Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 18, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Provisional Attachment of Bank Accounts - No notice u/s 74 was issued - Power u/s 83 of the GST - as on the date of attachment order dated 22.10.2021, there was no notice under Section 74 of the CGST Act. Consequently, the attachment order dated 22.10.2021 itself was without jurisdiction and consequently, it is not sustainable. - HC
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Violation of principles of natural justice - allegation that the petitioner has committed fraud and claimed input tax credit without movement of the vehicle through the check post. - As the order, which were never supplied to the petitioner at any point of time, it can be said without hesitation that the same will be in violation of principles of natural justice. It may be true that the petitioner has committed a grave offence but any order passed without providing an opportunity to defend his case would be in violation of the procedure established by law. - HC
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Violation of principles of natural justice - Not giving an opportunity of hearing the petitioner - The order also states that the owner of the goods, in his reply stated that no personal hearing is required, as he has submitted his reply. Of course, this aspect is disputed by the learned counsel for the petitioner, but from the record, a detailed written reply was given explaining his stand, which was not accepted. If factual aspects or perusal of record is warranted, the petitioner ought to have preferred an appeal, as provided under the Act. The scope of interference under Article 226 is very limited, hence the order passed by the authority warrants no interference. - HC
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Profiteering - purchase of flats - benefit of Input Tax Credit had not been passed on to the Applicant - The Authority determined amount of Rs. 85,77,419/- (including 12% GST) under section 133 (1) that has been profiteered by the Respondent from his home buyers (as per the list mentioned below), including Applicant No. 1, and shall be refunded by him along with interest @18% thereon, from the date when the amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the GCST Rules 2017. - NAPA
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Profiteering - Reduction in rate of GST on Paint from 28% to 18% - failure to pass the benefit on to the customers - there are no reason to differ from the Report of the DGAP and we therefore agree with the findings of the DGAP that the provisions of Section 171 of the CGST Act 2017 have been contravened in this case and the Authority determine the profiteered amount at Rs. 4,19,069/- under the provision of Rule 133 (1) of the CGST Rules. - NAPA
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Profiteering - purchase of Flat - allegation is that the benefit of input tax credit had not been passed on - project was not under execution before coming into force of the GST - Since there is no basis for comparison of ITC available before and after 01.07.2017, the Respondent is not required to recalibrate the price of the flat due to additional benefit of ITC. Hence, the allegations of the Applicants made in this behalf are incorrect and therefore, the same cannot be accepted - NAPA
Income Tax
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Stay of demand - ITO passed the impugned order asking the petitioner to pay 20% of the demand outstanding - the petitioner is directed to deposit 10% of the outstanding demand - CIT(A) directed to dispose of the appeal as expeditiously as possible, after affording an opportunity to the petitioner. - HC
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Revenue expenditure or capital expenditure - Section 37(1) - Disallowance on account of expenditure incurred for CDR - The CDR contains several waivers and modifications granted by the lenders and the conversion of debt into OCCRPS is just a part of the whole package. Moreover, the conversion of debt into OCCRPS is also well-addressed in our earlier discussion where we have observed that by issue of OCCRPS, there was no fresh inflow of the capital or increase in capital employed. Hence there is no benefit of enduring nature even by converting debt into OCCRPS - Claim allowed as revenue expenditure - AT
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Addition u/s 68 - genuineness of the credits - Unexplained investment by a partner - The affidavit by the partners (not on record), would only operate as a confirmation from them and, thus, only proves their identity, while, as afore-discussed, both the capacity and the genuineness are highly suspect and, therefore, rightly doubted and found as not satisfactorily explained by the Revenue. - Additions confirmed - AT
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Denial of claim of deduction u/s 80IA on interest and other income - H various higher judicial authorities have held that profits of the business of the undertaking include other incidental incomes derived from the business of the undertaking. This being the position of law, we have no hesitation in accepting the claim of the assessee that the income earned from the deposits is business income is eligible for deduction under section 80IA - AT
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Disallowance paid to mosque for providing free lunch to the assessee’s employees - The mosque was not under control of the assessee and free lunch was provided to the other persons and not exclusively to the labourers of the assessee. Therefore, in such circumstances, it could not be treated that the payment made by the assessee was wholly and exclusively for the purpose of the business of the assessee and accordingly the action of the Ld. CIT(A) in disallowing the ground is upheld. - AT
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Assessment u/s 153A - Unexplained cash loan - merely in absence of the direct evidence the prime and important evidence cannot be put aside and the department cannot take a different view than what is written in the seized records. The seized records evidently clear, the purpose of advance, name of broker, name of person paying and the date and amount paid is clearly written. - AT
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TDS u/s 195 - withholding tax - payments made to the foreign firms and non-residents - rendering the services was attracting and motivating the international students for taking admission in assessee’s university - it cannot be regarded as consultancy services provided to the assessee - these agents have not received the consideration in respect of their services in India or deemed to be received in India on their behalf as they do not have any PE or agent in India. The amount has been remitted directly to them outside India by the assessee. Therefore, provisions of section 5(a) is not applicable. - No TDS liability - AT
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Transfer pricing adjustment - Interest on delayed debtors/outstanding receivables from the AE - the assessee is fallowing a consistency approach of equality by not charging any interest from its AEs and non AEs though the payment in exceptional cases received beyond the credit period. Accordingly, we direct the AO/TPO to exclude the charging of interest on delayed debtors in computing the ALP. - AT
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Unexplained cash deposits in bank - receipt of rental deposits in cash - The fact remains that the cash rental deposits have been received by the assessee which is not at all disputed and usage of the same for deposits into various bank accounts cannot be rejected outrightly. Considering all the cash deposit into various bank accounts made by the assessee on various dates should be reasonably presumed that it is from the cash rental deposits received by the assessee on various dates. - AT
Customs
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Benefit Exemption from duty - imported goods “Skin Barriers Micropore Surgical Tapes” or not - This Tribunal being a creature of statute cannot sit in judgment on interpretation of a notification or the purport of the notification. However, the Bench is not Writ Court to decide the property of the notification being creature of the statute. This Bench has no jurisdiction to interpret the intention of the notification. - The arguments of the appellants are not acceptable and it is held that the exemption is not available to them. - AT
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Revocation of Customs Broker Licence of the Appellant - levy of penalty - There are no merit in learned Commissioner’s finding that appellant’s representative had not verified the seal before it was cut. Since appellant’s responsibility as customs broker was ceased once the bill of entry was given out of charge, then presence of his representative at the time of cutting the seal and its verification have no relevance nor his admission that he has not verified seal has any relevance. Merely presence of his representative after completion of his work responsibly cannot hold appellant responsible for such harsh action of revocation of licence. - AT
Indian Laws
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Dishonor of Cheque - Bank has been made as party - Liability of bank in case of dishonor of cheque - The bank is only the custodian of the money of the customers and has to comply with the instructions of such customers. In case of insufficiency of funds, the bank is only to report the same and as such, cannot by any stretch of the imagination be liable for any act of the customer who has issued the cheque which was later dishonoured. - HC
IBC
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Initiation of CIRP - Personal Guarantors to Corporate Debtors - an irrevocable Deed of Guarantee has been signed between the SBI led Consortium and the Personal Guarantor. - This is a fit case for admission and proceed against the Personal Guarantor/Respondent and initiate Corporate Insolvency Resolution Process. It is also seen from the report of Resolution Professional that he has not recommended for a negotiation between the parties for arriving at an amicable settlement for repayment. - Tri
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Reference of disputes arising out of collaboration agreement to arbitration - appointment of an Arbitral Tribunal - the proceedings under the Insolvency and Bankruptcy Code would take precedence and any moratorium issued therein would automatically bind the proceedings under the Arbitration Act. - In case the petition filed before the NCLT is admitted and moratorium comes into play, the legal consequences of the same would automatically apply to the proceedings under the Arbitration Act. - HC
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Initiation of CIRP - existence of debt of dispute or not - There is no claim regarding the principal amount and the issue of contention is demurrage and detention charges. The corporate debtor has averred that detention and demurrage charges does not fall under the definition of operational debt under Section 5(21) of the Code. It clearly reflects that a dispute was in existence prior to issuance of the statutory demand notice under Section 8 of the Code by the applicant. There is sufficient evidence to prove the existence of dispute. - Tri
SEBI
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Fraudulent and Unfair Trade Practices relating to Securities Market - Settlement Regulations - SEBI should reconsider and seriously give a thought in coming out with a fresh scheme under Clause 26 of the Settlement Regulations, 2018. Such scheme can be a onetime scheme for this class of person. The terms of settlement should be attractive so that it could attract the noticees / entities to come forward and settle the matter which will ameliorate the harassment of penalty proceedings to the noticees and at the same time would help to clear the backlog of these pending matters before various AOs. - AT
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Insider trading - appellant was restrained from buying or selling any securities - The investigation has not yet concluded and, therefore, it would take some time for issuance of a show cause notice. Final orders will come much later. Considering the aforesaid when only prima facie observations are being made which the appellant has sufficiently explained and discharged his burden we are of the opinion that at this stage debarring a person from accessing the securities market is not justified in the facts of the case. - AT
Central Excise
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Levy of interest and penalty - In the instant case, in view of the discussions, with the consent and concurrence of both the parties, instead of remanding it back, Rule 41 of the CESTAT (Procedure) Rule, 1982 should be invoked in, putting an end to the litigation that commenced way back in the early 1990’s only for the purpose of re-computation for the normal period when from the evidence on record it is quite evident that appellant had already paid Rs.3,50,000/- during investigation which is much higher than the entire demand raised for the normal period that would also meet the interest component. - AT
Case Laws:
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GST
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2022 (5) TMI 791
Provisional attachment of Bank Accounts of petitioner - section 83 of CGST Act - case of petitioner is that the allegation of fake Input Tax Credits (ITCs) is against an entity going by the name Vibe Tradex, which is a proprietorship concern of Mr. Chaman Goel s brother i.e., one, Mr. Chirag Goel and the the petitioner-company has nothing to do with Vibe Tradex - HELD THAT:- Having regard to the stand taken by Mr. Singh that under Rule 159(5) of the CGST Rules, 2017 (2017 Rules), the petitioner-company can file an objection to have the provisional attachment lifted, the writ petition is disposed off with the direction to the respondents/revenue, to treat the writ petition as an objection under sub-rule 5 of Rule 159 of the 2017 Rules - For this purpose, the authorized representative of the petitioner-company will present herself/himself before the concerned officer on 17.05.2022, at 11:30 P.M. - The concerned officer, after according personal hearing to the authorized representative of the petitioner-company, will pass a speaking order. Petition disposed off.
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2022 (5) TMI 790
Seeking permission to travel abroad i.e. Dubai - period from 07.06.2022 to 30.06.2022 - HELD THAT:- The petitioner has moved this application saying he never violated any condition set out in earlier orders, hence be granted permission on this occasion too - this application is coming up for the first time, hence learned counsel for the respondent intends to seek instructions. List on 19.05.2022.
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2022 (5) TMI 789
Provisional Attachment of Bank Accounts of petitioner - Section 83 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- A bare reading of Section 74 of the CGST Act, 2017, leaves no manner of doubt that proceedings under Section 74 of the CGST Act starts with issuance and service of notice upon the assessee. It has been admitted in the personal affidavit filed today by the respondent no.2 that no notice under Section 74 of the CGST Act has yet been issued. Thus, as on the date of attachment order dated 22.10.2021, there was no notice under Section 74 of the CGST Act. Consequently, the attachment order dated 22.10.2021 itself was without jurisdiction and consequently, it is not sustainable. In the personal affidavit, dated 11.05.2022 filed today, the respondent No.2 has referred Section 115 of the Finance Act, 2021 (No.13 of the 2021) whereby Section 83 of the CGST Act has been amended. Section 1(2)(b) of the Finance Act, 2021 provides that Sections 108 to 123 shall come into force on such date as the Central Government may by Notification in the Official gazette appoint. Petition allowed.
