Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 2, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of GST registration of petitioner - As the Notification would indisputably apply to the facts of this case, the petitioner may approach the competent authority to avail the benefit of the Notification and seek revocation of the cancellation of registration - HC
Income Tax
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Commission of offence u/s 276B r.w.s 278B - The petitioner neither falls within the definition of “Assessee”, “Principal Officer” nor an “Employee”. He was also not part and parcel of the management of HEC. The complaint also does not specify any overt act against the petitioner nor it has a single sentence to the effect that the petitioner is responsible for any of the acts which can attract any penal consequences nor it mentions that he was responsible for the daily affairs of the company - there is no material to summon the petitioner in the instant case by the Court below - order taking cognizance passed u/s 276B r.w.s 278B of Income Tax Act and Sections 409, 34 of IPC is quashed and set aside - HC
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Revision u/s 263 by CIT - low income from liquor business - the books of account, which are duly audited and furnished before the Assessing Officer, were never rejected and therefore, the observation of the PCIT that the Assessing Officer should have adopted profit rate of 3% to 5% from liquor trade cannot be sustained. - AT
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Disallowance of expenditure on salary and wages - establishment of nexus between the expenditure and the purpose of business - The assessee’s claim in the instant case is wholly unsubstantiated. No explanation, much less material, stands furnished before the AO. How, pray, could his action be faulted within law? He was accordingly well within his powers to make a reasonable estimate and disallow what he regarded as excessive or as not explained. - Order of CIT(A) deleting the additions set aside - AT
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Revision u/s 263 - Non deduction of tds u/s 194C - transportation charges - Merely because there is no compliance on the part of the assessee to furnish the prescribed information to the Revenue authorities the same cannot lead to a conclusion that the assessee has not complied with the first statutory obligation i.e. to obtain PAN of the payees. - Revision order set aside - AT
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Addition u/s 68 - assessee was unable to produce the Director of lender company so the identity of lender is not established - When the interest income of lender stands accepted by the Department, then the loan disbursed by it to earn that income cannot be considered to be tainted, by attributing suspicion to the identity or creditworthiness of sources of lender. - AT
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Recomputation of capital gains - Considering lower value of consideration for the sale of equity shares than the consideration initially agreed among the parties - Revenue has not doubted any leg of the transaction, and their plea is only limited to the revaluation of shares. There is also nothing to prove that the entire consideration of Rs.10 crore was received by the assessee and therefore the capital gains as initially offered by the assessee be upheld. - AT
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Disallowance u/s 40A(3) - depositing cash in bank account of supplier - the purpose of Section 40A(3), is only preventive and to check tax evasions and flow of unaccounted money or to check transaction which are not genuine and may be put up as camouflage to evade tax by showing fictitious or false transactions. Admittedly, this is not so in the present case of the assessee, as ld. AO also has accepted the fact that assessee directly deposited cash in the bank account of the supplier - Additions deleted - AT
Customs
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Constitutional Validity of pre-import condition - advance authorization - There is no constitutional compulsion that whilst framing a new law, or policies under a new legislation – particularly when an entirely different set of fiscal norms are created, overhauling the taxation structure, concessions hitherto granted or given should necessarily be continued in the same fashion as they were in the past. - the exclusion of benefit of imports in anticipation of AAs, and requiring payment of duties, under Sections 3 (7) and (9) of Customs Tariff Act, 1975, with the ‘pre-import condition’, cannot be characterized as arbitrary or unreasonable. - SC
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Stay of pre-deposit - Constitutional vires of Section 129E of the Customs Act, 1962 - given the financial position and the wherewithal of the Petitioners, an opportunity needs to be given to them to contest the valuation so imposed by the Respondents, which, otherwise cannot be contested by them. Thus, we consider the case of the Petitioners to be an appropriate case to exercise our discretion in the matter concerning waiver of pre-deposit of penalty. - HC
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Confiscation - redemption fine - penalty - import of Hydrogenated Vegetable oils (Vanaspati Ghee) - quantity of 45,120 Kg was found to be adulterated and unfit for human consumption - The action of the department in proposing for confiscating the goods and imposition of fine and penalties is legally tenable - the quantum of penalty and fine should be commensurate with the offence committed - AT
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Valuation of imported goods - In case of new machinery, Rules require valuation to be done on the basis of contemporaneous imports (NIDB data). In absence of such data, authority is required to follow the Valuation Rules in seriatum, which has not been done - Revenue have not assigned any reasons for not adopting NIDB data. Admittedly, the appellant have declared a higher value of USD 5000 per machine. - Demand set aside - AT
Indian Laws
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Pledge of shares - whether the accused No.1 Company was entitled to invoke the pledge at any time in the event of default or not? - It is found that the complaint, taken at its face value, does not disclose that any of the ingredients of the offence complained of have been made out. - SC
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Stamp duty - Asserting value of immovable property - Comprehensive sale of all the assets and, in a single transaction - the sale deed operated to convey the rights over the plant and machinery as well, which was comprised in the land scheduled in the sale deed. As far as the plant and machinery is concerned, it must, however, be only such plant and machinery, which was permanently embedded to the earth and answering the description of the immovable property as defined. - SC
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Wilful breach of the Memorandum of Understanding (MoU) - Dishonour of Cheque - non-compliance of ‘undertakings’ given to the Court - the Respondent has already been held guilty of contempt and considering his subsequent conduct as aforesaid, this Court sentences Respondent, Contemnor, Mr. Anand Kamal Goel, to undergo two (02) months imprisonment along with a fine of Rs. 2,000. - HC
IBC
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Initiation of CIRP - Corporate Guarantor - When the Bank has given time to the Guarantor to make payment on 01.10.2020, there can be no default on part of the Guarantor on any earlier date. The default on part of the Guarantor thus has to be subsequent to the notice dated 01.10.2020 i.e. Non-payment within seven days as required - The Deed of Guarantee dated 17.05.2019 is guarantee on demand and the limitation of Guarantor shall ensue only when demand is made to the Guarantor. - AT
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Rejection of section 9 application - initiation of CIRP - Enquiry into such allegations and counter-allegations would entail detailed investigation and the legislative intent of the IBC does not clothe the Adjudicating Authority with such powers of investigation. Thus the Adjudicating Authority has not committed any error by restraining itself from entering into any sort of roving enquiry on this issue. - AT
Service Tax
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Taxability - Liquidated damages/ penalties recovered - since, collection of such amount is towards delayed completion of work, which is not a regular phenomenon and arises out of non-performance of the contract in the manner prescribed, on rare occasions, it cannot be said that there are sufficient nexus between the parties on a regular basis for payment of such charges in order to abstain in proper performance of the assigned task within the scheduled time frame - such amount should not be equated with ‘consideration’, for the purpose of rendering any taxable service. - AT
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SVLDR Scheme - benefit of scheme denied due to his inability to make payment, pursuant to Form SVLDRS-3 in view of the expiry of the challan (mandate form) - the Petitioner cannot be deprived of the benefit of the SVLDR Scheme merely on the basis of a technical issue of reversal of the amount paid by Petitioner prior to 30 June 2020 on the ground of expiry of challan for which clearly the Petitioner was not at fault. - HC
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Valuation - Works contract or not - exclusion of value of material on which VAT has been paid - Commissioner (Appeals) has dropped the demand holding that the activity of the respondent is a works contract service though chargeable to service tax but the value for the material as has already been assessed for the purposes of VAT cannot be considered as the value for assessing service tax liability. - Appeal of the revenue dismissed - AT
Central Excise
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Doctrine of Merger - under the Doctrine of Merger, the Commissioner was not correct in re-visiting the issue which was already concluded in the remanded matter by the Tribunal, wherein directions were very specific and the Ld. Adjudicating authority was only required to examine the Certificate issued by the Senior Manager Accounts (Indirect Taxation) on behalf of TSL since it was not submitted before the Ld. Adjudicating authority during adjudication. - AT
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Non-payment of Excise Duty - 1456 pcs. of other branded garments and 4963 pcs. of branded garments - return of duty apaid garments - In the present case, the appellant was legally obliged to tender the requisite intimation in order to claim the exemption. Further, this failure is not once but with each time the goods were returned and under consideration in the present appeal. - Benefit of exemption not available - AT
VAT
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Jurisdiction of State GST Department to initiate proceedings for recovery of any nature for the period prior to acceptance of the Resolution Plan under IBC - While passing the impugned orders, the Deputy Commissioner failed to consider the replies of the party and acted with sheer non-application of mind. His conduct deserves to be deprecated. - HC
Case Laws:
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GST
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2023 (5) TMI 41
Cancellation of GST registration of petitioner - non-filing of Returns for a continuous period of six months - Notification dated 31.03.2023 - HELD THAT:- Clause (c) of the aforesaid Notification would apply to the facts of this case for which there is no dispute. As the Notification would indisputably apply to the facts of this case, the petitioner may approach the competent authority to avail the benefit of the Notification and seek revocation of the cancellation of registration - If the petitioner approaches the competent authority in light of the Notification dated 31.03.2023, the authority will take appropriate decision without booking any delay. Petition disposed off.
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2023 (5) TMI 40
Cancellation of registration of petitioner - non-filing of GST returns - HELD THAT:- This Court is of the opinion that the case of the petitioner firm covers with the notification dated 31.03.2023 and the petitioner firm can move an application before the competent authority with a prayer for restoration of its GST registration subject to fulfillment of the conditions mentioned in the said notification. In such circumstances, this writ petition is disposed of with liberty to the petitioner-firm to file application for restoration of its GST registration before the competent authority, which shall consider and decide the application filed by the petitioner-firm in the light of the notification dated 31.03.2023 issued by the competent authority under the Goods and Services Tax Act, 2017 expeditiously.
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Income Tax
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2023 (5) TMI 39
Commission of offence u/s 276B r.w.s 278B of Income Tax Act and Sections 409, 34 of IPC - Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B - accused persons were responsible for deductions of tax from the payments of the contractors, employees and others of HEC, Ltd. but on several occasions the accused persons have not deposited the deducted tax 2, within the stipulated period under the Income Tax Act, with the authority - as argued Petitioner was a retainer and not a regular employee and not responsible for deducting tax from any one - HELD THAT:- It is an admitted fact that the petitioner is not an employee of HEC, Ltd. The petitioner being not the employee of HEC, never had any control over the affairs of the company including the liability of deducting tax from the employees or the contractor and 4 depositing the same with the department. The petitioner neither falls within the definition of Assessee , Principal Officer nor an Employee . He was also not part and parcel of the management of HEC. The complaint also does not specify any overt act against the petitioner nor it has a single sentence to the effect that the petitioner is responsible for any of the acts which can attract any penal consequences nor it mentions that he was responsible for the daily affairs of the company. This Court after taking into consideration all these aspects has quashed issuance of summons and process against the petitioner [ 2015 (6) TMI 1254 - JHARKHAND HIGH COURT] This Court finds that there is no material to summon the petitioner in the instant case by the Court below. Accordingly, the order taking cognizance passed u/s 276B read with 278B of Income Tax Act and Sections 409, 34 of IPC is quashed and set aside. Misc. Petition is allowed.
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2023 (5) TMI 38
Revision u/s 263 by CIT - low income from liquor business - case was selected for complete scrutiny under CASS to verify the low income from TCS receipts-liquor - As per CIT AO ought to have verified the books, purchase bills and sale bills etc., since the case was selected for complete scrutiny and the reason was low income - HED THAT:- Since in the instant case, the assessee has furnished the requisite details to substantiate its low income from liquor business and the Assessing Officer, after considering the details, has taken a possible view, therefore, the learned PCIT, in our opinion, is not justified in invoking the jurisdiction u/s 263. PCIT are adopting profit rate of 3% to 5% profit from liquor trade only when the books are rejected. However, in the instant case, the books of account, which are duly audited and furnished before the Assessing Officer, were never rejected and therefore, the observation of the PCIT that the Assessing Officer should have adopted profit rate of 3% to 5% from liquor trade cannot be sustained. We, therefore, hold that the PCIT is not justified in invoking jurisdiction u/s 263 on the first issue i.e. low income from liquor trade. PCIT held the order to be erroneous and prejudicial to the interest of the Revenue for which he has invoked the provisions of section 263 i.e. non-verification of introduction of capital and withdrawal - Since AO in the instant case has not called for any information on the issue of introduction of capital and withdrawal and since there is nothing on record to show that the assessee has explained the source of introduction of such capital, therefore, the order of the AO on this issue has become erroneous and prejudicial to the interest of the Revenue and therefore, the PCIT, in our opinion, was fully justified in invoking revisional power u/s 263 of the I.T. Act. We, therefore, uphold the order of the PCIT invoking the jurisdiction u/s 263 of the Act on the second issue i.e. introduction of capital and withdrawal.
