Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 11, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
CST, VAT & Sales Tax
Indian Laws
Articles
News
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Rationalisation of Overseas Investment Regulations under FEMA, 1999 – Draft rules/regulations for Comments
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CCI approves acquisition of Bikaji Foods International Limited by Lighthouse India Fund III, Limited (Fund III) and Lighthouse India III Employee Trust
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Nearly 72% of financial transactions of Public Sector Banks (PSBs) done through digital channels
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Measures taken to curb food inflation and alleviate problems of common man due to COVID-19
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256 Central Public Sector Enterprises (CPSEs) operational with total annual turnover of ₹ 24, 61,712 crore as on 31.03.2020
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More than 1.17 lakh loans of ₹ 26,391 crore sanctioned to SC/ST and woman borrowers under Stand Up India Scheme (SUPI)
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Revenue Deficit Grant of ₹ 9,871 crore released to 17 States
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Shri Piyush Goyal addresses traders’ fraternity on National traders’ day
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Auction for Sale (Re-Issue) of (i) ‘5.63% GS 2026’, (ii) ‘GoI Floating Rate Bond 2033’, (iii) ‘6.64% GS 2035’, and (iv) ‘6.67% GS 2050’
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23.88 crore cumulative enrolments in Pradhan Mantri Suraksha Bima Yojana since its launch
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Digital payments surge from 1459.02 crore in FY 2017-18 to 4371.18 crore in FY 2020-21
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171 operating Central Public Sector Enterprises made net profit in FY 2019-20
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₹ 99,756 crore disputed tax amount settled under Vivad Se Vishwas scheme
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of certificate of registration under the CGST/SGST Act - The proper officer has issued a notice to cancel the registration of the petitioner in FORM GST REG 17, based on the report of the intelligence officer. It is clear that the State Tax Officer, Pala has himself did not conduct any enquiry as contemplated in Rule 25 - The proper officer ought to have independently assessed the situation, particularly, when the petitioner had produced the receipt of the building tax from the local authority to prove the authenticity of his stand. - The respondents are directed to restore the registration of the petitioner - HC
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Reversal of Input Tax Credit - fictitious suppliers/firms - fake invoices - demand to remit the amount availed as input tax credit at the stage of summons itself without following due procedure under Section 74 of the CGST Act, 2017 - No tax demand can be issued or raised when investigation is still in progress. The respondents cannot be allowed to put the cart before the horse and collect any tax, interest or penalty before they determine, in an enquiry, after putting the petitioner/assessee of notice - HC
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Ex-parte order - disallowance of Input Tax Credit and further imposing of tax - No sufficient time was afforded to the petitioner to represent his case and (b) order passed ex-parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. - Matter restored back - HC
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Seeking grant of Bail - it is alleged that the company received payment from its customers, but failed to remit the tax to the Government - section 132 (1) (d) of the Central Goods and Service Tax Act, 2017 - The petitioner is ordered to be released on the basis of the bail bonds and sureties, which have been executed by the petitioner and the sureties while being enlarged on interim bail granted - HC
Income Tax
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Validity of the reassessment proceeding framed u/s 147 - Admittedly, the addition on account of bogus purchases has been made by the AO which is sufficient enough for initiating the proceedings under section 147 of the Act - initiation of the proceedings cannot be held invalid merely on the reasoning that there was no addition made by the AO on account of freight expenses though there was the mention of such expenses in the reasons recorded. - AT
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Applicability of provisions of Section 40A(3) in respect of unaccounted business expenses incurred in cash - Admittedly, the seized document contains unaccounted income as well as unaccounted expenditure both were duly transacted only in cash. Hence, the applicability of provisions of Section 40A(3) of the Act to the said payments would not serve the scheme of taxation and would ultimately result only ending up in taxing the entire unaccounted gross receipts alone without giving benefit of deduction to the assessee. - AT
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Nature of expenses - technology recharge cost - If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future - AT
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Benefit of telescoping the commission income with the income declared in the return - assessee is only an accommodation entry provider - - only estimated commission @1% on investments and sales to outside companies / parties should be considered and the same should be telescoped with the income returned by the assessee for the respective assessment years - AT
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Reopening of assessment u/s 147 - tangible material with the respondent authority for recording satisfaction - when the department has not considered the objections raised by the petitioner for the reason that the petitioner company has failed to disclose fully and truly all the material facts necessary for his assessment for the year under consideration and when the AO has reason to believe that income chargeable to tax has escaped assessment, we are of the view that the above decision would be of no avail to the petitioner. - HC
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Reopening of assessment u/s 147 - bogus transactions or accommodation entries involving the assessee - the petitioner was issued a notice under section 133(6) of the said Act requesting it to furnish the evidence to prove the genuineness of the transactions mentioned therein before the issuance of the impugned notice u/s 148 of the said Act, however, the petitioner had chosen not to respond to the said notice. - Reopening sustained - HC
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Withholding of the refund - The procedure followed by the Assessing Officer does not show the proper application of two independent provisions as in Section 241A and Section 143 wherein once a refund is declared after scrutiny proceedings and such refund is withheld, a reasoned order has to follow because the assessment in such a case is done after production of materials and evidence required by the AO. - Refund to be granted w ith interest - HC
Customs
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Reduction in the quantum of penalty - Section 114(i) of the Customs Act, 1962 - abetment of falsely signed the invoices used for improper exportation - Jurisdiction of proceedings initiated by the DRI Officers - Penalty set aside on the ground of jurisdiction as well as principles res judicata - AT
Indian Laws
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Dishonor of Cheque - possibility of amicable settlement - Lok Adalat - A compromise or settlement cannot be forced upon the parties. In other words, in case one of the parties does not appears before the Lok Adalat where their case stands referred for compromise or settlement, the only inference which can be prudently drawn is that the party is not interested in having the matter compromised. That being the situation, the Lok Adalat has to thereafter proceed by ordering that as the matter could not be settled between the parties, the same is referred back to the court from which it was sent for the purpose of compromise or settlement. - HC
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Scope of Arbitral award - “award” delivered by an Emergency Arbitrator - Singapore International Arbitration Centre (SIAC Rules) - Section 17, as construed in the light of the other provisions of the Act, clearly leads to the position that such emergency award is made under the provisions of Section 17(1) and can be enforced under the provisions of Section 17(2) - thus, full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as “awards”. Such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act. - SC
VAT
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Validity of remand of matter to the AA to pass fresh order - It is settled principles of law that every decision is to be supported by reasons inasmuch as reasoning is the heart beat of every judgment. Without assigning any reasons as to how the order of the FAA is wrong, setting aside the order of the FAA and remanding the matter to AA by the Karnataka Appellate Tribunal, in our considered opinion has thus resulted in miscarriage of justice and error of jurisdiction which would entitle the Revision Petitioner to seek interference at the hands of this court. - HC
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Validity of an Ordinance which levied an additional sales tax @ not exceeding to 3% of the gross turnover - Ordinance was withdrawn in 1995 - The Court is unable to agree with the view expressed by the Tribunal that notwithstanding the clarification of the Government, the Ordinance in question was still required to be enforced for the period of its operation - the impugned order of the Tribunal and the corresponding orders of the ACST and STO seeking to enforce the Ordinance are hereby set aside - HC
Case Laws:
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GST
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2021 (8) TMI 410
Seeking grant of Bail - offence u/s Section 132(1) (i) of Assam GST Act, 2017 - HELD THAT:- This Court is of the view that Section 132 in the section 69 of the AGST Act providing the power to arrest is only with regard to the nature of the offences specified in the clauses (a), (b), (c) and (d) of the sub-section (1) of the section 132 for which the punishment is provided in the clauses (i) and clause (ii) of the sub-section(1) and the sub-section (2) of section 132 of the CGST Act. Therefore, when a Commissioner forms an opinion and has reason to believe that a person has committed any offence as specified in the clauses (a), (b), (c) and (d) of the sub-section (1) aforesaid, which is punishable under the clauses(i) and (ii) of the sub section(1) and the subsection (2) of section 132 of the AGST Act, he may by order authorize any officer of the central tax to arrest such person and accordingly, on authorization to arrest the accused person and on the strength of the said warrant the accused was arrested on 12.07.2021. This Court is of the view that the arresting authority falls under the term proper officer . When a person is arrested pursuant to the order passed by the Commissioner who has reason to believe that such person has committed any offence specified in the clauses (a), (b), (c) or (d) of sub-section(1) of section 132 of the AGST Act which is punishable under the clause(i) of that sub-section, then such offence being cognizable and non bailable as per sub-section (5) of Section 132 of the AGST Act, the officer authorized to arrest such person is duty bound to inform such person about the grounds of arrest and produce him before the Magistrate within twenty-four hours. Therefore, the reference to section 132(5) in sub-section (2) of section 69 of the ACGST Act is made so as to differentiate between the person for whom the Commissioner has reason to believe that such person has committed cognizable and non bailable offences or non-cognizable and bailable offences as provided in section 132 of the AGST Act. It appears that with a view to give effect to the power to grant bail by the authorized officer under the clause (a) of the sub-section (3) of the section 69, subclause(b) of sub-section(3)of the section 69 of the AGST Act provides for method, of course, subject to the provisions of the Code of Criminal Procedure, that in case of a non-cognizable and bailable offence, Deputy Commissioner or the Assistant Commissioner shall for the purpose of releasing an arrested person on bail or otherwise, has the same powers and be subjected to the same provisions as an officer-in-charge of a police station - the provisions of section 69 of the AGST Act are absolutely clear and unambiguous which provides that during the course of inspection, search and seizure when the Commissioner has reason to believe that the person has committed any offence as per the clauses (a), (b), (c) or (d) of the subsection (1) of section 132 of the AGST Act, which is punishable under the clause(i) or clause (ii) of the sub-section (1) or the sub-section (2) of the section 132 of the AGST Act, then he may pass an order authorizing an officer of the department to arrest such person. Taking into account, the fact that to carry out further investigation as per the observations made by this Court as regards requirement of further investigation, this Court is not inclined to grant bail to the Petitioner, at this stage - Petition dismissed.
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2021 (8) TMI 409
Cancellation of registration of the petitioner - time limitation - Section 29 of the Central Goods and Service Tax Act, 2017 read with Rule 22 of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- The application for revocation of cancellation of registration has to be made before the same officer who cancelled the registration. However, as regards the period of 30 days within which the application was to be submitted by the petitioner, the amendment made to Rule 23 of the CGST Rules, 2017 dated 18.05.2021 would be helpful to the petitioner because it says that such application can be filed either within 30 days or within such time period as extended by the Additional Commissioner or the Joint Commissioner or the Commissioner, as the case may be, in exercise of the powers provided under the proviso to sub-section (1) of Section 30 of the CGST Act. It is found that the period of limitation could be extended by any one of the aforementioned authorities. Since, in the present case, the amendment has been brought in the Rule 23 of the Rules of 2017 by notification dated 18.05.2021, the Commissioner who decided the appeal by order dated 19.02.2021, did not have the occasion to consider that aspect whether the period of limitation for filing application under Section 30 of the CGST Act, should be, in the present case, extended. Considering that the petitioner has bonafidely pursued the remedy of appeal under Section 107 of the CGST Act against the order of revocation of cancellation of registration dated 03.12.2019 and the appeal remained pending for a period of about one year, we are persuaded now to dispose of the writ petition by requiring the proper officer to consider the application for revocation of cancellation of registration, if now filed within 15 days from today, and decide the same on merits within 30 days from the date of filing of such application. Petition disposed off.