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2022 (5) TMI 788
Maintainability of petition - availability of alternative remedy - Cancellation of registration of petitioner - HELD THAT:- The record shows that the order of cancellation of registration qua the petitioner was passed on 06.08.2021 - thereafter, an application for revocation of cancellation of registration was filed on 21.10.2021, whereupon yet another show cause notice dated 17.11.2021 was issued to the petitioner. It is in this show cause notice dated 17.11.2021, wherein the respondent/revenue indicated that the reason for rejection of revocation of cancellation of registration was that when physical verification was conducted on 05.07.2021, the unit was found non-existent at the registered premises. A perusal of the said reply shows that the petitioner appears to have indicated to the respondent/revenue about the change in address. It appears that despite this information having been furnished, the petitioner's application for revocation of cancellation of registration was rejected, on 08.12.2021 - the petitioner preferred an appeal with the Appellate Authority, which met with the same fate. Prima facie, it appears to be a case of non-application of mind, and breach of the principles of natural justice. List the matter on 26.05.2022.
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2022 (5) TMI 787
Maintainability of petition - availability of alternative remedy of appeal - Cancellation of GST registration of petitioner - adequate opportunity not provided to the Petitioner - violation of principles of natural justice - HELD THAT:- There is un-explained gross delay on the part of the petitioner in approaching this Court in writ jurisdiction. The writ petition has been filed after about 2 years of the passing of the order of cancellation of the GST registration. In view of the judgment rendered by the Apex Court in the case of ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT ], the writ petition should not be entertained after the period of availing the alternative remedy of appeal is long over. The petitioner submits that since the garnishee notice was issued during the prevalence of lock down period and without any adjudication proceeding, petitioner may be allowed liberty to assail it in a separate proceeding as the petitioner may have the benefit of the extended period of limitation in view order passed by the Apex Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER ]. As such, the writ petition is not entertained, as regards the challenge to the order of cancellation of GST registration of the petitioner dated 25.10.2019 (Annexure-4). The petitioner is allowed liberty to raise his cause of action as respects the garnishee notice dated 20.10.2020 issued under Section 79(1)(c) of the JGST Act, 2017 in an independent proceeding, if permissible in law - petition disposed off.
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2022 (5) TMI 786
Denial of benefit of Input Tax Credit - purchase of the goods in question from the suppliers and asking the petitioners to pay the penalty and interest under the relevant provisions of GST Act - cancellation of registration of the suppliers with retrospective effect - HELD THAT:- Considering the facts as recorded, without any further verification it cannot be said that that there was any failure on the part of the petitioners in compliance of any obligation required under the statute before entering into the transactions in question and that there was no verification of the genuineness of the suppliers in question by the petitioner during the relevant period. These writ petitions are disposed of by setting aside the impugned orders and remanding these cases of the petitioners to the respondents officer concerned to consider afresh on the issue of their entitlement of benefit of input tax credit in question by considering the documents which the petitioners intend to rely in support of their claim of genuineness of the transactions in question and the respondent concerned shall also consider as to whether payments on purchase in question along with GST were actually paid or not to the suppliers (RTP) and also to consider as to whether the transactions and purchases were made before or after the cancellation of registration of the suppliers and also to consider as to compliance of statutory obligation by the petitioners in verification of identity of the suppliers (RTP). Petition disposed off.
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2022 (5) TMI 785
Violation of principles of natural justice - allegation that the petitioner has committed fraud and claimed input tax credit without movement of the vehicle through the check post. - case of petitioner is that the impugned proceedings came to be issued without furnishing the material relied upon by the authority concerned while directing the petitioner to pay tax - HELD THAT:- From the judgment of the Division Bench in BGR Energy Systems Limited v. Assistant Commissioner, Commercial Taxes, Large Tax Payer Unit [ 2009 (4) TMI 850 - ANDHRA PRADESH HIGH COURT] , it is very clear that a person proceeding must know that he is required to meet the allegations, which may lead to certain action being taken against him. Apart from that the Bench also held that an opportunity must be given to enable to controvert correct or comment on the evidence or information that may be relevant to the decision. A notice which does not mention the particulars, on which the case against the person is based, cannot provide a foundation for the proceedings that follow. As the order impugned herein refers to Exs.P1 and P2, which were never supplied to the petitioner at any point of time, it can be said without hesitation that the same will be in violation of principles of natural justice. It may be true that the petitioner has committed a grave offence but any order passed without providing an opportunity to defend his case would be in violation of the procedure established by law. The matters are remanded back to the 4th respondent to deal with the same afresh after furnishing the material relied upon and after giving an opportunity of personal hearing to the petitioner - Petition allowed by way of remand.
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2022 (5) TMI 784
Violation of principles of natural justice - Order of Confiscation of Goods and Conveyance - Demand of Tax, Fine and Penalty - contention is that the order impugned, came to be passed without giving an opportunity of hearing the petitioner - HELD THAT:- From the judgment of the Division Bench of the Gujarat High Court in Synergy Fertichem Pvt.Ltd v. State of Gujarat [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT ] , it is clear that Sections 129 and 130 of the Act are independent feature and the Act does not contemplate invoking Section 129 before passing an order of confiscation under Section 130 of the Act. Opportunity of personal hearing not given - HELD THAT:- It has to be noted that pursuant to the notice given, the petitioner herein submitted written objections, which are referred to in the order. The order also states that the owner of the goods, in his reply stated that no personal hearing is required, as he has submitted his reply. Of course, this aspect is disputed by the learned counsel for the petitioner, but from the record, a detailed written reply was given explaining his stand, which was not accepted. If factual aspects or perusal of record is warranted, the petitioner ought to have preferred an appeal, as provided under the Act. The scope of interference under Article 226 is very limited, hence the order passed by the authority warrants no interference. The writ petition is disposed off directing the petitioner to pay tax and penalty as ordered in the impugned order. But insofar as the payment of fine, we feel that the amount of Rs.9,00,000/-as ordered appears to be on higher side, as such the same is reduced to Rs.4,00,000/-. Insofar as fine relating to confiscation of conveyance is concerned, having regard to the fact that it is lying with the authorities since pretty long time, we feel that an amount of Rs.1,40,774/- as ordered to be paid may be reduced to Rs.1,00,000/-.
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2022 (5) TMI 783
Profiteering - purchase of flats - benefit of Input Tax Credit had not been passed on to the Applicant - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Authority finds that, the Report of the DGAP is prepared on the basis of the Documents/data provided by the Respondent and as per the provisions enshrined under Section 171 of the CGST Act, 2017 which the Respondent has violated by not passing on the benefit of ITC to his home/flat buyers. The findings of the DGAP has not violated any of the rights of the Respondent and the said report was submitted to this Authority, which has provided ample opportunities to the Respondent to submit his position and also offered personal hearing. As such, principle of natural justice is followed in true sense and spirit. Various judgments quoted by the Respondent have been followed by the Authority before passing this Order. Therefore, the submission of the Respondent is not acceptable. It is clear that the Respondent has profiteered by an amount of Rs. 85,77,419/- during the period of investigation i.e. 01.07.2017 to 30.06.2020. The Authority determined amount of Rs. 85,77,419/- (including 12% GST) under section 133 (1) that has been profiteered by the Respondent from his home buyers (as per the list mentioned below), including Applicant No. 1, and shall be refunded by him along with interest @18% thereon, from the date when the amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the GCST Rules 2017. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017. Application disposed off.
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2022 (5) TMI 782
Profiteering - Reduction in rate of GST on Paint from 28% to 18% - comparing the average pre-rate reduction base price of the products which were impacted by the tax rate reduction w.e.f 27.7.2018 with the actual post rate reduction base prices of the impacted products - violation of the provisions of Section 171 of the CGST Act, 2017 or not - quantum of profiteering - HELD THAT:- On random verification of the calculation compiled by DGAP in pursuant to the direction contained in its order dated 27.06.2020, The Authority finds that the calculation carried out by DGAP is correct. As stated, the Respondent was provided with adequate opportunity to provide relevant documents and records and also to extend necessary assistance to DGAP in the matter, but, they chose to remain inactive and did not extend necessary assistance. The Respondent has not raised any objection to quantification of profiteered amount of Rs. 4.19,069/- calculated in the DGAP Report dated 27.10.2020, a copy of which was provided to them - there are no reason to differ from the Report of the DGAP and we therefore agree with the findings of the DGAP that the provisions of Section 171 of the CGST Act 2017 have been contravened in this case and the Authority determine the profiteered amount at Rs. 4,19,069/- under the provision of Rule 133 (1) of the CGST Rules. The profiteered amount is determined as Rs 4,19,069/- as has been computed in Annexure-8 of the DGAP's Report dated 27.10.2020. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the CGST Rules, 2017. Further, since the recipients of the benefit, as determined, are not identifiable, the Respondent is directed to deposit an amount of Rs. 4,19,069/- in two equal parts of Rs. 2,09,534.50/- each in the Central Consumer Welfare Fund and the Karnataka Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the amount was realized by the Respondent from his recipients till the date of its deposit in the said fund. The above amount of Rs. 4,19,069/- shall be deposited, as specified above, within a period of 3 months from the date of receipt of this order failing which it shall be recovered by the jurisdictional CGST/SGST Commissioners. Penalty - HELD THAT:- It is evident from the narration of facts that Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 27.07.2018 to 30.09.2018, hence the penalty prescribed under the Section cannot be imposed on Respondent retrospectively. Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him is not required to be issued. Application disposed off.
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2022 (5) TMI 781
Profiteering - purchase of Flat - allegation is that the benefit of input tax credit had not been passed on - project was not under execution before coming into force of the GST - whether there are benefit of additional ITC available to the Respondent which are not passed on by him to the Applicant No. 1 and 2? - violation of the provisions of Section 171 (1) of the CGST Act, 2017 or not - HELD THAT:- It is established that there had been no additional benefit of ITC to the Respondent and hence he is not required to pass on the benefit to the above Applicants by reducing the prices of the flats. The Applicant No. 1 and 2 could have availed the above benefit only if the above project was under execution before coming into force of the GST as the Respondent would have been eligible to avail ITC on the purchase of goods and services after 01.07.2017 on which he was not entitled to do so before the above date. Since there is no basis for comparison of ITC available before and after 01.07.2017, the Respondent is not required to recalibrate the price of the flat due to additional benefit of ITC. Hence, the allegations of the Applicants made in this behalf are incorrect and therefore, the same cannot be accepted - it is established that the Respondent had not contravened the provisions of Section 171 (1) of the CGST Act, 2017 and there are no merit in the Applications filed by the above Applicants and the same are accordingly dismissed. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017. Application disposed off.
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Income Tax
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2022 (5) TMI 780
Stay of demand - ITO passed the impugned order asking the petitioner to pay 20% of the demand outstanding and after the payment of the same, the remaining 80% of outstanding demand may be considered for stay under Section 220(6) till the disposal of the first appeal - HELD THAT:- As per Section 220 sub clause (2) of the Income Tax Act, 1995, the petitioner-Assessee has to pay 1-1/2% per cent interest for every month for the outstanding amount. This Court is inclined to direct the respondent to dispose of the appeal as expeditiously as possible, after affording an opportunity to the petitioner. Meanwhile, the petitioner is directed to deposit 10% of the outstanding demand i.e Rs.22,78,019/- within a period of four weeks, from the date of receipt of a copy of this order.
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2022 (5) TMI 779
Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT:- As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. By virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.
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2022 (5) TMI 778
Addition u/s 69C - addition on account of custom duty and on account of peak amount - difference between the invoice value in rupees and assessable value for customs - CIT (A) has deleted the addition stating that the addition could not have been made once the corresponding sales have not been disputed - HELD THAT:- In this case, there is no material available with the learned CIT (A) to state so. Such a direction can only be valid when there is an import of goods, which has resulted into purchase debited in the profit and loss account, the quantity of the purchases have entered into the stock details [ quantitative details] and from such quantitative details, the sales have been made of the similar quantity during the year, then only the addition could have been restricted to G P . Otherwise, without that examination probably addition could not have been deleted. There is no material available with the CIT (A) to hold so. We also failed to understand that in such circumstances how the peak amount can be worked out and addition can be restricted to that extent. In view of this the order of the learned CIT (A) is not sustainable in law. In view of the above findings, we set aside the whole issue back to the file of the learned Assessing Officer with a direction to the assessee to reconcile the purchases with the invoices value stated by customs authority from the books of account of the assessee. The relevance to the assessable value is not the reason to make an addition as it is value only for the purposes of levy of customs duty. Assessee is directed to produce all the invoices mentioned in the information received from customs authority and also the respective custom duty paid against each of the invoices. AO is directed to examine the same and if still a different arises, the assessee may be given opportunity of hearing to explain the same and thereafter the issue may be decided on the merits of the case. Thus we allow the Grounds raised by the ld AO accordingly.
