TMI Tax Updates - e-Newsletter
June 30, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Central Excise CST, VAT & Sales Tax Indian Laws

Articles

• VICARIOUS LIABILITY OF GUARANTOR IN CHEQUE DISHONOR CASES
• GST REGISTRATION OF LIQUIDATOR UNDER IBC
• SEBI- SAT order A case of confirmation of penalty due to lacking of proper grounds, contentions and pleadings either not raised or ignored by the SAT

News

• Recommendations of 47th GST Council Meeting

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• GST Council defers tax on casinos, lottery

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• Cabinet approves Deregulation of Sale of Domestically Produced Crude Oil

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• Cabinet approves Computerization of Primary Agriculture Credit Societies (PACS)

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• India’s marine product exports record an all-time high in FY 2021-22; Grow by over 30% to Rs 57,586.48 crore (USD 7.76 billion)

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• Finance Minister Smt. Nirmala Sitharaman to release assessment report of States/UTs based on implementation of Business Reforms Action Plan (BRAP 2020) tomorrow in presence of Commerce & Industry Minister Shri Piyush Goyal

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• Inaugural Address by Governor, Shri Shaktikanta Das at the Statistics Day Conference on June 29, 2022

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Notifications

Customs

• 53/2022 - dated 28-6-2022 - Cus (NT)
  Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Seeks to amend Notification No.51/2022-CUSTOMS (N.T.), dated 16th June, 2022

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GST - States

• F. No. 3 (7)/Fin.(Exp-I)/2022-23/DS-I/538 - dated 27-6-2022 - Delhi SGST
  Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC

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• 04/2022-State Tax - dated 27-6-2022 - Delhi SGST
  Seeks to amend Notification No. 14/2019-State Tax, dated the 12th September, 2019

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• 03/2022-State Tax - dated 27-6-2022 - Delhi SGST
  Seeks to amend Notification No.10/2019-State Tax, dated the 12th September, 2019

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• 01/2022-State Tax (Rate) - dated 27-6-2022 - Delhi SGST
  Seeks to amend Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017

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• 37/GST-2 - dated 28-6-2022 - Haryana SGST
  Notification to waive interest for certain e-commerce operators as per the recommendations of the ITRGC under the HGST Act, 2017.

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Income Tax

• 72/2022 - dated 28-6-2022 - IT
  Income-tax authority to exercise the powers and perform functions and also jurisdiction as specified - Seeks to amend Notification No. 54/2014 dated the 22nd October, 2014

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• 71/2022 - dated 28-6-2022 - IT
  Jurisdiction of Income tax Authorities - Seeks to amend Notification No. 70/2014 dated 13th November, 2014

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• 70/2022 - dated 28-6-2022 - IT
  U/s 92C(2) of IT Act 1961- Computation of arm's length price

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SEZ

• S.O. 2923 (E) - dated 27-6-2022 - SEZ
  Central Government notifies an additional area of 1.5642 hectare, as a part of Special Economic Zone thereby making total area of the Special Economic Zone as 6.6042 hectares at Villages Talegaon and Panshil, Taluka-Khalapur and Village-Bhokarpada, Taluka-Panvel, District- Raigad, in the State of Maharashtra

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• S.O. 2922(E) - dated 27-6-2022 - SEZ
  Central Government notifies an additional area of 31.96 hectares, thereby making total area of the Special Economic Zone as 84.04 hectares at Banapur and Talbal Villages, Kukanur Taluka (erstwhile Yelburga Taluka) Koppal District in the State of Karnataka

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Circulars / Instructions / Orders

Customs

• Instruction No. 10/2022 - dated 28-6-2022
  FSSAI Imports related directions on rectifiable labeling information for imported food consignments and import of Clove Stem

Highlights / Catch Notes

GST

• Validity of assessment order - if the petitioner has got any objection and not paid tax as ascertained, a show cause notice has to be issued under Section 74(1) of the TNGST Act and after receiving objections, giving personal hearing, the assessment order ought to have been finalised. In this case, procedure not followed. It is also seen that following the impugned order, the respondent vide Form GST DRC-09, issued a communication, directing the Branch Manager, Axis Bank, Ramanathapuram, to recover the amount due from the petitioner under Section 79 of the TNGST Act, 2017, which is not proper. - assessment orders set aside - The respondent is directed to issue notice after following the procedures prescribed under the TNGST Act - HC
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• Supply or not - mixed supply or not - Liaison activities between India office and Dubai office - host of activities undertaken by the Appellant at the behest of their Dubai Head Office - intermediary Service or otherwise - the host of activities performed by the Appellant at the behest of their Dubai Head Office will come under the ambit of “Supply” in terms of Section 7(1 )(a) of the CGST Act, 2017, and are required to take GST registration, and discharge their IGST liability, if any, on the amount received from their Dubai Head Office. - AAAR
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• Levy of GST - recovery of nominal amount from the employees for making payment to the third-party service provider, providing food in canteen as mandated in the Factories Act, 1948 - The supply of food by the applicant is ‘Supply of Service’ by the applicant to their employees as the same is not a part of the employment contract and the canteen facility is provided as mandated under Factories Act. The nominal cost, which is recovered from the salary as deferred payment is ‘consideration’ for the supply and GST is liable to be paid. - AAR
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• Classification of supply - printed leaflet - supply of goods or supply of services - naturally bundled composite supply or not - matter of printing content being supplied by the recipient - the predominant activity is printing the contents of the customer in the required tangible inputs sourced by the applicant as per the requirement of the recipient and going by the clarification, the principal supply in the considered transaction is 'Supply of Service' - in the case at hand, the supply made by the applicant to the recipient is a composite supply with 'Supply of Printing Service' as the Principal Supply. - AAR
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• Profiteering - purchase of Stayfree Sanitary Napkins - allegation is that reduction in the rate of Input Tax Credit has not been passed y commensurate reduction of the price - the benefit of reduction in the tax rate has not been passed on to the recipients by way of commensurate reduction in the prices by the Respondent in terms of Section 171 (1) of the CGST Act, 2017 during the above period. - This Authority as per the provisions of Section 171 of the CGST Act, 2017, determines the profiteered amount as Rs. 9,84,354/- - NAPA
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• Profiteering - construction service supplied by the Respondent - post-GST, the Respondent has been benefited from additional ITC to the tune of 8.18% [11.74% (-) 3.56%] of his turnover for the said project and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 6.46,06,227/- for the project “Sierra-Vizag” - NAPA
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Income Tax

• TDS u/s 195 - application for 'Nil TDS Certificate' has been rejected and the petitioner has been directed to deduct tax at source at the applicable rate - The 'make available' requirement that is mandated under Article 12(4) grants benefit to the petitioner and accordingly, the question of falling back on the provisions of Section 9 of the I.T. Act does not arise. On this score alone, the conclusion in the impugned order of the payment for the service falling within the description under Section 9 of the I.T. Act as 'deemed income', is to be rejected. - HC
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• TDS u/s 192 or 194J - payment in respect of doctors engaged as retainers and consultants - distinction between a "contract for service" and a "Contract of service" - the provisions of section 194J of the Act are applicable to the assessee and not those of section 192 of the Income tax Act 1961 therefore, the appellant cannot be treated as an "assessee in default" in so far as the question of deducting tax at source in respect of doctors engaged as retainers and consultants was concerned - AT
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• Penalty u/s 271D - accepting loan in cash - reasonable cause - the AO has neither doubted the impugned transaction nor any addition made in this behalf even under section 68 of the Act. Only the reason for the Revenue was that the receipt of the loan was in cash, which was in violation of section 269SS of the Act. Thus, the Revenue authorities imposed penalty, as if the provision of section 271D is mandatory, without considering the ‘reasonable cause’ explained by the assessee both during the penalty proceedings. - Penalty deleted - AT
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• Bogus LTCG - genuineness of transaction not proved - exemption u/s 10(38) - assessee failed to prove genuineness of transaction and long-term capital gain on sale of shares by assessee was an arranged affair to convert its own unaccounted money and thus, exemption claimed under section 10(38) on sale of shares had rightly been disallowed. - CIT(Appeals) has not erred in facts and in law in confirming the addition made in respect of LTCG claimed as exempt in the instant facts. - AT
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• Condonation of delay of 10 years in filing the present appeal. - despite the cause of action having arisen after passing of the impugned order by learned CIT(A) and Official Liquidator also having power to initiate proceedings in the name of and on the behalf of the assessee, with the leave of the Court, no action was taken for filing the appeal against the impugned order. - the assessee has failed to prove any sufficient cause for not preferring the appeal within the limitation period. - AT
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• Penalty u/s 271D - entries through journal entries - Violation of provisions of section 269SS - round tripping of funds to evade taxes - proof of reasonable cause u/s 273B - these transactions were not made by the assessee with a malafide intent to evade tax and that there is no evidence brought on record to even remotely suggest that the assessee company by passing the aforesaid journal entries had sought to introduce its unaccounted income into the system. - it could be safely concluded that these entries neither reflect any receipt of loan nor repayment of loan. - AT
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Customs

• Levy of personal penalty - The foundation aspect of the case proceeded by the department against the company as well as the petitioner is no more inexistence. The petitioner as managing director has been imposed penalty which is a consequent lapse on the part of the misdeclaration by the company. Further, the foundation aspect of the department is set aside. The petitioner, who was imposed consequential penalty, if proceeded, would be is eligible to the enure benefit of the order passed by the CESTAT - HC
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• Personal penalty on the charge of forgery of Textile Committee report - It is found that forgery is a very serious charge which should be proved by clear and cogent evidence which seems to be missing in the present case as two of them have retracted their statement and the statement of Mahesh Bhansuhali is the one left for which both the appellants have asked for cross examination which was denied by the lower authorities, which should have been given since other confessional statements were retracted. - Moreover, when department’s claim of change of classification failed, the personal penalties being consequential to the main case of classification would also not sustain. - AT
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• Provisional release of goods - Demand of bank guarantee to the extent of 15% of the value of seized goods - it is important to note that the investigation is ongoing and country of origin of the goods will be determined only after the investigation is concluded. At this point of time, it cannot be said with certainty that the goods were imported from Iran. Be that as it may, the issue before this Tribunal is limited to the provisional release of goods and the same be decided keeping in mind the fact that the Appellant never intended to avail any benefit basis the COO and were and are willing to pay the duty on the goods imported vide the 4 bills of entry. - AT
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• Levy of penalty u/s 112(a) of the Customs Act, 1962 - Allegation of evasion of anti-dumping duty - joint liability with rea-importer - mis-declaring the country of origin as Malaysia, instead of China - There is no evidence to show that at the time of imports he was aware that goods were allegedly being mis-declared by Nalin Mehta to customs. - AT
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Corporate Law

• Oppression and mismanagement - conduct of due election of the Board of Directors - Lame excuses to conduct the election cannot be accepted for not conducting the election. The Tribunal cannot be a moot spectator in the matter. In order to give an end to the issue involved and in the interest of justice, it is high time to order for conducting the election to the Board of Directors of the 4th Respondent Company in terms of the Articles of Association of the 4th respondent Company. It is not necessary to appoint a Commissioner for the conduct of such an election, as the administrator is competent to conduct the election. - Tri
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Indian Laws

• Dishonor of Cheque - acquittal of accused - prepoderance of probablities - cheque in question is dated 20.04.1999, whereas, the letter asking to repay the amount is of 14.04.1999 i.e. prior to issuance of cheque - In the instant case, considering the evidence on record, it is observed by the learned trial Judge that the cheque in question appears to have been with the complainant prior to 14.04.1999 i.e. the date of post-card/letter written by the complainant to the respondent-accused - when the respondent-accused has succeeded in rebutting the presumption, the learned trial Judge has rightly come to the conclusion that the said provision would be of no help to the complainant. - HC
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• Dishonor of Cheque - existence of legally enforceable debt or not - acquittal of the accused - presumption of innocence - the presumption under Section 139 of the NI Act merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability and existence of legally recoverable debt is not matter of presumption under the said section. Nonetheless, as said earlier, the complainant has failed to prove that the cheque was drawn towards legally enforceable debt. - HC
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• Dishonor of Cheque - legally enforceable debt or not - rebuttal of presumption - both the Trial Court and the Sessions Judge's Court without analyzing the evidence placed before them in their proper perspective, have hastily embraced the fact that both the parties to the case were known to each other and the cheque that was issued by the accused, was presented by the complainant and the same came to be dishonored and also of the fact that a legal notice was also sent by the complainant after dishonor of the cheque, calling upon the accused to pay the cheque amount, have jumped to a conclusion that complainant has proved the alleged guilt of the accused - judgment of conviction and order on sentence set aside - HC
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IBC

• CIRP proceedings - IRP seeking details, books of accounts etc. - Since the Corporate Debtor/Respondent has got time upto 31/07/2022, the prayer of the IRP to provide the books of accounts, and all the relevant information in respect of the Corporate Debtor, assist the IRP to identify the company assets, handover the Keys of the factory gate and extend all the support and cooperation to complete the CIR Process cannot be granted at present, as the Financial Creditor who has filed the case before this Tribunal has agreed to the OTS, presumably with the approval of CoC, the IRP has to wait till the cut off date provided in the OTS approval.
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VAT

• Classification of goods - Bread-Rusk - Process of manufacturing - The burden or onus is on the respondent authorities to establish by placing on record cogent, convincing and substantive evidence to show that Rusk is not Bread so as to bring it under the residuary entry under Part-IV of Schedule-B so as to impose tax on Rusk and Toast at the rate specified under the residuary entry. - Once the Court agrees that the raw material as also the manufacturing process for Bread and Rusk is same and thereafter only the moisture is extracted, would not term that activity to be falling within the meaning of “manufacturer” as used in the Act. - HC
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Case Laws:

• GST

• 2022 (6) TMI 1258
  Validity of assessment order - search and seizure proceedings - proper service of notices or not - proper opportunity of hearing was provided or not - violation of principles of natural justice - HELD THAT:- There was a surprise inspection in the petitioner's showrooms, Office and Godown from 14.09.2021 to 16.09.2021 and certain defects were pointed out and thereafter, explanation sought for. Though the petitioner had sent their objections and their authorized representative/Chartered Accountant appeared before the respondent, but they were unable to give proper explanation with supporting documents. This is a merit of the case. It is seen that after issuance of notice in Form DRC-01A, dated 06.12.2021, the respondent has issued Form GST DRC-01A. Thereafter, if the petitioner has got any objection and not paid tax as ascertained, a show cause notice has to be issued under Section 74(1) of the TNGST Act and after receiving objections, giving personal hearing, the assessment order ought to have been finalised. In this case, procedure not followed. It is also seen that following the impugned order, the respondent vide Form GST DRC-09, issued a communication, directing the Branch Manager, Axis Bank, Ramanathapuram, to recover the amount due from the petitioner under Section 79 of the TNGST Act, 2017, which is not proper. The assessment orders, bearing Assessment Nos.33AAQCA6068B1ZR/2020-21, 33AAQCA6068B1ZR/2019-20 and 33AAQCA6068B1ZR/2021-22, dated 31.01.2022, are hereby quashed. The consequential recovery notice, dated 10.06.2022, issued to the Branch Manager, Axis Bank, is also hereby quashed. The respondent is directed to issue notice after following the procedures prescribed under the TNGST Act and issue show cause notice and after giving an opportunity to file their objections, pass appropriate orders on merits and in accordance with law. Petition allowed.

