Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 24, 2024
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Tax fraud case: Bail granted for alleged bogus invoicing & wrongful ITC claim, pending liability determination.
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Court dismisses petition challenging GST adjudication order for lack of hearing, directs filing appeal with costs.
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Accused of Rs.15 crore tax fraud through fake transactions, granted bail after 2 years in custody subject to bond & conditions.
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Firm wins right to access GST records from authorities to challenge registration cancellation.
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Quashed order for lack of due process; remanded to allow hearing on import duty exemption for brooms.
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Profiteering allegations dismissed for post-GST real estate project charging 8% GST + ITC.
Income Tax
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Assessing notices by Joint Officer invalid, non-compliance with rules.
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Ownership rights granted, unauthorized sale contested in property dispute; Court limits intervention on tax liability.
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Land sale proceeds apportionment between spouses under Portuguese Civil Code challenged; Revenue's reasoning flawed.
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Online databases/journals access receipts not taxable royalties or FIS - no PE, copyright not granted, 'make available' clause not satisfied.
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Rental income rightfully taxed as house property income, not business income, unless substantial additional services provided.
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Unexplained cash deposits face scrutiny - Assessees' failure to prove credibility leads to tax addition.
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Fees paid to foreign firms not taxable in India due to lack of PE/fixed base.
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Investment in multiple residential units for joint living space qualifies for tax deduction u/s 54F.
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Tribunal Allows Estimation of Income Based on Average Profits Despite Rejecting Books.
Customs
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Automated customs exchange rates now published on ICEGATE website daily at 6 PM, effective next day.
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Customs goes digital: Tablets for faster cargo clearance.
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Compulsive bail granted for possession of 1875 grams gold paste concealed in capsules despite incomplete probe.
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Customs authorities illegally retained seized gold jewelry beyond statutory limit, Court orders immediate release to owners.
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Customs penalty & CHA license revocation challenged: Absence of evidence.
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Customs officers' seizure of goods upheld; Courts cautioned against overriding administrative decisions.
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Smart speakers classified differently despite wireless capabilities.
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Royalty Payments: Not a Condition for Import Value? Ajinomoto Case Clarifies Customs Valuation Rules.
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Customs Valuation Amendment Saga: Awaiting DRI Probe Outcome for Final Assessment.
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Customs broker's license revoked, fined, and deposit forfeited without fair trial.
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Goods & services crossing state borders attract IGST; interest payable on delayed IGST for imports upheld by tribunal.
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Customs broker's license revocation, penalty & security deposit forfeiture challenged over alleged violations.
DGFT
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Simplifying procedures for unutilized duty-free imports under Advance Authorizations eases compliance burden.
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Smoother SCOMET authorizations: IMWG delegation for faster approvals.
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India allows export of 200,000 MT Non-Basmati White Rice to Malaysia via NCEL.
FEMA
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Tweaking FDI rules for LLPs, startups, equity swaps & investment caps.
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Unauthorized Fund Transfer from NRE Account: Bank Acquitted Due to Insufficient Evidence.
Corporate Law
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Govt appoints new Chairperson & Members for Investor Education & Protection Fund Authority.
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Ind AS - Transition guidance for new insurance contracts standard: fair value approach, comparative info, financial asset redesignation.
Benami Property
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Cash stash summoning order nixed for lack of prima facie reasoning.
Indian Laws
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Govt cannot adjudicate merits of industrial dispute before referring it to authorities.
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WhatsApp chats not provided to detainee: Detention order quashed for lack of consistency in High Court rulings.
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Faulty Application of Presumption u/s 139 in Negotiable Instruments Act.
IBC
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Extended time to respond to show-cause notices - 60 days from due date instead of 35 days from issuance.
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Amended rules for info utilities: Longer timelines, non-corp default records, debtor verification & disputed records for banks.
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Company Secretary's termination challenged, Tribunal approval argued.
PMLA
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New special courts in Ernakulam & Kozhikode designated to try money laundering cases under PMLA in Kerala districts.
SEBI
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Comprehensive framework for cybersecurity and resilience across SEBI regulated entities, covering five cyber resiliency goals.
Service Tax
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Film Revenue-Sharing Agreements - Taxation Quandary Unraveled.
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Patent application services by foreign firms taxable as legal consultancy from Sep '09.
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Cenvat credit denied for delay in submitting records, re-examination ordered on eligibility & net receipts basis demand.
Central Excise
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Reduced Special Excise Duty on Crude Oil to Rs. 2100/tonne from 17.08.2024 in public interest.
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (8) TMI 1095
Seeking grant of regular bail - wrongful Input Tax Credit (ITC) - fictitious invoices shown to be issued by nonexistent/ suspicious firms - HELD THAT:- The provisions of Section 132 of HGST Act, which are pari materia with Section 132 of CGST Act are relevant for the purpose. As per Section 132 (1)(b) and (c), whoever issues an invoice or bill without supply of goods or service or both in violation of provisions of this Act, leading to wrongful availment or utilization of Input Tax Credit or refund of tax or avails Input Tax Credit using such invoice or bill commits the offence under this Section and is liable for punishment with imprisonment for a term which may extent to 05 years and with fine in cases where the amount of tax evaded or the amount of Input Tax Credit wrongly availed or utilized or the amount of refund wrongly taken exceeds Rs. 500 Lakhs. In M/S. JAYACHANDRAN ALLOYS (P) LTD. VERSUS THE SUPERINTENDENT OF GST AND CENTRAL EXCISE, THE DEPUTY COMMISSIONER OF GST AND CENTRAL EXCISE HEAD QUARTERS PREVENTIVE UNIT, THE ADDITIONAL COMMISSIONER OF GST AND CENTRAL EXCISE, THE COMMISSIONER OF GST AND CENTRAL EXCISE [ 2019 (5) TMI 895 - MADRAS HIGH COURT] , the allegation of the revenue was that the petitioner-company had contravened the provisions of Section 16(2) of the CGST Act and availed excess ITC insofar as there had been no movement of goods as against the supplier and the petitioner and the transactions were bogus and fictitious, created only on paper solely to avail ITC. Show cause notice issued under Section 74(1) of the HGST Act/CGST Act upon him is yet to be adjudicated upon and the exact liability of the petitioner/his firm is yet to be fixed. The sentence to be awarded in this case is directly linked with the quantum of evasion of tax and the prosecution of the petitioner is also linked with determination of evasion of tax because if there is no evasion of tax, there can be no criminal liability. The determination of tax liability is subject to the challenge before tribunals and courts and does not fall within the realm of criminal courts. The determination of tax liability is subject to the challenge before tribunals and courts and does not fall within the realm of criminal courts. Further in view of the fact that one M/s Tata Steels Ltd. has also been issued notice under Section 74(1) of the HGST Act/CGST Act jointly with the petitioner on the allegations of being major recipient of the ITC and its liability is also to be adjudicated upon, which obviously may reduce the liability to be imposed upon the petitioner, coupled with the fact that maximum period of punishment to be awarded under Section 132 of the HGST Act is 05 years. The petitioner is directed to be released on regular bail, subject to his executing personal bonds with two solvent sureties each in the sum of Rs. 50 Lakhs to the satisfaction of the trial Court and further subject to the condition that he will surrender his passport before the trial Court and shall not leave the country during trial without prior permission of the Court. The present petition is allowed.
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2024 (8) TMI 1094
Challenge to adjudication order passed u/s 73(9) of the CGST/WBGST Act, 2017 - no opportunity of hearing was either afforded or granted to the petitioners - violation of circular no. CBIC 183/15/2022 GST dated 27th December, 2022 - violation of principles of natural justice - HELD THAT:- The petitioners in this case complain that their response to the show cause was not considered. It is noticed in the order passed u/s 73 of the said Act, the proper officer had categorically noted that the response filed by the petitioners along with the documents has been taken into consideration. In view thereof, it cannot be said that the petitioners response was not considered or the proper officer had glossed over the same while passing the order impugned. The sufficiency or otherwise of the response, and the appreciation thereof by the proper officer, cannot form the subject matter of consideration in a writ petition under Article 226 of the Constitution of India. Although, the petitioners complain of violation of statutory provisions of not being afforded with an opportunity of hearing, it is found that such issue has been raised as and by way of an afterthought. The order impugned had been passed on 31st October, 2023. The petitioners chose not to file an appeal within the prescribed period of limitation - since, the petitioners have not taken steps to challenge the same with the time prescribed and also having not approached this Court expeditiously, this Court ought not to extend any relief in favour of the petitioners especially when the petitioners have an alternative remedy in the form of an appeal although, the time to prefer an appeal has long expired. Subject to payment of costs of Rs.10,000/- to be paid by the petitioners to the respondents, leave is granted to the petitioner no.1 to prefer an appeal from the order dated 31st October, 2023, before the appellate authority provided such appeal is filed within two weeks from date - Petition disposed off.
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2024 (8) TMI 1093
Seeking grant of regular bail - applicant had shown fictitious transactions with 69 firms - wrongful benefits of input tax credit - Section 439 of the Criminal Procedure Code, 1973 - HELD THAT:- From the record it appears that the present applicant is alleged to have availed input tax credit worth Rs.15.58 Crores on the basis of fictitious transactions which had been shown by the present applicant to have been entered by him with 38 fictitious firms. The record also indicated that the assets of the firms of the present applicant have already been attached and having regard to the same and so also the fact that the punishment of the present offence is five years and the present applicant has been arrested in connection of the present offence in the month of June, 2024, the present application deserves to be allowed. In the facts and circumstances of the case and considering the nature of allegations made in the FIR and without discussing the evidence in details as well as without going into details, prima-facie, this Court is of the opinion that this is a fit case to exercise the discretion to enlarge the applicant on bail. Hence, the application is allowed and the applicant is ordered to be released on bail in connection with the aforesaid FIR, on executing a bond of Rs. 10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the fulfilment of conditions imposed.
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2024 (8) TMI 1092
Cancellation of firm s GST registration - Seeking copies of the returns and documents which are available with the GST authorities in order to enable the petitioner to pursue its appellate remedy - HELD THAT:- The respondent is directed to supply physical /soft copy of the documents as sought by the petitioner and as set out in the alternate prayer, if the same are available with the respondent. These documents shall be provided to the petitioner within one week from date. Petition disposed off.
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2024 (8) TMI 1091
Maintainability of petition - availability of alternative remedy - Violation of principles of natural justice - Exemption from IGST in view of Sr.No.144 of N/N. 2/2017 Integrated Tax (Rate) dated 28.06.2017 - seeking declaration that the Brooms sticks imported by the petitioner which are made out of Cocos Nucifera and Nypha Fruitcane - HELD THAT:- The fact remains that the impugned order-in-original is passed in the fragrant breach of principles of natural justice by not granting any opportunity of hearing to the petitioner and even the reply submitted by the petitioner is not considered and it is stated that no reply is filed, though the petitioner has tendered the reply in response to the show-cause notice on 11.06.2020. Without entering into the merits of the matter, the impugned Order-In-Original dated 31.12.2020 is hereby quashed and set aside and the matter is remanded back to the adjudicating authority who shall pass a fresh de novo order after giving an opportunity of hearing to the petitioner and the petitioner shall be at liberty to raise all the contentions which are raised in this petition - Petition disposed off by way of remand.