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2022 (5) TMI 777
Revenue expenditure or capital expenditure - Disallowance on account of fee paid to Registrar of Companies for increase in authorized share capital - HELD THAT:- It is on record that the increase in authorized capital was necessitated due to CDR and under the CDR, there was no fresh inflow of funds, only the existing debts were restructured whereby the OCCRPS were issued. Being so, we observe that the situation is governed by the decision in General Insurance Corporation [ 2006 (9) TMI 116 - SUPREME COURT] and not by Brooke Bond India Ltd [ 1997 (2) TMI 11 - SUPREME COURT] Therefore, we are of the view that the assessee has rightly treated the impugned expenditure as a revenue expenditure and claimed deduction and the lower authorities are wrong in disallowing deduction. Accordingly, we accept this Ground of assessee. Disallowance on account of expenditure incurred for CDR - HELD THAT:- CDR is nothing but re-conditioning of the existing loans and debts. The expenditure claimed by the assessee under the title of CDR charges are various expenses for implementing the activities of the CDR. In fact, the major component of Rs. 1,46,45,814/- is a sum of Rs. 1,00,00,000/- paid to the ICICI bank by way of remuneration since the ICICI Bank had acted as a Monitoring Institution . Thus there is neither acquisition of any kind of enduring advantage nor the expenditure could be termed as capital. At this stage, for the sake of completeness, we would like to address a pertinent concern of the revenue which the Ld. AO has mentioned in the order of assessment. According to the Ld. AO, by virtue of CDR, the debt was converted into equity (i.e. OCCRPS) and hence there is a benefit of enduring nature. In this regard, firstly we would like mention that the CDR contains several waivers and modifications granted by the lenders and the conversion of debt into OCCRPS is just a part of the whole package. Moreover, the conversion of debt into OCCRPS is also well-addressed in our earlier discussion where we have observed that by issue of OCCRPS, there was no fresh inflow of the capital or increase in capital employed. Hence there is no benefit of enduring nature even by converting debt into OCCRPS, as per the ratio laid down in General Insurance Corporation [ 2006 (9) TMI 116 - SUPREME COURT] Thus, we are of the considered view that the expenditure incurred by the assessee is a revenue expenditure and deserves deduction. We therefore, accept the claim of the assessee. Disallowance on account of interest u/s 43B - HELD THAT:- After a careful consideration we find adequate strength in the findings of Ld. AO noted earlier. For the sake of brevity, we do not repeat the same. However, we agree with the Ld. AO that the interest payable to those three banks attracted section 43B(e). Hence the Ld. AO has made a proper disallowance, which we uphold. Therefore, this Ground of assessee is dismissed. Addition u/s 115JB towards disallowance u/s 14A even if the disallowance u/s 14A is sustained in normal computation - HELD THAT:- This issue is squarely covered by the decision of Special Bench in ACIT Vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] where it was held that the disallowance computed u/s 14A of the Act cannot be added while computing book-profit u/s 115JB. Respectfully following the decision of Hon ble Special Bench, we accept this ground.
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2022 (5) TMI 776
Exemption u/s 11 - grant of registration u/s 12A - HELD THAT:- We find that the assessee has mentioned in the Ground of the Form No. 36 This is factually incorrect as Dr. Madhu Mohan is USA Citizen settled in America and has neither received any salary nor he is an employee of M/s Share Medical Care . Fourthly, CIT(E) has observed that the assessee has received grants from Share USA , Centre for disease Control USA and Other entities in terms of agreements entered with them and hence the assessee is involved in execution of work-contract. We are unable to accept this reasoning too because receipt of grants in terms of agreement per se does not mean that the assessee is executing work-contracts. The grant may be lump sum or based on some agreed factor in the agreement like number of charitable activities undertaken. But to say that if the grant is in terms of the agreement, it is automatically a consideration for work-contract, would be fallacious. We observe that all of the four points taken into account by the Ld. CIT(E) are not sufficient enough to demonstrate any problem in the objects or activities of the assessee. We also observe that the order passed by the Ld. CIT(E) nowhere raises any objection on the nature and characteristics of the objects or activities pursued or undertaken by the assessee. CIT(E) has nowhere observed in his order that any of the object or activity undertaken by the assessee is ingenuine or against the prescription of section 2(15) of the act. Therefore the refusal of the registration by Ld. CIT(E) is not on a sustainable ground. Being so, the Ld. CIT(E) has wrongly rejected the application of the assessee. We direct the Ld. CIT(E) to grant the registration as applied for by the assessee. Appeal of assessee allowed.
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2022 (5) TMI 775
Addition u/s 68 - genuineness of the credits - Unexplained investment by a partner - HELD THAT:- Even the genuineness of the credits is very doubtful as there is apparently no reason, nor any stands put forward at any stage, for the cash introduction by the partners, who could have introduced capital in the firms books through the banking channel, and more so, particularly considering the cash availability with them is not shown. Further, there is no justification for holding cash by them for months, if not years, together. That the source thereof is stated to be a loan further adds to its un-creditibility inasmuch as nobody would, normally speaking, take loan only to be held in bank or as cash-in-hand. Partners, being businessmen rather, understand the time value or the opportunity cost of money much more than non-businessmen, while, the said conduct defeats the very purpose of loan/borrowing, said to be interest bearing. The affidavit by the partners (not on record), would only operate as a confirmation from them and, thus, only proves their identity, while, as afore-discussed, both the capacity and the genuineness are highly suspect and, therefore, rightly doubted and found as not satisfactorily explained by the Revenue. Rather, the partner/s, being a related person, an assessee ought to be able even the personal details, normally not accessible for other creditors, in support of it s claims. The legal position stands examined in Jagmohan Ram Chandra [ 2004 (8) TMI 46 - ALLAHABAD HIGH COURT] also referring to its previous decisions in the matter, as well as in Kishorilal Santoshilal [ 1995 (2) TMI 14 - RAJASTHAN HIGH COURT] , both relied upon by the ld. CIT(A), in considerable detail. The decision by the jurisdictional High Court in Metachem Industries [ 1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT] is not in any manner supportive of the assessee s claims, rather, making it clear, and unless the credit is established, be it from a partner or from another, it would attract s. 68. Appeal of assessee dismissed.
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2022 (5) TMI 774
Exemption u/s 11 - Approval u/s 80G(5)(vi) - denial of approval u/s. 80G(5)(vi) in the instant case is the earning of huge profits, i.e., in excess of what may be deemed appropriate or reasonable by the competent authority - HELD THAT:- The assessee-society is registered as a charitable institution u/s. 12AA - Its object clauses (copy on record), which include that toward education, which it is presently solely undertaking and is per se charitable u/s. 2(15), i.e., independent and irrespective of the extent of profit that may arise in the course of carrying out the said charitable purpose. True, capital expenditure would only result in expansion of its activities and, consequently, further profit, but the said activities, being in the realm of education are, as aforesaid, charitable under the Act. We have, toward this, also gone through the rules and regulations of the assessee-society, including that per the latest amendment therein, i.e., on 28/12/2020 to find that there is no embargo in its charter on the earning of profits. None such is also observed either u/s. 80G(5) or the relevant rule, being r. 11AA. The same therefore does not serve as a valid ground for denial of approval. As perused each of the decisions cited by the Revenue, to find them as inapplicable. The same are, firstly, in respect of an Approval u/s. 10(23C)(vi), which provision clearly stipulates the condition of the educational institution as existing solely for the educational purpose and not for the purpose of profit, so that in the facts of a given case, it could be contended that the pre-dominant purpose for the existence of the said institution is the earning of profit. The other decisions are qua the residual clause of s. 2(15), i.e., advancement of any object of general public utility , to which commercial considerations apply, in contradistinction to the other charitable purposes, including education . As regards the objection with reference to the discrepancies in the assessee s accounts in view of the differences observed between the amount applied and amount accumulated as per the statement of computation of income (forming part of the return of income) and the audit report (in Form 10B), the same, to our mind, is a matter that may have a bearing on the quantum of exemption u/s. 11 of the Act and, thus, falls in the domain of the AO in the assessment proceedings. There is nothing on record to show that the assessee has been denied exemption u/s. 11 for that or any other reason Finally, while the ld. CIT(E) does state, at para 7 of his order, that he is taking steps to cancel the assessee s registration u/s. 12AA, Shri Jain, the ld. counsel for the assessee, would, on asking, confirm the Bench during hearing to the assessee having not received any notice for cancellation of the said registration. In any case of the matter, where so, approval u/s. 80G(5)(vi) would stand to be withdrawn in consequence (s.293C). The said statement by the ld. CIT(E), not acted upon, is thus, to no consequence. Assessee appeal allowed.
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2022 (5) TMI 773
Deduction u/s 80IA - work contract v/s development contract - Claim rejected on the ground that the assessee is not a developer, but a contractor since the assessee has merely executed the contract for the various sites awarded by various entities - whether a civil construction work is assigned on development basis or contract basis only the terms and conditions of the agreement needs to be considered? - HELD THAT:- On perusal of various clauses of Tender documents and case laws relied upon by both the parties, it reveals that the tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, safety and security of project and human resources, compliances of various statutory rules and laws. Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because if some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will deprive the assessee from claiming deduction u/s.80IA(4) of the Act. As such, looking to the overall aspects of work undertaken by the assessee we can safely come to the conclusion that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which entails the assessee to claim benefits under section 80IA(4) of the Act. Thus, the issue of claim of deduction under section 80IA(4) of the Act is allowed in favour of the assessee . Denial of claim of deduction u/s 80IA of the Act on interest and other income - HELD THAT:- We find that before the lower authorities the assessee has explained regarding interest income earned by it from the fixed deposits, security deposits, margin-money and from the bond, with the banks and other institutions, as per the terms and conditions of the contract agreement with the Government authorities. Furnishing of fixed deposits for bank guarantees, security deposits etc. are the pre-condition for awarding the project work by the competent authority, and therefore, these are necessity of regular course of business and has direct nexus with the activities. Jurisdictional High Court in the case of Empire Pumps P. Ltd (supra) held that interest income having direct nexus with its business, was to be considered as income derived from business. Thus, deduction under section 80I of the Act was allowed on such income. Yet in another decision by jurisdictional High Court in the case of CIT Vs. Shah Alloys Ltd. [ 2016 (8) TMI 1191 - GUJARAT HIGH COURT] has held that interest received on margin money placed for business purpose cannot be treated as income from other sources and is, therefore, eligible for deduction under section 80IA of the Act. Further, various higher judicial authorities have held that profits of the business of the undertaking include other incidental incomes derived from the business of the undertaking. This being the position of law, we have no hesitation in accepting the claim of the assessee that the income earned from the deposits is business income is eligible for deduction under section 80IA - Decided in favour of assessee. Setting off loss of four infrastructure facilities from the profits of other infrastructure facilities despite having legal provisions that deduction should be allowed on standalone basis - HELD THAT:- As relying on Nirma Ltd [ 2016 (7) TMI 331 - GUJARAT HIGH COURT] as decided that in terms of provisions of sub Section 5 of Section 80 IA, deduction has to be given unit wise without considering profit or loss of other eligible units. In that view of the matter respectfully relying upon the same we allow this ground of appeal preferred by the assessee with the direction upon the AO to grant relief to the assessee only on the profitmaking unit without setting off loss suffered by other eligible units. Thus, this ground of appeal preferred by the assessee is allowed. Disallowance of interest under section 36(1)(iii) - HELD THAT:- Revenue has not established any nexus between the interest bearing funds and free advances so allegedly made by the assessee nor it has been proved that the assessee has diverted the funds for non-business purpose so as to deny interest expenditure. The impugned disallowance is merely on some assumption that it is diversion of interest bearing funds without any basis or justification. The Hon ble Apex Court in the case of CIT v. Reliance Industries Ltd., [ 2019 (1) TMI 757 - SUPREME COURT] held that where interest free funds available with the assessee were sufficient to meet its investment and it could be presumed that the investments were made from the interest free funds available with assessee, therefore, there is no reason to deny the claim of the assessee. Hence, we delete the impugned disallowance of interest expenditure and this ground of appeal of the assessee is, thus, allowed. Disallowing the assessee s claim of bad debts - HELD THAT:- Upon consideration of the same the loss is found to be incurred during the course of conducting business by the assessee and therefore, the same can be allowed as business/trading loss under section 28 of the Act. With this observation we allow this ground of appeal raised by the assessee in both the appeals with the direction upon the Ld. AO to grant relief accordingly. Deduction under section 80 GGB denied by the revenue which has been contributed by the assessee to one political party by account payee cheque during A.Y. 2008-09 - HELD THAT:- The same was claimed as deduction under chapter VI-A at hundred percent under section 80 GGB in the return filed by the assessee appearing at page 1 of the paper book filed before us and the returned income was shown at Rs.54, 24,610. However the Ld AO on page 16 of his order has started the computation of income by taking the figure at Rs.64,24,614/- and disallowed the above claim. During the assessment by and under the reply dated 16.07.2010 the assessee had drawn the attention of the Ld AO to the annexed donation receipt. The same is further filed before us. In view of the provision of law under section 80 GGB we, therefore, allow this deduction of Rs.10,00,000 as claimed by the assessee. This ground of appeal preferred by the assessee is, therefore, allowed. Disallowance of employees contribution made under section 36(i)(va) - HELD THAT:- It appears from the records that that the Ld.AO has disallowed the impugned amount and added to the total income of the assessee as per provisions of section 2(24)(x) r.w.s. 36(1)(vi) of the Act in view of the judgement passed by the Hon ble Jurisdictional High Court in the case of CIT vs. GSRTC, [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] whereby and whereunder the ratio as laid down to this effect that when the employer has not credited the sum received by it as employees contribution to the employees account in relevant fund on or before due date as prescribed in the explanation to Section 36(1)(va), the assessee shall not be entitled to deduction of such amount though he deposits the said sum before filing of Return. We would like to mention that with all his fairness the Ld. Counsel appearing for the assessee conceded before us that the judgement goes against the claim of the assessee. In that view of the matter we dismiss this ground of appeal preferred by the assessee. Penalty u/s 271(1)(c) - disallowance of claim of deduction under Section 80IA (4) - HELD THAT:- Since we have already decided the quantum appeals preferred by the assessee granting relief of the claim of deduction under 80IA(4) of the Act, the penalty arising out of the said quantum proceeding automatically become infructuous. CIT-A has deleted the penalty on the ground that the assesses s claim is a bona fide one, all the particulars were fully disclosed in the return itself, supported by audit reports under Section 80 IA(7) in Form No. 10 CCB and none of the particulars or figures are found to be untrue or wrong. The disallowance is made only due to a bona fide difference of opinion between the assessee and the Department as to whether the assessee is a developer or contractor . It further appears that relying on the decision passed in the matter of Reliance Petro Products Pvt. Ltd., [ 2010 (3) TMI 80 - SUPREME COURT] the penalty was deleted by the Ld. CIT(A) which according to us is without any ambiguity so as to warrant interference. We, thus, find all the appeals preferred by the revenue as above as devoid of any merit and therefore, dismissed.