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• 2022 (6) TMI 1257
  Validity of provisional attachment order - proceedings under Section 67 has already been concluded - Section 83 of the CGST Act - HELD THAT:- The order of provisional attachment passed on 20th January, 2021 during the pendency of the proceedings under Section 67 of the CGST Act has worked out as admittedly the proceedings under Section 67 has already been concluded and the department is said to be in the process of proceeding to take action under Section 74 of the CGST Act. The respondents are directed to intimate the appellants banker within one week from the date of receipt of the server copy of this order to lift the attachment of the said bank account - Application allowed.

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• 2022 (6) TMI 1256
  Supply or not - mixed supply or not - Liaison activities between India office and Dubai office - host of activities undertaken by the Appellant at the behest of their Dubai Head Office - intermediary Service or otherwise - the activities undertaken by the Appellant can be construed as Supply as envisaged under Section 7 of the CGST Act, 2017 or not - place of Supply of the impugned activities is within taxable territory or not - Requirement to obtain registration - HELD THAT:- On perusal of the activities undertaken by the Appellant, it is noticed that the Appellant are undertaking a bunch of activities - On close scrutiny of the activities undertaken by the Appellant, it is noticed that all these activities may be construed as an individual independent supply in itself, if undertaken by the Appellant separately. Further, it is observed that the Appellant are charging, from their Dubai Head Office, a single price or consolidated amount, i.e., reimbursement of the monthly expenses on cost- to- cost basis. Thus, it can be concluded that the bunch of activities undertaken by the Appellant is nothing but the mixed supply as provided under Section 2(74) of the CGST Act, 2017. On perusal of the activities of the Appellant, it is conspicuous that the Appellant, inter-alia, are organizing various seminars, conferences, other interactive events for Indian Business entities and Dubai Business entities/ delegates for the better understanding of the business landscapes in India and Dubai, and for promoting and projecting Dubai as an international business hub as a part of the diplomatic mission of their Dubai Head Office. Thus, such activities of the Appellant can be grouped under the category of support services having the Service Accounting Code 998596 which has the description as Events, exhibitions, conventions and trade shows organization and assistance services - it is opined that the Appellant are providing support services to their Dubai Head Office, which attracts GST at the rate of 18% in terms of item (iii) of the entry at SI.No. 23 of the Notification No. 11/2017-C.T.(Rate) dated 28.06.2017, having the description Support services other than (i) and (ii) above . Whether the said activities undertaken by the Appellant can be construed as Supply as envisaged under Section 7 of the CGST Act, 2017? - HELD THAT:- It is concluded that the host of activities carried out by the Appellant will come under the ambit of Supply as provided under Section 7 of the CGST Act, 2017, which, inter-alia, covers all forms of supply of goods or services or both made or agreed to be made for a consideration by a person in the course or furtherance of business. Whether the place of Supply of the impugned activities is within taxable territory, or otherwise? - Section 13 of the IGST Act, 2017 - HELD THAT:- Since, the Appellant are, inter-alia, undertaking numerous activities pertaining to the organization of the various events in the nature of seminars, conference, round table discussions, etc., the place of supply in such cases will be the place where such events have been held. As it is evident that the Appellant are organizing such events in India, the place of supply of such services, provided by the Appellant, will be in India, i.e., in the taxable territory. Requirement to obtain registration - HELD THAT:- The Appellant are required to obtain GST registration, and pay IGST on the entire amount received from their Dubai Head Office for providing the said mixed supply of support services. On plain reading of the definition of consideration , it is apparent that the a very wide connotation has been given to the term consideration by the legislature which is evident by the presence of the expressions any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person , having a very wide expansion, which would clearly include even the payment, which are in the nature of reimbursement of the expenses. Thus, the cost -to -cost reimbursement, received by the Appellant from their Head Office in respect of the supply of services, will be construed as consideration . Whether the Appellant, i.e., DCCI-L.O. and its Dubai Head Office, i.e., DCCI-H.O. are one and the same person, or otherwise as per the GST law? - HELD THAT:- On perusal of the definition of the term person , it is seen that anybody corporate incorporated by or under the laws of a country outside India is a person. This means that as per the CGST Act, 2017, DCCI-H.O. is a person as it has been incorporated under the laws of a country outside India. Further, from the same definition of person , reproduced above, it is also manifest that every artificial juridical person, not falling within any of the above is also a person. This leads us to conclude that DCCI-L.O., i.e., the Appellant, who is also bound to comply with various statutory obligations in India, viz. filing of Annual Income Tax Returns with the Income Tax Authorities, filing of Annual Financial Statements with the Registrar of the Companies under the Indian Companies laws, etc., can definitely be considered as an artificial juridical person. Thus, it is seen that DCCI-H.O. and DCCI-L.O./Appellant are two different persons as per the GST law, and thereby, the activities undertaken by the Appellant at the behest of their Dubai Head Office will clearly constitute supply in terms of Section 7(1)(a) of the CGST Act. 2017 as all the prerequisites of the supply provided under Section 7(1)(a) of the CGST Act, 2017 are being satisfied by the activities undertaken by the Appellant at the behest of their Dubai Head Office. Thus, the host of activities performed by the Appellant at the behest of their Dubai Head Office will come under the ambit of Supply in terms of Section 7(1 )(a) of the CGST Act, 2017, and are required to take GST registration, and discharge their IGST liability, if any, on the amount received from their Dubai Head Office - Appeal filed by the Appellant is not maintainable, and hence hereby, dismissed.

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• 2022 (6) TMI 1255
  Levy of GST - recovery of nominal amount from the employees for making payment to the third-party service provider, providing food in canteen as mandated in the Factories Act, 1948 - HELD THAT:- The applicant provides canteen facility in both the units and follows different modus in running the canteen facility at their units at Kattur and Sathamangalam. The common factor seen is that the applicant while extending the canteen facility, is providing meals/food at concessional rates, i.e., no meal is extended free and specified amount in respect of the food consumed by the employee are collected by the applicant against such consumption of food. Also it is seen that consuming food at the canteen facility made available by the applicant in their premises is not mandatory because the deductions sheet reveals that only a limited number of employees have consumed food at the canteens also the consumption is limited to certain items/breakfast/lunch, etc, while the number of workers and labourers employed at the units are at large. With the above facts, the question sought on the liability to pay GST on the amount collected by the employees is taken up. The contention that the activity of supply of food for a nominal charge by them is neither a supply of goods nor a supply of service is not legally tenable. The next contention of the applicant is that there is no supply between the Applicant and the employees and the Applicant is not engaged in the business of provision of canteen services but has established the canteen as required under the Factories Act - From the provisions of Section 46 of Factories Act 1948, it is seen that the Act mandates establishing a canteen when more than two hundred and fifty workers are ordinarily employed in a factory and as per sub- clause (2)(dd) above, certain expenditure are to be borne by the employer - In the case at hand, in both the units, abiding by the above provisions, since the number of workers and contract labourers ordinarily employes exceeds 250 in number, the applicant has established the canteen. Managing committee for the canteen are present in the units as seen from the agreement entered into with the third party vendor and the submissions of the applicant and the menu along with the cost are decided by the said committee. The cost to be borne by the applicant as per the above provisions are borne by the applicant and the employee cost are arrived. The supply made by a taxable person in the course or furtherance of business is an Outward supply . It has been brought out above, that establishing canteen is in the furtherance of business of the applicant and supply of food to the employees when the same is not contractually agreed, is not an allowance as a part of the employment. Thus, the provision of food in the canteen for a nominal cost is a Supply for the purposes of GST. Schedule II to the CGST Act, 2017 describes the activities to be treated as supply of goods or supply of services - the supply of food is a Supply of Service . Whether the amount received from the employees is in the nature of recovery and not consideration as the recovered amount is directly paid to the third-party vendor without any profit element in the hands of the Applicant? - HELD THAT:- The running of canteen in the units of the applicant is in the course of furtherance of business. The applicant has chosen to run the canteen through a third party vendor in one of its units, while in other unit, the same is run by the applicant themselves. It is also clear that in running of such canteens, the employer, i.e., the applicant is mandated to bear certain costs. The contention that the applicant only collects the employee cost and pay the third party vendor that such employee cost is only a recovery is not acceptable. Provision of canteen facility and bearing certain costs in running of canteen are mandated on the part of the employer as per the Factories Act. Accordingly, such canteens are provided. It has been established that the supply of food in the canteens are Supply of Service by the applicant. In the case at hand, the applicant has established canteen facilities as mandated under Section 46 of the Factories Act, 1948 and supplies food at a nominal cost either directly or through third-party-vendor. The supply of food by the applicant is Supply of Service by the applicant to their employees as the same is not a part of the employment contract and the canteen facility is provided as mandated under Factories Act. The nominal cost, which is recovered from the salary as deferred payment is consideration for the supply and GST is liable to be paid.

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• 2022 (6) TMI 1254
  Classification of supply - supply of goods or supply of services - naturally bundled composite supply or not - Manufacture and supply of printed leaflet product on the physical inputs owned by the printer while the matter of printing content being supplied by the recipient - HSN heading under 4901 of GST Tariff Act or SAC code 9989, is applicable - determination of tax liability payable on such printed leaflet product supplied - HELD THAT:- Though the purchase Order/Bid furnished do not explicitly say that the scope of applicant is only 'Printing of the content' extended, it is seen from the Item description, that the work involves printing in a particular quality of paper/paper procured from certain Vendors; using particular colour of ink and Art Work and the supply of such leaflets is to be in certain form, i.e., folded and the leaflets are to be supplied in packages of certain number of the products. Thus, it is seen that the applicant undertakes printing of the leaflets using the materials of the specified standards and supplies the printed leaflets - In the case at hand, the recipient gives the content for printing and the applicant undertakes printing using the Paper and Ink purchased on his own account and the printed leaflet is supplied to the recipient. Thus applying the above definition, the supply is a composite supply consisting of printing service alongwith the supply of Paper in the form of printed leaflets. The printing process involves approval of the sample and accordingly printing the approved content/artwork. Thus the supply is a composite supply as per the definition at Section 2(30) of the Act stated above. The predominant element in this composite supply is the one for which the recipient is under taking the transaction with the supplier, i.e., printing of the leaflets. The supply of the material on printing is only ancillary to the main supply. The supply undertaken by the applicant involves printing and supply as leaflets in the required format; the content which instructs the users of the product in words, intangible inputs whose rights are with customer and shared with the applicant for printing in the required material/media. The nature of the physical inputs is transformed with the printing activities and without the printing, the final product cannot be used as a leaflets as required by the recipient. Thus the predominant activity is printing the contents of the customer in the required tangible inputs sourced by the applicant as per the requirement of the recipient and going by the clarification, the principal supply in the considered transaction is 'Supply of Service' - in the case at hand, the supply made by the applicant to the recipient is a composite supply with 'Supply of Printing Service' as the Principal Supply. The supply of printing services on paper are classifiable under SAC 998912. The principal supply being the 'Supply of Printing service', the composite supply at hand is classifiable under SAC 998912 and the applicable rate on such supply is that applicable for such supply. Applicable rate of GST on such supply - HELD THAT:- SAC 9989 covers 'Other Manufacturing Services; Publishing, Printing and reproduction Services; materials recovery services'. The applicable GST rate is provided vide SI.No. 27 of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 Notification G.O.(Ms) No.72 dated 29.06.2017. The said entry has undergone many changes and effective from 1st day of October 2021, the applicable rate is CGST @ 9% as per SI.No.27 of Notification 11/2017-C.T.(Rate) Dated 28.07.2017 as amended by Notification No. 06/2021-C.T.(Rate) dated 30th September 2021 SGST @ 9% as per SI.No. 27 of Notification G.O. (Ms) No. 72 dated 29.06.2017 No. II(2)/CTR/532(d-14)/2017 as amended.