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2024 (8) TMI 1090
Cancellation of registration of petitioner - failure to file an appeal within the stipulated time - contention of the petitioner is that the SCN for cancellation of registration dated 06.01.2021 directed appearance on 04.01.2021 and the order of cancellation of registration was passed on 20.01.2021 - HELD THAT:- True, there is an illegality in so far as the notice issued having shown a date prior to the date of the notice for hearing. However, the reply was directed to be submitted within seven days. The petitioner could have responded to the notice and asked for a further date which was not done by the petitioner. The petitioner does not have any case that the show-cause notice was not received by him. Further, it is also pertinent that the reason stated in the show-cause notice for cancellation of registration is that the petitioner has not filed returns for a continuous period of six months. The petitioner does not have a case that he had in fact filed a return in the continuous period of six months. The petitioner also did not file a reply to the show-cause notice. Petition dismissed.
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2024 (8) TMI 1089
Maintainability of petition - availability of statutory remedy of appeal against the impugned order before the Appellate Tribunal u/s 112 of the Bihar Goods and Services Tax Act - HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act. Under the circumstances, the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Petition disposed off subject to fulfilment of conditions imposed.
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2024 (8) TMI 1088
Profiteering - Respondent had not passed on the benefit of reduction in rate of tax or input tax credit (ITC) to him by way of commensurate reduction in the price - contravention of provisions in Section 171 (1) of the CGST Act 2017 - whether there was any reduction in the GST rate or the benefit of ITC and whether the benefit of rate reduction or ITC was passed on or not to the recipients as provided under Section 171 of the CGST Act, 2017? - HELD THAT:- It is clear from the DGAP's Report that the Respondent had started the above project in the post-GST regime as the commencement certificate was issued to him on 08.03.2018 by the Ahmedabad Urban Development Authority and the Respondent was registered under GST w.e.f.27.02.2018. As per the ITC register submitted by the Respondent, the first purchase invoice was issued on 27.02.2018. On perusal of the copies of sale agreements of all the customers submitted by the Respondent, it was found that there was no sale or even booking of the units in the above project during pre-GST regime. As far as rate reduction benefit is concerned, the Commission finds that after the implementation of the GST w.e.f. 01.07.2017, the Respondent was charging GST @ 8% with ITC. W.e.f. 01.04.2019, the Respondent was given the option either to charge GST @ 8% with ITC or 1% without ITC from the flat buyers vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019. The Respondent continued to charge GST @ 8% with ITC instead of 1%without ITC from the flat buyers. Therefore, as the Respondent had continued to opt for an effective GST rate of 8% along with ITC, there was no benefit of reduced rate to be passed on to the flat buyers. The Commission observes that no benefit of reduction of rate or additional ITC during the GST period as compared to the pre-GST period has accrued in the case of this Project to the Respondent, which he is obliged to pass on to his buyers. Hence, the allegations made by the Applicant No. 1 are not tenable. The Commission finds that the provisions of Section 171 (1) of the CGST Act,2017 are not attracted in the Respondent's project Swastik Heights . Therefore, the proceedings in the present case are hereby dropped.
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Income Tax
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2024 (8) TMI 1087
Delay in filling SLP - Deduction u/s 80-IB(10) and Disallowance u/s 40(a)(ia) - non- deduction of TDS on provision for expenses - HC [ 2022 (11) TMI 1507 - KARNATAKA HIGH COURT] decided issue in favour of assessee - HELD THAT:- We see no reason to condone the inordinate delay of 523 days in filing the Special Leave Petition as the explanation sought to be provided, does not constitute sufficient cause. Hence, petition(s) stands dismissed on the ground of delay.
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2024 (8) TMI 1086
Validity of proceedings u/s 153C - whether the assessee should be treated as a Searched Person or Other Person ? - Whether Loose Sheets and Diary have any evidentiary value? - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court of Karnataka at Bengaluru in Writ Appeal [ 2024 (2) TMI 116 - KARNATAKA HIGH COURT] held notices issued u/s 153C of the Act, based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal. As satisfaction note is required to be recorded u/s 153C for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue. As per the Panchanama provided herein, it is deemed appropriate to conclude that the notice provided u/s 153C is bad in law. Special Leave Petition is dismissed.
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2024 (8) TMI 1085
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 1084
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 1083
Reopening of assessment u/s 147 - claim of the petitioner for depreciation on tippers at the higher rate of 30% is not allowable as the petitioner is engaged in the business of mining and excavation of contractors and not in the business of running the tippers/ motor lorries on hire - HELD THAT:- It is not in dispute that the issue with regard to the claiming of depreciation at the rate of 30% on tippers is already decided by this Court vide Judgment and Order in Pr. Commissioner of Income Tax, Rajkot-1 Versus Durga Construction Company [ 2018 (5) TMI 1172 - GUJARAT HIGH COURT ] rendered in the Tax Appeal referred to herein above. The said decision is binding upon the respondent AO and therefore, the information in possession of the respondent AO cannot be said to result in escapement of the income on the same facts of the petitioner. It is pertinent to note that the petitioner has already provided all the material information during the course of the regular assessment and after considering the same, the assessment order u/s 143 (3) of the Act was passed. Thus, when the issue which is sought to be kept alive is already decided by this Court, the respondent AO cannot be said to have assumed the jurisdiction to reopen the assessment on the same facts which have achieved finality for disallowing the excess claim of the depreciation. Petitioner has disclosed fully and truly all the material facts relevant for the assessment and there is no failure on the part of the petitioner for the same. The respondent AO has also failed to point out any tangible material other than what is available on the record and as such the entire exercise of reopening is nothing but a change of opinion on the part of the AO. Appeal of assessee allowed.
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2024 (8) TMI 1082
Tax liability of the transaction now become the property of the decree holder by virtue of the said consent decree u/s 50C - sale of the property at at the instance of judgement debtor - Respondents has submitted that income tax implication is beyond the scope of the execution case because the decree itself does not provide any such condition as argued by the decree holder/petitioner - HELD THAT:- Judgement-debtors have harped on the point that what they did, they did in accordance with the terms of agreement and further, the sale of the property at Park Street at the instance of judgement debtor no. 1 in favour of judgement debtor no. 2 is in accordance with terms of consent decree. If we go through the said terms of consent decree dated 18.05.2018 we shall find that in condition no. 9 it has been mentioned that the property having an office space admeasuring approximately 1314 sq.ft. of 113 Park Street is transferred/allotted to the judgement-debtor no. 2 Smt. Manju Agarwal with the condition that she shall be entitled to use, enjoy and deal with the said premises as owner thereof without any hindrance/objection from any of the parties including deed of partition. All expenses incurred in the above process shall be exclusively borne by Smt. Manju Agarwal. From the condition no. 10 it further appears that neither the plaintiff nor the other defendants shall claim any right, title and interest over the said property in any manner whatsoever and Smt. Manju Agarwal shall be entitled to use, enjoy and/or deal with the same as owner thereof and in the manner as she likes. Therefore, from the above conditions it is revealed that by virtue of the said consent decree the plaintiff, the defendant no. 2 i.e. the decree holder and defendant no. 4 had relinquished their right in connection with the property as mentioned hereinabove and they had given absolute right to Smt. Manju Agarwal to use, enjoy and deal with the said office premises admeasuring 1314 sq.ft as owner thereof without any hindrance and objection, and further she has been given authority to deal with the said property as owner thereof and in the manner as she likes. The relevant deed of conveyance shows that the property was sold by the Nav Technology Pvt. Ltd. being represented by one of its directors, namely, Anmol Agarwal. There is no whisper that the other directors have given such authority to Ms. Anmol Agarwal to transfer the same on her own. There is no reference in the deed regarding any resolution by the other directors or majority of the directors authorising the respondent no. 1 to execute the same on their behalf. There is no signature of other directors confirming/ratifying such transfer. The question is whether a director can convey the property of the company without having such resolution or without confirmation of other directors. No answer to such a question is forthcoming from the side of the judgement-debtors. Whether an executing court can direct the person other than the vendor of a registered deed to shoulder the tax responsibility in connection with a transaction where sale value of the property is lesser than the value of the adopted or assessed by the Authority for the purpose of payment of stamp duty in respect of such transfer? - As per consent decree the Nav Technology Pvt. Ltd. along with other defendants are to execute transfer deed in respect of the office space as aforesaid in favour of Manju Agarwal. As the name of Nav Technology Pvt. Ltd. has been shown as the vendor and as the relevant provisions of the Income Tax Act direct the vendor to shoulder the tax responsibility, we cannot direct the then director or the vendee to shoulder the tax responsibility personally. As the law does not authorise an executing court to say anything palpably against the provisions of Income Tax Act, 1961 the executing court cannot pass such a direction. The undertaking given by the concerned lawyer shows that such undertaking was given against the provisions of law, and even if such undertaking is not respected, this court cannot direct the concerned party to shoulder the tax responsibility since if it does so it would go against the provisions of Income Tax Act, 1961 and also against the intention of the legislature. Therefore, though found that the judgement-debtors did not respect the underlying intention of the parties to the consent decree, the prayer for asking the judgement-debtor no. 2 to shoulder the tax responsibility cannot be allowed at this stage. So far as the other prayers of the instant petition are concerned it appears that evidence is required to prove such factual aspects particularly, the factum of surrender or the quantum of surrender value and so on in respect of the property at the third and fourth floor of P-161, VIP Road, Scheme VII M, Kolkata 700054. Without going through the evidence this court cannot allow the relevant prayers of the decree holder at this stage. Moreover, during the pendency of the execution proceeding admittedly some obligations of the consent decree as imposed upon the judgement-debtors have been complied with, and as the court is not apprised of specifically which portions of the obligations have been complied with by the judgement-debtors, from the side of the decree holder, the other prayers of the GA also cannot be allowed.
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2024 (8) TMI 1081
Reopening of assessment u/s 147 - Capital gain on sale of land - Apportionment of income between spouses governed by Portuguese Civil Code - as argued petitioner only had a 50% share in the properties since the original petitioner and her late husband were governed by the Portuguese Civil Code applicable to the residents of Goa - HELD THAT:- The husband of the original petitioner had already passed away in the year 1986 and hence there was no question of the original petitioner being governed by Section 5A of the IT Act which is applicable only to the division of incomes between the spouses who are governed by the Portuguese Civil Code. Section 5A does not deal with the division of assets. Hence, the question of stating that the original petitioner was governed by the provisions of Section 5A of the IT Act does not arise. In our view, therefore, the original petitioner could not be governed by the provisions of Section 5A of the IT Act. We find that the substantive rights of the original petitioner were governed by the provisions of the Portuguese Civil Code. The fact that the original petitioner is governed by the Portuguese Civil Code has been duly brought before the respondents. In our opinion, mere non-mention of the same in the return of income would not give rise to a situation where the tax on the sale of property beyond the share of the original petitioner could be taxed in her hands. The respondents do not appear to have disputed that the original petitioner was indeed governed by the provisions of the Portuguese Civil Code and this was already on record of the Revenue (Exhibit E/97). Moreover, the petitioner's husband had passed away way back in the year 1986 and the share of her husband had devolved from the date of his demise equally on his children. This position was also known to the Revenue when their return of income was filed. Reason cited by the Revenue for rejecting the explanation is, Copy of the Sale Deed was not available at the time of recording of reasons - We find that even such reasoning is fallacious and not tenable in law. The information from the office of the Sub-Registrar's for any registration is duly transmitted to the respondents. The execution of such Sale Deed was already on record. In such a case if the respondents fail to take note of the document which was available for transmission to the respondents from the Sub-Registrar's office, in our view, the assumption of jurisdiction will have to be regarded as erroneous. In any case, we find that at the time of passing of the order dated 16.07.2021, the Sale Deeds (which were available) ought to have been taken into consideration. Reopening notice quashed - Decided in favour of assessee.
