Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 29, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of IGST - credit card services - interest component of the Equated Monthly Instalments (EMI) of the loan granted by the respondent Bank on credit card - he services rendered by the bank by way of extending loans to the petitioner in the instant case amounts to credit card services, the interest component of EMI of the said loan is nothing but interest involved in credit card services which is not exempted from GST - HC
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Classification of supply - composite supply or not - arrangement for overhaul and repair of engines - It is observed that the Tender is for one Work Order comprising of different types of activities and arrangements all under one document and the applicant wants this Authority to divide the impugned activities artificially in four parts and answer the questions pertaining only to Major overhaul and Overhaul / repair of sub-assemblies. Such division of the single Tender to answer particular situations and ignore other situations will not be the right way to go forward and therefore this Authority will not be able to answer the questions raised by the applicant. - AAR
Income Tax
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Penalty u/s 43 of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015 (BMA) - Even before the bank account was detected by the revenue authorities, the entire balance in the said account, as per instruction of the assessee’s late mother, has been donated to a bonafide charity of the global repute. In these circumstances, the plea that such a lapse of non-disclosure, even if that be so, is only an inadvertent mistake, and that conscious non-disclosure or any mens rea in the non-disclosure is completely contrary to human probabilities, does merit acceptance. - AT
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TDS u/s 194C - Disallowance of Lorry Hire Charges u/s 40(a)(ia) - assessee is in transport business and on need basis, he hires lorries from time-to-time - payments have not been made to the any sub-contractor, therefore, question of TDS does not arise. - AT
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Additions on expenses on Road belonging to Zilla Parishad - The roads which were constructed around the factory with the help of the amount of Rs. 50,000 contributed by the assessee belonged to the Government of Uttar Pradesh and not to the assessee. - There can be no doubt that the construction of these roads facilitated the business operations of the assessee and enabled the management and conduct of the assessee’s business to be carried on more efficiently and profitably. - No additions - HC
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Validity of assessment order passed u/s. 143(3) r.w.s. 144C(13) read with section 144B - the assessment order has been passed beyond the time limit prescribed u/s. 144C(13) being more than one month after the date of receipt of the directions of the DRP by the AO, as per the information provided in the paper book submitted by the assessee's counsel. The factual veracity of these dates has not been disputed by the Revenue. - the order passed by the AO is void ab initio and liable to be quashed - AT
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TP Adjustment - TPO rejected the TP study undertaken by the assessee and proceeded to apply TNMM at the entity level which the assessee company has objected to - CIT(A) deleted the additions - We have perused the order passed by the CIT(A) particularly para 9 which is cryptic in nature and fails to lead to the specific conclusions as to why the TP adjustment made by the TPO are being deleted. Merely on the basis of generic observations without going into the functionality of the particular segments/international transactions TP adjustment cannot be deleted. - AT
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Revision u/s 263 by CIT - Capital gain computation - where the purchase of land & building and sale of land & building are covered under a single deed of purchase & sale, the calculation made by the ld. AO showing short term capital gain which has been valued in detail by the ld. AO, in our considered view, the order of the ld. AO is not prejudicial to the interests of the Revenue.- AT
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Levy of penalty u/s 271C - assessee failed to pay the deducted tax within the stipulated time - crucial facts were totally ignored by the AO as well as by the CIT(A) - payment of delayed TDS to the Government Treasury was not a negligent act on the part of the assessee but due to unavoidable circumstances. Therefore, Section 271C of the Act is not properly invoked. - AT
Customs
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Seeking permission to re-export the goods - Unflavored Supari (Betelnut Product) - if, the appellants permit him to re-export the goods taking into consideration the fact that goods are perishable and there is possibility that the value of goods will be reduced by efflux of time. It will be in the interest of both to permit the respondent to re-export the goods subject to reasonable conditions to protect the interest of the Revenue.- HC
Corporate Law
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Transfer of pledge shares - right of pledgee - whether Catalyst can transfer these shares to its name but only for the limited purpose of holding them safely until they are redeemed, sold (after notice to World Crest) or for the purposes of Catalyst’s recovery suit? - Sections 176 and 177 of the Contract Act - We are asked to hold, prima facie, that World Crest is not bound by the terms of the bargain it struck. That is merely asking for the impossible. Catalyst cannot be compelled to sell. World Crest will not redeem. In the meantime Catalyst can do nothing. This, we are asked to believe, is an equitable approach that the learned Single Judge should have been mindful of at World Crest’s instance. - HC
Indian Laws
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Dishonor of Cheque - material alteration in the cheque without any authentication thereto by the drawer of the cheque - acquittal of the accused - Section 87 of the N.I. Act which speaks about the effect of material alteration, states that any material alteration of a Negotiable Instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. - accused deserves to be acquitted of the alleged offence. - HC
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Enforceability of part of the Foreign Award - A significant aspect of the Foreign Award is that it does not provide for a setoff. - f a set-off that enured to the benefit of TAQA had been provided for in the Foreign Award and recognition or enforcement was sought without reckoning such set-off, such petition may have fallen foul of public policy. While the Company has affirmed an affidavit indicating that amounts awarded to it under the Foreign Award are for the benefit of TAQA, such arrangements between the Company and TAQA cannot be recognised and given effect to in these proceedings. - HC
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Dishonor of Cheque - it is crystal clear that vicarious liability under sub section 1 or 2 of section 141 of the Negotiable Instruments Act can be fastened if the person is having the control over the day to day affairs of the company. Looking to the explanation of the said section, it is crystal clear that the firm or the company are required to be made an accused in the complaint, which is lacking in the case in hand. However, such vicarious liability arises only when the company or the firm commits offence as primary offence. - HC
Case Laws:
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GST
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2022 (6) TMI 1204
Levy of IGST - credit card services - interest component of the Equated Monthly Instalments (EMI) of the loan granted by the respondent Bank on credit card - seeking direction upon the Bank and the IGST authorities to refund the IGST collected from the petitioner - maintainability of writ petition as well as lack of jurisdiction of this Hon ble Court - HELD THAT:- The principal objection of the respondents against maintainability of the instant writ petition is that the writ petition against the bank, which is not a nationalised bank is not maintainable. Article 226(1) of the Constitution of India lays down that notwithstanding anything in Article 32, High Court shall have power throughout the territories in relation to which it exercises jurisdiction to issue to any person or authority, including in appropriate cases, any government, within those territories directions, orders or writs including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari or any of them for the enforcement of any of the rights conferred by part III and for any other purpose - from a reading of the said constitutional provision it is evident that the High Court has power to issue directions, orders or writs to any person or authority. The petitioner has prayed for a declaration that the interest component of the EMI of the loan granted by the bank to the petitioner is exempted from the levy of IGST in view of the notification dated June 28, 2017. Apart from the bank the service tax authorities have also been impleaded as party respondents in this writ petition. This writ petition has been filed to compel the Bank and the Service Tax authorities to perform their obligations in accordance with the provisions of the statute regarding levy and collection of IGST and to grant exemption which the petitioner may be entitled to as per the notifications issued under the relevant statutes - by applying the proposition of law laid down by the Hon ble Supreme Court in FEDERAL BANK LTD. VERSUS SAGAR THOMAS ORS. [ 2003 (9) TMI 707 - SUPREME COURT] this court is of the considered view that since the petitioner has prayed for a relief to compel the respondent bank to grant exemption as per the provisions of the relevant statute upon a declaration being made in that regard, the instant writ petition is maintainable. Territorial jurisdiction of this court - HELD THAT:- It is not in dispute that the office of the respondent no. 1 is beyond the territorial jurisdiction of the High Court at Calcutta. In the credit card statements issued by the respondent no. 1 bank, it has been mentioned that the place of supply is the State of West Bengal. The demand draft was despatched to the petitioner at his residential address which falls within the territorial jurisdiction of this Hon ble Court. Thus, the part of the cause of action arose within the territorial jurisdiction of this Hon ble Court - since the part of cause of action arose within the jurisdiction of this Hon ble Court, this court has no hesitation to hold that this Hon ble Court has jurisdiction to try and entertain the instant writ petition. Whether the interest component of EMI of loan advanced by the Bank is exempted under notification dated June 28, 2017? - HELD THAT:- If the amount paid towards dues on the credit card is less than the total amount due finance charges shall be levied on such outstanding (including but not limited to the transaction fee and EMI as above) as per the applicable interest rates. The applicable interest rate shall be mentioned in the monthly statement - It is evident from the offer of loan that the same was not an offer to all intending borrowers but was restricted to a particular category of persons holding the Citi Bank Credit Card. The criteria for processing the loan, the manner in which the EMI of loan is reflected in the Credit Card statements and the charging of interest in case there is a shortfall in the payment of the amount due as well as the mode of payment all goes to prove that the service rendered by the Bank in extending the loan in question is nothing but a service pertaining to the said credit card. Since this Court has already held that the services rendered by the bank by way of extending loans to the petitioner in the instant case amounts to credit card services, the interest component of EMI of the said loan is nothing but interest involved in credit card services which is not exempted by notification no. 9/2017- Integrated Tax (Rate) dated June 28, 2017 - this Court holds that the interest component of EMI of loan advanced by the bank is not exempted under the said notification dated June 28, 2017. Thus, this issue is answered in the negative and against the petitioner. Petition dismissed.
