TMI Tax Updates - e-Newsletter
July 15, 2022

Case Laws in this Newsletter:

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

Articles

• GIST OF RECENT CBIC NOTIFICATIONS
• LATEST JUDGMENT OF SUPREME COURT ON RE-OPENING OF ASSESSMENT – AN ANALYSIS

News

• India’s overall exports (Merchandise and Services) grow by 23% in June; Exports growth in 1st quarter over 25%;

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• IBBI organises training programme for Indian Corporate Law Service Trainee Officers

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• Income Tax Department conducts searches on a Pharmaceutical Group in Bengaluru

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Notifications

Customs

• 42/2022 - dated 13-7-2022 - Cus
  Withdrawal of exemption from IGST on import - Seeks to amend Notification No. 51/96-Customs, dated the 23rd July, 1996 - Exemption to research equipments imported by public funded research institutions or a university of an Indian Institute of Technology or Indian Institute of Science, Bangalore or Regional Engineering College, non commercial institutions etc

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• 41/2022 - dated 13-7-2022 - Cus
  Scope of exemption to persons who can import under this scheme - Seeks to amend Notification No. 19/2019- Customs, dated the 6th July, 2019 - Exemption to specified defense equipment and their parts imported in India by the Ministry of Defence, Government of India or the defence forces

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• 40/2022 - dated 13-7-2022 - Cus
  Seeks to amend notification No. 50/2017-Customs - DEC tablet and S. No. 404 Petrol operations. - Effective rates of customs duty and IGST for goods imported into India

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• 61/2022 - dated 13-7-2022 - Cus (NT)
  Proper Officer for specific purposes - Notification No,26/2022-Customs (NT) dated 31.03.2022

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GST

• 16/2022 - dated 13-7-2022 - CGST
  Composition Scheme u/s 10 - Fly ash bricks; Fly ash aggregates; Fly ash blocks - Seeks to amend Notification No. 14/2019-Central Tax, dated the 7th March, 2019

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• 15/2022 - dated 13-7-2022 - CGST
  Scope of exemption from registration modified - Fly ash bricks; Fly ash aggregates; Fly ash blocks - Seeks to amend Notification No. 10/2019-Central Tax, dated the 7th March, 2019

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• 11/2022 - dated 13-7-2022 - CGST Rate
  Rescinds notification No. 45/2017- Central Tax (Rate) dated 14th November, 2017 - Concessional GST rate of 2.5% on scientific and technical equipments supplied to public funded research institutions

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• 10/2022 - dated 13-7-2022 - CGST Rate
  Concessional rate on intra state supply of bricks conditional to not availing the ITC - Seeks to amend Notification No. 02/2022-Central Tax (Rate), dated the 31st March, 2022

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• 09/2022 - dated 13-7-2022 - CGST Rate
  Inverted duty structure - Supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed under section 54(3) - Seeks to amend Notification No. 5/2017-Central Tax (Rate), dated the 28th June, 2017

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• 08/2022 - dated 13-7-2022 - CGST Rate
  Concessional CGST rate for supplies to Exploration and Production - rate revised from 2.5% to 6% - Seeks to amend notification No. 3/2017- Central Tax (Rate) dated 13th July, 2022

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• 07/2022 - dated 13-7-2022 - CGST Rate
  Supply of goods exempted from GST u/s 11(1) - Seeks to amend notification No.2/2017-Central Tax (Rate), dated the 28th June, 2017

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• 06/2022 - dated 13-7-2022 - CGST Rate
  CGST Rate Schedule u/s 9(1) - Seeks to amend notification No.1/2017-Central Tax (Rate), dated the 28th June, 2017

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• 05/2022 - dated 13-7-2022 - CGST Rate
  Services on which tax will be payable under reverse charge mechanism (RCM) under CGST Act - Seeks to amend Notification No 13/2017- Central Tax (Rate) dated 28.06.2017

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• 04/2022 - dated 13-7-2022 - CGST Rate
  Exempted supply of services under the CGST Act - Seeks to amend Notification No 12/2017- Central Tax (Rate) dated 28.06.2017

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• 03/2022 - dated 13-7-2022 - CGST Rate
  Rates for supply of services under CGST Act - Seeks to amend Notification No 11/2017- Central Tax (Rate) dated 28.06.2017

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• 11/2022 - dated 13-7-2022 - IGST Rate
  Withdrawal of concessional rate of GST - Rescinds notification No. 47/2017- Integrated Tax (Rate), dated the 14th November, 2017 - Concessional GST rate of 5% on scientific and technical equipments supplied to public funded research institutions

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• 10/2022 - dated 13-7-2022 - IGST Rate
  Scope of Fly ash bricks; Fly ash aggregates; Fly ash blocks modified - Seeks to amend Notification No. 02/2022-Intergated Tax (Rate), dated the 31st March, 2022 - concessional rate on inter state supply of bricks conditional to not availing the ITC

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• 09/2022 - dated 13-7-2022 - IGST Rate
  Scope of denial of refund of unutilized ITC extended - Seeks to amend Notification No. 5/2017-Integrated Tax (Rate), dated the 28th June, 2017

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• 08/2022 - dated 13-7-2022 - IGST Rate
  Seeks to amend Notification No. 3/2017-Integrated Tax (Rate), dated the 28th June, 2017 - Concessional rate of IGST on inter-State supplies of certain goods increased from 5% to 12%

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• 07/2022 - dated 13-7-2022 - IGST Rate
  Absolute Exemption from IGST on inter-State supplies of goods - Seeks to amend Notification No. 2/2017-Integrated Tax (Rate), dated the 28th June, 2017

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• 06/2022 - dated 13-7-2022 - IGST Rate
  IGST Rate Schedule u/s 5(1) - Seeks to amend Notification No. 1/2017-Integrated Tax (Rate), dated the 28th June, 2017

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• 05/2022 - dated 13-7-2022 - IGST Rate
  Scope of modified for certain Categories of services on which integrated tax will be payable under reverse charge mechanism (RCM) - Seeks to amend Notification No. 10/2017-Integrated Tax (Rate), dated the 28th June, 2017

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• 04/2022 - dated 13-7-2022 - IGST Rate
  Exemptions on supply of services under IGST Act - Seeks to amend Notification No. 9/2017-Integrated Tax (Rate), dated the 28th June, 2017

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• 03/2022 - dated 13-7-2022 - IGST Rate
  Rates for supply of services under IGST Act - Seeks to amend Notification No. 8/2017-Integrated Tax (Rate), dated the 28th June, 2017

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• 04/2022 - dated 13-7-2022 - UTGST
  Seeks to amend Notification No. 02/2017-Union Territory Tax, dated the 27th June, 2017

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• 03/2022 - dated 13-7-2022 - UTGST
  Seeks to amend Notification No. 02/2019-Union Territory Tax, dated the 7th March, 2019

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• 11/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. 45/2017-Union Territory Tax (Rate),dated the 14th November, 2017

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• 10/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. 02/2022-Union Territory Tax (Rate), dated the 31st March, 2022

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• 09/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. . 5/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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• 08/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. 3/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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• 07/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. 2/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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• 06/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. 1/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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• 05/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. 13/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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• 04/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. 12/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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• 03/2022 - dated 13-7-2022 - UTGST Rate
  Seeks to amend Notification No. 11/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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Highlights / Catch Notes

GST

• Detention of goods alongwith vehicle - E-Way bill stood expired - - This Court already held that there is no lack of bona fide on the part of the writ petitioner in the instant case for not extending the validity period of the E-Way bill within the short period of time. It is also not a case of willful attempt on the part of the writ petitioner to evade payment of tax - It is the admitted position that the petitioner has paid the amount of penalty levied by the adjudicating authority and the vehicle was also released thereafter - consequential demand of tax and penalty are all set aside and quashed - HC
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• Exemption from GST - services of examination conducted for ALL INDIA INSTITUTE OF MEDICAL SCEINECES (AIIMS) - the AIIMS qualifies the definition of educational institution and accordingly services provided by the applicant to AIIMS by way of services relating to admission i.e. by way of entrance examination is exempt under entry no. 66(b)(iv) of the Notification No. 12/2017 - AAR
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Income Tax

• Reopening of assessment u/s 147 - Notice issued u/s 148(A)(b) - Period of limitation - It is pertinent to mention here that since the defect committed by the Revenue by giving less than seven days' time to the Assessee to reply to the Notice issued u/s 148(A)(b) of the Act, is a curable defect; as such, the Revenue, if the law so permits, can issue fresh letter to the Assessee in continuation to the Notice issued u/s 148(A)(b) of the Act by giving him at least seven days' time and not more than thirty days to file its show-cause reply and proceed in the matter. - HC
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• Disallowing depreciation - determination of cost of assets - Transfers between Holding and Subsidiary Companies - The Assessee company had later allotted shares of S & G Investments and Hamlet Investments on 28.11.2003, thereby ceasing to be wholly owned subsidiary of MIL. In view of the this changed of status, by virtue of Section 47A, MIL offered the capital gains u/s. 47(iv) of the Act. Therefore, strictly speaking the provision of section 49(3) of the Act became applicable and the cost of acquisition of the Assessee was to be construed to be the cost, for which assets were acquired by Assessee. - AT
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• Allowability of non-compete fee paid - As the case of the Assessing Officer appears to be that the non-compete consideration is nothing but a part of the consideration payable for acquisition of shares of the appellant company and, therefore, any consideration paid for acquisition of shares cannot be allowed as revenue deduction while computing the business profits as taxable. - This finding made by the Assessing Officer remains uncontroverted by leading necessary evidence on record. - the claim made by the assessee cannot be allowed as deduction - Additions confirmed - AT
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• Depreciation on the value of the building as revalued prior to conversion of the erstwhile partnership firm into a private limited company - the prerequisite for invoking explanation 3 to Section 43(1) of the ITA was that the AO had to establish that the main purpose of the transfer of such asset was to reduce the income-tax liability by claiming extra depreciation on enhanced cost. The Court held that the AO had not recorded any finding in this regard. Accordingly, the Court held that the Assessee was entited to claim depreciation on the intangible assets. Therefore where a partnership firm revalues its intangibles (being eligible for depreciation) prior to succession into a company, the company is entitled to depreciation on such assets as per the revalued figures. - AT
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Customs

