Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 24, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Denial of Input Tax Credit (ITC) - supplier failed to pay the amount of GST to the government - It is clear that the literal nomenclature and the statutory language, mandates that there should be credit available in the credit ledger of the purchaser to claim Input Tax and otherwise the claim would be frustrated. - Credit cannot be allowed to the petitioner - HC
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Blocking of Input Tax Credit (ITC) - The trader/supplier namely was non-existing entity and had not conducted any business activity at the address for which, registration was obtained and found to have passed on ineligible input tax credit to numerous tax payers. - Petition dismissed - HC
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Detention of goods alongwith vehicle - e-way bill generated for return of goods without issuing credit note - The detention of the goods was per se illegal and unwarranted - the system and procedure cannot be used against the petitioner particularly in the light of the fact that the detention itself was illegal. Credit note under Section 34 is not required to be issued at the stage, when the goods were being returned without even they having been received by the recipient. - HC
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Principles of natural justice - non-issuance of mandatory notice u/s 74(1) - Assessment orders set aside, which are deemed to have been withdrawn, subject to the condition that the petitioner shall complies with the second request of the aforesaid Notification, which contemplates payment of interest due u/s 50(1) and late fee u/s 47 - HC
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Jurisdiction - legality of parallel proceedings initiated by the Central Tax Officer and the State Tax Officer - The proceeding initiated by the petitioner is with respect to the input tax credit claimed by the petitioner on the purchases made from the bogus dealer. The investigation, as initiated against the supplier of the petitioner, cannot have any bearing on the action taken by the State Tax Authority against the petitioner for the relevant periods, being distinct from each other and against two separate assessees. - Petition dismissed - HC
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Cancellation of GST registration of petitioner with retrospective effect from 01.07.2017 - Assessee filed the application for cancellation of registration but failed to submit the reply to the Show Cause notice issued - petitioner was not available at the principal place of business after he had ceased to carry on any business - Order of cancellation with retrospective effect is not correct - Direction issued - HC
Income Tax
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Frivolous additions by the Revenue - the Revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The Revenue despite being assisted by thousands of experts in the field of finance and taxation, has committed such elementary mistake leading to harassment to the assessee who has been compelled to file the present avoidable piece of litigation. More so, this Court has been compelled to decide this frivolous matter wasting its precious time and energy which could have been utilized in more pressing matters. - Cost of Rs. 25000 imposed - HC
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Interest u/s 234B - The term “assessed tax” has been defined in Explanation-1 of Section 234B (1). As per said Explanation-1 “assessed tax” means the tax on the total income determined under sub-Section (1) of Section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount provided in Explanation-I to section 234B. Therefore, the interest under Section 234B has to be charged on the assessed income and not on the returned income of an Assessee. - HC
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Reopening of assessment u/s 147 - The fact that the Assessment Order does not contain any reference or discussion relating to depreciation claimed by petitioner on the goodwill that it had paid while applying the shares of ETPL would mean that the query raised was considered by the A.O. while completing the assessment and the A.O. was satisfied with the explanation offered in respect of the query raised. - It is merely change of opinion - Notice quashed - HC
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Revision u/s 263 - Tax liability of award received by the assessee company on the acquisition of its lands under the NHAI Act, 1956 - absence of notification issued by the Central Government in terms of subsection (3) to Section 105 of the RFCTLARR Act, 2013 - AO had summarily accepted its aforesaid claim for exemption from tax, therefore, the same had rendered the order passed by him u/s. 143(3) as erroneous - AT
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Addition u/s 68 - share application money - not only the assessee company had failed to substantiate to the hilt the nature and source of the amount credited in its books of account based on any clinching documentary evidence, but also, there is no whisper in the orders of the lower authorities about any explanation of the respective investor companies about the nature and source of such sum so credited against their names in the books of account of the assessee company - Additions sustained - AT
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Stay of demand - Outstanding disputed demand of tax - the interest of the revenue is fully secured against quantified demand, since the bank accounts with an amount of Rs. 3700 Crores has been attached - However, in the event the attachment of above Bank Accounts as mentioned in earlier para stands vacated or revoked or disturbed or modified by any orders of Court or authorities, the assessee then shall deposit not less than 20% - AT
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Addition for undisclosed cash payments - Merely because the payments made by cheque appearing in the ledger copy and actually made by the assessee tallied, it cannot lead to the conclusion that the assessee has also made the cash payments. More so, when from the very beginning the assessee has vehemently denied of having made the cash payments. - AT
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Unexplained credit u/s 68 - Partially genuine - As per AO, an individual creditor is true up to 75% level and untrue up to 25% level, which is unheard practice because a purchase bill issued by creditor cannot be bogus for 25% and true for 75% level, particularly when books of accounts are not rejected and purchases made from the said creditor has not been treated as bogus. - Additions deleted - AT
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Addition u/s 68 - unexplained cash credit - The claim of the assessee company of having received share application money from the 41 share applicant/subscriber companies did further cast an obligation upon it to mandatorily supplement the same with the explanations of the respective investor companies about the nature and source of such sum credited against their names in the books of account of the assessee company - AT
Customs
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Smuggling - Gold - prohibited goods or not - Scope of prohibited goods - an infraction of a condition for import of goods would also fall within the ambit of Section 2(33) of the Act and thus their redemption and release would become subject to the discretionary power of the Adjudging Officer - the Court finds no illegality in the individual orders passed by the Adjudging Officer and which were impugned in these writ petitions. - HC
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Jurisdiction - Freezing of Bank Accounts of the purchaser of the Imported Goods - During the course of the hearing, the respondents have contended that they have not seized the goods but they have only detained the goods. On a query as to whether the department would have the powers to detain the goods in the facts of the present case, It is not pointed out any such provision which would empower the respondents in the facts of present case, to detain the goods. - HC
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Levy of penalty - authorized courier - incident of manipulation of their office system and the clearance of the consignments falsely declared as ‘documents’ - The appellant has cooperated with the investigation so as to bring out the truth. On appreciation of the evidence, we do not find grounds to hold that the appellant had played any role in the incident. - AT
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Confiscation - mis-declaration of quantity of goods - there is no dispute that the weight in the invoice was mentioned as per the theoretical weight basis by taking a standard weight for particular size of the plate. Therefore, it cannot be said that the appellant have made any mis –declaration of either weight or value - levy of redemption fine and penalty, both, set aside - AT
Indian Laws
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Modification of Arbitral Award - reduction in the rate of interest - The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality, i.e., that “illegality must go to the root of the matter and cannot be of a trivial nature”; and that the tribunal “must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground”. - SC
IBC
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Approval of Resolution plan - There is no error in the consideration of the CoC of the Resolution Plan and the commercial wisdom of the CoC by approving the Resolution Plan has to be given due weightage. - The Adjudicating Authority committed error in rejecting the Application for approval of the Resolution Plan
Service Tax
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Liability of service tax on lease - there vests a legal right in the service provider to recover the amount of service tax from the recipient of the service, even if there is no agreement between them for reimbursement of such tax by the recipient of the service to its provider - High Court uphold the decision of lower court - HC
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Extended period of limitation - it is found that it is a case of difference of opinion between the appellant and the Revenue. The appellant held a different view about the eligibility of CENVAT credit than the Revenue. - Demand set aside being the entire demand except what has been conceded by the appellant falls beyond the value period of limitation - AT
Central Excise
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Applicability of exemption notification - merely because the revenue's appeal is pending in the Hon’ble Supreme Court, Hon’ble high court judgments do not loose its binding nature in view of the judicial discipline - AT
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Recovery of sugar cess wrongly collected from the customers - cenvat credit on sugar cess paid - party always has the right to avail or not to avail exemption, as per the trite law relied upon by appellants. And all consequences regarding payment of duty as well as availing permissible credit will follow in such situation. Department cannot force availment of exemption as distinguished from withdrawal of levy in which case requirement of payment of tax becomes non-est. - AT
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Clandestine removal of goods - reliability of computer printouts taken from the pen drives recovered during the search, as evidence - In the absence of any evidence of procurement of raw materials required for the manufacture of the finished goods, the allegation of clandestine clearance in the impugned order is not sustainable. - AT
VAT
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Refund claim - Claim based on revised return filed - Separate application for refund not filed - Once a claim for refund stands embodied in the return itself, there is no additional obligation placed upon the assessee to file Form DVAT-21. This position, in any case, stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam and Consortium of Sudhir Power Projects. - HC
Case Laws:
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GST
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2023 (8) TMI 1038
Denial of Input Tax Credit (ITC) - supplier failed to pay the amount of GST to the government - impugned orders were quashed on the ground that the selling dealer was not examined and on the ground that there was no recovery initiated against the selling dealer - Violation of conditions of section 16 of GST Act - HELD THAT:- Input Tax Credit by the very nomenclature contemplates a credit being available for the purchasing dealer in its credit ledger by way of payment of tax by the supplier to the Government. It is true that Input Tax Credit is a concept introduced in the tax regime, all over the country for the purpose of avoiding the cascading effect of taxes. The benefit of such credit being availed by a purchasing dealer who sells or manufactures goods, using raw materials on which tax has been paid is a benefit or concession conferred under the statute - the contention of double taxation does not impress us especially since the claim is denied only when the supplier who collected tax from the purchaser fails to pay it to the Government. Taxation as has been held is a compulsory extraction made for the purpose of public good, by the welfare State and without the levy being paid to the Government; there can be no claim raised of the liability to tax having been satisfied and hence there is no question of double taxation. The seller and purchaser have an independent contract without the junction of the Government. The statute provides for a levy of tax on goods and services or both, supplied by one to the other which can be collected but the dealer who collects it has also the obligation to pay it up to the State. It is clear that the literal nomenclature and the statutory language, mandates that there should be credit available in the credit ledger of the purchaser to claim Input Tax and otherwise the claim would be frustrated. On the above reasoning, it is found that the claim of Input Tax Credit raised by the petitioner cannot be sustained when the supplying/selling dealer has not paid up the amounts to the Government; despite collection of tax from the purchasing dealer. The writ petition would stand dismissed.
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2023 (8) TMI 1037
Blocking of Input Tax Credit - petitioner is being denied the utilization of input tax credit availed on the purchases made from various buyers for discharging tax liability - Rule 86A of the Tamil Nadu Goods and Services Tax (TNGST) Rules, 2017 - HELD THAT:- There is no case made out for interfering with the steps taken by the respondents blocking the Input Tax Credit amounting to Rs.67,75,144/- as the petitioner appears to have availed Input Tax Credit on the strength of invoices of the trader/supplier namely M/s.Kiran Distributors, why is not having any business that was reportedly engaged in passing on ineligible input tax credit to various/numerous tax payers including the petitioner. The decision of the Punjab and Haryana High Court in Rajnandini Metal Limited case [ 2022 (6) TMI 279 - PUNJAB AND HARYANA HIGH COURT ] is distinguishable in the facts of the present case as the intimation issued to the petitioner categorically states that the Office of the respondents has received report that the trader/supplier namely M/s.Kiran Distributors was non-existing entity and had not conducted any business activity at the address for which, registration was obtained and found to have passed on ineligible input tax credit to numerous tax payers. There are no merits to interfere with the impugned order - petition dismissed.
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2023 (8) TMI 1036
Levy of penalty - Detention of goods alongwith vehicle - e-way bill generated for return of goods without issuing credit note - issuance of Credit Notes u/s 34 of the respective GST enactments - HELD THAT:- There is no dispute that the petitioner had dispatched the goods to the consignee/buyer by four different invoices all dated 25.12.2022 - The goods also accompanied e-way bills all dated 26.12.2022. The goods were not received by the consignee/buyer and therefore, they were re-transported back by the petitioner after generating four different e-way bills all 28.12.2022. Under Section 34(1) of the CGST Act, where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient [one or more credit notes for supplies made in a financial year] containing such particulars as may be prescribed - the goods which are being returned need not necessarily accompany a Credit Note. The Credit Note or Debit Note as the case may be are intended only for adjustment of tax liabilities on account of return of the goods and where tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply. The detention of the goods was per se illegal and unwarranted particularly in the light of the fact that the goods accompanied the e-way bills, which were generated for return of the goods - the system and procedure cannot be used against the petitioner particularly in the light of the fact that the detention itself was illegal. Credit note under Section 34 is not required to be issued at the stage, when the goods were being returned without even they having been received by the recipient. Issuance of Credit Note and/or Debit Note under Section 34(1) of the CGST Act, is only for adjustment of tax liability. The petitioner has to merely declare the details of the Credit Note in the monthly return during which Credit Note is issued for adjustment of tax liability - The question of issuing Credit Note also will arise only by the supplier and not by the recipient. Petition allowed.
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2023 (8) TMI 1035
Principles of natural justice - non-issuance of mandatory notice under Section 74(1) of the TNGST Act - requirements under Sections 46 and 62 of the said Act have not been complied with - HELD THAT:- The Court is inclined to set aside the impugned assessment orders which are deemed to have been withdrawn, subject to the condition that the petitioner shall complies with the second request of the aforesaid Notification, which contemplates payment of interest due under Sub-Section (1) of Section 50 of the said Act and the late fee payable under Section 47 of the said Act. The petitioner shall pay the aforesaid amount within a period of two weeks from the date of receipt of copy of this order. The impugned orders are set aside and the Writ Petitions are allowed.
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2023 (8) TMI 1034
Seeking recovery of service tax alongwith penalty - attachment of the appellant's bank account - HELD THAT:- Considering the facts and circumstances of the case and having regard to the submissions made by the learned counsel appearing on either side, it is opined that the order of the learned Single Judge shall be modified to the following effect: The attachment would continue only to the extent of the demand raised in the order dated 28.03.2022 including penalty, and it is open to the petitioner to operate the Bank account in excess of the said amount. Appeal disposed off.
