Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 23, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - Composition scheme - the turn over after the GST regime came to force is less than ₹ 1 crore - The argument that the turn over in the financial year starting from 1.7.2017 has only to be taken into consideration ignoring the previous turn over in the VAT regime does not sound to reason, because when the legislature at more than one place used the word ‘preceding financial year’, it would only mean that as on 1.7.2017, the turn over of the previous year under the VAT regime has to be reckoned with for the purpose of extending benefit under GST regime, provided the self-declarations made are correct - HC
Income Tax
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Assessment order passed against non-existent company - Merger of company as per the scheme of Amalgamation into other company - Since the assessee company ceased to be in existence as on the date when the AO passed the order of assessment, assessment so framed is not sustainable in the eyes of law, being a nullity. The order of assessment is liable to be annulled and is hereby annulled. - AT
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Transfer Pricing Adjustment - Adjustment on account of notional interest on the receivables - when the assessee is having their own funds and not paying interest on any loans, then there is no obligation on the assessee to charge interest from the interest free loan given nor any provision of the Act mandate the Assessing Officer to add notional interest received to the total income - the assessee being a debt free company, the action of the revenue making adjustment on account of notional interest on the receivables cannot be held to be legally valid. - AT
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Penalty u/s. 271(1)(c) - CIT(A) has made irrelevant observation in his appellate order, which are not only factually incorrect but have no relationship to the issue by way of penalty u/s.271(1)(c). This amply reflects lack of application of mind by the ld. CIT(A). - AT
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Reopening of assessment u/s 147 - Notice issued beyond the period of limitation - in view of the fact that 01.04.2018 was a Sunday, thus, for all purposes, notice was issued for reopening of assessment within the period of limitation for the assessment year 2011-12, and therefore, the respondent is to proceed further in accordance with law by following the procedures contemplated under the Act - HC
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Carry forward the unabsorbed depreciation beyond eight years - The interregnum restriction of limiting the claim for an eight-year period does not take away the right of an assessee to claim the balance of unabsorbed depreciation, forever. The balance of unabsorbed depreciation revives back into life and becomes eligible for carry forward and set off along with the other part unabsorbed depreciation available to the credit of the assessee - HC
Customs
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Confiscation of imported goods - Hand Mixer and its spare parts - The apprehension of the learned counsel for the appellant that the Appellate Tribunal has not started its sittings after the lock-down, have been countered by the learned Standing Counsel, who pointed out that the Tribunal has in fact started its sitting and are hearing matters listed before it. The appellate remedy is therefore efficacious. - HC
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Failure to file EGM - responsibility of the appellant to file the EGM to the proper officer before departure of the conveyance from the Customs station - only for continued non-compliance beyond 1.4.2019 the penalty is required to be imposed. In the present case, on receiving the notice from the department, the appellant has immediately rectified the defect. There is no allegation of continued non-compliance. The facts brought to light established that the error was only due to inadvertent omission / system error etc. - AT
Indian Laws
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Dishonor of Cheque - the said bouncing of cheques on second presentation cannot be a ground for prosecution under Section 138 of the Negotiable Instruments Act, 1881 as one of the conditions precedent for prosecution i.e the cheque itself should be valid on the date of its presentation, is not satisfied when the cheques are returned as not acceptable to the bank on account of being non-MICR cheques. - HC
Service Tax
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Short payment of service tax - Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) - Ld. Commissioner has categorically observed that difference in tax liability is mainly due to interpretation and change in calculation of service tax, therefore, the mistake of the respondent/assessee in the declaration is bona fide and there is no malafide on their part. - AT
Central Excise
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Rejection of Refund claim in cash of differential duty - SCN was not issued - It is the basic tenet of our Constitution that “justice should not only be done, but should manifestly and undoubtedly be seen to be done” - The fundamental principles of law are at stake and the Orders have been passed without affording proper and reasonable opportunities to the appellant - Matter restored back - AT
VAT
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Reopening of completed assessment - allegation of defective ‘C’ and ‘H’ forms - The action of the 1st respondent in rejecting the claim of the petitioner for concessional rate of tax / exemption on the ground of declarations being defective and also not returning the ‘C’ and ‘H’ declaration forms to the petitioner to rectify such defects, is highly objectionable and violative of principles of natural justice, resulting in serious prejudice to the petitioner - HC
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Refund of the tax paid - as no such communication withholding the refund has been received by the petitioner either before filing of the Writ Petition or during the pendency of the present proceeding - this Court cannot accept the statement made on behalf of the respondents that the 3rd respondent, having exercised powers conferred under Section 40(2) of the Act, has decided to withhold the refund due to the petitioner. - refund to be granted - HC
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Refund of Input Tax Credit - purchase turnover corresponding to export sales -The petitioner had also produced the certificate issued by the Postal Department of Government of India confirming and corroborating delivery of postal consignments to the consignees outside the country with relevant details, such as place of destination, date of delivery, etc. - the 1st respondent is directed to refund the sum by crediting the above said amount to the petitioner’s bank account, within fifteen (15) days - HC
Case Laws:
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GST
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2021 (7) TMI 867
Refund of deposited amount - petitioner had deposited 10% of the disputed amount of tax as a pre-condition for filing the appeal - HELD THAT:- The petitioner is ready and willing to deposit an additional 20% of the remaining amount of tax in dispute in compliance of the requirements under Section 112 (8) of UP GST Act. List for hearing in the second week of February, 2020.
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2021 (7) TMI 864
Constitutional Validity - Section 9 of the Constitution (One Hundred and First Amendment) Act, 2016 - Serial No. 9(ii), its proviso para No. 4 of the Explanation in Notification No. 8/2017-Integrated Tax (Rate) dated 28.06.2017 - Entry 10 of the Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017 - levy of Integrated-tax / IGST - services by way of transportation of goods by vessel from a place outside India, up to custom station of clearance of India - Ocean Freight services - reverse charge mechanism - deeming fiction of equating import of goods services into India with inter-state trade commerce - Importer within meaning of Section 2(26) of the Custom Act, 1962 deemed as recipient of service - HELD THAT:- Reliance placed in the case of MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA 1 OTHER [ 2020 (1) TMI 974 - GUJARAT HIGH COURT ] where it was held that impugned Notification No.8/2017 Integrated Tax (Rate) dated 28th June 2017 and the Entry 10 of the N/N.10/2017 Integrated Tax (Rate) dated 28th June 2017 are declared as ultra vires the Integrated Goods and Services Tax Act, 2017, as they lack legislative competency. Both the Notifications are hereby declared to be unconstitutional. This petition is disposed of in terms of the decisions given by the Gujarat High Court in Mohit Minerals Private Limited.
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2021 (7) TMI 863
Constitutional Validity - Sr. No. 9(ii) of the N/N. 8/2017-Integrated Tax (Rate) dated 28.06.2017 - Sr. No. 10 of the Notification No. 10/2017 Integrated Tax (Rate) dated 28.06.2017 - levy of Integrated-tax / IGST - services by way of transportation of goods by vessel from a place outside India, up to custom station of clearance of India - Importer within meaning of Section 2(26) of the Custom Act, 1962 deemed as recipient of service - HELD THAT:- Reliance placed in the case of MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA 1 OTHER [ 2020 (1) TMI 974 - GUJARAT HIGH COURT ] where it was held that impugned Notification No.8/2017 Integrated Tax (Rate) dated 28th June 2017 and the Entry 10 of the N/N.10/2017 Integrated Tax (Rate) dated 28th June 2017 are declared as ultra vires the Integrated Goods and Services Tax Act, 2017, as they lack legislative competency. Both the Notifications are hereby declared to be unconstitutional. This petition is disposed of in terms of the decisions given by the Gujarat High Court in Mohit Minerals Private Limited.