• Illegal detention of imported goods - waiver of the dammurage charges - The order passed by the Customs Authority dated 25th March, 2022 is binding upon the respondent Nos.3 to 6 and therefore, respondent Nos.3 to 6 are required to implement the order dated 25th March, 2022 passed by the Customs Authorities for waiver of the dammurage charges under Regulation 10(1)(l) of the SCMTR - without going into further details and merits of the case, the respondent Nos.3 to 6 are hereby directed to release the goods which are under their custody and not under the detention of the Customs Authorities - HC
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IBC

• Refusal to stay the proceedings initiated by the Respondent, Axis Bank Limited against the Appellant - The title “Insolvency and Bankruptcy Code” makes it amply clear that the statute deals with and/or tackles insolvency and bankruptcy. It is certainly not the object of the IBC to penalize solvent companies, temporarily defaulting in repayment of its financial debts, by initiation of CIRP. Section 7(5)(a) of the IBC, therefore, confers discretionary power on the Adjudicating Authority (NCLT) to admit an application of a Financial Creditor under Section 7 of the IBC for initiation of CIRP - SC
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• CIRP - direction to restore the electricity supply to the respondent no. 1 herein (writ petitioner) only on the reconnection charges without insisting upon deposit of its previous claims or past dues of electricity - The right of the appellant to recover the amount which was due prior to the resolution plan had extinguished on the approval of the resolution plan. The appellant is now required to provide the electricity connection to the respondent in terms of the Electricity Act, 2003, hence, learned Single Judge has not committed any error in allowing the writ petition and issuing requisite direction in this regard - HC
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SEBI

• Scope of the term "May" - Use of the word ‘may’ over the years is normally construed as permissive and not imperative. The words ‘may’ or ‘shall’ by their very etymological foundation denote discretion and mandatory nature of an act respectively. This Court has, therefore, held that the courts should not readily interpret the word ‘may’ as ‘shall’ unless such interpretation is necessary to avoid absurdity, inconvenient consequences or as mandated by the intent of the legislature which is gathered from the other parts of the statute. - SC
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• Interpretation of Regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 - In the context of the present case, it is to be noted that the Board is the draftsman of the legislation having enacted the Takeover Regulations 1997 and hence, their interpretation and understanding of the Regulations is of importance and relevance. In the context of the present case, the Board, nearly five years after the transactions, had issued the show-cause notice and then passed an order taking a view on interpretation of Regulation 10, which was contrary to the view expressed by it in several communications as also orders passed by the adjudicating authority. Past is passed and not present, and by giving ‘retroactive’ operation without good reason. - SC
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Central Excise

• Extended period of limitation - - Clearance of certain inputs as such declaring lesser assessable value resulting in short payment of duty than the cenvat credit availed on the said inputs - The appellants were made aware in 2008 about the default in short payment of amount. However, they continued with the practice and have showed a willful intention to not act as per the provisions of Rule 3(5) of the Cenvat Credit Rules. In such situation, invocation of extended period is justified and needs to be upheld. - AT
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Case Laws:

• GST

• 2022 (7) TMI 604
  Seeking issuance of a writ of mandamus to command the respondents - permission for rectification and / or correction of the GSTR 1 form either manually or through portal - HELD THAT:- Application is disposed of by directing the Assistant Commissioner State GST, Cooch Behar Charge being the respondent no.1 herein to consider the representation dated November 12, 2021 which is annexed as Annexure P/4 at page 60 of the writ petition and to dispose of the same by passing a reasoned order after giving an opportunity of hearing to the petitioner and / or its authorized representative and to communicate the same to the petitioner.

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• 2022 (7) TMI 603
  Detention of goods alongwith vehicle - Levy of tax and penalty - at the time of interception, the validity period of the E-Way bill stood expired - HELD THAT:- After going through the order of adjudicating as well as the order passed by the appellate authority, this Court finds that the authorities have not returned any finding that there was any deliberate and willful attempt on the part of the writ petitioner to evade payment of tax. In order to justify invocation of the power to impose penalty in terms of the said Act, it is necessary that such authority arrives at a definite finding that there was a deliberate and willful attempt on the part of the assessee to evade tax or there is lack of bona fide. This Court already held that there is no lack of bona fide on the part of the writ petitioner in the instant case for not extending the validity period of the E-Way bill within the short period of time. It is also not a case of willful attempt on the part of the writ petitioner to evade payment of tax - It is the admitted position that the petitioner has paid the amount of penalty levied by the adjudicating authority and the vehicle was also released thereafter. Tax with penalty set aside - application allowed.

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• 2022 (7) TMI 602
  Exemption from GST - services of examination conducted for ALL INDIA INSTITUTE OF MEDICAL SCEINECES (AIIMS) - eligibility of exemption under Entry 66 of Notification 12/2017-Central Tax (Rate) - HELD THAT:- There is no restriction of upto higher secondary level in respect of exemption covered in entry 66(b)(iv) of the Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017. The applicant is providing services in respect of (i) Recruitment Examination (ii) Entrance Examination and (iii) Semester/course Examination to the AIIMS. The services provided to an educational institution by way of services relating to admission to, or conduct of examination by, such institution is exempted as per entry 66(b)(iv) of the said notification. As regards the services by way of Recruitment Examination (for recruitment of employee) and Semester/Course examination is not mentioned in the said notification, the same are not exempted. It is found that the All India Institute of Medical Sciences (AIIMS) was established in 1956 by an Act of Parliament. As per Section 5 of the All India Institute of Medical Sciences Act, 1956, the AIIMS has been declared as an institution of national importance. As per Section 13 of the AIIMS Act, 1956, the objective of the AIIMS is to develop patterns of teaching in undergraduate and postgraduate medical education in all its branches so as to demonstrate a high standard of medical education to all medical colleges and other allied institutions in India; to bring together in one place educational facilities of the highest order for the training of personnel in all important branches of health activity and to attain self-sufficiency in postgraduate medical education. AIIMS conducts teaching programs in medical and para-medical courses both at the undergraduate and postgraduate levels and awards its own degrees. Thus, the AIIMS qualifies the definition of educational institution and accordingly services provided by the applicant to AIIMS by way of services relating to admission i.e. by way of entrance examination is exempt under entry no. 66(b)(iv) of the Notification No. 12/2017-ST dated 28.06.2012.

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• 2022 (7) TMI 601
  Maintainability of Advance Ruling application - Classification of supply - supply of goods or supply of services - supply of components of Pneumatic Conveying system by the applicant to its customers on High Sea Sales basis - place of supply - entry 8 to Schedule III of CGST Act - HELD THAT:- It is found that CGST Act, UPGST Act and the IGST Act do not define the term high seas. A high sea sale is a sale of goods by a consignee, named in the relevant bill of lading, to another buyer while the goods are en route to their eventual destination. A high sea sale can be made any time after the vessel has crossed the territorial waters of the exporting country but before it enters the territorial waters of the importing country. The taxability on High Sea Sales requires the determination of occurrence of High Sea Sales. As such, the import as well as High Sea Sales is determined on the basis of 'place of supply'. The 'place of supply' is not covered by Section 97(2) of the CGST Act, 2017 at all. So, the ruling on matters concerning 'place of supply' is outside the purview of the Authority for Advance Ruling. The current application is not covered within the scope of Section 97 of the CGST Act, 2017 as such the same is not covered under the ambit of Authority for Advance Ruling. As the questions raised do not fall within the mandate of Authority for Advance Ruling, the application is therefore disposed of as such.

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• Income Tax

• 2022 (7) TMI 600
  Reopening of assessment u/s 147 - Notice issued u/s 148(A)(b) - Period of limitation - Mandatory timeline of minimum 'Seven days' - HELD THAT:- After going through the aforesaid provision it is ample clear that a minimum time of seven days has to be granted to the assessee to file its reply to the show cause notice issued u/s 148 A(b) - The contention of the Revenue that though only three days time was given to the petitioner to file its reply but the order has been passed on seventh day as the Assessee did not file any reply, is not acceptable as the legislature has categorically stipulated mandatory timeline of minimum 'Seven days' and maximum 'Thirty days' to be given to the petitioner before the order u/s 148A(d) can be passed for reassessment proceeding. In the case at hand admittedly, the same has not been followed; as such the instant writ application is maintainable under the writ jurisdiction. It is pertinent to mention here that since the defect committed by the Revenue by giving less than seven days' time to the Assessee to reply to the Notice issued u/s 148(A)(b) of the Act, is a curable defect; as such, the Revenue, if the law so permits, can issue fresh letter to the Assessee in continuation to the Notice issued u/s 148(A)(b) of the Act by giving him at least seven days' time and not more than thirty days to file its show-cause reply and proceed in the matter. Consequently, the impugned order issued under Clause (d) of Section 148A impugned Notice issued under Section 148 for opening the reassessment proceeding for the Assessment Year 2018-19, is hereby, quashed and set aside.