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2022 (6) TMI 1203
Classification of supply - composite supply or not - arrangement for overhaul and repair of engines - principal supply in overhaul and repair of engines is services or not - rate of tax (GST) for all supplies (consisting of parts/ sub-assemblies and repair services) - HELD THAT:- The applicant has itself stated that the impugned supply can be sub divided into 4 types of supplies out of which it wants this Authority to consider only 2 types of supplies for decision. In other words, it means that the supply under the impugned Tender cannot be considered as a single composite supply of goods and services or both which are naturally bundled because the applicant itself has divided the Tender into 4 different supplies. It is observed that the Tender is for one Work Order comprising of different types of activities and arrangements all under one document and the applicant wants this Authority to divide the impugned activities artificially in four parts and answer the questions pertaining only to Major overhaul and Overhaul / repair of sub-assemblies. Such division of the single Tender to answer particular situations and ignore other situations will not be the right way to go forward and therefore this Authority will not be able to answer the questions raised by the applicant. Hence the questions raised by the applicant in respect of activity Major overhaul and Overhaul / repair of sub-assemblies, are not being answered.
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Income Tax
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2022 (6) TMI 1202
Depreciation on Geographical Report as intangible asset - whether the Geographical Report is only a document and not an asset and no deduction is permissible under Section 35E (2) ? - ITAT deleted the addition - HELD THAT:- Assessing Officer raised various queries on the Geographical Report for which the assessee offered certain explanation. The Tribunal elaborately considered the Geographical Report. To examine as to whether deduction can be claimed by the assessee on the said amount, the Tribunal noted that the Geographical Report is a fundamental document which was essential to assess the feasibility of the mine, to evaluate the economics of the mine and contains a mine-plan according to which the mining activity is to be carried on. Therefore, the Tribunal after appreciating the scope of the report held that the activity involves the nature of exploring, locating or providing deposits and it is only after the study of the Geographical Report, the location of deposit can be identified. Further, the Tribunal noted that the report gives the idea of the nature of deposit and whether mining activity can be carried on in the location. Thus, ultimately the Tribunal agreed with the assessee s stand. However with regard to the claim of the additional depreciation at 15%, the Tribunal did not agree with the assessee. However, the assessee is not an appeal as against such finding Additions on expenses on Road belonging to Zilla Parishad - HELD THAT:- It cannot be disputed by the revenue that by upgrading/ constructing the link-road from the mine to the railway station, the assessee stands benefitted as the transportation of coal which has been mined, can be transported more efficiently and profitably. Further, the road is a public road and the assessee is not the owner of the road and the road was upgraded/ constructed not exclusively by the assessee but the assessee had made contribution for doing the upgradation/ construction work and the remaining contribution was made by the Zilla Parishad. Therefore, the tribunal agreed with the assessee and dismissed the cross-objection filed by the revenue The roads which were constructed around the factory with the help of the amount of Rs. 50,000 contributed by the assessee belonged to the Government of Uttar Pradesh and not to the assessee. Moreover, it was only a part of the cost of construction of these roads that was contributed by the assessee, since under the sugarcane development scheme, one-third of the cost of construction was to be borne by the Central Government, one-third by the State Government and only the remaining one-third was to be divided between the sugarcane factories and sugarcane growers. These roads were undoubtedly advantageous to the business of the assessee as they facilitated the transport of sugarcane to the factory and the outflow of manufactured sugar from the factory to the market centres. There can be no doubt that the construction of these roads facilitated the business operations of the assessee and enabled the management and conduct of the assessee s business to be carried on more efficiently and profitably. It is no doubt true that the advantage secured for the business of the assessee was of a long duration inasmuch as it would last so long as the roads continued to be in motorable condition, but it was not an advantage in the capital filed, because no tangible or intangible asset was acquired by the assessee nor was there any addition to or expansion of the profit-making apparatus of the assessee. The amount of Rs. 50,000 was contributed by the assessee for the purpose of facilitating the conduct of the business of the assessee and making it more efficient and profitable and it was clearly an expenditure on revenue account. Revenue appeal dismissed.
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2022 (6) TMI 1201
Admission of additional evidence by CIT - Assessment of trust - corpus donation received by the trust unexplained - addition u/s 68 - CIT(A) who admitted the additional evidence under Rule 46A and partly allowed the appeal of the assessee on the ground that in the interest of justice, learned CIT(A) can admit the additional evidence - Revenue s contention is that Rule 46A prescribed that appellant shall not be entitled to produce additional evidence before the first appellate authority because in the case before us ample opportunity was given to the assessee to file the evidentiary support of his contention and CIT(A) ought to have record in writing the reason for its admission of additional evidences before him - HELD THAT:- CIT(A) can admit additional evidence if he finds it crucial and necessary for the disposal of the appeal. We think if additional evidence is without any blemish and in order to advances the cause of justice the same ought to be admitted. After considering the plethora of judgments, the paramount consideration of the adjudicating authority should be fair disposal of the appeal/case in order to protect interest of justice. As in the present case, assessee could not file certain details before the learned AO but he filed before the learned CIT(A) and learned CIT(A) forwarded same details for the comments of the learned AO and sought remand report. In remand report, learned AO did not doubt the content of documents but objected to filing of additional evidence under Rule 46A. After considering the remand report, CIT(A) decided the matter. As per Income Tax Act, learned CIT(A) has co-terminus power. Thus, we do not find any infirmity in the order of the CIT(A). We agree with the finding of learned CIT(A). - Decided against revenue.
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2022 (6) TMI 1200
Levy of penalty u/s 271C - assessee failed to pay the deducted tax within the stipulated time - HELD THAT:- From the perusal of the penalty order, it can be seen that the Assessing Officer proceeded on the basis that the assessee failed to pay the deducted tax within the stipulated time but from the perusal of the submissions of the assessee before the Assessing Officer it is seen that except the TDS on the interest payment to two parties the assessee has paid the TDS before the survey proceedings conducted at their premises as there was death of a person who was looking after the Income Tax matter of the Company which is mentioned in paragraph no.3 of the penalty order. These crucial facts were totally ignored by the AO as well as by the CIT(A) - payment of delayed TDS to the Government Treasury was not a negligent act on the part of the assessee but due to unavoidable circumstances. Therefore, Section 271C of the Act is not properly invoked. The ratio laid down in CIT vs. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] is applicable in the present case though the Section mentioned in that decision is Section 271(1)(c) - CIT(A) has simplicitor confirmed the penalty without looking into the aspect that the levy of penalty was in excess of the default. Thus, the reasoning given by the CIT(A) is not just and proper. Hence, penalty levied under Section 271C of the Act needs to be deleted. Levy of penalty under Section 272A(2)(g) - assessee made default by not filing quarterly returns in Form No.24Q and 26Q and by not issuing certificates of TDS in time - assessee submitted that the assessee company suffered from liquidity crash due to slow-down of the business and there was a delay in payment of TDS due to non-availability of funds and thus this cannot be treated as wilful default - Penalty was imposed without taking cognisance of the reasons given by the assessee which was genuine reason and cannot be strictly adhered to. The delay in issuance of certificate within the stipulated time was due to the non-availability of financial advise/concerned person who dealt with the tax matters of the company (death of Manish Shah). Thus, the CIT(A) totally ignored crucial aspect of the case and imposed penalty without application of mind. Hence, appeal of the assessee allowed.