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2021 (7) TMI 859
Levy of GST - Composition scheme - the turn over after the GST regime came to force is less than ₹ 1 crore - whether the authorities were right in directing the petitioner to pay tax at 28% and also as to what the word preceding financial year appearing in Section 10(1) of Act would mean? - HELD THAT:- The word preceding financial year appearing in Section 10 (1) of the Act is the crux of the issue. If the word preceding financial year is restricted to the period commencing from GST regime, then all the assesses, who have submitted their returns with false declarations in the GST regime for the financial year 2017-2018, would go scot free and would not be liable to pay any tax, as there would not be any preceding financial year in the GST regime for the period 2017-2018. This could not have been the intention of the legislature at all. If the intention of the legislature was to exclude the declarations made under VAT regime, the same would have found place in Section 10(1) of the Act itself - As the tax to be paid is to be determined under the new regime, the legislature thought it fit to fix a limit in the turn over of the preceding financial year for the purpose of extending the benefit under the composite scheme. A reading of the objects and reasons and the provisions of GST Act makes it clear that GST Act has only replaced VAT Act. All the taxes to be paid under VAT are subsumed into a single tax called GST, simplifying the tax collection process and making it easier not only to the customer, but also the State and Central authorities. The argument that the turn over in the financial year starting from 1.7.2017 has only to be taken into consideration ignoring the previous turn over in the VAT regime does not sound to reason, because when the legislature at more than one place used the word preceding financial year , it would only mean that as on 1.7.2017, the turn over of the previous year under the VAT regime has to be reckoned with for the purpose of extending benefit under GST regime, provided the self-declarations made are correct - by switching over from VAT to GST system, tax payment/collection on intra state supply of goods is being continued, but, however, in a different mode, thereby avoiding inconvenience and hardship to one and all. In the instant case, the dispute in so far as interpretation of the word previous financial year arose only for the financial year 2017-2018, as the GST regime commenced from 1.7.2017. If the intention of the legislature was that the turn over of the financial year under GST regime is only to be taken into consideration, then there would have been a clarification of the word preceding financial year - the word preceding appearing before the word financial year cannot be ignored and if done, one would doing mockery of the words financial year does not exceed ₹ 50 lakhs . Therefore, to fix a parameter for extending the benefits under the scheme and for payment of less tax in case of manufacturers and for those engaged in making supplies, the legislature thought it fit to take into account the turn over of the previous financial year. The collection of tax under the GST Act, 2017 is not in addition to the provisions of VAT, but, this is being introduced as a substitute to VAT Act to deal with both goods and services, so as to maintain uniformity across the length and breadth of the country. This has been introduced to meet the requirements under the recommendations of the GST council, in which all the States and Union territories are the stakeholders - there are no illegality in taking into consideration the previous year s turn over (under VAT regime) for the purpose of extending benefits under the composite scheme or for collecting taxes and penalty. Petition dismissed.
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Income Tax
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2021 (7) TMI 853
Transfer Pricing - Addition by way of upward adjustment in respect of reimbursement expenses on the basis of order u/s. 92C(3) - HELD THAT:- The associated concern has also reflected such expenses in their books of account and shown as expenses reimbursed by the assessee company. All the details and material facts were disclosed before the lower authorities by the assessee company and submitted that no international transaction has taken place between the assessee company and its associated concern in respect of amount shown as reimbursement of expenses, therefore, no question of arms length price determination was arised in its case. As observed that CIT(A) has not categorically disproved the material facts and explanation of the assessee company in support of its contention that it has made only reimbursement of expenses to its associated concerned which were incurred for the purpose of business of the assessee company. CIT(A) has stated in a general manner that assessee has reimbursed expenses which were the responsibility of associated concern, therefore, the transaction was not at arms length. CIT(A) has not given specific reason in support of his decision and also not disproved the submission of the assessee pertaining to nature of reimbursement of expenses and the relevant material demonstrating that such expenses were not incurred for any benefit of the subsidiary company. No merit in the decision of the ld. CIT(A). Therefore, this ground of appeal of the assessee is allowed. Addition of prior period expenses - HELD THAT:- AO found that there was no such prior period income and the same was the amount on account of reversal on discount and sales promotion expenses claimed and allowed in the earlier years. On query, the assessee company vide letter dated 22nd Nov, 2010 admitted that the amount of ₹ 30,80,966/- was actually the liability for expenses claimed and allowed in the earlier years by way of discount and rate difference etc. and agreed for adding the same u/s. 41(1) - on verification of the material on record, the Assessing Officer has brought to the notice of the assessee that such amount on account of reversal of expenses claimed was ₹ 42,48,547/- . The assessee has agreed for the same for making addition to its total income vide order sheet entry dated 3rd Nov, 2010. In the light of the above facts and finding, we do not find any infirmity in the decision of ld. CIT(A) after considering the supporting material which demonstrate that assessee was agreed for the impugned addition on account of reversal of actual expenses earlier allowed which has nothing to do with prior period expenses. Addition by invoking provision u/s. 40(a)(i) - Short deduction of TDS - HELD THAT:- As in case of CIT vs. Prayas Engineering [ 2014 (11) TMI 1086 - GUJARAT HIGH COURT] on the issue of short deduction of tax deducted but not paid to credit of the Government wherein after making adjustment no disallowance was made u/s. 40(a)(ia). After considering the finding of the Hon ble Jurisdictional High Court in the above referred case, we restore this issue to the file of Assessing Officer for adjudicating afresh after taking into consideration the observation of the Hon ble High Court in the above referred case Deduction claimed u/s. 10B of the act as per revised form no. 56G - Addition by re-computing profits of 100% export oriented unit excluding miscellaneous income, export incentive income and interest - HELD THAT:- CIT(A) has dismissed the appeal of the assessee on this issue in a general manner stating that assessee has not specified how the earlier certificate issued by the chartered accountant was incorrect. The Hon ble Jurisdictional High Court in the case of Mitesh Impax [ 2014 (4) TMI 484 - GUJARAT HIGH COURT] in this order has clearly held at para 38 to 41 of the order after distinguishing the judgment in the case of National Thermal Power Company Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] and the decision in the case of Goetze India Pvt. Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] that appellate commissioner or the Tribunal, the courts have recognized their jurisdiction to entertain a new ground or a legal contention. Claim cannot be shut out for all time to come merely because it is raised for the first time before the appellate authority without resorting to revising the return before the Assessing Officer. We direct the Assessing Officer to consider the claim of the assessee for claim of deduction of ₹ 7,37,91,346/- u/s. 10B as per the revised computation filed on form no. 56G after required verification. Once an income forms part of business of 100 per cent export oriented undertaking (EOU) of the assessee same cannot be excluded from eligible profit for purpose of computing deduction u/s. 10B of the Act. Since the revised claim of deduction u/s. 10B is required verification, therefore, we restore this issue raised in the ground of appeal no. 5 of the assessee to the file of the Assessing Officer for deciding de-novo as per the directions laid down in the above referred judicial pronouncements. Accordingly, this ground of appeal of the assessee also allowed for statistical purposes. Addition on account of additional depreciation - HELD THAT:- As decided in own case [ 2014 (10) TMI 1042 - ITAT AHMEDABAD] addition of machinery was after 31st of March 2005. Appellant was already in the business of manufacturing articles for things. The machine purchased is not covered by any clause of proviso to this section. The same was not used by any person before installation. It is not installed in office or residential premises. This is not office appliance or road transport vehicle. Further these machines are also not eligible for 100 percent depreciation in one year. Considering this appellant fulfils all the conditions required for claim of additional depreciation. Respectfully following the decisions of Madras High Court relied upon by the appellant, assessing officer is directed to allow additional depreciation on new plant and machinery purchased. Addition on account of product registration expenses less depreciation - HELD THAT:- As decided in own case [ 2014 (10) TMI 1042 - ITAT AHMEDABAD] in a situation when the genuineness of the expenditure was not doubted by the AO but only on a technical point the impugned disallowance was made we hereby hold that the issue being directly covered by the precedents as cited above in favour of the assessee; hence, this ground of the Revenue has no force, therefore, dismissed. Deduction u/s 10B of the act on exchange rate gain on revenue account - HELD THAT:- We do not find any reason to interfere in the finding of ld. CIT(A) and we consider that assessee is eligible for deduction u/s. 10B on foreign exchange fluctuation gain pertaining to revenue account. Therefore, this ground of appeal of the revenue is dismissed. Disallowance u/s 14A - HELD THAT:- It is undisputed fact that during the year under consideration the assessee has not earned any exempt income. In this regard, the Hon ble Jurisdictional High Court in the case of CIT vs. Corrtech Energy Ltd.[ 2014 (3) TMI 856 - GUJARAT HIGH COURT] is held that in the absence of any claim for exempted income no disallowance u/s. 14A of income tax act r.w.s. 8D of IT. Rule 1962 can be made. Following the decision of Hon ble Jurisdictional High Court as supra, we do not find any infirmity in the decision of ld. CIT(A).