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2023 (8) TMI 1033
Jurisdiction - legality of parallel proceedings initiated by the Central Tax Officer and the State Tax Officer - petitioner issued with summons by the Central Tax Officer, pursuant to which the petitioner is said to have filed the required documents before the said authority and the State Tax Authority has initiated proceedings on the very same transaction is the contention taken - HELD THAT:- There is no prohibition in the State Tax Authority initiating an action where the Central Tax Authority is seized of the matter but, however, on the very same transaction, obviously, only one assessment can be made and it is proper that the authority, who initiated the action first, continues with it and the other authority restrains itself from so proceeding. In the present case, no such difficulty arises. The proceeding initiated by the Central Tax Authority and State Tax Authority are against different assessees. The notice issued, produced at Annexure-1, in both the writ petitions, is under Section 70 of the CGST Act, 2017, which is the power to summon persons to give evidence to produce documents and not for intelligence based enforcement action on the noticee, who is the petitioner herein. The summons requires the petitioner herein to produce documents or things detailed as 1, 2, 3, the last of which being the details of purchases made from one M/s D.S. Bitumix, Kolkata-700001. The action, obviously, initiated by the central authority is against M/s D.S. Bitumix, Kolkata- 700001 and the summons is issued only insofar as the petitioner having dealt with the said assessee. The notice issued to the assessee by the State Tax Authority, as seen from Anenxue-3 dated 18.08.2022 in C.W.J.C No. 3279 of 2023, notices that during the course of investigation conducted by the Central Tax Authority, Kolkata, it was revealed that M/s D.S.Bitumix, Kolkata-700001, a bogus firm was engaged in availment of fake input tax credit and subsequently passing of irregular/inadmissible input tax credit to many entities. The petitioner was one such dealer, who had allegedly purchased material from the said bogus firm. The proceeding initiated by the petitioner is with respect to the input tax credit claimed by the petitioner on the purchases made from the bogus dealer. The investigation, as initiated against the supplier of the petitioner, cannot have any bearing on the action taken by the State Tax Authority against the petitioner for the relevant periods, being distinct from each other and against two separate assessees. Petition dismissed.
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2023 (8) TMI 1032
Profiteering - benefit of ITC was not passed on to the recipients by the Respondent during the period from 01.07.2017 to 31.05.2020 - contravention of provisions of Section 171 of the CGST Act, 2017 - HELD THAT:- The DGAP has furnished his Report dated 03.03.2023 to the Commission, stating that no other projects are being executed by the Respondent and hence the Respondent was not liable to pass on the benefit of Input Tax Credit and Section 171 (1) of the Central Goods and Services Tax Act, 2017 requiring that any reduction in the rate of tax on any supply of goods or services or the benefit of the input tax credit shall be passed on to the recipient by way of commensurate reduction in prices , is not applicable in the present case. The above fact has also been corroborated from the website of the UP RERA as well as the reply of the Jurisdictional State GST Commissionerate, Noida as per the report of the DGAP. This Commission finds that the provisions of Section 171 (1) of the CGST Act, 2017 are not attracted in the case of other projects of the Respondent and therefore the present proceedings are hereby dropped.
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2023 (8) TMI 1031
Profiteering - benefit of ITC was not passed on to the recipients by the Respondent during the period from 01.07.2017 to 31.12.2018 - contravention of section 171 of CGST Act - HELD THAT:- The DGAP in its Report has found that there is only one other project namely Godrej Elements , which was executed by the Respondent and the same has already been investigated by it and no profiteering has been found in respect of this project. The DGAP has also verified from the official website of the Maharashtra RERA that no other project is being executed by the Respondent. Hence, the DGAP has reported that there was no other project registered on the GSTIN: 27AAICP7601B1ZO, which can be investigated in terms of Section 171 of the CGST Act, 2017. This Commission finds that the provisions of Section 171 (1) of the CGST Act, 2017 are not attracted in the case of other projects of the Respondent and therefore the present proceedings are hereby dropped.
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Income Tax
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2023 (8) TMI 1030
Revision u/s 263 - non-service of notice as agitated in first round of litigation - Tribunal confirmed gross violation of principles of natural justice deciding issue in favour of assessee - as decided by HC [second round] revenue seeks to convert HC as if it is a second appellate Court over the findings of the tribunal, thus no substantial question of law arises - HELD THAT:- There is delay of 316 days in filing the special leave petition. We find no merit to interfere with the judgment and order impugned in this petition.
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2023 (8) TMI 1029
Revision u/s 263 by CIT - Estimation of income - Addition u/s 69C - Tribunal has elaborately examined this issue, and allowed assessee appeal - As decided by HC no discrepancy was found between the purchase shown by the assessee and the sales decline, thus assumption of jurisdiction by the PCIT u/s 263 was erroneous - HELD THAT:- There is delay of 286 days in filing the special leave petition. The special leave petition is dismissed both on the ground of delay as well as on the merits.
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2023 (8) TMI 1028
TP Adjustment - selection of comparable - Treatment of forex gain/loss - HELD THAT:- As stated at the Bar that this Appeal has been rendered infructuous and could be disposed of in view of order of full and final settlement of tax arrears being passed u/s 5(2) r.w.s. 6 of the Direct Tax Vivad Se Vishwas Act, 2020 and the Direct Tax Vivad Se Vishwas Rules, 2020. The submission of Additional Solicitor General appearing for the appellant and learned counsel for the respondent is placed on record. Accepting the aforesaid submission, the Civil Appeal is disposed of as having been rendered infructuous.
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2023 (8) TMI 1027
Reopening of assessment - determination of income chargeable to tax - distinction between consideration of sale and income chargeable to tax - whether income shown in the impugned order and notice to have escaped assessment, is income chargeable to tax or not? - HELD THAT:- Admittedly, the expression income chargeable to tax is not defined in the IT Act. Scheme of the IT Act specially the provisions which deal with computation of business income make it abundantly clear that definition of expression income and income chargeable to tax are at variance to each other. The expression income is inclusively defined under Section 2(24) of IT Act whereas income chargeable to tax obviously denotes an amount which is less than income . The income chargeable to tax is arrived at after deducting the permissible deductions under IT Act from income . As such quantum of income is invariably more than the income chargeable to tax. More so, all penal provisions under the scheme of income tax, emanate from the factum of evasion of tax calculated based on income chargeable to tax. Several High Courts have held that income chargeable to tax cannot be the gross receipts/consideration in any business transaction. The objection of learned counsel for Revenue that the petitioner having failed to file return for the relevant assessment year cannot seek to challenge the impugned order, is heard to be dismissed. The provisions from Section 147 to Section 151 pertaining to subject of income escaping assessment in the IT Act do not support the contention of the Revenue. There is nothing in Section 148, 148 A or Section 149 which may prevent assessee from taking advantage of said provisions merely because of his failure to file return. Neither the notice under Section 148A(b) nor order u/s 148 A(d), nor the consequential notice under section 148A give any indication that amount alleged to be income escaping assessment, includes land/buildings/shares/equities/ loans/ advances etc. as contended by the Revenue. When petitioner/assessee filed a reply to the notice u/s 148(A)(b) it was clearly revealed that the said amount is the gross receipt of sale consideration of 16 scooters. Meaning thereby that the said amount was the total sale consideration receipt of the transaction in question, and not income chargeable to tax which would obviously be less than the said amount. Along with reply the details of items sold and payment receipt, computation of total income and the computation of tax on total income was worked out and submitted to the Revenue. While considering the said reply and before passing the impugned order under Section 148A(b) of the IT Act, highly casual and perfunctory approach was adopted, turning a Nelson s eye towards the palpable and elementary aspect of clear distinction between consideration of sale and income chargeable to tax. It may not be out of place to mention that had the Revenue arrived at the correct figure of income chargeable to tax instead of the gross receipts/consideration, the possibility of the amount of Rs.7205084/- coming down to a figure below Rs.50 lacs cannot be ruled out. From the aforesaid discussion what comes out loud and clear is that the Revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The Revenue despite being assisted by thousands of experts in the field of finance and taxation, has committed such elementary mistake leading to harassment to the assessee who has been compelled to file the present avoidable piece of litigation. More so, this Court has been compelled to decide this frivolous matter wasting its precious time and energy which could have been utilized in more pressing matters. Revenue deserves to be saddled with exemplary cost - Decided in favour of assessee.
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2023 (8) TMI 1026
Addition u/s. 69 - unexplained investment - correct assessment year - HELD THAT:- A.O. should have added the Long-Term Capital Gain being the income of the Assessee and not the entire sale receipts, which included investment made by the Assessee in purchase of shares, as the investment was duly shown in balance sheet of the Assessee in previous year and was made out of past earning savings. On perusal of the same, it reveals that amount have been shown in the balance sheet in the name of Kailash Auto on purchase of 20000 and 10000 shares respectively for the assessment year 2014-2015, which is the investments of previous year and cannot be taxed in the subsequent year. Therefore, in our opinion, the A.O. could have added only income earned during Assessment Year 2015-16 and cannot tax the investment made in purchase of shares being income of past years, as there were no findings given by the A.O. that the purchase transactions were bogus transactions. Thus, Tribunal has rightly directed the A.O. to delete partially out of the total addition made u/s. 69 on account unexplained investment. We have no hesitation in holding that question decided against the revenue and in favour of the Assessee. Interest u/s 234B - to be charged on the returned income OR assessed income? - HELD THAT:- Recently the Hon ble Apex Court in its judgment passed in the case of Shree Choudhary Transport Co. [ 2020 (8) TMI 23 - SUPREME COURT] has held that in Income Tax matters the law to be applied is that which is enforce in the assessment year in question unless stated otherwise by express intendment or by necessary implication. Bare perusal of Section 234B of the Act it is crystal clear that the interest has to be charged on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. The term assessed tax has been defined in Explanation-1 of Section 234B (1). As per said Explanation-1 assessed tax means the tax on the total income determined under sub-Section (1) of Section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount provided in Explanation-I to section 234B. Therefore, the interest under Section 234B has to be charged on the assessed income and not on the returned income of an Assessee. In the present case, the Ld. ITAT in its impugned judgment, relying on judgment of this Court passed in the case of Ajay Prakash Verma ( 2013 (1) TMI 140 - JHARKHAND HIGH COURT ) has, erroneously held that the interest under Section 234B could be charged on the returned income and not on the assessed income. The Ld. ITAT has not even considered the provisions of Section 234B, as applicable during the period of AY 2015- 16, which is relevant to the instant appeal. The said finding of the Ld. ITAT is totally contrary to the provisions of Section 234A and 234B as amended by the Finance Act, 2001 and the Finance Act, 2006. Decided in favour of the revenue.
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2023 (8) TMI 1025
Reopening of assessment u/s 147 - claim for depreciation on goodwill arisen as a result of the amalgamation of ETPL with itself - HELD THAT:- As held by the Hon ble Apex Court in case of Indian Eastern Newspaper Society [ 1979 (8) TMI 1 - SUPREME COURT] even if it is an error that the AO discovered, still the error discovered on a reconsideration of the same material does not give him power to reopen the assessment. Though the primary facts necessary for assessment are fully and truly disclosed, the A.O. is not entitled on change of opinion to commence proceedings for reassessment. Even if the A.O. who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the A.O., who has decided to reopen the assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the A.O., it would not be open to reopen the assessment based on the very same material with a view to take another view. As held by the Division Bench of this court in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] it is not necessary that the assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Admittedly, as recorded in the assessment order petitioner s case was selected for scrutiny under CASS and accordingly notice dated 19th September 2018 u/s 143(2) of the Act and further notice dated 14th November 2018 under Section 142(1) of the Act alongwith questionnaire were issued and served on assessee. Petitioner was asked to furnish details from time to time. Petitioner has submitted all the details and also attended personal hearing. In the assessment order petitioner s submission regarding ESOP was rejected. The fact that the Assessment Order does not contain any reference or discussion relating to depreciation claimed by petitioner on the goodwill that it had paid while applying the shares of ETPL would mean that the query raised was considered by the A.O. while completing the assessment and the A.O. was satisfied with the explanation offered in respect of the query raised. We are satisfied that it is merely on the basis of change of opinion from that held earlier during the course of assessment proceedings that reopening of the assessment by the impugned notice is proposed. This change of opinion does not constitute justification and the reasons to believe that income chargeable to tax has escaped assessment. - Decided in favour of assessee.
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2023 (8) TMI 1024
Addition u/s 68 - unexplained share capital and share premium - According to the CIT(A) assessee had satisfied the triple test, i.e., i.e., established the identity, genuineness and creditworthiness of the investors, but this conclusion was reversed by the Tribunal, with a direction to the AO to make a fresh enquiry. HELD THAT:- The reversal of the CIT(A) s order has taken place, without the Tribunal discussing as to what part of the order was unsustainable. A direction of remand has been issued, without indicating to the AO what exactly he is required to examine afresh.We are of the view that the Tribunal will have to deliberate on the matter afresh and articulate in the order its reasoning, if it chooses not to agree with the order of the CIT(A). Consequently, the impugned order is set-aside. Accordingly, the question of law is answered in favour of assessee.
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2023 (8) TMI 1023
Validity of reassessment proceedings against dead person - HELD THAT:- The case of the petitioner is squarely covered by the decision [ 2023 (8) TMI 931 - GUJARAT HIGH COURT] which concluded that proceedings initiated by the Respondent authorities against a dead person, deserves to be quashed and set aside. Decided in favour of assessee.
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2023 (8) TMI 1022
Addition on account of share premium received u/s 56(2) (viib) - AR submitted that the NCLT admitted the application filed under IBC Code 2016 Insolvency and Bankruptcy Code and the same has been admitted - HELD THAT:- Considering the fact that the NCLT has declared moratorium consequently, as per Section 14 of the IBC 2016, it is order to prescribe the registration of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment decree or order in any court of law Tribunal arbitration, penal or other authorities. In view of the same, the present appeal filed by the Department of Revenue is deserves to be dismissed,
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2023 (8) TMI 1021
Interest levied for late deposit of TDS amount - there was an interim order operating in favour of the assessee, the assessee deposited the aforesaid TDS amount with the Income Tax Department on 10/04/2013 and the Department has levied interest for late deposit of TDS amount - HELD THAT:- As there an Interim Order dated 29/03/2011 in operation as on the date of remittance TDS, thus, in our opinion, there was sufficient cause for the assessee not to remit TDS amount and the authorities ought not to have charged the interest on the Assessee, accordingly we allow the Grounds of Appeal of the assessee, set aside the order of the CIT(A) by deleting the interest levied on the Assessee by the Revenue for late payment of TDS amount. Appeal of assessee allowed.
