Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 31, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI Short Notes
Articles
News
Notifications
Highlights / Catch Notes
GST
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Interest on the delayed disbursal of amount of Budgetary Support already sanctioned - Admittedly, the funds at the disposal of Commissionerate were far less than the claims received and, therefore, the amount though sanctioned in favour of the petitioner could not be released till the requisite funds were made available to the Commissionerate by the DIPP. - - In these circumstances, it is difficult for us to say that the amount payable to the petitioner under the Scheme was illegally, arbitrarily or without any reason withheld by the respondents. - petitioner is not entitled for interest - HC
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Seeking grant of regular bail - evasion of GST - Given the fact that the petitioner was arrested on 13.03.2021 and is in custody ever since in a case where the maximum sentence that could be awarded was 05 years, the further incarceration of the petitioner is not required, more so when his co-accused have been granted the concession of regular bail vide order dated 31.08.2022. - The further incarceration of the petitioner would be wholly unnecessary. - bail granted - HC
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Validity of show cause notice - Insufficient details in the SCN - no date, time and venue for personal hearing was shown in the notice - Section 74 of MPGST Act - It is evident that no personal hearing was granted to the petitioner, matter restored back - HC
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Classification of services - services provided by the Heli-Operators by way of transport of passengers by air in case of Helicopter Shuttle Services - rate of GST - The applicant in the instant case does not provide any service of “transport of passengers by air” and also they do not receive the services of “transport of passengers by air' by any of the “helicopter shuttle service operator”, as they do not fall under the category of 'passengers”. - application for advance rolling is not maintainable - AAR
Income Tax
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Income deemed to accrue or arise in India - Clause wise scheme and arrangement of various activities - Section 9
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Revision u/s 263 - LTCG chargeable in India - tax treaty entitlement, - whether the assessee is a resident for tax purposes? - CIT was of the view that the Ld. AO did not carry out factual inquiry/verification to ascertain that the assessee is a genuine investor or not - revision proceedings initiated by the CIT sustained - AT
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Income escaping assessment - Validity of Assessment concluded without issuing a valid statutory notice u/s 143(2) - return filed pursuant to the notice issued u/s 148 - Since in the present case, no valid notice under section 143(2) of the Act was issued by the AO, The entire assessment proceedings becomes null and void - AT
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Bogus purchases - estimation of income - Sales Tax Department has proved beyond doubt that the parties declared as hawala traders were involved in providing accommodation entry of purchases and the assessee was one of the beneficiary - CIT(A) took a reasonable view that the only profit percentage has to be added and estimated @ 6% of bogus purchases. - appeal of the revenue dismissed - AT
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Addition u/s 41(1) - Cessation of liability for sundry creditors - assessee failed to prove the credit balance of these two parties - Assessee has duly acknowledged its debt and has not done anything to write off its liability as cessation thereof - Assessment of the assessee has been completed u/s 143(3) by the same incumbent AO for AY 2012-13 wherein these balances of the two creditors continuing from AY 2010-11 had been accepted and no additions made thereon - additions deleted - AT
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Weighted deduction on R&D expenditure claimed u/s 35(2AB) - Claim denied for want of requisite approval received from DSIR - If the appellant is aggrieved by the denial of extension of approval u/s 35(2AB), the only course of action available to the appellant is to invoke writ jurisdiction of the Hon’ble High Court. Thus, the material on record clearly indicates that there was no requisite approval as envisaged u/s 35(2AB), which is condition precedent for availing the benefit of deduction u/s 35(2AB) - benefit of exemption was rightly denied - AT
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Determination of income of the trust after denial of the exemptions under section 11 - Once the exemption claimed by the assessee u/s 11 of the Act has been denied, the income of the assessee has to be assessed as “business income” and assessee is entitled for all usual deductions under the provisions of the Act while computing the income of the assessee under the head “business”, more so, deduction u/s 30 to 38 of the Act it has to be allowed - AT
Customs
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Seeking presence of his Advocate during the interrogation and recording of statements at visible but not audible distance - the direction which has been sought by the Petitioner as regards the presence of the lawyer at visible but not audible distance is an aspect of fair investigation and we do not find any reason to take a different view from the view taken by the Coordinate Benches of this Court - petition allowed. - HC
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Revocation of Customs Broker License - subletting of the license - It is alleged that the customs broker had granted access of the credentials, necessary for undertaking customs clearance, to persons not in their employment. The submission of customs broker, and not controverted in the impugned order, that access was provided only to privately sourced software used for compilation of data to be filed under ICEGATE strikes at the very root of the allegation of illicit grant of access. - none of the charges has been proved against the appellant - There are no reason for the continuation of revocation of the licence or forfeiture of the security deposit - AT
Corporate Law
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Requirement of maintenance of books of accounts - CBI asked the petitioner to furnish the books account for the period beyond eight years - On the basis of plea that the petitioner does not possess books of accounts beyond 8 years, while granting relief to the petitioner, CBI directed to have alternative remedy as available in the law and petitioner directed to cooperate with the CBI since the investigation is still going on - HC
IBC
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CIRP - right of the creditors for recovery of dues of the corporate debtors from the third parties - It is for the Resolution Professional or the successful resolution applicant, as the case may be, to take such civil remedies against third party, for recovery of dues payable to corporate debtor, which may be available in law. The remedy against third party, however, is not available under Section 66 of IBC, and the civil remedies which may be available in law, are independent of the said Section. - SC
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Disqualification of resolution applicant - wilful defaulter of bank - Rejection of Resolution Plan submitted by the Applicant - Appellant submits that on the day when Resolution Plan submitted by the Appellant came for consideration before the CoC, there was no declaration by Union Bank of India as willful defaulter - in view of the interim order passed by the High Court, the applicant cannot be held as wilful defaulter - However, in view of the Corporate Debtor being ordered to be liquidated vide separate Order dated 20th January, 2022 which order has not been challenged, no direction can be issued for consideration of Resolution Plan submitted by the Appellant afresh. - AT
PMLA
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Presence of Advocate during Enquiry/interrogation as a matter of right - in the earlier judgements of the High Court’s, the presence of advocate was allowed on the basis of apprehensions that there may be some coercive attempt may be made against the petitioner. Since in the present case there is no such apprehension, the presence of advocate cannot be allowed as a matter of right during investigation. - HC
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Money Laundering/Conspiracy - proceeds of crime - The words “prima facie case” as such have not been defined under any provision of the Code. At different stages of a criminal case, the level of satisfaction is different. At the stage of summoning “prima facie case” is to be seen. At the stage of the framing of charge, the level of satisfaction is higher than it and, finally, at the stage of judgment, the level of satisfaction is “proved beyond reasonable doubt”. For “Prima facie case”, it has to be shown that some offence has been committed and there is material regarding grave involvement of the person to be summoned. - HC
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Validity of the provisional attachment order - Money Laundering - The authorities, after elaborate discussion, made a finding that he has a reason to believe that the case under PMLA is established and therefore, invoked the powers under Section 5(1) of the PMLA and issued the order of provisional attachment. The language applied under the Act is “reason to believe”, therefore, it is sufficient if the authorities form an opinion that the materials available on record are sufficient for the purpose of proceeding against the persons. - petitioner has alternative appellate remedy. Writ petition dismissed. - HC
Service Tax
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Condonation of delay in filing appeal - Or the appeal was filed within the time - Once the appellant had indicated in ST-IV form that the order was received by the appellant only on December 21, 2018, then it was for the Department to have controverted that the order had been received by the appellant earlier to this date and an explanation for the delay should not have been expected from the appellant. - since the appeal has been filed within the period of two months from the date of receipt of order by the appellant, the appeal cannot be dismissed by the commissioner (appeals) on the ground of delay iby calculating the period from the date of order - AT
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Valuation - exclusion of value of material supplied during the course of provision of services - since the assessee has failed to provide the documentary evidence of value of consumables and other materials used, relating to AMC services, the benefit of exemption notification is rightly denied to the appellant -Demand of service tax, confirmed by invoking the extended period of limitation - AT
Central Excise
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Short payment of Central Excise duty - allegation of undervaluation of liquid hair dye - The revenue itself has directed the assessee to furnish the bond since the assessment is provisional - the issuance of show cause notice without finalisation of the provisional assessment is premature and liable to be quested - AT
VAT
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Review of Order after gap of 13 years - delay can be condoned or not - There is a period of one year provided as per the Act, 2003 for seeking review of any order passed by the Tribunal. Hence, the time for getting the reassessment order reviewed has already elapsed and the reassessment order has already attained finality. The order of the Tribunal dated 03.10.2012 (Annexure P-4) cannot be reviewed after a gap of 8 years - HC
Case Laws:
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GST
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2023 (5) TMI 1185
Seeking grant of bail - irregular availment of input Tax Credit / ITC - suppression of actual sales in their monthly GSTR-3B returns - case of applicant is that the applicant is neither owner nor proprietor of firm, whereas his mother Smt. Anusuiya Mishra is the proprietor of the firm - HELD THAT:- It is an admitted fact that the applicant is neither proprietor nor owner of the firm, whereas his mother Smt. Anusuiya Mishra is the proprietor of the firm. No charge-sheet or complaint has been filed by the Department against Smt. Anusuiya Mishra. The investigation of the Department was completed and there is no evidence or material that the applicant had not co-operated with the investigation or tampering the evidence or witnesses. The investigation was completed and charge-sheet/complaint has already been filed and there is no chance of tampering of evidence or influence of witnesses. The maximum punishment under Section 132(1)(a) of the Act, 2017 is five years which is triable by Magistrate. There is no criminal history of the applicant. The applicant is having fixed place of residence and there is no chance of his absconding. Considering the complicity of accused, severity of punishment as well as totality of facts and circumstances, at this stage, without commenting on the merits of the case, it is found to be a fit case for bail - The bail application is allowed.
