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TMI Tax Updates - e-Newsletter July 2, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Central Excise CST, VAT & Sales Tax Indian Laws Articles RECOVERY OF TAX DUES VIS-À-VIS CLAIM UNDER IBC – SUPREME COURT IN RUCHI SOYA CASE News ₹1,44,616 crore gross GST Revenue collection for June 2022; increase of 56% year-on-year Repayment of ‘8.08% GS 2022’ - Issue of Press Communique States’ Start-up Ranking 2021 to be declared on 4th July Cess of Rs. 23,250 per tonne imposed on crude; import of crude not to be subject to this cess Notifications Central Excise 11/2022 - dated 30-6-2022 - CE Seeks to amend notification No. 04/2019-Central Excise ( Road and Infrastructure Cess) 10/2022 - dated 30-6-2022 - CE Seeks to prescribe rates of Road and Infrastructure Cess for exports of petrol and diesel 09/2022 - dated 30-6-2022 - CE Seeks to exempt Aviation Turbine Fuel, from the whole of the Special Additional Excise Duty 08/2022 - dated 30-6-2022 - CE Seeks to exempt certain applicable duties on petrol, diesel and ATF cleared for exports 07/2022 - dated 30-6-2022 - CE Seeks to exempt crude produced by a person which is in excess of crude petroleum oil produced by such person during the preceding Financial Year 06/2022 - dated 30-6-2022 - CE Seeks to exempt crude petroleum produced by a person whose annual production of the said goods during the preceding Financial Year was less than two million barrels 05/2022 - dated 30-6-2022 - CE Seeks to amend the eighth schedule to Finance Act 2022 to prescribe Special Additional Excise Duty ON Crude Petroleum and ATF circular and notification 04/2022 - dated 30-6-2022 - CE Exemption to the excisable goods - Effective rates of Special Additional Excise Duty on petrol and diesel 03/2022 - dated 30-6-2022 - CE Seeks to amend notification No. 05/2019-Central Excise ( Special Additional Excise Duty) 02/2022 - dated 30-6-2022 - CE (NT) Seeks to amend Rule 18 and Rule 19 of the Central Excise Rules, 2017 so as to exclude Petrol, Diesel and ATF Customs 37/2022 - dated 30-6-2022 - Cus Seeks to continue the exemption from Integrated Tax and Compensation Cess on goods imported under AA/EPCG/EOU Schemes 36/2022 - dated 30-6-2022 - Cus Seeks to increase BCD rate on Gold imported under TRQ of India-UAE CEPA 35/2022 - dated 30-6-2022 - Cus Seeks to increase the rate applicable under BCD exemption on Gold imported under replenishment scheme 34/2022 - dated 30-6-2022 - Cus Seeks to exempt Gold imports from Social Welfare Surcharge 33/2022 - dated 30-6-2022 - Cus Effective rates of customs duty and IGST for goods imported into India - Customs duty on import of Gold - Seeks to amend Notification No. 50/2017-Customs, dated the 30th June, 2017 32/2022 - dated 30-6-2022 - Cus Seeks to exempt imports of Petroleum Crude and ATF from whole of the additional duty of Customs leviable thereon under sub-section (1) of section 3 of the said Customs Tariff Act, as is equivalent to the Special Additional Excise Duty. 57/2022 - dated 30-6-2022 - Cus (NT) Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2022 56/2022 - dated 30-6-2022 - Cus (NT) Extension of Transitional provisions - Sea Cargo Manifest and Transhipment (First Amendment) Regulations, 2022 55/2022 - dated 30-6-2022 - Cus (NT) Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver DGFT 15/2015-20 - dated 1-7-2022 - FTP Extension in deadlines for submission of applications under MEIS for exports made in the 4 months period, Sept 2020 to Dec 2020 14/2015-20 - dated 30-6-2022 - FTP Amendment in Export Policy of items under HS Codes 27101241, 27101242, 27101243, 27101244, 27101249, 27101941, 27101944 and 27101949 of Chapter 27 of Schedule 2 of the ITC (HS) Export Policy Income Tax 76/2022 - dated 30-6-2022 - IT Corrigendum - Notification No. 71/2022 dated 28th June 2022 75/2022 - dated 30-6-2022 - IT Central Government specifies a token which qualifies to be a virtual digital asset as non-fungible token 74/2022 - dated 30-6-2022 - IT Central Government notifies virtual digital assets which shall be excluded from the definition of virtual digital asset 73/2022 - dated 30-6-2022 - IT Quarterly statement of TDS - virtual digital asset (VDA) - Income-tax (20th Amendment) Rules, 2022 - Amends Rule 31A and inserts Form 26QE Circulars / Instructions / Orders Customs 09/2022 - dated 30-6-2022 Simplified regulatory framework for e-commerce exports of jewellery through Courier mode Companies Law 07/2022 - dated 29-6-2022 Further relaxation in paying additional fees in case of delay in filing Form 11 (Annual Return) by Limited Liability Partnerships up to 15th July, 2022 Highlights / Catch Notes GST Profiteering - allegation is that the benefit of reduction on the ITC not passed on by way of commensurate reduction in the price - The Respondent cannot deny the benefit of tax reduction to his customers and enrich himself at the expense of his buyers as Section 171 provides clear cut methodology and procedure to compute the benefit of tax reduction and the profiteered amount. - The Respondent was legally not required to collect the excess GST and therefore, he has not only violated the provisions of the CGST Act, 2017 but has also acted in contravention of the provisions of Section 171 (1) of the said Act as he has denied the benefit of tax reduction to the ordinary buyers by charging excess GST. - NAPA Visit to Get Source Profiteering - levy of penalty - supply of the products manufactured and sold by the Respondent - it is evident from the narration of facts that Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171(1) of the CGST Act, 2017 and he has thus committed an offence under Section 171(3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section with effect from 01.01.2020 onwards for the amount profiteered. - NAPA Visit to Get Source Income Tax Revenue expenditure or capital expenditure - Allowability of expenses on acquisition of clientele and technical human resource i.e., employees to execute the contract - it is not emerging that the assessee has acquired either complete business i.e., the profit apparatus or any capital asset. In such case, the expenses incurred are to be allowed as revenue and assessee has only amortized these expenses in 5 years and the same are allowable as revenue expenditure u/s.37 of the Act. - AT Visit to Get Source Penalty @ 10% u/s 271AAA - undisclosed income - there was no other undisclosed income to identify with the seized materials/Panchanama, the assessee while filing the return of income pursuant to section 153A - taking note that the amount has been brought to tax by the AO though not shown by the assessee in the Return of Income, the penalty u/s. 271 AAA of the Act cannot be legally sustained. - AT Visit to Get Source Default in payment of TDS - liability to pay interest - when the assessee is considered as in-default u/s. 201(1) - precondition - The obligation to deduct and deposit tax at source is thus with reference to tax deductible, i.e., that liable to be deducted under the provisions of Chapter-XVII of the Act, which provides for a mechanism for a lower (including nil) deduction of tax at source u/s. 197. The fact of the payee company having incurred a loss, so that it was not liable to any tax for the relevant year/s, becomes, therefore, largely irrelevant as far as assessee-payer is concerned. - AT Visit to Get Source Power to CIT(A) to set aside the order and remand back to AO - CIT(A) has only directed the AO to determine the actual distance based on these findings and then accordingly deal with the adjustment to be made. There is clearly a difference between setting aside an issue to the A.O., which power the Ld. CIT(A) does not have as per Section 251 of the Act, and giving directions to the AO. An issue set aside to the AO is left for adjudication to him, while in a case giving directions, the issue is restored to the AO only for acting on the adjudication done by the CIT(A). - AT Visit to Get Source Customs Entitlement for waiver of rent / demurrage payable to the respondents - storage of imported consignments of R22 Refrigerant Gas contained in four containers beyond the stipulated period - restricted goods or not - The petitioner also cannot be burdened with the demurrage liability for the period thereafter as the goods were not allowed to be re-exported despite the above mentioned orders. Therefore, partial waiver up to 19.10.2015 is liable to be sustained. - HC Visit to Get Source Corporate Law Appointment of Additional Director or independent Director - incorrect declaration in the aforesaid Form DIR-12 or not - The subsequent documents along with the resolutions if taken at its face value makes, it is abundantly clear that Mr. Bakshi was appointed as an Additional Director and there was no intention on the part of the petitioners to appoint him as an “Independent Director” nor any attempt was made to project him as “Independent Director”. One single statement that his consent was taken as “Independent Director” cannot be construed that the board of Directors had actually appointed him as “Independent Director” and not as “additional Director” - HC Visit to Get Source Indian Laws Dishonor of Cheque - legally enforceable liability of a non-existent partnership firm - dissolution of partnership firm - obligation upon the partners - The question of applicability of Section 45 of the Indian Partnership Act, 1932, is only a question of law and such a question could be raised at any stage of the case and also in appeal. In fact, the learned Trial Court itself should have considered this aspect of the matter, even though it was not raised by or on behalf of the present appellant because it is the duty of any Court of Law to find out the truth and to that end, examine the applicability of the relevant provisions of the Law to the facts of the particular case which it is called upon to decide. - HC Visit to Get Source Dishonor of Cheque - pre-deposit of quantum of compensation amount - double the cheque amount has been ordered as compensation - Applying the test of deciding the rights of the parties, it has been held that it is only a direction to deposit, subject to the final outcome in the appeal and therefore is only a matter of procedure without finally determining the rights of parties. Applying the test as to whether non-passing of such order or accepting of any plea by the accused or the complainant, whether it would result in culmination of proceedings, the answer is again in the negative - HC Visit to Get Source Central Excise Refund of additional duty on Diesel - Exemption to goods supplied to UN or an International Organisation - in the present case the duty for which the exemption and refund is claimed is not covered by the Notification as the same was imposed under Section 133 of the Finance Act 1999 as amended issue of Section 120 of Finance Bill, 2005. Therefore, the duty which is not mentioned in the Notification cannot be given exemption. - AT Visit to Get Source VAT Validity of pre-assessment notice - Serious allegations have been leveled against the petitioner in the said notice. It is for the petitioner to reply to the same to distance itself from the proposals contained therein, in such proceedings. Proceedings initiated under Section 27(2) of the Tamil Nadu Value Added Tax Act, 2006 cannot be scuttled. - HC Visit to Get Source Classification of goods - Equipment - idler - In the present case, the Petitioner does not appear to have placed on record materials to show what the function of the ‘idler’ is. The STO treated it as “machinery spare” whereas the ACST took the view that components parts and accessories thereof constituted a separate part of the entry and therefore 12% rate in respect of