Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 5, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking grant of bail - availment of fraudulent credit - fake GST invoices issued - In the present case, nothing on record to show that the investigation qua applicant is incomplete and he having tendency to flee away from justice. The entire documentary evidence seized by the authority. In such circumstances, when the authority failed to point out that the further custody of the applicant is necessary - Bail granted - HC
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Maintainability of appeal - failure to submit certified copy of the order - extension of period of time limitation - compliance of the rules of natural justice or not - Rule 108(3) has not prescribed for condonation of delay in the event where the Petitioner would fail to submit certified copy of the order impugned in the appeal nor is there any provision restricting application of Section 5 of the Limitation Act, 1963, in the context of supply of certified copy within period stipulated in sub-rule (3) ibid - The requirement to furnish certified copy of the impugned order within seven days of filing of appeal is provided as a procedural requirement. - HC
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Maintainability of petition - availability of alternative and efficacious remedy - it is apparent that the law made by the Parliament as well as the Legislature with regard to the appeals is very strict, insofar as, that it does not provide an unlimited jurisdiction on the First Appellate Authority to extend the limitation beyond one month after the expiry of the prescribed limitation. In such case, the petitioner/appellant is put to hardship and is left without remedy. In such cases, the party concerned may face starvation because of denial of livelihood for want of GST Registration. - HC
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Validity of SCN - It is the case of the writ applicant that he learnt about issuance of such show cause notice when the same came to be uploaded on common portal - cancellation of registration of premises of petitioner - Violation of principles of natural justice - The matter remanded back to the respondent Authority for denovo proceedings. - HC
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Seeking grant of Bail - illegal availment of ITC - In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the First Information Report, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail- HC
Income Tax
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VDA - Central Government notifies virtual digital assets which shall be excluded from the definition of virtual digital asset - Notification
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Quarterly statement of TDS - virtual digital asset (VDA) - Income-tax (20th Amendment) Rules, 2022 - Amends Rule 31A and inserts Form 26QE - Notification
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Jurisdiction of Income tax Authorities - Seeks to amend Notification No. 70/2014 dated 13th November, 2014 - Notification
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U/s 92C(2) of IT Act 1961- Computation of arm's length price - specifies the tolerance limit in case of wholesale trading and other cases - Notification
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TDS on virtual digital asset (VDA) - Order under section 119 of the Income-tax Act, 1961 (the Act) in relation to tax deduction at source under section 194S of the Act for transactions other than those taking place on or through an Exchange - Circular
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Reopening of assessment u//s 147 - The invalid notices so issued by the respondents vitiate the entire reassessment proceedings initiated against the appellant. Admittedly, no notice u/s 148 was issued by the second respondent, who is the jurisdictional assessing officer, for reassessment of the return of income of the appellant, within the time frame stipulated under the Act. - HC
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Revision u/s 263 - Period of limitation - doctrine of merger - The revision is on the basis that the AO has failed to, in view of the frequent transactions of purchase and sale of land during the year, as well as in the immediately preceding and succeeding year, as also the fact that the sales are to real estate developer, failed to investigate further, making proper inquiries, from the stand point that the income from these transactions is liable to be assessed as business income, i.e., as against capital gains. We fail to see as to how the doctrine of merger would operate in the instant case to oust the jurisdiction of the revisionary authority. - AT
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Revision u/s 263 - reopening of assessment u/s 147 - period of limitation - these issues are not such which can render the assessment erroneous. Similarly what prejudice is caused to the revenue is also not clear from the order of the ld PCIT. In order to revise the order the twin conditions have to be satisfied i.e. the order has to be erroneous and secondly it must be prejudicial to the interest of the revenue. - AT
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Rectification u/s 154 - Disallowance of interest on account of the fact that the money was invested in the capital of the firms, to earn exempt income - the issue as to whether the assessee has correctly claimed the set-off such interest paid to Chola-IDBI, in absence of any interest income for the firm is a highly debatable issue. - rectification order set aside - AT
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Penalty u/s. 271(1)(c) - the addition made in the impugned case on account of excess depreciation claimed, having been surrendered by the assessee itself without any prior detection by the Revenue, the excess claim having been demonstrated to have been made for bonafide reasons, it is surely not a case for levy of penalty at all. - AT
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Deduction u/s 80P(2)(a)(i) - assessee is a co-operative credit society having “A” class Members as well as “B” class Members as its society’s Members - mutuality - irrespective of the fact that whether the assessee is having “A” class Members or “B” class Members, the assessee is entitled for claiming exemption under section 80P(2)(a)(i) of the Act. - AT
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Disallowance of depreciation of plant and machinery claimed - As per AO stainless pipes / tubes were never purchased by the assessee and the assessee took accommodation entry to siphon of black money - The appellant could not explain how much other materials such as nuts, bolts, brackets, sockets consumed for fitting/installing the pipes/tubes were accounted for in its books though the AO had called for those details in the course of the assessment proceedings.Taking all these facts into consideration, hold that the appellant's claim regarding purchase of pipes/tubes is not correct. - AT
Customs
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Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2022 - Amendments in various regulations - Notification
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Extension of Transitional provisions - Sea Cargo Manifest and Transhipment (First Amendment) Regulations, 2022 - Notification
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Seeks to continue the exemption from Integrated Tax (IGST) and Compensation Cess on goods imported under AA/EPCG/EOU Schemes - Notification
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Effective rates of customs duty and IGST for goods imported into India - Customs duty on import of Gold - Seeks to amend Notification No. 50/2017-Customs, dated the 30th June, 2017 - Notification
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Simplified regulatory framework for e-commerce exports of jewellery through Courier mode - Circular
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Recovery of amount paid as drawback to petitioner on the ground that the claims were sanctioned erroneously - Note 2(b) of General Notes to All Industry Rates of Drawback - The fact that the shipping bills referred to advance licences and that was an error, is not disputed. - The factual position notwithstanding the error in the shipping bills, which an alert petitioner could have amended on time, petitioner will be entitled and should be granted the drawback as it was rightly granted earlier by the DGFT - HC
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Jurisdiction - competent officer to issue SCN - Power of Additional Director General, DRI, Mumbai to issue SCN - The SCN was without authority of law and consequential proceedings pursuant thereto including the impugned order of the CESTAT and accordingly, they are set aside - principles enunciated by the Hon’ble Apex Court [2021 (3) TMI 384 - SUPREME COURT] followed - HC
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Rejection of duty drawback - Evasion of payment of export duty and to avail duty drawback - fraudulent export of Semi-finished Leather - Even if it is to be assumed that samples were drawn on 14.10.2016, the Revenue has not brought out on record as to how and where the samples were preserved since more than three weeks after drawing the samples have they sent the samples to the CLRI for examination/report, since, as contended by the Learned Advocate for the appellants, leather is such a goods on which even the weather will have an impact; hence, preservation of the same is very much material. - AT
DGFT
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Amendments to Foreign Trade Policy 2015-2020 - Exemption of Integrated Goods and Service Tax (IGST) and Compensation Cess under Advance Authorisation, EPCG and EOU scheme. - Notification
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Extension in deadlines for submission of applications under MEIS for exports made in the 4 months period, Sept 2020 to Dec 2020 - Notification
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Amendment in Export Policy of items under HS Codes 27101241, 27101242, 27101243, 27101244, 27101249, 27101941, 27101944 and 27101949 of Chapter 27 of Schedule 2 of the ITC (HS) Export Policy - Notification
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Migration of e-BRC Portal/Website to new IT platform - Help Manual as well as FAQs have been made available to Bank Officials on the new portal after login - Trade Notice
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Clarification regarding Chip Import Monitoring System (CHIMS) - classification of microprocessors and memory modules - Importer may include multiple products in one registration number. However, for each shipment a separate registration number is required. - Circular
Corporate Law
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Further relaxation in paying additional fees in case of delay in filing Form 11 (Annual Return) by Limited Liability Partnerships up to 15th July, 2022 - Circular
SEBI
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Implementation of Circular on ‘Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities towards deliveries / settlement obligations and pledging / re-pledging of securities’ - Extension - Circular
Central Excise
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Restriction on rebate / refund of duty - Rule 18 and Rule 19 of the Central Excise Rules, 2017 amended so as to exclude Petrol, Diesel and ATF - Notification
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Eighth schedule to Finance Act 2022 amended to prescribe Special Additional Excise Duty ON Crude Petroleum and ATF circular and notification - Notification
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Seeks to prescribe rates of Special Additional Excise Duty for exports of petrol and diesel - Notification
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Remission of duty - Rejection of petitioner’s application for remission of excise duty - export goods that got destroyed in fire at the Container Warehousing Corporation Ltd. (CWC) warehouse - Excise duty is collected when the commodity leaves the factory for the first time and also because the duty is intended to be an indirect duty, which the manufacturer or producer is to pass on to the ultimate consumer, which he could not do if the commodity had, for example upon destroyed in the factory itself - petitioner is entitled to the Certificate granting remission of excise duty - HC
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Adjustment of amount of the duty demanded against the EOU unit - goods manufactured in EOU sold in DTA unit - The stand of respondent no.2 cannot be accepted that even though petitioner has already paid Rs.7,31,58,191/- through the DTA unit, the amount should once again be paid through the EOU unit and petitioner should apply for a refund of the amount paid through the DTA unit. If petitioner is compelled to do that, it would only mean that petitioner has to pay the said amount twice and then claim refund. - HC
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Short paid duty by firm - liability of the partners to make good such shot paid duty - joint and several liability - two / three partnership firms with common partners (or relatives of partners) - The liability alleged to have been incurred by M/s Sunshine Corporation is for the period of F.Y. 2001 to 2002, 2002 to 2003 and 2003 to 2004 during which the writ applicant was not in existence at all. - HC
Case Laws:
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GST
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2022 (7) TMI 134
Confiscation of goods carried by the petitioner - section 130 of the Goods and Services Tax Act, 2017 - HELD THAT:- It was submitted that the authorities sought to derive their powers to overcome the possession of the petitioner of goods in transit from section 129 of the GST Act. It was submitted that since section 129 of the GST Act begins with the non-obstante clause, it is a provision independent of section 130. It was submitted that the entire exercise of powers under section 130 was without jurisdiction. The above question raised by the petitioner would require a detailed examination, it could be immediately noticed that the impugned order came to be passed in a quick succession as noticed above, that too without permitting the petitioner to file reply. The hot hurry on the part of the authorities sacrificed the right of the petitioner to reply and in the process, there was evident breach of principles of natural justice to the prejudice to the petitioner. A prima facie case is made out for grant of interim relief - Rule, returnable on 21.07.2022.
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2022 (7) TMI 133
Seeking grant of bail - availment of fraudulent credit - fake GST invoices issued by the Traders of Bullion and Diamond Products without supply of corresponding goods - Sections 132(1)(b) and 132(1)(c) of the Central Goods and Service Tax, 2017 - HELD THAT:- On perusal of the material placed on record, it appears that so far case of present applicant is concerned, his role and modus operandi, unearth, while the authority was investigating the case of Bharat Soni and others. In the present case, the applicant herein being a Director and Proprietor of both the firms have categorically stated that his company made deposit of Rs. 2 crores to Electronic Cash Ledger and also had made payment totaling Rs.90 lakhs by reversing the alleged ITC. It is evident that the applicant has paid Rs.2,90,00,000/- through Electronic Cash Ledger as well cash. The amount involved is Rs.9.33 crores. In such circumstances, more than 10% amount has been deposited. It is settled law that there is no straight jacket formula for consideration of grant of bail to an accused. It all depends upon the facts and circumstances of each case - Here in the present case, after the arrest, the applicant has shown his bonafideness as discussed hereinabove. The applicant does not have any past record. The authority has expressed the apprehension that if bail is granted, the applicant will flee from justice and considering the pending investigation, his custody is necessary. This contention having no any merits, as merely raising the contention is not enough but it should be substantiate by acceptable material. In the present case, nothing on record to show that the investigation qua applicant is incomplete and he having tendency to flee away from justice. The entire documentary evidence seized by the authority. In such circumstances, when the authority failed to point out that the further custody of the applicant is necessary, and considering the particular facts and circumstances of the present case and keeping in mind the settled law laid down in the case of SANJAY CHANDRA VERSUS CBI [ 2011 (11) TMI 537 - SUPREME COURT] , wherein, it was observed that detention of the accused for an indefinite period is in violation of Article 21. The applicant is ordered to be released on regular bail subject to conditions imposed - application allowed.
