Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 22, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST Council Decisions - GST on goods and services - Latest updates
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Lease of plots to NMMC for Indoor Recreation Centre - the plots are leased by the applicant (a kind of pure services), to a Municipality i.e. a local authority in relation to a function entrusted to such Municipality under Article 243W of the Constitution and would be exempt as per Sr. No. 3 of Notification No. 12/2017-CentraI Tax (Rate)
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Levy of GST - pure service - the leasing of land for construction of building for use as PMC Commissioner’s and PMC Mayor’s residences does not fall within the scope of Entry 2 of 12th Schedule to the Constitution of India relating to “Regulation of land-use and construction of buildings”
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PIL against the company organizing online Fantasy games - t can be seen that success in Dream 11’s fantasy sports depends upon user’s exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real world game on any particular day. It is undoubtedly a game of skill and not a game of chance.
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Pure services or not - The services for setting up fire lines, plantation of trees in forest, river maintenance in forest, clearing of truck path in forest are pure services that are clearly falling within the purview of the term “Protection of Environment 'Road' / 'Fire Services”' as covered in 12th Schedule under Article 243W of the Constitution.
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Mentioning of GSTIN and dispatch place in the E-way bills - supply of goods imported into India - invoice raised from Mumbai Office for imports received at Paradip Port, Odisha - can do the transaction on Mumbai Office GSTIN, and issue e-way bill Mentioning the GSTIN of Mumbai and Dispatch place as Paradip Port
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Requirement of separate registration for different states - raising of invoice from Mumbai Head Office for imports received at various ports, located in various states in India - place of supply of goods - applicant can clear the goods on the basis of invoices issued by the Mumbai Head Office at Mumbai on payment of IGST in the State of Maharashtra and therefore they need not take separate registration in other states
Income Tax
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Revision u/s 263 - applicability of provisions of section 56(2)(vii)(b)(ii) - purchase of shops on less than stamp valuation - record clearly reveal that the AO has completely failed to examine the applicability of section 56(2)(vii)(b)(ii) to the subject transactions - due to such failure assessment order not only erroneous but prejudicial to the interests of Revenue - revision upheld
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Exemption u/s 10(37) - impugned land was acquired by executing a sale deed in favour of Vizhinjam International Seaport - the entire procedure prescribed under the Land Acquisition Act was followed, only price was fixed upon a negotiated settlement - it is not disputed that impugned land is not an agricultural land - acquisition of the urban agricultural land was a compulsory acquisition - entitled to Exemption
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E-commerce business - Selling at a price lower than the cost price - unless certain provisions such as Section 145(3)are invoked, the AO is not empowered to go beyond the book results - there is no provision by which the Revenue can ignore the sale price declared and proceed to enhance the sale price without any material before him to show that the Assessee has in fact realized higher sale price - addition deleted
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Proceedings u/s 153A - addition of Unexplained cash credit U/s 68 - if there is no incriminating material to reassess the income of the assessee then the AO legally cannot make the addition based on the information and evidence received from the Inv.Wing - it is open to the AO to initiate the proceeding U/s 147/148 instead of making the addition in the proceeding U/s 153A
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TDS u/s 195 - on payment made to two non-residents regarding order procurement services - DTAA between India and USA/Belgium - Both the non-resident derived their income as their business activity and their business profit is determined under Article 7 respective DTAA - none of the provisions of the Section 9 will be applicable and business income cannot be treated as fees for technical services - No TDS
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Addition based on foreign HSBC bank accounts - information received from French Government under DTAA - no material or evidence to say that the assessee was connected with the bank accounts in question - addition is is based on the presumption that the assessee has routed the money sourced from India through the three entities into the bank accounts in question - presumption, howsoever, strong cannot substitute an evidence - no addition
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Unexplained cash credit u/s 68 - both CIT(A)and ITAT had found that assessee had discharged his burden of explaining the genuineness of the cash credits in his account by providing confirmation and the source of funds and certificate from the assessee's bank - in similar circumstances, AO and Settlement Commission accepted transactions during the previous years to be genuine - no question of law arises
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Rectification u/s 254 - allowability of deduction u/s 54B on investment prior to sale - decision on merits after analyzing and evaluation of the relevant facts and evidence of the case cannot be reconsidered in the proceedings U/s 254(2) - revenue is reiterating its stand taken by the AO while disallowing the claim of deduction U/s 54B - no apparent mistake on the face of the order
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Reassessment u/s 147 - fictitious F&O loss by manipulative client code modification - return was originally processed u/s 143(1) and notice u/s 148 was issued within four years - in DIT (Inv.) report the assessee was listed as one of beneficiaries - AO itself conducted enquiries prior to issuance of notice u/s 148 by issuing notice u/s 133(6) to Broker - AO also applied independent mind before reopening u/s 147
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Reassessment u/s 147 - existence of Settlement Commission order in the relevant AY - concluded assessment by Settlement Commission u/s 245D(4) can only be reopened in case of fraud or misrepresentation of facts, as per section 245D(6) - the assumption of jurisdiction u/s 147 is invalid and without authority of law irrespective of sufficient material for the AO to form the belief for escaped assessment
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Nature of expenditure - software installed in their computer system - finding of facts recorded/affirmed by ITAT/CIT(A) after examination of the terms and conditions of the license that the assessee acquired only a right to use the software and that there was no enduring benefit acquired on account of the license promoted by them on payment of annual fee -revenue expenditure - no substantial question of law arises
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Rectification of order of Settlement Commission(ITSC) - at the time of the passing of the original order, the petitioner was a registered entity u/s 12A and withdrawal of the approval accorded u/s 10 (23C) (v) & 10 (23A) (via), as a consequence of cancellation or withdrawal of the same; cannot have retrospective effect - rectification by ITSC is not correct
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Cancellation of registration u/s 12A - with retrospective effect - Section 12 AA(3) doesn’t suggest or in any way contemplate that the registration of the assessee may be cancelled with retrospective effect, hence the cancellation of registration can only be prospective
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Reassessment u/s 147 - in the assessments of the earlier years deduction u/s 80IB(10) had been allowed because the assessee was, otherwise, entitled to such deduction, cannot be reopened on ground that in subsequent year petitioner had sold flats to related persons - no reasonable person could have formed the belief that income chargeable to tax has escaped assessment - notice quashed
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Reassessment u/s 147 - difference in salary payment - Reasons recorded by the AO are based on incorrect facts in addition to the fact that the AO has scrutinised the details of salary expenditure during original assessment - respondent has adopted a pedantic robotic approach ignoring the objections in toto with only one object of rejecting the objections ignoring that salary register was of Navsari unit only - notice u/s 148 is quashed
Customs
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Suspension of CHA / CB License - no physical verification of the premises or address of the IEC holder is mandated in the CBLR regulation, nor it is a general requirement. Thus, there is no case made out against the appellant CHA, as alleged in the offence report or in the impugned order of suspension.
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Principles of natural justice - The order-in-original relies upon statements as evidence. The order does not record a finding that, any of the conditions specified u/s 138B(1) stands satisfied thereby making such statements relevant without cross-examination of such witness by the petitioner.
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Jurisdiction - invocation of provisions of Section 18 of the Customs Act - reclassifying the same product - notwithstanding the petitioners having a statutory alternative remedy by way of an appeal, the writ petition is maintainable, if the petitioners substantiate that, fundamental rights stand breached or that, the impugned order is without jurisdiction or was passed in breach of the principles of natural justice is non-speaking
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Validity of the notice issued u/s 28(1) of the Customs Act - collection of duty on loading, unloading and handling charges - proviso (ii) to sub-rule (2) of Rule 9 introduced vide Notification dated 5-7-1990 is unsustainable and bad in law as it exists in the present form
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Condonation of 484 days delay - no attempt even made to explain the delay from 13th June, 2017 when the Pr.Commissioner of Customs (CC) sought information of likelihood of success in appeal along with grounds of appeal till 5th September, 2018 when the file was again put up before the Pr. CC - inaction shows negligence on the part of the Revenue - delay not condoned
IBC
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Initiation of CIRP - there exists serious dispute pending in between the Operational Creditor and the Corporate Debtor about the amount of debt, which require proper adjudication - this application is not maintainable under Section 9(5)(II)(d) of I & B Code.
Service Tax
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Extended period of Limitation - The Government does not had intention to evade payment of duty, therefore, in the present case we hold that extended period of limitation is not invokable
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Refund of excess paid service tax - The rejection of refund claim only on the ground that the issue of Service Tax liability on notional interest is pending is not sustainable in law
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In order to avail the benefit of exemption notification, it was for the petitioner to establish that the petitioner fulfilled the conditions with regard to supply to the specified agency. Merely raising a contention that the petitioner was entitled to benefit of exemption notification, really does not suffice in such matters.
Central Excise
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Delayed adjudication of show cause notice - SCN issued in 2006 - adjudicated in 2018 - The Department has failed to put forth any justification or show any explanation for delay in adjudicating the show cause notice - in absence of any proper explanation thereof, it is unlawful and arbitrary - SCN cannot be sustained.
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Section 11AC is a penal provision. Once it is held to be prospective in nature, it becomes effective only from the date it was brought into force i.e. 28-9-1996. Therefore, no penalty for the period prior to this date can be imposed under this provision.
VAT
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Validity of assessment order - Without embarking upon the exercise of ascertaining whether the first respondent has applied his / her mind independent of the proposal given by the enforcement wing, suffice to say that nothing has been recorded in the impugned assessment orders to show that there is independent application of mind qua proposal given by enforcement wing.
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Input tax credit - KVAT Act - in the absence of any other allegations made against the purchasing dealer in the assessment orders, merely for the reason that selling dealers have not deposited the collected tax amount or some of the selling dealers have been subsequently deregistered cannot be a ground to deny the input tax credit.
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Deemed assessment - making an assessment with regard to an assessee by relying on details in the websites and web portals of other entities / individuals - order set aside and directed to pass assessment order afresh after new module becoming operative and shall be completed within a period of three months from the date of operation of new module
Case Laws:
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GST
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2019 (6) TMI 1013
Supply of services - Pure services or not - composite supply of goods and services - supply of providing labour services for setting up fire lines in forests to protect forest from catching fire which cause damages to forest, labour services for plantation of trees in forests, labour services for rill / river maintenance (rill bank protection by using rill stones), labour services of clearing the truck path in forests - exemption under N/N. 12/2017- Central Tax (Rate) dated 28-06-2017. HELD THAT:- As per the Serial Number 3A in the exemption Notification, composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government entity by way of any activity in relation to any function entrusted to a Panchayath under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution, is exempted from Goods and Services Tax vide Notification No.12/2017-Central Tax (Rate) dated 28-06-2017 as amended by Notification No.02/2018 Central Tax (Rate) dated 25-01-2018. The functions like construction of roads, fire services, urban forestry, protection of environment etc. come within the scope and ambit of Article 243W of the Constitution. The services for setting up fire lines, plantation of trees in forest, river maintenance in forest, clearing of truck path in forest are pure services that are clearly falling within the purview of the term Protection of Environment 'Road' / 'Fire Services ' as covered in 12 th Schedule under Article 243W of the Constitution. Therefore, these services are exempted as per Sl.No.3 of the Notification No.12/2017-CentraI Tax (Rate) dated 28-06-2017 (SRO.No.371/2017).
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2019 (6) TMI 1012
Scope of Advance Ruling - Levy of GST - Export of services or not - Supply of services by India Branch of M/s. SutherIand Mortgage Services Inc. USA to the customers located outside India - inter company agreement with M/s. Sutherland Mortgage Services Inc. USA - Place of supply - HELD THAT:- The entire issue is intrinsically related to determination of place of supply of service by the applicant. In this case the supplier of services is located in India and the recipient of the services is located outside India. As per Sec.13 of IGST Act, the liability to pay tax is dependent upon the place of supply . This authority has been constituted in exercise of the powers conferred by section 96 of the Kerala Goods and Services Tax Act, 2017, which Act extends to the whole of the state of Kerala. This authority is a creature of statute and has to function within the legal boundary mandated by the Act. As the place of supply is not covered by Section 97(2) of the Acts, this authority is helpless to answer the question raised in the application, as it is lacking jurisdiction to decide the issues. The jurisdiction of this authority does not extend to the questions on determination of place of supply .
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2019 (6) TMI 1011
Requirement of separate registration or not - invoice raised from Mumbai Office for imports received at Paradip Port, Odisha - Place of supply of goods - whether transaction can be done on Mumbai Office GSTIN - mentioning of GSTIN and dispatch place in the E-way biills - HELD THAT:- As per the provisions of Section 7(2) of the IGST Act, 2017, supply of goods imported into India shall be treated as supply of goods in the course of inter - state trade or commerce and as per Section 5(1) of the Act, liable to IGST at the point when duties of Customs are levied on the said goods under Section 12 of the Customs Act, 1962. In respect of goods imported into India, as per provisions of Section 11(a) of the IGST Act, 2017, the place of supply shall be the location of the importer - In the present case since the Importer registered in Mumbai, the place of supply will be Mumbai, Maharashtra. In the present case, the place of supply is the location of the importer who is situated in the State of Maharashtra and hence the applicant will be clearing the goods by paying IGST using GSTIN issued to them in Mumbai, Maharashtra. Since the applicant has no establishment or place of operation or any godown or GSTIN in the State of Odisha, Paradip Port i.e. at the port of import, the place Of supply shall be the place from where the applicant makes a taxable supply of goods which, in this case is the Mumbai Head Office, the applicant can clear the goods on the basis of invoices issued by the Mumbai Head Office and therefore they need not take separate registration in the State of Odisha. If we do not need separate registration in Odisha, can we do the transaction on Mumbai Office GSTIN, then in case of issuance Of e-way bill is it correct to Mention the GSTIN of Mumbai and Dispatch place as Paradip Port? - HELD THAT:- Since, as an importer the place of supply for the applicant in this case will be Mumbai, Maharashtra and the goods also will be cleared on the name of the Mumbai registered address while paying IGST at the time of Customs Clearance, it would follow that they can do the further transaction mentioning the GSTIN of their Mumbai office. As a corollary, they can do the transaction on Mumbai Head Office GSTIN and can mention the GSTIN of Mumbai Head Office in the E-way Bill and dispatch place, as Customs Warehouse, Odisha, Paradip Port.