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2023 (8) TMI 1020
Rejection of books of accounts - CIT(A) holding that books of account cannot be rejected if the assessee has produced books of accounts and bills/ vouchers, even if there is absence of actual transaction - HELD THAT:- For rejecting the books of accounts, AO has to record any of the following defects as Where the assessing officer is not satisfied about the correctness or completeness of the accounts or Where method of accounting, cash or mercantile has not been regularly followed by the assessee or Accounting standards as notified by Central Government have not been regularly followed by the assessee. In the present case, there is no allegation by the AO that the assessee has not fulfilled the above three conditions. More so, the present assessee is a Private Limited Company, which is required to maintain the books of accounts as per Company Act and required to be audited under Company Act as well as Section 44AB of the Act by a qualified Chartered Accountant. The assessee has duly got audited books of accounts under Company Act and also under Income Tax Act by a qualified Chartered Accountant. There is no adverse remarks made by statutory auditor as well as by Income Tax auditor which could provoke the assessing officer to reject the books of accounts. If there is a decline in the gross profit rate or net profit rate as compared to earlier assessment years and there may be hundred one reasons for the same and the assessing officer shall bring on record specific defects in the books of accounts of the assessee before invoking the provisions of section 145(3) of the Act. The rejection of accounts cannot be made simply on the reason that lower net profit rate in comparison to earlier years or with the other assessee placed in similar circumstances . The power vested with the AO u/s 145(3) of the Act has to be exercised judicially and not arbitrarily. When the assessing officer does not accept the assessee s method of accounting, then he has to resort to the provisions of the section 145(3) of the Act for computation of income by adopting such other basis as determined by him. As gone through the reasons advanced by AO for rejecting the books of accounts to hold that accounts are not complete or correct from which correct profit cannot be deduced. The reasons advanced by assessing officer as discussed above cannot be said that valid reason to reject the books of accounts as the assessee s books of accounts duly audited under relevant Act and it is certified by qualified Chartered Accountants. AO not commented anything on the duly certified audit report furnished by the qualified Chartered Accountants when it has been certified that books of accounts are reflects true profit of the assessee s firm for the relevant assessment year. In such situation, the ld. AO not justified in rejecting the books of accounts of the assessee. Further observed that, the A.O. has not brought on record any evidence to prove that any expenditure and income recorded by the assessee is not supported by evidence or is bogus. Estimation of income @ 50% of Gross CWG receipts and @ 3% of Gross non-CWG receipts - As once the books of accounts of the assessee are rejected, then income of the assessee to be estimated on the basis of proper material available on record. In the present case, though AO has mentioned that he has rejected the books of accounts, he relied on the figures in the same books of accounts to make additions on various counts, which cannot be appreciable. In our opinion, the assessing officer on mere suspicion has rejected the books of accounts though there must be something more than mere suspicion to support the assessment order passed u/s 143(3) the rule of law on this subject has been fairly and rightly stated in the case of Dhakeswari Cotton Mills Ltd. [ 1954 (10) TMI 12 - SUPREME COURT] In our opinion, there is no valid reason to reject the books of accounts of the assessee and we do not find any infirmity in the order of ld. CIT(A) in accepting the books of accounts of the assessee. As we already held that the rejection of books of accounts is not justified, consequently, there is no question of estimation of income of the assessee and the assessment to be made on the basis of books of accounts of the assessee only, as such, the declared income of the assessee to be accepted. Decided in favour of assessee. Unexplained Cash Seized - HELD THAT:- Considering the fact that the AO has not doubted genuineness of the cash book submitted by the Assessee, the opening cash balance as on 28/10/2010 on the day the search and seizure operation conducted is actually more than the cash found therefore, the observation of the A.O. that Assessee could not provide satisfactory explanation for the cash found that too after submission of the cash book itself which is not doubted is erroneous. Thus, we find no error in the findings and conclusions of the CIT(A) and we do not find any merit in this ground of appeal of the revenue. Accordingly, this ground is also rejected.
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2023 (8) TMI 1019
Validity of assessment u/s 153A - Notice beyond six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted - period of limitation for removal of Prohibitory Order - HELD THAT:- The Prohibitory Order PO was released on 06/8/2020, which is beyond period of 30 days. The search party has therefore not followed the CBDT instruction dated 3/7/2002 even though it is binding on the department. We, therefore, find force in the argument of the AR that even though section 132(8A) grants a time limit of 60 days for removing the restraint order, the limit specified by the CBDT, Instruction dated 3/7/2002 for a period of one month is binding on the Ld. Revenue Authorities. Accordingly, in the instant case, the period of limitation for removal of Prohibitory Order expires on 1/3/2020. The argument of the DR that it is only an Instruction and not a Circular could not be accepted due to the fact that the Hon ble jurisdictional High Court have categorically held that the Authorities responsible for administration of the Act shall observe and follow any such orders, Instructions and Directions of the Board. Since the Prohibitory Order has not been removed within the time limit specified by the CBDT Instruction the releasing of the Prohibitory Order on 6/8/2020 and resultant Panchnama on 6/8/2020 becomes invalid in law. On this count also we find that the period of limitation for the purpose of passing the assessment order commences from 31/1/2020 and should have been completed on or before 31/3/2021 which was further extended by Taxation and Other Laws Amendment (TOLA) to 30th September, 2021. But, we find that the assessment order has been passed on 31/3/2022 which is bad in law. Whether Panchnama without any seizure cannot be treated as a valid one for the purpose of computing the period of limitation? - We are of the considered view that the last drawn Panchnama dated 6/8/2020 is only for the purpose of cancellation of the restraint order passed u/s. 132(3) of the Act and it could not be regarded as a Panchnama for the purpose of computation of limitation u/s. 153B - In the present case on hand, admittedly there is no search or seizure on 6/8/2020. Panchnama was drawn only for the purpose of cancellation of restraint order passed u/s. 132(3). Therefore, it cannot be considered as a last Panchnama drawn for conclusion of search in the absence of any material on the said date and the Panchnama which was drawn on 31/1/2020 itself is required to be considered as a last Panchnama as per the ratio laid down by various High Courts and the Hon ble Apex Court in the case of CIT vs. White and White Mineral (P.) Ltd [ 2010 (2) TMI 1321 - SC ORDER] Therefore, we have no hesitation to come to the conclusion that the AO passed on 31/3/2022 by the Ld. Assessing Officer is a time barred assessment. AO ought to have been passed the assessment order or before 30/09/2021 whereas it was passed on 31/3/2022. Thus, we hereby allow the Grounds of the assessee s appeal for the AY 2012-13. Violation of section 65B of the Indian Evidence Act - CBDT has issued an Investigation Manual for the purpose of collecting Digital Evidence in the cases of search and seizure. In para 2.6.3 of the said Manual, the CBDT has advised that the procedure has to be in consonance with the provisions of section 65B of the Indian Evidence Act. We find that section 65B(2) of the Indian Evidence Act clearly specifies the following conditions with respect to obtaining of Digital Evidence both for primary and secondary evidences. We find from the written submissions of the Ld. AR that the provisions of section 65B(2)(d) as extracted above was not followed by the Revenue. The Revenue failed to identify the primary system giving particulars of the device involved in the production of the data was produced by a computer. We are of the considered we that the four conditions stipulated in section 65B(2) ie., (a) to (d) along with section 65B(4) were not followed while obtaining the Certificate u/s. 65B of the Indian Evidence Act 1872 in the case of the assessee which are to be followed mandatorily. Therefore, we have no hesitation to hold that this Certificate is not a valid Certificate as prescribed under the Indian Evidence Act 1872 and hence cannot be enforced. Therefore, the Certificate obtained in the case of the assessee cannot be regarded as a legally valid certificate u/s. 65B of the Indian Evidence Act and the same has no recognition in the eyes of law. The information contained in the seized pendrive is could not be considered as admissible evidence as per the provisions of section 65B of Indian Evidence Act. Therefore, we are of the considered view that such inadmissible seized material is not sustainable in the eyes of law. Thus, the assessment order passed in the case of the assessee on 31/3/2022 is not a valid assessment order in the eyes of law and it deserves to be set aside. Estimation of income - bogus purchases - estimating the profit @ 20% on bogus purchases - HELD THAT:- Since the legal grounds raised by the assessee have been adjudicated in favour of the assessee. hence adjudication of the grounds raised vide Ground No. 5 and 6 on merits needs no separate adjudication.
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2023 (8) TMI 1018
Revision u/s 263 - Tax liability of award received by the assessee company on the acquisition of its lands under the NHAI Act, 1956 - absence of notification issued by the Central Government in terms of subsection (3) to Section 105 of the RFCTLARR Act, 2013 - AO had summarily accepted the assessee s claim of exemption concerning capital gain on the transfer of the lands, therefore, the same had rendered his order as erroneous in so far as it was prejudicial to the interest of the revenue - as per CIT Section 10 (37) is not applicable in case of the company assessee as it applies to individual and HUF only HELD THAT:- Confining our adjudication to the entitlement of the assessee company for claiming exemption from income tax under the RFCTLARR Act, 2013, we are of a firm conviction, in terms of our observations recorded hereinabove, that the provisions contemplating an exemption from income tax on any award received under RFCTLARR Act, 2013 in light of the overriding effect of Section 105(1)(5) r.w. OM dated 06.06.2019 issued by the CBDT would not be available to the assessee company. AR has misconstrued the order above, i.e., S.O 2368 (E) dated 28.08.2015, which has a limited scope of extending the benefits available to the land owners under the RFCTLARR Act, 2013 to similarly placed land owners whose lands were acquired under the 13 enactments specified in the Fourth Schedule, i.e., those concerning the determination of compensation in accordance with First Schedule, rehabilitation and resettlement in accordance with Second Schedule and infrastructure amenities in accordance with Third Schedule. CBDT Circular No.36/2016 clarifies is that the compensation received on compulsory acquisition of agricultural land and non-agricultural land under the RFCTLARR Act, 2013 would be similarly placed, AND that if the compensation received on compulsory acquisition of land is exempt u/s. 96 of the RFCTLARR Act, 2013, the same would not be taxable even if there is no specific exemption provision for such compensation in the Income Tax Act, 1961. Once again, we are unable to comprehend how the CBDT Circular No. 36/2016 which is absolutely in a different context /subject matter, would advance the claim of the assessee company that the compensation received on the acquisition of its lands under the NHAI Act, 1956 would be exempt u/s. 96 of the RFCTLARR Act, 2013. We are of the considered view that the absence of notification issued by the Central Government in terms of subsection (3) to Section 105 of the RFCTLARR Act, 2013, would though have a bearing on the application of the provisions of the Act relating to the determination of compensation in accordance with First Schedule, rehabilitation and resettlement in accordance with Second and Third Schedule, in the case of a person whose lands are acquired under the 13 enactments specified in the Fourth Schedule ; but the same cannot be so construed that it confers any right of exemption under Section 96 of the RFCTLARR Act, 2013 to an assessee from levy of income tax on the compensation received by him on acquisition of his land under the 13 enactments specified in the fourth schedule . As observed by the Pr. CIT, and rightly so, as the A.O had grossly erred in law and facts of the case in construing the provisions of the RFCTLARR Act, 2013 while framing assessment in the case of the assessee company, and had summarily accepted its aforesaid claim for exemption from tax, therefore, the same had rendered the order passed by him u/s. 143(3) as erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 of the Act. Decided against assessee.
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2023 (8) TMI 1017
Addition u/s 68 - unexplained nature and source of the amount credited in its books of account - share application money received from the 40 investor companies - assessee company (NBFC) is primarily engaged in the business of providing unsecured loans/advances and trading in shares and securities - HELD THAT:- As per the 1st Proviso to Section 68 of the Act an additional obligation was fastened upon the assessee company to substantiate the authenticity of its claim of having received genuine share application money, and the respective investors were required to offer an explanation as regards the nature and source of the sum so credited against their name in the books of account of the assessee company. To sum up, the claim of the assessee company of having received share application money from the 40 share applicant/subscriber companies did further cast an obligation upon it to mandatorily supplement the same with the explanations of the respective investor companies about the nature and source of such sum credited against their names in the books of account of the assessee company. In the present case before us, not only the assessee company had failed to substantiate to the hilt the nature and source of the amount credited in its books of account based on any clinching documentary evidence, but also, there is no whisper in the orders of the lower authorities about any explanation of the respective investor companies about the nature and source of such sum so credited against their names in the books of account of the assessee company. Because the assessee company had grossly failed to discharge the onus that was cast upon it as regards proving the authenticity of its claim of having raised genuine share application money of Rs. 121.88 crore (approx.) from the 40 investor companies, i.e., by satisfying the double facet conditions contemplated in the aforesaid statutory provision, i.e., Sec. 68 (post-amended), viz. (i) explanation about the nature and source of the credit in its books of account; and (ii) explanation by the investor companies as regards the nature and source of the sum so credited against their name in the books of account of the assessee company - therefore, no infirmity concluding that the entire amount as unexplained cash credit u/s. 68 of the Act, we uphold the same. Decided against assessee.
