TMI Tax Updates - e-Newsletter
July 21, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Process to Download GST Registration Certificate

   By: Ishita Ramani

2. SECTION 92 OF CPC IS NOT APPLICABLE IN A SUIT FILED BY A CHARITABLE TRUST AGAINST A THIRD PARTY

   By: DR.MARIAPPAN GOVINDARAJAN

3. GST-ITC on CSR Expenses before Sec 17(5)(fa) of CGST Act is notified

   By: Vivek Jalan

News

1. DPIIT and Govt. of Gujarat jointly launch ‘One District One Product’ Wall at Garvi Gujarat Bhawan today

2. Secretary, Department of Financial Services (DFS), holds review meeting under Financial Inclusion Schemes with heads of PSBs and other organisations

3. Secretary, Department of Financial Services (DFS), holds review meeting with heads of Public Sector Banks to assess the progress under PM SVANidhi scheme

Notifications

Customs

1. G.S.R. 523(E) - dated 30-6-2023 - Cus (NT)

Inland Container Depots for loading and unloading of goods - entries for Village Dahej, Taluka Vagra, Distt, Bharuch notified - Corrigendum - Notification No. 38/2023-Customs (N.T.) dated 23.05.2023

DGFT

2. 20/2023 - dated 20-7-2023 - FTP

Amendment in Export Policy of Non-basmati rice under HS Code 1006 30 90

Law of Competition

3. S.O. 3238 (E) - dated 14-7-2023 - Competition Law

Central Government exempts the Regional Rural Bank notified under sub-section (1) of section 23A of the Regional Rural Banks Act, 1976, for a period of five years

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-I –PoD1/P/CIR/2023/125 - dated 20-7-2023

New category of Mutual Fund schemes for Environmental, Social and Governance (“ESG”) Investing and related disclosures by Mutual Funds

2. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/74 - dated 19-5-2023

Master Circular for Mutual Funds

DGFT

3. Trade Notice No. 16 /2023 - dated 20-7-2023

Procedure for allocation of quota for export of broken rice on humanitarian and food security grounds, based on requests received from Governments of other Countries

Highlights / Catch Notes

GST

• High Court Confirms Penalty for Tax Evasion Due to Missing E-Way Bill; Vehicle Confiscation Avoided.

  Case-Laws - HC : Imposition of penalty in lieu of confiscation of the vehicle - absence of E-way bill - In the present case the intention of the petitioner is clear that the goods were being transported in the vehicle, with an intention to evade the tax - respondent authorities have shown material, which indicate and infers the intention of the petitioner, which is evasion of tax. - Levy of penalty confirmed - HC
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• AI Crate for Artificial Insemination Classified Under TI 7306 with 18% GST Rate.

  Case-Laws - AAR : Classification of goods - rate of tax - AI crate (Artificial Insemination Crate)/Travis - the product is nothing but a structure made of tubes, pipes of iron and steel. Ideally, therefore, the product falls within the ambit of TI 7306. - Liable to GST @18% - AAR
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• Plant Growth Regulators Classified with Pesticides Under CETH 38.08, Subject to 18% GST Rate.

  Case-Laws - AAR : Classification of goods - rate of tax - Plant growth regulator further helps plants in making efficient use of the nutrients for their growth. Plant growth regulators are classified under CETH 38.08 alongside other insecticides, fungicides, herbicides and disinfectants. In-fact plant growth regulator are even considered as pesticides in some parts of the world. - Liable to GST @18% - AAR
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• University Services to Colleges and Students Classified as GST "Supply" but Exempt from Payment.

  Case-Laws - AAR : Scope of supply - activities or services being provided by the University to its affiliated colleges and students - The services provided by the applicant to its affiliated colleges constitute a supply within the meaning and scope of “supply” - The services provided by the applicant to its affiliated colleges are exempted; from payment of GST - AAR
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Income Tax

• Income from Duty Drawback and Tax Refunds Recognized Only When Sanctioned by Authorities, Not When Claimed.

  Case-Laws - AT : Accrual of income in current AY - duty drawback and service tax refund - the income would be receivable only when the income accrues to the assessee and income would accrue to the assessee only when the assessee gets such a right to receive the income. The assessee would get a right to receive only when it is sanctioned to the assessee by the custom authorities and not when the assessee makes a claim of the same. - AT
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• Court Dismisses AO's Claims u/s 68 Due to Insufficient Evidence on Unexplained Share Capital Receipts.

  Case-Laws - AT : Addition u/s 68 - unexplained credit/receipt - bogus receipt towards share capital and share premium - The suspicion entertained on bona fides has not been carried out to any logical end. AO has attempted to implicate the assessee mainly on two grounds namely, inspector report which shows that the assessee was not in existence at the address and secondly, the summons issued u/s 131 has not been complied with by the Director of the Assessee. Both the points do not have much force. - AT
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• CIT Reviews Deduction u/s 36(1)(viia) for Bad Debts; Assessee Must Prove Debit Qualification.

  Case-Laws - AT : Revision u/s 263 by CIT - deduction u/s 36(1)(viia) - Provision for bad debts - Once a provision, under whatever name, is debited in the profit and loss account, then it is can be allowed, provided it is within the limits specified. None of the lower authorities had carefully gone into nature of the debits. It was for the assessee to show that these were indeed provisions for bad and doubtful debts. - AT
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Customs

• Revenue Accepts Order; Confiscation of Goods Set Aside; Section 125 Redemption Fines Not Applicable.

  Case-Laws - HC : Confiscation - Redemption fine - Since in the instant case, the appellant/ revenue has accepted the setting aside order of confiscation of goods, question of applying provisions of Section 125 dealing with the redemption fine which are in lieu of confiscation would not arise and therefore, on this ground itself, question of setting aside redemption fine as raised by the appellant revenue does not arise. - HC
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• Court Rules Customs Wrong in Withholding Imported Goods Due to Unresolved Trademark Dispute; No Established Rights Found.

  Case-Laws - HC : Rejection of clearance of the goods imported - denial on the ground of a trade mark dispute were pending - There is no warrant for the customs authorities in not permitting release of the goods in question in the absence of any right in respect of the mark in question having crystallized in favour of respondent no. 8 at the time petitioner sought clearance of the goods subject matter of bill of lading - HC
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• Department Misinterprets Remand Order as Directive to Issue Show Cause Notice; Tribunal Lacks Authority Under Customs Act, 1962.

  Case-Laws - AT : Validity of SCN - Department interpreted the remand order as a direction to issue SCN - The genesis of a litigation is the issuance of show cause notice. The intention of such show cause notice is to inform the party about the allegations and also to give opportunity to the party to put forward any defence with regard to the allegations. The said requirement is the basic principle of natural justice. There is no provision in the Customs Act, 1962 which enables the Tribunal to direct the department to issue show cause notice to a party. - AT
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• Goods Seized Under Customs Act Sec 110(2) Must Be Released; No Notice Issued Within Stipulated Period.

  Case-Laws - AT : Seeking provisional release of goods - Many moons beyond the stipulated period, under section 110(2) of Customs Act, 1962, for issue of such notice have come and gone without even a single notice proposing delayed issue of notice. Section 110(2) which is not contingent upon discretionary or even administrative exercise of any empowerment but absolute in intent must prevail in the absence of a constructive show cause notice recognizable by law. The seized goods are to be released forthwith to the appellant. - AT
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• Executives Cleared of Penalties under Customs Act Sections 112 and 114AA Due to Lack of Evidence in Consignee Name Alteration.

  Case-Laws - AT : Levy of penalty u/s 112 and 114AA of the Customs Act, 1962 - Executives / Employees of freight and forwarding agent - existence of mensrea - deliberate connivance with the main noticees in changing the name of the consignee - There is nothing on record to impute knowledge about the usage of false or incorrect material in the transactions undertaken as regards the present two appellants - In fact, the show cause notice does not remotely alleges and castigates the two appellants herein for manipulation and forgery in the bill of lading. - No penalty - AT
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• Court Rules No Mis-declaration: Imported Goods Correctly Classified, Smuggling Allegations Unproven by Authorities.

  Case-Laws - AT : Classification of imported goods - Mineral Spirits or Diesel Oil-High Speed Diesel (HSD) - Allegation of mis-declaration of goods - smuggling of diesel - none of the evidences relied upon by the department, to allege the mis-classification and under valuation resorted to by the appellants, stand the scrutiny of Law - Revenue failed to prove its case - AT
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Indian Laws

• Director's Liability Upheld in Cheque Dishonor Case Despite Joining Post-Issuance Due to Lack of Evidence.

  Case-Laws - HC : Dishonour of Cheque - vicarious liability of director - cheque was issued prior to the date of director joining the company - The petitioners have failed to bring on record any unimpeachable material or material of sterling quality to show that they were not responsible for day-to-day affairs of the company when the cheque was issued or dishonored or that the dishonoring of cheque in question was not attributable to any negligence or connivance or consent on their part. - Petition dismissed - HC
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• High Court Rules Continuing Criminal Case After Exoneration in Departmental Inquiry is Court Process Abuse.

  Case-Laws - HC : Continuation of criminal proceedings when petitioner was exonerated in the departmental enquiry in the same set of allegation - Creation of false documents and drawing of monies by cheating the Government and misappropriation of Government funds. As the petitioner was exonerated in the departmental enquiry, continuation of proceedings in respect of same set of allegations is nothing but abuse of process of Court - HC
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IBC

• Court Rules Arbitral Award Execution Valid Despite Insolvency Proceedings; Petitioner's Objections Not Within Challenge Scope.

  Case-Laws - HC : Execution of arbitral award - the arbitral proceedings were initiated prior to insolvency resolution date, suspended during the moratorium period, resumed upon expiry of the moratorium period and the approved resolution plan did not determine the claim of the respondent as nil - This court is of the considered view that the points raised by the petitioner objecting to the execution of the arbitral award were not fit to be entertained at the stage of execution. The grounds do not fit in the very narrow scope of assailing the award as nullity. - HC
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• NCLT Rules Corporate Debtor's Discounts Not Undervalued; Claims Lack Supporting Evidence Beyond April 2018 Meeting Minutes.

  Case-Laws - AT : Undervalued Transactions - avoidable transactions or not - Debtor of the Coporate Debtors - Discounts given by the Corporate Debtor for the benefit of the Appellant in the ordinary course of business or otherwise - The Appellant has not produced any document apart from the minutes of meetings dated 03.04.2018 to show that he had raised issue about poor quality and other issues for claiming discount with the Corporate Debtor at the time of supply of the raw material - NCLT rightly rejected the claim - AT
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• Resolution Professional Denied Incentive Fee; Committee of Creditors' 91.55% Vote Stands Firm, Authorities Uphold Decision.

  Case-Laws - AT : Grant of Performance linked Incentive Fee to Resolution Professional - RP was able to maximize the value of Corporate Debtor - Appellant had no right to claim performance linked incentive fee and his claim having been considered and rejected by the Committee of Creditors with 91.55% vote share cannot be faulted nor it can be interfered with by the Adjudicating Authority or Appellate Authority in exercise of its jurisdiction - AT
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Service Tax

• Court Overturns Service Tax Demand on GTA Services; Exemption Applies to Certain Recipients Under Reverse Charge Mechanism.

  Case-Laws - AT : Demand of differential service tax - Provider of GTA service - Whether the recipient of services were liable to pay ST on reverse charge basis (RCM) - all the service recipient are body corporate, dealer of excisable goods, registered factory, a partnership firm which are covered under exemption notification, whereby the service recipient is liable to pay service tax. Therefore, the assumption of the adjudicating authority is absolutely incorrect without any basis. - Demand set aside - AT
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• Fly Ash Removal from Silos Exempt from Service Tax; Not Classified as 'Cleaning Services' for Industrial Operations.

  Case-Laws - AT : Classification of services - cleaning services or GTA Services - The evacuation of ‘fly ash’ is required to continue the industrial activity. Unless the accumulated fly ash is removed from the silos, it cannot be utilized to receive further ‘fly ash’ emerging during the course of manufacturing. Thus, it is observed that removal of ‘fly ash’ from the silos is an essential part of the production process. - not chargeable to service tax under the category of ‘Cleaning Service’ - AT
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Central Excise

• CENVAT Credit Disallowed Beyond SCN Scope; Raw Material Use for Capital Goods Not Originally Alleged in SCN.

  Case-Laws - AT : Disallowance of CENVAT credit wrongly utilized - Order beyond the scope of the Show Cause Notice (SCN) - In any view of the matter the show cause notices do not allege that the raw materials on which CENVAT credit had been taken had not been utilized for fabrication of ‘capital goods’. The Commissioner, therefore, could not have examined this issue - AT
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Case Laws:

• GST

• 2023 (7) TMI 817
  Imposition of penalty in lieu of confiscation of the vehicle - absence of E-way bill - Intent to evade tax or not - HELD THAT:- Carrying e-way bill by the transporter is a requirement under the Rules, which has the sanction of the provisions of the Act. Therefore, it cannot be said that it is the duty of the owner of the goods alone to generate e-way bill. If e-way bill is not generated by the owner of the goods, who transports such goods, it is the transporter, who has to generate e-way bill. In the instant case, it has not been done. The main argument on behalf of the petitioner is that it is not a case of evasion of tax; it is merely failure to carry the e-way bill, which is requirement of the Rules and as such is punishable under Section 164(4) of the Act or under Section 122(1)(xiv) of the Act - Penalty under Sections 164(4) and 122(1)(xiv) of the Act may not come in way of the competent officer to proceed under Section 130 of the Act, if other circumstances permit to take action under Section 130 of the Act. In the present case the intention of the petitioner is clear that the goods were being transported in the vehicle, with an intention to evade the tax - respondent authorities have shown material, which indicate and infers the intention of the petitioner, which is evasion of tax. The petitioner was transporting goods without the e-way bill, with intent to evade the tax. It attracts the provisions of Section 130 of the Act. Accordingly, an order has been passed under Section 130 of the Act, which is impugned. This Court does not see any reason to make any interference in the impugned order - petition dismissed.

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• 2023 (7) TMI 816
  Seeking grant of bail - fraudulent availment of Input tax Credit - issuance of fake invoices - no delivery of goods - HELD THAT:- The applicants have reversed a substantial amount of ITC i.e. Rs. 113,90,49,678/-; further considering that applicants have been in jail since 29.11.2022; that offence is triable by JMFC and maximum sentence for the offence is up-to 5 years; further considering that material evidences appears to be documentary and electronic in nature, so, there is no chance of tampering or influencing the evidence and no likelihood of flight-risk of the applicants, it is found appropriate to release the applicants on bail. The application is allowed and it is directed that on each of the applicants furnishing a personal bond in the sum of Rs. 2,00,000/- with two sureties each for the like sum to the satisfaction of the concerned Court, they shall be released on bail on the conditions imposed.

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• 2023 (7) TMI 815
  Validity of preliminary reports issued by the Deputy Commissioner of Revenue, Bureau of Investigation/respondent no. 1 - preliminary reports challenged on the alleged ground that the said officer/respondent no. 1 does not have any jurisdiction to ask the petitioners to file any objection to the aforesaid preliminary reports or asking the petitioners to avail the opportunity of personal hearing - HELD THAT:- Considering the facts and circumstances of the case as appears from record and submission of the parties, it is found that what the petitioners have challenged in these writ petitions are a mere preliminary reports on the basis of investigation which is at preliminary stage and that the petitioners have been given several opportunities to file objection to the same, if they have got any, against the said preliminary reports and also several opportunities of personal hearing have been provided to the petitioners which they voluntarily did not avail and that the petitioners have not annexed to the writ petitions any of the objections or response which they have filed from time to time and that the judgment of the Hon ble supreme Court in the case of Canon India Private Limited [ 2021 (3) TMI 384 - SUPREME COURT ] relied upon by the petitioners is under a different Act and is distinguishable both on facts and law. There are no reason to interfere with the aforesaid impugned preliminary reports at this stage of investigation by which it has sought objection from the petitioners if they have any and accordingly these writ petitions being premature are dismissed.