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2024 (8) TMI 1080
Accrual of income - receipts from Indian customers - chargeable to tax as Royalty / FTS/FIS or not? - Amount received for sale of online or hard copy journals - assessee did not have a Permanent Establishment ( PE ) in India - HELD THAT:- As providing access to online database / journals is nothing but providing access to copyrighted article which does not amount to royalty. In this regard, reliance is placed on following decisions, wherein difference between a Copyright and a copyrighted article has been brought out very clearly in Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] , ZTE Corporation [ 2021 (7) TMI 1336 - SC ORDER] . Even as per Explanation 2 to the Section 9(1)(vi) of the Act, the impugned receipts from Indian customers do not constitute consideration for grant of any rights in the copyright, hence are not taxable as royalty. Thus, receipts from Indian customers for offshore sales of books / journals or providing access to online journals / online library do not qualify as Royalties under the Act as well as under the Treaty. The services are also do not fall under FIS as the services do not satisfy the clause make available as required for the provisions of Article 12 of DTAA. Assessee appeal allowed.
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2024 (8) TMI 1079
Correct head of income - rental income earned - house property income or business income - principle of consistency - HELD THAT:- AO has not highlighted any aspect, which goad him to say that rental income earned by the assessee is to be assessed as a business income. He simply reproduced some of the activities mentioned in the Memorandum of Association and shown 98% income of the assessee as rental income, therefore, it is to be construed as if, such income earned as a business income. It is not necessary that every time assessee will show profit, only then his business will be accepted separately - he has not highlighted the aspect as to how earning of rental income is being carried out by the assessee in an organized manner and not highlighted that apart from giving the property on rent, assessee has provided certain other facilities. As far as collection of service charges is concerned, i.e. part of statutory requirement, but the assessee has not declared any income for providing additional facilities to the occupiers of the premises and those aspects have not been considered by AO in the impugned assessment order. Therefore, the rental income declared by the assessee deserves to be assessed as a house property income and not as a business income. The rental income declared by the assessee has been accepted as a house property income in two scrutiny assessments, i.e. A.Ys. 2012-13 2013-14. In subsequent years, such income has been accepted under section 143(1). It suggests that in the earlier years as well as in subsequent years, the stand of the assessee has been accepted. It was accepted by AO in the present A.Y. also, in the first round but in the second round of proceeding on the strength of the order passed under section 263, ld. Assessing Officer did not accept. The principle of consistency is fully applicable in the present case. Thus, we are of the view that rental income declared by the assessee deserves to be assessed as an income from house property. The finding of the ld. Assessing Officer that such income is to be assessed as a business income is vacated - AO is directed to treat such income as an income from house property and determine the taxable income of the assessee. Appeal of the assessee is allowed.
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2024 (8) TMI 1078
Addition u/s 68 - sale of shares of penny stock treating it as bogus and estimated expenses - denial of exemption u/s. 10(38) - reliance on the report given by the Investigation Wing of the Income-tax Department, Kolkatta in order to arrive at the conclusion that the Long Term Capital Gain reported by the assessee is bogus in nature. HELD THAT:- We notice that the investigation report prepared by Investigation Wing, Kolkatta is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains. We notice that the AO has placed reliance on the said report, without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people, who were involved in the alleged rigging of prices. We notice that the promoters and their associations of M/s. Pine Animation Ltd., were initially debarred from accessing stock market, but the same has been revoked by the SEBI. We noticed earlier that the assessee has sold the shares during the period from June 05, 2014 to September 15, 2014. Thus, the transactions of purchase and sale of shares by the assessee have happened prior to the passing of initial order by SEBI, which has been later revoked. Hence, we are of the view that the transactions of purchase and sale of shares of M/s. Pine Animation Ltd., by the assessee would not be affected by the above said orders of the SEBI. In the statement recorded from the assessee, she has stated that she was guided by her husband in making the investment, who is a Chartered Accountant by profession. Further, the shares have entered and exited the demat account of the assessee. We notice that the AO himself has not found any defect/deficiencies in the evidences furnished by the assessee with regard to purchase and sale of shares. Further, the AO has not brought on record any material to show that the assessee was part of the group, which involved in the manipulation of prices of shares. Hence, there is no reason to suspect the purchase and sale of shares undertaken by the assessee. CIT(A) was justified in deleting the addition of value of sale consideration arising on sale of shares of M/s. Pine Animation Ltd. Since we have confirmed the decision of Ld CIT(A) in holding that the sale transactions of shares cannot be doubted with, the addition made by the AO with regard to estimated commission expenses is also liable to be deleted - Decided in favour of assessee.
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2024 (8) TMI 1077
Ex-parte order without affording a proper opportunity of hearing which is against the Principles of Natural Justice and as such the order passed is arbitrary and unjustified - non-compliance on the part of the assessee, but infact, no email/notice or SMS was received by the assessee to check the Portal - HELD THAT:- The matter now stands covered by the decision of Munjal BSU Centre of Innovation and Entrepreneurship, Ludhiana through its authorized signatory Shri Bharat Goyal Vs Commissioner of Income Tax (E), Chandigarh [ 2024 (3) TMI 479 - PUNJAB HARYANA HIGH COURT ] held that the provisions of Section 282(1) of the Income Tax Act and Rule 127(1) of the Income Tax Rules, 1962, envisage that it is essential that before any action is taken, a communication of the notice must be in terms of these provisions; that these provisions do not make mention of communication to be deemed by placing the notice on the e-portal of the Department; that an pragmatic view has always to be adopted in these circumstances; that an individual or a company is not expected to keep the e-portal of the Department open all the times so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms, etc.; and that the principles of natural justice are inherent in the Income Tax provisions and the same are required to be necessarily followed. The impugned order of the CIT(A) is, therefore, not sustainable in the eyes of law. Assessee is treated as allowed for statistical purposes.
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2024 (8) TMI 1076
Deduction u/s. 80P(2)(a)(i)/80P(2)(d) - interest income earned by a Cooperative Society formed with the object of accepting deposits from Members and lending money to its Members - HELD THAT:- On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. This issue was considered of CIT vs. Totagars Cooperative Sale Society, [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] wherein the Hon ble High Court after referring to the decision of Totgar s Co-operative Sale Society Ltd [ 2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon ble Supreme Court is not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. Interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks qualifies for deduction under the provisions of section 80P(2)(d) of the Act. Therefore, the grounds of appeal raised by the appellant stand allowed.
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2024 (8) TMI 1075
Addition of cash deposits by invoking the provisions of Section 68 - assessees could not explain their cases with credible source - HELD THAT:- An order [ 2024 (2) TMI 550 - JHARKHAND HIGH COURT ] passed by Hon'ble Jharkhand High Court was placed on record. It is seen that appeal was filed by both the assessees against the order of the ITAT Ranchi Bench before the Hon'ble Court. The contentions as made before lower authorities were reiterated. The Hon'ble Court which dealt with the matter at length held that both the assessees failed to prove identity, creditworthiness and genuineness of the creditors. The contention of the assessee regarding addition made u/s 68 of the Act on the ground that the amounts were not credited in the bank account, the Hon'ble Court has held that there was no error committed by and /or the tax authorities.Both the appeals were, consequently dismissed by the court. Interest charge u/s 234A and 234B - Departmental Miscellaneous applications on deletion of interest charge - HELD THAT:- Interest u/s 234AB could be charged on the returned income and not on the assessed income. 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 234B as amended by the Finance Act, 2001 and the Finance Act,2006. Decided in favour of revenue
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2024 (8) TMI 1074
TDS u/s 195 - disallowance u/s 40(a)(i) assessee failed to deduct tax on professional fee paid to various non-residents - as per AO professional fee paid to various non-residents was liable to tax in India in the hands of such non-residents in terms of the provisions of the Act read with the applicable articles of the corresponding DTAA CIT(A) deleted substantial amount of disallowance made by the AO u/s 40(a)(i) in respect of professional fee and allowed deduction as claimed by the Assessee holding that the professional fee paid to most of the non-residents was not liable to tax in India as FTS or Other Income - CIT(A) accepted the contention of the Assessee that the professional fee was in the nature of Business Profits or income from Independent Personal Services (IPS); and in absence of a Permanent Establishment (PE) or fixed base in India, respectively, the same was not liable to tax in India - HELD THAT:- We do not find merit in the contention advanced on behalf of the Revenue and concur with the conclusion drawn by the CIT(A) that the professional fee paid/payable to tax resident of UK was not liable to tax in India and therefore, Assessee was not required to withhold tax from the payments made to tax residents of UK. There is nothing on record to persuade us to take a different view. Accordingly we do not find any infirmity in the order passed by the CIT(A) deleting the disallowance made u/s 40(a)(i) of the Act by the Assessing Officer in respect of the aforesaid professional fee paid/payable to tax residents of UK. Disallowance in respect of remittance made by the Assessee to KPMG International Cooperative, Switzerland (KPMGI) without deduction of tax at source which was deleted by the CIT(A) - We find that the coordinate bench in assessee s own case for assessment year 2001 02 [ 2017 (4) TMI 869 - ITAT MUMBAI] has already held that contribution paid by the assessee to KPMG cooperative, Switzerland is covered by Mutuality concept i.e. mutual Association on its receipts would not constitute income chargeable to tax. The learned departmental representative could not controvert the above decision of the coordinate bench in assessee s own case, therefore, respectfully following the decision of the coordinate bench in assessee s own case for assessment year 2001 02, which has been followed by the learned CIT A, we do not find any infirmity in the order of the learned CIT (A) thus, the disallowance for non-deduction of tax at source is correctly deleted. Disallowance of ad-hoc basis, 25% of the total advertisement and publicity expenses - CIT(A) deleted addition - HELD THAT:- There is no basis for the ad-hoc disallowance made by the Assessing Officer. Also decided in Seagram Manufacturing Private Limited [ 2016 (12) TMI 1284 - DELHI HIGH COURT] as confirmed the order passed by the Tribunal deleting ad-hoc disallowance of 10% brand enhancement expenses made by the AO observing that disallowance made on an entirely artificial and notional basis from the expense otherwise deductible was not justified. We do not find any infirmity in the order passed by the CIT(A) deleting the disallowance being ad-hoc disallowance of 25% of advertisement expenses. Professional fee paid/payable to firm of individuals being tax residents of Australia - On perusal of Article 14 of the India Australia DTAA it becomes clear that the benefit of the said article is available to an individual and firm of individuals. Thus, the income from professional services derived by an enterprise carried on by a firm of individual in India shall be governed by the provisions contained in Article 14 of the India-Australia DTAA. The Revenue has failed to set up a case that tax resident of Australia has a fixed base or physical presence in India in terms of Article 14(1)(a) and 14(1)(b) of the India-Australia DTAA, respectively, and therefore, such income would not be liable to tax in India. As a result, the Assessee would not be required to withhold tax from the payments made to tax residents of Australia. Therefore, we concur with the conclusion drawn by the CIT(A), that the disallowance made by the AO in respect of payments made to tax residents of France by invoking provisions of Section 40(a)(i) of the Act cannot be sustained. Foreign Exchange Fluctuation - AO disallowed loss in account of foreign exchange fluctuation which was deleted by the CIT(A) as being consequential in nature - HELD THAT:- As per the chart furnished by the Assessee that the foreign exchange fluctuation loss pertains to professional fee paid/payable to tax residents of UK, Sweden, Indonesia and Bangladesh. Since we have confirmed the order passed by the CIT(A) in respect of the professional fee paid to the tax residents aforesaid countries. The order passed by CIT(A) deleting the disallowance of the aforesaid loss on account of foreign exchange fluctuation is confirmed.