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2023 (8) TMI 1016
Stay of demand - Outstanding disputed demand of tax - Attachment of bank accounts - HELD THAT:- The power of this Tribunal to grant stay u/s 254(2A) is to be read with 254(1) of the Act and either of the section cannot be read on standalone basis, otherwise it would make these provisions redundant. This principle as been discussed in the case of Hindustan Lever Ltd. [ 2023 (3) TMI 188 - ITAT MUMBAI] It is further held in the decision of Hindustan Lever Ld. cited (supra) that even though all the issues are covered by the binding judicial precedents in favour of the assessee, a conditional stay may be granted directing the AO to grant stay on collection/recovery of the demand impugned in the appeal. Thus, it is discernable that it is not be open to this Tribunal to grant a blanket stay as argued by the ld. Senior Counsel, as it would be contrary to the scheme of Act as visualized under the first proviso to section 254(2A) of the Act. Thus, provision of the law should not be interpreted to make other statutory provision within the same section, ineffective and nugatory. However, that will precisely be the outcome if we are to hold that the Tribunal's powers of granting the stay, even after the enactment of the first proviso to Section 254(2A), are unfettered inasmuch as a stay can indeed be granted even in clear disharmony with the statutory conditions set out under the first proviso to Section 254(2A). The requirement with respect to the partial payment of demand or furnishing of security in respect thereof will thus be redundant. The law as it stood at the point of time when in the case of ITO Vs. M.K. Mohd Kunhi [ 1968 (9) TMI 5 - SUPREME COURT] the judgment was delivered has undergone significant change vis- -vis the position prevailing as of now, and, therefore, the observations made by the Hon'ble Supreme Court are now to be read in the light of the subsequent enactment of the law. Unlike the Hon'ble Constitutional Courts above, it is not for this forum, i.e. the Income Tax Appellate Tribunal, to sit in judgment over the reasonableness of the legal provisions; when the remedies lie elsewhere. We have to perform the role assigned to us within the framework of the law as it exists; whether made by the lawmakers or as interpreted by the Hon'ble judges above. When the statute does not give this Tribunal the power to grant blanket stay, nor the Hon'ble Courts above hold so, it cannot be open to this Tribunal to hold that a blanket stay can be granted which is clearly contrary to the scheme of the law under the first proviso to Section 254(2A) of the Act. We are, thus, not inclined to hold that we have the powers to grant any stay on collection/recovery of demands impugned in the appeal before us, in violation of the first proviso to Section 254(2A) of the Act. As rightly pointed out by the ld. Senior Counsel, out of total attachment of Rs. 5551,27,15,824/- by Enforcement Directorate as well as by Income Tax authorities, an amount of Rs. 3700 Crores has been attached by both authorities and there was overlapping attachment. In our opinion, as of now, the interest of the revenue is fully secured against quantified demand of Rs. 1833,22,78,898/- for the present assessment year i.e. 2018-19. Being so, till this attachment continues, the assessee is not required to make any further payment and/or furnish any further securities. However, in the event the attachment of above Bank Accounts as mentioned in earlier para stands vacated or revoked or disturbed or modified by any orders of Court or authorities, the assessee then shall deposit not less than 20% or furnish security amounting to not less than 20% of the outstanding liability within two weeks from the date of such removal or vacating or revoking or modifying the attachment of the bank accounts mentioned in earlier para of this order.
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2023 (8) TMI 1015
Estimation of income - bogus purchases - assessee was also a beneficiary among others with regard to bogus purchase of diamonds - CIT(A) confirmed the addition @ 20% on the alleged purchases as bogus - HELD THAT:- Decision of the ld. CIT(A) is oxymoronic as the ld. CIT(A) having given categorical observation that the diamonds have been indeed purchased, sold, the profit is offered to tax, the name of the assessee has not been mentioned by the so-called bogus bill provider namely, Sh. Bhanwarlal Jain, but went on to disallow 20% of the purchases as bogus. Having satisfied with the reply, the AO has not made any further enquiries but made addition solely based on the information received from the Investigation Wing. Even, the statement given by the Sh. Bhanwarlal Jain has not pointed out any transactions with the assessee company. Hence, keeping in view, the entire facts and circumstances, we hold that the ld. CIT(A) has rightly deleted 80% of the addition made on account of alleged bogus purchases and wrongly confirmed 20% of the same purchases without any basis. We find that the assessee has duly discharged the onus placed upon the assessee regarding proving genuineness of the purchase. - Decided in favour of assessee. Unexplained Cash Sales/Cash Deposits - Assessee has deposited cash during the period of demonetization and has not able to substantiate with cogent reasons and documentary evidence about the source of cash - CIT(A) restricted part addition - HELD THAT:- As at the time of demonetization i.e. on 08.11.2016 there was not much variation in the cash sales/turnover of the assessee company in comparison to the preceding years. Explaining the fluctuations, the ld. AR submitted that the assessee company had cash in hand balance as low as Rs. 11,16,165/- as on 06.05.2016 and as high as Rs. 2.97 crores as on 10.08.2016 and Rs. 1.74 Crores as on 24.09.2016. Based on these amounts, it was not for the first time that the assessee had held cash in hand balance of Rs. 3 Crore or Rs. 4 Crores. In fact, in the year under consideration there were many occasions evident from the cash book which proves that assessee company has held such huge cash in hand balances in past also. Also the assessee has shown big increase in sales on 08.11.2016 in a single day which lead to increase in cash in hand which was done because VAT returns had not been filed for the said month, thus the logic given by the AO to doubt the genuineness of cash sales made on 08.11.2016 is again illogical and without any basis -As per the VAT legislation the VAT returns are filed quarterly i.e. the end of each quarter of the financial year. Meaning thereby the VAT return for the month of November, 2016 was due for filing in the month of January, 2017 i.e. at the end of 3rd quarter of the financial year. Hence, the observation of the AO in the assessment order has no legal standing, accordingly liable to be rejected. We also find that the ld. CIT(A) has rightly deleted the amount of Rs. 1,94,00,000/- owing to proving the details of all the parties with name and PAN number. Thus comparison of cash sales from the month of April 2016 to October 2016 reflected total cash sales of Rs. 15.29 Cr. which was also accepted by the Revenue. Further, the total cash deposits in the F.Y. 2014-15 was Rs. 27.53 Cr., F.Y. 2015-16 was Rs. 40.50 Cr., F.Y. 2016-17 was Rs. 32.39 Cr. and F.Y. 2017-18 was Rs. 32.90 Cr. approximately. Hence, keeping in view the entire cash deposits of the assessee were a period of four years including the period before us, the cash deposits of Rs. 2.63 Cr. as confirmed by the ld. CIT(A) cannot be upheld. - Decided in favour of assessee.
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2023 (8) TMI 1014
Best judgment assessment u/s 144 - negligence on the part of assessee in not responding to the notices issued by the AO - denial of exemption u/s 10(38) - assessee has tried to explain the reasons for not responding to the notices filed by the AO and delay in filing of objections before the DRP due to non-communication of notices to the assessee by its custodian in India-Kotak Custody Services - HELD THAT:- It is evident from records that the assessee could not represent its case before the AO, effectively. At the same time we are of view that there is negligence on the part of assessee in not responding to the notices issued by the AO. The assessee should have made reliable arrangement for communication of notices. Non-communication of notices cannot be attributed to the Department. Therefore, it is a fit case for levy of cost on assessee for not responding to the notices. Accordingly, we deem it appropriate to levy cost of Rs. 10,000/- on the assessee.
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2023 (8) TMI 1013
Addition u/s 69 - unexplained investment in jewellery - HELD THAT:- First for all the assessee has purchased the above said jewellery for her own purpose and payments have been made through banking channel. The above said purchases have been duly reflected in the books of account as part of investment. Hence, we are of the view that there is no scope for treating the above said purchases as unexplained investment warranting addition of u/s 69 - Accordingly, we set aside the order passed by CIT(A) and direct the AO to delete the disallowance under section 69 of the Act. Unexplained cash credit u/s 68 - bogus LTCG on sale of shares - HELD THAT:- The shares have entered the demat account of the assessee and it was held for a period of two years. The assessee has sold them after a period of two years through same broker. The assessee earned long term capital gains from such sale. The fact that the assessee has held the shares for a period of more than two years, in our view, would go in favour of the assessee. We also noticed that the assessee is a regular investor in shares and it is not stray incidence of purchase and sale of shares. We notice that the aggregate value of investments held by the assessee as on 31.3.2014 was Rs. 3.78 crores, which consisted of investments made in 73 companies. Purchase of shares has been accepted by the revenue in the earlier year and hence it may not be correct to treat the sale consideration as bogus in nature. It is not the case of the AO that either the assessee or the stock broker has been subjected to investigation by the SEBI. We also noticed that the AO has entirely relied upon the report given by the investigation wing without making further investigation in order to find out whether the assessee was part of the group which indulged in rigging the price of the shares. AR also submitted that the share price has increased three times during the period of two years which is normal phenomenon found in the share market. Tax authorities are not justified in assessing sale consideration of shares as unexplained cash credit u/s 68. Addition of 1% of the sale consideration of shares as expenditure incurred - Since we have deleted the assessment of sale consideration, this addition, being consequential in nature, is liable to be deleted. We order accordingly.
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2023 (8) TMI 1012
Validity of the assessment order passed u/s 153C r.w.s.143(3) - addition for undisclosed cash payments - assessee submitted that except the so called ledger account seized from a third party, no other evidence was collected by the AO to corroborate the entries in the ledger account - HELD THAT:- Admittedly, the incriminating material was not seized from the assessee. On further perusal of the incriminating material i.e. the ledger copy, it is observed that it depicts certain payments in cheque and in cash. The cheque payments mentioned in the ledger copy are through Kotak Bank and AXIS Bank. It is observed, from the stage of assessment proceedings itself the assessee has flatly denied its involvement in the transactions recorded in the ledger copy seized from the third party. The assessee has specifically submitted that the bank accounts mentioned in the ledger copy do not belong to him or his wife. It is the specific case of the assessee from the very beginning that he had purchased the flat for a consideration of Rs. 40 lacs and has paid it entirely through banking channel from his bank account held with State Bank of India and ICICI Bank and bank account standing in the name of his wife held with Bank of India. Surprisingly, no statement has been recorded from the third party from whom the incriminating material was seized with regard to the entries in the ledger copy. There is nothing on record to suggest that the third party from whom the ledger copy was seized admitted of having received the cash payment from the assessee. This is so because neither the AO nor learned CIT(A) have referred to any such statement or admission by Shri Viral K. Patel with reference to the seized material. Merely because the payments made by cheque appearing in the ledger copy and actually made by the assessee tallied, it cannot lead to the conclusion that the assessee has also made the cash payments. More so, when from the very beginning the assessee has vehemently denied of having made the cash payments. Thus, in my considered opinion, in absence of any clinching evidence to show that the assessee had made the cash payments, the addition of so called cash payment could not have been made - Appeal of the assessee stands allowed.
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2023 (8) TMI 1011
Validity of Assessment passed by AO - Form 35 are not matching to each other - CIT(A) has dismissed the appeal that it is a deficient/defective appeal filed against show cause notice issued by the AO u/s 274 r.ws. 271(1)(b) - HELD THAT:- As the assessee has raised the grounds before the Ld. CIT(A) against the assessment order passed u/s 144 r.w.s 147 of the Act however, in the form 35 the assessee has mentioned section under which the order was passed by the ITO as 271(1)(b) of the Act. Thus, it is apparent that there is a mistake in form 35 if it is considered in light of the grounds of appeal raised by the assessee. In the statement of facts the assessee has clearly stated his grievance against the assessment order passed by the AO. Therefore we set aside the impugned order of the Ld. CIT(A) and remand the matter to the record of the Ld. CIT(A) to grant one more opportunity to the assessee to rectify the mistake in form 35 and then decide the appeal of the assessee on merits. Appeal of the assessee is allowed for statistical purposes.
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2023 (8) TMI 1010
Validity of TP order u/s 92CA (3) - period of limitation for making the assessment order as per Section 153(3) - HELD THAT:- The period of limitation for making the assessment order as per Section 153(3) was 31/03/2014, i.e., 24 months from the end of the assessment year. The extension of period of limitation made u/s. 92CA (3) and also as per proviso to Section 153(1) was upto 31/03/2015 i.e. after a period of 12 months. The proceedings for the assessment have been completed before 31/03/2015 and prior to the date of which limitation expires as per Section 92CA(3A) was 29/01/2015 as the date prior to the date of which limitation expires is 30/03/2015 and 60 days expires on 31/02/2015. Accordingly, in view of the Section 92CA(3), ld. TPO s order which has been passed u/s. 92CA(3) on 29/12/2015 wherein in this case it has been passed on 30/01/2015. We quashed the final assessment order being barred by period of limitation u/s. 92CA (3). Once we have quashed the assessment order then, all the grounds raised by the Revenue becomes infructuous. Disallowance of interest of late payment of service tax u/s. 37(1) - Though this ground will become infructuous because once the assessment order itself has been quashed on the ground of limitation, then Section does not survive but in any case the interest of late payment of service tax is not penal in nature and same is compensatory. Now this issue is very well settled by the judgment in the case of Mahalaxmi Sugar Mills [ 1980 (4) TMI 1 - SUPREME COURT] and also by certain judgments of this Tribunal. Thus, on merits also, the disallowance is uncalled for.
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2023 (8) TMI 1009
Unexplained credit u/s 68 - assessee has not been able to explain the genuineness and creditworthiness of the sundry creditors - assessee submitted that since the assessee has submitted additional evidences and which was remitted back to the file of the AO for taking remand report, however AO has not submitted any remand report, therefore it is not a mistake on the part of the assessee - HELD THAT:- Additions cannot be made towards trade creditors u/s 68 as unexplained credits, when purchases are accepted as genuine. Thus, we note that no additions can be made u/s 68 towards trade creditors when genuineness of the purchases are not doubted. In the assessee s case on hand, the A.O. has not doubted the genuineness of the purchases. We note that in assessee s case the creditors have confirmed the transactions with the assessee. The confirmation of all creditors and their income tax returns containing PAN number and their addresses were there before the CIT(A). A.O. was not correct in making additions towards trade creditors u/s 68 of the Act, hence we delete the addition. AO has disallowed sundry creditors on estimated basis, at the rate of 25% of the sundry creditors without rejecting the books of accounts of the assessee. As per assessing officer, an individual creditor is true up to 75% level and untrue up to 25% level, which is unheard practice because a purchase bill issued by creditor cannot be bogus for 25% and true for 75% level, particularly when books of accounts are not rejected and purchases made from the said creditor has not been treated as bogus. CIT(A) has decided the issue on merit based on the evidences submitted by assessee and the material on record and therefore order passed by ld CIT(A) cannot be treated as an ex parte order, hence matter cannot be remitted back to the file of the ld CIT(A) (for second inning) for fresh adjudication, as contended by ld DR for the Revenue. Hence, considering these facts and circumstances, we delete the addition. Enhancement of assessment by CIT(A) - expenditure u/s 40A(3) - Revenue submitted that Ld. CIT(A) has co-terminus power as that of the AO and therefore has right to enhance the assessment - HELD THAT:- We find that the issue involved in the second ground of appeal of assessee, is no longer res integra. The question as to whether the ld CIT(A) can enhance the assessment without giving notice to the assessee, was considered by various judicial forums across India, wherein it was held that ld CIT(A) cannot enhance the assessment without giving notice to the assessee. See Sureshchandra Parekh [ 2017 (2) TMI 1540 - ITAT AHMEDABAD] - Decided in favour of assessee.
