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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 9, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Law of Competition Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles 1. Arbitrary valuation of goods not subjected to BIS specifications is invalid By: Bimal jain Summary: The CESTAT, Chennai ruled in favor of an appellant, setting aside an order that arbitrarily revalued imported goods not subject to BIS specifications. The appellant had imported various items, including shoes and toys, which were revalued and confiscated by customs authorities without adhering to natural justice principles. The tribunal found no evidence of proper valuation procedures and criticized the arbitrary nature of the revaluation. It noted the incorrect application of IGST rates and advised the appellant to seek a detention certificate from the appropriate authority, as the tribunal itself could not issue such a directive. 2. Multiple registrations all over India on account of singular RCM provision (i.e. renting of residential dwelling Services) and Time to revisit tax compliance strategy: By: Amit Agrawal Summary: A recent amendment to the GST law in India requires businesses to pay GST under the Reverse Charge Mechanism (RCM) for renting residential dwellings to registered persons. This has raised questions about whether businesses need to register their sales offices, often located in residential premises across various states, for GST. The article argues that these sales offices, being extensions of the main location, do not require separate registration as they do not supply goods or services independently. However, the main location is considered the recipient of rental services and must pay GST under RCM. Businesses are advised to reassess their GST compliance strategies to mitigate risks and ensure compliance. 3. Customs Authorities have no jurisdiction to initiate the proceedings for violation w.r.t. Foreign Trade/ Exchange By: Bimal jain Summary: The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Ahmedabad overturned an order by the Commissioner (Appeals) that confirmed the confiscation of goods and imposed penalties on an exporter for alleged violations of the Foreign Trade Policy. The case involved an exporter whose goods, initially destined for Iran, were offloaded in the UAE. The tribunal found that the exporter could not be held liable for the change in the port of discharge, as the goods' title had transferred to the foreign buyer. It concluded that Customs authorities lacked jurisdiction over alleged violations related to foreign trade and exchange. 4. Actions taken by the department during enquiry need not necessarily be termed as harassment By: Bimal jain Summary: The Madras High Court dismissed a petition alleging harassment by a GST Superintendent during an enquiry. The petitioner sought protection against alleged coercion to pay Rs. 29 lakhs without providing supporting documents. The court ruled that actions taken during an enquiry do not inherently constitute harassment, as the term is subjective. It instructed the petitioner to cooperate with the enquiry and directed the respondent to issue a notice for the petitioner's appearance within two weeks. Following the enquiry, the respondent may either register a complaint if a cognizable offense is found or close the case. News 1. 1,00,255 claims paid amounting to Rs. 1,990.57 crore under PMSBY 5,93,316 claims paid amounting to Rs. 11,866.32 crore under PMJJBY Summary: The Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) have disbursed 1,00,255 claims amounting to Rs. 1,990.57 crore and 5,93,316 claims amounting to Rs. 11,866.32 crore, respectively, as of July 2022. Due to claim ratios exceeding 100%, a committee recommended increasing premiums to ensure viability. The premiums were revised to Rs. 436 annually for PMJJBY and Rs. 20 for PMSBY. These schemes are accessible to all eligible age groups, not limited to specific demographics. Several private insurers are involved in implementing these schemes. 2. Various measures taken by Government contribute to increase in tax collection Summary: Government initiatives and economic recovery post-COVID have led to increased tax collections, as reported by the Union Minister of State for Finance in the Lok Sabha. Central tax revenue rose from Rs. 20.27 lakh crore in 2020-21 to Rs. 27.08 lakh crore in 2021-22. Measures include increased capital expenditure, privatization efforts, and the PM Gatishakti Scheme for infrastructure coordination. The Production Linked Incentive Scheme has expanded to 14 sectors, enhancing investment. Additionally, banking sector reforms and legislative changes like GST and the Insolvency and Bankruptcy Code have improved the business environment, supporting the goal of a five trillion dollar economy. 3. Measures taken by the Government to protect the interest of investors/account holders in the bank Summary: The government has implemented measures to safeguard bank investors and account holders, as stated by the Union Minister of State for Finance. The Deposit Insurance and Credit Guarantee Corporation (DICGC), under the Reserve Bank of India, insures all types of bank deposits up to Rs. 5 lakh per depositor. This insurance limit was increased from Rs. 1 lakh in February 2020, covering 97.9% of accounts by March 2022. The 2021 amendment to the DICGC Act allows depositors timely access to insured deposits during bank restrictions. These steps aim to enhance depositor protection and public confidence in the banking system. 4. “Jan Samarth” Portal eases loan application and disbursement process for applicants Summary: The Jan Samarth Portal, launched by the government on June 6, 2022, streamlines the loan application and disbursement process for applicants under various credit-linked government schemes. It serves as a unified platform connecting beneficiaries, financial institutions, and government agencies. Initially, it offers access to 13 schemes, including education, agriculture, business, and livelihood loans, targeting youth, students, entrepreneurs, and farmers. The portal allows users to register, check eligibility, and apply for loans at any time, enhancing accessibility and efficiency in obtaining financial assistance. Notifications DGFT 1. 25/2015-2020 - dated 8-8-2022 - FTP Amendment in Export Policy of items under HS Code 1101. Summary: The Central Government of India has amended the export policy for items under HS Code 1101, specifically wheat flour (atta), maida, samolina (rava/sirgi), wholemeal atta, and resultant atta. While the export of these items remains free, it is now subject to the recommendation of an Inter-Ministerial Committee (IMC) on wheat exports. From August 14, 2022, exports require a Quality Certificate from the Export Inspection Council or its agencies. Transitional arrangements under Para 1.05 of the Foreign Trade Policy, 2015-2020, do not apply. Specific consignments loaded or registered before the notification date are exempt until August 14, 2022. Highlights / Catch Notes GST Court Orders Unblocking of Input Tax Credit; Show Cause Notice to be Issued for Fraudulent Registration and Misstatement. Case-Laws - HC : Input Tax Credit - Credit disallowed on the ground being that the party with whom the assessee had transaction is non-existing at the declared place of business and the registration has been obtained by exercising fraud and willful misstatement/suppression of fact - ITC directed to be unblocked - SCN to be issued and adjudicated - HC Visit to Get Source Project Misclassified: Applicant's Project Doesn't Qualify as "Other Than Ongoing" per Notification No. 03/2019. Case-Laws - AAR : Project is falling under "other than On-going Projects" - New project or not - The Notification No. 03/2019 makes a distinction between ‘Ongoing project’ in clause (xx) of Para 4 and ‘Other than ongoing project’ in clause (xxviii) of Para 4. Accordingly ‘Other than ongoing project’ means a project which commences on or after 01.04.2019. Therefore the project undertaken by the applicant does not fall under this definition as claimed by him in the statement of facts submitted separately on 21.12.2021 - AAR Visit to Get Source Builder Violates CGST Act by Denying Input Tax Credit on Flats, Liable for Penalties u/s 171 (3A). Case-Laws - NAPA : Profiteering - Construction service - This Authority lands that the Respondent has denied the benefit of ITC to the buyers of his flats/customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. The Authority holds that the Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07.2017 to 31.3.2019, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. - NAPA Visit to Get Source Construction Firm Fails to Pass Input Tax Credit Benefits to Buyers; Profiteering Amount Set at Rs. 1,07,67,330. Case-Laws - NAPA : Profiteering - construction service - Respondent had not passed on the benefit of Input Tax Credit (ITC) - The Authority finds that, had the Respondent excluded the land value from the demand raised to his buyers, the value of land would have been excluded from the preview of profiteering. Therefore, the Authority finds that the facts or the cases relied upon by the Respondent are different from the present case. Hence, the Authority finds that this contention of the Respondent regarding exclusion of land value being untenable cannot be accepted. - the Authority determines the profiteered amount for the period from 01.07.2017 to 30.09.2019, in the instant case, as Rs.1,07,67,330/- for the project 'MJR Clique Hydra'. - NAPA Visit to Get Source Income Tax Taxpayer's Unexplained Cash Deposit Under Review; Will's Authenticity to be Verified for Father's Signature. Case-Laws - AT : Unexplained deposit of cash in the saving bank account of the assessee - assessee has took different stand before the CIT(A) and explained the source of deposit as received from his deceased father leaving behind the said cash alongwith the Will - To ascertain the genuineness of the Will, AO was required to verify the genuineness of the signatures of the father either from the undisputed record bearing his signature or otherwise by examination of the attesting witnesses or any other relevant material. - Matter restored back with directions - AT Visit to Get Source Unexplained Cash Deposits During Demonetization Confirmed As Income; Taxpayer's Business Claims u/s 44AD Deemed Ungenuine. Case-Laws - AT : Addition u/s. 69A r.w.s. 115BBE - unexplained cash deposits during demonetization out of income declared u/s. 44AD - it can be seen that the returns for the Assessment Years 2015-16 & 2016-17 is filed on the same day namely 25.11.2016 and other list of events taken place in the above case clearly shows that the claim made by the assessee is found to be not genuine. In the absence of any evidence in support of his garments business carried out by the assessee, and the cash deposit made during demonetization period out of the income declared under the garments business is not proved with necessary records. - Addition confirmed - AT Visit to Get Source Income Tax Commissioner Revises Assessment Due to AO's Oversight of Cash Expenses Exceeding Rs. 20,000 u/s 40A(3. Case-Laws - AT : Revision u/s 263 by CIT - addition u/s 40A ignored by AO - expenses have been incurred in cash exceeding Rs. 20,000/- per day - AO is expected to examine the provisions of section 40A(3) vis-à-vis respective transactions and determine which all these transactions are covered by the provisions of section 