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2022 (6) TMI 1199
Revision u/s 263 - LTCG - Difference in valuation of property - AO has acted upon assessee s calculation indexed cost on the basis of valuation filed by the assessee but as per DVO, the valuation of whole property as on 01.04.1981 determined at Rs. 27,35,720/-, the assessee calculated indexed cost on the basis of valuation at Rs. 42,00,000/- - DR submitted that in the facts of this case, the AO ought to have referred report of DVO and he shall take decision as per law to determine the actual cost of acquisition of the property sold and to determine the correct amount of long term capital gain earned by the assessee on sale of property - HELD THAT:- As relying on the decision of coordinate bench in the case of Monoj Kumar Biswas ( 2021 (9) TMI 603 - ITAT KOLKATA] we are of the view that the revisionary jurisdiction has not been exercised by the CIT (International Taxation) in accordance with the provisions of the Act. Accordingly we quash the revisionary proceedings initiated u/s 263 of the Act and consequential order passed u/s 263 of the Act. The appeal of the assessee is allowed.
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2022 (6) TMI 1198
Disallowance on account of purchase of shares - Addition of commission expenditure u/s.69C - HELD THAT:- As purchase and sale of share transactions were carried out by the assessee through the registered brokers i.e. Alankit Assignments and RBK Share Broking and Speculative transactions were carried out through the registered broker i.e. Alliance Intermediates and Network Pvt. Ltd. The assessee had incurred short term capital loss and earned long term capital gains in respect of purchase and sale of shares carried out through Alankit Assignments and RBK share broking which has been duly disclosed in the return of income. Assessee had only incurred speculation loss in respect of future and option transactions carried out through Alliance Intermediates and Network Pvt. Ltd during the year and this loss has not been set off with any speculation profit either during the year or in any subsequent assessment years. This factual aspect has been ignored by the lower authorities in the instant case and the addition has been merely made based on information received from a third party and ignoring the documents placed on record. Also in the case of Ms. Kokila S. Ajmera [ 2018 (3) TMI 1967 - ITAT MUMBAI] this Tribunal under same set of facts had categorically held that the speculation loss incurred by those individuals (who are relatives of this assessee before us) had not claimed set off of the same with future speculation income. Even if the speculation loss incurred by the assessee is treated as non-genuine, the same would be of no consequence so far as the determination of tax liability of the assessee in the instant case as well as in the subsequent years is concerned. The entire disallowance has been made on complete incorrect assumption of facts and on mistaken premise. We categorically hold that there is no purchase of shares made by the assessee through Alliance Intermediates and Network Pvt. Ltd which was claimed as deduction in return of income. Hence, there is absolutely no question on making any disallowance on account of purchase of shares in the assessment. Hence, the same is hereby directed to be deleted. Once the disallowance made on account of purchase of shares is deleted, the alleged related commission expenditure u/s.69C also automatically gets deleted. Hence, the grounds raised by the assessee are allowed.
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2022 (6) TMI 1197
Disallowance of depreciation claimed at a higher rate of 60% on POS Terminals - whether POS Terminal does not come under the purview of Computer Software which has been defined as any computer program recorded on any disc, tape, perforated media or other information storage device in Note 7 to New Appendix 1 of the Income Tax Rules,1962? - HELD THAT:- Issue decided in favour of assessee as relying on own case [ 2019 (2) TMI 993 - ITAT DELHI ] - Decided against revenue.
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2022 (6) TMI 1196
Validity of assessment order passed u/s. 143(3) r.w.s. 144C(13) read with section 144B - Reference to Dispute Resolution Panel u/s 144C - period of limitation - HELD THAT:- As amply clear from section 144C(7) that DRP before issue of any direction referred to in sub-section(5) may make such further enquiry or calls any further enquiry and get the result reported to it. Hence there is no provision in the Act that DRP's direction as contained in section 144C(5) may be subject to any further verification by any Income-tax authority other than giving effect by the AO. Hence the plea that since the TPO gave effect to the DRP's direction subsequent to the DRP's direction cannot in any manner be considered to expand the time limit as prescribed in the Act. Even from this date of TPO's giving effect, the final assessment order is time barred in any case. As already noted by us, Ld. DR's plea that TPO's giving effect to the DRP's direction on 18.02.2022 can be considered as sufficient compliance to the time barring provision contained in section 144C(13) is not legally sustainable. Undoubtedly, in this case, the assessment order has been passed beyond the time limit prescribed u/s. 144C(13) being more than one month after the date of receipt of the directions of the DRP by the AO, as per the information provided in the paper book submitted by the assessee's counsel. The factual veracity of these dates has not been disputed by the Revenue. In this view of the matter, we agree with the contention that the order passed by the AO is void ab initio and liable to be quashed as the final assessment order is time barred. Appeal of assessee allowed.
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2022 (6) TMI 1195
Late deposit of employee contribution to PF and ESI u/s. 36(1)(va) - contribution of PF deposited belatedly but before due date of filing of return of income u/s. 139(1) - HELD THAT:- The Bench has taken into consideration its various orders wherein similar issue has been decided in favour of the assessee on the issue in question. Recently, the similar issue of late deposit of employees PF/ESIC contribution by the assessee but paid the same before due date of filing of return of income in the case of Sanjay Porwal [ 2022 (4) TMI 898 - ITAT JAIPUR] wherein Issue was decided in favour of the assessee by holding that amendment in Section 36(1)(va) as well as Section 43B of the Act by way of inserting the explanation vide Finance Bill, 2021 are applicable only from A.Y. 2021-22 and subsequent assessment years and therefore, the said amendment is not applicable to the assessment year under consideration. Thus disallowance made on account of employees contribution towards PF/ESIC deposited before due date of filing of return of income u/s. 139(1) is deleted. Thus, the solitary ground of appeal of the assessee is allowed.
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2022 (6) TMI 1194
Depreciation of certain intangible assets including non computing fee, rights, patents, trademarks etc. @ 25% of the opening WDV - AO has disallowed on the ground that in the schedule of fixed assets the assessee had shown as goodwill of loan and under the head intangible assets no other intangible assets were shown to have been held by assessee in the balance sheet - HELD THAT:- Undisputedly the assessee has acquired food and pharma division of L T by virtue of agreement dated 26.05.2005 by paying excess consideration of net asset value, the excess was reflected as goodwill in the books of accounts of the assessee under the head intangibles and as such assessee is entitled for claiming depreciation on the said intangible assets/goodwill as held in case of SMIFS SECURITIES LTD. [ 2012 (8) TMI 713 - SUPREME COURT] . Consequently, ground raised by the assessee are allowed. TP Adjustment - TPO rejected the TP study undertaken by the assessee and proceeded to apply TNMM at the entity level which the assessee company has objected to - HELD THAT:- We have perused the order passed by the CIT(A) particularly para 9 which is cryptic in nature and fails to lead to the specific conclusions as to why the TP adjustment made by the TPO are being deleted. Merely on the basis of generic observations without going into the functionality of the particular segments/international transactions TP adjustment cannot be deleted. In these circumstances it is agreed by the authorized representatives of the parties to the appeal that TP issue is required to be decided afresh by the TPO by grouping commission income and supervisory income together and the remaining international transactions are to be benchmarked independently by going into the functionality of the same. Disallowance on account of license fee/royalty - HELD THAT:- We are of the considered view that facts on the issue are not completely brought out, neither discussed by the AO nor by the Ld. CIT(A). No findings have been returned if the same is a license fee or royalty. Even no detail of commission or royalty paid has been brought on record. So this issue is required to be remitted back to the AO to decide afresh after providing opportunity of being heard to the assessee. Disallowance u/s 36(1)(va) - employees contribution to PF has been paid late after the due date as per the provisions of the PF Act - HELD THAT:- We have perused the findings returned by the Ld. CIT(A) which need no inference as the assessee has deposited the employees contribution prior to the filing of the income tax return. In A.Y. 2005-06 the co-ordinate Bench of the Tribunal in assessee's own case deleted the same addition by relying upon the decision rendered by Hon'ble Apex Court in case of CIT vs. Vineet Cement Ltd. [ 2007 (3) TMI 346 - SC ORDER] - Hon'ble Bombay High Court in case of CIT vs. Ghatge Patil Transports Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT ] also decided the identical issue in favour of the assessee by upholding the Tribunal order that payment of employees contribution on account of PF before filing of income tax return is allowable deduction and has also decided in case of CIT v. Alom Extrusions Ltd. [ 2009 (11) TMI 27 - SUPREME COURT] . So in view of the matter, we find no illegality or perversity in the impugned findings delivered by the Ld. CIT(A), hence ground are determined against the Revenue.