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• 2022 (6) TMI 1253
  Profiteering - purchase of Stayfree Sanitary Napkins - allegation is that reduction in the rate of Input Tax Credit has not been passed y commensurate reduction of the price - violation of the provisions of Section 171 of the CGST Act, 2017 - Penalty - HELD THAT:- A plain reading of Section 171 (1) of the CGST Act, 2017 indicates that it deals with two situation:- one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the record that there has been a reduction in the rate of tax from 12% to Nil on Sanitary Napkins w.e.f. 27.07.2018, vide Notification No. 19/2018-CTR dated 26.07.2018. Therefore, the Respondent was liable to pass on the benefit of the above tax rate reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 27.07.2018 to 31.03.2019. This Authority had given specific direction to DGAP vide Interim Order No. 15/2020 dated 20.04.2020 to carry out investigation on the specific points that are discussed. Based on the said direction and subsequent investigation, the DGA.P has calculated that the Respondent has increased the base price of the impugned goods during the period from 27.07.2018 to 31.03.2019. Thus, the benefit of reduction in the tax rate has not been passed on to the recipients by way of commensurate reduction in the prices by the Respondent in terms of Section 171 (1) of the CGST Act, 2017 during the above period. Therefore, the DGAP had calculated the profiteered amount on the impugned item i.e. Sanitary Napkins by comparing the average pre-rate reduction base price of the impugned item with the actual selling price during the post-reduction period i.e. after 27.07.2018 by the Respondent during the period from 27.07.2018 to 31.03.2019. The mathematical methodology employed by the DGAP to compute the profiteered amount is correct, appropriate, reasonable and in consonance with the provisions of Section 171 (1) of the CGST Act, 2017. This Authority as per the provisions of Section 171 of the CGST Act, 2017, determines the profiteered amount as Rs. 9,84,354/- for period from 27.07.2018 to 30,03.2019 by the Respondent. The Authority finds that such amount needs to be passed on by the Respondent alongwith interest @ 18% as prescribed to the recipients of supply/customers other than the Applicant No. 1 as the profiteering in respect of the Applicant No. 1 has been found to be Nil as per the DGAP Report dated 24.09.2019. As the recipients other than the Applicant No. 1, of such supply are not identifiable, the Authority directs that, the Respondent shall deposit the said amount with interest in the Consumer Welfare Funds (CWP) of the Central and State Governments as prescribed under Rule 133 (3)(e) of the CGST Rules 2017, within three months of the date of this order, failing which such amount will be recovered under the provisions of CGST Act 2017. Penalty - HELD THAT:- The Authority finds that the Respondent has contravened the provisions of Section 171 (1) of the CGST Act, 2017. Therefore he is liable for imposition of penalty under the provisions of Section 171 (3A) of the said Act. However, since, the provisions of Section 171 (3A) have come in to force w.e.f. 01.01.2020 and the offence pertains to the period from 27.07.2018 to 31.03.2019, hence penalty under the above section cannot be imposed retrospectively on the Respondent. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.

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• 2022 (6) TMI 1252
  Profiteering - construction service supplied by the Respondent - it is alleged that the Respondent had not passed on the benefit of input tax credit (ITC) to him by way of commensurate reduction in the price of the flat purchased from the Respondent - contravention of section 171 of CGST Act - Interest - Penalty - time limitation - HELD THAT:- It is clear from the plain reading of Section 171 (1) that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC, On the issue of reduction in the tax rate. it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period: hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST On this issue it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 3.56% and during the post-GST period {July-2017 to March-2019), it was 11.74% for the project Sierra-Vizag . This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 8.18% [11.74% (-) 3.56%] of his turnover for the said project and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 6.46,06,227/- for the project Sierra-Vizag , the details of which are mentioned in Table-D. The Authority finds that the Respondent has profiteered by an amount of Rs. 6,46,06,227/- for the Project Sierra-Virag during the period of investigation i.e. 01.07.2017 to 31.03.2019, The above amount that has been profiteered by the Respondent from his home buyers in the above said Project shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him did the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the CGST Rules, 2017. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered. i.e. Rs. 6,46.06,227/- for the project Sierra-Vizag . Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017. Penalty - HELD THAT:- Vide Section 112 of the Finance Act, 2019 specific penalty provisions have been enacted for violation of the provisions of Section 171 (1). Such provisions have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A). Since, no penalty provisions were in existence between the period from 01.07.2017 to 31.03.2019 when the Respondent had violated the provisions of Section 171 (1). the Authority holds that the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.

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• Income Tax

• 2022 (6) TMI 1251
  TDS u/s 195 - application for 'Nil TDS Certificate' has been rejected and the petitioner has been directed to deduct tax at source at the applicable rate - Deduction u/s 195(2) on the 'sum chargeable under this Act' - Whether the petitioner is required to deduct TDS under Section 195(2) read with Article 12(4) of the convention between Government of United States of America and the Government of Republic of India for the avoidance of Double Taxation and the prevention of FISCAL evasion? - Whether the application of the petitioner dated 15.01.2020 filed under Section 195(2) of the Income Tax Act was not maintainable? - HELD THAT:- Keeping in mind that the determination under Section 195(2) or under Section 197 by grant of Certificate being tentative in nature, the assessee must be permitted to invoke such provision and seek for certificate in order to avoid consequences of non-deduction as enumerated above. It cannot be stated that the assessee is debarred from invoking such a provision if he were of the view that the payment being made was not chargeable under the provisions of the I.T. Act. To place such a heavy burden of adjudication upon the assessee before invoking the tentative determination under Section 195(2), considering the nature of proceedings, may not be called for. Accordingly, the recourse to Section 195(2) is perfectly in consonance with the object of Section 195 and cannot be faulted. Whether the petitioner is required to deduct TDS u/s 195(2) read with Article 12(4) of the convention between Government of United States of America and the Government of Republic of India for the avoidance of Double Taxation and the prevention of FISCAL evasion? - It is clear that 'FIS' under Article 12(4) would refer to payments of any kind to any person in consideration for rendering of technical or consultancy services (including through the provision of services of technical or other personnel) if such services make available technical knowledge, experience, skill, know-how or processes or consists of development or transfer of technical plan or technical design. In terms of Article 12(4)(b) for the purpose of construing 'FIS', it is necessary that the rendering of technical or consultancy services must make available technical knowledge, experience, skill, know-how or processes. Further, it may also consist of development and transfer of a technical plan or technical design.Accordingly, it is not a mere rendering of technical or consultancy services, but the requirement of make available in terms of Article 12(4)(b) requires to be fulfilled. In light of the above legal requirement whether the present payment would amount to 'FIS' requires to be determined. M.S.A., if subjected to scrutiny as regards the aspect of secondment does not reveal the satisfaction of the requirement of 'make available' which is a sine qua non for being a 'FIS'. DCIT has proceeded to pass the impugned order without examining this aspect. The fact that the employees seconded have the requisite experience, skill or training capable of completing the services contemplated in Secondment (Clause 6.2.4 of M.S.A.) by itself is insufficient to treat it as 'FIS' as has been concluded, de hors the satisfaction of 'make available.'The proceeding under Section 195 results in a tentative finding more as a safeguard to the payee and if such determination exempts the payee from making a deduction at that stage, such tentative deduction, it must be emphasized is still subject to final determination of taxability qua the recipient. Accordingly, the contention of respondents raised at the time of oral arguments that the enquiry regarding 'make available' still remains to be determined and is based on further material to be submitted regarding the requisition of the employees by the petitioner is an enquiry that is not called for. As the M.S.A. does not support 'make available', further enquiry beyond that may not be called for, considering the nature and scope of proceedings. Deduction u/s 195(2) on the 'sum chargeable under this Act' - DCIT has grossly erred while concluding that where the payment is made for the services rendered, then whether the charge for the services rendered is equivalent to the cost or not becomes irrelevant. The finding that the services rendered fall within the description of services as in Explanation-2 in Section 9(1)(vi) and that the element of profit is not an essential ingredient of receipt, to make it taxable is erroneous. It must be noted that as observed above, the provisions of the I.T. Act, will have to give way to the provisions of 'DTAA' when 'DTAA' is more beneficial to the assessee. It is in this context that the reliance on Explanation-2 in Section 9(1)(vii) may not be of relevance. The aforesaid provision of the I.T. Act which deals with 'FTS' is different from the concept of 'FIS' under Article 12(4). The 'make available' requirement that is mandated under Article 12(4) grants benefit to the petitioner and accordingly, the question of falling back on the provisions of Section 9 of the I.T. Act does not arise. On this score alone, the conclusion in the impugned order of the payment for the service falling within the description under Section 9 of the I.T. Act as 'deemed income', is to be rejected. Whether Deduction is on gross receipts? - What needs to be noticed is that the logic of deduction of tax on the gross amount as has been held in respect to Section 194C and Section 194J cannot be extended to Section 195 which specifically uses the term any other sum chargeable under the provisions of this Act. Such terminology is absent in Section 194C and Section 194J of the I.T. Act. The difficulty of ascertainment of income component as being an impossible burden on the payer in the context of Section 194C as observed by Apex Court is obviated in the present case, as Section 195(2) provides for a mechanism whereby the Assessing Officer may be called upon to determine proportion of the sum which is so chargeable. Accordingly, the contention of learned counsel for the Revenue regarding deduction on gross amount deserves to be rejected. Secondment and reimbursement of costs - Any conclusion on an interpretation of secondment as contained in the M.S.A. to determine who the employer is and determining the nature of payment by itself would have no conclusive bearing on whether the payment made is for 'FIS' in light of the further requirement of make available. Conclusion - As the finding as regards deduction of tax at source under Section 195 of the I.T. Act is tentative insofar as the Revenue is concerned. Even if the Revenue orders that there was no obligation to make deduction under Section 195, the question of liability of the recipient still remains to be decided subsequently. Accordingly, the question of prejudice to the Revenue at the stage of Section 195 order is unavailable to it. Curiously, the file contains a note by the same DCIT who has eventually passed the impugned order, which note dated 10.03.2020 addressed to the C.I.T. seeks for granting approval for granting deduction of TDS at the rate of zero per cent on cost-to-cost reimbursement. However, the opinion was directed to be reconsidered as per the endorsement found in the file and eventually an order was passed by DCIT contrary to the earlier view and has rejected the application. Accordingly, the findings in the impugned order and the conclusion regarding the employer-employee relationship is based on a wrong premise and is liable to be set aside. As observed by this Court in Director of Income Tax (International Taxation) v. Abbey Business Services India (P.) Ltd. ( 2020 (12) TMI 570 - KARNATAKA HIGH COURT ), it is also pertinent to note that the Secondment Agreement constitutes an independent contract of services in respect of employment with assessee. Hence, the DCIT in the impugned order has missed this aspect of the matter and has proceeded to consider the aspect of rendering of service as to whether it was 'FIS'. In light of setting aside of the impugned order in the context of legal position as noticed, the only order that can now be passed is of one granting 'nil tax deduction at source.' Accordingly, in light of the above discussion, the impugned order at Annexure-A dated 01.05.2020 is set aside and the respondent No.1 is directed to issue a Certificate under Section 195(2) of I.T. Act to the effect of 'Nil Tax Deduction at Source' as regards the petitioner's application dated 15.01.2020.

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• 2022 (6) TMI 1250
  Nature of receipts - Treatment to carbon credit receipt - Revenue or capital receipts - proceeds realized by the assessee on sale of certified emission reduction credit, which the assessee had earned on the clean development mechanism in its wind energy operations - HELD THAT:- As decided in S.P. SPINNING MILLS PVT. LTD.[ 2021 (1) TMI 1081 - MADRAS HIGH COURT] the receipts from sale of carbon credit is a capital receipt and cannot be included in the taxable income Technology Upgradation Fund (TUF) subsidy and compensation receivable on non performance of the energy generation - revenue or capital receipt - HELD THAT:- This substantial question of law is covered in favour of the assessee, by the decision of the Division Bench of the Punjab and Haryana High Court in the case of Commissioner of Income Tax v. Sham Lal Bansal [ 2011 (1) TMI 409 - PUNJAB AND HARYANA HIGH COURT] the view taken in Sahney Steel Press Works Ltd.'s case ( 1997 (9) TMI 3 - SUPREME COURT ) could not be applied in the present case, as in said case the subsidy was given for running the business. For determining whether subsidy payment was 'revenue receipt' or 'capital receipt', character of receipt in the hands of the assessee had to be determined with respect to the purpose for which subsidy is given by applying the purpose test, as held in Sahney Steel Press Works Ltd.'s case (supra) itself and reiterated in later judgment in CIT v. Ponni Sugars Chemicals Ltd. [ 2008 (9) TMI 14 - SUPREME COURT ] referred to in the impugned order of the Tribunal. Assessee appeal allowed.