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2019 (6) TMI 1010
Requirement of separate registration for different states - raising of invoice from Mumbai Head Office for imports received at various ports, located in various states in India - place of supply of goods - HELD THAT:- Since the applicant will be importing the goods into India, as per Section 7(2) of the IGST Act, 2017 such supply of goods imported into India shall be treated as supply of goods in the course of inter state trade or commerce - in respect of goods imported into India, as per Section 11(a) of the IGST Act, 2017, the place of supply shall be the location of the importer and in the present case since the importer is registered in Mumbai, the place of supply shall be Mumbai, Maharashtra. In the present case, the place of supply is the location of the importer who is situated in the State of Maharashtra and hence the applicant will be clearing the goods by paying IGST from their GSTIN issued in Mumbai, Maharashtra. Since the applicant will be storing the goods, after import, in various states for further sales, whether that would be interstate or intrastate supply would depend upon the place of supply of goods as per Section 10 and Section 11 of the IGST Act, 2017. The place from where the applicant makes a taxable Supply of Goods shall be his location, in this case, the Mumbai Head Office/Registered Office at Mumbai and even if the applicant has godowns in different states, we feel that the applicant can clear the goods on the basis of invoices issued by the Mumbai Head Office/Registered Office at Mumbai on payment of IGST in the State of Maharashtra and therefore they need not take separate registration in other states. Whether the applicant can adopt the procedure to raise the invoice from Mumbai Head Office/Registered Office at Mumbai for imports received at various ports, located in various States in India and charge IGST from Mumbai to our customers in various state is proper or not? - HELD THAT:- Not answered since the question is not covered under Section 97 of the CGST Act, 2017. If we cancel separate registration in various state can we do the transaction on Mumbai Head Office GSIN, then in case of issuance of E - way bill is it correct to mention the GSTN of Mumbai and mention dispatch place of port of respective state/port? - HELD THAT:- Not answered since the question is not covered under Section 97 of the CGST Act, 2017.
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2019 (6) TMI 1009
Applicability of notifications - Classification of supply of services - pure services - transfer by way of lease of vacant plots of Maharashtra State Government owned lands or of privately owned lands acquired under the Land Acquisition Act, 1894 by the Maharashtra State Government vested in CIDCO - transfer to Navi Mumbai Municipal Corporation( NMMC ) for the purpose of development and construction of Indoor Recreation Centre and Slaughter House - transfer to Panvel Municipal Corporation for the purpose of development and transfer of PMC Ward Office, PMC Commissioner s residence and PMC Mayor s residence. Whether the the supply of services would be covered within the scope of entry at Sr. No. 3 or any other entry of the Notification No. 12/2017-CentraI Tax (Rate) dated 28.062017 as amended by Notification No. 32/2017-CentraI Tax (Rate) dated 13.10.2017, 47/2017-central Tax (Rate) dated 14.11.2017 further amended by Notification No. 02/2018-CentraI Tax (Rate) dated 25.01.2018 read with parallel notifications issued under the MGST Act, 2017? HELD THAT:- CIDCO is clearly covered under the definition of Government Entity since it is constituted and established by the State Government of Maharashtra with 100% participation by way of Equity or Control to carry out the function of development of new township of New Bombay. Hence in the subject case we continue to hold that the applicant can be considered as a Government Entity - also NMMC and PMC are Municipal Corporations which satisfy the definition of a local authority as defined in Section 2 (69) of the CGST Act. As per Sr.No 2 (a) of Schedule II of the CGST Act, any lease, tenancy, easement, licence to occupy land is a supply of services . Hence, any supply which is either deemed as services under Schedule II of CGST Act or which are not covered under the definition of goods shall be categorized as pure services. However, as per the above mentioned notification, works contract services or other composite supplies involving supply of any goods are not covered in Sr. No. 3 - Since we find that the said supply is in the form of Pure Services then Sr. No, 3 of the Notification No. 12/ 2017-Central Tax (Rate) dated 28.06.2017 comes into play in the subject case. Lease of plots to NMMC for Indoor Recreation Centre - HELD THAT:- An Indoor Recreation Centre can be considered as a kind of amenity which is given to the public by the local authority for recreation and the same would be similar to amenities provided by the Municipalities in their jurisdiction - the plots are leased by the applicant (a kind of pure services), to a Municipality i.e. a local authority in relation to a function entrusted to such Municipality under Article 243W of the Constitution and would be exempt as per Sr. No. 3 of Notification No. 12/2017-CentraI Tax (Rate) 28.06.2017. Lease of plots to NMMC for slaughter house - HELD THAT:- Sr. No 18 of the 12 th Schedule under Article 243W is with respect to Regulation of Slaughter Houses and Tanneries Hence plots leased by the applicant (a kind of pure services), to a Municipality i.e. a local authority for setting up Slaughter Houses can be perceived to be in relation to a function entrusted to such Municipality under Article 243W of the Constitution ( Regulation of Slaughter Houses and Tanneries ) and would be exempt as per Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Lease of plots to PMC for PMC ward office - HELD THAT:- PMC is a Municipal Corporation, a local authority. Article 243 W of the Constitution of India has endowed Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government - In the absence of the establishment by way of a Ward Office, PMC would find it impossible to function. The said services would be exempt as per Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Lease of plots to PMC for PMC's Commissioner's and Mayor's residences - HELD THAT:- Construction of residence for officials cannot be considered to be a function envisaged under Article 243 W of the Constitution of India - We do not agree with the applicant s contention that the leasing of land for construction of building for use as PMC Commissioner s and PMC Mayor s residences falls within the scope of Entry 2 of Twelfth Schedule to the Constitution of India relating to Regulation of land-use and construction of buildings or within the scope of any of the Entries of the Twelfth Schedule to the Constitution of India - Even construction of residential complex predominantly meant for self use or use of the employees of Central Government, State Government, Union Territory, a local authority or a governmental authority is liable to GST.
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2019 (6) TMI 1008
PIL against the company organizing online Fantasy games - gambling or betting - actionable claim - game of chance or game of skill - supply of services or not - alleged conducting illegal operations of gambling/betting/wagering in the guise of Online Fantasy Sports Gaming - violation of Rule 31A of CGST Rules, 2018 - HELD THAT:- No betting or gambling is involved in their fantasy games. Their result is not dependent upon winning or losing of any particular team in real world on any given day - It is thus clear that the activity of the respondent No.3 do not amount to gambling or betting or wagering even if the definition contained in Finance Act, 1994 is taken into consideration. The allegation of the petitioner regarding GST evasion or erroneous classification - the activities mentioned in Schedule III under the CGST Act are not taxable as the same are neither supply of goods nor supply of services. The entry in schedule III relevant for the instant case is Entry 6 which includes actionable claims, other than lottery, betting and gambling. Admittedly, there is no dispute that the amounts pooled in the escrow account is an actionable claim , as the same is to be distributed amongst the winning participating members as per the outcome of a game. But, as held hereinabove since the activities of the respondent No.3 do not amount to lottery, betting and gambling, the said actionable claim would fall under Entry 6 of the Schedule III under Section 7(2) of CGST Act. Therefore, this activity or transaction pertaining to such actionable claim can neither be considered as supply of goods nor supply of services, and is thus clearly exempted from levy of any GST. The scope of definition of consideration extends only in relation to the supply of goods or services or both . Since, the said activity or transaction relating to the actionable claim qua the amounts of participants pooled in escrow arrangement, for which only acknowledgement is given, is neither supply of goods nor supply of services, the same is clearly out of the purview of the expression consideration - Since the actionable claim in the Online Fantasy Sport Gaming of the respondent No.3 are amongst such actionable claims as per Schedule III and Section 7(2) of the Act, which are not considered as supply of goods or supply of services , Rule 31A has no application. Moreover, actionable claim referred to in Rule 31A is limited to only activities or transactions in the form of chance to win in lottery or betting or gambling or horse racing in a race club . Thus, Rule 31A which is restricted only to such four supplies of actionable claim, has no application in this case. The authorities have therefore not taken any coercive steps against the respondent No.3. No case for issuing any directions is made out. It is seen that the entire case of the Petitioner is wholly untenable, misconceived and without any merit. It can be seen that success in Dream 11 s fantasy sports depends upon user s exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real world game on any particular day. It is undoubtedly a game of skill and not a game of chance. Petition dismissed.
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Income Tax
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2019 (6) TMI 1007
Unexplained cash credit u/s 68 - genuineness of the cash credits - HELD THAT:- Assessee as well as the creditor had offered their explanations. The creditor had explained his source of income, the transactions were effected through bank, which fact was substantiated by producing a certificate from the bank. It was in such circumstances that the CIT (Appeals) and the ITAT found that the assessee had established the identity of the creditor, source for the credit and genuineness of the transaction. Department had accepted a similar explanation offered in the previous assessment year assume relevance in the above context. Further, the Settlement Commission had also held similar cash transactions during the previous years to be genuine. Finding of the AO is that the assessee had not proved the credits by producing satisfactory evidence regarding the capacity of the remitter to advance the money and that the wife of the remitter being a partner in Chandragiri Construction, the proper course was to credit the amount in the capital account of the wife or to show the same as a loan from the creditor. A careful reading of the decision in Mohanakala [ 2007 (5) TMI 192 - SUPREME COURT] shows that even after rejecting the explanation given by the assessee, the assessing authority should consider the crucial aspect as to whether on the facts and circumstances of the case it could be inferred that the sums credited in the books of the assessee. As far as the instant case is concerned, both CIT(Appeals) as well as the ITAT had found the assessee to have discharged his burden of explaining the genuineness of the cash credits in his account by providing confirmation from the creditor regarding remittance and the source of funds and certificate from the assessee's bank. The explanation offered by the assessee, coupled with the fact that a similar explanation regarding remittances during the previous year was accepted by the Assessing Officer and similar remittances during the period prior had been accepted by the Settlement Commission, had weighed with the CIT(Appeals) and the ITAT. - Decided against revenue.
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2019 (6) TMI 1006
Disallowance u/s.14A on account of administrative expenses - HELD THAT:- In the present case, it is required to be noted that in the earlier years, the assessee was also having mixed funds and still considering the fact that the assessee was already having sufficient surplus interest free funds, the Division Bench of this Court has held that the disallowance under Section 14A is not permissible. At the cost of repetition, it is observed that the said decision has attained finality between the parties. Not only that, but the Department has followed the same in the subsequent assessment years also. Considering all, it cannot be said that the Tribunal has committed any error in deleting the disallowance made by the AO u/s 14A. See GUJARAT STATE FERTILIZERS AND CHEMICALS LTD [ 2018 (8) TMI 922 - GUJARAT HIGH COURT]. Set off of loss incurred on sale of fertilizers bonds - treating it as business loss and blatantly ignoring the fact that the fertilizer bonds subscribed to by the assessee falls within the bracket of section 2(14) - Whether sale of fertilizer bonds is not allowable as business loss and is to be instead treated as capital loss? - HELD THAT:- Proposed question is concerned, the same is also covered by the findings recorded by the Co-ordinate Bench in para 17 [ 2018 (8) TMI 922 - GUJARAT HIGH COURT] of its judgement wherein it was confirmed the finding of tribunal that loss of sale of fertilizer bond is business loss It transpires from the records that due to cash crunch Government of India at a certain point of time discharged its dues of paying the subsidy by replacing cash/cheque with the fertilizer bonds. These bonds are saleable in the open market and the prices of such bonds are varying. Against the subsidy income duly credited in the profit and loss account, assessee received fertilizer bonds. When these bonds were sold in the open market it fetched less value than the value at which they were given to the assessee. This gave rise to a loss which has been claimed as business loss. - appeal of revenue is dismissed
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2019 (6) TMI 1005
Disallowance towards Employees Contribution to PF and towards Employees contribution to ESIC - Whether the same were deposited with the relevant fund before the due date prescribed u/s 139(1) ? - HELD THAT:- As relying on GUJARAT STATE ROAD TRANSPORT CORPORATION [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] assessee did not deposit the amount of contribution with the PF Department / DSI Department within due date under the PF Act and/or ESI Act - There is no amendment in Section section 36(1)(va) and considering section 36(1)(va) as it stands, with respect to any sum received by the assessee from any of his employees to which the provisions of clause (x) of sub-section (24) of section 2 applies, assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 if such sum is not credited by the assessee to the employees' account in the relevant fund or funds on or before the due date as per explanation to section 36(1)(va) of the Act - By deleting Second Proviso to section 43B by Finance Act, 2003, it cannot be said that Section 36(1) (va) is amended and/or explanation below clause (va) of sub-section (1) of section 36 is deleted, which is with respect to employees' contribution - additions confirmed - Decided in favour of Revenue.