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2024 (8) TMI 1073
Deduction u/s 80P/80P(2)(d) - Interest income received from Co-operative Banks - alternative claim of the assessee that it is entitled to deduction of proportionate expenditure for earning interest income - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of Canara Bank Staff Credit Co-operative Societies Ltd. [ 2023 (10) TMI 1350 - ITAT BANGALORE ] had restored the matter to the AO to examine whether the amounts invested with the Co-operative Banks are out of compulsion under the Karnataka Co-operative Societies Act and the relevant Rules. It was further held by the Tribunal that if the investments are out of compulsion under the Act and the relevant Rules, the interest income received out of the investment made under such compulsion would be liable to be taxed as income from business which would entail the benefit of deduction u/s 80P(2)(a)(i) of the Act. In the event it is found that assessee is not entitled to get the benefit under section 80P(2)(a)(i) of the Act, the AO shall also examine whether it is entitled to deduction under section 80P(2)(d) of the Act in light of the recent judgment of the Hon ble Apex Court in the case of Kerala State Co-operative Agricultural Rural Development [ 2023 (9) TMI 761 - SUPREME COURT ] Appeal filed by the assessee is allowed for statistical purposes.
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2024 (8) TMI 1072
LTCG - deduction u/s 54F - investment in three flats - HELD THAT:- Admittedly, the appellant made investment of the sale consideration from plot of land in three flats comprising of two flats 1 BHK and the third one 2 BHK which were located on same floor, side by side in one building, to be joined to make a joint living. As seen that the assessee was running under time constraint to make the investment otherwise he would have altogether lost the deduction. Section 54/54F uses the expression 'a residential house' and that the expression used is not 'a residential unit'. In our view, the AO was wrong in interpretating the statute and so sustained by Ld. CIT (A) without appreciating the facts of the case in the light of provisions of statute applicable for the assessment year under consideration. As per statute, the Section 54/54F requires the assessee to acquire a 'residential house' and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the section should be taken to have been satisfied. There is nothing in these sections which require the residential house to be constructed in a particular manner. We hold that the only requirement for claim of deduction u/s 54F of the Act is that the house or Flats should be for the residential use and not for commercial use. CIT(A) order is infirm and perverse to the facts on record in confirming the addition. Accordingly, we accept the grievance of the appellant as genuine. Thus, the appellant is legally qualify for the claim of deduction u/s 54F and as such, the addition is deleted. Disallowance of deduction of amount kept in bank for registration as not eligible for deduction as the money has not been deposited in CGAS - AR submitted that booking of a flat with builder is akin to construction. If the assessee goes for construction, then he has full three years to complete the construction and obviously money will be invested as construction progresses - HELD THAT:- In the present case, the appellant assessee has booked flats which were going to be constructed by a builder had to be considered as a case of construction of flat , and not a case of purchase of flat. Since, registry was effected only after completion of construction and hence the appellant cannot be denied deduction is respect of the amount kept for registration in its bank account. Accordingly, we hold that the observation of the Ld. CIT(A) is perverse to the facts on record of the present case. In our view, that the appellant was lawfully eligible for the deduction for the said amount kept for registration of flats, in its bank account and utilized for the registration purpose. In the present case, since the disputed amount was utilized for the purposes of registration in turn construction of new house within the stipulated time and hence, we hold the same as part of allowable deduction u/s 54F of the Act. Accordingly, addition on account of denial of registration and stamp duty is deleted. Appeal of the assessee is allowed.
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2024 (8) TMI 1071
Estimation of income - Rejection of duly audited books of accounts of the assessee firm u/s.145(3) - Estimation of gross profit - HELD THAT:- Admittedly, the A.O after rejecting the books of account of the assessee firm u/s. 145(3) of the Act ought to have estimated its income on some logical basis. As the income of the assessee firm for the aforementioned five preceding and succeeding years had been framed u/s. 143(3) of the Act, therefore, we are of the view that the average NP rate of the aforementioned years can safely be adopted as a yardstick for estimating its income for the year under consideration. Our aforesaid view is supported by Dr. Prabhu Dayal Yadav case [ 2017 (12) TMI 680 - ALLAHABAD HIGH COURT] . The Hon ble High Court while disposing off the appeal for A.Y.2003-04 of the assessee before them, had observed, that as income disclosed by the assessee during the year before them was similar or comparable to the income which the department had assessed in his hands five years later, the same could safely be adopted as a yardstick while estimating his income for the year before them after rejection of the books of accounts. Admittedly, as income disclosed by the assessee firm during the year under consideration is higher as in comparison to that disclosed in the aforementioned preceding years/succeeding years (i.e. average NP rate), and it is not a case that any addition/disallowance had been made by the A.O during the year under consideration by acting upon any incriminating material found in the course of survey proceedings, therefore, we are of a strong conviction that the average NP rate of 2.56% (supra) can safely be taken as a yardstick for estimating the income of the assessee firm for the year under consideration. As the assessee firm had disclosed NP rate of 2.93% during the year, i.e. A.Y.2015-16, which is higher than the average NP rate of 2.56% for the aforementioned preceding years/succeeding years, therefore, we are of the view that no adverse inferences as regards its returned income was liable to be drawn. However, as the aforesaid NP rates of the aforementioned five preceding years/succeeding years are not discernible from record; nor anything has been placed before us which would prove to the hilt the veracity of the same, therefore, the A.O is directed to verify the same while giving effect to our aforesaid observations. We, thus, in terms of our aforesaid observations, though set aside the order of the CIT(Appeals) to the extent he had concurred with the claim of the assessee firm that its books of account in absence of pointing out of any specific defect were not liable to be rejected by the A.O u/s.145(3) but at the same time, in terms of our aforesaid observations, principally concur with him to the extent he had vacated the addition made by the A.O and accepted the latter s returned income. Appeal of the revenue is partly allowed.
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Benami Property
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2024 (8) TMI 1070
Summoning order passed in Criminal Complaint Case u/s 53 and 3 of the Prohibition of Benami Property Transaction Act, 1988 - Acting upon the assumption that the cash was the beneficial property of the applicant, who accumulated cash out of illegal gratification by misuse of official possession, it was attached under Section 24(4) of the PBPT Act HELD THAT:- Hon'ble Supreme Court of India in the case of Lalankumar Singh [ 2022 (10) TMI 1135 - SUPREME COURT] has specifically held that the order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not. Hon'ble Supreme Court of India in the case of Pepsi Foods Ltd. [ 1997 (11) TMI 518 - SUPREME COURT] has held that summoning of an accused in a criminal case is a serious matter and criminal law cannot be set into motion as a matter of course Ld' court below has simply summarized the contents of the complaint, fact that sanction order was passed and the court had jurisdiction to entertain the matter and thereafter without recording any reason or without examining the nature of allegation made in the complaint the evidence regarding truthfulness of the allegation or any reason whatsoever as to why the cognizance is being taken and the accused is summoned has straightaway passed the cognizance and summoning order, even prima facie satisfaction or reasons for taking cognizance or proceedings against the petitioner has not been recorded while passing the impugned order dated 27.2.2024, thus, the impugned summoning order dated 27.2.2024 is contrary to the law laid down by Hon'ble Supreme Court of India in the cases of Lalankumar Singh, Pepsi Foods Ltd. [supra] and Mehmood UL Rehman [ 2015 (3) TMI 1349 - SUPREME COURT] Considering the above, the application is disposed of. The impugned summoning order passed by learned IXth Additional Sessions Judge, Lucknow in Criminal Complaint Case is set aside.
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Customs
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2024 (8) TMI 1069
Seeking for setting aside the inventory cum seizure list as also the summons - seeking direction upon the appellant to unconditionally release the goods being 200 bags containing five metric tonnes of areca nuts which were seized by the customs authorities under the impugned seizure memo - HELD THAT:- Section 110 of the Customs Act, 1962 deals with seizure of goods, documents and things. Sub-section (1) states that if the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize such goods. The Hon ble Supreme Court in INDRU RAMCHAND BHARVANI VERSUS UNION OF INDIA [ 1988 (7) TMI 78 - SUPREME COURT ], held that the conclusions arrived at by the fact-finding bodies, the tribunal or the statutory authorities, on the facts found that the cumulative effect or pre-ponderance of evidence cannot be interfered where the fact-finding body or authority has acted reasonably upon the view which can be taken by any reasonable man, courts will be reluctant to interfere in such a situation. As has been seen from the impugned order, affidavits were not called for from the department, nonetheless in the appeal the authority has stated that the two summons were sent to the suppliers/traders at Imphal, Manipur from whom the writ petitioner is said to have purchased the goods and both the summons were returned undelivered with the postal endorsement addressee not known . Whether the appellant authority namely the authority of the Preventive Wing of the customs department had jurisdiction to seize the goods from the domestic cargo complex in the Netaji Subhas Chandra International Airport? - HELD THAT:- There is no aspect of customs functioning with which the preventive service is not directly or indirectly associated. The mannual states that the preventive officer of customs is the first to greet any visitor arriving in India and the last he has to see departure from India and in the process, he has to shoulder dual responsibility. On the one hand, he has conduct himself to the visitor as an ambassador of India. On the other, being a soldier in the economic front, he has to ensure the proper observance of the laws of the land by the visitor. Further a separate sub-heading has been devoted for Proper officers under the Customs Act, 1962 and a tabulated format has been given giving the relevant sections of the Customs Act and the subject to be dealt with by the officer in brief - the preventive officer has overall jurisdiction to discharge various duties and responsibilities with the main function of the preventing, smuggling of dutiable, prohibited and restricted goods. The cardinal principle of interpretation would be to read the notification as such and the interpretation if to be given should be to give effect to the notification in its letter and spirit and not to thawart the purpose for which it has being issued. In any event, the notification issued in exercise of powers under Section 4 (1) of the Act is for administrative convenience and the court should seldom step into the realm of administration and make a hair-splitting exercise when the scope of the notification is called in question. Thus, it is held that the seizure by the Preventive Department of the Customs is valid and the seizure is not vitiated for the reasons contended by the writ petitioner and consequently the order passed in the writ petition is set aside - appeal is allowed.
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2024 (8) TMI 1068
Classification of three devices - Echo Dot (5th Gen) - Echo Dot (5th Gen) with Clock - Echo Pop - whether the devices in question are classifiable under Customs Tariff Heading [CTH] 8517 62 90 or under CTH 8518? - HELD THAT:- The inclusion of the expression wireless would have to be read alongside the principal commodities which are covered by and fall within the expanse of CTH 8518. The word wireless would thus have to be read alongside loudspeakers , headphones and earphones . Merely because the subject devices are also enabled to perform and operate in a wireless environment, they would not be liable to be placed under CTH 8518. The impugned orders dated 12 July 2023 and 27 September 2023 set aside - the three subject devices would be liable to be classified under CTH 8517 62 90 - appeal allowed.