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• 2022 (7) TMI 599
  Revision u/s 263 - disallowance of other expenses estimated at 5% as done by the AO was incorrect - Whether the Tribunal committed substantial error in law in holding that the purchases other than other expenses , were not disallowed by A.O. in original assessment and assessee had also not produced necessary evidence of purchases before Commissioner in 263 proceedings? - HELD THAT:- The tribunal noted that there was no dispute with regard to the assessee s sale and purchase figures between the group concerns which has been accepted by the assessing officer who proceeded to disallow an estimated 5% of the inflated amount. Considering the factual position the tribunal held that the twin conditions required to be satisfied for invoking Section 263 of the Act was absent and, therefore, the assumption of jurisdiction by the PCIT was held to be bad in law. We note that the PCIT while invoking his power u/s 263 of the Act has proceeded based on conjecture and there is no finding recorded that the books of accounts of the assessee were rejected. Specific issue raised by the assessee that the documents and details were furnished before the assessing officer was not found to be incorrect. Therefore, we are of the view that the tribunal having taken note of the factual position had rightly interfered with the order passed by the PCIT. The learned standing counsel for the appellant placed reliance on the decision of the High Court of Gujarat at Ahmedabad in N.K. Industries Ltd. [ 2016 (6) TMI 1139 - GUJARAT HIGH COURT ] This decision is referred to since the decision in Vijay Proteins Ltd. [ 2015 (1) TMI 828 - GUJARAT HIGH COURT ] has been relied upon in the said case. We find that the decision in Vijay Proteins Ltd. is distinguishable on facts since in the said case it was conclusively found that the entire purchases were shown to be based on fictitious invoices and have been debited in trading account and the entire transaction was held to be bogus. As pointed out that the tribunal had come to a categorical conclusion that the amount of Rs.2,95,93,288/- representing alleged purchase from bogus suppliers and, therefore, it was held that the tribunal could not have restricted the disallowance only to Rs.73,23,32/-. Thus, there was a factual adjudication in the said case and the order passed by the tribunal was faulted for rejecting the disallowance. The decision is distinguishable on facts and cannot in any manner advance the case of the appellant before us. No substantial question of law arises

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• 2022 (7) TMI 598
  Revision u/s 263 by CIT - interest on unsecured loans and claimed deduction out of income, which has been during allowed by the AO - CIT viewed that such interest is not allowable u/s 14A and u/s 57(iii) as investment made was related to exempt income and interest expenses were incurred for earning income from other source - HELD THAT:- The order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax. Since the Pr. CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue. Thus we are of the opinion that the AO has adopted one possible legal view sustainable in law on the issue and mere invoking proviso based on revenue audit objection amounts non application of mind. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. Thus, the view taken by the AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, we find that twin condition were not satisfied for invoking the jurisdiction under section 263 of the Act. Therefore, in absence of the same the Id. Pr.CIT was not correct in exercise the jurisdiction under section 263 of the Act. In view of these facts and circumstances, wequash the impugned order passed under section 263 of the Act and allow the appeal of the assessee. In view of above findings of fact arrived at by the Tribunal and in view of settled legal position considered in the aforesaid findings, we are of the opinion that there is no infirmity in the impugned order passed by the Tribunal so as to give rise to any substantial question of law.

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• 2022 (7) TMI 597
  Revision u/s 263 - whether the parties to whom cash payments were made were milk producers and were covered by circumstances sated in clause(e)(ii) of Rule 6DD of Income Tax Rules? - HELD THAT:- It is abundantly clear from para No.3 and 4 of assessment order that regarding excess payment of Rs.20,000/-, each and every document were there before the assessing officer and assessing officer examined them and has taken a possible view, therefore, assessment order passed by the assessing officer under section 143(3) r.w.s. 147 of the Act, dated 18.03.2016, is neither erroneous nor prejudicial to the interest of revenue. As in view of settled legal position with regard to invoking of section 263 of the Act, 1961, we are of the opinion that there is no infirmity in the impugned order passed by the Tribunal so as to give rise to any question of law much-less any substantial question of law as proposed or otherwise.

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• 2022 (7) TMI 596
  Assessment of trust - addition made by the AO towards the amount transferred to the society holding the same as application of income - amount transferred to the society was only application of money and not a genuine expenditure in the assessee - assessee is an AOP of Cardiological Society of India (CSI), which is a registered society under the Societies Registration Act XXI of 1961 of West Bengal - HELD THAT:- We noted that the payments made by the assessee entity in accordance with bye-laws / specific purpose for which it was constituted and the AO has not disputed the nature of contribution made by assessee or the receipts transferred being directly in nexus with the income earned during the assessment year under consideration and the amount transferred. In our view, the surplus generated from conducting conference of the CSI would not become income in the hands of the assessee because this was a tool created by the CSI society and it in no way can be called application of income on diversion. As the assessee has already transferred these receipts to CSI, Headquarter Kolkata and CSI, Chennai chapter in the ratio prescribed as per byelaws and according to us, as ratio laid down by the Hon ble Supreme Court in the case of Sitaldas Tirathdas [ 1960 (11) TMI 17 - SUPREME COURT] the amount collected by assessee AOP for organizing conference on behalf of these two entities, the excess amount can be held as the amount in trust and in no way that can be held as the income of the assessee. Hence, we agree with the findings of the CIT(A) and the same is confirmed. The appeal of Revenue is dismissed.

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• 2022 (7) TMI 595
  TDS u/s 194C - advertisement charges paid to media - Default u/s 201(1) - as argued appellant is not liable to Deduct Tax at Source in respect of the payment of advertisement charges paid to the media directly and not through contractors - HELD THAT:- As per Section 194C(5) the twin conditions must be satisfied, i.e. the payment should exceed Rs.30,000/- and the aggregate payment should be more than Rs1,00,000/- in a year to one recipient. But in the case before us there are some payments made to the parties which are less than Rs.1,00,000/-. Therefore in this case TDS provision will not be applied as the total payment is below Rs.1,00,000/- during the year to a single party. As per proviso of Section 201(1) of the Act if the recipient pays the tax on the amount received from the assessee the assessee will not be treated as an assessee in default,if the recipients have complied as per the proviso of Section 201(1) of the Act then the assessee shall not be treated as an assessee in default. As per the documents available before us, there no any such proof submitted by the assessee for complying the proviso of Section 201(1) of the Act. Therefore,we consider it fit to send back the matter to the file of the AO for ve rification if the recipients have fulfilled the conditions of the proviso of Section 201(1) of the Act and if the AO finds as per the proviso of Section 201(1) of the Act then the assessee shall not be treated as assessee in default. We make it further clear that interest shall be charged as per Section 201A(1) - Needless to say the assessee should be provided reasonable opportunity of hearing and the assessee is directed to file the necessary documents for substantiating his case. The assessee is also directed not to take unnecessary adjournments for the speedy disposal of the appeal. Appeal filed by the assessee is allowed for statistical purposes.

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• 2022 (7) TMI 594
  Unascertained liability - assessee could not establish the justification with evidence nature of liability - CIT-A deleted the addition - HELD THAT:- Assessee has placed the copy of a cheque of Rs. 1,51,00,000/- in favour of the MD of Army Welfare Housing Organisation. There is communication on record that there was a dispute in regard to HT line in land sold by the assessee to AWHO. It can be observed that Ld. AO has not doubted this possible liability but considered it to be unascertained. The matter of fact is that instead of Rs. 75,58,000/- provision made the assessee ended making a payment of Rs. 1,51,00,000/- for this disputed liability after settlement. Considering the evidences before it Ld. CIT(A) had found the findings of ld. AO based on surmises or suspicion alone and same require no interference. The ground no 1 is disallowed. Addition on account of loss claimed in trading in foreign exchange - assessee could not establish the genuineness thereof with evidence without giving any appropriate facts - CIT-A deleted the addition - HELD THAT:- As finding of Ld AO that these investment were beyond ordinary business of Company is not correct. Further the time stamped contract notes of the authorized brokers operating through recognized stock exchange alongwith unique client code substantiate the claim of assessee that the transactions were genuine and ld. CIT(A) has rightly considered the same. Merely by introducing the rule of human prudence that no person would continue to make loss on day to day basis the documents reflecting the transactions cannot be alleged to be sham. No ground of interference is made out. The ground no 2 is disallowed.