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2023 (5) TMI 37
Levy of late filing fees u/s 234E - assessee filed returns of the TDS belatedly - intimation u/s 200A - Levy for period pertaining to the period prior to 1.6.2015 - HELD THAT:- As there was no provision u/s 200A of the Act for levying/demanding of fees u/s 234E of the Act while processing TDS return u/s 200A of the Act. It was only on 01.06.2015 that the statute was amended and clause (c) was inserted to section 200A, whereby, it was provided that while processing TDS return u/s 200A of the Act, fees, if any, shall be computed in accordance with the provisions of section 234E of the Act. As decided in Fatehraj Singhvi vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT ] when the statute confers no express power u/s 200A before 01.06.2015 on the authority either to compute any fees u/s 234E or to raise demand in this respect while processing return u/s 200A, the demand for the period prior to 01.06.2015, raised in an intimation u/s 200A, could not be sustained. Thus in this case as the penalty levied in this appeal pertinent to period prior to the Amendment of 01.06.2015, therefore, the penalty levied u/s 234E of the Act, is not sustainable and the same is accordingly ordered to be deleted. Decided in favour of assessee.
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2023 (5) TMI 36
Addition u/s 68 - unsecured loan taken - assessee is one of the beneficiary of such accommodation entry from the list of beneficiary form various entity managed by Anand Kumar - HELD THAT:- When assessee provided identity by giving complete addresses, GIR numbers/PAN as well as confirmation alongwith copies of assessment order wherever available and discharged his onus, no addition to be sustained. Loan was received and was repaid through banking channel and there is no allegation that any cash was deposited before issuing cheque to the assessee, in the account of lender. Lender has sufficiently owned money in the form of reserve and surplus of Rs. 11.94 crores. We direct the Assessing Officer to delete the addition of unsecured loan of Rs. 9.50 lacs. Addition of alleged commission paid made u/s 69C is also deleted. Appeal of assessee allowed.
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2023 (5) TMI 35
Disallowance of expenditure on salary and wages - establishment of nexus between the expenditure and the purpose of business - CIT-A deleted addition on finding it as not sustainable in law - HELD THAT:- Trite law that the burden to prove it s return, and the claim/s preferred thereby, is on the assessee, who only is in the intimate know of his affairs - The onus to show so, which is on the assessee, is to be discharged before the assessing authority, i.e., the authority designated and charged by law to frame an assessment under the Act. The assessee s claim in the instant case is wholly unsubstantiated. No explanation, much less material, stands furnished before the AO. How, pray, could his action be faulted within law ? He was accordingly well within his powers to make a reasonable estimate and disallow what he regarded as excessive or as not explained. It is well-settled that while exclusively concerns the purpose for which the expenditure is incurred, the word wholly adverts to its quantum, so that, where called upon to, as in the instant case, the entire of it is shown to have been incurred for purposes of business to merit deduction u/s. 37(1) in its respect. CIT(A) as an appellate authority, as indeed the assessing authority himself, could proceed only on the basis of the material on record, while in the instant case the AO, none of whose findings, we reiterate, are controverted, clearly states that the assessee, despite being called upon to, did not furnish any material or explanation, failing to provide even the basic data, viz., the person-wise details. The same, along with their function ought to have been furnished by the assessee at the minimum; rather, vis- -vis the preceding year, explaining the reasons for the quantum increase therein. It is then said that the expenditure on salary and wages is not liable to vary in direct proportion as well. The same does not help the assessee s case in any manner. It does not, firstly, absolve the assessee from proving the claimed expenditure as having been incurred wholly and exclusively for the purpose of its business. Two, the argument could equally validly be advanced to disallow the entire increase in expenditure (over the preceding year), allowing only that incurred during the preceding year inasmuch as the increase in volume may not translate into an increase in expenditure as well. That is, the argument is neither here nor there, and stands made only to mislead. We have no hesitation in, setting aside the impugned order, vacate the findings by the first appellate authority, and restore that of the AO. The impugned disallowance is sustainable in law, and is accordingly, restored in result. Any consequent change in the exemption u/s. 10AA, if and to the extent exigible, shall be made by the AO. Increase of 27% in the salary and wages expenditure - AY 2011-12 - HELD THAT:- As the increase in sales vis-a-vis the preceding year is at 17.38%, and not at 27%, a constancy of material cost w.r.t. the preceding year leads to a presumption of constancy of manufacturing operations. Increase in labour cost, claimed at ~ 1% of sales for AY 2009-10, would require being justified on the basis of new processes added, besides of course the increase in labour rate over time, which may be more or less of that obtaining for the goods sold and the cost of tools, moulds and prototypes, including material and labour cost thereon; with the latter including that incurred in-house as well, may require being capitalised as part of cost of acquisition thereof, where not held as stock-in-trade but as capital asset/s. In view of the foregoing, we only consider it proper to, in the interest of justice, restore the matter of allowance of the assessee s claim for salary and wages for this year (AY 2011-12) back to the file of the AO for fresh determination. The assessee, who shall have to prove the same on the anvil of s. 37(1), would be at liberty to adduce materials in support of it s contentions, as indeed the AO to cause verification, including adducing that in contradiction thereof.The incidental claim for depreciation, where the moulds, prototypes, etc., where found as held as capital assets, shall also be considered as per law.
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2023 (5) TMI 34
Deduction u/s 80P - As per AR Panchmahal District Co-operative Bank Limited and Dahod Urban Co-operative Bank Limited and interest received from these Co-operative Banks which were members of Co-operative Society Act should have been allowed - HELD THAT:- Panchmahal District Co-operative Bank Limited and Dahod Urban Co-operative Bank Limited both are registered under Societies Act and the interest received from these Co-operative Banks are allowable under Section 80P(2)(d) of the Act as per decision of Surat Vankar Sahakari Sangh Limited[ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] as observed that the provision of Section 80P(2)(d) of the Act does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. These Co-operative Banks are also registered Co-operative Societies and, therefore, AO as well as the CIT(A) was not right in disallowing the deduction under Section 80P(2)(d) of the Act. Appeal of the assessee is thus allowed.
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2023 (5) TMI 33
Revision u/s 263 - Non deduction of tds u/s 194C on the sums debited to P L account under the head transportation charges - assessee explained that all i.e. required is to obtain PAN from the parties to whom the payments of freight were made and since the assessee had obtained the PAN from the parties, he has complied with the provision of Section 194C (6) - HELD THAT:- The payer is required to obtain PAN only from the payee for paying the charges without deduction of tax at source. In the present case, the assessee has obtained the PAN of the payees and has thus complied with the provision of Section 194C(6) of the Act as mentioned above. The AO had made specific enquires and after satisfying himself took a plausible view. Assessee has not furnished the requisite declaration - No force in this contention of the PCIT. Firstly; the provisions have been amended with effect from 01.06.2015 and therefore not applicable for the year under consideration and secondly; the only obligation on the assessee was that to obtain the PAN number of the payees which he has obtained. Merely because there is no compliance on the part of the assessee to furnish the prescribed information to the Revenue authorities the same cannot lead to a conclusion that the assessee has not complied with the first statutory obligation i.e. to obtain PAN of the payees. Considering the case of Sunbeam Auto Ltd. [ 2009 (9) TMI 633 - DELHI HIGH COURT ] we set aside the order of the PCIT and restore that of the AO - Decided in favour of assessee.
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2023 (5) TMI 32
TP adjustment on account of payment of Regional Service Charges - requisite test for intra-group services - HELD THAT:- As coordinate bench of the Tribunal in assessee s own case in Ingredion India Pvt. Ltd. [ 2022 (10) TMI 1168 - ITAT MUMBAI ] for the assessment year 2012-13 remanded the issue to the file of the learned TPO with a direction to the assessee to demonstrate the requisite test for intra-group services as well as the need and benefit of the services from the associated enterprises. Since in the present case also, the determination of arm s length price of a similar international transaction is involved and both the parties have made similar submissions, therefore, we deem it appropriate to remand this issue to the file of the learned TPO with similar directions as rendered by the coordinate bench in the preceding assessment year. Accordingly, the impugned order on this issue is set aside. As a result, grounds no.1 and 2 raised in assessee s appeal are allowed for statistical purposes. Erroneous computation of total income for the year under consideration - difference is on account of the additional customs duty paid/deposited before filing the return of income - As per the assessee, while computing the assessed income in the final assessment order, the AO considered the income processed under section 143(1) of the Act, as the starting point, instead of the returned income, which was considered in the draft assessment order - HELD THAT:- As the difference is on account of the additional customs duty paid/deposited before filing the return of income, which is allowable u/s 43B of the Act, and in this regard the assessee has also filed a rectification applications dated 19/08/2022 before the AO, which is pending disposal. Therefore, in view of the above, we deem it appropriate to restore this issue to the file of the AO for computation of the total income, as per law, after necessary verification. As a result, grounds no.3 and 4 raised in assessee s appeal are allowed for statistical purposes.
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2023 (5) TMI 31
Validity of assessment u/s 92CA - period of limitation as prescribed u/s 92CA(3A) r.w.s. 153 - HELD THAT:- As the time limit for passing the order under Section 92CA(3) of the Act, computed as per the above judgements of Saint Gobain India Pvt. Ltd. [ 2022 (4) TMI 808 - MADRAS HIGH COURT ] expired on 31/10/2019. Since the order under section 92CA(3) of the Act has been passed 01/11/2019, i.e., after the expiry of the period of limitation, the same is set aside as being barred by limitation. Whether the Final Assessment Order passed on 31/03/2021 is barred by limitation and bad in law? - the order, dated 01/11/2019 passed by TPO under Section 92CA(3) of the Act is barred by limitation. The Appellant, therefore, does not qualify as an Eligible Assessee under Section 144C(15)(b)(i) of the Act. The Assessing Officer did not have jurisdiction to pass the Draft Assessment Order, dated 24/12/2019 u/s 144C(1) of the Act. As a result, the time limit available to the AO u/s 153 of the Act for passing the assessment order expired on 31/12/2019 even if the benefit of extended period of 12 months is granted on account of a valid reference having been made u/s 92CA of the Act. The Final Assessment Order has been passed in present case on 31/03/2021 and therefore, the same is barred by limitation. Assessee appeal allowed.
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2023 (5) TMI 30
Penalty levied u/s. 271(1)(c) - Estimation of income on bogus purchases u/s. 69C - revenue contended that the assessee has failed to contradict the information received from the Maharashtra Sales Tax Department pertaining to the fact that the assessee was a beneficiary of bogus bills - HELD THAT:- Addition made by the A.O. was on the basis of the estimation calculated @ 12.5% on the bogus purchase alleged to be made by the assessee from M/s. Arihant Steel supposed to be hawala party as per the Sales Tax Department. This is an undisputed fact which has been agreed by the Revenue. Various courts have held that the penalty cannot be levied in cases where the addition has been made on estimated basis. As justified that this proposition is a settled principle of law. The decisions relied upon by the ld. DR will not hold the case of the Revenue in the present scenario. Hence, by respectfully following the decisions cited above, we find no justification in the penalty levied u/s. 271(1)(c) of the Act in assessee s case. Decided in favour of assesee.
