TMI Tax Updates - e-Newsletter
July 9, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA Service Tax Wealth tax Indian Laws

Articles

1. Healthcare Industry under GST Net – Withdrawal of GST Exemption

   By: Chitresh Gupta

2. Delay in Filing of Appeal beyond period of 1 month condoned as Cancellation of Registration would affect the livelihood and violate Article 21 of Constitution

   By: Rachit Agarwal

News

1. Income Tax Department conducts searches on Pharmaceutical Manufacturers and Distributors in Haryana and Delhi-NCR

2. Union Finance Minister Smt. Nirmala Sitharaman chairs meeting with heads of Public Sector Banks and Regional Rural Banks (RRBs)

Notifications

Central Excise

1. G.S.R. 523 (E) - dated 7-7-2022 - CE

Corrigendum - Notification No. 08/2022-Central Excise, dated the 30th June, 2022

Customs

2. 58/2022 - dated 7-7-2022 - Cus (NT)

Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 51/2022-Customs(N.T.), dated 16 June, 2022

DGFT

3. 20/2015-2020 - dated 7-7-2022 - FTP

Syncing of ITC (HS), 2022- Schedule-1 (Import Policy) with the Finance Act, 2022 (No. 6 of 2022) dated 30.03.2022

GST - States

4. GST/2022-23/F.No. 509/68/State Tax - dated 6-7-2022 - Uttar Pradesh SGST

Seek to exempt taxpayers having AATO upto RS 2 crore from the requirement of furnishing return for FY 2021-22

Circulars / Instructions / Orders

FEMA

1. 09 - dated 8-7-2022

Asian Clearing Union (ACU) Mechanism – Indo-Sri Lanka trade

Highlights / Catch Notes

GST

• Withdrawal of Circular No. 106/25/2019-GST Clarifies Rule 95A on Tax Refunds for Airport Retail Outlets Under CGST.

  Circulars : Withdrawal of Circular No. 106/25/2019-GST dated 29.06.2019 - certain clarifications were given in relation to rule 95A - refund of taxes paid on inward supply of indigenous goods by retail outlets established at departure area of international airport - CGST - Circulars
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• New CGST Guidance Simplifies Refund Process for Unutilized ITC on Electricity Exports with Step-by-Step Instructions.

  Circulars : Manner of filing refund of unutilized ITC on account of export of electricity - CGST - Circulars
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• Procedure for Returning Erroneous GST Refunds: Re-Credit via FORM GST PMT-03A per CGST Circulars.

  Circulars : Return (pay back) of erroneous refund - Prescribing manner of re-credit in electronic credit ledger using FORM GST PMT-03A - CGST - Circulars
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• CGST Rules 2022 Amended: Streamlined Processes and Enhanced Compliance for Taxpayers Announced; Specific Changes Yet to be Detailed.

  Notifications : Amendments to various rules and forms - Central Goods and Services Tax (Amendment) Rules, 2022 - Notification
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• Rule 96 Changes: New Sub-Rules Introduced to Address Mismatch in GSTR-3B and Shipping Bills for Tax Refunds.

  Act-Rules : Refund - mismatch in case of GSTR-3B and shipping Bill - Prior verification of credentials of the exporter - Provision and manner of withholding of refund - Refund of integrated tax paid on goods or services exported out of India - Sub-Rules (1) and (2) amended - Sub-Rules (5), (6) and (7) omitted - New Sub-Rules (5A), (5B) and (5C) inserted - Rule 96 of the Central Goods and Services Tax Rules, 2017
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• Rule 95A Deleted: No More Tax Refunds for Retail Outlets at International Airport Departure Areas Retroactively.

  Act-Rules : Rule 95A deleted with retrospective effect - Refund of taxes to the retail outlets established in departure area of an international Airport beyond immigration counters making tax free supply to an outgoing international tourist (Omitted) - Rule 95A of the Central Goods and Services Tax Rules, 2017
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• Amendments to CGST Rules 2017: New Procedures for SEZ Refunds, Exporting Electricity, and Inverted Duty Structure in Rule 89.

  Act-Rules : Refund application - Specified person in case of SEZ - a statement in case of export of electricity - determination of value of goods exported out of India - formula for refund on account of inverted duty structure - Sub-Rule (1), (2), (4) and (5) amended - Application for refund of tax, interest, penalty, fees or any other amount - Rule 89 of the Central Goods and Services Tax Rules, 2017
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• Rule 88B Amends GST Interest Calculation Method for Delayed Tax Payments, Applied Retrospectively to Enhance Compliance.

  Act-Rules : Manner of calculating interest on delayed payment of tax - Fresh set of rule introduced with retrospective effect - Rule 88B of the Central Goods and Services Tax Rules, 2017
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• CGST Rules 2017: Amendments to Rule 87 Enable Tax Payment via UPI, IMPS & Cash Ledger Transfers for Better Flexibility.

  Act-Rules : Facility of deposit of tax through UPI / IMPS added - Transfer of Cash Balance in ELC to distinct person - Electronic Cash Ledger - Sub-Rule (3), (5) amended - New sub-rule (14) inserted - Rule 87 of the Central Goods and Services Tax Rules, 2017
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• Erroneous GST refunds require repayment with interest and penalties; re-credited to Electronic Credit Ledger u/r 86(4B).

  Act-Rules : Return (re-payment) of erroneous refund with interest and penalty, if applicable - the same shall be re-credited to the Electronic Credit Ledger - New Sub-Rule (4B) - Rule 86 of the Central Goods and Services Tax Rules, 2017
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• GST Update: Duty Credit Scrips Now Part of Exempt Supplies for Input Tax Credit Calculations u/r 43.

  Act-Rules : Exclusions from the aggregate value of exempt supplies - "value of supply of Duty Credit Scrips" added to the list - Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases - Rule 43 of the Central Goods and Services Tax Rules, 2017
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• Automatic GST Registration Reinstatement When Pending Returns Are Filed u/r 21A(4) of CGST Rules 2017.

  Act-Rules : Auto revocation of Suspension of registration on furnishing of all the pending returns - Second proviso to Sub-Rule(4) - Rule 21A of the Central Goods and Services Tax Rules, 2017
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• Commissioner's Observations on Transitional Credit Valid, No Current Proceedings Against Petitioner, Future Actions Not Prejudiced.

  Case-Laws - HC : Validity of observations made by the Commissioner, C.G.S.T. & CX regarding Transitional Credit - however, no proceeding for wrongful availment of Input Tax Credit has been initiated - This could not prejudice the case of the petitioner in case a fresh proceeding is initiated on that ground. - HC
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• High Court Overturns Penalty for Vehicle Detained Due to Human Error, Citing Section 107(11.

  Case-Laws - HC : Detention of goods alongwith vehicle - levy of penalty - Movement of the vehicle on the wrong direction - revenue considered the same as it was moving without valid documents - there may be chances of diversion that might have taken place due to human error and it cannot be definitely concluded that diversion was deliberate more so when the driver of the vehicle has filed an affidavit explaining the reasons and the intended purchasers have also confirmed that they were supposed to receive the said goods. - It is a fit case to set aside the impugned order passed under Section 107(11) - HC
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Income Tax

• ITAT Third Member Rules No Evidence of Cash Transactions u/s 40A(3), Distinguishing Prior Gujarat High Court Decision.

  Case-Laws - HC : Addition u/s 40A(3) - payment in cash - purchase of stock in trade - Decision of the Third Member of ITAT - The decision of HC [2013 (12) TMI 1731 - GUJARAT HIGH COURT], relied upon the revenue is distinguished as the case on hand is in a better footing as the revenue does not state that any cash transaction took place. - HC
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• Court Rules TDS Applies u/s 194C for Composite Contract on Passenger Rolling Stock Supply, Confirms ITAT Decision.

  Case-Laws - HC : TDS u/s 194C OR 194J - assessee entered into a Contract with a consortium - Whether contract can be segregated to attract TDS? - the dominant purpose of the Contract is supply of the passenger rolling stock. Thus, having taken a specific stand before the ITAT that the Contracts is a composite one, the Revenue cannot be permitted to take a contradictory stand before this Court - HC
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• Court Rules Transferor Not Taxed for Share Losses u/s 147; Liability Falls on Recipients Per Amendments.

  Case-Laws - HC : Reopening of assessment u/s 147 - loss on transactions of sale and purchase of shares - even otherwise the assessee being transferor of shares cannot be subjected to tax in the instant case, more particularly, considering the amendment brought by the Legislation on the statute book in the form of Sections 50CA and 56(2)(x)of the Act, which is applicable with effect from 01.04.2018 and 01.04.2017 respectively. The conjoint reading of both sections, clearly provides that the tax liability if any, arise in such kind of transactions will be applicable in the hands of recipients and no liability can be imposed on the transferor of shares. - HC
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• Court Rules Section 50C Inapplicable to Leasehold Rights, Assessee Wins Property Transfer Value Dispute Against Tax Department.

  Case-Laws - AT : Capital gain in respect of sale of only one property - addition u/s 50C - assessee itself had leasehold rights in the said property and hence in instant facts, the assessee cannot transfer/confer ownership rights in the said property in favour of the tenant - The Department has only questioned the transfer value in respect of one single property while accepting the sale/transfer value respect of all the other properties. Therefore, considering the above facts and the consistent position taken by various Courts/Tribunals on the issue of applicability of section 50C of the Act on transfer of leasehold rights in the property, we allow the appeal of the assessee. - AT
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• Ambiguity in Notice u/s 274 Voids Penalty for Concealed Income u/s 271(1)(c) of Income Tax Act.

  Case-Laws - AT : Penalty u/s 271(1)(c) - As a matter of fact the notice issued u/s 274 read with section 271 of the Act itself was ambiguous as it did not make it clear as to under which limb section of 271(1)(c) of the Act the notice was issued. On the other hand in the penalty order the ld AO has coined her own term “concealed income by furnishing inaccurate particulars.” - Thus ambiguity in issue of notice and findings make the impugned order of levying penalty void ab initio - AT
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• High Court Confirms Penalty for Defaults u/ss 269SS and 269T, Overturning CIT(A) Decision on Debt Assignment Entries.