unspecified taxability came into play when it concerned component parts and accessories. While it is true that idler by itself may not be a complete machine, what is exigible to tax is not only the complete machinery but also spare parts and accessories of machines. - HC Visit to Get Source Exemption from Sales Tax - goods sold for defence organization through various dealers - The requirement of Entry 29-B is that the dealer should have sold the goods to Defence Service installations and at the highest to Defence personnel and not to individuals who may or may not have further sold it to Defence personnel or Defence Services installations - HC Visit to Get Source Validity of assessment order - The provision of TNVAT Act, 2016 does not contemplate the appointment of an Arbitrator to look into correctness or otherwise of the revision notices issued for reversing the deemed assessment order. Therefore, there are no merits in the present writ petition. The petitioner should have filed a reply to the revision notices on merits and awaited for final orders. Instead, the petitioner resorted to dilatory tactics with request to appoint a Joint Commissioner. - HC Visit to Get Source Case Laws: GST 2022 (7) TMI 34 Profiteering - allegation is that the benefit of reduction on the ITC not passed on by way of commensurate reduction in the price - contravention of section 171 of CGST Act - penalty - time limitation - methodology in the CGST Act to calculate profiteering - period of investigation - base price discrepancies - claim of benefits like discounts or by way of price reduction post supply of goods to recipients by way of price reduction - increased quantity of grammage on certain SKUs - increase of Customs Duty on certain products - GST already collected needs to be deducted or not - netting off of higher benefits passed in respect of certain SKUs - loss due to reduced fiscal incentive under budgetary support scheme - computation of profiteering for luxury products - refund of profiteered amount if any - absence of any show cause notice (violation of principle of natural Justice) - absence of a Judicial member (Constitution of the authority is unconstitutional or not) - constitutional validity of section 171 of the CGST Act and Rules - Rules 126, 127 and 133 of the CGST Rules suffer from the vice of excessive delegation or not? Whether proceedings are time-barred under the provisions of Rule 133? - HELD THAT:- The time limits prescribed under Rule 133(1) and Rule 129(6) are not mandatory and hence all the contentions of the Respondent on the ground of not observing the time limits are untenable and hence rejected. Whether in absence of any prescribed methodology in the CGST Act to calculate profiteering or the procedure prescribed by Authority, the whole proceedings are arbitrary and liable to be dropped? - HELD THAT:- This Authority under Rule 126 has been empowered to 'determine' Methodology & Procedure and not to 'prescribe' it. Similarly, the facts of the cases relating to the sectors of Fast Moving Consumer Goods (FMCG), restaurant service, construction service and cinema service are completely different from each other and therefore, the mathematical methodology adopted in the case of one sector cannot be applied to the other sector. Moreover, both the above benefits are being given by the Central as well as the State Governments as a special concession out of their tax revenue in the public interest and hence the suppliers are not required to pay them from their own pocket and therefore, they are bound to pass on the above benefits as per the provisions of Section 171 (1) which are abundantly clear, unambiguous, mandatory and legally enforceable. The above provisions also reflect that the true intent behind the above provisions, made by the Central and the State legislatures in their respective GST Acts, is to pass on the above benefits to the common buyers who bear the burden of tax and who are unorganised, voiceless and vulnerable. It is abundantly clear from the above narration of the facts and the law that no elaborate mathematical calculations are required to be prescribed separately for passing on the benefit of tax reduction and computation of the profiteered amount. The Respondent cannot deny the benefit of tax reduction to his customers and enrich himself at the expense of his buyers as Section 171 provides clear cut methodology and procedure to compute the benefit of tax reduction and the profiteered amount. Whether period of investigation has been selected in arbitrary manner? - HELD THAT:- It is absolutely clear from the provisions of Section 171 (1) that “any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.” and therefore, every such person who has not passed on the above benefits is liable to be investigated till he passes on the benefits. Rule 129(2) also specifies that the DGAP shall conduct investigation and collect necessary evidence to determine whether the above benefits have been passed on. Accordingly, investigation has to be carried out till the date the benefit of tax reduction is not passed on by the Respondent which in this case is limited till 31.12.2018 but can be extended till he passes on the benefit. Therefore, there are clear cut provisions under the above Act and the Rules till what period the investigation is to be conducted and it cannot be restricted to a period of 3 months as contended by the Respondent as there is no such provision in the Act or the Rules or any justifiable ground and hence the above claim of the Respondent is not maintainable - the contention of the Respondent regarding arbitrariness of period of investigation is not sustainable and hence is rejected. Whether base price discrepancies have resulted in inflated profiteered amount? - HELD THAT:- The value of the supply does not include any discount which was given before or at the time of the supply if such discount had been duly recorded in the invoice issued in respect of such supply and thus, the GST was chargeable on the actual transaction value after excluding any discount (conditional as well as unconditional) and therefore, actual transaction value has been considered for computation of profiteering. Since, the DGAP has compared the transaction values of a SKU mentioned by the Respondent in his pre and post rate reduction invoices there is no question of comparing the net price of SKU (Gross price net of discounts) prior to reduction of tax with the gross price of SKU post reduction of tax in respect of certain SKUs - the contention of the Respondent regarding incorrect method of determination of profiteered amount due to discrepancies in the base price is unsustainable and is rejected. Whether claim of benefits like discounts or by way of price reduction post supply of goods to recipients by way of price reduction is considerable? - HELD THAT:- In view of the findings of the Authority in respect of the documents/evidences produced by the Respondent in support of his contention that GST rate reduction has been passed on through such trade discounts including credit notes, the Authority holds that such submission of the Respondent is not sustainable and hence is rejected. Whether increased quantity of grammage on certain SKUs can be permitted as commensurate reduction under section 171 (1) of the Act? - HELD THAT:- The Authority do not concur with the contention of the Respondent that increase in grammage would be covered within the ambit of the term commensurate reduction in price of goods and hence the said contention is rejected. Whether increase of Customs Duty on certain products needs to be considered for calculating the profiteered amount? - HELD THAT:- The Authority finds that the Respondent has not been able to provide adequate supportive documents to claim that there has been an impact on the pricing of the product due to any increase in the Customs Duty. Hence, the Authority does not find any merit in this submission of the Respondent. Whether GST already collected needs to be deducted from the profiteered amount? - HELD THAT:- It is informed by the Respondent that the GST collected over and above the higher base price has been duly deposited with the Government and it cannot be alleged to have been profiteered in respect of amount not retained by him. The Authority finds no merit in this submission of the Respondent. The Authority holds that if any registered person has charged any excess tax from any recipient of supply, the statutory provisions under Section 171 of the CGST Act, 2017, would require that such amount be refunded to the eligible recipients. It is the obligation of the Supplier to return/pass on such amount and it is the vested right of the recipient as vested in him by the Statute. In this connection it would be appropriate to mention that the Respondent has not only collected excess base prices from his customers which they were not required to pay due to the reduction in the rate of tax but he has also compelled them to pay additional GST on these excess base prices which they should not have paid. The Respondent has thus defeated the objective of both the Central and the State Governments to provide the benefit of rate reduction to the ordinary customers by sacrificing their tax revenue. The Respondent was legally not required to collect the excess GST and therefore, he has not only violated the provisions of the CGST Act, 2017 but has also acted in contravention of the provisions of Section 171 (1) of the said Act as he has denied the benefit of tax reduction to the ordinary buyers by charging excess GST. Had he not charged the excess GST, the customers would have paid less price while purchasing goods from the Respondent and hence the above amount has rightly been included in the profiteered amount as it denotes the amount of benefit denied by the above Respondent. It would also be appropriate to state here that price includes GST. The profiteered amount can also not be paid from the GST deposited in the account of the Central and the State Governments by the Respondent as the above amount is required to be deposited in the Consumer Welfare Funds (CWFs) as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017 along with the interest. Whether higher benefits passed in respect of certain SKUs, as claimed by Respondent, can be considered and netted of? - HELD THAT:- The Authority finds that the interpretation of DGAP in the matter is correct inasmuch as Section 171 of the CGST Act, 2017 provides that benefit of reduction in tax rate or the ITC has to be passed on to each and every supply individually. This will ensure equity and fairness to all the recipients of such goods and services, where the tax rates have been reduced or the ITC benefit has been made available. If the reduction in rate of tax is not applied uniformly for commensurate reduction in the prices, one recipient would be additionally benefited at the expense of another. The concept of 'zeroing' will keep a check upon the registered person in not permitting biased or uneven passing of benefits to recipients, where the tax rates have been reduced. The Authority finds that the contention raised by the Respondent does not merit any consideration and is hence rejected. Whether loss due to reduced fiscal incentive under budgetary support scheme can be considered to calculate the profiteered amount? - HELD THAT:- The Authority finds that the GST was implemented from 1.7.2017 and the above said provision of refund was in operation since then. However, the case of profiteering has been investigated by the DGAP after Notification No 41/2017-CT dated 14.11.2017, whereby the GST rates on certain products supplied by the Respondent were reduced. Further, DGAP in its calculations