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• 2022 (7) TMI 593
  Disallowing depreciation - determination of cost of assets - parent company of the Assessee transferred its healthcare business to the Assessee, pursuant to the business transfer agreement - Transfers between Holding and Subsidiary Companies - cost to be taken as revalue amount at time of transfer or WDV - HELD THAT:- Clause (iv) and (v) of section 47 tenders certain Transfers between Holding and Subsidiary Companies as not amounting to Transfer u/s. 2(47) wherein Capital Gain is not attracted on such transactions, section 47A(1) prescribe certain conditions on which the transactions shall not be considered as Transfer and if such conditions are not complied with, Capital Gain gets levied u.s. 45. If the Assets transacted between the Holding and Subsidiary Companies fall under prescribed conditions, then the exemption granted shall stand withdrawn and the transaction shall be chargeable to Capital Gain Tax in the previous year in which the original Transfer between the group Companies took place. Further, Section 49(3) of the Act provides, where the capital gain arising from the transfer of a capital asset referred to in clause (iv) or, as the case may be, clause (v) of section 47 is deemed to be income chargeable under the head Capital gains by virtue of the provisions contained in section 47A, the cost of acquisition of such asset to the transferee company shall be the cost for which such asset was acquired by it. It is admitted fact that the consideration of acquisition of healthcare business was discharged by the Assessee through issue of its equity shares in favor of the MIL. The Assessee company had later allotted shares of S G Investments and Hamlet Investments on 28.11.2003, thereby ceasing to be wholly owned subsidiary of MIL. In view of the this changed of status, by virtue of Section 47A, MIL offered the capital gains u/s. 47(iv) of the Act. Therefore, strictly speaking the provision of section 49(3) of the Act became applicable and the cost of acquisition of the Assessee was to be construed to be the cost, for which assets were acquired by Assessee. Since, it was a slump sale, the Assessee in its wisdom, was right to get the assets revalued and thereafter claim depreciation upon it. CIT(A) has corrected this error committed by the Ld. AO. At the same time the tribunal appreciates the distinction brought on record by the Ld. Sr. Counsel for the Assessee, with regard to judgment of Hon'ble Delhi High Court in Dalmia Ceramics Industries Ltd. [ 2004 (10) TMI 72 - DELHI HIGH COURT] - Case, on the fact of the case. Thus, the tribunal is inclined to dismiss the ground of appeal raised in the present appeals in regard to this controversy Disallowance of management consultancy fee on ad hoc basis - HELD THAT:- AO has himself allowed 50% of the expenses. To disallow 50% of total expenses on ad hoc basis mere use of discretion cannot be sustained. Assessment order does not show that any subjective analysis of the matter was done but merely relaying the special audit report, ad hoc disallowance was made. Even if special audit report referred in para 2 of the assessment order is considered same only mentioned that the services of Max India Ltd. were not related to the business of the Assessee alone but also to the subsidiary of the Assessee, Max Medical Services Ltd. (MMS). However, there is no iota of evidence on record to suggest the expenses of the Assessee relates to any extent to MMS. Thus, there is no error in the finding arrived by the Ld. CIT(A). Disallowances of preoperative expenditure - AO has disallowed deduction holding that there is no provision in the act to provide for deduction for allowing revenue expenditure for purchase pending capitalization - CIT-A deleted the addition - HELD THAT:- It can be appreciated that there is no dispute that expenditure incurred are revenue in nature. CIT(A) has rightly observed that Ld. AO has not doubted that expenditure were incurred for the healthcare business of the Assessee. Mere fact that expenditure were debited to the profit and loss account but were shown in balance sheet as preoperative expenditure pending capitalization cannot change the nature of expenses which was incurred wholly and exclusively for the expansion of the existing healthcare business, as acquired from MIL in the preceding year. Thus, the finding of the Ld. CIT(A) require no interference. Disallowance u/s. 14A read with Rule 8D - HELD THAT:- As the admitted state of affairs is that there was no exempt income during the relevant assessment years and based upon that the Ld. CIT(A) has deleted the addition. So same does not require any interference in the light of now settled proposition of law. Disallowances of professional fees etc. for obtaining loan from International Finance Corporation or Asian Development Bank - HELD THAT:- As observed that there is no dispute of the fact that the Assessee was in the course of expansion of business activity. Amount spent on appraisal of projects to check feasibility of granting loan does not bring into existence any new capital asset and thus cannot be treated as capital expenses. The Ld. CIT(A) has rightly deleted the addition made in that regard.

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• 2022 (7) TMI 592
  Unexplained cash Deposits - persons who had given the money to the Assessee to book the flats and only because the confirmations were not received from respective builders they were disallowed - HELD THAT:- Where the Assessee claims to be inter-mediatory between the investors and the builders and some part of the admitted payments made by these investors were confirmed, then remaining amounts not confirmed by builder, can be explained, by assessee, if these unconfirmed amounts totaling 11.01,371, were deposited by way of cheques to the respective builders M/s. Gaursons Hi-Tech Infrastructure Pvt. Ltd and Supertech Ltd failed to confirm. Thus, it will be appropriate to allow this ground with a direction to the ld CIT(A) to give opportunity to the Assessee to establish that amount paid to these two builders was by way of cheques or other banking mode and if assessee succeeds to establish the fact, the remaining addition of Rs. 11,01,317/- as sustained by the ld CIT(A) shall stand deleted. Enhancement of income - Assessee argued that addition has been made without giving any opportunity of hearing - HELD THAT:- DR could not controvert this arguments. In the light of the aforesaid irregularity and violation of mandate of law, the issue is restored to the files of Ld. CIT(A) to give opportunity of hearing to the Assessee. Disallowance of 10% of total expenses - HELD THAT:- As based on the business activity carried on by the Assessee the ld CIT(A) had upheld disallowance of 10% of total expenses on adhoc basis. The same being without any reason to distinguish how remaining 90% is allowed, the same cannot be sustained. Hence, this ground is decided in favour of the Assessee.

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• 2022 (7) TMI 591
  Disallowance u/s 14A r.w.r. 8D - CIT-A restricted the addition - HELD THAT:- As observed that apart from the investment of Rs. 5,95,53,892/- in shares, the assessee being a share broker had certain shares in stock on which dividend income of Rs. 87,971/- was received during the year. The Ld. CIT(A) restricted the disallowance u/s. 14A to Rs. 22,721/- being 0.5% of average holding of shares as stock in-trade of Rs. 45,44,163/-. In doing so, the Ld. CIT(A) relied on numerous precedents mentioned in para 5.1d of his order including the judgment in ACB India Ltd. vs. ACIT [ 2015 (4) TMI 224 - DELHI HIGH COURT] . We have not found any flaw in the finding of the Ld. CIT(A) which is backed by the judgment (supra) of the jurisdictional High Court. This ground is therefore rejected. Addition under the head 'Income from other sources' - While making the impugned addition the Ld. AO observed that it seems that the shares pledged by the assessee company with bank for obtaining working capital facilities were their own shares - Addition deleted by the Ld. CIT(A) - HELD THAT:- As the value of shares is an unexplained income of the assessee . It is obvious that the addition made by the Ld. AO was not based on any sound legal foundations but on conjecture and surmises. The Ld. CIT(A) quoted extensively from Circular No. 395 of NSE dated 07.04.2004 which allows the brokers to provide margin trading facility to their clients. For this purpose a broker may use his own funds or borrow from scheduled commercial bank and/or NBFCs, regulated by Reserve Bank of India. CIT(A), therefore came to the conclusion that the assessee pledged shares of the clients with banks for obtaining bank finance in order to meet the requirement of depositing margin money by each of the clients as per the regulation of SEBI. We concur with the view of the CIT(A) and hold that the Ld. AO was not at all justified in taking value of shares pledged as security for taking loans from the banks as undisclosed investment of the assessee. The impugned addition has rightly been deleted by the Ld. CIT(A). We, accordingly reject this ground No. 2 of the Revenue. Disallowance of directors' remuneration - According to the Ld. AO the above remuneration paid to the directors was not in accordance with provisions of section 197 of Companies Act, 2013. He therefore calculated allowable remuneration which worked out to Rs. 6,04,560/- and disallowed excess remuneration - CIT-A deleted the addition - HELD THAT:- We observe that the Ld. CIT(A) has taken note of the fact that the assessee company is a nongovernment public limited company not listed in the Stock market (shares of the assessee company are not traded). It is because of this reason that the provisions of the Companies Act, 1956/2013 do not apply to the case of the assessee company. We agree with the findings of the Ld. CIT(A) and hold that he has rightly deleted the impugned disallowance. Accordingly ground No. 3 of the Revenue is rejected. Disallowance of lead charges - AR submitted that the assessee in order to develop its clientele had entered into agreement with certain persons who were introducing new clients and had been sharing brokerage income with them - HELD THAT:- On consideration of the rival submissions, we are of the opinion that the disallowance made by the Ld. AO does not rest on sound footing as despite requisite details filed by the assesses before him, he made the impugned disallowance which is not sustainable. Agreeing with the findings of the Ld. CIT(A) which is backed by the judgment of the Hon'ble Supreme Court in SA Builders Ltd. [ 2006 (12) TMI 82 - SUPREME COURT] we reject ground No. 4 of the Revenue as well.

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• 2022 (7) TMI 590
  Undisclosed turnover - taxability of commission income - Rejection of books of accounts - NP determination - assessee has failed to furnish party ledgers and the details of the persons to whom cash payments were made. Hence, the AO by rejecting the books of accounts, proceeded to determine the profit @ 2% on the total turnover - whether the assessee be treated as kachha arahtias or pacca arahtias and whether the commission income or the total purchases be treated as the turnover of the assessee? - HELD THAT:- Since, it is a primary question to determine the taxability of commission income or otherwise, it needs to be established what is the relation between the Allana Group and the assessee, it needs to be examined what is the margin allowed by the Allana Group to the assessee, the leverage the assessee has in payment made to the shepherds, the nature of relationship of the principle-agent between the assessee and the Allana Group, how the monies have been transferred from the Allana Group to the assessee such as withdrawals of cash of cash receipts and also the cash payments in relation to provisions of Section 44AB and 40A. Hence, in the interest of justice to both the parties to deem it fit to remand the matter back to the file of the AO to examine and determine the real turnover of the assessee. Needless to say that the AO shall afford an opportunity being heard to the assessee and the assessee shall abide by the requirements and the details called for by the revenue authorities.appeal of the assessee is allowed for statistical purposes.

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• 2022 (7) TMI 589
  Nature of expenditure - cost of Employees/Options Plans (ESOP) pertaining to the prior period - revenue or capital expenditure - HELD THAT:- As issue raised in this case by the assessee as to allowability of ESOP cost being in the nature of Revenue expenditure has already been decided by the Special Bench of Tribunal in case of Biocon Ltd. [ 2013 (8) TMI 629 - ITAT BANGALORE] - The Co-ordinate Bench of Tribunal also in case of Goldman Sachs (I) Securities Pvt. Ltd. ( 2015 (12) TMI 966 - ITAT MUMBAI] decided the issue in favour of the assessee by holding that discount on issue of ESOP is allowable as deduction under the head Profits Gains of Business or Profession . So the expenditure claimed by the assessee on account of ESOP under section 37(1) of the Act is allowable. So, the impugned order passed by ld. CIT(A) directing the AO to delete the disallowance. Appeal of assessee allowed.

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• 2022 (7) TMI 588
  Penalty u/s 271C - payment towards EDC charges to DGTCP Haryana through HUDA without deduction of TDS - non deduction of tax at source as per provisions of Chapter XVII-B towards amount paid as External Development Charges (EDC) to Directorate of Town and Country Planning, Haryana (Haryana Government) (DGTCP) through banking channel favouring Haryana Urban Development Authority (HUDA) - HELD THAT:- As relying on own case for A.Y. 2014-15 [ 2022 (7) TMI 534 - ITAT DELHI] . we hold that imposition of penalty under Section 271C of the Act is not justified in view of the finding of the Co-ordinate Bench that the assessee has not committed any violation of provision of Chapter XVII B of the Act by making payment towards EDC charges to DGTCP Haryana through HUDA without deduction of TDS. - Decided in favour of assessee.

