision in the case of Hunwal Tea Estate cited by the Appellant is squarely applicable to the facts of this case. The retrospective amendment has validated recovery of CENVAT credit availed for the period from 08/07/99 to 22/12/2002 only. Whereas, the demand in this case has gone beyond 22/12/2002 and demanded recovery of CENVAT credit availed upto 28/02/2003 which is not permissible. The demand in the impugned order is not sustainable and is liable to be set aside - Appeal allowed.
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2023 (5) TMI 515
Refund claim - requirement of inclusion in the assessable value, the VAT amounts paid by the assessee using VAT, 37B Challans - amount deposited under protest or not - mark of protest in the cenvat credit account - rejection on the ground of time limitation - time limit prescribed under section 11B of Central Excise Act, 1944 - HELD THAT:- The appeal before the Tribunal was allowed in [ 2018 (4) TMI 1787 - CESTAT NEW DELHI] , in favour of the appellants relying on the earlier decision of the Tribunal in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [ 2018 (1) TMI 915 - CESTAT NEW DELHI] , which was based on the decision in the case of Wellspun [ 2017 (5) TMI 177 - CESTAT MUMBAI] , which concluded that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT, 37B Challans - Thus, the impugned orders were set aside and the appeal was allowed. Time Limitation - HELD THAT:- Section 11B (1) prescribes the period of one year from the relevant date and the term relevant date‟ is then defined under the Explanation as given above and the relevant clause (ec) specifically provides that in case the amount is refundable as a consequence of a judgement or order of an appellate Tribunal or any Court, it is the date of such judgement, decree, order or direction - In the present case, the amount became due by virtue of the decision of the Tribunal in [ 2018 (4) TMI 1787 - CESTAT NEW DELHI] whereby the impugned order including the subsidy amount in the transaction value was set aside and the appeal was allowed with consequential relief, which obviously implied that the amount so deposited by the appellant has to be refunded and therefore if the period of one year is computed from the said date, the application for refund dated 09.01.2019 was within the limitation period of one year. On this count itself the refund claim ought to have been allowed. Whether the amount deposited by the appellant was under protest ? - HELD THAT:- Having considered, the Supplementary Instructions, Chapter 13 of CBECs Excise Manual, which provides the procedure to be followed, it is found that it seems to be substantially complied with as the Cenvat account do mentions that, central excise duty debited against the amount received as State VAT subsidy under protest . The same cannot be ignored and the appellant is entitle to the benefit of the proviso to section 11B of the Central Excise Act, 1944, which specifically says that period of limitation of one year shall not apply where duty and interest is paid under protest. Appeal allowed.
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2023 (5) TMI 514
Clandestine removal - shortage of raw material - corroborative evidences or not - panchnama based on eye evidences - demand based on assumptions - HELD THAT:- There is no denial to the fact that the assessment at the time of search and preparation of Panchnama is on Eye estimation hypothetical basis. There has been catena of decisions to hold that such weight assessment is irrational, illogical and totally incorrect to allege that there is a shortage noticed at the time of verification. The earlier decision of this Tribunal in the case of BEHARIJI MARKETING PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2015 (10) TMI 1954 - CESTAT NEW DELHI] has been relied upon, where it was held that there is no evidence of clandestine removal of the goods. The appellant s representative had only accepted the shortages and there is no inculpatory statement admitting clandestine removal of the such alleged short found goods. There are no reason to differ from those authorities. Resultantly, the impugned decision is observed to be nothing but an act of violating judicial protocol. The adjudicating authority has failed to take into consideration the relevant decisions on this aspect even Departments own decision has been miserable ignored. The findings are not at all in terms of the directions given while remanding the matter to the adjudicating authority. Above all, the calculations as tendered today reveals that there was a miniscule shortage had the quantity of bath tank would have been considered. The calculations are based upon the figures already on record. Otherwise also as already observed above the shortcoming as noticed was 67.882 MTs only. The invoices on record for sale of recovered zinc from the tank clearly explain the said shortage. It becomes clear that had the quantum of zinc in bath tank would have been considered, there would not have been alleged shortage except for the miniscule which is unavoidable on account of wastage. The allegations otherwise are of clandestine removal. Department has not produced any evidence to show that the appellant has cleared goods without invoice or without payment of excise duty. No single document was found issued by the appellant nor there was a confessional statement of the appellant. Alleged shortage, as discussed above, is not at all sustainable. Appeal allowed.