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• 2022 (6) TMI 1249
  Reopening of assessment u/s 147 - though the petitioner has filed return of income in response to the notice under Section 148 of the Act, the same could not be E-verified within the due date - HELD THAT:- As it is seen that the petitioner had attempted to send a reply through the Web Portal, which could not be transmitted due to some technical glitches. Thereafter, the petitioner had sent his explanation, which was not accepted and therefore, the petitioner was served with notice, for which, he had sent a reply on 17.03.2022, seeking 10 days' time to furnish further submissions and documents. The reason given by the Assessing Officer that the assessment was getting barred by limitation of time and further time cannot be given, is unjustifiable and improper. Hence, this Court finds that the action on the part of the authorities in refusing to give time to the petitioner for submitting further documents, is improper. This Court is inclined to set aside the impugned order of the first respondent, dated 21.03.2022. Accordingly, it is set aside. The petitioner is directed to submit his reply along with supporting documents, within a period of two weeks from the date of receipt of a copy of this order. Thereafter, the respondents shall pass appropriate orders by following the procedures as contemplated under the Act, on merits and in accordance with law.

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• 2022 (6) TMI 1248
  Rectification application u/s 154 - Petitioner also seeks direction to refund along with applicable interest thereon, being the deposit of the Petitioner at the time of filing the appeal before the CIT(A) in respect of the Assessment Year 2009-10, which was allowed - as stated by petitioner the tax effect of all these six rectification applications taken together is in excess of Rs.3 crores. and the continued inaction in dealing with these rectification applications has resulted in huge financial resources of the Petitioner remaining locked-up - HELD THAT:- Issue notice. Mr.Sanjay Kumar, learned standing counsel accepts notice on behalf of the Respondent-Revenue. He states that he has no objection if the rectification application and the appeal effect orders are directed to be passed within a time period. Keeping in view the aforesaid as well as the facts mentioned in the present writ petition, this Court disposes of the present writ petition along with pending application with a direction to the Respondent-Revenue to decide the Petitioner s six rectification applications in accordance with law within eight weeks. The Respondent-Revenue shall also pass the appeal effect orders for the Assessment years 2009-10 and 2012-13 within eight weeks. This Court clarifies that it has not commented on the merits of the controversy. The rights and contentions of all the parties are left open.

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• 2022 (6) TMI 1247
  Addition u/s. 69/69B - Unexplained investment - variation between the sale (purchase) deeds and the accounts - purchase of land, which was from farmers, was completed over a period of 3 years (beginning with the year immediately preceding the relevant previous year), resulting in a mismatch when the sale deeds were sought to be compared with the entries in the accounts for the relevant year only - HELD THAT:- The land cost as per the assessee s accounts to be rather on a higher side, which does not agree with the AO s finding of unexplained investment. The ld. CIT(A) has toward this end considered the entire purchase, which also addresses the differences by observed the AO with reference to the audit report, as well as the aspect of payment to the creditors, summarizing the transactions As sale deeds being a part of the record, each of which stands reflected in the assessee s accounts, CIT-DR was required by the Bench to show as to which entries are stated by the AO to have not been paid by the assessee till the date of registration, inasmuch as each of the four sale deeds clearly mentions of the entire sale consideration having been paid by that date, or otherwise any discrepancy observed by the AO that remains to be satisfactorily resolved, to no answer, even as the matter was kept part-heard twice Further still, inasmuch as the land purchase details per the impugned order did not agree with that by the AO, the Bench made it a point to, during hearing, reconcile the two apparently different set of transactions, with a view to the confirm that the same are qua the same transactions, to find them as indeed so. The difference in the dates between the two tables, i.e., by the AO and the ld. CIT(A), as we find, is on account of the fact that while the tabulation by the AO is as per the date of the presentation of the sale agreement for registration, that by the latter records the date of registration. There is as such no difference between the two. - Decided against revenue.

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• 2022 (6) TMI 1246
  Penalty u/s.271(1)(c) - Defective notice u/s 274 - non specification of clear charge - HELD THAT:- Where the charge is not properly set out in the notice u/s 274, viz., both the limbs stand therein without striking off the inapplicable one, if any, the penalty order gets vitiated. Turning to the facts of the extant case, we find from the notice u/s 274 of the Act that the AO retained both the limbs, whereas penalty was imposed only with reference to one of them, namely furnishing of inaccurate particulars of income. We overturn the impugned order on this legal issue and direct to delete the penalty imposed by the AO. - Decided against revenue.

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• 2022 (6) TMI 1245
  Disallowance u/s 14A r.w.r. 8D - AR submits that the provisions of Rule 8D have only prospective application and could not have been applied in the assessment year prior to the assessment year 2008-09 - HELD THAT:- The provisions of section 14A prescribe that where an assessee earns exempt income, the expenditure incurred in connection with earning of exempt income cannot be allowed - As the provisions prescribing the method of computation of quantum of disallowance are prescribed under Rule 8D w.e.f. 1.4.2007. These provisions are held to be prospective and should not be applied for any assessment year prior to the assessment year 2008-09, as held in the case of CIT vs. Essar Teleholdings Ltd. 2018 (2) TMI 115 - SUPREME COURT] . However, the ld. CIT(A) rightly held that the provisions of Rule 8D have no retrospective application and restricted disallowance to sum of Rs.70,000/- on ad-hoc basis. Since the respondent-assessee is not in appeal challenging amount of disallowance, we have no option, but to confirm the findings of the ld. CIT(A). Thus, we do not find any merit in the ground of appeal no.1 raised by the Revenue. Accordingly, the ground of appeal no.1 raised by the Revenue stands dismissed. Set-off of brought forward business losses and unabsorbed depreciation losses relating to the demerged undertaking - HELD THAT:- In the present case, admittedly, after the scheme of demerger, the appellant had not carried on any business of demerged undertaking and the fact that the assets transferred to the demerged unit were held for sale goes to demonstrate the intention of the appellant that they had no intention of carrying on business of demerged undertaking. The scheme of demerger was carried out only with sole object to avail the benefit of set-off of brought forward business losses and unabsorbed depreciation losses of demerged undertaking. Therefore, for this very reason, the Assessing Officer had denied the benefit of set-off of brought forward business losses. According to us, the reasoning of the Assessing Officer is consistent with object behind enactment of provisions of section 72A of the Act. Furthermore, sub-section (5) of section 72A has been enacted empowering the Assessing Officer to deny the benefit of set-off of brought forward business losses, which means that merely because the scheme of demerger was approved by the Hon ble High Court ipso facto would not entitle the assessee for the benefit of set-off of brought forward business losses, contrary to the objects behind the enactment of the provisions of section 72A of the Act. CIT(A) had granted the benefit of set-off of brought forward business losses in a perfunctory manner without looking into the objects behind the enactment of provisions of section 72A and appears to have been carried out by the submissions of the assessee that once the scheme of demerger is approved by the Hon ble High Court, the assessing authority cannot go behind the scheme of demerger ignoring the provisions of section 72A, which governed the set-off of brought forward business losses in the case of amalgamation/demerger etc, which prescribes the conditions to avail the benefit of the scheme. In the circumstances, we find that the order of ld. CIT(A) is illegal and unreasonable. Therefore, the order of the ld. CIT(A) is reversed and the ground of appeal no.2 and 3 filed by the Revenue stands allowed.

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• 2022 (6) TMI 1244
  TDS u/s 192 or 194J - payment in respect of doctors engaged as retainers and consultants - demand raised by the AO u/s 201(1)/201(1A) - Scope of employer-employee relationship - distinction between a contract for service and a Contract of service - scope of terms and clauses of agreements entered into deductor company and retainer doctors/consultants doctors categorically affirm that there existed an evident employee employer relationship between the deductor company and retainer doctors/ consultants doctors - whether payment made to consultants doctors and retainer doctors should fall under the head Salary and the assessee hospital/ company was liable to deduct TDS at the rate applicable in the case of salary? - HELD THAT:- Chandigarh Bench of the ITAT in one of the group cases namely ACIT vs M/s. Fortis Healthcare Ltd. Mohali ( 2016 (3) TMI 629 - ITAT CHANDIGARH ) after a detailed analysis of the terms of the agreements of the retainer doctors as well as the salaried doctors and considering the decisions of various Benches of the ITAT and the judgement of the jurisdictional High Court in the case of Ivy Health Life Sciences (P) Ltd. [ 2015 (12) TMI 1063 - PUNJAB AND HARYANA HIGH COURT] held that the provisions of Section 194J applied to the retainer doctors and not those of Section 192. In the case of EHIRC Ltd. [ 2017 (9) TMI 1660 - RAJASTHAN HIGH COURT] after analyzing the two types of agreements identical to those in the present appeals and referring to judgements of other Hon'ble High Courts held that the retainer doctors attracted the provisions of Section 194J and not those of Section 192. Having gone through the provisions of section 192, Section 194J, Section 201 of the Income tax Act 1961, facts of the instant case and the judicial pronouncements on the issue involved, we are inclined to hold that the provisions of section 194J of the Act are applicable to the assessee and not those of section 192 of the Income tax Act 1961 therefore, the appellant cannot be treated as an assessee in default in so far as the question of deducting tax at source in respect of doctors engaged as retainers and consultants was concerned. - Decided against revenue.

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• 2022 (6) TMI 1243
  LTCG - Reference to approved valuer s reports - addition by adopting different cost of acquisition than claimed by the appellant - validity of reference of matter to the DVO u/s 55A - HELD THAT:- As relying on the case of Swami Sat yananda, 2020 (6) TMI 429 - ITAT KOLKATA] pre-amended section 55A(a) is applicable to the assessee wherein the terminology used is is less than its fair market value - we direct assessing officer to take indexed cost of acquisition of asset at Rs.80 per sq.meter, for the purpose of computation of long term capital gain.

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• 2022 (6) TMI 1242
  Allowability of Provision for Warranty - HELD THAT:- As merely because the assessee had returned back the provisions in subsequent year cannot be a basis for disallowing the assessee s claim in the current year, particularly when the assessee had given specific basis for making warranty provisions. The Hon ble Apex Court in case of Rotork Controls India (P) Ltd. ( 2009 (5) TMI 16 - SUPREME COURT] has given the criteria which are fulfilled by the assessee herein. Thus, issue is squarely covered in favour of the assessee.

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• 2022 (6) TMI 1241
  Allowability of 100% deduction u/s 80IC after substantial expansion - HELD THAT:- Hon ble Apex court in the matter of PCIT vs. Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] ] as held an assessee availing exemption of 100% tax on setting up of a new industry, which is admissible for 5 years, and either on the expiry of 5 years or thereafter (but within 10 years) from the date when these assessees started availing exemption, they carried out substantial expansion of its industry, from that year the assessees become entitled to claim exemption @ 100% again (Classic Binding Industries [ 2018 (8) TMI 1209 - SUPREME COURT] held not good law and reversed) Hence, keeping in view, the latest judgment of the Hon ble Supreme Court allowing 100% deduction u/s 80IC on substantial expansion of the unit, the appeals of the assessee are hereby allowed.

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• 2022 (6) TMI 1240
  Unexplained cash credit u/s 68 - assessee submitted confirmation from the creditor, bank statement, audited balance sheet of Sandesh Procon LP and the loan agreement with Sandesh Procon LLP in support of genuineness of the transaction - CIT-A deleted the addition - HELD THAT:- As assessee was able to produce the confirmation from the creditors in support of genuineness of the transaction, loan agreement with M/s Sandesh Procon LLP, bank statement and audited balance sheet of M/s Sandesh Procon LLP evidencing the above transaction were also placed on record to prove the genuineness of transaction. Further, the fact that the loan was repaid back with interest, on which TDS was duly deducted also lends support to the genuineness of transaction. In the case of Ayachi Chandrashekhar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT ] held that where department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. In view of the above facts and the judicial precedents by the jurisdictional High Court, we are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law in deleting the additions made by the Ld. Assessing Officer u/s 68 - Decided in favour of assessee. Disallowance u/s 14A r.w.r. 8D - sufficiency of own funds - HELD THAT:- As no infirmity in the order of the Ld. CIT(Appeals) when he held that if the assessee had sufficient funds for making investments in shares and interest free bonds and it had not used borrowed funds for such purpose, no disallowance can be made under section 14A of the Act and also that AO is required to take the average of investment from where non-taxable income has been earned in order to make disallowance under Rule 8D(2)(iii). In view of the above, we are of the considered view that Ld. CIT(Appeals) has not erred in facts and law in giving part relief to the assessee in respect of disallowance made by the Ld. Assessing Officer under section 14A of the Act. - Decided against revenue.

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• 2022 (6) TMI 1239
  Penalty u/s 271(1)(b) - non-compliance of Income Tax Notice - six reminders on different dates were also issued by the AO for filing return of income but the assessee failed to file return - no response from the side of the assessee even as when AO initiated penalty proceedings u/s 271(1)(b) of the Act for the failure of the assessee to comply with notice - HELD THAT:- As obsereved in the identical facts and circumstances, the Delhi Tribunal has decided the issue in favour of assessee in part in the case of Smt. Rekha Rani [ 2015 (5) TMI 1100 - ITAT DELHI] by observing that penalty for the first default of non-compliance of notice under section 142(1) of the Act was sufficient enough. Thus we set aside the order of Ld. CIT(A) and direct the AO to delete the penalty to the tune of ₹ 20,000/- and confirm the penalty of ₹ 10,000/-only. Hence, this ground of assessee s appeal is partly allowed.