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2022 (7) TMI 132
Seeking grant of Regular Bail - availment of fraudulent input tax credit - supply of only invoices without actual supply of goods - economic offence or not - offence punishable under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Service Tax, 2017 - HELD THAT:- Upon perusal of the material placed on record, in the facts of present case, based on the investigation and after complying the statutory mandatory provision, the applicant herein is arrested on 26.11.2021. The tenure of the alleged offence is between 2017 to 2019. The respondent no. 2 already determined the tax amount and has served demand notice and thereafter, complaint before the court concerned is filed. The entire case is based on documentary evidence and same has been seized by the department. In such circumstances, merely an offence is termed as economic offence , it would not mean that in every case bail needs to be denied. Whether bail is granted or not, it always depends on peculiar facts of each case. In the facts of the present case, more particularly fact that after filing the complaint, there is no progress in the trial proceedings and considering the cases of the court concerned, the trial of the case will take considerable time. The applicant is in custody since 26.11.2021 and he having no any past antecedent of like nature and there is no possibility of he being flee from justice and therefore, this Court does not find any good reason to detain the applicant in custody, that too, after completion of investigation and filing of the complaint. Thus, no useful purpose would be served by keeping the applicant behind bar, thus, present application is allowed and he is ordered to be released on bail, subject to conditions imposed - application allowed.
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2022 (7) TMI 131
Benefit of entry No. 74 of exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Naturopathy Centre - classifiable under SAC Heading 9993 or not - HELD THAT:- The grievance of the petitioner is that the Authority for Advance Ruling proceeded to return a finding that this was a case of supply of composite service and, consequently, the petitioner has been denied the benefit of the aforesaid exemption notification. Learned counsel for the petitioner submits that this was not even the stand of respondent-department before the Authority and, therefore, the petitioner was taken by surprise upon receiving the impugned order passed by the Authority for Advance Ruling. He submits that the petitioner specifically raised this ground in its appeal before the Appellate Authority. However, the Appellate Authority has not considered the said aspect in its impugned order. The learned counsel for the respondents are not in a position to dispute the aforesaid submission of the petitioner. This is also evident from the reading of the impugned orders passed by the respondent Authorities. Matter remanded back to the Appellate Authority for reconsideration of the appeal preferred by the petitioner - petition allowed by way of remand.
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2022 (7) TMI 130
Maintainability of appeal - failure to submit certified copy of the order - extension of period of time limitation - compliance of the rules of natural justice or not - HELD THAT:- If present case is considered in the light of order in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER ] of the Hon ble Apex Court, the petitioner is entitled to the benefit of exclusion of limitation of 7 days as stipulated in Rule 108(3) of the OGST Rules inasmuch as the certified copy of the Order dated 20.01.2021 being obtained on 21.05.2022 and offered to the Appellate Authority on 23.05.2022 for consideration in connection with the defect pointed out vide notice dated 13.05.2022, the same fell well within the 90 days period granted by the Hon ble Supreme Court in the IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER ]. Investigating further into the instant matter, this Court finds that Rule 108(3) has not prescribed for condonation of delay in the event where the Petitioner would fail to submit certified copy of the order impugned in the appeal nor is there any provision restricting application of Section 5 of the Limitation Act, 1963, in the context of supply of certified copy within period stipulated in sub-rule (3) ibid - The requirement to furnish certified copy of the impugned order within seven days of filing of appeal is provided as a procedural requirement. It is apt to say that the Appellate Authority has not exercised its power in proper perspective and the Petitioner cannot be said to be indolent, rather he it has pursued its matter diligently - Petition allowed.
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2022 (7) TMI 129
Maintainability of appeal - appeal dismissed only the ground of non-payment of pre-deposit by the petitioner - HELD THAT:- Perusal of the appellate order dated 06.08.2019 bearing memo no. 454 at Annexure-12 shows that the appeal was dismissed only on the ground of non-payment of deposit of 10% of the tax dues. We need not go into the merits of the case in the aforesaid facts and circumstances. However, we are inclined to allow the prayer of the petitioner for rehearing of the appeal subject to deposit of 10% of the tax dues. For that purpose, appellate order dated 06.08.2019 (Annexure-12) passed by the Joint Commissioner of State Tax (Appeal), Jamshedpur Division, Jamshedpur is set aside. The petitioner is directed to deposit the amount of Rs. 18,35,721.81/- or 10% of the total tax dues whichever is higher within a period of two weeks with the office of the Joint Commissioner of State Tax (Appeal), Jamshedpur Division, Jamshedpur in accordance with Section 107(6) of the Act. If the amount is deposited within the stipulated time, the appeal shall be restored to its original file and the Joint Commissioner of State Tax (Appeal), Jamshedpur Division, Jamshedpur shall proceed to hear the matter on its own merits. Petition disposed off.
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2022 (7) TMI 128
Maintainability of petition - availability of alternative and efficacious remedy to the petitioner/appellant under Section 107 of the Uttarakhand Goods and Services Tax Act, 2017 - cancellation of registration of petitioner - When if the statutory remedy or appeal under Section 35 is barred by the law of limitation whether in a Writ Petition under Article 226 of the Constitution of India, the order passed by the original adjudicating authority could be challenged on merit? - Section 107 of the Uttarakhand Act. HELD THAT:- It is apparent from the record that a notice was given on the website, which is not sufficient, and a personal notice has to be given before cancellation of the registration. Therefore, the Court can invoke its jurisdiction under Article 226 of the Constitution and hold that the orders passed by the learned Commissioner can be interfered in a writ jurisdiction. Viewing from another angle, it is apparent that the law made by the Parliament as well as the Legislature with regard to the appeals is very strict, insofar as, that it does not provide an unlimited jurisdiction on the First Appellate Authority to extend the limitation beyond one month after the expiry of the prescribed limitation. In such case, the petitioner/appellant is put to hardship and is left without remedy. In such cases, the party concerned may face starvation because of denial of livelihood for want of GST Registration. In this case, the petitioner/appellant is a semi-skilled labourer working as a painter doing painting on doors, windows of the houses - if the petitioner is denied a GST registration number, it affects his chances of getting employment or executing works. Such denial of registration of GST number, therefore, affects his right to livelihood. If he is denied his right to livelihood because of the fact that his GST Registration number has been cancelled, and that he has no remedy to appeal, then it shall be violative of Article 21 of the Constitution as right to livelihood springs from the right to life as enshrined in Article 21 of the Constitution of India. In this case, if we allow the situation so prevailing to continue, then it will amount to violation of Article 21 of the Constitution, and right to life of a citizen of this country. The writ petition is maintainable, and the learned Single Judge should have acted upon his judicial conscience enriched by judicial experience and practical wisdom, and held that the writ petition should be entertained. It is apparent from Sub-Section (1) of Section 107 of the Uttarakhand Act that any person aggrieved by any decision under the Act or the Central Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within the time frame. Now the question is - whether the Assistant Commissioner of GST, whose order is challenged in this case, is an adjudicating authority, or not? - This question came before the Hon ble Supreme Court in the case of M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] , wherein the power to levy a provisional attachment of the bank accounts by the Commissioner of GST was questioned. Upon such challenge before the Hon ble High Court of Himachal Pradesh, the said writ petition was dismissed. Thereafter, the matter went to the Supreme Court in a Special Leave Petition. The Hon ble Supreme Court took into consideration the provision of Section 107 of the Himachal Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as the H.P. Act ) as well as Section 2(4) of the H.P. Act, which defines adjudicating authority, and gave a finding. Section 2(4) of the Uttarakhand Act defines adjudicating authority to mean any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Commissioner, Revisional Authority etc. The provisions of the Uttarakhand Act is pari materia with the definition of adjudicating authority provided in the H.P. Act - Sub-Section (91) of Section 2 provides for the proper officer in relation to any function to be performed under this Act, means the Commissioner or the officer of the State tax who is assigned that functions by the Commissioner. Thus, it is apparent that the office of the Assistant Commissioner acts under the aegis and control of the Commissioner, and nowhere in the Uttarakhand Act, it is provided that he shall act independently to the duties assigned to him by the Commissioner. The learned Single Judge has committer error by holding that the writ petition is not maintainable, and, therefore, the same requires to be set aside. However, we are also aware of the fact that the learned Single Judge has not given any findings about the merits on the claim of the petitioner/appellant so far as the cancellation of his GST Registration number is concerned. Hence, the matter has to be remanded. Appeal allowed.
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2022 (7) TMI 127
Validity of SCN - It is the case of the writ applicant that he learnt about issuance of such show cause notice when the same came to be uploaded on common portal - cancellation of registration of premises of petitioner - Violation of principles of natural justice - HELD THAT:- The show cause notice is not tenable in eye of law inasmuch as the same is found without any material particulars, which a prudent person would be able to respond. In the facts of the case, upon bare perusal of the contents of the show cause notice, it is found that the reason recorded by the respondent authority is a mere incorporation of the relevant ground appearing in the Rules framed thereunder. The show cause notice should have referred to any material particulars as to in what manner the authority has prima facie found that the registration of the writ applicant has been obtained by means of fraud, will ful misstatement or suppression of facts. As against that upon perusal of the order for cancellation of registration passed by the respondent Authority, it refers to the initiation of proceedings under Section 67(2) of the GGST Act, 2017 in respect of M/s. Sridev Traders, Rajkot. It further emerges that the respondent Authority while passing the said order of cancellation of registration had referred to and relied upon the letter dated 14.12.2021 addressed by the State Tax Officer(1), Enforcement, Division-9, Bhavnagar with regard to the investigation proceedings. Thus, the respondent Authority has proceeded to pass the order for cancellation of registration on new material or facts which were neither formed part of the show cause notice nor the same were disclosed to the writ applicant. The respondent authority has failed to adhere to the basic principles of natural justice and such action of the respondent authority is illegal and is required to be interfered with. The matter remanded back to the respondent Authority for denovo proceedings.
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2022 (7) TMI 126
Seeking grant of Bail - illegal availment of ITC - offence punishable under Sections 132(1)(b), 132(1)(c) and 132(1)(k) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Following aspects are considered : I) Investigation is concluded as the complaint has been filed. II) The applicant is in custody since 22082021; III) Learned Senior Advocate for the applicant submitted that co-accused who were also part of the system in claiming fraud ITC, have been enlarged on default bail. IV) Considering the maximum sentence of 5 years. V) Learned Senior Advocate for the applicant under instruction submitted that the applicant is ready and wiling to deposit an amount of Rupees One Crore Only within the period of six months; VI) Learned Additional Public Prosecutor under the instructions of the Investigating Officer is unable to bring on record any special circumstances against the applicant. In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the First Information Report, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail - The applicant is ordered to be released on regular bail - Application allowed.