  Case-Laws - AT : Penalty imposed u/s 271D & 271E - default u/s 269SS & 269T - CIT(A) deleted the penalty holding that general entries leading to assignment of debt does not attract penalty under section 271D and 271 - following the decision of High court, levy of penalty confirmed - The finding of the Ld. CIT(A) set aside - AT
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• Pr.CIT's Order for Further Investigation on Deductions Deemed Unjustifiable u/s 263; Lacked Legal Merit.

  Case-Laws - AT : Revision u/s 263 - claim of deduction of expenditure and depreciation but no revenue has been earned - Pr.CIT has directed the AO to make further enquiry on the admissibility of expenditure - Except for an endeavour to embark upon a fishing & roving enquiry, there is no merit in the order passed by ld. Pr.CIT. In our considered opinion, the basic premise on which Pr.CIT has invoked his jurisdiction u/s 263 is legally not sustainable. - AT
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Customs

• Legal Challenge on Jurisdiction of Pr. ADG to Issue SCN Deemed Non-Maintainable Without Contesting Notification No.4/21-Customs.

  Case-Laws - HC : Maintainability of application - Jurisdiction - power of Pr. ADG, DRI to issue SCN - In the present case, the Board has issued instruction No.4/2021 dated 17.03.2021, to all adjudication authorities of DRI/ Customs for sending all pending adjudication of show cause notice cases to call book - unless the petitioner challenges the validity of notification No.4/21 – Customs dated 17.03.2021, the present petition is not maintainable challenging the consequential orders issued by the respondent i.e. Annexure P/1. - HC
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• Customs Broker's License Revoked, Security Deposit Forfeited for Indirect Dealings with Exporters; Appeal Allowed.

  Case-Laws - AT : Revocation of the Custom Broker License - forfeiture of security deposit - imposition of penalty - It is found that customs broker does not have unlimited authority to inquire and check the contents of the official documents. The only reason given in the order is that the appellant did not have direct contact with the exporters and therefore, the charge has been upheld - appeal allowed - AT
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Indian Laws

• Cheque Dishonored for Signature Mismatch: Legal Action u/s 138 NI Act and Section 420 IPC Explored.

  Case-Laws - HC : Dishonor of Cheque - dishonor because of mismatch of the drawer’s signature - adding colour of criminality to an issue which involves partial non-performance of business obligations - in case of offence relating to dishonour of cheque, there is no bar to proceed simultaneously under Section 138 of the Negotiable Instruments Act as well as under Section 420 of the Indian Penal Code. - The mens rea behind issuing such cheque will have to be determined based on the material to be collected during the course of trial - it is for the accused to explain as to how the cheque in question which pertained to his account bearing his incomplete signature reached in the possession of the complainant. Fair trial includes fair and proper opportunities allowed by law to prove innocence of the petitioner. - HC
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Service Tax

• Court Examines Tax Liability Statement Validity Under SVLDRS 3; No Refunds for Overpayments Per Section 130(2) of 2019 Act.

  Case-Laws - HC : Validity of statement issued in prescribed form SVLDRS 3 - tax liability that was due and payable - setting off of amounts already paid towards tax - if a declarant has made a pre-deposit or other deposits which exceed the amount payable, as indicated in the statement issued by the designated committee, the said amount shall not be refunded as per provisions of sub-section (2) of section 130 of 2019 Act. - the pre-deposit made by the petitioner is less than the amount stated in the impugned statement and therefore, in this matter, the petitioner steers clear of the aforesaid provision - the construction of provisions of section 123 (d) cannot enure to the benefit of the revenue. - HC
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• High Court Grants Refund of Service Tax for Export Services u/r 6A; Limitation Grounds Invalid.

  Case-Laws - HC : Refund of amounts paid as Service Tax - r In view of the admitted fact that the services rendered by the assessee satisfy all conditions of Rule 6A of the Service Tax Rules, 1994 and the services provided by it are export services, it is entitled for refund of the tax. In view of authority in the case of Shiv Shanker Dal Mills, the refund cannot be denied on the ground of limitation - HC
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Central Excise

• Withdrawal of Circular on CENVAT Credit for Bagasse and Waste in Manufacturing Alters Central Excise Treatment.

  Circulars : Reversal of CENVAT Credit - bagasse and similar other by-products or waste - Excisability of waste/ residue arising during the process of manufacture - Withdrawal of Circular No. 1027/15/2016-CX dated 25.04.2016 - Circular
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Case Laws:

• GST

• 2022 (7) TMI 345
  Seeking grant of Anticipatory Bail - petitioner was granted interim anticipatory bail by the Additional Sessions Judge and he had joined investigation, however, as per second status report, it was stated that the petitioner has not joined investigation and not cooperating in investigation, therefore, his bail application was dismissed - fraud of tax evasion of more than Rs. 4 crores - HELD THAT:- Without making any comment on the merits of the case, considering the serious allegations against the petitioner, this Court finds no ground to grant him the concession of anticipatory bail. The present petition is dismissed.

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• 2022 (7) TMI 344
  Attachment of Bank Accounts of petitioner - amended provisions of Section 83 of the CGST Act were not available when the attachment order was passed - proceeding under Section 74 of CGST was pending as on the date of attachment or not - applicability of Section 83 of CGST Act as substituted by the Finance Act, 2021, which has come into force w.e.f. 01.01.2022 - HELD THAT:- In the impugned order dated 19.05.2022, the respondent no.2 has not mentioned at all that when proceeding under Section 74 of CGST Act has been initiated against the petitioner. Thus, prima facie the impugned order appears to be an abuse of the power by the respondent no.2 and an attempt to over reach the judgment of this Court in VARUN GUPTA VERSUS UNION OF INDIA AND ANOTHER [ 2022 (5) TMI 789 - ALLAHABAD HIGH COURT] where it was held that as on the date of attachment order dated 22.10.2021, there was no notice under Section 74 of the CGST Act. Consequently, the attachment order dated 22.10.2021 itself was without jurisdiction and consequently, it is not sustainable. Despite time granted by order dated 15.06.2022, the respondents have not filed counter affidavit - three more days granted and no more time will further be granted to the respondents to file counter affidavit annexing therewith proof of pendency of proceedings under Sections 67 and 74 of CGST Act - Put up as a fresh case on 08.07.2022 at 10:00 A.M.

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• 2022 (7) TMI 343
  Seeking a direction to the first respondent to consider and pass order on the petition/application, within the time as stipulated by this Court - input tax credit - Section 140(5) of the Central Goods and Services Act, 2017 - HELD THAT:- If at all the petitioner is aggrieved and got merits and substance, he has to produce the relevant records and reply to the show cause notice, wherein he would be given a personal hearing, where he can appear along with the documents, satisfy the authorities. If the contention of the petitioner is reasonable, the same would be accepted, otherwise, further action it would be taken. The first respondent is directed to consider the petitioner s representation within a period of three weeks from the date of receipt of a copy of this order and inform the petitioner about the outcome of the same - the Writ Petition is disposed of.

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• 2022 (7) TMI 342
  Violation of principles of natural justice - no notice of personal hearing was received by the petitioner - demand u/s 73(2) of the Finance Act, 1994 and penalty of equivalent amount u/s 78 of the Finance Act, 1994 - HELD THAT:- It is found that intimation of personal hearing sent to the service provider i.e., the petitioner, was returned undelivered by the postal authorities. Following the same, respondent No.1 passed the impugned order on the basis of available materials. It would be in the interest of justice if the matter is remanded and petitioner is afforded an opportunity of hearing before confirmation of demand and imposition of penalty - Petition disposed off.

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• 2022 (7) TMI 341
  Validity of observations made by the Commissioner, C.G.S.T. CX regarding Transitional Credit - however, no proceeding for wrongful availment of Input Tax Credit has been initiated - Input tax credit - manpower supply services - service tax under forward charge and/or reverse charge mechanism - HELD THAT:- The observations made by the Commissioner, C.G.S.T. CX, Jamshedpur in his letter/order dated 31st March, 2021 (Annexure 8) towards disallowance of Transitional Credit to the tune of Rs.1,74,469/- is only incidental to the main subject of condonation of delay being considered by him in respect of entries in the books of account to be made up to the extended period of 30 days beyond 1st July, 2017, i.e. 31st July, 2017. The Commissioner, C.G.S.T., in fact, has admitted valid Transitional Credit of Rs. 1,73,989/-, but, in the absence of any proceeding contemplated under relevant provisions of the C.G.S.T. Act, the observations relating to disallowance of remaining amount of Transitional Cenvat Credit of Rs. 1,74,469/- against tax paid on 12th August, 2017 was uncalled for. This could not prejudice the case of the petitioner in case a fresh proceeding is initiated on that ground. Petition disposed off.

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• 2022 (7) TMI 340
  Detention of goods alongwith vehicle - levy of penalty - Movement of the vehicle on the wrong direction - revenue considered the same as it was moving without valid documents - HELD THAT:- Admittedly, the driver of the vehicle was carrying required E-way bills and tax invoices to deliver goods to Peenya Industrial area, Kalasipalyam and S.P.Road. The driver instead of taking a right turn at Hebbal junction and move towards Peenya Industrial area, he has taken a left turn and has moved towards Bommasandra Industrial area. The incident has happened at late night. Given the facts and circumstances of the case, there may be chances of diversion that might have taken place due to human error and it cannot be definitely concluded that diversion was deliberate more so when the driver of the vehicle has filed an affidavit explaining the reasons and the intended purchasers have also confirmed that they were supposed to receive the said goods. It is a fit case to set aside the impugned order passed under Section 107(11) of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017 and consequently, the impugned order passed under Section 129(3) of the Central Goods and Services Tax Act, 2017 - respondents are directed to release the vehicle and the goods detained pursuant to the said orders - Petition allowed.