has taken the average price of pre-GST rate reduction for the period from 1.9.2017. Hence, the withdrawal of budgetary support w.e.f. 01.07.2017, may not be a factor during the period 1.9.2017 to 14.11.2017, when the average price was determined for the purpose of calculating profiteering - the contention of the Respondent regarding impact on the price of the product on account of budgetary support scheme is not sustainable and is rejected. Whether profiteering should not be computed for luxury products? - HELD THAT:- The fact remains that if the prices of such products have not been reduced after reduction in the tax rates under Notification dated 14.11.2017; such products would undoubtedly come under the ambit of profiteering in term of Section 171 of the CGST Act, 2017. This contention of the Respondent is unsustainable and hence rejected. Whether profiteered amount, if any, can be refunded to recipients of the Respondent? - HELD THAT:- The Authority has discussed the object and intention of the Government in enactment of the provisions under section 171 of the CGST Act 2017 and the rules made thereunder in the earlier paragraphs. As mentioned earlier, this beneficial clause of the Act provides for transfer of the sacrifice of the Government revenue to the common person or the end users. The Respondent in his defence has informed that he has distributors, modern trade retailers, ecommerce and canteen stores as his customers. All these customers i.e. distributors, modern trade retailers, e-commerce and canteen stores, etc may have certain business agreements amongst them but ultimately the products supplied by the Respondent reaches to-the common person on payment of consideration. As such, distributors, modern trade retailers, e-commerce and canteen stores are intermediary in the process of transferring the consideration from the ultimate recipients to the Respondent - In this connection it would be relevant to state that it has been clarified several times by the Union Finance Minister, the Central Government and the GST Council that the benefit of tax reduction is required to be passed on to the ordinary customer, who bears the burden of tax - the contention of the Respondent that in case the profiteered amount is determined, such amount should be transferred to distributors, modern trade retailers, e-commerce, etc. is rejected. Whether in absence of any show cause notice proceedings initiated are in violation of principle of natural Justice? - HELD THAT:- The Authority finds that the Respondent was duly served show cause notices after receipt of the investigation Reports in which it was clearly stated that it appeared that he had violated the provisions of Section 171 and hence his liability for profiteering was proposed to be fixed. Therefore, it is abundantly clear that due notices were served on the Respondent to impose the consequences mentioned in Rule 133. Accordingly, the above claim of the Respondent is far from truth and not acceptable. Whether in absence of a Judicial member, the Constitution of the authority is unconstitutional? - HELD THAT:- It can be concluded that this Authority has not replaced any Courts, cannot be equated to a Court or a Tribunal and hence the mandate of having a Judicial Member cannot be said to apply to this Authority. Whether section 171 of the CGST Act and Rules made thereunder are unconstitutional and violative of article 14 and 19(1) (g) of the Constitution of India? - HELD THAT:- The intent of this provision is the welfare of the consumers who are voiceless, unorganised and vulnerable. This Authority is charged with the responsibility of ensuring that both the above benefits are passed on to the general public as per the provisions of Section 171 read with Rule 127 and Rule 133 of the CGST Rules, 2017. Hence, the anti-profiteering related Rules and Section 171 of the Act have express approval of the Parliament, all the State Legislatures, the Central and all the State Governments and the GST Council and therefore, Section 171 and the Rules are constitutional and are not violative of Article 14 and Article 19 (1) (g) of the Constitution. This Authority has nowhere interfered with the business decisions of the Respondent and therefore, there is no violation of Article 14 and Article 19 (1) (g) of the Constitution. Whether Rules 126, 127 and 133 of the CGST Rules suffer from the vice of excessive delegation? - HELD THAT:- These rules have been framed by the Central Government under Section 164 of the CGST Act, 2017 on the recommendation of the GST Council which is a constitutional body established under the 101st Amendment of the Constitution and comprises of all the Finance/Taxation Ministers of the States and the Union Finance Minister. Hence, the above Rules have express approval of the Parliament, all the State Legislatures, the Central and all the State Governments and the GST Council and therefore, constitution of this Authority under above Rules is legal and does not amount to excessive delegation. It is also mentioned that the Rule 122 only prescribes the qualifications of the members of the Authority whereas its constitution has been duly provided in Section 171 (2). Further it has been specifically provided in Section 171 (3) that “The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.” and hence, the functions and powers conferred on this Authority under Rule 127 also have mandate of the Parliament, the State Legislatures, the Central and the State Governments as well as of the GST Council and hence the conferring of powers and functions under the above Rules on this Authority does not tantamount to excessive delegation. Penalty - HELD THAT:- Tthe Respondent has denied the benefit of rate reduction to the recipients of his goods in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. The Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 15.11.2017 to 31.12.2018, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 15.11.2017 to 31.12.2018 when the Respondent had committed the above violation. Hence, the said penalty under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, notice for the imposition of penalty is not required to be issued to the Respondents. Application disposed off. 2022 (7) TMI 27 Carry forward of transitional credit - permission to petitioner to file declaration in form GST TRAN 1, either electronically or manually or be permitted to take the credit through monthly return GSTR-3B - HELD THAT:- If it is possible or feasible to open the portal so that the assessee may be able to file its TRAN 1 return or revised return or re-revised return in Maharashtra, an attempt should be made for that. If it is not possible or feasible, the concerned Assistant Commissioner shall communicate the same to petitioner within two weeks of uploading of this order. In such a case, petitioner should be permitted to make unutilized credit in its GST 3B Forms to be filed on the monthly basis. Similar approach has been taken by the Hon ble High Court at Calcutta in NODAL OFFICER, JT. COMMISSIONER, IT GRIEVANCE, GST BHAWAN VERSUS M/S. DAS AUTO CENTRE AND OTHERS [ 2021 (12) TMI 835 - CALCUTTA HIGH COURT ] where it was held that It is clearly clearly brought out the difficulties faced by the assesses and also as to how the assesses having substantially complied with the requirement under law and having been entitled to credit on account of transition to the GST regime which is beyond the purview of the assessee and the assessee cannot be put to prejudice on account of technicalities. Petition disposed off. 2022 (7) TMI 26 Validity of detention order - seizure of goods - computation of penalty as per Section 129 of the Act, 2017 - Section 129(1) of the U.P.G.S.T. Act, 2017 - HELD THAT:- Learned counsel for the petitioner states that the petitioner has an apprehension that the Adjudicatory Authority would proceed for sale of goods under Section 129 (6) of the Act, 2017 in case the time taken in filing of the appeal and the decision thereon - On the instructions received, learned Standing Counsel states that the respondent has agreed to the extent that in case the appeal is filed by the petitioner by complying the conditions of Section 107 of the Act, 2017, the seized goods and the vehicle would not be sold till the disposal of the appeal. It is an admitted fact of the matter that seized goods are not perishable in nature. There are no good ground to entertain the writ petition but in view of the assertions made, the writ petition is disposed of with the observations that, in case, the petitioner files an appeal by complying the conditions of Section 107 of the Act, 2017 within a period of three days from today, the Appellate Authority shall decide the appeal strictly in accordance with law. Petition disposed off. 2022 (7) TMI 25 Profiteering - supply of the products manufactured and sold by the Respondent - allegation is that the Respondent had not passed on the benefit of reduction of rate of tax to the consumers by way of commensurate reduction in base price of the products manufactured and sold by him - contravention of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- The rate of tax had increased from 21.16% to 28% post-GST in respect of some goods. There were such 491 other products where the rate of tax applicable in pre-GST era ranged from 18% to 25% that increased to 28% with introduction of GST. In respect of 27 products manufactured or traded by the Respondent, the effective GST rate was 18% - the Authority finds that ass per the DGAP s Report, in pre-GST era, there were 490 such manufactured products on which the rate of consolidated tax (i.e. CENVAT/Central Excise + VAT) applicable was 18% to 25% Ad-valorem i.e. less than 28% and the applicable rate of tax increased to 28% Ad-valorem with introduction of GST. Thus, the provisions of Section 171 of the CGST Act, 2017 are not applicable on supply of such goods. Further, there was reduction in the rate of tax applicable on only 13 manufactured goods and 14 traded goods in the GST-regime as per the DGAP s Report and its Annexures (i.e. in comparison to the consolidated tax rate of tax i.e. CENVAT/Central Excise + VAT applicable in pre-GST regime). It is also noted that the Respondent had not dealt in 13 of such 14 traded goods on which the rate of tax was decreased in post-GST regime. Hence, the DGAP s has calculated profiteering in respect of 13 manufactured goods and 01 traded goods (on which rate of tax was decreased with the introduction of GST) in which the Respondent has dealt post-GST. The Authority finds that, the Respondent s contention to consider rate price rather than transaction value for computation of profiteering is not sustainable as the transaction value is the base value (taxable value) upon which all the taxes are levied and paid to the Government. Therefore, to pass on the benefit of any rate reduction in terms of Section 171 of the CGST Act, 2017, the Supplier has to reduce the base value commensurately. Thus, it is evident from the narration of facts that Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171(1) of the CGST Act, 2017 and he has thus committed an offence under Section 171(3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section with effect from 01.01.2020 onwards for the amount profiteered. These provisions came into effect from 01.01 2020 i.e. penalty equivalent to ten per cent of the profiteered amount will be imposed upon him for the amount profiteered after 01.01.2020. However, no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority. Thus, the profiteered amount is determined as Rs. 1,18,33,987/-. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133(3)(a) of the CGST Rules, 2017. As per the outward sales data submitted by the Respondent, it is gathered that all the transactions of the Respondent are B2B customers. Therefore, each of the customer is identifiable. Hence, we order that the profiteered amount of Rs. 1,18,33,987/- shall be passed on/refunded along with interest @ 18% (from the date of receipt of the profiteered amount by the Respondent up till the date of passing on/refund of such profiteered amount to the recipients) by the Respondent as per Annexure-A and B to this Order within a period 3 months from the date of this order. Application disposed off. Income Tax 2022 (7) TMI 33 Disallowance u/s 36(1)(viii) - Amount transferred to Special Reserve - AO was of the view that the claim made by the assessee was not in accordance with the provision of the Act - HELD THAT:- We find that for working out the income from eligible business on which deduction u/s 36(1)(viii) of the Act is allowable, assessee had considered the ratio of interest income from Long Term housing loan to total interest income as against the working of AO being the ratio of interest income from Long Term housing loan to total receipts. We find that identical issue arose before the Tribunal in assessee s case for A.Y. 2015-16 decided issue in favour of assessee as held that methodology adopted by the assessee is consistently followed for last eight years. Same was accepted by the revenue without any objection - When the method has been consistently accepted for the above year we do not find any reason to defer from that. In view of this we do not find any infirmity in allowing the assessee claim of deduction u/s 36(1 )(viii) of the Act applying the ratio of 62.75%. - Decided in favour of assessee. 2022 (7) TMI 32 Revenue expenditure or capital expenditure - Allowability of expenses on acquisition of clientele and technical human resource i.e., employees to execute the contract - assessee has claimed 1/5th on account of amortization of business acquisition expenses - HELD THAT:- DR could not controvert the fact situation that the assessee has practically acquired business contracts of these three US companies with their clients for software development along with the technical resources including employees to execute contracts. We noted that from the facts, it is not emerging that the assessee has acquired either complete business i.e., the profit apparatus or any capital asset. In such case, the expenses incurred are to be allowed as revenue and assessee has only amortized these expenses in 5 years and the same are allowable as revenue expenditure u/s.37 of the Act. We find no infirmity in the order of CIT(A) and hence, the appeal of Revenue is dismissed. 2022 (7) TMI 31 Deduction u/s 80IB - housing project undertaken and constructed by it despite the fact that nominal part is commercial area - HELD THAT:- We noted that out of the assessee s housing project of total built up area of 15,843.85 sq.mt., this commercial built up area constituted only 98.46 sq.mt. which is negligible and marginal. We noted that the clause permitting the housing project to include commercial area up to 5% of the aggregate built up area was brought in by legislature w.e.f. 01.04.2005 and according to us the same can be given effect to the assesse s case retrospectively As the issue is squarely covered, we find that Hon ble Supreme Court has gone a step further while interpreting the provisions of section 80IB(10) of the Act, made it clear that the housing project contemplates under this section that includes commercial establishments or shops also. It was further clarified that by way of amendment in the form of Clause (d), an attempt is made to restrict the size of the said shops and/ or commercial establishments. Therefore, Hon ble Supreme Court, by necessary implication noted that the provision has to be read prospectively and not retrospectively. Accordingly, in view of the decision of Hon ble Supreme Court in the case of Sarkar Builders ( 2015 (5) TMI 555 - SUPREME COURT ] we allow the appeal of the assessee. 2022 (7) TMI 30 Disallowance u/s 14A - as per AO Assessee has received exempt income and has also made investments in equity shares and bonds - HELD THAT:- We find that the assessee has given detailed submissions stating that the disallowance u/s 14A is not called for as no direct expenditure has been incurred to earn such exempt income and secondly interest disallowance is also not called for as sufficient interest free funds to the tune were available to cover up the investments of Rs. 6.64 crores as on 31.03.2013. AO simply brushed aside the assessee s submission without recording any satisfaction about the correctness of the claim of the assessee proceeded to make the disallowance u/s 14A applying Rule 8D of the Rules. This Action of the ld. AO is not in consonance with the provision of Section 14A and therefore, we find no justification in the said disallowance made u/s 14A of the Act. We accordingly delete the said disallowance and allow the common issue raised by the assessee. 2022 (7) TMI 24 Disallowance of commission paid - As per AO these are non-genuine expenditure and the assessee could not substantiate the claim with any document - HELD THAT:- The assessee is into the trade of selling liquor to various hotel industries. Complete details of the persons receiving commission including their addresses, PAN nos., confirmations, agreement of the terms and conditions for providing services against the commission received have been filed. Payments of the commission is through banking channel and tax has been deducted at source on the said sum. Copies of income tax returns of the most of the persons have also been filed. Considering all these details available on record which specifically remains uncontroverted by the Revenue authorities, considering the total turnover of the assessee firm which is approx 28.72 crores and the consistency of claiming such commission expenditure, we are of the considered view that disallowance of commission expenditure was not called for as the assessee has furnished sufficient documentary evidences to prove the genuineness of the said claim of commission expenditure incurred by the assessee for business purposes for selling its goods. Thus, ground no. 2 raised by the assessee is allowed. Addition u/s 68 - Disallowance of interest expenditure and bogus loan creditors - HELD THAT:- Out of the three in the case of Sourav Shipping India Pvt. Ltd. it is a fresh loan taken during the year. The director of this company has accepted to have provided accommodation entry in the nature of unsecured loans to Parsan Brothers in lieu of commission. Further, Chandan Mondal has subsequently sworn in an affidavit declaring that statements made by him on 18.11.2016 before the Revenue authorities were not true and correct - no merit in this contention of the assessee that it is a genuine loan because during the assessment proceedings itself detailed statement was taken from Chandan Mondal and this person in his full understanding and knowledge has accepted to have provided accommodation entry to the assessee through the alleged company. We, thus, fail to find any merit in the contention of assessee. AO was justified in making addition u/s 68 of the Act for the loan taken from M/s. Sourav Shipping India Pvt. Ltd and the said addition is confirmed. As regards the remaining two cash creditors i.e. M/s. Dharmaraj Trading Co. and Gunius Wax Chemicals Pvt. Ltd. we find that both these concerns are having an opening balance in the books of the assessee. In the case of Dharmaraj Trading Co. opening balance is Rs. 7,07,658/- and that of Gunius Wax Chemicals Pvt. Ltd. is Rs. 1,63,090/-. No adverse material is found by the Revenue authorities and the addition has been made solely for the reason that these two parties did not reply to the notice u/s 133(6) of the Act but no further enquiry was conducted by the Revenue authorities. Complete details of the address, PAN No. and other financial documents stood filed before the Revenue authorities. The genuineness of the opening balance of the loan has not been doubted by the ld. AO. Under this given facts and circumstances we fail to find any merit in the action of the ld. AO making addition for unexplained cash credit received from these two. Interest disallowance - As amount paid to Sourav Shipping India Pvt. Ltd. and Sourav Film City Pvt. Ltd. remains to be sustained for the reason that the directors of both these companies have stated before the Revenue authorities to be an accommodation entry provider and failed to rebut this fact by placing any material in its favour. Except the interest of Rs. 2,82,247/- all the remaining interest amount are paid on the opening balances of the loans brought forward from last year and therefore, interest disallowance is not justified.Ground no. 3 raised by the assessee is partly allowed. 2022 (7) TMI 23 Addition u/s 14A r.w.r 8D - HELD THAT:- As assessee did not have any tax exempt income during the relevant previous year and that the period before us pertains to the period prior to insertion of explanation to section 14A. In this view of the matter, and in the light of consistent stand by co-ordinate benches, following Hon ble Delhi High Court s judgment in the case of Cheminvest Ltd vs CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] we uphold the plea of the assessee that no disallowance under section 14A was and in the circumstances of the case. The plea of the Assessing Officer is thus rejected. As regards the disallowance it is sustained on the basis of computation given in the alternative plea of the assessee, but given the fact that the basic plea of non-disallowance itself was to be upheld, there was no occasion to consider the computation given in the alternative plea. This disallowance must also be deleted. - Decided in favour of assessee. 2022 (7) TMI 22 Addition u/s 40A(A)(2)(B) - Disallowance of part of remuneration to the directors considering the same as excessive - HELD THAT:- In the case of Union of India v. Kaumudini Narayan Dalal [ 2000 (12) TMI 101 - SC ORDER] Hon ble Supreme Court had an occasion to consider whether it is open to revenue to accept a judgment in the case of one assessee, and appeal, against the identical judgment in the case of another. Their Lordships held that such a differential treatment on the same set of facts was not permissible in law, and observed that, it is not open to revenue to accept the judgment in the case of the assessee in that case and challenge its correctness in the case of another assessee, without just cause. When it is not possible for the revenue to challenge an order of the appellate authority in one case and when it has accepted identical order of the appellate authority in another case, it cannot at all be open to the Assessing Officer to challenge the order of CIT(A) on an issue on which relief has been given by CIT(A), in an earlier year, which has been not been challenged in appeal by the Assessing Officer. It is not the case of the Assessing Officer that the earlier year s CIT(A) s order was not challenged on account of low tax effect or any other technical reason. Once the stand of the CIT(A), on an issue, is accepted in one year, unless there are good and sufficient reason to take a different stand later, similar findings for a subsequent year cannot be challenged in further appeal either. For this reason alone, the grievance raised by the revenue is not maintainable in law and deserves to be rejected in limine. - Appeal dismissed. 