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• 2022 (6) TMI 1238
  Proceedings u/s 153A - addition on account of agricultural income - HELD THAT:- We find that in the impugned order, the learned CIT(A) after considering the submissions of the assessee and findings of the Assessing Officer has dismissed the appeal filed by the assessee both on jurisdiction as well as on merits of the case. In the absence of any contradictory material being available on record, we are of the considered view that the impugned order passed by the learned CIT(A) requires no interference and, therefore, is upheld. Accordingly, grounds raised by the assessee in its appeal for assessment year 2003 04 are dismissed. Addition u/s 68 - Unexplained cash credit u/s 68 - HELD THAT:- the source of the loan and even the source of the sources appear to be all in cash and an arrangement made to explain the credits In the hands of the appellan t- Even the claim of repayment of loan doesn't appear to be genuine as from the bank statement of Prakash Gore in Parvara Sahakari Bank Ltd., It is seen that loan claimed to be repaid to P.N. Yadav and E.K. Kapase on 23/10/2006 occurs after a cash deposit in the same account on the same date. In any case, these so called loan repayments from the above said account appear to be unique when compared to other transactions in the bank account. Also, all these transactions in the bank account had happened subsequent to the ACB search on the appellant's father and the requisition made u/s 132A by the Income Tax Department. Therefore, it can be inferred that this arrangement was made to explain to the authorities the investment in the name of the appellant. Addition confirmed - Decided against assessee.

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• 2022 (6) TMI 1237
  Penalty u/s 271D - contravention of section 269SS as taking cash loans and reasons for accepting loan in cash were also not reasonable and sufficient to drop the proceedings - HELD THAT:- The case of the assessee was that the loan in cash was taken from his HUF on account of extreme business exigency and necessity of honouring post dated cheques issued to the third parties. Further at that time, the assessee was not having sufficient balance in the bank, which would otherwise attract provisions of Negotiable Instrument Act and therefore, he was in compelling situation taken the loan in cash from his own HUF. Besides, to prove the genuineness of the transactions, the assessee has filed Income Tax Returns, confirmation; contra ledger accounts. That apart the AO has neither doubted the impugned transaction nor any addition made in this behalf even under section 68 of the Act. Only the reason for the Revenue was that the receipt of the loan was in cash, which was in violation of section 269SS of the Act. Thus, the Revenue authorities imposed penalty, as if the provision of section 271D is mandatory, without considering the reasonable cause explained by the assessee both during the penalty proceedings. We find that the explanation given by the assessee cannot be disregarded, more so, when it was a onetime affair to meet business exigency and urgent financial necessity. Further, the impugned transaction was from his individual capacity to his HUF capacity. A reasonable and justifiable explanation has been rendered by the assessee for the impugned transaction, and therefore, imposition of penalty under section 271D of the Act was not warranted. See TRIUMPH INTERNATIONAL FINANCE (I) LTD. [ 2012 (6) TMI 358 - BOMBAY HIGH COURT] Thus we delete impugned penalty imposed under section 271D of the Act, and allow the ground of appeal of the assessee.

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• 2022 (6) TMI 1236
  Bogus LTCG - genuineness of transaction not proved - exemption under section 10(38) in respect of capital gain arising from sale of shares denied - HELD THAT:- In the case of Smt. M.K. Rajeshwari [ 2018 (10) TMI 1649 - ITAT BANGALORE] Tribunal held that where assessee claimed exemption under section 10(38) in respect of capital gain arising from sale of shares, in view of fact that financial worth of said company was meagre and, moreover, there was abnormal rise in price of shares, it could be concluded that assessee introduced her own unaccounted money in garb of long term capital gain and, thus, claim raised by her was to be rejected. In the present case Assessing Officer held amount so received as unexplained cash credit under section 68 and made addition on ground that assessee failed to discharge burden of proof and explain nature and source of transaction and huge profit in all shares traded by assessee against human probability. AO held that it was found that assessee failed to justify manifold increase in prices of shares despite weak financials of companies. Investigation carried out by Department had brought facts on record that share prices had been manipulated artificially, purchased by a set of accommodation entry provider companies controlled by cartel of brokers, entry operator, etc. Moreover, fact that prices of all shares purchased by assessee went up, that too without any corresponding profit or prospects of company, and not even in single case price of share came down, was against human probabilities and impugned year was an isolated year of such profits with no such profits made in earlier or subsequent years. In such circumstances, the Tribunal held that assessee failed to prove genuineness of transaction and long-term capital gain on sale of shares by assessee was an arranged affair to convert its own unaccounted money and thus, exemption claimed under section 10(38) on sale of shares had rightly been disallowed. Thus we are of the considered view that the Ld. CIT(Appeals) has not erred in facts and in law in confirming the addition made in respect of LTCG claimed as exempt in the instant facts. - Decided against assessee.

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• 2022 (6) TMI 1235
  Condonation of delay of 10 years in filing the present appeal. - winding up proceedings against the assessee was initiated in the year 1998 and winding up petition was filed before the Hon ble Bombay High Court - HELD THAT:- In the present case, winding up petition was filed against the company in the year 1998 and the winding up order was ultimately passed by the Hon ble High Court on 30/03/2010. Thus, even if the provisions of section 458A of the Companies Act 1956 are said to be applicable to present case, the period from filing of the winding up petition till 30/03/2010 and a further period of one year from the date of winding up order i.e. till 30/03/2011, can be the excluded for the purpose of computation of limitation period of present appeal. In the present case, the impugned order by learned CIT(A) was passed on 03/12/2007. As the due date for filing the appeal against the aforesaid impugned order before the Tribunal was falling during the exclusion period, as stated in section 458A of the Companies Act, 1956, in our considered view, the limitation period in the present case started from 31/03/2011 The present appeal was filed by the assessee on 16/05/2018, i.e. after a more than 7 years from 31/03/2011. Further, in the present case, despite the cause of action having arisen after passing of the impugned order by learned CIT(A) and Official Liquidator also having power to initiate proceedings in the name of and on the behalf of the assessee, with the leave of the Court, no action was taken for filing the appeal against the impugned order. Section 446 of the Companies Act, 1956 only stays the commencement or continuation of any suit or other legal proceeding, except with the leave of the Court, inter-alia, after passing of the winding up order. The entire purpose or the scheme behind this section is to protect the company, if the order of winding up is made or a provisional liquidator is appointed, so that the Court itself, if possible, disposes of the matters pertaining to the assets and properties of the company. However, neither in the application nor in the affidavit supporting the same there is any claim or any supporting document that the Hon ble Court was approached for such permission on behalf of the assessee. From the facts stated in the affidavit, it is evident that the assessee initiated the process of filing appeal against the impugned order only after the Official Liquidator handed over the position of factory and other assets to the management of the assessee, pursuant to recall of winding up order dated 30/03/2010 by the Hon ble High Court. Thus, in view of above and in the facts and circumstances of the present case, we are of the considered view that the assessee has failed to prove any sufficient cause for not preferring the appeal within the limitation period.

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• 2022 (6) TMI 1234
  Disallowance in respect of agricultural expenses - assessee declared gross agricultural receipts - AO found the expenses to be on lower side by considering the general market trend for agricultural expenses being incurred at 35% of gross agricultural income - HELD THAT:- AO has simply rejected the assessee s claim of agricultural expenses being on the lower side on the basis of a yardstick of 35% being trend of current year . It is not understandable as to where from such trend came into vogue. If the percentage of agricultural expenses shown by the assessee for the year under consideration is lower than that of the immediately preceding year, it is better than that for the two years immediately prior thereto. Here is a case in which the assessee maintained complete details of agricultural expenses, which have not been faulted with by the AO. If the expenses were inadequate or wanting in any respect, the AO ought to have rejected such expenses by giving some plausible reasons, whereafter, he could have gone ahead with making a best judgment on some rational basis. Having not done so and simply making the addition on the basis of some trend , we find no reason to sustain the disallowance. For the foregoing reason, we are satisfied that the authorities below were not justified in making and sustaining the addition in such an ad hoc manner. The same is directed to be deleted. - Decided in favour of assessee.

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• 2022 (6) TMI 1233
  Penalty u/s 271D - entries through journal entries - Violation of provisions of section 269SS - undisclosed transactions by the group, in one of the allegations against the group is of resorting to round tripping of funds to evade taxes - proof of reasonable cause u/s 273B - HELD THAT:- As decided in own case we find from the aforesaid factual narration and the basis of passing journal entries by the assessee in its books that these entries are merely passed for squaring up of transactions or adjustment of entries. This categorical finding given by the ld. CIT(A) in his order has not been controverted by the Revenue before us. Yet another categorical finding recorded by the ld. CIT(A) which remain uncontroverted by the Revenue before us is that these transactions were not made by the assessee with a malafide intent to evade tax and that there is no evidence brought on record to even remotely suggest that the assessee company by passing the aforesaid journal entries had sought to introduce its unaccounted income into the system. We find that these are genuine transactions carried out in the normal course of the business of the assessee. Hence, if the aforesaid transactions are looked into from the perspective of the object and intention behind introduction of provisions of section 269SS and 269T of the Act , then the provisions of section 269SS and 269T of the Act cannot be made applicable to the facts of the instant case. Moreover, from the detailed explanation of the aforesaid transactions together with the purpose for which those journal entries were passed, it could be safely concluded that these entries neither reflect any receipt of loan nor repayment of loan. - Decided in favour of assessee.

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• 2022 (6) TMI 1232
  TP Adjustment - comparable selection - TPO had excluded companies having turnover of less than Rs.1 crore, however, the AO / TPO has not put upper limit to turnover for exclusion of companies having high turnover - HELD THAT:- We direct the AO / TPO to exclude the mentioned six companies [Larsen Toubro Infotech Limited, Mindtree Limited, Persistent Systems Limited, R S Software (India) Limited, Infosys Systems Limited AND Thirdware Solutions Limited] since it is having turnover exceeding Rs.200 crore. It is ordered accordingly. Interest on outstanding receivables from AE - TPO did not consider the assessee s submission that the trade receivables are not separate international transaction and impact if any, gets subsumed by way of working capital adjustment - HELD THAT:- The Tribunal in assessee s own case for assessment year 2008-2009 ( 2016 (10) TMI 1211 - ITAT BANGALORE ) had directed AO / TPO to determine afresh the ALP in respect of providing SWD services by considering the proper working capital adjustment in comparable prices. It was held by the Tribunal that in case after giving necessary adjustment, the international transaction of the assessee is found to be at arm s length, then there is no question of separate adjustment on account of allowing credit period from receivables from AE. Taking a consistent stand, we direct the AO / TPO to redo the transfer pricing analysis in respect of interest on outstanding receivables by taking into account the directions of the Tribunal in assessee s own case. Advances to the employees against their salary for meeting expenses on food and travel while working on clients deliverables / projects - advances which could not be recovered has been written of to the profit and loss account of the assessee for the relevant assessment year and claimed as allowable expenses / business loss in terms of section 37(1) r.w.s. 28 - HELD THAT:- The claim made by the assessee is not towards bad debt u/s 36(1)(vii) of the I.T.Act, but under the provisions of section 28 of the I.T.Act as business or trade loss. Giving advance to the employees as well as vendors were essential and wholly and exclusively linked to the business of the assessee. The loss if any is an incidental business loss. In this context, we rely on the judgment of the Hon ble Delhi High Court in the case of Triveni Engineering Industries Limited [ 2010 (9) TMI 26 - DELHI HIGH COURT] - Further, the advances given to the vendors, which is non-recoverable, is also allowable as business loss. This proposition has also been upheld by the Hon ble Apex Court in the case of Mysore Sugar Co. Ltd.[ 1962 (5) TMI 3 - SUPREME COURT] . Since the A.O. has not examined the claim of deduction u/s 37(1) r.w.s. 28 of the I.T.Act, we deem it appropriate to restore the issue to the files of the A.O. for de novo consideration. The assessee is directed to furnish necessary evidences before the A.O. The A.O. is directed to dispose of the matter expeditiously after affording a reasonable opportunity of hearing to the assessee. Disallowance on an adhoc basis 10% of the per diem allowance granted to the employees - company paid aggregate amount as per diem to the employees travelling for business / official purposes outside India to cover actual expenses of meals, travel, laundry and miscellaneous expenses etc - HELD THAT:- The per diem is given to the employees to meet daily expenses for foreign travels. The expenses are reimbursed on the basis of self-declaration of the employees. Since, these amounts are small amounts, reimbursement are given based on the self-declaration given by the employees. Per diem allowance is very minimal amount to meet the daily need and is not disproportionate or unreasonable. In this context, we rely on the judgment of the Hon ble jurisdictional High Court in the case of CIT v. Symphony Marketing Solutions India (P.) Ltd. [ 2016 (5) TMI 693 - KARNATAKA HIGH COURT] wherein it was held that per diem allowance of $50 to $75 paid by the assessee to its employees on official trips to the USA and Europe to be reasonable We are of the view that adhoc disallowance of 10% of per diem by AO and confirmed by the DRP is uncalled for. Therefore, we delete the disallowance.

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• 2022 (6) TMI 1206
  Rectification u/s 154 - non issue of refund - Respondent sought to transfer the refund to a bank account of the Petitioner which had been closed and so the Petitioner informed the respondents regarding the details of an alternate bank account in which such refund could be transferred - HELD THAT:- Keeping in view the averments in the application, the Respondent- Revenue is directed to take on record the details of the Petitioner s bank account, as mentioned in Para 6 of the present application, within four weeks from today and process the refund expeditiously in Petitioner s bank account, in accordance with law. With the aforesaid directions, present application stands disposed of.

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• Customs

• 2022 (6) TMI 1231
  Violation of principles of natural justice - delay in adjudication of show cause notices should be attributed to petitioner or not - HELD THAT:- The petitioner having filed response to the show cause notices, the adjudicating authority should be given an opportunity to conclude the proceedings. Should petitioner wish to make any further reply to the show cause notice, the same shall be filed within one week from today - the adjudicating authority will adjudicate on the show cause notices and pass a detailed and well reasoned order within six weeks from today. Petition disposed off.