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• 2023 (7) TMI 814
  Grant of Interim Bail - Constitutional validity of Section 69 of the Central Goods and Service Tax Act, 2017 - said provision is arbitrary and ultra vires of Articles 14 and 21 of the Constitution of India or not. The ground taken by the petitioner is that the sanction order dated 27.6.2023 is silent regarding the requirement specified in Section 41 (1) of Cr PC or the Arrest Memo does not record any satisfaction and opinion regarding the necessity to arrest and whatever reason recorded is regarding the commission of offence besides they are silent and the same ought to have been followed in the light of the general directions issued by the Supreme Court. HELD THAT:- There is no force in the argument raised by the Department that the release of the petitioner by this Court may hamper the investigation. Undisputedly, the Department has merely asked for judicial custody of the petitioner and it appears that they were satisfied with the interrogation held by them till seeking of such judicial remand and till date, no request has been made by the Department before the Court that they need the petitioner for any interrogation. Prima facie , the conduct of the Department shows that they are satisfied with the interrogation made by them and they may not be interested to further interrogate the petitioner. Moreover, assurance has been given by the petitioner that he will cooperate in the investigation and will not, in any manner, hamper the same. The law laid by the Apex Court in SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. [ 2022 (8) TMI 152 - SUPREME COURT] and Arnesh Kumar [ 2014 (7) TMI 1143 - SUPREME COURT ] very specifically state about the investigation and arrest of a person. Further, this law has been duly followed by all the courts. Thus, the petitioner has made out a case for proper construction of Section 69 of the Act, 2017 and the issues concerning violation of statutory and constitutional procedural safeguards in the matter of arrest, do merit consideration and in the meantime, a case for bail is also made out. It is directed that petitioner, Ashish Kakkar, be released on bail on furnishing a personal bond in the sum of Rs. 1.00 crore and two sureties each in the like amount to the satisfaction of the Court concerned, with the conditions, being imposed in the interest of justice - Petition allowed.

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• 2023 (7) TMI 813
  Requirement of compulsory GST registration or not - Condition of Request for proposal (RFP) issued by the respondents for establishing, operating and maintaining Lok Seva Kendra at Kanadia - HELD THAT:- Counsel for the State prays for time to seeks instructions. After hearing learned counsel for the parties, issue notice to the respondents on payment of P.F. by registered post with A.D. within 7 working days, returnable within 10 days. As an interim measure, the petitioner shall be permitted to submit proposal in pursuant to the RFP dated 30.5.2023 and further proceedings in pursuant to the said RFP shall be subject to final outcome of the petition.

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• 2023 (7) TMI 812
  Requirement to obtain registration with State Tax Authorities of Madhya Pradesh State - place of supply of service - rate of tax - SAC code applicable for providing the service under Work Contract - HELD THAT:- The applicant has made this application before the Gujarat Authority for Advance Ruling, seeking a ruling on whether he is liable to get himself registered under Madhya Pradesh GST. On being asked during the personal hearing it was informed that the place of supply of their service is Madhya Pradesh. Since the contract is not provided and also since the facts mentioned is cryptic and difficult to comprehend, it is opined that the proper authority for giving a ruling on the aforementioned question is the Madhya Pradesh AAR and not GAAR. The application filed by the applicant is rejected as the GAAR does not have the jurisdiction to rule on the question on account of the fact that as per the applicant the place of supply is Madhya Pradesh.

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• 2023 (7) TMI 811
  Classification of goods - rate of tax - AI crate (Artificial Insemination Crate)/Travis - classified under TI 9018 or under TI 7306? - HELD THAT:- The diagram of the product in question viz Al crate (Artificial insemination crate)/Travis, and the photograph of the product that was shown during the course of personal hearing, clearly depict that the product is nothing but a structure made of tubes, pipes of iron and steel. Ideally, therefore, the product falls within the ambit of TI 7306. Even otherwise, it is found that for the product to be classified under TI 9018, it should be a instrument or an appliance or at least an apparatus. The applicant has not produced anything before the Authority which would enable to arrive at a finding to hold that the product in question is a instrument or an appliance or an apparatus. This being the fact, the product would not fall within the ambit of TI 9018. Rate of tax - HELD THAT:- In terms of notification No. 1/2017- Central Tax (Rate), Schedule III, Sr. No. 220, the rate of GST is 18%. Reliance can be placed in the case of IN RE: M/S. S.K.M.L. INDUSTRIES, [ 2021 (8) TMI 528 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH] where it was held that After a detailed examination of the specific features of the Product i.e., Iron Tubular Trevis , or Insemination Crate-Cum-Trevis , we are of the opinion that it falls under Entry No.220 of Notification 1/2017 - (Integrated Tax) with HSN code 7306 of Other tubes, pipes and hollow profiles (for example, open seam or welded, riveted or similarly closed), of iron or steel attracting 18 % rate of tax.

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• 2023 (7) TMI 810
  Classification of goods - rate of tax - Rapigro - to be classified under TI 3507 or under 31010099? - whether the product is a fertilizer as claimed by the applicant or a plant growth regulator? HELD THAT:- CBIC s circular dated 6.4.2016, has clarified on classification of Fertilizers - the clarification states that fertilizers classified under chapter 31 may inter alia be minerals or chemical fertilizers - nitrogenous (CETH 3102), phosphatic (CETH 3103), potassic (CETH 3104) or fertilizers consisting of two or three of the fertilizing elements namely nitrogen, phosphorous and potassium. The chemical elements - nitrogen, phosphorus and potassium are also referred as macronutrients or primary fertilizer elements and are required in higher quantity by the plants. On going through the TI 3101, it is found that the description mentioned is of animal or vegetable fertilizer, whether mixed together or chemically treated, Guano, Other which includes animal dung, animal excreta others. The applicant has not specifically pointed out to us as to how the product Rapigro would fall under the description Others ie CTH 31010099. Moreover, at the cost of repetition, the applicant has failed to divulge as to what is the addition of other organic nutrients obtained through fermentation which is added by M/s. Sowbhagya to the vegetable protein to manufacture CPH Liquid. In the present era other than the classical PGRs various other new plant growth promoter/regulator/stimulator are discovered and are currently used by the farmer for increasing their yield/quality of their produce. As per the explanation of Circular, essential plant nutrients includes any primary nutrients viz nitrogen, phosphorus and potassium, secondary nutrients like calcium, magnesium and sulphur and micro nutrients like zinc, manganese, copper, iron, boron and molybdenum. On going through the analytical composition provided by the applicant [refer para 2.4] we do not find any mention or inclusion of these secondary or micro nutrients. The circular dated 6.4.2016 clarifies that It may also be noted that notifications issued under FCO are not relevant for deciding classification under Central Excise Tariff . The averment therefore, that since they have applied and have been granted registration as a bio stimulant under FCO would not be the sole determining factor under the present proceedings. Both fertilizer and plant growth regulator are different. While a fertilizer promotes growth of the plant, a plant growth regulator on the other hand also stimulates plant growth. The plant growth regulator in-fact promotes/inhibits the growth by affecting the structure at the physiological level. Whereas fertilizers provide nutrients, - the plant growth regulator is an organic component which when applied in low concentration promotes, inhibits or qualitatively modifies plant growth. Plant growth regulator further helps plants in making efficient use of the nutrients for their growth. Plant growth regulators are classified under CETH 38.08 alongside other insecticides, fungicides, herbicides and disinfectants. In-fact plant growth regulator are even considered as pesticides in some parts of the world. The applicant has also relied upon the Order-in-Original No. 16/2006 (ADC) dated 30.10.2006 to further aver that since CPH liquid is classified under TI 3101, Rapigro which is manufactured using the said liquid should also fall under the same Tl. The argument lacks merit primarily because the OIO has been decided way back before issue of the CBIC s clarificatory circular dated 6.4.2016, which specifically deals with classification of products falling under fertilizer, plant growth promoter, etc. and going by the same we find that the product viz RAPIGRO is a plant growth regulator. Thus, the classification of Rapigro under the Customs Tariff Act, 1975 and under the Central Goods Services Tax Act, 2017 will be under 38089340, as a plant growth regulator - rate of tax applicable on Rapigro is 18% as per SI. No. 87, Schedule III, notification No. 1/2017-CT (Rate) dated 28.06.2017.

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• 2023 (7) TMI 809
  Scope of supply - activities or services being provided by the University to its affiliated colleges and students - services rendered by a Government authority by way of any activity in relation to the functions entrusted to a Panchayat and Municipality - exemption under Entries 4 and 5 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and SRO 371/2017 dated 30.07.2017. Whether the services provided by the applicant to its affiliated colleges and students constitute a supply within the meaning and scope of supply as defined in Section 7 of the CGST Act, 2017? - HELD THAT:- The definition of business under the GST Act is an inclusive definition and is so wide in its scope and amplitude that it not only covers all activities or transactions that were subjected to various taxes that were subsumed in GST but also functions undertaken by Central Government, State Government or Local Authority as such public authority. In the case of DAYAL SINGH ORS. VERSUS U.O.I. ORS. [ 2003 (1) TMI 712 - SUPREME COURT] , the Hon ble Supreme Court held that; where the language of the statute is clear and unambiguous, nothing can be read into it by implication and the intention of the legislature has to be gathered from the language used. In view of the plain and unambiguous definition of the term business in the CGST Act there is no need for recourse to construction or interpretation and the plain meaning of the statue has to be applied - Therefore, the services provided by the applicant to its affiliated colleges are covered by the definition of business in the CGST Act and consequently constitute a supply within the meaning and scope of supply as defined in Section 7 of the CGST Act, 2017. Whether the supply is exempted under the entry at SI Nos. 4 and 5 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017? - HELD THAT:- The entry Nos. 17, 18 and 19 of Eleventh Schedule of the Constitution covers all types of education and education is also covered under entry No. 13 of the Twelfth Schedule of the Constitution. Therefore, education is a function entrusted to both Panchayath as well as Municipality under Article 243G and 243W respectively of the Constitution. University is a key institution of social change and development and the applicant being a Public University established under The Calicut University Act, 1975 an Act passed by the Legislature of the State of Kerala falls under the definition of Governmental authority in Para 2 (zf) of Notification No. 12/2017 CT (Rate) dated 28.06.2017. Therefore, the services provided by the applicant to its affiliated colleges are services by Governmental authority by way of activity in relation to function entrusted to a Panchayath and Municipality under Article 243G and 243 W of the Constitution and accordingly exempted from payment of GST as per entries at Si Nos. 4 and 5 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017.

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• Income Tax

• 2023 (7) TMI 808
  TP Adjustment - selection of MAM - TNMM OR Berry ratio - international transactions concerning indenting-transactions concerning the respondent/assessee and its AEs - Tribunal passed an order [ 2018 (10) TMI 1785 - ITAT DELHI ] whereby it concluded that the Transaction Net Margin Method (TNMM) was the most suitable method - HELD THAT:- We are closing the instant appeals in view of the fact that the appellant/revenue chose not prefer an appeal against the order [ 2018 (10) TMI 1785 - ITAT DELHI ] passed by the Tribunal in the AYs referred to hereinabove. According to us, the issues in the above-captioned appeals are pari materia with those that arose in AY 2007-08 to AY 2010-11. Via the impugned order, the Tribunal has, in sum, sought to re-examine the issue, in the light of the directions contained therein. The above-captioned appeals are, accordingly, closed as no substantial question arises for our consideration.

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• 2023 (7) TMI 807
  Revision u/s 263 - order passed by the Tribunal which inter alia set aside the order passed u/s 263 was carried in appeal by the revenue before this Court in the proceedings which has been admitted by a coordinate Bench of this Court [ 2018 (10) TMI 1999 - BOMBAY HIGH COURT] - HELD THAT:- It appears from the Tribunal s order [ 2015 (7) TMI 1208 - ITAT PUNE ] that the assessee had not asserted any plea on jurisdiction of the CIT to invoke Section 263 proceedings but on the contrary paragraph 12 of the said order reproduces submissions of the assessee only on merits of the case. In view of the our above observations we are not inclined to accept the contentions of assessee, that the orders of this Court [ 2018 (10) TMI 1999 - BOMBAY HIGH COURT] when in paragraph 2 thereof observes that the Court should not re-open the finding of the Tribunal that Section 263 of the Act was not attracted, would put a quietus to the issue. It is on the above conspectus, the present proceedings are required to be considered as to whether the Tribunal is correct in disposing of the appeal on the ground that it had become infructuous. Admit on the following substantial question of law: Whether the Tribunal in disposing of the assessee s appeal by the impugned order could have ignored that the order under Section 263 proceedings were not set aside by the tribunal on the issue of jurisdiction but on adjudication on its merits.

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• 2023 (7) TMI 806
  Capital gain addition on protective basis or substantive basis - assessee/partner holding 5% share in a partnership firm - whether the act of the respondents of recovering the amount assessed as protective addition against the petitioner and charging interest thereon and subsequently recovering the same without framing any substantive assessment is illegal and not sustainable in the eyes of law? - HELD THAT:- On applying the legal proposition to the effect that without substantive assessment, no recovery can be effected to the instant case, it is observed that since at the time of passing of assessment order by respondent No.2 where the protective addition was made in the case of the petitioner, no substantive addition had been made in the hands of the firm, therefore, no substantive additions were infact in existence. Subsequent demand in the absence of substantive addition being specifically made in the hands of the petitioner, recovery could certainly not be effected from him. Though the Tribunal had made observation that protective assessment may become substantive, however, it had neither declared the impugned assessment as substantive assessment nor gave any direction to the assessing authorities to frame the same qua the petitioner assessee. It is also not the case of the respondents that at any stage thereafter, the authorities had framed substantive assessment in respect of the additions made in the income of the petitioner against him. When without framing any substantive assessment, the respondents sought to recover the amount assessed protectively rather recovered the same by issuing the impugned demand notice and recovery certificate, their action cannot be stated to be sustainable in law. Accordingly, the impugned demand notice and recovery certificate have become liable to be set aside and it is ordered accordingly. Recovery pursuant to the impugned notice and certificate has already been effected from the petitioner by the respondents and further keeping in view the interest of the revenue who might be entitled to recover the amount protected by way of protective assessment as made against the petitioner from him or from the firm or any other person, by making substantive assessment, we consider it proper to remit the case with a direction to the assessing officer to consider the question of making substantive assessment in the matter against the proper assessee and then to pass an order of recovery in this case. It is made clear that if the assessing officer/proper officer fails to make any substantive assessment against the petitioner within a period of three months from the date of passing of this order, then the revenue shall be liable to refund the amount so recovered from the petitioner.

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• 2023 (7) TMI 805
  Revision u/s 263 - fees towards supervisory charges - composite contract or can be segregated - income taxable in India - CIT while examining the scope of the contract including the nature of receipt under different heads formed an opinion that it is a composite contract and this fee under the head supervisory services (i.e. item (e) above), cannot be segregated at the instance of assessee and this aspect was not examined by the AO constructively either in the assessment order or during the assessment proceeding - assessee has been contending that it has received fees towards supervisory charges and since it has not made available technical knowledge about providing of these supervisory charges, therefore, u/a 13 of India-UK Treaty, this receipt will not fall in the ambit of FTS and not taxable - HELD THAT:- As clauses if read into clauses starting from the Article 3, then, would reveal that it is a fee for one part from the composite contract and it cannot be segregated. This service was not being provided on a item which can be consider as stand alone item even without availability of this agreement. As far as the first-fold of submission of assessee AO has perused the submission of the assessee, we are of the view that the assessee had made a fatuous attempt to goad the adjudicating authority in a field, where facts are not available. The theory of conditions enumerated in Article 13 of the DTAA between UK and India is totally misplaced. The enquiry at this angle is to be made if it is determinable that services provided by the assessee are stand alone services and not dependent upon the agreement. It is an unnecessary argument raised by the assessee before AO for absolving from tax liability and this effort was not examined by the ld. Assessing Officer elaborately and diligently. If agreement is being perused, then, it would give a meaning that it is a composite agreement and different category of receipts cannot be segregated from it. Therefore, this concept of applicability of Article 13 is not at all applicable in the present case. The facts to that effect are not available precisely. Non-examination of AO with that angle has caused prejudice to the interest of the Revenue. The ld. CIT has rightly set aside this order by exercising powers under section 263. The observations made by us will not impair or injure the case of the Revenue and will not cause any prejudice to the defence/explanation of the assessee on merit. The observations made by us are for the purposes of bringing home our conclusion in support of the order of ld. CIT in this appeal. Therefore, the issue that has been relegated by the ld. CIT for fresh hearing - Appeal filed by the assessee is dismissed.