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2023 (5) TMI 1184
Interest on the delayed disbursal of amount of Budgetary Support already sanctioned - Budgetary Support Scheme - HELD THAT:- Circular dated 10.1.2019 stated that the claims under the Scheme are required to be disposed of within two weeks. True it is, that, in terms of Circular dated 10.01.2019, the claims under the Scheme are required to be disposed of within two weeks. It is not the case of the petitioner that the claims for release of payment under the Scheme were not considered or disposed of by the respondents within the stipulated time frame. The amount payable to the petitioner under the Scheme was duly sanctioned in favour of the petitioner. However, the said amount could not be disbursed due to non availability of requisite funds from DIPP. It is also not in dispute that that the benefit envisaged under the Scheme is in the nature of concession/incentive granted by the Government in favour of eligible industries, so as to provide them necessary cushion to face the financial hardship that may have visited such units/industries due to withdrawal of area based exemption notifications issued under the Central Excise Act. Such being the nature of concession given, no unit could lay a claim to the payment of amount under the Scheme as a matter of right - True it is, that the claims submitted under the Scheme are required to be disposed of within a period of two weeks, but, there is no complaint by the petitioner that his claim was not considered or disposed of by the respondents within the stipulated period. Sanction for release of amount was granted in time, but, disbursement of the amount took sometime. It is also not the case of the petitioner that there was deliberate delay on the part of the respondents to release the benefit. Admittedly, the funds at the disposal of Commissionerate were far less than the claims received and, therefore, the amount though sanctioned in favour of the petitioner could not be released till the requisite funds were made available to the Commissionerate by the DIPP. In these circumstances, it is difficult for us to say that the amount payable to the petitioner under the Scheme was illegally, arbitrarily or without any reason withheld by the respondents. The petitioner are no entitled to interest on the amount disabused to it under the Scheme for the following reasons: (i) That having regard to the nature of Scheme, the benefit under the Scheme is not claimable by the eligible industrial units as a matter of right. The benefit envisaged is in the nature of concession/incentive extended by the Government of India to enable the industrial units to tide over the financial hardship to which they may have been exposed with the withdrawal of area-based exemptions under the Central Excise Act; (ii) That the respondents had a valid reason not to disburse the amount sanctioned immediately. The Commissionerate was facing acute shortage of funds and the funds placed at its disposal by DIPP were not sufficient enough to meet even the claim of the petitioner. The amount was disbursed immediately when the funds became available; and, (iii) That there is no provision in the Scheme which provides for payment of interest in case of any delay in actual release of the benefit envisaged under the Scheme. Unless, it is pleaded and demonstrated that the amount payable under the Scheme was unauthorisedly and, without any reason, withheld by the respondents, it would be difficult for this Court to penalize the respondents by directing them to pay interest. Petition dismissed.
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2023 (5) TMI 1183
Seeking grant of regular bail - evasion of GST - Forming of a network of fake firms and defrauding the state exchequer. - availment of fraudulent Input Tax Credit - HELD THAT:- Since the grant or refusal of bail lies in the discretion of the Court the discretion is to be exercised with regard to the facts and circumstances of each case. However, bail is not to be denied to satisfy the collective sentiments of a community or as a punitive measure. Therefore, broadly speaking (subject to any statutory restrictions contained in Special Acts), in economic offences involving the IPC or Special Acts or cases triable by Magistrates once the investigation is complete, final report/complaint filed and the triple test is satisfied then denial of bail must be the exception rather than the rule. However, this would not prevent the Court from granting bail even prior to the completion of investigation if the facts so warrant - Given the fact that the petitioner was arrested on 13.03.2021 and is in custody ever since in a case where the maximum sentence that could be awarded was 05 years, the further incarceration of the petitioner is not required, more so when his co-accused have been granted the concession of regular bail vide order dated 31.08.2022. The further incarceration of the petitioner would be wholly unnecessary. Thus without commenting on the merits of the case, the aforementioned petitions are allowed and the petitioner-Amrinder Singh son of Gurnam Singh is ordered to be released on bail subject to the satisfaction of the Trial Court, concerned which is at liberty to impose any stringent conditions that it deems appropriate - Petition disposed off.
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2023 (5) TMI 1182
Validity of show cause notice - Insufficient details in the SCN - no date, time and venue for personal hearing was shown in the notice - Section 74 of MPGST Act - HELD THAT:- The show cause notice dated 22.07.2022 (Annexure P/3) issued under Section 74 of the Act, itself shows that before passing final order dated 24.08.2022 (Annexure P/4), the intention of the respondents was to give personal hearing to the petitioner as required under the law, but in the table given below, captioned as Details of personal hearing etc . , no Date, Time and Venue of personal hearing has been shown and in front of columns 3,4 5 of Date, Time and Venue, NA has been mentioned, which is sufficient to infer that no personal hearing was given to the petitioner before passing the impugned order dated 24.08.2022. Availability of alternative remedy of appeal - HELD THAT:- It is well settled that when due opportunity of hearing, as required under the law, has not been afforded and principle of natural justice has not been followed, then the question of availability of alternative remedy does not come in the way for exercising jurisdiction under Article 226 of the Constitution of India. The matter is remitted back to the Deputy Commissioner, Audit Wing, Jabalpur for passing order afresh, after giving personal hearing to the petitioner - Petition allowed by way of remand.
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2023 (5) TMI 1181
Classification of services - services provided by the Heli-Operators by way of transport of passengers by air in case of Helicopter Shuttle Services - rate of GST - Applicability of N/N. 11/2017 CGST (Rate) dated 28.06.2017. HELD THAT:- The applicant i.e. M/s Uttarakhand Civil Aviation Development Authority, Dehradun in their application dated 11.03.2023 has declared that M/s Uttarakhand Civil Aviation Development Authority, is a society formed by the State Government of Uttarakhand, for objectives which include developing tourism by way facilitating and controlling air transport in the state and to provide services in respect of air security and conducting rescue operations, which means to say that the applicant floats/ issue tenders to select helicopter shuttle service operators on select routes in the state of Uttarakhand on license basis, which entails providing of services by way of transport of passengers by air. The applicant in the instant case does not provide any service of transport of passengers by air and also they do not receive the services of transport of passengers by air' by any of the helicopter shuttle service operator , as they do not fall under the category of 'passengers . Hence the applicant do not fulfill the conditions as mandated in Section 95 of the CGST Act, 2017, in as much as the applicant i.e. M/s Uttarakhand Civil Aviation Development Authority, Dehradun has approached the Authority for Advance Ruling, Goods Service Tax, Uttarakhand, on matters or on questions which is not in relation to the supply of goods or services or both, being undertaken or proposed to be undertaken by them. The applicant in the instant case do not fulfill the criterion as mandated in sub-section (a) of the Section 95 of the CGST Act, 2017, and hence in terms of section 98(2) of the Central Goods And Services Tax Act, 2017, the present application is not admitted and rejected without going into the merits of the case.
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Income Tax
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2023 (5) TMI 1180
Revision u/s 263 - LTCG chargeable in India - tax treaty entitlement, - whether the assessee is a resident for tax purposes? - CIT was of the view that the Ld. AO did not carry out factual inquiry/verification to ascertain that the assessee is a genuine investor or not and he should have called for and verified the details of key personnel who manage the investment decisions of the fund - whether appellant is not entitled to the benefit of India-Mauritius Double Taxation Avoidance Agreement (India- Mauritius DTAA)? - HELD THAT:- AO communicated the reasons for selection of case and sought the explanation of the assessee - there is no Linkling in the assessment order as to what explanation was given by the assessee. The assessment order only mentions that the assessee filed details. What details were filed is not forthcoming from the assessment order. However, the details examined by the Ld. AO are not known. No reasons have been recorded by him to arrive at the conclusion that income returned by the assessee at Rs. Nil is acceptable and conforms to the legal position. Nothing is discernable as to how the issues raised were examined and found acceptable by him. In such a scenario wherein the assessment is completed without any enquiry/verification of the issues involved, in Gee Vee Enterprises vs. Addl. CIT [ 1974 (10) TMI 29 - DELHI HIGH COURT] that the assessment order is erroneous as also prejudicial to the interests of revenue as it caused prejudice to revenue administration as emphasised in Venkatakrishna Rice Co. [ 1981 (3) TMI 1 - MADRAS HIGH COURT] - Therefore, we are of the view that the CIT was justified in resorting to the provisions of section 263 of the Act. Decided against assessee.
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2023 (5) TMI 1179
Income escaping assessment - Validity of Assessment concluded without issuing a valid statutory notice u/s 143(2) - return filed pursuant to the notice issued under section 148 - HELD THAT:- In the present case, undisputedly no return of income was originally filed by the assessee, and only pursuant to the notice issued under section 148 of the Act the assessee filed its return of income on 31/03/2011. Thus, the first notice dated 20/02/2011 under section 143(2) of the Act was issued when no return of income was available on record and therefore, this notice cannot be said to have been issued to verify whether the assessee has understated the income or has computed excessive loss or under-paid the taxes in any manner. Hence the first notice issued u/s143(2) of the Act in the present case is a mere empty formality, without any legal consequence, and therefore, cannot be treated as a notice on a return filed by the assessee. As in DIT v/s Society for Worldwide Interbank Financial, Telecommunications[ 2010 (4) TMI 43 - DELHI HIGH COURT] held that the provisions of section 143(2) make it clear that the notice can only be served after the AO has examined the return filed by the assessee. Thus, first notice issued under section 143(2) is not a valid notice as per the provisions of the Act. Also since the return of income was filed by the assessee on 31/03/2011, therefore, the time limit for issuance of notice under section 143(2) of the Act, as per proviso to clause (ii), was available only till 30/09/2011. Second notice under section 143(2) of the Act was issued on 17/10/2011, i.e. beyond the time limit prescribed under the provisions of section 143(2) of the Act. Therefore, the second notice is also invalid as per the provisions of section 143(2) of the Act. In any case, it cannot be disputed that the AO in the present case has accepted the return of income filed by the assessee and has concluded the assessment under section 143(3) read with section 147 of the Act. Further, the mandatory requirement of issuance of notice under section 143(2) of the Act is quite clear from the decision of the Hon ble Supreme Court in ACIT vs Hotel Blue Moon[ 2010 (2) TMI 1 - SUPREME COURT] Since in the present case, no valid notice under section 143(2) of the Act was issued by the AO and the assessment was completed without following the mandatory requirement of the Act, therefore, the entire assessment proceedings concluded under section 143(3) read with section 147 of the Act is rendered null and void, and is accordingly quashed. Decided in favour of assessee.
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2023 (5) TMI 1178
Deemed dividend u/s 2(22)(e) - Director on company holding substantial shareholding in the assessee company as well another company - CIT-A deleted the addition - HELD THAT:- CIT(A) is not correct in deleting the addition in the hands of the assessee, observing that the addition is to be made in the hands of the Director of the Company who is common shareholder of both companiesy when the Hon ble Supreme Court has doubted the decision of the Delhi High Court in the case of Ankitech Pvt. Ltd. [ 2011 (5) TMI 325 - DELHI HIGH COURT ] and referred it to the Larger Bench of the Hon ble Supreme Court to re-look into the entire issue. The issue is not fully settled by Hon ble Supreme Court that too when later judgment of the Hon ble Supreme Court has referred the issue to the Larger Bench. Thus the Ld. CIT(A) is not correct in taking a decision with that of the previous judgment of the Hon ble Supreme Court in the case of Madhur Housing And Development Company [ 2017 (10) TMI 1279 - SUPREME COURT ] Therefore we hereby set aside the matter back to the file of the Ld. CIT(A) who is to decide the issue - Ground raised by the Revenue are hereby allowed for statistical purposes. Addition - delayed deposit of service tax - as per CIT-A service tax collected by the assessee was deposited before the due date of filing of the return - HELD THAT:- This amount was already offered for taxation in the subsequent assessment year i.e. 2012-13. Thus, CIT(A) directed the AO to verify the same and if it is found that the assessee has already offered this amount as income in the subsequent year, the income of that year be reduced by disallowance made u/s 43B. Decided against revenue.