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• 2022 (6) TMI 1230
  Seeking unconditional release of consignments - import of white whole Areca Nuts of Sri Lankan origin - HELD THAT:- In the course of investigation the samples were drawn and sent to Arecanut Research and Development Foundation, Mangalore by the customs authorities for determination of Country of Origin. The report dated 30th January 2020 issued by Arecanut Research and Development Foundation, Mangalore states that it seems to be of white whole Areca Nuts of Sri Lankan origin. The Areca nut samples supplied are of poor quality and as much as 20% of nuts are infested with moulds and does not comply with BIS standards for Areca nut. They are neither fit for chewing nor consumption by humans . There is no affidavit in rejoinder and Mr.Inderpal Singh Nirmale counsel for petitioner stated that petitioner has not checked the goods recently but it is possible that what is stated in the affidavit in reply could be correct because of passage of time. Respondents are directed to destroy the consignment of Arecanuts as per the procedure prescribed within four weeks from today - petition disposed off.

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• 2022 (6) TMI 1229
  Rectification of mistake - error apparent on the face of record or not - import of induction cookers in the semi knocked down condition - mis-declaration of goods or not - MRP was declared in the bill of entry or not - demand of differential duty alongwith interest and penalty - HELD THAT:- In the proceedings before the Commissioner (Appeals) and CESTAT, the company has alone preferred the appeal and not the petitioner, but in the CESTAT order it has been referred as the petitioner and the company have preferred the appeal and thereafter, the appeal was allowed by setting aside the penalty imposed on the petitioner. Finding error apparent, the department has filed a petition and such reference of petitioner alone was deleted. In the CESTAT order, setting aside of penalty imposed has been accepted by the department and the department had not filed any appeal and hence, the CESTAT order has become final. The order of the CESTAT is that the imported products of the petitioner were not permitted for sale to the consumer before mandatory testing. The classification under the Custom Tariff Act, 1975 cannot provide the escapement from the legal metrology Act 2009. Goods that are not subject to prescription or declaration maximum retail price legal metrology Act, 2009 do not come within the ambit of Section 4 (a) of Central Excise Act 1944. In view of the same, the levy of differential duty in the order by the lower authority was set aside. Hence there is no mis-declaration. The foundation aspect of the case proceeded by the department against the company as well as the petitioner is no more inexistence. The petitioner as managing director has been imposed penalty which is a consequent lapse on the part of the misdeclaration by the company. Further, the foundation aspect of the department is set aside. The petitioner, who was imposed consequential penalty, if proceeded, would be is eligible to the enure benefit of the order passed by the CESTAT - Petition allowed.

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• 2022 (6) TMI 1228
  Maintainability of appeal - appeal dismissed on the ground of non-compliance of the mandatory required as contained u/s129 (e) of the Customs Act, 1962 - HELD THAT:- The issue is already decided in the case of RAHUL RAJVAIDHYA VERSUS CUSTOMS CENTRAL EXCISE AND SERVICE TAX [ 2019 (10) TMI 227 - MADHYA PRADESH HIGH COURT ] where it was held that as the mandatory requirement of per-deposit as provided u/s 129 (e) has not been fulfilled, the Tribunal was justified in dismissing the appeal. Following the above-mentioned order, the present appeal is also dismissed.

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• 2022 (6) TMI 1227
  Classification of imported goods - goods declared as Polyester Bed Cover - the goods are Polyester Bed Cover or Polyester Fabric? - classifiable under Custom Tariff Heading 63041930 as declared by the Appellant or under Custom Tariff Heading 54075490 as claimed by revenue? - main contention of appellant is that department has not discharged the burden of proof of classifying the impugned goods under chapter 54 - applicability of case of MS SUNRISE TRADERS, JAI DURGA IMPEX, ALISHAN IMPEX, SATISH JINDAL, ADITYA LOOMTEX, TUSHAR TILAK, JMD TRADING CO, MOHIT SOIN, AJAY HIRALAL VIJ, JAI HANUMAN OVERSEAS, PANKAJ KUMAR KATARIA, PANKAJ KUMAR, SHREE SHYAM INTERNATIONAL AND TUSHAR GUPTA VERSUS C.C. -MUNDRA [ 2022 (1) TMI 468 - CESTAT AHMEDABAD] . HELD THAT:- In the relied upon order in the Textile Committee report, it was mentioned in the column of correct description and Classification of the sample that appropriate HS Code could not be provided due to rupture of yarn in weft while untwisting, the condition of having 85% texturised polyester yarn to classify under CTH 54075490 which is similar in the present set of appeals where warp is 38.4% texturised yarn and weft cannot be ascertained - Since we have already dealt the above reports of Textile Committee and ATIRA which are truly identical in nature, we find no reason to change our findings on the basis of the above reports as no new facts have been brought to our attention which warrants such a change. Since the revenue has not been able to discharge their burden of proof hence the classification of goods declared by the appellants cannot be disturbed. Forgery of the textile committee report - HELD THAT:- There are no reason to go into the detail as the fact that reports were forged does not impact the classification assuming the reports relied upon by the department are the original one as was held in Sunrise Trader case. Personal penalty on the charge of forgery of Textile Committee report, Mumbai on Bajrang Sharma, Amit Momamya and Mahesh Bhanushali - HELD THAT:- It is found that forgery is a very serious charge which should be proved by clear and cogent evidence which seems to be missing in the present case as two of them have retracted their statement and the statement of Mahesh Bhansuhali is the one left for which both the appellants have asked for cross examination which was denied by the lower authorities, which should have been given since other confessional statements were retracted. In our view imposition of penalty only on the basis of Mahesh Bhanushali is not tenable, hence set aside. Moreover, when department s claim of change of classification failed, the personal penalties being consequential to the main case of classification would also not sustain. Appeal allowed - decided in favor of appellant.

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• 2022 (6) TMI 1226
  Demand of bank guarantee to the extent of 15% of the value of seized goods - provisional release order already passed - power of department to review an order passed under Section 110A - review of the order to the extent it requires the Appellant to furnish a bank guarantee of 15% of value of the seized goods - HELD THAT:- In the present case, once the provisional release order was passed, the Office of the Deputy Commissioner of Customs, Ahmedabad, had no jurisdiction under the Customs Act to review the earlier order dated 4th February 2022 granting provisional release to the goods imported vide the Bills of Entry impugned in the present case. The correct approach would have been for the Respondent to challenge the correctness of the said provisional release order before this Tribunal. Further, there have been no reasons provided in the order dated 6th April 2022 as to why the department has changed its stand by directing the appellant to furnish a bank guarantee to the extent of 15% of the value of the seized goods as against the original condition mentioned in the provisional order dated 4th February 2022 which was to provide a bank guarantee to the extent of 15% of the duty payable. In TG ENTERPRISE VERSUS UNION OF INDIA], the Hon ble Gujarat High court, in a case relating to alleged mis-declaration of country of Origin, was looking into the challenge to the provisional release condition by which the Petitioner was directed to furnish a Bank Guarantee to the extent of 25% of differential duty amount. The High court was pleased to set aside the said condition by observing that Of course further investigation is going on and we cannot foresee what further evidence may be collected. Be that as it may, when yet show-cause notice for final adjudication has not been issued and even after issuance of show-cause notice, completion of the adjudication is bound to consume time, it would not be in anyone's interest to stop the clearance of goods when it is not the case of the department that the import of such materials has any other legal impediment. In the present case undisputedly, nothing has been placed on record showing any undervaluation of goods. While the department has submitted before the Commissioner (Appeals) that the issue of valuation is under investigation, however what cannot be ignored is that the goods imported are copper cathodes and the value of the same is determined basis the LME price. Also the provisional release order dated 06.04.2022 and the seizure memo dated 02.02.2022 is totally silent on the aspect of undervaluation. The seizure memo in fact gives the complete history of the matter but does not contain any allegation about the undervaluation of goods. Given the above it is submitted that the condition to furnish BG of 15% of value is extremely onerous, more so when the Appellant has shown his will to deposit entire amount of duty on value declared by it. In the present case, as evident from the Bills of entry, the appellant was always willing to deposit the entire duty of BCD + IGST which is over 25 crores and therefore, the condition to direct the appellant to furnish a bank guarantee of 15% of the value of the goods which is over 100 crores is excessive and arbitrary more importantly when the appellant is willing to deposit the duty payable on the seized goods. There is no dispute on the valuation or classification of the goods as is clear from the impugned provisional order. The provisional release order dated 06.04.2022 and the seizure memo dated 02.02.2022 does not mention anything about undervaluation as has been argued by the department before the Commissioner (Appeals) - Even before this Hon ble Tribunal no evidence has been placed to show any under valuation of goods. It is also found that a perusal of the seizure memo clarifies that it is the case of the department that the goods in the present case were imported from Iran as against the declared country viz., Zambia. Keeping the allegation in mind, the department had seized the goods imported vide 4 impugned Bills of Entry. The argument of the appellant that no benefit is accrued to the appellant by allegedly mis-declaring the Country of Origin as they were always willing to pay the entire duty payable on these goods without even the considering the said COO cannot be ruled out and have to borne in mind when conditions for provisional release was decided under the approval of the Respondent - Further it is a settled law that an importer unless proven otherwise beyond doubt cannot be said to have any role in the issuance of a COO as the same is issued by the competent authority of the originating country. However, at this point in time, it is also important to note that the investigation is ongoing and country of origin of the goods will be determined only after the investigation is concluded. At this point of time, it cannot be said with certainty that the goods were imported from Iran. Be that as it may, the issue before this Tribunal is limited to the provisional release of goods and the same be decided keeping in mind the fact that the Appellant never intended to avail any benefit basis the COO and were and are willing to pay the duty on the goods imported vide the 4 bills of entry. The order of Commissioner (Appeals) is liable to be set aside to the extent it directs provision of BG of 15% of value of goods - the ends of justice shall be met if the appellant is allowed the provisional release of the subject imported goods on execution of Bond of full value of such goods and furnishing the bank guarantee of Rs.1 Crore - Appeal allowed.

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• 2022 (6) TMI 1225
  Levy of penalty u/s 112(a) of the Customs Act, 1962 - Allegation of evasion of anti-dumping duty - mis-declaring the country of origin as Malaysia, instead of China - penalty imposed upon the appellants Jayesh Mehta and Harshad Vadodaria on the ground that appellants herein have aided and abetted the importer in importing the goods by way of mis-declaring the country of origin - validity of SCN - appellant points out that impugned order imposed penalty under section 112 (a) of the Act whereas show cause notice proposed penalty under section 112 (b) of the Act - appropriation of amounts deposited by or on behalf of company during investigation towards duty and interest liability - HELD THAT:- The appellants said role in relation to import of goods is not borne out of facts on record. Significantly, the case of the department of mis-declaration of Chinese origin goods for evading anti-dumping duty is wholly directed against Nalin Mehta. Jayesh Mehta has stated in his statement that he attended the work of customs clearance as representative of CHA and acted upon the direction of Nalin Mehta. There is no evidence to show that at the time of imports he was aware that goods were allegedly being mis-declared by Nalin Mehta to customs. Harshad Vadodaria has specifically stated in his statement that he was not aware that by using his factory s name and IEC Nalin Mehta and Jayesh Mehta indulged in evasion of anti-dumping duty by mis-declaring the country of origin. There is no other reliable and corroborative evidence to establish that appellants herein had knowledge that goods imported were of Chinese Origin, in that view it cannot be said that appellants herein have committed any act or omission, which rendered the goods liable to confiscation, accordingly penalty under section 112 (a) cannot be sustained. Validity of SCN - HELD THAT: - The impugned order imposed penalty under section 112 (a) whereas show cause notice invoked section 112 (b) of the Act, appellants herein were not put to notice under section 112 (a), the same cannot sustain in view of judgement in the case of AMRIT FOODS VERSUS COMMISSIONER OF CENTRAL EXCISE, UP. [ 2005 (10) TMI 96 - SUPREME COURT] where The Tribunal has set aside the order of the Commissioner on the ground that neither the show cause notice nor the order of the Commissioner specified which particular clause of Rule 173Q had been allegedly contravened by the appellant. We are of the view that the finding of the Tribunal is correct. Rule 173Q contains six clauses the contents of which are not same. It was, therefore, necessary for the assessee to be put on notice as to the exact nature of contravention for which the assessee was liable under the provisions of the 173Q. This not having been done the Tribunal's finding cannot be faulted. Appropriation of amounts deposited by or on behalf of company, Shobha Plastics, during investigation towards duty and interest liability - HELD THAT:- As regards, Shobha Plastics, it is seen that vide Order dated 05.11.2008 the Commissioner of Customs, Ahmedabad fastened duty liability jointly and severally upon Shobha Plastics and Nalin Mehta. However, the said Order dated 05.11.2008 was set aside by Tribunal vide its Order dated 15.04.2009 with a direction to the Commissioner to fix duty liabilities on each and every individual separately. Accordingly, Commissioner vide his common Order dated 19.01.2011 held Nalin Mehta to be the importer of the goods and fixed duty liability upon him along with interest and penalties. The present appellant, Shobha Plastics was not held liable to duty. Department has not preferred appeal against that order dated 19.01.2011 and hence the same has attained finality. In that view, appropriation of amounts deposited by or on behalf of Shobha Plastics during investigation towards duty and interest liability in the impugned order cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2022 (6) TMI 1224
  Refund claim - rejection of refund on the ground that the same was not deposited in the name of the Appellant - HELD THAT:- Having regard to the fact that proof of email reply fully acknowledged that demand draft was drawn with money transferred from the bank account of Appellant, it can be said without the slightest hesitation that the submission made by the Appellant before the Commissioner of Customs (Appeals) that has been recorded in para 5 of his Order-in-Appeal are true. The obvious reason for such wrong noting of draft in someone else s name could be a clerical error and could be remanded at the Respondent-Department s ends to facilitate refund of the disputed amount to the Appellant in compliance to the provision of refund available in the Customs Act, 1962 concerning refund. It is deemed proper to remand the matter back to the Original Authority for a fresh decision upon verification of bank documents produced by the Appellant before them and received by the Respondent-Department directly from the bank - appeal allowed by way of remand.