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2024 (8) TMI 1067
Seeking grant of bail - Applications filed u/s 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 - offences punishable under Sections 132 and 135 of the Customs Act, 1962 - conscious possession of 1875.91 grams of gold paste concealed in five capsules - HELD THAT:- In the instant case, as the petitioners have been in judicial custody for the last 61 days, the investigation in the case is not complete, all the offences alleged against the petitioners are punishable for a period up to ten years, and the Investigating Officer has not laid the complaint till date. Hence, the petitioners are entitled to be released on compulsive bail, since it is their indefeasible right under Section 167(2) of the Code. The applications are allowed, by directing the petitioners to be released on bail on them executing a bond for Rs.1,00,000/- with two solvent sureties each for the like sum, to the satisfaction of the court having jurisdiction, which shall be subject to the fulfilment of conditions imposed - bail application allowed.
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2024 (8) TMI 1066
Time limitation for issuance of SCN - whether the Show Cause Notice was issued within the period of time prescribed under section 110 (2) of the Customs Act, 1962 and what will be the consequence if the SCN was not issued within the limited period prescribed under the aforesaid Act? HELD THAT:- Section 110 (1) of the Customs Act, 1962 empowers a proper officer of the Customs to seize any goods if he has reason to believe that any such goods are liable to confiscation under the Act. Under section 110 (2) of the said Act, it is, inter alia, provided that where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. In the present case, it is an admitted fact that gold jewelleries were seized from the petitioners on 23-02-2024 and the Show Cause Notice under section 124 of the Customs Act was dispatched only on 25-08-2023 through speed post for delivery to the petitioners. If the period of six months as provided under section 110 (2) of the Act is to be reckoned from 23-02-2023, the period of six months will lapsed on 22/23-08-2023 - this court has no hesitation to hold that the Show Cause Notice dated 17-08-2023 was not given within the period of six months prescribed under section 110 (2) of the Customs Act, 1962 and consequently, this court is of the considered view that the retention of the seized gold jewelleries by the Customs officials is illegal as being violative of the provisions of section 110 (2) of the Customs Act. This court held that the objection raised by the learned counsel appearing for the respondents is misconceived and not tenable - the present writ petition is allowed by directing the respondents to release forthwith the seized gold jewelleries to the concerned petitioners.
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2024 (8) TMI 1065
Levy of penalty u/s 112(b) of CA - existence of proper evidence or not - appellant had obtained PNR movement documents from the steamer agent for movement of the subject cargo from the port to the concerned CFS and that the imported cargo was moved using the trailers owned by the importer/CHA - HELD THAT:- The charges made by revenue are not substantiated by the statements recorded in this case. The appellant had in his statement dated 13.3.2001 and 20.02.2001 stated that the consignments were moved to various CFSs by the steamer agent M/s. JVP Container Lines Pvt. Ltd. His statement was also corroborated by the Accountant of M/s.JVP Container Lines Pvt. Ltd, who has mentioned in his statement dated 14.2.2002 that the delivery order and PNR movement copies for seven containers were issued as per the instructions of M/s.Blue Bay Logistics and M/s.Vantec Systems. The penalty imposed on the appellant cannot be sustained. Similarly, the prayer of revenue to set aside and the appellants CHA licence is also not maintainable. The penalty imposed on the CHA by the impugned order be set aside and he may be permitted to operate the CHA licence. The impugned order is partly modified accordingly.
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2024 (8) TMI 1064
Refund of Special Additional Duty of Customs (SAD) leviable under section 3(5) of the Customs Tariff Act, 1975 - discrepancies on the description of the goods and the brand name not being mentioned in the invoice - non-submission of certain documents - HELD THAT:- The issue relating to the rejection of the Special Additional Duty of Customs (SAD) refund claim alleging that there is mismatch with regard to the description of goods etc. in the sales invoices when compared to the Bills of Entry and other minor discrepancies is no longer res integra. The fact remains that the appellant has produced a Chartered Accountant s Certificate along with the reconciliation statement as required by Boards Circular. In such a case the decision to discard the certificate should be based on certain incriminating and reliable documents and the reasons for disbelieving the certificate should be clearly spelt out. In the absence of such action the claim cannot be rejected. In CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] , a Larger Bench of this Tribunal examined a reference of a related matter as to whether to avail the benefit of Notification No. 102/2007, the condition 2(b) of the Notification is mandatory for compliance being a trader who cleared the goods on the strength of commercial invoices. The judgment went on to examine the genesis and object of the levy and the role of the exemption notification, which is very useful in understanding the issue - it was held in the case that ' non-declaration/ non-specification of the duty element as to its nature and quantum in the invoice issued would itself be a satisfaction of the condition prescribed under clause (b) of para 2 of the Notification 102/2007.' The Hon ble Madras High Court in its judgment in PP PRODUCTS LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI SEAPORT COMMISSIONERATE-IV [ 2019 (5) TMI 830 - MADRAS HIGH COURT] , examined whether the Tribunal, in the face of documentary evidence produced by the appellant, was correct in setting aside the order of the Appellate Authority, holding that there was no correction between the imports and subsequent sales? It held that ' The lower authority has not issued any DM or PH to the appellants for making the deficiencies good or to make any submissions. The department has not proved that the goods sold are different from the goods imported. The lower authority has not disputed the fulfillment of the other substantive conditions of the notification by the appellants. Rejection of partial amount of refund on this flimsy ground is not sustainable.' The impugned order rejecting the refund claims is not proper. The same is hence set aside - Appeal allowed.
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2024 (8) TMI 1063
Valuation - Inclusion of royalty to determine the value of the imported MSG, involving related parties - rejection of transaction value but the addition of certain charges to the price actually paid or payable - Rule 10(1)(c) (e) of the Customs Valuation Rules, 2007 (CVR 2007) - HELD THAT:- It is made clear that the royalties and licence fees should relate to the imported goods that the buyer is required to pay, directly or indirectly, as a condition of the sale of the goods. Hence the fact that the trademark belongs to a group company (Ajinomoto Japan) will not matter so long as there is no evidence adduced to establish that royalty is paid as a condition of sale of the impugned goods. Moreover as per the order of the Ld. Original Authority the value declared by the importer is acceptable under rule 3(3)(a) of CVR 2007. The appellant states that the payment of royalty by them is purely for the license to use trademark and is paid to Ajinomoto Japan. It is not a condition of sale by Ajinomoto Thailand. The Hon ble Supreme Court in Commissioner Of Customs vs M/S Ferodo India Pvt. Ltd. [ 2008 (2) TMI 12 - SUPREME COURT ], examined a similar issue involving Rule 9 of CVR 1988 which is in pari materia with Rule 10 of CVR 2007. The Hon ble Court held ' In such cases the principle of attribution of royalty/licence fees to the price of imported goods would apply. This is because every importer/buyer is obliged to pay not only the price for the imported goods but he also incurs the cost of technical know- how which is paid to the foreign supplier. Therefore, such adjustments would certainly attract rule 9(1))(c).' Prima facie the reasoning of the Ld. Commissioner is not valid as he does not have the jurisdiction to determine whether the process amounts to manufacture or not under the Central Excise Act - postponing the collection of duty to the time of domestic sale of the goods after being repacked under a trademark, amounting to manufacture, appears far too remote to retain the character of a Customs impost. The nexus between the imported goods and those being sold cannot be said to exist. As per the impugned order, the royalty is ordered to be paid for activities post customs clearance after the goods no longer retain the identity of the imported goods and are worked upon for sale domestically containing the trademark. Payment of royalty is not a condition of sale. Even the royalty paid to Ajinomoto Japan is not to be paid on the process of packing/ manufacture but only on the use of trademark. In such a situation Ajinomoto India is free to sell the goods domestically after it crosses the Customs barrier. If the domestic buyer of the goods has an independent agreement with Ajinomoto Japan to pay royalty on use of trademark on repacked goods for domestic sale, surely Ajinomoto India would not have been saddled with the additional cost of the royalty to its transaction value. There is nothing to show the appellant had adjusted the price of the imported goods in guise of enhanced royalty. Royalty is not paid to Ajinomoto Thailand from whom the appellant procures its goods. Revenue has not been able to establish the payment of royalty is a condition of sale' of the imported goods nor has any flow back or direct / indirect payment from Ajinomoto India to Japan or Thailand been established. In such circumstances postponing the collection of duty on the imported goods, on an uncertain quantity, to the time of domestic sale after being repacked under a trademark, appears far too remote to retain the character of a Customs impost. The question Revenue should have addressed / investigated is whether the import would have taken place from Ajinomoto Thailand if the appellant declined to pay royalty to Ajinomoto Japan or whether it would only lead to a denial of repacking of goods using the trademark. However, as it stands Revenue has failed to establish its allegations and hence the impugned order merits to be set aside. The impugned order is set aside - appeal allowed.
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2024 (8) TMI 1062
Rectification of mistake in value declared at the time of filing of bill of entry - amendment of the value mis-declared due to omission on the part of supplier/appellant at the time of import - Section 154 Customs Act, 1962 - HELD THAT:- Though there was considerable delay in seeking amendment of Bill of entries, since the goods were cleared provisionally, records will be available with the respondent to verify the facts for final assessment. Moreover, the amendment on the very same issue of value is directly connected with the investigation conducted by DRI and in such cases, the Department would have awaited the outcome of the DRI investigation before rejecting the request for correction/ amendment of the declared value. Considering the above, it is just and reasonable to set aside the impugned orders and remand the matter to the Adjudication Authority. The Adjudication Authority shall consider the outcome of the DRI investigation and if there is no allegation regarding misdeclaration of the value and no SCN is issued so far, considering the fact that the remedy of amendment under Section 154 was sought during the pendency of provisional assessment, the amendment as sought by the appellant shall be considered based on the outcome of the DRI investigation regarding unit price of the impugned imported goods and the provisional assessment should be finalised, accordingly, within a period of 3(three) months after the receipt of this final order, and appropriate order be passed in accordance with law after giving an opportunity of hearing to the appellant. Appeal allowed by way of remand.
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2024 (8) TMI 1061
Revocation of Customs Broker Licence - forfeiture of whole of security deposit - levy of penalty - contravention of Regulations 10(a), 10(b), 10(d), 10(e), 10(f), 10(k) 10(n) of the CBLR, 2018 - dittoing of the findings recorded in the inquiry report without any application of judicial mind or thinking to regulation contravened and the facts in hand - violation of principles of natural justice - HELD THAT:- It is found that the a bill of entry has been filed using the login id and password of the Appellant. Subsequently the consignment covered by the said bill of entry is found to be mis-declared and has been confiscated, allowed to be redeemed against payment of redemption fine, for re-export. Except for the few statements, whose excerpts are reproduced in the impugned order no other evidence has been adduced in the entire proceedings to hold the Appellant guilty of contravention of various provisions of Regulations 10 (a), (b), (d),(e),(f),(k) (n) of the CBLR, 2018 - From the excerpts as recorded in impugned order it is not found that even an iota of evidence as per which it can be concluded that Appellant was responsible for filing of the said bill of entry. Proprietor of importer Mr Archit Sharma specifically states that he never had contacted or met the Appellant or was even under impression that bill of entry for clearance of his consignments were to filed by the Appellant. When Appellant has denied about having signed or issued any such authorization letter the signatures on the letter have not been subjected to any forensic examination by a hand writing expert. Except for statement of the Shri Awadhendra Kumar that he was working as per agreement letter dated 16.07.2018 in partnership with Appellant there is nothing to implicate the Appellant in the entire proceedings. Even copy this agreement letter submitted by Shri Awadhendra Kumar has not been subjected to any forensic examination. On the contrary this letter goes on to establish the case that Appellant has stated in his statement to effect that his login id and password has been compromised and used for filing this bill of entry. The case of mis-declaration has been adjudicated without issuance of show cause notice on the basis of waiver of show cause notice by the importer implicating the Appellant and imposing penalty of Rs 1,00,000/- on him under Section 114AA of the Customs Act, 1962, and without holding him liable for penal action under Section 112 (a) or 112 (b) of the Customs Act,1962. Only importer has been held liable under Section 112 (a) of the Customs Act, 1962 for contravention making the goods liable for confiscation under Section 111 (d) and (o) of the Customs Act, 1962. The impugned order holding that Appellant have contravenened the provisions of regulation 10 (a), (b), (d),(e),(f),(k) (n) of the CBLR, 2018 is without any basis in law or on cogent examination of the facts in hand. Thus there are no merits in the impugned order. Appeal dismissed.