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2021 (8) TMI 408
Cancellation of certificate of registration under the CGST/SGST Act - invocation of Sub Section (2) of Section 29 of the CGST Act, 2017 - HELD THAT:- The proper officer can cancel registration of a person for the reasons stated in Sub Section (2) of Section 29 of the CGST Act. It is not the case of the respondents that the petitioner had contravened any of the provisions of the Act or Rules made thereunder, inasmuch as, no such allegation is levelled against the petitioner either in the show case notice (Ext.P5) nor such accusation is made against him in the impugned order at Ext.P8. My attention is not drawn to contravention of any provision of the Act or Rules framed thereunder by the learned Government Pleader. Similarly, there are no allegations either in the show cause notice or in the impugned order that the petitioner has failed to furnish returns for three consecutive tax periods or that he failed to file returns for a continuous period of six months. It is thus clear that in consonance with the allegation levelled in the show cause notice, the impugned order is passed for the reason that the business place is situated in a building which is partially completed with structures only and no building number is affixed by the local authority. Even otherwise, the respondent department cannot go beyond the show cause notice issued by it to the petitioner, requiring the petitioner to defend the case against him as conveyed to him in the show cause notice. Thus, this Court will have to examine whether the reasons stated in the show cause notice, which is reproduced in the foregoing paragraph, can be construed as reason for cancellation of registration as per provisions of Sub Section (2) of Section 29 of the CGST Act, 2017. The answer to this question is found to be in negative, because Sub section (2) of Section 29 does not envisage the contingency of situation of place of business in a partially completed building having no building number affixed on it by the local authority. In the case in hand, the State Tax Officer, Pala is the proper officer for assessment and he is a competent officer to invoke provisions of Rule 25. The State Tax Officer, Pala is also the registering authority of the petitioner. This officer has issued a notice to cancel the registration of the petitioner in FORM GST REG 17, based on the report of the intelligence officer. It is clear that the State Tax Officer, Pala has himself did not conduct any enquiry as contemplated in Rule 25 - The proper officer ought to have independently assessed the situation, particularly, when the petitioner had produced the receipt of the building tax from the local authority (Ext.P3) to prove the authenticity of his stand. This seems to have been not done by the proper officer. Without considering this document at Ext.P3, the registering authority had cancelled the registration. The application for revocation of cancellation of registration is also rejected by the respondent without proper enquiry in the matter. The respondents are directed to restore the registration of the petitioner - Petition allowed.
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2021 (8) TMI 405
Reversal of Input Tax Credit - fictitious suppliers/firms - fake invoices - demand to remit the amount availed as input tax credit at the stage of summons itself without following due procedure under Section 74 of the CGST Act, 2017 - HELD THAT:- A reading of various provision of section 74 indicates that a notice in sub-Section (1) of Section 74 of the Act may be issued by the proper officer if he is of the opinion that the input tax credit has been wrongly availed or utilized by reason of fraud, or any wilful-misstatement or suppression of facts, to the person who has wrongly availed or utilized input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50 and a penalty equivalent to the tax specified in the notice. Sub-Section (5) of Section 74 of the Act, however, enables the person chargeable with tax to, before service of notice under sub-Section (1) of Section 74, pay the tax along with interest payable under Section 50 and a penalty of 15% of such tax on the basis of his own ascertainment of such tax or the tax ascertained by the proper officer and inform the proper officer in writing of such payment. Sub-Section (9) of Section 74 of the Act enables the proper officer to determine the amount of tax, interest and penalty due from such person and issue an order, if the contents of the notice are disputed. Sub-Section (5) of Section 74 of the Act gives a choice to the tax payer to make any payment, if he is so chooses, but it does not confer any power on the respondents to make a demand as if there has been a determination of liability of the Assessee and demand tax along with interest and penalty - Before ascertainment of liability, the 4th respondent could not have issued the letter dt.25.04.2019 to the petitioner asking him immediately reverse the input tax credit of ₹ 1,52,35,820/- allegedly availed. No tax demand can be issued or raised when investigation is still in progress. The respondents cannot be allowed to put the cart before the horse and collect any tax, interest or penalty before they determine, in an enquiry, after putting the petitioner/assessee of notice - the respondents are restrained from coercing the petitioner to make any payment without issuing notice under Section 74(1) of the Act and following the procedure therein; and they are directed to refund ₹ 35,00,000/- already paid by petitioner with interest @ 7% p.a from the date of payment till date of refund within four (04) weeks from the date of receipt of a copy of this order. Petition allowed.
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2021 (8) TMI 403
Ex-parte order - disallowance of Input Tax Credit and further imposing of tax - Validity of Section 16(4) of the Bihar/Central Goods and Services Tax Act, 2017 - imposition of time limit for the availment of Input Tax Credit being violative of Article 14, Article 19(1)(g) and Article 300A of the Constitution of India - validity of amendment carried under Rule 61(5) of the Bihar/Central Goods and Services Tax Rules, 2017 inserted vide Clause 4(a) of Notification No. 49/2019 dated 9th October, 2019 - disallowance of Input Tax Credit - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This is for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case and (b) order passed ex-parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Matter restored back.
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2021 (8) TMI 402
Seeking grant of Bail - it is alleged that the company received payment from its customers, but failed to remit the tax to the Government - section 132 (1) (d) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- This Court, after hearing the parties to the lis, in order to give an opportunity to the petitioner to absolve himself of the tax liability by producing the accounts and tax payment made to the government on the payment received by the petitioner to the tune of ₹ 93 Crores, granted interim bail to the petitioner till 8.4.2021, which was thereafter extended up to 16.6.2021 and last of all, the matter was directed to be listed on 20.7.2021. An undertaking affidavit has been filed by the petitioner dated 22.07.2021 in which the petitioner has submitted that the security given to the bank for the loans and LC availed to the tune of about ₹ 75 Crores, security of property and machineries of the petitioner to the tune of about ₹ 200 crores has been given and the petitioner has undertaken that the properties are put up for sale by the bank and after adjusting the amount that is due and payable to the bank on account of the loans and LCs availed by the petitioner, the surplus proceeds may be utilised for payment of the amount of GST calculated after taking into account the input tax credits or other refund calculation eligibility and based on the advice of the consultants, a charge be created on the subject properties in favour of the Revenue to the extent of the outstanding GST dues, which shall rank in priority after the settlement of debts due to the Bank. The petitioner is ordered to be released on the basis of the bail bonds and sureties, which have been executed by the petitioner and the sureties while being enlarged on interim bail - Petition allowed.
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2021 (8) TMI 387
Refund of of Tax paid inadvertently to the government exchequer - Section 54 of CGST Act, 2017 - Whether payment, in the form of License Fee (LF) for issuance of License and Spectrum Usage Charges (SUC) for use of spectrum, as a percentage of the Adjusted Gross Revenue (AGR) to Department of Telecommunications (DoT) is a Supply under GST law or not? Whether issuance of license and allotment of spectrum as a Regulatory fee attract any levy of tax as per GST law or not? - HELD THAT:- The rendering of service from the Government (DoT) to business entities, (in the instant case the appellant ) established from the aforesaid statutory provision. Therefore, the levy of GST is appropriately applicable on the appellant as per sub-section (3) of Section 9 of the CGST Act, 2017 read with Notification No. 13/2017-Central Tax (Rate), dated 28 June, 2017 - if there was any doubt regarding taxability of service then the appellant was free to approach the Authority for Advance Ruling (AAR) as per clause (e) of sub-section (2) of Section 97 of CGST Act, 2017, because question of law about determination of the liability to pay tax on any service may be sought for advance ruling to AAR as per GST law, but the same was not opted by the appellant. Whether LF and SUC charges are consideration for supply as per GST law or not? - HELD THAT:- The permission of granting of License by DoT and allotment of spectrum on the basis of SUC for business activities is directly nexed with their revenue, hence, it cannot be held that these charges are regulatory fee - Further, as per Section 4 of the Telegraph Act The Government merely grants/delegates permission of carrying out the establishing, maintaining and working telegraphs . Granting permission for carry out the establishing, maintaining and working telegraphs and allocation of spectrum is a service which falls under HSN Head 997338 which specifically defines Licensing services for right to use other natural resources including telecommunication spectrum - If no GST is leviable on grant of license then why a service category at HSN Head 997338 as Licensing services for right to use other natural resources including telecommunication spectrum has been specified in the GST Act. Thus, it can be concluded that such type of services License Services for right to use other natural resources including Teleservices Spectrum are not regulatory fee and are taxable as per GST law under the specific Head 997338 meant for such services. The consideration in the form of LF and SUC paid by the appellant to the government is consideration as per clause (31) of Section 2 of CGST Act, 2017 which cover all the elements specified under ibid section of the Act. There are service provider as well as service recipient and the element of consideration is also involved in the instant case. Hence, the taxability is fasten on these payments as per GST Act. Whether impugned order is non-speaking order? - HELD THAT:- T he fact to be appreciated is that the rate amendments carried out vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 is nothing but to clarify the legislative intent as well as to resolve the unintended interpretations. Hence, the rate of tax specified vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 is very much applicable to the disputed period and as such the prevalent rate, at which appellant has paid, found in order. Whether License fee and Spectrum usage charges paid by the Appellant are covered in Service Rate Notification and are leviable to tax or not? - HELD THAT:- Licensing services for right to use other natural resources including telecommunication spectrum is specified in HSN sub-heading 997338, whereby taxability of said service has been fastened as per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017. Since, taxability of service in question has been specified in the Act, then it cannot be interpreted that it will not be taxed and refund will be issued for the GST payment in this regard. Further, all the submissions/averment of the appellant have been taken up for discussion in the instant appeal case. Therefore, there are no any merit of the appellant in this context. Appeal dismissed.
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2021 (8) TMI 386
Seeking refund of ITC on Export of Goods Services - period April, 2018 to March, 2019 - HELD THAT:- The adjudicating authority/proper officer has sanctioned refund claim amounting to ₹ 5,94,924/- out of refund claim amounting to ₹ 6,02,713/- and rejected amounting to ₹ 7,789/- and accordingly pass the Order-in-Original vide reference No. ZZ0808200304019, dated 21-8-2020 in Form GST RFD-06 whereas, on disbursement of the sanctioned refund claim in lieu of ₹ 5,94,924/- only ₹ 4,73,792/- has been disbursed resulted into less receipt of payment of ₹ 1,21,132/-. The appellant has also enclosed copy of payment order Number ZY0808200314831, dated 22nd August, 2020 amounting to ₹ 4,73,792/- (RFD-05). In view of the comments received from the concerned jurisdictional officer as well as grounds taken by appellant in their appeal memo, it is found that the appellant has received less refund amounting to ₹ 1,21,132/-, therefore, the appellant is entitled to get the less receipt payment which has been occurred by the adjudicating authority due to some technical problem in system - appeal allowed - decided in favor of appellant.
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Income Tax
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2021 (8) TMI 383
Withholding of the refund - petitioner submitted that to invoke the provision of Section 241A AO has to form an opinion that the grant of refund is likely to adversely affect the revenue - HELD THAT:- Withheld the refund without assigning any reason though the statute mandates for recording the same. Having not done so the officer concerned has acted arbitrarily. The procedure followed by the Assessing Officer does not also show the proper application of two independent provisions as in Section 241A and Section 143 wherein once a refund is declared after scrutiny proceedings and such refund is withheld, a reasoned order has to follow because the assessment in such a case is done after production of materials and evidence required by the AO. That apart and in any event the petitioner/assessee is a public limited company whose accounts are stringently scrutinized at the internal level. It is, therefore, more so required to apply the provisions more cautiously while withholding the refund after the same has been declared on completion of assessment on scrutiny. Analysis and findings the action on the part of the respondents in withholding of the refund for the assessment year 2018-19 is not sustainable in law and is set aside and quashed. The petitioner, is therefore, entitled to a mandatory order of refund. The respondents are directed to refund the amount within a period of four weeks from date with further interest on the principal sum from the date upto which interest has been added has been added to the principal sum in arriving at the figur till actual refund as per the provisions of the Income Tax Act, 1961. The respondents shall act on the basis of a server copy of this order without insisting for a certified copy thereof while processing the refund.