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• Income Tax

• 2022 (7) TMI 339
  Addition u/s 40A(3) - payment in cash - purchase of stock in trade - Decision of the Third Member of ITAT - The decision of HC, relied upon the revenue distinguished - HELD THAT:- As Court had rendered a decision holding that cash payment exceeding prescribed limit would attract Section 40A(3) of the Act. Therefore, the said decision is distinguishable on facts. Learned Advocate appearing for the respondent/assessee placed reliance on the decision of the High Court of Gujarat in the case of CIT-III vs. Dinesh Kumar Chandmal Jain[ 2013 (12) TMI 1731 - GUJARAT HIGH COURT] - In the said case, the assessing officer found that the assessee had paid an amount of Rs.18.22 crores in cash to six parties and disallowed 20% of such payment under Section 40A(3). However, the assessing officer was not in a position to actually prove that payment was made in cash, and, therefore, the said disallowance was set aside by the tribunal and the order passed by the tribunal was confirmed by the Hon ble Division Bench in the case of Dinesh Kumar Chandmal Jain (supra). In fact, on facts, the case on hand is in a better footing as the revenue does not state that any cash transaction took place. Considering the facts and circumstances, we find that there is no perversity in the order passed the learned third member of the tribunal agreeing with the learned administrative member of the tribunal. - Decided against revenue.

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• 2022 (7) TMI 338
  Seeking release of funds from the attached bank account to meet the essential expenditure - Validity of Petition in view of provision u/s 132(9B) - forum shopping - Provisional attachment orders made under the provisions of FEMA - Petitioner seeking modification of the order passed by this Court by relying on the order [ 2022 (7) TMI 301 - DELHI HIGH COURT] passed by a learned Single Judge of this Court directing the Directorate of Enforcement to release a further amount of Rs. 25 crores in favour of the Petitioner to meet its essential expenditure as well as towards salaries of employees - HELD THAT:- As petitioner seriously refutes the contention of forum shopping . He states that WP(C) [ 2022 (7) TMI 301 - DELHI HIGH COURT] had been filed as it pertains to a different cause of action. He, however, admits that in view of the subsequent orders dated 16th June, 2022 under Section 281B of the Act passed by the Assessing Officer, being ACIT, Central Circle-25, New Delhi, the petitioner would need to file a fresh writ petition. This Court is of the view that as the impugned orders dated 17 th December, 2021 have expired on 17th June, 2022 due to operation of law, the present writ petition is infructuous. Accordingly, the present writ petition along with application is disposed of with liberty to the petitioner to file a fresh proceeding in accordance with law to challenge the orders dated 16th June, 2022 passed under Section 281B. It is clarified that this Court has not expressed any opinion on the merits of the controversy. The rights and contentions of all the parties are left open.

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• 2022 (7) TMI 337
  Reopening of assessment u/s 147 - Notice issued against a non-existent company - Scheme of amalgamation Conceived - HELD THAT:- Petitioner states that Income Tax Officer Ward No. 19(1), Delhi has issued a letter dated 27th May, 2022 to the Petitioner stating that the notices issued under Section 148 of the Act between 01st April, 2021 to 30th June, 2021 have been held by the Supreme Court in Union of India Ors. vs Ashish Agarwal, [ 2022 (5) TMI 240 - SUPREME COURT] to be show cause notices under Section 148A(b) of the Act and initiated fresh reassessment proceedings against the amalgamated company. In the opinion of this Court, the Petitioner should take all its objections in its reply to be filed before the Assessing Officer in the proceedings under Section 148A of the Act. In the event, the time for filing the reply has expired, the Petitioner is given liberty to raise additional grounds by filing a supplementary reply within a week. In case, the Petitioner is aggrieved by the decision of the Assessing Officer, it shall be open to the Petitioner to challenge the same in accordance with law.

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• 2022 (7) TMI 336
  TDS u/s 194C OR 194J - assessee entered into a Contract with a consortium - Whether contract can be segregated to attract TDS? - Whether the Tribunal was correct in holding that the contract as supply contract while the services rendered such as design and testing, are covered by explanation 2 to Sec.9(1)(vii) of the Income-Tax Act? - Tribunal held that the contract as composite contract and no segregation possible - HELD THAT:- A careful perusal of the explanation shows that fee for Technical services does not include construction, assembly and mining operation etc. In the instant case, the Contract is one for designing, manufacturing, supply, testing, commissioning of passenger rolling stock and training Personnel. The total Contract is for Rs.1,672.50 Crores whereas, the training component is about Rs.19 Crores. Though the consortium consists of different Companies, BEML Ltd., is the consortium leader. To a query made by the Court with regard to payment made, Shri. Chaitanya, on instructions from the BMRCL Officer present in the Court, submitted that all cheques have been issued in favour of BEML Ltd. As the specific case of the Revenue before the ITAT is that the Contract is a composite one. Shri.Chaitanya is right in his submission that the dominant purpose of the Contract is supply of the passenger rolling stock. Thus, having taken a specific stand before the ITAT that the Contracts is a composite one, the Revenue cannot be permitted to take a contradictory stand before this Court The total project cost is Rs.1672.50 Crores out of which, the service part in the form of training accounts for about Rs.19 Crores. Thus, the dominant purpose is supply of Rolling Stock. Thus the questions raised by the Revenue are not substantial questions for consideration for more than one reason. Firstly because, the Revenue has taken a specific stand before the ITAT that the Contract is a composite Contract. Secondly because, the dominant purpose of the Contract is for supply of Rolling Stocks and the cost towards service component is almost negligible. Thirdly because, the word assembly must include the manufacture/assembly of the Rolling Stocks by BEML Ltd., being the Consortium leader. Fourthly because, the entire payment has been made in favour of BEML Ltd. Fifthly because, Revenue has not raised any objection with regard to payment of 90% of the Project costs, so far as deduction under Section 194J is concerned. Thus questions No.1 and 2 are answered in the affirmative in favour of the assessee. Question No.3 is whether the work taken up is ancilliary to supply of Rolling Stock or a part of it is rendering professional and technical services. For the reasons recorded herein above, we are of the view that the work taken up is ancilliary to supply of Rolling Stock and does not amount to professional or technical service.

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• 2022 (7) TMI 335
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - loss on transactions of sale and purchase of shares by the assessee - Onus to prove - HELD THAT:- We have carefully examined the aforesaid issue and we are in complete agreement of the findings assigned by the Tribunal inasmuch as that the assessee has discharged its onus to justify the loss claimed by it on purchase and sale of shares. Thus, the tribunal is right in observing that the onus has shifted on the Revenue Department to disprove the same by placing on record contrary evidence. Merely since the Companies and few purchasers have not responded to the notice issued by the Assessing Officer at the stage of reassessment cannot be a reason to discard the evidences placed by the assessee. Even otherwise we could notice that the aforesaid transactions were looked into by the AO during the original assessment and upon due compliance of the procedure envisaged under the Act. AO at the stage of original assessment was satisfied about the genuineness of such share transactions and had thereafter permitted the loss claimed by the assessee towards the share transactions. We are in complete agreement with the findings recorded by the Tribunal that even otherwise the assessee being transferor of shares cannot be subjected to tax in the instant case, more particularly, considering the amendment brought by the Legislation on the statute book in the form of Sections 50CA and 56(2)(x)of the Act, which is applicable with effect from 01.04.2018 and 01.04.2017 respectively. The conjoint reading of both sections, clearly provides that the tax liability if any, arise in such kind of transactions will be applicable in the hands of recipients and no liability can be imposed on the transferor of shares. We cannot accept the submissions of the Revenue to treat the present case as a case of escapement of income conferring jurisdiction on the Assessing Officer for reopening the assessment. In fact for the reasons recorded, the Assessing Officer had no jurisdiction to initiate the reassessment under Section 147 read with Section 148 of the Act, more particularly, in absence of any new tangible material found on record. So far the issue of deleting the addition of disallowance of loss claimed on sale and purchase of shares in case of assessee is concerned, as noted above, both the CIT (A) as well as Appellate Tribunal have elaborately discussed the supporting evidence and has individually examined the transactions of each five Companies. - Decided in favour of assessee.

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• 2022 (7) TMI 334
  Nature of expenditure - ISO Certification expenditure - revenue or capital expenditure - HELD THAT:- Upon appreciation of material brought on record vis-a-vis the findings of the CIT(A) as regards treating the ISO Certification expenditure as Revenue expenditure is concerned, we are in complete agreement with the said findings of the CIT(A). The Supreme Court in catena of decisions has laid down the guidelines in the nature of test for determination of the actual nature of the expenditure wherein it is observed that the test for determination of nature of expenditure has to be considered in light of the fact that if the advantage received on incurring expense facilities relates to the carrying on of the business more efficiently and more profitably leaving the fixed capital untouch, then such expenditure has to be treated as revenue in nature. We agree with the view of ITAT that the CIT(A) was justified in treating the entire amount as revenue in nature. We find that making of payments towards obtaining ISO Certificate in no manner touches the fixed capital of the company though it may create a positive image for particular product of the assessee company which may ultimately smooth the conduct of the business of the assessee company. However, the same in no manner actually adds to any gain in the fixed capital of the company. Subsidy receipt - Nature of receipts - subsidy was received by the assessee company under capital ASIDE Scheme - HELD THAT:- On bare perusal of the content of the aforesaid letter, it reflects that such subsidy was given towards administrative expenses incurred by the assessee company during the execution of project for upgradation of infrastructure facilities. The CIT(A) has rightly arrived at finding that the administrative expense being incurred for expansion of the infrastructure facility falls in the category of capital in nature and has therefore, rightly deleted the addition of an amount of Rs.3.87 crore made by the Assessing Officer. We could note that the ITAT has examined the components of sanctioned subsidy and has thereafter arrived at a finding that the same has been rightly treated as capital subsidy by CIT(A). Thus, the findings recorded by the ITAT cannot be termed as perverse or dehors the record, which calls for our interference. So far as reference to Explanation 1 of Section 43 of the Act is concerned, we find no error of law is committed by the ITAT as well as the CIT(A), while deleting the addition of an amount of Rs.3.87 crore by treating the same under the capital subsidy. In view of the above, concurrent findings recorded by the CIT(Appeals) and by the ITAT, the question of law raised by the department does not deserve any further consideration. The said question also being no more res-integra, it could not be said that the present appeal involves any question much less substantial question of law. It may be noted that the Appeal under section 260A of the Act, could be admitted only on the High Court being satisfied that the case involves a substantial question of law. - Appeal of revenue dismissed.