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• 2022 (6) TMI 1205
  Seeking provisional release of goods - Jurisdiction - HELD THAT:- The parties agree that the order under challenge passed by the CESTAT dated 10.05.2022 be quashed and set aside as the same is without jurisdiction. A further statement is made by the learned counsel for the respondent Mr. Motwani that against the order of provisional release dated 06.04.2022, the respondent shall file an appeal by 25.05.2022 under Section 128 if the Customs Act. On such appeal being filed, the Competent Authority shall decide the same within a period of 10 days from the date of filing of the same - Appeal disposed off.

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• Corporate Laws

• 2022 (6) TMI 1223
  Oppression and mismanagement - Seeking order and direct conduct of due election of the Board of Directors for managing the affairs of the 4th Respondent company - seeking appointment of a commissioner for conduct of such election - seeking direction that the management of the affairs of the 4th respondent company be entrusted to the Board of Directors so elected - HELD THAT:- On 23.06.2017 Alexander Correya and Others filed a Petition against M/s. Bhagyodayam Company and Others (TCP/21/KOB/2019) under Section 241 and 242 of the Companies Act, 2013 alleging acts of oppression and mismanagement. Vide order dated 28.08.2018 the NCLT Chennai Bench passed an order superseding the Board of Directors appointing an Administrator and who took control of the 4th Respondent Company. Respondents 5 to 9 herein who are superseded Managing Director and Trustees preferred Company Appeal No. (AT) 338/2018, and Respondents 10 to 12 herein preferred Company Appeal No. (AT) 439/2018 before the Hon'ble NCLAT. The Hon'ble NCLAT, Delhi heard the appeals in detail on 23.07.2020, and vide order dated 23.07.2020 dismissed the appeals upholding the findings of the Hon'ble NCLAT, Chennai. On dismissal of the Appeals, Respondents 5 to 9 herein, preferred Civil Appeal 2999/2020 before the Hon'ble Supreme Court. The Hon ble Supreme Court of India heard the Appeal in detail on 19.11.2020 and rejected all the contentions raised by the Appellants therein and dismissed the Civil Appeal No. 2999/2020 vide judgment dated 19.11.2020. Since all the contentions raised by the Respondents/ superseded Managing Directors and Trustees before the NCLT Chennai Bench have been rejected by that Bench, which was appealed before Hon ble NCLAT and Hon ble Supreme Court and there also they failed, these Petitioners who are stated to be binamis of the suspended Managing Directors and Trustees cannot now come forward with an application for impleadment at this belated stage. Hence, the contention for an impleadment need not be considered. Whether an order as sought for by the Intervening Petitioners can be granted? - HELD THAT:- The request of the interveners to conduct the Board meeting has not been specifically denied by the present Administrator. Instead, he is harping on the allegations raised by the former Administrator that the Auditor has not properly audited the accounts. Lame excuses to conduct the election cannot be accepted for not conducting the election. The Tribunal cannot be a moot spectator in the matter. In order to give an end to the issue involved and in the interest of justice, it is high time to order for conducting the election to the Board of Directors of the 4th Respondent Company in terms of the Articles of Association of the 4th respondent Company. It is not necessary to appoint a Commissioner for the conduct of such an election, as the administrator is competent to conduct the election. The Administrator is directed to conduct the election to the Board of Directors of the 4th respondent Company as early as possible, at any rate, within 45 days from the date of receipt of a copy of this order - petition disposed off.

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• Insolvency & Bankruptcy

• 2022 (6) TMI 1222
  Violation of principles of natural justice - Non-speaking order - grievance of the Appellant is that the Impugned order suffers from serious infirmity in the eye of law because of the fact that the said order is bereft and devoid of reasons, for want of material particulars in explaining necessary qualitative and quantitative reasons, for arriving at the just conclusion - HELD THAT:- Considering the fact that the Impugned Order suffers from infirmity in the eye of law, therefore, it cannot stand a moment scrutiny in law, especially, for want of qualitative and quantitative reasons being ascribed thereto in the said Order and especially the said order is a cryptic and unreasoned one, which necessitates an inevitable conclusion to be arrived at, by this Tribunal, that the same is not valid in law. This Tribunal is inclined to interfere to the said Impugned order for substantial cause of justice. The Impugned Order dated 24.05.2022 in IA/320/CHE/2021 in CP/1156/IB/2018 passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench-1, Chennai) in CP/1156/IB/2018 is hereby set aside - the matter is remitted back to the Adjudicating Authority (National Company Law Tribunal, Division Bench-1, Chennai) and the Adjudicating Authority (National Company Law Tribunal, Division Bench-1, Chennai) is directed to take up IA/320/CHE/2021 in CP/1156/IB/2018 for Hearing de novo and to dispose of the same, by passing a reasoned Speaking Order on merits, of course, after providing adequate opportunities to both the parties, in accordance with law. Appeal disposed off.

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• 2022 (6) TMI 1221
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It can be seen from the records of the proceedings placed, that since the Corporate Debtor's account has been classified as fraudulent transaction by the banker and the Corporate Debtor is unable to infuse more funds and submit better proposal for OTS. However, CIRP to be initiated on the Corporate Debtor and it is proved that there is a debt and default on the part of the Corporate Debtor. In view of the 'financial debt' which is proved by the Financial Creditor and the 'default' being committed on the part of the Corporate Debtor, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor - Application admitted - moratorium declared.

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• 2022 (6) TMI 1220
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Upon perusal of the records and documents annexed with the Petition, it is observed that the amount was disbursed to the Corporate Debtor and the default subsists. Thus, the amount is legally due and payable to the Corporate Debtor. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor - Petition admitted - moratorium declared.

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• 2022 (6) TMI 1219
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - exisence of debt and dispute or not - HELD THAT:- It is evident from the documents on record that the advance was availed from the Financial Creditor by the Corporate Debtor and that amount was duly disbursed to the Corporate Debtor from time to time. The balance confirmation statement which has also been signed by the Corporate Debtor evidences the fact that the amount was disbursed and the same is an acknowlegement of liability. In addition to the balance confirmation statement the liability of the Corporate Debtor is clearly reflected in the balance sheet of the Corporate Debtor. It is abundantly clear that the Corporate Debtor owes a financial debt to the Financial Creditor. There is Balance confirmation by the Corporate Debtor of the dues payable to the Financial Creditor. On account of its acknowlegement of debt the Corporate Debtor has confirmed the amount as stipulated in the confirmation of accounts dated 15.04.2017, due and payable to the Financial Creditor. The Financial Creditor submits that in view of the Corporate Debtor s loan having become due and payable on demand and its failure and inability to pay the same, the Petition to be admitted - this Bench is of the considered opinion that there is no dispute regarding the fact that Corporate Debtor owes money to the Financial Creditor. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• 2022 (6) TMI 1218
  Seeking dissolution of the company - Section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- A bare perusal of the material available on record shows that the Board of Directors of the Company has taken a conscious decision for closing down the company, because the company has no significant business operations from last two years. Thus, the Board of Directors of the company have unanimously proposed to liquidate the company by invoking the provisions of voluntary liquidation under Section 59 of the Code - It has been mentioned in the petition that the liquidator has not received any claims, therefore, no prejudice and loss will be caused to anyone, if the company is dissolved. In support of the same, the company has duly passed the requisite Special Resolution in its Extra Ordinary General Meeting on 06.08.2020 by confirming the decision of its Board of Directors and proposing for its Voluntary Liquidation. From the perusal of the record of the case, it is seen that the Liquidator, after his appointment has duly performed his duties and completed necessary formalities to complete the liquidation process of the applicant company, which has been averred in the present petition and, thus, the liquidator has prayed for an order from this Tribunal to dissolve the applicant company. Since there is no objection received from any angle opposing the proposed voluntary liquidation/dissolution of the company either from the side of the shareholders or from creditors, nor any adverse comment have been received from the public at large against such liquidation/dissolution, despite there being a public announcement by the liquidator and also updation of the same in the website of the Insolvency and Bankruptcy Board of India (IBBI). It is also evident from the record that the proposed liquidation was duly communicated to the Registrar of Companies, NCT of Delhi Haryana as per Form MGT-14 and Form GNL-2 and the same is also reported to have been approved. Apart, as per record of the present case, it is seen that the company is not found involved in such kind of business activities, which are detrimental to the interest of public at large. Further, it is not the case that the proposed liquidation may affect adversely to its shareholders/members or is contrary to the provisions of law - the present application deserves to be allowed for the proposed Liquidation/Dissolution of the Corporate Person. This Adjudicating Authority in exercise of power conferred to it under Section 59 (8) of the Insolvency and Bankruptcy Code, 2016, orders that the Corporate Person (Applicant Company) SAIF Advisors Private Limited shall stand dissolved with effect from 27.06.2022 - application allowed.

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• 2022 (6) TMI 1217
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- As per the direction of this Tribunal, the learned PCS for the applicant filed the record of default of NeSL website, from which it is clear that the Corporate Debtor has committed default in repayment of its credit facilities availed from the Financial Creditor by way of various credit facilities sanctioned, granted and disbursed by the Applicant. The record produced by the applicant received from the Information Utility shows as Deemed to be Authenticated . The status of authentication as Deemed to be Authenticated is prima facie evidence for smooth admission under Section 7 of the IBC. It is relevant to note that Hon ble Supreme Court of India in the case of M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR., [ 2017 (9) TMI 58 - SUPREME COURT ], has laid down the guiding principles to admit or reject an application filed under Section 7 of the IBC. To admit an application filed under Section 7 of IBC, the Adjudicating Authority is to be satisfied that a default has occurred; that the Corporate Debtor is entitled to point out that default has not occurred in the sense that the debt , which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the Adjudicating Authority is satisfied that a default has occurred, the Application must be admitted unless it is incomplete. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of the minimum amount stipulated under Section 4(1) of the IBC. Therefore, the debt and default stand established and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared.

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• 2022 (6) TMI 1216
  Seeking handover possession of four Apartments during the period when CIRP was going on - whether during the period of CIRP, the relief sought by the applicant to handover possession of four Apartments to the applicant can be allowed? - HELD THAT:- A reading of Section 43(2)(b) of the IBC, 2016, would make it clear that if the prayer of the applicant is allowed which will be in the nature of transferring/alienating or disposing off the Corporate Debtor any of its assets or any legal rights or beneficial interest therein. This will result in change in the status of the assets of the Corporate Debtor after the commencement of Insolvency Resolution Process. The transfer has the effect of putting such Creditor or surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assets being made in accordance with Section 53. Moreover, while admitting the application moratorium has been ordered under Section 14 of the IBC. The RP cannot handover the possession of the four Apartments to the applicant. The applicant is to wait till the CIRP is concluded - Application dismissed.

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• 2022 (6) TMI 1215
  Seeking direction to respondents to provide the books of accounts and all the relevant information in respect of the Corporate Debtor - seeking direction to assist the IRP to identify the company assets - handing over the Keys of the factory gate and extension of all the support and cooperation to complete the CIR Process - HELD THAT:- Independent of all the legal proceedings pending, the respondent preferred a proposal for One Time Settlement (OTS) before the Financial Creditor and also the Interim Resolution Professional appointed by this Tribunal. While the proposal for OTS preferred by the respondent was pending consideration with the Financial Creditor, the WP No. 15804 of 2022 was disposed off with a direction to the Resolution Professional to place the proposal before the Committee of Creditors (CoC) at the next meeting. Thereupon, the proposal for OTS has been sanctioned by the Financial Creditor and the same was communicated to the respondent vide letter dated 04/06/2022 issued by the Financial Creditor. In view of the OTS approved by the Financial Creditor, the respondent should be permitted to settle his entire liability towards the Financial Creditor within the time stipulated in the OTS. On going through the OTS proposal, which was approved by the Financial Creditor who has filed the CP(IB)/34(KOB)/2021, it is seen that the respondent can clear the liability to the Financial Creditor by 31/07/2022. It is also stated that if the claim of the Bank of Rs.105 lakh is paid as per the OTS approved, the Bank is ready to withdraw their claim before the CoC. It is also stated that if the Corporate Debtor delays the payment instalments, that will attract interest at the rate of 9% - Since the Corporate Debtor/Respondent has got time upto 31/07/2022, the prayer of the IRP to provide the books of accounts, and all the relevant information in respect of the Corporate Debtor, assist the IRP to identify the company assets, handover the Keys of the factory gate and extend all the support and cooperation to complete the CIR Process cannot be granted at present, as the Financial Creditor who has filed the case before this Tribunal has agreed to the OTS, presumably with the approval of CoC, the IRP has to wait till the cut off date provided in the OTS approval. Application dismissed.