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2023 (5) TMI 1177
Deduction u/s 80P - interest income received from the co-operative bank - AO denied the deduction claimed by the assessee u/s 80P by applying the provisions of section 80P(4) since the assessee is providing credit facilities to its members - HELD THAT:- Section 80P(4) is of relevance only in a case where the assessee, who is a co-operative bank, claims a deduction under section 80P - we find no merits in the aforesaid reasoning adopted by the learned CIT(A) in denying deduction under section 80P(2)(d) of the Act to the assessee. In a recent decision in PCIT vs Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. [ 2023 (5) TMI 372 - SC ORDER] held that a taxpayer who is merely giving credit to its members cannot be said to be the Co-operative Banks/Banks under the Banking Regulation Act and the banking activities under the Banking Regulation Act are altogether different. Therefore, held that the assessee, a co-operative credit society, could not be termed a bank/co-operative bank and that being a credit society, it was entitled to exemption under section 80(P)(2) of the Act. Thus, there is also no basis in the finding of the AO that section 80P(4) is applicable to the assessee. Regarding the claim of deduction under section 80P(2)(d) of the Act, it is also pertinent to note that all co-operative banks are co-operative societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the co-operative banks is allowable as a deduction under section 80P(2)(d) of the Act. Thus we uphold the plea of the assessee and direct the AO to grant deduction under section 80P(2)(d) of the Act to the assessee in respect of interest income earned from investment with co-operative bank. Decided in favour of assessee.
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2023 (5) TMI 1176
Bogus purchases - estimation of income - Sales Tax Department has proved beyond doubt that the parties declared as hawala traders were involved in providing accommodation entry of purchases and the assessee was one of the beneficiary - as per CIT only profit percentage has to be added and estimated @ 6% of bogus purchases - HELD THAT:- We find the Jurisdictional Hon ble High Court in the case of Pooja Paper Trading Co. [ 2019 (3) TMI 62 - BOMBAY HIGH COURT] and Simit P Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] has considered the profit element and the income was estimated. CIT(A) took a reasonable view that the only profit percentage has to be added and estimated @ 6% of bogus purchases. DR could not controvert the findings of the CIT(A) with any new cogent evidence and material to take a different view. CIT(A) dealt on the facts and considered the profit element in the bogus purchases and also the A.O has not disputed the sales - Decided against revenue.
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2023 (5) TMI 1175
Unexplained cash credit - unexplained income - contention of assessee that cash deposit was out of cash withdrawal - As per revenue only source of income shown by the assessee is agriculture income , which may have been used for house hold purpose - HELD THAT:- Assessee except contending that the assessee has sufficient cash balance for making deposit in bank, has not explained the real source of cash and cheque deposits. We find that the assessing officer in his summary has clearly demonstrated the cheque deposits and immediate withdrawal or on deposits of money in cash immediately transferred by way of cheque, the assessee has failed to give any satisfactory reply against the finding of the assessing officer. As in full agreement with the observation of the assessing officer that the assessee has only shown source of income from agriculture activities. keeping in view the general practice in society that ordinarily peoples keep certain money in cash, therefore, by giving such benefits the assessee is granted benefit of Rs. 2,80,000/- and remaining addition of Rs. 22,00,000/- is upheld. Appeal of assessee is partly allowed.
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2023 (5) TMI 1174
Addition u/s 69A - cash deposit unexplained - HELD THAT:- We find force in the contention of assessee that although originally after receipt of cash of Rs. 40 lakh, Rs. 20 lakh each were deposited to the joint bank account of assessee and his wife Shri Dinesh their son but at the time of returning the cash Shri Dinesh was away from home therefore this amount was completed from withdrawals from the joint bank account of assessee and his wife. As assessee has successfully demonstrated with supporting evidence source of cash deposit to his bank account during FY 2010-11 relevant year under consideration and therefore no addition was required to be made in the hands of assessee and therefore we allow the grounds of assessee on merits and direct to delete the entire addition.
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2023 (5) TMI 1173
Addition u/s 41(1) - Cessation of liability for sundry creditors - assessee failed to prove the credit balance of these two parties - AO found discrepancies from the information received from creditors which were received against the notices issued u/s 133(6) vis- -vis assessee s books of accounts - HELD THAT:- Admittedly, this is not a case of doubtful expenditure. It is a case where on calling of information by ld. AO from the two creditors, there appears to be a difference in the balance confirmed by the creditors vis- -vis reported by the assessee in its audited financial statements. Assessee has duly acknowledged its debt and has not done anything to write off its liability as cessation thereof - Assessment of the assessee has been completed u/s 143(3) by the same incumbent AO for AY 2012-13 wherein these balances of the two creditors continuing from AY 2010-11 had been accepted and no additions made thereon. Also, assessee has placed on record the invoices which were raised in respect of these two liabilities and respective ledge accounts from its audited books of accounts. We are in agreement with these submissions so made by assessee and therefore, delete the additions so made. Accordingly, the ground taken by the assessee is allowed.
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2023 (5) TMI 1172
Weighted deduction on R D expenditure claimed u/s 35(2AB) - Claim denied for want of requisite approval received from DSIR - HELD THAT:- In the present case, no doubt, expenditure had been incurred on R D, however, the requisite approval u/s 35(2AB) was obtained from the prescribed authorities, as evident from the assessment order. No doubt, the assessee company had filed an application for seeking the extension of such approval. Such extension was denied by the prescribed authorities on account of fact that the assessee company had not adhered to the prescribed conditions. This denial of extension was communicated to the AO by the prescribed authorities. If the appellant is aggrieved by the denial of extension of approval u/s 35(2AB), the only course of action available to the appellant is to invoke writ jurisdiction of the Hon ble High Court. Thus, the material on record clearly indicates that there was no requisite approval as envisaged u/s 35(2AB), which is condition precedent for availing the benefit of deduction u/s 35(2AB) As settled principle of construction while construing the provisions of exemption, the provisions should be construed strictly as laid down by the Constitution Bench of the Hon ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs Dilip Kumar Company Others [ 2018 (7) TMI 1826 - SUPREME COURT] - Decided against assessee.
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2023 (5) TMI 1171
Revision u/s 263 by CIT - Debatable issue - admissibility of LTCL on securities - whether long term capital loss on securities (STT paid) can be adjusted against the non-STT paid long term capital gain resulting from securities or other assets? - whether the carrying forward of such loss is admissible? - HELD THAT:- We find merit AR argument that AO has taken one of the tow possible view while framing the assessment u/s 143(3) accepting the claim of the assessee in which the long term capital loss (STT paid) has been allowed to be set off and carried forward for future set off. The issue is debatable one and therefore jurisdiction u/s 263 of the Act is not available to PCIT in the case of debatable issue. As in the case of Kishorebhai Bhikhabai Virani [ 2015 (2) TMI 807 - GUJARAT HIGH COURT has been referred to by the Co-ordinate Benches namely Raptakos Brett Co. Ltd. [ 2015 (6) TMI 529 - ITAT MUMBAI] and M/s Rare Investments [ 2019 (11) TMI 634 - ITAT MUMBAI] and after considering the same, the issue was decided in favour of the assessee. On the issue of non-availability of jurisdiction u/s 263 in case of debatable issue, we find support from the decision of Malabar Industrial Co. Ltd.[ 2000 (2) TMI 10 - SUPREME COURT] wherein it has been held that jurisdiction u/s 263 of the Act cannot be assumed in respect of a debatable issue which is reiterated in the case of CIT vs. Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT] - The case is also supported by the decision of Sunil Lamba [ 2019 (3) TMI 1254 - DELHI HIGH COURT] where referring to the two decisions of the Hon ble Apex Court in the case of Malabar Industrial Co. Ltd. (supra) and Max India Ltd. (supra) quashed the order passed u/s 263 of the Act on the ground that the issue is debatable one and ld PCIT has no jurisdiction. Assessee appeal allowed.
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2023 (5) TMI 1170
Exemption u/s 11 - denial of claim while processing return u/s 143(1) on the reason that assessee has not filed the audit report in form No.10B along with return of income - HELD THAT:- The assessee stated before us that the medical emergency of the trustee is a reason for delay in filing the audit report in form no.10B along with return of income. Admittedly, the assessee filed the return of income on 10.1.2018, wherein assessee enclosed the income and expenditure account and balance sheet and statement of income which are dated 1.1.2018. When the assessee was in a position to get audited its books of accounts and filed the audited income and expenditure account and balance sheet along with statement of income, how it was not able to file the audit report in form no.10B is not explained. Assessee has taken the support of petition filed for condonation of delay in filing the appeal before this Tribunal dated 18.1.2023 so as to explain the delay in filing audit report in form no.10B along with return of income. Assessee has not separately explained this delay in filing the audit report in form no.10B along with return of income with any reasonable causes. Having said this, we are of the opinion that there is no good and sufficient reason to condone the delay in filing the audit report in form no.10B along with return of income - Lower authorities are justified in denying the exemption u/s 11 of the Act to the assessee in view of the non-filing of audit report in form no.10B along with return of income.Decided against assessee. If the exemption u/s 11 is denied for non-filing of audit report in form no.10B, the assessee s income is to be computed in accordance with law as business income and gross income of the assessee cannot be taxed by the AO - Once the exemption claimed by the assessee u/s 11 of the Act has been denied, the income of the assessee has to be assessed as business income and assessee is entitled for all usual deductions under the provisions of the Act while computing the income of the assessee under the head business , more so, deduction u/s 30 to 38 of the Act it has to be allowed. In view of this, we direct the AO to tax only the net income of the assessee after granting all usual expenditure u/s 30 to 38 of the Act and not gross income of the assessee. Ordered accordingly.
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2023 (5) TMI 1169
Disallowance u/s 14A - assessee made suo-moto disallowance u/r 8D(2)(iii) after taking into account only those investments which actually yielded exempt income in calculating amount of average investment - as per CIT-A only those investments on which exempt income has been earned in the year under consideration can only be considered for computation of disallowance under Rule 8D as relying on ACB India Ltd case [ 2015 (4) TMI 224 - DELHI HIGH COURT] - HELD THAT:- No error or infirmity in the order of the Ld.CIT(A) and find no justification to interfere with the order of the Ld.CIT(A) . Accordingly, the Ground No. 1 of the Department is dismissed. Disallowance as prior period expenses - AO made the disallowance by relying upon the order passed in the preceding years in the Assessee s own case - CIT(A) had deleted the addition of the preceding years by relying on the decision of the Tribunal in Assessee s own case [ 2014 (11) TMI 1174 - ITAT DELHI] - HELD THAT:- No justification to interfere with the order of the Ld.CIT(A). Accordingly, the Ground No. 2 of the Department is dismissed.