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• 2023 (7) TMI 804
  Unexplained cash credit u/s 68 - denial of natural justice - as argued assessee was not granted sufficient time to cross-examine Mr. Vipul Vidur Bhatt, on whose statement reliance has been placed by the AO - HELD THAT:- As in the peculiar facts of the present case wherein the assessee made multiple detailed submissions pursuant to various notices issued by the learned CIT(A), NFAC, it cannot be held that an appropriate opportunity of being heard was not provided to the assessee and there is a violation of principles of natural justice. We find that in the preceding year, the AO relied on a similar statement recorded of Mr. Vipul Vidur Bhatt on which reliance has been placed in the year under consideration. Therefore, when the same statement of Mr. Vipul Vidur Bhatt has been relied on in both the assessment years by the AO, we find no basis in the plea of the assessee that sufficient time was not granted for cross-examining Mr. Vipul Vidur Bhatt in the year under consideration. In any case, we find that in the preceding year, despite the grant of sufficient time to the assessee, Mr. Vipul Vidur Bhatt did not comply with the summons issued u/s 131 of the Act. SEBI had barred Sunrise Asian Ltd and other entities to whom the assessee had sold the shares from accessing the securities market or buying, selling or otherwise dealing in the securities market, either directly or indirectly or be associated with the securities market in any manner for a period of 6 months to one year. Further, we find that the SEBI found the manipulative trade executed by Sunrise Asian Ltd., as well as the entities to whom these shares were sold by the assessee. Though, the assessee was not part of the investigation conducted by SEBI, however, the same does not absolve her from proving the genuineness of the transaction in shares of Sunrise Asian Ltd. under section 68 of the Act. Plea of the assessee that the payment for the acquisition of shares was made from the bank account and the shares were dematerialised and credited to the Demat account maintained by the assessee - Not only Sunrise Asian Ltd but the exit providers were also found to be involved in manipulative trade practices by the SEBI. Mr. Vipul Vidur Bhatt in his statement had admitted and confirmed that all the entities controlled and managed by him are mere bogus paper companies and he is involved in providing accommodation entry on a commission basis. Thus, not only Sunrise Asian Ltd but Conart Traders Ltd, whose shares were initially purchased by the assessee in physical form, were found to be belonging to Mr. Vipul Vidur Bhatt in the present case. Accordingly, we find no infirmity in the findings of the AO, which were confirmed by the learned CIT(A) vide impugned order - Decided against assessee.

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• 2023 (7) TMI 803
  Rectification u/s 154 - disallowance of Interest claimed - debatable and arguable issue - HELD THAT:- We keep in mind this settled legal proposition and advert to facts of the instant case wherein, the issue of sec. 154 rectification pertaining to the alleged prior period expenditure is highly debatable one only since the same involves crystallization issue in the earlier assessment year; on mercantile basis and in the year of payment is liable to be paid, after crystallization. This is indeed coupled with the various judicial pronouncements i.e., PCIT vs. Adani Enterprises[ 2016 (7) TMI 1250 - GUJARAT HIGH COURT] holding that such a claim is indeed a tax neutral case in case the concerned assessee is assessed at uniform rate throughout. We hold these peculiar facts and circumstances that both the learned lower authorities have erred in law and on facts in initiating sec. 154 rectification proceedings against the assessee.

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• 2023 (7) TMI 802
  Foreign exchange fluctuation loss - forex losses of current account transactions - Whether loss was arrived at by the assessee was notional in nature.? - CIT(A) deleted the addition - HELD THAT :- The question as to whether such gains or losses, involving foreign exchange already stand settled in hon ble apex court s landmark decision in CIT vs. Woodward Governor India P. Ltd.,[ 2009 (4) TMI 4 - SUPREME COURT] . This is indeed coupled with the fact that the relevant Accounting standard AS-11 has also issued necessary clarification that such differences ought to be recognized as income or expenditure, as the case may be, in revenue account. There is no discussion in the Assessing Officer s corresponding findings in his assessment order 27.12.2011 that the assessee s transactions in fact, had been taken in capital than in revenue account so as to be treated as capital expenditure as per CBDT s instruction no.3/2010 dated 23.03.2010. It rather emerges that the assessee had worked-out it s various losses relating to inventory only in current account followed by it s supportive evidence issued by the Bank of Baroda s [cash credit] sanction letter . Decided against revenue. Penalty u/s 271(1)(c) - assessee s survey declaration - HELD THAT:- DR could not produce any material found or seized during the course of survey which can substantiate the Revenue s claim that the assessee had concealed or furnished inaccurate particulars of it s income. We also wish to quote hon ble apex court s landmark decision in CIT vs., Reliance Petro Products [ 2010 (3) TMI 80 - SUPREME COURT] wherein their lordships have settled the law that each and every disallowance/ addition does not lead to automatic levy of penalty. We thus find no reason to reverse the CIT(A) s action deleting the impugned penalty. Decided against revenue.

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• 2023 (7) TMI 801
  LTCG on sale of residential property - FMV of property inherited - co-owners - assessee a non resident individual - AO noticed that property was inherited and its valuation was carried out on 09.11.2018 to determine its Fair Market Value (FMV) as on 01.04.2001 - AO noticed that property was inherited and its valuation was carried out on 09.11.2018 to determine its Fair Market Value (FMV) as on 01.04.2001 - As explained assessee s property commanded a much higher rate as on 01.04.2001 than the value estimated by the DVO - HELD THAT:- AO noted that this property was inherited by the assessee from his parents who had purchased the property in 1967/69. Since the property was purchased prior to 1st April, 2001, the assessee got it valued from a registered valuer and used the value for determining tax payable on long term capital gain arising from this transaction. AO accepted the FMV as on 01.04.2001 as determined by the registered valuer of the assessee. Similarly, in the case of Ms. Poonam Sachdev, sister of the assessee, the assessment for AY 2019-20 was completed on 28.09.2021 after complete scrutiny under CASS without making any addition, though the assessee had declared 1/3rd share of capital gain arising from the sale of the same property. Therefore, impugned addition in the case of the assessee is not warranted at all when the same FMV has been accepted in the cases of other co-owners. Decided in favour of assessee.

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• 2023 (7) TMI 800
  Reopening of assessment u/s 147 - Admissibility of interest expenses claimed by assessee u/s 57(iii) - change of opinion - As assessee argued in original assessment deduction was allowed on the same set of fact and even in the excess deduction was allowed will be changed of opinion - HELD THAT:- The use of the words reason to believe in section 147 has to be interpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the AO who may even initiate such reassessment proceedings merely on his change of opinion on the basis of same facts and circumstances which have already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said provision was incorporated in the scheme of the IT Act so as to empower the Assessing Authorities to re-assess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order. Section 147 does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the AO the power of review and section 147 confers the power to re-assess and not the power to review. Thus reopening under section 147 is nothing but based on changed of opinion on same set of facts, which is not valid. Thus, the action of reopening of assessment is set aside. Decided in favour of assessee.

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• 2023 (7) TMI 799
  Registration u/s 12AB denied - charitable activities of the trust were confined to a particular caste Surat Parish and Sindhis , therefore the provision of section 13(1)(b) are applicable and hence Ld. CIT(E) rejected the Form 10AB for the registration u/s 12AB - assessee argued that objects of trust are purely charitable without discrimination of creed, nationally or place except name, since it is started by Sindhis - HELD THAT:- We note that assessee trust, has two type of objects, one exclusively for Sindhi caste and second other objects which are for the benefit of public in general, that is open for all sections of society. But these other objects, which are open for all public, have really been carried on, by the assessee-trust or not, is a question of fact, which has not been examined by CIT (E). As school is run by assessee- trust, which is open for all sections of the society/caste, this fact has not been examined by ld CIT(E), as there is no reference in the entire order of CIT(E), hence it is a fresh argument before us which needs examination by CIT(E). Assessee-trusts have other objects like: to help poor, to give medical aid and to help public in general, in case of fire, flood and earthquake. Question before us is that since the assessee trust is an old trust, and whether in past, these activities were carried on by the assessee-trust or not, is not ascertainable by us from the paper book filed by the assessee. Considering these facts, we are of the view that entire lis of the assessee should be remitted back to the file of the ld CIT(E ) for examination - Appeal allowed for statistical purposes.

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• 2023 (7) TMI 798
  Income estimation - Case selected under CASS - income estimated @8% of the cash deposits / credits in the bank account - HELD THAT:- Assessee had taken sub contract from Smt.Veera Veni Nainala till the date of execution of sale i.e. 19.04.2016 in favour of the assessee. We also find that the assessee had deposited the amount collected in his bank account for rendering various services viz. electricity bills, telephone bills, water bills and other revenue services, which in turn was transferred by way of RTGS to Govt. of Andhra Pradesh for which he derived commission. Revenue could not controvert the fact that the amount collected and deposited in his bank account was not his income, but it was the amount collected for various services rendered and for depositing into the account of Govt. of Andhra Pradesh. We find force in the argument of the Ld.AR therefore set aside the order passed by the Ld.CIT(A) and allow the appeal of the assessee.

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• 2023 (7) TMI 797
  Rejecting application u/s 12A - mismatch in the name of PAN database vis- -vis certificate of registration - CIT(E) was of the view that the assessee has not furnished required details, thus verification of object of trust could not be verified - HELD THAT:- We find that such mistake may be inadvertent otherwise the registration number and PAN and the object of assessee are not in dispute. The assessee is in existence from 1954 and registered under the provisions of Bombay Public Charitable Trust . Considering the fact that the basic ground of rejection of application under section 12AB was mismatch in the name of assessee vis- -vis name shown in PAN, Application under Form10AB, and Trust deed, which may due to inadvertence, otherwise the registration number with Charity Commissioner and PAN is not in dispute. The assessee was not given opportunity either to explain the mismatch or to get such mismatch to correct, thus, in our view, the assessee deserve one more opportunity to correct their name, wherever required - Appeal of assessee is allowed for statistical purposes.

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• 2023 (7) TMI 796
  Accrual of income in current AY - duty drawback and service tax refund - HELD THAT:- For the refund of duty drawback the assessee accounts the same when it gets the right to receive the duty drawback which is nothing but mercantile system of accounting. This fact has not been disputed by the revenue authorities in any of the previous years as submitted by the ld. AR. In the present case, we conclude that the income would be receivable only when the income accrues to the assessee and income would accrue to the assessee only when the assessee gets such a right to receive the income. The assessee would get a right to receive only when it is sanctioned to the assessee by the custom authorities and not when the assessee makes a claim of the same. This view is supported by the judgment of CIT v. Asea Brown Boveri Ltd [ 2020 (7) TMI 20 - KARNATAKA HIGH COURT] and CIT v. Sriyansh Knitters (P) Ltd. [ 2010 (10) TMI 638 - PUNJAB AND HARYANA HIGH COURT] - Ground No.2 raised by the assessee on this issue is allowed. Interest payment on excess claim of refund - addition u/s 37(1) - adjustment against the duty drawback for the period for which the assessee benefitted on the excess amount of duty drawback @ 1% instead of 0.15 - HELD THAT:- Rule provides refund of excess claim and interest thereon, but it is not in the nature of penalty or fine where the Rule itself provides for payment of principal as well as interest. Hence, in our considered opinion, it should not be considered as penalty or fine. Therefore, the assessee has not violated the provisions of Explanation 1 to section 37(1) of the I.T. Act. As relying n Attire Designers (P.) Ltd [ 2022 (9) TMI 1102 - DELHI HIGH COURT] we hold that the interest paid by the assessee towards excess claim of refund of duty drawback is not penal in nature. Therefore, Explanation 1 to section 37 will not apply and assessee is eligible for claiming it as expenditure. Since the assessee has adjusted the interest paid from the refund of export benefit, it will not affect the profitability of the company. Accordingly, this issue raised by the assessee is allowed.

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• 2023 (7) TMI 795
  Levy of penalty u/s 271(1)(b) - assessee did not comply with the notice issued u/s 142(1) - HELD THAT:- Assessee submitted that the assessee appeared before the AO and also filed a written reply to the notices issued during the assessment proceedings. The same was completely ignored by the AO and the assessment order was passed u/s 144 r.w.s. 147 - CIT(A) without controverting the aforesaid fact dismissed the appeal filed by the assessee against the penalty order passed under section 271(1)(b) of the Act, since the assessee could not respond to notices of hearing. AR submitted that since the notices of hearing issued by the learned CIT(A) were not received, therefore, the assessee could not attend to the same. In the present appeal, the assessee is duly represented by the learned AR and wishes to pursue the litigation against the penalty levied by the AO. Penalty under section 271(1)(b) is unsustainable in the peculiar facts of the present case - Appeal by the assessee is allowed.

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• 2023 (7) TMI 794
  Disallowance of commission claimed as deduction while computing the cost of sale of land - AO had disallowed the same for want of details and confirmation of the payments - before the ld. CIT(A), assessee submitted that the expenses being share of stamp duty expenses as borne by the assessee, thus deleted the additio - HELD THAT:- At the time of hearing also, assessee could not justify such share of stamp duty expenses and neither could place on record any evidence to show regarding the claim made by the assessee. We are not in conformity with the findings of the ld. CIT(A) on this issue and since he has come to a conclusion without examination of any evidence and also has failed to provide specific reasons regarding the allowability of share of stamp duty expenses while computing capital gains, the findings of the CIT(A) are therefore, reversed and the addition made by the AO is restored. Ground no.1 of Revenue s appeal stands allowed. Indexed cost of improvement while computing the capital gains - CIT(A) has deleted the addition by holding that such addition was made by the AO merely on suspicion, doubts and surmises without bringing any concrete evidence, simply rejecting the contentions of the assessee - HELD THAT:- We are of the considered view that the onus always lies upon the assessee who seeks deduction of expenses. The assessee has to prove the genuineness of the expenditure claimed towards indexed cost of improvement. In this case, the assessee has failed to prove the genuineness of the expenditure and, therefore, it was not correct, judicially, for ld. CIT(A) allowing the indexed cost of improvement made to the asset sold. We do not find any merit in the findings of the ld. CIT(A) on this issue and the same is reversed. Ground No.2 of appeal of the Revenue stands allowed. Exemption u/s 54F - The findings of the ld. CIT(A) is devoid and bereft of any merit allowing benefit of exemption u/sec. 54F which is therefore reversed and accordingly, the ground of appeal no.3 filed by the Revenue stands allowed. Deduction u/sec. 54EC - time limit for investment exceeded - HELD THAT:- The issue is covered by the decision of CIT vs. Coromandal Industries Limited [ 2014 (12) TMI 852 - MADRAS HIGH COURT] as held from a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied.

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• 2023 (7) TMI 793
  Principles of mutuality - Surplus income shown in the return of income by mistake - Taxation at maximum marginal rate - society v/s AOP - whether income of a Co- Operative Housing Society is assessable as Co-op Society u/s 80P or as AOP at maximum marginal rate? - principles of consistency - a mistake has been committed by the CA of the assessee, wherein at the time of filing return of income, the surplus income earned by the assessee, which operates on the principle of mutuality, has been incorrectly offered to tax in the return of income - HELD THAT:- As in the past years as well as in the succeeding assessment years, the income earned by the assessee has not been subject to tax, since it is a society formed exclusively for the benefit of its members, and the Department has accepted this position both in the preceding and succeeding assessment years. Accordingly, in view of the well-established principles of consistency , the surplus income earned by the assessee cannot be subject to tax, since this income was offered to tax purely by way of mistake by the CA of the assessee at the time of filing of return of income. Matter is being restored to the file of Ld. CIT(Appeals) to analyse whether this position taken by the assessee that it s income has not been subject to tax in any of the earlier or succeeding assessment years by the Department, is factually correct. It is a well-settled principle of law that if there is no change in facts relation to assessee s case, then the position taken by the Department in the earlier and succeeding assessment years should not be disturbed, unless certain new facts are before the Department, which would necessitate it to change its earlier position. Appeal of the assessee is allowed for statistical purposes.