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2023 (8) TMI 982
Addition u/s 68 - unexplained cash credit - share applicant/subscriber companies lacked identity, genuineness, and creditworthiness - assessee failed to discharge the primary onus that was cast upon it u/s 68 - HELD THAT:- Once the assessee has submitted the documents relating to identity, genuineness of the transaction and creditworthiness, then the A.O. must conduct an inquiry, and call for more details. It was further observed that if the assessee is not able to provide a satisfactory explanation of the nature and source of the investments made, it is open to the revenue to hold that it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source. The Hon'ble Apex Court in NRA IRON STEEL PVT. LTD. [ 2019 (3) TMI 323 - SUPREME COURT] had further observed that the Department is obligated to carry out careful scrutiny of a private placement of shares, and the assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the A.O., and failure of the same would justify the addition of the said amount to the income of the assessee. Also, the Hon'ble Apex Court had not found favour with the view taken by the lower appellate authorities, wherein they had observed that as the assessee company had filed all the documentary evidence in the course of assessment proceedings, therefore, the onus that was cast upon it to establish the creditworthiness of the investor companies stood discharged. Rebutting the aforesaid view taken by the lower authorities, the Hon'ble Apex Court had observed that the lower appellate authorities, while so concluding, had not even adverted to the field inquiry conducted by the A.O., which revealed that in several cases, the investor companies were found to be non-existent, and thus the onus to establish the identity of the investor companies was not discharged by the assessee. Considering the principles which the Hon'ble Supreme Court had laid down in the case of Pr. CIT, Circle-1 Vs. NRA Iron Steel Pvt. Ltd. (supra), we find that the facts involved in the present case before us fall within four corners of the same. The claim of the assessee company of having received share application money from the 41 share applicant/subscriber companies did further cast an obligation upon it to mandatorily supplement the same with the explanations of the respective investor companies about the nature and source of such sum credited against their names in the books of account of the assessee company. However, we find that in the present case before us, not only the assessee company had failed to substantiate to the hilt the nature and source of the amount credited in its books of account based on any clinching documentary evidence, but also, there is no whisper in the orders of the lower authorities about any explanation of the respective investor companies about the nature and source of such sum so credited against their names in the books of account of the assessee company. As in the case of the present assessee company before us, we find that as it had failed to discharge the onus that was cast upon it as regards proving the authenticity of its claim of having received share application money from the share applicant/subscriber companies by satisfying the set of conditions envisaged u/s 68 of the Act, i.e. (i). proving the identity and creditworthiness of the share applicant/subscriber companies, and establishing the genuineness of the transactions under consideration based on irrefutable documentary evidence; and (ii). explanation of the share applicant /subscriber companies about the nature and source of the sum recorded against their name in the books of the assessee company. Because the assessee company had grossly failed to discharge the onus that was cast upon it as regards proving the authenticity of its claim of having raised genuine share application money from the 41 investor companies, i.e., by satisfying the double facet conditions contemplated in the aforesaid statutory provision, i.e., Sec. 68 of the Act (postamended), viz. (i) explanation about the nature and source of the credit in its books of account; and (ii) explanation by the investor companies as regards the nature and source of the sum so credited against their name in the books of account of the assessee company - therefore, finding no infirmity in the view taken by the lower authorities who had rightly held the entire amount as unexplained cash credit u/s. 68 - Decided against assessee.
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Customs
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2023 (8) TMI 1008
Smuggling - Import of Gold - prohibited goods or not - Scope of prohibited goods - scope of redemption under Section 125 of Customs Act - HELD THAT:- Section 2(33) of the Act defines prohibited goods to mean any goods the import or export of which is subject to any prohibition under the Act or any other law for the time being in force. It however significantly proceeds to exclude goods which have come to be imported or exported in compliance with the conditions which apply. The exclusion of imported or exported articles and transactions which have been completed subject to due compliance with the conditions prescribed are clearly excluded from the ambit of prohibited goods by virtue of the usage of the phrase but does not include . The expression prohibited goods as used in Section 2(33) and the concept of prohibition must therefore and necessarily draw colour and meaning from the specific exclusion of goods which have come to be imported or exported upon due compliance with the conditions prescribed. If compliance with conditions for import or export were irrelevant and the expression prohibition were to be understood in absolute terms, there clearly does not appear to be any justification for the definition clause to also deal with those goods which enter the territory of India after complying with the various conditions for import that may have been prescribed. In our considered opinion, this is the first aspect which appears to indicate that the word prohibition is intended to also extend to a restriction or regulation under the Act. It is significant to note that Section 111 of the Act which deals with the confiscation of improperly imported goods. While dealing with the circumstances in which the imported goods may become liable for confiscation, the provision firstly speaks of dutiable or prohibited goods. Section 111, apart from speaking of dutiable or prohibited goods also brings within its net goods which have come to be imported either in violation of conditions prescribed or goods which have been concealed as well as imported articles which may have otherwise not complied with the conditions prescribed under the Act - Section 111 is of the power of confiscation being extendable not just in the case of dutiable or prohibited goods but also to goods whose import may have been effected in violation of the conditions prescribed by the Act. This is clearly evident from a reading of Clauses (e), (f), (g), (h), (i), (j), (m), (n), (o) and (p) of Section 111. The FTP thus stands imbued with a statutory flavour and would clearly fall within the meaning of a measure formulated under the FTDR and all stipulations contained therein being liable to be recognised as requirements placed under the said enactment and thus referable to Section 3(4) - The concept of prohibition spoken of in Section 3(4) of the FTDR would thus have to be understood and interpreted on a conjunctive reading of Section 2(33) read with Section 11 of the Act together with Section 3(2) of the FTDR. It must however be borne in mind that Section 111 of the Act clearly contemplates undervaluation of goods resulting in that transaction falling in the category of improper import and thus liable for confiscation. In Sheikh Mohd. Umer, the Supreme Court has clearly expounded upon the correct meaning to be assigned to the expression prohibited goods - the response of the SBI can by no stretch of imagination be construed as diluting the rigour of a regulatory measure operated by RBI in relation to the import of gold. Quite apart from the fact that the response was not of the RBI itself, we find that SBI correctly responded to the query which stood posed by asserting that the regulation of imports or exports is principally a subject which falls within the remit of the Ministry of Commerce/DGFT. It had further while replying to the query stated that the regulation of imports/exports would be governed by the EXIM Policy and the FTP as prevalent at the relevant time. The Court holds that an infraction of a condition for import of goods would also fall within the ambit of Section 2(33) of the Act and thus their redemption and release would become subject to the discretionary power of the Adjudging Officer - the Court finds no illegality in the individual orders passed by the Adjudging Officer and which were impugned in these writ petitions. The Court finds no merit in the challenge raised to the impugned orders in the present batch of writ petitions - Petition dismissed.
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2023 (8) TMI 1006
Absolute confiscation - Gold - petition was carrying all the documents with him in connection with the gold in question - HELD THAT:- Considering the facts and circumstances of the case as appears from record including the order of the Revisional Authority by which it has been held that the petitioner was a bona fide owner of the impugned gold and that the petitioner himself was ready and willing to re-export of the goods in question and that having all valid document with him, the action of the respondents/Customs Authority concerned in not releasing the goods in question in spite of the fulfillment of condition imposed by the Revisional Authority by making payment of redemption fine though by a delay of 15 days and penalty of Rs.50,000/- within time and that the respondents authority concerned has not challenged the aforesaid order of the Revisional Authority any further, the action of the respondents authority concerned in not releasing the gold in question is very harsh, arbitrary and illegal. The petition is disposed of by directing the respondent authority concerned to release the gold in question and allow the petitioner to re-export the same as per the order of the Revisional Authority dated 10th October, 2019, within a period of 30 days from the date of communication of this order.
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2023 (8) TMI 1005
Jurisdiction - Freezing of Bank Accounts of the purchaser of the Imported Goods - power to the seal the godown premises of the Petitioner - whether in the facts and circumstances of the present case, the respondents would have authority and jurisdiction to detain the goods and documents and attach the bank accounts? - HELD THAT:- Once the goods are cleared for home consumption and enter the domestic market for sale, such goods cannot be seized from the subsequent purchasers and that too if the third person against whom action is initiated has already sold the goods in open market and when there was no demand or proceedings pending for recovery of duty etc. against such third person. In the present case, the goods imported by M/s ST Electricals were initially cleared for home consumption by the said importer and the said goods have changed hands in open market and is also out of the possession of the petitioner. The respondents in their affidavit in reply have referred to the communication from Jodhpur Customs authorities dated 8 July 2023 and 12 July 2023 wherein the Jodhpur authorities have directed the respondents to seize the very goods imported by M/s ST Electricals. In the said reply, the respondents have stated that these very goods have been sold by the petitioner to Narayan Power Solutions. The situation would have been different if the Customs were to bring some materials to show that the goods in question were being allegedly dealt by M/s. ST Electricals in connivance with the petitioner or that the petitioner was not a bonafide third party purchaser. If this be the case, then the action of detaining the goods of the petitioner was contrary to the revenues own stand and this would hold good for attachment of the bank account. Thus, on the facts of the present case, the impugned action in detaining the goods in question (some other goods of the petitioner) is contrary to the provisions of the Act as noted by us moreso when same is not pursuant to any recovery of pending dues of the petitioner or proceedings pending against the petitioner under the Act. The respondents have tried to justify their action by stating that they have acted upon communication from the Authorities at Jaipur and they themselves have not taken the action independently but at the behest of the Commissioner, Jaipur. The respondents in the affidavit-in-reply had referred to a communication from Jaipur authority but same is not annexed to the reply nor shown to us. We have not been shown by the respondents any other communication which supports their contentions that the action is taken at the behest of the communication which even otherwise the respondents could not have acted upon without applying their mind. During the course of the hearing, the respondents have contended that they have not seized the goods but they have only detained the goods. On a query as to whether the department would have the powers to detain the goods in the facts of the present case, It is not pointed out any such provision which would empower the respondents in the facts of present case, to detain the goods. The impugned action of the respondents in detaining the goods in question and attaching the bank account of the petitioner without there being any demand due from the petitioner or any proceedings pending is without jurisdiction and without any authority of law - the detention of goods declared illegal - petition allowed.
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2023 (8) TMI 1004
EPCG Scheme - denial of benefit of N/N. 55/2003 - Demand of differential duty - denial of benefit of condition of the notification in as much as the car was not registered as tourist vehicle for a substantial period and also that the foreign exchange was received from various other services and not by use of the car - non-maintenance of proper vehicle movement records and the vehicle travel journey documents showed only very less amount collected from using the vehicle for travel purpose - HELD THAT:- In the case of COMMISSIONER OF CUSTOMS (AIR CARGO EXPORT) VERSUS HOTEL EXCELSIOR LTD. [ 2016 (5) TMI 1418 - DELHI HIGH COURT] similar issue was considered and the Hon ble High Court, Delhi observed the Court is unable to disagree with the reasoning of the CESTAT that as long as foreign exchange is earned by the hotel and the imported cars are being used, there cannot said to be a violation of any statutory requirement. Thus, the impugned order before does not call for any interference. The same is sustained. Appeals filed by the department are dismissed.
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2023 (8) TMI 1003
Levy of penalty u/s 112 (a) of the Customs Act, 1962 - authorized courier - not obtaining authorization from the consignee for the import of the consignment - failure to comply with Regulation 13 of the Courier Regulations - HELD THAT:- The facts have revealed that the appellant had no knowledge about the incident of manipulation of their office system and the clearance of the consignments falsely declared as documents . Sri Naveen Kumar who was a former employee of the appellant has categorically admitted that he is only responsible for the manipulation committed and that no one in the office of the appellant as well as the appellant is involved in the offence. The SCN also has not alleged any role played by the appellant in the clandestine activity. Apart from alleging that appellant did not obtain any authorization there is no overt act of involvement established against the appellant. It is also seen from the records that Sri Naveen Kumar was terminated from services. Sri T.S. Narayanan, who is the General Manager of the appellant authorized courier has submitted before the officers that all the consignments were booked by M/s.Jupiter Import Export Pte. Ltd., Singapore. The appellant has cooperated with the investigation so as to bring out the truth. On appreciation of the evidence, we do not find grounds to hold that the appellant had played any role in the incident. In such circumstances, the order of revocation of the license cannot be sustained and requires to be set aside. However, as the appellant has not obtained authorization from the importer, the forfeiture of security deposit would be adequate. Forfeiture of Rs.10 lakhs is on the higher side - forfeiture of Rs.5,00,000/- would be sufficient. Appeal allowed in part.
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2023 (8) TMI 1002
Condonation of delay of 23 days in filing this appeal - sufficient reasons for delay or not - HELD THAT:- It is a settled position in law that the appeal should not be dismissed for such reasons and the appellant should be given the opportunity to argue the matter on merits. In the case of MUNICIPAL CORPORATION, GWALIOR VERSUS RAMCHARAN (D) BY LRS. [ 2002 (4) TMI 944 - SUPREME COURT] where it was held that the High Court ought to have been taken a liberal, and not a rigid and too technical a view of the issue before it and should have condoned the delay in filing the appeal and concentrated on examining whether the appeal raised any substantial question of law worth being heard by the High Court. In our opinion, a sufficient cause for condoning the delay in filing the appeal before the High Court is made out. The said delay of 23 days in filing the appeal before him is condoned and matter remanded back to the Appellate Authority for decision on merits and after following the principles of natural justice - the order of Commissioner (Appeals) cannot be upheld.
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2023 (8) TMI 1001
Valuation of imported goods - Auto-components - related party to the Respondent or not - rejection of value adopted in the overseas invoices and Bill of Entry filed by the Respondent - enhancement of value - HELD THAT:- From the detailed findings given by the Commissioner (Appeals), it is seen that he has gone into all the relevant facts and has given a considered decision. No specific points have been brought in by the Revenue in their Appeal against this reasoned decision. Therefore, there are no need to interfere with the OIA passed by the Commissioner (Appeals). The Department s Appeal is dismissed.
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2023 (8) TMI 1000
Confiscation - redemption fine - penalty - mis-declaration of quantity of goods - total weight of cargo was found to be 53820 Kgs as against declared weight of 51716 Kgs - quantity of 2104 Kgs has been found in excess over and above declared quantity which is excess by 4.1 % of the declared quantity - HELD THAT:- In the present case the appellant have billed the goods as per the standard theoretical weight basis as per the size of the plates. There is no difference in the number of plates, it is obvious that when the weight is calculated as per the size of plate on the theoretical basis, there has to be difference in the weight calculated and shown in the invoice and the actual weight. It is also fact that the appellant had paid the invoice value on the basis of the weight declared in the invoice irrespective that the actual weight is slightly more than the declared weight. The appellant have also discharged the custom duty on the differential weight of the goods. In this fact, there are no mis-declaration on the part of the appellant as there is no dispute that the weight in the invoice was mentioned as per the theoretical weight basis by taking a standard weight for particular size of the plate. Therefore, it cannot be said that the appellant have made any mis declaration of either weight or value - both the lower authorities not agreed upon in as much as the redemption fine and penalty were imposed. Appeal allowed.