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2019 (6) TMI 1004
Characterization of expenses - Interest incurred on borrowings utilized for getting control over the management of Bhart Pulverising Mill Ltd - capital expenditure or revenue expenditure - Assessee had borrowed funds and invested the same for purchase of shares of subsidiary company - eligibility for deduction u/s 36(1)(iii) as claimed by the Assessee - HELD THAT:- Similar issue was discussed by this Court PIRAMAL GLASS LIMITED [ 2019 (6) TMI 891 - BOMBAY HIGH COURT] held that the expenditure incurred for gaining controlling interest of a subsidiary company is a business expenditure. We notice that this Court in the case of Commissioner of Income Tax, Panaji Goa V/s. Phil Corpn. Limited [ 2011 (6) TMI 912 - BOMBAY HIGH COURT] held that the Assessee was entitled to deduction of interest on overdraft under Section 36(1)(iii) of the Act when the investment was made by the Assessee in shares of subsidiary of the company to have control over the said Company. - Decided against revneue
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2019 (6) TMI 1003
Discount on issue of ESOP - whether allowable as deduction in computing the income under the head profit and gain of the business? - HELD THAT:- Appeal admitted :- Whether on the facts and in the circumstances of the case and in law, the ITAT was right in holding that the discount on issue of ESOP is allowable as deduction in computing the income under the head profit and gain of the business? TP Adjustment - comparable selection criteria - HELD THAT:- Motilal Oswal Investment Advisory Private Limited - We notice that similar issue had come up for consideration before the Tribunal in case of Carlyle India Advisors (P.) Ltd. Vs. Dy. CIT [ 2014 (11) TMI 91 - ITAT MUMBAI] . The Tribunal considered the instance of Motilal Oswal and discarded the same relying on the earlier decision in case of the very same assessee in which the Tribunal had inter-alia observed that the profit and loss account appears to be only consolidated account. The company is registered with SEBI as a merchant banker. It was further observed that the said company was engaged in merchant banking. This view has been confirmed by this Court in M/S. NVP VENTURE CAPITAL INDIA PVT. LTD. [ 2018 (9) TMI 1182 - BOMBAY HIGH COURT] Brescon Advisors - Tribunal had cited proper reasons for discarding this comparable. It was noticed that the audit report of Brescon Advisors shows that its income is earned from debt realization and debt syndication. The company also makes significant investments using its own funds. The Tribunal relied on its earlier decision holding that the company which mostly uses its own investments cannot be compared with the present case. The Tribunal also observed that overall profile of the company was not functionally similar. We are broadly in agreement with the view of the Tribunal. Khandwala Securities - overall operations included Investment Banking Corporation Advisory Services, Institutional Banking etc.. The annual report of the company showed that its performance was affected by global crises and resultant market melt down. These were the distinguishing features noticed by the Tribunal. The Tribunal also noted that the DRP also admitted the said company also engaged is corporate advisory services for which separate segmental are available. Primarily, on these grounds, the Tribunal discarded the said instance. We see no error in view of the Tribunal. Sundaram Finance Distribution Limited - Tribunal recorded that this company had no employees and had outsourced its activities. In similar circumstances, in case of Aptara Technology the Tribunal had found that the said was not comparable. The issue had traveled to the High Court at the hands of the revenue. This Court in case of Pr. CIT vs. Aptara Technology (P.) Ltd [ 2018 (4) TMI 404 - BOMBAY HIGH COURT] rejected the revenue s appeal. Without recording separate reasons, therefore, this question is not considered. Integrated Capital Service Limited - DRP refused to exclude the said company only on the ground that same was included by the assessee in its transfer pricing study. The Tribunal was of the opinion that this cannot be a ground to bind the assessee. It was open for the assessee to bring correct facts on record and claim the exclusion of the said instance.This view has been consistently taken by this Court in several orders. No question of law in this respect therefore arises. Axis Private Equity Limited - The Tribunal therefore, held that this company was functionally different from the assessee-company and was therefore, excluded from the comparable. In that view of the matter, no question of law arises. Disallowance of penalty - for non compliance to clearing house trades and trades and client code modification - HELD THAT:- We notice that similar issue was considered by this Court in case of CIT VS ANGEL CAPITAL DEBIT MARKET LTD. [ 2014 (5) TMI 584 - BOMBAY HIGH COURT] in favour of assessee. Hon'ble Court upheld the finding of fact recorded by the ITAT is that the amount paid as penalty was on account of irregularities committed by the assessee s clients. Such payments were not on account of any infraction of law and hence allowable as business expenditure. In such a case the explanation to section 37 would not apply. Accordingly question raised by the Revenue cannot be entertained.
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2019 (6) TMI 1002
Claim of deduction u/s 80-IA(4) - denial of claim as assessee did not fulfill the required conditions as prescribed for claiming deduction u/s 80-IA(4), as the inland container depot / container freight station is not included in inland ports as ports on rivers or canals - HELD THAT:- Identical question came up for consideration before this Court [ 2018 (4) TMI 749 - BOMBAY HIGH COURT] Container Freight Station (CFS) run by the respondent-assessee is eligible for deduction under Section 80IA of the Act as an infrastructure facility - Decided in favour of assessee.
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2019 (6) TMI 1001
Addition u/s 40 (a) (ia) - payments made to the C F Agents towards ocean freight charges and IHC charges paid in connection with shipment through the non-resident shipping Co. - HELD THAT:- The amount of disallowance u/s 40 (a) (ia). Therefore, the tax effect will be around ₹ 3.00 lakhs. Hence, in view of the circular, we do not propose to answer this question of law and we reserve it for some other fit case. Bad debts written off - contention of the Revenue is that the Assessee failed to prove that the amount written off by them had really become a bad debt - AO held that there was no proof to show that what was written off had already become a bad debt - HELD THAT:- In T.R.F. Limited v. Commissioner of Income Tax [ 2010 (2) TMI 211 - SUPREME COURT] has clarified that after the amendment of Section 36 (1) (vii) with effect from 01.04.1989, it is not necessary to establish that the debt in fact had become irrecoverable. Therefore, the second substantial question of law does not survive in the light of the said decision of the Supreme Court.
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2019 (6) TMI 1000
Nature of expenditure - expenditure incurred towards software installed in their computer system - revenue or capital expenditure - CIT(A) held that the assessee acquired only a right to use the software (CTCL), that the software renewal expenditure was incurred every year based on the number of licenses used and that the intellectual property rights of the software were held by the software vendor (FTIL) confirmed by ITAT - HELD THAT:- In the case on hand, we test the correctness of the order passed by the Tribunal confirming the order passed by the CIT(A), who examined the terms and conditions of the license and on facts, recorded a finding that the assessee acquired only a right to use the software and that there was no enduring benefit acquired by the assessee on account of the license promoted by them on payment of annual fee. Thus, in our considered opinion, no substantial question of law arises for consideration in this appeal. - Decided against revenue
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2019 (6) TMI 999
Reopening of assessment u/s 147 - there is an order of the Settlement Commission u/s 245D(4) in relation to the assessment year in respect of which the assessment is sought to be reopened - HELD THAT:- A perusal of the appraisal report, on which reliance has been placed by the AO, reveals that there was sufficient material for the AO to form the belief that income chargeable to tax has escaped assessment. The material also refers to the petitioner so as to establish a link between the relied upon materials and the petitioner. Considering the nature of material available with the Revenue, it is not possible to state that on the reasons recorded, the AO could not have formed the belief that income chargeable to tax has escaped assessment. In the facts of the present case, since the Settlement Commission has passed an order u/s 245D(4) in respect of the assessment year in relation to which the assessment is sought to be reopened, the AO has no jurisdiction to invoke the provisions of section 147 of the Act and reopen an assessment, which has become conclusive. Such concluded assessment can only be reopened in case of fraud or misrepresentation of facts, as contemplated under subsection (6) of section 245D. The assumption of jurisdiction on the part of the Assessing Officer u/s 147 of the Act by issuing the impugned notice u/s 148 of the Act is, therefore, invalid and without authority of law. Thus, though on the reasons recorded for reopening the assessment, the AO could have formed the belief that income chargeable to tax has escaped assessment, in this case, as discussed earlier, since there is an order of the Settlement Commission u/s 245D(4) in relation to the assessment year in respect of which the assessment is sought to be reopened, the AO has no jurisdiction to reopen the assessment. The impugned notice u/s 148 , therefore, cannot be sustained. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 31.03.2018 issued by the respondent u/s 148 is hereby quashed and set aside. It is, however, open for the respondent/Revenue to move the Settlement Commission for appropriate relief of declaration that the previous order u/s 245D(4) is void, setting out the relevant facts and circumstances. - Decided in favour of assessee.
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2019 (6) TMI 998
Reopening of assessment - difference between the amount of salary payment recorded in the salary register impounded and the amount of salary debited in the P L account - objections raised by the petitioners against notice are rejected - change of opinion - HELD THAT:- A bare perusal of the reasons recorded and the justification, explanation and reconciliation provided by the petitioner in the objections would clearly lead to a conclusion that there is no escapement of income, irrespective of the aspect that claim of salary was scrutinised or not scrutinised during the course of original assessment. It appears from the order dated 21.8.2018 disposing the objections raised by the petitioner that the respondent has adopted a pedantic robotic approach ignoring the objections raised by the assessee petitioner in toto with only one object of rejecting the objections. The respondent is duty bound to consider and apply his mind to the objections raised. However, on perusal of the order dated 21.8.2018 whereby the objections raised by the petitioners are rejected, it transpires that reasons given for rejecting the objections are nothing but an eyewash as justification, explanation and reconciliation provided by the petitioner is not even referred to by the respondent. Such an approach of the respondent is required to be deprecated. Reasons recorded by the assessing officer are based on incorrect facts in addition to the fact that the AO during the course of original assessment has scrutinised the details of salary expenditure by issuing notices u/s 142(1) and by calling for information and hence, it is evident that the assessment is sought to be reopened on a mere change of opinion, which is not permissible in law. AO has considered the claim of the petitioner with respect to the salary expenditure and, therefore, when the petitioner filed the objections to the impugned notice which is based only upon the salary register of Navsari unit impounded during the course of survey conducted in the year 2016, the respondent ought to have dropped the reopening proceedings. - Decided in favour of assessee
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2019 (6) TMI 997
Reopening of assessment u/s 147 - validity of reasons to believe - disallowance of deduction u/s 80IB(10) as assessee sold the flats to related persons - HELD THAT:- It is well settled that under the Income tax Act, 1961, the assessment for each year is a separate assessment and has to be assessed separately. While making the assessment for a particular year, the AO has to see whether the assessee is entitled to claim a deduction in that assessment year. Insofar as assessment year 2011-12 is concerned, the assessee had duly complied with the requirements of section 80IB(10) and was therefore, entitled to the deduction claimed thereunder. However, now, the AO seeks to reopen the assessment and disallow such deduction on the ground that in the previous year relevant to assessment year 2013-14, the petitioner had sold flats to related persons. In the opinion of this court, if, in the year 2013-14, any event has taken place that disentitles the petitioner from claiming deduction under section 80IB(10) it would relate to that year alone. The assessments of the earlier years wherein deduction had been allowed because the petitioner/assessee was, otherwise, entitled to such deduction, cannot be reopened to disallow a claim, which was valid in the year under consideration. In the aforesaid premises, this court is of the considered opinion that on the reasons recorded for reopening the assessment, no reasonable person could have formed the belief that income chargeable to tax has escaped assessment. The impugned notice u/s 148 therefore cannot be sustained. - Decided in favour of assessee.
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2019 (6) TMI 996
Registration u/s 12A - cancellation of registration with retrospective effect - power of CIT to initiate steps for cancellation of the registration of a Trust - benefit of carry forward of losses for subsequent years as contemplated under section 11 (1) (a) - rectification application filed to Income Tax Settlement Commission - Whether the money invested in acquisition of the TV Channel shall be considered to be in view of the object of the Trust? - Whether disclosure made before the Settlement Commission by the petitioner Trust is full and true? - HELD THAT:- Section 12 AA (3) of the Act of 1961, doesn t suggest or in any way contemplate that the registration of the assessee may be cancelled with retrospective effect. And therefore, this court is of the view that the cancellation of registration can only be prospective. As regards the issue of the petitioner Trust s disclosure being full and true or not; this court is of the view that the petitioner Trust s disclosure shall be considered full and true for when it filed the settlement application before the Income Tax Settlement Commission, for it disclosed its undisclosed income in the said application and the same was allowed by the Commission, so also accepted u/s 245D (1), while declaring the said application as not invalid and maintainable u/s 245D (1). The Income Tax Settlement Commission should not have relied upon the arbitrary and illegal order dated 16th Jan, 2018, made by the respondent-department, while considering the rectification applications that were filed regarding the order dated 30th June, 2017. The Commission should have kept in mind, the petitioner Trust s status at the time when the original order dated 30th June, 2017 was made and not the status subsequent to the order dated 16th Jan, 2018, made by the respondent-department. Thus, at the time of the passing of the original order, the petitioner Trust was a registered entity u/s 12A and withdrawal of the approval accorded u/s 10 (23C) (v) 10 (23A) (via), as a consequence of cancellation or withdrawal of the same; cannot have retrospective effect as has been discussed earlier. It is therefore, evident from the factual matrix of the case at hand, that the petitioner Trust, is entitled to all the benefits u/ 11 (1) (a) of the Act of 1959, including set off or carry forward of losses to the subsequent year(s) and depreciation, in respect to expenses incurred for construction of educational buildings in terms and tune with the objects of the Trust. The exclusion of the investment made by the petitioner Trust in the TV Channel appears to be one such perversity. On a glance of the facts and materials available on record of the case at hand, it is evident that the said TV Channel was acquired by the petitioner Trust for educational training in 'Journalism' and 'Mass Communication', as it was offering courses for graduation and post-graduation in 'Mass Communication' and 'Journalism'. Applying principle of MAHARSHI MAHESH YOGI VEDIC VISHWAVIDYALAYA VERSUS STATE OF M.P. ORS. [ 2013 (7) TMI 1044 - SUPREME COURT] it is evident that education cannot be confined to the meaning of one subject only and keeping this precedent in mind, it is concluded that the said investment in TV Channel shall be considered to be in consonance with the objectives and in the purview of the objects of the Trust. In the result, the petitioner-Trust is entitled to the benefit of Section 11(1) (a) of the Rajasthan Public Trust Act, 1959 and for carry forward of unabsorbed losses as well as benefit of amount spent on construction of new educational buildings. The petitioner-Trust is also entitled for benefit of amount incurred in acquisition of TV Channels and quashment of telescoped benefit of cash expenses. - Decided in favour of assessee.