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2022 (6) TMI 1193
Revision u/s 263 by CIT - Capital gain computation - HELD THAT:- Computation where capital gain is calculated separately for sale of land and sale of building, the result would be short term capital loss. If the capital gain is calculated in the manner as directed by Pr. CIT, then the assessment so framed shall be prejudicial to the interests of the Revenue. Therefore, under the given facts and circumstances of the case where the purchase of land building and sale of land building are covered under a single deed of purchase sale, the calculation made by the ld. AO showing short term capital gain which has been valued in detail by the ld. AO, in our considered view, the order of the ld. AO is not prejudicial to the interests of the Revenue. Therefore, since the assessment order dated 26.12.2019 is neither erroneous nor prejudicial to the interests of the Revenue and a detailed enquiry of the issue raised in the show cause notice u/s 263 of the Act has been conducted by the ld. AO, adopting one of the permissible view in law, ld. Pr. CIT erred in assuming jurisdiction u/s 263 - We, therefore, quash the impugned order of the ld. Pr. CIT u/s 263 of the Act and restore the order so framed u/s 143(3) - Hence, grounds of the appeal raised by the assessee are allowed.
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2022 (6) TMI 1192
TDS u/s 194C - Disallowance of Lorry Hire Charges u/s 40(a)(ia) - assessee is in transport business and on need basis, he hires lorries from time-to-time - HELD THAT:- In this case, the assessee did not have any sub-contract and he was hiring Trucks from open market on individual and need basis and in support of its contention, assessee has filed Truck Nos. as well different Truck numbers and owners of all trucks are different. In this case, payments have not been made to the any sub-contractor, therefore, question of TDS does not arise. In view of the above we allow the appeal of the assessee.
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2022 (6) TMI 1191
Penalty u/s 43 of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015 (hereinafter referred to as the BMA ) - non-disclosure of a foreign asset in the income tax return - HELD THAT:- The assessee is a high net worth individual (HNI), with aggregate payment of taxes around Rs 2,350.66 crores in the last seven years by her, her husband and the private limited company she chairs- as noted by the Assessing Officer himself at page 8 of the impugned penalty order, and, when seen in the light of this financial position, the amount held in the alleged undisclosed foreign bank account is a small, if not trivial, amount of UK 2,34,710, and that it is not, by any stretch of logic or imagination, a case of siphoning unaccounted wealth in India to the undisclosed bank accounts abroad. It is also important to bear in mind the fact that there is a categorical finding by the first appellate authority that even though the assessed may have been technically a signatory of the undisclosed foreign bank account, her and her husband s conduct all along has unequivocally established complete detachment with the said asset so far as any personal interest is concerned- a typical hallmark of someone holding an asset in a fiduciary capacity and in trust. When the beneficial owner of the said bank account, i.e. her late mother, passed away, she and her husband simply donated money to a well-known charity of global repute, as was the wish of the departed soul. All the thirty years that she was the technical owner of this legacy left behind by her father, which was for the benefit of her mother, she simply did not touch the money- did not take a penny or add a penny. It is a somewhat rare situation with touching reverence, almost to a fault, to the wish of the assessee s late father that the money was kept intact for the benefit of the assessee s mother, which mother never used, and then donated it, within weeks of her mother s death, to a charity of her late mothers choice, and a charity which has earned the prestigious Noble Peace Prize in 1999 for its humanitarian work. The degree of reverence for the feelings of the parents, as unambiguously shown by the mother, is undisputed. With this kind of detachment, and truly dealing with this as trust money in letter and in spirit, her belief that she was not required to disclose it as her bank account, cannot be said to be lacking bonafides. While the amount held in the said account is donated to the charity, the entire tax liabilities in respect of the same have been paid by the legal representative of Dr Pramila Gandhi, and the matter has attained finality as such. It is also important to bear in mind the fact that the uncontroverted stand of the assessee is that the assessee, as also her husband, were signatories because Dr Pramila Gandhi was having health issues and was not in a position to travel. It was more of being a signatory for the operation of the bank account, rather than holding the bank account even in a fiduciary capacity, and, as such, the assessee s belief that she was not required to disclose this bank account cannot be said to be lacking bonafides. The scheme of penalty is of such a that essentially it does not cover the cases in which the lapses have occurred on account of good and sufficient reasons. A lapse per se cannot be reason enough to punish anyone, and the controversy, if at all, is about as to who has the onus of demonstrating the bonafides of such cases- the assessee or the revenue authorities, but once there is a clear finding of bonafides in conduct, irrespective of whether such conduct is lawful or not, the penalty is not impossible- unless, of course, the penalty is statutorily simply an automatic consequence, in cause and effect relationship. That s certainly not the case here. The very fact that the Assessing Officer has the discretion to impose a penalty puts him under a corresponding obligation to exercise the said discretion with proper regard to the facts and circumstances of the case in a holistic manner and in totality. The total amount involved in the undisclosed foreign account is UK 2,34,710 (equivalent to Rs 2,16,58,946 at the relevant point of time of assessing the said amount), which is relatively small considering the tax exposure of the assessee, as discussed earlier. The money in the said account did not belong to the assessee, was never used by the assessee and is part of the legacy left behind by her father in 1986- and this position is duly accepted by the revenue authorities. Not a rupee out of that bank account is held to be belonging to the assessee, and the entire money has been brought to tax in the hands of the assessee s late mother. Even before the bank account was detected by the revenue authorities, the entire balance in the said account, as per instruction of the assessee s late mother, has been donated to a bonafide charity of the global repute. In these circumstances, the plea that such a lapse of non-disclosure, even if that be so, is only an inadvertent mistake, and that conscious non-disclosure or any mens rea in the non-disclosure is completely contrary to human probabilities, does merit acceptance. No reasonable person would consciously or deliberately withhold disclosure about this foreign bank account, for an ulterior motive, from the tax authorities, and, in any case, admittedly the money does not belong to the assessee- as is the position accepted by the Assessing Officer himself. Viewed thus, on merits of assessee s conduct, it was not a fit case for the imposition of impugned penalty. It is also not a case of siphoning of unaccounted Indian wealth to the undisclosed foreign bank accounts, prevention of which was the noble cause for which the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was enacted immediately upon the present Government coming to the power. Such well-intended stringent legislation as the BMA, enacted for the larger causes of public good and to check tax evaders, cannot be so interpreted as to cause undue hardship to the citizenry for such harmless technical or venial breaches of the law. Thus it was not a fit case for invoking the penal provisions under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, even if it was lawful for the Assessing Officer to do so. In view of these twin reasons also, the conclusions arrived at by the learned CIT(A) cannot be faulted. As we hold so, we may add that there are consequences for the lack of appropriate disclosure in the income tax return, and these consequences are provided under the Income Tax Act, 1961, and our observations hereinabove must not come in the way of those proceedings under the Income Tax Act, 1961.