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2021 (7) TMI 849
Carry forward the unabsorbed depreciation beyond eight years - HELD THAT:- The question of law that arise for consideration in the above appeal has already been decided against the Revenue and in favour of the assessee in M/s.KMC Speciality Hospitals India Ltd. [ 2014 (5) TMI 1027 - ITAT CHENNAI ] when the quantum of unabsorbed depreciation is computed after the amendment, whatever balance of unabsorbed depreciation is available to the credit of the assessee, must be determined as unabsorbed depreciation eligible for carry forward and set off. The interregnum restriction of limiting the claim for an eight-year period does not take away the right of an assessee to claim the balance of unabsorbed depreciation, forever. The balance of unabsorbed depreciation revives back into life and becomes eligible for carry forward and set off along with the other part unabsorbed depreciation available to the credit of the assessee. - Decided in favour of assessee.
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2021 (7) TMI 848
Disallowance of loss in the stock valuation - HELD THAT:- Assessee, apart from submitting an unsigned chart, allegedly based on the books of account maintained by the Assessee, had failed to produce on record any material in support of the substantial variation between the cost price and the market price. In such a situation, there was nothing wrong with the approach of the Assessing Officer and the determination ultimately made by the Assessing Officer. We dismiss this Appeal by holding that substantial question of law as framed, does not arise in the matter or any case, based on the material on record, is required to be answered against the Appellant-Assessee.
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2021 (7) TMI 846
Deduction u/s 80IA - Correct head of income - Income derived from letting out of property - whether lease rent income received from letting out modules of Software Technology park to various lessees would constitute income from business and eligible for deduction - HELD THAT:- As decided in M/S. TIDAL PARK LTD. [ 2021 (7) TMI 302 - MADRAS HIGH COURT] income derived from letting out of the property with all amenities and facilities would be income from business and cannot be assessed either as income from house property or as income from other sources. - Decided in favour of assessee.
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2021 (7) TMI 840
Reopening of assessment u/s 147 - Notice issued beyond the period of limitation - HELD THAT:- In the present case, the initial notice under Section 148 of the Income Tax Act was issued on 31.03.2018, which was despatched on the same day and the cover was franked by the Postal Department on 02.04.2018, in view of the fact that 01.04.2018 was a Sunday, thus, for all purposes, notice was issued for reopening of assessment within the period of limitation for the assessment year 2011-12, and therefore, the respondent is to proceed further in accordance with law by following the procedures contemplated under the Act as well as the directives issued by the Hon'ble Supreme Court of India in the case of GKN Driveshaft (India) Ltd.. [ 2002 (11) TMI 7 - SUPREME COURT] and such an exercise is directed to be done as expeditiously as possible.
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2021 (7) TMI 839
Reopening of assessment u/s 147 - non disposing of the objections filed by the writ petitioner on the reasons furnished for re-opening the assessment under Section 147/148 - HELD THAT:- If at all the petitioner is entitled to get a copy of the sanctioning order passed by the Commissioner, the same is to be furnished enabling the assessee to defend his case in the manner known to law. As far as the objections raised by the petitioner vide letter dated 26.06.2018 is concerned, the order disposing of the objections dated 28.11.2018 has not spelt out any fact relating to the objections or findings to the said objections raised by the petitioner. Thus, this Court is of the opinion that the disposal of the objections must be meaningful and findings are to be given by the Assessing Officer to proceed with the matter by following the provisions of the Income Tax Act. It is repeatedly held that the directives in GKN Driveshafts India Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] regarding disposal of the objections means that the objections raised both factually and legally must be considered with reference to the provisions of the Act and the principles and a finding is to be given enabling the assessee to defend the case properly. In the present case, the order disposing of the objections, reveals that the said objections raised by the petitioner have not been considered. Thus, the matter is to be remanded back for fresh consideration of the objections filed by the writ petitioner on 26.06.2018.
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2021 (7) TMI 836
Disallowance of interest - AO had disallowed the entire interest payment - CIT(A) restricted the disallowance to 50% of the interest payment - HELD THAT:- As in assessee s own case for A.Y. 2010-11 and for similar reasons hold that no disallowance of interest is called for in the year under consideration. We therefore set aside the order passed by CIT(A). Thus the ground of assessee is allowed and that of Revenue is dismissed.
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2021 (7) TMI 835
Penalty u/s. 271(1)(c) - expenditure on account of annual exchange service charge - whether revenue expenditure or capital in nature - HELD THAT:- we find that the assessee s claim is that an expenditure on account of annual exchange service charge is to be treated as revenue expenditure. In our considered opinion, the aforesaid claim, by no stretch of imagination can be said to be ex-facie bogus - a disallowance of the same cannot lead to the conclusion that the assessee is guilty of furnishing of inaccurate particulars of income or concealment of income. The conduct of the assessee is not contumacious to warrant levy of penalty u/s.271(1)(c) of the Act. In this regard, we draw support from the decision of the larger bench of Hon'ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] or the proposition that an authority may not levy penalty unless the conduct of the assessee is found to be contumacious. The penalty u/s.271(1)(c) is not at all leviable on the facts of the case. The reference to the decision of Hon'ble Supreme Court in the case of Dharmender Textile [ 2008 (9) TMI 52 - SUPREME COURT] and Hon'ble Delhi High Court in the case of CIT vs. Zoom Communications Pvt. Ltd. [ 2010 (5) TMI 34 - DELHI HIGH COURT] by the A.O. are not at all relevant on the facts here. On the facts of this case, the aforesaid two Supreme Court s decisions referred by us are germane and applicable on all fours on the facts of this case. We agree with the ld. Counsel of the assessee that the ld. CIT(A) has made irrelevant observation in his appellate order, which are not only factually incorrect but have no relationship to the issue by way of penalty u/s.271(1)(c). This amply reflects lack of application of mind by the ld. CIT(A). Assessee has also further raised the ground that since the assessee has been made liable to pay tax only on book profit, the penalty u/s.271(1)(c) cannot be sustained with reference to addition in normal computation. For this proposition, he has relied upon the decision of Hon'ble Supreme Court in the case of Nalwa Sons Investment Ltd [ 2012 (5) TMI 150 - SC ORDER] and CBDT Circular in this regard. In our considered opinion, since we have already held on merits that the penalty levied is not at all sustainable, adjudication of this aspect of ld. Counsel of the assessee s submission is only of academic interest. Hence, we are not engaging into the same. In the result, we set aside the orders of the authorities below and direct that the penalty in this case be deleted. Appeal by the assessee stands allowed.
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2021 (7) TMI 834
Undisclosed income appearing in seized documents - assessee surrendered undisclosed income in statement u/s 132(4) - HELD THAT:- As the assessee computed the undisclosed income appearing in seized documents, which has been accepted by the AO. The assessee has successfully demonstrated the error in statement and the Assessing Officer in the case of M/s Inspiration also accepted the computation of undisclosed income by the assessee. In the present case, the addition has been made for the difference of surrendered amount during the statement u/s 132(4) and amount declared in the returned income, just because the assessee surrendered said amount u/s 132(4). This addition has been made in complete disregard to the error pointed out by the assessee in surrendered amount. The seized documents are not related to the assessee. The direction given by the CIT(A) to take remedial action in the case of M/s Inspiration also goes to prove that, if any higher amount was to be assessed looking to the surrender, then it would have to be done in the case of M/s inspiration and not in the case of the assessee. We set aside the order of the lower authorities on the issue in dispute and delete the addition in the hands of the assessee. The grounds of the appeal of the assessee are accordingly allowed.
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2021 (7) TMI 833
Unsecured loan/deposit made u/s. 68 - HELD THAT:- At the time of hearing, the ld. AR of the assessee submitted before us that there are additional evidences which they wish to bring on record and prayed for admission of the same before us. His submission was that these evidences are relevant in determining whether the additions made u/s. 68 of the Act is warranted or not and they wanted to place them before the ld. CIT(A) The findings arrived at and reasons given therein by the ld. CIT(A) are not complete enough and the reasons governing the said findings are not coming out from the order of ld. CIT(A). DR also could not bring on record any submissions or materials/evidences to show that the additional evidences which the assessee now wants to file were already on record before the Department. The Income Tax Act, being a welfare legislation, we are of the considered view that one more opportunity should be provided to the assessee and that the ld. CIT(A) may consider the additional evidences which the assessee wants to file in support of his claim u/s. 68 of the Act and to represent his case on merits - Ground allowed for statistical purposes. Disallowance of site expenses, labour expenses and travelling conveyance expenses - AO had resorted to disallow 20% of these expenses and added the same to the income of assessee - CIT(A) upheld the addition made by the AO as being reasonable and justified - HELD THAT:- Before us, the ld. AR made a prayer that since the issue on unsecured loans addition has been remanded to the file of ld. CIT(A) for fresh adjudication, therefore, for the sake of completeness of the entire matter, let this issue be re-adjudicated by him and the matter may be restored back to his file. The ld. DR accepted the proposition put forth by the ld. AR of the assessee. After hearing the parties, in the interest of justice, we agree with the submissions made by the ld. AR and in view thereof, the order of ld. CIT(A) is set aside on this issue also and the matter is remanded back to his file for re-adjudication as per law. This ground is also allowed for statistical purposes.