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2023 (5) TMI 29
Re-statement foreign exchange gain - interest received on FDR - Addition on account of foreign-exchange gain realized on re-statement of the outstanding loan liability at the year end - AO noticed that assessee had reduced the income on account of foreign exchange profit on restatement of ECB loan - CIT-A deleted the addition - HELD THAT:- We find that CIT(A) while deciding the issue in favour of the assessee has also noted the fact that in A.Y. 2014-15, when the re-statement of foreign currency loan at the year-end had resulted into loss and the same was disallowed by the assessee in the return of income, it was accepted by the AO as a notional loss but however in A.Ys. 2012- 13 2013-14, AO is treating the same loss arising out of the restatement of the same loan as taxable income and thus there is an inconsistency in the approach of AO in the treatment in 2 different years. CIT(A) has further given a finding that provision of Section 43A 43AA are not applicable to the facts of the case of the assessee, as the ECB loan obtained by the assessee was for the purpose of setting up of a plant and the ECB loans acquired by the assessee have been utilized for the purpose of acquisition of capital assets in India. Interest earned from fixed deposits on unutilized ECB loans is concerned, we find that CIT(A) after relying on the various decisions cited in his order has given a finding that the payment of interest and the earning of interest was inextricably linked to each other and the same was required to netted off and therefore, assessee had rightly capitalized the interest. Hon ble Delhi High Court in the case of PCIT vs. Triumph Realty Pvt. Ltd. [ 2022 (4) TMI 1233 - DELHI HIGH COURT ] has held that the interest earned from fixed deposits on unutilized foreign exchange borrowing loan during the year is a capital receipt. Before us, Revenue has not pointed to any fallacy in the findings of CIT(A) nor has placed any contrary binding decisions in its support. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. Addition on account of salary paid to the employees - as held by AO to be capital in nature - AO concluded that four employees were assigned the job at plant which was under construction and name of those employees and salary paid - HELD THAT:- As before CIT(A), assessee had inter alia submitted that the work for construction of new plant was entrusted to Shimizu Corporation India Pvt. Ltd. on turn-key basis and none of the employees were directly involved in the construction of plant. AR had further submitted that the employee s salary which has been disallowed by the AO were engaged in the regular basis activities of trading and manufacturing of petrochemical products and had no direct nexus in the construction of new plant. Before us, Revenue has not placed any material on record to point out any fallacy in the findings of CIT(A) nor placed any material on record to point out that the submissions made by Learned AR before the Tribunal or before the CIT(A) were incorrect. In such a situation, we find no reason to interfere with the order of CIT(A) on this issue and thus the ground of Revenue is dismissed. Cross objection of assessee - assessee had erroneously offered a sum as income although the same ought to have been capitalized as the loan was obtained and utilized for capital purpose and installing plant - HELD THAT:- Any ground legal contention or even a claim would be permissible for the first time before the appellate authority or the Tribunal when the facts of such ground are already on record. In the present case, the contention of AR that the facts necessary to examine the ground, the assessee s contention is already on record has not been demonstrated by Revenue to be not correct. As per case of Mitesh Impex [ 2014 (4) TMI 484 - GUJARAT HIGH COURT ] we hold that CIT(A) has not justified in not adjudicating the ground raised by the assessee before him for the first time. We therefore restore the issue back to the file of CIT(A) and direct him to decide the issue in accordance with law and after giving reasonable opportunity of hearing.Thus the ground of assessee is allowed for statistical purposes.
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2023 (5) TMI 28
Short deduction of tds - TDS u/s 194C OR u/s 194-I - CAM charges paid by the assessee - HELD THAT:- No hesitation to hold that the CAM charges paid by the assessee did form part of the actual rent payment which was paid to the property owner by the assessee company. In the present case, the facts and circumstances of the payment of CAM charges are quite similar to the facts and circumstances of the above two cases i.e., Kapoor Watch Company Pvt. Ltd. [ 2021 (1) TMI 209 - ITAT DELHI ] and Connaught Plaza Restaurants P. Ltd. [ 2022 (1) TMI 409 - ITAT DELHI ] Therefore, we hold that CAM charges paid by the assessee were liable for deduction at source @ 2% i.e., u/s 194C - Decided in favour of assessee.
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2023 (5) TMI 27
Addition u/s 68 - assessee was unable to produce the Director of lender company so the identity of lender is not established - HELD THAT:- The transactions have taken from banking channels and if there were sham transactions, then how merely appearance of a Director would have made a difference. It seems the Ld. Tax Authorities have fallen in error in laying too much stress on the failure of assessee to ensure presence of Director of the lender company. The Bench is of firm view that the Act does not mandate how the burden of proof u/s 68 of the Act, to prove genuineness of lender and transaction, is to be established. Each case has to be considered on basis of own facts. The burden on assessee to prove genuineness of lender and transaction is only to rebut the presumption but that does not entitle the Ld. Tax Authorities, to discredit the evidence produced, with a stroke of a whimsical need for a particular piece of evidence only. The quasi-judicial authorities are supposed to examine the evidence produced before them and draw inferences based on their relevance and credibility, to consider if the burden is discharged or not. However, the same seems to be not the case here as presuming the information received from the investigation wing to be sacramental, the Ld. Tax Authorities have failed to appreciate the relevant evidence produced by the assessee and have failed to consider it without impeaching the credibility of that evidence. Suspicion howsoever strong cannot take place of proof. Tax Authorities have fallen in error in citing suspicion alone instead of sifting truth from the evidence produced before it. When the interest income of M/s. Arti Securities and Services Pvt. Ltd. stands accepted by the Department, then the loan disbursed by it to earn that income cannot be considered to be tainted, by attributing suspicion to the identity or creditworthiness of sources of M/s. Arti Securities and Services Ltd. as a lender. Assessee has also provided the copy of order of CIT(A) in case of M/s. Arti Securities and Services P. Ltd. CIT(A) has deleted an addition made u/s 68 in the hands of this company - so called suspicious and dubious activities of the lender M/s.Arti Securities and Services P. Ltd. have been examined in earlier years and nothing was proved by the Department. Authorities below have fallen in error in concluding that the assessee had failed to discharge it s burden u/s 68 of the Act. Decided in favour of the assessee.
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2023 (5) TMI 26
Assessment u/s 153A - addition to the business income, deemed income under section 56(2)(vii)(a) of the Act, cash credit under section 68 of the Act and interest income - As argued unfortunately, all the persons responsible for the affairs of the company were in judicial custody and, therefore, the assessee could not produce all the relevant books, vouchers etc., before the authorities to prosecute the case diligently - HELD THAT:- As material clearly establishes that from 12/02/2016 to 23/10/2018 all the persons responsible for the affairs of the company were in custody and in their absence, as claimed by the AR, some part of the material was produced before the authorities. There is nothing contrary to disbelieve the statement of the learned AR that the assessee could not prosecute the proceedings before the authorities diligently due to the fact of non-availability of the persons responsible for the affairs of the company. In fact, this peculiar circumstance is taken note by the Co-ordinate Benches of this Tribunal in the cases of the group concerns on earlier occasions as is evidenced by the copies of the orders in the case of DCIT vs. Agri Gold Constructions P. Ltd [ 2022 (11) TMI 1347 - ITAT HYDERABAD] and M/s. Dream Land Ventures Private Limited [ 2023 (4) TMI 1185 - ITAT HYDERABAD] . We are of the considered opinion that it would be in the interest of justice to set aside the impugned orders and to restore the matters to the file of the learned AO to adjudicate the same afresh giving an opportunity of being heard to the assessee and also to produce all the relevant material at their custody. Appeal treated as allowed for statistical purpose.
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2023 (5) TMI 25
Recomputation of capital gains - Considering lower value of consideration for the sale of equity shares than the consideration initially agreed among the parties - HELD THAt:- As when the title of the subject land itself was found to be not clear and shrouded by litigation, the purchaser not only initiated the legal action against the seller of the land but also, on the other hand, entered into a Settlement Deed to close the transaction of sale of shares of Shivalik Land Development Ltd at Rs.25 lakh, which was already paid to the assessee. No other allegation has been made by the Revenue in the present case. Revenue has not doubted any leg of the transaction, and their plea is only limited to the revaluation of shares. There is also nothing to prove that the entire consideration of Rs.10 crore was received by the assessee and therefore the capital gains as initially offered by the assessee be upheld. Thus we find no infirmity in the impugned order in directing the AO to recompute the capital gains on the transfer of shares of Shivalik Land Development Ltd by taking the total sale consideration at Rs.25 lakh. As a result, the grounds raised by the Revenue are dismissed.
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2023 (5) TMI 24
Addition of cash deposited during demonetization - assessee demonstrated from the documents placed in the paper book that assessee had adequate cash in hand on the date of announcement of demonetization and deposit of amount is a miniscule amount in comparison to the total turnover which is adequately substantiated by books of accounts and corroborative documents - HELD THAT:- D/R, nothing was brought on record to controvert the same. We, considering the facts and material on record, find force in submissions made by ld. Counsel for assessee and accordingly delete addition made in this respect. Disallowance u/s 40A(3) on account of payments made stockist of drugs and medicine by depositing cash in bank account of supplier - HELD THAT:- Consequence which were to befall on account of non-observation of Section 40A(3) must have nexus to failure of such objective. Accordingly, the genuineness of the transaction, it being free from vice of any device of evasion of tax, is a relevant consideration. In the present case, assessee has deposited cash directly in the bank account of the supplier i.e., M/s. K D Enterprises, against supply of certain medicines. We hold that the purpose of Section 40A(3) of the Act, is only preventive and to check tax evasions and flow of unaccounted money or to check transaction which are not genuine and may be put up as camouflage to evade tax by showing fictitious or false transactions. Admittedly, this is not so in the present case of the assessee, as ld. AO also has accepted the fact that assessee directly deposited cash in the bank account of the supplier M/s. K D Enterprises. As decided in Smt. Shelly Passi [ 2013 (3) TMI 219 - PUNJAB AND HARYANA HIGH COURT ] cash payment in the bank account of payee is sufficient to get exemptions in terms of Rule 6DD inasmuch as it is ensured that payee alone receives the payment and to ensure that the payment is routed through bank channel so as to trace the origin and conclusion of the transactions is traceable thereby fulfilling the criterion of introduction of Section 40A(3) of the Act. Thus we allow the ground of appeal and direct for deletion of addition made u/s 40A(3). Addition u/s 69C - suppressed purchases - AO has treated this amount as unexplained expenditure by holding that there is difference of creditors balance as on 31/03/2017 - HELD THAT:- As in respect of addition on account of alleged suppressed credit note from M/s. Aditya Medisales Ltd., it was pointed out that it related to the sales return which has been duly reduced from the purchases made by the assessee and does not have any bearing on the profit reported by the assessee. Both the issues are purely questions of fact and having reference to the material on records as well as the discussion above, we are of the considered view to allow both the grounds and direct the deletion of addition on both these issues. Disallowance of Sales commission paid by the assessee and claimed as expenditure - assessee referred to the list of sales commission agents,which contained sales made by each of the salesmen and their respective PAN - HELD THAT:- Assessee also referred to the chart giving comparison of sales and commission made by the assessee with all the salesmen, in the preceding three assessment years as well as the subsequent assessment year, to demonstrate that assessee has been consistently conducting its business through these salesmen and incurring expenditure towards sales commission. Ld. Counsel also referred to some of the confirmation which were obtained against notice u/s 133(6) on some of the salesmen and their income tax returns in which they have offered the earning of sales commission in their return. D/R, nothing was brought on record to controvert the factual position - we find it proper to allow these two grounds taken by the assessee and direct for deletion of addition made by ld. AO towards sales commission expense. Appeal of assessee allowed.
