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TMI Tax Updates - e-Newsletter May 16, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws News FAQs on real estate - GST FAQs (Part II) on real estate - GST Project ‘SPARROW-CBIC’ for online writing of Annual Performance Appraisal Report (APAR) in SPARROW (Smart Performance Appraisal Report Recording Online Window) for Group ‘B’ and ‘C’ Officers of Central Board of Indirect Taxes & Customs (CBIC) implemented Interest Rate Benchmark Reform Proposed amendments to IFRS 9 and IAS 39 Comments to be received by 17 June 2019 Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified Workshop on Artificial Bio Organs held in Visakhapatnam Notifications Customs 36/2019 - dated 15-5-2019 - Cus (NT) Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver GST - States 10/2019-State Tax (Rate) - S.O. 215 - dated 10-5-2019 - Bihar SGST Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017 38/1/2017-Fin(R&C)(10/2019-Rate)/2826 - dated 13-5-2019 - Goa SGST Seeks to amend Notification No. 38/1/2017-Fin(R&C)(11/2017-Rate), dated 30th June, 2017 2825 - dated 13-5-2019 - Goa SGST Corrigendum - Notification No. 38/1/2017-Fin(R&C)(3/2019-Rate), dated the 29th March, 2019 Removal of Difficulty Order No. 05/2019-State Tax - dated 8-5-2019 - Goa SGST Goa Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019 38/1/2017-Fin(R&C)(101)/2804 - dated 8-5-2019 - Goa SGST Government of Goa hereby appoints the 21st day of June, 2019, as the date from which the provisions of the Goa Goods and Services Tax (Fourteenth) Amendment Rules, 2018 rule 12 of notification No. 38/1/2017-Fin(R&C)(85), dated 31st December, 2018, shall come into force. 38/1/2017-Fin(R&C)(100)/2805 - dated 8-5-2019 - Goa SGST Notify procedure for quarterly tax payment and annual filing of return for taxpayers availing the benefit of Notification No. 38/1/2017-Fin(R&C)(2/2019-Rate)/2527 dated 8th March, 2019 38/1/2017-Fin(R&C)(099)/2806 - dated 8-5-2019 - Goa SGST Goa Goods and Services Tax (Third Amendment) Rules, 2019 60/GST-2 - dated 10-5-2019 - Haryana SGST Amendment of notification no. 46/ST-2, dated 30.06.2017 under the HGST Act, 2017. SRO-145 - dated 28-2-2019 - Jammu & Kashmir SGST Amendment in Notification No. SRO-279 dated 08-07-2017 SRO-144 - dated 28-2-2019 - Jammu & Kashmir SGST State Government appoints the 1st day of February, 2019, as the date on which the provisions of the Jammu and Kashmir Goods and Services Tax (Amendment) Act, 2018 (Governor’s Act No. XXV of 2018), except clause (b) of section 8, section 17, section 18, clause (a) of section 20, sub-clause (i) of clause (b) and sub-clause (i) of clause (c) of section 28, shall come into force. SRO-143 - dated 28-2-2019 - Jammu & Kashmir SGST Rescinds Notification No. SRO-GST-8 dated 08-07-2017 G.O. (Ms.) No. 61 - dated 10-5-2019 - Tamil Nadu SGST Amendments to the Commercial Taxes and Registration Department Notification No.II(2)/CTR/532(d-14)/2017,Extraordinary, dated the 29th June, 2017, - Construction services - Rate of state tax on services. VI(1)/209(a)/2019 - dated 30-4-2019 - Tamil Nadu SGST Notifies the officers and perform the functions conferred on them under the sections. F.1-11 (91)-TAX/GST/2019 (Part-II) - dated 6-5-2019 - Tripura SGST CORRIGENDUM - Notification No. 3/2019-State Tax (Rate), dated the 30th March, 2019 771-F.T. - dated 10-5-2019 - West Bengal SGST Amendment in Notification No. 1135-F.T. [11/2017- State Tax (Rate)], dated the 28th June, 2017 766-F.T. - dated 8-5-2019 - West Bengal SGST Amendment of rule 109A under the WBGST Rules, 2017 Circulars / Instructions / Orders GST - States Circular No. 70/2019-TNGST - dated 2-5-2019 GST on Seed Certification Tags. Circular No. 71/2019-TNGST - dated 2-5-2019 GST exemption on the upfront amount payable in for long term lease of plots, under Notification 12/2017-Central Tax (R) S.No. 41 dated 28.06.2017. Circular No. 68/2019-TNGST - dated 26-4-2019 Clarification in respect of utilization of input tax credit under GST. DGFT Policy Circular No. 23/2015-20 - dated 15-5-2019 Non-requirement of submission of Hard Copy of application at RAs for issue of Advance Authorisation (AA) & EPCG Authorisation 08/2015-20 - dated 14-5-2019 Amendment in the Para 3.01(b) of the Handbook of Procedures Highlights / Catch Notes GST Offence u/s 132 of GST - interim protection to the petitioner - the power to punish set out in Section 132 would stand triggered only once it is established that an assessee has ‘committed’ an offence that has to necessarily be post-determination of the demand due from an assessee, that itself has to necessarily follow the process of an assessment. Visit to Get Source Allegation of indulged in Bill Trading activity - offence u/s 132 of GST - Seizure of records and documents - Direction issued to the department - Copies of the documents sought will be furnished within a period of two (2) weeks from the date of receipt of a copy of this order upon remittance of copying charges. Visit to Get Source Technical glitch in the GST portal - Respondents directed to either open the portal so as to enable the Petitioner to again file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31st May 2019. Visit to Get Source The Service provided to the Central Government by way of construction, erection, commissioning. installation, completion, fitting out, of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession will attract 12% GST Visit to Get Source Job Work - valuation - liability of GST - The job worker, as a supplier of services, is liable to pay GST if he is liable to be registered. He shall issue an invoice at the time of supply of the services. The value of services would include not only the service charges but also the value of any goods or services used by him for supplying the job work services, if recovered from the principal. Visit to Get Source Classification of supply - healthcare services - composite supply or not - supply of medicines, consumables, surgical items, items such as needles, reagents etc used in laboratory, room rent used in the course of providing health care services to in-patients - the hospital provides a bundle of supplies which is classifiable under health care services eligible for exemption. Visit to Get Source Classification of services - printing of pictures - As per Circular No. 84/03/2019 - GST dated 01.01.2019, service of printing pictures falls under service code 998386 as Photographic and Videographic processing Services as the colour printing of images from digital media is specifically covered under this classification - taxable at the rate of 18% Visit to Get Source Classification of supply - supply of medicines, consumables, surgical items etc, to in-patients - composite supply as defined in Section 2 (30) of the CGST Act, 2017 - the hospital provides a bundle of supplies which is classifiable under health care services eligible for exemption under Sl.No.74 of Notification No. 12/2017-CT(R) dated 28th June, 2017. Visit to Get Source Recovery of arrears of taxes - grant of facility of payment by installments defaulted - it appears that the liability is around ₹ 99.00 lakhs according to the Department. There are 100 people working in the Company. Therefore, while it is necessary to recover the tax arrears, it is also necessary to keep the Industry alive - Writ Petition is disposed of granting the facility of payment in installments Visit to Get Source Levy of GST - medical diagnostic service - As per SRO.No.371/2017 vide sl.no.74 (Notification No.12/2017-CT (Rate) dtd.28-06-2017, services by way of diagnosis come under the category of health care services covered under SAC 9993 in connection with health care services provided by a clinical establishment - exempt from GST Visit to Get Source Maintainability of writ petition - Section 107 clearly provides an efficacious alternative remedy to the petitioner to approach the appellate authority - It is a settled principle of law that generally, a writ jurisdiction cannot be invoked, in case the efficacious alternative remedy is available - petition dismissed Visit to Get Source Judicial propriety - STO coercive action after stay granted by FAA - restraining transfer of vehicles to RTO authorities & attachment of land - the action of the second respondent is clearly in contravention of the stay order passed by the FAA in favour of the petitioner - is in flagrant disregard & lack of respect for the order passed by FAA - not sustainable Visit to Get Source Income Tax Unexplained bank deposit u/s 68 - bank passbook - After the introduction of the definition of the books or books of account u/s 2 (12A), the passbook can also be considered as books or books of account - Section 68 does not make any distinction about who maintains the books of account, the only requirement is that the books should be of an assessee - addition sustained Visit to Get Source Assessment u/s 153A - notice u/s 143 (2) - A specific notice is required to be issued u/s 153A(1)(a) calling upon the persons searched or requisitioned to file return - That being so, no further notices u/s 143(2) can be contemplated for assessment u/s 153A - The words 'so far as may be' in Section 153A(1)(a)cannot be interpreted that the issue of notice u/s 143(2) is mandatory Visit to Get Source Priority of claim after attachment orders u/s 281 - - mortgagee right of recovery vs Income tax dept right of recovery - the properties which belong to third party guarantors, which do not form part of the proceedings before the NCLT under I & B Code, can always be sold by the bank and the attachment orders which are issued by the TRO after creation of mortgage cannot bind the bank Visit to Get Source Compounding of offence u/s 276-B - application with wrong officer - compounding fees as first application @ 3% OR as second (subsequent) application @ 5% - whether, the application should be treated as second application for the Financial Year 2013-14 and 2014-15 or as first application is purely a question of fact - writ dismissed Visit to Get Source Settlement commission power u/s 245D - Commission could have either rejected the application or allowed it to be proceeded further - When a duty is casts on the Commission, it is expected that the Commission would perform the duty in the manner laid down in the Act, especially when no further remedy is provided in the Act against the order of the Settlement Commission - remanded to commission Visit to Get Source Customs Refund of excess duty paid - The sole ground on which the refund application has been returned is that the Bill of Entry submitted by the petitioner has not been re-assessed by the concerned assessing officer - the statement is clearly contrary to law and untenable, since the the passing of an order of assessment is not within the control of an assessee. Visit to Get Source Interest on the refund u/s 27A - the Explanation to Section 27A makes it clear that the orders passed by the Commissioner (Appeals) and the Appellate Tribunal are also deemed to be orders passed u/s 27(2) - even if the ACC rejects an application for refund u/s 27(2), the moment the said order is set aside on first appeal or second appeal, the order merges - assessee is entitled to interest from the date of expiry of 3 months of the date of application Visit to Get Source DGFT Non-requirement of submission of Hard Copy of application at RAs for issue of Advance Authorisation (AA) & EPCG Authorisation Visit to Get Source Indian Laws Representation by a lawyer of own choice - Wilful Defaulter - No lawyer has any right under Section 30 of the Advocates Act to appear before the in-house committees - Given the scheme of the Revised Circular, it is difficult to state that oral hearing is mandatory - he Revised Circular, being