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Customs
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2023 (5) TMI 1168
Seeking direction to the Respondent No. 1-Directorate of Revenue Intelligence (DRI) and its officers to permit the presence of his Advocate during the interrogation and recording of statements at visible but not audible distance - seeking permission to record his voluntary statement in his own handwriting - HELD THAT:- The Calcutta High Court in the case of ENFORCEMENT DIRECTORATE VERSUS PARTHA CHATTERJEE [ 2022 (7) TMI 1412 - CALCUTTA HIGH COURT] , followed the decision of the Delhi High Court in the case of DIRECTORATE OF ENFORCEMENT VERSUS SATYENDAR KUMAR JAIN [ 2022 (6) TMI 382 - DELHI HIGH COURT] and held that the allegation against the E.D. that the Advocate of the accused was not allowed to be present at the time of raid is found to be false and the order permitting the presence of lawyer was set aside. The decisions of the other High Courts have taken a view that the presence of lawyer cannot be insisted as a matter of right. However, the decisions have a persuasive value and is not binding upon this Court. The decision of the Apex Court in the case of V VIJAY SAJNANI ANR. VERSUS UNION OF INDIA ANR. [ 2012 (4) TMI 706 - SUPREME COURT] as well as the decision of Coordinate Benches of this Court, are binding which have permitted the presence of a lawyer at visible but not audible distance. Thus, the direction which has been sought by the Petitioner as regards the presence of the lawyer at visible but not audible distance is an aspect of fair investigation and we do not find any reason to take a different view from the view taken by the Coordinate Benches of this Court - petition allowed.
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2023 (5) TMI 1167
Maintainability of revenue s appeal - time limitation - Refund of 4% additional duty of customs paid - review order as required under Sub Section (2) of Section 129D of Customs Act, 1962 has been passed by the Reviewing Authority beyond the period of three months as envisaged under Sub Section (3) of Section 129D of Customs Act, 1962 - HELD THAT:- Similar appeals had come up for hearing before the Tribunal wherein the Commissioner (Appeals) had dismissed appeals filed by Department on the ground of being time barred. In those cases also it was urged by the Department that the seal impressed on the Order-in-Original by the Reviewing Cell would establish that the order was received by the Reviewing Authority on a much later date. The Tribunal after considering the submissions made by the learned AR and perusing the records observed that there was no reason to disbelieve, the observation made by the Commissioner (Appeals) that there was no evidence available before him as to the date on which the Reviewing Authority received the order - Reliance can be placed in the case of COMMISSIONER OF CUSTOMS (EXPORTS) , CHENNAI VERSUS M/S. VCR TIMBER ENTERPRISES AND M/S. MEHNDIPUR BALAJI IMPEX (P) LTD. [ 2023 (3) TMI 1082 - CESTAT CHENNAI ] where it was held that It is opined that the seal seen affixed on the photo copy of the Orders-in-Original found in the annexure to the appeal filed by the department, purporting to show the date of receipt of the order in the review section, to be suspect - the strong inference that can be drawn is that there was no evidence available to establish as to the date on which the order-in-original was received by the Review Cell and apparently there was a delay in passing the review order. In some appeals there is no seal affixed on the Order-in-Original but it is merely stated in the grounds of appeal that the order was received by the Reviewing Authority on a much later date. The Tribunal in a similar matter in COMMISSIONER OF CUSTOMS (EXPORTS) , CHENNAI VERSUS M/S. NAGAPPA EXPORTS, M/S. AMARA RAJA BATTERIES LTD. AND M/S. NORITSU KOKI CO. LTD. [ 2023 (3) TMI 1216 - CESTAT CHENNAI ] has held that As there is no evidence to substantiate the contention of the Department that the Order-in-Original was received on such dates by the Review Cell and as there is no reason to dis-believe the findings of the Commissioner (Appeals) that there was no evidence as to the date on which Order-in-Original was received by the Reviewing Authority, the strong inference that can be drawn is that there is a delay in passing the review orders in these appeals. There are no ground to take a different view. The impugned orders passed by the Commissioner (Appeals) are sustained - appeal of Revenue dismissed.
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2023 (5) TMI 1166
Revocation of Customs Broker License - Forfeiture of Security deposit - levy of penalty - imputation and articles of charge, for breach of regulation 10, 11(a), 11(b), 11(d), 11(e), 11(m) and 11(n) of Customs Broker Licensing Regulations, 2013, in connection with the handling of 66 packages of readymade garments for export to Sudan and Nigeria - time-lines prescribed in Customs Brokers Licensing Regulations, 2013 had not been complied with or not - HELD THAT:- It would appear that the licensing authority has assumed that the order of the Hon ble High Court of Bombay in THE PRINCIPAL COMMISSIONER OF CUSTOMS (GENERAL) MUMBAI VERSUS UNISON CLEARING PVT. LTD., AND OTHERS [ 2018 (4) TMI 1053 - BOMBAY HIGH COURT ] had, in fact, shifted the commencement of time-lines and, thereby, precluded challenge to non-adherence thereof. This is far from a correct appreciation of the decision of the Hon ble High Court. It is also seen that the articles of charges against the appellant can be perceived as being in two spheres with one necessarily following from the other. The primary charge is that the appellant has been in breach of regulation 10 of Customs Broker Licensing Regulations, 2013 requiring the licence to be operated only by the licencee or his authorized person/employee which the inquiry authority, on the basis of certain facts and circumstances as well as statements of two persons said to be employees of M/s Millenium Freight Forwarders, concluded as having been sublet or otherwise transferred. The findings on the other charges, relating to obligations devolving upon customs brokers, held against the appellant herein is inevitable consequence of the finding on the primary charge. Accordingly, it would be appropriate to examine the sustaining of the primary charge and only proceed to look at the submissions in relation to other charges upon such being so. The impugned order has arraigned the appellant on the other charge of not knowing the customer upon the foundation that the licence had been sub-let to the two persons. It is alleged that the customs broker had granted access of the credentials, necessary for undertaking customs clearance, to persons not in their employment. The submission of customs broker, and not controverted in the impugned order, that access was provided only to privately sourced software used for compilation of data to be filed under ICEGATE strikes at the very root of the allegation of illicit grant of access. Hence, the conclusion that the appellant had not obtained authorization from the customer is a conclusion that may not sustain - Breach of regulation 11(d) and 11(e) of Customs Broker Licensing Regulations, 2013 has been alleged on the finding of export processing having been handled by M/s Millenium Freight Forwarders Pvt Ltd but their operation as possible intermediary between the appellant and the exporter is no ground to hold that the processes were carried out through a person other than themselves. Accordingly, the finding against the appellant on these two charges will not sustain. The findings, insofar as the alleged breach of regulation 11(m) of Customs Broker Licensing Regulations, 2013 by not verifying antecedents and correctness of the import-export code (IEC) and other details is concerned, is also based entirely on the role played by M/s Millenium Freight Forwarders Pvt Ltd as sub-let owner of the licence. It has been held that the two employees of the appellant were, in fact, employees of the M/s Millenium Freight Forwarders Pvt Ltd and, in view of the finding on the issue of subletting as well as the employment of the said two persons and in the light of the uncontroverted finding that the two employees have not dealt with the export consignment, it cannot be said that this Regulation had been breached by the appellant. Consequently, none of the charges stand proved against the appellant. It is also taken note of that the impugned order has chosen to examine certain other cases pertaining to allegations levelled against the present appellant which is not in conformity with Customs Broker Licensing Regulations, 2013; for a licensing authority to go beyond the articles of charge framed and to seize upon extraneous incidents, to the extent that the outcome of those proceedings remain unknown, is tantamount to extraneous influencing of the proceedings under Customs Broker Licensing Regulations, 2013 that does not behove appropriate discharge of responsibilities by the licensing authority. There are no reason for the continuation of revocation of the licence or forfeiture of the security deposit - the impugned order set aside - appeal allowed.
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Corporate Laws
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2023 (5) TMI 1165
Recovery of dues - direction to Recovery Officer, DRT, Bangalore to comply with the directions of the Hon'ble Division Bench - direction to R-3 to associate with the Official Liquidator to bring the properties for sale and then to take his portion of outstanding dues on the sale proceeds as per law or otherwise - seeking permission to Official Liquidator to engage the services of ITCOT for valuing the assets of the company in liquidation - conduct of sale through public auction by giving vide publicity in the newspapers - meeting out the expenses in connection with sale. HELD THAT:- It is relevant to mention herein that when the applicant Tungbhadra Sugar Works Limited, being a third party, was not impleaded as a party respondent in the proceedings before the Supreme Court, the applicant, giving reasons for the delay and also proving their ownership over the properties, filed applications for impleadment before the Supreme Court stating that they were ready to settle the dues of the workers, creditors and other statutory dues and that the management was taking necessary actions for revival of the company for the welfare of 947 workmen. Accepting their case that the applicant was a necessary party and was ready to settle the dues of the workmen, creditors and other statutory dues and the management was also taking necessary actions for revival of the company for the welfare of 947 workmen, the Supreme Court allowed the impleadment applications. In the meanwhile, the debts of Tapti Machines Private Limited were later assigned to MTitanium Apartments Private Limited vide the deed of assignment dated 06.01.2012. The motto of justice is to resolve the dispute and give a quietus to the problem once and for all. In the case on hand, when the Official Liquidator was appointed by the Court to resolve the disputes of the secured creditors, borrowers, workmen and the other creditors, peculiarly, the disputes between the creditors and the borrowers have been resolved. Evidently the borrower, having accepted the settlement, has given their acceptance in writing that there is no dispute pending between them. Secondly, the evidence with regard to the settlement of disputes of the workmen also has been enclosed showing that the claims and the dues payable to the workmen also have been settled and the workmen have also reached a settlement before the Assistant Labour Commissioner, Mangalore. But the only objection raised by the Official Liquidator shows that these settlements have not been effected through him. It is true that the Official Liquidator has been appointed to resolve the disputes. It may be restated that when Tungbhadra Sugar Works Limited addressed a letter to the State Bank of Mysore for creation of mortgage by deposit of title deeds in respect of the loans of Deve Sugars Limited, the applicant has confirmed that even after the execution of the agreement dated 15.01.1994, the execution of the conveyance deeds for transfer of properties in favour of Deve Sugars Limited have not been completed yet. In the meanwhile, since the agreement for transfer dated 15.01.1994 was cancelled on 30.09.1998, the rights and liabilities sought to be created by the sale agreement have become non est in the eye of law. The following directions are thus issued:- (i) The applicant, Tungbhadra Sugar Works Limited has settled the debts of Deve Sugars Limited, the company in liquidation to the Pegasus Assets Reconstruction Private Limited and on receipt of the entire moneys, they have also returned the title deeds of the properties. (ii) Since the charge against the company has been completely lifted, the applicant, Tungbhadra Sugar Works Limited is entitled to the possession of the land including the plant and machinery morefully described in the Schedule to the Judge's summons. (iii) The first respondent, Official Liquidator is, accordingly, directed to handover the possession of the land, building, plant and machinery morefully described in the Schedule to the Judge's summons to the applicant, Tungbhadra Sugar Works Limited. Consequently, an injunction order is granted restraining the first respondent from in any manner interfering with the right of enjoyment of the applicant to the schedule mentioned properties. (iv) Since the workmen's dues have also been settled by the applicant, as indicated above, the first respondent is hereby directed to pay the arrears of rent of the warehouse, after deducting the security expenses incurred for maintaining the properties, including the balance funds available, to the applicant within a period of four weeks from the date of receipt of a copy of this order. Application allowed.