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• 2022 (6) TMI 1214
  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 Counsel for the Corporate Debtor, during the course of hearing of the matter, on 13.04.2022 has admitted the liability and claim filed by the Operational Creditor. The Counsel for the Corporate Debtor further submitted that the admission is made as per the instructions of her client and, as on date, the Corporate Debtor is unable to pay the amount claimed in the section 9 application - It is clear from the order of Tribunal that the Counsel for the Corporate Debtor has specifically admitted the debt and submitted to the Tribunal to pass appropriate orders. The counsel for the Corporate Debtor, on instructions of her client, has therefore admitted the debt and default. Upon appreciation of the documents placed on record to substantiate their respective claims, 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 accepted the said default. Therefore, 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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• PMLA

• 2022 (6) TMI 1213
  Seeking grant of bail - Money Laundering - present applicant-Hemant Kumar Sinha was the Chief Secretary of the trust and it was alleged that the trust was engaged in collecting money from the public by cheating the poor people and inducing them to invest money which would become fourfold within 16 months - applicability of provisions of Section 45(1) of PMLA - HELD THAT:- This Court is of the considered view that the provisions of Section 45 of the Act, 2002 prior to judgment of Hon ble Apex Court in the case of NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. [ 2017 (11) TMI 1336 - SUPREME COURT] was declared unconstitutional; but the defects of provisions of the said act was cured by the Parliament by way of Amendment Act 13 of 2018 and consequently, the twin conditions of Section 45 while disposing of the bail applicant under the Act, 2002 stood revived. The twin conditions under Section 45 (1) for the offences classified thereunder in Part-A of the Schedule was held arbitrary and discriminatory and invalid in Nikesh Tarachand Shah. Subsequently, the Section 45 of the Act, 2002 has been amended by Amendment Act 13 of 2008, whereby the words imprisonment for a terms of imprisonment of more than three years under Part A of the schedule has been substituted with accused of an offence under this Act . The Hon ble Apex Court in THE ASST. DIRECTOR ENFORCEMENT DIRECTORATE VERSUS DR. V.C. MOHAN [ 2022 (1) TMI 511 - SUPREME COURT] held once the prayer for bail is made for the offence under PMLA 2002, the rigors principle underlying Section of 45 get triggered on. There are reasonable ground to believe that the applicant is guilty of the offence of money laundering and he is likely to commit the offence, if enlarged on bail - bail application dismissed.

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• Central Excise

• 2022 (6) TMI 1212
  Extended period of Limitation - suppression of facts or not - details of trading was available in the Balance Sheet of the respondent during the relevant period and that there was much confusion during the relevant period as to whether credit could be availed in respect of trading activities and the issue was in litigation leading to perversity - mere availability of details of trading in Balance Sheet is sufficient to drop the demand for extended period on the ground that there was no suppression, or not - attributing the prior knowledge of trading activity of the respondent ignoring the fact that the respondent produced the Balance Sheet only during the investigation and not prior to that. HELD THAT:- Undisputed facts of the case are, as recorded in paragraph 6 of the show cause notice, it was issued based on the balance sheet for the year ending 2008. Thus, the contentions of the Revenue that respondents trading activity was not known to the department and that it was learnt based on intelligence report are not tenable. The substantial questions raised by the Revenue are answered in favour of the assessee - Appeal dismissed.

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• 2022 (6) TMI 1211
  Levy of Penalty u/r 26 of CER, 2002 - Allegation of clandestine removal - Failure to account for the manufactured goods properly and on visit of the officers, the excess goods were found which was lying unaccounted - Polished vitrified Tiles - appellant claims that the unaccountal of goods is due to mis-match and cessation of the factory and the concerned staff has left the job - Confiscation of such excess found goods - Redemption Fine - Penalty - HELD THAT:- It is found from the facts, that the appellant in his statements recorded by the investigating agency nowhere stated that the goods found excess in the factory were lying for clandestine removal therefore, the serious allegation made by the department that the goods were kept for clandestine removal without payment of duty is not supported by any evidence. The appellant has stated in their statement that the unaccountal of goods is due to mis-match and cessation of the factory and the concerned staff has left the job therefore, even though the goods were found unaccounted for which the company has been imposed with redemption fine and penalty, personal penalty cannot be imposed on the Chairman and MD of the company who is not looking after the accountal of the goods manufactured. The only lapse on the part is that being the Chairman and MD of the company, he has not ensured that the proper accounting of the finished goods is being done or not for which a token penalty can be imposed. The penalty is reduced from Rs. 5 Lacs to Rs.1 Lac - the impugned order stands modified to the above extent - Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2022 (6) TMI 1210
  Classification of goods - Bread-Rusk - Process of manufacturing - to be classified under Entry 9 of Schedule B of the HPVAT Act or is classified as an unlisted item under the residual entry i.e. Part III of Schedule A of the HPVAT Act and subject to VAT @ 12.5% (subsequently increased to 13.5%)? - Burden/onus to prove - HELD THAT:- It needs to be borne in mind that it is now well settled principle of law that in interpreting different entries, attempts shall be made to find out as to whether the same answers the description of the contents of the basic entry and only in the event it is not possible to do so, recourse to the residuary entry should be taken by way of last resort. Hon'ble Supreme Court in MAURI YEAST INDIA PVT. LTD. VERSUS STATE OF UP. [ 2008 (4) TMI 101 - SUPREME COURT] has held that if there is a conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry, the former should be preferred. As regards the contention of the respondents that the Rusk would fall under residuary entry, the burden of proof is on the respondents and the onus also lies on them to first establish conclusively that by no conceivable process of reasoning can the said product be brought under any of the tariff items and hence the product was being brought under any of the tariff items, hence the product was being brought under the residuary item - Hon'ble Supreme Court in PUMA AYURVEDIC HERBAL (P) LTD. VERSUS COMMISSIONER OF C. EX., NAGPUR [ 2006 (3) TMI 141 - SUPREME COURT] has held that It is settled law that the burden of showing correct classification lies on the revenue. If we look at the facts of the instant case there does not appear to have been any strong evidence led by the revenue before the authorities to establish the fact that the matter would not fall within the entry item bread as is reflected under schedule-1, entry-7 of the VAT Act. The burden or onus is on the respondent authorities to establish by placing on record cogent, convincing and substantive evidence to show that Rusk is not Bread so as to bring it under the residuary entry under Part-IV of Schedule-B so as to impose tax on Rusk and Toast at the rate specified under the residuary entry. Once the Court agrees that the raw material as also the manufacturing process for Bread and Rusk is same and thereafter only the moisture is extracted, would not term that activity to be falling within the meaning of manufacturer as used in the Act. Petition allowed.

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• Indian Laws

• 2022 (6) TMI 1209
  Dishonor of Cheque - acquittal of acused - presumption of innocence - prepoderance of probablities - scope of interference in acquittal appeals - Section 138 of NI Act - HELD THAT:- It is well settled by catena of decisions that an appellate Court has full power to review, re-appreciate and consider the evidence upon which the order of acquittal is founded. However, the Appellate Court must bear in mind that in case of acquittal, there is prejudice in favour of the accused, firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reaffirmed and strengthened by the trial Court. In the case under NI Act, the cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability. Further, explanation to this section defines the debt and other liability to mean a legally enforceable debt or other liability. In this context, after due appreciation and evaluation of the evidence on record, the learned trial Judge has come to a conclusion that the debt in question cannot be said to be legally enforceable debt and the complainant has failed to prove otherwise. It is observed by the learned trial Judge that in the case on hand, the complainant has not produced any documentary evidence to prove his legal debt from the accused and hence, it cannot be believed that the complainant had legal dues from the respondent accused. This Court has also gone through the documentary evidence as well as the depositions of the witnesses examined by the complainant to prove its case, however, a perusal of the depositions of the witnesses reveals not an iota of evidence suggesting about the amount of Rs.2,30,000/- was due to the complainant from the accused, except the fact that they had given their due amount (of loan instalments) to the respondent accused. Further, considering the material on record, it appears that the complainant has filed the complaint in question before the learned Magistrate under the provisions of Section 138 of the NI Act towards dishonour of cheque of Rs.45,000/-, the sum, which as per the case of the complainant company itself, was given to the respondent accused towards loan. A bare perusal of the complaint reveals that there is not single utterance as regards the other dues of the complainant and the complaint is filed only for the loan amount, which, admittedly was of Rs.45,000/- only - Besides, in the Loan Agreement Exh. 29 also, as per the learned trial Judge there are interpolation/corrections. Further, there found no seal and signature of the appellant company, except the signature of the respondent - accused in the said agreement, Exh. 29, which ought to have been there. The learned trial Judge has come to the conclusion that the debt cannot be said to be the legally enforceable debt, which is sine qua non in such matters and the complainant has failed to prove the same beyond reasonable doubt. The presumption Under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. In the instant case, considering the evidence on record, it is observed by the learned trial Judge that the cheque in question appears to have been with the complainant prior to 14.04.1999 i.e. the date of post-card/letter written by the complainant to the respondent-accused - when the respondent-accused has succeeded in rebutting the presumption, the learned trial Judge has rightly come to the conclusion that the said provision would be of no help to the complainant. The complainant has failed to prove the case against the accused beyond reasonable doubt inasmuch as the ingredients of the offence alleged are not fulfilled. The Court has gone through in detail the impugned judgment and order and found that the learned trial Judge has meticulously considered the depositions of all the witnesses and came to such a conclusion and in the considered opinion of this Court, the learned trial Judge has rightly come to such a conclusion, which do not call for any interference at the hands of this Court. In the considered opinion of this Court, the complainant has failed to bring home the charge against accused for want of sufficient material. The findings recorded by the learned trial Judge do not call for any interference - Appeal dismissed.

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• 2022 (6) TMI 1208
  Dishonor of Cheque - existence of legally enforceable debt or not - acquittal of the accused - presumption of innocence - Section 138 of NI Act - HELD THAT:- In the case under NI Act, the cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability. Further, explanation to this section defines the debt and other liability to mean a legally enforceable debt or other liability. In this context, after due appreciation and evaluation of the evidence on record, the learned trial Judge has come to a conclusion that the debt in question cannot be said to be legally enforceable debt and the complainant has failed to prove otherwise. It is observed by the learned trial Judge that in the present case, the complainant has not produced any documentary evidence to prove his case and hence, it cannot be believed that the complainant had a legal dues from the respondent accused. In the overall facts and circumstances of the case, the learned trial Judge has come to the conclusion that the debt cannot be said to be the legally enforceable debt, which is sine qua non in such matters and the complainant has failed to prove the same beyond reasonable doubt. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. In the instant case, considering the evidence on record, it is observed by the learned trial Judge that, in his cross-examination, the complainant has stated that he had given Rs.20 lakh to the accused, out of which, he had arranged Rs.2 lakh from Nathabhai Maganbhai Patel, Rs.2 lakh from Bharatkumar Narandas Patel and Rs.2 lakh from his friend Arvindbhai Chimanbhai Patel. Thus, he had taken an amount of Rs.6 lakh from others, however, to prove such a fact, the complainant has not examined any of above witnesses. On re-appreciation and reevaluation of the oral as well as the documentary evidence on record, it transpires that the complainant has failed to prove the case against the accused beyond reasonable doubt inasmuch as the ingredients of the offence alleged are not fulfilled. The Court has gone through in detail the impugned judgment and order and found that the learned trial Judge has meticulously considered evidence on record and come to such a conclusion - the presumption under Section 139 of the NI Act merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability and existence of legally recoverable debt is not matter of presumption under the said section. Nonetheless, as said earlier, the complainant has failed to prove that the cheque was drawn towards legally enforceable debt. In the considered opinion of this Court, the complainant has failed to bring home the charge against accused for want of sufficient material. The findings recorded by the learned trial Judge do not call for any interference - Appeal dismissed.

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• 2022 (6) TMI 1207
  Dishonor of Cheque - legally enforceable debt or not - validity of confirmation of conviction for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumption - HELD THAT:- In the instant case, though a presumption about existence of legally enforceable debt was initially formed in favour of the complainant under Section 139 of the N.I.Act, however, the accused by eliciting several statements in the cross-examination of PW1 in his favour and also leading evidence by examining four witnesses from his side, could able to successfully make this court to suppose that no consideration and debt existed. Thus, the presumption formed in favour of the complainant was successfully rebutted by the accused. Once the presumption formed in favour of the complainant stands rebutted, the onus would be upon the complainant to prove the existence of legally enforceable debt or passing of the consideration to the drawer of the cheque towards the cheque issued in his favour. In the instant case, except attempting to show that a presumption was formed in his favour under Section 139 of the N.I.Act, since the complainant has not taken any further steps to show that there existed a legally enforceable debt or that consideration towards the cheque under Ex.P-1 was passed on to accused, suffice it to say that the complainant had failed to prove the alleged guilt against the accused. However, both the Trial Court and the Sessions Judge's Court without analyzing the evidence placed before them in their proper perspective, have hastily embraced the fact that both the parties to the case were known to each other and the cheque that was issued by the accused, was presented by the complainant and the same came to be dishonored and also of the fact that a legal notice was also sent by the complainant after dishonor of the cheque, calling upon the accused to pay the cheque amount, have jumped to a conclusion that complainant has proved the alleged guilt of the accused. Since the said finding of both the Trial Court and the Sessions Judge's Court now proved to be perverse and erroneous, the same warrants interference at the hands of this Court. The impugned judgment of conviction and order on sentence passed by the learned Civil Judge and J.M.F.C, Turuvekere, holding the revision petitioner (accused) guilty of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 and sentencing him for the alleged offence, is set aside - the Criminal Revision Petition is allowed.

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