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2023 (5) TMI 513
Remission of Duty - goods destroyed by fire in factory - Rule 21 of Central Excise Rules, 2002 - HELD THAT:- The issue in the present case is no longer res integra. In the case of VOLTAMP TRANSFORMERS LTD. VERSUS COMMISSIONER OF C. EX., VADODARA [ 2009 (12) TMI 743 - CESTAT AHMEDABAD ] it was held that all the assessees are required to account for all the goods manufactured/produced and when some goods are destroyed because of fire accident or natural cause, in terms of provisions relating to accountal, assessee would be required to explain reasons for non-accountal. Therefore, demand for duty would be natural consequential action and when the appellant replies, the adjudicating authority would take into consideration the replies submitted by the assessee and come to a conclusion whether remission under Rule 21 is required or not and there was no requirement of application for remission in this case and the reply to the show cause notice is sufficient for claiming the remission if the appellant is otherwise liable for remission as per the legal provisions. In the present case the entire case has been made out against the appellant for failure to get a proper order for remission - taking into account all facts that the goods have been destroyed in fire, remission could have been ordered at the time of adjudication of this case. There is no case made out that the goods destroyed have ever been cleared from the factory premises. Duty could not have been demanded without such clearances. Appeal allowed.
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2023 (5) TMI 512
Liability of Excise Duty - Spent earth arising during the course of manufacture of refined vegetable oil - spent earth being residue / waste is eligible for exemption notification no. 89/95- CE dated 18.05.1995 or not - HELD THAT:- The very same issue has been considered by this Tribunal s Larger Bench in the case of M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD [ 2018 (2) TMI 1395 - CESTAT NEW DELHI] and following the said larger bench judgment the Hon ble Supreme Court also dismissed the Revenue s appeal upholding the view taken by the Tribunal. In the case of M/S SHREE FATS PROTIENS PVT. LTD. VERSUS CCE, JAIPUR I [ 2017 (5) TMI 1449 - CESTAT NEW DELHI] this Tribunal has taken a view that recovered oil and tank sledge emerging during refining oil is not liable to central excise duty as the same is either covered under exemption Notification No. 89/95- CE dated 18.05.1995 as waste product or not arising out of manufacturing process as in case of bottom sediments called tank sledge. In the present case also the nature of process and also the goods i.e. spent earth is absolutely identical to the goods in the above decision. The Division Bench of this Tribunal in the case of COMMISSIONER OF CUS. C. EX., HYDERABAD-III VERSUS DIVIS LAB [ 2017 (4) TMI 329 - CESTAT HYDERABAD] dealing with the identical nature of goods held that waste obtained as by product during manufacturing process i.e. spent solvent is not excisable as products merely industrial waste and not goods of high purity. In the same decision it was further held that issue relating to dutiability of spent earth arising as residue in process of refining crude palm oil was considered in Jaimini edibles and facts India Pvt ltd and decided in assessee s favour. The Revenue has contended that as per the amendment in section 2 (d) of Central Excise Act, 1944 all the goods arising during manufacture is liable to duty. On going through amended Section 2 (d) it is found that section 2 (d) does not decide what is manufacture and what is not manufacture. Even though the Section 2 (d) was amended but the definition of manufacture under section 2 (f) remains same before and after amendment in section 2 (d). When based on the process it was found that the process of generation of spent earth is not such which falls under the definition of manufacture given in section 2 (f) the amendment of section 2 (d) will not have any effect. Therefore, the revenue s contention on the amendment of 2 (d) is not of any help to them. The spent earth generated in the manufacture of refined oil is not liable for excise duty. Accordingly, the impugned orders are not sustainable hence, the same are set aside - appeal allowed.
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2023 (5) TMI 511
Refund of the accumulated CENVAT Credit - denial of benefit on the ground that the invoices were addressed in the old address of the appellant - denial also on the ground of lack of nexus between the input services and the output service exported by the appellant - HELD THAT:- The issue regarding mention of wrong address in the disputed invoices has not been agitated by the Department at the time of availment of CENVAT Credit by the appellant. It is no doubt, and admitted fact that the Department had the occasion or scope to invoke the provisions of Rule 14 ibid read with Section 73 ibid at the material time, when the CENVAT Credit was availed by the appellant. In this case, since the Department has failed to invoke such provisions at the relevant point of time, the benefit of refund provided under Rule 5 ibid, cannot be curtailed on the issues, like invoices mentioned some other address and there is no nexus with the exportation of output service. In other words, Rule 5 ibid in unambiguous terms provides that grant of refund is subject to fulfillment of the conditions laid therein and as per the procedures laid prescribed in the notification issued thereunder and not otherwise. The authorities below have not discussed the issue regarding entitlement of the appellant to the benefit of refund inasmuch as, there is no specific discussion as to whether or not, the procedures laid down under Rule 5 ibid as well as the notification have not been complied with by the appellant. Thus, in absence of such specific findings being recorded, in our considered view, rejection of refund benefit cannot be sustained - in the case of CREDIT SUISSE BUSINESS ANALYTICS (INDIA) PVT LTD VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX NAVI MUMBAI [ 2022 (1) TMI 970 - CESTAT MUMBAI ], this Tribunal went to the extent of allowing the CENVAT Credit, even if the invoices were not submitted before the Bench for ascertaining the eligibility of the CENVAT Credit. In the case of Qualcomm India Pvt. Ltd. [ 2019 (8) TMI 1645 - CESTAT HYDERABAD ] and M/S BNP PARIBAS INDIA SOLUTION PVT LTD VERSUS COMMISSIONER OF CGST, MUMBAI EAST [ 2021 (12) TMI 676 - CESTAT MUMBAI ], the co-ordinate Bench of the Tribunal has consistently held that nexus aspect cannot be questioned, while considering the grant of refund provided under Rule 5 ibid. Hence, the denial of refund benefit by the Department will not stand judicial scrutiny as per the authoritative decisions rendered by the judicial forum. There are no merits in the impugned order, in so far it has denied the CENVAT benefit to the appellant - appeal allowed.