40A(3) and which all transactions fall under the exception as so provided in the Rule 6DD and decide accordingly. - AO has failed to examine and invoke at first place - Revision sustained - AT Visit to Get Source Shares Sale: Are They Investment or Stock-in-Trade? AO's Classification Disputed for Capital Gain, Not Business Income. Case-Laws - AT : Correct head of income - Gain on sale of shares - nature of purchase of shares either as “investment” or “stock-in-trade” - AO has not given any clear cut finding that the shares held as “stock-in-trade” were sold by the assessee and claiming capital gain. When this basic foundation is not being doubted by the AO - The action of the A.O. treating the sale of shares held as “investment” by the assessee and offered the same for short term capital gain cannot be treated as business income. - AT Visit to Get Source Customs High Court Suggests Quashing 24-Year Delayed Show Cause Notice u/s 28 of Customs Act for Unfair Adjudication. Case-Laws - HC : Delay in adjudication of SCN - 24 years - Jurisdiction to demand duty u/s 28 of the Customs Act, 1962 - The action, which is unfair, and in violation of principles of natural justice cannot be sustained. Various judicial pronouncements have taken a view that the weight of judicial pronouncements leaned in favour of quashing the proceedings if there had been an undue delay in deciding the same. In the absence of any period of limitation it is incumbent upon every authority to exercise the power of adjudication post issuance of show cause notice within reasonable period. - show cause notice should be quashed - HC Visit to Get Source Court Rules No Duty or Interest Payable Without Section 28 Notice; Section 28AB Interest Also Not Applicable. Case-Laws - HC : Liability of interest in terms of Section 28AB and Notification - When notice under Section 28 itself has not been issued in this case, the question of determination of any duty payable under sub-Section (2) of Section 28 does not arise and consequently, any interest payable under Section 28AB also would not arise - HC Visit to Get Source Refund of Security After EODC: Application Must Be Filed Within 6 Months, Avoid Dismissal Over Technicalities. Case-Laws - HC : Refund of the security amount once the EODC is issued - time limit for filing the refund application is six months from the date of clearance of goods - The petitioner was unquestionably prosecuting his refund claim in a bonafide manner which ought not to have thrown away on hyper-technical objection of not having been filed before the competent authority and/or not having been filed in the prescribed format and finally as being delayed. - HC Visit to Get Source Court Orders Return of Gold Bangles; Petitioner Must Execute 50% Bank Guarantee Under Customs Act Section 125. Case-Laws - HC : Seeking release/return the detained Gold Bangles - Baggage Rules (no concealment in the body or luggage) - Section 125 of the Customs Act, 1962, gives rights to the owner or from whom the goods have been seized to redeem such goods on payment of fine. Further, this Court consistently held that goods can be handed over on executing 50% of the Bank guarantee on the duty amount. In view of the same, this Court directs the petitioner to execute 50% of the Bank guarantee in lieu of customs duty and on execution of the Bank guarantee, the respondents are directed to hand over the gold bangles to the petitioner - HC Visit to Get Source Court Rules on License Re-validation and Bond Waiver under Duty Free Entitlement Scheme; Stresses Compliance with Executive Orders. Case-Laws - HC : Duty Free Entitlement Scheme - re-validation of the licence as well as bond waiver - This court is of the opinion that when there is specific instruction by way of executive order, to satisfy the requirement pertaining to reduction of quantity of vitamin mixes, the same cannot be slightly brushed by the learned Judge by observing that there is no requirement to furnish individual consumption details of vitamin mixes, as per the import export policy for 1992-97. - HC Visit to Get Source Court Rules Decade-Long Delay in Customs Duty Case Violates Natural Justice Rights, Invalidates Proceedings. Case-Laws - AT : Exemption from Customs Duty - actual user condition - imports of Polyester lining material - the delay of over a decade here, especially when genuine efforts have been made by the Appellant to participate in them, truly violates the Appellant’s right to natural justice and vitiates the entire proceeding. - AT Visit to Get Source Vessel Valuation Dispute: Original MOA Price vs. Reduced Addendum Price Under Scrutiny; Case Remanded for Further Review. Case-Laws - AT : Valuation of Vessel - Whether the transaction value of the vessel is to be priced mentioned in the original MOA or the reduced price indicated in the addendum? - the genuineness and the necessity of reduction in the price are required to be scrutinised very carefully - the Ld. Commissioner (Appeals) passed the impugned order only by relying the finding of lower adjudicating authority - In the instant case, the Ld. Commissioner (Appeals) has not examined the genuineness of the addendum, and has proceeded to reject the appeal of the appellant. - Matter restored back - AT Visit to Get Source Customs Agent's Penalty Overturned: Assisting as Witness Not Misconduct Under Regulation 18 of CBLR 2018. Case-Laws - AT : Levy of penalty under Regulation 18 of CBLR 2018 on the appellant-CHA - revocation of customs broker license - simply assisting the customs as a witnesses or otherwise in the examination of the goods does not amount to mis-conduct. Accordingly, the penalty imposed under Regulation 18 of CBLR 2018 is uncalled for. - AT Visit to Get Source Indian Laws Consumers Can Seek Refunds or Compensation for Delayed Apartment Possession from Commission Under Unfair Trade Practices. Case-Laws - SC : Unfair trade practices - failure to deliver possession of the apartment within the time - A consumer invoking the jurisdiction of the Commission can seek such reliefs as he/she considers appropriate. A consumer can pray for refund of the money with interest and compensation. The consumer could also ask for possession of the apartment with compensation. The consumer can also make a prayer for both in the alternative. If a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant it, of course subject to the merits of the case. If a consumer seeks alternative reliefs, the Commission will consider the matter in the facts and circumstances of the case and will pass appropriate orders as justice demands - SC Visit to Get Source IBC Supreme Court Rules No Debt Acknowledgment Within Limitation Period; NCLAT Quashes Insolvency Proceedings Against Debtor. Case-Laws - SC : Initiation of CIRP - NCLT admitted the application - NCLAT quashed the proceedings - Financial Creditors - Period of limitation - An acknowledgement made in writing within the period of limitation extends the period of limitation. In this case, there was no acknowledgement of debt within three years from the period on which the account of the Corporate Debtor was declared NPA or within three years from the date on which the loan facilities were recalled. - SC Visit to Get Source NCLT admits CIRP application despite 14-year-old default due to ongoing default, SICA suspension, and balance sheet acknowledgment. Case-Laws - AT : Initiation of CIRP - Period of limitation - Date of default / NPA is 14 years old - ongoing default of the corporate debtor under the NCD Facility and suspension of the legal proceedings under SICA and acknowledgment made under the Balance Sheet - NCLT rightly admitted the application - AT Visit to Get Source Private Bank Misuses Insolvency Process for Debt Recovery, Raising Concerns of Forum Shopping, Says Appellant u/s 7. Case-Laws - AT : Initiation of CIRP - Period of limitation - It is the case of the Appellant that the date of default of Non-Performing Assets (NPA) on 05.07.2014 and the Bank/ R2 has filed petition under Section 7 of the Code on 11.12.2019 - NCLT admitted the application - This case finally reflects that this is a forum shopping being done by a private sector bank which is not healthy. - CIRP mechanism is not for a debt recovery as Hon’ble Supreme Court has already settled the law on this aspect. Hence, CIRP cannot be used for bringing a Corporate Debtor to liquidation & thereby enriching Private Sector Bank. - AT Visit to Get Source Central Excise High Court Grants Refund of Excise Duty to De-bonded Export Oriented Unit for Goods Exported as DTA Unit. Case-Laws - HC : 100% EOU - de-bonding - refund of the excise duty previously paid - Admittedly, such duty was paid at the time of what is referred to de-bonding. However, this would not prevent the exporter from claiming refund of excise duty if the goods are eventually exported. The petitioner as a DTA unit exported the goods and claimed refund of excise duty previously paid in its capacity as an EOU - refund allowed - HC Visit to Get Source Cash Refund and Interest for Unutilized CENVAT Credit in Pre-GST Era Confirmed u/s 142(3) of CGST Act. Case-Laws - AT : Refund claim of unutilised CENVAT Credit - exports of goods - as per the notification claimant to take back the credit of the difference between the amount claimed and amount sanctioned - The Appellant is entitled to get cash refund with applicable interest, if any, against CENVAT Credit available to its credit during pre GST regime as per provision contained in Section 142(3) of the CGST Act - AT Visit to Get Source Case Laws: GST 2022 (8) TMI 369 Defreezing of bank accounts and immovable property - Section 83 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- On a plain reading of Section 83 of the Central Goods and Service Tax Act, 2017, the attachment order cannot continue. The respondent is directed to lift the attachment - Petition allowed. 2022 (8) TMI 368 Gross GST liability before adjusting input tax credit available in the credit ledger - Section 50 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court is inclined to allow this writ petition by setting aside the Demand Information Notice DIN-20200262WJ00005DF3DE in Communication bearing C.No. GST/01/INTEREST/BBSRIX/2020/64, dated 18th February, 2020 (Annexure-3) and remand the matter to the Superintendent, GST Central Excise, Bhubaneswar-IX Range for reconsideration of the matter taking into consideration the amendment carried out by virtue of the Finance Act, 2021. The writ petition disposed off. 2022 (8) TMI 367 Seeking grant of pre-arrest bail - Availment and passing of fraudulent Input Tax Credit (ITC) - passing ITC without actual supply of goods in contravention of Section 16 of the CGST Act, 2017 - HELD THAT:- The situation which, prima facie, obtains is that there is material to show that as many as 21 fake entities have been created to avail and further pass on ITC without the underlying transactions of sale and delivery of goods. The allegations are such that they warrant custodial interrogation. Mere presence of the applicant, before the authorities, or for that matter, the willingness of the applicant to cooperate with the investigation cannot serve the purpose of facilitating effective investigation and unearthing the fraud in all its facets. There is prima facie material to warrant interrogation of the applicant. The allegations are such that without personal interrogation of the applicant, fraud cannot be unearthed completely - the discretion cannot be exercised in favour of the applicant. Application dismissed. 