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• 2023 (7) TMI 792
  Addition u/s 68 - assessee had taken loan from 4 persons, which remained unexplained and cannot be treated as genuine - HELD THAT:- As assessee has not been able to furnish any plausible explanation to establish the creditworthiness and the genuineness of the parties. Accordingly, CIT(Appeals) has not erred in facts and in law in confirming the aforesaid addition in the hands of the assessee. TDS u/s 194A - assessee had made interest payment to 11 parties without deducting tax at source - CIT(Appeals) dismissed the appeal of the assessee on the ground that during the course of assessment, the assessing officer had found certain discrepancies in the information furnished by the assessee, which still remained uncontroverted during the course of appellate proceedings as well - HELD THAT:- We observe that the assessee had made interest payment to several parties without deduction of tax at source. Before Ld. CIT(Appeals), the assessee made no specific arguments to controvert the findings made by the assessing officer and gave no specifics explanation for non-deduction of tax at source. Accordingly, we are of the considered view that CIT(Appeals) has not erred in facts and in law in confirming the disallowance made by the assessing officer on account of non-deduction of tax on interest payments by the assessee. Addition u/s 24 - income from house property - HELD THAT:- CIT(Appeals) observed that on verification of facts it emerged that Tata Projects Ltd had made payment of Rs. 6 lakhs to the assessee after deducting tax at source under section 194J of the Act, as professional/ technical fee. Accordingly, the income against which deduction under section 24 of the Act was claimed by the assessee is not income from house property . Accordingly, the AO had correctly disallowed the claim of deduction u/s 24. Addition on account of donation expenses - AO disallowed a sum claimed as deduction by the assessee u/s 80G - CIT(A) restricted disallowance - HELD THAT:- CIT(Appeals) has taken into consideration the material placed on record by the assessee during the course of appellate proceedings, and has appropriately given relief to the assessee on the basis of documents furnished. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) so as to call for any interference. Addition on account of interest expenses - assessee has not produced any evidence in support of its contention to controvert the findings made by the AO - HELD THAT:- As appellant though was given opportunity to produce evidences in respect of the claim of interest income, it failed to produce any evidences before the AO. No claim can be allowed without producing documentary evidences. Since appellant has not produced any evidences in spite of giving opportunities, the claim cannot be allowed and the disallowance is hereby confirmed. Decided against assessee. Disallowance of job work charges - HELD THAT:- CIT(Appeals) has not erred in facts and in law in confirming the aforesaid disallowance in absence of any explanation/documentary evidence having been submitted by the assessee during the course of assessment proceedings or in appellate proceedings before Ld. CIT(Appeals). Disallowance u/s 40A(3) - payments on account of job work expenses in cash - HELD THAT:- Even during the appellate proceedings, appellant has not attended the proceedings before the undersigned to submit the reasons or circumstances for making such a huge payment in cash. In such circumstances, the disallowance and addition made by the AO u/s 40A(3) of the Act is hereby held justified - Decided against assessee. Disallowance for donation expenses - HELD THAT:- CIT(Appeals) has not erred in facts and in law in confirming the above addition in absence of any documentary evidences having been furnished by the assessee either during the course of assessment order during the course of appellate proceedings before Ld. CIT(Appeals) with respect to the aforesaid donation. Disallowance of telephone expenses, travelling expenses, vehicle expenses, petrol and diesel expenses and depreciation expenses etc. on account of personal use - HELD THAT:- As disallowance made by the assessing officer to the extent of 10% of those expenses, in absence of any documentary evidence having been placed on record by the assessee either during the course of assessment proceedings or appellate proceedings.

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• 2023 (7) TMI 791
  Unexplained excess stock of silver - valuation of stock of silver ornaments of assessee during survey - CIT(A) in appeal order relied on local trader and ascertained the purity of silver jewellery from @ 40% to @62 % and ascertained the purity @ 52% on silver jewellery - HELD THAT:- The assessee has not disputed the weight and purity during survey, and merely has stated in a general manner that value is higher. Thus, the assessee cannot retract from his own statement, and the only reason acceptable is the applicability of average rate of 65% of purity in silver item adopted by departmental valuer despite being actual weight and purity of each and every item of silver available with departmental valuer during the course of survey. Matter need to be set aside to the AO and an expert departmental valuer(who is an approved valuer) be appointed by the department to find out the correct value of silver based on actual weight and purity and then applying the then prevailing rate of silver at that relevant point of time. AO had not allowed the opening stock of silver (stock of silver claimed to be available in the books of accounts on the date of survey) which was already declared in the books of assessee. Interest of justice would be sub served if the impugned order is set aside and the matters are remitted back to the ld. AO for consideration thereof afresh related valuation of silver silver jewellery for ascertain the rate of purity, as directed by us in the preceding para of this order. The opportunity for fresh valuation of silver silver jewellery should be allowed to assessee considering the books of accounts, as directed by us in this order. Decided in favour of assessee for statistical purposes.

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• 2023 (7) TMI 790
  Revision u/s 263 - computation of long term capital gain - determination of fair market value - HELD THAT:- As in case the AO has adopted one of the courses permissible in law would not render the order of the AO erroneous. Similarly after the AO has taken a possible view then the order of the AO would not be regarding as erroneous merely because the commissioner does not agree with the view of the AO. Therefore, in case in hand when the AO has adopted one of the possible method of determination of fair market value which is more than the value as determined by the registered valuer then a different value determined by the DVO in the report which is received after the completion of the assessment would not render the order of the AO being erroneous and prejudicial to the interest of the Revenue. Determination of the fair market value as on 01.04.1981 - Assessee has raised specific issues before ld. CIT(A) regarding the validity of reference made by the AO to DVO for want of any enabling provisions u/s 55A prior to amendment as well as determination of fair market value as on 01.04.1981 by the AO. It is evident from the record that the issue of determination of fair market value as on 01.04.1981 was very much subject matter of the appeal before the Ld. CIT(A) and therefore, powers of the Pr. CIT u/s 263(1) as per clause(c) of explanation (1) are extended only to such matter which has not been considered and decided in the appeal. In other words the matter which is subject matter of the appeal before the appellate authority is beyond the powers of the Pr. CIT while invoking the provision of section 263 of the Act. Therefore, when the issue of determination of fair market value of the land in question as on 01.04.1981 was subject matter of the appeal before the Ld. CIT(A) then the Pr. CIT would have no jurisdiction to revise the order of the AO on the same issue. Appeal of assessee allowed.

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• 2023 (7) TMI 789
  Revision u/s 263 - sale consideration for sale of agricultural land - assessment of trust - assessee claimed amount spent on purchase of agricultural land as exemption u/s 11(1A) but since the Assessee was not registered u/s 12A/12AA or section 10(23C), the provisions of sections 11 and 12 of the Act were not applicable - AO had wrongly granted deduction u/s 54B to the Assessee as this section 54B is applicable to persons with status of individual or HUF only but the Assessee is a trust - HELD THAT:- Assessee has not controverted the facts that (i) it is not registered either u/s 12A or section 12AA, or approved u/s 10(23C) of the I.T. Act and that as such, the exemptions u/ss 11 12 are not applicable to it, as rightly observed by the ld. CIT(E). (ii) The AO had wrongly given benefit of deduction u/s 54B to the Assessee, without any claim by the Assessee for such benefit. (iii) Even otherwise, the provisions of section 54B of the Act are applicable to individuals and HUFs, whereas the Assessee is a trust, and so, not entitled to benefit u/s 54B of the Act. (iv) The Assessee is not entitled to benefit u/s 10(21) r.w.s. 35(1) r.w.s. 11 of the I.T. Act. (v) Whether the sale of the property was voluntary or otherwise, is not material to the assessment of the income chargeable to tax under the Income Tax Act, except if any exemption or benefit becomes available from the transaction of sale. CIT(E) has correctly held the assessment order to be erroneous as well prejudicial to the interests of the Revenue. CIT(E) has, rightly, hence, cancelled the assessment order passed u/s 143(3) - Decided against assessee.

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• 2023 (7) TMI 788
  Validity of order passed by DRP w/o mentioning DIN / Document Identification Number - HELD THAT:- As relying on Intrado EC India Private Ltd. [ 2023 (1) TMI 18 - ITAT BANGALORE ] since the DIN was not mentioned in DRP order which was mandatory as per CBDT Circular No.19 in view of the facts noted above in regard to communications done with the assessee, we hold that the DRP directions is invalid in the eyes of law and shall be deemed to have never been issued. Appeal of assessee allowed.

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• 2023 (7) TMI 787
  Reopening of assessment u/s 147 - recording of satisfaction by the competent authority before the issuance of notice u/s 148 - what s the date of the grant of such approval by the ld PCIT? - HELD THAT:- Range head has recommended and granted the approval physically under his signatures on 26.03.2018 and thereafter, online on 28.03.2019 and unless the Range head recommends the matter, the matter cannot proceed further and therefore, the later approval granted by the Range head on 28.03.2019 is taken as the correct date of recommendation. Similarly, the ld. PCIT who is the approving authority in the instant case has granted the approval online on 28.03.2018 and thereafter, physically under his signatures on 29.03.2019 and therefore, the latter approval granted by him is taken as the correct and final date of grant of approval which is 29.03.2019 by the Competent authority for issuance of notice u/s 148 by the AO. Thus where the notice u/s 148 has been issued well before the date of grant of approval by the ld PCIT on 29.03.2019, the same is clearly a jurisdictional defect u/s 151 which cannot be cured as it goes to the foundation of the whole of the assessment proceedings u/s 147 and therefore, the consequent assessment proceedings deserve to be set-aside on this ground itself. Decided in favour of assessee.

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• 2023 (7) TMI 786
  Scope of Limited scrutiny u/s 143(2) - disallowance u/s 40A(7) - Whether the AO has travelled beyond the scope of limited scrutiny and made additions in respect of three issues (subject matter of challenge before the Tribunal) which never formed part of the issues identified for limited scrutiny - HELD THAT:- The assessee submitted that the AO framed assessment beyond the scope of limited scrutiny is not correct as the proposal for addition in respect of disallowance u/s 40A(7) of the Act was deleted and the Assessing Officer has restricted its comments only on the issue of disallowance under Section 40A(7) of the Act which is in consonance with limited scrutiny assessment. Therefore, ground no.1 is dismissed. Disallowance u/s 36(1)(va), addition u/s 37 and addition under other sources - The said disallowances were made as per order dated 13.11.2019 which is intimation under Section 143(1) of the Act and the same was not challenged by the assessee before the CIT(A) as well as before the Tribunal. This amounts to acceptance of the disallowance on the intimation under Section 143(1) itself and the same cannot be taken at this juncture as the appealable order has not commented on the said disallowance or not given any reasons on the said disallowances. It is merely mentioning the earlier disallowances. The assessee has not challenged the intimation under Sub-section-1 of Section 143 before the CIT(A) and, therefore, scope of the appeal before the Tribunal is restricted to limited scrutiny only. Therefore, the disallowance made by the Assessing Officer in respect of intimation under Section 143(1) of the Act cannot be taken in the present appeal. Therefore, ground no.2 is dismissed.

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• 2023 (7) TMI 785
  Addition u/s 68 - unexplained credit/receipt - bogus receipt towards share capital and share premium - genuineness and creditworthiness of the subscribing company in this case remained unproved - HELD THAT:- Where the existence of the shareholder/subscriber is fully identifiable and unequivocally proved by direct evidences, the creditworthiness of the subscriber is justifiable by formidable evidences and the genuineness of the transaction carried out through banking channel and return of allotment for subscription of shares have been filed before the competent authority, the dispute raised by the Revenue appears inexplicable. The substantial net worth enjoyed both by the subscriber as well as the source of source also provides sound basis to infer the bona fides of the transaction and fortifies the plea of the assessee. The suspicion entertained on bona fides has not been carried out to any logical end. AO has attempted to implicate the assessee mainly on two grounds namely, inspector report which shows that the assessee was not in existence at the address and secondly, the summons issued u/s 131 has not been complied with by the Director of the Assessee. Both the points do not have much force. The inspector is stated to have visited on local address utilized on share basis. No verification at registered office situated at Kolkata was done. This apart, it is illogical to fasten liability on the assessee merely because director of the subscriber sitting 1500 km away could not personally attend at the command of the AO at a short notice but instead produced his representative in an available time span of merely four days. Thus, when seen in the light of cumulative facts, the allegation made against the assessee by the Assessing Officer has been rightly found to be devoid of any strength by the CIT(A). We concur with the conclusion drawn by the CIT(A) on facts that charge of the AO towards lack of satisfactory explanation contemplated u/s 68 of the Act against the assessee is without any demonstrable basis. Decided in favour of assessee.

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• 2023 (7) TMI 784
  Revision u/s 263 by CIT - deduction u/s 36(1)(viia) - Provision for bad debts - HELD THAT:- AO framed the assessment pursuant to the directions of the Tribunal wherein it was held that the use of the word any before the words provision for bad and doubtful debts would indicate that nomenclature under which the provision is made, may not be a critical factor in determining the allowance. Once a provision, under whatever name, is debited in the profit and loss account, then it is can be allowed, provided it is within the limits specified. None of the lower authorities had carefully gone into nature of the debits. It was for the assessee to show that these were indeed provisions for bad and doubtful debts. Accordingly, the matter was restored back to AO for fresh adjudication. Pursuant to the same, Ld. AO has accepted both the provisions as provisions made u/s 36(1)(viia) and re-work the deduction. CIT has opined that provision against standard asset could not be considered as provision u/s 36(1)(viia) - Regarding reserve for short provision for waiver of loans, it was held that the government could not be held to be doubtful debtor and therefore, the provision so made could not be considered as provision u/s 36(1)(viia). So far as the provision against standard asset is concerned, we find that the assessee is classifying the debt asset as per RBI mandate and making provisions against the same at specified rates. The assessee is required to make general provision against standard asset also since there would always be an inherent risk of even standard debts going bad in future. It could also be seen that Ld. Pr. CIT has referred to contrary decisions of Tribunal and accordingly, it could be said that the issue was a debatable one. The debatable issues, in our considered opinion, could not be subjected to revision. When Ld. AO has adopted one of the possible views which is not contrary to any law, the revision of the same could not be held to be justified. Therefore, the impugned order, to that extent, stands quashed for all the years under consideration. Reserve for short provision for waiver of loans - We concur that government could not be held to be doubtful debtor and therefore, the provision so made could not be considered as provision u/s 36(1)(viia). Even as per assessee s submissions, this provision has been reversed in subsequent year and offered to tax. The Ld. AO has failed to consider this aspect and therefore, the revision of the order, to that extent, is upheld. Our observations, as above, shall not be construed as an expression on the merits of the case and the assessee is free to substantiate his claim, to that extent. The impugned order stand modified accordingly. The appeal stand partly allowed. Reserve for DCB difference - same was considered by Ld. AO as provision for the purpose of computation u/s 36(1)(viia) - This amount represents fraudulent transactions done by certain staff members. This is stated to be a recoverable amount and not bad debt of loans and advances disbursed to the customers. CIT observed that the same do not qualify for deduction u/s 36(1)(viia). From the stated facts itself, we prima face concur that the provision so made could not be considered as provision for bad debts u/s 36(1)(viia). Therefore, the revision of the order, to that extent, is to be upheld. AO is directed to carry out the directions given in impugned order and re-adjudicate. The assessee is free to agitate the issue. The appeal stand partly allowed.

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• Customs

• 2023 (7) TMI 783
  Confiscation - Setting aside the redemption fine imposed under section 125 of the Customs Act, 1962 - excess found goods cleared under bond - penalty under section 112(a) of the Customs Act, 1962 - import of parts of Aircraft - recovery of customs duty on excess/shortage goods. Redemption fine - HELD THAT:- The sequitur of not challenging the setting aside order of confiscation of goods brings about a result of the Revenue taking a position that provisions of section 111 of the Act dealing with confiscation are not applicable to the case of the respondent/ assessee. If that be so, the question of redemption fine in lieu of confiscation would not arise. The provisions of Section 125 would get attracted only if the goods are confiscated. The appellant/revenue is not correct in stating that the Tribunal has confirmed the confiscation since in para 4.7 of its order, the Tribunal has expressly stated that they are setting aside confiscation order. Since in the instant case, the appellant/ revenue has accepted the setting aside order of confiscation of goods, question of applying provisions of Section 125 dealing with the redemption fine which are in lieu of confiscation would not arise and therefore, on this ground itself, question of setting aside redemption fine as raised by the appellant revenue does not arise. This Court in the decision in cases of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS FINESSE CREATION INC. [ 2009 (8) TMI 115 - BOMBAY HIGH COURT] , COMMISSIONER OF CUSTOMS (IMPORT) VERSUS M/S RISHI SHIP BREAKERS [ 2009 (9) TMI 974 - BOMBAY HIGH COURT] and COMMISSIONER OF CUSTOMS (EXPORTS) VERSUS SUDARSHAN CARGO PVT. LTD. [ 2010 (7) TMI 325 - BOMBAY HIGH COURT] , have held that if the goods are not available for confiscation there cannot be any redemption fine. The Supreme Court has dismissed the SLP of the revenue in the case of COMMISSIONER VERSUS FINESSE CREATION INC [ 2010 (5) TMI 804 - SC ORDER] - In the instant case, admittedly the appellant/revenue could not find actual goods for confiscation and therefore, the order setting aside the redemption fine is in consistence with the decisions of this Court. Penalty u/s 112(a) of CA - HELD THAT:- The appellant/revenue is wrong in saying in that the Tribunal has confirmed the confiscation. Therefore, the appellant/revenue has accepted that the goods were not required to be confiscated. If that be so, the penalty under Section 112(a) is in relation to such goods liable for confiscation. The confiscation order having set aside, consequently the penalty under Section 112 (a) is also consequently not applicable. Even otherwise, the Tribunal in paragraph 4.9 of its order has deleted penalty on the ground that looking into the enormity of the inventory managed and handled by the respondent/assessee and the fact that the respondent/assessee is a Public Sector Undertaking, the order imposing penalty is not justified. The Tribunal also took note of the fact that the entire case is made on the basis of the report prepared by the external auditors as part of internal assessment and control mechanism adopted by the respondent/ assessee to verify and manage the inventory of imported goods and therefore, there is no deliberate act on the part of the assessee to evade the duty - these are the findings of facts on the basis of which the penalty has been set aside and the same being not alleged as perverse, no question of law would arise. No substantial question of law arises for consideration of this Court - Appeal of Revenue dismissed.