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2023 (5) TMI 1164
Requirement of maintenance of books of accounts - respondent can call upon the petitioner to provide the books of accounts for the period beyond the period of eight years or not (for financial years 2010-11 and 2011-12) - Section 128(5) of the Companies Act - HELD THAT:- The learned SPP for the CBI has now taken a plea per proviso to sub- Section 5 Section 128 of the Companies Act they have the power to ask the petitioner to provide the books of account prior to the period mentioned in sub-section. However, a bare perusal of the proviso would show it requires a direction by the Central Government to the company to keep the books of account for a longer period as it may deem fit. Admittedly, no such direction was ever passed per proviso to Section 128(5) of the Companies Act. The petition stands allowed in terms of prayer a of the petition on the plea the petitioner does not have any books of account beyond the period of eight years viz. for the financial year 2010-11 and 2011-12. The respondent is at liberty to take further action in accordance with law, since the investigation is still going on. The petitioner shall continue to cooperate in the investigation.
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2023 (5) TMI 1163
Oppression and mismanagement - Consent Terms provided for acquisition of the entire shareholding - strict compliance with non-compete obligations. It is contended that Consent Terms are in the nature of compromise decree and NCLT has jurisdiction to execute the Consent Terms under section 424 of the Companies Act, 2013, but before execution and passing of the Impugned Order, it should have looked into alleged breach of the non-compete obligations under the Consent Terms, should have adjudicated upon. HELD THAT:- As provided in clause 4, a sum of Rs.2,23,00,000 is to be paid on the final execution of the Consent Terms immediacy and the balance Rs. five crores was to be paid in five equal instalments of Rs. one crore each on various dates between 30.4.2019 and 31.8.2019 respectively. It is also clear that the payment of Rs.7.23 crores against gratuity, salary, non-compete compensation and amicable settlement compensation are to be paid independent of the payment towards shares held by Mukund Muley and his wife Arati Muley entailing in consequent to the payments by the Appellants to them. Clause 7 of the Consent Terms provide that in the event there is any default by any party, the Consent Terms will cease to be binding on the non-defaulting party, but without prejudice to this condition, in case of breach of non-compete obligation by the Respondents (R-1 and R-2), R-1 and R-2 shall be liable to return the amounts paid towards non-compete compensation and amicable settlement compensation. Thus, it is clear that the non-compete obligation and related compensation has been given a special position in the Consent Terms, and significant amount has been provided to be paid to R-1 in compliance of the non-compete obligation. NCLT is bound by law to execute its order/decree if called upon to do so, and that it has the power to execute an order under section 424(3) of the Companies Act, 2013. Further, as has been held in the judgment in the matter of M/s. Greisheim GmbH vs. Goyal MG Gases Pvt. Ltd. [ 2022 (1) TMI 1312 - SUPREME COURT ] a litigant is entitled to receive the fruits of decree, which in the present case is amount of Rs. 28.77 crores against sale/transfer of their shareholding by the Respondents in addition to certain other payments. It, therefore, becomes abundantly clear that NCLT has not erred in taking action for execution of the Consent Terms which were taken on record and approved by the NCLT. The facts of the case make it clear that the company Cotmac took unilateral action for termination of Consent Terms after it alleged breach of non-compete obligation by R-1, but it did not approach the NCLT for clarification or definite decision on breach of terms and conditions of the Consent Terms as it was required to do. Such an action by the Company and the Appellants fall short of the clause 27 of the Consent Terms and therefore the breach of Consent Terms by R-1 and R-2 remained mere allegation by one of the parties - since the breach of Consent Terms were not established by the Appellants, as was required under clause 27 of the Consent Terms, the NCLT moved correctly by considering the Execution Application filed by the Respondents. In view of the fact that the Consent Terms were agreed to by the rival parties to ensure that the Company continues to function as a healthy, viable and active company, the issue of execution of the Consent Terms in entirety should also be looked at by the NCLT upon an application to be made by any of the parties to the Consent Terms - it would be just and proper that when the shares of A-2 and A-3 are sold by the Company pursuant to execution of Consent Terms, the first right of purchase of those shares are given to A-2 and A-3, so that the possibility of the Company falling in the hands of its competitors/rivals is obviated. This would be in keeping with the objective of the Consent Terms and would take care of the interests of the company. There is no error in the Impugned Order of the NCLT, and the Impugned Order is maintained with the following clarification/direction: (i) Only such number of shares out of the attached shares of A-2 and A-3 shall be sold by which the requisite amount of Rs.28,77,51,750 plus interest @ 10% p.a. for the period of delay in payment, keeping in mind the date/schedule of various instalments payments included in the Consent Terms is realized and paid to R-1 and R-2. The remaining shares shall be released to remain in the ownership of A-2 and A-3. (ii) In para 12 of the Impugned Order, the NCLT has kept the issue of enforcement of other prayers made in the Execution Application open and still to be adjudicated upon. It may endeavour to do so as early as possible. Appeal dismissed.
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Securities / SEBI
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2023 (5) TMI 1162
Condonation of delay - inordinate delay in approaching the Tribunal - As decided by SAT there is an inordinate delay in approaching the Tribunal with no adequate reason to condone the delay at this belated stage - HELD THAT:- We find no error in the order of the Securities Appellant Tribunal, Mumbai. Appeal is accordingly dismissed. Pending application, if any, stands disposed of.
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Insolvency & Bankruptcy
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2023 (5) TMI 1161
Grant of anticipatory bail - recovery under Section 66 of IBC against the persons who, prima facie, appear to be primarily responsible for the fraudulent affairs of the corporate debtors - HELD THAT:- In the name of seeking a clarification, the endeavor of the applicant herein is to indirectly get over with the judgment and order dated 18.01.2023 in WP(C) (PIL) 04 of 2023 passed by Tripura High Court in [ 2023 (1) TMI 921 - TRIPURA HIGH COURT] . Such an endeavor, in the guise of a clarification, cannot be permitted. The Tripura High Court has rightly relied upon the observations made by this Court in a binding precedent, in Usha Ananthasubramanian Vs. Union of India [ 2020 (2) TMI 1081 - SUPREME COURT] , which pertains to a matter under Section 339(1) of the Companies Act, 2013 which is pari materia with Section 66 of IBC. The High Court in the case of Sudipa Nath [ 2023 (1) TMI 921 - TRIPURA HIGH COURT] has rightly observed that an application under Section 66(1) by the resolution professional would not bar any civil action in accordance with law, either at the instance of resolution professional or liquidator or by the corporate debtor in its new avatar on a successful CIRP for recovery of any dues payable to the corporate debtor by such organization / legal entities. Such legal action is independent of Section 66(1). It is for the Resolution Professional or the successful resolution applicant, as the case may be, to take such civil remedies against third party, for recovery of dues payable to corporate debtor, which may be available in law. The remedy against third party, however, is not available under Section 66 of IBC, and the civil remedies which may be available in law, are independent of the said Section. The application for clarification is wholly misconceived and, accordingly, stands dismissed.
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2023 (5) TMI 1160
Operational Debt or not - advance payment paid by the Operational Creditor and not refunded by the Corporate Debtor - falls within the scope of Operational Creditor or not - NCLT held that the alleged debt is not an Operational Debt as defined u/s 5(21) of IBC, 2016 - HELD THAT:- The National Company Law Appellate Tribunal [NCLAT] has reversed the above decision while relying upon the decision of this Court in Consolidated Construction Consortium Limited vs Hitro Energy Solutions Private Limited [ 2022 (2) TMI 254 - SUPREME COURT] , where it has been held that Section 5(21) has to be interpreted in a broad and purposive manner in order to include all those who provide or receive operational services from the Corporate Debtor which ultimately leads to an operational debt. The NCLT in its original order had not considered the other defences that were raised by the applicant to the application under Section 9 of the IBC. Hence, on remand, all the rights and contentions of the parties on the merits of the case are kept open to be urged before and decided by the NCLT. Application disposed off.
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2023 (5) TMI 1159
Disqualification of resolution applicant - wilful defaulter of bank - Rejection of Resolution Plan submitted by the Applicant - Appellant submits that on the day when Resolution Plan submitted by the Appellant came for consideration before the CoC, there was no declaration by Union Bank of India as willful defaulter - disqualification under Section 29A of I B Code - whether the Appellant was disqualified at the time when the Resolution Plan submitted by the Appellant came for consideration? - HELD THAT:- Appellant was not willful defaulter at the time he submitted the Resolution Plan and at the time his plan came for consideration, we cannot lose sight of the fact that by another order dated 20th January, 2022 in IN THE MATTER OF FANENDRA H. MUNOT LTD., WOOD PRESERVERS PRIVATE LIMITED VERSUS LB INDUSTRIES PRIVATE LIMITED [ 2022 (1) TMI 1370 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI] filed by the RP seeking liquidation, Adjudicating Authority has passed an order on 20th January, 2022 which has been brought on record at page 393 of the Appeal paper Book by the Appellant himself. The order dated 20.01.2022 having not been challenged has attained finality. The Corporate Debtor is in the Liquidation and Liquidation Process has commenced subsequent to the Order dated 20th January, 2022. Liquidation Process having commenced there is no occasion for issuing any direction for consideration of the Resolution Plan of the Appellant. It is also relevant to notice that according to the Regulation 2B, compromise or arrangement proposed under Section 230 has to be completed within 90 days of order of liquidation. But we having by this order held that order of identification committee declaring the promoters/directors as willful defaulter is not in operation which we have found by order of the date, ends of justice will be served if 90 days period is allowed to the Appellant to submit a compromise or arrangement to the Liquidator. The order of the Adjudicating Authority dated 20th January, 2022 upholding the decision of CoC declaring the Appellant as ineligible to submit a Resolution Plan under Section 29A is set aside. It is held that Appellant was eligible to submit a plan on the date of its submission as well as on the date it came up for consideration - Appeal disposed off.
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PMLA
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2023 (5) TMI 1158
Presence of Advocate during Enquiry/interrogation as a matter of right - petitioner submits that as of now the investigation has been completed and the prosecution complaint has also been filed - HELD THAT:- In view of the fact that the investigation has already completed and the respondent has chosen not to come forward to contest the same. There is no impediment in confirming the order in DIRECTORATE OF ENFORCEMENT VERSUS SATYENDAR KUMAR JAIN [ 2022 (6) TMI 382 - DELHI HIGH COURT] granting permission that during the time of enquiry/interrogation from the accused, one Advocate of the accused shall be allowed to remain present at a safe distance where from where he can see the accused but not hear him . The petition is allowed in terms of order in DIRECTORATE OF ENFORCEMENT VERSUS SATYENDAR KUMAR JAIN [ 2022 (6) TMI 382 - DELHI HIGH COURT] .