2022 (8) TMI 366 Input Tax Credit - Credit disallowed on the ground being that the party with whom the assessee had transaction is non-existing at the declared place of business and the registration has been obtained by exercising fraud and willful misstatement/suppression of fact - HELD THAT:- Admittedly, the allegations relate to transactions pertaining to financial year 2017-2018 and accordingly by a notice dated October 22, 2021 the alleged claim of input tax credit to the tune of Rs.71,23,836.66 paisa each under CGST/SGST head had been disallowed. If that is so, the remaining credit which the assessee will be entitled to on account of blocking of the electronic credit ledger is that the entire business activity has come to a standstill. Apart from that when the communication blocking the electronic credit ledger was passed the credit which was available under that head was only Rs.19,00,000/-. The writ appeal along with the application are disposed of by directing the authority to restrict blocking of the electronic ledger credit to the tune of Rs.71,23,836.66 paisa under CGST/SGST head and issue a show cause notice upon the appellant within a period of 10 days from receipt of the server copy of the order and thereafter shall afford a reasonable time to the appellant to submit its reply to the show cause notice, after which the appellant be afforded an opportunity of personal hearing and an order be passed on merits in accordance with law. 2022 (8) TMI 365 Levy of GST on RCM basis - project is falling under other than On-going Projects - New project or not - share of land lord -applicability of notification 4/2019 - applicability of RCM to daily wages, Labour Charges and Contract Labour - limit on the percentage of material to be used in project - Whether Salaries, Incentives, Brokerage, Remuneration and interest on Working Capital are liable for RCM? - project of combination of affordable Flats (Carpet Area is less than 60Sq Mts), and Non affordable flats (Carpet Area is more than 60Sq Mts) - whether different rate of tax be adopted for different units, i.e., GST 1% in case of affordable Units and 5% in case of Non affordable units based on the Carpet area? HELD THAT:- The Notification No. 03/2019 makes a distinction between Ongoing project in clause (xx) of Para 4 and Other than ongoing project in clause (xxviii) of Para 4. Accordingly Other than ongoing project means a project which commences on or after 01.04.2019. Therefore the project undertaken by the applicant does not fall under this definition as claimed by him in the statement of facts submitted separately on 21.12.2021 - This notification offers the promoter an option to shift to the new scheme or to continue under the earlier scheme. Under the new scheme, for residential apartments, the developer promoter has to pay CGST as well as SGST @0.5% without ITC for affordable residential apartments and 2.5% without ITC for other residential apartments and reverse the input tax credit available in the credit ledger as on 31.03.2019. However if the developer promoter intends to continue under the old scheme and avail ITC, he has to submit a declaration before 20.05.2019 to the jurisdictional authority. In the case of the applicant, it appears they have not opted for the old scheme, hence they fall under new scheme and therefore have to pay tax @0.5% for CGST as well as SGST for affordable residential apartment and @ 2.5% CGST SGST for other residential apartments without availing ITC. The tax on the portion of constructed area shared with the land owner-promoter has to be paid by applicant as his liability in the capacity of developer-promoter and not as Reverse charge mechanism. The law regarding services by an employee to the employer in the course of or in relation to his employment enumerated in Schedule III to CGST Act, 2017 remains unchanged. Therefore tax will not be attracted for labour engaged on daily basis or employees etc., if the service is rendered in the course of such an employment. However manpower supply or labour supply services by manpower supply agency falls under SAC 98519 and is taxable @18%. This tax has to be paid by the manpower supply agency. The Notification No. 03/2019 makes a distinction between Ongoing project in clause (xx) of Para 4 and Other than ongoing project in clause (xxviii) of Para 4. Accordingly Other than ongoing project means a project which commences on or after 01.04.2019. Therefore the project undertaken by the applicant does not fall under this definition as claimed by him in the statement of facts submitted separately on 21.12.2021 - If the initial contract for land and building, even if entered through (2) different un severable agreements, constitutes a single contract and hence will attract tax @0.5% for affordable housing and @2.5% for other housing under CGST SGST respectively without ITC. However any other agreement which is beyond the scope of initial agreement and is a severable agreement vis- -vis the initial agreement then the construction made under this contract will attract 9% tax under CGST SGST each with ITC. 2022 (8) TMI 364 Profiteering - purchase of a Flat - allegation is that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in price - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Authority finds no reason to differ from the computation of profiteering in the DGAP s Report or the methodology adopted. The DGAPs Report concludes that the ITC as a percentage of the turnover that was available to the Respondent for the project Swati Florence during the pre-GST period (April-2016 to June-2017) was 2.31% and during the post-GST period (July-2017 to July-2020), it was 8.64%. This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 6.33% (8.64% - 2.31%) of his turnover and the same was required to be passed on to the customers/home buyers/recipients. Hence, as tabulated in Table C above, the Authority determines the profiteered amount for the period from July-2017 to July-2020, in the instant case, as Rs.4,52,79,754/- and the same was required to be passed on by the Respondent to their customers/home buyers/recipients. It is also evident from the Report of the DGAP that during the investigation, the Respondent has claimed that he has passed on benefit of ITC amounting to Rs.1,78,71,200/- to the customers/home buyers/recipients. To verify the claim of the Respondent, the DGAP sent e-mails to 177 customers/home buyers/recipients asking them to confirm whether they have received the benefit of ITC as claimed by the Respondent. Out of 177 customers/home buyers/recipients. only 36 customers/home buyers/recipients replied. Out of these 36 customers/home buyers/recipients, only 32 customers/home buyers/recipients confirmed the receipt of benefit of ITC from the Respondent. Hence, the verification of passing on the benefit of additional ITC done by the DGAP is not conclusive and it cannot be confirmed that the Respondent has passed on an amount of Rs.1,78,71,200/- to his customers/home buyers/recipients. Therefore. the profiteered amount required to be passed on to the customers/home buyers/recipients by the Respondent is determined to be Rs.4,52,79,754/-. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to his customers/home buyers/recipients in contravention of the provisions of Section 171 (I) Of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. That Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was July-2017 to July-2020, therefore, he is liable for imposition of penalty under the provisions of the above Section tor the amount profiteered from 01.01.2020 onwards, Accordingly, notice be issued to him. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. 2022 (8) TMI 363 Profiteering - Construction service - it is alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in the price - contravention of section 171 of CGST Act - interest - penalty - HELD THAT:- The Authority determines that the Respondent has profiteered an amount of Rs. 3,48,979/-. Therefore, given the above facts, the Authority under Rule 133 (3)(a) of the CGST Rules orders that the Respondent shall reduce the price to be realized from the buyers of the flats/customers commensurate with the benefit of ITC received by him The details of the recipients and benefit which is required to be passed on to each recipient/homebuyer/customer alongwith the details of the unit are contained in the Annexure- A to this order. The Authority directs that such profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply, if not already passed on, alongwith interest @18% (as prescribed under Rule 133(3)(b) of the CGST Rules, 2017 from the date such amount was profiteered by the Respondent up till the date such amount is passed on. returned to the respective recipient of supply) within a period of three months of the date of receipt of this Order, if not already passed on. This Authority lands that the Respondent has denied the benefit of ITC to the buyers of his flats/customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. The Authority holds that the Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07.2017 to 31.3.2019, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 31.03.2019 when the Respondent had committed the above violation. Hence, the said penalty under Section 171 (3A) cannot be imposed on the Respondent retrospectively. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. 2022 (8) TMI 362 Profiteering - construction service - allegation is that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to her by way of commensurate reduction in price - contravention of section 171 of CGST Act - interest - penalty - HELD THAT:- The Authority finds that in the present case, the Respondent has raised invoice to his home buyers which included the consolidated demand of the land and the construction services. No separate demand for the land in the invoice has been issued by the Respondent to his home buyers. The Authority finds that, if the Respondent would have issued separate invoice demanding the cost of land, the amount of GST charged would have been 18% and not 12%. The Authority finds that, had the Respondent excluded the land value from the demand raised to his buyers, the value of land would have been excluded from the preview of profiteering. Therefore, the Authority finds that the facts or the cases relied upon by the Respondent are different from the present case. Hence, the Authority finds that this contention of the Respondent regarding exclusion of land value being untenable cannot be accepted. The Authority finds no reason to differ from the above detailed Computation of profiteering in the DGAP s Report or the methodology adopted. Hence, the Authority holds that, the as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 3.71 % and during the post-GST period (July-2017 to September-2019), it was 8.76% - the Authority determines the profiteered amount for the period from 01.07.2017 to 30.09.2019, in the instant case, as Rs.1,07,67,330/- for the project MJR Clique Hydra . This profiteered amount of Rs. Rs.1,07,67,330/- includes GST on the base profiteered amount of Rs. 96,13,687/-homebuyer/customer recipient and unit No. wise break-up of this amount as given in Annexure-13 of the DGAP Report is accepted. This amount is inclusive of Rs.1,03,453/- (including GST on the base amount of Rs. 92,369/-) which is the profiteered amount in respect of the Applicant No. 1, mentioned at serial No. 108 of Annexure-13 of the said Report. The Authority determines the profiteered amount for the period from to 30.09.2019. in the instant case. as Rs. Rs.1,07,67,330/- for the project MJR Clique Hydra . This profiteered amount of Rs. Rs.1,07,67,330/- includes GST on the base profiteered amount of Rs.96,13,687/-. The homebuyer/customer /recipient and unit No. wise break-up of this amount as given in Annexure-13 of the DGAP Report is accepted. This amount is inclusive of Rs.1,03,453/- (including GST on the base amount of Rs. 92,369/-) which is the profiteered amount in respect of the Applicant No. 1, mentioned at serial No. 108 of Annexure-13 of the said Report. Interest - HELD THAT:- The Respondent is liable to pay interest to all customers/ flat buyers/ recipients. as prescribed and applicable on the entire amount profiteered. i.e. Rs. Rs.1,07,67,330/- for the project MJR Clique Hydra . Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on payment of the profiteered amount, as per the provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the customers/ flat buyers/ recipients in his project MJR Clique Hydra in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A), under which liability for penalty arises for the above violation, shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.09.2019 when the Respondent had Committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for the said period. This Order having been passed today falls within the limitation prescribed under Rule of the CGST Rules, 2017. Income Tax 2022 (8) TMI 361 Disallowance of consumption incentive - disallowance of the expenses claimed under the head consumption debtors the said addition was made by the AO on the ground that these expenses are in the nature of a provision - HELD THAT:- As evident from the record that the aforesaid disallowance has been deleted by the CIT(A) and ITAT, after considering the material on record and satisfying itself that it is an ascertained liability of the assessee which is liable to be allowed. This is a finding of fact returned by CIT(A) and upheld by ITAT. The chart filed by the Respondent evidencing that this expense was consistently allowed since AY 2004-05 and allowed by the AO is also not in dispute. The consistency rule has been enunciated in M/s Radhasaomi Satsang, Saomi Bagh, Agra [ 1991 (11) TMI 2 - SUPREME COURT] - no infirmity in the order passed by ITAT upholding the decision of CIT(A) deleting the disallowance on account of consumption debtors . Disallowance u/s 14A - Expenditure incurred on earning exempt income - HELD THAT:- As per the law settled by this court in the case of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] and PCIT vs. IL FS Energy Development Company Ltd.[ 2017 (8) TMI 732 - DELHI HIGH COURT] the disallowance to be made under Section 14A cannot be in excess of the exempt income earned by the assessee. The counsel for the revenue has placed reliance on the CBDT circular 5/2014 to contend that disallowance u/s 14A would be attracted even if corresponding exempt income is not earned during the financial year. The said circular cannot be relied upon since its contrary to the law laid down by this Court. There is no challenge to the finding of the CIT (A) and the ITAT that AO failed to record satisfaction before invoking the provisions of Section 14A which is the condition precedent for making the addition. In this view of the matter the additional disallowance made by the AO is impermissible and contrary to law. ITAT was correct in upholding the order of the CIT(A) deleting the disallowance. Disallowance u/s 36(1)(va) on account of late deposit of employee s contribution to PF - Scope of amendment - HELD THAT:- Memorandum acknowledges that courts have taken a view that the due date to be considered for the purposes of Section 36(1)(va) of the Act is under Section 43B and it is in that background that the Explanation has been inserted to alter this position. Further, the Memorandum explicitly stipulates that the said amendment will take effect from 1st April 2021 and it cannot therefore cannot apply to assessment year 2012-13 under consideration. The legislature is therefore conscious that the Explanation seeks to change the law as it stands on date and is therefore intended to apply to subsequent assessment years. The contention of the revenue therefore that the said amendment is retrospective cannot be accepted. amendment to Section 36(1)(va), which is for removal of doubts , cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood. It is also noted that in the facts of the case, the due date for depositing the Employees contribution to the Provident Fund was 20th April, 2012 and the assessee had deposited the same on 25th April, 2012. There is no dispute that the amount stands deposited before the filing of the return. We, therefore, find that there is no ground for taking a view different from the view consistently held by this court since AIMIL Ltd.[ 2009 (12) TMI 38 - DELHI HIGH COURT] . 2022 (8) TMI 360 Computation of Deduction u/s 80HHC - as per assessee there were export earnings and hence, the negative profit as Nil should be taken into consideration for computation of deduction under section 80HHC - deduction should be taken as a whole and the loss derived by the assessee from one limb of the business should be set off against the profit of other limb of the business - HELD THAT:- As in view was followed in the subsequent decision of the Hon ble Supreme Court in CIT v. K.Ravindranathan Nair [ 2007 (11) TMI 10 - SUPREME COURT ] in which it was categorically stated that for computation of deduction under section 80HHC(3)(c), losses suffered by the assessee in the export of trading goods are to be set off / adjusted against profits from export of manufactured goods and vice versa and the assessee would not be entitled to deduction, if after such adjustments/ set off the net figure is a loss Applying the aforesaid legal proposition to the facts of the present case, this court is of the view that there is no infirmity in the order so passed by the Tribunal, warranting interference. As such, the substantial question of law raised herein is answered in favour of the Revenue. 2022 (8) TMI 359 Deduction of interest expenses paid for commercial property given on lease rent against income assessable under the head Income from House Property - Addition by merely stating that the possession of the space is not handed over to the appellant till 31.03.2011 - Validity of directions given by the Ld CIT(A), without considering the fact that the appellant is a beneficial owner of the said property - HELD THAT:- When income of commercial property they accepted and even allowed applicable standard deduction on the same, then how they can take a reverse view while dealing with allowability of interest. Secondly, legally also the action of Ld. CIT (A) is not tenable as per law. So, on both the grounds action of Ld. CIT(A) is not sustainable. In the result, ground no.1 of assessee be allowed and action of Ld. CIT (A) is reversed. Addition u/s 14A r.w.r. 8D - HELD THAT:- We are of the considered view that technically the action of AO was wrong and in defiance of the conditions prescribed in section 14A read with Rule 8D. Moreover, referring the decision of Jurisdictional ITAT [ 2018 (1) TMI 782 - ITAT MUMBAI] as has been held there that Ld. CIT(A) is not empowered to remove the deficiency in the order of AO. Alternatively also we hold that section 14A is not applicable in the present case as argued by the assessee vide para-12 above. Section 14A of the Act is applicable only those income which are prescribed in chapter-III. Any income which are part of total income but ultimately not chargeable to tax by virtue of chapter 6A or as in the instant case section 67, section 86 read with section 167B of the Act. As section 14A is not applicable in the case of assessee, hence, there is no question of suo moto disallowance by assessee on interest on TDS - As directed to the AO, for accepting revised computation to be filed by the assessee reversing suo moto disallowances made in anticipation of applicability of section 14A. 2022 (8) TMI 358 Deduction u/s.80P(2)(a)(i) in respect of interest income earned from banks - AO held such interest income to be falling under the head Income from other sources and hence, ineligible for deduction u/s.80P. - HELD THAT:- The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [ 2019 (4) TMI 682 - ITAT PUNE] decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. [ 2014 (9) TMI 833 - DELHI HIGH COURT] not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] - No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. Assessee appeal allowed. 2022 (8) TMI 357 Addition on account of cash credits u/s 68 and 69A read with section 115BBE - advances received from related/identifiable and assessed parties, who had made certain advance payments on different dates from 1.4.2016 to 18.10.2016 in small installments and, later on, sales were made to such parties and the advances so received were adjusted against the sales to such parties - HELD THAT:- Neither any confirmation nor any evidence of they being assessed to tax has been furnished and, as such, the identity, genuineness of the transactions and creditworthiness have not been proved and, therefore, we have no hesitation in confirming the said addition of Rs. 1,20,000. Thus, this ground of appeal is dismissed. Addition for parties who have advanced different amounts have filed confirmed copies of account mentioning their PAN, address, affidavits duly attested and evidence of filing their Tax Returns along with cash summary for the Financial Year 2016-17 which confirms the transactions of the assessee, both with regard to the advance amount paid by each of the related concerns which was subsequently adjusted against the sales made to these four parties and also, on account of the deposit of cash by each one of them on various dates towards the Housing Loan of the assessee to the tune of Rs. 48.50 lacs. Such evidences, as furnished, have not been doubted by the AO and even the sales as made by the assessee to the four relates parties against the advance of Rs. 28 lacs received earlier, have not been doubted, nor purchases in the hands of such related parties have been doubted in their hands. Thus, the opening stock, purchases, sales and closing stock in the hands of the assessee have been accepted by the Assessing Officer and the books of accounts of the assessee have also not been rejected u/s 145(3) of the Act and as such the entries relating to the related parties in effect stand accepted and, as such, the confirmation of the two additions i.e. both in regard to the amount of Rs. 28 lacs and Rs. 48.50 lacs are not justified. Also three HUFs who have independent identity and are being assessed and carrying the business, they have out of their independent sources made the cash deposits in the housing loan and in this regard they have furnished the necessary proof in respect of the amount deposited in the Housing Loan accounts of the assessee and, thus, the source of source also stands justified and just because such parties were not co-borrowers, the addition as made by the AO and confirmed by the NFAC is not justified and therefore, we have no hesitation in deleting the same. Decided partly in favour of assessee. 