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2022 (7) TMI 82
Maintainability of appeal - time limitation - appeal was dismissed on the ground that the appeal was filed beyond the period of extended limitation - HELD THAT:- As per subsection (1) of Section 107 of the CGST Act, limitation for filing appeal is three months from the date of communication of the order appealed against. Under subsection (4) of Section 107 of the CGST Act, the appellate authority may allow the appeal to be presented within a further period of one month, provided sufficient cause is shown by the appellant. Though the lower appellate authority may be right in holding that while it may allow filing of an appeal beyond the limitation of three months for a further period of one month, therefore, by extension of limitation beyond the extended period of one month delay beyond the extended period of one month cannot be condoned, we are of the view that such a stand taken by respondent No.1 may adversely affect the petitioner. This is more so because respondent No.2 had suo motu cancelled the GST registration of the petitioner on the ground of non-filing of returns and as GST Tribunal has not been constituted under Section 109 of the CGST Act, petitioner would be left without any remedy. It is further found that the issue pertains to cancellation of GST registration of the petitioner. In the facts and circumstances of the case, it would be just and proper if the entire matter is remanded back to respondent No.2 to reconsider the case of the petitioner and thereafter to pass appropriate order in accordance with law. Petition allowed by way of remand.
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Income Tax
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2022 (7) TMI 125
Reopening of assessment u//s 147 - Mandation of Issue of notice where income has escaped assessment - jurisdiction of judicial or quasi-judicial authority to issue notice - first respondent transferred the files pertaining to the appellant to the second respondent - HELD THAT:- Admittedly, the appellant is an assessee on the file of the second respondent and hence, the first respondent has no jurisdiction over the appellant to issue notice under section 148 for reopening the assessment for the relevant assessment year, after recording the reasons to believe that some of the income of the appellant has escaped assessment, this court is of the opinion that the notice dated 28.03.2018 issued by the first respondent under section 148 of the Act, without jurisdiction, lacks legal sanctity and hence, the same is held to be invalid. As the first respondent, who recorded the reasons for reopening the assessment under section 148(2), has no jurisdiction over the appellant, to issue notice dated 28.03.2018 under section 148(1). Though the files pertaining to the reassessment proceedings of the appellant were transferred, the second respondent has no authority to continue the reassessment proceedings under section 129 and hence, the notice dated 14.12.2018 issued by him is also held to be invalid. The invalid notices so issued by the respondents vitiate the entire reassessment proceedings initiated against the appellant. Admittedly, no notice u/s 148 was issued by the second respondent, who is the jurisdictional assessing officer, for reassessment of the return of income of the appellant, within the time frame stipulated under the Act. In this case, the limitation period of six years for reopening the assessment for the year 2011-12 under section 147 of the Act, came to an end on 31.03.2018. In such circumstances, there is no requirement for this court to go into the other issue based on the factual matrix projected by the appellant i.e., whether the appellant has disclosed fully and truly all the material particulars that are necessary for assessment for the relevant assessment year. Assessee appeal allowed.
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2022 (7) TMI 124
Deduction claimed u/s.80IB(10) on account of 'extra work - HELD THAT:- It is an admitted position that the assessee is otherwise eligible for deduction u/s.80IB(10) in respect of one of its projects, namely, Khinvasara Fort . AO did not dispute the otherwise allowability of deduction of income from the Khinvasara Fort project, but observed that the assessee could not furnish any evidence as to the nature of extra work on which the deduction was also claimed. Similar position remained before CIT(A) as well that the assessee could lead no evidence to demonstrate the nature of extra work. Here, it is relevant to note that section 80IB(10) provides deduction at 100% of profit derived from the housing project which fulfils the requisite conditions. It is only the profit from the eligible project which qualifies for deduction. If the developer also undertakes certain other works unconnected with development of project and charges separately from customers, that income cannot qualify for the deduction. Thus, the examination of nature of work done and the resultant income becomes sine qua non for granting or not granting of deduction u/s.80IB(10). Here is a case in which the AO did not dispute the otherwise eligibility of deduction u/s. 80IB(10) on the Khinvasara Fort . The assessee himself carved out a separate figure of `extra work done worth Rs.2.99 lakh on which deduction was claimed. However, he failed to show the nature of extra work done for examination by the AO as to whether that also qualified for the deduction. Similar position prevailed before the CIT(A) as well inasmuch as the assessee could not state the nature of `extra work . There is no change in the factual scenario before the Tribunal as well on this score. In view of the fact that the assessee failed to lead any evidence whatsoever to show the nature of extra work done, the action taken by the authorities below cannot be taken exception to. Addition being Architect fees - AO on perusal of details of Legal and professional charges, observed that a sum was paid to Ms. Monali Mutha and Mr. Sujit S. Mutha towards interior designing, drafting and consultancy charges for Resort Project Nirvana at Shoolibanjan, Aurangabad - Since the Nirvana project was not eligible for deduction u/s.80IB(10) and there was no revenue from the `Nirvana project, the AO disallowed this sum - CIT(A) countenanced the view of the AO - HELD THAT:- The architect has mentioned the name of Nirvana project. However, the claim of the assessee has been that such Legal charges pertained to all the on-going projects. Assessee s Profit and loss account depicts figure of Legal and professional charges in total, which impliedly includes the amount of Rs.11.00 lakh under consideration. Page 16 contains allocation of Legal and professional expenses involved in these projects, having been allocated to the Fort project eligible for deduction u/s.80IB(10) - If disallowance of any expenditure from the eligible housing project is made, it means that the income from it would correspondingly increase, resulting into higher amount of deduction u/s.80IB(10) also. Out of total Legal and professional expenses incurred by the assessee share of the expenses allocated to eligible project - Applying the same proportion to the disputed payment of Rs.11.00 lakh, the share of the Fort project in such total amount disallowed comes - As the eligible project claimed deduction for this sum, which got disallowed by the AO, the amount of deduction u/s. 80IB(10) will accordingly have to go up - To sum up, the disallowance of Rs.11.00 lakh is sustained and the amount of deduction u/s.80IB(10) is increased by a sum of Rs.5.43 lakh.
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2022 (7) TMI 123
Revision u/s 263 - Period of limitation - HELD THAT:- The only material brought on record by the assessee in the instant case is as to the date of dispatch by the postal department, which, in our view, does not, for the reason of its variance with the date of the order, dislodge the statutory presumption (under the Evidence Act) of the date of it s issue. That is, cannot be regarded as conclusive of the matter. Tribunal, as indeed any fact finding authority, has necessarily to go by the material on record, and it s findings are to be based on relevant material (CIT v. Radha Kishan Nandlal [ 1975 (3) TMI 2 - SUPREME COURT] , Daulat Ram Rawatmull [ 1972 (9) TMI 9 - SUPREME COURT] , Oman Salay Mohammed Sait [ 1959 (3) TMI 2 - SUPREME COURT] , Dhirajlal Girdhari Lal [ 1954 (10) TMI 8 - SUPREME COURT] - We have already indicated of a much higher workload attending the year-end, which may explain the time lag of a few days between the date of its passing and the date of its despatch, which is of a certified copy thereof, prepared by the staff. Under the circumstances, given the clear law in the matter, we do not think that it could be said that the date of issue of the impugned order/s is not the date on which the same is apparently signed, i.e., 31/3/2017. The assessee s challenge, therefore, fails. Invalidity of the impugned orders on the basis of doctrine of merger inasmuch as the assessment sought to be revised has been subject to appellate jurisdiction in all cases, and which stands passed on 29/8/2016, i.e., prior to the issue of notice u/s. 263(1) - We have for the purpose perused the appellate orders, forming part of the paper-book in all cases, save Anuradha Upadhyay, so that the argument is not applicable in her case. The revision, in all cases, on the other hand, is on the basis that the AO has failed to, in view of the frequent transactions of purchase and sale of land during the year, as well as in the immediately preceding and succeeding year, as also the fact that the sales are to real estate developer, failed to investigate further, making proper inquiries, from the stand point that the income from these transactions is liable to be assessed as business income, i.e., as against capital gains. We fail to see as to how the doctrine of merger would operate in the instant case to oust the jurisdiction of the revisionary authority. In fact, as stated by the Pr. CIT, the Revenue has not accepted the stand of the AO, resulting in it being in appeal before the Tribunal. The assessee s claim is untenable, and stands made only for the sake of it; the two issues being different. Sale of immovable property - The revision in the instant cases has been for the reason of lack of enquiry, i.e., as regards sale of immovable property valued at Rs. 30 lacs or more, information in respect of which came to the notice of the Revenue, while the sale value disclosed in the return filed was much lower. Or, in other cases, on account of discrepancies observed due to sale being not registered. No serious contention was in fact raised before us in this regard. That absence of proper enquiry, i.e., as warranted in the facts and circumstances of the case, would make an order erroneous inasmuch as there is no proper application of mind, is trite law. The same is among the four tests; the other three being: wrong assumption of facts; incorrect application of law; and omission to observe the principles of natural justice, laid down by the Apex Court, as in Malabar Indl. Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] The law, as amended w.e.f. 01/6/2015, statutorily deems an order made without inquiry which should have been made as liable for revision on that account. That is treats the order per se erroneous and prejudicial to the interests of the Revenue for that reason, as explained decades ago in Gee Vee Enterprises [ 1974 (10) TMI 29 - DELHI HIGH COURT] The plea is without merit. Revised stands passed without the issue of notice u/s. 143(2) - We are, again, unable to persuade ourselves to agree with him. Yes, an assessment u/s. 143(3) would normally arise only on the service of notice u/s. 143(2) in the matter inasmuch as the same, as explained in Asst. CIT v. Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] assumes the nature of a jurisdictional notice. The decision of this aspect, i.e., if it, in the given facts and circumstances, represents a jurisdictional fact, would therefore need to be ascertained; there being contrary decisions as well where the Hon'ble Court have otherwise. This is in view of the words so far as may be occurring in s. 148(1). A non-issue or non-timely issue of a notice u/s. 143(2) may not therefore operate to disturb the jurisdiction already assumed by the AO to frame the assessment u/s. 147 upon verification of the assessee s claims. The fact of non-issue of notice u/s. 143(2) itself is not conclusively established, i.e., as a fact, inasmuch as non-mention of issue of notice u/s. 143(2) in the order cannot by itself be regarded as conclusive of the said fact. It is only thereupon that we could proceed to examine the issue of the same resulting in an absence or otherwise of a valid assumption of jurisdiction to frame an assessment. These, it may be appreciated, are collateral proceedings. Only proved or admitted facts in the proceedings could therefore be taken into account in the instant proceedings, the scope of which cannot be extended to decide the factual or legal aspects attending the former, which has to be taken as having assumed finality. The finality of concluded proceedings cannot be lightly, if at all, disturbed. The Courts are in fact, even in the relevant proceedings, slow to adopt a construction which deprives the parties of valuable rights inasmuch as when the right of appeal is not preferred within the time prescribed therefor, the other side acquires a valuable right (refer, inter alia, Mela Ram Sons [ 1956 (2) TMI 5 - SUPREME COURT] ). The plea is, for the reasons afore-stated, without basis, both on facts and in law. Decided against assessee.
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2022 (7) TMI 122
Exemption u/s. 54EC - delay on part of the appellant in depositing the sale consideration of the property sold u/s 54EC - scope of permissible limit of six months from the date of sale of the land - AO disallowed the exemption claimed u/s. 54EC by holding that a perusal of section 54EC shows that the investment in bonds should be made at any time within a period of six months after the date of such transfer and a period of six months from the date of transfer is afforded to the Assessee to purchase the bonds which in the instant case commences from 16.10.2013 and ends on 14.04.2014 - HELD THAT:- The provisions itself reflects that investment can be made as a whole or in part of the capital gains.We are in concurrence with the determination made by the ld. Commissioner that as per section 54EC of the Act, the time period of investment starts from the date of transfer and not from the date of receipt of consideration. Coming to the period of six months calculation, Hon ble Coordinate Benches of the Mumbai Tribunal in the case of Neela S. Karyakarte vs. ITO ( 2015 (12) TMI 618 - ITAT MUMBAI] , Aquatech Engineers [ 2013 (6) TMI 726 - ITAT MUMBAI] and Niamat Mahroof Virji 2016 (12) TMI 1081 - ITAT MUMBAI] dealt with the definition of six months as prescribed u/s. 54EC of the Act and clearly held that six months have to be interpreted as six calendar months and not 180 days. Admittedly the provisions of section 54EC of the Act are beneficial provisions to encourage investments in Govt. bonds and for the benefits of the claimants therefore the purpose of introduction of the provisions in the section has to be kept in mind while granting incentive and/or exemption and thus the Hon ble Courts have interpreted the provisions in its right perspective. In the instant case, the sale deed was made in the month of October, 2013 therefore, the Assessee was supposed to invest u/s. 54EC of the Act within six calendar months starting from November onwards and upto the month of April, 2014, which in the instant case has been done by the Assesseeon dated 30.04.2014, accordingly the Assesseeis entitled to get the benefit of exemption u/s. 54EC of the Act. Consequently, the addition of Rs.50 lacs made by the Assessing Officer and affirmed by the ld. Commissioner is deleted. Appeal of assessee allowed.