in public interest, must be construed reasonably. Visit to Get Source Service Tax Principles of Natural Justice - issue of Show Cause Notice (SCN) without pre-SCN Consultation - HC set aside the SCN - The respondents will call upon the petitioner to appear before them with all relevant materials and afford it full opportunity of pre-SCN Consultation, prior to issuance of show cause notice, if at all found necessary Visit to Get Source Validity of Show Cause Notice (SCN) - Levy of service tax - fees collected by them towards internet fee and skill development fee - educational institution - HC declined to quash the SCN. Visit to Get Source Rectification of Mistake - It is not in all cases that the application of a wrong provision or the non-application of a right provision would tantamount to a mistake apparent from the record - it is subject to certain parameters - may be the petitioner has a good case on merits - should only file an appeal against the original order Visit to Get Source Central Excise CENVAT Credit - inputs/capital goods - staging structure - impugned articles were required to suitably support and facilitate the smooth functioning of the machines of the sugar mill - applying the principle of user test, credit allowed. Visit to Get Source Supplies against the international competitive bidding - Benefit of N/N. 06/2006-C.E. - the said condition is required to be fulfilled only in case goods are imported, therefore the said condition cannot be mutatis mutandis applied in case of goods indigenously supplied. Visit to Get Source Method of Valuation - clearance of tooth brushes in combo pack/bulk/naked condition to manufacturer of Toothpaste for free distribution - the tooth brushes supplied by the appellant which is not for retail sale but for free supply by the tooth paste manufacturer will not be valued under Section 4A in the hands of the appellant Visit to Get Source Method of Valuation - clearance without affixing any MRP - impugned goods are not components, parts or assemblies of the Two Wheeler but are accessories of two wheelers and hence not liable for valuation in terms of Section 4A and Notification No. 49/2008 – CE (NT) - demand not sustainable Visit to Get Source VAT Recovery of arrears of sales tax and penalty from the Legal Heirs of deceased - - The impugned order contains a fatal flaw insofar as it is addressed to the petitioner Firm and one of its partner, both not being legal heirs of the deceased sole proprietor. The Firm and Partner cannot thus be fastened with the liability of the deceased proprietor. Visit to Get Source Requirement with the pre-deposit - appellant is incurring huge losses as is evident from the Balance Sheets and is not in a position to deposit the amount - Since the appellant failed to deposit 25% amount of the additional demand of the tax as required under the law, the Tribunal rightly dismissed the appeal. Visit to Get Source Service of SCN - It was found that Form VAT 112 was not filed by the petitioner. Therefore, the AO did not commit a mistake in sending the show cause notice to the address as reflected in their records - however, one opportunity should be given to the petitioner imposing cost Visit to Get Source Case Laws: GST 2019 (5) TMI 905 Classification of supply - healthcare services - composite supply or not - supply of medicines, consumables, surgical items, items such as needles, reagents etc used in laboratory, room rent used in the course of providing health care services to in-patients for diagnosis or treatments which are naturally bundled and are provided in conjunction with each other - Sl.No. 74 of Notification No.12/2017-CT(R) dated 28 th June, 2017 - HELD THAT:- Composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. As per Section 2(90) of the CGST Act, 2017, principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. The provision of services of supply of medicines, consumables, surgical items, items such as needles, reagents etc used in laboratory, room rent used in the course of providing health care services to in-patients and patients admitted for a day procedure such as IVF for diagnosis or treatments is a composite supply as defined in Section 2 (30) of the CGST Act, 2017 and accordingly tax liability has to be determined in accordance with Section 8 of the CGST Act, 2017. In this case the provision of health care services being the principal supply and the other supplies being dependent on the provision of health care services can only be considered as services ancillary to the provision of health care services. In case of an inpatient, the hospital provides a bundle of supplies which is classifiable under health care services eligible for exemption under Sl.No.74 of Notification No.12/2017-CT(R) dated 28 th June. 2017. 2019 (5) TMI 904 Classification of services - process and treatment carried out on the goods belonging to the principal and made available by the principal - job-work or not - Whether the activity of job work carried out on goods falling under Chapter heading 5702 and 5703 is liable to CGST at the rate of 2.5% under Entry No.26 (i)(b), Notification No. 11/2017-CT(R) dated 28.06.2017 (Corresponding 2.5% under Kerala (GST)? HELD THAT:- Any treatment or process undertaken by a person on the goods belonging to another registered person is a job work as defined in Clause (68) of Section 2 of the CGST / SGST Act. As per the Circular No.38/12/2018 dtd. 26-03-2018 issued by CBEC, it is clarified that, in addition to the goods received from the principal, the job worker can use his own goods for providing the services of job work. The services are performed on physical inputs owned by units other than units providing the services. As such, they are characterized as outsourced portions of a manufacturing process or a complete outsourced manufacturing process. Under job work services, the output is not owned by the unit providing this service. Therefore, the value of the services is based on the service charge paid, not the value of the goods manufactured. The job worker, as a supplier of services, is liable to pay GST if he is liable to be registered. He shall issue an invoice at the time of supply of the services. The value of services would include not only the service charges but also the value of any goods or services used by him for supplying the job work services, if recovered from the principal. The materials supplied for execution of job work are falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975. The materials like carpets, coir etc. are supplied by the principal for executing job works along with moulds in the required designs. All the raw materials supplied by the principal are covered under Chapter 50 to 63 of the Customs Tariff Act, 1975, Therefore the job work services applied on such goods squarely come under Sl.No. 26 (i)(b) of Notification 11/2017 CT (Rate) dated 28.06.2017 and taxable @ 5% GST. 2019 (5) TMI 903 Classification of services - printing work carried out by the applicant - whether printing work carried out by the applicant with the photo quality perfection comes within the purview of service of printing of pictures as covered under Circular No. 84/03/2019 - GST dated 01.01.2019? - HELD THAT:- As per Circular No. 84/03/2019 - GST dated 01.01.2019, it is clarified that service of printing pictures falls under service code 998386 - Photographic and Videographic processing Services and not under 998912 Printing and Reproduction Services of recorded media, on a fee or contract basis. The word other printing services used in the service classification code 998912 has limited application like printing on newspaper, book printing or printing on media of plastic, glass, metal, wood, ceramic etc. The technological difference between ordinary print with digital print is in the way the images get transferred onto the paper. As per the explanatory notes to the scheme of classification of services, the printing of pictures / images on glossy coated paper / photo paper will not come under the Service Classification Code 998912 as it is specifically excluded from the classification and included in the Service Classification Code 998386. Therefore, the work of printing of images from digital media executed by the applicant comes within the ambit of Service Classification Code 998386 as the colour printing of images from digital media is specifically covered under this classification. Thus, the colour printing of images from digital media is under Service Classification Code 998386 and taxable at the rate of 18%. 2019 (5) TMI 902 Classification of supply - supply of equipment - design, fabrication, procurement, instrumentation and control and commissioning of Trisonic Wind Tunnel with Ejector System - works contract or not - concessional rate of GST - Sl.No. 243A of First Schedule of Notification No.01/2017-Integrated Tax (Rate) dated 28.062017 as inserted by Notification No. 07/2018 Integrated Tax (Rate) dated 25.01.2018 - Entry at SI No. 3 (vi) of Notification No. 08/2017 Integrated Tax (Rate) dated 28.06.2017 as amended by Notification No.24/2017 Integrated Tax (Rate) dated 21.09.2017 - HELD THAT:- The work of design, realisation, integration and commissioning of Trosonic Wind Tunnel as a turnkey project will fall under the definition of works under Section 2 (119) of the CGST Acts 2017. The Service provided to the Central Government by way of construction, erection, commissioning. installation, completion, fitting out, of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession will attract 12% GST as per Sl.No.3(vi) of Notification No. 08/2017 Integrated Tax (Rate) dated 28.06.2017. 2019 (5) TMI 901 Classification of supply - health care services or not - composite supply or not - supply of medicines, consumables, surgical items, items such as needles, reagents etc. used in laboratory, room rent used in the course of providing health care services to in-patients for diagnosis - naturally bundled services or not - Sl.No. 74 of Notification no.12/2017-CT(R) dated 28 th June, 2017 - HELD THAT:- Composite supply means a supply made by a taxable person to a consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. As per Section 2(90) of the CGST Act, 2017, principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. The provision of services of supply of medicines, consumables, surgical items, items such as needles, reagents etc used in laboratory, room rent used in the course of providing health care services to in-patients is a composite supply as defined in Section 2 (30) of the CGST Act, 2017 and accordingly tax liability has to be determined in accordance with Section 8 of the CGST Act, 2017 - In this case the provision of health care services being the principal supply and the other supplies being dependent on the provision of health care services can only be considered as services ancillary to the provision of health care services. The in-patient is under continuous monitoring of the doctors and nursing staff and administration and dosage of medication is all under the control of the doctor and the nursing staff. The entire treatment protocol is documented and recorded. Thus it is clear that in case of an inpatient, the hospital provides a bundle of supplies which is classifiable under health care services eligible for exemption under Sl.No.74 of Notification No. 12/2017-CT(R) dated 28th June, 2017. 