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• 2022 (7) TMI 333
  Capital gain in respect of sale of only one property - addition u/s 50C - transfer of leasehold rights in a plot/land - assessee has acquired the impugned property on lease from Kanpur Development Authority vide lease deed for a period of 99 years - As per AO assessee has failed to prove that the sale of the impugned property and capital gains thereon had been declared in the return of income - CIT(Appeals) dismissed the appeal of the assessee by holding that what the assessee was sold was not a leasehold property, but the ownership rights in the property had been transferred under the impugned sale deed and therefore tenancy right of the buyer had been converted into ownership rights by the sale deed under consideration, where the assessee was shown to the landlord property - HELD THAT:- What the assessee has transferred are leasehold rights in the property which vested in him, to the tenant of the property. The same is evident from the terms of Agreement of Ownership In view of the consistent position taken by various Courts/Tribunals on this issue, we hold that Ld. CIT(Appeals) erred in facts and law in holding that what the assessee transferred were ownership rights in the property in question and therefore provisions of section 50C of the Act applied to transfer of rights in the impugned property. What we note is that the assessee itself had leasehold rights in the said property and hence in instant facts, the assessee cannot transfer/confer ownership rights in the said property in favour of the tenant. Further, the assessee has also produced before us a list of 50 properties in respect of which leasehold rights were transferred by the assessee in the same premises i.e. Sitaram building. The Department has only questioned the transfer value in respect of one single property while accepting the sale/transfer value respect of all the other properties. Therefore, considering the above facts and the consistent position taken by various Courts/Tribunals on the issue of applicability of section 50C of the Act on transfer of leasehold rights in the property, we allow the appeal of the assessee.

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• 2022 (7) TMI 332
  Unexplained investment u/s 69 - appellant failed to explain the source of opening capital - HELD THAT:- CIT(Appeals) has given part relief to the assessee on a purely ad-hoc basis, without controverting the genuineness of the documents placed on record by the assessee in support of his claim that the opening balance is out of past savings. We are inclined to take the view that the assessee has been able to place on record sufficient evidence to support his case that the opening balance of Rs. 10,01,133/- is out of past savings of the assessee, and hence the addition made by the Ld. CIT(Appeals) is hereby set aside. - Decided in favour of assessee.

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• 2022 (7) TMI 331
  Assessment u/s 153A - Addition u/s 69C - basis of the addition was a statement of Shri Pradeep Kumar Jindal recorded on oath u/s 132(4) of the Act wherein he admitted to providing accommodation entries to Shri Anand Kumar Jain, HUF and his family members and the entries found in the incriminating material - HELD THAT:- The basis of assessments are alleged incriminating material found from Shri Pradeep Kumar Jindal, which incriminating material/information may have belonged to the appellants and its group companies. In our considered opinion, in such a situation, the Legislature has provided section 153C in the Statute to frame the assessment. If the Assessing Officer frames the assessment without resorting to the dedicated section provided by the legislature, the whole exercise of enacting such a provision would become futile. Similar was the fate of members of the family, namely Shri Anand Kumar Jain, HUF, Individual, Shri Satish Dev Jain. In their respective cases also, under similar circumstances, assessment was framed u/s 153A r.w.s 143(3) of the Act. In their cases also, basis of the addition was a statement of Shri Pradeep Kumar Jindal recorded on oath u/s 132(4) of the Act wherein he admitted to providing accommodation entries to Shri Anand Kumar Jain, HUF and his family members and the entries found in the incriminating material. The quarrel travelled upto the Hon ble High Court of Delhi [ 2021 (3) TMI 8 - DELHI HIGH COURT] Facts being identical, basis of addition are also similar and the assessees considered by the Hon ble High Court are members of same group. Therefore, respectfully following the aforementioned judgment of the Hon ble Jurisdictional High Court of Delhi, we have no hesitation in quashing the captioned assessment orders and decide the appeals in favour of the assessees. Addition based upon some loose sheet found at the time of search from the premises of Indo Autotech Ltd. - As explained hereinabove, first the Assessing Officer proceeded by treating the entries as unexplained expenditure and sought explanation from the assessee. Then the Assessing Officer took the view that the assessee has made investments and sought clarification from the assessee, and without any further ado, he made the addition as accommodation entries received by the assessee. The conduct of the Assessing Officer is not only uncertain but full of jigsaw puzzles. As no concrete evidence has been brought on record to justify the addition, we have no hesitation in deleting the same. Accordingly, the captioned assessment orders are quashed following the judgment of the Hon ble Jurisdictional High Court of Delhi [supra]. Appeal of assessee allowed.

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• 2022 (7) TMI 330
  Estimation of income - GP estimation - Assessee pleaded before CIT-A that estimation of business income at 10% of total Revenue is very harsh and that too without any material - Assessee pleaded for the estimated 5% on the gross receipts - HELD THAT:- In the preceding paragraphs, while dealing with the issue for the assessment year 2012-13, we reached a conclusion that the estimate of income of the assessee at 5% of the gross receipts would be proper and would meet the ends of justice, having regard to the nature of business and the other attendant circumstances like market competition, high fluctuations, shortage of liquidity etc. With this view of the matter, we allow the contentions of the assessee and direct that the income of the assessee may be estimated at 5% of the gross receipts for the assessment year 2017-18 also.

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• 2022 (7) TMI 329
  Penalty u/s 271(1)(c) - additions for provision for liquidated damages charges and interest on TDS - HELD THAT:- As quantum appeal in regard to the addition made by the ld AO on account of provision of liquidated damages stands deleted and once the quantum appeal is allowed no foundation is left for the levy of penalty on that account. See Fortune Technocomps P.Ltd. [ 2016 (5) TMI 859 - DELHI HIGH COURT ] where it has held that once the assessment order of the AO in the quantum proceedings was altered by the Ld.CIT(A), in a significant way, the very basis of initiation of penalty proceedings was nonexistent. Interest on TDS - AO in his assessment order had not mentioned a word regarding his satisfaction for proceeding with penalty proceedings u/s 271(1)(c) of the Act while passing the impugned penalty order dated 23.03.2018. The assessment order does not mention if penalty proceedings has to be for concealment of particulars of income or for furnishing inaccurate particulars of income. As a matter of fact the notice issued u/s 274 read with section 271 of the Act itself was ambiguous as it did not make it clear as to under which limb section of 271(1)(c) of the Act the notice was issued. On the other hand in the penalty order the ld AO has coined her own term concealed income by furnishing inaccurate particulars. Thus ambiguity in issue of notice and findings make the impugned order of levying penalty void ab initio and ld CIT(A)failed to consider the same. Appeal of assessee allowed.

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• 2022 (7) TMI 328
  Levy of penalty u/s 271C - TDS u/s 194C - Non deduction of TDS in payments made to authorities like HUDA - HELD THAT:- Giving thoughtful consideration to the matter on record, the clarification dated 19.06.2018 available on page no. 1 of the paper book makes it very obvious that receipts on account of EDC are being deposited in the Consolidated Fund of the State, accordingly directions were issued to colonizer like present assessee, to not deduct TDS. The Co-ordinate Benches in M/s. Perfect Constech P. Ltd. case [ 2020 (12) TMI 1158 - ITAT DELHI] and case RPS Infrastructure Ltd. [ 2019 (9) TMI 39 - ITAT DELHI] have held that assessee was not required to deduct tax at source at the time of payment of EDC. Thus levy of penalty u/s 271C of the Act cannot be sustained. The grounds raised in the appeals are allowed

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• 2022 (7) TMI 327
  Validity of assessment u/s 153C r.w.s. 153A - search and seizure operation u/s.132 of the Act was carried out on 21.06.2011 at the business and residential premises of the Platinum Group of cases to which the Assessee also belongs - HELD THAT:- We noted that only the document seized relates to the Assessment Year 2011 2012 that is the sale deed - Apart from this, there is no incriminating material or seized material found by the Department during the course of search at the business and residential premises of the Assessee. We are of the view that once there is no incriminating material found during the course of search, then the Assessing Officer cannot exercise any power u/s.153C r.w.s.153A of the Act because the power u/s.153A being not accepted, to be exercised redundantly, but the same should be exercised if the search reveals any incriminating material. Hon ble Bombay High Court in the case of Commissioner of Income Tax Vs. Continental Warehousing Corporation (Nhava Sheva) Limited [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] has laid the same proposition. Further, we are of the view that the assessment has to be made u/s.153A of the Act only on the basis of the seized material. This view is also found by the Hon ble Delhi High Court in the case of the Commissioner of Income Tax Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] - Decided in favour of assessee.

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• 2022 (7) TMI 326
  Penalty imposed u/s 271D 271E - default u/s 269SS 269T - Assessing Officer had levied the Penalty on the grounds that the loans had been repaid and received by modes other than by account payee or any other mode provided in section 269SS 269T - CIT(A) deleted the penalty holding that general entries leading to assignment of debt does not attract penalty under section 271D and 271 - HELD THAT:- In the case, we find that assessee is neither before us by way of appeal or cross-objection or even under Rule 27 of the ITAT Rules to support existence of reasonable cause. The Department has challenged the finding of the Ld. CIT(A) wherein it is held that receipt/payment of loan by way of general entry is not in contravention of 269SS or 269T provisions. Therefore, we are restricted to decide the ground of the Department only. The finding of the Ld. CIT(A) is contrary to the decision of the Hon ble Jurisdictional High Court TRIUMPH INTERNATIONAL FINANCE (I) LTD. [ 2012 (6) TMI 358 - BOMBAY HIGH COURT] and therefore liable to set aside. Decided in favour of revenue.

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• 2022 (7) TMI 325
  Revision u/s 263 - claim of deduction of expenditure and depreciation but no revenue has been earned - Pr.CIT has directed the AO to make further enquiry on the admissibility of expenditure, major portion of which is depreciation of software obtained by the assessee AND since the assessee has not earned any revenue even after few years of above said commencement, AO has not done enquiry for allowing the said expenditure - HELD THAT:- Pr. CIT s inference that AO should make further unspecified enquiries so that assessee should not be allowed expenditure and the depreciation because the assessee has not earned any revenue is not based upon any material whatsoever. Except for an endeavour to embark upon a fishing roving enquiry, there is no merit in the order passed by ld. Pr.CIT. In our considered opinion, the basic premise on which Pr.CIT has invoked his jurisdiction u/s 263 is legally not sustainable. Hence we set aside the order of the ld. Pr.CIT and decide the issue in favour of the assessee.