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Customs
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2023 (5) TMI 42
Constitutional Validity of pre-import condition - advance authorization - Exemption from all custom duty levies, including IGST and compensation cess - incorporation of pre-import condition as per N/N. 33 / 2015-2020 and N/N. 18/2015-Cus dated 01.04.2015 by N/N. 79/2017-Customs dated 13.10.2017 - Whether pre-import condition violated Article 14, which permitted reasonable classification to achieve specific ends? - The High Court, after considering the notifications and taking into account the exporters submissions, held that paragraph 4.27 of the FTP envisaged exports in anticipation of authorisation, in terms of the cycle of import-manufacture-export carried out, including delivery time of 3-4 months allowed normally by overseas buyers, within minimum six months time for completion of the cycle. HELD THAT:- By the Notification No. 18/2015-Cus dated 01.04.2015, issued in exercise of powers under Section 25 (1) of the Customs Act, 1962, goods imported into India against valid AAs were exempted from the whole of the duty of customs leviable thereon which was specified in the First Schedule to the Customs Tariff Act, 1975 and from the whole of the additional duty, safeguard duty, transitional product specific safeguard duty and anti-dumping duty leviable thereon, respectively, under Sections 3, 8B, 8C and 9A of the Act. The GST regime came into force with effect from 01-07-2017. However, no corresponding amendment was carried out to this notification but Section 3 of the Customs Tariff Act, 1975 was amended by substituting Sections 3 (7) and (9), whereby levy of integrated tax [under Section 5 of the Integrated Goods and Services Tax Act, 2017 and levy of Goods and Service Tax compensation cess leviable under Section 8 of the GST Act (Compensation to States) Cess Act, 2017] was incorporated. Since IGST and compensation cess was levied against AAs, they were apparently challenged before the Delhi High Court in several petitions, wherein interim relief was granted. Because of the initial problems relating to GST, the committed refund of IGST got delayed, resulting in blocking of working capital for many businesses. The Union then issued an amending notification dated 13-10-2017 in exercise of powers under Section 25 (1) of the Customs Act, 1962 (Notification 79/2017 - dated 13.10.2017) inter alia amending the opening paragraph of Notification 18 / 2015 (dated 1.4.2015) whereby goods imported into India were exempted from the whole of the duty of customs leviable thereon, specified in the First Schedule to the Customs Tariff Act, 1975 and from the whole of the additional duty leviable thereon under sub-sections (1), (3) and (5) of Section 3, IGST leviable thereon under sub-section (7) of section 3 and compensation cess leviable under sub-section (9) of section 3 - exemption from levy of IGST under Section 3 (7) and compensation cess leviable under Section 3 (9) of Customs Tariff Act, 1975 were subject to the conditions that the export obligation shall be fulfilled by physical exports only and shall also be subject to pre-import condition . By a notification paragraph 6.8(a) and paragraph 6.8(h) of the said FTP were amended, preventing EOUs from making DTA sales of the finished marble made from imported rough marble, with immediate effect. The change was made a few months after renewal of letter of permission to the unit, authorizing it to manufacture and export marble tiles for 5 years, subject to a specified monetary limit - the absence of pre-import conditions in respect of basic customs duty, and other levies, where in anticipation of AAs, duty free imports can be made, in contradistinction with the need to follow such pre-import conditions in respect of IGST and compensation cess, rendered the AAs worthless. Lastly, it was held that exporters, who have to import inputs, would face impossibility in fulfilling the pre-import condition , because the normal cycle of import of inputs and export of finished products would be for a period of six months, whereas the period, which the regime permits, would work out to three months. In this court s opinion, the introduction of the pre-import condition may have resulted in hardship to the exporters, because even whilst they fulfilled the physical export criteria, they could not continue with their former business practices of importing inputs, after applying for AAs, to fulfil their overseas contractual obligations. The new dispensation required them to pay the two duties, and then claim refunds, after satisfying that the inputs had been utilized fully (wastage excluded) for producing the final export goods. The re-shaping of their businesses caused inconvenience to them. Yet, that cannot be a ground to hold that the insertion of the pre-import condition , was arbitrary, as the High Court concluded. There is no constitutional compulsion that whilst framing a new law, or policies under a new legislation particularly when an entirely different set of fiscal norms are created, overhauling the taxation structure, concessions hitherto granted or given should necessarily be continued in the same fashion as they were in the past. When a new set of laws are enacted, the legislature s effort is to on the one hand, assimilate- as far as practicable, the past regime - the exclusion of benefit of imports in anticipation of AAs, and requiring payment of duties, under Sections 3 (7) and (9) of Customs Tariff Act, 1975, with the pre-import condition , cannot be characterized as arbitrary or unreasonable. The High Court was persuaded to hold that the subsequent notification of 10.01.2019 withdrew the pre-import condition meant that the Union itself recognized its unworkable and unfeasible nature, and consequently the condition should not be insisted upon for the period it existed, i.e., after 13.10.2017. This court is of the opinion that the reasoning is faulty. It is now settled that the FTPRA contains no power to frame retrospective regulations. Construing the later notification of 10.01.2019 as being effective from 13.10.2017 would be giving effect to it from a date prior to the date of its existence; in other words the court would impart retrospectivity - To give retrospective effect, to the notification of 10.01.2019 through interpretation, would be to achieve what is impermissible in law. Therefore, the impugned judgment cannot be sustained on this score as well. Appeal of Revenue allowed.
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2023 (5) TMI 23
Stay of pre-deposit - Constitutional vires of Section 129E of the Customs Act, 1962 - seeking a direction to Respondents to admit the Appeal filed by the Petitioners without pre-deposit of the mandatory duty as stipulated in Section 129E of the Act - HELD THAT:- A Coordinate Bench of this Court in Pioneer Corporation case [ 2016 (6) TMI 437 - DELHI HIGH COURT ], where the Court, while discussing the amendment made to Section 35F of the Central Excise Act, 1944 [CE Act] ( which Section is pari materia to Section 129E of the Act and also requires a pre-deposit in the case of an Appeal), held that prior to the amendment of Section 35F of the CE Act, a discretion was available to the Central Excise and Service Tax Appellate Tribunal [CESTAT] to consider financial hardship and accordingly determine the pre-deposit amount post the amendment, a direction of waiver of the pre-deposit would be contrary to the express legislative intent of the amendment. However, it further held that the jurisdiction of the High Court under Article 226 cannot be taken away and that such power should be used only in rare and deserving cases where a clear justification is made out for such interference. The Coordinate Benches of this Court in Narender Yadav case [ 2019 (1) TMI 1542 - DELHI HIGH COURT ] and Shubh Impex case [ 2019 (6) TMI 29 - DELHI HIGH COURT ], both of which, while dealing with the amended provision of Section 129E of the Act, have permitted waiver of the mandatory pre-deposit as is envisaged in the said provision but, in exceptional circumstances. In Nimbus Communications case [ 2016 (8) TMI 451 - BOMBAY HIGH COURT ], a Coordinate Bench of the Bombay High Court has upheld the requirement of mandatory pre-deposit in the case of an Appeal filed after 06.08.2014, while discussing Section 35F of the CE Act. The issue that arose before the Court was whether the law as applicable on the date of commencement of the lis or on the date of filing of the appeal would govern the dispute. The case was disposed of by consent of the parties holding that the amended provisions would not apply to those appeals and applications which were pending prior to 06.08.2014, regardless of the date of commencement of the lis. Thus an analysis of the conspectus of law gives a clear understanding that after passing of the Amendment Act on 06.08.2014, the amended Section 129E of the Act and also Section 35F of the CE Act shall be applicable in those cases where the Appeal has been filed after 06.08.2014 - the Coordinate Benches of this Court have exercised and, thus, preserved the power as available under Article 226 of Constitution of India, 1950 to either waive the pre-deposit condition or to grant the right to appeal subject to a part deposit or security. The power, albeit, has been exercised only in rare and exceptional cases. Valuation and Prices - HELD THAT:- The price and valuation of Agarwood Chips and Agarwood Oil varies hugely depending on its grade and variety - the prices relied upon by the Petitioners are not the same as those stated in the Agarwood Policy. These are also very different from the valuation relied upon by Respondent No. 1 and 2 to impose the penalty under the Act. The provisional valuation appears to be taken verbatim from the Panchnama and the seizure memos dated 20.09.2019. The SCN adopts the same valuation for the goods seized and the OIO only reproduces this valuation - The valuation of the goods seized, is also not in terms of the prices as set forth in the Government of Assam s Agarwood Policy. No proper calculation has been made for the penalty levied. The penalty imposed on the Petitioners has been imposed based on a provisional valuation. The penalty imposed is therefore without any legal basis and cannot be sustained. Admittedly, the Petitioners are poor daily wage earners who are unable to make a challenge to the seizure and confiscation on account of the penalty imposed on them. The aforegoing discussion on the prices and valuation of Agarwood Chips and Agarwood Oil suggest, albeit, prima facie, that no proper valuation of the goods seized was carried out by the Respondents. Therefore, given the financial position and the wherewithal of the Petitioners, an opportunity needs to be given to them to contest the valuation so imposed by the Respondents, which, otherwise cannot be contested by them. Thus, we consider the case of the Petitioners to be an appropriate case to exercise our discretion in the matter concerning waiver of pre-deposit of penalty. Respondent No. 1 is directed to decide the Appeals preferred by the Petitioners on merits, without insisting on the requirement of pre-deposit - Petition allowed.
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2023 (5) TMI 22
Jurisdiction - power of proper officer to issue SC - impugned proceedings beyond limitation or not - HELD THAT:- The impugned order-in-original is an appealable order under Section 129A of the Customs Act, 1962, before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). Though such an appeal is required to be filed within three months from the date on which the order appealed against is communicated, CESTAT may admit the appeal after expiry of the limitation period if it is satisfied that there is sufficient cause for not presenting the appeal within that period. It would be more appropriate if the petitioner avails the statutory remedy provided under Section 129A of the Customs Act, 1962. All contentions are kept open. - Petition dismissed.
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2023 (5) TMI 21
Confiscation - redemption fine - penalty - import of Hydrogenated Vegetable oils (Vanaspati Ghee) - quantity of 45,120 Kg was found to be adulterated and unfit for human consumption - non-confirmation to the standards laid down under item No. A-19 of Appendix B of the PFA Rules, 1955 - HELD THAT:- The fact that these consignments were inspected before shipment from the foreign country and respective authorities have issued certificates of analysis, which prove bona fides of the appellant importer. It is not the case of the department that the appellant importer was aware of the fact that the impugned goods were not conforming to the standards. Therefore, it cannot be held at least that the appellants had mens rea. In terms of Notification No. 3(RE-2001) 1997-2002 dated 31.03.2001 that the products will have to comply with the quality and packaging requirements as laid down under PFA Act and that compliance of these conditions is to be ensured before allowing customs clearance of the consignments. We understand that customs authorities have detained these consignments for this reason and have imposed penalties and fine after following due process of law as contained in board circular No. 58/2001-CUS dated 25.10.2001 vide which it is directed that if the products fails the test, the customs authorities will ensure that the goods are re-exported out of the country by following the usual adjudication procedure or destroyed as required under the relevant rules. The action of the department in proposing for confiscating the goods and imposition of fine and penalties is legally tenable - the quantum of penalty and fine should be commensurate with the offence committed. In the instant case, it is established that the appellant has not violated the provisions intentionally and that there was no mens rea or any motive that can be attributed to the appellant. In this case impugned goods have been undoubtedly rendered liable for confiscation and accordingly the confiscation and imposition of penalty under section 112 is legal and proven. However, looking into the facts and circumstances of the case and the long history of litigation of the case, it is found that ends of justice could be met if the redemption fine and penalty are suitably imposed in respect of appeal no. C/192/2008 - Coming to the other appeal i.e. C/736/2007 it is found that in the instant case no redemption fine has been imposed and the goods were allowed to be re-exported imposing a penalty under section 114 A has been imposed. We find that penalty under Section 114 A is invariably linked to the quantum of duty evaded and therefore penalty under Section 114 A cannot be imposed in isolation. As there is no demand of duty in the impugned case, the imposition of penalty under Section 114 A cannot be sustained. Appeal is partially allowed by restricting the redemption fine to Rs. 3,00,000/- and penalty under Section 112 to Rs. 1,00,000/-. Other Appeal No. C/736/2007 is allowed.