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2022 (6) TMI 1190
Penalty levied u/s 271(1)(c) - bogus purchases - HELD THAT:- The quantum addition [ 2018 (8) TMI 2085 - ITAT DELHI] issue was agitated before the learned Commissioner of Income-tax (Appeals) who directed the Assessing Officer to restrict the disallowance to 30 per cent. of the purchases. Penalty has been levied on such estimation made by the learned Commissioner of Income-tax (Appeals). Facts of the earlier assessment year also show that estimation was made in respect of purchases from same party which was subsequently reduced to 25 per cent. while giving appeal effect to the order of the Tribunal. When the addition as have been made on estimated basis, there is no conclusive evidence to show that the assessee has concealed the income or has furnished inaccurate particulars of income. Therefore, we do not find any merit in the levy of penalty on estimated income. We, accordingly, direct the Assessing Officer to delete the penalty so levied. - Decided in favour of assessee.
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Customs
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2022 (6) TMI 1189
Seeking permission to re-export the goods - Unflavored Supari (Betelnut Product) - seeking issuance of Detention Certificate for waiver of demurrage and container detention charges - HELD THAT:- The respondent has no objection to submit himself for enquiry. As a matter of fact the investigation is going on and the respondent has already appeared before the investigation agency once. This Court is unable to find any reason to interfere with the order of learned Single Judge, which gives only simple direction to the appellants to complete the adjudication process one way or the other with an option to the respondent to re-export the goods back to the place from where the goods were imported. As pointed out by this Court earlier, this Court do not find any merit in the grievance expressed by learned counsel for the appellants. In the present context, the respondent has given an undertaking that they will execute a bond to cover the value of the goods, pending adjudication, if, the appellants permit him to re-export the goods taking into consideration the fact that goods are perishable and there is possibility that the value of goods will be reduced by efflux of time. It will be in the interest of both to permit the respondent to re-export the goods subject to reasonable conditions to protect the interest of the Revenue. The appellants are directed to permit the respondent to exercise their option as per the order of learned Single Judge upon the respondent executing a bond to the full value of the goods that is sought to be re-exported and this order or direction is issued without prejudice to the rights or authority of the appellants to proceed further with the investigation and to impose or collect whatever charges that may be permissible under law - appeal dismissed.
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Corporate Laws
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2022 (6) TMI 1188
Transfer of pledge shares - right of pledgee - whether Catalyst can transfer these shares to its name but only for the limited purpose of holding them safely until they are redeemed, sold (after notice to World Crest) or for the purposes of Catalyst s recovery suit? - Sections 176 and 177 of the Contract Act - HELD THAT:- When there is a default by the pledgor, i.e., the pledgor does not fulfil his promise to pay the debt, the pledgee has the right (but not an obligation) to sue on the date and to continue retention of the pledged goods as a collateral security and also the right to sell the goods but after reasonable notice of the proposed sale to the pledgor. Once sold, the pledgor s right of redemption is extinguished and forever lost. Until the sale actually occurs, the pledgor is entitled to his right of redemption, again on payment of debt. What happens when a pledgee brings suit for recovery of the debt? Although the pledgee is entitled to retain the goods, he must return them on payment of the debt (and expenses). The Supreme Court in PTC INDIA FINANCIAL SERVICES LIMITED VERSUS VENKATESWARLU KARI AND ANOTHER [ 2022 (5) TMI 813 - SUPREME COURT] also reaffirmed that a pledgee has only special property in the pledge but the general property remains with the pledgor. It is said to be a right in the pledged goods higher than the mere right of detention but less than the general property right. This is explained: the pledgee has a right to transfer the general property rights in the pledged items, i.e., to pass title, so long as the pledge is not redeemed. This is also said to be a conditional general property interest . i.e. subject to the condition that the general property can be passed to a third party if the pledged goods are brought to sale. This means that a pledgee can validly pass full tile in the pledged goods, i.e. plenary ownership and general property rights to a third party on sale. The pledgee cannot validly acquire these rights by a sale to itself. Until that sale to a third party happens or takes place the pledgor has a right to redeem and this redemption means that the pledgor gets back the entirety of the general property rights in the pledged goods. The right of ownership of a demat security (share) vests in what is known as the beneficial owner . Every person or entity who or which is recorded as a beneficial owner can transact and deal in securities but must do so through a DP. Section 12 of the Depositories Act permits the pledge and hypothecation of securities held in a depository. In PTC India, This Section was held not to be inconsistent with the Contract Act. We believe, on a careful consideration that Mr Khambata is correct on two very broad issues. First, whether on this presentation on behalf of World Crest, it can be said that it has made out so overwhelming a prima facie case that an order in its favour had to be made in the impugned order; and since it was not, whether we must do so. As the learned single Judge said there are contentious issues. There is the historical background. We are being asked to infer that the recording of Catalyst s name under Regulation 58(8) as the beneficial owner results in it having some severely curtailed rights as a beneficial owner - Second, we are being asked to presume that the conferment of voting rights in Clause 2.1(b) amounts or equates to the general property in the shares, and the contract or pledge document could not so provide. We are shown no clear interdiction, but are being asked to read it into PTC India and the law relating to pledges. Clause 2.1 says that it preserves all rights under Section 176. Therefore, the parties knew exactly what they were about when they entered into the contract. PTC India restates long-standing law on pledges; it does not re-write it. An interesting thought experiment might be to consider the situation as its stood before the era of the dematerialization at a time of physical securities when they were accompanied with blank transfer forms. If there was a power of such transfer, Mr Khambata argues, and it was effected surely it could not be suggested that the transferee would be rendered such an emasculated member of the company. Appeal dismissed.
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Insolvency & Bankruptcy
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2022 (6) TMI 1187
Seeking direction to conduct a forensic legal audit by a professionally qualified expert and appointment of the same - seeking direction on the Respondent No. 1 Respondent No. 2 to cooperate with the Applicant and to hand over him all the books of accounts, documents, legal papers concerning the past and present affairs of the Corporate Debtor - seeking unhindered and unobstructed access of all the properties of the Corporate Debtor by the Applicant - verification of whole process of Appraisal, Sanction, Documentation, Disbursement and monitoring of the Credit Facilities granted to the Corporate Debtor - HELD THAT:- Since there has been no co-operation from the directors in spite of various orders dated 04 March, 2020, 18 November, 2021, 17 December, 2021 and 09 February, 2022 and bailable warrant dated 11 March, 2022 and 28 March, 2022 passed by this Adjudicating Authority, which were to be recalled by executing a personal bond of Rs. 1,00,000/- each upon production. This Adjudicating Authority had time and again directed the police authorities to cause production of two directors Mr. Pankaj Kumar Singh and Mr. Manoj Kumar Singh in the court but the same was not fruitful, in so far Mr. Manoj Kumar Singh is concerned - It is noticed from the report of the police authorities that Mr. Manoj Kumar Singh's whereabouts are not traceable. This is not acceptable to the Court, considering the vast resources available to the police. In today's day and age, it is highly improbably that a person can just disappear off the face of the earth. Mr. Sudeep Sarkar, IPS, Deputy Commissioner of Police, South East Division is directed to be present before this Court on the next date of hearing in case Mr. Manoj Kumar Singh is not traced and brought to court. Time is of the essence since the entire liquidation process, which is to be completed within a defined time-frame under the Insolvency Bankruptcy Code, 2016, is required to be completed. Application disposed off.
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2022 (6) TMI 1186
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The applicant has claimed the default on part of the Respondent for amount of Rs. 13,98,035 (Rupees Thirteen Lakhs Ninety Eight Thousand and Thirty Five), including 18% interest - In compliance of Section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016, the Operational Creditor has filed affidavit dated 25.07.2019 stating that no notice of any preexisting dispute has been received by the Applicant from the Corporate Debtor relating to the dispute of the un-paid Operational Debt. This Tribunal vide order dated 21.09.2021 directed the counsel of Operational Creditor (Operational Creditor is subjected to CIRP) to file an affidavit cum undertaking to pay an amount of Rs. 2 Lacs to IRP as mobilization advance which may be ordered by the Tribunal if the CIRP is initiated against the Corporate Debtor and also continue to keep paying the fee and expenses of RP until the constitution of CoC. The Liquidator of the Operational Creditor filed an affidavit on 11.01.2022 stating that the Operational Creditor/Applicant has sufficient funds to pay the CIRP Cost, in case CIRP of the Corporate Debtor is admitted, he undertakes to pay the same as directed by this Hon'ble Tribunal. This Adjudicating Authority is of the view that there is an operational debt which is due from the Corporate Debtor and the Corporate Debtor has defaulted in making payment of the amount due and along with that, in the absence of any pre-existing dispute, this tribunal admits this application and initiates CIRP on the Corporate Debtor with immediate effect. Application admitted - moratorium declared.