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2022 (7) TMI 121
Allowance of carry forward to future years of unabsorbed depreciation and its treatment as current depreciation - HELD THAT:- As we see no reason to interfere in the order of the CIT(A) allowing the carry forward of unabsorbed depreciation pertaining to AY 200-01 and 2001-02 following the decision of General Motors India .P. Ltd ( 2012 (8) TMI 714 - GUJARAT HIGH COURT] - The ground of appeal raised by the Revenue is dismissed.
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2022 (7) TMI 120
Disallowance of commission expenses - HELD THAT:- We find that the assessee made TDS on payments of commission, similarly it was also subject to service charges payments. Both the parties are taxed at the maximum rates. The assessing officer has not brought any adverse evidence on record to discard the evidences filed by the assessee to substantiate the genuineness of the commission payment. We find that Hon ble Gujarat High Court in CIT Vs Sujlon Energy Ltd ( 2013 (7) TMI 697 - GUJARAT HIGH COURT] held that where there was sufficient evidence regarding authenticity of payment of sales commission to agents, same cannot be disallowed. In CIT Vs Shree Rama Multi Tech Ltd ( 2013 (10) TMI 306 - GUJARAT HIGH COURT] held that increase in commission expenses as compared to earlier year was no ground to disallow the expenses. In Nangalia Fabrics (P) Ltd ( 2013 (8) TMI 80 - GUJARAT HIGH COURT] it was held by High Court that commission paid through account payee cheque s on account of sales canvasses by party was not bogus payment. In Voltamp Transformers (P) Ltd [ 1980 (10) TMI 35 - GUJARAT HIGH COURT] as held that when assessee-company, dealers in transformers, appointed firm consisting wives of its main shareholder as partners, as its sole selling agent at agreed commission ranging from 3% to 5%, the Tribunal was not justified and wrongly concluded that commission was exorbitant and was not justified by the test of commercial expediency. As held that the commercial expediency and the business need of organisation are concerned, it is not the view point of the assessing officer which should count but it should be the viewpoint of the ordinary bussiessman dealing with a situation faced by the assessee. The Coordinate bench of Mumbai Tribunal in Quantum Advisors (P) ltd [ 2016 (10) TMI 1 - ITAT MUMBAI] also took view that where the group concern had adequate infrastructure and ability to render marketing and distribution in term of agreement with the assessee as a result of which assessee got business, payment could not be rejected on mere hypothetical basis. - Decided against revenue. Deemed dividend u/s 2(22)(e) - HELD THAT:- CIT(A) after considering the submissions of assessee accepted the contention/ explanation of the assessee held that on going through the ledger account of both the concerns i.e. Pawan Syntex Pvt. Ltd. and Rashmi Polyfab Pvt. Ltd., it is apparent that at the beginning of F.Y. 2010- 11 i.e. on 01/04/2010, the assessee had amount receivable from both the companies, therefore, lump sum amounts shown in separate accounts cannot be treated as unsecured loans. The net effect of merging of both the accounts of the two companies ultimately indicates balance receivable at the end of the financial year as well. The ld CIT(A) accepted the submissions of the assessee that the amount of Rs. 82.25 lacs and Rs. 29.00 lacs received from these two companies were pertaining to business transactions. Before us, the ld CIT-DR has not controverted these findings of the ld CIT(A), except making submissions that the ld CIT(A) accepted the version of assessee. Neither any contrary fact nor any law is brought to our notice to discard the finding of ld CIT(A) that transaction of amount of Rs. 82.25 lacs and Rs. 29.00 lacs received from these two group companies were not pertaining to business transactions. Hence, we do not find any merit in this ground of appeal raised by the assessee. Delay in depositing the employees contribution towards PF and ESI - HELD THAT:- We find that as on today the issue is covered against the assessee by the decision of Hon ble High Court in CIT Vs GSRTC ( 2014 (1) TMI 502 - GUJARAT HIGH COURT] - Therefore, the assessee has no merit in its case - INstead of keeping the matter alive, the case was restore to Ld.CIT(A) to give effect to the order of the Tribunal in accordance with the decision of Hon'ble Supreme Court in SLP of Gujarat State Road Transport Corporation(supra), In the result, appeal of the assessee is allowed for statistical purpose.
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2022 (7) TMI 119
Penalty u/s 271(1)(c) - addition as assessee indulged in providing accommodation entries - reopening u/s 147 on the basis of information received from Investigation Wing that a search action was conducted on Rajendra Jain and his group that certain incriminating material was found leading to conclusion that Rajendra Jain group was indulged in providing accommodation entries in the name of bogus sales and unsecured loans and the assessee was one of the concern controlled by Rajendra Jain group - HELD THAT:- Considering the fact that addition in the assessment order, on the basis of which the penalty was levied, is purely an estimated addition. It is settled position in law that no penalty under section 271(1)(c) can be levied on additions made on estimation. The similar view was taken in Manish Dhirajlal Mehta [ 2014 (11) TMI 939 - GUJARAT HIGH COURT] , Vijay Proteins Ltd.[ 2015 (1) TMI 828 - GUJARAT HIGH COURT] , Vijay Proteins [ 2015 (1) TMI 828 - GUJARAT HIGH COURT ] and other various cases. No contrary facts or law is brought to our notice by the ld. Sr. DR for the revenue at the time of hearing of these appeals. Therefore, considering the totality of facts and circumstances, we direct to delete the penalty levied under Section 271(1)(c) of the Act. - Decided in favour of assessee.
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2022 (7) TMI 118
Revision u/s 263 - distinction between lack of enquiry and inadequate enquiry - As per PCIT claim for deduction u/s 54B came to be allowed by the AO without verification and enquiries - HELD THAT:- If there was enquiry even an inadequate that would be itself give no occasion to the Commissioner to exercise the power of revision u/s 263 as held by the Hon ble Bombay High Court in the case of CIT vs. Gabriel India Ltd [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] Pr.CIT had not brought on record any material to show that the claim made for deduction u/s 54B is not allowable to the assessee. The power of revision u/s 263 cannot be exercised with a view to initiate a roving and fishing enquiry in the matters which we have already concluded - See PARASHURAM POTTERY WORKS CO. LIMITED VERSUS INCOME-TAX OFFICER, CIRCLE I, WARD A, RAJKOT [ 1976 (11) TMI 1 - SUPREME COURT] We are of the considered opinion that the AO had allowed the claim for deduction u/s 54B of the Act after due verification and examination of the details filed before the AO and it cannot be said that there is total lack of enquiry on the part of the AO while allowing the claim of the assessee. Therefore, the assessment order cannot be termed as erroneous . There is no material on record indicating that the appellant had not satisfied the conditions laid down under the provisions of the Act for claiming exemption u/s 54B - Therefore, the assessment order cannot be branded as erroneous and prejudicial to the interests of the revenue . CIT is not justified in exercising the power of revision u/s 263 of the Act and order passed u/s 263 by the ld. Pr.CIT is hereby set-aside. Accordingly, the grounds of appeal raised by the assessee stand allowed.
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2022 (7) TMI 117
Penalty u/s 271(1)(c) - allegation of concealment of income as assessee has not disclosed Capital Gain on sale of Land - assessee claimed that the penalty order has been passed beyond the statutory time limit mentioned in the Act - HELD THAT:- Penalty Order was passed on 07/06/2018. The Assessment order u/s 143(3) was passed on 20/12/2017. The Penalty notice u/s 271(1)(c) was issued on 20/12/2017. There is no dispute on these dates. Thus, the penalty order was passed within Six(06) months of passing the assessment order. In the case under consideration Section 275(1)(c) will be applicable because there is no appeal against the additions made in the assessment order. The statutory time limit to pass the Penalty order is 6 months or end of the financial year whichever is later, if the assessee has not preferred any appeal against the additions made in the assessment order. It is observed that the Penalty Order was passed within Six(06) months of passing the assessment order. Hence it was passed withintime. Thus, the Ground No.1 of the appellant assessee is dismissed. Undisclosed LTCG - assessee submitted that the assessee has failed to offer the Capital gain under the bonafide belief that the land is outside the statutory limit of 8 kms hence the sale is not taxable as capital gain - As facts of the case as they exist at the time of penalty order, there is concealment of income by the assessee from sale of impugned land - assessee has now filed additional evidence to claim that the land is agricultural land and beyond 8 kms. Therefore, in the interest of justice, we set aside the Penalty levied on the issue of sale of impugned land to the file of the assessing officer with a direction to decide the issue afresh after giving opportunity to the assessee. Assessee is directed to file all the relevant documents before the AO - AO shall also verify from the returns and other documents whether the assessee had offered income from agricultural activity from the impugned land in earlier years. The Assessing Officer shall be at liberty to collect necessary evidence independently. We specifically mention here that we have gone through the Penalty notice issued by the AO, it was observed that the AO has struck off the appropriate words in the penalty notice. The Penalty Notice has been specifically issued for concealment of Income. AO has also levied the penalty for concealing the interest income of Rs.8414/-. We set aside this issue also to the file of the AO to decide a fresh after conducting necessary inquiries and after giving opportunity to the assessee. Thus, the Penalty Order under section 271(1)(c) of the Act is set aside and Assessee s Ground Nos.2 3 are allowed for statistical purpose.
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2022 (7) TMI 116
Revision u/s 263 - reopening of assessment u/s 147 - period of limitation - HELD THAT:- As the issue on which the ld. PCIT revised and set aside the reassessment order passed u/s 143(3) r.w.s. 147 comprised of issues of current liability, withdrawal against debit capital account and not charging of service tax in the profit and loss account which were undoubted not the subject matter of reassessment proceedings. Therefore, the period of limitation has to run from the date of assessment as framed under section 143(3) but there was no assessment u/s 143(3) - We have also examined the possibility of treating the intimation passed u/s 143(1) of the Act as assessment order and limitation can be reckoned from that order. Even in that scenario our conclusion would be same . Therefore, in view of this, we are inclined to hold that the revisionary jurisdiction exercised by the ld. PCIT is wrong and thus cannot be sustained as it hopelessly barred by limitation. Even otherwise on merits, the issues raised by the ld PCIT in the revisionary proceedings which finally resulted into the reassessment order dated 18.12.2013 being revised and set aside in no way can be said to be issues rendering the assessment order to be erroneous - the issues raked up and proposed by the ld PCIT in the order passed u/s 263 of the Act were not such which could render the assessment as erroneous. The main purpose of exercising the revisionary jurisdiction u/s 263 of the Act was non examination of current liabilities Rs. 55,10,278/-, withdrawals of Rs. 33,09,490/- against debit capital balance and not charging of service tax to the profit and loss account nor showing it as payable in balance sheet. We observe from the audited balance sheet that substantial part of the current liability is coming from the preceding year and non examination of the same could render the assessment as erroneous is not understandable. Similarly the withdrawals against negative capital balance can render the assessment as erroneous is also beyond our understanding. Lastly the non charging of service tax and not showing in the balance sheet can influence the correctness of the order. In our considered opinion these issues are not such which can render the assessment erroneous. Similarly what prejudice is caused to the revenue is also not clear from the order of the ld PCIT. In order to revise the order the twin conditions have to be satisfied i.e. the order has to be erroneous and secondly it must be prejudicial to the interest of the revenue. This ratio has been laid down in the case of Malabar Industrial Co. Ltd Vs CIT ( 2000 (2) TMI 10 - SUPREME COURT] - But in the instant case before us these conditions are not satisfied. - Decided in favour of assessee.