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• 2022 (7) TMI 324
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - Non specification of clear charge - assessee argued for non mentioning of whether assessee has been penalized for furnishing of inaccurate particulars of income or concealment of income? - HELD THAT:- The basis of levy of penalty itself is not correct. Apart from this, assessee s appeal in quantum proceedings has been admitted by Hon ble jurisdictional High Court, therefore issue in quantum proceedings are debatable, hence penalty on debatable issue should not be levied, as held in the case of Ankita Electronics (Pvt) Ltd. ( 2015 (3) TMI 1029 - KARNATAKA HIGH COURT] hence penalty order under section 271(1)(c) of the Act, needs to be quashed. Accordingly, we quash the penalty order under section 271(1) (c) of the Act. - Decided in favour of assessee.

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• 2022 (7) TMI 323
  Penalty u/s 271AAB - defective notice u/s 274 - As per assessee penalty notice so issued is defective as it does not disclose specific charge and secondly there is no concealed income as search took place prior to due date of filing of income-tax return - HELD THAT:- A bare reading of notice demonstrates that notice relate to ingredients of penalty u/s. 271(1)(c) of the Act, it does not contain the ingredients of section 271AAB of the Act. Under these facts the notice is improper and is not in accordance with requirement of law. The assessing officer is expected to make his direction clear as to which clause of section 271AAB of the Act, he wishes to invoke. There is clear absence of such direction. Ld. counsel for the assessee has relied upon various judicial pronouncements in support of his contention that where the notice is being defective, therefore, no penalty can be levied or sustained. We observe that the issue is squarely covered in assessee s own case for the assessment-year 2015-16 [ 2020 (8) TMI 905 - ITAT INDORE] - Hence the same decision will prevail for assessment-year 2016-17. Since the penalty imposed in assessment-year 2015-16 was deleted, the penalty for assessment-year 2016-17 is also not sustainable. - Decided in favour of assessee.

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• 2022 (7) TMI 322
  LTCG - JDA transaction - Nature of land sold - Primary contention of the assessee was that the impugned land was an agricultural land not falling with the definition of capital assets u/s 2(14) - HELD THAT:- In the instant case, as mentioned earlier, in view of the various clauses in the JDA, it is clear that the assessee has given only a permissive possession and not the legal possession as contemplated within the meaning of section 53A of the Transfer of Property Act - we are of the view that the provisions of section 53A of the Transfer of Property Act are not applicable to the impugned JDA. In view of the matter, the provision of section 2(47)(vii) of the I.T.Act are also not applicable during the relevant financial year. 12. The judgment of the Hon ble Karnataka High Court in the case of Dr.T.K.Dayalu ( 2012 (6) TMI 405 - KARNATAKA HIGH COURT] relied on by the CIT(A) is distinguishable on facts. In the instant case, the assessee has neither received any non-refundable deposit nor has delivered the possession of the land to the developer, except for granting license to have ingress and egress into the land proposed to be developed, and accordingly, there is no transfer as defined u/s 2(47) of the I.T.Act. The implementation of the proposed project was legally restrained following the refusal of consent by the Hon ble National Green Tribunal as well as the Karnataka State Pollution Control Board orders dated 04.05.2010 and 05.10.2016, respectively. To revive the abandoned project, the assessee and the developer had entered into an amended relinquishment agreement with Bangalore Development Authority vide agreement dated 09.05.2019 in order to comply with the directions of the Hon ble National Green Tribunal. As per the said agreement, the assessee surrendered the total area of 2.35 acres out of total area of 7.25 acres of land to be utilized for the proposed project. Thus, reducing the available area for the proposed project to only 4.30 acres as against 7.25 acres as originally envisaged. The assessee obtained revised sanction plan from the Bangalore Development Authority vide letter dated 11.11.2019 and a fresh JDA agreement was entered between the developer and the assessee vide agreement dated 27.11.2019. Therefore, following the dictum laid down by the in the case of CIT v. Balbir Singh Naini ( 2017 (10) TMI 323 - SUPREME COURT] we hold that the provisions of section 45 were not attracted for the relevant assessment year. It is ordered accordingly.

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• 2022 (7) TMI 321
  Ex parte order paased by AO and NFAC - Addition u/s 69A - assessee submitted that due to non-receipt of notice from the Assessing Officer there was non-representation before the Assessing Officer for which he has passed the ex parte order. Similarly, due to lack of proper opportunity granted by the NFAC, the assessee could not file the requisite details before the NFAC for which the NFAC also passed the ex parte order sustaining the addition made by the AO - HELD THAT:- We deem it proper to restore the issue to the file of Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the Assessing Officer without seeking any adjournment under any pretext failing which the Assessing Officer is at liberty to pass appropriate order as per law. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2022 (7) TMI 320
  Disallowance u/s 14A r.w.r. 8D - DR submitted that the assessee having borrowed funds for the purpose of making the investments in the sister concern and disallowance u/s. 14A of the Act if not confirmed, a disallowance u/s. 36(1)(iii) of the Act should be considered by the Tribunal - HELD THAT:- Coming to the argument of CIT-DR that the disallowance u/s. 36(1)(iii) of the Act is liable to be made, we are unable to agree with this argument of ld. CIT-DR as this is not an issue that has been raised by the AO or the CIT(A) and it is not open to an appellate authority, being the Tribunal, to make a disallowance under the provision which has not been invoked by the AO. It is also to be mentioned here that in an appeal the revenue is fully entitled to defend the order of the AO before the Tribunal. It cannot seek to bring to tax any income or take refuge of any of the other provisions of the Act for the purpose of making a fresh addition or disallowance. The assessee admittedly has not received any exempt income. The assessee s investment in its sister concern are claimed by the assessee to be in the business interest of the assessee insofar as the assessee has started its activity in coal also. But the assessee has not been able to point out in the audit report or the balance sheet where it has dealt with in coal. A perusal of the decision of the Hon ble Supreme Court in the case of Chettinad Logistics Pvt. Ltd. ( 2018 (7) TMI 567 - SC ORDER] as also the decision in the case of GVK Project and Technical Services Ltd. ( 2019 (5) TMI 725 - SUPREME COURT] shows that no disallowance u/s. 14A can be made if no exempt income has been received. However, under the provisions of rule 8D(2)(ii), admittedly, a disallowance is to be made and to such extent the disallowance has been made by the AO and confirmed by the CIT(A). Therefore, the addition representing Rs. 1,49,06,500/- stands confirmed. The balance of the disallowance as made by the AO and confirmed by the CIT(A) by invoking the provisions of Section 14A r.w.r. 8D, stands deleted. Appeal of assessee is partly allowed.

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• 2022 (7) TMI 319
  Disallowance for not depositing monthly pension - HELD THAT:- The alleged amount of monthly pension for Financial Year (in short FY ) 2017-18 has been paid to the provident fund account before the due date of filing return of income and therefore, no disallowance is called for u/s. 43B - no details were filed before the first appellate authority even after being granted various opportunities. Therefore, in the interest of justice and being fair to both the parties and looking to the quantum of the addition and the claim being made by the assessee as an officer of Court that the alleged amount has been paid before the due date of filing return of income, we restore this issue to the file AO who shall verify the veracity of the claim of the assessee of having paid the alleged amount duly supported by necessary receipt/challan of having paid the pension amount and if the claim of the assessee is found to correct in light of provision of Section 43B of the Act, then the said disallowance may be deleted and if found otherwise then ld. AO can proceed in accordance with law. Disallowance towards PF ESI - employees contribution towards PF ESI - Assessee s claim is that the same amount pertaining to FY 2017-18 has been deposited before the due date of filing return of income u/s. 139(1) - HELD THAT:- We find that this issue is no longer res-integra as held by this Tribunal in the case of Lumino Industries Ltd. [ 2021 (11) TMI 926 - ITAT KOLKATA] wherein a view was taken in favour of the assessee by the Tribunal after holding that the amendment brought in by Finance Act, 2021 w.e.f 01.04.2021, is prospective in operation and so will be in force from AY 2021-22 onwards and not retrospective. A/R brought to our notice the contents of the impugned order of ld. CIT(A) wherein it is noticed that the ld. CIT(A) has acknowledged that the assessee had made the remittance/payment of employees contribution towards PF ESI before the due date of filing of return of income. Therefore we are inclined to allow ground no. 3 of the assessee and direct the A.O. to delete the disallowance.

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• Customs

• 2022 (7) TMI 318
  Maintainability of application - Jurisdiction - power of Pr. ADG, DRI to issue SCN - validity of notification No.4/21 Customs dated 17.03.2021 not challenged - Case of petitioners is that Officers of DRI have no jurisdiction to conduct a raid and issue a show cause notice as they are not proper officer under Section 28 of Customs Act for reassessment - HELD THAT:- In the present case, the Board has issued instruction No.4/2021 dated 17.03.2021, to all adjudication authorities of DRI/ Customs for sending all pending adjudication of show cause notice cases to call book because Apex Court has decided to reconsider the case of Canon Pvt. Ltd [ 2021 (3) TMI 384 - SUPREME COURT ] in review petition. The respondent has filed a copy of the order in Union of India and Godrej and Boyce Manufacturing Co. Ltd. [ 2022 (2) TMI 636 - SUPREME COURT ] to show that the issue as to who would be the proper officer under Custom Act in light of Section 28 (11) of the Customs Act has been found to consider by the Apex court. Since the petitioner is seeking quashment of show cause notice relying on Canon India Pvt. which is under review before the Apex Court, therefore, the respondent authority awaiting the final outcome of the aforesaid case has rightly sent the case of the petitioner to call book in the exercise of power under Section 28 (9A) of Customs Act. Petitioner is not challenging the validity of Notification No.4/2021-Customs dated 17.08.2021 issued by Central Board of Indirect Taxes and Customs whereby the cases Shri Anil Agrawal and 11 others have been directed to be kept pending until further direction. The petitioner s case is similar to the case of Shri Anil Aggrawal, therefore, unless the petitioner challenges the validity of notification No.4/21 Customs dated 17.03.2021, the present petition is not maintainable challenging the consequential orders issued by the respondent i.e. Annexure P/1. The writ petition is dismissed.