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2024 (8) TMI 1060
Refund of the interest - interest paid on the IGST imported goods which they paid with delay - taxable event. Taxable event - HELD THAT:- The taxable event for levy of IGST is the inter-state supply of goods and services which definition also includes supply in the course of importation. The charging section for collection of IGST on the imported goods is section 4 of the IGST Act read with section 3(8) of the Customs Tariff Act. The Constitutional mandate for collection of IGST is clause (2) of 246A. IGST is credited to Major Budget head 0008 and it has to be apportioned between the Centre and States as decided by Parliament on the recommendations of GST Council. Therefore, the IGST collected when goods are imported is not a duty of customs. Interest is payable on IGST which is paid late or not - HELD THAT:- Unlike in the case of customs duties, no rate of IGST is prescribed either in the schedules to the Customs Tariff Act or under any notification issued under the Customs Tariff Act. Section 3 of the Customs Tariff Act refers to the IGST payable under section 5 of the IGST Act. In other words, whatever is payable under the IGST Act on inter-state supplies within India is payable under section 3 of the Customs Tariff Act read with section 5 of the IGST Act if the supplies are in the course of importation. When interest is payable on delayed payment of IGST on inter-state supplies within India, the same bill also apply to delayed payment of IGST on imports. This is especially so since section 3 of the Customs Tariff Act makes IGST payable under IGST Act. There are no legal basis or reason to hold that the interest payable on delayed payment of IGST does not apply if such delayed payment is on supply in the course of imports. The impugned order upheld - appeal dismissed.
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2024 (8) TMI 1059
Revocation of the appellant s CB license - imposition of penalty and forfeiture of security deposit - violation of Regulations 10(a), 10(b), 10(d), 10(e), 10(m) and 10(n) of CBLR, 2018 or not - whether the appellant Customs Broker has fulfilled all his obligations as required under CBLR, 2018 or not? - HELD THAT:- In both the B/Es filed by the appellants CB on behalf of the importer, had declared the proper description of the imported goods and its value has been indicated as per the documents given to them by the importer. In fact, the various query raised by the customs officer raising any doubt in compliance, value of the goods has been satisfactorily explained and the goods have been assessed to customs duty. It is not the case of Revenue, that the description, value particulars of imported goods indicated in the B/Es were different from the one indicated in the commercial invoices submitted to the Customs at the time of filing of B/Es. The facts indicate that Shri Laxmi Narayan Mishra, who had fabricated the description of the invoice in this case was actually involved in preparation of parallel fabricated invoice with incorrect description and connected violations in respect of imported goods. There are no strong grounds to hold that the appellant CB has violated the Regulation 10(a) ibid, only on the ground that they had accepted the documents indirectly from the importer through the logistics service provider. However, as the mis-declaration is apparent in the documents relating to import submitted along with the Letter of Authority given to the appellants, to the extent of mis-match in the description of the goods in MAWB and invoices, the appellants CB should have been more careful in scrutiny of the authority letter dated 28-8-2019 given to them along with import documents particularly when these were received from person other than importer who is in logistic trade, in the light of above DGFT s policy circular dated 16-9-2013. The appellants CB had declared the description of the imported goods and other details in both the B/Es for aforesaid imports as given in the invoices supplied by the importer. Further, the appellants were not aware of the mis-declaraton of the imported goods as there was no evidence to the claim of the department that the appellants knew about mis-declaration and further all incriminating documents were recovered only from Shri Naseer Amir Khan, who is claimed to be the beneficial owner of imported goods - the declaration made in the Bills of Entry is the same as that is provided in the Commercial invoices, and the description declared as per invoices were fabricated by Shri Laxmi Narayan Mishra by preparing parallel set of invoices, which could not be detected even by the customs authorities at the time of assessment or at the time of clearance of the goods. In the absence of any document to prove the claim of mis-declaration of goods, it is difficult to fasten such liability on the appellants CB. It is found that the appellants CB could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents were obtained from the importers through an intermediary in ensuring that all documents relating to imports are genuine and that these are not fake or fabricated - the appellants CB are found to have not complied with the requirement of sub-regulation 10(a) ibid and thus imposition of penalty to this extent, for failure in not being proactive for fulfilling of Regulation 10(a) of CBLR, 2013 alone, is appropriate and justifiable. There are no merits in the impugned order passed by the Learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants; for forfeiture of security deposit and imposition of penalty, inasmuch as there is no violation of Regulations 10(b), 10(d), 10(e), 10(m) and 10(n) ibid, and the findings in the impugned order is contrary to the facts on record - appeal allowed.
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Insolvency & Bankruptcy
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2024 (8) TMI 1058
CIRP - VAT / Sales Tax dues - Treatment of claims as Secured claims vis-a -vis Unsecured claims - Rejection of application of appellant to treat its claim as Secured Creditor during the liquidation under waterfall arrangement as stipulated in Section 53 of IBC - it was held by NCLAT that 'the Respondent classified remaining admissible outstanding dues as Unsecured debts. The Adjudicating Authority, therefore, also passed the Impugned Order accordingly based on Resolution Plan put up for approval by CoC through the Respondent' - HELD THAT:- There are no error in the view taken by the National Company Law Appellate Tribunal. Appeal dismissed.
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2024 (8) TMI 1057
Seeking protection under Section 218 of the Companies Act, 2013 - as interim relief it is prayed for re-appointment as Secretary of the Club - submission which was advanced before the NCLT by the Appellant was that the termination was in violation of Section 218(1)(b) of the Companies Act and no employee could be removed from the Club without prior approval of the Tribunal - HELD THAT:- It is clear that only intent and object of the Appellant is to seek protection under Section 218 of the Companies Act and get reappointed as Secretary. The said issue of protection under Section 2018 having already been pronounced by the NCLT, which order has not been interfered with by this Tribunal or the Hon ble Supreme Court, subsequent applications CA-88/2023 and CA-34/2024 are nothing but re- agitation of the issues which has already been raised by the Appellant and rejected. Appellant has given much emphasis on non-decision of CA-88/2023 and CA-34/2024 inspite of order of this Tribunal passed on 10.08.2023 and 11.01.2024. As noticed above, on 10.08.2023, this Tribunal has observed that in view of the fact that application has been filed under Section 218 of the Companies Act, the Tribunal shall endeavour to dispose of the application at an early date. Subsequently, another IA was filed being IA No.194 of 2024, which was disposed of by this Tribunal by order dated 11.01.2024. The Court who is in control of the proceedings has right to conduct the proceedings in orderly manner and resist attempt of the litigants who tend to raise repeatedly unconnected issues. In the present case it is noticed that the Appellant has been making submissions time and again with regard to CA-88/2023 and CA-34/2024 with regard to entitlement of protection under Section 218 of the Companies Act. Appellant very conveniently in entire appeal has not referred to earlier order of the NCLT dated 25.03.2021 where application under Section 218 was filed and in which no relief was granted of setting aside his termination or permitting his continuance. Thus, no grounds have been made to interfere with the order dated 05.04.2024 passed by the NCLT. Appeal is dismissed.
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FEMA
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2024 (8) TMI 1056
Applicability of FERA - Suit filed seeking recovery by the plaintiff against the defendant bank - defendant bank unauthorizedly and without permission of the plaintiffs misappropriated an amount of Rs. 2 crores towards the liability of M/s Asian Wire Ropes Ltd. - plaintiffs are Non-Resident Indians ( NRIs ) carrying the business of Import and Export who came to India for exploring business opportunities. The plaintiff no. 2 is the wife of plaintiff no. 1, who subsequently is said to have obtained a status of Resident Indian - plaintiffs opened a Savings Bank Account with the defendant bank/NRE Account - As stated that in the absence of plaintiff No. 1 from Delhi, plaintiff no. 2 on 23.04.1990 received a note from the then Branch Manager of defendant no. 2 requesting a blank cheque (only bearing signature of plaintiff no. 2) on urgent basis.On the return of the plaintiff no. 1, the plaintiff no. 1 learnt that a sum of Rs. 2,00,00,000/- has been transferred from his NRE Account to the defendant s Hyderabad Branch - as alleged officials of defendant no. 2 had obtained a blank cheque from the plaintiff no. 2 and in a clandestine manner, filled entries in the cheque and added detailed instructions on the back of the cheque without any such directions by the plaintiffs Whether the suit is within time? - Admittedly, the suit is based on the fact that on 23.04.1990 money was illegally transferred from plaintiffs account by the defendant bank. The suit was filed on 22.04.1993, i.e. within three years from the date of cause of action. Therefore, the suit as filed was within the limitation period of three years. The Court fees of Rs. 2,70,000/- was filed along with the suit and since the court fee of Rs. 3,672 was not available on the said date, it was purchased and deposited on 07.05.1993. All objections were duly removed and the matter was re-filed on 17.05.1993. It is settled proposition that the deficiency in court fee is not fatal and the payment of deficit court fee is a curable defect. Under section 149 of CPC, the courts have been granted the discretion to permit receiving the deficit court fee at any stage, even in the absence of an application praying for the same, subject to the said discretion being exercised equitably. The plaintiff has cured the defect of deficit court fee within 30 days of the objections. A minor delay in payment of balance court fee cannot act as an impediment in entertaining the suit filed by the plaintiff.Hence, the present suit is held maintainable and within the period of limitation. When did plaintiff No. 2 change her status from non-resident Indian to resident Indian and whether an intimation thereof was given to the bank? If so, on which date? - There is no evidence on record to prove that on 17.04.1990, the plaintiff No. 2 ceased to be an NRI. There is no evidence on record to show that the defendant bank was duly informed by the plaintiff no. 2.The NRE Account Opening Form, i.e. PW1/D44, clearly casts an obligation upon the plaintiffs the duty to inform the defendant bank a change in their residential status. Even if it is assumed that there had been a change, the plaintiff no. 2 continued to issue cheques from the same account, i.e. (Ex. PW1/D58) cheque dated 07.05.1990 for Rs. 1,00,00,000/- issued from NRE Account No. 6523 to create a Fixed Deposit with the Defence colony branch, i.e.(Ex PW1/D68). The said transaction shows that the plaintiff no. 2 continued to issue cheques in the capacity of a joint account holder and continued to sign from the NRE account. Therefore, in the absence of any material evidence being on record to show that there was a change in residential status of plaintiff No. 2 and that the same was duly informed to defendant bank, the Issue no. III is decided against the plaintiff and in favour of the defendant bank. Discharge the onus of proof on the plaintiffs - There is no doubt that a bank cannot be callous or deal with its customers in a causal manner. The defendant bank does not have a Specimen Signature Card for Saving Bank Account bearing No. 6524, wherein as per the plaintiff no. 2 she signed as R Murti . The defendant bank has two Specimen Signature Cards for NRE Account No. 6523 alongwith multiple photocopies of the Specimen Signature Card NRE Account no. 6523 for absolutely no reason or explanation. The defendant bank may have personal equations with clients but they are bound to follow the procedure and mandate of law. If a Specimen Signature Card is missing (which is a mandatory requirement for clearing of cheques and bank operations) the bank is required to take action, including but not limited to conducting an inquiry and registering of an FIR. The defendant bank cannot be accepted to say that a Specimen Signature Card of an individual is lost and the defendant bank did nothing about it. The party which comes to the court and seeks the courts adjudication on issues in its favour has to discharge the onus of proof. The plaintiffs have failed to prove that the instructions written on the reverse side of the cheque were not given by the plaintiff no. 2 but written by the defendant bank. The plaintiffs have failed to prove that the act of encashing the cheque in question, i.e. Ex. PW1/D31, is improper especially since the defendant bank has sufficiently proved that the plaintiff no. 2 would continually sign cheques both signed as R. Murti and R. Shandilya in the NRE Account no. 6523. Thus the plaintiffs have not been able to discharge the onus of proof. Whether, the transfer of Rs. 2 crores is hit by the provisions of Foreign Exchange Regulation Act? If so, to what extent? - FERA is a special legislation, containing exhaustive provisions of investigation, inquiry, trial and appeal. It is a self-contained code, including statutory functionaries specifically and specially constituted to inquire and adjudicate upon any contraventions, as alleged. The provisions under FERA empowers the Directorate of Enforcement and its officers to search, recover, arrest, hold trial for offences and impose punishment for offence under the Act. The proceedings under FERA are quasi-criminal in nature. The courts have held that the power to adjudge any contravention alleged under the act would lie with Directorate of Enforcement in the first instance. As no complaint has been filed to FERA. The plaintiffs have also failed to show how the provisions under FERA will be applicable against the defendant bank. Plaintiffs are not entitled for recovery of any amount.