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• 2022 (7) TMI 587
  Allowability of non-compete fee paid in terms of the consultancy agreement entered by the appellant company - AO had doubted the sum and substance transactions and held that the payment was made as part and parcel of purchase of shares of the appellant company - AO was of the opinion that this non-compete fee was paid as part of obligation stipulated in the agreement to purchase of shares of the appellant company - HELD THAT:- As the case of the Assessing Officer appears to be that the non-compete consideration is nothing but a part of the consideration payable for acquisition of shares of the appellant company and, therefore, any consideration paid for acquisition of shares cannot be allowed as revenue deduction while computing the business profits as taxable. This finding made by the Assessing Officer remains uncontroverted by leading necessary evidence on record. Further, admittedly, the expenditure was incurred in terms of the agreement entered between Shri Ajay Pitre and the appellant company on 09.04.2013. Therefore, in terms of the said agreement, the liability had clearly crystallized during the financial year 2013-14 relevant to the assessment year 2014-15 and had not incurred during the assessment year 2017-18. Thus, the assessee company had also failed to satisfy the conditions precedent to claim as revenue expenditure, as the expenditure was incurred during the previous year relevant to the assessment year under consideration, therefore, the claim made by the assessee cannot be allowed as deduction for the reasons stated above. Accordingly, the grounds of appeal raised by the assessee stands dismissed.

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• 2022 (7) TMI 586
  Addition u/s 68 on accommodation entry of loan and addition u/s 69C on Commission - information from the Investigation Wing was that there was a search/survey action conducted in the premises of M/s Bhanwarlal Jain Group from which it was evident that they were involved in providing in accommodation entry to beneficiary companies by providing cheque in lieu of cash and the assessee company had availed unsecured loan from few companies - CIT-A deleted the addition as opined that the AO has made the additions of entire loan merely on the basis of general statement / information - HELD THAT:- CIT(A) took note of the fact that there were no specific findings by the AO on alleged involvement of the assessee in such accommodation transactions other than the general statement recorded during the search of Shri. Banwarlal Jain which has been retracted . CIT(A) further noted that during the remand proceedings before the AO, the assessee had filed Affidavit in respect of loan given and received back, ledger account, Income tax returns and Confirmation given by all the lenders to the assessee. CIT(A) notes that the AO could not find any fault/infirmity in respect of the said relevant evidences on the issue and has simply ignored the same by merely relying on the general statement. CIT(A) has found that AO has not carried out any investigation to prove that the assessee has indulged in taking accommodation entry from the aforesaid lenders. CIT(A) also took note that even during the search the cash trail has not been identified to bring on record that the assessee had given cash in lieu of the purported loan/accommodation transaction by exposing that the cash given by assessee was deposited in some bank account which was routed to the entities/lenders which gave loans to the assessee. On the aforesaid finding of relevant facts of the CIT(A), he gave relief to the assessee. As before us, the revenue could not point out any error in the finding of fact discussed (supra). In the light of the uncontroverted finding of facts by the CIT(A), according to us, the assessee had discharged the onus to prove the loan transaction which could not be rebutted by the AO. Based only on the retracted general statement of Shri Bhanwarlal Jain, without any incriminating oral testimony against the assessee on this issue of loan, and in the light of the supporting evidence of the loan given by the assessee (which has been repaid interest income taxed in the hands of the lenders) it would be unsafe to mulct any addition in the hands of the assessee. So the impugned action of the Ld. CIT(A) is confirmed. - Decided against revenue.

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• 2022 (7) TMI 585
  Conversion of partnership into a private limited company - Depreciation on the value of the building as revalued prior to conversion of the erstwhile partnership firm into a private limited company - asset was transferred by the erstwhile partnership firm to the private limited company i.e., the Assessee on it s becoming a private limited company not taxable as capital gain u/s 47(xiii) - HELD THAT:- On almost identical facts, the Hon ble Karnataka High Court held that the Assessee is entitled to depreciation on enhanced cost consequent to revaluation prior to conversion of the partnership firm into a private limited company, in the case of Padmini Products Pvt. Ltd. Vs. DCIT [ 2020 (10) TMI 424 - KARNATAKA HIGH COURT] - As per section 47(xiii) transfer of a capital asset or intangible asset by a firm to a company because of succession of the firm by a company in the business carried on by the firm, shall not be regarded as transfer on satisfaction of certain conditions. The Court first found that intangible asset of the Assessee intangible assets, were transferred to the taxpayer for a valuable consideration. The Court found that authorities had neither questioned the valuation of the intangible assets nor did they doubt the genuineness of the transactions. Since the Assessee had succeeded the business of the firm, which had trademarks registered in its name and therefore, was entitled for depreciation. The Court held that the prerequisite for invoking explanation 3 to Section 43(1) of the ITA was that the AO had to establish that the main purpose of the transfer of such asset was to reduce the income-tax liability by claiming extra depreciation on enhanced cost. The Court held that the AO had not recorded any finding in this regard. Accordingly, the Court held that the Assessee was entited to claim depreciation on the intangible assets. Therefore where a partnership firm revalues its intangibles (being eligible for depreciation) prior to succession into a company, the company is entitled to depreciation on such assets as per the revalued figures. We are of the view that since neither the AO nor the CIT(A) had the benefit of the aforesaid decision of the Hon ble High Court, we deem it fit and proper to direct the AO to examine the issue afresh in the light of the aforesaid decision after affording the Assessee opportunity of being heard. We therefore allow these appeals for statistical purpose.

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• Customs

• 2022 (7) TMI 584
  Illegal detention of imported goods - waiver of the dammurage charges - Dry Dates - freely importable goods or not - seeking release and handover the physical possession of the goods to petitioner - It is the case of the petitioner that the imported goods were detained without passing any order of detention or without issuance of any seizure memo in terms of Section 110 of the Customs Act, 1962, which is the only enabling Section to detain the goods imported by the petitioner - HELD THAT:- Since the goods were already detained for more than one month and the free days as provided by the respondent No.4 were restricted to only 14 days from the date of filing of the Bills of Entries, the petitioner having requested the respondent Nos.1 and 2 to issue Detention Memos in terms of Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulation, 2009 as well as Regulation 10 of the Sea Cargo Manifest Regulation, 2018. The respondent No.2 vide letter dated 25.03.2022 have issued Detention Memo under Sea Cargo Manifest Regulations, 2018, wherein it has been directed that the Shipping Lines shall not charge Container Demmurge Charges for the period of Detention. The order passed by the Customs Authority dated 25th March, 2022 is binding upon the respondent Nos.3 to 6 and therefore, respondent Nos.3 to 6 are required to implement the order dated 25th March, 2022 passed by the Customs Authorities for waiver of the dammurage charges under Regulation 10(1)(l) of the SCMTR - without going into further details and merits of the case, the respondent Nos.3 to 6 are hereby directed to release the goods which are under their custody and not under the detention of the Customs Authorities by implementing the order dated 25th March, 2022 for waiver of the dammurage charges under Regulation 10(1)(l) of the SCMTR. Such exercise shall be completed within two weeks from the date of receipt of this order. Petition disposed off.

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• Corporate Laws

• 2022 (7) TMI 583
  Seeking grant of Bail - acts of misappropriation of huge sums of money - Section 212(6) of Companies Act - HELD THAT:- Since the applicants have already retired and similarly situated persons have already been granted bail, especially, the main accused Nitin Johri and Neeraj Singhal, therefore, the applicants also need to be enlarged on bail. As regards the legal embargo of Section 212(6), Sub-section-(i) has duly been complied with, as the Public Prosecutor (Ld. CGSC) has been given a chance to oppose the bail applications. The Applicants are not guilty of the offence of which they are charged with, and therefore, it is opined, that they are not likely to commit any further offence while on bail. The Applicants are enlarged on bail on the following terms and conditions - Each applicant shall furnish a personal bond with two local sureties in the sum of Rs. 25,000/- each, to the satisfaction of the Trial Court - Application disposed off.