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• 2023 (7) TMI 782
  Rejection of clearance of the goods imported - denial on the ground of a trade mark dispute between the petitioners and respondent no. 8 is sub-judice - HELD THAT:- Rule 3 provides for Notice by the right holder to the Customs Authorities in relation to goods infringing Intellectual property rights and requesting for suspension of clearance of goods suspected to be infringing intellectual property rights. Rule 4 provides for registration of such notice and Rule 6 provides for prohibition for import of goods infringing intellectual property rights. Thus, the 2007 Rules provide for a complete scheme in relation to the goods infringing Intellectual property rights falling under the definition of Intellectual Property as defined in Rule 2(a). It is only after the registration of notice by the Commissioner, the import of infringing goods into India is deemed to be prohibited within the meaning of Section 11 of the C.E. Act as ordained by Rule 6. Having noted the statutory scheme as contained in the Rules, in the present case, the official respondents have not brought to our notice any steps taken by the official respondents under the 2007 Rules so as to register respondent no. 8 s complaint and notify the same as per the specific requirement of the Rules. It is thus clear that without any of the conditions in the Rule being satisfied, the Customs department has withheld clearance of the goods of the petitioner. For such reason, action on the part of the Customs officials to withhold clearance of the petitioners goods would be required to be held to be ex-facie illegal. Reliance as placed by learned counsel for the petitioners on the decision of the Division Bench of this Court in NBU BEARINGS PVT. LTD. ANR. VERSUS UNION OF INDIA ORS. [ 2021 (3) TMI 544 - BOMBAY HIGH COURT] is quite apposite. In such decision, the Court has considered the provisions of 2007 Rules as also the provisions of Trade Marks Act and Copyright Act in dealing with similar situation wherein the petitioner in such case had a copyright dispute with respondent no. 6. On such dispute, the Court observed that the petitioners therein and respondent no. 6 were litigating against each other to establish their respective right, title and entitlement to the ownership of the copyright in question. Although various proceedings were pending in the Court, neither of the parties were in a position to obtain any order from the Civil Court and produce the same before the customs authorities to take benefit of the statutory provisions - It was also observed that in the absence of a Court order as contemplated under sub-section (4) of Section 53 of the Copyright Act, which was a relevant Act as pressed into service in the said proceedings, the customs authorities were not justified to withhold the consignment imported by the petitioners, on a complaint of respondent no. 6 therein, unless respondent no. 6 obtains appropriate interim orders from the Civil Court declaring that respondent no. 6 was the owner of the mark in question and places the same for consideration of the customs authorities. In such circumstances, the Court had permitted release of the goods in question - the view taken by the Division Bench in NBU Bearing Pvt. Ltd. is squarely applicable in the facts of the present case. There is no warrant for the customs authorities in not permitting release of the goods in question in the absence of any right in respect of the mark in question having crystallized in favour of respondent no. 8 at the time petitioner sought clearance of the goods subject matter of bill of lading - Petition disposed off.

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• 2023 (7) TMI 781
  Valuation - inclusion of freight in the assessable value for the purpose of assessment or not - Rule 9 (1) (b) (i) of the Customs Valuation Rules, 1988 - HELD THAT:- It is brought out from the submissions made by the Ld. Counsel for the respondent as well as records that the there was an issue of adding the element of freight to each export which was incorrect - it is found that the same has been excluded by the adjudicating authority. The Commissioner (Appeals) while remanding the matter has put forward the points for consideration at arithmetic level as well as legal level. These points have been correctly considered by the adjudicating authority in the de novo order. On perusal of the grounds stated in this appeal filed by the department, it is found that the argument put forward by the Ld. Counsel for the respondent that the department has not put forward any specific point to negate the calculation of the differential duty is not without substance - it is also noted that the very same reason was the basis to dismiss the appeal filed by the department by the Commissioner (Appeals). Appeal filed by the department is dismissed.

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• 2023 (7) TMI 780
  Validity of SCN - Department interpreted the remand order as a direction to issue SCN - recovery of differential duty - SCN in respect of past consignments have been issued after the appellate stage of the litigation - extended period of limitation - HELD THAT:- In UTRACON STRUCTURAL SYSTEM PVT. LTD. VERSUS COMMR. OF CUS., CHENNAI [ 2008 (9) TMI 363 - CESTAT, CHENNAI ] passed by the Tribunal in the earlier round of litigation it has been categorically held by the Tribunal that department ought to have issued a SCN to the assessee before proceeding against the assessee for recovery of differential duty in respect of past consignments. The department is directed to refund the duty collected from the assessee in respect of past consignments as the same has been collected illegally without issuing a SCN. However, it appears that Tribunal has also remanded the matter in order to enable the Commissioner to afford opportunities to the parties to keep up with the principles of natural justice - there is no explicit or express direction to issue a SCN. The department has issued the SCN, by interpreting the remand as a direction to issue SCN. The genesis of a litigation is the issuance of show cause notice. The intention of such show cause notice is to inform the party about the allegations and also to give opportunity to the party to put forward any defence with regard to the allegations. The said requirement is the basic principle of natural justice. There is no provision in the Customs Act, 1962 which enables the Tribunal to direct the department to issue show cause notice to a party. Extended period of limitation - HELD THAT:- The earlier order of adjudication was passed on 09.05.2008. After the appeal before the Tribunal, the department cannot invoke the extended period alleging that assessee has suppressed facts with intention to evade payment of duty. The Commissioner (Appeals) has rightly held that there are no grounds for invoking extended period - Further, it is the case of department that description of the goods in invoice is Steel 7 Ply Wire and assessee has misdeclared in the Bill of Entry as Non Alloy Steel Wire for wrongly availing the concessional rate of duty. But the department has failed to produce the invoices relied by them to allege misdeclaration of goods. The goods are not also not available. The SCN is apparently time barred. The demand of duty with interest is time barred and cannot sustain - Appeal allowed.

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• 2023 (7) TMI 779
  Seeking provisional release of goods - non-compliance with the mandatory requirement of producing a Pre-Shipment Inspection certificate as required under para 2.32 of Hand Book of Procedures of Foreign Trade Policy 2004-09 - Confiscation - redemption fine - penalty - HELD THAT:- The appellant has not complied with the requirement of producing a Pre-Shipment Inspection certificate as required under para 2.32 of Hand Book of Procedures. The goods have been subjected to 100% examination. There are no remnants of arms or ammunitions or any banned substances. Ld. Counsel for appellant has relied upon various decisions to argue that the goods have been subjected to 100% inspection and that the non-compliance of the requirement of production of PSI certificate would be only a procedural infraction and would not tantamount to improper import of goods - it is noted that after inspection of the goods, there is no prohibited goods or banned substances. The original authority has imposed redemption fine of Rs.10,42,820/- and penalty of Rs.4,46,922/- which is on the higher side. The decisions relied by the Ld. Counsel for appellant show that courts have been lenient to set aside the redemption fine and penalties. In the decision relied by the Ld. A.R the redemption fine and penalty has been reduced. Taking into consideration that the goods have been subjected to 100% examination and the fact that the appellant had borne the cost of such examination as well as the delay in clearance of goods, we are convinced that redemption fine and penalties imposed are too excessive - the redemption fine reduced to Rs.1,00,000/-- (Rupees One lakh only) and the penalty is reduced to Rs.50,000/- (Rupees Fifty thousand only). Appeal allowed in part.

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• 2023 (7) TMI 778
  Refund of SAD - Rejection on the ground that there was no endorsement as required under Para 2(b) of the Notification No.102/2007-Cus. Dated 14.09.2007 to the effect that No credit of the additional duty of customs levied under sub-section (5) of Section 3 of the Customs Tariff Act.1975 shall be admissible on invoices - rejection also on the ground of non-accounting of SAD amount in 2008-09 and the correction was made in the accounting year 2009-10 by showing the SAD due amount as receivable in their books of account - violation of principles of natural justice. HELD THAT:- It is a case where the appellant had imported the goods by paying additional duty and the value of the goods supplied to M/s Power Grid Corporation of India Ltd was fixed way back in 2008. It has been clearly agreed and understood between the buyer and seller that no other tax other than octroi and entry tax would only be charged and reimbursed by the buying entity. In transactions between the parties for the previous period, the price of the goods was the same and the Adjudicating Authority allowed refund of Rs.38,81,529/- vide Order-in-Original dated 14.05.2011 dated 14.06.2011. The goods in both the cases used in transmission of electricity were sold under same LOA. As far as refund of SAD is concerned, there are catena of decisions by various Tribunals, which have categorically held that refund cannot be denied on technical infirmity. Board s Circular No.18/2010 dated 08.07.2010 clarifies that production of books of account is not be insisted and only certificate from Chartered Accountant is sufficient to allow refund. In the appellant s case at the time of filing of refund claim, the appellant submitted Chartered Accountant certificate showing the amount as receivable in the books of account. Once the assessee has complied for the said requirement, and considering the terms of the contract between the parties, the refund cannot be rejected on the ground of unjust enrichment. Appeal allowed.

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• 2023 (7) TMI 777
  Refund of SAD - revenue under the belief that the item imported by them i.e. industrial betel is not same as edible Betel denied the refund claim - time limitation - HELD THAT:- There are details reasons given in the impugned order about the item imported and the items sold by the Baburam Harichand being the same. The co-relation between the imported goods and the goods sold by Baburam Harichand has not been contested by the revenue. The revenue appeal does not counter any arguments given by the Commissioner (Appeals). In view of the above, we do not find any merit in the appeal filed by the revenue and the same are dismissed. Time limitation - HELD THAT:- Baburam Harichand (respondent) has filed appeal against rejection of the refund claim on the ground of limitation. They have asserted that they had filed claim within limitation and produced prop thereof. A perusal of the appeal filed by the Baburam Harichand shows that at page 37 they have enclosed challan of payment of duty, indicating date of payment as 10.02.2011 in Appeal No. C/11729/2014 and similarly some evidence were given in Appeal No. C/11730/2014. It is notice that this evidence has not been examined by the Commissioner (Appeals). The appeals filed by the Baburam Harichand are allowed by way of remand to Commissioner (Appeals) to examine the evidence produced by the appellant. The appeals filed by the revenue are dismissed and the appeals filed by Baburam Harichand are allowed by way of remand.

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• 2023 (7) TMI 776
  Seeking provisional release of goods - Gold - Denial of access to the property - determination of actual ownership - exclusion of presumptive adjudicatory jurisdiction over the impugned goods - burden to prove u/s 123 of Customs Act, 1962 - HELD THAT:- A plain reading of the provision for inversion of onus makes it abundantly clear that there is only one stage of verification; the shifting of onus is specific to the person from whose possession the goods were seized as well as, if there be any, other person claiming ownership thereto and, if these had been seized from possession of none, on any claimant of ownership. The target of the trigger for invoking this presumption of smuggling, and only in relation to goods specified in the provision or under the notifying authority of the Central Government, is the person from whom it was seized and/or any claimant of ownership. It is a principle in jurisprudence that possession is nine-tenths of the law and (quite ironically, in the same numeral) section 110 of Indian Evidence Act, 1872 has transplanted that into law binding on customs authorities too. It is apparent that, in circumstances of there being no other claimant, and even if there was, the failure to ensure strict fulfillment of section 123 of Customs Act, 1962 cannot be overcome by adjudicatory restraint, self-imposed or externally prescribed, on withholding such process from the appellant. Consequently, the appellant is either the principal noticee in proceedings initiated under section 124 of Customs Act, 1962 till conclusion or the goods are not liable for confiscation and cannot be retained any longer: the two contingencies cannot exist, to the contrary, simultaneously. Even if show cause notice for confiscation of the impugned goods is warranted by failure to discharge onus, the owner must be placed on notice; it is not the claim in the impugned order that some other claimant has surfaced and nor does entertainment of that claim fall within adjudicatory jurisdiction under Customs Act, 1962. Every deprivation of property by presumption of illegal possession is a deviation from the presumption in Indian Evidence Act, 1962 supra and is empowered by specific law to the contrary; even these statutes exist to relieve possession in favour of the State and not to determine ownership - An investigation that is supposedly to culminate with establishing of facts to which known law is to be applied cannot be allowed to be perverted for the convenience of investigators to apply known law to contrived facts. Greater good may, doubtlessly, be a pure motive but such affirmation of motives, doing violence to the law, is an insinuating weed that will ultimately overwhelm rule of law. It is the law that should be applied to established facts and the established fact is that the owner, even if only ostensible, has not been issued with notice of intent to confiscate goods seized from their possession. Many moons beyond the stipulated period, under section 110(2) of Customs Act, 1962, for issue of such notice have come and gone without even a single notice proposing delayed issue of notice. Section 110(2) which is not contingent upon discretionary or even administrative exercise of any empowerment but absolute in intent must prevail in the absence of a constructive show cause notice recognizable by law. The seized goods are to be released forthwith to the appellant. Appeal disposed off.

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• 2023 (7) TMI 775
  Levy of penalty u/s 112 and 114AA of the Customs Act, 1962 - Executives / Employees of freight and forwarding agent - existence of mensrea - knowledge of prohibited goods concealed in the subject imports of A4 paper reams or not - entire case made out against the appellants is with regard to deliberate connivance with the main noticees in changing the name of the consignee without due diligence and verification and without NOC from the consignee M/s Hong Kong Jofa Paper Limited and M/s Guangzhou BMPAPER Paper Company Limited - HELD THAT:- For imposition of penalty under Section 112 of Customs Act, 1962, it can be noted that a person is liable for penal consequences under Section 112 of the Customs Act for committing an act or failure to do so an act as would render such goods liable to confiscation. Penalty under Section 112 is also imposable on a person who is concerned with in any manner in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchase of or dealing in any other manner with goods for which knowledge about their liability to confiscation exists with the person concerned with regard to any of the aforesaid activities. For levy of penalty under Section 112 of Customs Act ibid, the imputations of conduct as brought out in the show cause notice and as analysed in the Order-in-Original and the Order-in-Appeal have to be gone into to ascertain the correctness or otherwise of the imposition of such penalty. Thus, it is an undisputed fact that the impugned five containers found to contain prohibited goods, concealed amids cartons of A4 paper reams, were initially booked in the name of Ashtvinayak International, however later changed to M/s Global World Traders - it is wrong to infer, contrary to what has been done by authorities below that the said change in consignee name, meant to deceive the authorities is clearly a case of connivance. In fact, as it comes out from the testimonies of the various persons including Sarvesh Sharma, Anil Batra others, this change is clearly on account of misrepresentation by Anil Batra and there is not a fig leaf of evidence led in the show cause notice to conclude the same is attributable to connivance. The authorities below have failed to disengage what they indicate as a failure in exercising due diligence with what they conclude as connivance. Any failure, if so, of due diligence certainly cannot be a case of connivance. Connivance is required to be led by positive evidence and mere surmise or presumption or the failure to do a particular thing leading automatically to the other cannot in itself be a given. Also any observation beyond that charged or alleged in the show cause notice is clearly a violation of the principle of natural justice being in excess of the charge made out and therefore beyond the scope of the show cause notice. In fact what is stated in the order in so many words is not at all stated in the show cause notice. Thus, there is considerable force in the contention of the learned advocate when they assail the order to have been passed in excess of the show cause notice prescriptions. For invoking of penalty under Section 114AA of the Customs Act, as evident from the language of Section 114AA of the Customs Act, it can be noted that for levy of such penalty, it is imperative that there has to be a deliberate/knowing usage of false or incorrect material in the transaction. There is nothing on record to impute knowledge about the usage of false or incorrect material in the transactions undertaken as regards the present two appellants - As per the fact on records, in the intervening time, the requisite payments were made to their principle overseas, that accounts for the change in status from freight collect to prepaid and this fact cannot be given a go by. The said difference pointed out by the learned Adjudicating Authority cannot be therefore held sufficient enough to uphold the charge of forgery and use of fact forged/fictitious documents. In fact, the show cause notice does not remotely alleges and castigates the two appellants herein for manipulation and forgery in the bill of lading. Any finding to say so is thus perverse of the show cause notice and thus is clearly not sustainable. The penalty therefore under Section 114AA is not leviable. This Tribunal in the case of V. LAKSHMIPATHY VERSUS COMMISSIONER OF CUSTOMS, COCHIN [ 2003 (1) TMI 404 - CEGAT, BANGALORE ] in respect of invocation of penalty under Section 112 had held the existence of mens rea as an essential ingredient to invoke the same. This pre supposition is non-existing in the present matter as show cause notice leads no evidence to indicate a guilty mind on part of the appellant - In the case of MOHAMMED ILIYAS VERSUS COMMISSIONER [ 2018 (8) TMI 2119 - SC ORDER] the honourable Apex Court had held the penalty under Section 114AA, as not leviable (among other reasons) for no discussion being made as to the type of false /incorrect material. Similar is however the position in the present case. Thus, no penalty under Section 112 and Section 114AA is leviable - the impugned order in as much as it concerns the imposition of the penalty on the two appellants can therefore not be sustained and is therefore set aside - appeal allowed.