2022 (8) TMI 356 Unexplained deposit of cash in the saving bank account of the assessee - assessee has took different stand before the CIT(A) and explained the source of deposit as received from his deceased father who died on 06.01.2011 leaving behind the said cash alongwith the Will - HELD THAT:- AO as well as the CIT(A) doubted the genuineness of the Will in question without conducting any enquiry or examination of the genuineness. The assessee has produced the affidavit of one of the attesting witness of the Will to prove the Will executed by his father. Therefore, it is manifest from the record that the entire issue of addition is dependent on the existence and genuineness of the Will of the father of the assessee which was produced by the assessee during the appellate proceedings before CIT(A) but the same was not accepted by the authorities below without conducting any verification or enquiry. To ascertain the genuineness of the Will, AO was required to verify the genuineness of the signatures of the father either from the undisputed record bearing his signature or otherwise by examination of the attesting witnesses or any other relevant material. Hence, in the facts and circumstances of the case, the matter is set aside to the record of the Assessing Officer to re-adjudicate the same after conducting a proper enquiry regarding the genuineness of the Will - Appeal of the assessee is allowed for statistical purpose. 2022 (8) TMI 355 Validity of faceless assessment - sufficient opportunity of hearing especially during the Covid-19 Pandemic period was not given to the assessee, which is violation of principles of natural justice - HELD THAT:- It is seen from the appellate order though five opportunities were given by the NFAC from April, 2021 to November, 2021. The assessee does not dispute the above hearing dates, however not filed any submissions before NFAC and now claiming before us violation of principles of natural justice. The assessee could not produce before us any valid reasons for non appearance of the assessee, before the NFAC which was only National Faceless Appellate proceeding. Thus the NFAC is correct in applying the legal maxim VIGILANTIBUS, NON. DORMIENTIBUS, JURA SUBVENIUNT which means, law will help only those who are vigilant. Law will not assist those who are careless of his/her right. Only those persons, who are watchful and careful of using his/her rights, are entitled to the benefits of law. Thus law confers rights on persons who are vigilant of their rights. The assessee could not demonstrate the reasons for non appearance on the hearing dates by NFAC before deciding the appeal. So we do not find any merit in the grounds raised by the assessee. The same is hereby rejected. Addition u/s. 69A r.w.s. 115BBE - unexplained cash deposits during demonetization out of income declared u/s. 44AD - HELD THAT:- Assessee has not obtained the PAN Number as required u/s. 139(1)(ii) of the Act read with Rule 114 of the Income Tax Rules. The Ld. Counsel has not produce any details for the delay in obtaining PAN Number on 10.11.2016 even though the assessee s return of income field for the Assessment Year 2015-16 wherein the gross turnover as admitted by the assessee is Rs. 9,10,500/- which is violation of Section 139A(1)(ii) - assessee though placed before us, the Return of Income filed by the assessee for the subsequent Assessment years namely 2019-20 2020-21. The above returns also resulting in Nil assessable income and readymade business turnover assessable under 44AD @ 8% is Rs. 1,80,047/- for the Assessment Year 2010-20 and Rs. 49,693/- for the Assessment year 2020-21. Further as it can be seen that the returns for the Assessment Years 2015-16 2016-17 is filed on the same day namely 25.11.2016 and other list of events taken place in the above case clearly shows that the claim made by the assessee is found to be not genuine. In the absence of any evidence in support of his garments business carried out by the assessee, and the cash deposit made during demonetization period out of the income declared under the garments business is not proved with necessary records. Thus the assessee failed to prove the concurrent findings of the lower authorities with proper evidences. In the absence of the same, we do not find any merits to interfere with the orders passed by the lower authorities, consequently the grounds raised by the assessee are hereby rejected. 2022 (8) TMI 354 Disallowance u/s. 14A - Addition on account of interest and on account of administrative expenses as per the provisions of Rule 8D - Mandation of recording satisfaction - HELD THAT:- As before making disallowance u/s. 14A of the Act the Assessing Officer has to state as to how he is not satisfied with the submissions of assessee that no expenditure has been incurred keeping in view the books of accounts of the assessee which means he has to point out from the books of accounts as to which expenditure is relatable to earning of such income. No such findings has made by Assessing Officer in this case. Disallowance out of salary and wages - Addition made on adhoc basis due to insufficiency of vouchers or due to self made cash vouchers - HELD THAT:- As we find that the Assessing Officer had made disallowance equivalent to 5% of such expenses which the ld. CIT(A) has restricted to 50% of such disallowance which is quite reasonable, keeping in view the fact that the Hon ble Allahabad High Court in the case of Rimjhim Ispat Ltd. [ 2016 (1) TMI 374 - ALLAHABAD HIGH COURT] has held that where the expenses was not supported bills/vouchers the disallowance equivalent to 5% of such expenditure was justified. - Decided partly in favour of assessee. 2022 (8) TMI 353 Credit of TDS by the borrowers on gross interest payment - contention of the assessee is that the borrower was required to bear the cost of the tax i.e. tax-deductible at source and the lender i.e. DZ Bank AG was to be received sum net of any deduction or withholding tax - HELD THAT:- As respectfully following the decision of the Hon ble Bombay High Court in the case of Yashpal Sahni [ 2007 (7) TMI 7 - HIGH COURT , BOMBAY] for availing credit of TDS, the assessee has to discharge its responsibility of substantiating whether tax was deducted by the payer of income. From the contract agreement also it is evident that the borrower was required to intimate to the DZ Bank AG regarding the amount of tax deducted at source and paid to the tax authority. Before us, the assessee has even neither furnished any details of the amount of TDS in respect of interest income, which it has shown if any in its profit and loss account, nor furnished any evidence to support deduction of tax at source by the payer of income. The assessee has not furnished any certified copies of ledger account of assessee in the books of borrower parties so as to reflect the amount credited in the account of the assessee. Statutory provisions and judicial precedents, we feel it appropriate to restore this issue of granting credit of tax deducted source to the file of the AO for verification as to whether the assessee has shown interest income corresponding to the TDS in profit and loss account for the year under consideration and whether the tax has been deducted at source by the payer of the income. Assessing Officer need not to insist for demand in respect of said TDS payment to Government account as explained by the CBDT in OM F/No 275/29/2014-IT(B) dated 11.03.2016. The onus is on the assessee to substantiate its claim of tax deducted at source by way of necessary documentary evidence. AO is also at liberty to verify or make necessary inquiries from the borrower of loans as to what amount has been deducted by them in respect of the interest paid or credited to the assessee. It is needless to mention that the adequate opportunity of being heard shall be provided to the assessee. The grounds relating to the credit of the TDS are accordingly allowed for statistical purposes in all the four appeals of the assessee 2022 (8) TMI 352 Bogus purchases - disallowance of 91% of the purchase claimed in respect of project - HELD THAT:- Addition was made fully depending on the available documents from the VAT authorities. No cross verification was allowed by the ld AO. The VAT authorities are generally examining the payment of VAT. The Sale Tax Department mostly concerned about the input tax credit availed by the party payment of output tax. The assessee had utilized this purchase for its working progress. The whole addition was made on borrowed satisfaction from VAT department. No proper cross verification was made by the revenue authorities. The ld DR also did not make any strong objection against the assessee. The stock was exhausted by the assessee during the year through sales. - Decided in favour of assessee. 2022 (8) TMI 351 Late remittance of employees contribution to PF and ESI - assessee had paid the employees contribution to PF and ESI prior to the due date of filing of the return u/s 139(1) - scope of amendment - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1). As the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee 2022 (8) TMI 350 Addition u/s 68 - Unexplained loan receipts - as per AO there has been rerouting of the money through various layers like the deposits in the name of persons of no means and the same had been deposited in the banks and after depositing in the bank, the amount had been transferred to a closely held company, from which the assessee had received Rs.1.00 crores - HELD THAT:- As unsecured loan received by the assessee from Karnimata Commerce Pvt. Ltd. is also part of unaccounted money available with the group which was laundered and re-introduced in the grab unsecured loan through the bank account of the creditor and the assessee having failed to establish the genuineness of the transaction and creditworthiness of the creditor. CIT(A) has rightly treated 10% of the amount credited in the books of account of the assessee as income of the assessee following the findings given by the Settlement Commission, thus, the Modus Operandi of the assessee cannot be treated differently than the Modus Operandi adopted by the members of the group. No reason to distinguish the case of assessee from the cases of other assessee s of the Group, where a considered finding of the Settlement Commission is already in place. Accordingly, we refrain ourselves from interfering with the just and proper findings recorded by the CIT(A) in this regard. Thus, we uphold the same and dismiss ground No.1 of the assessee. Disallowance of interest on unsecured loan - As on perusal of the findings given by the Settlement Commission in this regard, we found that the assessee could not prove the creditworthiness of the lender company in view of the enquiry report submitted by the Pr.CIT, Central Circle. Since, the findings of Settlement Commission are applied in the case of assessee and a relief of 90% has already been given to the assessee on her unexplained income U/s 68 of the Act, no expense with respect to the said income can be further allowed. Thus, we are of the considered opinion that the interest paid with reference to the impugned unsecured loan cannot be allowed to the assessee and, therefore, we uphold the order of the CIT(A) on this ground. Accordingly, the ground No.2 of the assessee is also dismissed. Consequently, the appeal of the assessee is dismissed. 2022 (8) TMI 349 Disallowance of employees contribution to provident fund (PF) and employees state insurance (ESI) u/s. 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B - HELD THAT:- As in the case of Essae Teraoka Pvt. Ltd.[ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] we hold that the employee s contribution paid by the assessee before the due date of filing the return of income u/s.139(1) of the Act is allowable as a deduction and the addition is deleted. Disallowance of interest on TDS - AO held that expense towards interest on TDS which is penal in nature and not allowable u/s. 37(1) - HELD THAT:- The coordinate Bench of this Tribunal in Velankani Information Systems Ltd. [ 2018 (10) TMI 68 - ITAT BANGALORE] dealt with this issue and held that interest on delayed payment of TDS cannot be allowed as deduction. As it is clear that the basis why tax or interest is not allowed as deduction u/s.37(1) of the Act is on the reasoning that it cannot be regarded as an expense incurred wholly or exclusively for the purpose of Assessee s business. Therefore the allowability of interest on taxes paid should not be looked out from the definition of tax as given in Sec.2(43) of the Act. The submissions made by the learned counsel for the Assessee are based on a misconception that the definition of interest u/s.2(43) of the Act is relevant and that the disallowance in question has to be judged in the parameters of Sec.40(a)(iib) In our considered view this contention of the ld AR is completely out of context as we have already held that Sec.40(a)(ii) is not relevant to the present issue before us at all. Moreover, the levy of interest on delayed payment of TDS u/s.201(1A) though held to compensatory in nature, the allowability of the same cannot be decided simply based on that. The levy of 201(1A) is a levy for delay in the remittance of tax that is deducted and not paid into the government account and is levied towards the use of funds belonging to the exchequer. The interest u/s.201(1A) can be equated to the levy of interest u/s.234. Interest u/s.234 is a levy on delay in the payment of income tax and the TDS is nothing but the income tax paid on behalf of the payee and therefore the interest on the same u/s.201(1A) is also in the nature of interest levied on the income tax. On that count also interest on delayed payment of TDS cannot be claimed as a deduction. Comparison of the provisions of section 40(a)(ii) and section 179 - Section 179 is a provision for recovery from the directors of a private company and in that context the legislature has defined the word tax due . As we have already held that Section 40(a)(ii) is not applicable to the present case at all, we are of the view that the contentions raised in this regard are untenable. 2022 (8) TMI 348 Exemption u/s 11 - Charitable activity u/s 2(15) - Scope of principle of consistency - As per CIT-A assessee is not carrying on activity for charitable purposes instead its purpose involves carrying on activity in the nature of business and is thus covered by proviso to section 2(15) read with section 13(8) - HELD THAT:- Where there are no material changes in the facts and circumstances of the case and same nature of activities have been carried on in the past years and in the year under consideration and there is no change in law, a view once taken by the Revenue authorities in the past years should not ordinarily be disturbed or varied in the year under consideration. In other words, the principle of consistency has been well enshrined in tax jurisprudence which should be respected and adhered to by the authorities. Therefore, the contention of the assessee regarding consistency in approach by the Revenue authorities need to be appropriately addressed and for that reasons, we believe that the matter deserve to be said set-aside to the file of the Assessing office for examination a fresh and to record a specific finding in this regard as to why he believes that a position accepted by the Revenue in the earlier years should not be followed and the reasons for arriving at such a finding. Objects fall under the category of medical relief, relief of the poor and yoga and doesn t fall under the category of advancement of any other object of general public utility - If we look at the definition of the charitable purpose as defined in section 2(15) of the Act, it defines charitable purpose to include relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility. In our understanding, prima facie reading of the aforesaid provisions require to identify objects which are falling under individual category of relief to the poor , education , yoga , medical relief , etc and in cases, where it is falling under more than one category, then apply the dominant purpose test to identify a suitable category rather than clubbing all the objects as falling under the category of general public utility as the language used is any other object of general public utility and therefore, the significance and import of any other object need to be appreciated and which means that an object which doesn t fall specifically under any of the earlier categories. In this regard, we find that firstly, the Assessing officer has summarily decided this issue and thereafter, the ld. CIT(A) has merely confirmed the findings of the Assessing officer without addressing the matter and the contentions so raised by the assessee and for this reason as well, the matter deserve to be set-aside. In this regard, it is also noted that a fresh registration has been granted by the ld. PCIT vide order dated 15.10.2021 u/s. 12AA of the Act, for A.Y. 2022-23 to A.Y. 2026-2027 with the objects of relief of the poor, education, medical relief and yoga to the assessee society. The AO is therefore directed to take the same into consideration and decide the matter afresh and record his specific finding and the basis of arriving at such finding. Application of dominant purpose test - Where there are activities which are undertaken by the assessee society free of any charges, one needs to examine what the nature of these activities and how the same have been carried on by the assessee society and what are the cost implications thereof. The reflection of such activities in the income and expenditure will be more on the expense side rather than on the revenue side which apparently has escaped the attention of the Assessing officer. For this reason as well, we believe that it would be in fitment of things that the matter is set-aside to the file of the Assessing officer who shall examine the same afresh as per law taking into consideration aforesaid discussions after providing reasonable opportunity to the assessee. Needless to say, the Assessing officer is free to call for any information/documentation and the assessee is also at liberty to raise its contentions and file any information/documentation before the Assessing officer. Appeal of the assessee is allowed for statistical purposes. 2022 (8) TMI 347 Revision u/s 263 by CIT - addition u/s 40A ignored by AO - HELD THAT:- As the expenses have been incurred in cash exceeding Rs. 20,000/- per day throughout the financial year, the Assessing officer is expected to verify these expenses not just applying the test of genuineness and whether the expense have been incurred for the purposes of assessee s activities as so claimed and purposes for which it is claimed to be incurred but also the necessity of payment been made in cash on a recurring basis and applicability of provisions of section 40A(3). As we find that more than 50% of these expenses have been incurred in cash exceeding Rs. 20,000/- per day, therefore, these are cash transactions spreading throughout the financial year and it is not a case of certain sporadic cash transactions which could have escaped the attention of the Assessing officer and have been noticed subsequently by the ld. CIT(E). We therefore find that it is a case where the Assessing officer has completely failed to examine the provisions of section 40A(3) and applicability thereof in the facts of the instant case. AO is expected to examine the provisions of section 40A(3) vis- -vis respective transactions and determine which all these transactions are covered by the provisions of section 40A(3) and which all transactions fall under the exception as so provided in the Rule 6DD and decide accordingly. Only where the AO has examined the transactions from the perspective of section 40A(3) read with exceptions thereto and the ld. CIT(E) arrives at a different finding, the question of change of opinion arises. Where there is no examination and no formation of opinion at first place, the question of change of opinion as so contended by the ld. AR doesn t arise. Where the provisions of section 40A(3) are applicable in the facts of the case and which the AO has failed to examine and invoke at first place and the ld. CIT(E) subsequently noticed and thereafter, records his findings as to how the said provisions are applicable in the facts of the case, it is no doubt a case of reappraisal of the facts but with a view to highlight the applicability of correct law which the AO has failed to apply which is very much within the domain and jurisdiction of the ld. CIT(E) and in the process of applying the correct law, where the AO is directed to carry out further verification of individual transactions, the same is clearly permissible and necessary guidance can be drawn from the decision of the Hon ble Supreme Court in case of Malabar Industrial Company Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] ) - Decided against assessee. 2022 (8) TMI 346 Correct head of income - Gain on sale of shares - nature of purchase of shares either as investment or stock-in-trade - STCG v/s business income - period of holding of shares - assessee is maintaining its shareholding in two separate portfolios namely one as investment and another as stock-in-trade - HELD THAT:- It is clear from Clause 3(b) of the CBDT Circular No. 6 of 2016 dated 29.02.2016 made it clear in respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years. As it can be seen from the assessment order, the assessee is consistently taking the same stand of that the shares held as investment is offered for capital gains or loss. AO has not given any clear cut finding that the shares held as stock-in-trade were sold by the assessee and claiming capital gain. When this basic foundation is not being doubted by the AO - The action of the A.O. treating the sale of shares held as investment by the assessee and offered the same for short term capital gain cannot be treated as business income. For the only reason that the assessee is not carrying out any business activity during this assessment year except the sale of shares. Thus we hold that the sale of SIL shares held by the assessee as investment is to be treated only as short term capital gain and not as business income and thus we allow the grounds of appeal of assessee. 