2022 (7) TMI 21 Addition u/s 68 - unexplained cash credit - HELD THAT:- As in the instant case the assessee has failed to meet the three ingredients of section 68 of the I.T. Act, 1961 i.e., identity of Investor/Creditor, creditworthiness and genuineness of the transaction in the matter. Therefore, clearly proved that assessee has not discharged its initial onus to prove the identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. CIT(A), therefore, rightly confirmed the order of the A.O. Even before the Tribunal the assessee did not take any steps to furnish any documentary evidences in respect of the amount received by it towards the alleged accommodation entry sum of Rs.25 lakhs during the F.Y. 2009-10 and the other addition made by AO. Since the assessee has not placed any material to controvert the findings of lower authorities nor has pointed out any fallacy in the findings of the lower authorities we dismiss the appeal of the assessee. 2022 (7) TMI 20 Penalty @ 10% u/s 271AAA - undisclosed income - HELD THAT:- Issue decided in favour of assessee as relying on case of Garg Brothers Pvt. Ltd [ 2022 (3) TMI 1076 - ITAT KOLKATA] assessee in its disclosure petition has conditionally offered to cover any other undisclosed income which has been unearthed during search. This action of assessee was out of abundant caution and conditional (provided there is material suggesting any undisclosed income un-earthed during search). However, finding that there was no other undisclosed income to identify with the seized materials/Panchanama, the assessee while filing the return of income pursuant to section 153A - taking note that the amount has been brought to tax by the AO though not shown by the assessee in the Return of Income, the penalty u/s. 271 AAA of the Act cannot be legally sustained. - Decided in favour of assessee. 2022 (7) TMI 19 Default in payment of TDS - liability to pay interest - when the assessee is considered as in-default u/s. 201(1) - precondition - whether being not deemed to be in-default u/s. 201(1) would by itself result in being not deemed to be in-default u/s. 201(1A) of the Act? - assessee contested no tax was liable to be deducted as the payee-company had in fact suffered losses for each of the relevant years, i.e., after including the income received from the assessee, so that it (payee) was not liable to any tax u/s. 4, toward which the tax deduction at source is, seeking refund of both, the deposit of tax deducted at source (TDS) and interest paid for its delayed deposit. HELD THAT:- The two provisions are to be therefore considered independently, i.e., in the given facts and circumstances of the case, on the terms specified therein, and an absence of any outstanding liability for tax deduction at source may not dilute or extinguish that toward interest, which sure is though compensatory in character. All the three components of interest find specification in the provision (s. 201(1A)) itself. The obligation to deduct and deposit tax at source is thus with reference to tax deductible, i.e., that liable to be deducted under the provisions of Chapter-XVII of the Act, which provides for a mechanism for a lower (including nil) deduction of tax at source u/s. 197. The fact of the payee company having incurred a loss, so that it was not liable to any tax for the relevant year/s, becomes, therefore, largely irrelevant as far as assessee-payer is concerned. As a corollary, while the tax liable to be deducted at source could be recovered from an assessee-payee, as indeed he is liable to (s.190 r/w s. 191), the interest liability (for delayed payment of tax) cannot. That is, while the liability to tax is a vicarious liability, even as clarified earlier by the Apex Court in Eli Lily Co. (I) Pvt. Ltd. ( 2009 (3) TMI 33 - SUPREME COURT] that to interest is not. The position shall continue even post-amendment by way of proviso to s.209(1)(d) by Finance Act, 2012, w.e.f. 01/04/2012, i.e., AY 2012-13 onwards. This is as both the payee-deductee and the payer-deductor are separately liable to interest for default on delayed payment of advance tax and tax deductible at source u/ss. 234B and 234C and s. 201(1A) respectively. The liability to tax, incurred in either case, u/s. 4 r/w s. 190, being, however, in respect of the same tax, payment by either would serve as the terminus point for computing/working the liability to interest, even as clarified by the Apex Court in Hindustan Coca-Cola Beverages ( 2007 (8) TMI 12 - SUPREME COURT ). The question posed by the assessee-appellant at the beginning of the order, is, in light of the foregoing, answered in the negative. We are conscious, when we say so, that our answer may, perhaps be, or construed as, at variance with that by the Hon'ble jurisdictional High Court in IJM Ltd . ( 2017 (1) TMI 1713 - MADHYA PRADESH HIGH COURT ], whose ruling is binding on us. We shall revert in this aspect, in some detail, later. Suffice here to say that our stating so is, with respect, based on the clear provisions of law, as explained by the Apex Court per its several decisions, some of which stand referred to. Assessee in-default u/s. 201(1) - whether the assessee is liable to refund of interest levied and deposited u/s. 201(1A) of the Act? - HELD THAT:- as the assessee had been deemed to be in default u/s. 201(1) for such larger sums. We have already abundantly clarified that the tax deductible is only with reference to the tax liable to be deducted under the provisions of the Act and, therefore, any deduction in excess of the rate/s specified in the tax deduction certificate/s, which is separate for each year, cannot be regarded as tax liable to be deducted u/c. XVII-B. The date of issue of the certificate, as long as it falls within the relevant year or prior thereto, is immaterial. Any tax collected u/s. 201(1) in excess of this sum is not liable for compensatory interest u/s. 201(1A). Interest in excess of that computed thus is liable for refund along with interest u/s. 244A, even as held by the Hon'ble jurisdictional High Court [ 2020 (5) TMI 25 - MADHYA PRADESH HIGH COURT] . The AO shall, for each of the years under reference, modify the order u/s. 201(1) 201(1A) accordingly, and toward which the assessee shall provide him the necessary details with dispatch, which the AO shall verify/cause to verify from his records. The AO shall also share the computation of the refund of interest u/s. 201(1A), and interest u/s. 244A thereon, with a view to avoid subsequent application/s u/s. 154 in the matter. Any unresolved difference, if any, shall be spelt out by the AO per a speaking order. The AO shall, considering the time lapsed, shall complete the process latest by 31/10/2022. We decide accordingly. 2022 (7) TMI 18 Power to CIT(A) to set aside the order and remand back to AO - Capital gain - capital asset u/s 2(14) - Limits of urbanization - distance of the land to be measured from the municipal limit - Power of CIT(A) as directed the A.O. to determine the situation of the impugned land from the municipal limits of Ahmedabad as on 06.01.1994 and to delete the addition if the land was found to be beyond the 8KM. - HELD THAT:- First plea of the Revenue that the ld. CIT(A) had no power to set aside the issue, we may point out that in the impugned case, the ld. CIT(A) had not set aside any issue for reconsideration but on the contrary had given his findings on the issue and proceeded thereafter to direct the A.O. to act upon these findings. He has given his finding that distance of the land for determining whether it is urban or rural land is to be measured from the municipal limits of Ahmedabad as on 06.01.1994, that is the date when the CBDT notification regarding urbanization was notified in the official Gazette. He has only directed the AO to determine the actual distance based on these findings and then accordingly deal with the adjustment to be made. There is clearly a difference between setting aside an issue to the A.O., which power the Ld. CIT(A) does not have as per Section 251 of the Act, and giving directions to the AO. An issue set aside to the AO is left for adjudication to him, while in a case giving directions, the issue is restored to the AO only for acting on the adjudication done by the CIT(A). - Decided ageist revenue. Distance is to be measured from the municipal limit as on 06.01.1994 - D.R. has been unable to point out any contrary decision either of the Hon'ble High Court and Supreme Court in this regard. We therefore find no infirmity in the order of the ld. CIT(A) who has followed the decision of the ITAT while holding that the distance of the land sold by the assessee is to be measured from the municipal limit of Ahmedabad as on 06.01.1994, that is the date of CBDT Notification specifying limits of urbanization, following the decision of the ITAT in several cases. - Decided against revenue. 2022 (7) TMI 17 Levy of penalty u/s. 271(1)(c) - disallowance of claim of exemption u/s. 54F - CIT- A deleted the addition - HELD THAT:- As assessee had furnished all particulars relating to the claim of exemption by way of investment in residential properties, that the claim was made under the bonafide belief that all investment would be made within the period specified but could not be done so for reasons beyond his control as the construction was not completed in time and noting that on the requirement of investment in capital gains account scheme there was a judgment of the Hon'ble Karnataka high court [ 1986 (6) TMI 7 - KARNATAKA HIGH COURT] holding the requirement to be merely procedural and directory in nature. The Ld. CIT(A) accordingly deleted the penalty on the ground that all particulars with respect to the claim having been truly furnished, mere disallowance of claim in law would not tantamount to charging the assessee with concealing/furnishing inaccurate particulars of income so as to levy penalty u/s. 271(1)(c) of the Act. We are entirely in agreement with the findings of the Ld. CIT(A) in this regard and find no infirmity in the same. - Decided against revenue. Customs 2022 (7) TMI 29 Entitlement for waiver of rent payable to the respondents - storage of imported consignments of R22 Refrigerant Gas contained in four containers beyond the stipulated period - restricted goods or not - HELD THAT:- The petitioner had imported R22 Refrigerant Gas. However, in the Bill of Entry filed for clearance of the aforesaid gas, the petitioner had declared it Refregerant Gas R410A. The Department refused to allow the clearance of imported consignment since the imported consignment was of restricted items in terms of the relevant classifications and the import was without a valid import licence. The petitioner was thus not allowed to clear the imported consignment. The petitioner had earlier filed W.P. in M/S. SHERISHA TECHNOLOGIES PVT. LIMITED, REP. BY ITS DIRECTOR, HAVING ITS CORPORATE OFFICE T. NAGAR, CHENNAI 600 017. VERSUS THE CHIEF COMMISSIONER OF CUSTOMS, CHENNAI CUSTOMS ZONE, CUSTOM HOUSE, CHENNAI, THE DIRECTORATE OF REVENUE INTELLIGENCE (ZONAL UNIT) , MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CHENNAI [ 2015 (8) TMI 1552 - MADRAS HIGH COURT] for a Mandamus to consider the petitioner's representation dated 29.01.2015. The petitioner had stated that the Chinese supplier supplied the restricted Gas by mistake instead of R410A Refrigerant Gas contrary to purchase order proforma invoice and R22 gas which was to be exported to Panama were wrongly sent to India and therefore that the petitioner may be allowed to re-export the goods to the supplier back in China - The said writ petition came to be disposed of by order dated 24.08.2015 directing the respondent to consider the petitioner's representation on imported consignment in four tanker containers vide four Bills of Entries back to the supplier. The imported consignment after their import into India was stored in the fourth and fifth respondents Container Freight