2019 (5) TMI 900 Levy of GST - medical diagnostic service - Forward Charge or Reverse Charge Mechanism? - Clinical Establishment - requirement of registration - SI. No.74 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The diagnostic centres are organized facilities to provide diagnostic procedures such as radiological investigation supervised by a radiologist and clinical laboratory services by laboratory specialists usually performed through referrals from physicians and other health care facilities. Clinical / Medical diagnostic laboratory means a laboratory with one or more of the following; where microbiological, serological chemical, hematological, immune-hematological, immunological, toxicological, cytogenetic, exfoliative cytogenetic, histological, pathological or other examinations are performed of materials f fluids derived from the human body for the purpose of providing information on diagnosis, prognosis, prevention, or treatment of disease. These types of diagnosis or investigations rightly come under the category of health care services and are, therefore, eligible for exemption from GST. As per Section 24, persons who are required to pay tax under reverse charge shall obtain registration. Therefore, as per Section 24 of the State Goods and Services Tax Act, compulsory registration would be for persons exclusively engaged in provision of exempt supplies if they receive supplies liable to reverse charge as per notifications issued under Section 9(3) of the State Goods and Services Tax Act. 2019 (5) TMI 899 Technical glitch in the GST portal - Uploading TRAN-1 form on the common portal within time limitation - transitional credit - transition to GST regime - Counsel for the Petitioner points out that as of present the portal does not permit a registered trader/dealer to save on his/her system the filled up TRAN-1 or TRAN-2 form. According to him it does not even permit a print out of a filled up form. This makes it difficult for the trader/registered dealer to know whether the form has been correctly filled up. The issue at present is technical glitch in the system which does not permit a rectification in a situation where a dealer may have, due to inadvertence, or a bonafide error, not correctly filled up a form or where the system, due to a limitation in the algorithm/software programme, does not accept the entries sought to be made by the dealer. HELD THAT:- The GST system is still in a trial and error phase as far as its implementation is concerned. Ever since the date the GSTN became operational, this Court has been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through the GST portal - The Court s attention has been drawn to a decision of the Madurai Bench of the Madras High Court in TARA EXPORTS VERSUS THE UNION OF INDIA, GOODS AND SERVICE TAX COUNCIL, THE PRINCIPAL COMMISSIONER OF CGST AND CENTRAL EXCISE, THE PRINCIPAL SECRETARY/COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE CENTRAL GST OFFICER AND THE ASSISTANT COMMISSIONER, CGST AND CENTRAL EXCISE [ 2018 (9) TMI 1474 - MADRAS HIGH COURT] where after acknowledging the procedural difficulties in claiming input tax credit in the TRAN-1 form that Court directed the Respondents either to open the portal, so as to enable the petitioner to file the TRAN 1 electronically for claiming the transitional credit or accept the manually filed TRAN 1 and to allow the input credit claimed after processing the same, if it is otherwise eligible in law . In the present case also the Court is satisfied that the Petitioner s difficulty in filling up a correct credit amount in the TRAN-1 form is a genuine one which should not preclude him from having his claim examined by the authorities in accordance with law - A direction is accordingly issued to the Respondents to either open the portal so as to enable the Petitioner to again file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31st May 2019. The Petitioner s claims will thereafter be processed in accordance with law. With a view to ensure that in future such glitches can be overcome, the Court directs the Respondents to consider providing in the software itself a facility of the trader/dealer being able to save onto his/her system the filled up form and also a facility for reviewing the form that has been filled up before its submission. It should also permit the dealer to print out the filled up form which will contain the date/time of its submission online. The Respondents will also consider whether there can be a message that pops up by way of an acknowledgment that the Form with the credit claimed has been correctly uploaded. Petition disposed off. 2019 (5) TMI 898 Judicial propriety - STO coercive action after stay granted by FAA - restraining transfer of vehicles to RTO authorities - attachment of land - Entry Tax Act - HELD THAT:- the first appellate authority has granted stay against the coercive recovery of remaining dues in respect of all three years, the second respondent State Tax Officer could not have continued with the attachment of the agricultural land of the petitioner and the instructions issued to the RTO authorities to restrain transfer of any vehicle of the petitioner. The impugned communication dated 11.3.2019 of the second respondent is clearly in contravention of the stay order passed by the first appellate authority in favour of the petitioner; and is in flagrant disregard of the same, and, therefore, cannot be sustained. It is quite perturbing to note that despite the first appellate authority having stayed further recovery, not only did the second respondent not act on his own and revoke the instructions issued to the RTO authorities and lift the attachment over the land, even after the petitioner drew his attention to the order and made a request to revoke the instructions and attachment, the second respondent in flagrant disobedience of the order passed by the first appellate authority insisted upon continuing with the same, which displays lack of respect for the order passed by the first appellate authority. For the foregoing reasons, the petition succeeds and is accordingly allowed - decided in favor of petitioner. 2019 (5) TMI 897 Maintainability of petition - alternative remedy available - Liability of Interest - recovery proceedings u/s 79 of the CGST/SGST Act - Principles of natural justice - HELD THAT:- The present writ petition is highly misplaced for Section 107 of the Act clearly provides an efficacious alternative remedy to the petitioner to approach the appellate authority. It is, indeed, a settled principle of law that generally, a writ jurisdiction cannot be invoked, in case the efficacious alternative remedy is available. Even otherwise, the petitioner has approached this Court in order to circumvent the efficacious alternative remedy. For, according to Section 107(6) of the Act, an appeal can be filed provided the appellant makes the statutory deposit before the appellate authority. It is only in order to escape the said liability, the petitioner has rushed to this Court - Even if the petitioner is of the opinion that the principles of natural justice have been violated, he is free to raise the said plea before the appellate authority. This Court is not inclined to invoke the writ jurisdiction - petition dismissed. 2019 (5) TMI 896 Defreezing of Current Account - validity of search and seizure proceedings - HELD THAT:- The account of the petitioner shall be released on or before 11.04.2019. Liberty was sought to file application for revival of the petition, in case the account is not so released. 2019 (5) TMI 895 Allegation of indulged in Bill Trading activity - offence u/s 132 of GST - Seizure of records and documents - Production of copies of the documents and records seized during the inspection as well as copies of statements recorded by the inspecting authorities - Whether the petitioner is entitled to a mandamus as prayed for in regard to supply of the documents and statements sought for by it in the light of the provisions of the Act? - HELD THAT:- The Act provides for an assessment to be made after notice to be issued to the assessee - In the present case, the petitioner/assessee has been filing monthly returns regularly. This is not disputed. However, the Department apprehended that the petitioner was engaging in bill trading activities and launched an investigation in the premises to verify the business activities of the petitioner and its compliance with the provisions of the Act. The main prayer of the petitioner is for furnishing of copies of documents and records seized from its premises on 15.10.2018, 16.10.2018 17.10.2018. Thus, if the Department was of the view that this prayer was not liable to be granted for reasons that the documents were sensitive or such production would prejudice its interests, it ought to have said so in counter. In the absence of any such averment I must only conclude that there is no such apprehension in the mind of the Department and the prayer of the petitioner is thus, liable to be accepted. Copies of the documents sought will be furnished within a period of two (2) weeks from the date of receipt of a copy of this order upon remittance of copying charges. - the issue decided in favor of petitioner. Whether the interim protection sought for to prevent the respondents from invoking the powers under Section 69 of the Act read with Section 132 thereof in respect of the petitioner is liable to be granted? - HELD THAT:- In the present case, the Department does not dispute that action was intended or envisaged in the light of Section 132 of the CGST Act, the counter fairly stating that the provisions of Section 132 of the CGST Act were shown to the Assessee. There is thus no doubt in my mind that the Department intended to intimidate the petitioner with the possibility of punishment under 132 and this action is contrary to the scheme of the Act. While the activities of an assessee contrary to the scheme of the Act are liable to be addressed swiftly and effectively by the Department, (the statute in question being a revenue statute where strict interpretation is the norm), officials cannot be seen to be acting in excess of the authority vested in them under the statute - the power to punish set out in Section 132 of the Act would stand triggered only once it is established that an assessee has committed an offence that has to necessarily be post-determination of the demand due from an assessee, that itself has to necessarily follow the process of an assessment - the issue decided in favor of petitioner. Whether the petitioner's request for a direction to the respondents to complete adjudication and make an assessment after following the due process of law is liable to be accepted? - HELD THAT:- The Issue is allowed, directing the respondents to conclude the process of adjudication within a period of twelve (12) weeks from today, after issuing show cause notice to the petitioner setting out the proposals for assessment, affording full opportunity to the petitioner to respond to the same and advance submissions in person, and pass a reasoned and speaking order, in accordance with law. Petition allowed. 