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2022 (5) TMI 772
Addition u/s 68 of unsecured loan received from the appellant's wife - Addition on the basis of peak credit as against the addition of closing balance - HELD THAT:- Assessee has not provided new address of M/s Firdos Mondal or filed documentary evidence in support of identity, creditworthiness or genuineness of the transaction in respect of loans received from M/s Firdos Mondal. Further, the Ld. CIT(A) has on perusal of the ledger account of M/s Firdos Mondal in the books of the assessee has directed to take peak credit for addition. In our opinion, CIT(A) is justified in treating peak credit and unexplained cash credit as the assessee is liable to discharge his onus in terms of section 68 of the Act for all the credit money which is received from M/s Firdos Mondal during the year under consideration. The Ld. CIT(A) has treated the peak of all credits after adjusting the money returned to her. We do not find any error or perversity in the order of Ld. CIT(A) on the issue-in-dispute and accordingly, we uphold the same. The ground No. 1 of the assessee is dismissed. Disallowance paid to mosque for providing free lunch to the assessee s employees - HELD THAT:- It is evident from the letter of mosque produced by the assessee that the free lunch used to be provided by the mosque labourers/artisan etc. in that area. The facility of the assessee happened to be in vicinity of mosque so those employees were availing free lunch provided irrespective whether those were employed in the facility of the assessee or not. By way of making payment of Rs.1,00,000/- by the assessee to the mosque it could not be established that the payment was a quid pro quo for the free lunch facility extended to the labourers/Karagirs of the assessee. The mosque was not under control of the assessee and free lunch was provided to the other persons and not exclusively to the labourers of the assessee. Therefore, in such circumstances, it could not be treated that the payment made by the assessee was wholly and exclusively for the purpose of the business of the assessee and accordingly the action of the Ld. CIT(A) in disallowing the ground is upheld. The ground No. 2 of the appeal of the assessee is accordingly dismissed. Disallowance of travelling expenses being 20% on the ground of personal use - HELD THAT:- Assessee failed to substantiate that there was no personal use in travelling and petrol expenses by the assessee. Therefore, we do not find any error in the order of Ld. CIT(A) in upholding 20% of travelling expenses for personal use disallowed in terms of section 37(1) of the Act. The ground of the appeal is accordingly dismissed.
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2022 (5) TMI 771
Assessment u/s 153A - Unexplained cash loan - assessee has not maintained any books of accounts and also failed to provide name, PAN, address of the persons with whom the loans were said to be taken - HELD THAT:- On perusal of the reply of the assessee on the points raised by the AO we find no breach of provision of law once the transaction recorded on the seized paper evidently make it clear that the money so received is on account of the proposed sale of agricultural land of the assessee. The argument of the AO that the advance is subject to interest but it has no bearing on the receipt of the money so far as to its nature is concerned. Thus, merely in absence of the direct evidence the prime and important evidence cannot be put aside and the department cannot take a different view than what is written in the seized records. The seized records evidently clear, the purpose of advance, name of broker, name of person paying and the date and amount paid is clearly written. Whether this receipt of advance is income of the assessee or not? - Since, the possession of the land and transfer is not took place this advance receipt is not chargeable to tax under the Act. Now, we have to see that the law permits to receive the money in advance or not? The receipt of money in cash w.e.f. 01.06.2015 considered as specified sum under the provision of section 269SS of the act and since, the money has been received before this date this receipt of advance is also in accordance with the law. Thus, the money so received and noted on this page is not prohibited receipt in the hand of the assessee and considering the nature of the receipt the same is also not chargeable to tax. Merely, the assessee looking to the facts and circumstance expressed his inability to submit the circumstantial evidence the basic nature of transaction in absence of this information does not change its nature of receipt. When the details connected with the transaction are outside the purview of the provision of section 68 as all the circumstantial evidence found in the course of search conducted by the department proves that the money so received is an advance against the sale of agricultural land. The benefit of doubt, thus, goes in favour of the assessee so far as regard the nature of receipt is concerned as section 292C cast an obligation upon the parties that when the documents found in search the party who is alleging that the facts are different as to what has been written has to prove with an evidence that the content written on the seized paper are not correct. Thus, at this stage it is also noted after taking into consideration the receipt the subsequent page seized source is considered as money received as advance. All these seized documents confronted to the assessee during the course of search in the statement recorded, he has offered a sum of Rs. 2.Cr. based on the loose papers found during the course of search although the income consists partly of as undisclosed income and partly as agricultural income. Alternatively, once it is accepted to be a loan or advance it is a capital receipt and not a revenue receipt. Hence, on this analogy also the amount cannot be added to income as also held by CIT(A), as we find no contrary argument before us or any material brought before us by the Revenue to convince us to take a different view of the matter then the view so taken by the Ld CIT(A). Thus, we do not find any merit in this ground of appeal raised by the revenue. Agricultural income - AO contended that based on loose paper assessee has surrendered Rs. 2.00 cr as unaccounted income - On going through the bunch of evidence where in the holding of land is as much as 230 vighas are in possession and the assessee has placed on records the accounts of the agricultural income, corroborated this income with the seized bills related to these agricultural activities of the assessee. Even the ld. CIT(A) has accepted that the assessee has earned the agricultural income but has not given the benefit of exemption. We observed on looking to the size of the holding evidence showing the earning of the net agricultural income supported by an evidence to the extent cannot be considered as not proved or not genuine and thus ground of the assessee is allowed. Addition made on unexplained jewellery - assessee has not submitted any concrete evidence in support of jewellery found during the search proceedings - HELD THAT:- Assessee explained and reconciled the valuables with the Wealth tax return and holding of the various family member reconciling the version of the family at the time of search. The submission of the assessee made before the Ld. CIT(A) is duly recorded on the page from 9 to 24, which is very detailed and exhaustive and was relied upon by assessee in addition to the brief submitted before us. No incriminating documents were found to proof that the assessee has made purchase out of books of the jewellery. Looking the detailed finding of ld. CIT(A) and since, the ld. DR has not placed any tangible argument that how and why the finding of the ld. CIT(A) is not correct on fact and on law, in the absence of such argument we find no reason to interfere in the finding of the Ld. CIT(A) and this ground no. 2 raised by the department in this appeal stands dismissed. Unaccounted sale of mustard seed / oil - profit estimated on account of the unexplained sales the separate disallowance u/s. 40A(3) made - HELD THAT:- We confirm the action of the ld. CIT(A) that whole sale consideration cannot be added as income only the related profit can be added in the income of the assessee. As regards the estimation of profit the ld. AR of the assessee has filed the comparative rate of profit before us for two parties having substantial turnover and the profit declared by them ranging between 3.25 % to 4.56 % as G. P. On the other hand, the ld. DR has requested that as per provision of estimated profit @ 8 % in section 44AD the same may be considered instead of 10 %. Having considered the rival contentions we feel that 8 % being the rate of general rate of estimate for small assessee, whereas the ld. AR has filed the chart showing the rate of profit declared by the assessee engaged in the similar line of activity. Thus it would be the end of justice if the G. P. addition be restricted to 5 % instated of 10 % estimated by the ld. CIT(A). Thus, the ground no. 4 of the revenue is considered accordingly and the assessee got relief to the extent of 5 % and thus, this ground no. 4 of the revenue is partly allowed. Unexplained cash credits - in search proceedings certain loose papers consisting of credit entries found and the assessee could not have verified from his books of accounts - HELD THAT:- AR of the assessee based on the detailed argument presented by way chart proved that the money that has been received as alleged by the AO is in fact the money that has been received back. The source of the advancing this money was the amount received on agricultural land which is already considered and thus, once the money advances sources are proved, then on receipt that money against that receipt is not subjected to tax. Therefore, this credit not attract the provision of section 68 of the Act and thus, the ld. CIT(A) has correctly deleted this addition and in the absence of any tangible material provided by the ld. DR we hold to confirm the view of the ld. CIT(A) and thus ground no. 6 raised by the department is dismissed. Addition on account of undisclosed interest income despite the fact that assessee has paid interest to various persons against the cash loan whereas assessee having cash creditors - HELD THAT:- Considering the arguments of the assessee and in the absence of any tangible argument from the ld. DR stating as to why and how the addition of notional interest would survive in the light of the facts submitted before us and therefore, we have no reason to hold a different view than what has been decided by the ld CIT(A) and thus, the ground no. 7 raised by the revenue is dismissed.