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• 2022 (7) TMI 317
  Revocation of the Custom Broker License - forfeiture of security deposit - imposition of penalty - failure to advise client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof - requirement of bringing the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs - Regulation 10(d) of the CBLR, 2018 - HELD THAT:- It is apparent that a custom broker does not actually physically see the goods before the same are received in custom area. The Custom Broker operates on the basis of document supplied to him and in that context it can hardly be held that the shipping Bill filed by the Custom Broker on the strength of documents supplied by the exporter is wrong. While repeatedly it has been asserted that the appellant had assisted the exporter in the mis-declaration no specific manner in which such assistance was extended has been mentioned. The impugned order solely relied on the inquiry report without giving his own findings. In this circumstances there are no merit in confirmation of charge under Regulation 10(d) of the CBLR 2018. The same is dropped. Violation Regulation 10(e) of CBLR, 2018 - failure to exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage - HELD THAT:- It is apparent that the case of over valuation and misclassification has been booked on the basis of examination of cargo. The custom broker could not have in possibly detected the same from documents supplied by the exporter to the appellant without examination of goods. In this circumstances we do not find any merit in the argument that the appellant had fail to follow Regulation 10(e) of the CBLR, 2018. Violation of Regulation 10(n) of the CBLR, 2018 - verification of correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information - HELD THAT:- There is no requirement for custom broker to physically meet the exporter or physical go and verify the address of the exporters. The responsibility of custom broker is limited to verification on the basis of documents obtained by him. In this case it is seen that they obtained the Bank sign authorization. It is found that customs broker does not have unlimited authority to inquire and check the contents of the official documents. The only reason given in the order is that the appellant did not have direct contact with the exporters and therefore, the charge has been upheld - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2022 (7) TMI 316
  Seeking withdrawal of travel restrictions and LOC issued against the Petitioner - HELD THAT:- It is not in dispute that the investigation of serious fraud wherein a huge loss to public exchequer is caused and certain offenders are yet to be nabbed. Learned Counsel appearing for Respondent No. 2 SFIO was justified in submitting before this Court that as there is some material showing that the Petitioner had invested the funds for purchasing the shares of the said company and though, there was an order of SEBI on some aspects the Petitioner had not supplied the true and complete information and the investigating agency needs to unearth various links and if the Petitioner is permitted to travel abroad, the possibility of evading of the Petitioner and ultimately hampering the investigation cannot be ruled out. Reliance placed in the case of MR. CHAITYA SHAH VERSUS THE UNION OF INDIA AND OTHERS [ 2021 (11) TMI 662 - BOMBAY HIGH COURT ] where it was held that The LOC is properly issued, it is extended through proper procedure and the appropriate authority has approved its extension. The Petitioner s presence is necessary for effective investigation into the affairs of Gitanjali Gems Limited and other concerns - There is a strong flight risk as far as the Petitioner is concerned and, therefore, the relief sought for in this Petition cannot be granted. The Petition is devoid of merits, deserves to be dismissed - Petition dismissed.

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• 2022 (7) TMI 315
  Seeking to transfer of proceedings relating to winding-up of a company to the NCLT - seeking appropriate directions for the Official Liquidator to handover the possession of the mortgaged properties of the company (in liquidation) to the applicant - transfer of pending proceedings as well - 5th proviso of the newly amended Section 434 (1) (c) of the Companies Act, 2013 - HELD THAT:- In the newly introduced Insolvency regime and after the amendments to the Act, there is a radical change in the approach whilst dealing with companies in liquidation. It is true that there is no automatic transfer of all proceedings pending for winding-up of a company to the NCLT. In fact, there is an element of discretion which the Company Court retains in respect of pending winding-up proceedings even post amendment. However, such discretion has to be exercised in the facts and circumstances of each case. The sole test laid down in the decision of Action Ispat [ 2020 (12) TMI 535 - SUPREME COURT ] as followed in A. Navinchandra Steels (P) Ltd. [ 2021 (3) TMI 38 - SUPREME COURT ] is whether an irreversible situation has arisen warranting the Court to stay its hands and not transfer the proceeding to the NCLT. There are no facts whatsoever which justify the conclusion of an irreversible situation having arisen in the facts of the case. The company was directed to be wound-up on the 6th March, 2017. Thereafter, one of the contributories, namely Indo Wagon Engineering Ltd. had obtained diverse orders from Court whereby they continued to be in possession of the assets of the company (in liquidation). Admittedly, till date there is no scheme for repayment of the outstanding dues of the creditors which has been framed. There are no merit in the objection raised by the contributory that a petition under Section 7 and Section 9 of the Insolvency and Bankruptcy Code 2016 (the Code) should be pending before the NCLT, prior to directing transfer of the winding-up proceedings to the NCLT. Neither is this legislative intent nor is this pre-condition borne out from the language of the newly amended section. Accordingly, there are no merit in this submission and the same is rejected - also there are no merit in the submission that the fact that some moneys have been paid by the contributory would create an irreversible situation which justifies these proceedings being transferred to the NCLT. None of these grounds make it impossible to set the clock back compelling the Company Court to proceed which the winding-up of the company instead of transferring the proceeding to the NCLT. All such issues can always be decided by the NCLT during the course of winding-up. Hence, there is no impossible situation arisen which justifies this Court retaining this winding-up proceeding. It is to be remembered that, the jurisdictional change brought about in the amended Section 434 (1) (c) makes it clear that it is now obligatory for the Court (in the absence of any irreversible or exceptional circumstances) to transfer the proceedings to the NCLT. This is the clear legislative intent. In fact, to continue with the winding-up proceedings in the absence of an irreversible situation would tantamount to committing a jurisdictional error. The decision relied on by the contributory, UNION OF INDIA VERSUS AMRIT LAL MANCHANDA [ 2004 (2) TMI 361 - SUPREME COURT ] is distinguishable and inapplicable to the facts of this case. It is directed that this Company Petition being CP No. 387 of 2014 and all applications filed therein stand transferred forthwith to the National Company Law Tribunal Kolkata - application allowed.

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• 2022 (7) TMI 300
  Seeking directions on the Official Liquidator to publish a sale notice in respect of the assets of Maheswary Ispat Limited - no winding up proceedings carried on by the Liquidator - no assets have been sold - whether this Court has the power to exercise jurisdiction in view of the 5th proviso of Section 434(1(c) of the Companies Act, 2013? - HELD THAT:- Ordinarily, there is a strong presumption that Civil Courts have jurisdiction to decide all questions of civil nature. The exclusion of jurisdiction of Civil Courts must either be explicitly expressed or clearly implied. In my view, the section does not contemplate proceedings being automatically transferred to the Tribunal. There is an element of discretion which the Company Court retains in respect of pending proceedings whether to exercise the power to transfer or not depending on the facts and circumstances of each case. Despite the pendency of the winding up proceedings for more than six years, there is nothing to demonstrate that an irreversible situation has arisen which justifies this Court in retaining this proceeding. None of the assets of the company (in liquidation) have been sold. There is nothing in the Status Report filed by the Official Liquidator to demonstrate that the Official Liquidator has taken any steps whatsoever to make it impossible to set the clock back warranting this Court to proceed with the winding up notwithstanding the embargo now created under the aforesaid section. There are no facts which have been brought to the attention of this Court either by the Official Liquidator or any of the parties which permits this Court in retaining jurisdiction. There are no substance in the argument that it is only upon filing of a formal application, that a proceeding can be transferred to the National Company Law Tribunal under the aforesaid section - What is of essence is that the Court must examine the facts of each case to ascertain whether an irreversible situation has arisen or not or and the stage of the liquidation proceedings. The making of an application is a mere formality and is not imperative in nature. In fact, to continue with the winding up proceedings simply because no application for transfer has been filed would tantamount to committing a manifest jurisdictional error. In my view, in a given case, after examination of the relevant facts if the Court suo moto finds that the conditions for transfer are satisfied, it should transfer a proceeding to the Tribunal even in the absence of a formal application. Hence, such contention is rejected. Petition with any pending application in this petition stands transferred to the National Company Law Tribunal, Kolkata. Liberty is granted to the applicant to raise its grievances in CA 15/2021 before the Tribunal in accordance with law - petition disposed off.

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• Insolvency & Bankruptcy

• 2022 (7) TMI 314
  Seeking adjustment of amount deposited in escrow account - recovery of dues of the RMGL, one of the subsidiary of the IL FS - whether HSVP is obliged to deposit 80 % of debt due as determined by Comptroller and Auditor General of India which amount is to protect the interest of Lenders? - HELD THAT:- All the investigations and enforcement machinery has to follow to its logical conclusion but the deposit of only 80% debt due have been directed by the Hon ble Supreme Court in RAPID METRORAIL GURGAON LIMITED ETC. VERSUS HARYANA MASS RAPID TRANSPORT CORPORATION LIMITED ORS. [ 2021 (3) TMI 1180 - SUPREME COURT] . All issues between the parties has to be sort out by the Arbitration as noticed above both RMGL/RMGSL and HSVP/HMRTC have invoked the Arbitration clause in the Concession Agreement and has given notice to each other which proceeding may take its logical conclusion and the distribution of the 80% debt due is in terms of the Concession Agreement has to be subject to final resolution. The distribution of 80% of debt due deposited in the escrow account of RMGL and RMGSL has to be in accordance with the Direction of this Tribunal dated 12th March, 2020 in paragraph 64 to 66. 80% of debt due as determined by CAG is laying in the Escrow Account of RMGL and RMGSL. The interim distribution of the said amount is permitted on pro rata distribution as suggested by Union of India and approved by this Tribunal in UNION OF INDIA VERSUS INFRASTRUCTURE LEASING FINANCIAL SERVICES LTD., SOMANY PROVIDENT FUND INSTITUTION ORS. [ 2020 (3) TMI 1398 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] . The Interim Distribution of the amount shall be amongst the Financial Creditors of both the Project No. 1 and 2. The Interim Distribution shall abide by the final resolution of ILFS Companies after following due procedure as prescribed in Revised Distribution Framework . Application disposed off.

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• 2022 (7) TMI 313
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- In the present case, it is clear from the facts that the Corporate Debtor had admitted its liability and had agreed to pay Rs.1,00,000/- per month for 42 months in the proceeding filed before the Hon ble High Court of Calcutta. The Corporate Debtor, however failed and committed default in payment of the instalments - Even in the reply to the notice under section 8 of Code served on the Corporate Debtor by the Operational Creditor, the Corporate Debtor could not give any notice relating to any dispute as regards the unpaid debt or any suit having been filed or Arbitration Proceedings regarding the said claim of the Operational Creditor. Time Limitation - HELD THAT:- Since the Corporate Debtor had sought orders from the Hon ble High Court for making repayment of the loan which was passed on 21st November, 2016, and the present petition having been filed on 19th July, 2019, this petition is very much within time. Thus, the Operational Creditor has proved its case without any doubt - Since the petition is otherwise complete in all respects, petition is admitted - moratorium declared.