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2023 (5) TMI 20
Confiscation of paper cup machines imported - redemption fine - penalty - undervaluation and mis-declaration of goods (mis-declaration of brand) - HELD THAT:- Admittedly, Shri Pankaj Jain has not admitted any under-valuation of the imported goods. Shri Pankaj Jain has stated that such machinery is also manufactured in India and he has purchased one similar machine from M/s. Lami Coats Shivakashi (T.N.) vide their invoice No. 0281 dated 16.12.2015 for Rs. 4,50,000/- plus GST of Rs. 9,000/-. This machine was equivalent in efficiency with the model imported by the appellant viz. TW- D16. This fact has not been found to be untrue by the Revenue. Allegation of mis-declaration of brand - HELD THAT:- Admittedly, there is no mis-match in the data contained in the bill of entry filed by the appellant and the import documents viz. bill of lading, invoice, etc. The appellant have stated that he had ordered for TW-D16 machines whereas the supplier has erroneously dispatched the DEBAO D-16 model machines. This error has been admitted by the shipper/exporter, which fact has not been found to be untrue. So far whatsapp data obtained from Samsung 4 G LTE mobile phone, alleged to be submitted by Shri Pankaj Jain to the Revenue at the time of recording of his statement on 23.05.2016, a question was put to him by Revenue please tell since when u are using the Samsung 4G LTE brand phone. In answer, Shri Pankaj Jain stated - that this phone is being used at his home for almost 2 years. This phone is also used for the purpose of the business. It is further recorded that Shri Pankaj Jain submitted the Samsung 4G LTE mobile phone to the Revenue for further investigation, which was sealed in an envelope (without recording the IMEI No.) bearing signature of Shri Pankaj Jain. Evidently, IMEI number is the identification number of a mobile phone - the appellant have, in course of recording his further statement by Revenue on 18.05.2018, stated that he has never used Samsung 4 G LTE mobile phone and it was under coercion exercised by the officers of DRI, he was made to write that he has used the Samsung 4 G LTE phone and is submitting the same for further investigation. He has never used Samsung 4 G LTE phone having Sl. No. R 33 C50059El having IMEI No. 359554043878258. Valuation Report submitted by the Chartered Engineer, Shri R.K. Agarwal - HELD THAT:- The appellant have disputed the valuation by Shri R.K. Agarwal, Chartered Engineer on the ground of competency and also on merits. The Chartered Engineer has been empowered to value only in case of import of second hand machinery under the Customs Valuation Rules. In case of new machinery, Rules require valuation to be done on the basis of contemporaneous imports (NIDB data). In absence of such data, authority is required to follow the Valuation Rules in seriatum, which has not been done - Revenue have not assigned any reasons for not adopting NIDB data. Admittedly, the appellant have declared a higher value of USD 5000 per machine. Further it is found that the show cause notice is bad as the same does not propose rejection of transaction value nor the demand of differential duty. Thus, the show cause notice is both speculative and presumptive - the adoption of unit price of USD 12450 per machine is bad as the said price is in respect of import of only one machine. Hence, the same is not comparable, as in the present case the appellant have imported a lot of 16 machines. Jurisdiction of DRI officers to issue show cause notice - HELD THAT:- The said ground is left open, in view of my findings on merits. Appeal allowed.
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Corporate Laws
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2023 (5) TMI 19
Levy of penalty under section 43-A of Competition Act, 2002 - alleged failure to give notice under Sub-section 2 of Section 6 of the Act - Appellant submitted that once the CCI had found that there was no appreciable adverse effect on competition in the relevant markets as a result of Transactions I and II, the jurisdiction did not lie with the CCI to open proceedings under Section 43A. HELD THAT:- The clarificatory notification dated 27.3.2017 issued by the Ministry of Corporate Affairs makes it clear where a portion of an enterprise or division or business is being acquired, taken control of, merged or amalgamated with another enterprise, the value of assets of the said portion or division or business and are attributable to it, shall be the relevant assets and turnover to be taken into account for the purposes of calculating the threshold under section 5 of the Act. The Press Release issued on 30.3.2017 gives information to the public about the nature of this notification and mentions that this notification is to provide clarity on the calculation method for assets and turnover because such a matter was causing confusion among the business entities. The said notification, therefore, being clarificatory in nature, applies with retrospective effect. It is noted that this Tribunal in the matter of Eli Lilly and Company [ 2020 (3) TMI 1446 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] considered that the De Minimis notification dated 4.3.2011, and Notification dated 4.3.2016, both issued by the Ministry of Corporate Affairs under Section 54 of the Act provide exemption to certain transactions due to their small size. Further, the Press Release dated 30.3.2017 states and informs that for combination that fall within the threshold limits, there would be no requirement for their filings to be notified before the CCI. After considering the De Minimis notification dated 4.3.2016 and the Press Release dated 30.3.2017, this Tribunal decided that for the purpose of calculation of assets and turnover, what is being acquired is relevant as the assets and turnover of what is left over with the seller after the acquisition will not have any role to play in the context of the business of the purchaser/acquirer after the acquisition. On this basis, this Tribunal set aside the order of CCI in the Eli Lilly case. The clarificatory notification dated 27.3.2017 gives a purposive construction to the earlier De Minimis notifications dated 4.3.2011 and 4.3.2016 and therefore, the notification dated 4.3.2016 would have retrospective effect insofar as the jurisdictional threshold for Transactions I and II are concerned. In view of the fact that the total turnover of the acquisition i.e. acquired trademarks Savlon and Shower to Shower is only Rs.68.37 crores, it is opined that ITC would not be required to notify the Transactions I and II before the CCI as these transactions would be exempt in the light of the De Minimis notification. Thus, the penalty imposed by the CCI on ITC for the reason it did not notify the Transactions I and II under section 6(2) of the Act, should not have been imposed and to that extent we set aside the Impugned Order of the CCI. No penalty was required to be imposed on the Appellant - The appeal is, therefore, allowed to the limited extent of the issue of penalty.
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Insolvency & Bankruptcy
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2023 (5) TMI 18
Refund of the court fee which had been filed in connection with the instant suit - ambit of a settlement which is alluded to in Section 16 of Court-Fees Act, 1870 - solitary remedy of participating in proceedings to be instituted under the IBC - collective settlement of claims - HELD THAT:- The Court notes that once personal insolvency has commenced in terms of Section 95, the interim moratorium would come into play immediately upon the institution of those proceedings. In terms of the commencement of proceedings under the IBC, the plaintiff would now have the solitary remedy of filing a claim and participate in the collective statutory settlement process that would ensue against the defendants. Since the same would also relate to a settlement of claims, it would appear to fall within the scope of Section 16. The prayer as made in the present application is allowed. The Registry to take appropriate steps for refund of the court fee which stands deposited accordingly.
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2023 (5) TMI 17
Initiation of CIRP - Corporate Guarantor - default in payment of guaranteed amount by the Corporate Debtor is the same default as is committed by the Principal Borrower - period of limitation for both the Principal Borrower and the Corporate Guarantor shall be same for the purposes of filing Section 7 application for the Bank or not - Deed of Guarantee dated 17.05.2019 is guarantee on demand and the limitation of Guarantor shall ensue only when demand is made to the Guarantor or not - notice dated 01.10.2020 issued by the Bank to Guarantor can be treated to be notice on demand as contemplated in the guarantee and the default on the part of the Guarantor shall be only after notice dated 01.10.2020 i.e. during period of Section 10A? - application filed by the Bank under Section 7 was barred by Section 10A or not. Whether default in payment of guaranteed amount by the Corporate Debtor is the same default as is committed by the Principal Borrower and the period of limitation for both the Principal Borrower and the Corporate Guarantor shall be same for the purposes of filing Section 7 application for the Bank? - HELD THAT:- As per Section 128, the liability of the Surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. Law, thus, contemplates liability of the Surety i.e. Guarantor co-extensive with that of the Principal Debtor - The question of start of period of limitation against the Guarantor when the default committed by the Guarantor in non-fulfilment of its obligation as contained in the guarantee deed has come for consideration before the Hon ble Supreme Court in several cases. The Hon ble Supreme Court in Margaret Lalita Samuel vs. Indo Commercial Bank Ltd [ 1978 (9) TMI 180 - SUPREME COURT ] has observed that cause of action arises when the contract of continuing guarantee is broken i.e. breach is committed by the Guarantor to the guarantee given. The scheme of I B Code clearly indicate that both the Principal Borrower and the Guarantor become liable to pay the amount when the default is committed. When default is committed by the Principal Borrower the amount becomes due not only against the Principal Borrower but also against the Corporate Guarantor, which is the scheme of the I B Code. When we read with as is delineated by Section 3(11) of the Code, debt becomes due both on Principal Borrower and the Guarantor - There can be default by the Principal Borrower and the Guarantor on the same date or date of default for both may be different depending on the terms of contract of guarantee. It is well settled that the loan agreement with the Principal Borrower and the Bank as well as Deed of Guarantee between the Bank and the Guarantor are two different transactions and the Guarantor s liability has to be read from the Deed of Guarantee. Whether the Deed of Guarantee dated 17.05.2019 is guarantee on demand and the limitation of Guarantor shall ensue only when demand is made to the Guarantor? - HELD THAT:- In view of the clear stipulation in the Deed of Guarantee, default on the part of the Guarantor cannot be treated to be on 05.09.2019, when it is alleged that the Principal Borrower committed default, nor the default on the part of the Guarantor can be on date of NPA i.e. 05.12.2019 for the purpose of present case. In the present case, admittedly, the Bank has issued notice dated 01.10.2020 to the Principal Borrower as well as to the Guarantor - Essel Infraprojects Ltd. Notice dated 01.10.2020 which has been brought on the record indicate that notice is addressed to the Principal Borrower and to Guarantors - When the Bank has given time to the Guarantor to make payment on 01.10.2020, there can be no default on part of the Guarantor on any earlier date. The default on part of the Guarantor thus has to be subsequent to the notice dated 01.10.2020 i.e. Non-payment within seven days as required - The Deed of Guarantee dated 17.05.2019 is guarantee on demand and the limitation of Guarantor shall ensue only when demand is made to the Guarantor. Whether notice dated 01.10.2020 issued by the Bank to Guarantor can be treated to be notice on demand as contemplated in the guarantee and the default on the part of the Guarantor shall be only after notice dated 01.10.2020 i.e. during period of Section 10A? - HELD THAT:- The Notice dated 01.10.2020 issued by the State Bank of India to Guarantor has to be treated to be notice on demand as contemplated in the guarantee and the default on the part of the Guarantor shall be only after notice dated 01.10.2020 i.e. during period of Section 10A. Whether the application filed by the Bank under Section 7 was barred by Section 10A? - HELD THAT:- The application filed by the Bank under Section 7 was barred by Section 10A. The application under Section 7 filed by the Bank being barred by Section 10A could not have been admitted - Appeal allowed.
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2023 (5) TMI 16
Seeking modification in the order - direction was issued to the Resolution Applicant to make distribution to the Appellant as per its admitted claim of Rs.956.21 crores which however, shall be without affecting distribution of amounts to other Financial Creditors both Assenting and Dissenting Financial Creditors and other stake holders - jurisdiction of Appellate Tribunal to give such directions - HELD THAT:- Rule 11 states the inherent powers of the Appellate Tribunal to make such orders or give such directions as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal. The power has to be exercised to avoid ambiguity and confusion. However, Rule cannot be invoked to revisit the findings retuned as regards the assertion of facts and pleas raised in the appeal and it is not open to re-examine the findings on questions of fact. It is, however, open to correct the conclusion if the same is not compatible with the finding recorded. Granting the relief, as prayed in the application, shall involve modification of direction as contained in Para 30(II). This Tribunal consciously directed that additional burden be taken by the Applicant, which is clear by direction (III). Payment in consequence shall be borne by the Resolution Applicant. Permitting the direction as prayed in Para 4(II) of the application, which is prayer to modify the judgment shall clearly go contrary to the Direction issued in Para 30(III). What in essence is asked is to modify the direction - the prayer which is sought by the Applicant are not within the jurisdiction of this Tribunal and cannot be granted in exercise of our jurisdiction under Rule 11. Of course any error in the judgment can be corrected in the Appellate Jurisdiction. Application dismissed.