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2021 (8) TMI 382
Reopening of assessment u/s 147 - bogus transactions or accommodation entries involving the assessee - subsequent reliable and creditworthy information received from the investigating wings - HELD THAT:- In the case of Ess Kay Engineering Co. (P) Ltd. versus Commissioner of Income Tax[ 1997 (7) TMI 114 - SC ORDER] it has been observed that the AO is not precluded from reopening the assessment of an earlier year on the basis of fresh material discovered subsequently during the course of assessment of next assessment year. As the petitioner that the reopening was sought to be done on the basis of false and incorrect material as no amount of ₹ 20 lacs was received from Kamdhenu Marketing, however, the petitioner had made purchases from Kamdhenu Marketing and had made payments against such purchases, and that the alleged receipt of accommodation entry of ₹ 1,05,00,000/- from Jignesh Shah was also based on false information, inasmuch as, the petitioner had borrowed the said amount from Arihant Enterprise Ltd. at the relevant time when Shri Dhiren Shah was the Director of the Company and not Jignesh Shah. Apart from the fact that no such contention was raised by the petitioner in the objections filed by it on reopening of the assessment, nor in the memo of petition, and has been raised for the first time in the affidavitin- rejoinder, such contention could not be taken into consideration at this juncture, it is also pertinent to note that the petitioner was issued a notice under section 133(6) of the said Act on 21.03.2019 requesting it to furnish the evidence to prove the genuineness of the transactions mentioned therein before the issuance of the impugned notice under section 148 of the said Act, however, the petitioner had chosen not to respond to the said notice. Be that as it may, the respondent has considered all the objections in detail raised by the petitioner in the impugned order dated 13.12.2019, which order being just and proper does not call for any interference. The petition being devoid of merits is dismissed.
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2021 (8) TMI 380
Reopening of assessment u/s 115WG - Fringe benefits escaping assessment - denial of natural justice - HELD THAT:- At the first instance, assessments are being made on the basis of the information provided by the assessee and thereafter, if the AO has reason to believe that any fringe benefits chargeable to tax escaped assessment, then he could reopen the assessment. It is not as if the AO is empowered to reopen the assessment, if he has the reason to believe. Even thereafter if any other fringe benefits escaped assessment is noticed during the course of proceedings under Section 115WG, then also he is empowered to proceed for assessment / reassessment and pass appropriate assessment/reassessment order. Whether opportunity to be provided for reopening of assessment under Section 147 of Income Tax Act, has to be extended to Section 115WG also? - Ground raised is that the impugned order contains additional material of reasons, which were not made available to the petitioner/assessee while communicating the reasons for initiating proceedings under Section 147 - The reasons furnished for reopening of assessment in proceeding dated 14.07.2016 states that any specified security or sweat equity shares (Section 115WB(1)(d) (Difference between the fair market value on the vesting date and amount recovered from or paid by the employee) and contribution to an approved superannuation fund for employees (in excess of one lakh rupees in respect to each) only a sum of ₹ 106,72,53,396/- was offered to FBT against the total amount of ₹ 243,69,22,379/- claimed as Stock Compensation Expenses in the previous year relevant to Asst Year 2010- 11. The subsequent paragraph would state that as such the under computation of fringe benefits to the extent of ₹ 136,96,68,983/- (₹ 243,69,22,379 ₹ 106,72,53,396) in Asst Year 2009-10 is brought to notice. Typographical error committed by the Assessing Authority by not including the three lines, which was mentioned in the impugned order in the reasons furnished in the proceeding dated 14.07.2016, has not caused any prejudice to the interest of the petitioner/assessee and the subject was categorically dealt with by the Assessing Authority through out the proceedings and the petitioner/assessee also had the knowledge about the said facts and circumstances and raised objections. Even in cases where during the course of proceedings, if the Assessing Officer finds any other fringe benefits chargeable to tax, which had escaped assessment and which has come to his notice, shall also be assessed and appropriate orders shall be passed by the Authority. This being the scope of the reassessment proceedings contemplated u/s 115WG, the very ground raised that it is a 'change of opinion', cannot be accepted. The reasons were disclosed to the petitioner/assessee. The petitioner/assessee has responded to the reasons and the incompleteness of the reasons as stated by the petitioner/assessee is incorrect and certain typographical error would not constitute a ground for quashing the entire initiation of proceedings under Section 115WG. The reason for reopening as contemplated would not be construed as a 'change of opinion' and further the petitioner/assessee has to submit all the details for the purpose of completing the reassessment proceedings. Successive Assessing authority had taken a different stand is not accepted. The successive officer followed the proceedings only based on the reopening of the assessment initiated by the erstwhile officer by invoking Section 115WG and such continuation of the proceedings cannot be raised as a valid ground unless any malafide is established against any such officer. Aud it objections cannot be a reason for reopening of assessment - This Court is of an opinion that Section 147, the conditions stipulated for reopening of assessment as well as the scope of Section 133A, unambiguously portray the powers of the authority to secure informations by conducting survey. Thus, such informations provided by way of audit objections, would be a cause for re-opening of assessment under Sections 147/148 of the Act, if the Assessing Authority is able to trace out certain materials, which were not adjudicated during the original assessment. The purpose of audit objection is to ensure the correctness of the procedures followed and the decisions taken in accordance with the provisions of the Income Tax Act. Thus, during the course of audit objections, if any materials are identified, undoubtedly, such materials shall be considered as a new material for the purpose of reopening of assessment. Each provision under Chapter XIV procedure cannot be separated as far as the Income Tax Act is concerned. Each Section has got linkage with one another as far as the procedures to be followed by the authorities competent are concerned as well as the rights of an assessee to defend their case. Thus, a balancing procedures as contemplated, are to be followed scrupulously by the competent authorities. Sources through which the materials are taken cannot be questioned by the assessee. Section 147/148 provides much wider scope for the purpose of reopening of the assessment. Thus, in the presence of any new materials made available then the Assessing Officer, is duty bound to exercise his power of reopening of assessment by following procedures contemplated. Thus, the very contention raised in this regard, does not merit consideration. This being the scope of the reopening proceedings under Section 115WG, the petitioner/assessee has to participate in the reopening proceedings by availing the opportunities to be provided for the purpose of completion of proceedings. The disputed facts raised by the petitioner/assessee need not be adjudicated by the writ Court under Article 226 of the Constitution of India. Such an adjudication has to be undertaken through original records and evidences made available.
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2021 (8) TMI 379
Reopening of assessment u/s 147 - tangible material with the respondent authority for recording satisfaction and reopening the assessment for the year under consideration - HELD THAT:- The function of the assessing authority at this stage is to administer the statute and what is required is a reason to believe and not to establish fact of escapement of income and therefore, looking to the scope of Section 147 as also sections 148 to 152 of the Act, even if scrutiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the assessing authority can form a belief that the income of the petitioner has escaped assessment, it is always open for the assessing authority to reopen the assessment. In the case on hand AO has reason to believe that the petitioner company was providing accommodation entries for the shell/paper companies meaning thereby, bogus companies/concerns. The reasons for the formation of the belief by the AO in the instant case, appear to have a rational connection with or relevant bearing on the formation of belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. Accordingly, no interference is called for at the hands of this Court in this petition under Article 226 of the Constitution of India. The learned senior advocate for the petitioner has relied upon the decision in GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] . There cannot be any other view than what is taken in the said decision, however, in the case on hand, when the department has not considered the objections raised by the petitioner for the reason that the petitioner company has failed to disclose fully and truly all the material facts necessary for his assessment for the year under consideration and when the AO has reason to believe that income chargeable to tax has escaped assessment, we are of the view that the above decision would be of no avail to the petitioner.
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2021 (8) TMI 373
Addition u/s 68 - whether unpaid trade creditors could be added u/s 68 of the Act has been examined by various courts? - HELD THAT:- Outstanding balances related to the purchases made during the year under consideration and not brought forward balances. AO did not get reply from both the trade creditors and hence he proceeded to assess the outstanding balances, while accepting the purchases made during the year payments made during the year. AO has made the addition u/s 68 of the Act and did not invoke provisions of sec. 41(1) of the Act. On the contrary, the assessee has shown that the payments have been made in the succeeding year through banking channels. Accordingly, we are of the view that the revenue could not rely upon the decision rendered in the case of Sureshkumar T Jain. Under these set of facts, we are of the view that the AO could not have made addition of trade creditors u/s 68 of the Act. We set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned addition of trade creditors. Though the assessee has raised legal ground challenging the validity of reopening of assessment, A.R said that he will not press the same, if the appeal of the assessee is allowed on merits. Appeal of the assessee is allowed.
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2021 (8) TMI 372
Rectification u/s 254 - Addition of disallowance made u/s. 14A to book profits u/s. 115JB - HELD THAT:- Tribunal has not adjudicated ground No. 2 of Revenue s appeal. Learned counsel of the assessee pleaded that this issue is covered in favour of the assessee by decision of RELIANCE UTILITIES POWER LTD. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC BANK LTD. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] that disallowance under section 14A of the Act cannot be imported in section 115JB. We find that in the Miscellaneous Application it is not permissible to decide upon the merits of an issue which has not been adjudicated. Hence, we recall the ground No. 2 in Revenue s appeal to be decided afresh.
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2021 (8) TMI 371
Benefit of telescoping the commission income with the income declared in the return - assessee is only an accommodation entry provider - HELD THAT:- There is absolutely no dispute that assessee is only an accommodation entry provider and that all the entries reflected in the books are merely accommodation entries and not real transactions of the assessee - AO had rejected the book results and had resorted to determining the income of the assessee on an estimated basis by estimating commission @1%. Hence, the income returned by the assessee cannot be brought to tax. Similarly, the loss returned by the assessee cannot be allowed to be set off with estimated commission income. We find that assessee is seeking telescoping benefit of commission income with the income returned by the assessee because, the ld. AO had started the computation of income from the figure of income / loss as per the return of income. We hold that (a) in the A.Y.2008-09 to 2011-12, only estimated commission @1% on investments and sales to outside companies / parties should be considered and the same should be telescoped with the income returned by the assessee for the respective assessment years. (b) in the A.Y₹ 2012-13, 2013-14 2014-15 only estimated commission @1% and investments and sales to outside companies / parties should be considered without disturbing the set off as given by the ld. AO in his assessment order as this Tribunal does not have power of enhancement. The ground Nos. 5 6 are disposed of in the above mentioned terms. Addition of income @1% on the value of increase in investments - HELD THAT:- We deem it fit and appropriate that the aforesaid chart on investments filed by the assessee requires to be re-visited by the ld. AO and we deem it fit to remand this issue to the file of the ld. AO for denovo adjudication on this aspect of the issue in accordance with law. Accordingly, ground No.7 raised by the assessee for A.Y₹ 2012-13, 2013-14 and 2014-15 is allowed for statistical purposes. Addition u/s 68 - HELD THAT:- No finding has been given by the ld. AO with regard to the fact of receipt of monies by issuance of convertible equity warrants; its treatment given by assessee in the books; prevailing law on the impugned issue; whether the same was done in accordance with SEBI Guidelines as pointed out by the assessee in its annual report etc. We find that the ld. AO directly concludes the issue that the amount forfeited represents unaccounted income of the assessee. We find that the ld. AO had also not brought on record, under what provisions of the Act, the amount forfeited becomes income of the assessee. Hence, in the interest of justice and fair play, we deem it fit and appropriate, to remand this issue to the file of ld. AO for denovo adjudication in accordance with law. Since, the entire issue is sent back to the file of the ld. AO for denovo adjudication in accordance with law, the reliance placed on the decision in the case of Alag Securities [ 2020 (6) TMI 304 - BOMBAY HIGH COURT] would be premature at this stage. The assessee is at liberty to quote the said decision before the ld. AO while adjudicating this issue in the denovo proceedings. The ld. AO is hereby directed to determine its applicability to the facts of the case. Appeals of the assessee for all the years are partly allowed for statistical purposes.