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• 2022 (7) TMI 312
  Validity of Lease deed - seeking reversal of transaction - execution of lease deed is in the nature of transaction as described in Section 45 of the I B Code, 2016 or not - seeking cancellation of lease deed - seeking direction to make differential lease consideration payment after determination of market value of annual lease consideration of the premises - preferential related party payments - seeking to furnish a list of inventories of the infringing goods and the sale register of the infringing goods sold by Respondent Nos. 3 to 5 - Section 66 of the I B Code, 2016 - HELD THAT:- This Adjudicating Authority is of the view that from the documents made available in the application and subsequent pleadings, the applicant/ resolution professional has successfully shown that the lease deed dated 30th November 2016 is grossly undervalued to the detriment of the creditors of the corporate debtor. Furthermore, by virtue of the said lease deed dated 30th November 2016, the Applicant/ Resolution Professional has also been successful to show that the entire business of the corporate debtor has been transferred to a related party to corporate debtor, being Respondent No. 3. Without even considering the aforesaid facts, the applicant/ resolution professional has been successful in showing that the lease deed dated 30th November 2016 itself is grossly fraudulent, illegal and void ab initio in as much as the same has been executed after the issuance of the notice under Section 13 (2) of the SARFAESI Act, 2002 in light of Mannalal Khetan v. Kedarnath Khetan [ 1976 (11) TMI 135 - SUPREME COURT ]. The lease deed dated 30th November 2016 has been executed fraudulently and is grossly undervalued in order to defraud the creditors of Corporate Debtor and accordingly the such act of respondents is liable to be prosecuted under Section 45, Section 49 and Section 66 of the I B Code, 2016. Accordingly, the lease deed dated 30th November 2016 is hereby set aside by this Adjudicating Authority in light of the powers conferred under Section 45, Section 49 read with Section 66 of the I B Code, 2016. In addition to the above, the Respondent Nos. 6 and 7 have failed to appear and/ or place their submissions before this Adjudicating Authority. In the absence of any justification to the transactions entered into with related parties, being Respondent Nos. 6 and 7 within the lookback period, the said transactions fall under the ambit of Section 43 of the I B Code, 2016 and accordingly, Respondent Nos. 6 and 7 are hereby directed to make payments of Rs. 11,10,000/- and Rs. 5,50,000/- respectively for being related party preferential transactions under Section 43 of the I B Code, 2016. Infringement of trademark - HELD THAT:- This Adjudicating Authority refuses to interfere in disputes arising out of Intellectual Property Rights. However, we make it clear that in the absence of any valid agreement assigning the trademark of corporate debtor in favour of respondent no. 3, the respondent no. 3 is hereby restrained from using the property of the corporate debtor. The present application is allowed in terms of the directions stated and the Respondent Nos. 3 to 5 are hereby directed to handover peaceful, vacant, undisturbed and unhindered access to the plant, factory, land, building, shed and premises located within the 17.25 acre of land to the resolution professional/ applicant.

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• 2022 (7) TMI 311
  Seeking direction to the Respondents to consider the resolution plan of the Applicants - seeking for quashing the 7th CoC meeting dated 13.10.2021 - HELD THAT:- The CoC considered all the resolution plans submitted by the prospective resolution applicants in the 7th meeting at 4:00 PM including the revised resolution plan of the Successful Resolution Applicants. The CoC did not approve the resolution plan of the Applicants as the payment term of the resolution plan was 6 years. Moreover, the Applicants had proposed in the resolution plan to extinguish the guarantee given by the Suspended Management of the Corporate Debtor. The resolution plan of the Successful Resolution Applicant was considered by the CoC as more feasible and viable hence the sole member of the CoC approved the resolution plan of the Successful Resolution Applicant. It is also noted that the Applicants were given an opportunity to revise the resolution plan but, the Applicants had not submitted the resolution plan at a given time. The contention of the Applicants that the offered value of the resolution plan of the Applicants was more than the offered value of the Successful Resolution Applicant even then the CoC rejected the resolution plan of the Applicants is not well-founded - It is not a disputed fact that the Applicants had not submitted the revised resolution plan at 3:30 PM on the day of the 7th CoC meeting. Moreover, the CoC in its commercial wisdom considered the resolution plan of the Successful Resolution Applicant more feasible and viable and approved the plan which is equally important as the maximization of the value of the assets of the Corporate Debtor. Thus, no violation of the IB Code was committed by Respondents during the 7th CoC meeting - application rejected.

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• 2022 (7) TMI 310
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- This Adjudicating Authority instructed the Corporate Debtor to produce translated copies of the said documents, which the Corporate Debtor failed to produce. As such, the documents produced in Bhojpuri language have not been relied upon. The Corporate Debtor has failed to produce any other proof in support of its above-mentioned contention. In absence of the same, mere verbal claim of the Corporate Debtor is untenable. Further, the said contention also makes it clear that there is clearly an amount due from the Corporate Debtor to the Operational Creditor. On perusal of the record, it is seen that the date of default has not been explicitly mentioned in the petition or the demand notice. However, it has been mentioned that the operational debt fell due from the issuance of the invoices. The details of the transactions as provided in the computation table annexed to the petition provide that the first date of default would be 04 December 2018. While the Corporate Debtor has taken the plea of pre-existing disputes in the reply-affidavit, the Corporate Debtor has not explained the nature of the said disputes. As such, the said plea is not maintainable. The Operational Creditor has sent the demand notice to the Corporate Debtor dated 15 July 2019 by registered post and thereafter, vide email dated 17 August 2019, giving the corporate Debtor ample opportunity to either clear its outstanding dues or notify the Operational creditor of pre-existing disputes. Further, it has provided affidavit under section 9(3)(b) of the Code wherein it is mentioned that the Operational Creditor had sent to the Corporate Debtor a demand notice dated 15 July 2019 and that the Corporate Debtor had not replied to the said demand notice. The instant petition is therefore complete. This Adjudicating Authority is satisfied that there is an Operational Debt due from the Corporate Debtor to the Operational Creditor and that the Corporate Debtor has defaulted in the payment of the same. Petition admitted - moratorium declared.

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• 2022 (7) TMI 309
  Seeking substitution/change of the present Resolution Professional, Mr. Arunava Sikdar - Application has been filed by State of Rajasthan through Joint Director Industry who holds 4% shares in Committee of Creditors for change of Resolution Professional alleging certain allegations against the RP - HELD THAT:- As per Section 27(2) of IBC such Resolution can only be passed by minimum 66% of votes by the members of Committee of Creditors. In this case no such proposal of change of Resolution Professional has been placed before the CoC by the Applicant. The Applicant as only made allegations and failed to provide substantial proof of the same. The Hon ble NCLAT has categorically held that if there is an explicit provision in the Code for change of Resolution Professional the same should be followed. It also held that the ingredients of Section 27 of the Code are self-explanatory and admits of no exception. Therefore, the present application filed by the State of Rajasthan is dismissed. Seeking substitution of the Resolution Professional of JMEL - It is submitted by the Applicant herein that the present Resolution Professional is already a Resolution Professional in the matter of Affinity Beauty Salons Private Limited, Shivam Fragrances Pvt. Ltd. Chempharms Industries Private. Limited - majority of the workmen and employees of the Corporate Debtor are residents of Jaipur (Rajasthan) which makes it inconvenient for the workmen to approach the Resolution Professional who is located in Delhi - HELD THAT:- As per the provisions of Section 27(2) of IBC, 2016, this application is liable to be dismissed. Hence, the present application is dismissed.

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• 2022 (7) TMI 308
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- There are no hesitation to hold that the applicant has established financial debt of a sum of over Rupees one crore payable by the Corporate Debtor. The Demand Notice dated 12.05.2014 issued under section 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 issued to the Corporate Debtor remained uncomplied. The Financial Creditor has also offered OTS to the Corporate Debtor. However, the Corporate Debtor failed to make payment in terms of the approved OTS. The Balance Sheet of the Corporate Debtor for the year 2016-2017 filed by the Corporate Debtor at pages 601-635 also disclosed financial debt of the Corporate Debtor in favour of the applicant - Therefore, this record clinchingly establishes not only the existence of financial debt but also its default by the Corporate Debtor. Therefore, this Tribunal is satisfied, a financial debt due and payable by the corporate debtor to the applicant and its default stands established, hence it is a fit case to put the Corporate Debtor in CIRP. Petition admitted - moratorium declared.

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• 2022 (7) TMI 299
  Seeking approval of a Resolution Plan in respect of Sri Balaji Forest Products Private Limited - approval of the resolution plan by the Committee of Creditors, already done - Section 30(6) and Section 31 of the Insolvency and Bankruptcy Code, 2016 read with regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- The Resolution Plan has been approved with 93.46% voting share. As per the CoC, the plan meets the requirement of being viable and feasible for revival of the Corporate Debtor. By and large, all the compliances have been done by the RP and the Resolution Applicant for making the plan effective after approval by this Bench - On perusal of the documents on record, it is also satisfying that the Resolution Plan is in accordance with sections 30 and 31 of the IBC and also complies with regulations 38 and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Seeking grant of time to comply with the statutory obligations/seeking sanctions from governmental authorities - HELD THAT:- The Resolution Applicant is directed to do the same within one year as prescribed under section 31(4) of the Code - In case of non-compliance of this order or withdrawal of Resolution Plan, the CoC shall invoke the Performance Bank Guarantee furnished by the Resolution Applicant. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect - Moratorium imposed under section 14 shall cease to have effect from the date of this order - Application allowed.