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• Securities / SEBI

• 2022 (7) TMI 582
  Interpretation of Regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 referred to as Takeover Regulations 1997 - increase in shareholding beyond 15% (beyond the open offer) - to yield greater influence over management of the company - Power to levy penalty - HELD THAT:- As the Board as well as the Adjudicating Officer have treated the expression acquirer , for the purpose of Regulation 10, to include a person acting in concert and the combined shareholding were taken into consideration for deciding whether there was a breach of Regulation 10. Where the acquirer , including the person acting in concert , already had shares or voting rights in excess of the prescribed limit, they were not held guilty of violating Regulation 1028. It is important for the regulator to be consistent and predictable. Further regulations must be clear as ambiguous regulations cause confusion and uncertainty. Regularity and predictability, along with certainty, are hallmarks of good regulation and governance. These principles underpin the rule of law , check arbitrariness and are read as the intent of the legislation, which the Courts, if need be, will enforce as a principle of interpretation. The Board is entrusted to preform legislative, executive, investigative and adjudicatory functions. In the context of the present case, it is to be noted that the Board is the draftsman of the legislation having enacted the Takeover Regulations 1997 and hence, their interpretation and understanding of the Regulations is of importance and relevance. In the context of the present case, the Board, nearly five years after the transactions, had issued the show-cause notice and then passed an order taking a view on interpretation of Regulation 10, which was contrary to the view expressed by it in several communications as also orders passed by the adjudicating authority. Past is passed and not present, and by giving retroactive operation without good reason. Regulation 10 of the Takeover Regulations 1997, as interpreted and applied by the Board for over ten years, is sought to be overturned by the Board, thereby, creating penal consequences. This should not be permitted and is hardly acceptable when we apply the principle of good governance and regulation. Thus on the enforcement of Takeover Regulations 2011, it is clear that Regulation 10 will apply on an acquirer who crosses the threshold of 15%, which under the Takeover Regulations 2011, has been increased to 25%. Further, Regulation 10 would apply both when an individual acquirer or an acquirer in concert with others acquires shares or voting rights beyond the threshold level and such an acquirer would have to comply with the applicable regulation. Takeover Regulations 1997 and Takeover Regulations 2011, therefore, postulate different preconditions and thresholds. Reliance placed upon the Takeover Regulatory Advisory Committee Report would show that there was a rethought and re-examination of Regulation 10 pursuant to which Regulation 3(3) was enacted and made a part of the regulatory mechanism under the Takeover Regulations 2011. The use of the word may in Regulation 44 and the wording of Sections 11(1), 11B and 11(2)(h) reflect that the Board has been conferred a discretion, which in turn also means and should be interpreted as imposing a duty, an aspect which we will elucidate in the subsequent paragraphs. Use of the word may over the years is normally construed as permissive and not imperative. The words may or shall by their very etymological foundation denote discretion and mandatory nature of an act respectively. This Court has, therefore, held that the courts should not readily interpret the word may as shall unless such interpretation is necessary to avoid absurdity, inconvenient consequences or as mandated by the intent of the legislature which is gathered from the other parts of the statute. Significantly, in the present case, the investors of the target company have not raised any objection. The impugned order passed by the Whole Time Member does not refer to any market manipulation or fluctuation in share price, which was detrimental to the interests of the investors. It is not the case of the Board that any windfall gains or profits have been made by the respondents on account of violation of Regulation 11(1) of Takeover Regulations 1997. The order passed by the Whole Time Member, in fact, does not take into account the impact of the order on the securities market in case the investors/shareholders in the target company as on 16th June 2007 are given an option to sell their shares on or after 31st December 2012, possibity of distruption on the functioning market place, detrimental impact on the market place/investor confidence, qualitative impact of the retroactive directions on the law s santity predicated on predicibilty and legal stability, as well as undermining of the people s faith and trust on the Board as the protector of law. The directions, therefore, cannot be sustained. There is, as noticed and held below, some merit in the contention of the Board that the Appellate Tribunal could not have imposed penalty under Section 15-H when proceedings under the said Section had not been invoked by the Board and there is no order passed by the adjudicating authority imposing penalty under Section 15-H of the Act. However, the effect of the argument raised by the Board would be that the order passed by the Whole Time Member under Regulation 44 giving directions would be quashed and set aside. The respondents would have, therefore, escaped without having to pay any penalty for violation of Regulation 11(1) of the Takeover Regulations 1997. It is in this factual background we have to decide the present appeals. As noticed above, the respondents have not filed appeals or cross objections challenging the penalty imposed by the Appellate Tribunal for violation of Regulation 11(1) of the Takeover Regulations 1997. Power of the Appellate Tribunal under section 15T of the Act - Board has contended that the Appellate Tribunal, in the exercise of power under Section 15-T and while considering appeals against proceedings under Section 11 and 11B of the Act and Regulation 44 of the Takeover Regulation, 1997, could not have converted the directions of the Board with monetary penalty under Section 15-H - HELD THAT:- In the context of the present appeal, it is to be noted that in the case of Sunil Krishna Khaitan, an order in the form of directions under Regulation 44 of the Takeover Regulations 1997 was issued. It was this order which was made subject matter of challenge before the Appellate Tribunal.Thus we do not accept the contention of the Board that the Appellate Tribunal while exercising appellate power could not have set aside and quashed the directions given in the appeal. At the sametime, in Sunil Krishna Khaitan s case proceedings under Section 15-H for levy of penalty were not initiated and no order of penalty under 15-H was passed by the adjudicating authority. The Appellate Tribunal, therefore, was not hearing an appeal against imposition of penalty under Section 15-H of the Act. Further, an order under Section 15-H of the Act is passed by an adjudicating authority which, while imposing penalty, is required to take into consideration the factors mentioned in Section 15-J. As referred to Regulation 45 which in sub-regulation (6) refers to different types of penalties which can be imposed on a person violating any of the provisions of the Regulations. The Appellate Tribunal does not have the power for the first time to initiate and thereupon, impose penalty for non-compliance of the provisions of the Regulations under Chapter VI-A of the Act while deciding an appeal against directions issued under Regulation 44 of the Takeover Regulations, 1997. That power is vested with the authority specified in the Act or the Regulations. The Appellate Tribunal is an appellate forum and not the authority empowered to initiate penalty proceedings under Section 15-H or suo moto issue directions under Section 11, 11B or 11(4)(d) of the Act. It can uphold or set aside the direction issued, or modify and substitute the direction issued under Regulation 44 of the Takeover Regulations 1997 read with Sections 11, 11B and 11(4)(d) of the Act. Similarly, Appellate Tribunal can uphold, set aside, modify and even substitute the order of penalty under Chapter VI-A of the Act. The power to initiate and levy penalty in terms of Section 15-I is vested with an officer to be appointed by the Board, not below the rank of Divisional Commissioner, to act as an adjudicating officer. The adjudicating officer is required to hold an inquiry in the prescribed manner after giving the person a reasonable opportunity of being heard for the purpose of imposing any penalty. Powers are vested with the adjudicating officer to summon and enforce attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document. The Appellate Tribunal in the case of Sunil Krishna Khaitan, could not have substituted the penalty imposed by the Board under Regulation 44 with that of penalty under Section 15-H. An appropriate view, in our opinion, would be that when the Appellate Tribunal holds that the order passed by the Whole Time member on violation of Regulations 10, 11 and 12 is sustainable, but the directions given in the order under Regulation 44 are not sustainable, it should leave it open to the Board to initiate proceedings and pass an order under Chapter VI-A of the Act. As held above, in the absence of any cross-appeal or cross-objection by the respondent in Sunil Krishna Khaitan s case we are not interfering with the order imposing penalty of Rs.25,00,000/- for the violation of Regulation 11(1) of the Takeover Regulations 1997. The said direction has attained finality. At the same time, we are inclined to direct that the Board would give quietus to the matter and should not initiate proceedings under Chapter VI-A of the Act. Civil Appeals preferred by the Board are dismissed with the clarification as to the power of the Appellate Tribunal under Section 15-T of Chapter VI-A of the Act, which is confined to examination of correctness and legality of the order under challenge.

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• Insolvency & Bankruptcy

• 2022 (7) TMI 581
  Refusal to stay the proceedings initiated by the Respondent, Axis Bank Limited against the Appellant - solvent companies, temporarily defaulting in repayment of its financial debts - initiation of the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC - HELD THAT:- From a perusal of the application filed by the Respondent Financial Creditor under Section 7(2) of the IBC in the statutory form, a copy whereof is included in the Paper Book, it is apparent that the Respondent Financial Creditor filed the application in the NCLT for initiation of CIRP against the Appellant in its individual capacity and not as lead bank on behalf of the other creditors. The Respondent Financial Creditor claimed that a total amount of Rs.553,27,99,322.78 was due from the Appellant Corporate Debtor to the Respondent Financial Creditor, of which Rs.42,83,45,538.32 was on account of the interest and further Rs.11,21,68,673.81 towards penal interest. The principal outstanding amount was Rs.499,22,85,110.65. When an application is filed under Section 7(2) of the IBC, the Adjudicating Authority (NCLT) is required to ascertain the existence of a default from the records of the information utility or any other evidence furnished by the financial creditor under sub-section (3) of Section 7 of the IBC, within 14 days of the date of receipt of the application. The Appellate Authority (NCLAT) erred in holding that the Adjudicating Authority (NCLT) was only required to see whether there had been a debt and the Corporate Debtor had defaulted in making repayment of the debt, and that these two aspects, if satisfied, would trigger the CIRP. The existence of a financial debt and default in payment thereof only gave the financial creditor the right to apply for initiation of CIRP. The Adjudicating Authority (NCLT) was require to apply its mind to relevant factors including the feasibility of initiation of CIRP, against an electricity generating company operated under statutory control, the impact of MERC s appeal, pending in this Court, order of APTEL referred to above and the over all financial health and viability of the Corporate Debtor under its existing management. It is well settled that the first and foremost principle of interpretation of a statute is the rule of literal interpretation, as held by this Court in LALITA KUMARI VERSUS GOVT. OF UP. ORS. [ 2013 (11) TMI 1520 - SUPREME COURT ] If Section 7(5)(a) of the IBC is construed literally the provision must be held to confer a discretion on the Adjudicating Authority (NCLT). Section 9 prescribes the mode and manner by which an Operational Creditor can make an application for initiation of CIRP. After expiry of ten days from the date of delivery of the notice or invoice demanding payment, if the operational creditor does not receive payment from the Corporate Debtor or notice of dispute, the Operational Creditor may file an application before the Adjudicating Authority (NCLT) for initiation of CIRP - The Legislature has consciously differentiated between Financial Creditors and Operational Creditors, as there is an innate difference between Financial Creditors, in the business of investment and financing, and Operational Creditors in the business of supply of goods and services. Financial credit is usually secured and of much longer duration. Such credits, which are often long term credits, on which the operation of the Corporate Debtor depends, cannot be equated to operational debts which are usually unsecured, of a shorter duration and of lesser amount. The title Insolvency and Bankruptcy Code makes it amply clear that the statute deals with and/or tackles insolvency and bankruptcy. It is certainly not the object of the IBC to penalize solvent companies, temporarily defaulting in repayment of its financial debts, by initiation of CIRP. Section 7(5)(a) of the IBC, therefore, confers discretionary power on the Adjudicating Authority (NCLT) to admit an application of a Financial Creditor under Section 7 of the IBC for initiation of CIRP - The Adjudicating Authority (NCLT) failed to appreciate that the question of time bound initiation and completion of CIRP could only arise if the companies were bankrupt or insolvent and not otherwise. Moreover the timeline starts ticking only from the date of admission of the application for initiation of CIRP and not from the date of filing the same. The Adjudicating Authority (NCLT) as also the Appellate Tribunal (NCLAT) fell in error in holding that once it was found that a debt existed and a Corporate Debtor was in default in payment of the debt there would be no option to the Adjudicating Authority (NCLT) but to admit the petition under Section 7 of the IBC - Appeal allowed.