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2021 (7) TMI 832
Addition u/s 68 - Addition/action of AO in respect of share capital and premium infused into the assessee company HELD THAT:- An opportunity is being given to the assessee to produce the director of investor companies as well as itself to the satisfaction of the AO to prove identity, creditworthiness and genuineness of the share capital and premium infused into their account. And the AO after giving proper opportunity to the assessee, to pass assessment order considering the documents and material produced post/pre this order and after appreciation of entire evidence the AO to decide the issue in accordance with law. And the assessee is at liberty to produce all documents written submission before the AO to substantiate/clarify the observation of AO in the assessment order dated 30.12.2016 and needless to say that if AO is intending to use any third party statement against the assessee, then the assessee may be given a copy of the statement/material and opportunity to cross-examine the maker of the statement. With the aforesaid observation, the impugned order is set aside, and the matter is remanded back to AO for fresh consideration and to give opportunity to assessee to produce the director of sixteen investor companies in accordance to law. Appeal of the assessee is partly allowed for statistical purposes.
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2021 (7) TMI 831
Transfer Pricing Adjustment - selection of one comparable namely, Interactive Man Power Solution Pvt. Ltd. (IMSPL) - HELD THAT:- The comparable in dispute is engaged in the business of recruitment service provider and staffing solutions. The ld. DRP accepted to the fact that it is clear from the annual report that the comparable in question is engaged in the business of recruitment process outsourcing services but at the same time upheld the action of the TPO holding that the comparable is providing support services to their clients. We have seen that there are no segmental financials for marketing and the functions of the assessee are different from that of the comparable thus defaulting the FAR analysis. Hence, we hereby direct that IMSPL be deleted from the list of comparables. Adjustment on account of notional interest on the receivables - HELD THAT:- In all these years, the assessee is found to be a debt free company and there is no dispute on these facts. We have considered the judgment of Pr. CIT Vs BECHTEL India Pvt. Ltd. for the assessment year 2010-11 [ 2016 (9) TMI 196 - DELHI HIGH COURT ] after examining the order in the assessee's own case affirmed that when the assessee is a debt free company, the question of charging any interest on receivables do not arise. The SLP filed by the revenue has been summarily dismissed by the Hon'ble Supreme Court [ 2017 (7) TMI 1058 - SC ORDER ] Even on general fundamentals, when the assessee is having their own funds and not paying interest on any loans, then there is no obligation on the assessee to charge interest from the interest free loan given nor any provision of the Act mandate the Assessing Officer to add notional interest received to the total income - the assessee being a debt free company, the action of the revenue making adjustment on account of notional interest on the receivables cannot be held to be legally valid. Reconciliation of income credited to P L account and in the amount reflected in AS-26 - HELD THAT:- DRP held that the reconciliation is primary correct and directed the AO to verify and give effect which the AO failed to carry out. The AO is hereby directed to follow the directions given by the ld. DRP without fail while passing the order giving effect to the ITAT order. Deduction of Education Cess under the head income from business and profession - HELD THAT:- The similar issue has been adjudicated by the Co-ordinate Bench of ITAT in a number of cases wherein the Education Cess is held to be an allowable deduction. See Bharat Rasayan Ltd. [ 2021 (3) TMI 710 - ITAT DELHI ] - Decided in favour of assessee.
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2021 (7) TMI 830
Assessment order passed against non-existent company - Merger of company as per the scheme of Amalgamation into other company - HELD THAT:- Since the assessee company ceased to be in existence as on the date when the AO passed the order of assessment, assessment so framed is not sustainable in the eyes of law, being a nullity. The order of assessment is liable to be annulled and is hereby annulled. Since the assessee company ceased to be in existence as on the date when the AO passed the order of assessment, assessment so framed is not sustainable in the eyes of law, being a nullity. The order of assessment is liable to be annulled and is hereby annulled.
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2021 (7) TMI 829
Income taxable in India as royalty u/s 9(l)(vi) of the Income Tax Act, as well as Article 13(3) of the India - France - revenue received by the assessee from supply of software - HELD THAT:- A similar quarrel was decided by this Tribunal in favour of the assessee and against the revenue [ 2014 (4) TMI 273 - ITAT DELHI] confirmed by HC [ 2015 (5) TMI 431 - DELHI HIGH COURT] as held that when the assessee supplies the software which is incorporated on a CD, it has supplied tangible property and the payment made by the cellular operator for acquiring such property cannot be regarded as a payment by way of royalty. This order of the Hon ble High Court of Delhi has been upheld by the Hon ble Supreme Court in a bunch of appeals in the case of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] - Decided against revenue.
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2021 (7) TMI 828
TP Adjustment - application of turnover filter in choosing comparable companies - HELD THAT:- As far as excluding the companies on the basis of turnover is concerned, the issue has been settled in several decisions of the Tribunal and has been elaborately discussed by this Tribunal in the case of Autodesk India Pvt. Ltd. v. DCIT [ 2018 (7) TMI 1862 - ITAT BANGALORE ]. The Tribunal in this decision after review of entire case laws on the subject, considered the question, whether companies having turnover more than 200 crores upto 500 crores has to be regarded as one category and those companies cannot be regarded as comparables with companies having turnover of less than 200 crores. The five companies Larsen Tourbo Infotech Ltd, Persistent Systems Ltd.,Tech Mahindra Ltd, Mindtree Ltd and RS Software India Pvt. Ltd.should be excluded from the list of comparable companies. We hold and direct accordingly. The learned DR however pointed out that the Assessee did not raise this issue of turnover filter before AO and raised it before DRP in which the turnover limit of ₹ 1000 crores alone is mentioned. In our opinion, this will not be very material, as the turnover filter of ₹ 200 crores has been applied in several cases by this Tribunal. The Assessee cannot be denied the right to seek its exclusion before the Tribunal and in this regard the learned counsel for Assessee has rightly placed reliance on the decision in the case of DCIT v. Quark Systems (P.) Ltd. [ 2009 (10) TMI 591 - ITAT, CHANDIGARH ] for the proposition that the Assessee cannot be precluded from seeking exclusion of a company selected by it in its TP study, when the company is otherwise not comparable to the Assessee. We therefore direct exclusion of the aforesaid 5 companies from the list of comparable companies. Treating provision for bad and doubtful debts as part of non operating expense while computing operating margin of comparables - On this issue, which is raised for the first time, we do not find any grounds raised before the lower authorities and hence this ground does not arise out of the order of the AO and hence dismissed.
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2021 (7) TMI 827
Validity of reopening of assessment u/s 147 - assessment against legal heirs - assessment has been framed in the name of one of the daughter of the deceased Tahar singh whereas there are seven legal heirs of the deceased assessee - HELD THAT:- As relying on First Additional ITO Vs. Mrs. Susheela Sadananda [ 1964 (10) TMI 6 - SUPREME COURT ] we restore the entire appeal to the files of the AO. The AO is directed to issue notice to all the legal heirs of the deceased assessee and decide afresh as per the provisions of the law after giving a reasonable and sufficient opportunity of being heard to the assessee.