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• FEMA

• 2022 (7) TMI 302
  Amounts released despite the stay order - on query ASG accepts this - HELD THAT:- Prima facie this is contempt of the orders of this Court. On our asking the query as to which of the Officer(s) to whom the contempt has to be issued, learned senior counsel states that the amount will be released within 3 days and that this Court may hold its order on issuance of notice of contempt. We take this stand of the learned ASG on record. Insofar as the constitution of the Tribunal is concerned, the affidavit states that the Search-cum-Selection Committee was appointed in terms of Order dated 26.10.2001. The process thereafter is taking place. It is pointed out to us that the Chairman demitted office on 21.9.2019 being a retired judge of the High Court and thereafter a Single Member Tribunal doing only interim proceeding work and he too demitted office sometime in March-April, 2021. Even the last Chairman was on extension. We are of the view that the status report does not reflect a complete picture and we would like to know the details as to what steps were taken starting from at least six months prior to the Chairman demitting office on 21.9.2019 to fill up that post right upto the department order dated 26.10.2021 with supporting documents.

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• 2022 (7) TMI 301
  Provisional attachment orders made under the provisions of FEMA - prayer for grant of interim directions was opposed by learned CGSC who contended that the Certificate of Registration (COR) of the petitioner already stands cancelled by the Reserve Bank of India (RBI) - HELD THAT:- Insofar as the question of cancellation of the COR is concerned, the Court notes that the same would have no bearing on the issues which arise in the present writ petition since that constitutes action taken by the RBI under the statutory provisions contained in the Banking Regulation Act, 1949. The said action would only impact the right of the petitioner to continue the business which was permitted. The Court notes that insofar as the release of Rs. 15.5 crores is concerned, it was submitted by Mr. Ganesh that the aforesaid sum has not been released in fact and the petitioner has not even been able to utilise the same till date. The Court further notes the submission of Mr. Ganesh who contends that the aforesaid amount which was released was just sufficient to meet the needs of the petitioner for the period between November 2021 to January 2022. Bearing in mind the issues, which stand raised, this Court is of the opinion that in the interim certain amounts would merit being released in favour of the petitioner to enable it to meet its day to day expenses pending final disposal of the present writ petition. Accordingly, let a sum of Rs. 25 crores be released in the interim, subject to the condition that the petitioner shall utilise the said monies only for the purposes of meeting its day to day essential expenditure as well as towards salaries of employees. The petitioner shall also place on the record of these proceedings an affidavit disclosing details of utilisation of the sum which is being released. The Court further takes on board the undertaking of the petitioner that no part of the monies which stand released in the interim and pursuant to this order shall be remitted overseas. The interim release which has been directed in terms of this order shall be in addition to the amount of Rs 15.5 crores which was released pursuant to the statement of the learned ASG as recorded before the Supreme Court.

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• Service Tax

• 2022 (7) TMI 307
  Validity of statement issued in prescribed form SVLDRS 3 - tax liability that was due and payable - setting off of amounts already paid towards tax - Seeking declaration that the impugned statement is ultra vires section 66B of the Finance Act 1994 - seeking declaration that impugned statement violates the provisions of Articles 14, 19 (1) (g), 265 and 300A of the Constitution - HELD THAT:- While there is no dispute about the fact that the petitioner falls under the voluntary disclosure category and that it has deposited before the scheme kicked in i.e., 01.09.2019, amounts towards tax liability, which included the relevant period, the contesting respondents i.e., respondent nos. 2 to 4, refused to take cognizance of the same, as the designated committee under the proviso appended to sub-section (1) of section 126 is not empowered to verify the declaration made concerning the amount of duty set forth by the declarant in the prescribed form i.e., SVLDRS-1. The submission of the contesting respondents is that the petitioner cannot go beyond the purview of the scheme, and if the argument of the petitioner is accepted, that there is an ambiguity in the scheme, since it is akin to a beneficial legislation, the provisions of the scheme ought to be interpreted in a manner that favours the revenue, as against the declarant. The expression tax dues involves a combination of two words tax and dues - while the term/word tax is commonly understood as meaning imposition of a governmental charge on persons, properties, entities, and transactions to yield public revenue. The word dues would be something which is owed or payable (in the context of present matter, tax) constituting a debt2. Therefore, when the words tax and dues are read conjointly, it could only mean imposition of charge which is owed and payable and thus, by necessary implication, would exclude tax liability which is already discharged and/or paid - therefore, the expression total amount of duty in clause (d) of section 123 of the 2019 Act, in our opinion, could only mean the total amount of outstanding duty payable by a declarant making voluntary disclosure, as it could never have been intended by the legislature that the revenue would collect and/or recover tax liability which has already been discharged by the declarant. The obvious intent of the legislature in forging the scheme under the 2019 Act is to encourage assessees to make a clean breast of their affairs and resultantly, extend the necessary benefits to the revenue by adding to their financial wherewithal, sans the attendant difficulties and costs that would otherwise have to be incurred to initiate of recovery and legal proceedings - the only caveat that one needs to enter at this stage (and something that does not arise for consideration in this case), is that if a declarant has made a pre-deposit or other deposits which exceed the amount payable, as indicated in the statement issued by the designated committee, the said amount shall not be refunded as per provisions of sub-section (2) of section 130 of 2019 Act. In the instant case, the pre-deposit made by the petitioner is less than the amount stated in the impugned statement and therefore, in this matter, the petitioner steers clear of the aforesaid provision - the construction of provisions of section 123 (d) cannot enure to the benefit of the revenue. Thus, it would suffice if a direction is issued, quashing the impugned statement dated 12.02.2020, and consequentially respondent no. 4 be called upon to issue a fresh statement in the prescribed form i.e., SVLDRS-3, after taking into account the pre-deposit made by the petitioner towards tax liability, as indicated in its declaration made in the form SVLDRS-1 - petition disposed off.

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• 2022 (7) TMI 306
  Refund of amounts paid as Service Tax - rejection on grounds of limitation under Section 11B of the Central Excise Act, 1944 even though the levy under Section 66B of the Finance Act, 1994 does not apply to the activities of the Appellant - according to the Assessing Authority, appellant is not liable to pay service tax, but the application in respect of the taxes paid for the period between April 2016 to December 2016, are barred by time under Section 11B of Central Excise Act - HELD THAT:- In SHIV SHANKER DAL MILLS ETC. ETC VERSUS STATE OF HARYANA ORS. ETC. [ 1979 (11) TMI 261 - SUPREME COURT] the Hon ble Supreme Court of India speaking through Justice Krishna Iyer has held that The petitioners who had, under mistake, paid larger sums which, after the decision of this Court holding the levy illegal, have become refundable, demand a direction to that effect to the Market Committees concerned. There cannot be any dispute about the obligation or the amounts since the Market Committees have accounts of collections and are willing to disgorge the excess sums Indeed, if they file suits within the limitation period, decrees must surely follow. What the period of limitation is and whether Article 226 will apply are moot as is evident from the High Courts judgment, but we are not called upon to pronounce on either point in the view we take. In view of the admitted fact that the services rendered by the assessee satisfy all conditions of Rule 6A of the Service Tax Rules, 1994 and the services provided by it are export services, it is entitled for refund of the tax. In view of authority in the case of Shiv Shanker Dal Mills, the refund cannot be denied on the ground of limitation - appeal allowed - decided in favor of appellant.

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• 2022 (7) TMI 305
  Valuation - inclusion of reimbursement claimed by the Appellant from the clients during the course of providing the services of Customs House Agent - Rule 5 of the Service Tax Rules, 1994 - HELD THAT:- The issue is no longer res integra inasmuch as the very Rule on the basis of which impugned demand has been raised has been held to be ultra vires the provisions of the Finance Act, 1994. The Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT ] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. The impugned demand raised by the Ld. Commissioner cannot be sustained, except for the short payment of service tax which has already been deposited by the Appellant - Penalty set aside - appeal allowed.

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• Wealth tax

• 2022 (7) TMI 304
  Wealth tax Assessment - assets under section 2(ea) of the Wealth Tax Act - i nterpretation of section 2(47)(v) of the Income-tax Act - whether Tribunal was correct in law in holding perversely that the appellant continued to be the owner of urban land under section 2(ea) of the Wealth Tax Act, 1957 despite the fact that the appellate (after transferring the land to the developer through JDA dated 05-12-2000) retained only the right to receive 15.3% of the total built up area, which does not fall within the exhaustive definition of assets under section 2(ea) of the Wealth Tax Act, 1957? - HELD THAT:- A combined reading of Clause 10.1(g), Clause 13.1, 13.2 and Clause A(viii) of the Annexure-A together with the No Objection under Chapter XX-C of the IT Act and the letter written by Shri. Dhingra prima facie demonstrates that the Developers did have power to alienate their portion of the property; and they had entered into the property. It is a different matter if the project did not progress further. A mere failure of the project does not undo the acts of the parties. Therefore, in our view, the impugned order passed by the ITAT is not sustainable and in the facts and circumstances of this case, it is just and appropriate for the ITAT to have a re- look into the matter in the light of the contents of MDA, NOC issued under Chapter XX-C and the letter written by Shri. Dhingra. Appeals are allowed.

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• Indian Laws

• 2022 (7) TMI 303
  Dishonor of Cheque - dishonor because of mismatch of the drawer s signature - adding colour of criminality to an issue which involves partial non-performance of business obligations - parallel proceedings for offence punishable under Section 420 of the Indian Penal Code can be initiated alongwith Proceedings under Negotiable Instruments Act or not? - HELD THAT:- It is now well-settled that in case of offence relating to dishonour of cheque, there is no bar to proceed simultaneously under Section 138 of the Negotiable Instruments Act as well as under Section 420 of the Indian Penal Code. It is to be mentioned that the drawer of the cheque will have to take abundant precaution while issuing the cheque, so that the cheque should be honoured and contracted obligations are fulfilled. If the drawer intentionally tampers with the cheque, the cheque with difference in signature, will be definitely returned. In the present case even after service of statutory notice, the amount involved in the cheque are not paid by the petitioner. In such circumstances, petitioner will have to explain that tampering of cheque if any, was not made with any oblique motive. The mens rea behind issuing such cheque will have to be determined based on the material to be collected during the course of trial - it is for the accused to explain as to how the cheque in question which pertained to his account bearing his incomplete signature reached in the possession of the complainant. Fair trial includes fair and proper opportunities allowed by law to prove innocence of the petitioner. As the materials available so far discloses prima facie offence against the present petitioner, it would not be proper to quash the proceeding at its threshold exercising power under Section 482 of the Code. Application dismissed.

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