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2023 (5) TMI 1157
Seeking enlargement on bail - Money Laundering - scheduled offences - discrepancies including diversion of APSSDC funds through various shell companies - requirement under Section 45 (1) of the PMLA for grant of bail, fulfilled or not - HELD THAT:- In an identical case in SANJAY RAGHUNATH AGARWAL VERSUS THE DIRECTORATE OF ENFORCEMENT [ 2023 (4) TMI 874 - SUPREME COURT] , lodging of the prosecution complaint is sequel to the registration of the FIR in the predicate offence way back in the year 2021. In the present case on hand also, no charge sheet has been filed in the predicate offence for the last more than 15 months. The petitioner herein is also a Chartered Accountant by profession and has been in jail from 04.03.2023. It is the first offence insofar as the petitioner is concerned. There are no other complaints registered as against him. The said argument gives room to say that second condition in clause (2) of sub-section (1) of Section 45 of the PMLA would be satisfied. In the aforesaid circumstances, continued incarceration of the petitioner is not justified. In respect of a query raised by the investigating agency, the petitioner herein gave response to each and every question that has been asked for. Prosecution complaint was also filed on 01.05.2023. The petitioner was arrested on 04.03.2023 and since then he is in judicial custody. Time and again, petitioner is continuously attending before the investigating agency and co-operating with the investigation. This Court is of the opinion that it is not necessary to detain the petitioner in jail further. In view of the aforesaid facts and circumstances, this Court feels that request of the petitioner for grant of bail can be considered, however, on certain conditions. The petitioner shall be enlarged on bail on his executing a personal bond for a sum of Rs. 50,000/- with two sureties each for the like sum to the satisfaction of the I Additional Sessions Judge-cum- Metropolitan Sessions Judge, Visakhapatnam - petition allowed.
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2023 (5) TMI 1156
Money Laundering/Conspiracy - proceeds of crime - scheduled offences - forgery, manipulation of Government records, preparing back dated orders so that compensation may be granted at a much higher rate showing land as 'Non-Agricultural' - causing loss to Government Treasury - joint trial - HELD THAT:- In the case of STATE OF JHARKHAND THROUGH SP, CBI VERSUS LALU PRASAD @ LALU PRASAD YADAV, SAJAL CHAKRABORTY AND DR. JAGANNATH MISHRA [ 2017 (5) TMI 490 - SUPREME COURT ], the Hon ble Supreme Court discussed the aspect of joint trial. In such huge cases, there may be a conspiracy, conspiracy separate and interlinked. The Hon ble Supreme Court held that When several offences are alleged to have been committed by several accused persons this Court has laid down that normal rule is of separate trials. It is clear from the impugned order dated 28.04.2022 that it was passed when the petitioners were not before the Court. Undoubtedly, an accused has no right to be heard before taking cognizance. The petitioners could not have been heard at that stage. The finding with regard to the separate trials, as recorded, in the order 28.04.2022 is definitely a tentative finding. It has been recorded at a pre-cognizance stage. Now, separate complaints have been filed against the petitioners. If petitioners are so advised, they may definitely move an application before the court for joinder of charges or a joint trial. In the eventuality of such application having been filed, the court would have an advantage of having views of the petitioners also and thereafter, such an application could be decided. Any conclusion recorded by this court, on this aspect, at this stage may prejudice the rights of the petitioners to move such an application for joinder of charge/trial before the court concerned. Therefore, the Court refrains from recording any conclusion on it. This Court is of the view that the court had acted within its jurisdiction while passing the order dated 28.04.2022, in the case. It is in accordance with law. The question as to whether all the subsequent seven complaints may be jointly tried or not is still open. In case, an application for joint trial is filed in any of the subsequent seven complaints, the court would definitely decide such application in accordance with law. Therefore, the impugned order dated 28.04.2022 does not warrant any interference. Enhancement of compensation - HELD THAT:- A bare perusal of Section 3C of the NH Act, in fact, makes it clear that at this stage objections to the use of land for the purpose or purposes mentioned under Section 3A (1) of the NH Act are entertained. It means that any person can object that for the purpose or purposes as mentioned in Notification under Section 3A(1) of the NH Act, land cannot be acquired. It apparently does not relate to compensation part, which is a subsequent stage - At the stage of Section 3D of the NH Act the objections raised under Section 3C are considered and final notification is made. The determination of compensation is done under Section 3G of the NH Act. At that stage, the competent authority would give a public notice in the newspapers inviting claims from all persons interested in the land to be acquired. Section 3G (7) of the NH Act is quite wide. It empowers the competent authority as well as the arbitrator to determine the compensation by assessing market value, etc. In the case of NATIONAL HIGHWAYS AUTHORITY OF INDIA VERSUS SRI P. NAGARAJU @ CHELUVAIAH ANR [ 2022 (7) TMI 1413 - SUPREME COURT] , the Hon ble Supreme Court has held that for the purposes of determination of compensation under the NH Act, the provisions of the RFCTLARR Act, 2013 would also apply. Cognizance of an offence is taken and thereafter, summoning is done, if there is prima facie case made out against the person to be summoned. The words prima facie case as such have not been defined under any provision of the Code. At different stages of a criminal case, the level of satisfaction is different. At the stage of summoning prima facie case is to be seen. At the stage of the framing of charge, the level of satisfaction is higher than it and, finally, at the stage of judgment, the level of satisfaction is proved beyond reasonable doubt . For Prima facie case , it has to be shown that some offence has been committed and there is material regarding grave involvement of the person to be summoned. In the case of Martin Burn Ltd. Vs. R.N. Bangerjee, [ 1957 (9) TMI 65 - SUPREME COURT] , the Hon ble Supreme Court in some other context discussed the concept of a prima facie case and observed that a prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed. While determining whether a prima facie case had been made out the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence. Having considered the material, cognizance has been taken and the petitioners and others have been summoned. This Court does not see any illegality in the summoning order. Therefore, there is no reason to interfere in the cognizance and summoning order dated 06.09.2022 passed in SST No. 14 of 2022. In the instant case, the petitioners Ramesh Kumar and Om Prakash are farmers. Their land was notified as Agricultural Land under Section 3D of the NH Act. They had never filed any objections either under Section 3C or 3G of the NH Act. Their role is given in paras 9.1 and 9.2 of the complaint respectively. The role of the petitioners Dinesh Pratap Singh, Arpan Kumar, Bhole Lal and Vikas Kumar is given in paras 9.4, 9.3, 9.5 and 9.7 of the complaint respectively. They all were revenue officers/official at the relevant time. Their role is identical to the acts attributed to them in other complaints. The averments as made in the complaint definitely make out a prima facie case against all these petitioners. The cognizance and summoning order passed on14.10.2022 is quite in detail. The court below has taken into consideration the material placed before it. Having considered the material, cognizance was taken and the petitioners and others have been summoned. This Court does not see any illegality in the summoning order. Therefore, there is no reason to interfere in the cognizance and summoning order dated 14.10.2022 passed in SST No. 17 of 2022. Petition dismissed.
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2023 (5) TMI 1155
Maintainability of petition - availability of alternative remedy of appeal - Validity of the provisional attachment order - Money Laundering - petitioner joined as a Clerk with the customs clearing agency - indulging in wrong practice of passing orders favourable to the importers of unaccompanied baggage on getting illegal gratification - petitioner has been afforded with the opportunity to defend his case or not - violation of principles of natural justice - HELD THAT:- Section 8 of the PMLA denotes adjudication and the procedure to be followed for adjudication under the Act. The learned counsel for the petitioner reiterated that if the property is claimed by a person other than the person to whom notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money laundering. As far as Clause 8(2) is concerned, the authorities are bound to give an opportunity to such persons to prove that the property has not been involved in money laundering. However, the authorities are of an opinion that no such enquiry is required in respect of the third parties. It is for them to take a decision to proceed with the adjudicatory process. It is for the person who is claiming the right over the property, has to establish that the property has not been involved in money laundering. In this regard, if any person is aggrieved, either they can approach the adjudicating authority or the appellate authority, as the case may be, under Section 26 of the PMLA. Therefore, the petitioner cannot claim that an opportunity must be afforded by the competent authority at the time of adjudication. Such an opportunity provided under the Act cannot be misconstrued for the purpose of claiming that the adjudicating authority should issue notice for such third parties for the purpose of completing the adjudicatory process. In the present case, if at all the petitioner possess any materials to establish that the property has not been involved in money laundering, then, he is at liberty to approach the appellate authority for the purpose of establishing his case. As far as the provisional attachment order dated 28.03.2017 is concerned, the authority under Section 5(1) of the PMLA has elaborately considered the facts and circumstances of the case and evidences available on record including the materials / documents - The authorities, after elaborate discussion, made a finding that he has a reason to believe that the case under PMLA is established and therefore, invoked the powers under Section 5(1) of the PMLA and issued the order of provisional attachment. The language applied under the Act is reason to believe , therefore, it is sufficient if the authorities form an opinion that the materials available on record are sufficient for the purpose of proceeding against the persons. In respect of the appellate remedy contemplated under the statutes and approaching the High Court under Article 226 before exhausting the remedy, this Court considered the principles in M/S. SRI SATHYA JEWELLERY, M/S. G.R. THANGAMALIGAI (FIRM) , M/S. SHREE VIGNESHKUMAR JEWELLERS, SHRI. N.S. CHENGALVARAYAN, PARTNER, M/S. SRI VASAVI GOLD BULLION PVT. LTD., SHRI. P. SEETHARAM (ERSTWHILE DIRECTOR) , M/S. ROYAL INDIA GEMS AND JEWELS PVT. LTD., SHRI K. UMAPATHY, CHAIRMAN, M/S. THANGAMAYIL JEWELLERY LIMITED, M/S. JAIPUR GEMS, M/S. INTERNATIONAL EXIM AGENCY, MR. A.M. MARIAPPAN, PROPRIETOR, SHRI. SANDEEP SURANA, FORMERLY EXECUTIVE DIRECTOR, M/S. G.R. THANGAMALIGAI SONS, SHRI G. RAJENDRAN, SHRI G.R. RADHAKRISHNAN, SHRI G.R. PADMANABHAN, SHRI. MITHUN SACHETI, M/S. STARFIRE GEMS PVT. LTD., M/S. SURANA CORPORATION LIMITED VERSUS THE PRINCIPAL COMMISSIONER OF CUSTOMS, CHENNAI, THE JOINT COMMISSIONER OF CUSTOMS [ 2021 (4) TMI 1210 - MADRAS HIGH COURT ] where it was held that The High Court cannot adjudicate the facts and merits with reference to documents and evidences. Trial is not entertainable under Article 226 of the Constitution of India. All such procedural aspects are to be followed by complete adjudication/trial by the original authorities as well as by the appellate authorities under the provisions of the Statute and the powers under Article 226 of the Constitution of India is limited to find out whether the processes contemplated under the Statutes and the procedural aspects are followed by the competent authorities as well as the appellate authorities or not. The High Court, under Article 226 of the Constitution of India, is not expected to usurp the powers of the appellate authorities by adjudicating the merits of the matter on certain documents and evidences. In the event of adjudication of merits under Article 226 of the Constitution of India in the absence of complete trial with reference to the documents and evidences, there is a possibility of miscarriage of justice, and therefore, the High Court is expected to be cautious, while entering into the venture of adjudication of certain merits with reference to the original documents and evidences produced by the respective parties to the lis. This being the legislative intention, High Court is expected to trust the institutional authorities as well as the hierarchy of institutions contemplated under the Statutes. The petitioner is at liberty to prefer an appeal before the appellate authority under Section 26 of the PMLA. In the event of preferring an appeal, the same shall be considered on merits and in accordance with law - Petition dismissed.