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2021 (7) TMI 826
Disallowance u/s 36(1)(iii) - interest had been charged on the funds given out and that as to why the interest on funds diverted for non business purpose should not be disallowed - HELD THAT:- In the present case, the contention of Assessee that the assessee company was having sufficient interest free funds available with it which would be said to have been used in making interest free advances to M/s GDPL requires verification at the level of the A.O. therefore this issue is set aside to the file of the A.O. to be adjudicated afresh in accordance with law after providing due and reasonable opportunities of being heard to the assessee. Addition of interest - assessee had taken term loan for purchase of machinery, he asked the assessee to explain as to why the interest pertaining to loan taken for purchase of machinery should not be disallowed and capitalized to be included as cost of machinery, as and when the same was purchased and put to use - HELD THAT:- Similar issue was a subject matter of the assessee s appeal [ 2019 (4) TMI 1990 - ITAT CHANDIGARH] the matter is required to be restored to the file of the Assessing officer to duly consider the aforesaid contention of the assessee, examine the details of the finances available with the assessee vis-a-vis amount capitalized by the assessee and decide the issue afresh in the light of the decision in the case of CIT (LTU) Vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] - The orders of the lower authorities are set aside and the matter is remanded to the Assessing officer to decide the issue afresh as per the observations made above. In the result, the appeal of the assessee is treated as allowed for statistical purposes. Addition invoking the provisions of Section 41(1) - sundry creditors were outstanding for more than three years, so it was liable to be taxed under section 41(1) of the Act as cessation of liability - HELD THAT:- In the present case it appears that the facts that payments were made in certain cases after passing of the assessment order and few were written back as per the practice of the assessee company were not brought to the knowledge of the A.O. and the Ld. CIT(A) is also silent on those facts. We therefore deem it appropriate to set aside this issue back to the file of the A.O. to be adjudicated afresh in accordance with law after providing due and reasonable opportunities of being heard to the assessee. Appeal of the Assessee is allowed for statistical purposes.
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2021 (7) TMI 825
Undisclosed income - Treating the receipts wrongly appearing in Form 26AS as income of the appellant - As contended by the Ld. Representative of the assessee that the appellant claimed TDS credit on the basis of credit appearing in Form 26AS - as assessee has argued that the entry of receipts from Goa Hotels and Clubs Pvt. Ltd., D. S. Gupta Construction Pvt. Ltd. were not recorded and raised by the appellant as though in Form 26AS, therefore, the same is liable to be deleted - HELD THAT:- Since both the parties agreed to re-confirm the transactions, therefore, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to re-consider all the entries and to decide the matter of controversy in accordance with law. Needless to say that an opportunity of being heard is required to be given to the assessee. Disallowance on account of doubtful advances u/s 36(1)(vii) r.w.s. 36(2) for the purpose of computing total income under normal provisions of the Act - HELD THAT:- Once a provision in respect of doubtful debts stood created and ultimately carried to the Balance-sheet, wherein Loans and Advances or debtors stood reduced by the amount of such provision, then such treatment amounted to actual write off because, in the final analysis, at the year end, the so called provision does not remain and the balance-sheet only carries the amount of loans and advances or debtors, net of such provision made by the assessee for the impugned bad/doubtful debt. It is also held that it is not necessary to square up each individual account. A provision for doubtful debt such presented in accounted would be regarded as an allowable expenditure u/s 37(1)(vii) - See case of Bank of India [ 2012 (9) TMI 790 - ITAT, MUMBAI] DR has refuted the said contention but the issue has already been settled in the above mentioned case. However, the CIT(A) has allowed the doubtful debts but declined the claim of doubtful advances on the ground of that the assessee is not in the banking business. The claim has wrongly been declined, therefore, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee.
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Customs
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2021 (7) TMI 866
Freezing of petitioner's Bank Account - extension of time for further six months from the date of expiry of the period prescribed - seeking extension for issuance of final show cause notices by the Jurisdictional Commissionerate, by four weeks - HELD THAT:- As the investigation was completed within time i.e. on June 24, 2021, as directed by this Court, the revenue had complied with the order dated February 24, 2021 passed by this Court, hence, there was no impediment for the revenue to issue the show cause notices. The Interim Applications are disposed of.
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2021 (7) TMI 865
100% EOU - sale in DTA at concessional rate of duty - benefit of N/N. 2/95 - benefit of physical export applicable to deemed export or not - HELD THAT:- With reference to the Exim Policy, as well as circulars issued by the Ministry of Commerce and Ministry of Finance and the business transactions, as well as the nature of benefits claimed, involves an adjudication of technical points. Such technical points with reference to the business transactions cannot be adjudicated in a writ proceedings under Article 226 of the Constitution of India. It requires examination of certain records as well as the policy decisions, which all are prevailing during the relevant point of time, more specifically, for the purpose of extending the benefits. Thus, it would be preferable, such issues are decided by the 5th respondent, Commissioner of Central Excise and the 4th respondent, Tribunal, which all are the expert bodies in the field. The power of judicial review under Article 226 of the Constitution of India, need not be extended for the purpose of adjudication of such technical issues, more specifically, when the appeal is pending before the CESTAT and the appeal against the show cause notice is also pending before the 5th respondent, Commissioner of Central Excise. All the facts and circumstances with reference to the records are to be adjudicated and the application of the principles also must be decided by affording opportunity to the parties. This being the factum established, the respondents 4 and 5 are directed to proceed with the proceedings which all are pending before them, after hearing parties and by affording opportunity to the petitioner and take a decision and pass orders, as expeditiously as possible. Petition disposed off.
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2021 (7) TMI 860
Confiscation of imported goods - Hand Mixer and its spare parts - import objected to by the Customs on the ground that the goods imported were not Hand Mixer but were Hand Held Blenders - section 125 of the Customs Act, 1962 - penalty u/s 112(a) of the Act - HELD THAT:- The judgment does not warrant any interference. Appellant has only been relegated to the statutory remedy of appeal. No prejudice is caused on account of the said relegation. No circumstance exist for this Court to interfere in the extraordinary jurisdiction under Article 226 - The apprehension of the learned counsel for the appellant that the Appellate Tribunal has not started its sittings after the lock-down, have been countered by the learned Standing Counsel, who pointed out that the Tribunal has in fact started its sitting and are hearing matters listed before it. The appellate remedy is therefore efficacious. The appellant are directed to prefer an appeal before the Tribunal in accordance with law, within a period of one week from the date of receipt of a copy of this judgment - appeal dismissed.
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2021 (7) TMI 856
Failure to file EGM - responsibility of the appellant to file the EGM to the proper officer before departure of the conveyance from the Customs station - violation of Section 41 of the Customs Act, 1962 - penalty under Section 117 of the Act - HELD THAT:- The appellant is not master of the vessel but only vessel operator / shipping line who has filed the EGM on behalf of the master of the vessel. As per Rule 96 of the CGST Rules, 2017, the shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported, out of India, once both EGM and valid return in Form GSTR-3/GSTRB are furnished by the applicant. The IGST Refund module for exports has an inbuilt procedure to automatically grant refund after validating the Shipping Bill date against the GST Returns. The common errors and combination of errors hinders the problem of refund of IGST paid against exports. In Circular No.1/2019-Cus., F.No.450/119/2017-Cus-IV, dated 02.01.2019, the department has put forward resolutions to solve the problem of EGM errors which hamper IGST refund processing - only for continued non-compliance beyond 1.4.2019 the penalty is required to be imposed. In the present case, on receiving the notice from the department, the appellant has immediately rectified the defect. There is no allegation of continued non-compliance. The facts brought to light established that the error was only due to inadvertent omission / system error etc. Penalty u/s 117 of CA - HELD THAT:- Penalty is a form of punishment by recovery of an amount from the offender. It is a form of pecuniary punishment inflicted by law for its violation. If there was no willful intention / wrongful mind for violating the law and such violation occurred was only due to inadvertent omission / system error, imposition of penalty is unwarranted. If there was continued non-compliance even after the errors being pointed out by the department, the circumstances would have been different and penalty may be imposable. It is also to be stated that after the amendment to Section 41, the section itself provides for penalty not exceeding ₹ 50,000/-. That too only if proper officer is satisfied that there is no sufficient cause for delay in filing EGM. This being so, the invocation of Section 117 is not legal or proper. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (7) TMI 861
Auction and sale of immovable/scheduled property - Rejection of bid of applicant - seeking stay on the process of issuance of fresh public notice for auction of the scheduled properties - direction to respondent to file an appropriate report before this Hon'ble Court for the confirmation of sale of the scheduled properties in favour of the applicant herein - HELD THAT:- The bid of the applicant was not accepted and the stage of negotiating with him did not arise to validly make the complaint that approval of the Court was necessary, could not be brushed aside lightly. Even if the said aspect is left aside, the scenario offered was that there was only one bid from the applicant. The comparative price was not available except quoted by the applicant. Respondent No.1 appears to have been guided by the said factum and only one offer having been received in the auction, it decided not to accept it and opt for fresh auction by publishing new advertisement. The paramount principle is always that the properties should fetch maximum price in the larger interests of revenue and in the cases like on hand, in public interest. It may be noted that the applicant, when was communicated about the decision of not acceptance of his bid, was conveyed that it will be open for him to participate in the fresh auction. As per the new advertisement which is produced and also screen shared, fresh auction has to be conducted in terms of the order dated 14th June, 2018 of the Company Court in Company Application No.314 of 2015, aforesaid. Under various terms and conditions of the auction and as per the schedule of auction, the inspection of property was undertaken on 23rd June, 2021 from 11:00 a.m. to 4:00 p.m. The last date for receiving the bids and uploading of the documents including proof of payment is 06th July, 2021. The e-auction date is fixed to be 07th July, 2021 between 1:00 p.m. to 5:00 p.m. with auto extension clause of five minutes. The current auction shall be held, conducted and concluded strictly in accordance with the order dated 14th June, 2018 passed in Company Application No.314 of 2015 and the conditions mentioned therein shall govern to the present auction as well - The auction shall be conducted in association with the Official Liquidator in its all stages and steps - application disposed off.