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2023 (5) TMI 15
Rejection of section 9 application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - time limitation - Respondent sent reply to the demand notice much beyond the statutory period of 10 days prescribed by the IBC - pre-existing debt and dispute or not - issue of credit notes in the context of outstanding dues. Issue of credit notes in the context of outstanding dues - HELD THAT:- It has been held by the Adjudicating Authority that the credit notes sent via the email are genuine and the issuance of the said letters further confirms the Corporate Debtor s contention that the instant petition has pre-existing disputes. That apart it is noticed that at pages 309 and 310 of APB, two letters dated 02.05.2019 and 04.06.2019 have been sent by the Corporate Debtor requesting the Operational Creditor to issue credit notes for a balance sum of Rs. 2,11,52,579/- on the ground that material worth of Rs. 2.25 crore had been rejected by them - the finding of the Adjudicating Authority is agreed upon that the balance amount claimed as operational debt has been unequivocally disputed by the Corporate Debtor and no liability admitted on this count. The present is therefore not a case where there is an undisputed debt for which Corporate Debtor can be brought under the rigours of CIRP. Three communications purportedly issued by the Corporate Debtor - HELD THAT:- The Adjudicating Authority in the impugned order has duly considered this aspect and relied on the decision taken by this Tribunal in the matter of Shelendra Kumar Sharma v. DSC Limited [ 2019 (12) TMI 1643 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] wherein it has been held that the question as to whether documents are forged or not cannot be decided by the Adjudicating Authority. The authenticity of the postal stamps on the postage receipts are not the subject matter which can be decided by the Adjudicating Authority or this Tribunal in view of summary jurisdiction having been conferred on them by the IBC. Enquiry into such allegations and counter-allegations would entail detailed investigation and the legislative intent of the IBC does not clothe the Adjudicating Authority with such powers of investigation. Thus the Adjudicating Authority has not committed any error by restraining itself from entering into any sort of roving enquiry on this issue. Whether these three letters had raised a semblance of dispute and if so whether the dispute is patently feeble? - HELD THAT:- Looking conjointly at the three communications issued by the Corporate Debtor regarding supply of defective goods and other related issues on 01.07.2017, 03.10.2017 and 25.04.2019 as also the credit notes issued on 31.01.2018, 02.05.2019 and 04.06.2019 questioning the existence of any operational debt, we have no hesitation in concurring in the findings recorded by the Adjudicating Authority in that there was sufficient foundation of genuine disputes between the two parties. The Adjudicating Authority has also not erred by not getting into the allegations and counter-allegations regarding forgery and fabrication of documents/postage receipts as such conduct of such enquiries/ investigations is beyond the remit of summary proceedings. The Adjudicating Authority did not commit any error in rejecting the Section 9 application on the ground of pre-existing dispute - Appeal dismissed.
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2023 (5) TMI 14
Seeking condonation of delay of 6 days in filing appeal - commencement of period for computation of limitation - order was passed against different Corporate Debtor - HELD THAT:- From the facts, which have been brought on the record it is clear that on 13.01.2023 when the Adjudicating Authority passed order in Company Petition (IB) No. 79 (ND) 2021, order was passed against the company Mansfield Cables Company Infrastructure Pvt. Ltd. [ 2023 (1) TMI 1245 - NATIONAL COMPANY LAW TRIBUNAL NEW DELHI ], which is apparent from the copy of order Annexed with Appeal as Annexure A-I. When insolvency resolution process has not begun against the present Corporate Debtor of which the Appellant is director i.e. Mansfield Power Infrastructure Pvt. Ltd., there is no question of limitation start running against the Corporate Debtor on 13.01.2023, when the order was passed. There can be no quarrel to the proposition of law laid down by the Hon ble Supreme Court in V. Nagarajan vs. SKS Ispat and Power Limited Ors. [ 2021 (10) TMI 941 - SUPREME COURT] that limitation for filing an appeal shall commence from the date when the order is pronounced. The above judgment of the Hon ble Supreme Court with regard to commencement of period of limitation from the date order is pronounced/ delivered is firmly settled. Limitation shall start for filing appeal from the date of pronouncement of order i.e. on 13.01.2023 but not against the Corporate Debtor of which Appellant is suspended Director rather limitation shall start against the Company Mansfield Cables Company Infrastructure Pvt. Ltd., against whom the order was passed. The law is well settled that limitation for filing Appeal shall commence from the date when order is delivered or pronounced but present is a case where order was passed against different Corporate Debtor namely Mansfield Cables Company Infrastructure Pvt. Ltd., which came to be corrected on 17.01.2023 and order dated 17.01.2023 correcting the name of the company was not in the knowledge of the present Corporate Debtor. In the peculiar facts of the present case, the Appellant is entitled to seek condonation of delay in filing the appeal which according to the Appellant has been filed with delay of only six days. The limitation can run against the Appellant when it is party to the proceeding and order is passed against it whether ex-parte or after hearing the appellant. Limitation shall commence in both from the passing of order either ex-parte or after hearing the appellant. When order under Section 9 was not passed against the company in question, it cannot be seen how limitation start running. Appellant in his application has categorically stated that he came to know of letter dated 18.01.2023 sent by the Resolution Professional which was received on 06.02.2023. Resolution Professional in the reply does not deny that he has not sent a letter. It is only stated that he has sent an email on 18.01.2023 to the Appellant. In the peculiar circumstances of the present case where order was not against the Corporate Debtor for initiating section 9 proceeding but a different company which was corrected subsequently, are satisfied that sufficient cause has been shown for condonation of delay in filing the appeal. Delay condonation application allowed.
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Service Tax
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2023 (5) TMI 13
SVLDR Scheme - benefit of scheme denied due to his inability to make payment of Rs.2,74,860/- pursuant to Form SVLDRS-3 in view of the expiry of the challan (mandate form) in the face of the fact that although the payment that was made vide RTGS dated 22 June 2020 was initially accepted but later on reversed and refunded to the Petitioner s bank account due to an expired challan - HELD THAT:- The SVLDR Scheme is a Scheme that had been brought in by the Government put an end to legacy disputes in indirect tax matters which would benefit the tax payer, assessees as well as the Revenue. The tax payers would have the benefit of ending the legacy disputes with the Revenue Authorities and the Revenue Authorities would in turn unlock the Revenues that were locked up in such disputes. The Apex Court in the case of M/S. SHEKHAR RESORTS LIMITED (UNIT HOTEL ORIENT TAJ) VERSUS UNION OF INDIA ORS. [ 2023 (1) TMI 256 - SUPREME COURT] had while considering a challenge under the SVLDR Scheme held that the Appellant therein cannot be punished for not doing something which was important for it to do - The Apex Court holding as above allowed the appeal of the Appellant and setting aside the order of the High Court directed that the payment made by the Appellants therein be appropriated towards the settlement of dues under the SVLDR Scheme and the issue discharge certificate. Thus, the Petitioner cannot be deprived of the benefit of the SVLDR Scheme merely on the basis of a technical issue of reversal of the amount paid by Petitioner prior to 30 June 2020 on the ground of expiry of challan for which clearly the Petitioner was not at fault. The Respondent-Authorities are directed to allow the Petitioner to pay the amount of Rs. 2,74,860/- under the SVLDR Scheme pursuant to the subject SVLDRS-3 and thereafter, issue the necessary discharge certificate under the said scheme - petition allowed.
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2023 (5) TMI 12
Valuation - Works contract or not - exclusion of value of material on which VAT has been paid - period from June, 2012 to July, 2017 - blasting services for extraction of sand stone etc. by using explosive material procured by them - Commissioner (Appeals) has dropped the demand holding that the activity of the respondent is a works contract service though chargeable to tax under section 65B (44) of Finance Act, 1994 but the value for the material as has already been assessed for the purposes of VAT cannot be considered as the value for assessing service tax liability. HELD THAT:- Similar issue has been dealt by the Hon ble Apex Court, the 3 Judge Bench in the case of M/S. LARSEN TOUBRO LIMITED ANOTHER VERSUS STATE OF KARNATAKA ANOTHER [ 2013 (9) TMI 853 - SUPREME COURT] wherein the 46th Amendment of 1982 has been appreciated to have widened the concept of sale or purchase of goods that would be eligible to tax by introducing the fiction of a deemed sale to the transactions covered specifically by sub-clauses (a) to (f) to sub-article 29A of the said Article. Hon ble Court held that the expression goods (whether as goods or in some other form) appearing in sub-clause (b) of 366 (29A) of the Constitution has the effect of enlarging the term goods by bringing within its fold goods in all different forms. Adopting Larsen and Toubro, there exists no reason to differ from the findings that term works contract cannot be confined to a contract to provide labour and services alone and any contract which is undertaken to bring into existence some element of works involving supply of goods would be sufficient to hold the said as works contract . The Apex Court in the case of Larsen Toubro has held that in performance of contract for construction of building, goods like cement, concrete, steel, bricks etc. are intended to be incorporated in structure and even though they lost their identity as goods. Hence it is liable to tax under Article 366 (29A) (b) of Constitution as was introduced vide 46th Amendment of 1982 Act. The very basis of 46th Amendment was the decision of Hon ble Supreme Court in THE STATE OF MADRAS VERSUS GANNON DUNKERLEY CO. (MADRAS) LTD. [ 1958 (4) TMI 42 - SUPREME COURT] wherein the Constitution Bench had laid down dominant intention test to find out as to whether a particular contract involved transfer of property in goods. The Court was of the opinion that if the dominant intention of a contract was not to transfer the property in goods, but it was Works Contract, or for that matter, a contract in the nature of rendering of services, even if a part of it related to the transfer of goods, that would be immaterial and no sales tax on the said part could be levied, going by the principle of dominant intention behind such a contract, which was in the nature of Works Contract in the contract relating to construction of buildings. Thus, the Court also held that such a contract was indivisible. In the light of 46th amendment, any service in the nature of works which involves utilization of goods is classifiable only as works contract service and that the transfer of goods in such contract has to be considered as the deemed sale. Reverting to the facts of the present case, it is observed that undisputedly, the assessee respondent was purchasing explosives from the authorized seller under a license for being used for the blasting purposes at customer s site. Though the assessee was not selling the explosive to the mine blaster and was issuing the same for execution of mining works but there is no simultaneous denial to the fact that the assessee was issuing bills to the customer in which they were charging for the explosive material and blasting service separately and that the assessee was paying applicable VAT on the explosive material. From the entire above discussion dominant intention test to ascertain the factum of sale no more holds a good law. There are no infirmity with the Order of Commissioner (Appeals), same is hereby upheld - appeal of Revenue dismissed.
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2023 (5) TMI 11
Taxability - Liquidated damages/ penalties recovered by the appellant from its suppliers and contractors for delayed completion of the assigned work - Section 65E(e) of the Finance Act, 1994 - HELD THAT:- The provision of the taxable services, the appellant had paid the service charges along with service tax amount as per the claims made in the invoices. The liquidated damages / penalties recovered by the appellant for delay in completion of the work or supply of goods cannot be considered as Service , for the purpose of levy of service tax. Further, the amount received by the appellant cannot also be termed as Consideration for provision of the taxable service. Thus, the amount charged by the appellant towards liquidated damages / penalty cannot form part of the taxable value for payment of service tax thereon. Reliance can be placed in appellant own case BHEL Bhopal Vs. CCE [ 2022 (9) TMI 1005 - CESTAT NEW DELHI ] - the order passed by this Tribunal in the case of the appellant itself has also been accepted by Service Tax Department inasmuch as no appeal against the said order was filed before the Hon ble Supreme Court. Leviability of service tax on the declared service under the category Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act under clause (e) of Section 66E of the Finance Act, 1994 - HELD THAT:- The CBIC vide Circular No. 214-1-2023-ST dated 28.02.2023 has clarified that the above expression has three limbs namely, agreeing to the obligation to refrain from an act; agreeing to the obligation to tolerate an act or a situation; and agreeing to the obligation to do an act. It has further been clarified that in order to be covered under such phrase, there must be independent contractual arrangements and must have necessary and sufficient nexus between the supply (agreement to do or to abstain from doing something) and the consideration. In the present case, it is not a matter of routine that the appellant had invariably collected the amount towards liquidated damages / penalties from each and every contract entered into between it and the service provider. Since, collection of such amount is towards delayed completion of work, which is not a regular phenomenon and arises out of non-performance of the contract in the manner prescribed, on rare occasions, it cannot be said that there are sufficient nexus between the parties on a regular basis for payment of such charges in order to abstain in proper performance of the assigned task within the scheduled time frame - such amount should not be equated with consideration , for the purpose of rendering any taxable service. Appeal allowed.