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2021 (8) TMI 370
Appeal of the assessee for want of prosecution - HELD THAT:- It appeared that the assessee is not interested in prosecuting the present appeal. Since none appeared on behalf of the assessee despite service of notices therefore, following the decision in the case of CIT vs B. N. Bhattacharya [ 1979 (5) TMI 4 - SUPREME COURT] and in the case of CIT vs Multiplan India Pvt. Ltd. [ 1991 (5) TMI 120 - ITAT DELHI-D] . We hereby dismissed the appeal of the assessee for want of prosecution. - Decided against assessee.
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2021 (8) TMI 369
Disallowance of depreciation - assessee company was yet to set up and commence its business activities - HELD THAT:- The assessee was duly granted registration by the RBI and as per the terms of the Registration the assessee was to commence the business within six months Except for the surmises and conjectures, AO s hypothesis has no legs to stand. There is no law that there is a presumption that if the assessee earns a smaller income, commencement of business should be doubted. The claim that the issue of CIR to 32 persons is an arrangement is not backed by any inquiry whatsoever from those 32 persons by the AO. AO has clearly misled himself. No case has made out that there was any examination of assessee s infrastructure and it was found lacking In our considered opinion the Assessing Officer has no technical qualification whatsoever in commenting upon the technological preparation of the assessee in delivering output. In our considered opinion learned CIT(A) has passed a correct order and has analysed all the facts pointed out by the AO. Nature of expenses - technology recharge cost - whether the assessee s claim of technology recharge cost is revenue expenditure or capital expenditure? - HELD THAT:- It may be gainful to refer to the exposition in the case of Empire Jute Co. Ltd. [ 1980 (5) TMI 1 - SUPREME COURT ] wherein it was observed that there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principles laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. On the touchstone of the above said Hon'ble Supreme Court decision and on the facts and circumstances of the case in our considered opinion learned CIT(A) has taken correct view of the matter and it does not need any interference in our part. Appeals of the Revenue stands dismissed
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2021 (8) TMI 368
Rectification u/s 154 - denying the assessee s claim of refund of DDT paid, by holding that DDT is not income tax paid - HELD THAT:- We are of the opinion learned CIT(A) has erred in holding that DDT cannot be considered income tax paid and refund cannot be granted. As regards the plea that the claim is not maintainable under section 154 of the Act, we find that the Assessing Officer in his order has duly agreed and allowed the same. However, effect of the same has not been given. This is legally absolutely untenable. If the Revenue finds section 154 order erroneous the recourse cannot be denial of the said credit after passing an order under section 154 - CIT(A) has rejected the claim in his order on merits of the issue and considering the provision of the Act. We have held above that learned CIT(A) misled himself and his order is not legally sustainable. Hence, we set aside the order of learned CIT(A) and decide the issue in favour of the assessee.
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2021 (8) TMI 367
Unexplained expenditure/ investment - sustainability of protective addition in absence of any substantive addition - HELD THAT:- We find that residuary surrender against unexplained expenditure/investment/assets was not specifically identified and before the settlement commission the assessee has already paid taxes on the enhanced income in the case of one of the group company - the finding of the CIT(A) on the issue in dispute is justified and we do not find any error in the same. Accordingly, we uphold the same and dismiss the ground of appeal of the Revenue.
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2021 (8) TMI 366
Addition on account of profit earned @ 50% of the gross receipts - unaccounted expenses - seized documents proceeded to allow deduction towards unaccounted expenses - HELD THAT:- Considering the fact that these are unaccounted expenses and all these unaccounted expenses could not be fully substantiated by the assessee with proper supporting documents and also considering the fact that assessee s declared profit was 19.05% as per its regular books of accounts which is also categorically admitted by the ld.CIT(A) we hold that the assessee would have made profit of 20% approximately on these unaccounted transactions by having the benefit in the form of huge cash discounts, huge savings in levy of indirect taxes, better negotiation of prices of materials due to cash purchases and also the expenses specifically identified by Ld CIT(A), which the Ld AR has explained the nature of expenses in his submissions before us, may be few expenses which may be not substantiated by the assessee due to the fact that these expenses met out of unaccounted cash and they may not taken particular interest to record the proper reasons - we direct the Assessing Officer to add 20% gross receipts as the unaccounted income which has to be distributed to all the assessment years in accordance with the percentage of work completed by the assessee. Applicability of provisions of Section 40A(3) in respect of unaccounted business expenses incurred in cash - HELD THAT:- Admittedly, the seized document contains unaccounted income as well as unaccounted expenditure both were duly transacted only in cash. Hence, the applicability of provisions of Section 40A(3) of the Act to the said payments would not serve the scheme of taxation and would ultimately result only ending up in taxing the entire unaccounted gross receipts alone without giving benefit of deduction to the assessee. This is certainly not the intention of the legislature and more so, the provisions of the Act. Accordingly, the grounds raised by the assessee in this regard for all the assessment years are partly allowed. Addition made on account of capital contribution in the assessee firm by the partner - HELD THAT:- We find that the seized documents does not state the year of receipts of on-money by the assessee - benefit should be given to the assessee by holding that the on-money receipts that pertaining to the entire project were received by the assessee in the initial year itself and the said money is certainly available for making capital contribution in to the assessee firm, irrespective of the fact that only part of the such on-money receipts has been offered to tax in A.Y. 2011-12. What is to be seen is the availability of cash in the hands of the partner to make the capital contribution in the assessee firm which is explained by on-money receipts. Hence, we direct the Assessing Officer to delete the addition made being the deficit and unexplained capital contribution. Accordingly, the ground No.3 raised by the assessee is allowed.
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2021 (8) TMI 365
Validity of the reassessment proceeding framed u/s 147 - eligibility of reason to believe - information received from VAT department - whether reasons recorded to the assessee within the period of 60 days from the date of filing of return in pursuance to section 148? - HELD THAT:- We find that the AO in his reassessment order has given a clear finding that the information from the VAT department, Maharashtra was received upon the conclusion of the assessment under section 143(3) Reasons recorded by the AO to the assessee on demand which has been duly complied with by the AO in the case on hand - we note that there was no violation of the principles laid down by the Hon'ble Gujarat High Court in SAHKARI KHAND UDYOG MANDAL LTD. [ 2014 (6) TMI 149 - GUJARAT HIGH COURT] -Thus the issue whether the assessment framed under section 147 of the Act in the given facts and circumstances is sustainable in the eyes of law is upheld. Accordingly, we are not impressed with the argument of assessee. Whether the proceedings under section 147 of the Act were initiated by the AO was merely on the basis of the information received from the VAT department, Maharashtra without application of mind? - AO upon receiving the information from the VAT department, Maharashtra verified from the financial statements of the assessee and thereafter found that the assessee has shown creditors in its books in the name of the aforesaid entities on account of purchases of consumables. The amount of consumables purchase from the aforesaid entities shown in the books of accounts was exactly matching with the information received from the VAT department, Maharashtra. Thus what is inferred is this that the AO after application of his mind arrived on the reasons to believe that the income of the assessee has escaped assessment. Furthermore, the AO at the time of issuing notice under section 148 of the Act has to form prima facie opinion for the escapement of income rather than he has to reach to the conclusion that the income has escaped assessment - we are not impressed with the argument of the learned AR for the assessee. Disallowance made by the AO in the assessment framed under section 147 - Proceedings were initiated under section 147 of the Act after recording the reasons on two counts namely bogus purchases viz a viz freight expenses on such bogus purchases. Admittedly, the addition on account of bogus purchases has been made by the AO which is sufficient enough for initiating the proceedings under section 147 of the Act - initiation of the proceedings cannot be held invalid merely on the reasoning that there was no addition made by the AO on account of freight expenses though there was the mention of such expenses in the reasons recorded. Accordingly, after considering the facts in totality we hold that the initiation of proceedings under section 147 of the Act was within the framework of the law. Accordingly we uphold the same. Thus the ground of appeal of the assessee is hereby dismissed. Bogus purchases - addition by estimating the profit at the rate of 25% of the purchases - HELD THAT:- CIT(A) was of the opinion that the estimated disallowance at the rate of 25% of the purchases will provide justice to plug the leakage of revenue. Accordingly the learned CIT(A) confirmed the addition in part for an amount of ₹ 25,12,43,170/- and deleted the addition for an amount of ₹ 75,37,29,510/-. Thus the ground of appeal of the assessee was partly allowed. Disallowances of letter of credit charges - HELD THAT:- As we have already given a finding that the assessee carried out bogus transactions of purchase and sales, thus in our considered view such charges are not eligible for the deduction. It is because the assessee was not carrying out the bogus transactions. Hence, we do not find any reason to interfere in the finding of the authorities below. Thus the ground of appeal of the assessee is dismissed. TDS u/s 195 - commission to its agent based in USA and UAE without deducting taxes - HELD THAT:- We note the assessee before authorities below only contended that the agents have no establishment or business connection in India and payments were made outside India. As such the assessee has not substantiated the nature of services provided by the foreign agent. Accordingly we direct the assessee to provide the details of the services obtained from the commission agents to the AO. Therefore in such circumstances we do not find any infirmity in the order of the learned CIT(A). Hence the ground of appeal of the assessee is allowed subject to verification. Addition on account late payment of EPF - Addition u/s 36(1)(va) read with section 2(24)(x) on delayed payment of Employee contribution to the PF account - HELD THAT:- As relying on GUJARAT STATE ROAD TRANSPORT CORPORATION [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] issue decided against assessee. Addition u/s 14A - AO found that the assessee during the year made investment in share and mutual funds and also incurring interest expenses but did not offer any disallowances of expenses - addition on two fold i.e. on account of interest expenses and on account of administrative expenses - HELD THAT:- Assessee before CIT(A) has claimed that it has sufficient interest free fund of ₹ 10308.49 million to meet the amount of investment of ₹ 72.69 million. The assessee in support of its claim has also submitted copy of balance sheet before the learned CIT(A). We find that the claim of the assessee was not controverted by the learned CIT(A) or by the learned DR. At the outset we note that it has been now settled position of law by the various courts that where own interest free fund of the assessee is sufficient enough to meet the investment then no any disallowances is warranted under section 14A r.w.r. 8D of the Act on account of interest expenses - See TORRENT POWER LTD [ 2014 (6) TMI 185 - GUJARAT HIGH COURT] - thus we direct to the AO delete the addition made on the account of interest expenses. Addition on account of administrative expenses - We note that the issue on hand has been covered by the order of the coordinate bench of this ITAT in case of Madhusudhan Industries Limited [ 2015 (2) TMI 1329 - ITAT AHMEDABAD] where it was held by the coordinate bench that the disallowances of expenses under section 14A r.w.r 8D of the Act cannot be made over and above the exempt income earned by the assessee. Respectfully following the same we do not find any infirmity in the order of the learned CIT(A). In the result the ground of appeal of the assessee is allowed whereas the ground of appeal of the Revenue is dismissed. Addition on account of advertisement expenses - HELD THAT:- There was no doubt raised by the AO about the advertisement expenses claimed by the assessee in the profit and loss account. What was doubted the advertisement expenses which were treated as deferred revenue expenditure and therefore the same was disallowed. The question arises, can the AO made the disallowance of part of the expenses on the reasoning that the assessee failed to furnish the business purpose viz a viz the identity of the party. The answer stands in negative provided part of the expenses were allowed by the AO and part of the expenses which were disallowed by the AO were pertaining to the same parties - such facts are not arising from the order of the authorities below. In such a situation, we are inclined to restore the issue to the file of the AO for de-novo adjudication as per the provisions of law. It is also directed to the assessee that it shall cooperate in the set-aside proceedings before the AO and liberty is also granted to it for filing the necessary evidences in support of its claim. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Addition on account of claim made u/s 35D - assessee in computation of income claimed deferred revenue expenses - HELD THAT:- genuineness of expenses incurred by the assessee in the earlier year which were treated as deferred revenue expenditure and the same were accepted by the revenue in the assessment framed under section 143(3) of the Act cannot be doubted in the year under consideration. It is because the expenses were not incurred in the year under consideration. But the deduction was claimed in the year under consideration as the same was treated as deferred revenue expenses in the earlier assessment year and that fact was also admitted by the revenue. Accordingly we are of the view that such expenses cannot be disallowed in the year under consideration without disturbing the year to which such expenses relate. Accordingly, we are not impressed with the finding of the authorities below - we direct the AO to verify before allowing the deduction of such expenses whether these expenses were treated as deferred revenue expenditure in the earlier assessment years and the same were accepted in the assessment framed under section 143(3). Addition made on account mismatch in the amount of income disclosed in the books of accounts viz a viz reflected in the form 26 AS - HELD THAT:- Admittedly, the onus lies upon the assessee to furnish the necessary details as desired by the AO during the assessment proceedings. However, in the case on hand, the revenue before rejecting the contention of the assessee should have verified the fact from the aforesaid parties whether they have paid any income to the assessee. It is for the reason that the form 26AS is generated by the income tax Department on the basis of information furnished in the TDS returns by various parties. Accordingly, in the interest of justice and fair play, we restore the issue to the file of the AO for fresh adjudication as per the provisions of law. It is also pertinent to note that the assessee shall cooperate in the assessment proceedings and it will be at liberty to file the necessary details in support of its contention. Hence the ground of appeal of the assessee is allowed for the statistical purposes.