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2019 (6) TMI 995
Deduction u/s 80-IB/80-IC - reallocation of common indirect expenses - HELD THAT:- DRP has merely followed the decision of Tribunal in assessee s own case. The revenue is unable to point out any distinguishing feature during the impugned AY. Nothing on record would suggest that the ruling of Tribunal is not applicable to the facts of the present case. [ 2015 (12) TMI 514 - ITAT MUMBAI] . It has been brought to the notice that department s appeal against Tribunal s decision for AY 2008-09 has already been dismissed by Hon ble Bombay High Court. Respectfully following binding judicial pronouncement, we upheld the stand of Ld. DRP. DRP has overruled application of provisions of Section 80- IA(10) by following the decision of Ld. DRP in AY 2008-09 2009-10 which was confirmed by Tribunal in [ 2015 (12) TMI 514 - ITAT MUMBAI] Therefore, taking consistent stand in the matter, we confirm the directions of Ld. DRP, in this year also. Depreciation claim on computer peripherals - @15% OR 60% - HELD THAT:- As decided in assessee's own case [ 2015 (12) TMI 514 - ITAT MUMBAI] we direct Ld. AO to allow depreciation @60% on the computer peripherals. Ground No. 1 stand allowed. Addition being un-reconciled amount reflected in Annual Information Return [AIR] - HELD THAT:- The perusal of directions of Ld. DRP reveal that this issue was not raised by the assessee before Ld. DRP. The letter stated to be issued by the bank, as placed before us, is after the date of directions of Ld. DRP. Therefore, while concurring with the stand of Ld. Sr. Counsel that mistaken reporting in AIR could not entail addition in the hands of the assessee, we deem it fit to restore the matter back to Ld. AO with a direction to the assessee to reconcile the stated discrepancy. AO is free to peruse latest AIR information of the assessee and seek information from the bank so as to arrive at logical conclusion TP adjustment - ALP of Export Sales - HELD THAT:- As no further appeal has been preferred by revenue for AY 2009-10 against the order of the Tribunal, on this issue. The revenue is unable to controvert the same. Therefore, respectfully following the consistent view of the Tribunal, we delete TP adjustment of ₹ 129.83 Lacs on account of export sales and allow ground no. 2 of assessee s appeal. Commission on Corporate Guarantee - TPO estimated the same @2.25% 1.15% for these two years which was restricted to 0.50% by the Tribunal in both the years - HELD THAT:- Hon ble Bombay High Court rendered in Glenmark Pharmaceuticals Ltd. V/s ACIT [ 2017 (2) TMI 1305 - BOMBAY HIGH COURT] as confirmed by Hon ble Supreme Court [ 2018 (12) TMI 608 - SUPREME COURT] . In the said decision, Hon ble court has approved the estimation @ 0.53% 1.47%. This decision has been rendered after considering the decision in CIT V/s Everest Kento Cylinders Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] . Therefore, respectfully following the higher judicial wisdom, on the facts, we restrict the estimation to 2%. The Ld. AO / TPO is directed to recompute the impugned TP adjustment. TP adjustment pertains to ALP of intra group services - reimbursement to AE at cost - The cost was allocated in the ratio of sale of Kiwi Products worldwide - HELD THAT:- In the absence of complete information, Ld. TPO was precluded to proceed with determination of ALP of these transactions. The primary onus to provide complete TP documentation was on assessee. No doubt, OECD guidelines makes it imperative for the assessee to demonstrate that the services were, in fact, received and thereafter, it was to be established that the price paid for these services was at Arm s Length. Therefore, we restore the matter back to the file of Ld. TPO for re-determination of ALP of these transactions with a direction to the assessee to demonstrate cost allocation keys, evidences in support of the receipt of services etc. Needless to add that sufficient opportunity of being heard shall be granted to the assessee. Ground No. 3 stands allowed for statistical purposes. TP adjustment for AMP expenditure - International transaction as defined u/s 92B - absence of any arrangement between the assessee and its AE - HELD THAT:- As relying on JOHNSON AND JOHNSON PVT. LTD. VERSUS ADDL. COMMISSIONER OF INCOME TAX LTU 1, MUMBAI [ 2018 (11) TMI 1106 - ITAT MUMBAI] in the absence of any arrangement between the assessee and its AE, the mere incurring of third-party AMP expenditure could not be termed as international transaction as defined u/s 92B and therefore, the question of determination of ALP of the same would not arise at all. Therefore, we delete the impugned adjustment as proposed in the final assessment order. - Decided in favour of assessee.
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2019 (6) TMI 994
Addition based on foreign HSBC bank accounts - information received by Govt. of India from the French Government under DTAA - income received or accrued in India - CIT-A deleted addition - bank accounts have been opened in the name of entities viz. Zetec Ventures Ltd and Zeke Limited based in British Virgin Islands and assessee is a Director in one of the two entities and the second entity was founded by assessee - The claim of the assessee was that none of the bank accounts in question have any relation or connection to India or to any of assessee s transactions in India HELD THAT:- The onus was on the Department to prove that the particular asset in question was within the taxing provisions of the Indian Income Tax Act, 1961. The proposition has been arrived at, relying on the judgment of Parimisetty Seetharaman vs. CIT [ 1965 (4) TMI 21 - SUPREME COURT] . Therefore, we proceed further on the premise that the onus was on the AO to establish that qua the three bank accounts in question assessee had the ownership and also the fact that the transactions therein have Indian connection. As per the CIT(A) there is no material or evidence to say that the assessee was connected with the bank accounts in question so as to justify an inference that any income thereof was received or deemed to have been received or accrued or deemed to have accrued in India. A perusal of the Grounds of appeal raised by the Revenue before us reveal that none of the findings recorded by the CIT(A) have been assailed on the basis of any material or evidence. In fact, the entire case of the Revenue, which had been adverted to at the time of hearing before us, is based on the presumption that the assessee has routed the money sourced from India through the three entities into the bank accounts in question. It is a well-settled proposition that a presumption, howsoever, strong cannot substitute an evidence and, therefore, in our view, the CIT(A) made no mistake in deleting the addition. What is required is to weigh and consider all evidences and material which are available on record. Considering the facts of the instant case and noting that there was complete absence of material, as noted by the CIT(A) too, we find that the application of test of human probabilities to sustain the addition would be unjustified - Decided in favour of assessee.
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2019 (6) TMI 993
Addition on account of amortization of premium paid for purchase of securities - nature and character of the relevant securities held by the assessee - HELD THAT:- It is also observed that the CBDT Instruction No. 17/2008 issued on 26.11.2008 relied upon by the ld. D.R. recognizes the significance of this distinction made between the securities held as stock-in-trade and investment on the basis of RBI guidelines dated 16.10.2000. in view the said Instruction issued by the CBDT as well as the decision of Punjab Sind Bank [ 2012 (9) TMI 446 - DELHI HIGH COURT] we are of the view that this matter should go back to the AO for deciding the same afresh after determining the nature and character of the relevant securities held by the assessee and even the ld. Counsel for the assessee has finally agreed with the same. We accordingly set aside the impugned order by the ld. CIT(Appeals) on this issue and restore the matter to the file of the AO. Addition u/s 14A by applying Rule 8D - HELD THAT:- Since no such satisfaction was recorded by the AO, it was not permissible to him to invoke Rule 8D and make a further disallowance u/s 14A. It is observed that the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to A.Ys. 2008-09 and 2009-10, inasmuch as, no proper satisfaction u/s 14A(2) was recorded by the AO in the assessment order passed for the year under consideration about the disallowance suo motu offered by the assessee being incorrect by pointing out any deficiency. We, therefore, respectfully follow the decision of the Coordinate Bench of this Tribunal rendered in assessee s own case in [2016 (6) TMI 181 - ITAT KOLKATA] and uphold the impugned order of the CIT(Appeals) deleting the disallowance made by the AO u/s 14A by applying Rule 8D. Addition on account of income from house property - CIT(Appeals) directed the AO to determine the income of the assessee from house properties by taking the annual value on the basis of Municipal valuation - HELD THAT:- As in case of CIT vs.- Satya Company Limited . 1993 (8) TMI 293 - CALCUTTA HIGH COURT] wherein held when the Municipal valuation of the property in question itself is available and such valuation has not been disputed, the same should be adopted as the annual value of the property after adding 1/9th thereto. Assessee has also agreed for the adoption of the same method to determine the annual value of the assessee s properties. We accordingly modify the impugned order of the ld. CIT(Appeals) on this issue and direct the AO to determine the annual value of the assessee s properties by adopting the Municipal valuation after adding 1/9th thereto. Ground No. 3 of the Revenue s appeal is thus partly allowed. Addition on account of assessee s claim for deduction u/s 36(1)(viii) - apportioning the operating expenses - HELD THAT:- As rightly contended on behalf of the assessee in this regard before the CIT(Appeals) as well as before us, the operating expenses were required to be incurred by the assessee in relation to its total banking business and the non-performing assets definitely formed part of such business. The assessee-Bank was required to manage both performing as well as non-performing assets and the operating expenses incurred by it thus were attributable to non performing assets also. It appears that this vital aspect was not appreciated by the authorities below in proper perspective and as rightly contended by the ld. Counsel for the assessee, the basis adopted by them for apportioning the operating expenses without proper appreciation of the vital position resulted in a distorted picture. The basis adopted by the assessee for the apportionment of operating expenses was more fair and reasonable and since the same followed consistently by the assessee in the earlier years was accepted by the revenue till assessment year 2010-11, we hold that the disallowance made by the AO and confirmed by the ld. CIT(Appeals) on this issue by deviating from the stand consistently taken in the earlier year is not sustainable. - Decided in favour of assessee.
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2019 (6) TMI 992
TDS u/s 195 - non deduction of TDS on payment made to two non-residents i.e. J2S Inc, USA and Navos B.V.B.A., Belgium - income accrue or arise in India - DTAA between India and USA and DTAA between India and Belgium - CIT(A) treating the order procurement services rendered by the non-residents and commission/retainer fee as royalty and fees for technical services - HELD THAT:- In case of the assessee company, two non-resident foreign companies, one by the name of J2S INC, USA and another by the name of NAVOS, Belgium were appointed to locate foreign buyers to whom the assessee company could sale its services. Thus, both the foreign companies rendered order procurement services outside India which is their business activity. Invoices received from the parties also show that services rendered by them were sales procurement services and not fees for technical services or royalties. The contention of the DR that the services provided is in the nature of advisory services based upon the skills of the non-resident, is contrary to the terms and conditions of the agreements. In the previous year relevant to the AY 2012-13 only the retainer fee as per the agreement was paid and no order procurement services in real terms were materialized by the said non-resident. Thus, the Explanation Clause of Section 9 (vii) of the Act will not be applicable on the ground that income was from the source outside India. Both the non-resident assessee derived their income as their business activity and their business profit is determined under Article 7 of DTAA between India and USA as well as from Article 7 of DTAA between India and Belgium and will then decide as to where business income will be taxable. Therefore, none of the provisions of the Section 9 of the Act will be applicable in the present case, business income cannot be treated as fees for technical services as held by the AO. AO as well as CIT(A) was not correct in treating the order procurement services rendered by the non-residents and commission/retainer fee as royalty and fees for technical services. Transactions was between India and Switzerland and not between two different non-resident as is in the present case. The order of the CIT(A) is set aside. - Decided in favour of assessee.
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2019 (6) TMI 991
Exemption u/s 11 12 - charitable activity u/s 2(15) or not? - as per AO activities of renting out the property has no nexus with the promotion of Fine Arts Crafts objective - the rent being received by the society is subject to TDS is a pure rent - HELD THAT:- As decided in assessee's own case [ 2019 (2) TMI 905 - ITAT DELHI] Assessee society has carried out activities in the form of annual art exhibitions, camps for senior and junior artists, providing maintenance to aged artists etc. It is also not the department s case that any part of surplus was diverted from the society and applied for any personal benefit of any member or office bearer of the society. Therefore, it can be safely concluded that the dominant activity of the assessee society is not business, trade or commerce and, accordingly, any incidental or ancillary activity like hiring out of art gallery or selling paintings would not also fall within the categories of trade, commerce or business. Proviso to Section 2(15) of the Act, which was inserted by Finance Act, 2008, was directed to prevent the unholy practice of pure trade, commerce and business entities from masking their activities and portraying them in the garb of an activity in the object of a general public utility but was not designed to hit at those institutions, which had the advancement of the objects of general public utility at their hearts and were charity institutions.- Decided in favour of assessee.
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2019 (6) TMI 990
Reopening of assessment u/s 147 - AO held the F O loss as fictitious loss being inflicted by manipulative client code modification - in DIT (Inv.) report the assessee was listed as one of beneficiaries - return was originally processed u/s 143(1) - notice u/s 148 was issued within four years from the end of the assessment and hence first proviso to Section 147 is not applicable - HELD THAT:- In the instant case, the AO received information from learned DIT(I CI), Mumbai through learned PCIT, Mumbai that the assessee is beneficiary of obtaining fictitious F O Loss from broker which was manipulated losses by modifying client code modifications. It had come to notice that many brokers were indulging in the tax evasions through modification in client code modifications in FY 2009-10 wherein fictitious profit/losses were created which was given by these brokers to their clients/beneficiaries in consideration of brokerage income which was also not disclosed to Revenue but when enquiry was conducted u/s 131(1A), these brokers surrendered these brokerage income from undisclosed sources. Further, the AO itself conducted enquiries prior to issuance of notice u/s 148 by issuing notice u/s 133(6) to Broker Inventure and the said broker never gave specific replies but gave general and evasive replies. Thus, the AO also applied independent mind before reopening of concluded assessment u/s 147 . This sudden spurt in client code modifications undertaken by Brokers in the month of March 2010 was subject to probe by SEBI and NSE as well by Income-tax Department. As we will see later in this order, there is mention of this sudden spurt in client code modifications in the month of March 2010 in various judicial orders pronounced by Courts/tribunal. It is also pertinent to mention here about the client code modification facility allowed by Stock Exchanges which is permitted in accordance with framework of SEBI/Stock Exchanges rules/regulations and circulars which are issued from time to time The assessee had also suffered F O Loss of ₹ 31,98,597.50 through Broker Inventure for transactions undertaken through NSE in the month of March 2010 which were inflicted by client code modifications undertaken by Brokers with Stock Exchanges and which were held to be fictitious losses by authorities below. The assessee transactions in F O segment also happened in the month of March 2010. The transactions inflicted through client code modification incurred through Broker Inventure in the month of March 2010 itself were as high as 92.2% of total transactions executed by assessee with broker Inventure on quantum of loss ratio basis. We hold that re-opening of the concluded assessment by the AO u/s 147 Act was valid and is therefore upheld/ sustained . Further , based on our above discussions on touch stone of preponderance of probabilities we hold that additions made by the AO to the income of the assessee by holding F O loss to the tune of ₹ 31,98,657.50 as fictitious loss being inflicted by manipulative client code modification was validly done by the AO and hence additions to the tune of ₹ 31,98,657.50 as was made by the AO which was later confirmed by learned CIT(A) by treating aforesaid F O loss as bogus loss is upheld. Further, we upheld the additions to the tune of 1% of the said fictitious losses to the income of the assessee by way of commission paid by the assessee to the brokers for arranging these fictitious losses. - Decided against assessee.