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2023 (5) TMI 10
Refund of excess service tax paid - rejection of the refund application on the ground that the services provided to M/s CIDCO as per the work order dated 01.04.2009 related to erection, commissioning and installation services and as such, the service tax liability has been appropriately discharged and since no excess payment of tax has been made, they are not entitled for the benefit of refund - N/N. 45/2010-ST dated 20.07.2010 - HELD THAT:- On careful examination of the agreement dated 01.08.2003 entered into between M/s MSEB and M/s CIDCO read with the work order dated 01.04.2009 issued to the appellant by M/s CIDCO, it is found that the assigned work executed by the appellant were in context with installation and commissioning of the sub-station for and on behalf of the MSEB. The Central Government under Notification No. 45/2010-ST dated 20.07.2010 has exempted payment of service tax on taxable services relating to transmission and distribution of electricity. Since, the appellants in the present case, have provided the activities for installation of the power generation station, ultimately made for distribution of electricity, in our considered view, the benefit provided under the Notification No. 45/2010-ST dated 20.07.2010 should appropriately be available to them. There are no merits in the impugned order, insofar as it has confirmed the service tax demand of Rs. 39,10,853/- on the appellant. Hence, the appeal filed by the appellants to such extent is allowed, with the direction to grant consequential refund, upon fulfilment of the conditions that the incidence of service tax has not been passed on to any other person and same has been borne by the appellant themselves. For the limited purpose of ascertaining the arithmetical accuracy of the refund claim amounting to Rs. 17,02,362/-, the matter is remanded to the original authority for passing of the de novo adjudication order - Appeal allowed by way of remand.
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Central Excise
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2023 (5) TMI 9
Breach of principles of natural justice - Non-service of SCN - notices have been returned left - Lock down period - HELD THAT:- Petitioners were not served. Once the authority was aware that the Petitioner was not served as notices have been returned left , then the such notices cannot be made foundation of passing an adverse order as such order would amount to passing an order without notice. Also, during lock-down period, where even issuance of physical service or notices were difficult. Keeping this aspect in mind and since the Petitioner was seeking opportunity of hearing, on the earlier date we had put the Petitioner to notice that indulgence, if any, of this nature would be subject to Petitioner demonstrating bonafide by depositing certain amount. The Petitioner had sated that 7.5% of the dues had the Petitioner filed an appeal would be 6 lacks and the Petitioner had deposited the amount of Rs. 4 lacks in the Registry of this Court. Considering the totality of the circumstances, it is opined that Petitioner has demonstrated his benefits and an opportunity needs to be given to the Petitioner to put forth his case. The proceedings stand restored to file of the concerned Commissioner. The amount of Rs. 4 lacks deposited in this Court stands transferred to the adjudicating authority, subject to further orders to be passed in the proceeding - petition allowed.
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2023 (5) TMI 8
Irregular availment CENVAT Credit - ineligible documents namely supplementary invoice/debit notes issued by M/s. Tata Steel Ltd. - violation of provisions of Rule 3 and Rule 9 of the CENVAT Credit Rules, 2004 - period January 2009 to December 2013 - Doctrine of Merger. HELD THAT:- The Tribunal vide Final Order No.75350/2022 dated 14.06.2022 [ 2022 (6) TMI 1390 - CESTAT KOLKATA ] has held that We direct that the original authority examine the dated Certificate, which the Ld. Counsel for the appellants has undertaken to submit to the satisfaction and allow the credit as may be applicable as per law. We also direct that the entire exercise be completed within the period of eight weeks from the date of receipt of this order. The Ld. Commissioner in the denovo Order-in-original which is also the order impugned has recorded that the details of invoices mentioned in the documents submitted by the assessee were matched with the copies of invoices submitted and were found to match. In subsequent paragraphs though he reiterates the specific direction of the Tribunal, but goes on to examine the statutory provisions and has passed the impugned order - the Ld. Commissioner has re-adjudicated the dispute which is already settled by the earlier order of this Tribunal in the first round of litigation. Thus, under the Doctrine of Merger, the Commissioner was not correct in re-visiting the issue which was already concluded in the remanded matter by the Tribunal, wherein directions were very specific and the Ld. Adjudicating authority was only required to examine the Certificate issued by the Senior Manager Accounts (Indirect Taxation) on behalf of TSL since it was not submitted before the Ld. Adjudicating authority during adjudication. The denovo order passed by the Adjudicating authority is hit by Doctrine of Merger as he has gone beyond the directions or findings of this Tribunal in the earlier round of litigation - Appeal allowed.
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2023 (5) TMI 7
Non-payment of Excise Duty - 1456 pcs. of other branded garments and 4963 pcs. of branded garments - appellants submitted that these branded goods were returned to them and were initially cleared under cover of duty paid invoices during the period 2011-12 2012-13, it is for these goods the benefit of exemption Notification No.31/2011-CE dated 24th March, 2011, was availed (on 1456 pcs.) - extended period of limitation - HELD THAT:- The fact that no intimation as envisaged in the Notification No.31/2011-CE dated 24th March, 2011 has been furnished to the Department, coupled with the fact of anomalous sets of invoices, one bearing the rubber stamp indicating geographical and other details and the other set with no such rubber stamp (as was pointed out by the Learned A.R.) leaves much for consideration about the genuineness and acceptance of the said documents, submitted towards substantial compliance of their case. It is evidently clear that for availing benefit of an exemption notification, its stipulated condition must necessarily be observed. However, in the present case not even the primary requirement of intimation to the jurisdictional authority is met with - The Hon ble Apex Court in the case of EAGLE FLASK INDUSTRIES LIMITED VERSUS COMMISSIONER OF C. EX., PUNE [ 2004 (9) TMI 102 - SUPREME COURT] , has categorically held that fulfillment of a notification conditions, set out for availment of exemption benefits are not empty formalities and merely procedural with no consequence attached for non-observance. Thus attendant conditions filing of declaration/undertaking/intimation are in the nature of action where failure to do so could lead to attendant consequences. The obvious consequence being the denial of the benefit in the present case. In the present case, the appellant was legally obliged to tender the requisite intimation in order to claim the exemption. Further, this failure is not once but with each time the goods were returned and under consideration in the present appeal. The benefit of exemption Notification No.31/2011-CE dated 24.03.2011 therefore, in respect of 1456 pcs is not admissible to the appellants. The benefit of duty paid nature of goods and the consideration of the said stock of 1456 Pcs. of branded good as out of duty paid stocks, cannot therefore be considered in favour of the appellants. 4963 pcs. of branded pants not found to be reflected in the ER I statement for July 2012 - clandestine clearance or not - HELD THAT:- While certified copies of ER-I for the months of April 2012, May 2012 June 2012 have been appended as a part of the appeal paper book copies/transcripts of ER-I filed online for subsequent months are not on record. Instead the appellants have appended their private records and statement culled out for the period 1.4.12 to 31.3.13 in respect of the said goods which gives the date-wise periodical opening closing balance of the product in addition to certain other details as may have been maintained by them for their cross-reference and business purposes. I am afraid quantities of the product indicated therein cannot conclusively establish their case of holding on to the impugned 4963 Pcs. of branded pants. Extended period of limitation - no mens rea existing? - HELD THAT:- To seek shelter under the plea of demand working, being an extension of documents tendered during audit is not only preposterous and abominable but also completely unethical, uncalled for unwarranted. The same being without a semblance of a legal justification deserves no merit. For the availment of benefit of Notification No. 31/11 CE Dated 24.03.2011, one of the principle requirement is the submission of the requisite intimation for which even a rigid time frame of 48 hours is provided in the notification itself and which admittedly has not been done at all and on occasions more than one. Also the misrepresentation in the monthly ERI record certainly is a case for rightful invocation of the suppression clause. No benefit accrues to the assessee, even though such detections are an outcome of the documents supplied/retrieved from the appellants themselves during the course of audit. The plea of the appellants on limitation therefore, fails completely and cannot be entertained. No benefit is accruable to them on this ground. Appeal dismissed.
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CST, VAT & Sales Tax
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2023 (5) TMI 6
Seeking deletion of adverse entries regarding the sales tax liability of Regent and Eastman - seeking direction upon the tehsildar to mutate the subject property, after quashing of the order dated 22nd December 2006 - declaring the action of the excise and taxation officer as illegal, unjust and without the authority of law. Whether, in view of dismissal of the special leave petition qua PNB by the order dated 8th April, 2011, the judgment and order outlawing section 16-B of the HPGST Act can at all be examined? - HELD THAT:- A law, which the State legislature had the competence to enact, has been outlawed by the High Court while hearing a writ petition which was rendered infructuous due to developments subsequent to its filing and prior to its disposal but such developments had not been brought to the notice of the High Court - A reading of the affidavit reveals that during the pendency of the writ petition (filed by PNB) before the High Court, the borrower had offered a compromise proposal which PNB had accepted. In terms thereof, the borrower paid to PNB an amount of Rs.36 lakh towards full and final settlement of the loan liability. Upon receipt of the compromise amount, the title deed of the mortgaged property was duly returned to the borrower. Pursuant thereto, PNB filed an application for withdrawing the execution case before the Recovery Officer, DRT, Chandigarh on 13th August, 2002 and the case, upon being disposed of as withdrawn, was consigned to the record room. The High Court by its judgment and order dated 2nd January, 2008 decided an infructuous writ petition and, in the process, outlawed section 16-B of the HPGST Act when the same was not at all warranted - it was also a clear but inadvertent error on the part of this Court to dismiss only the special leave petition against PNB as infructuous; the appropriate course for this Court ought to have been to dismiss the writ petition of PNB itself as infructuous having regard to the clear stand taken by PNB in its aforesaid affidavit dated 30th September, 2010 that nothing survived for a decision on the writ petition on the date it was decided in view of release of the property from mortgage - this issue is answered in affirmative. Should the answer to the above question be in the affirmative, whether section 16-B of the HPGST Act should have been outlawed by the High Court on the ground that it is ultra vires the Constitution or the Banking Companies Act? - HELD THAT:- The High Court while seized of the writ petition of PNB [ 2008 (1) TMI 836 - HIMACHAL PRADESH HIGH COURT] was not at all concerned with the SARFAESI Act as such. The matter had travelled to the High Court from proceedings under the DRT Act. There was, thus, no occasion for the High Court to pronounce on the validity of section 16-B of the HPGST Act based on what was held by its coordinate Bench in M/s A.J. Infrastructures Pvt. Ltd. [ 2007 (9) TMI 563 - HIMACHAL PRADESH HIGH COURT] . The High Court was therefore in clear error. Thus, section 16-B of the HPGST Act is a perfectly valid piece of legislation and is not ultra vires the Constitution and/or the Banking Companies Act as erroneously held in the decision of the High Court dated 2nd January, 2008. Also, following the decision in Central Bank of India [ 2009 (2) TMI 451 - SUPREME COURT ], it is held that any observation in the decision dated 7th September, 2007 touching upon section 16-B of the HPGST Act vis- -vis section 35 of the SARFAESI Act is of no effect. Whether having regard to the facts and circumstances triggering the writ petitions, the High Court was justified in returning the findings that the State s claim of first charge on the subject properties is not substantiated? - HELD THAT:- Section 14 of the HPGST Act postulates assessment of tax. The cumulative effect of the several sub-sections of section 14 is that after returns are furnished by a dealer in respect of any period, the duty of the assessing authority is to assess the appropriate quantum of tax required to be paid by the dealer, in terms of the procedure laid down therein; and to initiate steps, also in terms of the laid down procedure, to recover any amount of unpaid tax, penalty or interest payable under the enactment. Section 16 envisages that any amount of tax, penalty or interest payable under the HPGST Act remaining unpaid after the due date shall be recoverable as arrears of land revenue. Section 16-A, starting with a non-obstante clause, confers power on the Commissioner or any officer other than the one excluded to initiate a special mode of recovery. While adopting such a stand, the State and its department either overlooked or were ignorant of the requirement of law that section 16-B would be attracted only after determination of the liability and upon any sum becoming due and payable; and that, it is only thereafter that the charge, if any, would operate - no relevant documentary evidence having been placed before the High Court, when CWP 306 of 2007 was being heard, to indicate that necessary steps under the HPGST Act had been initiated by the State and its officers, the third issue has to be answered by holding that the State not having taken steps as required by law for realization of its dues, there was no determination of liability, a fortiori, question of taking recourse to the HPLR Act for recovery of dues as arrears of land revenue did not arise. Without such determination of liability, no red entry marks could have been inserted in the revenue records and the High Court was right in holding that the State ought not to have refused mutation. Whether dismissal of the review petition/application for recall instituted by the State by the High Court suffers from any infirmity, legal or otherwise? - HELD THAT:- No error apparent on the face of the record was pointed out, which is the first ground for seeking a review. Documents were annexed to the application, which were in existence when the reply to CWP 306 of 2007 was filed by the State and no case had been set up that despite discharge of due diligence, such documentary evidence, which were in existence, could not be annexed to the said reply. Much indulgence is shown to the State Governments when they carry judgments/orders in time-barred appeals/revisions, having regard to the impersonal machinery being involved. However, undue indulgence cannot be shown to the State Governments either when they do not file a proper reply or when, despite there being a provision for review, such remedy is not pursued and a different one pursued presumably to overcome the restrictions the provision for review imposes - High Court was justified in rejecting the application for recall. Relief - HELD THAT:- The appellants (State and its officers) are not entitled to any relief except the declaration that section 16-B of the HPGST Act is not ultra vires any provision of law. In view of section 16-B having been outlawed by the High Court on 2nd January, 2008, this declaration shall not enure to the benefit of the State in respect of cases that are old and have been closed but would be effective once again from this day. Appeal disposed off.