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2022 (7) TMI 115
Rectification u/s 154 - Disallowance of interest on account of the fact that the money was invested in the capital of the firms, to earn exempt income - as noted that the appellant was neither deriving any interest income nor remuneration from these partnership firms and the interest expenditure was thus disallowed - HELD THAT:- The assessee in the instant case is a partner in the firm M/s. Vivilash Digital Colour Labs Pvt.Ltd and has invested in the firm by borrowing from financial institutions i.e Chola-IDBI on which she has paid interest of Rs. 15,85,752/-. There is also a provision in the partnership deed to pay interest on capital to the partners. Since, there was no sufficient profit, interest was not provided by the firm on the capital. The assessee claimed interest income as expenditure and set-off the same against other income. This was also accepted by the AO in the order passed u/s. 143(3). It has been held in various decisions, which are relied on by the ld.counsel for the assessee that there need not be income to claim the expenditure u/s. 57. It is also held that such interest expenditure is allowable, even when there is no income. Thus, the issue as to whether the assessee has correctly claimed the set-off such interest paid to Chola-IDBI, in absence of any interest income for the firm is a highly debatable issue. It has been held in various decisions that provisions u/s. 154 for rectification of the order cannot be applied to debatable issues. The Hon ble Supreme Court in the case of T.S.Balaram vs Volkart Brothers [ 1971 (8) TMI 3 - SUPREME COURT] has held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points which there may be conceivably two opinions. It was held that a decision on a debatable point is not a mistake apparent from the record. Therefore set aside the order of the ld.CIT(A) on this issue and the grounds raised by the assessee are allowed.
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2022 (7) TMI 114
Penalty u/s. 271(1)(c) - penalty imposed for filing of inaccurate particulars of income in Income Tax Return - excess depreciation claimed by the assessee - HELD THAT:- Clearly all the years when the assessee had claimed excess depreciation on the land and plant and machinery component of the properties purchased in 2011 and 2012 Revenue had failed to detect the same. Even in the impugned year it was not the AO who discovered the same, but it was the CIT(A) who became aware of this excess claim of depreciation that too on the suo moto submission of the assessee. The letter filed by the assessee to the CIT(A) reveals that the admission was made not on account of a patently incorrect claim made earlier by the assessee. But on the contrary excess depreciation on the land component of the properties had been claimed based on a legal opinion, and when it sought to align its books in accordance with MCA notification, it reversed what according to it was excess depreciation claimed and offered the same to tax - It is not the case that the Revenue has categorically found the assesses claim of depreciation to be patently not in accordance with law. In fact whatever was surrendered by the assessee has been accepted by the Revenue without even examining the same. Thus the addition made in the impugned case on account of excess depreciation claimed, having been surrendered by the assessee itself without any prior detection by the Revenue, the excess claim having been demonstrated to have been made for bonafide reasons, it is surely not a case for levy of penalty at all. All particulars, relating to the properties on which depreciation was claimed, was duly disclosed by the assessee. And the assessee itself, to align its books of accounts with an MCA notification, disclosed all particulars relating to the excess claim also. We therefore hold that the assessee cannot be charged with having concealed/furnished any inaccurate particulars of income in the present case. On the contrary we agree with the ld. Counsel for the assessee that the assessee had on its own come clean before the Department when it rectified its Books of accounts. Appeal of assessee allowed.
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2022 (7) TMI 113
Deduction u/s 80P(2)(a)(i) - assessee is a co-operative credit society having A class Members as well as B class Members as its society s Members - case of the AO is that in so far as deposits received from B class Members, there is no mutuality and they are only nominal members - HELD THAT:- Similar issue on identical facts was subject matter in appeal before the Tribunal in the case of AA-435 Velankattuvalasu Primary Agricultural Cooperative Credit Society Ltd [ 2022 (4) TMI 1414 - ITAT CHENNAI] . We hold that irrespective of the fact that whether the assessee is having A class Members or B class Members, the assessee is entitled for claiming exemption under section 80P(2)(a)(i) of the Act. Thus, the ground raised by the assessee is allowed. Interest income received from Erode District Central Co-operative Bank - The assessee has claimed deduction of interest Income received under section 80P - AO has denied the same and held that the interest income falls in the category of Other Income and brought to tax, which was confirmed by the ld. CIT(A). Similar issue on identical facts was subject matter in appeal before the Tribunal in the case of The Salem Agricultural Producers Co-operative Marketing Society Ltd.[ 2016 (9) TMI 699 - MADRAS HIGH COURT] - we hold that the assessee is eligible for claiming deduction under section 80P(2)(d) of the Act. Thus, the ground raised by the assessee is allowed.
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2022 (7) TMI 112
Penalty u/s 271(1)(c) - Defective notice u/s 274 - mandation of mentioning correct limb for leveying penalty - HELD THAT:- It is well-settled law on the subject as held by various Courts and Tribunals that Section 271(1)(c) penalty order is not sustainable if AO has not mentioned the specific charge in respect of which i.e. whether the penalty is being levied for concealment of income or for furnishing inaccurate particulars of income , which are distinct and separate offences. The Supreme Court in the case of CIT v. SSA'S Emerald Meadows[ 2016 (8) TMI 1145 - SC ORDER] held that where Tribunal, relying on a decision of Karnataka High Court, allowed appeal of assessee holding that notice issued under section 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated and High Court, on appeal, held that there was no substantial question of law arising for determination, SLP was to be dismissed. Even on merits, in respect of addition under section 68 of the Act on account of cash deposited in the bank, we note that the AO in the assessment order has made a specific noting that the amount in question was received on 04-04- 2014, which falls outside the purview of this assessment year under consideration. Further, in respect of addition the assessee has submitted that this was an inadvertent mistake in mentioning the incorrect salary figure, which was rectified before the AO during the course of assessment proceedings. It is well-settled proposition that penalty cannot be imposed merely because assessee accepted assessment order levying tax and interest, unless it is discernible from assessment order that addition was on account of concealment (CIT v. Manjunatha Cotton Ginning Factory[ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Therefore, in view of the above facts and the legal position discussed above, we are of the considered view that in the instant set of facts, penalty proceedings are liable to be set aside. Appeal of the assessee is allowed.
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2022 (7) TMI 111
Disallowance of depreciation of plant and machinery claimed - As per AO stainless pipes / tubes were never purchased by the assessee and the assessee took accommodation entry to siphon of black money - in the absence of details as to when the said stainless steel pipes / tubes were put to use by the assessee, AO disallowed the claim of depreciation. HELD THAT:- The appellant has stated that the scraps were kept with the appellant and were never sold. This is again very unconvincing. I find from indiamart that value of stainless steel pipe scrap is at least 20% of the cost of new pipes. As the appellant has stated, the pipes were used for carrying hazardous chemicals. Therefore, for safety considerations, such pipes have to be replaced when they are in fairly good condition to avoid the accident. For industries handling hazardous chemicals, it is not possible to wait till the conditions of the pipes deteriorate so much that leakages start. It was necessary for such industries to go for preventive maintenance Therefore, it can be presumed that the condition of the pipes replaced were fairly good from scrap value angle. Therefore the appellant's contention that the scrap was never sold and had little worth is not acceptable. The appellant could not explain how much other materials such as nuts, bolts, brackets, sockets consumed for fitting/installing the pipes/tubes were accounted for in its books though the AO had called for those details in the course of the assessment proceedings.Taking all these facts into consideration, hold that the appellant's claim regarding purchase of pipes/tubes is not correct. In view of the detailed finding of facts recorded by the CIT(A) above and in the absence of any material to controvert the same, we find no reason to interfere with the impugned order passed by the learned CIT(A). Accordingly, the sole ground raised by the assessee in both the appeals is dismissed.
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2022 (7) TMI 110
Undisclosed income - Unexplained expenditure u/s 69C - additional Income towards cost of purchase of movie - order passed u/s.143(3) r.w.s. 153B(1)(b) - CIT-A deleted the addition - as per AO assessee had declared additional Income over and above its regular income during the course of search proceedings u/s.132 - HELD THAT:- We ourselves do not subscribe to the reasons given by the Assessing Officer for the simple reason that once there is no dispute about additional income credited into the profit and loss account, then the AO cannot make further addition on said undisclosed income merely for the reason that the assessee has incurred loss for the year even after undisclosed income - assessee has incurred huge expenditure for the movie Thalaivaa subsequent to the period of search. Further, additional income offered during the course of such is also on account of cost of purchase of movie Thalaivaa. Therefore, once income is credited to the profit loss account, corresponding expenditure relatable to said income also needs to be debited into the profit loss account. In this case, the assessee has done exactly the same which resulted in loss for the year under consideration. In fact, the learned CIT(A) has considered detailed written submissions filed by the assessee, including financial statements and observed that on the additional income offered during the course of search, the assessee has credited into books of accounts for the relevant financial year. The said findings of the CIT(A) goes uncontroverted. The revenue fails to bring on record any contrary evidences to counter the findings of fact recorded by the CIT. Therefore, we are of the considered view that there is no error in the reasons given by the learned CIT(A) to delete additions made towards undisclosed income found during the course of search. Hence, we are inclined to uphold order of the learned CIT(A) and dismiss appeal filed by the Revenue.
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2022 (7) TMI 109
Delayed payment of employees contribution to the provident fund disallowable u/s 36 (1) (va) - HELD THAT:- The facts in the case clearly shows that the employee share of provident fund contribution for the month of may 2017 was remitted to the provident fund authority on 16/6/2017. The due date of remittance of the provident for the month of May 2017 earlier was up to 15/6/2017 however, the same was extended by a date and the due date under the respective provident fund law was extended up to 16/6/2017. This evidence is available at page number seven 11 of the paper book which says that the last date for remittance for the due month of may 2017 is payable by 15/6/2017 is extended by one day i.e. extended up to 16/06/2017. Thereby it is apparent that when the assessee has deposited the above sum within that extended due date i.e. 16/6/2017, without going into the controversy whether the amendment made by the finance act 2021 is applicable retrospective or not, there is no delay in deposit of the employee s contribution. In nutshell, the employee s contribution has been deposited by the assessee within the due date prescribed under the respective provident fund laws. Thus, adjustment made by the Central processing centre is also not in accordance with the law. Assessee appeal allowed.
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2022 (7) TMI 108
Penalty u/s 271(1)(c) - bogus business loss - whether the assessee has furnished inaccurate particulars of income by adjusting the bogus business loss against the taxable short-term capital gain? - HELD THAT:- As revenue authorities concurrently have reached the conclusion that there was no business activity carried out by the assessee in the year under consideration. The conclusion arrived by the authorities below wad based on the finding that the assessee in the income tax return has shown sales, purchases and other transaction in the income tax return whereas the assessee in the returns filed under VAT and excise has declared nil turnover. AR at the time of hearing has not controverted the finding of the authorities below. In such a situation there remains no ambiguity to the fact that the assessee has shown bogus transactions of the business by generating the loss therein in order to set offs such loss against the taxable income. Thus we hold that, the assessee has furnished inaccurate particulars of income by claiming bogus business loss. It is not the case that the profit under the head business and profession was estimated by the revenue authorities as contended by the learned AR for the assessee. In fact the entire business loss claimed by the assessee was treated as bogus in the absence of any documentary evidence. The primary onus lies upon the assessee to furnish the basic documentary evidence in support of the particulars shown by it in the income tax return. But we note that the assessee has failed to do so. Accordingly the provisions of section 145(3) of the Act was invoked after rejecting the loss shown by the assessee in entirety. As such, there was no element of estimating the income as contended by the learned AR for the assessee. Thus we disagree with the argument advanced by the learned AR for the assessee that profit from the business was estimated. The assessee cannot be absolved from the penalty merely on the reasoning that it has agreed for the addition/disallowance during the quantum proceedings. See MAK DATA P. LTD. [ 2013 (11) TMI 14 - SUPREME COURT] In the case on hand, the ld. AR appearing on behalf of the assessee has not brought any material/reliable information suggesting that the assessee has made voluntary disclosure during the assessment proceedings before the detection of bogus loss shown by it by the income tax Department. Accordingly, we are of the view that the assessee cannot escape from the penalty in the given facts and circumstances. Accordingly, we do not find any infirmity in the order of the learned CIT-A and therefore we decline to interfere in his order. Hence, the ground of appeal of the assessee is hereby dismissed.