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2021 (8) TMI 364
Undisclosed receipts - search proceedings - During the course of search various loose papers were found and seized from the residential premises of the appellant - AO took in to consideration that the documents being represent the cash book prepared by the appellant himself in his own handwriting and observed that the assessee never provided working of these cash books neither explained the contents thereof - HELD THAT:- Inability on the part of the appellant to provide the names of the actual buyers and sellers as asked for by the Ld. AO was sole basis for adding the entire credit side of the receipts to the income of the appellant which, amounting to us, is not sustainable neither justifiable. It is neither mandatory on the parties of the authorities to presume that whenever books of accounts are seized, the same belongs to the assessee irrespective of any other facts which may dissuade the authorities from doing so. Preponderance of probability has to be taken into consideration before rejecting the explanation furnished by the appellant. When the appellant has not denied the fact of being a property broker then in the absence of undisclosed investment found during search the AO is not justified in adding the entire receipts shown in the credit side of the seized cash sheet as the income of the appellant as rightly been observed by the Ld. CIT(A) while deleting the addition made by the Ld. AO; the same according to us is just and proper and without any ambiguity so as to warrant interference. Hence, the ground of appeal preferred by the Revenue is found to be devoid of any merit and, thus, dismissed. Chargeability of interest u/s 234B(3) - HELD THAT:- Charge the interest as per sub-section (3) of Section 234B of the Act as made by the Ld. CIT(A) is just and proper and therefore, the same is hereby confirmed. Thus, this ground of appeal preferred by the Revenue is found to be devoid of any merit and hence, dismissed.
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2021 (8) TMI 363
Income taxable in India - Addition on Account of Royalty and/or FIS - PE in India - DRP confirming the action of the AO in bringing to tax 90% of the receipts as Royalties under the provisions of Article 12(3) of the Double Taxation Avoidance Agreement between India and USA ('DTAA') and thus, liable to tax in India - assessee is an entity incorporated in United States of America (USA) - HELD THAT:- As stated by the ld. A.R, and rightly so, in the preceding years i.e A.Y. 2012-13 and A.Y. 2013-14 too the arrangement between the assessee and Wockhardt Hospital Limited was regulated by the terms and conditions of the Master Services Agreement, dated 31.01.2011. In the backdrop of the aforesaid facts, we are of the considered view that the issue as to whether or not the amount received by the assessee from Wockhardt Hospital Limited could be brought to tax in its hands as royalty and/or FIS had been decided by the Tribunal while disposing off the aforementioned appeals in in A.Y. 2012-13 [ 2018 (5) TMI 2077 - ITAT MUMBAI] and in A.Y. 2013-14,[ 2018 (11) TMI 1862 - ITAT MUMBAI] wherein held that the consideration received by the assessee pursuant to the Master Services Agreement , dated 31.01.2011 was neither in the nature of royalty nor FTS, but was in the nature of business profits, which in the absence of the assessee s PE in India could not be brought to tax in India. Short credit of TDS - HELD THAT:- As the grievance of the assessee would require verification of facts, therefore, in all fairness we herein direct the A.O to verify the factual position and in case the claim of the assessee is found to be in order, then, allow the credit for the deficit amount of TDS to the assessee as per extant law. The Ground of appeal is allowed for statistical purposes. Levy of interest u/s 234B and 234D - HELD THAT:- As the levy of interest is mandatory as held by the Hon ble Supreme Court in the case of CIT Vs. Anjum H.M. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] therefore, we herein direct the A.O to re-determine the interest liability of the assessee while giving effect to our appellate order. The Ground of appeal is allowed for statistical purposes. Incorrect recovery of interest u/s 244A - HELD THAT:- Claim of the assessee that the A.O had erred in recovering interest u/s 244A of the Act require verification of facts, therefore, in all fairness we herein direct the A.O to verify the factual position. In case the claim of the assessee is found to be in order, then, the consequential relief be allowed to the assessee. The Ground of appeal allowed for statistical purposes.
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Customs
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2021 (8) TMI 411
Classification of imported goods - two models of head mounted devices - to be classified under CTH 85176290, or under CTH 84.71? - HELD THAT:- The subject goods, namely head mounted tablets, have the following features, i.e., a high-resolution micro display comparable to the display of a 7-inch tablet device, a 2.0 GHz 8-core Qualcomm Snapdragon CPU, a 2 GB RAM, Bluetooth/GPS/GLONASS/A-GPS connectivity, Wi-Fi connectivity, 16 GB internal storage (expandable up to 254 GB with SD cards), 16 MP camera, among others. These devices weigh 380 to 430 grams and runs on 3250 mAh Li-ion rechargeable batteries having a battery life of 9 to 10 hours. These devices can process data, execute programmes, and connect to internet via a wireless network, send/receive e-mails, upload/download files, download software applications, conduct video/VolP (Voice over Internet Protocol) communication, among others. The input method for the device is voice commands, instead of a traditional keyboard. The device converts voice commands into text to execute desired functions. Placing reliance on the relevant Chapter Notes, the WCO's classification advice, the Board circular No. 20/2013-Cus., dated 14.05.2013 on classification of tablet computers, and also considering the fact that the head mounted tablet devices of RealWear incorporate all the features of a tablet computer, except a touch screen, the applicant has argued that these devices are more akin to automatic data processing machines than apparatus for transmission or reception of voices, image, data, including apparatus for communication in a wired or wireless network. It is also emphasised by the applicant that these Android based devices are capable of allowing installation of third-party software products, examples of which, cited by the applicant, are Microsoft Teams, Cisco Expert on Demand etc. These third-party applications are stated to be capable of being stored in the device for use when needed. The HMT device is a hands-free remote collaboration tool. It acts as a virtual assist and can capture videos and photos and share the same with workers at another location for any assistance. One can view documents/workflows. The product catalogues also lay emphasis on the device aiding mentor/expert connection with workers on field from remote location. Hence, it appears that HMT devices are a type of apparatus for the transmission or reception of speech, images and other data between two points. Based on the discussion, HMT devices are rightly classifiable under sub-heading 85176290. Thus, head mounted tablets of M/s. RealWear, namely HMT-I and HMT-1Z1 merit classification under heading 85.17, and more specifically under sub-heading 85176290 of the first schedule to the Customs Tariff Act, 1975 - The rate of customs duty for these devices, as per the tariff in force, is 10% advalorem - IGST is payable on imports @ 18%. The imports would also attract Social Welfare Surcharge @ 1% - The benefit of exemption available to goods of sub-heading 85176290 by virtue of Sr. No. 20 of the table annexed to the Notification No. 57/2017-Cus., dated 30.06.2017, as amended.
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2021 (8) TMI 406
Seeking grant of Bail - smuggling - alleged fake recovery of 23 biscuits - section 135 of the Custom Act 1962 - HELD THAT:- While rejecting the bail application, the court below has taken into consideration of the cumulative recovery of the 23 gold biscuits from all the four co-accused and on the basis of which, the bail of the present accused-applicant was rejected without considering that from the present accused-applicant only 6 gold biscuits were recovered. It is also admitted fact that the order dated 27.01.2021 passed by the court below granting bail to the co-accused Vikas Kumar Daga has not been challenged before any court of law. There is no previous criminal history which is admitted fact of the present applicant. It is also submitted that apprehension as shown by the learned counsel for the opposite party that there is chance to influence the trial by the present applicant as he is an influential person. Considering the facts and circumstances of the case and the applicant also undertakes that he will appear in trial as and when required and shall abide by the conditions of bail imposed by this Court, it is a fit case for grant of bail to the applicant - the present application is allowed.
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2021 (8) TMI 394
Reduction in the quantum of penalty - Section 114(i) of the Customs Act, 1962 - abetment of falsely signed the invoices used for improper exportation - Jurisdiction of proceedings initiated by the DRI Officers - HELD THAT:- Though the appellant has submitted that he has a good case on merit and submitted that Department has not been able to establish abetment of the appellant in the illegal export but he, during the course of argument, has relied upon the judgment of the Hon ble Apex Court in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] to buttress his argument that the SCN issued by the DRI is without jurisdiction because DRI Officers are not proper officers during the period of dispute and therefore, the SCN itself is bad in law. Further, the imposition of penalty for abetment is also hit by principles res judicata as the appellant has been issued with SCN dated 13.01.2011 for the same offence by Mysore Customs Commissionerate and the same was finally decided by this Tribunal in N.A. JAYARAM, MEHBOOB KHAN, N.J. SHYLA AND RAJESH BALAR VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, MYSORE [ 2018 (2) TMI 948 - CESTAT, BANGALORE] by reducing penalty to ₹ 2,50,000/- each under Section 114(i) and Section 114AA of the Customs Act, 1962. Since on these two legal grounds, the SCN issued to the appellant as well as the imposition of penalty on him is not sustainable in law. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 392
Failure to file EGM in respect of shipping bill - time limitation - review order for filing the appeal before Commissioner (Appeals) was not issued within 3 months as stipulated in Section 129D (3) of the Customs Act, 1962 - penalty u/s 117 of CA - monetary limit involved in he appeal - HELD THAT:- Section 129D uses the word three months‟ and not ninety days . The period has to be calculated on the basis of actual calendar months. Section 3 (35) of General Clauses Act, 1897 provides that the word month would mean a calendar month and by extension of the term three months‟ would only mean a period of three calendar months. Thus, the period would expire in the third month on the date corresponding to the date upon which the period starts. As a result, depending upon the months, it may be 90 days or 91 days or 92 days or 89 days, as the case may be - the review order issued on 08.04.2019 is well within time and the impugned order passed by Commissioner (Appeals) dismissing the Revenue appeal as time-barred is not legal and proper. The amount involved in the present case is only ₹ 50,000/- (Rupees Fifty thousand only). It is a penalty imposed under Section 117 of the Customs Act, 1962. In terms of Board‟s circular issued in F.No.390/Misc./163/2010-JC dated 17.08.2011 regarding the Government‟s litigation policy, it is stated that monetary limit for filing appeal by the department before CESTAT is ₹ 5 lakhs. Thereafter, the said monetary limit has been enhanced to ₹ 50 lakhs. The penalty is imposed under Section 117 for late filing of EGM - In the present case, the cause of action is prior to 31.01.2019. Further, there is no allegation of continued non-compliance to take recourse to penal provisions. The matter is remanded to the Commissioner (appeals) who shall decide the case on merits - The order of the Commissioner (Appeals) rejecting the appeal on the ground of being time barred is set aside - appeal disposed off.