2019 (5) TMI 894 Failure to allow the rectification of error on GST Portal despite multiple representations - submission of Form TRAN-1 - HELD THAT:- The present writ petition stands disposed of and the respondents are directed to place the matter of the petitioner before the Nodal Officer, enabling him to take appropriate action for revising the transitional form known as TRAN-1. The aforesaid exercise be concluded within a period of 30 days from the date of receipt of certified copy of this order. Petition disposed off. 2019 (5) TMI 893 Recovery of arrears of taxes under the APGST Act and CST Act - grant of facility of payment by installments - wilful defaulter or not - HELD THAT:- Under normal circumstances, a person, who secured the facility of payment by installments and who committed default in complying with the same, may not be entitled to any indulgence - But, the facts of the case are little peculiar. It is seen from the representation made by the petitioner that the petitioner became a sick company from the year 2011 and their account was declared as Non-Performing Asset by the State Bank of India. It appears that in the year 2017, the bank accepted a One Time Settlement (OTS) and the petitioner came out of the woods. The company is on the path to recovery. Unfortunately, at the time when the petitioner secured an order for payment by installments, they also had the OTS Scheme sanctioned from the bank. Therefore, obviously, the priority went towards clearing the dues of the bank. Hence, the petitioner cannot be said to be a willful defaulter, disentitled to any indulgence. Today, it appears that the liability is around ₹ 99.00 lakhs according to the Department. There are 100 people working in the Company. Therefore, while it is necessary to recover the tax arrears, it is also necessary to keep the Industry alive. The Writ Petition is disposed of granting the facility of payment of the arrears of taxes, in twelve (12) equal monthly installments, with the first of such installment being paid on or before 15th April, 2019 and all subsequent installments being paid on or before 15th of every succeeding English Calendar Month. Income Tax 2019 (5) TMI 892 Settlement commission power u/s 245D - application made in terms of Section 245C - Petitioner Company had made full and true disclosure of income along with the manner in which such income was derived - Settlement Commission, by the order u/s 245D(4) without deciding the application on merit, relegated the Petitioner Company to the AO - HELD THAT:- The requirement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition u/s 245C. Unlike Section 139 which provides for filing of revised return, there is no provision for revision of an application made in terms of Section 245C. That shows clear legislative intent that the applicant for settlement has to make a true and fair declaration from the threshold. It is on the basis of the application received that the Commission calls for the report to decide whether the application is to be rejected or permitted to be continued. The declaration contemplated in Section 245C is in the nature of voluntary disclosure of concealed income, but as noted above it must be true and fair disclosure. Voluntary disclosure and making a full and true disclosure of the income are necessary preconditions for invoking the Commission s jurisdiction. In the scheme of thing, we are of the considered opinion that the petitioner company is right in contending that the Settlement Commission could have either rejected the application or allowed it to be proceeded further. If the Commission felt that the matter required further inquiry, it could have directed the Principal Commissioner or Commissioner of Income Tax to enquire and submit the report to the Commission to take a decision. The Commission could not get round the application for settlement. When a duty is casts on the Commission, it is expected that the Commission would perform the duty in the manner laid down in the Act, especially when no further remedy is provided in the Act against the order of the Settlement Commission. We set aside the order and dispose of the writ petition with a direction to the Settlement Commission to proceed to decide the application for settlement afresh in accordance with law and pass order. 2019 (5) TMI 891 Compounding of offence u/s 276-B - approval for compounding u/s 279(2) with a direction for payment of compounding charges - guidelines issued by CBDT (F.No.285/35/2013 IT) dated 23/12/2014 - compounding fees as first application @ 3% OR as second (subsequent) application @ 5% - failure to pay the TDS/TCS - HELD THAT:- The petitioner did submitted an application for compounding fees for the Financial Year 2013-14 and 2014-15 on 19/07/2017 in the office of Dy CIT (TDS), Indore instead of submitting it before the CCIT/DGIT and it was a mandatory requirement to submit an application before the CCIT (Pr. CCIT, Bhopal) keeping in view the instructions dated 02/11/2018 and also as per the Income Tax Act, 1961. Later on again an application was filed for Financial Year 2013-14 and 2014-15 on 15/01/2018, which was received in the office of Pr. CIT on 17/01/2018. Not only this, the petitioner also submitted an application for compounding in respect of Financial Year 2015-16 on 16/10/2017 and thereafter, he submitted an application for compounding offence in respect of Financial Year 2013-14 and 2014-15 on 15/01/2018, which was received on 17/01/2018. Hence, the Pr. CCIT was justified in levying compounding fee for the aforesaid financial years treating the same as second occasion. Order passed by Pr. CCIT is in consonance with the guidelines issued by the Central Board of Direct Taxes. The guidelines issued by the CBDT for the purposes of compounding fee have not been struck down in any of the judgment. It is purely a question of fact i.e. whether, the application should be treated as second application for the Financial Year 2013-14 and 2014-15 or as first application. Pr. CCIT was justified in treating the application as second applications / occasions and therefore, this Court does not find any reason to interfere with the order passed by the Pr. CCIT. The writ petition is accordingly dismissed. 2019 (5) TMI 890 Stay of the demand - Penalty u/s 271(1)(c) - HELD THAT:- Let affidavit-in-opposition be filed within four weeks; reply, if any, thereto by two weeks. CIT (Appeals), Kolkata XXIV is requested to dispose of the appeals for the Assessment Years 2012 2013 and 2013 2014 pending before him within a period of four weeks from date. Advocate on record of the petitioner is requested to communicate the order passed by this Court to the Commissioner of Income Tax (Appeals), Kolkata XXIV. As no coercive steps have been taken till date by the Revenue authorities, on the prayer of learned counsel appearing for the parties, leave is granted to the petitioner to file appropriate application, if necessary. 2019 (5) TMI 889 Priority of claim after attachment orders u/s 281 - mortgagee right of recovery vs Income tax dept right of recovery - property sold after attachment orders - Sub-Registrars refusing to register the sale deeds, in view of the orders of attachment passed by the 2nd respondent Tax Recovery Officer (TRO) - properties which belong only to third party guarantors, which do not form part of the proceedings before the NCLT under I B Code - claim of the TRO is that the very creation of the mortgage, during the pendency of the assessment proceedings, is null and void u/s 281 of the Income Tax Act, 1961 - HELD THAT:- The properties which the petitioner bank has sold under the Securitization Act, are that of third party guarantors. If the petitioner bank has sold or attempting to sell the properties of the 5th respondent company, then what the learned Senior Standing Counsel for the Income Tax Department contends may be right. The properties of a company ordered to be wound up under the provisions of the Insolvency and Bankruptcy Code, 2016, cannot be brought to sale by the bank under the Securitization Act. But when the properties sought to be sold are that of third party guarantors, the said impediment cannot stand in the way of the bank. The action of the Sub-Registrars, who are respondents 6 to 10, in refusing to register the sale deeds, in view of the orders of attachment passed by the 2nd respondent Tax Recovery Officer, is not in accordance with law. The properties which belong only to third party guarantors, which do not form part of the proceedings before the National Company Law Tribunal, can always be sold by the bank and the attachment orders which are issued by the 2nd respondent after creation of mortgage cannot bind. Hence, the Writ Petition is disposed of, directing respondents 6 to 10 to proceed with the registration of the properties of third party guarantors sold by the bank outside the purview of the Insolvency and Bankruptcy Code, 2016. 2019 (5) TMI 888 Disallowance of salary expenses - salary expenses had gone up by 268% as compared to last year while turn over showed only marginal increase from ₹ 6.96 Crores to ₹ 7.04 Crores - HELD THAT:- Salary has been paid to 7 persons out of which 4 persons are newly employed during the year. The 3 persons to whom salary was being paid last year also are Shri S.B. Jajoo in whose case salary has been increased by ₹ 5,000/- per month. Shri S.B. Jajoo has more than 34 years of experience of running of industry and business. The increase in his salary is by ₹ 5,000/- only and looking to his profile/experience such increase cannot be adversely viewed and no disallowance of salary paid to Shri S.B. Jajoo is warranted. In the case of Smt. Santosh Jajoo the increase in salary is of ₹ 10000/- per month. She has been with the company since 2007-08. No special qualification of Smt. Santosh Jajoo or her work experience to justify the increase in her salary of ₹ 10000/- as against that of ₹ 5000/- in the case of Shri S.B. Jajoo and Shri Pankaj Jajoo has been placed on record. She is one of the family members of the director the increased payment of salary by ₹ 5000/- per month is considered to be excessive and the disallowance of salary in her case to the above extent is confirmed which works out to ₹ 60000/-. In the case of Shri Pankaj Jajoo it has been explained that comparison with last year is not justified as last year salary for two months was paid it was also pointed out that increase in salary is of ₹ 5000/- per month only which looking to the qualification of Shri Pankaj Jajoo who as an engineer was looking after the production was justified. Coming to the salary payment to newly employed personnel, salary is paid to Shri V.S. Gaud at the rate of ₹ 12000/- per month as Accounts Officer and to Shri Sanjay Dixit at the rate of ₹ 10000/- per month as Accountant. As against this salary at the rate of ₹ 25000/- per month has been paid to Smt. Richa Jajoo and Smt. Divya Jajoo employed as office in charge and factory supervisor. No special qualification/experience of Smt. Richa Jajoo and Smt. Divya Jajoo have been placed on record to justify the higher salary paid to them except stating that being family members they were responsible for overall administration etc. and were more trustworthy and dependable. It is seen that, even Smt. Santosh Jajoo was being paid salary of ₹ 15000/- per month from A.Y. 2007-08 before her salary was increased in this year. Considering that both Smt. Richa Jajoo and Smt. Divya Jajoo do not have any other special qualification ₹ 10000/- is considered to be excessive and hence the disallowance to the above extent is confirmed. Disallowance of travelling expenses - HELD THAT:- As perused the materials available on record and gone through the orders of the authorities below. We find that the A.O. in para-5 of the assessment order has made addition merely on estimate basis. A.O. has not given any reasoning as to why the expenditure is being disallowed. Therefore, we do not see any infirmity into the order of the Ld. CIT(A) and the same is affirmed. Ground raised in this appeal is dismissed. Addition on account of suppression of sales - HELD THAT:- As evident that the CIT(A) has noted the fact that during the course of assessment proceedings as well as appellate proceedings, appellant had pointed out that in respect of trading goods for the assessment year 2009-10, the turnover of ₹ 32,84,698/- was included the turnover of ₹ 14,83,939/- pertaining to the manufactured goods, which was wrongly booked as turnover of the traded goods and hence the profit percentage was showing major variation. CIT(A) has given a finding that the assessee has filed complete details of traded goods for the year under consideration and also the comparative details for the previous year. It is observed by the CIT(A) that the contention of the assessee was found to be verifiable. The revenue has not rebutted these observations by placing any other material on record. Therefore, we do not see any infirmity in the findings of the CIT(A) and the same is hereby affirmed. 