2022 (8) TMI 303 Addition u/s 69A as unexplained cash deposits in bank account which the assessee deposited on account of demonetization - HELD THAT:- As observed from the record that the assessee as meticulously given case flow statement giving different date wise cash available is supported by the bank statement placed on record. The assessee has also placed on record the affidavit of his mother supported by the withdrawal made by her mother from her bank accounts all these evidences, the Revenue failed to establish any fault or contrary finding to this bulk of papers and merely the addition sustained on account of suspicious reasons. We also find force in the argument of assessee that the assessee has deposited the demonetization money at one instant only proves that the assessee is having these much of cash and on account of demonetization she has not choice but to deposit in Bank. In these observations, ground No. 2 raised by the assessee is allowed. Unexplained credit entries in bank account u/s 69 - At the time of hearing of the appeal before ld. CIT(A) assessee requested time to submit the evidence but the same were not placed on record on account of corona virus - HELD THAT:- Considering the additional evidence placed on record the contentions raised by the assessee that the credit is already explained based on the evidence placed on record. Since, we have based on the argument of the ld. AR of the assessee admitted that these additional evidences but since these evidence were not placed before the AO we deem it fit to set aside this issue to the file of the Assessing Officer to verify the veracity of the record and contention raised by the assessee. Giving sufficient opportunity to the assessee. The AO is directed to decide whether based on the evidences placed on record the addition of Rs. 2,00,000/- is required to be added or not and with this observation the ground no. 3 raised by the assessee is allowed for statistical purposes. Deduction u/s 80C made in respect of HDFC life insurance - HELD THAT:- CIT(A) did not deal this issue as assessee has not placed on record a petition under Rule 46A but assessee contended that details are already in bank statement. Considering the overall facts we also feel that let this issue also be verified by ld. AO based on the evidence the assessee has placed on record. Thus, this ground No. 5 is also allowed for statistical purposes. 2022 (8) TMI 302 Validity of reference of matter to DVO u/s 142A - additions made on the basis of the DVO report - Non rejection of books of accounts - HELD THAT:- As reference to the DVO was made by the A.O. much prior to 01.10.2014 and without rejecting the books of account of the assessee. Therefore, in view of the Co-ordinate Bench order in the case of M/s.Shetty Constructions [ 2020 (2) TMI 790 - ITAT BANGALORE] we hold that reference to the DVO in the present case is illegal, hence, additions based on the DVO report are deleted. Additional income declared in survey proceedings - MD disclosed additional income on account of difference in value between the books of account of the assessee and the actual cost - HELD THAT:- The addition based on the DVO s report was deleted by us only on the preliminary objection, namely, that the books of account of the assessee was not rejected prior to the reference to the DVO. The rejection of the DVO s report on preliminary objection does not mean the value found therein is totally incorrect. This fact is reinforced by the MD in the sworn statement recorded on two different dates (i.e., on the date of survey on 11.07.2013 and u/s 131(1) of the I.T.Act on 24.07.2013), wherein he admitted that there may be some difference in the expenditure incurred in the building with the cost recorded in the books of account and also readily agreed to offer additional income of Rs.50 lakh in the hands of the assessee-company. Therefore, based on the declaration of the MD on two different dates, we confirm the addition of Rs.50 lakh for this assessment year. Moreover, we find that inspite of the addition of Rs.50 lakh, there is no tax liability for the assessment year 2013-2014 2022 (8) TMI 301 TP Adjustment - Selection of MAM - assessee submitted to consider CUP as most appropriate method in view of the availability of TIPS data base for comparability and filed additional evidence in the form of TIPS data - HELD THAT:- Exercise of examining comparability has already been carried out by the TPO in remand during DRP proceedings, wherein the TPO has rejected the comparability on the ground that geography and volume of the transactions was not available in the database. In our opinion, the AO or the TPO has authority to call for complete information of the transactions of import of raw materials and export of finished goods from the Custom Authorities including invoices of import or export having details of geography and volume. The Ld. TPO may also remove the related party transactions from the relevant information. We note that AO in assessment year 2014-15 has carried out exercise for comparing the international transactions of the assessee with the uncontrolled transactions available in TIPS data base and that too after the order of the Ld. DRP for year under consideration.We feel it appropriate to restore the matter to the AO/TPO for comparing the TIPS data with the international transactions of the assessee under CUP method of comparability as most appropriate method. In case, the CUP method fails, the Ld. AO/TPO may explore another methods including TNMM. - Ground of the appeal are accordingly allowed for statistical purposes. Nature of receipt - compensation received on termination of marketing support agreement - revenue or capital receipt - contention of the assessee that said compensation is respect of loss of source of income and therefore it is capital in nature and not chargeable to tax - HELD THAT:- As there was no restriction on the assessee to carry out his activity of marketing support services to anyone. By way of cancellation of marketing support service agreement in respect of SBH, there is no damage or impairment to the trading structure of the assessee. There was no removal of any employee of the marketing team by way of amendment in agreement and therefore there is no loss of source of income. The entire team of marketing support as capable of rendering services as was before the termination of market support of SBH. Moreover, the marketing team was providing marketing support in respect of other product after termination of assessment for SBH. In the case of Kettlewell Bullen Co. Ltd. [ 1964 (5) TMI 4 - SUPREME COURT] also it is held that where payment is made to compensate the person for cancellation of the contract, which does not affect the trading structure of his business or deprive him of what in substance is a source of income, termination of the contract being a normal incident of the business and such cancellation leaves him free to carry on his trade (freed from the contract terminated), the receipt is revenue. Charging of interest u/s 234A - HELD THAT:- As assessee has contended that the assessee filed its return of income on 27/11/2015, whereas due date prescribed for filing return of income under section 139 (1) during relevant assessment year was 30/11/2015 and therefore interest u/s 234A has been wrongly levied. Both the parties agreed that issue is for verification by the AO and accordingly, the issue in dispute is restored to the file of the AO for deciding in accordance with law after verifying the facts on the record. Appeal is accordingly allowed for statistical purposes. 2022 (8) TMI 300 Addition u/s 40A(3) - payment made to the driver of the lorry of the Supplier - As per AO payments have been made to labours for cleaning of pond, for JCB baffling charges, for purchase of sand, bricks, jally, purchase of salt, etc. and the assessee has not provided any evidences namely, bills and vouchers to prove that said payments had been made to cultivator, grower or producer in order to be excluded under section 40A(3) by virtue of Rule 6DD(e) - HELD THAT:- Assessee has to make the payment by account payee cheque drawn on a bank or account payee bank draft and then only deduction will be allowed. In the present case, the assessee has paid to his agent through bearer cheque, in turn; his agent has withdrawn the cash. From the above it is very clear that the assessee has violated section 40A(3). In this case, neither the assessee nor his agent has able to establish that the payments are made to farmers. The Agent of the assessee Shri Chinna says that he was not having any details of farmers and after purchase, the entire material has been transported to the assessee and the assessee is only handling the remaining part of the business. Shri Chinna further says that he was not having the details of farmers to whom payment was made. The assessee Shri Shahjahan says that he was not aware from whom the copras were purchased by his agent and also supplied directly by his agent to M/s. VVD Sons. Ultimately, neither the assessee nor his agent is able to prove that the payments have been made to the farmers. Therefore, the case of the assessee does not come within the purview of exception provided under Income Tax Rules in Rule 6DD(k). That apart, during the course of assessment proceedings, the Assessing Officer has asked the assessee to furnish the details of purchases and supplies made to M/s. VVD Sons and no details are filed inspite of repeated request made by the Assessing Officer. Even before us, no details are filed. Only in the written submissions, figures are stated and figures are not amounting to details of purchases and sales which are actually required for adjudication. Assessee has not furnished any details as to whom the payments were made. Accordingly, we reverse the common order passed by the ld. CIT-A for all the assessment years under appeal and restore that of the assessment order passed by the AO. Accordingly, the ground raised by the Revenue is allowed for all the assessment years. Since similar grounds on identical facts and circumstances have been raised by the Revenue in respect of all other assessee and accordingly, the appellate order passed by the ld. CIT(A) in respect of other assessee have also been reversed and restored that of the assessment order passed by the Assessing Officer for all the assessment years under appeal. Accordingly, all the appeals filed by the Revenue are allowed. 2022 (8) TMI 299 Assessment of trust - Disallowing sum while finalizing the assessment of the assessee trust - expenditure shown by the assessee is on higher side/ excessive - As per CIT-A appellant has not been able to prove with the help of documentary evidences that entire revenue expenses debited the income and expenses account were incurred wholly and exclusively for the purpose of Trust - HELD THAT:- It is not disputed by the both the parties that there is not a single instance observed in the original assessment proceeding and in the remand proceeding about the correctness and completeness of the records maintained by the assessee. We also found force in the argument of assessee that when the income of the assessee is exempt from tax what it will make a difference about the claim of the expenditure this is also confirmed by the AO, on page 3 of the assessment order the wherein the AO has observed that As the A Trust is registered u/s. 10(23C(vi) income earned during the year under consideration is exempt and hence assessed at Rs. Nil . We also found force in the argument of ld AR of the assessee that assessee has discharged its complete onus producing and appearing in both the proceedings. Not only that the entire addition has been made purely on the basis of the assumptions and surmises is purely devoid of any merit. Even the CIT(A) also did not consider the contentions of the assessee on merit despite the submission and remand report placed before him by submitting the written contentions and ld CIT(A) also chose to remain silent while dealing with the appeal of the assessee. As not disputed that the assessee has maintained regular books of accounts, which are audited by an independent Charted Accountant, in his report the auditor nowhere discussed any defects in the set of records maintained by the assessee, the books were presented before the AO in original as well as in remand proceeding, no specific defect or bogus vouchers/bills are observed. Whatever arguments made by the Ld DR in the hearing has also been dealt with convincing answer and