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2021 (8) TMI 391
Import of capital goods availing the benefit of exemption notification No. 153/93-Cus dated 13.8.1993 - requirement of fulfilment of condition of import being goods are imported into India for being used for the export of software out of India under STP hundred percent export oriented scheme - both sides want the impugned order to be set aside. Revenue wants the matter to be remanded to the original authority after setting aside the impugned order. HELD THAT:- ILPL has, admittedly, availed the benefit of the exemption notification which is available subject to some conditions. Condition (ii) as applicable during the relevant period mandates the goods shall only be used for the purpose of export of software by the STP units located in the premises of ISP . It is undisputed that ILPL used the goods for both STP and non-STP units. In the impugned order, partial exemption was given on proportionate basis in proportion to the land used for STP and non-STP units. There is no provision in the exemption notification to allow partial exemption - What the Commissioner has done is to convert the full exemption available under this notification into a proportionate partial exemption. The Commissioner has no power to modify an exemption notification while applying it. What the Commissioner has done is to convert the full exemption available under this notification into a proportionate partial exemption. The Commissioner has no power to modify an exemption notification while applying it. If the conditions of the exemption notification were not fulfilled, can the adjudicating authority still give the benefit of the exemption notification or will it amount to modifying the exemption notification? - HELD THAT:- Section 111(o) of the Customs Act, 1962 states that any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer. The matter is remanded to the Adjudicating Authority to pass an order citing specific provisions of the exemption notification under which the decisions are taken regarding the availability of the benefit of notification, benefit of depreciation in value. If the Adjudicating Authority decides to sanction non-fulfilment of any of the conditions of the exemption notification as per section 111(o), that must also be indicated. If any confiscation is ordered or penalty imposed, the relevant provisions must be cited. Appeal disposed off.
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Corporate Laws
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2021 (8) TMI 396
Oppression and Mismanagement - challenge of impugned order on the ground that it has no jurisdiction and it has not considered the JV rights and rights of minority shareholders - exercise of jurisdiction under Section 241 242 of the Act - HELD THAT:- The Appellant group was not transparent in working of SHFP, so called JV company, where the Respondents are non-resident investors and after three / four years working when the Respondents generated a doubts on non-filing statutory returns under the Act and not getting proper accounts, they wish to interfere into the company which any investor will do, if they have invested the fund. From 2013-17, the Appellant group who was in the management of so-called JV Company failed to carry the JV Agreement in the AoA and MoA and thereby they lose the right to enforce the JV Agreement into the company s formation documents i.e. AoA and MoA . It is the general practice that first the JV agreement is finalised then within a reasonable period the same is appropriately incorporated in AoA and MoA - Non-resident investor believed the Appellant group and left the management of the Company to the Appellant Group for the 3 years plus period and at a later date in 2017/2018 when they generated the doubt and wish to put its representative as Board Member based upon their investments, the Appellant group started playing truant. As a result of which the Respondent approached the Tribunal with their grievance for convening EGM under the provisions of the Act and the same has been permitted by the Tribunal in its impugned order dated 26.07.2019 by keeping extra precautions of appointing Observer and asking a permanent invitee to the meeting of the Board from the nationalised bank i.e. Union Bank of India which has sanctioned the credit facility to the Company. The impugned order is in conformity with terms of the provisions of the Act and the law laid down on the subject. There is also no jurisdictional error and violation of natural justice - Appeal dismissed.
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2021 (8) TMI 389
Scheme of Amalgamation - seeking directions with regard to meetings of shareholders and creditors - Section 230(1) read with Section 232(1) of the Companies Act, 2013 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - directions regarding issuance of various notices also issued. The scheme is approved - application allowed.
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2021 (8) TMI 388
Reduction of Share Capital - section 66 of the Companies Act, 2013 read with the National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016 - HELD THAT:- In order to safeguard the interest of those who are in the dissenting minority category, who would otherwise not be willing to accept the price of ₹ 14,680 per share offered by the petitioner-company in consideration of cancellation of their shares and reduction, the petitioner-company shall facilitate constituting a trust in which the fractional shares shall be vested for benefit of the dissenting shareholders - in order the safeguard of interest of the dissenting shareholders, who do not offer the shares to the company for cancellation of the shares held by them by accepting price of ₹ 14,680 per share, the petitioner-company shall facilitate constituting Trust, in which fractional shares of the dissenting shareholders shall be vested for their benefit arising thus shares through an appropriate deed, delineating and rights and entitlement of the beneficiaries and other matters incidental or ancillary thereto. In this regard provisions has contained in section 89 of the Companies Act, 2013 and rules made there under, in so far as it pertains to declaration in respect to beneficial interest. This Tribunal comes to an irresistible conclusion that the consolidation of shares is free from any legal infirmities and falls within the contours of section 61(1)(b) of the Companies Act, 2013 - this Tribunal is of the view that it is just and proper to confirm the consolidation of share capital of the applicant-company. The application for reduction of share capital is approved.
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Securities / SEBI
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2021 (8) TMI 398
Fraudulent and Unfair Trade Practices - settlement in terms of SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 seeked - HELD THAT:- Petitioners are entitled to move application for settlement even at the appellate stage. However, for the said purpose, the petitioners would have to move appropriate application before the appellate forum. The said applications thereafter be rooted to the High Powered Advisory Committee which may examine the aspect keeping in view the fact that other similarly situated two companies (supra) have been allowed to get the matter settled and settlement orders have been passed in relation to the other similarly situated companies (supra). The issue with regard to the condition as laid down by the Internal Committee can also be examined by the High Powered Advisory Committee and it may take its own decision in this regard. As on today, so far as this Court is concerned, it is of the confirmed opinion that such a precondition is not existing and the same only related to the earlier settlement applications. This Court concludes that no relief can be granted to the petitioner for revival of the settlement applications and the petitioner has to move afresh application if so chooses in terms of Regulation 7 of the Settlement Regulations, 2018. If such afresh application for settlement is moved, it shall be placed before the High Powered Advisory Committee as provided under Regulation 7 of the Settlement Regulations, 2018 and a decision shall be taken at the earliest. However, taking into consideration that the orders have already been passed under Section 11B of the SEBI Act, 1992, there can be no precondition of depositing the amount of 50% over the settlement amount. The said condition would only operate after the settlement is arrived at and determined by the concerned Committee. Similarly, in relation to settlement of penalty also, the aforementioned observations will equally apply.
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Insolvency & Bankruptcy
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2021 (8) TMI 393
Replacement of IRP - Case of appellant is that the Application for the replacement of IRP was time barred on the date of passing of the impugned order as more than 270 days (herein more than 470 days) has already elapsed from the start of Corporate Insolvency Resolution Process - HELD THAT:- The NCLT under order dated 11.12.2020 (at page 235 of the Reply Affidavit of Respondent No. 3) excluded a period of 252 days i.e. from 04.02.2020 to 13.10.2020 and allowed the extension of 90 days with the direction to the RP to expedite the process for seeking Resolution Plan. On the admitted facts and judgment relied by the Respondents particularly in the case of K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS [ 2019 (2) TMI 1043 - SUPREME COURT] wherein Hon ble Supreme Court has held that The commercial wisdom of CoC has been given paramount status without any judicial intervention and in the instant case the decision taken by the CoC in the commercial wisdom has been approved by the Ld. Adjudicating Authority - this Appellate Tribunal in NAVEEN KUMAR JAIN VERSUS COMMITTEE OF CREDITORS OF K.D.K ENTERPRISES PVT. LTD. ORS. [ 2020 (11) TMI 957 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] wherein this Appellate Tribunal has held that replacement of IRP/RP also falls within the commercial wisdom of the CoC. The Appellant does not have vested any right to continue on the post of IRP / Resolution Professional - there is no illegality committed by the Ld. Adjudicating Authority while passing the impugned order. Appeal dismissed.
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2021 (8) TMI 390
Seeking extinguishment of all the disputed and undisputed claims against the Applicant relating to the period prior to the effective date i.e. 20th September 2018 in terms of the approved Resolution Plan - HELD THAT:- Considering the papers/documents made available before this Bench and the observations made and the Judgment of the Hon'ble Supreme Court in the cases of the Committee of Creditors of Essar Steels India Ltd. Vs. Satish Kumar Gupta and others [ 2019 (11) TMI 731 - SUPREME COURT] and Ghanashyam Mishra and Sons Private Limited through the Authorised Signatory Vs. Edelweiss Asset Reconstruction Company Limited [ 2021 (4) TMI 613 - SUPREME COURT] , the prayer made in the present IA No. 17 of 2021 is accepted that the demand of the Respondents for ₹ 13,74,80,376.00 stands extinguished as the Law is settled that once the Resolution Plan approved by the Adjudicating Authority becomes binding on all stakeholders and all claims not dealt stand extinguished. The prayer made by the Petitioner for refund of ₹ 4,23,15,716.00 along with interest to them for the period AY 1982-83 to 1992-1993 is hereby rejected - Application disposed off.
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PMLA
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2021 (8) TMI 404
Cheating - proceeds of crime - accused induced gullible victims to invest in a bike and receive monthly pay back, including principle and rental income on that bike for one year under the scheme - accused absconded with the money - accused was not registered as a NBFC with the RBI and hence it was not authorized to initiate any collective investment scheme - HELD THAT:- The purpose of enacting the PMLA was to prevent money laundering and to prevent confiscation of property derived from or involved in money-laundering. The purpose of investigation under the PMLA is to unearth the proceeds of crime and attach the same and to punish the offenders who are involved in committing the offence of money-laundering. Section 45 (1A) mandates that no Police Officer shall investigate into an offence under the PMLA unless specifically authorised by a general or special order issued by the Central Government. Just because an investigation for an offence under the PMLA has to be conducted by an officer, unless specifically authorized, it cannot be said that no investigation can be conducted for offences which are mentioned in the schedule of the PMLA by other investigating agencies and that they are precluded from investigating those offences. The offences are distinct and a person can be convicted and sentenced to punishment under the IPC as well as under the PMLA. Since the offence under the IPC and the offence under the PMLA are distinct offences, investigations for offences under the IPC and for offences under Section 3 of the PMLA can be carried out by different agencies. Section 45(1A) of the PMLA does not exclude other agencies from conducting investigations into the offences mentioned in the schedule of the PMLA. The prosecution for the offences under the IPC and other offences mentioned in the schedule of the PMLA, under which the petitioner is charged, are entirely different and mutually exclusive. It cannot be said that the rights of the petitioner under Article 20 (2) of the Constitution of India are infringed. The contention of the learned counsel for the petitioner that conducting two parallel investigations would infringe the rights of the petitioner under Article 20(2) of the Constitution of India is completely unfounded - Petition dismissed.