2019 (5) TMI 887 Assessment u/s 153A - non issuance of notice u/s 143 (2) - Addition u/s 68 - cash deposited the savings bank account maintained with the state bank of India - HELD THAT:- The words 'so far as may be' in clause ( a ) of sub-section (1) of section 153A cannot be interpreted that the issue of notice u/s 143(2) is mandatory in case of assessment u/s 153A. The use of the words 'so far as may be' cannot be stretched to the extent of mandatory issue of notice u/s 143(2). A specific notice is required to be issued under clause ( a ) of sub-section (1) of section 153A calling upon the persons searched or requisitioned to file return. That being so, no further notices u/s 143(2) can be contemplated for assessment u/s 153A. In view of this, we do not find any infirmity in the order of the learned assessing officer in issuing notice u/s 143 (2), on 6/12/2007, as there is no requirement prescribed under the law for issue of notice under that section where the assessment is taken u/s 153A - Decided against assessee. Addition u/s 68 - assessee has also taken care that none of the alleged loans exceeds the amount of INR 20,000. There is no documentary evidences produced before the lower authorities with respect to creditworthiness and genuineness of transactions of loan. Assessee had various opportunities to adduce evidence at the time of assessment. The assessee did not the used them and during the course of remand proceedings could produce only six persons who also lacks credibility. None of the persons produced also submitted their bank passbook to show the source of the funds. AO further noted an interesting fact that all the persons who are the lender to the assessee are also employed with the same company in which the assessee is a managing director. This it shows the genuineness of the transaction in serious doubt as the managing director of the company is taking loan of INR 18,000 from the various employees from his company. In view of this, we do not find any infirmity in the order of the learned CIT A, in confirming the addition u/s 68 of the amount deposited in the bank account of the assessee. Unexplained bank deposit u/s 68 - bank passbook is books or books of accounts - no requirement that the books of account should be maintained by the assessee himself - HELD THAT:- Even if the assessee does not maintain any books of accounts but the amount is deposited in the bank account of the assessee, which remains unexplained the addition could be correctly made u/s 68. Further looking at the definition of the books or books of accounts‟ it is apparent that passbook is a daybook which is kept in the return form or as a printout of data stored in a floppy. After the introduction of the definition of the books or books of account u/s 2 (12A) of the act, the passbook can also be considered as books or books of account. There is no distinction who writes it, but it is record of the transactions entered into by the assessee with the bank. The provisions of section 68 also does not make any distinction about who maintains the books of account, the only requirement is that the books should be of an assessee. There is no requirement that the books of account should be maintained by the assessee himself. In view of this, we do not find any infirmity in the order of the learned CIT A, in confirming an addition on account of unexplained bank deposits u/s 68 of the income tax act. Accordingly, the additional ground raised by the assessee for assessment year 2004 05 is also dismissed. 2019 (5) TMI 886 Unexplained income based on receipt given by the appellant as security - Addition u/s 69 - survey under section 133A - Addition based on 1 memorandum of understanding and 1 receipt was found in survey - HELD THAT:- It is very important to note that had this transaction actually taken place, then along with the memorandum of understanding and the receipt the relevant documents/title deed of the property, should also have been found from the premises. No question has been raised by the AO about the existence of the documents of that property in the form of title deed et cetera. Though the memorandum of understanding and receipt were found from the office of the assessee however in absence of any corroborative material the addition cannot be made. Further the memorandum of understanding that has been found from the office of the assessee was not signed at all by the assessee. Even the property mentioned in that particular memorandum of understanding was never transacted at all. Further on reading of the memorandum of understanding it is clear that Mr. Jayant did not have any right in the property. Preamble of the memorandum of understanding clearly shows that the property is in dispute. The assessee has also explained the other transactions entered into by Mr. Jayant with the assessee. Further the receipt found from the office of the assessee was also not dated and therefore it was not known that on which date the assessee has paid the alleged money to Mr Jayant - there is no signature of another party on the memorandum of understanding itself. Further on the receipt also the signature of these 2 parties have been obtained, however none of the parties confirmed that in fact there witness to the payment of INR 7,500,000 by assessee to Mr Jayant. Thus property did not belong to Mr Jayant, even otherwise he did not have any right to sell this property, property mentioned in the memorandum of understanding remains untransacted, no enquiry by the learned assessing officer with respect to the original title deed of the property mentioned in the memorandum of understanding along with the receipt but not found during the course of search, memorandum of understanding not signed by the assessee,confirmation of both the parties that the transactions have not fructified, version of the witness not confirming the memorandum of understanding and in absence of any corroborative material found during the course of search with respect to the above property, We are not inclined to confirm the above addition. - Decided in favour of assessee. 2019 (5) TMI 885 Rectification of mistake u/s 254 - monetary limit - maintainability of appeal - Addition u/s 69B - additions of different amounts at the hands of the assessee u/s on protective basis - additions were made on the basis of material found during the search and seizure operation conducted in Ms. Chandbibi Zaidi, wherein, bank account in the name of the assessee and Ms. Chandbibi Zidi indicating deposit - HELD THAT:- The facts involved in all the appeals being identical, the Tribunal while disposing off the present appeals not only took note of the factual aspect of the issue but also found that the order passed by the Tribunal for the assessment year 2007-08 squarely applies to the facts of the present appeal. Tribunal upheld Commissioner (Appeals) on the issue. That being the case, the contention of the Department that the appeal order passed by the Tribunal suffers from mistake apparent on the face of record, as envisaged under section 254(2) is without any basis. On the contrary, it is very much clear from the present misc. applications that the Department in the guise of rectification is actually seeking a review of the order which is not permissible in law. AR had submitted that the tax effect on the disputed additions is less than the monetary limit of ₹ 20 lakh as per CBDT Circular no.3/ 2018, dated 11th July 2018. Therefore, the present appeals of the Revenue would otherwise not be maintainable. We find substantial force in the aforesaid submissions of the learned AR. Since the tax effect on the disputed additions is much below the monetary limit of ₹ 20 lakh, the present appeals would be covered by the CBDT Circular referred to above, hence, would not maintainable. Therefore, it would have been a fruitless exercise to recall the appeal order. In view of the aforesaid, we dismiss the applications filed by the Revenue - Misc. applications are dismissed. 2019 (5) TMI 884 Quantification of deduction u/s 80IC - Whether profits and losses of the eligible units were to be netted? - HELD THAT:- Identical issue already stands decided in favour of the assessee by the I.T.A.T. vide their orders passed in the case of M/s Milestone Gears Pvt. Ltd. ( 2019 (1) TMI 421 - ITAT CHANDIGARH ) and Globe Precision Industries Pvt. Ltd. [2019 (1) TMI 531 - ITAT CHANDIGARH ] which decisions had been rendered after considering the judgement of the Hon ble jurisdictional High Court in the case of Him Teknoforge [2012 (9) TMI 162 - HIMACHAL PRADESH HIGH COURT ] ,and further since the Ld. DR has been unable to distinguish the said decisions before us ,the issue in the present appeals, we hold, stands squarely covered by the aforestated orders of the I. T.A.T.. Following the same we hold that the assessee is entitled to deduction u/s 80IC with respect to the profits earned by it from eligible units, ignoring the losses from other eligible units/undertakings. - Decided in favour of assessee. 2019 (5) TMI 883 Addition u/s. 68 of unexplained cash credit - share capital/premium - revenue contends during the course of hearing AO had rightly made the impugned addition as the assessee failed to prove the identity, genuineness and creditworthiness of its shareholders/investors/subscribers in issue - HELD THAT:- Revenue takes us through CIT(A) s findings deleting the impugned addition and submits that the AO could not verify the assessee s investor parties/subscribers during the course of assessment and therefore the CIT(A) ought not to have deleted the impugned addition in absence of such a vital factual verification. The assessee fails to dispute this clinching fact that the AO had not enable to verify the investor parties/subscribers for the purpose of genuineness and creditworthiness of the share capital/premium in issue. As relying on ITO V/s Primeline Sales P.Ltd [ 2019 (1) TMI 1562 - ITAT KOLKATA] we restore the matter back to the Assessing Officer for fresh adjudication after affording adequate opportunity of hearing to the assessee. - Revenue s appeal is allowed for statistical purpose Customs 2019 (5) TMI 882 Refund of excess duty paid - assessment of the proper value of the units and consignment imported not made - amendment of Bill of Lading is called for to reflect any change in Unit price but is not effected to - HELD THAT:- Prior to 2011, when Section 27 was amended, a person was entitled to seek refund only in a situation where the claim arose out of the payment made by him in pursuance of an order of assessment or borne by him in pursuance of an order of assessment - Subsequent to amendment of Section 27, the provisions of Section 27 have been considerably widened, as a result of which, after 08.04.2011, a claim for refund would lie in respect of any amount paid or borne by a person. The sole ground on which the refund application has been returned is that the Bill of Entry submitted by the petitioner has not been re-assessed by the concerned assessing officer. This observation falls in the face of the position that the passing of an order of assessment is not within the control of an assessee. It is for the Assessing Officer to take up a Bill of Lading and frame an assessment thereon. If the statement in the impugned letter is to be carried its logical conclusion, no refund may be sought by any person unless an order of assessment is made, which itself is only at the discretion of an Assessing Officer. Therefore, the statement is clearly contrary to law and untenable. The Assistant Commissioner ought not to have insisted upon an order of assessement having been passed. The petitioner is permitted to re-submit its application for refund within a period of two(2) weeks from today. The said applications will be considered by the respondents on merits and in accordance with law - petition allowed. 