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2022 (6) TMI 1185
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - threshold limit applicable on debt arising post 24.03.2020 - Section 4 of the IBC, 2016 - HELD THAT:- On perusal of records it is seen that the present IB/1424/ND/2019 had been revived vide order dated 31.03.2022 in IA 1399/ND/2022 and the amount of debt claimed by the Applicant in the said application was Rs. 4,97,902/- as on 31.03.2022. Therefore, the notification of MCA dated 24.3.2020, shall be applicable on the present application. As per notification of MCA dated 24.3.2020, the threshold limit to be considered for application filed u/s. 7 or 9 will be Rs. 1 Crore. This threshold limit will be applicable for applications filed on or after 24.3.3020 even if the debt is of date earlier than 24.03.2020. Since the present application under section 9 of the code had been revived on 31.03.2022, therefore the threshold limit of Rs. 1 Crore of debt will be applicable in the given facts. The intent of legislation to fix the threshold limit was to save the Companies from being rotted to NCLT for initiation of CIRP proceedings, due to COIVD-19 effect. The said notification was always prospective in nature but having retrospective repercussion also. Hence, even if the amount was due prior to 24.03.2020 and the demand notice was send prior to that the petition u/s. 7 or 9 of the Code cannot be filed against the Corporate Debtor. Henceforth, for the above-mentioned reasons, the present Application cannot be admitted. Application dismissed being not maintainable.
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2022 (6) TMI 1184
Liquidation of Corporate Debtor - appointment of liquidator for undertaking liquidation process - section 33(2) of I B Code - HELD THAT:- Since this Adjudicating Authority did not receive any Resolution Plan under Sub-Section (6) of Section 30 of the I B Code, 2016, this Adjudicating Authority deems it proper to allow the Application. This Adjudicating Authority hereby order for Liquidation of M/s. Sesha Saila Power and Engineering Private Limited which shall be conducted in the manner as laid down in Chapter III of part II of the I B Code, 2016 - This Adjudicating Authority hereby appoint Mr. Anil Seetaram Vaidya as Liquidator as resolved by CoC. Application allowed.
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2022 (6) TMI 1183
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - petition filed by Corporate Applicant for initiation of Corporate Insolvency Resolution Process (CIRP) against itself - section 10 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There is no dispute from any quarter towards the fact that the debt is due and payable by the Corporate Applicant to various creditors and that the Corporate Applicant is unable to pay the same. The application is free from defects and complete in all aspects as required under the law. The Application shows that the Corporate Debtor is in default of a debt that is due and payable, and the default is more than the threshold amount as stipulated under section 4(1) of the Code at the relevant time. The default stands established and there is no reason to deny the admission of the present Application. In the light of the facts stated in the application and the evidence placed on record, this Adjudicating Authority admits this Application and orders initiation of CIRP against the Corporate Debtor - Application allowed.
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2022 (6) TMI 1182
Seeking Liquidation of Corporate Debtor - seeking appointment of Liquidator of the Corporate Debtor - HELD THAT:- Since this Adjudicating Authority did not receive any Resolution Plan under Sub-Section (6) of Section 30 of the I B Code, 2016, and this Adjudicating Authority deems it proper to allow the Application. This Adjudicating Authority hereby order for Liquidation of M/s. PVK Engineers Private Limited, which shall be conducted in the manner as laid down in Chapter III of part II of the I B Code, 2016 - Application allowed.
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2022 (6) TMI 1181
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - invoices forged by the Applicant to extort money - invoices not authenticate - HELD THAT:- The Applicant has alleged a default on part of the Respondent in payment of a sum of Rs. Rs. 9,46,177/-. The Respondent has, in reply to the Demand Notice dated 16.05.2019 in Form 3 under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, issued by the Petitioner/Applicant, raised dispute in relation to amount due and the invoices raised. The Respondent has even disputed the invoices raised by the Petitioner/Applicant by stating that certain invoices raised by the Petitioner/Applicant are deliberately and malafidely forged. In terms of this judgment of the Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited [ 2017 (9) TMI 1270 - SUPREME COURT ], it is clear that to qualify as pre-existing dispute, the dispute has to be raised before the issuance of notice u/s. 8, IBC Code, 2016. The Corporate Debtor must bring to the notice of the Operational Creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute. The Respondent, in reply to the notice u/s. 8, had stated that the amount due as per his ledger was Rs. 210/- which was supported by his books of accounts. The Respondent has failed to produce any prior communication before the issuance of notice u/s. 8 of IBC Code, 2016 so as to establish that the dispute was pre-existing. Thus, this Tribunal is of the view that no pre-existing dispute exists between the parties. The Respondent has alleged that invoices have been forged by the Applicant to extort money from the Respondent. Both the Respondent and the Applicant have attached their ledgers which do not match and the Respondent has claimed that invoices have been forged by the Applicant - As per the ledger maintained by the Respondent, a mere amount of Rs. 210 is due to the Applicant. The amount of debt due, if any, cannot be ascertained as long as the authenticity of invoices is proved. The dispute with respect to forgery of invoices cannot be decided by this Adjudicating Authority. This Adjudicating Authority is not expected to ascertain the veracity of invoices raised. Therefore, the Applicant may explore other legal remedies. In the present case, the authenticity of the invoices is itself in doubt, the debt cannot be established at this stage and therefore, proceedings under Section 9 of the IBC Code, 2016 cannot be initiated against the Respondent - application dismissed.
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Service Tax
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2022 (6) TMI 1180
Maintainability of petition - Demand-cum-Show Cause Notice issued against a deceased person - HELD THAT:- Since the Demand-cum-Show Cause Notice dated 08.11.2019 as well as the consequential order dated 01.02.2022, both issued by the Assistant Commissioner, CGST and Central Excise, Division-I, Guwahati being issued to a person already deceased, the same are being nullified are hereby set aside and quashed. The respondents in the CGST are at liberty to initiate appropriate proceeding as provided under the provisions of the Finance Act, 1994 following the due procedure of law, in respect of such recovery of Service Tax - Petition disposed off.
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Central Excise
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2022 (6) TMI 1179
CENVAT Credit - input services - GTA service - sale of goods by using the said transportation service is on FOR basis - HELD THAT:- The documents submitted by the appellant which were also placed before the lower authority such as invoices, it clearly established that the freight was not separately charged from the customers the same was borne by the appellant therefore, it is the part and parcel of the invoice value and the excise duty was charged on the said value. As per this undisputed fact, it is held that the appellant is entitled for the Cenvat Credit on GTA Services. The same issue on the identical fact has been decided by this Tribunal in the case of M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD] and M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] where it was held that as the ownership of the goods remained with the Appellants till the goods reached to the customer s doorstep and the freight charges as well as damage (insurance) to the goods till destination were borne by the Appellant, they are eligible for the credit of service tax paid by them on outward freight. Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 1178
Levy of penalty - wrong availment of CENVAT credit - suppression of fact or not - voluntary reversal of the amount - period July 2009 to July 2010 - HELD THAT:- The Adjudicating Authority imposed a penalty under section 11 AC on the basis of a proposal made in the SCN under Rule 15 read with section 11 AC. During the relevant period there was no such provision for penalty in respect of wrong availment of cenvat credit on input services. Therefore, during the relevant period the penalty was not imposable either under Rule 15 (1), 15(2) or 15 (4). Rule 15(4) was made for service providers whereas the appellant is the manufacturer. Penalty set aside - appeal allowed - decided in favor of appellant.