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Indian Laws
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2023 (5) TMI 510
Jurisdiction of the referral court at pre-referral stage - existence and validity of an arbitration agreement - Section 11(6) of the Arbitration and Conciliation Amendment Act, 2015 - HELD THAT:- Post-Arbitration and Conciliation Amendment Act, 2015, the jurisdiction of the court under Section 11(6) of the Act is limited to examining whether an arbitration agreement exists between the parties nothing more, nothing less . Thus, as per the Section 11(6A) of the Act, it is the duty cast upon the referral court to consider the dispute/issue with respect to the existence of an arbitration agreement. It is required to be noted that as per the settled position of law, pre-referral jurisdiction of the court under Section 11(6) of the Arbitration Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties to the agreement and the applicant s privity to the said agreement - The Secondary inquiry that may arise at the reference stage itself is with respect to the non-arbitrability of the dispute. Both are different and distinct. So far as the first issue with respect to the existence and the validity of an arbitration agreement is concerned, as the same goes to the root of the matter, the same has to be to conclusively decided by the referral court at the referral stage itself. If the dispute/issue with respect to the existence and validity of an arbitration agreement is not conclusively and finally decided by the referral court while exercising the pre-referral jurisdiction under Section 11(6) and it is left to the arbitral tribunal, it will be contrary to Section 11(6A) of the Arbitration Act. It is the duty of the referral court to decide the said issue first conclusively to protect the parties from being forced to arbitrate when there does not exist any arbitration agreement and/or when there is no valid arbitration agreement at all. The impugned common judgment and order passed by the High Court in respective Arbitration Petitions, referring the disputes to arbitration is hereby quashed and set aside. The matter is remitted back to the High Court/referral court to decide the respective arbitration petitions afresh - Appeal allowed.
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2023 (5) TMI 509
Dishonour of Cheque - insufficient funds - petitioner were involved in day-to-day affairs of the company so as to warrant their summoning by the learned Magistrate or not - Section 138 and 141 of the NI Act - HELD THAT:- It is settled law that only those directors, who were incharge of and responsible for day to day affairs of the company can be made liable under Section 141(1), or those directors, managers, officers etc. of the company due to whose negligence, connivance or consent the offence under Section 138 has been committed can be made liable under Section 141(2) - In the present case, the complainant has alleged that the accused company had issued the cheque in question for an amount of Rs. 19,98,779/- in favour of the complainant as part-payment for discharge of its debt, however, the same had got dishonored upon its presentation for the purpose of encashment. The complainant has averred in the complaint that accused no. 2 to 5 are the directors of the accused company and accused no. 6 is the company secretary as well as signatory of the accused company, as per the details available on MCA website, and all of them were therefore, responsible for day to day functioning of the accused company. Upon perusal of record, including the minutes of meetings annexed with the present petition, it is revealed that petitioner no. 1 was present in every meeting, minutes of which have been annexed, which prima facie indicate that she was responsible for day to day functioning of the accused company. As far as petitioner no. 2 is concerned, the mere fact that he was, at the relevant time, not present in India does not absolve her of her responsibilities towards the company and at times it may be possible that though one may not be physically present in India, however, in this age of technology one can take part in day-to-day affairs of the company and perform all the acts that a director is required to perform while being in a foreign country. Even otherwise, the veracity of such claims cannot be examined at this stage by this Court. It is also not the case of these petitioners that they were not the whole time directors or were non-functional directors of the accused company - Similarly, the presence of petitioner no. 3 can be seen in majority of the minutes of meetings annexed with the petition. As observed, a company secretary can also be held liable as per Section 141(2) of NI Act if it can be proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of company secretary. As per details of MCA website and as also averred by complainant, petitioner no. 3 is also a signatory of the accused company. Considering the overall facts and circumstances of the case as well as the material placed on record, this Court is of the opinion that the contentions raised before this Court at this stage are triable issues which can be decided only during the course of trial by leading evidence before the learned Trial Court and therefore, this Court does not deem it a fit case to exercise its powers under Section 482 Cr.P.C. for setting aside the summoning order and complaint qua petitioners at this stage when trial has still not yet commenced and the accused persons have merely been summoned by the Trial Court. Petition dismissed.
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