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Corporate Laws
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2023 (8) TMI 999
Validity of amended Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 vide notification dated 03.01.2020 - guidelines for enforcement of corporate governance and formation of a High Power Committee to look into lapses leading to closure of more than 6 lakh companies - HELD THAT:- At this stage, the petitioner - Suman Kumar, who appears in person and has been heard, raises a grievance regarding non-issue/non-compliance of E-FORM INC-22A (ACTIVE) on mismatch etc. - no comment made in this regard. The petitioner Suman Kumar, if advised, may make a representation or file appropriate proceedings, which proceedings, if filed, will be decided in accordance with law. Petition dismissed.
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Insolvency & Bankruptcy
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2023 (8) TMI 998
Approval of Resolution plan - CIRP - NCLT rejected the plan - Plan contains the provision for extinguishment of personal guarantee of the personal guarantors - HELD THAT:- The Hon ble Supreme Court again in LALIT KUMAR JAIN VERSUS UNION OF INDIA AND ORS. [ 2021 (5) TMI 743 - SUPREME COURT ] had occasion to consider the provisions of the Code as well as the law pertaining to personal guarantor and the consequence of approval of the Resolution Plan on the rights of the personal guarantors. In the said judgment, the Hon ble Supreme Court held that sanction of a resolution plan does not per se operate as a discharge of the guarantor s liability. It was held that approval of a resolution plan does not ipso facto discharge a personal guarantor. The use of expressions per se and ipso facto clearly indicate that by approval of the Resolution Plan, personal guarantors are not per se and ipso facto discharge from its obligation which may arise of the guarantee given to the Financial Creditor. The use of above expressions conversely indicates that there may be situations and circumstances, for example, relevant clauses in the Resolution Plan by which personal guarantors may be discharged. The judgment of the Hon ble Supreme Court in Lalit Kumar s case cannot be read to mean as laying down law that personal guarantee never can be discharged in a Resolution Plan. There can be no dispute that Moratorium under Section 14 is not applicable on the personal guarantors. Non-applicability of the Moratorium on personal guarantor is with different object and purpose. Personal guarantors are liable along with the principal borrower and can be proceeded with for recovery of dues by the Financial Creditor but the question as to whether personal guarantee given to the Financial Creditor can be extinguished in a Resolution Plan is a question which is a separate question and was not under consideration by the Hon ble Supreme Court in State Bank of India vs. V. Ramakrishnan and Anr [ 2005 (10) TMI 542 - SUPREME COURT] . The present is a case where CoC consciously considered the clauses in the plan for relinquishing the personal guarantees of the Financial Creditors and as noticed above for a consideration offered by the Successful Resolution Applicant for release of the personal guarantee passed the Resolution Plan accepting the clause in the plan for release of the personal guarantee - The present is not a case where issue pertaining to the release of the personal guarantee was not before the CoC and was not deliberated. There is no error in the consideration of the CoC of the Resolution Plan and the commercial wisdom of the CoC by approving the Resolution Plan has to be given due weightage. The Adjudicating Authority committed error in rejecting the Application for approval of the Resolution Plan on the ground that plan could not have contained a provision for extinguishment of personal guarantee of the personal guarantors. Plan allocates a plan value for extinguishment of personal guarantee which has been accepted by the Financial Creditors by a vote share of 78.04% - the order of the Adjudicating Authority dated 06.01.2023 is unsustainable - Appeal allowed.
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Service Tax
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2023 (8) TMI 1039
Refund of service tax in relation to a rental transaction with the Mumbai International Airport Limited - Rejection on the ground that the payment of service tax on renting of immovable property of the duty free shops was not liable to be refunded in terms of the provisions of the Finance Act 1994 - HELD THAT:- The review is allowed by recalling the judgment dated 10 April 2023 [ 2023 (4) TMI 613 - SUPREME COURT ] - appeal shall stand restored to the file of the Court. The Civil Appeal shall stand tagged with the above appeals. The Registry shall obtain administrative directions so that all the appeals can be clubbed together and be heard by one Bench expeditiously. The appeal having been restored to the file for final disposal, it is directed that no coercive steps shall be taken for the recovery of the dues, pending the disposal of the appeal.
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2023 (8) TMI 997
Liability of service tax on lease - burden of service tax should be borne by the lessor i.e. the service provider or the lessee i.e. the service recipient? - entitlement to pendente lite interest and if so, for what period - HELD THAT:- In the case of M/s Meattles [ 2012 (10) TMI 685 - DELHI HIGH COURT] , a suit was filed by the Plaintiff for declaration, recovery of money and injunction and the prime issue before the Court was whether the Defendant was liable to pay service tax on the rent. In Pearey Lal [ 2010 (10) TMI 137 - DELHI HIGH COURT] , learned Single Judge has categorically observed that the Court is not unmindful of the circumstance that service tax is a species of levy which parties clearly did not envision while entering into their arrangement. Having so observed, the Court held that if the overall objective of the levy was to be taken into consideration, it is the service which is taxed and the levy is an indirect one, which necessarily means that the user has to bear it. The rationale, why this logic is to be accepted is that the ultimate consumer has contact with the user and it is from them that the levy would ultimately be realized by including the amount of tax in the cost of service or goods. Another Division Bench of this Court in Raghubir Saran [ 2013 (6) TMI 587 - DELHI HIGH COURT] , held that service tax is neither a property tax nor outgoing in respect of the premises, but is a tax on the commercial activity carried on. Pertinently, the Division Bench was dealing with Clause 7.1 of the Lease Deed therein, which placed the responsibility of paying property taxes and other outgoings on the lessor and the Court held that Clause 7.1 only deals with taxes which are relatable to the property and not the activity carried out in the premises, which is on what service tax is levied. It is true that when the Lease Deeds were executed by the parties, there was no stipulation with respect to service tax and this was introduced later by the Finance Act, 2007. However, in view of the judgements of this Court holding that the legislative intent is quite clear that the service tax is to be ultimately borne by the recipient of the service, though it is the service provider who is statutorily liable to pay the said tax to the exchequer, the Appellant must fail in its challenge in the present Appeal. In view of the clear observation of the Courts that there vests a legal right in the service provider to recover the amount of service tax from the recipient of the service, even if there is no agreement between them for reimbursement of such tax by the recipient of the service to its provider, this Court finds no reason warranting interference with the impugned order of the learned trial court. Grant of pendente lite interest on the entire service tax amount - HELD THAT:- The Plaintiff is only partially correct. The suit was filed by the Plaintiff on 06.12.2013 and therefore, he cannot lay a claim to pendente lite interest for any period prior thereto. Insofar as interest from 06.12.2013 to 30.05.2015 is concerned, the Court finds merit in the plea of the Plaintiff. Courts have repeatedly held that no person or authority can retain money belonging to another person or party without authority of law and if the Court comes to a conclusion on a given set of facts that a party has been wrongly denied use of its money, it is the duty of the Court to see that the party is appropriately compensated. The decree passed by the Trial Court is upheld with the aforementioned modification with respect to the pendente lite interest component - appeal dismissed.
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2023 (8) TMI 996
Classification of services - Business Auxiliary Service or Business Support services - consideration received from the companies, accounted as commission in the books of accounts - HELD THAT:- On going through both the agreement and offer letter, it is found that none of them specify the nature of services to be in relation to administrative services like maintenance of payroll of the employees, maintenance of attendance data, managing office supply needs, planning meeting, scheduling appointments etc. This being so, the arguments of the appellant cannot be appreciated that the services was in the nature of Business Support Service . Moreover, there is no mention of charges paid for the said Business Support Services claimed to have been rendered by the appellants. The consideration is only in the form of a fixed percentage of the total transaction that the principals had with their clients. Therefore, notwithstanding, the averments of the appellants and the affidavits filed by the Counsel on behalf of the appellants, it is not convinced that the appellants have rendered Business Support Services . Thus, an agreement, oral or written, is the source to understand the type of service rendered. In the instant case, it is understood from the contracts or the offer letter that the appellants rendered services with reference to the main work of their principals i.e. provision of support for logistics - there are nothing in the records or in the arguments proposed by the appellants to set aside the impugned order - the impugned order does not necessitate any interference - appeal dismissed.
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2023 (8) TMI 995
CENVAT Credit - Extended period of limitation - Adjustment of excess amount paid - development of franchisee service during the Financial year 2010-11 - extended period of limitation - HELD THAT:- The reasons for invoking extended period of limitation given in the Show Cause Notice [SCN] was that after audit, a letter dated 7.9.2012 was sent to the appellant asking it to pay the service tax short paid due to wrong availment of CENVAT credit along with interest and penalty. The appellant had deposited it but sent a letter dated 30.11.2012 contending that the amount was not deposited by it voluntarily as it was deposited without SCN and adjudication. Further, the appellant had deposited the service tax with interest, but failed to deposit the penalty and instead contested the voluntary deposit of the service tax. By doing so, according to the SCN, the appellant had intentionally and wilfully suppressed the facts of availing inadmissible CENVAT credit on the inputs which were used for non-taxable services - according to the SCN, the appellant had deposited the disputed tax and interest but not the penalty but later contested the demand itself and by doing so, the appellant had intentionally and wilfully suppressed the facts of availing inadmissible CENVAT credit. Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] the Supreme Court examined Section 11A of the Central Excise Act, 1944 which was worded similar to Section 73 of the Finance Act, 1994. The case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credit on input services. The position of the appellant was at the time of self-assessment and, during the adjudication proceedings and that it is entitled to the CENVAT credit. Thus, it is found that it is a case of difference of opinion between the appellant and the Revenue. The appellant held a different view about the eligibility of CENVAT credit than the Revenue. Thus, the central excise officer has an obligation to make his best judgment if either the assessee fails to furnish the return or, having filed the return, fails to assess tax in accordance with the Act and Rules. To determine if the assessee had failed to correctly assess the service tax, the central excise officer has to scrutinize the returns. Thus, although all assessees self-assess tax, the responsibility of taking action if they do not assess and pay the tax correctly squarely rests on the central excise officer, i.e., the officer with whom the Returns are filed. For this purpose, the officer may require the assessee to produce accounts, documents and other evidence he may deem necessary. Thus, in the scheme of the Finance Act, 1994, the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment - It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72. Therefore, to say that had the audit not been conducted, the incorrect availment of CENVAT credit would not have come to light is neither legally correct nor is it consistent with the CBEC s own instructions to its officers. The appellant assessee was required to file the ST 3 Returns which it did. Unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose anything else - It is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 and issue an SCN under Section 73 within the time limit. If the officer does not do so, and any tax escapes assessment, the responsibility for it rests on the officer - Extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of Act or Rules with an intent - Intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or (c) because the appellant did not seek any clarification from the Revenue; or (d) because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit. It is found in favour of the appellant on the question of limitation. As the entire demand except what has been conceded by the appellant falls beyond the value period of limitation it is not necessary to examine the merits of the case - the impugned order is set aside except to the extent of denial of CENVAT credit or Rs. 1,45, 724 on the architectural services during the period 2011-12 and interest thereon and order of its recovery. Appeal partly allowed.
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Central Excise
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2023 (8) TMI 994
Transfer of unutilized CENVAT Credit - entitlement of credit which was available in the books of accounts of one Vivin Laboratories Private Ltd., as they have taken over the plant and machinery of the said company on outright sale basis, including transfer of land - rejection of transfer of credit on grounds of lack of correlation of documents - violation of principles of natural justice - HELD THAT:- It is found that the Respondent is the successor owner of the factory of Vivin Laboratories, with its assets and liabilities (which is nil on date of transfer), due to change of ownership on account of sale - It is held that Rule 3 of CCR is not applicable in the facts of the present case, as Rule 3 applies in case of removal of capital goods. Here there is no removal, as the capital goods remained in the same factory/premises, and there is only change of ownership. The respondent-assessee is entitled to take transfer of Cenvat Credit available in the books of the transferor Vivin Labs, as per Rule 10 of Cenvat Credit Rules. Appeal of Revenue dismissed.
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2023 (8) TMI 993
Valuation - determination of assessable value of stock-transferred petroleum products by the Appellant from their Refinery to Marketing Division - terminalling Charges shown in the Stock-Transferred Invoices when the said goods were transferred from their Refinery to their Marketing Division - HELD THAT:- There are force in the argument of the Appellant. There cannot be any sale or purchase between the depots/marketing Division and the Refinery of the same Division. The transaction between the Refinery and the Marketing Division was not a sale. Just because the Terminalling Charges are shown separately in the stock-transferred invoices, it does not mean that central excise duty is payable on that charges. The final sale took place at the Marketing Division, on the Transaction value, which includes all charges incurred upto the Marketing Division, including the 'Terminalling Charges'. Hence, duty has been discharged by the Appellant on the transaction value, which includes the 'Terminalling Charges' also. No evidences has been brought on record by the Revenue to rebut the claim of the Appellant that the Terminalling Charges were included in the transaction value at which the petroleum products were sold by their Marketing Division. In the absence of any such evidence, the allegation that duty has not been paid on the 'Terminalling charges' is not sustainable. The demands of duty along with interest confirmed in the impugned order are not sustainable. Since, the duty itself is not sustainable the question of imposing penalties does not arise - impugned order set aside - Appeal allowed.