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2022 (5) TMI 770
TDS u/s 195 - payments made to the foreign firms and non-residents - services provided by the foreign firm to the assessee in respect of student recruitment/admission falls under the category of Fees for Technical Services u/s 9(1)(vii) - As per AO payment in respect of Ph.D Thesis Evaluation is concerned, the AO held that Ph.D Thesis Evaluation involves expertise of the evaluator to examine the thesis of the student and clearly falls under the head Fee for Technical Services u/s 9(1)(vii) and payments for Faculty Development charge faculty development program is a technical service because it is not merely in the nature of a discussion or advice but specific programs not only to increase the technical knowhow but also other skills of any faculty - HELD THAT:- We find the assessee in the instant case is a Trust registered under section 12A of the I.T. Act, 1961 and is also approved under section 10(23)(vi) We find merit in the arguments of Assessee that the nomenclature given in the agreement as consultants will not conclude that these persons were rendering consultancy services to the assessee. For deciding whether these persons were rendering any technical services as provided under section 9(1)(vii) of the I.T. Act, 1961, one has to look into the terms and conditions of the agreement. We find in the case of M/s. Super Poly Fabrics Ltd.[ 2008 (4) TMI 31 - SUPREME COURT] the Hon ble Supreme Court has held that there cannot be any doubt whatsoever at a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof. Neither the nomenclature of the document nor any particular activity undertaken by the parties to the contract would be decisive. We are of the considered opinion that the intention of the agreement and the nature of the services rendered by these agents have to be looked into rather than just wording of the MOU terming the agents as consultants. A perusal of the terms and conditions shows that these persons have to market the assessee s educational courses. The sole purpose for rendering the services was attracting and motivating the international students for taking admission in assessee s university which is nothing but marketing of the educational courses run by the assessee university among the international students. In our opinion it cannot be regarded as consultancy services provided to the assessee. On a pointed query raised by the Bench, the Learned Counsel for the Assessee stated and not controverted by the Ld. D.R. that these agents do not have any role ultimately in admitting the students. We find as per Clause-9 of the MOU, it is apparent that the right of admission of the students in assessee s university is surely and purely based on the discretion of the assessee s central admission cell. The working of the agent is limited to collect the required documents, attest the same and sent a scanned copy of these documents to the assessee. After receiving these documents from the agents, the university admission cell checks the documents and evaluate the same for the eligibility of the admission of the applicants. Once the non-resident student takes admission in the university and pay full fee, the agent who referred that particular applicant is entitled for commission. Similarly as per clauses 10 and 11 of the MOU the agent is entitled to commission only after the student is enrolled. In case of refund the agent is not entitled to any commission. The agent has no role to direct the assessee how they should admit the students. The work of the agent, in our opinion, is only relating to the marketing of the assessee s educational courses. It is also not disputed that these persons are not having any permanent establishment in India. Even the remittance was made outside India. A perusal of the provisions of Section 195 of the I.T. Act, 1961 shows that under this Section a person shall be liable to deduct tax at source out of the payment or remittance made to a non-resident if such sum is chargeable to tax. We find there is no dispute to the fact that these agents have not received the consideration in respect of their services in India or deemed to be received in India on their behalf as they do not have any PE or agent in India. The amount has been remitted directly to them outside India by the assessee. Therefore, provisions of section 5(a) is not applicable. So far as the applicability of sub-clause (b) of Section 5(2) is concerned, it is also not disputed that these agents have not rendered any services in India. Since the services have been rendered by them outside India, therefore, it cannot be held that the income for the services rendered by them accrues or arise in India in the case of the non-resident. So far as the applicability of provisions of Section 9(1)(vii) of the I.T. Act, 1961 is concerned, we are of the considered opinion that the same is also not applicable. The contention of the Revenue that these agents have been paid fees for technical services rendered by them which is deemed to arise or accrue in India are not correct especially when these agents have not rendered any technical services and the payment made by the assessee to them in our opinion are not fee for technical services. Services rendered by these agents cannot be regarded to be the managerial, technical or consultancy services. These agents are not managing the affairs of the assessee university. They are not giving any technical advise to the assessee. They are also not having any technical or special skill in this regard and no such material was brought to our notice to substantiate the same that these agents are either managing the affairs of the assessee or are giving any technical advise to the assessee. Further they are also not having any technical special skill in this regard. The services rendered by them are also not the consultancy services as they are not giving any consultancy to the assessee. For a consultancy services, the services must be rendered in the form of an advise or consultation given by the non-resident to the Indian resident. However, in the instant case, these agents are only marketing the educational course of the assessee among the intended non-resident students for which commission was paid for motivating and attracting the students or making them aware of about the utility of the various educational courses run y the assessee university. Such type of services, in our opinion, cannot be called as consultancy services. Remittances made by the assessee outside India to these agents as per the terms and conditions of the MOU cannot be deemed to be accrue or arise in India and, therefore, will not be chargeable to tax in India. Since such remittances is not chargeable to tax in India, the assessee was not under an obligation to deduct tax at source. We, therefore, hold that the assessee cannot be treated as an assessee in default in respect of non-deduction of tax under the provisions of Section 201 of the I.T. Act, 1961 in respect of commission on student recruitment/admission. Accordingly, we set aside the order of the Ld. CIT(A) and direct the A.O. to delete the demand of TDS made under section 201 as well as levy of interest under section 201(1A). Ph.D Thesis Evaluation - Evaluation of the Ph.d Thesis for which they have received the commission cannot be treated as fees for technical services. By evaluating Ph.d thesis paper, they have not provided to the assessee any technical services but merely applied their skill for evaluating Ph.d Thesis. Therefore, we are of the considered opinion that no technical services were rendered to the assessee by the Ph.d thesis evaluators and the assessee has also not asked for any technical services. We, therefore, are of the considered opinion that the Ld. CIT(A) was not justified in holding the assessee to be an assessee in default for not deducting the TDS from the remittance made to the Ph.d Thesis evaluators under section 201 of the I.T. Act, 1961 and consequently interest charged under section 201(1A) of the I.T. Act, 1961. Therefore, the ground relating to this issue in both the A.Ys. 2016-17 and 2017-18 are allowed. Faculty Development Expenses - We find as per Article 12(5) of DTAA between India and Singapore the services rendered by Singapore party for educating the faculty and staff so that their professional and technical knowledge be upgraded/updated cannot be regarded to be the fee for technical services. Further as per provisions of Section Article 7 of DTAA which is applicable in the instant case, the amount paid to Singapore party shall be liable to tax in India only if that party has PE in India. As mentioned earlier, it is an undisputed fact that the non-resident does not have any PE in India. Therefore, the income so earned by the non-resident cannot be said to be chargeable to tax in India. We, therefore, are of the considered opinion that the assessee was not liable to deduct tax at source under section 195 - we set aside the order of the Ld. CIT(A) and hold that the assessee has not made any default in not deducting the tax and, therefore, assessee is not an assessee in default under section 201 of the I.T. Act, 1961 and consequently the interest under section 201(1A) of the I.T. Act, 1961. The A.O. is accordingly directed to delete the addition and ground raised by the assessee on this issue is allowed. Rate of deduction of tax in case income of the non-resident is chargeable to tax - A.O. was of the view that tax has to be deducted @ 20% which has been upheld - HELD THAT:- As we have already held that assessee cannot be deemed to be an assessee in default in respect of non-deduction of tax on the remittances made to the non-residents - Therefore, ground of appeal in our opinion, does not require any adjudication being academic in nature.
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2022 (5) TMI 769
Business loss incurred by the appellant on purchase and sale of guargum - Treated as a speculation loss and it cannot be set off against the business profit of the appellant - As argued appellant had paid for the purchase of guargum through banking channel and therefore, transaction of purchase was a genuine transaction - HELD THAT:- As mentioned in the assessment order that assessee had filed audit report in Form No. 3CB and 3CD. However, the AO has not mentioned whether any quantitative details of the guargum were filed or not!. The assessee claims that assessee had purchased and sold 160 tonnes of guargum . The assessee has also filed copy of the godown receipt for the month of March 2005. Assessee specifically stated that said receipts were filed before AO. As mentioned in the assessment order that no details were filed. Therefore, in the interest of the justice, the issue is set-aside to the file of the Assessing Officer to verify all the bills, godown receipts afresh. The AO will also verify whether any stock statement was submitted alongwith Audit Report. The assessee is directed to submit all the details before the Assessing Officer. The Assessing Officer is directed to provide an opportunity of being heard to the assessee, accordingly, grounds raised by the assessee are allowed for statistical purpose.
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2022 (5) TMI 768
Exemption u/s 11 - grant of Provisional Registration instead of Regular Registration under section 12AB - HELD THAT:- In the present case, it has not been disputed that the assessee trust was duly registered under section 12AA of the Act. Thus, the only provision applicable to the assessee trust for the purpose of applying for registration is section 12A(1)(ac)(i) - section 12AB(1)(a) of the Act provides that where an application is made under section 12A(1)(ac)(i) the Principal Commissioner or Commissioner shall pass an order in writing registering the trust or institution for a period of 5 years. However, in the present case, the assessee trust being registered under section 12AA and thus rightly made an application under section 12A(1)(ac)(i) of the Act, was granted Provisional Registration in Form 10 AC subject to certain conditions. It is pertinent to note that section 12AB(1)(c) deals with granting of Provisional Registration to the trust or institution for a period of 3 years from the assessment year from which registration is sought. The said section is applicable in cases where application is made under section 12A(1)(ac)(iv) of the Act. It is also not disputed that the Provisional Registration would be granted for a period of 3 years to the charitable institutions which are yet to start their activities. However, in the present case, the assessee trust was already holding certificate dated 30.10.2009 issued under section 12AA of the Act. We noticed that section 12AB(1)(a) of the Act, which deals with grant of Regular Registration for a period of 5 years does not authorise the Principal Commissioner or Commissioner to impose any conditions for grant of such registration. We further noticed that though the impugned order granted Provisional Registration subject to certain conditions, however, same was granted for a period of 5 assessment years i.e. from assessment year 2022-23 to assessment year 2026-27. We also noticed that the impugned order for provisional registration in Form 10AC was issued under section 12A(1)(ac)(i) of the Act, which provision merely deals with making an application for registration. We are of the considered opinion that application filed by the assessee trust under section 12A(1)(ac)(i) was not properly considered for grant of registration under section 12AB of the Act. Accordingly, we direct the designated authority under section 12AB to de novo consider the application of the assessee trust under section 12A(1)(ac)(i) of the Act and grant the registration as per law. As a result, grounds raised by the assessee are allowed for statistical purpose.
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2022 (5) TMI 767
Deduction u/s 80IC - eligible units excluding certain items forming part of the operational income of such eligible units and in reducing the deduction - HELD THAT:- We find in the assessee s own case for the A.Ys 2009-10, 2010-11 2011-12 the Hon ble Tribunal has restored the matter to the file of the AO to determine whether the said items form part of the operational income of the eligible units and allow the deduction u/s 80IC - As relying on [ 2020 (2) TMI 1270 - ITAT MUMBAI ] - We restore the disputed issues to the file of the assessing officer with the similar directions and allow the ground of appeal for statistical purpose. Reallocating 50% of certain administrative and selling and marketing expenses of the non eligible units to the eligible units while computing the deduction u/s 80IC - HELD THAT:- Considering the facts and ratio of the judicial decisions and the DRP directions for the A.Y.2011-12 [ 2020 (2) TMI 1270 - ITAT MUMBAI ] we direct the assessing officer not to restrict the claim u/sec 80IC of the Act by reallocating 50% of administrative and selling marketing expense of the non eligible unit. Disallowance u/s 14A r.w.r 8D(2) - HELD THAT:- We find the facts of the present year are similar to earlier year were the contentions envisaged by the Ld.AR that the assessee has not earned tax exempt income and therefore no disallowance U/sec 14A r.w.r 8D(2) is applicable. We considered the ratio of judicial decisions were no disallowance u/sec 14A of the Act is warranted in the absence of earning the exempt income. Accordingly, with the similar directions in the earlier year the assessing officer is directed to delete the disallowance after examination and verification of assessees claim. Transfer pricing adjustment on account of guarantee commission - HELD THAT:- We find the Hon ble High Court of Bombay [ 2019 (9) TMI 473 - BOMBAY HIGH COURT] and Hon ble Tribunal in assessee s own case [ 2020 (2) TMI 1270 - ITAT MUMBAI ] has observed that the rate of guarantee commission cannot exceed 0.5% of the guarantee amount. We direct the TPO/AO to restrict the corporate guarantee commission charged by the assessee as against the 2% of the actual barrowed amount considered for ALP by the TPO. Interest on delayed debtors/outstanding receivables from the AE - AR emphasized that the export sales to AEs and non-AEs are similar and the assesssee does not charge any interest from the AEs as well from the Non-AEs, and receives the outstanding amounts generally within the stipulated credit period. AR relied on the judicial decisions supporting the non chargeability of interest. We considering the facts, and circumstances are of the opinion that the assessee is fallowing a consistency approach of equality by not charging any interest from its AEs and non AEs though the payment in exceptional cases received beyond the credit period. Accordingly, we direct the AO/TPO to exclude the charging of interest on delayed debtors in computing the ALP.