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• 2023 (7) TMI 774
  Classification of imported goods - Mineral Spirits falling under CTH 27101990 of the Customs Tariff Act, 1975 or Diesel Oil-High Speed Diesel (HSD) falling under CTH 27101930 of the Tariff Act? - period May 2017 to April 2018 - Allegation of mis-declaration of goods - smuggling of diesel - Reliance upon the statement, diary and CPU seized during investigation - HELD THAT:- On perusal of the test report annexed to the Appeal Memorandum, it is noted that the Joint Director, in both the test reports, after testing the samples on 6 parameters has concluded that the samples under reference is other than Mineral Spirit. Each of the two samples may be considered as Diesel Oil. The use of term may be goes on to show that the report issued by the Custom House is not conclusive and is a mere opinion. As per Britannica Dictionary, meaning of words may be means possibly but not certainly, or perhaps . Further, as per Macmillian Dictionary, word may be is used for showing that one is not sure whether something is true or whether something will happen. The adjudicating authority has committed an error to re-classify the goods imported vide the 3 bills of entry on the basis of a test report which on the face of it is non-conclusive. It is settled principle of law that classification is a departmental function. It is also a settled law that onus to prove a fact is on the person who asserts the same. In the present case, the department has relied upon a test report, which does not conclusively show that the goods imported merit classification under heading proposed by the revenue. The stand of the department that language used in the impugned test report is a general practice, itself is objectionable inasmuch as no documentary evidences were adduced for deciding the issue of classification contrary to the classification claimed by the appellants in respect of the impugned goods. For a product to be considered as Diesel Oil, the same requires to fulfil all 21 parameters mentioned in IS 1460:2005. In the present case, the Custom House Laboratory vide aforesaid test reports have tested only 6 parameters. Hence, in other words, the Custom House Laboratory has not tested all the 21 parameters required in terms of IS 1460: 2005 - without testing all the parameters, the test reports cannot be considered to reclassify the imported goods as Diesel Oil. The case of the department for the live consignment and for the past consignment should fail, as the primary evidence in the form of test reports cannot be relied upon by the department as held in the preceding paragraphs - With respect to the goods imported by 51 bills of entry, the same in any event are well supported by independent test reports, which conclusively prove that the goods are Mineral Spirit. Neither have the department challenged the contents of the said Test Report nor have they provided any contrary test report to the one produced by the Appellant. In view thereof, the Appeals of the Appellants deserve to be allowed. Retraction of statement - It was not open for the adjudicating authority to simply brush aside the retraction and follow the retracted statements without any corroborative evidence - there are merits in the arguments of the Appellants that the adjudicating authority has erred in the impugned order by placing reliance on the invoices of Gulf Petrochem FZC to hold that the goods imported under live consignments were not mineral spirit but HSD - it is found that these invoices cannot be relied upon to hold that the goods were mis-declared by the Appellants. Reliance on Invoice issued by the Third party in Gulf - On perusal of the records, it is found that there is no invoice relating to sale of these Gas Oil or Ultra Low Sulfur gas oil from Skynet to Appellants nor is there any invoice from Skynet to Appellants for sale of HSD. The Department neither questioned Gulf Petrochem FZC nor Skynet to ascertain as to whether they supplied Gas oil or Ultra Low Sulfur gas oil to the Appellants instead of Mineral Spirit - in absence of any invoice from Skynet showing sale of goods other than Mineral Spirit and also in absence of aforesaid supplier being questioned, the invoices issued by Gulf Petrochem FZC cannot be relied upon to hold mis-declaration and consequent confirmation of the duty demand. On reliance placed by the adjudicating authority on the diary of 2016 as it stated Dubai payment/Dubai hawala to hold that the Appellants received HSD from Dubai, on perusal of the said dairy, it is found that the same nowhere mentions about receipt or sale of HSD by the Appellants. Furthermore, the foreign supplier of the Appellants is Skynet and as per their invoices, all payments were made in favour of the supplier in Singapore and not Dubai - the said Diary cannot be relied upon to dispute the classification of goods. The classification of goods imported under the 3 live bills of entry and 51 past Bills of Entry have been wrongly rejected. The question of valuation will have to be allowed in favour of the Appellant as the same was disturbed by the department on the ground that goods imported were Diesel Oil and not Mineral Spirit. It is made clear that none of the evidences relied upon by the department, to allege the mis-classification and under valuation resorted to by the appellants, stand the scrutiny of Law - It is opined that the department failed to substantiate the allegations by cogent and legally admissible evidences. Hence, under the facts and in the circumstances of the case, there are no hesitation in allowing the appeals in favour of the appellants. Appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (7) TMI 773
  Maintainability of objection to execution of the arbitral award referrable to section 47 of the CPC - arbitral award itself was a nullity and hence non-executable - arbitral award not challenged under Section 34 of Arbitration Act, 1996 - HELD THAT:- This court is of the considered view that having not challenged the arbitral award under section 34 of the Act of 1996, the law does not contemplate second opportunity to challenge the award particularly when the Act of 1996 is a self-contained code which prescribes the specific grounds and specific mode of challenge to an arbitral award. This would be the position except under the circumstances, where the award cannot be termed as an award in the eyes of law and therefore it is required to be rendered void ab initio /nullity and consequently required to be declared non-est in the eyes of law. This can be done pursuant to such objection raised under section 47 of CPC at the stage of execution of the award. Award which suffers from inherent lack of jurisdiction in the eyes of law, cannot be said to be award and therefore would fall outside the provision of Arbitration and Conciliation Act, 1996 and can certainly be declared as a nullity in an appropriate proceeding including under section 47 of CPC at the stage of execution of the award. The plea of nullity with regard to the arbitral award can be taken under section 47 of the CPC , but in a very narrow campus. Whether the arbitral award in the present case could be assailed as a nullity and hence non-executable within the permissible grounds of raising such a plea? - HELD THAT:- This Court is of the considered view that the point as to whether the realisable value with respect to one or the other creditor was nil or otherwise certainly require close examination of the resolution plan read with the orders passed by NCLT/NCLAT/Supreme Court which itself is a debatable issue on facts as well as on law. In view of the aforesaid situation and in the light of the facts and circumstances of this case, the arbitral proceedings culminating in the award involved in this case, cannot be said to be suffering from inherent lack of jurisdiction. Upon perusal of the proceedings of the facilitation council, this court finds that the petitioner had submitted before the facilitating council that the order of the facilitation council on the point of jurisdiction which was decided against the petitioner was challenged before the District Court at Alipore but the petitioner never produced the ad-interim order before the Facilitation Council. Otherwise also, the order of stay passed by the District Court at Alipore has no impact due to the interim order as well as the final order passed by Hon ble Calcutta High Court in the civil revision application. The interim order passed by the District Court is also not available before this court, which was never produced before the Facilitation Council also to ascertain the nature and extent of the interim order. Such issues are not the issues relating to patent or inherent lack of jurisdiction of the facilitation council so as to render the award a nullity in the eyes of law. The argument of the learned counsel for the petitioner, that the award suffers from patent or inherent lack of jurisdiction/ nullity and therefore the objection to the execution of the award could have been taken at the stage of execution without challenging the award under Section 34 of the Act of 1996, is hereby rejected - Issue decided against the petitioner and in favour of the respondent. Irrespective of maintainability of the objection to arbitral award under section 47 of the CPC, Whether on facts, the Facilitation Council lost its jurisdiction to proceed and pronounce the arbitral award in view of insolvency resolution plan of the petitioner which was duly approved under section 31 of the IBC? - HELD THAT:- This issue requires consideration of the point as to whether the amount claimed by the respondent and pending for adjudication in the arbitral proceedings much prior to insolvency commencement date, was ever declared to be nil in terms of the insolvency resolution plan of the petitioner read with various orders passed by NCLT, Kolkata / NCLAT, New Delhi/Supreme court. This would require examination of the approved insolvency resolution plan. It is not in dispute that the approved insolvency resolution plan was never interfered by the NCLT, Kolkata / NCLAT, New Delhi and Hon ble Supreme Court. The argument of the petitioner that the dues of the petitioner with respect to the pending arbitral proceedings in the instant case before the West Bengal facilitation council was determined to be nil, does not find support from the approved resolution plan placed on record by the petitioner themselves. In such circumstances, there was no occasion for the respondent to challenge the resolution plan. Admittedly, some of the creditors (operational/financial) had challenged the resolution plan with respect to their claim and provisions made in the resolution plan but all such objections /challenges were dismissed and there has been no interference in the approved resolution plan at any stage. Irrespective of maintainability of the objection to arbitral award under section 47 of the CPC, on facts, the Facilitation Council did not lose its jurisdiction to proceed and pronounce the arbitral award on account of approval of the insolvency resolution plan of the petitioner under section 31 of the IBC. This is on account of the reason that the arbitral proceedings were initiated prior to insolvency resolution date, suspended during the moratorium period, resumed upon expiry of the moratorium period and the approved resolution plan did not determine the claim of the respondent as nil whose pending litigation before the west Bengal facilitation council was taken note of in the resolution plan - issue decided against the petitioner and in favour of the respondent. No need to enter into the issue as to whether MSME Act will prevail order the IBC - HELD THAT:- In the facts of this case, there is no conflict between the proceedings/ final award passed by the facilitation council on the one hand and the manner of dealing with the claim of the respondent under IBC/ approved resolution plan on the other hand. The only impact was that the arbitral proceedings before the facilitation council remained suspended during the period of moratorium declared under IBC and such suspension of proceedings was in terms of section 14 of the IBC. Moreover, the scope of the present proceedings is very limited and it primarily relates to the issue as to whether the award could be assailed as a nullity in the execution proceedings even when it has not been challenged under section 34 of the Arbitration and Conciliation Act of 1996 and as to whether the award could be said to be suffering from patent lack of jurisdiction. This court is of the considered view that the points raised by the petitioner objecting to the execution of the arbitral award were not fit to be entertained at the stage of execution. The grounds do not fit in the very narrow scope of assailing the award as nullity. The scope of such ground has been dealt in details under point no. (a) with findings at para 32 to 35 above. The points raised to assail the award as nullity required deliberations on fact and law and was certainly beyond the scope of examination at the stage of execution of the arbitral award by the executing court. The impugned order does not call for any interference - Petition dismissed.

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• 2023 (7) TMI 772
  Undervalued Transactions - avoidable transactions or not - Debtor of the Coporate Debtors - Discounts given by the Corporate Debtor for the benefit of the Appellant in the ordinary course of business or otherwise - HELD THAT:- From a perusal of the ledger account submitted by the Liquidator, who has access to the records of the Corporate Debtor, the Corporate Debtor appears to have given a discount of Rs.6,19,273.00 for C/Y sale, Rs. 13,76,320.00 for poor quality of raw material, Rs. 10,00,960.00 for labour and other charges due to material problem and Rs. 7,15,430.00 for rate difference - the ledger account maintained by the Corporate Debtor correctly depicts that amounts of discounts given to the Appellant and the amount due and payable by the Appellant to the Corporate Debtor, since the Corporate Debtor would not have any ostensible reason not to record the entries relating to Appellant incorrectly and further no reason has been given by the Appellant why this Corporate Debtor s Ledger Account should not be relied on. Whether the abovementioned discounts were given by the Corporate Debtor for the benefit of the Appellant in the ordinary course of business? - HELD THAT:- The Appellant has not produced any document apart from the minutes of meetings dated 03.04.2018 to show that he had raised issue about poor quality and other issues for claiming discount with the Corporate Debtor at the time of supply of the raw material, but he is now claiming these discounts on the basis of meeting held on 03.04.2018 which took place barely ten days before the passing of the CIRP initiation order - the Appellant has not produced any other document apart from the minutes of the meeting dated 3.4.2018 to buttress his claim that the said discounts were given in the ordinary course of business and why these discounts were admitted after a lapse of many months after the supply of raw material. Moreover, it is found that such benefit of discounts were given to the Appellant within the look-back period of one year, and therefore in the absence of cogent explanation regarding these discounts it clearly infringes Section 45(2)(b) and fall in the relevant period for avoidable transactions as laid down stipulated in Section 46(1)(i) of the IBC. The Adjudicating Authority has not committed any error in holding that the balance as on 31.03.2018 (before discount) in respect of material supply to Technico Industries Ltd. (Appellant) is Rs. 31,00,475.00, which is the balance shown in paragraph 26 of the Impugned Order - the unambiguous view is upheld that the Adjudicating Authority has not committed any error in passing the Impugned Order. The Appeal is devoid of merit and is dismissed.

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• 2023 (7) TMI 771
  Grant of Incentive Fee to Resolution Professional - It is submitted that when the Resolution Professional was able to maximize the value of Corporate Debtor he was entitled to performance linked incentive fee - HELD THAT:- The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 provided for payment of Resolution Professional cost which included fee to be paid to the Resolution Professional. From the facts which have been brought on record and the Order of the Adjudicating Authority it is clear that the claim of incentive fee of the Appellant came to be considered by the CoC in its meeting dated 01.12.2022 and was not approved with 91.55% voting. The decision of the CoC dated 01.12.2022 as noted above is a business decision of the CoC while approving the Resolution Plan including the payments which have to be made to the various creditors, stakeholders as well as to the Insolvency Professional Cost, which have to be deliberated and voted upon by the Committee of Creditors. The payment of Performance Linked Incentive Fee in event it is paid to the Resolution Professional shall be part of the Insolvency Resolution Cost which affects the entitlement of stakeholders when the Insolvency Resolution Cost is increased by adding performance linked incentive fee it is bound to reduce the payment which is to be received by the various stakeholders under the Resolution Plan, since the amount which is proposed in the Resolution Plan is a fixed amount - The law is well settled that the commercial decision of the CoC has to be given due credence and the Adjudicating Authority or the Appellate Authority is not to interfere in the commercial decision of the CoC unless it does not fulfill the requirement of Section 30 of the Code. Hon ble Supreme Court again in KALPRAJ DHARAMSHI ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. ANR. [ 2021 (3) TMI 496 - SUPREME COURT ] reiterated that limited judicial review which is available to the Adjudicating Authority and Appellate Authority can in no circumstances entitle to review the business decision arrived at by the majority of the CoC. The decision taken by the CoC in not approving the payment of performance linked incentive fee to the Appellant thus cannot be faulted and is in accord with the discretionary power vested with the CoC under Regulation 34B. Appellant at best was entitled for consideration of his claim under statutory scheme. When claim is considered and not approved, Appellant has no right to claim that he was mandatorily entitled for payment of performance linked incentive fee. Thus, Appellant had no right to claim performance linked incentive fee and his claim having been considered and rejected by the Committee of Creditors with 91.55% vote share cannot be faulted nor it can be interfered with by the Adjudicating Authority or Appellate Authority in exercise of its jurisdiction - appeal dismissed.