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PMLA
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2024 (8) TMI 1055
Directing the Petitioner Bank to keep the account frozen of a particular customer - direction to Petitioner Bank to make a demand draft of the frozen amount along with the interest accrued thereon in favour of the Joint Director, Enforcement Directorate - HELD THAT:- It is seen from a perusal of Section 8 (3) and 8 (4) of the Act of 2002 that after an order is passed by the Adjudicating Authority and the provisional order of attachment is confirmed, the Director or any other Officer authorized by him shall forthwith take possession of the property attached under Section 5 or frozen under Sub-Section 1 (A) of Section 17 of the Act of 2002 in such manner as may be prescribed. As the Respondent Nos. 1 and 2 had expressed their no objection in transferring the amount lying in the account in question and the statutory mandate contained in Section 8 (4) of the Act of 2002, this Court is of the opinion that the direction so given in the communication dated the 12.04.2024 which was received by the Petitioner on 19.04.2024 is required to be complied with. This Court therefore grants 7 (seven) days time to the Petitioner Bank to comply in terms with the directions so contained in the communication dated 12.04.2024 - Petition disposed off.
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Service Tax
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2024 (8) TMI 1054
Classification and taxability of services related to patent application provided by various foreign companies all located outside India - Service Tax liability in terms of Notification No.36/2004-ST dated 31.12.2004 issued under Section 68(2) of the Finance Act, 1994, read with Rule 2(l)(d)(iv) of the Service Tax Rules, 1994 and in terms of Section 66A of the Finance Act, 1994 - invocation of extended period of demand and penalties for contraventions of various Sections of Finance Act, 1994. Classification and taxability of services related to patent application provided by various foreign companies all located outside India - HELD THAT:- As rightly claimed by the Counsel, the services which are purely in the form of professional and patent related services cannot be classified under Business Support Service for operational assistance for marketing. Reliance placed by the Commissioner on the amended version also is not applicable since it cannot be retrospectively applied for the period under dispute. The legal consultancy services was brought to taxable net with effect from 01.09.2009 by amending the Finance Act under Section 65 (105) (zzzzm) which is defined as To a business entity, by any other business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner and there is no dispute of the fact that this classification has been accepted by the department from 01.09.2009 - there are no reason to classify the above services under BSS and also taking into consideration the fact that the payment of Service Tax under Legal Consultancy Service for the above services from 1.9.2009 not being disputed, we set aside the impugned order. Since the services received by the appellant are aptly covered under the Legal Services, the question of classifying them under the Business Support Services does not arise. The learned counsel submission that (successor to Service Tax regime), the Legal services specifically includes Legal documentation and certification services concerning patents, copyrights and other intellectual property as a separate sub-heading emphasises the point that the impugned services clearly fall under the ambit of legal services. Service Tax liability in terms of Notification No.36/2004-ST dated 31.12.2004 issued under Section 68(2) of the Finance Act, 1994, read with Rule 2(l)(d)(iv) of the Service Tax Rules, 1994 and in terms of Section 66A of the Finance Act, 1994 - HELD THAT:- The appellant is not liable to service tax during the disputed period under BSS, whether they are liable to pay Service Tax under reverse charge mechanism or not is only academic as there is no denial of the fact that they are liable for payment of Service Tax under Reverse charge mechanism. Invocation of extended period of demand and penalties for contraventions of various Sections of Finance Act, 1994 - HELD THAT:- The appellant herein has been rendering various services such as Scientific or Technical Consultancy Service, Technical Testing and Analysis Service, Renting of Immovable Property Service, Business Auxiliary Service etc; on which service tax is discharged regularly. Appellant has also been filing ST-3 Returns regularly and there is nothing on record to show that there is wilful suppression of misstatement of facts. No grounds have been alleged in the impugned order for invocation of suppression and as rightly claimed by the appellant in view of the Hon ble Supreme Court s decision in the case of M/S. UNIWORTH TEXTILES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE. RAIPUR [ 2013 (1) TMI 616 - SUPREME COURT] , the question of invoking suppression without any mala fide intention is proved on the part of the appellant. The demand is set aside for the period from March 2006 to 31.08.2009 along with interest and all other penalties. The demand of service tax from 01.09.2009 under Legal Consultancy service is upheld - Appeal disposed off.
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2024 (8) TMI 1053
Taxability - revenue-sharing arrangements between theatre owners and distributors - principal contention of the appellant is that the agreements have been misconstrued for contriving a new entity birthed therefrom and that the circular of 2011 has been inappropriately relied upon by disregard of the clear instructions in that of 2009 inasmuch as the former has not disowned the exhortation that each arrangement must be scrutinized for ascertaining the elements of service, as set out in Finance Act, 1994, as prelude to tax. HELD THAT:- Parallel is an expression deployed in context of the film industry but here we find two parallel lines - of constitutional restriction disbarring levy on screening of films and fictional conception of an entity excoriating the flesh and blood of the charging provision - sought to be converged for bringing the box office , or part thereof, within the tax net of Finance Act, 1994. The implication is that the box office manifests the joint venture between the exhibitor and distributor and, though not liable to tax of itself, had incurred costs of procuring service from the two collaborators of which provision of support service of business or commerce , enabling the venture to screen films, was sought to be fastened on the exhibitor - Once again, and with the additional benefit of subsequent developments in the above dispute, the Tribunal had cause to look at another controversy, and with substitution of the distributor by association of persons as recipient, identical to the one now here in M/S. INOX LEISURE LTD. VERSUS COMMISSIONER OF SERVICE TAX-V, MUMBAI [ 2022 (3) TMI 1256 - CESTAT MUMBAI] . It was noted therein that the earlier decision was applicable even in the changed circumstances of negative list and any contrary stand on taxability was doubtlessly unacceptable. Thus, the demand and penalty in the impugned order have no basis in law and must be set aside - appeal allowed.
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2024 (8) TMI 1052
Benefit of input service tax credit - short payment of Service Tax by arriving at the demand on the net receipt basis - Extended period of limitation - whether there is any infirmity in the Order of the Commissioner (Appeals) who has partly upheld the Order of the Original Authority or otherwise? Benefit of input service tax credit for the year 2015-16, which was to be adjusted against the demand for the same period - HELD THAT:- It is found that when the Commissioner (Appeals) has allowed the deduction to the extent of Service Tax paid by their vendor from the gross value for working out differential demand, which has not been disputed by the Revenue nor appealed against, the same principle will have to be applied for the remaining years i.e., 2014-15, 2016-17 2017-18 (up to June, 2017). Commissioner (Appeals) has only stated that as the Appellant failed to submit any Cenvat Credit account showing that they had taken the credit in their books of accounts, credit cannot be allowed particularly in view of the restriction that Cenvat Credit has to be taken within one year from the date of issue of invoice - Commissioner (Appeals) should have given a detailed speaking order as regards denying the Appellant s claim for said deductions also. Therefore, this issue needs to be re-determined by the Commissioner (Appeals) where the Appellants will be at liberty to produce all supporting documents for seeking such adjustment/deduction. Short payment of Service Tax by arriving at the demand on the net receipt basis, without giving them the benefit of cum-tax value - HELD THAT:- The Commissioner (Appeals) has already extended this benefit to the Appellant and recalculated the Service Tax paid as Rs.6,71,569/- (Para 14). Therefore, there is also no reason to interfere with this finding of the Commissioner (Appeals) on this ground. With regard to Service Tax of Rs.47,683/- confirmed after abatement of 67% as against applicable 60%, the Commissioner (Appeals) has in terms of Rule 2A(ii)(a) of the Service Tax (Determination of Value) Rules, 2006 held that abatement admissible will be 60% and not 67% and therefore, upheld the demand of Rs.47,683/-. However, with regard to Service Tax demand of Rs.77,002/- confirmed on account of short payment of Service Tax for the period 2017-18 (up to June, 2017), since there was no dispute about the short payment nor Appellant has made any specific submission, confirmed demand was upheld as such. Therefore, on this issue also there appears no infirmity in Impugned Order - barring the issue of confirmation of demand of Rs.47,683/- by resorting to Rule 2A(ii)(a) of Service Tax Rules and not allowing certain adjustments against Service Tax paid to vendors/sub-contractors for remaining years, the rest of the Order does not need any interference as there is no ground substantiated by the learned Advocate to suggest that there was any gross error in arriving at such calculation or in denying any legal rights of the Appellant in the facts of the case or evidence on record. The rules relied upon by the Commissioner (Appeals), was not invoked in the SCN, as admitted by the Adjudicating Authority also and therefore, the same could not become the basis for confirming the demand when the grounds on which demand is proposed to be confirmed was not disclosed in the SCN, in view of settled legal position in this regard - the demand upheld by the Commissioner (Appeals) is not tenable and requires to be set aside. Similarly, the contention of the Appellant regarding eligibility for adjustment for remaining years also needs to be reexamined in view of lack of detailed reasons given for denial. Extended period of limitation - HELD THAT:- In the facts of the case, it is obvious that the Appellants were following certain method of calculation for discharge of Service Tax which was not proper or in accordance with the applicable laws, Rules, etc. The whole discrepancy was noticed only on detailed verification and plausible submissions made by the Appellants. Some of the submissions like deduction of Service Tax paid to the vendors, though accepted by the Commissioner (Appeals), and not disputed by Revenue, are debatable on the fair reading of applicable legal provisions which require service provider to discharge Service Tax and the service recipient is required to pay the Service Tax. The recipient of service on which service tax has been paid is also entitled to take credit and utilize against his further liability subject to provisions of Cenvat Credit Rules - Since the Commissioner (Appeals) has already given the benefit in this regard and this aspect is not being disputed by the Revenue, this issue is not being examined. However, the fact remains that though the Appellants have claimed bonafide belief of the practice that was being followed by them regarding deductions from the gross value, it could not be said that following wrong practice or inconsistent practice which is not permissible under the law, would tantamount to their disclosure of facts to the Department and in turn prevent the Department from invoking the extended period. In the facts of the case, the grounds on which the Commissioner (Appeals) has upheld the decision of the Adjudicating Authority for invoking extended period are correct and therefore, there is no need to interfere with the findings of the Commissioner (Appeals) on this issue. In other words, the extended period will be applicable in the facts of the case. The Order of the Commissioner (Appeals) does not need any interference, except to the extent of its confirming the demand of Rs.47,683/- which cannot be sustained and denial of adjustment for the years 2014-15, 2016-17 2017-18 (up to June, 2017) without giving adequate reasons for its denial. This issue therefore requires to be re-determined by the Appellant Authority on the basis of documents submitted including any other relevant documents which Appellants may adduce in support of their claim. Penalty proposed under Section 78 will also has to be re-determined in view of final confirmed demand liable to be paid by the Appellants. The Appeal is therefore partly allowed by way of setting aside the Order of confirmation of Rs.47,683/- by Commissioner (Appeals) and remanding the issue of eligibility and extent for adjustment against demand for the years 2014-15, 2016-17 2017-18 (up to June, 2017).