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Service Tax
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2023 (5) TMI 1154
Levy of Service tax - selling passenger cars and also provide free services to their customers during warranty period - cost of materials/spares reimbursed by M/s. TATA Motors - cost of spares and accessories reimbursed for free services provided during the warranty period has to be included in the taxable value or not. HELD THAT:- The department has relied upon Rule 5 (1) service tax (determination of value 2006) which reads wherein expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable services provided or to be provided and shall be included in the value for the purpose of charging service tax on the said notification . This Rule was under consideration before the Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] and it was held that reimbursable expenses cannot be included in the taxable value. The period involved is prior to the amendment of Section 67 of the Finance Act, 1994. The very same issue as to whether the cost of spares and material used for free services during warranty period has to be included in the taxable value or not was considered by the Tribunal in the case of ABT LTD. VERSUS CCE, COIMBATORE, CHANDRA AUTOMOBILE INDIA PVT. LTD. AND SREE SARADHAMBAL AUTOMOBILES P. LTD. [ 2018 (5) TMI 716 - CESTAT CHENNAI] and it was held that the cost of spare parts cannot be included for purposes of levy of service tax. Such demand of service tax is not justified and hence are set aside. The demand cannot sustain - Appeal allowed.
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2023 (5) TMI 1153
CENVAT Credit - rendering both taxable and exempted services and having not maintained separate accounts - providing the interconnection service, was also collecting interconnect usage charges (IUC), the tax on which was being remitted by the appellant only from 01.06.2007 - non-payment of service tax on interconnection service - period from April 2005 to May 2007 - extended period of limitation. Suppression of fact or not - providing interconnection service and receiving charges for the same - suppressed the fact of not maintaining separate accounts, as required under the statute. Whether the Revenue is justified in holding that the appellant had utilized the CENVAT Credit in excess of the 20% limit prescribed under Rule 6(3)(c) of the CENVAT Credit Rules, 2004 and whether the consequential demand for recovery of the alleged credit used in excess of 20% is justified? HELD THAT:- In the impugned order, the Adjudicating Authority has clearly admitted that Show Cause Notice No. 71/2008 dated 28.03.2008 was issued to M/s. Vodafone Essar South Limited, Chennai and Show Cause Notice No. 14/2010 dated 29.04.2010 was issued to M/s. Vodafone Essar Cellular Limited, Coimbatore and it appears that the above Show Cause Notices were for the periods from September 2004 to March 2007 and April 2005 to May 2007 respectively. Further, he appears to have accepted the plea of the appellant in their reply to the Show Cause Notice No. 71/2008 that, in view of the clear provisions of Rule 6(5) ibid., they were entitled to avail and utilize the whole of the CENVAT Credit in respect of the specified services unless the same were used exclusively for providing exempted output service; that it is not the case of the Revenue that the appellant had used any of the specified services exclusively for providing exempted output service and that the restriction under Rule 6(3)(c) would not apply to services specified in Rule 6(5) ibid. It is clear from the findings of the Learned Commissioner that he has held that the ceiling of 20% under Rule 6(3)(c) is not applicable to capital goods and 17 input services specified under Rule 6(5). The Bench has also considered the Board Circular No. 137/203/2007-CX-4 dated 01.10.2007 to hold that ceiling of 20% of the service tax payable on utilization of credit for payment of service tax, as prescribed in Rule 6(3)(c) has to be compared not with total credit utilization, but with the utilization of credit, other than capital goods credit and service tax credit in respect of the 17 input services mentioned in Rule 6(5) . That is to say, all the credit pertaining to input services under Rule 6(5) and capital goods credit, should be permitted to be utilized; the restriction is only in respect of the input services credit not falling under Rule 6(5) and inputs. In the impugned order, the Learned Commissioner however, denies the above benefit to the appellant by holding that the appellant did not provide any evidence or supporting documents to prove their claim - the above conclusion cannot be agreed upon for the reason that the same set of documents, apparently, were relied upon and the Learned Commissioner has also nowhere denied the fact that the eligibility to utilize the whole of CENVAT Credit could not be denied in respect of the specified services unless the same were exclusively used for providing exempted output service and nor is it the case of the Department that the restriction under Rule 6(3)(c) would not apply to the services specified in Rule 6(5). Extended period of limitation - HELD THAT:- The fact remains that other than alleging wilful suppression of facts, the Revenue has not adduced any documentary evidence in support of its allegation to justify the same - in the very same order in IDEA CELLULAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, ROHTAK [ 2009 (2) TMI 91 - CESTAT NEW DELHI] , the Learned Principal Bench has, following the ratios of the Hon ble Supreme Court, held that something positive rather than mere inaction or failure on the part of an assessee has to be proved before invoking the extended period of limitation, though the Learned Bench has sustained the demand therein for the normal period - The same ratio applies to this case also. The demand as well as the impugned order, to the extent it is appealed, cannot sustain, either on merits or on limitation and hence, the same is set aside - Appeal allowed.
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2023 (5) TMI 1152
Condonation of delay in filing appeal - sufficient explanation for delay provided or not - appeal dismissed only for the reason that it was filed beyond the statutory time period contemplated under section 85 of the Finance Act, 1994 - HELD THAT:- A perusal of sub-section (1) of Section 85 shows that any person aggrieved by any decision or order passed by the Adjudicating Authority, may file an appeal to the Commissioner of Central Excise (Appeals). Sub-section (3A) of section 85 provided that the appeal shall be presented within two months from the date of receipt of the order of such Adjudicating Authority but the proviso provides that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month. In the instant case, the Commissioner (Appeals) has found that the appeal that was filed on February 11, 2019 was not only filed beyond the period of two months from the order dated January 16, 2018 but was even beyond the extended period of one month and so dismissed the appeal for the reason that there was no power to condone any delay beyond one month after the expiry of one month - The Commissioner (Appeals), however, as is clear from the order dated July 22, 2019, observed the appellant had not submitted any explanation for delay in receipt of the order. Once the appellant had indicated in ST-IV form that the order was received by the appellant only on December 21, 2018, then it was for the Department to have controverted that the order had been received by the appellant earlier to this date and an explanation for the delay should not have been expected from the appellant. Thus, as the order was actually served upon the appellant only on December 21, 2018 and the appeal was filed on February 11, 2019 which would be within two months from the date of receipt of the order, the dismissal of the appeal by the Commissioner (Appeals) only for the reason that it was filed beyond the statutory period prescribed under sub-section (3A) of section 85 of the Finance Act deserves to be set aside. The impugned order dated July 22, 2019 is, accordingly, set aside and the matter is remitted to the Commissioner (Appeals) to decide the appeal on merits - appeal allowed.
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2023 (5) TMI 1151
CENVAT Credit - common input services used in providing taxable services and exempted services - non-maintenance of separate record for the Cenvat credit availed as per Rule 6(2) of the Cenvat Credit Rules, 2004 - non-payment of amount as provided under Rule 6(3) ibid - whether the adjudicating authority was correct in holding that once the credit availed on common inputs /service is reversed, the appellants are not required to reverse the amount as contemplated under Rule6(3A)(ii) of the said Rules? HELD THAT:- Adjudicating authority has recorded a finding that there are plethora of decisions of various appellate forums wherein it was consistently held that when the entire Cenvat credit stands reversed, it is as good as not availing the credit. The learned Commissioner has relied upon the decision of High Court in the COMMISSIONER OF C. EX., BANGALORE-III VERSUS HIMALAYA DRUG COMPANY [ 2011 (2) TMI 1165 - KARNATAKA HIGH COURT] ; COMMISSIONER OF CENTRAL EXCISE VERSUS ASHIMA DYECOT LTD. [ 2008 (9) TMI 87 - HIGH COURT GUJARAT] upheld by the Supreme Court in COMMISSIONER VERSUS ASHIMA DYECOT LTD. [ 2009 (3) TMI 975 - SC ORDER] ; COMMISSIONER OF CENTRAL EXCISE VERSUS ASHIMA DYECOT LTD. [ 2008 (9) TMI 87 - HIGH COURT GUJARAT] ; HELLO MINERALS WATER (P) LTD. VERSUS UNION OF INDIA [ 2004 (7) TMI 98 - ALLAHABAD HIGH COURT] and some decisions of the Tribunal. The issue is no longer res integra. In the instant case, the appellants have reversed the entire credit availed by them on common inputs and to this extent the case law of LALLY AUTOMOBILES PVT. LTD. VERSUS COMMISSIONER (ADJUDICATION) , CENTRAL EXCISE [ 2018 (7) TMI 1679 - DELHI HIGH COURT] relied upon by the authorised representative is not applicable to the facts of the case as the issue decided in Lally Automobiles Pvt. Ltd. was about reversal of proportional credit and requirement of arriving at the amount to be reversed and on reasonable and logical principles. No case has been made out by Revenue for setting aside the impugned order - impugned order does not suffer from any infirmity and so appeal filed by the Revenue is dismissed.