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2019 (6) TMI 989
Rectification of mistake u/s 254 - incorrect claim of deduction u/s 54B - part of purchase consideration was paid subsequent to the receipt of the sale consideration of the existing asset part of purchase consideration was paid by the assessee prior to the receipt of the sale consideration - allowability of deduction u/s 54B on investment prior to sale - HELD THAT:- Tribunal has decided the issue on merits after analyzing and evaluation of the relevant facts and evidence. The said decision on merits of the case cannot be reconsidered in the proceedings U/s 254(2). The Revenue is reiterating its stand and it was taken by the AO while disallowing the claim of deduction U/s 54B hence, we do not find that the miscellaneous application has pointed out any apparent mistake on the face of the order which can be rectified U/s 254(2). The jurisdiction of the Tribunal U/s 254(2) is very limited and circumscribed to rectify the apparent mistake on record but not to reevaluate the fact and evidence already considered while passing the impugned order on merits. Hence, we do not find any merits or substance in the miscellaneous application filed by the Revenue.
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2019 (6) TMI 988
Initiation of proceedings u/s 153A - addition of Unexplained cash credit U/s 68 - initiate the proceeding U/s 147/148 instead of making the addition in the proceeding U/s 153A - HELD THAT:- No quarrel the AO was bound to proceed U/s 153A in pursuant to the search and seizure action however, if there is no incriminating material to reassess the income of the assessee then the AO legally cannot make the addition based on the information and evidence received from the Investigation Wing, Mumbai and consequently ought to have completed the reassessment U/s 153A without making any addition. We uphold the order of the ld. CIT(A) in deleting the addition made by the AO due to legal hurdle of making such addition without incriminating material but if the material and evidence received by the AO during the course of reassessment proceedings U/s 153A which was not available with the AO at the time of passing the assessment U/s 143(3) then, it is open to the AO to initiate the proceeding U/s 147/148 of the Act instead of making the addition in the proceeding U/s 153A - Appeal of the Revenue is dismissed.
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2019 (6) TMI 987
E-commerce business - Selling at a price lower (predatory pricing) than the cost price - disallowance of loss - business model of creating marketing intangible assets for long-term benefits - expenditure of a capital nature - HELD THAT:- As decided in own case [ 2018 (5) TMI 337 - ITAT BANGALORE] the starting point for computing income from business is the profit or loss as per the profit and loss account of the Assessee, which cannot be disregarded unless certain provisions [Section 145(3)] of the IT Act are invoked. Since the AO has not invoked such provisions, the AO is not empowered to go beyond the book results. As held that it is settled law that where a trader transfers his goods to another trader at a price less than the market price and the transaction is a bonafide one, the taxing authority cannot take into account the market price of those goods, ignoring the real price fetched to ascertain the profit from the transaction and income which has accrued or arisen can only be subject matter of total income and not income which could have been earned but not earned . As held that the AO was not right in proceeding to ignore the books results of the Assessee and resorting to a process of estimating total income of the Assessee in the manner in which he did, what can be taxed is only income that accrues or arises as laid down in Sec.5 of the Act. Nothing beyond Sec.5 of the Act can be brought to tax . There is no provision to disregard the loss declared by the Assessee and also there is no provision by which the Revenue can ignore the sale price declared by an Assessee and proceed to enhance the sale price without any material before him to show that the Assessee has in fact realized higher sale price. Valuation of intangibles is academic since it rejected the basic position adopted by the Revenue and held that the Assessing Officer should accept the loss declared by the Assessee. The Tribunal concluded that the action of the Revenue in disregarding the books results cannot be sustained and the further conclusion that the action of the Revenue in presuming that the Assessee had incurred expenditure for creating intangible assets/brand or goodwill is without any basis. Accordingly, the loss declared by the Assessee in the return of income should be accepted by the AO and the action of disallowing the expenses in without any basis. We are of the view that the aforesaid conclusion of the Tribunal will equally apply to AY 2012-13 to 2014-15 also as the basis of making the addition in these AYs are also the same as it was made in AY 2015-16. The allegation of the revenue regarding the Assessee and M/S.WS Retail Pvt.Ltd., being related parties does not emanate from the order of assessment. The revenue cannot be permitted to take a stand which was not the factual basis on which addition was made by the AO. Even otherwise, there is no basis for the stand taken by the revenue in the grounds of appeal. We therefore find no merit in these appeals by the revenue. Respectfully following the order of the Tribunal in Assessee s own case for AY 2015-16, we uphold the orders of the CIT(A) and dismiss, these appeals by the revenue.
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2019 (6) TMI 986
Entitlement to the benefit of section 10(37) - proof of compulsory acquisition - as submitted by assessee property as taken over by Vizhinjam International Seaport, was an agricultural land and was compulsorily acquired by the Government of Kerala - only reason for the A.O. to deny the benefit of section 10(37) was that the impugned land was acquired by executing a sale deed in favour of Vizhinjam International Seaport and it was not a case of compulsory acquisition - HELD THAT:- As in the case of Balakrishnan v. Union of India Others [ 2017 (3) TMI 745 - SUPREME COURT] had categorically held merely because the sale price was fixed through a negotiated settlement, the character of acquisition would still remain compulsory. In the instant case, the entire procedure prescribed under the Land Acquisition Act was followed, only price was fixed upon a negotiated settlement. The A.O. did not have case that the impugned land is not an agricultural land. Therefore, in view of the above judgment of the Hon ble Apex Court (supra), we hold that the acquisition of the urban agricultural land was a compulsory acquisition and the same would be entitled to the benefit enumerated in section 10(37) of the I.T.Act. - Decided in favour of assessee.
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2019 (6) TMI 985
Revision u/s 263 - AO had failed to examine the applicability of provisions of section 56(2)(vii)(b)(ii) - purchase of shops on less than stamp valuation - HELD THAT:- On a perusal of the material available on record, including the impugned assessment order, we find not even a hint of any enquiry conducted by the AO for examining the applicability of the aforesaid provision to the purchase of shops by the assessee. In fact, in the grounds raised in the present appeal, the assessee has not raised any ground with regard to the applicability of section 56(2)(vii)(b)(ii). The only submission made by AO having completed the assessment after conducting necessary enquiry with regard to the purchase of shops, the assessment order cannot be held to erroneous and prejudicial to the interests of Revenue. The facts on record clearly reveal that the AO has completely failed to examine the applicability of section 56(2)(vii)(b)(ii) to the subject transactions. Thus, non examination / non consideration of applicability of the aforesaid provision makes the assessment order not only erroneous but prejudicial to the interests of Revenue. Therefore, in our considered opinion, learned Principal CIT has correctly exercised his power under section 263 to revise the assessment order. We may observe that while setting aside the assessment order CIT has not expressed any opinion with regard to applicability of section 56(2)(vii)(b)(ii). Rather he has directed the AO to make necessary enquiry keeping in view the provision of section 56(2)(vii)(b)(ii). Therefore, it is open for the assessee to make all submissions available to it to demonstrate that the provisions of section 56(2)(vii)(b)(ii) is not applicable to the subject transactions. We further direct the AO to consider the submissions made by the assessee on its own merits and decide the issue after dealing with all the submissions made by the assessee by a well-reasoned and speaking order. - Decided against assessee.
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Customs
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2019 (6) TMI 984
Duty Free Import Authorization inflation in CIF value - Import of Printing Ink-Intaglio - HELD THAT:- The appeal is admitted.
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2019 (6) TMI 983
Condonation of delay of 731 days in filing appeal - valuation of imported goods - HELD THAT:- There is a delay of 731 days in filing the appeal which has not been explained satisfactorily - Even on merits, there is no reason to interfere with the impugned order - appeal dismissed both on the ground of delay as well as on merits.
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2019 (6) TMI 982
Application for early hearing of the appeal - Benefit of Notification No. 43/2002 - HELD THAT:- Let the appeal be listed in the month of March, 2019 before the appropriate Bench - Application disposed off.
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2019 (6) TMI 981
Benefit of N/N. 64/88-CUS dated 1st March 1988 - Whether the CESTAT was right in law in setting aside the duty demand, confiscation and penalty? - HELD THAT:- This Court admitted the appeal of the Revenue on the issue of admissibility of Notification No. 64/88-CUS dated 1st March 1988. In the above view, it is submitted that this Court should exercise the jurisdiction to entertain this appeal. This appeal is adjourned to 1st July 2019.
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2019 (6) TMI 980
Duty Drawback - applicability of Circular No.83/2003-Customs dated 18.09.2003 in post GST era - HELD THAT:- The Learned Assistant Solicitor General, who is before this Court, submitted that the third respondent Board will issue a clarification qua said circular. If this is done that will put an end to the controversy in instant writ petition and that will douse the anxiety of the writ petitioner in the instant writ petition. The impugned SCN is not quashed, but kept in abeyance for period of eight weeks from the date of receipt of a copy of this order. Within the aforesaid eight weeks, the third respondent Board shall issue a clarification particularly with reference to issue raised by the writ petitioner pertaining to applicability of said circular post GST era - Depending on the clarification, either show-cause will get revived and carried to its logical end or dropped, obviously post eight weeks. Petition disposed off.
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2019 (6) TMI 979
Condonation of 484 days delay in filing an appeal - no proper explanation given for condonation of delay - HELD THAT:- There is no attempt even made to explain the delay from 13th June, 2017 when the Principal Commissioner of Customs sought information of likelihood of success in appeal along with grounds of appeal till 5th September, 2018 when the file was again put up before the Principal Commissioner of Customs. This inaction shows negligence on the part of the Revenue in challenging the order dated 18th April, 2017 of the Tribunal in time. On being asked whether any responsibility has been fixed for the delay, we were informed that it is a separate issue. Thus no sufficient cause has been made out for condonation of delay - Notice of Motion is dismissed.
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2019 (6) TMI 978
Grant of Bail - It has been contended by the Learned Counsel for the applicant that the co-accused Vinay Kumar Agarwal having similar role has been granted bail by this Court vide order dated 7-1-2019 - HELD THAT:- The larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court in the case of Dataram Singh v. State of U.P. and Another, [ 2018 (2) TMI 410 - SUPREME COURT ] and without expressing any view on the merit of the case, I find it to be a case of bail. Let applicant Ramdhani Maurya be released on bail in Case Crime No. Nil of 2018, under Section 135 [of the] Customs Act, 1962, Police Station-Custom Locality, District-Varanasi on furnishing a personal bond and two sureties each in the like amount to the satisfaction of magistrate/Court concerned, subject to conditions imposed.
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2019 (6) TMI 977
Principles of natural justice - cross-examination of witnesses of the prosecution not allowed - production of evidences under Customs Act - HELD THAT:- A party to the proceeding, introducing evidence through a natural person in the proceeding, is obliged to offer such witness for cross-examination to the opposite party. It is for the opposite party to either cross-examine such witness or to decline the same. However, till such time, the witness is offered for cross-examination to the opposite party, the statement given by such witness, in the proceeding does not become admissible as evidence in the proceeding. Such statement cannot be treated as evidence. Section 138B of the Act of 1962 carves out few exceptions from such cardinal principle in a proceeding. Section 138B(1) of the Act of 1962 stipulates that, a statement made and signed by a person before any gazetted officer of the customs during the course of any enquiry or proceeding under the Act of 1962 shall be relevant, for the purpose proving, in any prosecution of an offence under the Act of 1962, the truth of the facts which it contains when, the person who made the statement is dead, or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable, or when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. The exceptions carved out under Section 138B(1) of the Act of 1962 from the general law of evidence, apply to a proceeding of adjudication under the Act of 1962, as it would apply in a proceeding before a Court for the prosecution of any offence under the Act of 1962. The Act of 1962 empowers the Customs authorities to make an enquiry, initiate adjudication proceedings and file prosecution. The Act of 1962 allows an appeal against an order-in-original passed in the adjudication proceeding. There [are] provisions for revision also. When making an enquiry, an officer of the Customs may require attendance of a person to make a statement. He is empowered to require a person to make a statement under Section 108 of the Act of 1962. Such a statement made in the course of an enquiry, and if its limited to the enquiry, then, the question of the person making the statement being open to cross-examination does not arise. However, once an adjudication proceeding is initiated, and a statement made under Section 108 of the Act of 1962 is introduced as a piece of evidence in such adjudication proceedings, then, the person making that statement must be made available for cross-examination to the party against whom such statement has been used in the adjudication proceedings, subject to the provisions of Section 138B of the Act of 1962. In the facts of the present case, the order-in-original records that, the petitioner was disallowed cross-examination of any person making any statement against the petitioner under Section 108 of the Act of 1962. The order-in-original relies upon such statements as evidence. The impugned order-in-original does not record a finding that, any of the conditions specified under Sections 138B(1) of the Act of 1962 stands satisfied thereby making such statements relevant without cross-examination of such witness by the petitioner. The adjudication proceedings conducted by the adjudicating authority and resultant the impugned order-in-original stand vitiated by breach of principles of natural justice - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 976
Validity of the notice issued under Section 28(1) of the Customs Act, 1962 - collection of duty on loading, unloading and handling charges - Rule 9(2)(b) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - HELD THAT:- Issue decided by Supreme Court in the case of WIPRO LTD. VERSUS ASSISTANT COLLECTOR OF CUSTOMS OTHERS [ 2015 (4) TMI 643 - SUPREME COURT ] where it was held that proviso (ii) to sub-rule (2) of Rule 9 introduced vide Notification dated 05.07.1990 is unsustainable and bad in law as it exists in the present form and it has to be read down to mean that this clause would apply only when actual charges referred to in Clause (b) are not ascertainable - the writ appeal is allowed in terms of the order of the Hon ble Supreme Court.