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• Service Tax

• 2023 (7) TMI 770
  Short declaration of taxable value in the service tax return (as compared to the service related taxable value declared by them in their Income Tax Return (ITR)/ Form 26AS) - appellant claims the difference either to be reverse charge or negative listed and exempt - confirmation of service tax demand against appellant based on data shared by the CBDT - extended period of limitation - suppression of facts or not. Whether Appellant is liable to pay service tax on such differential value? HELD THAT:- In the present matter when the Service tax is demanded on Income declared before the income tax authorities, it is the responsibility of the department to show that the said income are proceeds of the taxable services and appellant had rendered these services to customers with positive evidences. In the present case department failed to do so. Further on going through the impugned show cause notice, it is found that the show cause notice does not analyze any taxable activities carried out by the Appellant and whether the same would fall within the definition of any taxable service. It is settled principle of law that unless and until the clear analysis of the activity done by the assessee is carried out and classification of service is ascertained, demand of service tax only on the basis of data provided by the CBDT cannot be confirmed. It is found that the Income tax return and Form 26AS is not a statutory documents for determining the taxable turnover under the Service Tax provisions. The said documents are at the most relevant for Income Tax purpose only. Whereas under the Service Tax provisions, the service tax is chargeable on the taxable service provided. Thus, we find that the whole basis of show cause notice is incorrect - it is not found that the demand confirmed on the basis of Income Tax data to be sustainable. It is also found that absolutely no proper inquiry has been made by the department with the Appellant as regard the disputed difference. No statement in this regard asking them about the income declared to the income tax authorities has been recorded. No evidence was produced by the department to show that the amounts declared by the appellant before the income tax authorities are pertaining to the taxable services. In absence of any such evidence, it cannot be said that the income declared by them to the income tax authorities is attributable to the taxable services provided by them to their clients during the disputed period - in the case of COMMISSIONER OF C. EX., LUDHIANA VERSUS RAMESH STUDIO COLOR LAB [ 2010 (5) TMI 466 - CESTAT, NEW DELHI ] where similar service tax demand had been made against the respondent in similar circumstances, the Tribunal has upheld the Appellate order setting aside the service tax demand and penalty against the respondent. Similarly in the case of KIPPS EDUCATION CENTRE VERSUS CCE, LUDHIANA [ 2008 (3) TMI 269 - CESTAT NEW DELHI ], it was held by the Tribunal that income voluntarily disclosed before the income tax authorities could not be added to the taxable value unless there is evidence to prove the same. In this case also, there is no evidence to show that the income disclosed is the part of taxable service. Thus, the demand of services tax is not sustainable on the basis of CBDT data or data provided by the Income tax department. It is found that the adjudicating authority in his order assumed that it is not clear that whether the service recipients are individuals or body corporate for this reason he confirmed demand on the entire value. In this regard it is found that the appellant in their additional submission given the details of service recipient of GTA, wherein all the service recipient are body corporate, dealer of excisable goods, registered factory, a partnership firm which are covered under exemption notification, whereby the service recipient is liable to pay service tax. Therefore, the assumption of the adjudicating authority is absolutely incorrect without any basis. Extended period of limitation - Suppression of facts or not - HELD THAT:- Department has invoked the extended period alleging suppression of facts, for the reason that the exempt/non-taxable services were not disclosed in the service tax returns. It is observed that the appellant obtained service tax registration in the year 2005 and the department had conducted various audit from the year 2005 up to June 2017 and it had never objected to the Appellant with respect to the practice of not reporting the exempted or non-taxable turnover in the Service tax returns, or never intimated the Appellant that this practice could be considered as suppression of facts. Therefore, neither there was intent to evade payment of Service tax, nor to suppress any facts from the revenue, and hence, the adjudicating authority grossly erred while invoking extended period of limitation, and hence, the entire proceeding is liable to be quashed on the ground of time bar also. Thus, the show cause notice was admittedly issued only for the period 2015-16, whereas the demand in the Order in-original was confirmed for 2015-16, 2016-17 and 2017-18 (up to June 2017) which is a serious error on the part of the adjudicating authority - it is found that when no demand was raised in show cause notice as no quantification was made, the demand cannot be confirmed in the adjudication order without quantifying the demand in the show cause notice, for this reason also the demand for the period which was neither quantified nor raised in the show cause notice is ab-initio, void and illegal and the same is not sustainable on this ground alone. Appeal allowed.

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• 2023 (7) TMI 769
  Classification of services - loading and transporting of limestone rejects/high silica/Phyllite/B belt and dumping in specific dump yard/stockyards including dozing - loading of ROM, limestone, waste etc., with hydraulic excavators into tippers/dumpers and preparation of drilling block and cleaning of loading area after blasting for tipper movement - work of loading and transportation of limestone . To be classifiable as cargo handling service or mining activity? HELD THAT:- In the facts of the present case there is no dispute that the Appellant have assisted or done the work of excavation of the mineral, thereafter have transported the same including loading and unloading to the prescribed crusher/hopper of the service receiver. It is found that at the initial stage of enquiry also when the authorised person, Mr. Rao (respondent) appeared before the Revenue and his statement was recorded, wherein he was asked upon with reference to the contracts, the works awarded to him for loading and transportation of limestone from mines to crusher, whereas he has stated that he was undertaking the work of excavation apart from loading and transportation. Clarifying, Mr. Rao stated that they have entered into contract with Metro Cement Ltd; that the excavated area will be measured by their surveyor in the presence of Assistant Mines Manager/Geologist. The billing is done based on the report given by them. Thus submitted that the work undertaken by them includes excavation also and further stated that without excavation, loading cannot be done - It is further found that the learned Commissioner have observed in the Impugned Order that the work order also do not indicate that the stockyard or crusher to which material is transported is within the mine area. The Appellant did not substantiate this contention that the crusher/hopper is within the mine area. They also did not assert that stockyards are within mining area. The primary activity done by the Appellant was mining and the activity of loading and unloading of mineral and dumping the same to the prescribed stockyards/crusher is incidental to mining. Further such activity has been defined and made taxable under the head Mining service with effect from 1st June, 2007 - the activities done by the Appellant are classifiable under the head Mining service which was not taxable prior to 1st June, 2007 - Appeal allowed.

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• 2023 (7) TMI 768
  Levy of Service Tax - deposits made in favour of the appellant by the members of the consortium - difference in the rate charged by the appellant from the members of the consortium and non-members for providing cargo handling services - case of the department is that a lesser rate has been charged from the members of the consortium - period of dispute is 2014-15 and 2013-14. HELD THAT:- It transpires from the records that for the previous years, three show cause notices had been issued to the appellant raising demand of service tax on two issues. The first issue was with regard to the demand of service tax on deposits made in favour of the appellant by the members of the consortium. The second was with regard to the demand of service tax on the difference in the rate charged by the appellant from the members of the consortium and non-members for providing cargo handling services . These three show cause notices were adjudicated by three separate orders confirming the demand. These three orders of the adjudicating authority were assailed before the Tribunal in three service tax appeals. All the three service tax appeals were decided by a common order dated 22.11.2019. The appeals were allowed and the three impugned orders were set asides. As the reasons given by the adjudicating authority for confirming the demands are the same as in the earlier three proceedings, the two orders, each dated 28.09.2017, passed by the Commissioner (Appeals) deserve to be set aside and are set aside. Appeal allowed.

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• 2023 (7) TMI 767
  Classification of services - certain works/subcontracts awarded by the Appellant company for execution of works contract (sub-contract) - service received by the Appellant from the sub-contractors is in the nature of Manpower Supply Service or Works Contract Service? HELD THAT:- From a plain reading of the Work Order, it is evident that the Work Order is not for supply of manpower service, but it is work awarded for construction activity specifying the rate payable for particular quantum of work to be executed. Further, it is not disputed that the sub-contractor has got full liberty to employ such number of workmen and use such quantum and variety of tools and tackles as may be required. Further, the Appellant company as the Principal is not obligated, though Appellant supervised the work of the sub-contractor from time to time. Further, there is no rate specified per workmen to be provided by the sub-contractor - It is also held that as the main contract is for construction activity, undisputedly in the nature of Works Contract service, the sub-contractor having been awarded the part of such work, is also classifiable rightly under Works Contract service. The service in question received by the Appellant is in the nature of Construction service and/or Works Contract service and not Manpower Supply service, under any stretch of imagination - Appeal allowed.

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• 2023 (7) TMI 766
  Classification of services - cleaning services or GTA Services - appellant entered into an agreement with M/s CESC Ltd to evacuate fly ash from silos and hydro bins of various thermal power stations of M/s CESC Ltd. - period 16.06.2005 to 04.01.2007 - HELD THAT:- A perusal of the definition of cleaning service indicates that the Appellant has not undertaken any of the activities specified therein. It is observed that fly ash is being evacuated and removed as per the contract and the same cannot be termed as a cleaning activity . The evacuation of fly ash is required to continue the industrial activity. Unless the accumulated fly ash is removed from the silos, it cannot be utilized to receive further fly ash emerging during the course of manufacturing. Thus, it is observed that removal of fly ash from the silos is an essential part of the production process. The issue is no more res Integra and has been decided by the Tribunal in the case of M/S. COMMISSIONER OF CENTRAL EXCISE SERVICE TAX-RANCHI VERSUS M/S. HINDUSTAN STEEL WORKS CONSTRUCTION LTD. [ 2018 (11) TMI 1217 - CESTAT KOLKATA] where it was held that In the present case, the activity of excavation and transportation of fly ash from the pond, for channeling the slurry water-flow cannot be termed as cleaning activity in terms of Section 65 (24B) of the Finance Act. The Respondent is not clearing the fly ash with the objective of cleaning the pond or free the pond from contamination. Fly ash is being excavated and transported to the specified areas as per the contract. Thus, the activities undertaken by the Appellant are not chargeable to service tax under the category of Cleaning Service - appeal allowed.

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• Central Excise

• 2023 (7) TMI 765
  CENVAT Credit - inputs - plastic granules other than polycarbonate - credit availed by showing that these inputs were used and consumed in relation to manufacturing of energy meters, electric wires, cables, electronic parts and batteries - reliability of testing report/opinion - cross-examination of the persons whose statements are relied upon - HELD THAT:- It was neither the case of the appellant nor any material has come on record to show that it was not possible for the appellant revenue to procure the attendance of some of these witnesses without undue delay or expense or due to any other reason such person could not be produced for cross-examination. Since the revenue had chosen to heavily rely upon the statements of such persons, therefore, it was for the revenue to make such persons available for cross-examination for their evidence or statements to be considered and as it was not done so, therefore, in our considered opinion, the learned Tribunal had rightly ignored the statements of such persons for arriving at a conclusion that the order passed by the adjudicating authority was liable to be set aside. The adjudicating authority had also placed reliance upon the testing report/opinion given by one Dr. K. Prakalathan, Manager (Testing), CIPET, Chennai regarding the inputs used for manufacturing of the energy meters, the samples of which were sent to him for the purpose of testing. The adjudicating authority had observed that it was revealed from the report of the CIPET Chennai that the samples of energy meters were manufactured with polycarbonate only. It is relevant to mention here that the report of the Manager (Testing) as such has not been produced on record but it is revealed from the order passed by the adjudicating authority that the expert had opined that the mixing of polycarbonate with non polar plastic granules like granules of polymers of ethylene (PE), granules of polymers of propylene (PP) or granules of polymers of styrene (PS) was difficult. The Tribunal had observed that this report could not be considered to be conclusive on the point that the body part of energy meter could not be manufactured by mixing polycarbonate with plastic granules of the type which were of the inputs in dispute in this case - On perusal of the record, there are no reason to differ with the observations as made by the Tribunal on this point as the report of the testing officer cannot be stated to be conclusive on the point that energy meter could not be manufactured by mixing of the inputs in dispute i.e. plastic granules of polymers of ethylene (PE), granules of polymers of propylene (PP) or granules of polymers of styrene (PS) and especially when all these inputs in question undisputedly qualified as engineering materials. Therefore, the observations made by the Tribunal on this point also deserve to be affirmed. The adjudicating authority had also observed that the invoices showing purchase of goods/inputs in dispute from various suppliers were paper transactions and this observation was made by relying upon statements of the suppliers. As also observed, such statement could not be considered to be relevant and admissible and hence had rightly not been relied upon by the Tribunal. The revenue failed to produce any material on record to show that either the goods qua which invoices were issued by the suppliers had been diverted to some third party or there was any instance of the money being received back in cash by the assessee as shown to be paid on account of purchase of the disputed inputs. The appellant-revenue had also failed to ascertain as to how much quantity of the inputs was required for manufacturing finished goods which were found at the time of the search - It is well settled that in an appeal under Section 35 G of the Act, 1944, this Court cannot re-appreciate the evidence and conclude that the finding of fact is incorrect so the appeal can only be maintained on the substantial question of law. Since the findings recorded by the Tribunal are essentially the findings of fact recorded on appreciation of material brought on record the same cannot be gone into by this Court under Section 35 G of the Act, 1944. There are no merit in the appeal filed by the revenue against the main assessee M/s Avon Meters Private Limited. Accordingly, the same is dismissed.

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• 2023 (7) TMI 764
  Disallowance of CENVAT credit wrongly utilized - capital goods - G.P. Coils - G.P. Sheets - HR Coils - C.R. Sheet - M.S. Angle - M.S. Plates - M.S. Channel - Shape and Section - Alloyed/Unalloyed cold Rolled Coil Throughed Corrugated C R Sheet - and Primer Pains - recovery alongwith interest and penalty - Order beyond the scope of the Show Cause Notice (SCN) - HELD THAT:- The panchnama prepared by the panchas who had been called by the Central Excise Officers to witness the verification of inputs used in the manufacture of capital goods , also gives details of the verification that was conducted to establish that the parts were used in the machines for fabrication work. The panchnama also records that the Officers were provided photocopies of relevant purchase invoices along with store issue slips of material duly signed by the concerned technical authority - It is, therefore, clear that the materials on which CENVAT credit had been taken had all been used for fabrication work of machines which are capital goods. In any view of the matter the show cause notices do not allege that the raw materials on which CENVAT credit had been taken had not been utilized for fabrication of capital goods . The Commissioner, therefore, could not have examined this issue - It is, therefore, not possible to sustain the finding recorded by the Commissioner that the items in question have not been used for fabrication of capital goods . Penalty - HELD THAT:- The imposition of penalty upon the Gautam Goel cannot also be sustained. Even otherwise, the learned counsel for the appellant is justified in asserting that there was no evidence on record to suggest that he was involved in the day to day affairs of the appellant, particularly with regard to availment of CENVAT Credit. Appeal allowed.

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• 2023 (7) TMI 763
  Valuation - amount of subsidy received by the appellant from the State Government under the Rajasthan Investment Promotion Scheme, 2010 is includible in the assessable value of the goods cleared or not - section 4(3)(d) of the Central Excise Act, 1944 - period March 2011 to March 2015 - HELD THAT:- The issue, stands settled by an order dated 21.03.2023 of the Tribunal while answering on the reference that had been made on account of difference of opinion between the two Members constituting the Division Bench in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS CGST- ALWAR [ 2023 (3) TMI 1120 - CESTAT NEW DELHI ] where it was held that In the promotion policy involved in the present case, the subsidy does not reduce the sales tax that is required to be paid by the assessee as the entire amount of sales tax collected by the assessee from the customer is paid. The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act. The decision of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] was considered in the aforesaid order and it was held that it would not be applicable in the facts of the present case. In view of the aforesaid answer to the reference made by the Division Bench, the order of the Commissioner (Appeals) deserves to be set aside and is set aside - appeal allowed.

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• 2023 (7) TMI 762
  Levy of Excise Duty - additional consideration or not - compensation received as a result of cancellation of orders by West Bengal Power Development Corporation - Extended period of limitation - HELD THAT:- In this case, the show-cause notice has been issued by invoking extended period of limitation as the facts that the appellant has submitted all the material information to the Department through their letter dated 10.05.2002 about non-receipt of two contracts and thereafter, vide their subsequent letter dated 19.03.2003, which was submitted on 25.03.2003, the appellants informed the Assistant Commissioner of Central Excise, Durgapur Division about the final cancellation of the contracts by the customer and appended the orders of cancellation of contracts issued by the customer along with the final MOU. As per the said MOU, the appellant received the payment. As the show-cause notice has been issued to the appellant on 10.10.2007 by invoking the extended period of limitation, in that circumstances, it is held that as all the information were available to the Department in 2003 itself and no information has been suppressed by the appellants, in that circumstances also, the show-cause notice issued after the period of four years of the information gathered is not sustainable and is highly barred by limitation. All the demands are barred by limitation - Appeal allowed.