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Service Tax
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2021 (8) TMI 401
Condonation of delay in filing petition - whether the petition can be dismissed on the ground of delay and latches? - HELD THAT:- The dates and events clearly shows that there is no delay in approaching the learned Writ Court. However, the larger question would be whether the appellant can seek for the relief granted to Mr.P.Manickam by filing a representation in the year 2009 and whether he could have filed a writ petition to consider his representation and whether the order dated 06.03.2014 could have been challenged in a writ petition without approaching the Central Administrative Tribunal. These issues have to be considered in the writ petition and since the writ petition was dismissed only on the ground of delay and laches, the writ petition should be heard afresh and a decision should be arrived at on merits. The writ petition is restored to the file of the learned Single Bench of this Court, with liberty to the respondents to file additional counter-affidavit, if they so desired. Since the writ petition is of the year 2014, the Registry is directed to list the writ petition before the concerned Court, during second week of August 2021 - Appeal allowed.
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2021 (8) TMI 397
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - seeking adjustment of pre-deposit amount - Renting of Immoveable Property of Service - Circular bearing No. 1071/4/2019-CX.8 by the Department dated 27-8-2019 - HELD THAT:- It is to be noted that the petitioner at an earlier point of time in its communication dated 7-8-2013 to the Assistant Commissioner of Service Tax, Division-II, Bangalore had stated that the entire amount payable towards the service tax on rent as regards the show cause notice for the period 1-4-2008 to 31-3-2011 had been paid and details of the challans are produced alongwith the letter dated 7-8-2013, a copy of which has been produced by way of a memo dated 19-2-2021 - It is also to be noted that the show cause notice issued at Annexure-A also refers to the period of 1-4-2008 to 31-3-2011 and accordingly, the contention that there is co-relation with the deposits made by the petitioner cannot be brushed aside without further enquiry as sought for in the present petition. It is specifically clarified that manual processing of declaration would be allowed subject to conditions mentioned in the communication dated 8-1-2021, the objection has been addressed. The Estimation in SVLDRS-2 at Annexure-C dated 9-12-2019 is set aside and consequently the Statement in Section 127 in Form SVLDRS-3 at Annexure-G dated 27-2-2020 is also set aside. The Declaration in Form No. 1 is to be reconsidered and a Discharge Certificate if eligible to be made out in SVLDRS-4 - Application disposed off.
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2021 (8) TMI 395
Refund of unutilized credit - input services - Freight Charges - Plant Rental Charges - Cleaning Charges - Pest Control Services - Payment made under RCM. Freight Charges - HELD THAT:- Freight Charges are included in the inclusive part of the definition of input service under Rule 2 (l) of the CENVAT Credit Rules, 2004 and hence, the denial by the lower authorities is bad. The impugned order to this extent is set aside and this ground is allowed. Plant Rental Charges - HELD THAT:- Since services of renting of equipment for organizing events are allowed as valid input service, the same logic should apply here and accordingly, in principle, the denial of CENVAT Credit is held bad. The Delhi Bench of the CESTAT in the case of M/s. HCL Technologies Ltd. v. C.C.E., Noida [ 2015 (8) TMI 595 - CESTAT NEW DELHI] has held so - a perusal of the Order-in-Original as well as the impugned Order-in-Appeal makes it clear that there is no specific discussion on this issue. In view of this, this issue is remanded to the file of the Adjudicating Authority who shall verify all such details that may be furnished by the appellant and then pass appropriate order in the light of the directions/guidelines laid down by the Delhi Bench in the case of M/s. HCL Technologies Ltd. - matter on remand. Cleaning Charges - HELD THAT:- It has been held in M/S HCL TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE AND SERVICE TAX, NOIDA [ 2015 (9) TMI 1037 - CESTAT NEW DELHI] that cleaning services are essential for providing output services and therefore, the same would qualify as input service and hence eligible for refund - the denial of CENVAT Credit on this service is bad. Pest Control Services - HELD THAT:- This issue is akin to Cleaning Services, which is very much essential to keep the business premises safe and clean and hence, the denial is clearly uncalled for - refund allowed. Payment made under RCM - HELD THAT:- This issue is remanded to the file of the Original Authority who shall verify the payment following the directions and then pass an appropriate speaking order in accordance with law. The appeal stands partly allowed and partly remanded.
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CST, VAT & Sales Tax
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2021 (8) TMI 407
Seeking forbearance on respondents and their subordinates from demanding or collecting Entry Tax in respect of the petitioner's Imported vehicle - ROLLS ROYCE GHOST FK42 RHD, Diamond Colour - assignment of new registration mark - HELD THAT:- This Court is of the considered view that it is the constitutional duty of the High Court to contribute for the development of the constitutional principles as the Indian Constitution is not a mere law but a visionary document. The 'Obiter dicta' offered in various judgments become law for the purpose of development and to make the constitutional rights more vibrant to reach the constitutional goals. Therefore, the petitioner cannot say that his case is to be dismissed in a simple manner, by way of allowing the withdrawal of the writ petition, or by dismissing on the ground that the issues have already been settled. The learned counsel for the petitioner made a submission that the petitioner is willing to withdraw the writ petition. Even in such circumstances, the Court has to consider the circumstances and conduct of the petitioner and pass appropriate orders in order to avoid such unwarranted circumstances as well as to avoid unnecessary multiplicity of litigations in future. Thus, this Court though fit to pass orders, making the citizen aware, for the benefit of the public at large and to remind that the citizen are bound to respect the fundamental duties enunciated under the Constitution of India. The petitioner is directed to pay the balance arrears of Entry Tax of ₹ 30,30,757.00, as demanded by the respondents, within a period of 48 hours - Petition dismissed.
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2021 (8) TMI 400
Validity of remand of matter to the AA to pass fresh order - validity of Section 39(1) of KVAT Act - case of Revision Petitioner is that the Karnataka Appellate Tribunal ought not to have remanded the matter to the AA without discussing the merits of the matter - HELD THAT:- On cumulative consideration of the entire materials on record, there are sufficient force in the arguments put forth on behalf of the Revision Petitioner that Karnataka Appellate Tribunal ought to have recorded the reasons before remitting the matter to the AA as to how the answers recorded by the FAA is erroneous. On meticulous consideration of the order of the Karnataka Appellate Tribunal pointed out by the counsel for the Revenue, we failed to understand as to how the Karnataka Appellate Tribunal came to the conclusion that the matter needs to be remitted to AA for fresh consideration. On perusal of the order of the FAA, it is crystal clear that each and every one of the contentions of the Revision Petitioner and the Revenue has been dealt in detail by the FAA by assigning cogent and convincing reasons. As against the same, the order of the Karnataka Appellate Tribunal is silent on the vital aspect of the matter. It is settled principles of law that every decision is to be supported by reasons inasmuch as reasoning is the heart beat of every judgment. Without assigning any reasons as to how the order of the FAA is wrong, setting aside the order of the FAA and remanding the matter to AA by the Karnataka Appellate Tribunal, in our considered opinion has thus resulted in miscarriage of justice and error of jurisdiction which would entitle the Revision Petitioner to seek interference at the hands of this court. The matter requires to be reconsidered by the Karnataka Appellate Tribunal afresh in accordance with law. It is for the Karnataka Appellate Tribunal to pass order on merits after assigning proper reasons in that regard pointing out the errors committed by the FAA - Revision Petition is allowed.
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2021 (8) TMI 399
Validity of an Ordinance which levied an additional sales tax @ not exceeding to 3% of the gross turnover - Ordinance was withdrawn in 1995 - whether for the period during which the Ordinance was in force, and tax was not collected by the dealer, would it still be enforced? HELD THAT:- The Court notes that although the Ordinance was in the first place introduced to levy additional sales tax, it was in force only for a period of less than one month since the Government appears to have had second thoughts and decided that it was not in the interest of common people of Odisha to levy the additional sales tax - Sales tax is an indirect tax, the burden of which is passed on to the consumer. Where additional sales tax had not been collected by the dealer during the period in question, he would be in no position to pass on the burden, if it sought to be enforced subsequently i.e. even after the Ordinance stands withdrawn. Perhaps for the said reason, the Government took a conscious decision not to enforce the collection of additional sales tax, if it had not already been collected by the dealer. This appears to be a salutary move which would be consistent with the intention of not burdening the common people of Odisha. The Court is unable to agree with the view expressed by the Tribunal that notwithstanding the clarification of the Government, the Ordinance in question was still required to be enforced for the period of its operation - the impugned order of the Tribunal and the corresponding orders of the ACST and STO seeking to enforce the Ordinance are hereby set aside - revision petition disposed off.
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Indian Laws
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2021 (8) TMI 385
Scope of Arbitral award - award delivered by an Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre (SIAC Rules) - order under Section 17(1) of the Arbitration and Conciliation Act, 1996 or not - order passed under Section 17(2) of the Arbitration Act in enforcement of the award of an Emergency Arbitrator by a learned Single Judge - appealable or not. Whether an Emergency Arbitrator s award can be said to be within the contemplation of the Arbitration Act, and whether it can further be said to be an order under Section 17(1) of the Act? - HELD THAT:- An arbitration proceeding can be administered by a permanent arbitral institution. Importantly, Section 2(6) makes it clear that parties are free to authorise any person including an institution to determine issues that arise between the parties. Also, under Section 2(8), party autonomy goes to the extent of an agreement which includes being governed by arbitration rules referred to in the aforesaid agreements. Likewise, under Section 19(2), parties are free to agree on the procedure to be followed by an arbitral tribunal in conducting its proceedings - Given that the definition of arbitration in Section 2(1)(a) means any arbitration, whether or not administered by a permanent arbitral institution, when read with Sections 2(6) and 2(8), would make it clear that even interim orders that are passed by Emergency Arbitrators under the rules of a permanent arbitral institution would, on a proper reading of Section 17(1), be included within its ambit. It is significant to note that the words arbitral proceedings are not limited by any definition and thus encompass proceedings before an Emergency Arbitrator, as has been held hereinabove with reference to Section 21 of the Act read with the SIAC Rules. The heart of Section 17(1) is the application by a party for interim reliefs. There is nothing in Section 17(1), when read with the other provisions of the Act, to interdict the application of rules of arbitral institutions that the parties may have agreed to. This being the position, at least insofar as Section 17(1) is concerned, the arbitral tribunal would, when institutional rules apply, include an Emergency Arbitrator, the context of Section 17 otherwise requiring the context being interim measures that are ordered by arbitrators. The same object and context would apply even to Section 9(3) which makes it clear that the court shall not entertain an application for interim relief once an arbitral tribunal is constituted unless the court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious. In essence, what is provided by the SIAC Rules and the other institutional rules, is reflected in Sections 9(2) and 9(3) so far as interim orders passed by courts are concerned. The introduction of Sections 9(2) and 9(3) would show that the objective was to avoid courts being flooded with Section 9 petitions when an arbitral tribunal is constituted for two good reasons (i) that the clogged court system ought to be decongested, and (ii) that an arbitral tribunal, once constituted, would be able to grant interim relief in a timely and efficacious manner. Section 17, as construed in the light of the other provisions of the Act, clearly leads to the position that such emergency award is made under the provisions of Section 17(1) and can be enforced under the provisions of Section 17(2) - thus, full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as awards . Such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act. Maintainability of the appeal that has been filed under Order XLIII, Rule 1(r) - HELD THAT:- reading of Order XXXIX, Rule 2(3) and 2(4) as it originally stood, and Order XXXIX, Rule 2-A as it stands after the 1976 Amendment Act is to prescribe under Section 94 of the Code of Civil Procedure as to what is the consequence when a temporary injunction order and/or an order appointing a receiver of property is flouted. The consequences are mentioned in Sections 94(c) and (d) itself and fleshed out by Order XXXIX - the expressions in relation to and any proceedings would include the power to enforce orders that are made under Section 9(1), and are not limited to incidental powers to make interim orders, as was suggested by Mr. Viswanathan. Thus, if an order under Section 9(1) is flouted by any party, proceedings for enforcement of the same are available to the court making such orders under Section 9(1). These powers are, therefore, traceable directly to Section 9(1) of the Act which then takes us to the Code of Civil Procedure. Thus, an order made under Order XXXIX Rule 2-A, in enforcement of an order made under Section 9, would also be referable to Section 9(1) of the Arbitration Act. There can be no doubt that the legal fiction created under Section 17(2) for enforcement of interim orders is created only for the limited purpose of enforcement as a decree of the court. To extend this fiction to encompass appeals from such orders is to go beyond the clear intention of the legislature. Mr. Salve s argument in stressing the words under the Code of Civil Procedure in Section 17(2), thus holds no water as a limited fiction for the purpose of enforcement cannot be elevated to the level of a genie which has been released from a statutory provision and which would encompass matters never in the contemplation of the legislature. Appeal provision in the Arbitration Act - HELD THAT:- There can be no doubt that Section 37 is a complete code so far as appeals from orders and awards made under the Arbitration Act are concerned. This has further been strengthened by the addition of the non-obstante clause by the Arbitration and Conciliation (Amendment) Act, 2019. In BGS SGS SOMA JV VERSUS NHPC LTD. [ 2019 (12) TMI 626 - SUPREME COURT] , this time, the Court dealt with the maintainability of an appeal under Section 37 of the Act in a case in which an application under Section 34 of the Act was ordered to be transferred from a court which had no jurisdiction to a court which had jurisdiction - This judgment is determinative of the issue before us as it specifically ruled out appeals under Order XLIII Rule 1 of the Code of Civil Procedure when it comes to orders being made under the Arbitration Act. Despite Section 17 being amended by the same Amendment Act, by making Section 17(1) the mirror image of Section 9(1) as to the interim measures that can be made, and by adding Section 17(2) as a consequence thereof, significantly, no change was made in Section 37(2) (b) to bring it in line with Order XLIII, Rule 1(r). The said Section continued to provide appeals only from an order granting or refusing to grant any interim measure under Section 17. There can be no doubt that granting or refusing to grant any interim measure under Section 17 would only refer to the grant or non-grant of interim measures under Section 17(1)(i) and 17(1) (ii). In fact, the opening words of Section 17(2), namely, subject to any orders passed in appeal under Section 37 also demonstrates the legislature s understanding that orders that are passed in an appeal under Section 37 are relatable only to Section 17(1). It is thus concluded that no appeal lies under Section 37 of the Arbitration Act against an order of enforcement of an Emergency Arbitrator s order made under Section 17(2) of the Act. Appeal disposed off.