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2023 (5) TMI 5
Jurisdiction of State GST Department to initiate proceedings for recovery of any nature for the period prior to acceptance of the Resolution Plan - HELD THAT:- Law is well-settled that with the finalization of insolvency resolution plan and the approval thereof by the NCLT, all dues of creditors, Corporate, Statutory and others stand extinguished and no demand can be raised for the period prior to the specified date. The impugned show cause notices and the demand orders came to be passed in reference to the Financial Years 2017-18 and 2018-19, which are much prior to the date of finalization of the Resolution Plan, i.e. 12.10.2019 - The Deputy Commissioner, State GST Department exercises quasi judicial functions while acting under the provisions of the GST Act and thus, it is expected from such officer to act judiciously, consider the reply of the party, apply mind to the facts and law and pass a reasoned order. However, a bare perusal of the impugned orders dated 22.04.2020 is sufficient to satisfy us that the officer acted in gross defiance of the settled legal position as expounded by Hon'ble Supreme Court in the case of Committee of Creditors of Essar Steel India Ltd. [ 2019 (11) TMI 731 - SUPREME COURT ] and this Court in the case of Ultra Tech Nathdwara Cement Ltd. [ 2020 (4) TMI 269 - RAJASTHAN HIGH COURT ]. Such laconic approach of the authority exercising quasi judicial powers reflects sheer incompetency and pedantic approach and adds to the evergrowing dockets of cases in the courts - While passing the impugned orders, the Deputy Commissioner failed to consider the replies of the party and acted with sheer non-application of mind. His conduct deserves to be deprecated. The impugned orders and demand notices do not stand to test of law, i.e. mandate of Section 31 read with Section 238 of the IBC and the interpretation thereof as made by Hon'ble the Supreme Court in the case of Committee of Creditors of Essar Steel India Ltd. Hence, the same are declared to be invalid and quashed. Petition allowed.
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Indian Laws
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2023 (5) TMI 4
Pledge of shares - whether the accused No.1 Company was entitled to invoke the pledge at any time in the event of default or not? - Section 34 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- In the event of any of the events occurring in sub-clauses (a) to (i) of Clause 9 of the ICDA, the lender would be entitled at its discretion to enforce its rights as mentioned in the ICDA, Deed of Personal Guarantees, Corporate Guarantee and LoP. A perusal of sub-clause (a) of Clause 9 of the ICDA would reveal that, if any installment of interest required to be paid as per the ICDA remains unpaid even after the expiry of 3 days from the respective due date for payment, accused No.1 Company was entitled to enforce its rights as mentioned in Clause 9 of the ICDA. Similarly, if any shortfall in the security pledged vide LoP executed, subject to which facility was granted, was not replenished even after giving due Notice, accused No.1 Company was entitled to invoke Clause 9 of the ICDA. A perusal of Clause 5 of the LoP would reveal that the Pledgee was entitled to invoke the pledge at any time in the event of default or otherwise for as many number of shares as the Pledgee/lender deems fit in its sole discretion. It further provided that such invocation of pledge would not amount to sale of shares to the lender and the borrower would not be entitled to any credit/adjustment on such invocation/transfer of shares to the lender s account on that date - A perusal of the terms of the ICDA as well as the LoP would clearly reveal that, in the event of any of the events occurring as provided in Clause 9 of the ICDA, accused No. 1 Company was entitled to sell the shares either to itself, its group companies or to any outsider. The accused No.1 Company had also agreed not to dispute or claim any loss on account of the price at which such securities were sold. 16. A perusal of the entire complaint would reveal that the only allegation is that accused No.1 Company had sold the shares to itself when the market price of the shares had fallen. The complainant/respondent No.1 has attempted to turn a purely contractual dispute between the parties into a criminal case. Not only that, there is an inordinate delay in lodging the complaint. Though the complainant/respondent No.1 was aware about the sale of the shares in the year 2001, it did not do anything except filing an application before the learned Arbitrator. According to the complainant/respondent No.1, it received the information from the BSE and NSE in the year 2006, which fortified its suspicion about the fraud being played. Even thereafter, for a period of 5 years, it was silent and filed the complaint only in the year 2011 - though an attempt was made at the time of hearing to contend that it has only filed the complaint after it came to know about the fraud in the year 2009, there is no averment to that effect in the complaint. It is found that the complaint, taken at its face value, does not disclose that any of the ingredients of the offence complained of have been made out. In the totality of the circumstances, it is found that the present complaint is nothing else but an abuse of process of law - appeal allowed.
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2023 (5) TMI 3
Suit for a decree directing the appellant to execute a deed of cancellation in respect of the Development Agreement - prayer for the delivery of possession of the suit property - application under Rule 11 of Order VII of the Code of Civil Procedure, 1908 filed on the ground that in view of the arbitration clause in the Development Agreement, the dispute ought to be referred to arbitration - HELD THAT:- The dispute, whether the Development Agreement stands cancelled or whether the agreement can be lawfully cancelled, is a dispute arising out of or in connection with the Development Agreement. Therefore, as per the arbitration clause, if the issue concerning cancellation is not mutually resolved, the same must be referred to arbitration. The only ground on which the High Court has interfered is that the adjudication pursuant to invocation of Section 31 of the Specific Relief Act is an adjudication in rem. However, in the case of Deccan Paper Mills Company Limited1, this Court has categorically held that it is impossible to hold that an action instituted under Section 31 of the Specific Relief for cancellation of an instrument is an action in rem. In view of the applicability of the arbitration clause to the dispute subject matter of the suit filed by the respondent, the learned Trial Judge was justified in passing an order under Section 8 of the Arbitration Act by directing that the dispute be referred to the arbitration. The impugned judgment and order of the High Court is set aside - the judgment and order of the Trial Court is restored - appeal allowed.
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2023 (5) TMI 2
Stamp duty - Asserting value of immovable property - Comprehensive sale of all the assets and, in a single transaction - Whether it is permissible to draw up a conveyance for only a part of such transaction for seeking registration? - whether the Registration Authorities are empowered to go behind an ostensible instrument and ascertain the stamp duty payable on the actual transaction? - applicability of GoMS 103 dated 07.02.2001. HELD THAT:- In Member, Board of Revenue [ 1955 (10) TMI 27 - SUPREME COURT] , this Court had the occasion to expound the law by interpreting Sections 3, 4, and 5 of the Indian Stamp Act. In the said case, the Respondent therein had executed a power of attorney. The power of attorney countenanced power being conferred on the agent by the respondent in his individual capacity and also in other capacities such as trustee, etc. The question which inter alia fell for decision was whether the word matter in Section 5 was to be conflated with category - this court has held that When two words of different import are used in a statute in two consecutive provisions, it would be difficult to maintain that they are used in the same sense, and the conclusion must follow that the expression distinct matters in Section 5 and descriptions in Section 6 have different connotations - In other words, the Court apparently approved of the view taken that the Court should look at the instrument as it stood. When it comes to the definition of immovable property in the Transfer of Property Act, it has been defined as not including standing timber, growing crops or grass . In the Registration Act, 1908, immovable property includes, apart from land and buildings, things attached to the earth or permanently fastened to anything which is attached to the earth but not including standing timber, growing crops or grass. Most importantly, we cannot also be oblivious that Section 8 of the Transfer of Property Act declares that in the absence of an express or implied indication, a transfer of property passes to the transferee all the interests, which the transferor was capable of passing in the property and in the legal incidents thereof. Such incidents includes, inter alia, where the property is land, all things attached to the earth. When the property is machinery attached to the earth, the movable parts thereof also are comprehended in the transfer. The mere fact that there is no express reference to plant and machinery in the Recital Clause cannot mean that the interest in the plant and machinery which stood attached to the land, which was scheduled, was not conveyed to the first respondent. The value of, what was actually purchased, has been expressly set out in the Preamble to the sale deed. The effort of respondents 1 and 2 was to avoid payment of the stamp duty as due in law. The Division Bench erred in not noticing the true purport of the sale deed in conjunction with Section 8 of the Transfer of Property Act and the definition of the word immovable property , which we have adverted to. Viewed in the context of Duncans Industries Limited (supra) and Member, Board of Revenue (supra), as also the other attendant facts, including the contents of the Preambular portion, as also the conduct of the Respondents 1 and 2, it would be clear that the sale deed operated to convey the rights over the plant and machinery as well, which was comprised in the land scheduled in the sale deed. As far as the plant and machinery is concerned, it must, however, be only such plant and machinery, which was permanently embedded to the earth and answering the description of the immovable property as defined. It would appear that such an inquiry was not done to ascertain the same by the appellants. The second appellant will ascertain the value of plant and machinery on the basis of it answering the description of the immovable property as understood in law. The Appeal filed against the Judgment in Writ Appeal No. 2457 of 2005 is partly allowed.
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2023 (5) TMI 1
Wilful breach of the Memorandum of Understanding (MoU) - Dishonour of Cheque - Section 138 of Negotiable Instruments Act, 1881 - HELD THAT:- In view of the acknowledgment, assurances and the undertakings given by the Respondent in these proceedings, the submission of the Respondent during the hearing dated 06.03.2023; that the MoU was signed under coercion is clearly a dishonest plea. This Court is, therefore, unable to accept the submission of the learned counsel for the Respondent, that the MoU was executed under coercion. In fact, the said submission of the Respondent clearly evidences that the apology tendered by the Respondent on 14.07.2021 after he was held guilty of contempt is not bona fide. In this affidavit of apology dated 14.07.2021, the Respondent had admitted his liability and sought further time to honor his undertaking. This Court is of the opinion that the Respondent has only been biding time after he was held guilty of contempt vide orders dated 13.07.2021 and 20.12.2021. The last payment was made on 24.02.2022 and despite giving two undertakings on 02.06.2022 and 31.08.2022, not a single paisa has been paid by the Respondent. The Apex Court has time and again reiterated that non-compliance of undertakings given to the Court will amount to contempt of orders of the Court. In this regard, it is instructive to refer to the judgment of Supreme Court in HSBC PI Holdings (Mauritius) Limited v. Pradeep Shantipershad Jain and Others, [ 2022 (7) TMI 568 - SUPREME COURT ], wherein it has been held that non-payment of the outstanding amount by the Respondent even after repeated opportunities and directions passed by the court will amount to punishment under contempt of Court. In this matter on 06.03.2023, on an enquiry to the Respondent with respect to the time required by him to sell his immovable property to raise the funds, the Respondent was non-committal and vague. He stated that he is still looking for a buyer and it was not possible to give a firm date. This Court did not find that the response of the Respondent was serious or made in good faith. The Respondent is owner of immovable properties and therefore, has sufficient means to make the payment undertaken by him; he, however, lacks the will to make the payment to the Petitioner. In view of the aforesaid contumacious conduct of the Respondent, this Court is unable to accept the submission that the punishment of imprisonment should not be awarded to the Respondent. Sentencing - HELD THAT:- As the Respondent has already been held guilty of contempt and considering his subsequent conduct as aforesaid, this Court sentences Respondent, Contemnor, Mr. Anand Kamal Goel, to undergo two (02) months imprisonment along with a fine of Rs. 2,000. In default of payment of the fine, he shall further undergo fifteen (15) days simple imprisonment - the Registrar General of this Court directed to take necessary steps to have the convicted contemnor taken into custody and cause him to send to Central Jail, Tihar, under appropriate warrant of commitment for undergoing the sentence awarded. The present contempt petition and all the pending applications, if any, are disposed of.
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