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• 2022 (7) TMI 580
  CIRP - validity of direction to restore the electricity supply to the respondent no. 1 herein (writ petitioner) only on the reconnection charges without insisting upon deposit of its previous claims or past dues of electricity and other charges which had resulted into disconnection - resolution plan already approved - in the resolution plan, the relief relating to grant of power connection was not allowed - HELD THAT:- Hon ble Supreme Court in the matter of Ghanashyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT ] has considered the scope of Section 31(1) of the IBC and has held that once the resolution plan is sanctioned under Section 31(1) of the IBC, the claims provided in the plan will stand frozen and all such claims which are not part of the plan will stand extinguished. In the matter of Committee of Creditors of Essar Steel India Limited [ 2019 (11) TMI 731 - SUPREME COURT ], Hon ble Supreme Court has expressed that a successful resolution application cannot be faced with undecided claim after the resolution plan is accepted as this would amount to a hydra head popping up, leading to the uncertainty of amounts payable by a prospective resolution applicant. It is undisputed before this Court that the claim of the appellant to recover the earlier dues of about Rs. 25 crores as against the respondent no. 1 does not survive. As per the judicial pronouncement noted on the facts of this case, such a claim extinguishes on approval of resolution plan. Section 43 of the Electricity Act, 2003 casts a duty upon the distribution licensee to supply electricity on request - Having due regard to the provision of Section 43, it is not open to the appellant to contend that though the earlier dues are not recoverable from the respondent no. 1, yet, the appellant will not supply electricity to the respondent. The counsel for respondent no. 1 has made it clear before this Court that it is ready to pay the fresh connection/reconnection charges to the appellant. The right of the appellant to recover the amount which was due prior to the resolution plan had extinguished on the approval of the resolution plan. The appellant is now required to provide the electricity connection to the respondent in terms of the Electricity Act, 2003, hence, learned Single Judge has not committed any error in allowing the writ petition and issuing requisite direction in this regard - Appeal dismissed.

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• 2022 (7) TMI 579
  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:- It is observed that the so-called debit note issued by the corporate debtor vide e-mail dated 22.5.2018 which is attached at page 182 of the appeal paperbook, does not contain any particulars regarding the date of issue, PAN, GSTIN, UIN of the corporate debtor nor it is signed by any representative of the corporate debtor. The respondent has also not presented any document or brief in support of the fact that the said debit note was actually issued for return of defective goods and that the defective goods were actually returned to the operational creditor - It is found that there is no communication from the corporate debtor regarding any defect or quality of the goods supplied sent to the operational creditor nor there is any evidence of the defective goods being returned to the operational creditor after raising a demur or protest about its quality. It can thus be concluded that there is no material on record to suggest that were not returned for any defect in quality and it was only 2 years later in 2018 that the purported debit note was raised - it does not appear to be a debit note which inspires confidence and which can be taken to indicate pre-existence of dispute regarding the quality of supplied goods. Moreover the three emails sent on dates 2.7.2018, 5.9.2015 and 5.12.2018 are actually internal emails of the corporate debtor and not sent to the operational creditor raising any dispute about the quality of goods supplied by the operational creditor. The Hon ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] held that the dispute should actually exist, and it should not be spurious, hypothetical or illusory, for the rejection of the application on the basis of pre-existing dispute - In this case, the dispute is spurious, fabricated and hypothetical. Therefore, the conclusion of the Adjudicating Authority is that the dispute existed before the issue of demand notice under section 8 and thereafter section 7 application is erroneous. Since the section 9 application was rejected only on the ground of pre-existing dispute , the application is admitted for initiation of Corporate Insolvency Resolution Process against the corporate debtor - The matter is sent to the Adjudicating Authority for issuing the necessary orders consequent to admission of section 9 application within 15 days of this judgment.

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• 2022 (7) TMI 578
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Section 10A of the IBC 2016 - HELD THAT:- This Tribunal has heard the Ld. Counsels appearing for the respective parties at the stage of Admission and after a careful consideration of the arguments advanced on either side, this Tribunal is of the considered view that the Appellant/Corporate debtor is not entitled to get an interim relief of stay of the impugned order passed by the Adjudicating Authority. However, since the contentions advanced on either side require a detailed rumination in the hands of this Appellate Tribunal, this Tribunal is per forced to direct the Ld. Counsel for the R-1/Financial Creditor to take notice and to file Reply/Response (on both modes) before the office of the Registry within two weeks from today, and to serve the copy to the other side without fail. The Ld. Counsel for the Appellant is required to serve the Appeal Paper Book(s) to the Ld. Counsel for the R-1/Financial Creditor through email within two days from today (if not done already). The email address shall be furnished by the Ld. Counsel for the Respondent No.1 to the Ld. Counsel for the Appellant to do the needful in this regard. This Tribunal directs the Appellant to file Rejoinder within one week thereafter, after the receipt of the Reply/Response, Status report of Respondent No.2/IRP before the Office of the Registry (on both modes) and to serve a copy to the other side - The Registry is directed to list the matter on 1st August, 2022.

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• 2022 (7) TMI 577
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - unregistered partnership firm can file for CIRP against a Corporate Debtor or not? - existence of debt and dispute or not. Whether an application filed by an unregistered partnership firm is maintainable or not? - Section 69 of the Partnership Act,1932 - HELD THAT:- The ban on unregistered partnership firm in filing other proceeding is only when the suit in relation to such proceeding is pending before any Court. It seems that there is no pending suit before any court of law relating to the debt. Therefore, in the absence of any pending suit before any Court of law, Section 69(3) of the Partnership Act, 1932 will not come to the aid of the Corporate Debtor in the present case. Pre-existing dispute - HELD THAT:- The Corporate debtor has already raised the dispute in a meeting held on 11.11.2017 and the Operational Creditor has sent the demand notice on 14.11.2017. Therefore, the dispute was raised prior to the issuance of Demand Notice and the nature of dispute raised by the Corporate Debtor seems to be genuine. This Bench hereby holds that dispute is in existence between them as on the date of receipt of Section 8 notice by the Corporate Debtor. Petition dismissed.

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• 2022 (7) TMI 576
  Seeking direction to Resolution Professional to accept the claim of reimburse of service tax amount along with interest - seeking direction to Resolution Professional to accept the claim of balance payment of the executed work along with interest - HELD THAT:- In the absence of documents sought by the Resolution Professional, the Resolution Professional is right in saying it was not possible for him to grant any claim that has been rejected. There are no error as such by the Resolution Professional. Application dismissed.

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• 2022 (7) TMI 575
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default surpasses the threshold amount stipulated under section 4(1) of the Code, i.e., Rupees one lakh, at the relevant time. Further, the instant petition is well within the limitation period. The Corporate Debtor has contended that the interest claimed by the Operational Creditor is illegal as it is not mentioned in the purchase order or in the alleged invoices. In this respect, the tax invoice dated 20 February 2018 can be referred to, wherein the provision for interest @ 24% has been mentioned. Further, even if the interest component is excluded from the total claimed amount, the principal amount itself crosses the minimum pecuniary threshold under section 4(1) of the Code. As such, the instant petition is maintainable. The demand notice is in consonance with Rule 5 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016. As such, the Corporate Debtor's contention that the same has not been sent in Form 4 is not maintainable. This Adjudicating Authority is satisfied that the Corporate debtor has defaulted in its payment of dues to the Operational Creditor. Further, demand notice has been served on the Corporate Debtor and affidavit under section 9(3)(b) has been attached to the petition. As such the instant petition is complete in all respects. Application admitted - moratorium declared.

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• 2022 (7) TMI 574
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Financial Creditor has established that the Credit facilities were sanctioned and duly disbursed to the Corporate Debtor and there has been default in repayment of Debt on the part of the Corporate Debtor - the nature of Debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that there is a Default as defined under section 3 (12) of the Code on the part of the Debtor. The two essential qualifications, i.e. existence of debt and default , for admission of a petition under section 7 of the I B Code, have been met in this case. Hon ble Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT ] held that in section 7 of the Petition when the debt and default is proved the Adjudicating Authority bound to admit the Petition. Unlike section 9 where the scope to look into, disputes which is necessary to be considered before admission of the Petition - In view of the above, the facts and present Petition reveals that the Corporate Debtor has admitted the debt and the same is due and payable. 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 - petition admitted - moratorium declared.

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• Central Excise

• 2022 (7) TMI 573
  Demand of Interest - Clearance of certain inputs as such declaring lesser assessable value resulting in short payment of duty than the cenvat credit availed on the said inputs - Rule 3(5) of Cenvat Credit Rules, 2004 - extended period of limitation - HELD THAT:- In the present case undisputedly the appellants have availed the CENVAT credit as was admissible to them on the inputs received by them. However, at the time of clearance of the said inputs as such, they have short paid the amounts required to be paid by them in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. The appellants have short paid the amounts at the time of clearance of the goods. The case of short payment of the amounts at the time of clearance of goods is akin to the case of short payment of duty on the goods of own manufacture when cleared by the appellants. Such cases need to be handled accordingly. It has been held by the Hon ble Apex Court that in the case of short payment of duty at the time of clearance of the goods, the liability to pay interest on the same shall be absolute and there can be no denial of the same - Reference is made to the decision of the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS INTERNATIONAL AUTO LTD. [ 2010 (1) TMI 151 - SUPREME COURT] where it was held that Explanation (2) to sub-section 2(B) of section 11A ibid states that payment by assesees in default by own ascertainment or as ascertained by C.E. officer not exempt from interest chargeable under section 11AB ibid. Interest leviable for loss of revenue on any count. Accrual of price differential duty when paid after clearance, it indicates short payment/ short levy on date of removal hence interest become leviable. Extended period of limitation - HELD THAT:- The appellants were made aware in 2008 about the default in short payment of amount. However, they continued with the practice and have showed a willful intention to not act as per the provisions of Rule 3(5) of the Cenvat Credit Rules. In such situation, invocation of extended period is justified and needs to be upheld. The decision of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] relied upon by the appellants is altogether in different context and has no applicability to the facts of the present case as in the said it was held that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. In favour of assessee.