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2023 (8) TMI 992
Applicability of exemption notification - bagasse based plain and pre-laminated boards manufactured and cleared by the respondent falling under Chapter 44109090 and 44101190 of Central Excise Tariff Act, 1985 - liable for payment of excise duty @8% adv. as provided under Notification No. 4/2006-CE dated 01.03.2006 (Sr. 87) or eligible for full exemption under notification No. 6/2006-CE dated 01.03.2006 (Sr.No.82)? HELD THAT:- The department have chosen Notification No. 4/2006-C.E. only on the ground that the description of the impugned product is matching with the entry in the said notification. However, it is noted that there is no dispute that the appellant is manufacturing bagasse board which is covered by Sl. No. 82 of Notification No. 6/2006. No evidence and reason has been produced by the department regarding the dispute that as to why the product manufactured by the respondent cannot be called as bagasse board - it is found that the impugned goods are eligible to get exemption without any condition under these two notifications. The respondent cannot be compelled to opt for a notification which has higher duty liability. The Hon ble Supreme Court in various decisions held that the assessee can claim a notification which is more beneficial to them. Reference can be made to Supreme Court decision in M/S. ARVIND LIMITED. AND M/S. ARVIND POLYCOT LIMITED VERSUS CCE. - AHMEDABAD-III [ 2014 (6) TMI 271 - CESTAT AHMEDABAD ] where it was held that when two exemption notifications, one granting absolute unconditional exemption to excisable goods and the other granting unconditional partial exemption to the said goods, are operative simultaneously, it is the choice of the appellant to opt for that notification which is more beneficial to him. In the present facts and circumstances of these appeals, provisions of Section 5A(1A) of the Central Excise Act, 1944 are not applicable. On the identical issue a matter came before the Hon ble High Court of Gujarat in the case of DARSHAN BOARDLAM LTD. VERSUS UNION OF INDIA [ 2013 (4) TMI 326 - GUJARAT HIGH COURT ] wherein the Hon ble High Court held that pre laminated bagasse board is entitled for exemption under Notification No. 6/2006-CE (Sr. 82) dated 01.03.2006. Thus, merely because the revenue's appeal is pending in the Hon ble Supreme Court, Hon ble high court judgments do not loose its binding nature in view of the judicial discipline. Therefore, following the above judgments, it is held that respondent is entitled for exemption notification No. 6/2006-CE (Sr.No.82) dated 01.03.2006. The impugned order is upheld. The Revenue s appeal is dismissed.
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2023 (8) TMI 991
Recovery of sugar cess wrongly collected from the customers - import of raw sugar - recovery of interest u/s 11DD of CEA - Sugar Cess Credit availed utilize by the Appellant towards clearance of final goods - double taxation. Whether the appellant is entitled for cenvat credit on sugar cess paid as part of CVD in respect of import of raw sugar? HELD THAT:- This very issue has been considered by the Hon ble Karnataka High Court in the appellant s own case [ 2014 (1) TMI 1469 - KARNATAKA HIGH COURT] , where it was held that At the time of importing raw sugar the assessee has paid the additional Customs duty or CVD (countervailing duty) as prescribed under Section 3 of the Customs Tariff Act of 1975 If the Article imported is a like article produced or manufactured in India and if excise duty on such like article is leviable, the assessee is liable to pay the additional duty. The Excise Duty on sugar is payable under two enactments, ie (1) Section 3 of Central Excise Act of 1944, at the rate prescribed in the Central Excise Tariff Act, 1985 In addition, the assessee is also liable to pay cess as a duty of excise under the Sugar Cess Act of 1982 On such additional duty or CVD paid at the time of import by the assessee, apart from the Basic Customs Duty, he is entitled to the Cenvat credit in terms of clause (vii) of Rule 3 of Cenval Credit Rules, 2004. In view of the above Karnataka High Court judgment which is in favor of the appellant in their own matter, the issue is no longer res-Integra. Accordingly the appellant is legally entitled for the cenvat credit on the sugar cess paid on import of raw sugar. In view of the forgoing and also the fact that Section 11D can be invoked only if duty is collected, but not paid, whereas in the instant case, same was paid from accumulated CENVAT Credit, it is found that the case of department has no legs to stand. Further, when levy i.e. Sugar Cess in this case has not been done away with, but has only been exempted vide Notification No. S.O. 102 (E), dated, 07.01.2009 by Ministry of Consumer Affairs, party always has the right to avail or not to avail exemption, as per the trite law relied upon by appellants. And all consequences regarding payment of duty as well as availing permissible credit will follow in such situation. Department cannot force availment of exemption as distinguished from withdrawal of levy in which case requirement of payment of tax becomes non-est. The impugned order set aside - appeal allowed.
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2023 (8) TMI 990
Maintainability of appeal - appeal dismissed for the reason of delay in making the pre-deposit - HELD THAT:- In the present case, Commissioner (Appeals) as on very frivolous ground that of pre-deposit as made subsequent filing of the appeal dismissed this appeal and which cannot be justified in the manner because on the date of consideration of the appeal pre-deposit was already made. From the perusal of section 35F it is quite evident that the Commissioner (Appeal) or Tribunal is barred from entertaining any appeal before the conditions as imposed by the section 35F are complied with. This section do not put any bar on filing of the appeal or state that appeal could not have been filed till the pre-deposit has been made. The bar has been imposed on the consideration of appeal by the Commissioner (Appeal) or the Tribunal. Thus when the appeal is to be taken up for consideration by the concerned appellate authority he is required to satisfy himself that the conditions of Section 35F are complied with. Thus if the pre-deposit is made at any time before the consideration of the appeal by the concerned authority, then the conditions of Section 35F are satisfied and the said authority is within his right to consider the appeal and make orders as deemed fit. Also, it is evident that In the present case on the date of consideration of the appeal the requirements of 35F have been complied with, thus order of Commissioner (Appeal) dismissing the appeal for this reason is result of improper appreciation of the phrase entertain the appeal , used in the Section 35, ibid. There are no merits in the impugned order and set aside the same. Taking note of the pre-deposit made as recorded in para 6 of the impugned order, it is directed that the Commissioner (Appeals) to hear the appellant on merits and pass a well speaking reasoned order. Matter remanded back to Commissioner (Appeal) for decision on merits within the three months from the date of receipt of this order.
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2023 (8) TMI 989
Clandestine removal of goods - evidences available on record substantiate that the Appellants are the owners of the two pen drives and the data contained therein or not - reliability of computer printouts taken from the pen drives recovered during the search, as evidence - conditions mentioned in Section 36B has been followed in this case or not, relying on computer printouts - procedure as set out in Section 9D of the Central Excise Act, 1944 was followed or not - retraction of statements - corresponding investigation to corroborate the claim, at the receiver's end or not - absence of any evidence of procurement of the major raw materials such as Iron Ore and Coal, without invoices - penalty on Appellant companies and it's Director. Whether evidences available on record substantiate that the Appellants are the owners of the two pen drives and the data contained therein? - HELD THAT:- It is on record that the entire duty demand, except for 01-07-2014 to 16-07-2014, is based on the two pen drives recovered on the date of search on 17.07.2014, resumed from the shirt pocket of Shri. Sushil Kumar Roy. The computer printouts have been taken on three dates, namely, 17-07-2014, 28-11-2014 and 11-03-2015. The Forensic Examination of both the pen drives was conducted on 05-072021, though without the presence of the Appellants. A perusal of this report reveals that no printouts were taken from the two pen drives on any of the above three dates. The Appellants stated that they have made detailed submission about this Forensic Report in their further submissions dated 27-05-2022, but the same have not been taken into account by the adjudicating authority - It is observed that this Forensic Report was obtained by the department from their own expert and hence it became part of the adjudication proceedings. It is observed that the entire duty demand is based upon the computer printouts taken from these two pen drives, The Forensic Report questions the very existence of the computer printouts and the adjudicating authority has not given any finding on this report. Not giving any finding on the Forensic Report dated 05.07.2021 would only lead to the conclusion that the said Report did not support the case of the department and hence the adjudicating authority ignored the same and has not give any finding on it. When the Forensic Report dated 05.07.2021 revealed that some files were accessed on 17-07-2014, 28-11-2014 and 11-03-2015 but it did not show that on the said three dates any printouts were taken, the investigation should have ascertained the reasons for this discrepancy. When the Appellant raised the issue before the adjudicating authority, she should have given a finding on this point, as the data available in the pen drives is the basis for the entire demand. However, the adjudicating authority has chosen not to give any findings on this report. In view of the above, we hold that the Revenue has not established the ownership of the pen drives and consequently the existence of such computer printouts and the data contained therein. Accordingly, the answer to question is negative. Whether the computer printouts taken from the pen drives recovered during the search can be relied upon as evidence to demand duty? - Whether conditions mentioned in Section 36B has been followed in this case to rely upon the computer printouts as evidence? - HELD THAT:- A perusal of sub section (2) of Section 36B of the Act, clearly mandates that the same can be admitted as evidence only when the computer in which the data was fed is owned by the person against whom the evidence is being used. It is observed that the department did not identify any computer in which the information was allegedly fed by JBIL-III or JBIL-IV. The department relied upon the data resumed form two pen drives. The pen drive is a floating device and has no evidentiary value on its own and can be admitted as evidence only when it strictly fulfills the conditions specified in Section 36B of the Central Excise Act - It is observed that the Hon'ble Apex Court in the case of Tukaram S. Dighole vs. Manikrao Shivaji Kokate [ 2010 (2) TMI 1130 - SUPREME COURT] held that electronic devices such as Pen Drive with fast development in the electronic techniques, are more susceptible to tampering and alterations by transposition, excision, etc which may be difficult to detect and therefore such evidence has to be received with caution. It is observed that pen drive is not a substantial evidence in the absence of corroborative evidence. The Appellants contended that corroborative evidences such as consumption of unaccounted materials, production of unaccounted finished goods, extra labour, extra consumption of electricity, clearance of goods from the factory, receipt of cash on account of alleged clandestine sales are required to substantiate clandestine clearance. We observe that all the above factors are conspicuous by its absence in the present proceedings. The investigation has not established the availability of any of the above mentioned corroborative evidences, to substantiate their allegations. It is observed that JBIL-III and JBIL-IV have vehemently denied ownership of these two pen drives and the authenticity of the data therein. Only two statements of Shri Sushil Kumar Roy, Associate (Commercial) of JBIL-III and one statement of Shri Kanhaiya Agarwal, weighbridge in-charge of JBIL-III were recorded. The statement of Shri Sushil Kumar Roy regarding clandestine clearances in respect of entries in the computer printouts was not categorical - There was no categorical admission by him. He also says that inrespect of some of such cases bills might have been issued from JBIL IV, but entries were made in the pen drives only to keep account. This statement was given on the date of search om 17.07.2017. However, we observe that this averment of Shri Sushil Kumar Roy was not probed further. Section 65B of Evidence Act is parimateria with Section 36B of the Central Excise Act, 1944 - it is found that unless the conditions of Section 65B(2) of the Evidence Act, which is parimateria with Section 36B(4) of the Central Excise Act are complied with, no reliance can be placed on any computer printouts . Admittedly, the procedure set out in Section 36B has not been followed in this case. Thus, following the judgement of the Hon ble Apex Court and the other decisions, it is held that the data resumed from the computer print out alone cannot be relied upon to demand duty, without any corroborating evidence. Whether the procedure as set out in Section 9D of the Central Excise Act, !944 was followed in this case or not? If not followed, then whether the statements recorded under Section 14 of the Central Excise Act, 1944 can be relied upon to demand duty? - Whether the statements not retracted within a reasonable time, but retracted at the time of cross examination, has any evidentiary value? - HELD THAT:- It is observed that during the course of cross examination, most of the persons who have given the statements retracted their statements. In the impugned order, the adjudicating authority has held that if the statements were recorded under threats and duress, it is not understood as to what prevented them from retracting their statements within a reasonable period of time. She further held that all the statements of the concerned persons were supported by documentary evidences. Accordingly, she justified in demanding duty by relying upon these statements. However, a perusal of Section 9D of the Central Excise Act, 1944 clearly establishes that unless a person who has made the statement is examined as a witness before the Adjudicating Authority, no reliance can be placed on any statement recorded under section 14 of the Central Excise Act. Any statement recorded under Section 14 of the Central Excise Act could be admitted in evidence only after the process of examination and cross examination is completed under Section 9D. Once it duly came on record that various statements recorded from the witnesses were not of voluntary nature but were recorded after putting undue pressure upon the witnesses the same could not be admitted in evidence by the Adjudicating Authority. The same clearly lost its evidentiary value. Once these statements are excluded from evidence no reliance could be placed on the computer printouts and other evidences - the statements recorded cannot be relied upon to demand duty, unless the procedure set out in Section 9D are followed. None of the statements recorded in this case conclusively establish any clandestine clearance. During cross examination all of them retracted their earlier statements. Hence, the evidentiary value of the statements have to be examined. The corroborating evidence relied upon by the Revenue in this case is the data recovered from the pen drives. As discussed, the data available in the pen drives cannot be relied upon as they have not satisfied the conditions set out in Section 36B of the Central Excise Act. Thus, it is observed that there is no corroborative evidence brought in by the Revenue to substantiate the retracted statements. In view of the discussion, it is held that the demands in the impugned order cannot be confirmed on the basis of the statements recorded as they have not fulfilled the procedure set out in Section 9D of the Central Excise Act, 1944 - Thus, the answer to Questions are in the negative. Whether the allegations of clandestine clearance of finished goods JBIL III sustainable without any corresponding investigation to corroborate the claim, at the receiver's end? - HELD THAT:- A perusal of various Annexures to the show cause notice where the duty has been demanded shows that all sorts of vehicles were allegedly used to effect clandestine removal as the net weight of such consignments vary from 9 MT to 42 MT. Various types of vehicles ranging from 6 tyres to 14 tyre vehicles are used to transport such materials. A perusal of computer printouts and Annexure 1 to 3 to show cause notice reveal that against all the consignments allegedly cleared without invoices, vehicle numbers on which these consignments were allegedly transported have been duly mentioned therein. If the case of the DGCEI is treated to be true that the DGCEI had an intelligence that JBIL III indulged in clandestine removal of finished goods on regular basis, the investigating agency had an ample opportunity to intercept atleast some of these consignments which were being allegedly cleared without payment of duty. But, DGCEI did not make even a slightest attempt in this direction which was absolute necessary to give any credibility and veracity to these allegations. The investigation has failed to establish the alleged clandestine clearance of goods by the Appellants and hence the demands confirmed in the impugned order are not sustainable. Accordingly, answer to the Question is in the negative. Whether the demands confirmed in the impugned order on clandestine clearance of finished goods is sustainable in the absence of any evidence of procurement of the major raw materials such as Iron Ore and Coal, without invoices? - HELD THAT:- The investigation has not brought in any evidence regarding purchase of any of the raw materials required for manufacture of such huge quantity of finished goods. There was absolutely no investigation from any supplier of raw materials that they ever sold the raw materials either to JBIL III or JBIL IV without invoices and received any cash from them. Similarly, no investigation was conducted from any of the transporters to the same effect. There is no scope for procurement of coal as a raw material in clandestine manner. It is observed that unless JBIL III and JBIL IV have received the quantities of raw materials mentioned in the two charts above, they could not have manufactured finished goods and removed the same clandestinely. It is observed that there is absolutely no evidence on record that either JBIL III or JBIL IV received proportionate quantities of raw materials in clandestine manner or without accounting and used the same to manufacture unaccounted finished goods and clandestinely removed the same. No investigation was done to ascertain the procurement of raw materials required for manufacture of such huge quantities of finished goods and its subsequent clandestine clearance. In the case of Mohan Steels Ltd. Vs. Commissioner of Central Excise, Kanpur [ 2004 (7) TMI 530 - CESTAT, NEW DELHI] it has been held that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. In the absence of any evidence of procurement of raw materials required for the manufacture of the finished goods, the allegation of clandestine clearance in the impugned order is not sustainable. Accordingly, the answer to question is negative. Whether penalty is imposable on the Appellant companies and it's Director, on the basis of the evidences available on record? - penalty equivalent to the duty confirmed has been imposed on both the Appellant companies JBIL III and JBIL IV, in terms of provisions of Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 - Penalty of Rs.5,00,00,000/- was imposed on Shri. Aditya Jajodia ( wrongly mentioned as Ajit jajodia in the impugned order), Director of the Appellant Companies, under Rule 26 of the Central Excise Rues, 2002 - HELD THAT:- The allegation against the Appellant companies was that they indulged in clandestine manufacture and clearance of finished goods without payment of Central Excise duty. The discussions clearly establish that the duty demanded on the Appellant companies are not sustainable. Even the duty itself is not sustainable; the demand of interest and penalty on the Appellant companies is also not sustainable. Accordingly, the above said penalties imposed on the Appellant companies JBIL III and JBIL IV are liable to be set aside. Regarding the Penalty imposed on the Director. Shri. Aditya Jajodia, it is found that the Adjudicating Authority has discussed his role in Para 37 of Order-in-Original and held that Shri Aditya Jajodia has failed to participate in the investigation and also failed to come up with proper explanation regarding the documentary evidences recovered during the search and adduce proper evidence to establish that he was not involved in the act of clandestine removal of excisable goods. The investigation has not brought out any evidence against Shri. Aditya Jajodia. There is no evidence on record to show that he was concerned with the clandestine procurement of raw materials or instrumental in clearance of the finished goods in a clandestine manner. Since, the allegation of clandestine clearance itself is not sustained, we hold that the allegation of aiding and abetting the clandestine clearance against the Director also not sustainable. Accordingly, we hold that the penalty imposed on the Director Shri. Aditya Jajodiya is not sustainable, and answer to question is in the negative. The demand of duty confirmed in the impugned order against JBIL III and JBIL IV are not sustainable. Since the demand of duty is not sustainable, the demand of interest and imposition of penalty against the Appellants JBIL III and JBIL IV are also not sustainable. As there is no evidence against the Director, the penalty imposed on him is not sustainable. Accordingly, the demands of duty and penalties related to the aforementioned three Appellants in the impugned order are set aside. Appeal allowed.