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2022 (5) TMI 766
Unexplained cash deposits in bank - receipt of rental deposits from various tenants as there is time gap between receipt of rent deposits and the deposit into the bank accounts - HELD THAT:- Assessee actually received rent deposits from various parties to the tune of Rs.1.54 crores and out of this, an amount of Rs.40,95,300 has been given credit towards the deposits in assessee s wife s bank account.- CIT(Appeals) has not accepted that the balance of Rs.1,08,00,000 is available to the assessee to deposit the same into the bank account of the assessee at Rs.1,07,72,650. The lower authorities have not brought on record any evidence to show that these rental deposits of Rs.1,08,00,000 have been used by the assessee for any other purpose or used to deposit in any other bank account. Thus, it cannot be said that these rental deposits received from various tenants were used for assessee s personal purpose or any other investment purpose. It cannot be disputed that the rent deposits received from various tenants have been used by the assessee for any other purpose than the deposit into various bank accounts. The assessee might have kept the rent deposits received in the form of cash with him and deposited the same into various bank accounts at a later date. It is quite possible that the assessee might have kept the rent deposits received in the form of cash for some purpose and the same remains to be utlised for one reason or the other and the cash balance continued to remain with him for a long period. Later, the assessee deposited into various bank accounts. Some times it may also happen that cash balance with the assessee continues to remain as cash balance even for many months and sometimes received by the assessee might be on the same day. All these probable aspects of the matter cannot be simply ignored or brushed aside. The fact remains that the cash rental deposits have been received by the assessee which is not at all disputed and usage of the same for deposits into various bank accounts cannot be rejected outrightly. Considering all the cash deposit into various bank accounts made by the assessee on various dates should be reasonably presumed that it is from the cash rental deposits received by the assessee on various dates. - Decided in favour of assessee.
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Customs
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2022 (5) TMI 765
Benefit of exemption under N/N. 21/2002-Cus dated 1.3.2002 on imported goods - Skin Barrier Microporus Surgical Tapes - incorrect understanding of the product name Wafer and held that they are not Skin Barriers Micropore Surgical Tapes - case of appellant is that there is a punctuation error in the notification giving rise to an interpretation that the exemption is not applicable in the impugned goods - invocation of extended period of limitation - penalty - HELD THAT:- The issue is no longer res integra as being decided by the Bangalore Bench in the case of 3M INDIA LTD, SHRI KULVEEN SING BALI, SHRI M.S. SWAMINATHAN VERSUS COMMISSIONER OF CUSTOMS, BANGALORE-I [ 2020 (7) TMI 93 - CESTAT BANGALORE] . It has also been brought to our notice that the same has been upheld by the Apex Court. Therefore, the decision of the Bangalore Bench has attained finality and further process by the decision of Tribunal in the case of M/S. SUTURES INDIA P. LTD. VERSUS COMMISSIONER OF CENTRAL CUSTOMS, CHENNAI [ 2019 (4) TMI 538 - CESTAT CHENNAI] cannot be relied upon. There are no error in the notification, if any, should have been brought to the notice of the concerned authorities and got corrected. This Tribunal being a creature of statute cannot sit in judgment on interpretation of a notification or the purport of the notification. However, the Bench is not Writ Court to decide the property of the notification being creature of the statute. This Bench has no jurisdiction to interpret the intention of the notification. Time Limitation - Penalty - HELD THAT:- The appellants have successfully demonstrated that the imports have been taken place over the years and Department has been allowing the same after examination atleast in respect of few consignments even after the introduction of self-assessment regime. Under these circumstances, it cannot be held that the appellants have suppressed or mis-represented any material fact so as to warrant the invocation of extended period. For this reason, it is found that impugned orders are not maintainable as far as the limitation is concerned. Accordingly, the penalty cannot be imposed on the appellants. The appeal is partly allowed confirming the demand of duty for the normal period and setting aside the penalty imposed on the appellant.
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2022 (5) TMI 764
Revocation of Customs Broker Licence of the Appellant - levy of penalty - Shortage in the cargo of silver bars - whether the appellant can be made responsible for any wrong deed happened behind their back? - Advance intimation to CONCOR - High value cargo not shifted to the designated warehouse immediately on arrival - seal verification - time limitation - HELD THAT:- The documentary evidence abundantly establishes the fact that while handing over the container to transporter that is CONCOR in this case at port of import Nhava Sheva, for further transhipment to ICD, Khodiyar shipping line had clearly mentioned description of goods as silver bars on the face of all such documents i.e Both Gate Local Import General Manifest (IGM), Transhipment Permit and CONCOR s forwarding note and provided proper information to CONCOR about description of goods as Silver Bars in container no. CAIU 6840387 and subsequently CONCOR had prepared their own rail summary dated. 31.01.2019 for train no. BRTX22731 from Nhava Sheva to Vadodara which also clearly indicate description of goods as Silver Bars - in terms of provisions laid down in foregoing Customs notifications and circular, filing of Transhipment Permit, filing of both Gate Local IGM and Forwarding Note for handing over container to CONCOR for transhipment to ICD, Khodiyar was responsibility of Shipping Line. Thereafter, booking of container from Nhava Sheva for Transhipment to ICD, Khodiyar and for that preparation of Rail Summary till arrival of the container at ICD, Khodiyar was responsibility of CONCOR as transporter.It was not appellant s responsibility and appellant as a Customs Broker had no role to play in terms of Customs Act and CBLR 2018 and he was not authorized to do so by Customs authorities - the CONCOR circulars did not mandate each addressee to inform CONCOR separately. It appears that while deciding the matter Commissioner of Customs has not taken into consideration aforesaid provisions under Customs notification and circulars for transhipment of goods/container wherein specific responsibilities were cast on Shipping Line as declarant and CONCOR both as transporter and custodian and accordingly documentary evidence available on record as well as statement of CONCOR s Chief Manager at ICD, Khodiyar. It is also found that Commissioner has not produced any substantial evidence to his findings - Considering the provisions of Customs notification and circulars and the documentary evidence on record, CONCOR as a transporter as well as custodian were well aware that they were carrying Silver Bars in container no. CAIU 6840387, therefore in the present case intimation by any party including Customs Broker whom CONCOR circular was addressed have no relevance - thus, the appellant being Customs Broker cannot be held responsible in any manner under Regulation 10 (d) of CBLR 2018. It is evident that CONCOR who was sole responsible in terms of Regulation 6 (1) (d) (h) of Handling of Cargo in Customs Area Regulation, 2009 to verify Transhipment documents i.e IGM, Transhipment Permit as well as their own Rail Summary from Nhava Sheva to Vadodara before allowing unloading of container no. CAIU 6840387 from the train and place the container at demarcated area according to the nature of the goods, whereas in present case CONCOR had left the said container dormant at the first location I/9/34/A from 02.02.2019 to 04.02.2019 knowing the fact that both IGM and Transhipment Permit as well as Rail Summary from Nhava Sheva to Vadodara categorically indicated goods as Silver Bars and therefore container should have been placed by CONCOR as a custodian immediately after its unloading from train to its demarcated place which they did not - conjoint reading of aforesaid provisions, deposition of Chief Manager, CONCOR and Deputy Manager, CONCOR, ICD-Khodiyar as well as offence report of Deputy Commissioner of Customs and CONCOR s public tariff it is clear without any doubt that it was sole responsibility of CONCOR as a custodian at ICD, Khodiyar to unload the container from train and further placement of that container at demarcated area according to the nature of goods. It was not appellant s responsibility and appellant as a Customs Broker had no role to play in terms of Handling of Cargo in Customs Area Regulations, 2009 and CBLR 2018. Appellant was not authorized to do so by Customs authorities - the appellant being Customs Broker cannot be held responsible in any manner under Regulation 10 (m) of CBLR 2018 with regard to placement of container at its demarcated place in ICD. Violation of Regulation 10 (e) of the CBLR, 2018 - charge is that appellant had not verified seal on container - HELD THAT:- It appears from the CONCOR s weighment receipt no. 1155 and findings of inquiry report and offence report of Deputy Commissioner of Customs, ICD, Khodiyar reproduced in forgoing para that while moving container from location I/9/34/A to the notified area placed in ICD, CONCOR s officials were well aware about discrepancy in seal number and weight of container was less than it was mentioned in their own rail summery which they did not disclose to customs authority - it is found from the police investigation report that, when container arrived at ICD at that time not only the weight was less than what was mentioned in the documents but seal number was also different. Further they concluded that theft had not taken place at ICD, Khodiyar which is in the limits of Adalaj Police Station and further CONCOR had also conducted investigation and reported that the theft had not happened in the ICD, Khodiyar premises. Thus, it was negligence on part of CONCOR and its appointed agency that they did not verify seal on container no. CAIU 6840387 and weight of the container was recorded less than it was mentioned in their own documents when it arrived at ICD, Khodiyar and further while moving the container from its first location they came to know about discrepancy in seal number and weight which they did not inform customs authority nor to the appellant - The responsibility for verification of seal number and gross weight was also cast on Shipping Line. There are no merit in learned Commissioner s finding that appellant s representative had not verified the seal before it was cut. Since appellant s responsibility as customs broker was ceased once the bill of entry was given out of charge, then presence of his representative at the time of cutting the seal and its verification have no relevance nor his admission that he has not verified seal has any relevance. Merely presence of his representative after completion of his work responsibly cannot hold appellant responsible for such harsh action of revocation of licence. It appears that while deciding the matter Commissioner of Customs has not taken into consideration such crucial facts which were on record. Time Limitation - HELD THAT:- The appellant has made out a strong prima facie case on limitation too. Since on the basis of detailed finding the issue is decided on merit and facts of this case, a final finding on Limitation is not required. Legality of revocation of License - HELD THAT:- Revocation of license should be commensurate with the gravity of the offence. Since the revocation of Customs Broker License is an extreme step and a harsh punishment as well as denial of livelihood of not only for Customs Broker but for his employees and their families too those who are dependent on customs broker. Adjudicating authority should take such harsh action only in the rarest of the rare case. It is observed that this case is not of misdeclaration of goods, undervaluation of goods, wrong classification of goods, evasion of duty, violation of Customs Act or appellant no way acted with mala fide intention. Penalty - HELD THAT:- The integrity of appellant cannot be doubted. From the order of the Commissioner we find that the submissions made by the appellant, responsibilities cast on declarant, transporter and custodian by virtue of various Regulations, circulars, public notices and facilitation note discussed in forgoing paras were not duly considered and the harshest penalty of revocation of license was imposed on appellant. Such harsh punishment of revocation of license is unwarranted which is bad in eye of the law and cannot sustain. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 745
Benefit Exemption from duty - imported goods Skin Barriers Micropore Surgical Tapes or not - denial of benefit on the ground of incorrect understanding of the product name Wafer and held that they are not Skin Barriers Micropore Surgical Tapes - extended period of limitation - penalty - N/N. 21/2002-Cus dated 1.3.2002 at Sr. No. 363 (A) - HELD THAT:- The issue is no longer res integra as being decided by the Bangalore Bench in the case of 3M INDIA LTD, SHRI KULVEEN SING BALI, SHRI M.S. SWAMINATHAN VERSUS COMMISSIONER OF CUSTOMS, BANGALORE-I [ 2020 (7) TMI 93 - CESTAT BANGALORE] . It has also been brought to notice that the same has been upheld by the Apex Court. Therefore, the decision of the Bangalore Bench has attained finality and further process by the decision of Tribunal in the case of M/S. SUTURES INDIA P. LTD. VERSUS COMMISSIONER OF CENTRAL CUSTOMS, CHENNAI [ 2019 (4) TMI 538 - CESTAT CHENNAI] cannot be relied upon. It is found that the appellants have submitted that there has been a punctuation error in the notification giving rise to an interpretation that the exemption is not applicable in the impugned goods. It is found that any such error in the notification, if any, should have been brought to the notice of the concerned authorities and got corrected. This Tribunal being a creature of statute cannot sit in judgment on interpretation of a notification or the purport of the notification. However, the Bench is not Writ Court to decide the property of the notification being creature of the statute. This Bench has no jurisdiction to interpret the intention of the notification. In the case of 3M INDIA LTD, SHRI KULVEEN SING BALI, SHRI M.S. SWAMINATHAN VERSUS COMMISSIONER OF CUSTOMS, BANGALORE-I [ 2020 (7) TMI 93 - CESTAT BANGALORE] , Tribunal has discussed the issue at length and observed that the product named Skin Barriers Micropore Surgical Tapes exists and to that extent the arguments of the appellants are not acceptable. The arguments of the appellants are not acceptable and it is held that the exemption is not available to them. Time Limitation - suppression of facts or not - penalty - HELD THAT:- The appellants have successfully demonstrated that the imports have been taken place over the years and Department has been allowing the same after examination atleast in respect of few consignments even after the introduction of self assessment regime. Under these circumstances, it cannot be held that the appellants have suppressed or mis-represented any material fact so as to warrant the invocation of extended period. For this reason, it is found that impugned orders are not maintainable as far as the limitation is concerned. Accordingly, it is held that penalty cannot be imposed on the appellants. All the appeals filed by the parties are partly allowed confirming the demand of duty for the normal period and setting aside the penalties imposed on the appellants.