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2022 (7) TMI 79
Revision u/s 263 by CIT - Eligibility for deduction u/s 80P - assessee being credit society was eligible for deduction under section 80P(2)(i)(a) of the Act for interest income earned from credit facilities provided to its members only. However, the interest income from fixed deposit made with Co-operative bank is not allowable deduction under section 80P(2)(a)(i) - HELD THAT:- As the different Hon ble High Courts have taken different view with respect to the deduction of the interest income earned by the assessee from the co-operative bank. Some of the judgements are in favour of the assessee and some of them are against the assessee. It is also an admitted fact that the Hon ble High Court of Gujarat is in favour of the assessee with respect to the interest on deposits made with the co-operative bank. As per SABARKANTHA DISTRICT COOPERATIVE MILK PRODUCERS UNION LTD [ 2014 (6) TMI 977 - GUJARAT HIGH COURT] it is transpired that the AO has taken one of the possible view for allowing the deduction to the assessee under the provisions of section 80P(2)(d)/80P(2)(a)(i)(a) of the Act. Where two view are possible on the issue and the AO has taken one of the possible view, but the PCIT do not agree with the view adopted by the AO, in such scenario, the order of the AO cannot be held erroneous. We find no error in the order of AO so as to justify the initiation of proceedings under section 263 of the Act by the Ld. Pr. CIT. Thus, the revisional order passed by the learned PCIT is not sustainable and therefore we quashed the same. Hence, the ground of appeal of the assessee is hereby allowed.
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2022 (7) TMI 78
Penalty u/s 271(1)(c) - Manadation of specification of charge - HELD THAT:- AO is under obligation to specify the appropriate limb of clause c of section 271(1)(c) of the Act at the time of initiation as well as at the time of levy of penalty notice. In this case it has been drawn our attention that while issuing the notice at two occasion AO failed to specify the charge under which the assessee is liable for penalty and therefore, without going into the merits of the case, we set-a side the order of CIT(A) and direct the Assessing Officer to delete the levy of penalty imposed upon the assessee, relying on the various decision cited by the co-ordinate bench while the rendering the decision in the case of Shri Roopa Nankani. In the result the appeal of the assessee is allowed on legal issue. - Decided in favour of assessee.
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Customs
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2022 (7) TMI 107
Recovery of amount paid as drawback to petitioner on the ground that the claims were sanctioned erroneously - Note 2(b) of General Notes to All Industry Rates of Drawback - The fact that the shipping bills referred to advance licences and that was an error, is not disputed. - HELD THAT:- One fact very clearly emerges from the documents annexed to the petition and the affidavits is that the advance licences of petitioner were invalidated for direct import of relevant HDPE/P Granules / Chips and petitioner was allowed to procure the same indigenously from Reliance Industries Ltd, Mumbai. The fact that the granules used in the ropes exported had been procured from Reliance Industries Ltd by paying excise duty also is not disputed. The fact that the shipping bills referred to advance licences and that was an error, is also not disputed. It is indisputable that petitioner did not use any HDPE granules procured under the advance licences by direct import but procured the granules from indigenous source, i.e., Reliance Industries Ltd. If that is the factual position, petitioner should be entitled for the drawback. Mr. Jetly in fairness submitted that locally procuring the products on which excise duty is paid and those products are used in manufacture for export goods, the excise duty paid can be claimed as drawback. The factual position notwithstanding the error in the shipping bills, which an alert petitioner could have amended on time, petitioner will be entitled and should be granted the drawback as it was rightly granted earlier by the DGFT - this observation of respondent no.2 is erroneous and it is satisfying that it is this erroneous presumption, that made respondent no.2 arrive at the conclusions that he arrived at. The show cause notice impugned in the petition is also discharged - any amount deposited with the authorities shall be refunded alongwith applicable interest if any, within 4 weeks of petitioner making the application for refund - application disposed off.
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2022 (7) TMI 106
Seeking direction to entrust the pending litigation against the M/s. Plus Duty Free (Pvt.) Limited/1st respondent to some other officer - HELD THAT:- By preserving all the rights available to the 1st respondent against the order dated 05.04.2022 and granting liberty to the 1st respondent to work out the remedies in accordance with law within a week from today and in the interregnum the order dated 5.4.2022 is kept in abeyance. The writ appeal stands disposed of.
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2022 (7) TMI 105
Jurisdiction - competent officer to issue SCN - Power of Additional Director General, DRI, Mumbai to issue SCN - HELD THAT:- In the instant case, show cause notice dated 27/29.8.2002 (Annexure-D) came to be issued by the Additional Director General, DRI, Mumbai would be without jurisdiction in the teeth of principles enunciated by the Hon ble Apex Court [ 2021 (3) TMI 384 - SUPREME COURT] and as such the point formulated hereinabove deserves to be answered in favour of the appellant and against the respondent, as it goes to the root of the matter and consequently the order of the Tribunal cannot be sustained. It is made clear that substantial questions of law framed in the background of the facts obtained in the present case are kept open and no opinion is expressed on the same since the very issuance of show cause notice by the Additional Director General, DRI has been held as without authority of law. The SCN was without authority of law and consequential proceedings pursuant thereto including the impugned order of the CESTAT dated 2.6.2010 / 5.8.2010 (Annexure-J) and accordingly, they are set aside - Appeal allowed.
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2022 (7) TMI 104
Rejection of duty drawback - Evasion of payment of export duty and to avail duty drawback - fraudulent export of Semi-finished Leather - samples did not satisfy the norms and conditions laid down in the Public Notice No. 21/2009-14 dated 01.12.2009 - it is also alleged that the appellants have mis-declared the semi-finished goods as finished goods only to get duty drawback and to evade payment of export duty at 60% ad valorem - Confiscation - redemption fine - penalty - Extended period of limitation - HELD THAT:- Even if it is to be assumed that samples were drawn on 14.10.2016, the Revenue has not brought out on record as to how and where the samples were preserved since more than three weeks after drawing the samples have they sent the samples to the CLRI for examination/report, since, as contended by the Learned Advocate for the appellants, leather is such a goods on which even the weather will have an impact; hence, preservation of the same is very much material. The Revenue has not satisfactorily and effectively shook the first report of the CLRI dated 07.10.2016 and hence, it has to be held that the norms and conditions laid down under the Public Notice No. 21/2009-14 dated 01.12.2009 are satisfied, as opined by the expert. Hence, the demand of confiscation apart from demand of duty liability and the various penalties levied on the appellants cannot sustain, since the very basis on which the case of the Revenue rests is not well-founded. In view of the above, the impugned orders are set aside and so also the various demands confirmed therein. The co-ordinate Bench of the CESTAT in the case of M/S. INTERGLOBE AVIATION LTD VERSUS C. C-THE PRINCIPAL COMMISSIONER CUSTOMS BANGALORE [ 2021 (7) TMI 1027 - CESTAT BANGALORE] to justify the invoking of extended period of limitation - the Learned co-ordinate Bench has only upheld the invoking of the extended period of limitation since the Bench found that it was a clear case of mis-declaration, which is not the case here. The Revenue has only alleged switching of the samples without substantiating the same and has obtained report from the CLRI dated 09.11.2016 without drawing any samples. Appeal allowed.
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2022 (7) TMI 80
Seeking provisional release of seized imported consignments - unflavoured supari (Betel Nut Product) - perishable goods or not - to be classified under Chapter-8 Entry 0802 80 or not - Section 110A of the Customs Act, 1962. Whether the products fall under Chapter 8 satisfying the definition of whole/split/ground/any other form of Areca nut or Chapter 21, being, betal nut product known as supari? HELD THAT:- No doubt, the provisions of Section 110A provide for provisional release upon terms to be imposed by the authority. However, the provisions of Section 125, that deals with 'option to pay fine in view of confiscation' provides for two situations. In the case of confiscation of prohibited goods, the option to pay fine in lieu of confiscation is discretionary, such discretion to be exercised by the authority - It is only in the case of other goods, that are not prohibited, that the Officer shall offer to the owner or the person from whose possession the goods were seized, an option to pay a fine, in lieu of confiscation. Thus, in the case of prohibited goods, the discretion as to whether fine may be imposed in lieu of confiscation is that of the officer concerned. Having said so, it is incumbent upon the authority to be prompt in exercise of such discretion, particularly in the case of perishable goods such as the commodity in question. The consignments are in the Customs Station since February 2022 and have been exposed to inclement weather and the vagaries of nature. Though some of the petitioners have already made applications for provisional release under Section 110A of the Act, they wish to update their representations in view of events that have transpired in the recent past. All petitioners are permitted to make applications for provisional release under Section 110A and such applications as/if and when received shall be disposed by the adjudicating authority after hearing the petitioners and simultaneous with a prima facie determination of the classification of the commodity in each case, within a period of two (2) weeks from date of receipt of the applications. Petition disposed off.
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Corporate Laws
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2022 (7) TMI 103
Oppression and Mismanagement - seeking appointment of an Administrator to manage the day-to-day affairs of the 01st Respondent Company - creation of mortgage - Petitioners alleged that the 02nd Respondent Group itself is responsible for the present bad state of affairs of the 01st Respondent Company, while the 02nd Respondent's Group contends that the Petitioners are responsible for the same - Sections 241 and 242 of Companies Act - HELD THAT:- In any event, it is not in dispute that there is no Board which can function and run the Company as on date. The only objection raised by the 02nd Respondent Group is that if an Administrator is appointed, the Petitioners who are responsible for the bad state of affairs of the Company and who are facing various proceedings and prosecutions will escape from their responsibility and liability. In our view, the contention of the 02nd Respondent's Group is unsustainable. On the other hand, when even according to them the Petitioners who are holding 50.23% shareholding and managing the affairs of the Company are responsible for bad state of affairs of the 01st Respondent Company, it is in the interest of the 02nd Respondent Group and also in the interest of the Company and all other stakeholders to keep the Petitioners away from the management of the 01st Respondent Company by appointing an independent Administrator to run the Company till the C.P. is disposed of. It is directed that Justice Shri Anand Byra Reddy, Retired Judge of the Hon'ble High Court of Karnataka, is hereby appointed as an Administrator of the 01st Respondent Company with immediate effect and shall hold office and will manage the affairs of the 01st Respondent Company until further orders of this Tribunal. Application disposed off.