2019 (5) TMI 881 Interest on the refund u/s 27A - Section 130A of the Customs Act, 1962 - doctrine of Merger - HELD THAT:- The Explanation to Section 27A makes it clear that the orders passed by the Commissioner (Appeals) and the Appellate Tribunal are also deemed to be orders passed u/s 27 (2). In other words what is recognized by the Explanation to Section 27 A is nothing but the common law doctrine of merger . Even if the Assistant Commissioner of Customs rejects an application for refund u/s 27 (2), the moment the said order is set aside on first appeal or second appeal, the order merges. The last portion of the substantial part of the Section 27A makes it clear that the starting point for calculation of interest is the expiry of three months from the date of receipt of the application. The date of commencement of the liability for payment of interest is not relatable to either the date of the original order or the date of the order of the appellate authority but relatable only to the date of expiry of three months from the date of the application - Therefore, it leaves no iota of doubt that the assessee in this case became entitled to interest from the date of expiry of 3 months of the date of application. The date of expiry of the period of three months from the submission of the application, cannot be the date of expiry of three months from the date of the reminder. It is the original application that triggers the period, from which the liability to pay interest on the refund arises for the Department. Therefore, the writ petitions are bound to be allowed. The question of law raised by the Revenue is answered against them and the four appeals are dismissed. Corporate Laws 2019 (5) TMI 880 Restoration of name of an assessee company in the Register of ROC, Gujarat, Ahmedabad - case of escapement of income - HELD THAT:- In the present matter, it is undisputed position in the matter that the income tax department has already taken a conscious/ administrative decision against the Respondent No. 2 company on alleged escapement of income from assessment during the relevant financial year, hence, its name ought not to be removed in the light of above stated proviso - Hence, by considering the public interest involved in the present matter and also to protect adequately the interest of the Revenue/ Central Government, the name of the respondent company requires to be restored in the statutory register being maintained by the ROC so as to enable the appellant (Income Tax Department) as well as other Regulatory Authorities to proceed further in respect of its legal action against the assessee company as per rule and in accordance with the law. It would be just and proper to restore the name of the company M/s. Blue Eye Infotech Pvt. Ltd. In the register maintained by the Registrar of Companies, Ahmedabad so as to enable the Income Tax Department to initiate or to proceed with its statutory action/ proceedings in respect of the assessee company - appeal allowed. Insolvency & Bankruptcy 2019 (5) TMI 879 Admission of Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Although the Appellant claims that the Adjudicating Authority did not give Appellant a hearing, the Impugned Order shows that the Adjudicating Authority had proof of service on the Corporate Debtor - Although the Appellant claims existence of a dispute and the Appeal claims that a letter like Annexure A5 dated 23rd December, 2017 was sent to the Operational Creditor, there is no proof of service of such letter filed on record. The plea is thus unsupported by evidence. Remitting back the matter would not serve any purpose and the learned Adjudicating Authority having found the Application complete and having admitted the Application under Section 9, the Impugned Order calls for no interference on our part. Appeal dismissed. 2019 (5) TMI 878 Non-compliance with the provisions of Section 9(3)(c) by the Operational Creditor - validity of demand - Demand Notice under Section 8(1) was issued by the Appellant on 24th April, 2017 without attaching the invoices relating to debt which are payable - time limitation - HELD THAT:- There is nothing on the record to suggest that the invoices dated 23rd July, 2014 were forwarded or received by the Respondent- Spicejet Limited . Therefore, the Demand Notice issued on 24th April, 2017 as relates to invoice dated 23rd July, 2014, though it cannot be held to be barred by limitation, but in absence of specific evidence relating to invoices actually forwarded by the Appellant and there being a doubt, we hold that the Adjudicating Authority has rightly refused to entertain application under Section 9 which requires strict proof of debt and default. No relief can be granted - appeal dismissed. Service Tax 2019 (5) TMI 877 Validity of Show Cause Notice (SCN) - Levy of service tax - fees collected by them towards internet fee and skill development fee - educational institution - petitioner would submit that the impugned Show Cause Notice has been issued without authority under law - HELD THAT:- Being a Show Cause Notice, it is settled law that it can be challenged under Article 226 of the Constitution of India only when it has been issued without authority under law. Even though the petitioner submitted that the impugned Show Cause Notice has been issued without authority under law, it is the case of the respondent that the impugned Show Cause Notice has been issued only in accordance with law. The impugned Show Cause Notice cannot be quashed by this Court. However, the respondent is directed to pass final orders, after considering all the objections raised by the petitioner - petition disposed off. 2019 (5) TMI 876 Rectification of Mistake - mistake apparent from the record or not - It was contended that Rule 2A of the Service Tax (Determination of Value) Rules, 2006, was not even taken note of while arriving at the quantum of tax - HELD THAT:- The question as to whether the non-application of the relevant provision of the rules would tantamount to a mistake apparent on the face of the record, is subject to certain parameters. It is not in all cases that the application of a wrong provision or the non-application of a right provision would tantamount to a mistake apparent from the record. May be the petitioner has a good case on merits. But, an order of rejecting of an application for rectification cannot per se be taken to be wrong in the light of the limited scope of Section 74 of the Finance Act. Therefore, the petitioner should only file an appeal against the original order dated 10.01.2019. Time Limitation for filing appeal - Section 85(3A) of the Finance Act - HELD THAT:- Under Section 85(3A) of the Finance Act, the petitioner has a remedy of appeal within two (2) months - In this case, the period of two (2) months can be calculated only from the date of receipt of the order of rejection of the rectification of application. The date of order of rejection of the rectification application is 28.02.2019. It was received by the petitioner on 04.03.2019. Therefore, the petitioner has time up to 04.05.2019 for filing an appeal against the order in original dated 10.01.2019. Petition dismissed. 2019 (5) TMI 875 Maintainability of petition - Alternative remedy of appeal - Levy of Service Tax - Renting of Immovable Property Service - issue in dispute for long time - HELD THAT:- The litigation in regard to this issue has a chequered history - On 05.04.2018 the matter was listed for final hearing before the Supreme Court and has been referred to a Bench of nine judges in the case of MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA ORS [ 2011 (3) TMI 1554 - SUPREME COURT ] . The period of assessment in the present case is 01.06.2007 to 30.06.2008 and 01.07.2008 to 31.01.2015. It is also an admitted position that as regards the total arrears of ₹ 38,14,620, computed as on 19.10.2010 a sum of ₹ 24,35,280/- has been collected by the service tax department by way of attachment of rents paid by the 3rd respondent, the lessee in the property in question. In the light of the discussion and bearing in mind the position that a substantial portion of the disputed demand has already been collected by the Revenue, I am inclined to permit the petitioner to file an appeal challenging the order-in-original before the Commissioner of Service Tax(Appeals) - petition dismissed. 2019 (5) TMI 874 Principles of Natural Justice - issue of Show Cause Notice (SCN) without pre-SCN Consultation based on Audit - petitioner has sought an opportunity of personal hearing that has admittedly not been granted - HELD THAT:- While the report appears to proceed on the basis that the Consultative process is being implemented effectively and regularly, the present case would establish otherwise. The impugned SCN has been issued, admittedly, without engaging the petitioner/assessee in the process of pre-SCN consultation. The impugned show cause notice is set aside - The respondents will call upon the petitioner to appear before them with all relevant materials and afford it full opportunity of pre-SCN Consultation, prior to issuance of show cause notice, if at all found necessary - petition allowed. 2019 (5) TMI 873 Grant of stay - condition of pre-deposit complied with - Telangana Entry of Goods into Local Areas Act, 2001 - HELD THAT:- At the time of filing of the first appeal, the petitioner had paid 12.5% of the disputed tax. Therefore, the petitioner can be granted stay subject to the imposition of a condition. This is in view of the fact that a batch of writ petitions challenging the vires of the Act are pending on the file of this Court. The writ petitions are disposed of granting interim stay of collection of the balance tax during the pendency of the appeal subject to the condition that the petitioner deposits 12.5% of the demand (in addition to the 12.5% already deposited) within a period of six (6) weeks from the date of receipt of a copy of this order - There will be no order as to costs. 