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• Indian Laws

• 2023 (7) TMI 761
  Enforceability of Arbitration agreement even when the Work Order is unstamped and unenforceable under the Indian Stamp Act, 1899. Finding in N.N. GLOBAL [ 2021 (1) TMI 1121 - SUPREME COURT ] - The Court found that an Arbitration Agreement is a distinct and separate agreement, which is independent from the substantive commercial contract in which it is embedded. Under the Doctrine of Kompetenz Kompetenz, the Arbitral Tribunal had competence to rule on its own jurisdiction, including objections with regard to the existence, validity and scope of the Arbitration Agreement. Section 16(1) of the Act was relied upon. The Court made a copious reference to case law in support of the Doctrine of Kompetenz-Kompetenz. Section 5 of the Act contemplated minimal judicial interference. The Court referred to the Maharashtra Stamp Act, 1958. Section 34 of the said Act, essentially, is pari materia with Section 35 of the Stamp Act, 1899 hereinafter referred to as the Stamp Act. There are other provisions, which essentially follow the same pattern as is contained in the latter Act. The Court, thereafter, went on to refer to Item 63 of Schedule I of the Maharashtra Stamp Act, 1958, which dealt with Works Contract . It was found that the Stamp Act is a fiscal measure. Thereafter, the Court went on to discuss the Judgment of this Court reported in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited. Finding in SMS TEA ESTATES [ 2011 (7) TMI 1289 - SUPREME COURT ] - When a lease deed or any other instrument is relied upon as contending the arbitration agreement, the court should consider at the outset, whether an objection in that behalf is raised or not, whether the document is properly stamped. If it comes to the conclusion that it is not properly stamped, it should be impounded and dealt with in the manner specified in Section 38 of the Stamp Act. The court cannot act upon such a document or the arbitration clause therein. But if the deficit duty and penalty is paid in the manner set out in Section 35 or Section 40 of the Stamp Act, the document can be acted upon or admitted in evidence. Finding in GARWARE - The Bench of two learned Judges took the view that the Arbitration Clause contained in the sub-contract would not exist as a matter of law until the sub-contract was duly stamped. It was further found that Section 11(6A) deals with existence as opposed to Section 8, and Section 45 of the Act. AS PER K. M. JOSEPH, J. Whether the statutory bar contained in Section 35 of the Stamp Act applicable to instruments chargeable to stamp duty under Section 3 read with the Schedule to the Act, would also render the arbitration agreement contained in such an instrument, as being non-existent, pending payment of stamp duty on the substantive contract/instrument? HELD THAT:- The view taken in SMS Tea Estates as followed in Garware and by the Bench in Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram and other Charities v. Bhaskar Raju and Brothers and others [ 2020 (2) TMI 678 - SUPREME COURT ] as to the effect of an unstamped contract containing an Arbitration Agreement and the steps to be taken by the Court, represent the correct position in law as explained by us hereinbefore. N.N. Global was wrongly decided, when it held to the contrary and overruled SMS Tea Estates and Garware. An instrument, which is exigible to stamp duty, may contain an Arbitration Clause and which is not stamped, cannot be said to be a contract, which is enforceable in law within the meaning of Section 2(h) of the Contract Act and is not enforceable under Section 2(g) of the Contract Act. An unstamped instrument, when it is required to be stamped, being not a contract and not enforceable in law, cannot, therefore, exist in law. Therefore, we approve of paragraphs-22 and 29 of Garware. To this extent, we also approve of Vidya Drolia (supra), insofar as the reasoning in paragraphs-22 and 29 of Garware is approved. The true intention behind the insertion of Section 11(6A) in the Act was to confine the Court, acting under Section 11, to examine and ascertain about the existence of an Arbitration Agreement. The Scheme permits the Court, under Section 11 of the Act, acting on the basis of the original agreement or on a certified copy. The certified copy must, however, clearly indicate the stamp duty paid as held in SMS Tea Estates. If it does not do so, the Court should not act on such a certified copy. An Arbitration Agreement, within the meaning of Section 7 of the Act, which attracts stamp duty and which is not stamped or insufficiently stamped, cannot be acted upon, in view of Section 35 of the Stamp Act, unless following impounding and payment of the requisite duty, necessary certificate is provided under Section 42 of the Stamp Act - the provisions of Sections 33 and the bar under Section 35 of the Stamp Act, applicable to instruments chargeable to stamp duty under Section 3 read with the Schedule to the Stamp Act, would render the Arbitration Agreement contained in such instrument as being non-existent in law unless the instrument is validated under the Stamp Act. In a given case, the Court has power under paragraph-5 of the Scheme, to seek information from a party, even in regard to stamp duty. As per RASTOGI, J. The existence of a copy/certified copy of an arbitration agreement whether unstamped/ insufficiently stamped at the pre-referral stage is an enforceable document for the purposes of appointment of an Arbitrator under Section 11(6A) of the Act, 1996 where the judicial intervention shall be minimal confined only to the prima facie examination of existence of an arbitration agreement alone keeping in view the object of 2015 amendment and the courts must strictly adhere to the time schedule for the appointment of Arbitrator prescribed under Section 11(13) of the Act, 1996. All the preliminary/debatable issues including insufficiently stamped/unduly stamped or validity of the arbitration agreement etc. are referrable to the Arbitrator/Arbitral Tribunal under Section 16 of the Act, 1996 which, by virtue of the Doctrine of Kompetenz - Kompetenz has the power to do so. The decision in SMS Tea Estates Private Limited stands overruled. Paras 22 and 29 of Garware Wall Ropes Limited which are approved in paras 146 and 147 in Vidya Drolia and Others are overruled to that extent. AS PER HRISHIKESH ROY, J. Whether the statutory bar under Section 35 titled Instruments not duly stamped inadmissible in Evidence of the Stamp Act,1899 would be attracted when an arbitration agreement is produced under Section 11(6) of the Arbitration Act,1996? HELD THAT:- The objective behind the enactment of the Arbitration Act,1996 was to, inter alia, avoid procedural complexity and the delay in litigation before Courts. Impounding and stamping at the Section 11 stage would frustrate the very purpose of the amended Arbitration Act,1996 as the enforcement of arbitration agreements would be stalled on an issue, which is capable of being resolved at a later stage. To defer stamping to the stage of the arbitrator would in my view achieve the objective of both the Arbitration Act, 1996 and the Stamp Act, 1899. The contours of the jurisdiction of the judge referring matters for arbitration, cannot be permitted to suffer from confusion and ambiguity. As can be seen, the present 5 judge-Bench could not provide clarity on the issue referred to us, on account of the fractured verdict, leading to legal uncertainty. The constitution of a larger Bench in this Court is certainly not commonplace as the last occasion when 7 judges assembled was in the year 2017. Around 5 matters as I am informed, are already awaiting the attention of 7 judges Bench. In such backdrop, the interplay between the Acts and how its objective is to be achieved in the course of Arbitral proceedings either at the referral stage or thereafter is much too important to be left lingering for a clarificatory verdict by a larger Bench. Therefore, I would appeal to the legislative wing of the State to revisit the Amendments which may be necessary in the Stamp Act,1899 in its application to the Arbitration Act,1996. The State might put into place a convenient mechanism which would efface the inconsistencies in both the Arbitration Act,1996 and the Stamp Act,1899. If we look at the legislative intent of the Arbitration Act,1996 and what our country is hoping to be as the destination of choice for Arbitration, I m of the considered opinion that it would be appropriate to interpret the statutory interplay in a constructive manner without defeating the legislative intent and thwarting the speedy referral to arbitration. The examination of stamping and impounding need not be done at the threshold by a Court, at the pre-reference stage under Section 11 of the Arbitration Act, 1996 - Non-stamping/insufficient stamping of the substantive contract/instrument would not render the arbitration agreement nonexistent in law and unenforceable/void, for the purpose of referring a matter for arbitration. Garware wrongly applied the principle in Hyundai [ 2018 (8) TMI 1469 - SUPREME COURT ] to hold that an arbitration agreement would not exist-in-law if it is unstamped/insufficiently stamped. An arbitration agreement should not be rendered void if it is suffering stamp deficiency which is a curable defect. To this extent, Garware and Hyundai do not set out the correct law. AS PER C. T. RAVIKUMAR, J. Whether the Court called upon to invoke the power under Section 11 (6) should or could exercise the power coupled with duty under Section 33 of the Indian Stamp Act, 1899, when the document carrying the arbitration agreement or arbitration clause is found unstamped or insufficiently stamped or without going into such matter, should it confine its exercise of power in the matter of appointment of Arbitrator(s) only and refrain itself from proceeding further in view of the mandate under Section 33 of the Indian Stamp Act, 1899? The Bar under Section 35 of the Stamp Act on admission of instruments not duly stamped in evidence, as is evident from proviso (a) to it, is not permanent and is curable by following procedures provided thereunder and making an endorsement as provided under Section 42(1) of the Stamp Act. Sub-section (2) of Section 42 makes it clear that every such instrument so endorsed shall thereupon be admissible in evidence and be acted upon and authenticated as it had been duly stamped. The upshot of the discussion is that being unstamped or insufficiently stamped, the agreement would not be available to be admitted in evidence and to be acted upon , till it is validated following the procedures prescribed under the provisions of the Stamp Act and till then, it would not exist in law . As already found the nature of exercise of power under Section 11 (6) is judicial and therefore, it was thought only fit to permit to exercise such power only on the original instrument or else, on its certified copy, to be understood with reference to Section 63 (1) read with Section 74 and 76 of the Evidence Act. When once the intention behind paragraph 2(a) of the scheme is understood in that manner with reference to the provisions under Section 63 (1), 74, 76 and 79 of the Evidence Act, the expression certified copy employed in paragraph 2(a) of the scheme framed under Section 11(10) of the Act cannot be interpreted to mean any other kind of copies provided under Section 63 of the Evidence Act other than under Section 63 (1) of the Evidence Act. It cannot be presumed that despite the conspicuous difference in the said expressions, under paragraph 2 (a) certified copy alone was permitted to be appended along with the application under Section 11 of the Act, unintentionally. - I am of the considered view that it was so prescribed, fully understanding the nature of exercise of power under Section 11 (6) of the Act and also the presumption of genuineness and correctness of certified copy available by virtue of Section 79 of the Evidence Act.

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• 2023 (7) TMI 760
  Dishonour of Cheque - discharge of legal liability - vicarious liability of director - cheque was issued prior to the date of director joining the company - HELD THAT:- In the present case, learned counsel for the petitioners had argued that the petitioners had joined the accused company as directors on 23.09.2015, whereas the cheques in question had been issued on 30.12.2013 i.e. about two years prior to their joining. It was also argued that the instructions for stop-payment of the cheques were issued in April, 2015 i.e. about five months prior to the joining of petitioners as directors in the accused company. In this regard, this Court notes that the cheques in question are all dated 21.09.2017 i.e. about two years after the petitioners had joined the accused company as directors and had been dishonored on 01.12.2017. As regards the contention that the cheques were blank and undated when issued in the year 2013, and the same had later been filled and presented for encashment by the complainant, this Court notes that whether or not the cheques in question were undated or blank or issued as security cheques are all triable issues, to be decided upon leading evidence, and the same cannot be gone into by this Court at this stage. This Court deems it appropriate to refer to the decision of Hon ble Apex Court in case of Sunil Todi v. State of Gujarat [ 2021 (12) TMI 175 - SUPREME COURT] whereby it has been held The order of this Court in Womb Laboratories holds that the issue as to whether the cheques were given by way of security is a matter of defence. This line of reasoning in Womb Laboratories is on the same plane as the observations in HMT Watches, where it was held that whether a set of cheques has been given towards security or otherwise or whether there was an outstanding liability is a question of fact which has to be determined at the trial on the basis of evidence. The rationale for this is that a disputed question of this nature cannot be resolved in proceedings under Section 482 CrPC, absent evidence to be recorded at the trial. As apparent from the records of the case, the complainant in the complaint under Section 138 of NI Act has specifically averred that the accused company had issued the cheques in question and accused no. 2 to 10 were its directors and accused no. 11 was the company secretary, all of whom were in charge of and responsible for the conduct and affairs of accused company and the cheques in question had been issued with the consent, knowledge and connivance of all the accused, as all of them had been taking part in day-to-day activities of accused company - the cheques in question are all dated 21.09.2017, i.e. when the petitioners were undisputedly the directors in the accused company. The petitioners have failed to bring on record any unimpeachable material or material of sterling quality to show that they were not responsible for day-to-day affairs of the company when the cheque was issued or dishonored or that the dishonoring of cheque in question was not attributable to any negligence or connivance or consent on their part. The role of each petitioner in commission of offence, if any, can become clear only during the course of trial, and cannot be examined in detail by this Court while exercising jurisdiction under Section 482 Cr.P.C. Having found no reasons to interfere with the impugned summoning order, the present petitions stand dismissed.

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• 2023 (7) TMI 759
  Dismissal of complaint for non-prosecution / non appearance before the court - Exercise of discretion by Trial Court under the provisions of Section 256 of the Code of Criminal Procedure - complainant has not remained present on two dates at the stage of recording the evidence - HELD THAT:- The learned Magistrate cannot simply say that the steps are not taken since long. Now, whether two day s absence is sufficient for dismissal?. There is no straitjacket formula. It depends upon the facts. In particular case even six dates or more than that can be presumed to be sufficient for not dismissing the complaint. It is pure question of fact. Learned Advocate Mr. Dave (respondent) is right that now-a-days you can see roznama online. He is right that the accused is not required to attend the Court and to reproduce record. However, two days absence cannot be said to be justifiable ground for dismissing the complaint. It is not job of the Court to see that the matters are dismissed just because either of party is not remaining present. The job of the Court is to see that justice is done by giving sufficient opportunities to the parties. Always there is rule of audi alteram partem. In this case, it is felt that the learned Magistrate has hastily dismissed the complaint. In fact, one option was available to learned Magistrate that is to say, while adjourning the matter he could have regulated conduct of the complainant, even by passing certain strict orders, that is to say, even by imposing cost. Learned Magistrate has simply considered absence of complainant only on two dates and dismissed the complaint. The Respondent is justified in opposing the Appeal, on the basis of facts and circumstances. When the rights of both parties are balanced, the matter needs to be restored. Leave to prefer an Appeal is granted - Matter restored back.

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• 2023 (7) TMI 758
  Continuation of criminal proceedings when petitioner was exonerated in the departmental enquiry in the same set of allegation - Creation of false documents and drawing of monies by cheating the Government and misappropriation of Government funds. HELD THAT:- On the basis of very same set of allegations, the proceedings i.e. both departmental as also criminal, were initiated against the petitioner. In so far as the departmental proceedings are concerned, it is evident from the material on record i.e. proceedings of the Director of Public Health and Family Welfare dated 10.01.2022 that the Charge referred to above, was dropped pursuant to a report submitted by the Inquiry Officer. In such circumstances, continuation of criminal proceedings with reference to the very same set of allegations, is not legally sustainable. In Radheshyam Kerjiwal s case [ 2011 (2) TMI 154 - SUPREME COURT ], the Hon ble Supreme Court was dealing with an issue with regard to impact of the findings recorded in adjudication proceedings under the provisions of Foreign Exchange Regulation Act, 1947 on criminal proceedings, and whether in case in the adjudication proceedings, the person concerned is exonerated, can he ask for dropping of the criminal proceedings on that ground. The said issue was answered by a majority of 2:1 in favour of the appellant before the Hon ble Supreme Court, inter alia holding that in the case of the findings by the Enforcement Directorate in the adjudication proceedings that there is no contravention of the provisions of the Act, it would be unjust and abuse of process of the Court to permit the Enforcement Directorate to continue with the criminal prosecution. In Ashoo Surendranath Tewari s case [ 2020 (9) TMI 1150 - SUPREME COURT ] a three member Bench of the Hon ble Supreme Court, while referring the above said ratio laid down in Radheshyam Kerjiwal, set aside the Judgment of the High Court and that of the Special Judge and discharged the appellant therein from the offences under the Penal Code. The conclusion reached in the above said case was based on the Central Vigilance Commission s (CVS) order which was in favour of the appellant and chances of conviction in a criminal Trial involving the same facts appear to be bleak. This Court is of the opinion that the aforesaid judgments would squarely applies to the case of the petitioner. As the petitioner was exonerated in the departmental enquiry, continuation of proceedings in respect of same set of allegations is nothing but abuse of process of Court - Petition allowed.

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