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2023 (5) TMI 1150
Modification in the quantum of penalty - Exemption from service tax in respect of value of goods and materials sold by the service provider while providing the service - benefit of N/N. 12/2003-ST dated 20.06.2003 - Maximum penalty of Rs.2,74,400/- in terms of Section 77 (1) (a) of the Finance Act, 1994 - failure to take registration - invocation of extended period of limitation. Whether the appellant has been rightly denied the benefit of Notification No. 12/2003-ST dated 20.06.2003, which provide for exemption from service tax in respect of value of goods and materials sold by the service provider while providing the service? - HELD THAT:- The lower adjudicating authority has held that the appellant has not produced any evidence regarding consumables or spare parts used while providing the AMC service to its customers and the service provider has charged service tax on the gross amount received for the AMC and 4C Bills raised upto April, 2009 and adopted the method of artificially splitting the AMC charges from 20.04.2009 onwards in the ratio of 75% to supply portion and 25% of AMC charges to service portion to avail the benefit of exemption from service tax in respect of value of goods and material sold by the service provider to the recipient of service. Under the Notification No. 12/2003-ST dated 20.06.2003, the appellant is required to provide documentary proof specifically indicating the value of the said goods and materials used in providing the service. The appellant is engaged not only in providing AMC services but also in selling computers, printers and peripherals. In the absence of any documentary evidence of value of consumables and other materials used co-relating to AMC services, the benefit of notification is rightly denied to the appellant. Maximum penalty of Rs.2,74,400/- in terms of Section 77 (1) (a) of the Finance Act, 1994 - Whether the penalty imposed at the maximum of Rs. 200/- for every day during which the failure to take registration continued amounting to Rs. 2,74,400/- is justified in the facts of this case? - HELD THAT:- Though imposition of penalty and the amount computed is absolutely legal, a lenient view can be taken in view of the amendments carried out to this Section in Finance Act, 2013, providing for imposition of penalty of Rs.10,000/- at the maximum. The ends of justice will be adequately met considering all the facts in this appeal if the penalty imposed under 77(1) (a) of the Finance Act, 1994 is limited to Rs. 10,000/-. So, modification of the penalty to Rs. 10,000/- ordered, considering the fact that the appellant has obtained necessary service tax registration on 08.04.2009. Whether the extended period is rightly invoked in the background of the facts obtained in this appeal? - HELD THAT:- The appellant has collected service tax without registration and without filing ST-3 returns and failed to credit the same into the Government account. As such, the extended period is rightly invoked for demand of service tax and also for imposition of penalties in this case. The impugned order does not call for any interference and so the appeal is rejected but for modification of the penalty imposed under Section 77(1)(a) of Chapter I of the Finance Act, 1994 to Rs. 10,000/-.
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Central Excise
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2023 (5) TMI 1149
Exemption benefit - excisability of waste generated during the preparation of final product namely Rice Bran Oil Product - denial of exemption Notification No. 89/95-CE dated 18.05.1995 - HELD THAT:- It is found that for a different period, Appellant s appeal was allowed by this Tribunal in extending benefit of exemption under Notification No. 89/95-CE and holding that the same would apply to the waste namely Gums Recovered Oil etc. The same issue is also settled in the case of M/s. Ricela Health Foods Ltd [ 2018 (2) TMI 1395 - CESTAT NEW DELHI ] by the Larger Bench of this Tribunal - Further the issue has attended finality by rejection of appeal in the case of COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I VERSUS MARICO LTD. [ 2022 (10) TMI 1174 - SC ORDER] by the Hon ble Supreme Court in confirming the order passed by this Tribunal permitting exemption of products like Fatty Acids, Wax and Gum arising in the course of manufacture of refined vegetable oil, as those are waste and not manufactured products and allowing availment of Notification No. 89/95-CE, by way of dismissal of appeal of the Commissioner of Central Excise, Chandigarh-I. The orders passed by the Commissioner of Customs Central Excise (Appeals), Nagpur are hereby set aside - appeals allowed.
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2023 (5) TMI 1148
Short payment of Central Excise duty - allegation of undervaluation of liquid hair dye - SCN alleged that the appellants incorrectly claimed higher abatement of excise duty of 105% (duty payable for goods classifiable under Tariff Item 14F) instead abatement of excise duty 8% or 10% (duty payable for goods classifiable under Tariff Item 68) which has been actually paid by them - recovery of differential duty alleged to be short levied along with Interest and penalty - HELD THAT:- The order determining the classification was challenged by the Appellant before the Hon ble Bombay High Court [ 2002 (9) TMI 128 - HIGH COURT OF JUDICATURE AT BOMBAY ], where the issued was determined in favour of revenue. This order was challenged by the appellant before the Hon ble Supreme Court [ 2008 (7) TMI 12 - SUPREME COURT ], and Hon ble Supreme Court decided the issue in favour of appellant, i.e classification of liquid hair dye was held under TI 68. In the present case there is an specific letter dated 14th September 1982 of the Superintendent, informing the appellant that the assessment are to be made provisional and directing them to execute bond etc as required under law. In view of the observations made by the larger bench of tribunal the demands for duty or refunds can be effected only after finalization of the assessment. Thus the show cause notice dated 07.10.1988 was pre-mature and demand made under Section 11A in terms of the said show cause notice is pre-mature. Appellants as observed by the impugned order do not dispute that differential duty is payable by them hence we do not go into the issues relating to the demand/ quantification of duty paid by the appellant even under protest. The show cause notice issued without finalization of the assessment is pre-mature, so the demand made in terms of Section 11A of the Central Excise Act,1944 cannot be sustained and the amounts should have been recovered from the appellants by finalization of the provisional assessment. Thus the authorities are directed to finalize the provisional assessments at the earliest and appropriate the amounts as required from the amounts deposited by the appellant under protest in these proceedings. Interest and penalties - HELD THAT:- As the demands made under the Section 11A are set aside, the demand for interest and penalties imposed also cannot be upheld - It is also observed that the during the period under dispute there was no provision for demanding the interest under the Central Excise Law. In case of provisional assessment the provisions to demand interest were first introduced in the w.e.f. 1.7.2001 in Rule 7(4) of the Central Excise (No. 2) Rules, 2001 which provides for imposition of interest consequent to order for final assessment under subrule. This Rule 7(4) being in the nature of delegated legislation cannot be retrospective as have been held in the decisions referred to by the learned counsel for appellant. The Board vide its Circular F. No. 354/66/2001-TRU dated 21.6.2001 clarified that Rule 7 relating to provisional assessment and for charging of interest, will apply to cases in which provisional assessment is resorted to on or after 1.7.2001 and not to past cases of provisional assessment even if the assessments are finalized on or after 1.7.2001. In view of the above the demand for interest as upheld by the impugned order cannot be sustained and is set aside - As the demand made under Section 11A is set aside so is the penalty imposed under Rule 173 Q of the erstwhile Central Excise Rules, 1944. Impugned order refers and relies upon the decision of Hon ble Bombay High Court in the appellants case which admittedly has been set aside by the Hon ble Supreme Court. The approach of the Commissioner (Appeal) by relying on the decision which has been set aside is not a fair judicial practice and cannot be approved. There are no merits in the impugned order and set aside the same - appeal allowed.
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CST, VAT & Sales Tax
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2023 (5) TMI 1147
Review of Order after gap of 13 years - delay can be condoned or not - right for cross-examination to the third party in reassessment proceedings - Seeking Refund alongwith Interest - HELD THAT:- In the facts of the present case, initial assessment order was passed wayback on 09.01.2001 (Annexure P-1). Thereafter, reassessment order was passed on 12.06.2002 (Annexure P-2) and a demand for Rs. 18,20,000/- was raised. Thereafter, appeal filed by the assessee before the Joint Excise and Taxation Commissioner (A), Hisar was dismissed vide order dated 19.12.2002 (Annexure P-3). However, the demand was reduced to Rs. 17,06,322/-. The said order was challenged by the petitioner whereby the Tribunal disposed of the appeal on 03.10.2012 (Annexure P-4) by observing that the assessee had a right for cross-examination to the third party in reassessment proceedings. However, the Tribunal did not remand back the matter to the Assessing Authority for reassessment vide order dated 03.10.2012 (Annexure P-4). For all intents and purposes, orders from 09.01.2001 (Annexure P-1) till the order dated 19.12.2002 (Annexure P-3) passed by Joint Excise and Taxation Commissioner (A), Hissar have attained finality. Even if the Department has filed application for modification of the order of the Tribunal dated 03.10.2012 (Annexure P-4) as reflected in the affidavit filed by the Excise and Taxation Commissioner dated 18.03.2020, the time taken from 03.10.2012 till 09.01.2020 (date of filing application) i.e. 8 years cannot be condoned as per Section 35 of the Act, 2003. There is a period of one year provided as per the Act, 2003 for seeking review of any order passed by the Tribunal. Hence, the time for getting the reassessment order reviewed has already elapsed and the reassessment order has already attained finality. The order of the Tribunal dated 03.10.2012 (Annexure P-4) cannot be reviewed after a gap of 8 years and as on today almost 13 years have gone by and even at this stage, application filed by the respondents for reviewing order dated 03.10.2012 (Annexure P-4) is still pending for adjudication - Moreover, Section 18 of HVAT Act is not attracted in the present case for deciding the remanded case in two years as the present case was not remanded back to the Assessing Authority. As per Section 35 of the Act, 2013, even review application is not maintainable and has to be dismissed on the ground of delay. The writ petition is allowed and direction is given to the respondents to refund an amount of Rs. 17,06,322/- pursuant to order dated 19.12.2002 (Annexure P-3) alongwith statutory interest as per law.
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2023 (5) TMI 1146
Cancellation of Exemption/Entitlement Certificate for discontinuance of business by the unit during the currency of Exemption Period - activities did not totally stopped in Delhi as there were still many suppliers - Rule 28A of HGST Rules, 1975 - HELD THAT:- It is not in dispute that the appellant was granted benefit of exemption from sales to the tune of Rs. 68,24,200/-for nine years, but, he availed the benefit of only Rs. 6,22,830/-, as the industry unit was closed down and he could not run the unit for next five years, as per the policy. Whether the circumstances were beyond the control of the appellant-Company? HELD THAT:- After going through order dated 09.11.2017, it appears that the authorities had accepted this fact that identical units in the area closed down due to the fact that the consumers of their product started their own units and thus, their market was lost. Further the earlier yarn units also started their own woven fabrics units and are in bad shape. The appellant was allowed exemption to compete in the market but he chose to close the business, after availing the benefit of exemption. Most of the suppliers of the appellant were in Delhi and it cannot be presumed that such activities totally stopped in Delhi. The demand of the product is much more. The reasons given by the appellant were held to be not beyond its control so as to be covered under the proviso to Rule 28A (11) of the HGST Rules, 1975. In Priti fan s case, the appellant-unit suffered due to the floods directly as well as indirectly due to over all loss of economic activity in the vast flood affected region in and around Rohtak. The appeal was allowed and it was held that the adverse effects of the floods cannot be underestimated which appeared to have delivered the final crushing blow to the viability of the Unit. It was opined that the Unit, tiny as it was since its inception, deserve the benefit of first proviso to Rule 28A (11B). In the facts of the present case, it is not in dispute that the appellant had availed the benefit of 6,22,830/- during the relevant period, he was granted the benefit of exemption from sales to the tune of Rs. 68, 24,000/- for a period of nine years. This fact in itself shows that there was loss in business, which were beyond the control of the appellant. The case of the appellant cannot be discarded on the ground that the company should increase the business and invest more money in production. It is not a case where the assessee had availed the benefit of exemption beyond Rs .68,24,000/-, which was granted to it. The writ petition is allowed.
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