2019 (5) TMI 872 Condonation of delay of 350 days in filing an appeal - demand of service tax as per the proviso to Section 73 (1) of the Finance Act, 1994 - the appellate pleaded that his brother died leaving the family in distress and that therefore there were some difficulties in organizing the affairs of his business - Whether the Tribunal was justified in adopting a pedantic approach in the matter of condonation of delay? HELD THAT:- We do not know how the death of the appellant s brother a few days before the receipt of the Order-in-Original could be a valid ground to reject the reasons for the delay. In any event, the Order-in- Original was dated 23.01.2015. The appellant s brother died on 13.02.2015. The appellant stated that the family was in a state of shock and that prompt action could not be taken - Once it is not disputed that the appellant s brother died after the order was passed but before it was received, we see no reason as to how the service of the copy of the order before the death of the appellant s brother would make things different. As a matter of fact, the appellant has already filed a VCES application and paid the entire service tax liability. Therefore, the refusal of the Tribunal to condone the delay appears to be contrary to law and unjustified. The delay in filing the appeal before the Tribunal is condoned - COD application allowed. Central Excise 2019 (5) TMI 871 Method of Valuation - clearance of tooth brushes in combo pack/bulk/naked condition to manufacturer of Toothpaste for free distribution by inserting the brush in the tooth brushes pack - valued u/s 4 or u/s 4A of CEA - case of the department is that the tooth brushes so cleared was required to be assessed under Section 4A of the Central Excise Act, 1944. i.e. on MRP basis, on the basis that the toothpaste manufactured by the appellant for their customer were also packed in the blister packing in 1/2/3/4 prices in pack printed with MRP at it, as per Standards of Weights and Measures Act and were assessed as per section 4A of the Central Excise Act, 1944. HELD THAT:- The facts is not under dispute that the tooth brushes manufactured and supplied by the appellant were cleared either in bulk form or combo pack or in naked condition that means without any retail packing. Goods were supplied to tooth paste manufacturer who in turn used these tooth brushes for making a combo pack with tooth paste for free supply, therefore, the tooth brushes cleared by the appellant was neither sold as such in retail either by the appellant or the buyers i.e. M/s Colgate Palmolive (India) Limited, Oral care etc. In this identical fact the issue was considered by the Hon ble Supreme Court in the case of JAYANTI FOOD PROCESSING (P) LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAJASTHAN [ 2007 (8) TMI 3 - SUPREME COURT] where it was held that valuation cannot be done u/s 4A of CEA. Relying on the Hon ble Supreme Court judgment the Mumbai Bench of the Tribunal in the case of NESTLE INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GOA [ 2017 (10) TMI 203 - CESTAT MUMBAI] also held that promotional pack of maggi noodles supplied free with Packet of Tata Tea and such packs of maggi noodles were not bearing MRP with declaration free with Tata Tea . Therefore, provisions of Standards of Weights and Measures Act, 1976 and Rules made there under would not apply on such supplies. Thus, the tooth brushes supplied by the appellant which is not for retail sale but for free supply by the tooth paste manufacturer will not be valued under Section 4A in the hands of the appellant - the value adopted by the appellant under Section 4 is correct and legal which does not need any interference. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 870 Method of Valuation - goods being accessories of two wheelers - components parts OR accessories - appellant after manufacturing of such goods are clearing to the above buyers without affixing any MRP and assessing the same in terms of Section 4 of Central Excise Act - section 4 or 4A of CEA? - N/N. 49/2008- CE (NT) - Clandestine removal - applicability of legal Metrology Act, 2009 - HELD THAT:- The fact remains that these goods when bought by the individual customers were at their own option and the Two Wheeler manufacturers were not mandatorily required to fix these goods on the two wheelers at the time of sale of two wheelers to their customers. The Revenue has not brought any evidence on record to show that the Two Wheelers may not run without the impugned goods or it is mandatory to fix these goods at the time of clearance of the two wheelers from the two wheeler manufacturers factories. The impugned goods are attached to the two wheelers for the convenience and safety of the vehicle as well as of the rider. There is clear difference between the parts and accessories and they cannot be equated with each other. Section 4A of the Central Excise Act, 1944 covers only those excisable goods which are required to declare the retail sale price under the provisions of legal Metrology Act, 2009. Even if the goods are presumed to be listed under Notification 49/2008, the same would not be covered under the provisions of Section 4A of the Central Excise Act, if these are not covered by the provisions of the legal Metrology Act, 2009 and the Rules framed therein. As per explanation of above Notification 49/2008-CE (NT), retail sales price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight charges, commission payable to dealers and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and sale price is the sole consideration for such sale. Thus it can be seen that the retail sale price is defined with reference to sale to the ultimate consumer only whereas the industry or institutional consumers are not ultimate consumers - There is no dispute about the fact that the Appellants are selling the goods in bulk pack, wherein per box includes 5 / 6/ 10 pieces per box. It is, thus, absolutely clear that the goods when cleared by the Appellant are not intended for retail sale at the end of M/s RC. The impugned goods are not components, parts or assemblies of the Two Wheeler but are accessories of two wheelers and hence not liable for valuation in terms of Section 4A and Notification No. 49/2008 CE (NT). Further that the goods were at the time of clearance from the factory of M/s RC were not intended to be sold to the ultimate consumer in retail but were intended to be cleared in wholesale package to the industrial customer and hence not liable to duty in terms of Section 4A and Notification No. 49/2008 CE (NT) - the demand made against M/s RC in terms of Section 4A and in terms of Notification No. 49/2008 CE (NT) is not sustainable.. Confiscation of goods - no evidence that the goods were diverted elsewhere - HELD THAT:- The charges of clandestine removal has to be investigated and proved and cannot be merely alleged on the basis of incomplete challans or records. No buyer of such goods which were inputs or semi finished goods has been found. No statement of any job worker is appearing on record and no evidence except job work challans are appearing on record. In absence of any buyer and receipt of any consideration it cannot be said that any goods were removed by RC. No discrepancy in stocks has been shown to have occurred. The allegation lacks any corroborative evidence and hence the demands are not sustainable. The show cause notice has not adduced single evidence that the goods were diverted elsewhere. The Appellant has removed all the finished goods on invoices and there is no evidence to suggest removal of inputs or semi finished goods without legitimate invoices. There is no mention in the show cause notice or the impugned order to show that if the semi finished goods after job work were not received back in the factory then where else the same were cleared. The goods were being cleared without complying with the provisions of Section 4A, we hold that since the valuation of goods in terms of section 4 i.e. assessment of duty on transactional value under section 4 is correct, therefore the confiscation of goods is not sustainable. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 869 Benefit of N/N. 06/2006-C.E. dated 01.03.2006 (Serial number 91) - supplies against the international competitive bidding - goods exempted from custom duty - contention of the Revenue is that the appellant should fulfill all the conditions prescribed for the purpose of exemption Notification No. 21/2002- Cus. HELD THAT:- From the reading of the notification it clear that there are 2 conditions applied:- The first condition is that the goods should be supplied against international competitive bidding which is not under dispute as already held by the Commissioner (Appeals). The Second condition is that the goods supplied by the appellant are exempted from duties of custom leviable when imported into India. As per Notification No. 21/2002-Cus dated 01.03.2002 (serial no. 214) the goods supplied by the appellant is admittedly exempted when imported into India, therefore, both the conditions stand fulfilled. Notification No. 06/2006-C.E does not prescribe any condition that condition provided for custom notification should be complied with by the assessee who manufacture and supply the goods indigenously under Notification No. 06/2006-C.E. The only condition is that the goods supplied by the appellant are exempted from custom duty which is not under dispute as per Notification No. 21/2002-Cus. From the reading of the condition 29 of Notification No. 21/2002-Cus, it is clear that the said condition is required to be fulfilled only in case goods are imported, therefore the said condition cannot be mutatis mutandis applied in case of goods indigenously supplied. So far the appellant s supplies is against the international competitive bidding and the goods are exempted from custom duty, if imported into India, the appellant is entitled for the exemption Notification No. 06/2006- C.E. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 868 CENVAT Credit - input services - outward transportation of goods (GTA Services) - agreement of sale on FOR Destination basis or not - reliance placed on the decision of the Bench in the case of M/S. MAHLE ENGINE COMPONENTS INDIA PVT. LTD. AND OTHERS VERSUS CCE ST, CHENNAI-III, COMMR. OF GST CE (CHENNAI OUTER) , CCE, CHENNAI NORTH, I, PUDUCHERRY [ 2019 (4) TMI 635 - CESTAT CHENNAI] where it was concluded that the appellants should be given an opportunity to establish which is the place of removal for them and then look into the eligibility of credit on GTA Services availed for outward transportation up to the buyer s premises in the light of the Board s Circular dated 08.06.2018 - HELD THAT:- The appellant to first establish whether there was an agreement or the purchase order wherein it is made clear as to the terms; and the manufacturer was required to deliver the manufactured goods at the buyer s premises; and then comes the transfer of ownership, which is to be ascertained - without examining these aspects, the observations of the adjudicating authority, cannot be sustained since the buyer s premises where the goods are alleged to have been delivered would at the most become the place of acceptance of supplies. Appeal allowed by way of remand. 2019 (5) TMI 867 CENVAT Credit - inputs/capital goods - staging structure falling under chapter heading No.73089090 - HELD THAT:- In the present case from the purchase order, it is apparent that a purchase order was placed as per the technical specifications. Keeping in view the scope of work required for the Energy Efficient Expansion of the Sugar Mill of the appellant. It stands clarified from the purchase order itself that existing sugar mill was proposed to be modified and for the said modification, the apparatus was purchased - Technological structures and staging are part of the machineries, in the sense that different equipment and plant like Pans, Crystallizers, Tank etc. are erected at a given height, and base which is provided by these technological structures and staging. The plant and machineries will be incomplete without these structures and staging. Keeping in view the same, the principal of user test as has been held by Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] , wherein the Hon ble Supreme Court has considered an identical issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set. The credit stands allowed in the light of Rule 57Q of the erstwhile Central Excise Rules, 1944. In addition, the Department s own Circular No. 964/07-2012 dated 2nd April 2012 supports the appellant s case and also the Circular No. 966/2009 dated 18 May, 2012 come to the rescue of the appellant which contained clarification regarding classification of structural components and admissibility of Cenvat credit Cenvat Credit there upon. It was clarified in the said Circular that Cenvat Credit is available in support of such structural components, which though are used for laying foundation or for making structural support, but if the machine cannot work without such support, these become the