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2021 (7) TMI 855
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - breach of payment terms by the corporate Debtor under the Settlement Agreement - HELD THAT:- It is an undisputed fact that the parties had executed the Settlement Agreement and the Corporate Debtor was obligated to strict adherence of terms and conditions of payment which he obliterated and committed default of payment terms. Post admission of CIRP against the Corporate Debtor on 14.02.2019, the parties executed the Settlement Agreement dated 28.02.2019 and the Corporate Debtor filed the same before the Hon ble NCLAT. The Corporate Debtor has committed default of payment terms and cheques for the month of April and May were dishonored. The corporate Debtor vide letter dated 22 May, 2019 promised to pay an amount of ₹ 50,00,000/ and requested not to take any legal action. All the terms of payment were again defaulted and the cheque in June were also dishonored. Hence the petitioner exercised his rights under the Settlement Agreement and has filed the present petition - There is a debt and default of payment terms of settlement Agreement dated 28.02.2019 and all ingredients of Sec7 of I B code are thus satisfied and petition is thus admitted. The matter was listed on 9.08.2019, when the corporate debtor failed to appear and notice was issued, thereafter on 26.08.2019, the corporate debtor appeared and handed over a cheque of ₹ 1 Crore to the petitioner prove his bonafides and explore the possibilities of settlement. On 17.09.2019, the Learned Senior Counsel for the Corporate Debtor sought three weeks time to make a clear proposal and handed over a demand draft of ₹ 1 crore in lieu of the bounced cheque - The Corporate Debtor failed to file any reply. On 05.05.2021, the matter was posted for pronouncement of orders, however, in view of orders passed in application seeking extension of time for the undertaking of payment of monies, the pronouncement of orders was deferred till 05.07.2021. On 05.07.2021, the matter was adjourned to 08.07.2021, the counsels from both sides were present and it was informed that the amounts were not paid. There is a clear default of non- payment of monies by Corporate Debtor and hence the petition is admitted. Petition admitted - moratorium declared.
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Insolvency & Bankruptcy
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2021 (7) TMI 858
Appointment of Resolution Professional - Section 22 of the I B Code - HELD THAT:- So far statutory provision as contained in Section 22 of the I B Code which contemplates appointment of Resolution Professional and further replacement is concerned, this power can only be used when the ingredients of Section 22 is met - so far as the provision of Section 27 of IB Code is concerned it contemplates with the Replacement of Resolution Professional by CoC. This power can only be used when the ingredients of Section is met. In the facts of this case neither the ingredients of Section 22 27 of the Insolvency Bankruptcy Code, 2016 is made out - Learned Adjudicating Authority is conscious of the fact that the Appellant herein could not provide leadership to CIRP proceedings and further there was clash between the Secured and Unsecured Creditors and timeline for CIRP proceedings was running out. The Learned Adjudicating Authority have rightly exercise this power and there is no merit in the Appeal and is accordingly dismissed.
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2021 (7) TMI 857
Interest on delayed payment of sale consideration - delay on the part of the Respondent to pay balance sale consideration or not - refund of excess interest paid, due to the delay, for which respondent id responsible - can the burden of interest be fastened on the Respondent / Successful Bidder - process of sub-division of the land was restricted to the leasehold land and not to the other freehold land - HELD THAT:- The delay in payment of balance sale consideration in respect of leasehold land cannot be attributed to the Respondent. However, the Respondent is responsible in respect of delay in payment of balance sale consideration in respect of freehold land. Accordingly, the Appellant is directed to refund the excess interest deducted by him to the Respondent to the extent of leasehold land. The impugned order is set aside - appeal disposed off.
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2021 (7) TMI 852
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - account was classified as NPA - time limitation - HELD THAT:- Although the NPA was declared in respect of Corporate Debtor in 2012, but the Corporate Debtor kept on acknowledging its Debt in its correspondence letters with the Bank and also the Respondent had made part payment of ₹ 10,00,000/- towards loan liability in the year 2017 while the present IB petition is filed in 2018. Hence it is found to be filed well within limitation. Since the Respondent did not file its Reply/objection to the present IB petition, it goes uncontested. Hence the Debts which are more than Rs. One Lakh stands admitted and the default in making repayment of loan goes undisputed. Therefore the present IB petition is found to be filed in conformity with the provisions of the Code and rules, regulations made thereunder. Hence is found complete and CIRP can be triggered in respect of present Respondent. For the aforesaid reasons, the present IB petition deserves for Admission. On perusal of the documents annexed with the IB petition it is found that the Respondent/Corporate Debtor has committed default in repayment of debt. The disbursement of loan amount is substantiated by the Statement of accounts of the Petitioner. The Liability of the Respondent Corporate Debtor is also reflected in ledger account of the Respondent in the books of the Petitioner. Therefore it is a fit case where the CIRP can be triggered in respect of the present Corporate Debtor. Petition admitted - moratorium declared.
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Service Tax
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2021 (7) TMI 854
Short payment of service tax - Service Tax Voluntary Compliance Encouragement Scheme, 2013 - abatement sought for material components - availment of Composition Scheme - substantial false declaration or not - HELD THAT:- The calculation of tax short paid, as made by the ld. Commissioner in the impugned order, is not due to any mis-declaration or false declaration under VCES. Ld. Commissioner has categorically observed that difference in tax liability is mainly due to interpretation and change in calculation of service tax, therefore, the mistake of the respondent/assessee in the declaration is bona fide and there is no malafide on their part. In view of the decision of the Larger Bench in the case of M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] , the respondent is not required to pay service tax on the receipt of materials supplied free of cost, received from the principal. Thus, the amount demanded in the impugned order for the period 2012-2013 and 2013-2014 is set aside. Hence, the respondent is only required to pay the differential duty of ₹ 1,53,100/-. Further, penalty under Section 78 is also set aside, there being no case of falsification or contumacious conduct, in the facts and circumstances on the part of the respondent/assessee. The late fee of ₹ 20,000/- under Rule 7C is reduced to ₹ 10,000/-. The appeal of Revenue is dismissed.
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Central Excise
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2021 (7) TMI 862
Principles of Natural Justice - petitioner did not informed about the summons to their counsel regarding the personal hearing - the impugned order was passed without providing personal hearing to the learned counsel who represented petitioner - HELD THAT:- This Court is of the considered opinion that in all circumstances, the parties aggrieved are bound to prefer an appeal before the appellate authority. However, in certain circumstances, the Courts are bound to consider whether the denial of opportunity caused certain prejudice to the interest of the person aggrieved. In the present case, admittedly, the summons were issued to the petitioner. However, the learned counsel for the petitioner entered appearance in the proceedings before the respondent on 04.03.2014 itself. Thus, there is a possibility that the petitioner would not have informed about the summons to their counsel regarding the personal hearing. Under those circumstances, the counsel was not aware of the date of personal hearing and the same resulted in passing of the final order without hearing the learned counsel who entered appearance on behalf of the writ petitioner. This Court is of an opinion that the petitioner has to be provided with an opportunity of personal hearing for the purpose of submitting the judgments, documents and the grounds raised to defend their case - the matter is remanded back to the respondent for fresh consideration after providing an opportunity to the learned counsel who entered appearance on behalf of the petitioner and thereafter pass final orders on merits and in accordance with law - Petition allowed by way of remand.