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2022 (6) TMI 1177
CENVAT credit - empty packaging drums of cenvatable input - non excisable goods or not - requirement to pay an amount of 6% in terms of 6(3) of the Cenvat Credit Rules, 2004 - HELD THAT:- On the identical issue this Tribunal in MS BANCO GASKETS I LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2021 (8) TMI 77 - CESTAT AHMEDABAD] has categorically held that empty packaging material of cenvatable input is not liable for payment either as excise duty or as cenvat credit under Rule 6(3) of Cenvat Credit Rules, 2004. The appellant is not liable to make any payment on clearance on empty drums - Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 1176
Refund of unspent balance of Personal Ledger Account (PLA) due to change in taxation regime from central excise to GST with effect from 01.07.2017 - Applicability of limitation as provided under section 11 B is applicable in the case of refund of unspent PLA Balance - HELD THAT:- The Learned Commissioner (Appeals) rejected the refund claim on the ground that the limitation under 11B is applicable according to which the claimant should have filed the refund within the one year from date of payment. In case of PLA balance, it is not deposited as a duty but it is deposited as advance towards the duty. The PLA Amount takes the color of excise duty only when it is utilized for payment of duty on clearance of excisable goods. The unspent balance of PLA is only advance not duty therefore, Section 11B is not applicable. The Tribunal in the case of NAVDEEP PACKAGING INDUSTRIES VERSUS COMMR. OF C. EX., AHMEDABAD-II [ 2006 (12) TMI 323 - CESTAT, MUMBAI] has held that since there is a specific provision for refund of PLA balance under Rule 9(1A) and 173G(1A) of the said Rules, therefore, such refund would be squarely covered under the said Rules and not under Section 11B of the Central Excise Act. 1944. which applies only for refund of duty. In view of the above decision along with board circular dated 06.01.1973 the appellant is entitled for the refund of PLA balance and limitation provided under Section 11 B is not applicable. Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 1175
Recovery of CENVAT Credit - inputs - alleged non-receipt of inputs in excess of the tolerance margin of 0.4% at the facility of the appellant as evidenced by their own goods receipt note (GRN) - HELD THAT:- Availment of CENVAT credit of duties paid on inputs is enabled by rule 3 of CENVAT Credit Rules, 2004. The credit taken by the appellant is the duty of central excise paid by the supplier as recorded in the invoices and any difference in quantity, manifested in goods receipt note (GRN) on actual weighment at place of receipt, does not alter the tax thus borne on the goods except when credit accrues to the supplier through appropriate debit notes raised by recipient. No such document is placed on record. There is no evidence of any of inputs having been returned to supplier or rerouted elsewhere. The lower authorities are, themselves, not certain that duties, to the extent of quantity not received, have been re-credited by the manufacturer as is evident from the finding referred to. It is only by adverse presumption that the liability under rule 14 of CENVAT Credit Rules, 2004 has been ordered for recovery. Furthermore, rule 3 of CENVAT Credit Rules, 2004 does not offer any adjustment towards tolerance or allowance and, yet, the lower authorities have deigned to provide for some arbitrary margin; implicit in the sheer arbitrariness is the principle of spreading the entire invoice value, and corresponding duty discharged, over the quantity of the goods as actually delivered. Tolerance limits are prescribed according to the nature of the goods and for the purpose of computation wherever such quantity is critical. Insofar as CENVAT credit is concerned, the underlying foundation is discharge of identical amount of duty on inputs procured for manufacture or for rendering of service on the part of supplier. Reliance can be placed in appellant own case M/S. SAVITA OIL TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR. [ 2019 (6) TMI 1672 - CESTAT MUMBAI] ], where it was held that the decision of Tribunal in NEERA ENTERPRISES VERSUS COLLECTOR OF CENTRAL EXCISE, CHANDIGARH. [ 1998 (5) TMI 119 - CEGAT, NEW DELHI] , COMMISSIONER OF C. EX., RAJKOT VERSUS BOMBAY DYEING MFG. CO. LTD. [ 1997 (10) TMI 141 - CEGAT, MUMBAI] and host of others on similar lines preclude the recovery of duty in consequence of difference between quantity paid for and actual ascertainment on receipt. Considering the circumstances and, in particular, the appellate orders in their own cases of identical recovery for other periods, the liability confirmed by original authority, and upheld in the impugned order, is without authority of law - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (6) TMI 1174
Validity of revision proceedings - power of Commissioner and other prescribed authorities to suo motu revise an earlier order - HELD THAT:- The statutory provision of law u/s 33 of the Telangana Value Added Tax Act, 2005, makes it very clear that there is a remedy of appeal against an order passed under section 32 of the Act. In the considered opinion of this court, as the petitioner was heard by the revisional authority while passing the impugned order, and the revisional authority was jurisdictionally competent to pass such an order, the petitioner has to prefer an appeal, keeping in view the statutory remedy of appeal available under the Act. All the grounds raised by the petitioner will certainly be looked into by the appellate authority and the petitioner shall be free to place reliance upon the judgments of the honourable Supreme Court as well as other judgments and to raise all possible grounds before the appellate authority. This court does not find any reason to interfere with the impugned orders, in the light of the fact that there is a statutory remedy of appeal available to the petitioner - Petition dismissed.
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Indian Laws
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2022 (6) TMI 1173
Dishonor of Cheque - material alteration in the cheque - acquittal of the accused - contention of the learned counsel for the petitioner (accused) is that, the cheque at Ex. P-1 has been materially altered, without the notice or consent of the drawer of the cheque, as such, the instrument has become invalid - HELD THAT:- In the instant case, the alteration in the cheque at Ex. P-1 has been admitted by none else than the drawee Bank Manager in his evidence as DW-1. Though it was not elicited from him about the nature of the said alteration, however, he has identified the said alteration as an alteration in the date of the cheque. In the date column, the year appears to have been manipulated and appears to have been postponed the time of payment. Thus, undoubtedly, it is a material alteration in the cheque - Section 87 of the N.I. Act which speaks about the effect of material alteration, states that any material alteration of a Negotiable Instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. In the instant case, there is nothing on record to show that the alteration in the date of the cheque at Ex. P-1 was made in order to carry out the common intention of the original parties. Therefore, by virtue of the material alteration being made to the date of the cheque without any authentication thereto by the drawer of the cheque, the instrument becomes void. However, the banker, even there being a material alteration in the cheque, did not proceed to mention the same as one among the reasons for returning of the cheque, but only stated that the cheque was returned for the reason of closure of the account by the drawer. It is clear that since the account of the drawer of the cheque was closed with the drawee Bank as on the date of the presentation of the cheque at Ex. P-1, it confined the reason for returning of the cheque only to the reason of account closed . Thus, it cannot be deduced that, had there been any material alteration in the cheque at Ex. P-1, the banker should have necessarily mentioned about the same. At the cost of repetition, it is again observed that DW-1 as a Bank Manager of the drawee Bank himself has stated that there is alteration in the date column of the cheque at Ex. P-1. Surprisingly, neither the Trial Court nor the learned Sessions Judge's Court have noticed this aspect, on the contrary, merely because there was a cheque return memo and legal notice copy, they have proceeded to hold that the guilt against the accused has been proved beyond all reasonable doubts. Had they noticed the material alteration existing in the cheque at Ex. P-1, making the instrument at Ex. P-1 void, then, they would not have proceeded to hold the accused before it guilty of the alleged offence. Since the finding of both the Trial Court as well the learned Sessions Judge's Court holding the accused guilty of the alleged offence is now established to be a perverse and erroneous finding, the same warrants interference at the hands of this Court. Thus, without discussing the other aspect of the alleged allegation of financial incapacity of the complainant to lend such a huge sum of money to the accused, suffice it to hold that the impugned judgments of both the Courts deserve to be set aside and the accused deserves to be acquitted of the alleged offence. Criminal Revision Petition stands allowed.