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• 2022 (7) TMI 572
  Recovery of CENVAT Credit alongwith interest and penalty - Wrongful availment of CENVAT credit - invalid documents under Rule 16(1) of Central Excise Rules, 2002 - transformers originally cleared by the appellant on payment of duty and subsequently received back for repairs etc. - to be treated as inputs or not - HELD THAT:- The amounts so paid by the Appellant in terms of Rule 16 (2) were undisputedly paid by the appellant at the time of removal of goods from their factory and there is no delay in making the payment from the due date - In the present case there is no delay in payments that were required to be made as per rule 16 (2), and if there was no delay in making the payments of the amount due, the demand for interest cannot be sustained for what so ever reason. Reliance placed in the case of HITESH PLASTIC PVT. LTD. VERSUS COMMISSIONER OF C. EX. CUS., VAPI [ 2009 (3) TMI 337 - CESTAT, AHMEDABAD] where it was held that Admittedly, the goods stand returned in the present case and the appellant would be entitled to the credit, in terms of the said rules. Accordingly, I set aside the impugned order and allow the appeal with consequential relief to the appellants. The view expressed in the decisions also supports the stand of the appellant that they could have followed the procedure as prescribed by Rule 16 (1) on the basis of triplicate copy of their own invoices, the view as expressed by the Commissioner in the impugned order. Appeal allowed - decided in favor of appellant.

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• 2022 (7) TMI 567
  Seeking refund of service tax paid on ocean freight - case of appellant is that the appellant is entitled for Cenvat credit of service tax paid on ocean freight and accordingly, they are entitled cash refund under Section 142(3) read with Section 11B - HELD THAT:- Both the lower authorities passed the order on the ground that the refund which were claimed than cash refund of Cenvat credit of service tax paid on ocean freight in terms of Section 142(3) read with Section 11B is not admissible. As regard the said issue this Tribunal s Division Bench has referred the matter to the Larger Bench in the case of M/S. BOSCH ELECTRICAL DRIVE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF G.S.T. AND CENTRAL EXCISE, CHENNAI [ 2021 (10) TMI 1345 - CESTAT CHENNAI] - No order is passed on cash refund of Cenvat credit governed under Section 142 (3) of CGST Act, 2017. Since the appellant have made claim on the basis of Hon ble Gujarat High Court judgment in the case of SAL Steels Limited [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT ] that levy of service tax itself is illegal. Their refund claim of service tax paid by them is not on this ground. Since now appellant argued that they are entitled to refund of service tax paid on ocean freight there will not have any effect on reference made by the Division Bench. Further this issue was not examined by the lower authorities about the levy of service tax on ocean freight and also the judgment of Hon ble Gujarat High Court was not available before the lower authorities. Matter remanded to the Adjudicating Authority to decide the case afresh under Section 11B that whether the service tax paid by the appellant on ocean freight is legal and correct or otherwise - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2022 (7) TMI 571
  Jurisdiction - power of authority of the Special Commissioner of Revenue, West Bengal to issue notice to the petitioner dealer, proposing to review and / or revise the final Audit cum Assessment order dated 7.2.2017 which was subsequently reviewed on 7.7.2017 by exercising its suo motu powers - HELD THAT:- This Court is of the view that various factual as well as legal issues are to be decided. Notice dated March 22, 2022 was issued on the ground of short levy of tax. Accordingly, this Court is of the considered view that the interest of justice will be subserved if liberty is granted to the petitioner to approach the authority concerned by filing an objection to the said notice raising therein all points both factual as well as legal including the issue of jurisdiction of the third respondent to issue such notice. Two weeks time is granted to the petitioner to file objection to the proposed order contained in the notice dated March 22, 2022 raising all points legal, factual and jurisdictional issue. If such objection is filed within the aforesaid time limit, the Special Commissioner of Revenue, West Bengal being the third respondent is directed to conclude the said proceeding initiated by issuance of the notice dated March 22, 2022 after giving an opportunity of hearing to the petitioner or his authorized representative and by passing a reasoned order which shall be communicated to the petitioner.

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• 2022 (7) TMI 570
  Principles of natural justice - percentage of yield of rice bran oil not decided from the evidence available on record - no scope for further enquiry - requirement to remand the case to the assessing authority especially when there is no suppression of sale on the part of the dealer-assessee - HELD THAT:- In the present case, the Court finds that the Tribunal noted two things: that there was no logic or materials to support the decision of the ACST to fix the yield percentage of price bran oil for the Petitioner at 20% for both the periods i.e. 2005-06 and the current year. Equally the Tribunal also found that the Petitioner s claim that the yield was 16.10% and 14.44% for the two periods respectively was also not supported by any logic or scientific materials. Although, counsel for the Petitioner contends that the Petitioner did place on record all the materials in his possession, it is evident that the Department was had not placed any materials on record in support of its contention. In the circumstances, requiring the ACST to undertake the exercise afresh after permitting the materials in support of either case to come on record appears to be the correct course of action for the Tribunal to have adopted - the Court is unable to find any error having been committed by the Tribunal in that regard. The impugned order of the Tribunal is not interfered with. It is clarified that Assessing Officer i.e. ACST will approach the entire issue of afresh uninfluenced by the earlier decision taken by the ACST or observations on merits by the Tribunal. The fresh exercise be completed by the ACST within period of four months from today - the question framed is answered in favour of the Department and against the Assessee - revision petition is disposed off.

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• 2022 (7) TMI 569
  Taxability - trade discount was a permissible deduction from the turnover or not - trade discount is includible in the sale price - whether the Tribunal was justified in holding that First Tax paid goods shall be taxed at more than one point in the same series of sale? - HELD THAT:- It is pointed out that in the earlier returns filed by the Petitioner deduction of trade discount from the gross turnover was claimed and was allowed by the STO. However, the Tribunal has the impugned order concluded that the Petitioner did not disclose the trade discount in the monthly returns and therefore, disallowed it. It was contended on behalf of the Petitioner that even if the trade discount was not specifically mentioned in the definition of sale price it would still be allowable as a deduction. This Court notes that in M/S. CEAT LTD. VERSUS COMNR. OF SALES TAX [ 2019 (8) TMI 1828 - ORISSA HIGH COURT] , a Division Bench of this Court addressed this very issue and allowed an identical plea that trade discount would be deductible from the gross taxable turnover by referring to several decisions including the one delivered by the Andhra Pradesh High Court in Cynamid India Limited v. Commissioner of Sales Taxes [ 2001 (12) TMI 841 - ANDHRA PRADESH HIGH COURT ]. It was further held that as long as revised returns were filed, the claim could not be rejected on the ground that the deduction was not disclosed in the original return. Insisting on the Petitioner paying sale tax on subsequent sales after having paid sales tax at the first point - HELD THAT:- Counsel for the Petitioner relies on the assessment orders passed in the Petitioner s own case for the subsequent period 2004-05 as well as the earlier period 2001-02 and 2002-03 as well as the corresponding appellate orders where it has been held that the Petitioner would not be liable to pay sales tax on the subsequent sales even if the sale price is higher than the purchase price at the first point of sale. The questions framed are answered in the negative i.e. in favour of the Petitioner Assessee and against the Department - the revision petition is disposed of.

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• Indian Laws

• 2022 (7) TMI 568
  Wilful breach of orders - Allegation of wilful, intentional and deliberate disobedience of the directions issued by this Court - non-deposit of shortfall amount so as to maintain a balance of USD 60 million in the Corporation Bank account maintained by Avitel Post Studioz Limited - resisting the present contempt proceedings, namely, the order passed by the learned Single Judge by the High Court by which the respondents were directed to maintain a balance of USD 60 million in their Corporation Bank account is executable - HELD THAT:- It is required to be noted that in the present proceedings it is not the case of noncompliance of the order passed by the learned Single Judge confirmed by this Court alone. There is a further specific direction issued by this Court vide order dated 06.05.2021. Therefore, there is a noncompliance of direction issued by this Court dated 06.05.2021 by which the respondents were directed to deposit the shortfall amount so as to maintain a balance of USD 60 million. That thereafter, a further application for exemption from depositing the shortfall amount pursuant to order dated 06.05.2021 has also been dismissed by this Court. Therefore, thereafter it shall not be open for the respondents to submit that as order dated 22.01.2014 passed by the learned Single Judge is executable, the present contempt proceedings may not be entertained. Taking into consideration the earlier decisions of this Court in the cases of RITA MARKANDEY VERSUS SURJIT SINGH ARORA [ 1996 (9) TMI 641 - SUPREME COURT] and BANK OF BARODA VERSUS SADRUDDIN HASAN DAYA AND ORS. [ 2003 (12) TMI 665 - SUPREME COURT] , it is specifically observed and held by this Court that the petitioner can execute the decree can have no bearing on the contempt committed by the respondents. The respondents guilty for deliberate and wilful disobedience of judgment and order dated 19.08.2020 passed by this Court in Civil Appeal No. 5158/2016 as well as order dated 06.05.2021 passed by this Court in the present petition. The respondents have rendered themselves liable for suitable punishment under the provisions of the Contempt of Courts Act for such deliberate and wilful disobedience - Put up the matter before this Bench on 12.08.2022 for further order on punishment.

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