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2019 (6) TMI 975
Jurisdiction - invocation of provisions of Section 18 of the Customs Act, 1962 - HELD THAT:- The impugned order is without jurisdiction when it proposes to invoke the provisions of Section 18 of the Customs Act, 1962 - reliance placed in the case of JAJU PETRO CHEMICAL PVT. LTD. ANOTHER VERSUS THE COMMISSIONER OF CUSTOMS (PORT) OTHERS [ 2017 (7) TMI 633 - CALCUTTA HIGH COURT] . The action of the authorities in reclassifying the same product after its writing dated December 16, 2015 and requiring the petitioners to revert to Serial No. 2202 10 10 is unacceptable. Notwithstanding the petitioners having a statutory alternative remedy by way of an appeal, the writ petition is maintainable, if the petitioners substantiate that, fundamental rights of the petitioners stand breached or that, the impugned order is without jurisdiction or was passed in breach of the principles of natural justice is non-speaking. The impugned order-in-original is without jurisdiction and is dismissed.
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2019 (6) TMI 974
Jurisdiction - invocation of provisions of Section 18 of the Customs Act, 1962 - HELD THAT:- The impugned order is without jurisdiction when it proposes to invoke the provisions of Section 18 of the Customs Act, 1962 - reliance placed in the case of JAJU PETRO CHEMICAL PVT. LTD. ANOTHER VERSUS THE COMMISSIONER OF CUSTOMS (PORT) OTHERS [2017 (7) TMI 633 - CALCUTTA HIGH COURT] . The action of the authorities in reclassifying the same product after its writing dated December 16, 2015 and requiring the petitioners to revert to Serial No. 2202 10 10 is unacceptable. Notwithstanding the petitioners having a statutory alternative remedy by way of an appeal, the writ petition is maintainable, if the petitioners substantiate that, fundamental rights of the petitioners stand breached or that, the impugned order is without jurisdiction or was passed in breach of the principles of natural justice is non-speaking. The impugned order-in-original is without jurisdiction and is dismissed.
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2019 (6) TMI 973
Imposition of penalty u/s 117 of CA - demand solely based on statement under Section 108 of the Customs Act given before the officers of SIIB - retraction of statements - HELD THAT:- The appellants in their reply to the show-cause notice has completely retracted their statement given earlier and has alleged torture and inhuman treatment made to them during the recording of the statement. Further even the copies of the statement have not been given to the appellants and they were not supplied all the documents relied upon by the Department and thereby deprived them to defend themselves properly. Further, the Department has not filed any report in the Police Station for the theft of the seal of the Department. Further, no Mahazar was prepared on the spot for the recovery of the alleged seal and the said alleged seal was never shown to the appellant. Revenue has not been able to prove the allegations against the appellants with cogent and convincing evidence so as to warrant the imposition of penalty under the provisions of Section 117 of the Customs Act, 1962 - penalty set aside - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 972
Waiver of late filing charges - late presentation of the Bill of Entry - confusion due to name in the Bill of lading - period 31.07.2017 to 08.02.2018 - the date of entry of the vessel at the port up to the date of presentation of amended IGM - Section 46 of the Customs Act, 1962 - HELD THAT:- There is sufficient force in the contentions of the Ld. DR when he pointed out to the date of Bill of Lading from which it is very much clear that the appellant was also very much in the know of the developments. Some of the e-mail exchanges between the parties inter se placed on record refers to the correspondences made after the Bill of Lading which carries the name of the appellant as the consignee. Further, the correspondence/exchange of emails placed on record are all inter-se communications which are not having any evidentiary value and the same is not binding on the Revenue. Though the appellant has explained the delay up to the date of application for request of waiver, ie., 08.02.2018, the appellant s explanation is insufficient. Appeal dismissed - decided against appellant.
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2019 (6) TMI 971
Suspension of CHA License - imposition of penalty - benefit of Duty Free Import Authorisation (DFIA) - it appeared that CHA failed to discharge his responsibilities and duties cast upon him as custom broker under the provisions of CBLR, 2013 and he appeared to have abetted for export of goods by not discharging his responsibilities, duties and obligations cast upon him - HELD THAT:- The allegations of Revenue against the appellant CHA are prima-facie vague for the reason that the offence report is based on one show cause notice No. 121/2018, issued in September, 2018 on the aforementioned parties being M/s Encanterra Traders Private Limited, M/s Chef s Choice, M/s Hira Traders and their Directors/Partners / Prop. wherein the appellant CHA has not been made a co-noticee. Further, there is no allegation of connivance on the part of the appellant CHA firm with the aforementioned parties. Further, the offence report has been issued almost after one year when the offence was detected in October, 2017 and investigations began. We also find that the appellant have not violated any of the CHA regulations and have obtained proper documents required to meet the requirement of KYC. It is nowhere alleged, in what way the appellant did any irregularity in handling export consignment, for which they have filed the Bill of Entry on behalf of the said M/s Encanterra Traders Private Limited. The appellant have had also verified the IEC code of the said client M/s Encanterra Traders Private Limited and found to be in order. Further, no physical verification of the premises or address of the IEC holder is mandated in the CBLR regulation, nor it is a general requirement. Thus, there is no case made out against the appellant CHA, as alleged in the offence report or in the impugned order of suspension. Accordingly, the impugned order of suspension is set aside. CHA license restored - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 970
Prohibited goods or not - Betel Nuts - Confiscation - it was alleged that declared CIF value is less than ₹ 110 per Kilogram specified for Free Import by DGFT in the Notification No. 12(RE- 2013)/2009-2014 dt. 13/05/2013 - HELD THAT:- An identical issue has been considered by the very same Bench in COMMISSIONER OF CUSTOMS (PREV.) , W.B., KOLKATA AND ORS. VERSUS GOLD INTERNATIONAL AND ORS. [2017 (11) TMI 1834 - CESTAT KOLKATA] relied by the Consultant. The Tribunal in its earlier Order had considered the decision of the Hyderabad Bench of the Tribunal in the case of M/S INTERNATIONAL SEAPORT DREDGING LTD. VERSUS CC ST, VISAKHAPATNAM-CUS [ 2016 (11) TMI 176 - CESTAT HYDERABAD] . Finally, the Tribunal took the view that since the goods were cleared after collecting duty on the basis of tariff value, it cannot be held that the goods are prohibited. Confiscation of the imported Betel Nuts is set aside - Redemption fine and penalty are also set aside - the duty paid as per tariff value is upheld - appeal disposed off.
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2019 (6) TMI 969
Finalization of provisional assessment - classification of goods - refrigerator - benefit of N/N. 85/2004-Cus., dated 31st August, 2004 - primary claim of the appellant is that the declared classification was the same as the code in the certificate of origin issued by the competent authority in the country of export and that it is not within the competence of the assessing officer to alter such classification. HELD THAT:- The imported goods, though claimed to be refrigerators , were found to be combined refrigerator freezer and, hence, neither covered by the claimed heading nor eligible for the claimed exemption. It is admitted by the appellant that the declaration was made on the basis of the code in certificate of origin ; Section 12 of Customs Act, 1962 requires that the rate of duty be determined in accordance with Customs Tariff Act, 1975 and a code in a certificate cannot be the sole basis for such determination. No other detriment has been visited upon the appellant. The appellant has discharged the duty liability, as revised in the finalised assessment, and has not mounted a serious challenge to the findings of the lower authorities. Appeal dismissed - decided against appellant.
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Securities / SEBI
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2019 (6) TMI 968
Sham loan transaction - violation of the SEBI laws - whether the loan agreement, in fact, wrested control of NDTV to VCPL? - Whether call option gives an unfettered right of controlling the company without exercising the right of call option? - HELD THAT:- Upon the interpretation of the loan agreement at this stage, we are of the opinion that these agreements have remained in existence for the past 10 years. The loan agreements were executed in the year 2009 and 2010. Whether there was a violation of the SEBI laws including the PFUTP Regulations are all required to be considered. At this stage, prime-facie , we are of the opinion that a listed company which is managed by the appellants holding more than 61% of the total shares cannot remain headless. The impugned order has been passed restraining the appellants, Dr. Prannoy Roy and Ms. Radhika Roy from occupying a position as a Director or in any Key Managerial personnel in NDTV for a period of two years. Such orders prima facie would not be in the interest of the shareholders of the NDTV or for that matter the investors at this stage. We accordingly, grant the respondent six weeks time to file a reply from today. Three weeks thereafter to the appellants to file a rejoinder. The matter would be listed for admission and for final disposal on September 16, 2019. Even though the prayer for an interim stay was strongly opposed by the learned senior counsel for the respondent, considering the aforesaid, we stay the effect and operation of the impugned order dated June 14, 2019 till the next date of hearing. However, the appellants shall not alienate or create any encumbrance on their shareholding in NDTV till further orders. It is essential for SEBI to supply a copy of the impugned order to the aggrieved party, namely, the appellants. An adjudication proceeding had been initiated by SEBI by issuance of the show cause notice. The appellants thus have the first right to be supplied a copy of the impugned order from SEBI.
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Insolvency & Bankruptcy
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2019 (6) TMI 967
Initiation of Corporate Insolvency Resolution Process - Corporate Debtor defaulted in paying an amount of ₹ 57,26,667 against the invoices raised on 04.08.2011 and 08.08.2011 by the Operational Creditor towards supply of TMT Bars - HELD THAT:- As to operational debt, the consideration that goes to buyer is goods or services as the case may be, whereas the consideration comes to the seller or service provider is not the goods but money. That money value changes as time keeps running. It is understandable if goods of the same value come back, the creditor can sell the same in the market at the rate prevailing as on that day. In a situation like this, if value addition that accrues upon the money yet to be paid to such seller is not taken into consideration, it will become injustice. It may be said that since alternative remedy is available to have recourse before civil court, the creditor can proceed before civil court, because the creditor is not remediless. This argument or proposition remains right if any prohibition to claim interest by operational creditor is envisaged under the Code, as long as such prohibition is absent, the operational creditor obviously can claim interest as envisaged under Sale of Goods Act. As to material placed before this Bench, this Operational Creditor counsel having filed Purchase Orders, Invoices and the Acknowledgements reflecting that this debt is not barred by limitation and section 8 notice being served upon the debtor and the debtor having not disputed anything on the claim amount mentioned by the creditor, this Operational Creditor counsel has proved the existence of debt and default. Petition admitted - Mr. Karuppiah Muruganandan appointed as Interim Resolution Professional - Moratorium declared.
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2019 (6) TMI 966
Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - Corporate Debtor allegedly committed default in paying operational debt - whether there exist a dispute about the amount claimed which require investigation and adjudication? HELD THAT:- The Operational Creditor did not disclose these facts in his application filed under Section 9 of Insolvency and Bankruptcy Code, 2016. But the Operational Creditor claimed from the Corporate Debtor exact same amount pertained to same period for which he had made allegations of cheating etc. This itself shows that there is a serious dispute pending about the amount claimed by the Operational Creditor against the Corporate Debtor - there exist dispute about the amount of debt, hence, this application is not maintainable in view of the provision of Section 9(5)(II)(d) of I B Code. However it has to be seen whether the Corporate Debtor by way of reply of demand notice under Section 8 of Insolvency and Bankruptcy Code, 2016 has brought this fact to the notice of the Corporate Debtor. The Corporate Debtor did not say anything in his affidavit-in-reply that he has sent notice etc. No copy of reply is produced on record. But the Operational Creditor himself admitted this fact stating that on 13.04.2018, he received reply from the Corporate Debtor raising frivolous and baseless dispute (point 8 Part V of the application under Section 9 of Insolvency and Bankruptcy Code, 2016). This makes it clear that the Corporate Debtor has brought to the notice of the Operational Creditor pendency of dispute about the amount of debt as claimed by him. Thus, there exists serious dispute pending in between the Operational Creditor and the Corporate Debtor about the amount of debt, which require proper adjudication - this application is not maintainable under Section 9(5)(II)(d) of I B Code. Petition dismissed.
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2019 (6) TMI 965
Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - outstanding debt - section 9 of Insolvency Bankruptcy Code, 2016 - winding up petition petition - time limitation - HELD THAT:- It is pertinent to note that the date of default, admittedly, is 31.07.2009 and the period of limitation would be three years in the present case. Therefore, the limitation period for filing of Petition would expire on 30.7.2012. The Petition before the Hon ble High Court was filed on or after 24.06.2013 which is after almost 11 months from the date of legal notice dated 26.07.2012. It is pertinent to mention that Hon ble High Court of Delhi in Interactive Media and Communication Solution Private Limited vs GO Airlines Limited, [ 2013 (2) TMI 195 - DELHI HIGH COURT ] has held that a claim which is barred by limitation on the date of filing of the Petition cannot be said to be within limitation if the notice under section 434 of Companies Act demanding payment of the said claim was sent within limitation. In the present case, the notice under section 434 was filed on 26.07.2012 which is within limitation period; however, the petition for winding up was filed on 24.06.2013 which is beyond the period of limitation. Thus, it appears that the winding up petition has been filed beyond the period of limitation of three years. The petition is rejected as the debt being barred by law of limitation.