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CST, VAT & Sales Tax
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2023 (8) TMI 988
Condonation of delay of 390 days in filing the Special Leave Petition - no sufficient reasons for delay - HELD THAT:- It is found that delay of 390 days in filing the Special Leave Petition, now converted into Civil Appeal, has not been explained to the satisfaction of this Court, inasmuch as there is no narration as to what happened between 18.02.2019, the date on which the impugned order was passed till 25.04.2019. Thereafter the only explanation given is that the file had got mixed up with some other files and, therefore, ultimately only on 13.01.2021, the same was noticed and steps were taken to send a letter to the Office of the Advocate General of the State of Kerala and a copy to the Special Govt. Pleader (Taxes) and thereafter, steps were taken to file the appeal on 22.07.2021. The reason cited for the gross delay of 390 days in filing the Special Leave Petition, now converted into a Civil Appeal, does not pursuade to condone the delay. The explanation offered is not satisfactory and not sufficient in the eye of law to condone the delay - Appeal dismissed on the ground of delay.
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2023 (8) TMI 987
Refund claim - It is the case of the petitioner that bearing in mind the provisions of Section 38(3)(a)(ii) of the DVAT Act, the refund application was liable to be granted within two months from the submission of the revised return and thus latest by 31 May 2015 - HELD THAT:- Once the objections had been duly lodged online, the mere fact that the respondents were unable to trace out the objections filed physically would not detract from the right of the petitioners to claim refund - it is further constrained to observe that the various status reports as well as the averments made in this respect relate to the objections which had been filed for FY 2014-15, those pertaining to FY 2015-2016 and the first quarter of FY 20172018. However, the claim for refund which is made in the instant writ petition, undisputedly, relates to and emanates from the return which was submitted for the quarter ending 31 March 2014. Undisputedly all objections which pertained to FY 2012-13 as well as the period for April 2013 to December 2013 had been duly considered and ultimately disposed of by the respondents themselves in terms of the order of the OHA dated 31 October 2019. As would be evident from a bare perusal of Rule 34, a claim for refund of tax is liable to be made in Form DVAT-21 only if such a refund is not claimed in the return itself. This clearly emerges from Rule 34(1) which uses the expression except claimed in the return . The aforesaid position is again reiterated in sub-rule (2) and which stipulates that only such claim for refunds may be made in Form DVAT-21 which have not been claimed in any previous return. It is thus manifest that once a claim for refund stands embodied in the return itself, there is no additional obligation placed upon the assessee to file Form DVAT-21. This position, in any case, stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam [ 2023 (4) TMI 4 - DELHI HIGH COURT] and Consortium of Sudhir Power Projects [ 2023 (2) TMI 290 - DELHI HIGH COURT] . Once a claim for refund stands embodied in the return itself, there is no additional obligation placed upon the assessee to file Form DVAT-21. This position, in any case, stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam and Consortium of Sudhir Power Projects. There thus existed no justification for the respondents adjusting the sum of Rs. 10,74,67,218/- on 03 December 2018. This since evidently the objections were yet to be disposed of by the OHA on that date - the stand as taken by the respondents cannot be sustained and it is observed that they clearly acted in flagrant violation of the mandate of Section 38 of the DVAT Act. The impugned order dated 31 May 2022 is hereby quashed. The respondents are consequently directed to refund the amount of Rs. 6,62,74,405/- along with interest from the date it fell due - Petition allowed.
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2023 (8) TMI 986
Levy of luxury tax under the provisions of the Tamil Nadu Tax on Luxuries Act, 1981 - amendment Act No.24/2002 to the Tamil Nadu Tax on Luxuries Act, 1981, imposing 1% on gold, silver, platinum jewellery and other precious stones at every point of purchase - HELD THAT:- The respondent ought to have called upon the petitioner to show cause as to why the amount that was paid by the petitioner covered by the impugned order should be refunded back to the petitioner as the petitioner would have passed on the incidence of tax to its customers - If the petitioner had produced evidence that the incidence of tax was not passed on to the customers, it is not on the part of the duty of the Department/State Government to retain the tax, which was otherwise not due to it. The impugned order set aside and case remitted back to the respondent to pass a fresh order after calling upon the petitioner to show cause as to how the tax amount, which has been paid by the petitioner pursuant to the impugned order should not be retained by the State Government on account of unjust enrichment. The respondent shall pass appropriate orders keeping note of Paragraphs 97 and 98 of the decision of the Hon'ble Supreme Court in M/s.Godfrey Phillips India Limited case - petition allowed.
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Indian Laws
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2023 (8) TMI 1007
Enhancement of minor penalty - seeking direction to respondents to issue No Objection Certificate to enable him to join as Professor (Energy Engineering) in North Eastern Hill Central University, Shillong - HELD THAT:- From the perusal of reply as well as arguments of learned counsel for the respondents, it is evident that there is no provision which empowers Appellate Authority to enhance quantum of penalty imposed by original authority. In the case in hand, appellate order dated 16.12.2022 has been passed by Joint Secretary to Government of India and it has been passed in terms of Central Civil Services (Classification Control Appeal) Rules 1965. Neither reply nor arguments of learned counsel for the respondents are disclosing power of Appellate Authority to enhance penalty, thus, penalty has been enhanced without jurisdiction. It is settled proposition of law that Appellate Authority can enhance penalty if there is specific provision and in the absence of provision, Appellate Authority cannot enhance penalty. A Division Bench of this Court in M/S NIRVAIR SINGH VERSUS FINANCIAL COMMISSIONER TAXATION [ 2017 (3) TMI 1423 - PUNJAB HARYANA HIGH COURT ] has adverted with this issue and has held that Appellate Authority cannot enhance penalty in the absence of specific power. From Clause VII of paragraph 2 of Office Memorandum dated 28.09.2022, it is evident that it is applicable for Vigilance Clearance whereas petitioner is not seeking Vigilance Clearance. The petitioner is not asking for certificate without disclosing factum of penalty whereas petitioner is seeking No Objection Certificate to join another department. The case of the petitioner is not covered by aforesaid clause, thus, reliance placed by respondent is misplaced. The respondent is hereby directed to issue No Objection Certificate within one week from today - petition disposed off.
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2023 (8) TMI 985
Modification of Arbitral Award - reduction in the rate of interest - whether the High Court erred in modifying the arbitral award to the extent of reducing the interest, from compound interest of 18% to 9% simple interest per annum? - HELD THAT:- Section 31(7)(b) of the 1996 Act, was amended by Act 3 of 2016, w.e.f. 23.10.2015. The pre-amended provision, empowers the arbitrator to award both pre-award and post-award interest, and specifies that the awarded sum would carry an interest of 18% per annum, unless provided otherwise, from the date of award till the date of payment. In the present case, given that the arbitration commenced in 1997, i.e., after the Act of 1996 came into force on 22.08.1996, the arbitrator, and the award passed by them, would be subject to this statute. Under the enactment, i.e. Section 31(7), the statutory rate of interest itself is contemplated at 18% per annum. Of course, this is in the event the award does not contain any direction towards the rate of interest. Therefore, there is little to no reason, for the High Court to have interfered with the arbitrator s finding on interest accrued and payable. Unlike in the case of the old Act, the court is powerless to modify the award and can only set aside partially, or wholly, an award on a finding that the conditions spelt out under Section 34 of the 1996 Act have been established. The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality, i.e., that illegality must go to the root of the matter and cannot be of a trivial nature ; and that the tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground . The impugned judgment warrants interference and is hereby set aside to the extent of modification of rate of interest for past, pendente lite and future interest. The 18% per annum rate of interest, as awarded by the arbitrator on 21.01.1999 (in Claim No. 9) is reinstated. The respondent-state is hereby directed to accordingly pay the dues within 8 weeks from the date of this judgment.
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2023 (8) TMI 984
Retrenchment from services - Whether the action of the management of Food Corporation of India, Patna, retrenching the services of S/Sh. Sashi Shankar and 20 others (list enclosed) is justified and legal? If not, what relief the concerned workmen are entitled to? - HELD THAT:- In UNION OF INDIA (UOI) AND ORS. VERSUS N. MURUGESAN AND ORS. [ 2021 (10) TMI 1375 - SUPREME COURT ], this Court pointed out that the phrases approbate and reprobate mean that no party can be allowed to accept and reject the same thing, as the principle behind the doctrine of election is inbuilt in the concept of approbate and reprobate, that is, a person cannot be allowed to have the benefit of an instrument while questioning the same. It was noted that an element of fair play is inbuilt in this principle and it is a species of estoppel dealing with the conduct of a party. In the case on hand, the management of FCI filed a writ petition challenging the Award passed by the Tribunal but having secured conditional interim relief therein, the management chose to implement the impugned Award though it was under no compulsion to do so - the management of FCI, be it for whatever reason, chose to acquiesce with and accept the Award in its entirety, though it made such compliance subject to the result of the writ petition. Its somnolence, thereafter, in taking timely measures for expeditious disposal of the writ petition compounded the matter further, leading to the passing of 18 long years, which conclusively weighed with the learned Judge and, in our considered opinion, rightly so. A party to a proceeding cannot be permitted to challenge the same but thereafter abide by it out of its own free will; garner benefit from it; get the opposite party to effectively alter its position; and then press its challenge after the passage of a considerable length of time. Having allowed the workmen to put in regular service to its own benefit for over two decades, the management can no longer claim an indefeasible right to continue with and canvass its challenge to the Award, merely because it made its compliance with the Award conditional long ago. In the light of their absorption in regular service, these workmen, who may have otherwise opted for employment opportunities elsewhere, altered their position and remained with the FCI. Having placed them in that position, it is no longer open to the management of FCI to seek to turn back the clock - the position obtaining for over two decades cannot be altered, by accepting the legally weighty but essentially pedantic view taken by the Division Bench, ignoring the factual position. The appeal filed by the Executive Staff Union of FCI, on behalf of the workmen, is accordingly allowed.
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2023 (8) TMI 983
Disciplinary Proceedings against Chartered Accountant (CA) - Irregularities in Securities and Banking Transactions (the JPC) SEBI Inspection Report on Canbank Mutual Fund (CBMF) and Annual Reports of various schemes of CBMF for the year 1991-92 - removal of Respondents from the register of members for a period of six months - HELD THAT:- Considering the nature of the charges, the three charges only relate to non-reporting in the annual reports of CBMF. Respondent is not accused of indulging in violative transactions or Respondent was responsible or liable for the alleged losses of CBMF or Respondent indulged in direct or indirect lending or underwriting etc. Nothing has been brought to our notice that Respondent had committed any similar offence earlier or later, in view of the fact that the matter relates to Financial Year 1991-1992. Almost 21 years have passed since the report was received from the Disciplinary Committee. The information relates to Financial Year 1991-92 and the Institute received it in 1995. The fact that the pendency of this Reference itself would have been like the proverbial Damocles sword hanging over the head of Respondent for about 30 years and in view of the fact that Mr. Mehta has given an undertaking on instructions as recorded, there is no need to take any further action against Mr. Salivati. It is directed that the proceedings be filed by the Institute - Reference disposed.
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