accessories / components thereof and as such, classified to be called as capital goods. In the present case, the impugned articles were required to suitably support and facilitate the smooth functioning of the machines of the sugar mill and as such, while applying the above principle of user test such structures have to be considered as the part of the relevant machines. Since the definition of capital goods includes components, spares accessories of such capital goods, we have no hesitation in holding that the impugned structural items would fall within the ambit of capital goods as contemplated under Rule 2 (a) of the Cenvat Credit Rules. Hence, appellant is held entitled to avail the Cenvat Credit. Credit allowed - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (5) TMI 866 Requirement with the pre-deposit - appellant is incurring huge losses as is evident from the Balance Sheets and is not in a position to deposit the amount - reversal of input tax credit - bye products retained by the millers - HELD THAT:- The Tribunal while dismissing the appeal of the appellant noticed that the law required the entertaining of the appeal only when compliance under Section 62(5) of the Act was made. Further, the first appellate authority had already granted partial protection by directing the appellant to deposit 25% of the additional tax demand only. Therefore, the appellant was liable to comply with the provisions of Section 62(5) of the Act. Since the appellant failed to deposit 25% amount of the additional demand of the tax as required under the law, the Tribunal dismissed the appeal on that account. The appellant was required to pre-deposit 25% amount of the additional demand of tax liability only as directed by the DETC(A) and the Tribunal as a condition precedent for hearing of the appeal, which was reasonable and justified - appeal rightly dismissed. 2019 (5) TMI 865 Service of SCN - grievance of petitioner is that the show cause notice was sent to the previous address and that therefore, they were unable to file a reply - HELD THAT:- It was found that Form VAT 112 was not filed by the petitioner. Therefore, the Assessing Officer did not commit a mistake in sending the show cause notice to the address as reflected in their records - But, at the same time, the turnover which the petitioner claimed to be exempted under the Telangana Value Added Tax Act, 2005, has been treated as stock transfer and a levy made under the CST Act, 1956. If the petitioner had promptly informed the change of address and participated in the proceedings, this could not have been happened. One opportunity should be given to the petitioner. But, since the respondents were not at fault, we directed the petitioner to make payment of a sum of ₹ 3,00,000/- - The amount of ₹ 3,00,000/- deposited pursuant to the order passed by this Court, will be dealt with depending upon the out come of the assessment. If no tax liability is fastened ultimately, by any order passed by the Assessing Officer, the amount deposited shall be refunded. Petition allowed. 2019 (5) TMI 864 Recovery of arrears of sales tax and penalty from the Legal Heirs of deceased - HELD THAT:- The facts and circumstances of the present case, do not warrant an interpretation of, or adjudication upon the legal submissions made as aforesaid, simply for the reason that the legal representatives of the deceased sole Proprietor have consciously taken it upon themselves to defray the arrears of penalty for the periods in question by carrying forward the litigation and filing and pursuing the Tax Case (Revisions) before this Court - there is no question that the legal representatives are, and have admitted liability to the penalty levied. There is no question that the legal heirs of Mr.Abdul Gafoor are liable to defray the penalties that has been imposed upon him by the Commercial Tax Authorities. However, the present order is only addressed to the Firm and Partners who cannot be held liable for the arrears of the sole proprietorship. The impugned demand notice thus fails and is set aside - It is made clear that the Department is at liberty to recover the amounts from the legal heirs of Mr.Abdul Gafoor, in accordance with law. The impugned order contains a fatal flaw insofar as it is addressed to the petitioner Firm and one of its partner, both not being legal heirs of the deceased sole proprietor. The Firm and Partner cannot thus be fastened with the liability of the deceased proprietor. Refusal of the respondents to permit the first petitioner to download C Forms that are required for the conduct of business in order to avail concessional rate of tax - HELD THAT:- Admittedly, the Firm does not have any arrears of sales tax, penalty or interest - the rejection by the Department of the petitioners' request to download 'C' forms is not in accordance with law. Petition disposed off. Wealth tax 2019 (5) TMI 863 Wealth tax assessment - non recording of reason showing escapement of wealth from taxation - admission of additional ground - validity of the original order passed u/s 16(3) in appeal against the order passed u/s 25(2) where the original order passed u/s 16(3) which was was subject to revision - HELD THAT:- As decided by the coordinate bench in the case of Westlife Development [ 2016 (6) TMI 1208 - ITAT MUMBAI] is in Income Tax matter but the principles laid down squarely applies to the wealth tax matter also as respective section of the assessment, reassessment and revision are similar. In view this, we hold that there is no infirmity in the argument of the AR in challenging the validity of the assessment which is subject to revision. Now as per the earlier order of the coordinate bench in this appeal on the order sheet it was found that the original records were required to be produced by the department. Such records were produced before us by the CIT- DR. On request to show the reasons recorded for issue of notice u/s 17 based on which the assessment u/s 16(3) was made, CIT DR could not show us such reasons recorded from the records. Order sheet of the assessment proceedings also did not show that any such reasons were recorded by the WTO. It is apparent that the original order passed u/s 16(3) of the Act read with section 17 of the WTA Act is passed without recording any reason showing escapement of wealth from taxation. In absence of any such reason shown to us, we do not have any other alternative but to quash the order u/s 25(2) of the WT Act passed by Commissioner of Wealth Tax. Consequently, we hold that order passed u/s 25(2) of the Act is invalid and hence quashed. Accordingly, appeal of the assessee for Assessment Year 2003-04 is allowed. Indian Laws 2019 (5) TMI 862 Representation by a lawyer of own choice - Wilful Defaulter - whether when a person is declared to be a wilful defaulter under the Circulars of the Reserve Bank of India, such person is entitled to be represented by a lawyer of its choice before such declaration is made? HELD THAT:- The in-house committees are not vested with any judicial power at all, their powers being administrative powers given to inhouse committees to gather facts and then arrive at a result. Secondly, it cannot be said that the Circulars in any manner vests the State s judicial power in such in-house committees - No lawyer has any right under Section 30 of the Advocates Act to appear before the in-house committees so mentioned. Further, the said committees are also not persons legally authorised to take evidence by statute or subordinate legislation, and on this score also, no lawyer would have any right under Section 30 of the Advocates Act to appear before the same. Whether an oral hearing is required under the Revised Circular dated 01.07.2015? - HELD THAT:- The said Circular makes a departure from the earlier Master Circular in that an oral hearing may only be given by the First Committee at the first stage if it is so found necessary. Given the scheme of the Revised Circular, it is difficult to state that oral hearing is mandatory. There is no right to be represented by a lawyer in the in-house proceedings contained in paragraph 3 of the Revised Circular dated 01.07.2015, as it is clear that the events of wilful default as mentioned in paragraph 2.1.3 would only relate to the individual facts of each case. What has typically to be discovered is whether a unit has defaulted in making its payment obligations even when it has the capacity to honour the said obligations; or that it has borrowed funds which are diverted for other purposes, or siphoned off funds so that the funds have not been utilised for the specific purpose for which the finance was made available. Whether a default is intentional, deliberate, and calculated is again a question of fact which the lender may put to the borrower in a show cause notice to elicit the borrower s submissions on the same. Article 19(1)(g) is attracted in the facts of the present case as the moment a person is declared to be a wilful defaulter, the impact on its fundamental right to carry on business is direct and immediate. This is for the reason that no additional facilities can be granted by any bank/financial institutions, and entrepreneurs/promoters would be barred from institutional finance for five years. Banks/financial institutions can even change the management of the wilful defaulter, and a promoter/director of a wilful defaulter cannot be made promoter or director of any other borrower company. Equally, under Section 29A of the Insolvency and Bankruptcy Code, 2016, a wilful defaulter cannot even apply to be a resolution applicant. Given these drastic consequences, it is clear that the Revised Circular, being in public interest, must be construed reasonably. The Committee comprising of the Executive Director and two other senior officials, being the First Committee, after following paragraph 3(b) of the Revised Circular dated 01.07.2015, must give its order to the borrower as soon as it is made. The borrower can then represent against such order within a period of 15 days to the Review Committee. Such written representation can be a full representation on facts and law (if any). The Review Committee must then pass a reasoned order on such representation which must then be served on the borrower. Appeal allowed. 2019 (5) TMI 861 Inclusion of names in the list of the Reserve Bank of India s Credit Information Companies list of Wilful Defaulter - Conversion of security for the cash credit facility by illegally clubbing the two accounts - debt was classified as non-performing assets (NPA) - HELD THAT:- The petitioner company has been given notice well in advance to appear in the hearing to explain why the petitioner company should not be enlisted as wilful defaulter - complying all the formalities the petitioner company was duly furnished with all documents. In spite of that the petitioner company repeatedly failed, neglected and avoided to appear in the hearing on some pretext or other. The Court also cannot shut its eyes on the argument as demonstrated by Mr. Bhattacharya (appearing at Page 222 224 of the writ petition) that ample opportunity was given to the petitioner company to appear before the hearing. But unfortunately the petitioner company failed , neglected and avoided to appear before the hearing - The Court also finds that talk of settlement was going on between the petitioner company and the respondent bank but the petitioner company failed to comply with the terms of settlement. Therefore, settlement also failed. This writ petition is a pre-mature one. Accordingly this writ petition does not deserve any interference by this Hon ble Court - the present writ petition is dismissed without any order as to costs.
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