Station. The facts on record clearly indicate that the official respondents have also not co-operated with the petitioner for re-export R22 Refrigerant Gas, despite, the Order in Original No.43805 of 2016 dated 05.01.2016 of the second respondent and the subsequent dismissal of the appeal of the petitioner vide Order in Appeal C.Cus II No.373 374/2016 dated 19.04.2016 - The private respondents namely the fourth and fifth respondents cannot be forced to bear the loss suffered by them on account of storage of R22 Refrigerant Gas imported by the petitioner illegally which was earlier attempted to be cleared contrary to the restriction for the period after Order in Appeal C.Cus II No.373 374/2016 dated 19.04.2016 was passed by the Commissioner of Customs (Appeals-II). The petitioner also cannot be burdened with the demurrage liability for the period thereafter as the goods were not allowed to be re-exported despite the above mentioned orders. Therefore, partial waiver up to 19.10.2015 is liable to be sustained. The demurrages for the period between 19.10.2015 and passing of the Commissioner of Customs (Appeal-II) vide Order in Appeal C.Cus II No.373 374/2016, bearing reference No.C3-II/181 182/O/2016-SEA dated 19.04.2016 will have to be borne by the petitioner, as the petitioner showed no inclination to re-export the consignment. For the period thereafter, the loss caused to the fourth and fifth respondents on account of storage of R22 Refrigerant Gas will have to be borne by the Customs Department. Since the goods are still reportedly in the custody of the fourth and fifth respondents, the official respondents as also the fourth and fifth respondents are directed to permit re-export of the imported consignment by the petitioner to the foreign exporter from China provided the consignment of imported R22 Refrigerant Gas are still there in the containers and have not evaporated due to efflux of time as expeditiously as possible from the date of receipt of a copy of this order, subject to the petitioner paying the demurrage charges to the fourth and fifth respondents for the period between 19.10.2015 up to 19.04.2016 together with applicable interest - the amount is directed to be calculated by the fourth and fifth respondents as expeditiously as possible, preferably, within a period of thirty days from the date of receipt of a copy of this order and suitably intimated to the petitioner. Petition allowed in part. 2022 (7) TMI 16 Levy of penalties under Section 112(a) and Section 114AA of the Customs Act, 1962 - Sufficient opportunity of hearing provided by the authorities below to the appellant or not - HELD THAT:- The Adjudicating Authority did not give any personal hearing after recording that the notice issued to this appellant had returned unserved. Further, even though the First Appellate Authority has recorded, at paragraph 3 (c) of the impugned Order-in-Appeal, the specific contentions as to the non-following of the procedure contemplated under Section 153 of the Customs Act read with Section 122A ibid. by the Adjudicating Authority, but however, there is no discussion or finding recorded on this aspect anywhere by the First Appellate Authority in the impugned order. The Act prescribes the procedure to be followed before passing an adjudication order, which has to be strictly adhered to and there is no shortcut. Hence, the notice issued to the appellant in this case on hand, which was returned unserved, is as good as no notice, in the absence of following the procedure laid down under Section 153 ibid. The First Appellate Authority having recorded this specific ground urged by the appellant, has ignored the same, which is not in accordance with law. The Order-in-Original suffers from infirmity of not following the procedure laid down under the statute and hence, the same is held to be unsustainable - the matter is restored to the file of the Adjudicating Authority for passing a de novo adjudication order in accordance with law and it goes without saying that sufficient and reasonable opportunities shall be provided to the appellant, as prescribed under the statute - Appeal allowed by way of remand. Corporate Laws 2022 (7) TMI 15 Appointment of Additional Director - it is alleged that pursuant to the Board Minutes, the petitioner no.1/Company had appointed Mr. Bakshi as an Independent Director and made an incorrect declaration in the aforesaid Form DIR-12 that Mr. Bakshi was appointed as Additional Director - Section 149 of the Companies Act - HELD THAT:- It is clear that the court concerned has not disclosed in the impugned order as to how he satisfied about prima facie case against the accused persons and what are the grounds for proceeding against the accused persons. The said order is not only very cryptic but also does not reflect that he has applied his mind. The order has been passed in a very casual and routine manner. Needless to say that the well settled principle of law is that the final purpose of a criminal proceeding is to secure justice and to prevent the abuse of process of law. The subsequent documents along with the resolutions if taken at its face value makes, it is abundantly clear that Mr. Bakshi was appointed as an Additional Director and there was no intention on the part of the petitioners to appoint him as an Independent Director nor any attempt was made to project him as Independent Director . One single statement that his consent was taken as Independent Director cannot be construed that the board of Directors had actually appointed him as Independent Director and not as additional Director . Accordingly, the allegations levelled in the complaint appears to be absurd and inherently improbable and if a prudent person tests is applied then the inevitable conclusion would be that there is no chance of conviction as there is nothing to show that the alleged false statement was made knowing it to be false or any omission of material fact was made knowing it to be material in order to deceive someone or to gain any undue advantage from the company or it s share holders or it s creditors, in order to attract the relevant sections. The ultimate conclusion is that if the present proceeding is allowed to be continued in view of the aforesaid facts and circumstances of the case, that will be an abuse of process of court because the allegations levelled in the complaint is absurd and inherently improbable in view of the documents available in the record including the Annexures - Application allowed. Insolvency & Bankruptcy 2022 (7) TMI 14 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:- In terms of the order dated 21.11.2019 and to remove the defects pointed out, the learned counsel for the petitioner filed compliance affidavit vide Diary no.6652 dated 27.11.2019 stating that the date of default mentioned in Form No.5 is unintentional and by mistake, and in fact the date of occurrence of default is 02.03.2013 and acknowledgement of the same was made on 07.03.2015 and again on 01.09.2017 as shown in the relevant balance sheets and hence, the CP is within limitation. Whether there is default in payment or not? - HELD THAT:- It is observed from the record that in the present case, the occurrence of default is evidenced by the copy of the acknowledgement by the corporate debtor and the account statement of the Petitioner/Applicant and the same are attached as Annexure A-6 and Annexure A-7 A-8 respectively of the petition. The respondent-corporate debtor has also filed a reply wherein it has been admitted that there is default in respect of financial debt and amount mentioned in the petition is due towards the petitioner and shown its incapacity to pay the liability. The application filed in the prescribed Form No.1 is found to be complete. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. Accordingly, the petitioner proved the debt and the default, which is more than the threshold limit - Petition admitted - moratorium declared. 2022 (7) TMI 13 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 - service of notice - whether the demand notice in Form 3 dated 31.07.2018 was properly served? - HELD THAT:- The service through publication has been done to that effect. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that none appeared on behalf of corporate debtor despite repeated service and has been set ex parte vide order dated 09.08.2021. Moreover, petitioner has appended affidavit u/s 9(3)(b) stating that corporate debtor has not issued any notice or raised any dispute regarding the debt for which the present petition has been filed by the operational creditor. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 23.01.2020 vide Diary No. 651 whereas the date of default is 21.01.2019, therefore, this Adjudicating Authority finds that this application has been filed within limitation. It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is above threshold limit. In the present petition all the aforesaid requirements have been satisfied. It is seen that the petition preferred by petitioner is complete in all respect. The material on record which remains unrebutted clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition deserves to be admitted. Petition admitted - moratorium declared. Central Excise 2022 (7) TMI 12 CENVAT Credit - input service - C F Agent service - the service is provided upto at the place of removal - Rule 2(l) of Cenvat Credit Rules, 2004 - HELD THAT:- The dispute is related to Cenvat on C F Agent service. The C F Agent service is provided for sale of the goods take place on behalf of the appellant. The sale of goods from the C F Agent service is treated as sale by the appellant themselves, therefore, the C F Agent services are received upto the place of removal. This issue has been considered in the appellant s own case NITCO LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, DAMAN [ 2022 (5) TMI 250 - CESTAT AHMEDABAD] where it was held that appellant is entitled for Cenvat credit on Storage and Warehousing Service at C F Agent s premises. The C F Agent Service is admissible input service in the terms of Rule 2(l) of Cenvat Credit Rules, 2004 - Appeal allowed - decided in favor of appellant. 2022 (7) TMI 11 Refund of additional duty on Diesel - goods were supplied under N/N. 108/95-CE - Exemption to goods supplied to UN or an International Organisation as per notification - HELD THAT:- The exemption is in respect of the duty mentioned that covered under Section 3 and the additional duty on excise liveable thereon under sub section 1 of section 3 of additional duty of excise (Goods of Special Importance) Act, 1957. However, in the present case the duty for which the exemption and refund is claimed is not covered by the Notification as the same was imposed under Section 133 of the Finance Act 1999 as amended issue of Section 120 of Finance Bill, 2005. Therefore, the duty which is not mentioned in the Notification cannot be given exemption. The view is reinforced by the law laid down by the Hon ble Supreme Court in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS [ 2019 (12) TMI 286 - SUPREME COURT ], wherein it was categorically held that the duty which is not exempted cannot be given exemption under the guise of duty of excise. Hence, the appellant is not neither entitled for the exemption nor for the refund of the cenvat credit. Accordingly, the impugned order has not suffered from any infirmity - Appeal dismissed. 