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Corporate Laws
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2022 (5) TMI 763
Sanction of Scheme of Arrangement by way of Demerger - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions are issued forthwith in respect to convening/holding or dispensing with the meetings of the Shareholders, Secured and Unsecured Creditors as well as issue of notices including by way of paper publication - application allowed.
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2022 (5) TMI 762
Seeking approval of the Scheme of Merger - section 230-232 of the Companies Act, 2013 r/w Companies (Compromises, Arrangements And Amalgamations) Rules, 2016 - HELD THAT:- The meeting of the Equity shareholders, optionally convertible redeemable non-cumulative Preference shareholder, non-convertible redeemable non-cumulative preference shareholder, Secured and Unsecured Creditors of the Applicant Company are dispensed with - Application allowed.
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Securities / SEBI
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2022 (5) TMI 761
Fraudulent and Unfair Trade Practices relating to Securities Market - Transaction violative of Regulation 3 and 4 of the PFUTP Regulations - HELD THAT:- Specified proceedings has been defined under Section 2(f) of the Settlement Regulations, 2018, namely, the proceedings that have been initiated by SEBI under the SEBI Act, Securities Contracts (Regulation) Act, 1956 or Depositories Act, 1996 as the case may be. 14,000 odd cases have been initiated under the illiquid stock option matters wherein similar kind of transaction have been executed and similar violation is proposed against all these noticees under Regulation 3 and 4 of the PFUTP Regulations. These 14,000 entities form a class of persons and are involved for similar defaults. Therefore, in our opinion, the Board can specify a procedure and terms of settlement for these classes of persons under Clause 26 of the Settlement Regulations, 2018. SEBI should reconsider and seriously give a thought in coming out with a fresh scheme under Clause 26 of the Settlement Regulations, 2018. Such scheme can be a onetime scheme for this class of person. The terms of settlement should be attractive so that it could attract the noticees / entities to come forward and settle the matter which will ameliorate the harassment of penalty proceedings to the noticees and at the same time would help to clear the backlog of these pending matters before various AOs. While considering the scheme SEBI should take into consideration the provision of Section 15HA of SEBI Act prior to the amendment made by Act No. 27 of 2014 with effect from September 8, 2014. We find that various AOs have imposed a sum of Rs. 1 lakh for similar trades which were executed prior to September 8, 2014 and Rs. 5 lakh have been imposed for similar trades after the amendment of September 8, 2014. SEBI should also take into consideration that only a few trades were executed for small gains and some of the AOs have exonerated these noticees on the ground that such miniscule trades did not create any impact. We also request SEBI that while framing a scheme under the Settlement Regulations, 2018 it may also take into consideration the reduction of the quantum of penalty imposed in matters decided so far. We direct the Registrar of this Tribunal to send a certified copy of this order to the Chairperson of SEBI within a week for necessary information and action.
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2022 (5) TMI 760
Insider trading - information relating to the financial results was an Unpublished Price Sensitive Information ( UPSI ) - confirmatory order confirming the ex-parte ad-interim order whereby the appellant was restrained from buying or selling any securities, either directly or indirectly, till further orders - appellant was a Senior Corporate Counsel of Infosys and, being an officer/employee of Infosys, was reasonably expected to have access to the UPSI and, on a preponderance of probability basis, the appellant was in possession of UPSI and thus, was an insider under Regulation 2(1)(g) of the PIT Regulations - HELD THAT:- As in the absence of any direct or indirect evidence coming forth at this stage and the fact that the investigation is still continuing which may take time for issuance of a show cause notice, we are of the opinion that the continuation of the interim order against the appellant is unjustified especially when the appellant has not traded in the scrip nor there is any finding that he is a party to the unlawful gain. Admittedly, the appellant has not traded in the scrip. The two partnership companies have traded in the scrip in which admittedly the appellant is not a partner. Direction to deposit the unlawful gain have already been issued against the two partnership companies. The interest of the securities market is thus safeguarded. The investigation has not yet concluded and, therefore, it would take some time for issuance of a show cause notice. Final orders will come much later. Considering the aforesaid when only prima facie observations are being made which the appellant has sufficiently explained and discharged his burden we are of the opinion that at this stage debarring a person from accessing the securities market is not justified in the facts of the case. We further observe that the investigating party will not be influenced by any observation made by us in the present order which are tentative in nature and will not be utilised to the advantage of either party. The confirmatory order as well as the interim order in so far as it relates to the appellants cannot be sustained and are quashed. The appeals are allowed. In the circumstances of the case parties shall bear their own costs.
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Insolvency & Bankruptcy
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2022 (5) TMI 759
Reference of disputes arising out of collaboration agreement to arbitration - appointment of an Arbitral Tribunal - Effect of proceedings under IBC for admission of application for initiation of CIRP - demand notice issued for recovery of dues by Operational Creditor - HELD THAT:- It is observed that there is no dispute with regard to the execution of the collaboration agreement or the fact that it contains an arbitration clause. Respondent had issued a demand notice demanding certain payment of unpaid operational dues from the petitioner by its demand letter dated 31.12.2021 - the demand letter was responded to by the petitioner by its reply-cum-notice of dispute dated 13.01.2021. In the said reply while disputing the claim of the respondent, petitioner had in paragraph 4(i) called upon the respondent to pay a sum of Rs.1,97,70,192/- to the petitioner and thereafter, in the last paragraph contended that clearly the disputes had arisen and consequently proceeded to appoint an Arbitrator under clause 17 of the collaboration agreement. It clearly cannot be held that no demand was made by the petitioner on the respondent. The merits of the demand or the validity of the same are not to be adjudicated in a petition under Section 11 and as such the same is not being commented upon. However, what is clear, from the notice of demand sent by the respondent and the reply by the petitioner, is that there are disputes between the parties with regard to the entitlement either of the respondent or the petitioner to receive certain amount from the other side. In view of the judgment in INDUS BIOTECH PRIVATE LIMITED VERSUS KOTAK INDIA VENTURE (OFFSHORE) FUND (EARLIER KNOWN AS KOTAK INDIA VENTURE LIMITED) OTHERS [ 2021 (3) TMI 1178 - SUPREME COURT] , the proceedings under the Insolvency and Bankruptcy Code would take precedence and any moratorium issued therein would automatically bind the proceedings under the Arbitration Act - In case the petition filed before the NCLT is admitted and moratorium comes into play, the legal consequences of the same would automatically apply to the proceedings under the Arbitration Act There is no merit in the objection raised by the respondent on the appointment of an Arbitral Tribunal - Petition disposed off.
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2022 (5) TMI 758
Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The RP is approaching this Tribunal for passing an order of Liquidation of the Corporate Debtor as referred to in section 33(1) of IBC, 2016, as no resolution plan was received by the Resolution Professional under section 30 of the Code. Hence there is no alternative to save the CD, but to go for Liquidation. The RP Mr. Sharavan Kumar Vishnoi who has filed the present Liquidation Application has annexed the consent form of Mr. Debashish Nanda to act as a Liquidator, for which this Bench is of the considered view that, it is implied that Mr. Shravan Kumar Vishnoi has withdrawn his consent to act as RP as well as Liquidator in the present matter. Therefore, this adjudicating authority in light of Section 34(1) r/w section 34(4)(c) of IBC, 2016, in absence of any written consent submitted by the Mr. Shravan Kumar Vishnoi (RP), in the prescribed form to appoint him as the Liquidator, hereby decided to appoint Mr. Debashish Nanda as the Liquidator. The present application u/s. 33(2) of IBC stands allowed and liquidation of the corporate debtor, namely M/s. RS Ingot and Billet Private Limited in the manner as laid down in the Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 and in accordance with the relevant Rules and Regulations, is hereby ordered.
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2022 (5) TMI 757
Seeking dissolution of Corporate Person - voluntary liquidation - section 59 of IBC - HELD THAT:- The Counsel drew the attention of this Tribunal to the declarations and the special dissolution as required under Section 59 and also about the information given to the Registrar of Companies (RoC) and the Board. The intimation given to the RoC is also filed. The final report submitted by the Liquidator is also placed before this Tribunal. The CIRP costs were also recorded and the closure of the bank account is also done. Hence, it can be seen that the requirements under Section 59 are complied with by the Applicant and hence, there need not be any demur to allow the Application and grant the reliefs as sought for. The Petition is allowed and Corporate Person shall stand dissolved from the date of this order - decided in favor of petitioner.
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2022 (5) TMI 756
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Applicability of IBC on Government Companies - HELD THAT:- It is found that the corporate debtor is a Government Company wholly owned by the State Government formed for serving public service and all the directors are also appointed by the State Government from the concerned departments. It is also noted that the Corporation is engaged in the development of Handloom Handicraft in the State of Gujarat and implements various schemes and projects of the State Government, assisting different crafts and craftsmen/artisans. It is evident that Corporate Debtor is engaged with the public cause and the money involved in all these activities of the public exchequer. On the facts of the case, it is clear that the applicant has rendered services to the respondent. However, apparently there was no agreement regarding the payment, including the quantum of payment, to the applicant by the respondent. The letter dated 11.01.2018 by the applicant to the respondent mentions charges as commission/brokerage but qualifies it by the statement, to be discussed and mutually agreed . No evidence regarding discussion or mutual agreement has been furnished - From the facts on record, it is clear that there was a pre-existing dispute regarding the quantum of commission payable. In absence of any written agreement, it is difficult to ascertain what was the correct commission payable. The respondent had, even during the hearing, expressed its willingness to pay the brokerage as approved by the State government. From the facts of this case, it is apparent that the genuine and bonafide dispute existed between the parties. The instant application is not maintainable - application dismissed.
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2022 (5) TMI 755
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt of dispute or not - HELD THAT:- Prima facie it appears that the claim raised by the applicant is towards the detention and demurrage charges incurred by the applicant for delay and failure to clear the cargo from the CFS at Mundra and Nhava Sheva ports. On perusal of the records it is found that on 08.09.2020 the applicant had issued legal notice to the corporate debtor demanding a sum of Rs. 3,16,46,277.29 towards detention and demurrage charges comprising Rs. 35,00,000/- on account of the estimated demurrage/detention charges, Rs. 12,73,961/- towards additional cost paid for clearance of 14 shipments by Hero MPPL, a sum of Rs. 9,23,257/- towards interest on account of the corporate debtor's failure to pay the invoices and Rs. 1,20,00,000/- towards the estimated detention and demurrage charges for the non-clearance of one shipment of three containers. The said legal notice was replied by the corporate debtor by email dated 08.09.2020 raising a dispute with regard to liability of the corporate debtor on the amount of clearance charges paid by the third party buyer. There is no claim regarding the principal amount and the issue of contention is demurrage and detention charges. The corporate debtor has averred that detention and demurrage charges does not fall under the definition of operational debt under Section 5(21) of the Code. It clearly reflects that a dispute was in existence prior to issuance of the statutory demand notice under Section 8 of the Code by the applicant. There is sufficient evidence to prove the existence of dispute. The instant application cannot be considered for admission and needs to be rejected - The instant application stands rejected and disposed of.
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2022 (5) TMI 754
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - default committed under Indian Contract Act - HELD THAT:- On going through the report dated 13.11.2021 filed by the IRP. It is noted under section 128 of Indian Contract Act, 1872 that when a default is committed, the Principal Borrower and Surety are jointly and severally liable to Creditor and Creditor has the right to recover its dues from either of them or from both of them simultaneously - In this application filed by the Financial Creditor, a Deed of Guarantee dated 25.04.2014 is executed between the SBI led Consortium and the Personal Guarantor. Clause 24 of the Deed of Guarantee states that this Guarantee shall be irrevocable and the obligations of the Guarantors hereunder shall be discharged except by performance and then only to the extent of such performance, such obligation shall not be conditional on the receipt of any prior notice by the Guarantors or by the Borrower and the demand notice by the Lenders shall be sufficient notice to or demand on the Guarantors. Based on the judgment of Hon'ble Supreme Court in LALIT KUMAR JAIN VERSUS UNION OF INDIA AND ORS. [ 2021 (5) TMI 743 - SUPREME COURT ], the Personal Guarantor cannot be discharged from his liability upon the approval of Resolution Plan under section 31 of IBC, 2016. Therefore, the liability of the Personal Guarantor continues and the Financial Creditor is in condition to realize the default amount from the Personal Guarantor. On-going through the averments in the IBA, the reply of Respondents after the report of the Resolution Professional as also the report of Resolution Professional narrated, it is opined that this is a fit case for admission and proceed against the Personal Guarantor/Respondent and initiate Corporate Insolvency Resolution Process. It is also seen from the report of Resolution Professional that he has not recommended for a negotiation between the parties for arriving at an amicable settlement for repayment. Application admitted - Moratorium declared.