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FEMA
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2019 (6) TMI 964
Stay of demand - waiver of pre-deposit - Tribunal dismissing the appeals for non-prosecution - HELD THAT:- The appeals filed before the Tribunal could not have been dismissed for non-prosecution. Yet, we may point out that the conduct of the appellants in not appearing for several hearings also cannot be appreciated. We have to necessarily interfere with the common order passed by the Tribunal dated 14-9-2018, which was communicated to the appellants on 25-9-2018. So far as the conditional order passed by the Tribunal is concerned, considering the financial position pleaded by the appellants and their case that they are unable to realize export production in spite of their diligent efforts, we are of the considered view that the appellants have made out a prima facie case. However, this observation is made only for the purpose of imposing a condition on the appellants, so that the appeals before the Tribunal can be heard and disposed of on merits. Accordingly, CMA disposed of by slightly modifying the common order passed by the Tribunal by directing the appellants to deposit with the first respondent namely the Special Director, Enforcement Directorate, Government of India, 50% each of the penalty amounts imposed individually and furnish a bond for the balance 50% each and keep the bond alive till the appeals are heard and disposed of on merits by the Tribunal. No costs. Consequently, the connected CMPs are closed. The common order passed by the Tribunal dismissing the appeals for non-prosecution are set aside and the appeals are restored to the file of the Tribunal. The appellants are granted eight weeks time from the date of receipt of a copy of this judgment to deposit 50% each as directed above. Subject to the deposit of 50% each by the appellants within the time prescribed, the Tribunal shall fix a date for hearing of the appeals and pass orders on merits
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Service Tax
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2019 (6) TMI 963
Benefit of exemption notification - failure to fulfill the conditions - Condonation of delay in filing appeal - time limitation - principles of natural justice - HELD THAT:- the contention as raised neither relates to jurisdiction of the Adjudicating Authority nor can it be said that the Adjudicating Authority has acted in flagrant disregard to the law or violated principles of natural justice. The petitioner's plea with regard to the applicability of exemption notification was quite vague, inasmuch as the petitioner did not even bother to specify the exemption notification in question. Besides, in order to avail the benefit of exemption notification, it was for the petitioner to establish that the petitioner fulfilled the conditions with regard to supply to the specified agency. Merely raising a contention that the petitioner was entitled to benefit of exemption notification, really does not suffice in such matters. Petition dismissed.
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2019 (6) TMI 962
Imposition of Penalty - service tax paid along with interest before the issue of SCN - benefit u/s 73(3) of the Finance Act, 1994 - suppression of facts or not - bonafide belief - HELD THAT:- This issue is no more res integra and has been settled in favour of the appellant that once the appellant pays the tax along with interest before the issue of show-cause notice, then he is not liable to pay the penalty as held in the case of M/S. T.V. ISMAIL HAJI CO. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX [ 2017 (5) TMI 766 - CESTAT BANGALORE]. The appellants are not liable to pay the penalty under Section 78, which is set aside - As far as, penalty under Rule 7c read with Section 70 is concerned, it is also set aside because the same Rule 7 is not applicable in the facts and circumstances of the case - Penalty under Section 77(1)(a) is upheld because the appellant failed to get themselves registered under the service tax within the stipulated time. The penalty under Section 78 and Rule 7c read with Section 70 is dropped and penalty of ₹ 10,000/- under Section 77(1)(a) is upheld - appeal allowed in part.
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2019 (6) TMI 961
CENVAT Credit - input service distributor - non-reversal of proportionate cenvat credit taken against Baddi factory at Himachal Pradesh, enjoying area based exemption - Rule 6(3) of the Cenvat Credit Rules 2004 - HELD THAT:- A cursory reading of Rule 6 would reveal that it deals with admissibility and non-admissibility of cenvat credit on input used in or in relation to the manufacture of exempted goods or for provision of exempted service or input service and it does not deal with manufacturer or service provider. As has been interpreted in several decisions in or in relation to is a broader concept which encompasses the entire manufacturing process or provision of services and it has not excluded input service provider (ISD) from its purview since Rule 7 also states that ISD would distribute cenvat credit in respect of service tax paid on the input service to its manufacturing units or units providing output service or outsource manufacturing units. Rule 6(5), as was existing during the relevant period, is applicable to the appellant and the benefit of the same was not extended to the appellant. Further there are three contradictory calculation sheets given in the show cause and by the lower authorities which is required to be reassessed on the basis of available records. This is a fit case which requires re-adjudication - appeal is allowed by way of remand to the Commissioner (Appeals) for re-assessment of duty liability only.
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2019 (6) TMI 960
Refund of excess paid service tax - rejection of refund claim only on the ground that the issue of Service Tax liability on notional interest is pending - HELD THAT:- Confirmation of demand of Service Tax on notional interest on security deposit was challenged before the Hon ble High Court and the same is pending before the same but rejection of the refund claim only on the ground that demand is pending in another case is not tenable in law. Further, both the cases are independent, the present case relates to the refund of excess Service Tax paid whereas the demand for Service Tax on notional interest on security deposit is altogether independent litigation which is pending disposal before the Hon ble High Court. Further it is a settled law that refund cannot be denied merely on the ground that some demand is pending in another case which is subjudice before the Court. The rejection of refund claim only on the ground that the issue of Service Tax liability on notional interest is pending is not sustainable in law - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 959
CENVAT Credit - input services - purchase of Group Insurance Policy to the extent of 4/5 times of the tax paid - HELD THAT:- The entire credit availed towards purchase of Accident Group Insurance policy is admissible to the Appellant and it had rightly availed so - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 958
Extended period of Limitation - Business Auxiliary Service - Legal Service - services provided to Government agencies - malafide intentions or not - imposition of penalties - HELD THAT:- The Government does not had intention to evade payment of duty, therefore, in the present case we hold that extended period of limitation is not invokable - extended period of limitation as well as penalty not imposable - demand upheld for normal period. Commercial Training or Coaching Service - demand of service tax - HELD THAT:- Since the appellant does not have its own training institute and training is provided by franchisee training institutes, the service tax is not payable by the appellant in respect of computer and non-computer training because service recipients are trainees and the service providers are franchisee training institutes. Therefore, the demand in respect of Commercial Training or Coaching Service even for the normal period of limitation is not sustainable - demand not sustainable. Consulting Engineering services - HELD THAT:- Consultancy Engineering Services were provided in respect of survey work allotted to Government Agencies. We further note that learned Counsel for the appellant had argued that the Consultancy Services were provided to Government Agencies - since the consultancy services were provided to Government Agencies by the Government Company, therefore, service tax is not payable on the said activity. Appeal allowed in part.
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2019 (6) TMI 957
Imposition of penalty - differential rate of tax paid before issuance of SCN with interest - Section 73(3) of Finance Act - Management Consultancy services - HELD THAT:- Since the tax with applicable interest stood discharged well before the issuance of SCN, the very SCN could not be issued in terms of Section 73(3) of the Act and the question of further imposition of equivalent penalty under Section 78 should not have arisen. The appellant has never disputed the differential service tax that became payable on account of change in tax rate. Since they have duly paid the differential tax with interest before issue of SCN, the imposition of penalty in this case is unwarranted. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 956
Refund - Scope of SCN - benefit of N/N. 19/2015 dt. 14/10/2015 - Commissioner(Appeals) in the impugned order has gone beyond the show-cause notice as well as beyond the adjudication order and decided that the appellant is not eligible to the benefit of the exemption notification - bar of unjust enrichment - Section 11B of the Central Excise Act, 1944 - HELD THAT:- The impugned order examining the eligibility of the appellant to the benefit of N/N. 19/2015 dt. 14/10/2015 is beyond the show-cause notice because in the show-cause notice, eligibility of the appellant to the benefit of the said Notification is not assailable. Further in the Order-in-Original also, the adjudicating authority has not disputed the eligibility of the appellant. The Order-in-Original has denied the refund only on the ground that the appellant has not produced any evidence regarding the payment of service tax on the said commission during that period. The appellant is entitled to the benefit of the exemption Notification No.19/2015 dt. 14/10/2015 but for quantification / verification of proof of payment of service tax and also to examine the unjust enrichment, the matter is remanded back to the original authority - appeal allowed by way of remand.
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Central Excise
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2019 (6) TMI 955
Benefit of N/N. 5/2006 (Sl. No. 5) dated 01/03/2006 - Footwear - denial of benefit of notification on the ground that the appellant had manufactured and cleared footwear without embossing the MRP on such footwear - HELD THAT:- Issue notice on the application(s) for condonation of delay as also on the appeal(s), returnable in four weeks.
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2019 (6) TMI 954
Penalty u/s 11AC of CEA - period from 1-4-1994 to 16-1-1997 - whether the penalty could also be imposed under the aforesaid provision for the period prior to 28-9-1996 inasmuch as Section 11AC of the Act under which the penalty proceedings were initiated, was brought on the statute book by amendment only w.e.f. 28-9-1996? - HELD THAT:- It is held by the High Court itself in the impugned judgment that Section 11AC is prospective in nature. In spite of that the High Court has upheld the penalty imposed by the appellant for the entire period including the period prior to 28-9-1996 - We are of the opinion that here the High Court clearly fell into error. Undoubtedly, Section 11AC is a penal provision. Once it is held to be prospective in nature, it becomes effective only from the date it was brought into force i.e. 28-9-1996. Therefore, no penalty for the period prior to this date can be imposed under this provision. The penalty for the period 1-4-1994 to 27-9-1996 set aside - penalty from 28-9-1996 onwards is upheld - appeal allowed in part.
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2019 (6) TMI 953
Classification of goods - trims for refrigerators - whether classifiable under CTH 39 as plastic articles or under heading 8418 as parts of refrigerators? - HELD THAT:- There is no merit in the appeal - appeal dismissed.
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2019 (6) TMI 952
Jurisdiction - Scope of judicial review - HELD THAT:- At the highest, as the ground raised, may have warranted some examination the exercise of appellate jurisdiction, but not in exercise of powers of judicial review. In this case, the petitioner, delayed the institution of appeal and therefore, cannot expect that the this Court converts itself into an appeal court whilst exercising powers of judicial review under Article 226 of the Constitution of India. The contention as raised would require reevaluation and re-appreciation of factual position. Such an exercise cannot be undertaken in the exercise of limited jurisdiction of judicial review. The impugned order was made on 10th March 2016. Even the final order by the Tribunal was made on 21st November 2017. This petition was however, instituted only on 29th September 2018. There is absolutely no explanation for inordinate delay in the institution of the petition - petition dismissed.
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2019 (6) TMI 951
Violation of principles of natural justice - opportunity of personal hearing - the complaint of the petitioner is not that there was no compliance whatsoever with the principles of natural justice or fair play but rather, the complaint relates to insufficient compliance with such principles - HELD THAT:- Since this is not a case of total noncompliance with principles of natural justice, the issue of prejudice also assumes significance. It is not sufficient for the petitioner to merely allege failure of natural justice, but further the petitioner, has to make out a case of consequent prejudice, particularly in a case where the complaint really is of inadequate opportunity and not of no opportunity whatsoever. The case of prejudice, if any, as also response to the same will essentially involve adjudication into factual aspects which exercise can be effectively undertaken in the course of appeal rather than in these proceedings. The petitioner, in the facts and circumstances of the present case, has therefore not made out a case warranting the exercise of extraordinary jurisdiction under Article 226/227 of the Constitution of India, bypassing the alternate and efficacious remedy by way of an appeal before the Appellate Authority. This is not a case of no opportunity but at the highest the complaint relates to 'no adequate opportunity'. The petitioner will therefore, have to make out a case, not only of failure of natural justice but also a case of consequent prejudice. All this, will require examination and evaluation of facts, which can be conveniently gone into the appeal rather than in the exercise of powers of judicial review - we are satisfied that no case has been made out to entertain the present petition bypassing the alternate and efficacious remedy of appeal clearly available to the petitioner. Petition dismissed.
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2019 (6) TMI 950
Maintainability of petition - alternative statutory remedy of appeal - Detention of goods - HELD THAT:- There is no dispute to the fact that the main writ petition before the Writ Court was filed challenging only the consequential detention notice, dated 04.01.2019 with further direction to drop all further proceedings issued pursuant to the order in Original dated 09.01.2018. Needless to state that when an order in Original was passed against the petitioner by the competent authority, without challenging the same, the petitioner is not entitled to challenge the consequential proceedings viz., the detention notice. The petitioner is permitted to withdraw the main writ petition itself and accordingly, the writ petition itself is dismissed as withdrawn with liberty to file an appeal before the appellate authority challenging the order in Original.
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2019 (6) TMI 949
Maintainability of writ petition - Refund of CENVAT credit - Rule 5 of 'Cenvat Credit Rules, 2004' - Statutory Appeal under Section 35-B of the CE Act - HELD THAT:- A careful perusal of Section 35-B of CE Act, reveals that the powers of the Tribunal have not been circumscribed in any manner qua testing no notification plea and there is nothing before this Court to demonstrate that the Tribunal i.e., CESTAT cannot go into the aforesaid aspect of the matter. Therefore, it is clear that an alternate remedy qua impugned order is available for the writ petitioner. With regard to the alternate remedy, it is no doubt, not an absolute Rule. In other words, alternate remedy is a rule of discretion and not a rule of compulsion. Though alternate remedy is a Rule of discretion, in a long line of authorities, the Hon'ble Supreme Court has repeatedly held that exercise of writ jurisdiction on the teeth of alternate remedy, will be when the matter falls under certain specified exceptions. In the instant case, after hearing both the aforesaid learned counsel, this Court is unable to persuade itself to believe that the petitioner is able to demonstrate that it's case falls under any of the aforesaid exceptions. In other words, the facts and circumstances of this case, cannot be brought within the contours and four corners of the exceptions, adumbration of which have been made - this Court is of the considered view that owing to the factual matrix this is an appropriate case to leave it open to the writ petitioner to avail the alternate remedy by filing a Statutory Appeal to CESTAT under Section 35-B of the CE Act. Petition disposed off.