2022 (7) TMI 10 Quantification of duty on the transfer of inputs - Applicability of LIFO method - whether the appellant have taken the excess Cenvat Credit which was passed on by the Chennai Unit to the appellant? - Rule 3(5) of Cenvat Credit Rules - HELD THAT:- There is no dispute that the appellant have taken the credit of the duty actually paid by the Chennai Unit. The assessment of duty payment by Chennai Unit was not disputed by department. Therefore, at the recipient end the dispute of valuation cannot be raised. This issue is no longer res integra as the same has been decided in various judgments as cited by the appellant - As per the judgment of Hon ble Apex Court in the case of MDS SWITCHGEAR LTD. VERSUS COMMR. OF C. EX., CUS., AURANGABAD [ 2001 (4) TMI 130 - CEGAT, MUMBAI] , it was held that the duty paid on the inputs shall be available as Cenvat Credit to the recipient. Thus, the appellant has correctly availed the credit which cannot be denied - appeal allowed - decided in favor of appellant. 2022 (7) TMI 9 CENVAT Credit - exempted product/by-product - Silica Sand and Ball Clay generated as by product during the course of mining of Lignite and clearance thereon - HELD THAT:- The issue is no longer res integra as the same has been decided in the appellant s own case in GUJARAT MINERAL DEVELOPMENT CORPORATION LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2021 (10) TMI 307 - CESTAT AHMEDABAD] where it was held that Once it is established that the product in question are by-product then it is settled in respect of by-product demand under Rule 6 will not sustain. Accordingly, in the present case also, Silica Sand and Ball Clay being a by-product, no demand under Rule 6 shall sustain. It is found that the same facts are involved in the present case - appeal allowed - decided in favor of appellant. 2022 (7) TMI 8 CENVAT Credit - exempted product/by-product - Bagasse generated during the course of manufacture of Sugar - Rule 6 of Cenvat Credit Rules - HELD THAT:- The issue is no longer res-integra in the light of the Hon ble Supreme Court judgment in the case of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] where it was held that In the present case it could not be pointed out as to whether any process in respect of Bagasse has been specified either in the Section or in the Chapter notice. In the absence thereof this deeming provision cannot be attracted. Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and the absence of manufacture, there cannot be any excise duty. Even after the period of amendment under section 2(f) also the Allahabad high court in the case of M/S BALRAMPUR CHINI MILLS LTD. THROUGH ITS GENERAL MANAGER VERSUS UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT] has stuck down the circular dated 25.04.2016 and it was held that in the case of generation of Bagasse in the manufacture of sugar and clearance thereof Rule 6 of Cenvat Credit Rules, 2004 has no application. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (7) TMI 28 Prayer for writ of Mandamus to appoint a Joint Commissioner from the Commercial Taxes Department to consider the legality of the assessment orders passed by the third respondent relating to the assessment years Tamil Nadu Value Added Tax 2011-12, 2012-13 and 2013-14 - validity of pre-assessment notice - HELD THAT:- The question of appointment of Joint Commissioner from the Commercial Tax Department to consider the legality of the Assessment Orders passed by the third respondent therein namely, the Commercial Tax Officer for the Assessment Years 2011 - 2012, 2012 - 2013 and 2013 - 2014 respectively, cannot be countenanced in the light of the fact that the issue has travelled up to the Hon ble Supreme Court. That apart, the petitioner s appeals were pending before the second respondent/Appellate Deputy Commissioner. Further orders may have been passed during the pendency of the appeal before the Hon ble Supreme Court by the Appellate Deputy Commissioner inasmuch as the Hon ble Supreme Court while dismissing the appeal filed by the petitioner against the order of the Division Bench, in M/S. V.V.V. AND SONS EDIBLE OIL LIMITED, VERSUS THE COMMERCIAL TAX OFFICER-1 (FAC) , VIRUDHUNAGAR [ 2015 (12) TMI 1652 - MADRAS HIGH COURT] had affirmed the decision of the learned Single Judge in M/S. V.V.V AND SONS EDIBLE OILD LIMITED VERSUS THE COMMERCIAL TAX OFFICER 1 (FAC) VIRUDHUNAGAR. [ 2015 (11) TMI 1867 - MADRAS HIGH COURT] and had granted liberty to the petitioner to file a statutory appeal under Section 58 of the Tamil Nadu Value Added Tax Act, 2006. That apart, the provisions of the Tamil Nadu Value Added Tax Act, 2006 also does not contemplate appointment of the Joint Commissioner or any other Officer from the Commercial Tax Department as an arbitrator to decide the legality of the Assessment Orders or Revision Notice which are the subject matter of appeal before the Appellate Commissioner or by the Appellate Tribunal as the case may be. The impugned notice has relied upon the inspection by the enforcement being officers on 24.10.2014 and 25.10.2014. Serious allegations have been leveled against the petitioner in the said notice. It is for the petitioner to reply to the same to distance itself from the proposals contained therein, in such proceedings. Proceedings initiated under Section 27(2) of the Tamil Nadu Value Added Tax Act, 2006 cannot be scuttled. There are no merits in the petition - petition dismissed. 2022 (7) TMI 7 Correctness of mechanism of calculation of set off under Note-1 and Note-2 of List-C of OST Act in respect of Entry No.76 of rate chart - HELD THAT:- It has been factually found by the Tribunal that no document was filed by the Assessee to disprove the allegation of the assessing authority denying the set off in respect of consumable since there was no purchase invoice produced by the Assessee. Importantly, the Tribunal noted that although in the grounds of appeal the Assessee claimed to have documents he was willing to produce, in fact he failed to produce such documents to disprove the case of the Department. Learned counsel for the Assessee was not able to dispute that the Assessee here is not claiming a benefit under any IPR and the question therefore of Assessee being entitled to benefit of exemption apart from the benefit under the IPR does not arise. The Court is not inclined to interfere as the orders impugned appear to have turned purely on facts and have not been shown to be perverse or erroneous. Consequently, the question framed is answered in the affirmative i.e. in favour of the Department and against the Assessee. Revision petition dismissed. 2022 (7) TMI 6 Classification of goods - Equipment - whether equipment is same as machinery and would be covered under the Finance Department Notification No.44987-CTA-105/89-F dated 22 nd December 1989 w.e.f. 1st January 1990 and Notification No.1691/CTA-37/01 (PT)-F dated 9th January 2002 w.e.f. 1st March, 2002? - disallowance of claim of deduction under section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act for sale of mechanical equipments i.e. idler to HEC against Form No.XXXIV - HELD THAT:- As per the notification dated 9th January 2002 issued by the Finance Department, the entry at serial No.175 states machinery, machinery parts and spare parts and component parts and accessories thereof and tools would be exigible to tax at the first point of sale - Admittedly, the Petitioner is the first seller of the idlers to HEC. The entry in question refers not only to machineries but also component parts thereof and accessories. It also includes tools . The decision of the Allahabad High Court in COMMISSIONER OF SALES TAX, UP., LUCKNOW VERSUS OM IRON FOUNDRY, AGRA [ 1973 (11) TMI 69 - ALLAHABAD HIGH COURT] was dealing with the question whether pulleys were not parts of the machinery. The High Court observed that the goods in question were ordinary pulleys connecting shafts with electrical motors or oil engines for transmission of power . In the present case, the Petitioner does not appear to have placed on record materials to show what the function of the idler is. The STO treated it as machinery spare whereas the ACST took the view that components parts and accessories thereof constituted a separate part of the entry and therefore 12% rate in respect of unspecified taxability came into play when it concerned component parts and accessories. While it is true that idler by itself may not be a complete machine, what is exigible to tax is not only the complete machinery but also spare parts and accessories of machines. The Court is not persuaded that the idler sold by the Petitioner does not form part of machinery or is not an accessory. The distinction sought to be drawn by Mr. Sahoo between equipment and machinery is not convincing in the context in which the question arises here. If the idler was a component part of machinery or even an accessory or a tool, it would still be exigible to tax at the first point of sale. Questions decided in favour of the Department and against the Assessee thereby upholding the view expressed by the STO, ACST and the Tribunal - revision petition dismissed. 2022 (7) TMI 5 Refund of amount deposited - refund sought on the ground that the deposit done during the course of the search was not justified as it was contrary to the provision of the Acts - HELD THAT:- Before passing any order, petitioner shall be given a personal hearing and notice of personal hearing shall be given at least seven days in advance - If the Adjudicating Authority is going to rely on any judgment or authority or judicial pronouncement of any forum, a list thereof shall be provided to petitioner along with notice of personal hearing so that petitioner can deal with or distinguish the same. If after the personal hearing, petitioner wishes to file written submissions, the same shall be filed within three working days thereafter. Mr. Shah states that petitioner will co-operate with respondents and attend the hearing and will not seek any adjournment. 2022 (7) TMI 4 Exemption from Sales Tax - goods sold for defence organization through various dealers - benefit of exemption under 29-B of List-A of list of Goods exempted from Orissa Sales Tax of Tax rates under Orissa Sales Tax Law - HELD THAT:- As rightly interpreted both by the ACST and the Tribunal, in order to claim exemption from payment of sales tax, the burden was on the dealer to show that goods had been sold to Defence Service Installations located inside Orissa for resale to Military installations and personnel. Factually, the Assessee was unable to produce evidence in support of sales to the value of Rs.1,11,73,805 which satisfied the requirement of the above Entry 29-B. In other words, while for the remaining sales made to defence personnel or defence organizations for which proof was produced by the Assessee, the deduction as claimed was allowed, the sales to the aforementioned three individuals was not treated as sales to Defence Service installations. The requirement of Entry 29-B is that the dealer should have sold the goods to Defence Service installations and at the highest to Defence personnel and not to individuals who may or may not have further sold it to Defence personnel or Defence Services installations - In that view of the matter, the Court is unable to find any error having been committed either by the ACST or the Tribunal that calls for any interference. The question framed is answered in favour of the Department and against the Assessee. The revision petition is dismissed. 