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2022 (5) TMI 753
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- Considering the facts and circumstances of the instant case in a conspectus fashion holds unhesitatingly that the notification dated 24/03/2020 of the Ministry of Corporate Affairs, Government of India, is prospective in nature and it is not retrospective or retroactive in nature. Further, the said notification will not apply to the pending applications filed before the concerned Adjudicating Authority' (Authorities), under IBC (waiting for admission), prior to the issuance of the aforesaid notification, as opined by this Tribunal. Viewed in the above prospectives, the conclusion arrived at by the Adjudicating Authority' in the impugned order to the effect that the notification dated 24/03/2020 of the Ministry of Corporate Affairs, Government of India, shall be considered as prospective and not retrospective and the finding that there was no payment on the side of 'Corporate Debtor' after receipt of Demand Notice, no pre-existing dispute also alleged or proved and ultimately admitting the application filed by the 2nd Respondent/Operational Creditor are free from legal infirmities. Petition dismissed.
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2022 (5) TMI 752
Seeking rectification of order - delisted company (process of de-listing shall be completed by the Monitoring Committee in accordance with the the Resolution Plan) - typographical error - it is alleged that this Adjudicating Authority vide order dated 14.10.2021, inadvertently, directed the Resolution Applicant to maintain the public shareholding at a minimum 5% which is applicable on the listing company - HELD THAT:- It is noted that this Adjudicating Authority vide its order dated 14.10.2021 [at para-10(10)(X)] has already given a direction for extinguishment of the share capital of the Corporate Debtor without any payment (including any cancelled value of the said equity shares or preference shares). However, this Adjudicating Authority, given a direction to the Resolution Applicant to maintain the public shareholding at minimum 5% which is not applicable as against the Corporate Debtor. As it has been proposed in the Resolution Plan (at para 4.6.1) for de-listing of the securities from NSE and BSE as per applicable Regulations and directions of this Adjudicating Authority after the approval of the Resolution Plan. The same has already been complied with by the Monitoring Committee and the NSE and BSE have delisted the securities of the Corporate Debtor. Hence, the direction with respect to maintain the minimum 5% public shareholding is merely a typographical error and it will not affect the object or any implications of the Resolution Plan. Necessary rectification is to be carried out - application allowed.
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2022 (5) TMI 751
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - existence of debt and dispute or not - breach of contract under Indian Contract Act - HELD THAT:- On going through the report dated 04.12.2021 filed by the IRP, it is noted under section 128 of Indian Contract Act, 1872 that when a default is committed, the Principal Borrower and Surety are jointly and severally liable to Creditor and Creditor has the right to recover its dues from either of them or from both of them simultaneously. In this application filed by the Financial Creditor, a Deed of Guarantee dated 25.04.2014 is executed between the SBI led Consortium and the Personal Guarantor. Clause 24 of the Deed of Guarantee states that this Guarantee shall be irrevocable and the obligations of the Guarantors hereunder shall be discharged except by performance and then only to the extent of such performance, such obligation shall not be conditional on the receipt of any prior notice by the Guarantors or by the Borrower and the demand notice by the Lenders shall be sufficient notice to or demand on the Guarantors. Therefore, CIRP can be proceeded against the Personal Guarantor as an irrevocable Deed of Guarantee has been signed between the SBI led Consortium and the Personal Guarantor. This is a fit case for admission and proceed against the Personal Guarantor/Respondent and initiate Corporate Insolvency Resolution Process. It is also seen from the report of Resolution Professional that he has not recommended for a negotiation between the parties for arriving at an amicable settlement for repayment. Petition admitted - moratorium declared.
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Service Tax
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2022 (5) TMI 750
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - it is alleged that the petitioner could not deposit within the prescribed timeframe the amount declared in the scheme - HELD THAT:- Ordinarily no direction can be issued by the Court for extending the timeframe provided under the Scheme as this would be the prerogative of the respondents having regard to the ground realities - However, given the circumstances that have been put forth by Mr. Mankotia on behalf of the petitioner, in particular, the fact that the petitioner claims that she is afflicted with cancer, the designated committee or any other appropriate authority will treat the writ petition as a representation and dispose of the same. Petition disposed off.
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2022 (5) TMI 749
Voluntary Compliance Encouragement Scheme - classification of services - works contract or construction of road under civil construction services? - factual errors in the computation of the demand or not - eligibility for cum-duty benefit - eligibility for exemption on the service rendered for construction of a road - Penalty. Whether there is a calculation error in the demand confirmed? - HELD THAT:- The Commissioner arrived at the differential duty payable by way of a Chart and finds that: I also hold that the differential amount of Rs.1,29,744/- is recoverable from the declarant under section 73 of the Finance Act, 1994 read with Section 111 of Finance Act, 2013. However, he has confirmed an amount of Rs.3,64,587/-. The appellant has given a calculation sheet to show the differential duty payable for different years from 2008-09 to 2011-12. The adjudicating authority has not considered these submissions. There is also an inherent contradiction in the calculation and findings by the adjudicating authority. Whether the adjudicating authority was correct in classifying the services rendered by the appellant under Works Contract Service ? - HELD THAT:- The classification of taxable services has to be on the basis of nature of the work and terms of the contract. Though works contract has service and supply of goods as essential ingredients, vice-versa may not be true. The classification of services can be done only when the same falls under works contract as defined in the Statute. - There is force in the submissions of the appellant. The classification of the service should necessarily depend on the nature of the work and the contract and not on the basis of nomenclature - Whether the appellant is eligible for cum-duty benefit? - HELD THAT:- The appellant has made out a prima facie case for the cum-duty benefit - reliance placed in the case of P. JANI CO. VERSUS COMMR. OF SERVICE TAX, AHMEDABAD [ 2010 (7) TMI 297 - CESTAT, AHMEDABAD] where it was held that as regards the request for treatment of the amount received as inclusive of service tax, I agree with the contention of the learned advocate that the decision of the Tribunal in the case of COMMR OF C. EX CUS., PATNA VERSUS ADVANTAGE MEDIA CONSULTANT [ 2008 (3) TMI 59 - CESTAT KOLKATA] applies and in view of the provisions of Section 67 of Finance Act, 1994, the amount received has to be treated as inclusive of tax. Whether the appellant is eligible for exemption on the service rendered for construction of a road? - Commissioner has denied exemption from the service tax on the ground that it was a private road; no free access was permissible to general public; the value of services in construction of a road was not separately worked out and that the services are not covered in exempted services - HELD THAT:- The provision of section 65 (105) (zzzza) of the Finance Act shows that the said provision does not differentiate between a public road or a private road. Therefore, it appears that the observations of the Commissioner are not correct - the impugned order has not appreciated the legal position correctly and has not given findings backed by law and reason. The appellant did not place on record the necessary documents and submissions before the Commissioner. Therefore, in the interest of justice, the issue requires to be remanded to the adjudicating authority for proper appreciation of law and the facts of the case - appellant may submit the necessary documentary evidence and submissions before the adjudicating authority. Penalty - HELD THAT:- Understandably, this is a case opened up after a declaration had been filed by the appellant under the VCES. Though, the authorities can verify the correctness of the claim of the appellant and arrive at the exact tax liability, imposition of any penalty would be detrimental to the Scheme itself. In fact, imposition of penalty would defeat the very purpose of bringing in such an amnesty Scheme to encourage voluntary tax compliance. Therefore, penalty cannot be imposed, in the facts and circumstances of the case. The appeal is partly allowed by way of remand to the adjudicating authority. Penalties imposed are, however, set aside.
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Central Excise
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2022 (5) TMI 748
Refund of accumulated CENVAT Credit - accumulated credit at the time of closure of unit of the assessee - HELD THAT:- In SHRI VITTHALSAI SSK LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NAGPUR [ 2019 (12) TMI 390 - CESTAT MUMBAI] , the Tribunal had also rejected such claim for refund of credit that had accumulated in an undertaking taken over by the assessee themselves in the past. Refund cannot be granted - there is no merit in the grounds set out by the appellant for setting aside the order of the first appellate authority. Accordingly, the appeals are dismissed.
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2022 (5) TMI 747
Levy of interest and penalty - invocation of extended period of limitation - business of interior designing and furnishing - turnover of small scale exemption limit of Rs.30,00,000/- exceeded - manufacturing of various types of furniture without obtaining Central Excise registration - HELD THAT:- As could be noticed from the order passed by this Tribunal in respect of the present Assessee-Appellant on dated 14.01.2009 [ 2009 (1) TMI 935 - CESTAT MUMBAI ], penalty and interest for the extended period was set aside by observing that learned Commissioner therein had correctly assessed that the liability of duty had occurred on point of law and there existed reasonable basis for doubt in discharge of duty liability - However, in the present appeals both invocation of extended period and imposition of penalty and interest are being confirmed by the Commissioner, even by distinguishing the order passed by the Hon'ble Supreme Court in Craft Interiors Pvt. Ltd. [ 2006 (10) TMI 2 - SUPREME COURT ] - We cannot do so nor would encourage such thin line distinction to bypass the judicial precedent set by the highest Court of this land. In the instant case, in view of the discussions, with the consent and concurrence of both the parties, instead of remanding it back, Rule 41 of the CESTAT (Procedure) Rule, 1982 should be invoked in, putting an end to the litigation that commenced way back in the early 1990 s only for the purpose of re-computation for the normal period when from the evidence on record it is quite evident that appellant had already paid Rs.3,50,000/- during investigation which is much higher than the entire demand raised for the normal period that would also meet the interest component. Appeal of the partly allowed on issue of limitation.
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Indian Laws
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2022 (5) TMI 792
Seeking grant of Bail - framing of charges - Appellant who is an undertrial prisoner, has already undergone a long period of incarceration - offences punishable Under Sections 10, 13, 15, 16, 17, 18, 18A, 18B, 19, 20, 23 and 38 of the Unlawful Activities (Prevention) Act, 1967 - HELD THAT:- The fact remains that the Appellant has been in custody as an undertrial prisoner for a period of nearly 8 years already. The Appellant, it may be noted, is charged with offences, some of which are punishable with a minimum punishment of 10 years and the sentence may extend to imprisonment for life. Learned Counsel for the Appellant also points out that one of the co-Accused namely Shri Aadil Ansari has been released on bail on 30.09.2020 by this Court. No doubt, in this regard, we keep in mind the submission of the State that the role attributed to the said Accused is different. The condition in Section 43D(5) of the Act of 1967 has been understood to be less stringent than the provisions contained in Narcotic Drugs and Psychotropic Substances Act, 1985 - in the nature of the case against the Appellant, the evidence which has already unfolded and above all, the long period of incarceration that the Appellant has already undergone, time has arrived when the Appellant be enlarged on bail. The Appellant is directed to be released on bail subject to such conditions as shall be fixed by the trial Court - appeal allowed.
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2022 (5) TMI 746
Dishonor of Cheque - Bank has been made as party - Liability of bank in case of dishonor of cheque - Vicarious liability of the partner - Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 - HELD THAT:- What can be observed is that for an offence under Section 138 to be made out a cheque has to be issued by the account holder under his name and signature. It is clear that only the holder of the account on which the cheque is drawn can be made liable and such culpability cannot be extended to others except as provided under Section 141 N.I. Act which deals with offences by and on behalf of the company or partnership, where the signatory to the cheque may be a Director of the company or a Partner of a partnership firm. In the present case, the petitioner/HDFC Bank has been made a party by the complainant/respondent No. 1 where no role can be attributed to the bank as far as the issuance or the dishonour of the cheque in question is concerned. The bank is only the custodian of the money of the customers and has to comply with the instructions of such customers. In case of insufficiency of funds, the bank is only to report the same and as such, cannot by any stretch of the imagination be liable for any act of the customer who has issued the cheque which was later dishonoured. Viewed thus, this Court finds that the learned Judicial Magistrate First Class, Shillong has failed to appreciate the facts and the provisions of law and has unnecessarily put the petitioner to great hardship by issuing of process. The petitions under consideration finds merit before this Court and the same is accordingly allowed.
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