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Central Excise
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2024 (8) TMI 1051
Maintainability of appeal - low tax effect - notification dated 06.08.2024 - HELD THAT:- The appeal is disposed of owing to low tax effect.
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2024 (8) TMI 1050
CENVAT Credit - input service - place of removal - services received for the purposes of export of the finished goods - HELD THAT:- The issue has been examined by this Tribunal in the respondent s own case COMMR. OF CENTRAL EXCISE, CUS. SERVICE TAX, BHUBANESHWAR-I M/S. NALCO LTD. [ 2024 (8) TMI 593 - CESTAT KOLKATA] for the another unit, wherein this Tribunal has observed ' Since the fact of taking the Cenvat Credit on a monthly basis on account of such ISD invoices was very much reflected in the ER-1, the Department cannot take the stand that Respondent has suppressed any fact.' The respondent is entitled to the Cenvat Credit of the service in question as input service in terms of Rule 2 (l) of the Cenvat Credit Rules, 2004 - there are no infirmity in the impugned order - appeal dismissed.
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2024 (8) TMI 1049
Levy of interest on the duty calculated to be short-paid and appropriated against their payment - finalisation of provisional assessment - Rule 7(4) of the CER, 2002 - HELD THAT:- The principle laid down in in Steel Authority of India Ltd. [ 2019 (5) TMI 657 - SUPREME COURT ] is loud and clear that on finalization of provisional assessment, the interest is to be calculated of the duty short-paid from the succeeding month on which the said duty was payable. This principle has been subsequently endorsed by the Hon ble Supreme Court in Bharat Heavy Electricals Ltd. s case. The judgment cited by the learned advocate for the appellant in the appellant s own case is in a different context and set of facts. In the present case the Appellant has voluntarily discharged the differential duty short paid and chose not to claim refund of the excess duty paid indue course of clearance to their other related interconnected undertaking, obviously for the reason that the said Unit has already availed credit on the excess amount paid. Therefore, to ascertain the interest payable on the differential short paid on finalization of the provisional assessment for the Financial years 2008-09 2009-10, in the light of the judgments of Hon ble Supreme Court in Steel Authority of India Ltd., the matter needs to be remanded to the adjudicating authority for calculation of interest. The impugned orders are modified and the appeals are disposed of by way of remand to the adjudicating authority.
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Indian Laws
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2024 (8) TMI 1096
Challenge to order passed by the Ministry of Labour, Government of India by which the appropriate Government has refused to make reference for settlement of dispute arose between the parties - HELD THAT:- Several grounds were raised by the petitioner including non-compliance of the provisions contained under Section 25G of the Act of 1947, while terminating the services of the petitioner. Reply to the aforesaid application was submitted by the respondents and an objection was taken therein that the petitioner had hardly worked for only 85 days with the respondents, hence, under these circumstances, none of the provisions of the Act of 1947 were attracted and no dispute arose between the parties, which was required to be adjudicated by the Labour Court by making a reference. Considering the application filed by the petitioner and reply submitted by the respondents, the competent authority refused to make reference only on a technical count that the petitioner has worked for 85 days only and he could not substantiate his claim for further employment with any documentary evidence. Whether under these circumstances, the order passed by the authority dated 05.07.2010 is legally sustainable in the eye of law or not? - HELD THAT:- In the case of Telco Convoy Drivers Mazdoor Sangh and another vs. State of Bihar and Others [ 1989 (4) TMI 342 - SUPREME COURT ], the Hon ble Apex Court had held that though while considering the question of making reference under section 10(1) of the Act of 1947, the Government is entitled to form an opinion as to whether an industrial dispute exists or is apprehended , but it is not entitled to adjudicate the dispute itself on its merits. While exercising power under Section 10(1) of the Act of 1947, the function of the appropriate Government is an administrative function and not a judicial or quasi judicial function. It, therefore, cannot delve into the merits of the dispute and take upon itself the determination of the lis. The impugned order dated 05.07.2010 stands quashed and set aside. The matter is remitted to the appropriate Government for making reference of the dispute - Petition disposed off.
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2024 (8) TMI 1048
Prosecution for the offences punishable under the Narcotic Drugs and Psychotropic Substances Act, 1985 - illegal transport of pentazocine, a psychotropic substance, from Hajipur to Lucknow by train for being sold in the market as an intoxicating item - HELD THAT:- In the facts of the case, the consignment was booked by accused no.1, and therefore, he was found to be transporting the psychotropic substance in contravention of Section 8(c) of the NDPS Act. There is no allegation against the appellant of transporting the contraband. The consignment was booked in the name of the accused no.1 as per the prosecution case. Therefore, unless it is proved that the appellant had supplied the consignment to accused no.1 or was a part of a criminal conspiracy to commit an offence under Section 22(c), the appellant cannot be punished. Perusal of the evidence of accused no.3, who was examined as a defence witness, shows that he was carrying on the business of M/s Maheshwari Medical in his wife's name. He stated that he issued invoices for sending Fortwin injections to the appellant. However, there is no evidence on record to show that accused no.3 procured the contraband that is the subject matter of the prosecution and handed it over to the appellant or accused no.1. There is no recovery from the appellant of any incriminating material. There is no evidence to show that the contraband tried to be transported by accused no.1 by railway parcel was delivered by or on behalf of the appellant to accused no.1. There is no evidence of any conspiracy against the appellant. Therefore, the respondent has not established the offences punishable under Sections 22(c) and 29 of the NDPS Act against the appellant beyond a reasonable doubt - In the charge, there is no reference to the allegation of commission of an offence under Section 29 of the NDPS Act. However, it is not necessary to go into the question of whether non-framing of charge under Section 29 of the NDPS Act has resulted in the failure of justice. The reason is that there is absolutely no legal evidence on record to show that the contraband attempted to be transported by accused no.1 by a railway parcel was supplied to him by the appellant. There is no evidence of the appellant's participation in any conspiracy. The conviction of the appellant cannot be sustained - the impugned judgments set aside and the appellant is acquited of all charges against him - appeal allowed.
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2024 (8) TMI 1047
Detention order - smuggling - contraband gold - baggage - Non-supply of relevant documents (WhatsApp chats) - right of the detenus under Article 22(5) of the Constitution of India - HELD THAT:- In the present case, the detenue had sought the copies of the said WhatsApp chats. However, the Division Bench of the High Court in the present case, while rejecting the case of the detenue, observed that the detaining authority had arrived at a subjective satisfaction on the basis of various documents and that non-supply of the WhatsApp chats would not vitiate the detention order. It, therefore, held that the findings of the Coordinate Bench of the same High Court in the cases of Nushath Koyamu [ 2022 (6) TMI 326 - KERALA HIGH COURT] and other connected matters in respect of other detenus could not be followed in the present case. The Division Bench of the High Court while passing the impugned judgment and order should have followed the view taken by another Division Bench of the same High Court specifically when the grounds of detention and the grounds of challenge were identical in both the cases. In the event, the Division Bench of the High Court was of the view that the earlier decision of the Coordinate Bench of the same High Court was not correct in law, the only option available to it was to refer the matter to a larger Bench. Order of detention is quashed and set aside - Appeal allowed.
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2024 (8) TMI 1046
Dishonour of Cheque - burden of proof to rebut the presumption - presumption under Sections 118(a) and 139, NI Act - Section 313 of CrPC - HELD THAT:- When presumption under Section 139 was raised, Trial Court ought to have conducted proceedings basis that the cheque was issued in discharge of a debt or liability towards the complainant. At this juncture, the onus was on the accused to rebut the presumption under Section 139. Had the accused been successful in rebutting said presumption, the onus would have then shifted onto the complainant/appellant. The fundamental flaw on part of Trial Court was failing to note effect of the presumption under Section 139 NI Act. As a result, Trial Court erroneously proceeded to deliberate upon want of evidence on part of appellant/complainant i.e. no interest was charged, friendly relations between the parties were not proved, financial capacity not established, and most importantly, guilt of the accused was not proved beyond reasonable doubt. Supreme Court in Sumeti Vij v. Paramount Tech Fab Industries [ 2021 (3) TMI 383 - SUPREME COURT] observed that statement under Section 313 CrPC is not substantive evidence of defence by accused, and hence, same is insufficient for the purpose of rebuttal of presumption under Section 139 NI Act. Much like the present case, in Sumeti Vij accused had not replied to legal notices sent, nor had made any payments thereafter. Furthermore, while accused gave a statement under Section 313 CrPC, defence evidence was not led therein even though accused pleaded not guilty and claimed trial. Presumption under Section 139 read with Section 118 of the NI Act is essentially based on pure common sense. Instead of having the accused prove to the contrary, the accused is acquitted, as in this case, without having led any defence evidence and purely relying upon the inconsistencies in the affirmative proof provided by the complainant. The law and its application, is therefore turned on its head. This Court is of the view that there was a fundamental error in the approach taken by the Trial Court whereby it went on to dissect the case put up by the appellant, instead of first examining whether the respondents had rebutted the presumption under Section 139 of NI Act. The impugned order is set aside - appeal allowed.
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2024 (8) TMI 1045
Seeking grant of bail - involvement in business of prohibited drugs and for recovery of 3600 tablets of Lomotil and 298 tablets of Alprax 0.5 - HELD THAT:- Taking into consideration the entire facts and circumstances, but without commenting on merits thereon it is required to be considered at the time of adjudication of bail application, it is opined that petitioner may be enlarged on bail in present case at this stage. The petitioner is ordered to be enlarged on bail, subject to fulfilment of conditions imposed - petition allowed.
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