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2021 (8) TMI 384
Offence of gambling and betting - online game known as Dream 11 - HELD THAT:- Considering that the Union and State matter is completely different and that private petitioners Special Leave Petitions have been dismissed earlier, this Special Leave Petition is also dismissed.
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2021 (8) TMI 381
Dishonor of Cheque - possibility of amicable settlement - Lok Adalat - stoppage of the proceedings and acquittal of the accused by invoking the provisions of Section 256 of the Code of Criminal Procedure - HELD THAT:- The rationale of referring a matter to the Lok Adalat is to explore the possibility of amicable settlement of the dispute between the parties beyond the rigors that apply to regular Court. However, Lok Adalat/National Lok Adalat is not a substitute for a regular Court. The provisions of Section 20 and sub-sections thereof, are expressly clear that in the absence of the matter which stands referred to the Lok Adalat, being settled between the parties by way of a compromise or settlement, the Lok Adalat has to refer back the matter to the Court from which it was sent to the Lok Adalat for the purpose of amicable settlement and the Court has to proceed with the matter from the same stage from which it was sent to the Lok Adalat. Coming to the facts of the present case, after the matter stood referred to the National Lok Adalat by the Court concerned, the endeavour which was to be made by the National Lok Adalat was to have the matter compromised or settled between the parties. But, of course, the compromise could have been arrived at between the parties, if there was meeting of minds - A compromise or settlement cannot be forced upon the parties. In other words, in case one of the parties does not appears before the Lok Adalat where their case stands referred for compromise or settlement, the only inference which can be prudently drawn is that the party is not interested in having the matter compromised. That being the situation, the Lok Adalat has to thereafter proceed by ordering that as the matter could not be settled between the parties, the same is referred back to the court from which it was sent for the purpose of compromise or settlement. However, by no stretch of imagination, the Lok Adalat can confer upon itself the powers of a regular criminal Court and proceed as per the provisions of Section 256 of the Code of Criminal Procedure, as has been done in the present case by the Lok Adalat. The provisions of Section 256 of the Code of Criminal Procedure cannot be exercised by the Lok Adalat. Not only this, the 1987 Act does not confer any power upon the Lok Adalat to dismiss the case in default on account of nonappearance of a complainant or proceed against the respondent side ex parte on the failure of the respondent to appear before the Court. When the case was referred to the Lok Adalat in order to explore the possibility of a compromise between the parties, dismissal of the complaint by the Lok Adalat for want of attendance of the complainant is, but obvious, an act beyond the jurisdiction of the Lok Adalat. As the respondent stands acquitted by way of the impugned order, therefore, the order passed by the Lok Adalat could have been assailed by the present appellant only under the provisions of Section 378(4) of the Code of Criminal Procedure. The matter is remanded back to the appropriate Court from which it stood referred to the National Lok Adalat with the direction that the Court shall proceed with the matter, from the stage, from which it was referred to the National Lok Adalat and proceeding with in accordance with law - appeal allowed by way of remand.
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2021 (8) TMI 378
Dishonor of Cheque - insufficiency of funds - criminal proceedings as well as order questioned on the ground that once the account was maintained by the company, the complaint could not have been filed against the Director without arraying the company as a party/accused - HELD THAT:- A perusal of the cheques in question reveals that the said cheques have been issued from account maintained by company namely DSKT Infrastructure Pvt. Ltd. Further, the perusal of the complaint reveals that the company has not been arrayed as an accused. It is evident that whenever a cheque has been issued by the company and the same stands dishonoured, the company is required to be arrayed as an accused and in absence thereof, the proceedings cannot be continued - A perusal of order impugned reveals that the trial court too has taken cognizance and issued process in a mechanical manner in utter disregard of the law laid down by Hon'ble the Apex Court in M/S. PEPSI FOODS LTD. ANR VERSUS SPECIAL JUDICIAL MAGISTRATE ORS [ 1997 (11) TMI 518 - SUPREME COURT] . The criminal proceedings as well as order impugned are quashed - petition dismissed.
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2021 (8) TMI 377
Dishonor of cheque - insufficiency of funds - existence of a legally enforceable debt or not - rebuttal of presumption - HELD THAT:- The alleged financial incapacity of the complainant to lend the loan as canvassed by the learned counsel for the petitioner/accused would not come to the forefront. However, a reading of the evidence led by the parties, more particularly of PW-1 would go to show that, she joined by her husband is running a Provision Store wherein she could able to make out a savings of a sum of ₹ 2,000/- per month and that, she also has got income from her mother's house in the form of sharing the lease amount of Mango garden being maintained by her mother, has remained specifically un-disputed and un-denied. From that evidence, though it can be inferred that the complainant had financial capacity to lend such a huge sum to the accused, still, the alleged financial capacity would not make out a case for her against the accused, proving the alleged guilt of the accused for the offence punishable under Section 138 of the N.I. Act. Since, the accused could able to successfully rebut the presumption formed in favour of the Crl.R.P.No.3/2019 complainant and as the complainant could not able to prove the alleged loan transaction with the accused, it has to be held that, the complainant has failed to prove the alleged guilt against the accused. Thus, the interference at the hands of this Court in the impugned judgments is warranted. The Criminal Revision Petition is allowed.
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2021 (8) TMI 376
Dishonor of Cheque - rebuttal of presumption or not - non-consideration of version of P.W.1 - burden of proof will shift to the defendant or not - reliance placed upon the nugatory contentions of the defendant - Section 118 of the Negotiable Instruments Act - HELD THAT:- The suit in question has been laid on the strength of the promissory note. In the written statement itself, the defendant had admitted his signature in the promissory note. His only defence is that when the defendant handed over the promissory note, it was blank. In other words, in a blank promissory note, his signature was taken. The defendant would explain that the plaintiff was conducting an unregistered chit business and that at the time of disbursing the prize money, the plaintiff was the habit of taking signature in the blank pro-note from the subscribers of the chit group. The defendant had also handed over the suit pro-note only under such circumstances. Since the relationship between the parties came under strain, the plaintiff had chosen to misuse the suit promissory note and filed the suit on that basis. In the case on hand also, the signature in the suit pro-note has been admitted - there has been a gap of almost 16 years between the date of execution of the suit pro-note and the examination of the witnesses in the Court. In view of the efflux of time, the memories are likely to fail. The contradictions noted in the deposition of the witnesses by the First Appellate Court are not really material. The only way the defendant could have rebutted the presumption is to show that the plaintiff was running the chit business and that, when he had bid for the prize money, the suit pronote was taken. The plaintiff had categorically stated that the defendant was none other than his nephew. The plaintiff had originally stated that the defendant was the son of his elder brother. Later, the plaintiff clarified that the defendant was his cousin's son. But the fact remains that the defendant and the plaintiff are close relatives. Hence, there is no merit in the contention that the witnesses examined on the side of the plaintiff are relatives. In view of the relationship between the parties namely the plaintiff and the defendant, the fact that the attestor is also a relative pales into insignificance. The first Appellate court has unnecessarily given importance to minor contradictions. The impugned Judgment and decree passed by the First Appellate Court is set aside - Appeal allowed.
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2021 (8) TMI 375
Dishonor of Cheque - signature in the cheque leaf is admitted - HELD THAT:- The petitioner has filed this petition after seven years from the date of filing of the private complaint in C.C.No.32 of 2013. Only to drag on the case, the petitioner has come forward with this petition. When the signature and issuance of cheque are admitted by the petitioner, there is no necessity to send the entries for expert opinion. There is nothing sufficient enough to interfere with the order of the Judicial Magistrate - Criminal Revision Case is dismissed.
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2021 (8) TMI 374
Dishonor of Cheque - financial transaction took place between the petitioner and the respondent or not - petitioner claims that the cheque in question was not issued by the petitioner to the respondent / complainant - rebuttal of evidence adduced on the side of the complainant - HELD THAT:- It is true that Section 391 of the Code of Criminal Procedure confers power upon the Appellate Court to permit additional evidence to be taken. As rightly pointed out by the III Additional District and Sessions Judge, Tirunelveli, summoning of the letter of the petitioner, dated 30.03.2010 requesting the Manager, ICICI Bank, Tirunelveli Junction Branch, to stop payment of cheques and the Bank account maintained by him in Savings Account No.613501514466, are not at all necessary for the just decision of the appeal in C.A.No.125 of 2018, since even if the cheque issued by the petitioner happened to be dishonoured on the ground that account closed , a prosecution under Section 138 of the Negotiable Instruments Act, is still maintainable. Based on the complaint lodged by the present petitioner, one K.R.P.Elango, has been prosecuted and the mere contention of the present petitioner is that only at the behest of K.R.P.Elango, the respondent /complainant filed a complaint cannot be accepted, in the absence of sufficient proof. The examination of the Post Man, Mukkudal Post Office, is not necessary for the present case. Since it is not the case of the petitioner that he did not receive any statutory notice, dated 09.11.2011 - the Criminal Original Petitions are dismissed.
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