2022 (7) TMI 1 Validity of assessment order - assessment orders have been challenged in these writ petitions instead of filing Statutory Appeal before the Appellate Authority under Section 51 of TN VAT, 2006 - HELD THAT:- The facts on record seems indicate that there was surprise inspection conducted at the petitioner's place of business and the petitioner's sister concern namely, M/s.V.V.V Edible Oils Limited on 24.10.2014 to 27.10.2014 and certain irregularities and omission were noticed. Though it sought to be explained by the petitioner that the petitioner and the aforesaid petitioner's sister concern were sharing a common godown and that inadvertently and by oversight gingelly seeds issued for production from the aforesaid Godown to the factory of the petitioner's sister concern with the delivery challans of the petitioner. Thereafter, D3 report was forwarded by the Enforcement Wing based on which, revision notices dated 02.08.2018 were issued to the petitioner. Apart from these notices similar notice were not only issued for the Assessment Years 2013-14 and 2014 -15 but also for the Assessment Years 2009-10 2012-13 on 29.07.2016. The petitioner asked the first respondent to appoint the Joint Commissioner vide representation dated 06.09.2018 which was not resulted in any favourable orders. The provision of TNVAT Act, 2016 does not contemplate the appointment of an Arbitrator to look into correctness or otherwise of the revision notices issued for reversing the deemed assessment order. Therefore, there are no merits in the present writ petition. The petitioner should have filed a reply to the revision notices on merits and awaited for final orders. Instead, the petitioner resorted to dilatory tactics with request to appoint a Joint Commissioner. The case remitted back to the second respondent. The petitioner shall file reply if any to the revision notices dated 02.08.2018, within a period of 30 days from the date of receipt of a copy of this order - petition allowed by way of remand. Indian Laws 2022 (7) TMI 35 Award of the Permanent Lok Adalat - conciliation proceedings mandatory under Section 22-C of the Legal Services Act 1987 (LSA) or not - adjudicatory functions of Permanent Lok Adalats under the LSA Act. Whether the conciliation proceedings before the Permanent Lok Adalats are mandatory? - HELD THAT:- This issue is clearly resolved from a bare reading of Section 22-C. Section 22-C provides a step-by-step scheme on how a matter is to proceed before the Permanent Lok Adalat. The first step is the filing of the application which ousts the jurisdiction of other civil courts, in accordance with Sub-sections (1) and (2). The second step is the parties filing requisite submissions and documents before the Permanent Lok Adalat, in accordance with Sub-section (3). On the completion of the third step to its satisfaction, the Permanent Lok Adalat can move to the fourth step of attempting conciliation between the parties, in accordance with Sub-sections (4), (5) and (6). Subsequently, in the fifth step in accordance with Sub-section (7), the Permanent Lok Adalat has to draw up terms of settlement on the basis of the conciliation proceedings, and propose them to the parties. If the parties agree, the Permanent Lok Adalat has to pass an award on the basis of the agreed upon terms of settlement. Only if the parties fail to reach an agreement on the fifth step, can the Permanent Lok Adalat proceed to the final step and decide the dispute on its merits. The Permanent Lok Adalat, based on the materials before it, shall propose terms of settlement and communicate them to both parties, regardless of whether they participated in the proceedings. If the party present before the Permanent Lok Adalat does not agree or if the absent party does not respond in a sufficient period of time, only then can the Permanent Lok Adalat adjudicate the dispute on its merits Under Section 22-C(8). Keeping in mind the principles enshrined in Section 22-D, the Permanent Lok Adalat shall once again notify the absent party of its decision to adjudicate the dispute on its merits, in case it wishes to join the proceedings at that stage. Section 22-C(8) is amply clear that it only comes into effect once an agreement Under Section 22-C(7) has failed. The corollary of this is that the proposed terms of settlement Under Section 22-C(7), and the conciliation proceedings preceding it, are mandatory. If Permanent Lok Adalats are allowed to bypass this step just because a party is absent, it would be tantamount to deciding disputes on their merit ex parte and issuing awards which will be final, binding and will be deemed to be decrees of civil courts. This was simply not the intention of the Parliament when it introduced the LSA Amendment Act. Its main goal was still the conciliation and settlement of disputes in relation to public utilities, with a decision on merits always being the last resort - It is thus held that conciliation proceedings Under Section 22-C of the LSA Act are mandatory in nature. Whether Permanent Lok Adalat has adjudicatory functions? - HELD THAT:- As highlighted in the Objects and Reasons accompanying the LSA Amendment Act, its introduction led to the creation of two different types of Lok Adalats. The first is a Lok Adalat constituted Under Section 19 of the LSA Act, having no adjudicatory power, which can only conduct conciliatory proceedings. The second is a Permanent Lok Adalat, established Under Section 22-B(1) of the LSA Act in respect of public utility services, which can carry out both conciliatory and adjudicatory functions, subject to the procedure to be followed Under Section 22-C of the LSA Act. The scheme of the LSA Act makes clear the distinction between the two types of Lok Adalats. Section 20 of the LSA Act provides that the Lok Adalat shall aim to arrive at a compromise or settlement between the parties. If no such compromise or settlement is arrived at, then the record of the case is returned to the court from which the Lok Adalat had received the reference. The court would then proceed to adjudicate the dispute - The Permanent Lok Adalat would first conduct conciliation proceedings and attempt to reach an amicable settlement of the dispute. However, if the parties fail to reach an agreement, it shall decide the dispute, as long as the dispute does not relate to an offence. Section 22-D further indicates that the Permanent Lok Adalat is empowered to decide the dispute between the parties on merits. In United India Assurance Co. Ltd. v. Ajay Sinha and Ors. [ 2008 (5) TMI 745 - SUPREME COURT] , this Court held that the Permanent Lok Adalat performs an adjudicatory role if the conciliation between the parties fails - Likewise, in INTERGLOBE AVIATION LTD. VERSUS N. SATCHIDANAND [ 2011 (7) TMI 1025 - SUPREME COURT] , this Court observed that the Permanent Lok Adalat's role mutates from that of a conciliatory body to an adjudicatory body, if the parties fail to reach an agreement, where it can decide the dispute between the parties. Thus, the powers of the Lok Adalat constituted Under Section 19 of the LSA Act are to be distinguished from the nature of powers granted to a Permanent Lok Adalat established Under Section 22-B of the LSA Act. It is in the context of interpreting the jurisdiction of Lok Adalats constituted Under Section 19 of the LSA Act, that this Court has held that the Lok Adalat cannot perform any adjudicatory function in terms of Section 20 of the LSA Act. The observations of the Division Bench in the impugned judgment in respect of the adjudicatory powers of the Permanent Lok Adalats were incorrect, while upholding its ultimate conclusion since the Permanent Lok Adalat failed to follow the mandatory conciliation proceedings in the present case - Application disposed off. 2022 (7) TMI 3 Dishonor of Cheque - legally enforceable liability of a non-existent partnership firm - dissolution of partnership firm - obligation upon the partners of the firm to issue public notice of the dissolution of the firm - Section 141 of NI Act - Section 45 of the Indian Partnership Act, 1932 - HELD THAT:- On perusal of the record including the evidence led by the parties, it is seen that neither the respondents had filed any document to show that they had complied with the mandate of Sections 45 and 72 of the Partnership Act,1932, by issuing public notice nor this issue was raised by the appellant before the Trial Court. Even the Trial Court failed to deal with the said issue. However, this being a question of law, there is no prohibition against raising the said contention in appeal. The question of applicability of Section 45 of the Indian Partnership Act, 1932, is only a question of law and such a question could be raised at any stage of the case and also in appeal. In fact, the learned Trial Court itself should have considered this aspect of the matter, even though it was not raised by or on behalf of the present appellant because it is the duty of any Court of Law to find out the truth and to that end, examine the applicability of the relevant provisions of the Law to the facts of the particular case which it is called upon to decide. The matter is remitted to the Trial Court with a direction to permit the parties to lead the evidence on the aspects as discussed. 2022 (7) TMI 2 Dishonor of Cheque - quantum of compensation amount - case of complainant is that inasmuch as Section 148 of the Negotiable Instruments Act, 1881 lays down that 20% of the compensation/fine amount has to be deposited, while in the instant case, double the cheque amount has been ordered as compensation - HELD THAT:- The bar in sub-section (2) of Section 397 is not meant to be attracted to such kinds of intermediate orders. They may not be final orders for the purposes of Article 134 of the Constitution, yet it would not be correct to characterise them as merely interlocutory orders within the meaning of Section 397(2). It is neither advisable, nor possible, to make a catalogue of orders to demonstrate which kinds of orders would be merely, purely or simply interlocutory and which kinds of orders would be final, and then to prepare an exhaustive list of those types of orders which will fall in between the two. The first two kinds are well-known and can be culled out from many decided cases. The Hon'ble Supreme Court of India has considered the issue and laid down tests characterise whether an order is interlocutory order or not. In Hasmukh A. Jahveri Vs. Shella Dadlani [ 1980 (9) TMI 293 - BOMBAY HIGH COURT ], the Hon'ble Supreme Court of India held that the meaning of the term interlocutory order is not always converse of the term final order and held that an order determining important rights and liabilities cannot be termed as interlocutory. Applying the tests to the power exercisable under Section 148 of the Negotiable Instruments Act, 1881, as rightly pointed out by the learned Counsel for the respondent, it is not a pre-condition in the appeal to be taken on file and therefore will not result in a final order of deciding the appeal. Applying the test of deciding the rights of the parties, it has been held that it is only a direction to deposit, subject to the final outcome in the appeal and therefore is only a matter of procedure without finally determining the rights of parties. Applying the test as to whether non-passing of such order or accepting of any plea by the accused or the complainant, whether it would result in culmination of proceedings, the answer is again in the negative - Therefore, applying any of the tests advocated by the Hon'ble Supreme Court of India, still the order, which is passed in exercise of power under Section 148 of the Negotiable Instruments Act, is neither a final order nor an intermediate order so as to hold that the revision as against the same is maintainable. However, as held by the Hon'ble Supreme Court of India in MADHU LIMAYE VERSUS STATE OF MAHARASHTRA [ 1977 (10) TMI 111 - SUPREME COURT] , the petitioner would be at liberty to approach this Court in exercise of inherent power under Section 482 of the Code of Criminal Procedure. This Criminal Revision Case is dismissed as not maintainable.
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