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2022 (7) TMI 102
Seeking winding up the Respondent Company - Section 271 (c), (d) and 272(3) of the Companies Act, 2013 - HELD THAT:- The Respondent Company in Liquidation incorporated on 24.01.2011 does not have any commercial operation after 2012. The last Balance Sheet was filed on 31-03-2012 and thereafter there was no operation and the company has not filed any Balance Sheet. Paid up share capital of the Respondent Company in liquidation was only Rs. 1,00,000.00 and the Balance Sheet filed as on 31.03.2012 suggests that there is a loss of Rs. 9,726.00. Practically the company was in operation only for a year or so and there is no asset to liquidate belonging to the company. The liquidation value of the company is NIL. The Official Liquidator has sent winding up order to the Company but the letter was returned undelivered with a postal remark Left . His representative had also visited the Registered Office of the Company at Paltan Bazar, Guwahati for physical verification and taking possession of the assets of the company. But, it was found that the company had closed the office long back. Hence, he could not find anything in the office. There is no realizable value of the Respondent Company in Liquidation to recover. There would be no useful purpose to continue with the process of liquidation of the Respondent Company in Liquidation under the provisions of Companies Act, 2013. No one has come forward against the winding up of the Company. Hence, the process under the provisions of Section 302(2) of the Companies Act, 2013 is deemed to have been completed and thus it is just, proper and reasonable in the circumstances of the case for the Tribunal to dissolve the company. The Tribunal in exercise of powers conferred under Sub Section (2) of Section 302 of the Companies Act, 2013, the Company in Liquidation i.e., M/s. Saradha Griha Developers Private Limited is ordered to be dissolved with effect from the date of this Order i.e. 21.06.2022 - Application allowed.
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Insolvency & Bankruptcy
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2022 (7) TMI 101
Legality of Liquidation Process - Appellant / Liquidator points out that the Adjudicating Authority has not taken into consideration the Hon ble High Court of Orissa s Order, at the time of passing the Interim Stay, which has resulted in jeopardising the Liquidation Process - HELD THAT:- This Tribunal after giving anxious consideration of the contentions advanced on either side with great care, caution and circumspection is of the considered opinion that ten days time is to be granted to the Respondent Nos.1 and 2 and to Respondent No.13 to file their Replies / Responses / Counters in IA(IBC)579/CHE/2022 in CP/1307/IB/2018 and accordingly, grants the same. On receipt of the Reply / Response / Counter of the Contesting Respondents (who has entered appearance), it is open to the Appellant / Liquidator to file Rejoinder, if any, through E-filing as well as through Hard Copy and to serve a copy of the same to the other side within one week, thereafter. Besides this, the other Respondents for whom the Notices were ordered by the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) in the Impugned Order dated 03.06.2022, will also complete their Pleadings within seventeen days from Today and thereafter, the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) is to take up the matter for Final Hearing and to pass Orders on merits - Appeal disposed off.
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2022 (7) TMI 100
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The transactions between the parties giving rise to this operational debt have not been denied or disputed. The only averment in the reply affidavit is that the Corporate Debtor was negotiating with the Operational Creditor for returning of unused lining cloths, which was in good condition and a request to appropriate the value of the returned goods against the claim of the principal amount of Rs.5,33,520/-. The Corporate Debtor has further mentioned that a request was made to the Operational Creditor to waive the interest. The Corporate Debtor has not raised any other defence which could help the Corporate Debtor. On the other hand, the Operational Creditor has been able to prove the operational debt and the default. Even the Demand Notice has been duly served on the Corporate Debtor, which has not been responded to giving rise to the presumption that the amount claimed by the Operational Creditor is acknowledged and admitted by the Corporate Debtor. It further indicates and tentamounts to the inability and incapability of the Corporate Debtor to pay off its outstanding operational debt to the Operational Creditor. Application admitted - moratorium declared.
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2022 (7) TMI 99
Seeking eviction of T-RMC Private Limited from the land/premises of the Corporate Debtor - seeking eviction on the ground that the Corporate Debtor had entered into purported tenancy agreements in favour of T-RMC at a grossly undervalued monthly rent of Rs.55,000/- to defraud the secured creditors and to create third party interest after issuance of Notice under SARFAESI by the Secured Credito r - HELD THAT:- It is ordered that the T-RMC Private Limited and other entities, if there be any, is directed to remove its establishment along with all its employees, staffs, officers, workmen engaged by them including all its machineries from the subject land/ premises of CEPL within 30 days from the date of approval of the Resolution Plan and handover vacant peaceful possession of the land/premises to the Resolution Applicant - It is further directed that the Resolution Applicant shall not be in any manner liable to take any responsibility and/or liability in respect of the said T-RMC including its suppliers / contractors / vendors / employees / workers / staffs or any other entities whatsoever. It is further directed that the Resolution Applicant shall not be in any manner liable to take any responsibility and/or liability in respect of the said T-RMC including its suppliers / contractors / vendors / employees / workers / staffs or any other entities whatsoever. Though the Valuation Report shows that the fair rent for the subject land/premises of the Corporate Debtor should be Rs.4.85 lakh but for the ends of justice, it is ordered that the said T-RMC shall make a further payment to the Corporate Debtor at the rate of Rs.2,00,000/- per month to be calculated from the date of creation of such tenancy in its favour till the date of handing over peaceful vacant possession of the land to the Resolution Applicant within the period stipulated above. In the event of failure to make such payment within the stipulated period, the Corporate Debtor and/or the Resolution Applicant shall be at liberty to claim and realise mesne profit from T-RMC at such rate as may be reasonably decided by the Corporate Debtor and/or the Resolution Applicant. Application allowed. Though the Valuation Report shows that the fair rent for the subject land/premises of the Corporate Debtor should be Rs.4.85 lakh but for the ends of justice, it is ordered that the said T-RMC shall make a further payment to the Corporate Debtor at the rate of Rs.2,00,000/- per month to be calculated from the date of creation of such tenancy in its favour till the date of handing over peaceful vacant possession of the land to the Resolution Applicant within the period stipulated - application allowed.
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2022 (7) TMI 98
Liquidation of Corporate Debtor - Section 33 of IBC - HELD THAT:- It is submitted that the CoC in its 4th meeting held on 13.08.2020 has resolved to appoint the present RP i.e. Mr. Atul Mittal, Registration No. IBBI/IPA- 001/IP-P00439/2017-2018/10762 as liquidator and he has filed his consent in Annexure-K. In view of the satisfaction of the conditions provided under Section 33 of the Code, the Corporate Debtor i.e. M/s Glister Hospitality Gurgaon Private Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code. The Corporate debtor is liquidated with immediate effect in the manner provided under Chapter III Part II of the IBC 2016 - application allowed.
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2022 (7) TMI 97
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - whether the demand notice in Form 3 dated 05.10.2019 was properly served? - HELD THAT:- The petitioner has placed a tracking report, whereunder it was stated that the registered post was delivered to the corporate debtor. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that respondentcorporate debtor in its reply has admitted that its liability and inability to pay the debt. Moreover, petitioner has appended affidavit u/s 9(3)(b) stating that corporate debtor has not issued any notice or raised any dispute regarding the debt for which the present petition has been filed by the operational creditor. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 09.12.2019 vide Diary No.6959 Whereas the date of default is 14.12.2016, therefore, this Adjudicating Authority finds that this application has been filed within limitation. Apart liability of debt is admitted by respondent-corporate debtor. In the present petition all the aforesaid requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition is admitted - moratorium declared.
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2022 (7) TMI 96
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Admittedly, from the Petition itself it is seen that the date of default is 19 January2007, admittedly again; no payment has been received by the Petitioner after 19 January 2007. The demand notice is dated 09 September 2019 - The Operational Creditor claims that this act is the triggering point for the date of default. However, we do not accept this contention for the reason that nonpayment of the Commercial Tax withheld in terms of the Memorandum of Understanding as agreed between the parties cannot constitute an Operational Debt within the meaning of section 5(21) of the Code. The submissions by the Operational Creditor reflect its intention,i.e., to seek recovery of its dues under the Code. Nevertheless, the rudimentary principle behind the enactment of the Code isto help the distressed Corporate Debtor to stand back on its feet, and not to make this Adjudicating Authority wear the cap of a recovery court. Further, the vakalatnama filed by the Operational Creditor is also not proper, though this is not fatal to the petition itself. Petition dismissed.
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2022 (7) TMI 95
Maintainability of application - objection of non-applicant - HELD THAT:- Hon ble NCLAT s decision in the matter of SREI Infrastructure Finance Ltd v. Right Tower Pvt. Ltd [ 2018 (2) TMI 1838 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], is referred, wherein, while upholding the right of any person to intervene, it was held that any person may intervene any may bring the facts to the notice of the Adjudicating Authority. After perusal of the contents of this application, documents on record, objections of non-applicant thereto and position of law, it can be opined that there is material present, to allow intervention of the applicant and accordingly, the instant Application is allowed to the extent of intervention by applicant. Petition disposed off.
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2022 (7) TMI 94
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - HELD THAT:- The petitioner has placed a tracking report, whereunder it was stated that the speed post was delivered to the corporate debtor. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that respondent-corporate debtor in its reply has admitted its liability and also the inability to pay the said debt. Moreover, petitioner has appended affidavit u/s. 9(3)(b) stating that corporate debtor has not issued any notice or raised any dispute regarding the debt for which the present petition has been filed by the operational creditor. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 15.11.2019 vide Diary No. 6370. Whereas the due date is a day prior to the date of default i.e. 02.09.2019. Therefore, this Adjudicating Authority finds that this application has been filed within limitation. As noted in paragraph above this liability of debt is admitted by the respondent-corporate debtor. In the present petition all the requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. Petition admitted - moratorium declared.
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2022 (7) TMI 93
Application seeking exit from an agreement entered into with the Corporate Debtor by the Applicant prior to the initiation of CIRP - HELD THAT:- Admittedly, CIRP proceedings were initiated and moratorium was declared against the Corporate Debtor on 19.02.2020. Further, a Resolution Plan has been approved by the CoC and the I.A. filed by the Resolution Professional seeking approval of the said Resolution Plan from this Adjudicating Authority was heard and orders were reserved therein. At this stage, no orders can be passed in the instant Application seeking exit from an agreement entered into with the Corporate Debtor by the Applicant prior to the initiation of CIRP. Moreover, this Adjudicating Authority in its summary adjudication cannot adjudicate the rights and obligations of a Joint Venture Agreement and can give any conclusive finding. Application dismissed.
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Service Tax
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2022 (7) TMI 92
Levy of penalty u/s 78 of Finance Act - non-discharge of service Tax on due dates - Service Tax with interest paid before the issuance of the show cause notice - suppression of facts or not - issuance of SCN under rule 73 (3) of FA - HELD THAT:- It is found that this is not the case where the appellant have supressed the transaction of services whereas, they have issued the legitimate invoices wherein they have shown the Service Tax. This is only case of delayed payment of Service Tax which was subsequently paid on 1st December, 2005 along with interest. From Section 73(3) it is clear that if the assesse on his own ascertainment or on pointed out by the department pay the required Service Tax along with interest then department is not supposed to issue any show cause notice, consequently, no penalty can be imposed - In the present case, the appellant have admittedly paid the Service Tax on 1st December, 2005 along with interest, thereafter, the show cause notice was issued on 12.03.2017. Since, the appellant had already paid the Service Tax along with interest without contesting the same their case clearly falls under Section 73 (3) of Finance Act, 1994. The penalty imposed under Section 78 is set aside - Appeal allowed - decided in favor of appellant.
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2022 (7) TMI 91
Refund of CENVAT credit - rejection on the ground that exporter is an intermediary and place of provision of service is India - N/N. 27/2012-CE(NT) dated 18.06.2012 - HELD THAT:- In view of the judgments referred in the preceding paragraph namely EASTERN PACIFIC SHIPPING (INDIA) P. LTD. VERSUS COMMR. OF CGST, MUMBAI EAST [ 2019 (10) TMI 1324 - CESTAT MUMBAI ] that had set the ratio on the issue that seafarer s recruitment service provider, who processes the entire selection, medical test, insurance, transportation, training etc. to the overseas client and received convertible foreign exchange, is not an intermediary. Appellant is entitled to get the refund of CENVAT credit claimed by it from the period from October, 2016 to June, 2017 amounting to Rs.12,01,918/- alongwith applicable interest and the Respondent-Department is directed to pay the same within two months of communication of this order - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (7) TMI 90
Remission of duty - Rejection of petitioner s application for remission of excise duty - export goods that got destroyed in fire at the Container Warehousing Corporation Ltd. (CWC) warehouse - HELD THAT:- There was nothing to prevent the Central legislation from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to that afterwards whether it will be consumed, destroyed or given away. That is not the case. Excise duty is collected when the commodity leaves the factory for the first time and also because the duty is intended to be an indirect duty, which the manufacturer or producer is to pass on to the ultimate consumer, which he could not do if the commodity had, for example upon destroyed in the factory itself. It is for that reason, the Act and the Rules framed thereunder provide for satisfactorily accounting for, in case the goods are not exported etc. and the goods are also allowed to be removed under a bond. If we have to accept what Mr. Mishra submits, the Act and the Rules would not have provided for such eventualities in case goods are destroyed before its removal from the place of manufacturer or provide for place of removal to mean a warehouse or any other place where the goods are permitted to be deposited without payment of duty or the bond would not provide for due arrival of the goods at the place of export and their export therefrom under custom supervision. The goods have been satisfactorily accounted for and petitioner is entitled to the Certificate granting remission of excise duty for the goods, destroyed in the fire - Petition disposed off.