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2021 (7) TMI 851
Reversal of CENVAT Credit - spent wash and press mud - waste/exempt goods - common inputs used in manufacture/clearance of spent wash and press mud in terms of Rule 6(2) and Rule 6(3) of Cenvat Credit Rules, 2004 - HELD THAT:- The very same issue was considered by the Tribunal in the appellant s own case M/S. BANNARI AMMAN SUGARS LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, SALEM COMMISSIONERATE [ 2018 (11) TMI 1449 - CESTAT CHENNAI] where it was held that press mud does not fit into the definition of exempted goods , as defined under 2(d) of CCR because it is not an excisable good; nor can it be termed as a final product because it is not manufactured or produced from input or using input service. The demand cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 850
Rejection of Refund claim in cash of differential duty - SCN was not issued - principles of natural justice - Section 142 (3) of the C.G.S.T. Act, 2017 - HELD THAT:- The Order-in-Original has been passed undoubtedly without the issuance of Show Cause Notice. The Commissioner (Appeals) in the impugned Order has also observed that one Shri P. Veera Kumar appeared before the Adjudicating Authority, but however, both the authorities below are silent as to whether the said person, who is alleged to have been heard, was well-versed with the law and the change in law and whether the said person was authorized by the appellant-company to argue before the authorities. It is the basic tenet of our Constitution that justice should not only be done, but should manifestly and undoubtedly be seen to be done . The fundamental principle has to be followed along with the principles of audi alteram partem and any Order which creates a doubt as to the manner in which it was passed, has to be held as having passed without adhering to the above principles, which view is also supported by various decisions relied upon by the Learned Advocate for the appellant. The fundamental principles of law are at stake and the Orders have been passed without affording proper and reasonable opportunities to the appellant - the matter is remanded to the file of the Adjudicating Authority to pass a fresh order, following the principles of audi alteram partem, especially in the light of the change in law - appeal is allowed by way of remand.
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CST, VAT & Sales Tax
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2021 (7) TMI 844
Refund of Input Tax Credit - purchase turnover corresponding to export sales - rejection on the pretext that customs clearance certificate was not produced by the petitioner - HELD THAT:- Admittedly, under Section 38(1) of the APVAT Act, 2005, refund due to an exporter has to be made within 90 days from the date of VAT return, and so the 1st respondent who is presumed to be aware of the said provision, could not have rejected the refund due to the petitioner - More importantly, on 28.04.2006, after remand by the Appellate Deputy Commissioner on 18.04.2006, it is the 1st respondent who had issued advice to the petitioner referring to the petitioner s application for refund of ₹ 4,71,347/- stating that the said refund claim was accepted. It is not in dispute that the petitioner s application for refund enclosed the documents except the customs clearance certificate which was not being issued by the Customs Authority - petitioner had also admittedly produced label / customs declaration furnished to the postal authorities to evidence export proper as the goods were exported by post by it. The petitioner had also produced the certificate issued by the Postal Department of Government of India confirming and corroborating delivery of postal consignments to the consignees outside the country with relevant details, such as place of destination, date of delivery, etc. It had also produced other documents referred to in Rule 35(6) other than the customs clearance certificate. The action of the 1st respondent in denying refund to the petitioner is violative of Article 14 of the Constitution of India, perverse and in contempt of the order dt.18.04.2006 of the Appellate Deputy Commissioner (CT), Punjagutta Division, Hyderabad - the 1st respondent is directed to refund the sum of ₹ 6,38,724/- by crediting the above said amount to the petitioner s bank account, within fifteen (15) days from the date of receipt of a copy of this order, along with interest due thereon at the rate of 1% per month - petition allowed.
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2021 (7) TMI 843
Non-grant of interest on the additional refund amount - respondent passed order with regard to the additional refund payable to the petitioner, but, had failed to award statutory interest - section 38(2) of Gujarat VAT Act - HELD THAT:- It is not disputed and even otherwise stated in the orders passed in revisions, the petitioner, taking advantage of the Amnesty Scheme, had made payment of the tax amount only and the petitioner was granted the remission for the interest amount as per the order dated 21.07.2020. The order passed by the appellate authority having been revised by the revisional authority as per the order dated 21.07.2020, the question of invoking the provisions contained in section 38(2) of the said Act did not arise. It is needless to say that as per the provisions of section 38(2) of the said Act, a registered dealer entitled to refund in pursuance of any order other than referred to under sub-section (1) or in pursuance of any order by any Court, would be entitled to receive, in addition to the refund, simple interest, as mentioned in the said sub-section (2) - So far as the present cases are concerned, by virtue of the orders passed in the revisions, the petitioner was not entitled to any amount of refund and on the contrary, was liable to pay additional amount of tax with interest. There being no order passed by the revisional authority for refund of any amount, nor any order passed by any other Court, invocation of sub-section (2) of section 38 of the said Act by learned advocate Mr. Trivedi for the petitioner is thoroughly misplaced. All the petitions being devoid of merits, are dismissed.
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2021 (7) TMI 842
Withholding of the Refund of the tax paid - change in classification of goods - Mango pulp/puree - denial of refund due to the petitioner on the ground of the pendency of the tax revision cases before the Hon ble High Court - HELD THAT:- The approach of the respondents in not granting refund along with interest beyond the period permitted, without the assessee/ dealer asking for the same, in contradistinction can be compared with the proceedings under Income Tax Act, 1961. In the assessment orders / intimations issued by the Income Tax Authorities, where refund is due, the proceeding issued itself provides for the calculation of Interest under Section 244-A of the Income-tax Act, 1961, and the same is paid out along with the refund of tax. Though it is contended by the 3rd respondent that he exercised powers conferred under Section 40(2) of the Act, to withhold the refund due to the petitioner, no order/proceeding to that effect is shown to this Court. The said statement made on behalf of the respondents is also disputed by the learned counsel for the petitioner, as no such communication withholding the refund has been received by the petitioner either before filing of the Writ Petition or during the pendency of the present proceeding - this Court cannot accept the statement made on behalf of the respondents that the 3rd respondent, having exercised powers conferred under Section 40(2) of the Act, has decided to withhold the refund due to the petitioner. The respondents are hereby directed to refund the amount - Petition allowed.
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2021 (7) TMI 841
Reopening of completed assessment - declaration forms filed by the petitioner claiming concessional rate of tax/exemption not considered - allegation of defective C and H forms - violation of principles of natural justice - HELD THAT:- The 1st respondent ought to have considered the fact that the declaration forms are not generated by the petitioner, and on the other hand, are issued by the concerned authorities of the petitioner s buyers, located in the other State. The petitioner cannot compel the authorities in the respective States to fill up the details before the same are issued to the petitioner, who merely on receiving the same, has filed with the 1st respondent. If only the 1st respondent had issued a notice pointing out the deficiencies and returned the defective C and H forms, the petitioner could take steps to get the same rectified by sending the original declarations to the issuer. If the 1st respondent had done so, such action could have been considered as in the interest of justice and fair-play. The action of the 1st respondent in refusing to return the original C and H declaration forms submitted would also deprive the petitioner to claim the difference of tax from the purchaser, if they fail to provide the duly rectified declaration forms and would result in loss to the petitioner - It is settled position of law that whenever declaration forms filed are found to be defective in nature, the authority is duty bound to return the same to the dealer/assessee who filed the same to enable him to rectify such defects. The action of the 1st respondent in rejecting the claim of the petitioner for concessional rate of tax / exemption on the ground of declarations being defective and also not returning the C and H declaration forms to the petitioner to rectify such defects, is highly objectionable and violative of principles of natural justice, resulting in serious prejudice to the petitioner - the action of the 1st respondent in passing the impugned order is in violation of principles of natural justice and calls for interference by this Court. The matter is remitted back to the 1st respondent with a direction to the 1st respondent to return the defective C and H declaration forms to the petitioner by issuing a notice pointing out the deficiencies - petition allowed by way of remand.
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2021 (7) TMI 838
Validity of NIL demand assessment order - non-availability of documents - benefit of concessional tax - Inter-State sale of goods - sales during the course of transit - HELD THAT:- There was a Nil Assessment Order passed under the CST Act, 1956 in favour of the petitioner for the year 2009-10 by the 3rd respondent - This order had been revised by 2nd respondent under Section 32 of the Telangana VAT Act, 2005 r/w Section 9(2) of the CST Act, 1956, and the 2nd respondent withdrew allegedly incorrect exemption/concessional rate allowed to the petitioner to the tune of ₹ 2,19,10,137/-. The finding of the Deputy Commissioner (CT), Secunderabad Division, Hyderabad that only clerical or arithmetical mistake apparent from the record are liable to be corrected under Rule 60 is unexceptionable - there are no error in the order passed by the 2nd respondent warranting interference by us in exercise of jurisdiction under Art. 226 of the Constitution of India. Petition dismissed.