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2019 (6) TMI 948
CENVAT credit - inputs - export of goods - rebate claimed - HELD THAT:- We admit the appeal on the ground that there is substantial point of law involved. Nonetheless considering the fact that some factual issues are also involved, we think it fit to remand the matter back to the Learned Tribunal after setting aside the impugned order dated 20th March, 2018 with a request to the Learned Tribunal to re-hear and re-determine the matter afresh within three months of communication of this order. Appeal disposed off.
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2019 (6) TMI 947
Delayed adjudication of show cause notice - SSI Exemption - clearance of Medicaments on payment of duty for loan licensees - branded goods or not - period 2001-02 to 2005-06 - time limitation - HELD THAT:- though the show cause notice came to be issued in the present case in the year 2006 and it remained dormant for pretty long years without any adjudication, even after retrieving the case from the Call Book in the year 2009 the adjudication into the case did not conclude till 24-5-2018, the petitioner cannot be blamed for non-adjudication of the show cause notice as he had never requested to transfer it to the Call Book or he has never delayed any proceedings pending adjudication. The Department has failed to put forth any justification or show any explanation for delay in adjudicating the show cause notice even after it had retrieved the case from the Call Book on 28-9-2009 till the passing of the order impugned in this petition. As such, it has to be adjudicated within reasonable time and in absence of any proper explanation thereof, it is unlawful and arbitrary - SCN cannot be sustained. Alternative remedy of appeal - HELD THAT:- Since the impugned order is quashed and set aside on the ground of delay in adjudication proceedings, the argument of alternative remedy raised by the respondent is rejected as the proceedings itself is vitiated for delay in adjudication proceedings. There is no need to relegate the petitioner to the alternative remedy as the order impugned is held to be unreasonable and arbitrary. Petition allowed - decided in favor of petitioner.
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2019 (6) TMI 946
Imposition of penalty under Rule 209A read with Rule 26 of the Central Excise Rules, 2002 - HELD THAT:- This Court is of the opinion that the petitioners are entitled to relief in view of the consistent view taken in this regard by the Courts. In Suvidhe Ltd. v. UOI, 1996 (82) E.L.T. 177 (Bom.), it was held that the amount paid as pre-deposit, for pursuing the appellate remedy or for any other reason mandated by law, cannot be treated as a tax as that is only a condition for pursuing the appellate remedy. The petitioners contention that they are entitled to interest from the date of the final order of the CESTAT, is justified and warranted. As to the second submission made with respect to the invalidity of Section 35FF on account of its prospective nature, the Court recollects that the provisions of law ought not to be read in a manner so as to invalidate them. The writ petition is allowed.
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2019 (6) TMI 945
Clandestine removal - main allegation against them as per show cause notice is that they have supplied invoices to one M/s. Delight Industries, Delhi, to facilitate the availing of cenvat credit without supplying goods - HELD THAT:- In the chain of transaction, supply of goods in question from M/s. Bokaro Steel Limited to M/s. Prompt Enterprises has not been doubted. Further, the transaction between M/s. Prompt Enterprises and the appellant M/s. Amar Steel Syndicate, have not been doubted. The doubt has been raised by Revenue on not finding the goods at the time of inspection, for which a cogent explanation was given by the partners of M/s. Delight Industries that such goods were lying with their job workers at the relevant time, that no further investigation was made in this respect. So far, the evidence of the transporters and personnel of M/s. Prompt Enterprises is concerned, such statements have been recorded behind the back of these appellants. There is no mis-match of the records of these appellant nor any mis-match in the physical stock on the day of search (30 September, 2014) was found. Further, the Revenue have not investigated that if the goods were not received by M/s. Delight Industries, then to where alternatively were they dispatched. Further, the crucial evidence of the truck drivers in question have not been recorded. Further, no goods were found to be removed clandestinely attracting confiscation and accordingly the penalty invoked under Rule 25 on the appellant firm and Rule 26 on the partners is bad and not imposable. The cogent explanation given by the partners of M/s. Delight Industries was not found untrue - the parties in question have maintained proper records and the transaction in question was found recorded in the relevant books of accounts, registers, maintained in ordinary course of business. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 944
Imposition of penalty - benefit of N/N. 1/2011-CE dated 1.3.2011 as amended - demand of excess duty without availing the CENVAT credit - HELD THAT:- In the present case appellant has collected the duty from its customers and not deposited the same with the Government amounts to suppression of fact with intent to evade duty. Further, I find that the appellant have also not filed returns for which he has been imposed penalty. I also find that the appellant has deposited ₹ 8,43,829/- during the course of investigation which has been appropriated in the impugned order. The original authority has imposed equal penalty of ₹ 20,31,243/- under Section 11AC of the Central Excise Act, 1944 on the firm and also imposed equal penalty on Partner Shri M. A. Mathew under Rule 26 of Central Excise Rules, 2002 which according to me is on a very higher side because once the equal penalty has been imposed on the firm, the imposition of penalty of ₹ 20,31,243/- on the Partner is not justified and therefore the penalty reduced to ₹ 1,00,000/- on Shri M. A. Mathew, Partner of the firm under Rule 26 of Central Excise Rules, 2002. Appeal dismissed - decided against appellant.
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2019 (6) TMI 943
CENVAT credit - duty paying documents - credit availed on the basis of photocopies of the Bill of Entry - not valid documents - Rule 9 (1) of CCR - HELD THAT:- In the present case, the receipt of the inputs and duty paid on the inputs was used in the manufacture of the final product is not in dispute and the Department could have verified all these documents from their record. The Division Bench of the Delhi Tribunal in the case of CENTURY METAL RECYCLING PVT. LTD. VERSUS CGST, CCE, ALWAR [ 2018 (7) TMI 984 - CESTAT NEW DELHI] on an identical issue has held that As long as the input is received in the factory of the production and used for the manufacture of excisable goods, there should not be any bar in taking Cenvat credit under Rule 9 thereof which is substantial benefit and not to be denied on account and procedural ground. In various decisions, it has been consistently held that CENVAT credit can be taken on the photocopy of the Bill of Entry provided other requirement with respect to receipt of input into the factory, duty paid character inputs and their use is not in dispute - Further, the appellant has submitted the various documents to prove the receipt of its usage but the same has not been considered and CENVAT credit has been denied merely on the ground that photocopy of the Bill of Entry is not the proper document. Case remanded to the original authority only for the purpose of verification of the documents relating to its receipt and usage of the inputs - appeal allowed by way of remand.
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2019 (6) TMI 942
CENVAT Credit - input services - courier service - credit denied on the ground that the appellant is selling the goods at their factory gate, therefore, for the courier service, they are not entitled to avail the Cenvat credit - HELD THAT:- In this case, the goods were sold through courier and till the goods are delivered to the buyer, the appellant is the owner of the goods, as in case, buyers refuse to take the delivery of the goods, it is the duty of the courier to return back the goods to the appellant. In that circumstance, the goods have been delivered by the appellant at buyer s place and the place of buyer is the place of removal in facts and circumstances of the case. Therefore, the appellant is entitled to avail the Cenvat credit on courier service. Credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (6) TMI 941
Input tax credit - KVAT Act - failure to remitting of tax on the part of seller - Whether remitting of tax by registered selling dealer is a condition precedent in claiming input tax credit by the purchasing dealer against a valid invoice with the tax component paid? - HELD THAT:- Sections 10[2]and [3] of the KVAT Act contemplates what is input tax in relation to any registered dealer and the net tax payable by a registered dealer in respect of each tax period. Section 11[a] [1] to [9] deals with input tax restrictions. Section 11[a][9] would be relevant for the purposes of the present case which spells out about the input tax restrictions inasmuch as the tax paid on goods purchased by a dealer who is required to be registered under the Act, but has failed to register. It is also admitted by the prescribed authority that there is no provision in KVAT Act which restricts input credit on purchases effected from defaulting dealers. It is clear that the benefit of input tax cannot be deprived to the purchaser dealer, if the purchaser dealer satisfactorily demonstrates that while purchasing goods, he has paid the amount of tax to the selling dealer. If the selling dealer has not deposited the amount in full or a part thereof, it would be for the revenue to proceed against the selling dealer - Indisputably, the petitioner has purchased the goods from a registered dealer not from an unregistered dealer. Section 9 of the KVAT Act provides collection of tax by registered dealers. If there is any default on the part of such registered dealers in not remitting the tax, so collected into the Government treasury or any designated bank and furnish monthly returns as specified under Section 35 to the prescribed authority, the proceedings are required to be initiated against such registered selling dealers in accordance with the provisions of the KVAT Act. The re-assessment orders and the demand notices at Annexures A, B, C and D are set aside - proceedings are restored to the file of the respondent No.1 prescribed authority for reconsideration. Respondent No.1 prescribed authority shall re-consider the matter in accordance with law and after providing an opportunity of hearing to the petitioner shall conclude the re-assessments in an expedite manner - Petition allowed by way of remand.
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2019 (6) TMI 940
Validity of assessment order - primary and pivotal submission made by learned counsel for writ petitioner is that a perusal of the impugned assessment orders made by the first respondent, would reveal that the first respondent has not made any independent assessment and the first respondent has merely accepted the proposal given by the enforcement wing - writ petitioner assessee has not availed of the opportunity given to the writ petitioner for filing documentary evidence - HELD THAT:- There is no elaboration whatsoever as to why the assessing authority has accepted the proposal given by the enforcement wing. In other words, there is nothing in the impugned assessment orders to show what weighed the mind of the assessing officer to accept the proposal given by the enforcement wing. In the absence of such discussion, it follows as an inevitable sequitur that there is nothing in the impugned orders to say that the first respondent has applied his / her mind independently ie., independent of the proposal of the enforcement wing. Without embarking upon the exercise of ascertaining whether the first respondent has applied his / her mind independent of the proposal given by the enforcement wing, suffice to say that nothing has been recorded in the impugned assessment orders to show that there is independent application of mind qua proposal given by enforcement wing. Impugned order are set aside on the sole ground of not making assessment independent of the proposal of the enforcement wing / not giving reasons for accepting enforcement wing proposal - the first respondent shall redo the assessments for all the seven years in accordance with law - petition disposed off.
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2019 (6) TMI 939
Deemed assessment - validity of assessment order - Section 22(2) of TNVAT Act - imposition of tax on turnover - service of notice to petitioner - HELD THAT:- The issue covered in the case of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] where it was held that this Court is fully convinced that the procedure adopted by the respondent, Assessing Officers in all these cases are half baked attempts, which have not yielded results and these cases are before this Court or before the Appellate Authorities and all that the Assessing Officers can record is that they have issued show cause notices or passed orders reversing the Input Tax Credit with no appreciable impact on the revenue collection. The case of JKM Graphics Solutions is now governing the field and the procedure of making an assessment with regard to an assessee by relying on details in the websites and web portals of other entities / individuals is incorrect besides being unsafe. Therefore, it follows as a further sequitur that the writ petitioner is entitled to have the impugned order set aside on the ground that it is in violation of JKM Graphics Solutions Private Limited principle - the immovable property belonging to the petitioner has been attached pursuant to the assessment After submission of new methodology /module for assessment before learned single Judge, which this Court is informed is being done in the course of ensuing week, respondent shall make assessment afresh - Attachment of immovable property made vide proceedings dated 20.02.2013 shall continue to remain until adjudication and assessment afresh - petition allowed by way of remand.
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2019 (6) TMI 938
Rectification of Mistakes - validity of assessment order u/s 9[2] of CST Act, 1956 - petitioner submit that it is in order to avoid the scenario of remand from the higher Appellate Forums, which has been suffered by the assessee relating to the assessment year 2006-07, the petitioner filed the rectification application under Section 69 of the KVAT Act seeking rectification of the reassessment order before the Assessing Officer to examine each individual transactions - HELD THAT:- It is only an apprehension of the petitioner that the assessment order passed by the KAT relating to the assessment year 2006-07 would be repeated for the assessment year 2012-13. It is trite law that Section 69 of the KVAT Act can be invoked only with a view to rectify any mistake apparent from the record. The phrase mistake apparent from the record cannot be enlarged to re-examine/re-analyze/re-visit the concluded issues based on the factual aspects, which were before the authority at the time of passing of the assessment order. The scope of the rectification of mistakes is limited. The request of the assessee to re-examine the individual transaction would not come within the ambit of error apparent on the face of the record. It is the subjective perception of the assessee. The First Appellate Authority has the co-extensive jurisdiction of the Assessing Authority in as much as examination of the documents as now requested by the petitioner. Hence, in the circumstances, no ground is made out by the petitioner to interfere with the order and endorsement impugned - petition stands dismissed with liberty to the petitioner to file a statutory appeal in accordance with law against the order impugned.
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Wealth tax
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2019 (6) TMI 937
Wealth tax assessment - revision application filed under Section 25 of the Wealth Tax Act - whether the properties in question are agricultural lands at the relevant time? - assessee for the first time before this Court, raised such a plea that the lands are agricultural lands without specifically pleading so in the revision application filed under Section 25 of the Wealth Tax Act - HELD THAT:- In the light of new plea, it is also noticed that learned counsel for writ petitioner fairly submits that the writ petitioner's case pertains to assessment year 2008-09 and subsequently in 2011, the land in question has been converted qua use. This statement is also noticed, which means, post 2011, there will be no claim by the writ petitioner under said Act. Order - The impugned order made by the first respondent is set aside. Though obvious, it is made clear that impugned order is set aside solely for the purpose of facilitating the authority to hear afresh (in the light of new plea raised by writ petitioner). First respondent is directed to hear the revision afresh in the light of the additional/new plea which the writ petitioner has raised, i.e., plea that the land in question is agricultural land. It is made clear that all pleas, arguments and questions pertaining to the agricultural land new plea of the writ petitioner are left open to be agitated before the first respondent revisional authority and the revisional authority shall consider the same and decide on the same in accordance with law. The revisional authority shall afford an opportunity of personal hearing to the writ petitioner before passing orders afresh. Entire aforesaid exercise shall be completed within a period of three months from the date of receipt of a copy of this order.
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