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2022 (7) TMI 89
Adjustment of amount of the duty demanded against the EOU unit - the DTA unit and the EOU unit - goods manufactured in EOU sold in DTA unit - there is only single legal entity (i.e. Petitioner-company) who merely possesses separate registrations - double taxation or not - HELD THAT:- The petitioner should pay the entire amount and claim refund of Rs.7,31,58,191/-. According to respondent no.2, the DTA unit and the EOU unit are independent of each other and, therefore, petitioner cannot claim adjustment / credit for the amount, which was paid to the DTA unit for the liability of the EOU. At the same time, in the impugned order, respondent no.2 says that the duty liability under Excise Act devolves on manufacturer of goods. In our view, the manufacturer of goods is petitioner as a corporate legal entity. Petitioner was having two separate units, one for manufacturing the goods for exports without payment of excise duty and one for domestic consumption to the DTA - It can be accepted that both are separate units and separate entities. It is not disputed anywhere or denied that petitioner has not paid Rs.7,31,58,191/- but according to respondent no.2, the EOU was not entitled to discharge the duty payable of DTA clearances from Cenvat credit, but the duty discharge by DTA unit in this case was substantially from Cenvat credit account and only partly from the current account. The stand of respondent no.2 cannot be accepted that even though petitioner has already paid Rs.7,31,58,191/- through the DTA unit, the amount should once again be paid through the EOU unit and petitioner should apply for a refund of the amount paid through the DTA unit. If petitioner is compelled to do that, it would only mean that petitioner has to pay the said amount twice and then claim refund. Abatement on account of applicability of Notification No.23 of 2003 - HELD THAT:- On the first point of suspension, in the final order itself, respondent no.2 admits that the DTA permission granted was not yet cancelled for the amended period and only a show-cause notice has been issued proposing to cancel the DTA and show-cause notice was still pending. In the petition also there is an averment that the show-cause notice was still pending. Therefore, that could not have been the basis to deny the abatement of Rs.36,80,850/-. Achievement of positive NFE - HELD THAT:- Respondent no.5 through one P. S. Raman, Deputy Development Commissioner, has filed an affidavit affirmed on 5th October, 2012, in which there is a positive averment that appellant had achieved positive NFE as per the details submitted in the DTA Sale. It is also stated that DTA Sale permissions were issued to the unit only after ascertaining the fact that the unit has achieved positive NFE. Therefore, petitioner will be entitled to the abatement on account of applicability of Notification No.23 of 2003. Petition disposed off.
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2022 (7) TMI 88
Short paid duty by firm - liability of the partners to make good such shot paid duty - joint and several liability - two / three partnership firms with common partners (or relatives of partners) - Seeking direction to respondents to accept the form of declaration and to undertake process of verification by designated committee - seeking direction to issue statement under sub-section (1) and (4) of Section 127 of the Act and issue discharge certificate - HELD THAT:- Indisputably one composite show cause notice was issued in the case on hand. The writ applicant cannot be held liable for the alleged duty short paid by M/s Sunshine Corporation. In the show cause notice nowhere it has been stated that M/s Sunshine Paints (writ applicant) is jointly and severally liable for the alleged duty short paid by M/s Sunshine Corporation. The reason is not far to seek. The liability alleged to have been incurred by M/s Sunshine Corporation is for the period of F.Y. 2001 to 2002, 2002 to 2003 and 2003 to 2004 during which the writ applicant was not in existence at all. The partners of the writ applicant firm cannot be made liable to make good the duty alleged to have been short paid by M/s Sunshine Corporation. In other words M/s Sunshine Corporation cannot be considered as a co-noticee for the purpose of the said scheme. A co-noticee is the one who is liable for the very same amount along with the others. Such is not the case on hand. When the notice segregates the liability and the demand is made separately from M/s Sunshine Corporation the reason given for rejecting the declaration would not be sustainable in law. Whether the writ applicant can be treated as co-noticee? - HELD THAT:- It is apparent that the Sunshine Corporation is being considered as principal noticee whereas M/s. Sunshine Paints (writ applicant) has been considered as the co-noticee for the sole reason that the writ applicant took over the business of M/s. Sunshine Corporation. As noted, for the period during which M/s. Sunshine Corporation incurred liability writ applicant firm was not even in existence and in such circumstances, the writ applicant cannot be treated as a co-noticee. Bombay High Court in the case of THOUGHT BLURB VERSUS UNION OF INDIA AND ORS. [ 2020 (10) TMI 1135 - BOMBAY HIGH COURT] after examining the budget speech of the Hon'ble Finance Minister while introducing the scheme as well as considering the statement and objects of the scheme and the views expressed by the Board held that a liberal view is required to be taken to make the scheme successful - Similarly, in JYOTI PLASTIC WORKS PVT. LTD., JAI PLASTICS, N.D. PATEL VERSUS UNION OF INDIA [ 2020 (11) TMI 156 - BOMBAY HIGH COURT] , a Division Bench of Bombay High Court took note of the objective of the scheme and thereafter took the view that a reasonable and pragmatic approach has to be adopted. The decision of the committee dated 11.2.2020 is set aside and the matter remitted to the committee (respondent No.2) to take a fresh decision in accordance with law after giving due opportunity of hearing to the writ applicant by treating its declaration under the litigation category as a valid declaration - matter on remand.
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2022 (7) TMI 87
CENVAT Credit - input services - services provided to the third party on free of cost basis - HELD THAT:- The same issue in the appellant's own case has been decided by this Tribunal in HITACHI HOME AND LIFE SOLUTIONS INDIA LTD. AND JOHNSON CONTROL HITACHI AIR CONDITIONING INDIA LTD VERSUS C.C.E. S.T. -AHMEDABAD-III [ 2022 (4) TMI 130 - CESTAT AHMEDABAD] which is for the earlier period and this case is for the subsequent period, except the period there is no change in the facts and circumstances of the case - It was held in the case that the credit on warranty service provided free of cost during the warranty period through third parties cannot be denied. Credit allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (7) TMI 86
Validity of search and seizure proceedings - whether the inspection and investigation have been conducted by different officers in a wrong manner, resulting in misunderstanding of facts and misinterpretation of provisions? - Section 67 of the TNGST Act - HELD THAT:- It is seen that there was a surprise inspection in the petitioner's showrooms, Office and Godown from 14.09.2021 to 16.09.2021 and certain defects were pointed out and thereafter, explanation sought for. Though the petitioner had sent their objections and their authorized representative/Chartered Accountant appeared before the respondent, but they were unable to give proper explanation with supporting documents. This is a merit of the case. It is seen that after issuance of notice in Form DRC-01A, dated 06.12.2021, the respondent has issued Form GST DRC-01A. Thereafter, if the petitioner has got any objection and not paid tax as ascertained, a show cause notice has to be issued under Section 74(1) of the TNGST Act and after receiving objections, giving personal hearing, the assessment order ought to have been finalised. In this case, procedure not followed. The assessment orders are hereby quashed. The consequential recovery notice, dated 10.06.2022, issued to the Branch Manager, Axis Bank, is also hereby quashed. The respondent is directed to issue notice after following the procedures prescribed under the TNGST Act and issue show cause notice and after giving an opportunity to file their objections, pass appropriate orders on merits and in accordance with law. Petition allowed.
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Indian Laws
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2022 (7) TMI 85
Dishonor of Cheque - legally enforceable debt and liability or not - raising of presumption under Sections 118 and 139 of the Negotiable Instruments Act - HELD THAT:- The appellant/complainant himself admits that the cheque was issued for the purpose of securing job in Midhani company which is not by any legal means. In the said circumstances, when the cheque was drawn not for the purpose of securing any debt or liability, but pursuant to an illegal contract of an agreement entered into between the complainant and the accused, it cannot be said that it is a legally enforceable debt and such contracts/agreements are prohibited under law. For the said reason, as the cheque drawn was not in support of any debt or liability, the same cannot be legally enforceable. The argument of the learned counsel for the appellant that the case be remanded for denovo trial cannot be entertained for the reason of the appellant not making out any grounds to remand the matter for fresh trial. There is no illegality either procedural or otherwise committed by the learned Magistrate to remand the matter back for fresh trial as urged by the appellant/complainant. Appeal dismissed.
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2022 (7) TMI 84
Dishonor of Cheque - preponderance of probability - rebuttal of presumption - section 139 of NI Act - HELD THAT:- This Court, on analysing the documents and depositions, find that the Trial Court has appreciated the law and evidence properly and applied his mind judiciously to arrive at the finding. The reasoning given by the Trial Court appeals both to common sense and law. The presumption under Section 139 of the Negotiable Instruments Act, 1881 is not an irrebuttable presumption, it is sufficient if the accused rebut the presumption by preponderance of probability. In this case, the accused through the agreement dated 22/08/2007 entered between him and the complainant has established that the money alleged to have been paid by the complainant was towards the screening right of the film THE HOST and for the 10% commission, it is not a loan as alleged in the complaint. The Trial Court for reasons recorded, had held that the alleged letter of guarantee dated 09/09/2007 is shrouded with suspicious and the witnesses contradictory version about its execution render this document unreliable. Shockingly, the Appellate Court has not even examined the documents but mechanically held that the accused is guilty of the offence under Section 138 of Negotiable Instruments Act, in the light of the admission of the signature in the cheques and in view of the letter of guarantee dated 09/09/2007. The perversity in the order of the Appellate Court is explicitly exhibited by not appreciating the evidence and apply the correct law - Application allowed.
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2022 (7) TMI 83
Dishonor of Cheque - Petitioner submitted that the complaint preferred by the first Respondent/Complainant is not maintainable against the Petitioner herein who is arrayed as Accused No.5 who had resigned as early as on 24.01.2012 and there is no specific averments against the Petitioner/Accused No.5 anywhere in the complaint regarding the overt act of the Petitioner - Section 138 of NI Act - HELD THAT:- This Petition cannot be allowed. What had been raised by the Petitioner is treated as valuable defence available to the Petitioner before the trial Court and not to invoke the powers under Section 482 of Cr.P.C. based on the print out taken from the Registrar of Companies which is not an authenticated copy. If this Petition is allowed, it would amount to miscarriage of justice by placing reliance on some copies furnished by the learned Counsel for the Petitioner which is not an authenticated copy.
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2022 (7) TMI 81
Removal of encroachment made in the waterbody - service of notice - HELD THAT:- Though notice is expected to be served on the respondents 5 to 7, considering the fact that the encroachment is spread over substantial portion of the waterbody at the instance of several individuals and the nature of the order going to be passed by this Court, no prior notice to the respondents 5 to 6 is required. This Court directs the fourth respondent to consider the representations of the petitioner dated 01.04.2022 and 30.05.2022 and initiate appropriate action under the provisions of the Tamil Nadu Protection of Tanks and Eviction of Encroachment Act, 2007 and the Rules framed thereunder - Petition disposed off.
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