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Indian Laws
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2021 (7) TMI 847
Dishonor of Cheque - service of legal notice - presentation of cheque second time - bouncing of cheques on the ground that the same were not-acceptable to the bank on account of its being non- MICR - applicability of prosecution under Section 138 of Negotiable Instruments Act, 1881 - HELD THAT:- Admittedly the second bouncing of cheques was not on account of any insufficiency of fund in the bank, nor the same was on account of any act of stop payment etc. from the side of the petitioner. Thus, by the time the second presentation of cheques was made in the bank, the same had become not acceptable by the bank on account of being non-MICR cheques. Accordingly, the petitioner had no role to play in return of cheques upon second presentation, but the same were not acceptable by the bank itself on account of technical reasons. As per proviso (a) of section 138 of the Negotiable Instrument Act, 1881, the cheque has to be presented within six months from the date it is drawn or within the period of its validity, whichever is earlier - the said bouncing of cheques on second presentation cannot be a ground for prosecution under Section 138 of the Negotiable Instruments Act, 1881 as one of the conditions precedent for prosecution i.e the cheque itself should be valid on the date of its presentation, is not satisfied when the cheques are returned as not acceptable to the bank on account of being non-MICR cheques. Whether the cheques bounced upon their first presentation on 11.06.2007 on account of insufficiency of funds can still be taken as a trigger point for constituting offence under Section 138 of Negotiable Instruments Act, 1881? - HELD THAT:- In the instant case, the legal notice was sent on 24.07.2007. Accordingly, if the first dishonour is taken into consideration, the dispatch of legal notice regarding bouncing of cheques, is beyond the time period of 30 days as prescribed under proviso (b) to Section 138 of Negotiable Instruments Act, 1881. Thus, the first bouncing of cheques when read with the date of dispatch of legal notice, also does not help the complainant in any manner whatsoever as one of the conditions precedent as prescribed under proviso (b) to Section 138 of Negotiable Instruments Act, 1881, will still remain unsatisfied. Whether the dispatch of demand notice under certificate of posting can be said to a valid mode of service under the provisions of Section 138 of Negotiable Instruments Act, 1881? - HELD THAT:- In the instant case, admittedly, there is no service report regarding service of demand notice upon the petitioner and what is on record is only the dispatch proof under certificate of posting - This court finds that the learned trial court has not at all given any finding regarding service of demand notice upon the petitioner said to have been dispatched under certificate of posting and the petitioner has been convicted by holding that the case was filed within a period of 30 days after arising of cause of action which is after 15 days from the dispatch/service of notice. Before the appellate court, a plea was raised by the defence that the demand notice was incorrectly addressed and there was non-service of demand notice but the said plea was rejected by recording that the complainant was thoroughly cross examined and there were no material contradiction in his evidence, who was the sole witness of the case - Admittedly, there is no service report regarding service of the demand notice. This Court also finds that there is no material circumstance on record to show service of demand notice, much less any particular date of service of demand notice upon the petitioner. Both the learned courts below have failed to consider that there was no evidence regarding service of demand notice to the petitioner sent under certificate of posting. This court is of the considered view that no presumption in connection with such demand notice under Section 138 of Negotiable Instruments Act, 1881 sent through certificate of posting can be drawn unless it is coupled with other facts and circumstances which go to show that the party had notice. This Court is of the considered view that presumption of deemed service of notice only by virtue of the same having been sent through registered post/speed post can be drawn by virtue of the provisions of Section 27 of the General Clauses Act which specifically refers to registered post but has no reference to letters sent under certificate of posting. Admittedly there is no service report of legal notice in the present case which was sent under certificate of posting and not by registered post. Even if it is assumed for the sake of arguments that legal notice sent under certificate of posting would draw a presumption of deemed service, though under section 27 of the General Clauses Act, 1887 the question of presumption of service of letter arises only when it is sent under registered post, then also the complaint case filed by the complainant in the instant case is pre-mature when considered in the light of the time-lines prescribed under Section 138 of Negotiable Instruments Act, 1881 - the condition precedent for filing the case under Section 138 of the Negotiable Instruments Act, 1881, having not been satisfied, the complaint itself was not maintainable on the day it was filed and accordingly, the petitioner could not have been convicted under the said Section. The question of any presumption regarding existing debt under Section 139 of the Negotiable Instruments Act, 1881 also could not arise as the complaint itself was not maintainable. The impugned judgements of conviction of the petitioner under Section 138 of Negotiable Instruments Act, 1881 suffer from patent illegality and ignoring the mandatory provisions of Section 138 of Negotiable Instruments Act, 1881 with regards to the cause of action as fully discussed above, which calls for interference under revisional jurisdiction of this court. The present revision petition is hereby allowed. The impugned judgements and sentence passed by the learned courts below are hereby set aside.
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2021 (7) TMI 845
Dishonor of Cheque - it is claimed that cheque issued by way of security and not against any legally payable debt - evidences produced or not - burden to prove - principles of natural justice - HELD THAT:- Admittedly, the petitioner did not even lead any defence evidence in spite of grant of opportunity by the learned court below and none of the witnesses whose name appeared as witnesses on Exhibit-A deposed before the court to explain the circumstances under which it was issued. On the other hand, the P.W. 2 is the eye-witness of the entire transaction and has explained the circumstances under which the cheque was issued by the petitioner to the complainant and has fully supported the prosecution case - From the records of the case, it appears that the P.W. 2 clearly deposed that cash of ₹ 1,00,000/- was handed over to the petitioner by the complainant in his presence and the petitioner had issued the cheque in lieu of the same. This Court finds that although the learned appellate court has held that no reliance could be placed on Exhibit-A by the petitioner, but the learned trial court has fully considered the contents of Exhibit-A and found that the same could not help the petitioner in any manner. This Court finds that the petitioner has failed to discharge his initial burden to prove that the cheque was not issued in discharge of any liability and the petitioner could not discharge the said burden even by referring to Exhibit-A. This Court is of the considered view that the basic ingredients for offence under Section 138 of Negotiable Instruments Act, 1881 were duly satisfied and the learned court below has not committed any error in rejecting the plea of the petitioner based on exhibit-A - criminal revision petition is dismissed.
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2021 (7) TMI 837
Maintainability of this criminal miscellaneous petition - exercise of inherent jurisdiction by this Court under Section 482 Cr.P.C. - Matter compromised between parties - HELD THAT:- It is well established and recognised practice that against appellate order confirming the judgment of conviction, the revision petition lies under Section 397 read with Section 401 Cr.P.C. - this Court will not entertain a petition under Section 482 Cr.P.C. where the petitioner has other remedy available under the Code except under exceptional circumstances. After considering earlier judgments of the Hon'ble Supreme Court of India in the case of Madhu Limaye vs. State of Maharashtra [ 1977 (10) TMI 111 - SUPREME COURT ] , the Court proceeded to hold that there can be no total ban on the exercise of extraordinary jurisdiction conferred on a High Court under Section 482 Cr.P.C. if such exercise of power is necessary to give effect to any order under this Code or to prevent the abuse of process of the Court or otherwise to secure the ends of justice - In the present case, no such exceptional circumstance exists which could warrant exercise of inherent jurisdiction by this Court under Section 482 Cr.P.C. instead of relegating the petitioner to invoke the well established regular mode of challenge to the judgment of conviction affirmed in appeal, by way of revision petition. The only exceptional circumstance, pointed out by the learned counsel for the petitioner to invoke the extraordinary jurisdiction of this Court under Section 482 Cr.P.C. instead of revisional jurisdiction is that the matter has been compromised between the parties. It is trite that cognizance of the factum of settlement of dispute between the parties by way of compromise, can be taken by this Court in its revisional jurisdictional also and appropriate order can be passed. Therefore, mere settlement of dispute by way of compromise between the parties, cannot be reckoned as such exceptional circumstance under which this Court can exercise its inherent and extraordinary jurisdiction vide Section 482 Cr.P.C. against the order of conviction affirmed in appeal in view of availability of regular remedy of revision petition inasmuch as the factum of compromise can be taken into consideration by this Court under its revisional jurisdiction also. This criminal misc. petition is dismissed being not maintainable.
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9911796707