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2022 (6) TMI 1172
Dishonor of Cheque - insufficiency of funds - vicarious liability - It is alleged that the accused knowing it well that there is no sufficient fund in the account still issued the cheques and made himself liable u/s 138 of N.I.Act - HELD THAT:- The Court has gone through the materials on record and finds that in the complaint the firm is not made an accused. On perusal of the cheques which have been brought on the record by way of I.A petition it transpires that the cheque in question was issued by the firm and the petitioner is not a drawer in both the cases. On perusal of this section, it is crystal clear that vicarious liability under sub section 1 or 2 of section 141 of the Negotiable Instruments Act can be fastened if the person is having the control over the day to day affairs of the company. Looking to the explanation of the said section, it is crystal clear that the firm or the company are required to be made an accused in the complaint, which is lacking in the case in hand. However, such vicarious liability arises only when the company or the firm commits offence as primary offence. The judgment relied by Mr. Singh, the learned counsel appearing on behalf of the petitioners in the case of ANEETA HADA VERSUS GODFATHER TRAVELS TOURS (P.) LTD. [ 2012 (5) TMI 83 - SUPREME COURT ] is on the same footing which is helping the petitioners. Recently, the Hon'ble Supreme Court has again examined this aspect of the matter in the case of Dilip Hariramani v. Bank of Baroda [ 2022 (5) TMI 424 - SUPREME COURT ] - By the Hon'ble Supreme Court in the judgment clearly held that section 141 of the Negotiable Instruments Act extends vicarious criminal liability to the officers associated with company or firm when one of twin requirements of section 141 has been satisfied, which person(s) then, by deeming fiction, is made vicariously liable and punished. In absence of the firm and looking into the admitted position that the petitioner is not the drawer and in both the case he cannot be liable to be punished. Petition allowed.
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2022 (6) TMI 1171
Dishonor of Cheque - funds insufficient - offence punishable under Section 138 of N.I. Act - HELD THAT:- The evidence of PW-1, which has remained un-denied, supported by the cheque at Ex.P-1 and the banker's endorsement at Ex.P-2, which shows that there was no sufficient balance in the account of the drawer/accused on the date when the cheque was presented for its realisation and also the copy of legal notice at Ex.P-3 and the postal acknowledgement at Ex.P-5, which further go to show that the complainant had demanded the payment of cheque amount from the accused within the statutory period, but, still the accused did not pay the cheque amount, would make it clear that the complainant has proved the alleged guilt against the accused beyond reasonable doubt - both the trial Court, as well as the Sessions Judge's Court have convicted and confirmed the conviction of the accused for the offence punishable under Section 138 of N.I. Act respectively. In the instant case, the petitioner/accused is convicted for the offence punishable under Section 138 of N.I. Act and is sentenced to pay fine of Rs. 5,00,000/- and in default of payment of fine, to undergo simple imprisonment for a period of two months. Since in the light of the facts and circumstances of the case, the sentence ordered by the trial Court and confirmed by the Sessions Judge's Court being proportionate to the gravity of the proven guilt against the accused, there are no reason to interfere in the impugned judgments. Criminal Revision Petition is dismissed.
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2022 (6) TMI 1170
Enforceability of part of the Foreign Award - Seeking declaration of enforceability under Sections 47 and 49 of the Arbitration and Conciliation Act,1996 (the Arbitration Act) of a final award - seeking declaration that the Foreign Award be deemed to be a decree of this Court - HELD THAT:- One part of the Foreign Award grants the claims made by the Company. By the other part of the Foreign Award, the counter claim of NCCIHL towards part consideration for the Subsequent Sale Shares was directed to be paid by TAQA/the Respondent herein. In addition, the Foreign Award provided for the payment of costs by both the claimants to NCC. By these petitions, the respective Petitioner seeks enforcement of the part of the Foreign Award which is in favour of the respective Petitioner against TAQA. TAQA/ the Respondent is a company based in Cuddalore, and the respective Petitioner pleads that the assets of TAQA/the Respondent are situated within the civil appellate jurisdiction of this Court. This contention is not disputed by TAQA. Therefore, there is no doubt that this Court qualifies as a High Court with jurisdiction in terms of the Explanation to Section 47 of the Arbitration Act in an action for recognition and enforcement against TAQA. Whether these proceedings are liable to be rejected on account of the NCLT order? - HELD THAT:- The NCLT is empowered to admit an action for corporate insolvency resolution at the instance of a financial creditor or operational creditor, as defined in the IBC, or the company concerned. As regards these proceedings, the grounds in Section 48 of the Arbitration Act have been held to be exhaustive in cases such as VIJAY KARIA ORS. VERSUS PRYSMIAN CAVI E SISTEMI SRL ORS. [ 2020 (2) TMI 628 - SUPREME COURT ] . Indeed, the Supreme Court held that the court concerned has the discretion to reject the resistance to enforcement if made on grounds which only affect party interest even if one of the grounds under Section 48 are made out. Therefore, the objection on this ground is rejected. In view of the judgment of the Hon'ble Supreme Court in FUERST DAY LAWSON LTD. VERSUS JINDAL EXPORTS LTD. AND VICE-VERSA AND ITE INDIA P. LTD. VERSUS MUKESH SHARMA ORS. AND SHIVNATH RAI HARNARAIN INDIA COMPANY VERSUS GLENCORE GRAIN ROTTERDAM AND TINNA FINEX LTD. VERSUS NATIONAL ABILITY S.A. ANR. AND SEA STREAM NAVIGATION LTD. VERSUS LMJ INTERNATIONAL LTD. , [ 2011 (7) TMI 1275 - SUPREME COURT] , a composite petition is maintainable to fulfil dual purposes: (i) recognise and declare a foreign award as enforceable, in the first stage; and (ii) enforce/execute in the second stage. The Arbitration Act, however, only deals with the above mentioned first stage and recourse is necessary, in the Indian context, to Sections 36 to 74 of the Code of Civil Procedure, 1908, read with Order XXI thereof in the second stage. Non-joinder of the Company - HELD THAT:- As regards non-joinder, the Foreign Award did not grant any relief to NCCIHL against the Company. Therefore, there is no question of any enforcement action against the Company by NCCIHL. As a corollary, the Company is not a necessary party to the petition by NCCIHL. As regards the petition by NCC, costs were directed to be paid by both the Company and TAQA to NCC; therefore, the Company could have been made a party to that petition. However, in an action for recognition and enforcement, the award holder can choose to proceed against one of the award debtors subject to the condition that it cannot recover more than the amount awarded if separate proceedings are subsequently instituted against the other award debtor. Whether the proceedings may be instituted in more than one high court in India? - HELD THAT:- The Explanation to Section 47 clearly does not expressly prevent the institution of proceedings under Chapter -1 of Part II in more than one high court. Section 49, no doubt, uses the expression ''deemed to be a decree of that Court''. Since the expression decree of that court is used, can it have said that only one court in India should be approached for such purpose? There can be no doubt at all that an award holder may seek to enforce the relevant award or a part thereof in more than one country especially if the award debtor has assets in more than one country. As regards enforcement of a foreign award in India, given the Explanation to Section 47 of the Arbitration Act, the jurisdictional high court should be determined by raising the question as to which high court may exercise jurisdiction over the questions forming the subject matter of the award, either in exercise of original or appellate civil jurisdiction. In turn, the answer to this question would depend on the location of the: (i) person or entity; or (ii) assets of such person or entity against whom/which the award is sought to be enforced. Whether the recognition and enforcement of a part of the Foreign Award is contrary to public policy, in the peculiar facts and circumstances of this case, is a separate and distinct matter? - HELD THAT:- A significant aspect of the Foreign Award is that it does not provide for a setoff. The reasons for not doing so are not difficult to discern: the monetary claim of the Company was granted but not that of TAQA. On the other hand, the monetary counter claim of NCCIHL was granted against TAQA but not against the Company. The only exception is with regard to the grant of the claim of costs by the claimants, including TAQA, against NCCIHL - If a set-off that enured to the benefit of TAQA had been provided for in the Foreign Award and recognition or enforcement was sought without reckoning such set-off, such petition may have fallen foul of public policy. While the Company has affirmed an affidavit indicating that amounts awarded to it under the Foreign Award are for the benefit of TAQA, such arrangements between the Company and TAQA cannot be recognised and given effect to in these proceedings. As regards NCC, no part of the Foreign Award is enforceable against it and, therefore, its petition cannot be objected to at all on the ground that the petition before the Delhi High Court is pending. The respective Petitioner is entitled to an order declaring that the Foreign Award is recognised and is, consequently, enforceable as a decree of this Court - Petition allowed.
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