on that there are no further comments required after considering the submission of the ld. AR of the assessee. We find that the claim of the assessee is supported bills and vouchers recorded in the books of accounts which are audited as per requirement of the act and auditor has specifically reported that all the expenses incurred by the assessee is per the object of the society. CIT(A) as well as AO has not pointed out any single defects in the records maintained by the assessee while making an adhoc disallowance neither the AO nor the ld. CIT(A) before arriving at such a finding, recorded specific finding highlighting particular expenditure which accordingly to him is not allowable, a general observation for all the expenditure disallowance of lump sum out of all expenses cannot be disallowed. The observations of AO in the remand proceeding is duly explained in the arguments and considering the explanations the ld. DR has not pointed out any strong rebuttal on the version of the ld AR of the assessee in respect of each of expenses. In the remand proceeding, the reasons for disallowance of lumpsum amount is also missing in this case. The AO failed to prove even in the remand proceeding that why and what count a sum of Rupees 50,00,000/- which is 11 % as per his version in remand proceeding should sustain. In the instant case, it is palpably clear that neither the AO nor ld CIT(A) observed any specific expenditure as excess or unreasonable, and their action of confirming lump sum disallowance at Rs. 50,00,000/- out of all the expenses cannot be sustained on a Lum sump amount in the eyes of law considering the findings and observations made hereinabove and thus, the same is hereby deleted and ground of the assessee s appeal is allowed. Customs 2022 (8) TMI 345 Jurisdiction to demand duty under Section 28 of the Customs Act, 1962 - whether the SCN, not having been adjudicated by Respondent No.2 and/or his predecessors for a period of 24 years, although Petitioners have filed replies and attended personal hearing, has become stale - Principles of natural justice - HELD THAT:- Where show cause notices were issued but adjudicating order has not been passed for such a long period, in this case almost 25 years, such show cause notices cannot be kept pending. Such delayed adjudication wholly attributable to the revenue would be in contravention of procedural fairness and thus violative of the principles of natural justice. The action, which is unfair, and in violation of principles of natural justice cannot be sustained. Various judicial pronouncements have taken a view that the weight of judicial pronouncements leaned in favour of quashing the proceedings if there had been an undue delay in deciding the same. In the absence of any period of limitation it is incumbent upon every authority to exercise the power of adjudication post issuance of show cause notice within reasonable period. The view expressed by a division bench of this Court in SUSHITEX EXPORTS (INDIA) LTD. ORS. VERSUS THE UNION OF INDIA ANR. [ 2022 (1) TMI 777 - BOMBAY HIGH COURT] . After 25 years, Petitioners, having approached this Court impugning the show cause notice, cannot be made to suffer an order to facilitate conclusion of the proceedings which, because of the inordinate delay in its conclusion, is most likely to work out prejudice to them. Had Petitioners not invoked the jurisdiction of this Court, the show cause notice would have continued to gather dust. It is concluded that not only the impugned show cause notice should be quashed, Petitioners are also certainly entitled to refund of amount of Rs.30,00,000/- - application disposed off. 2022 (8) TMI 344 Re-assessment of duty - Violation of principles of natural justice - seeking issuance of speaking order in respect of finalized Bills of Entry after complying with the requirements of principles of natural justice - HELD THAT:- Section 17 of the Customs Act, 1962 (hereinafter referred to as the Act, 1962 ) provides for assessment of duty. Under sub-section (1) of Section 17, an importer entering any imported goods under section 46 of the Act, 1962 or an exporter entering any export goods under section 50, shall, save as otherwise provided in Section 85, self-assess the duty, if any, leviable on such goods. Sub-section (2) of Section 17 provides for verification of entries and self-assessment of goods referred to in subsection (1) by the proper officer. Sub-section (4) of Section 17 provides for re-assessment of duty by the proper officer where the self-assessment is not done correctly. Sub-section (5) provides that the proper officer shall pass a speaking order on the re-assessment in matters other than those where the importer or exporter, as the case may be, confirms his acceptance of the said re-assessment in writing. There are no doubt that the petitioner himself has confirmed in writing his acceptance of re-assessment. Therefore, there exists no occasion to pass a speaking order on the re-assessment - petition dismissed. 2022 (8) TMI 343 Liability of interest in terms of Section 28AB and Notification No.47/1996-CUS (NT) dated 9th October 1996 - import of medical equipments - non compliance with the conditions attached in Notification No.64/88-CUS dated 1st March 1988 - prospective effect of section 28AB - wilful suppression of facts or not - HELD THAT:- In the case of DIWAN CHAND SATYA PAL AGGL. IMAGING RESEARCH CENTRE VERSUS UNION OF INDIA AND OTHERS [ 2016 (3) TMI 989 - DELHI HIGH COURT ] where the facts were similar, the Delhi High Court held that when the provisions of Section 28AB did not exist in the statute at the time of import of the equipments by petitioners, provisions of Section 28AB could not have been invoked - the view expressed by the Delhi High Court is agreed upon. Moreover, Section 28AB will be applicable only where any duty has not been levied or has been short levied or erroneously refunded by reasons of collusion or any wilful mis-statement or suppression of facts by a person, who is liable to pay the duty as determined under sub-Section (2) of Section 28 - sub-section (2) of Section 28 provides that notice under sub-Section (1) should have been first issued. To demand interest under Section 28AB, in such a notice there shall be allegations of collusion or wilful mis-statement or suppression of facts by the person liable to pay duty. Only after considering the representation of the person to whom such a notice has been issued, the proper officer should have determined the amount of duty or interest from such person. Otherwise no interest under Section 28AB can be demanded. None of the pre-conditions required to demand interest under Section 28AB, viz; (a) issuance of notice under Section 28(1) containing justifiable allegations of collusion or wilful misstatement or suppression of facts by the person liable to pay duty; (b) Permit noticee to file representation in response to the notice; (c) Consider such a representation ; and (d) determine the amount of duty or interest due from such person; has been complied with. When notice under Section 28 itself has not been issued in this case, the question of determination of any duty payable under sub-Section (2) of Section 28 does not arise and consequently, any interest payable under Section 28AB also would not arise - Petition disposed off. 2022 (8) TMI 342 Refund of the security amount once the EODC is issued - non-filing of refund application in the prescribed form - time limit for filing the refund application is six months from the date of clearance of goods - HELD THAT:- The petitioner had been bonafide pursuing his claim for refund of bank guarantee which was initially filed to the Commissioner Customs, Chennai within a period of one and a half months from the date of issuance of the EODC. The application was referred back to the petitioner almost after five months later vide letter dated 30.04.2019 conveying that the refund application had to be filed before another officer. The petitioner filed the refund claim application to the concerned officer albeit not in the prescribed format whereafter, it was again returned and was filed afresh in the prescribed format. Therefore, the finding of the respondents Authority that the application for refund was timebarred is totally unwarranted. The petitioner was unquestionably prosecuting his refund claim in a bonafide manner which ought not to have thrown away on hyper-technical objection of not having been filed before the competent authority and/or not having been filed in the prescribed format and finally as being delayed. The concerned authority shall treat the refund application of the petitioner to be within limitation and shall proceed to decide the same as per law within a period of three months from today - Petition allowed. 2022 (8) TMI 341 Smuggling - gold biscuits of foreign origin - power of Magistrate to discharge the accused under Section 245(2) of Cr.P.C. - HELD THAT:- In the case on hand, the learned Magistrate without examining any witnesses straight away had taken cognizance on the complaint lodged by the respondent and issued summons to the petitioners - it is clear that previous stage could be from the stage of Section 200 of Cr.P.C., whereby the learned Magistrate upon taking cognizance, is entitled, either to straight away issue process or conduct an enquiry by postponing the issue of process under Section 202 of Cr.P.C. Therefore, either he can issue process or dismiss the complaint under Section 203 of Cr.P.C. Depending on the circumstances of the case, it can be held that even before the issue of process or examining the sworn statement of the complainant, there could be cognizance in a particular case. The only requirement is that the learned Magistrate should have taken authoritative notice of the allegations made in the complaint. In the case on hand, upon presentation of the complaint, with out examining witnesses the learned Magistrate had taken cognizance and straight away issued summons to the petitioners. Therefore, even though the words at any previous stage of the case is meant to from the stage of inception i.e., under Section 200 of Cr.P.C., the same would not be extended to the check and call on stage as it will be in the domain of the complainant, if the complaint is returned to modify, add, delete the contents of the complaint. The learned Magistrate ought not to have taken cognizance as against the petitioner even before recording their statements. Therefore, the impugned proceedings cannot be sustained as against the petitioner and it is liable to be set aside - Petition allowed. 2022 (8) TMI 340 Seeking release/return the detained Gold Bangles - prohibited goods or not - Baggage Rules (no concealment in the body or luggage) - oral declaration by customs authorities - valid invoices of gold bought, was produced - HELD THAT:- It is not in dispute that the petitioner is working in Singapore for the past 5 years and he is having a valid Work Permit Card issued by the Republic of Singapore and is also having a Bank Account in Singapore. As could be seen from the Detention/Seizure of Passengers Baggage Receipt issued by the third respondent, the petitioner had left India on 05.12.2016 to Singapore and returned to India again after 5 years i.e., on 01.05.2022, which shows that for the past 5 years, the petitioner was working in Singapore and he is also having a valid Work Permit Card issued by the Republic of Singapore. The petitioner came to India to attend the marriage in his family and for that purpose, he was carrying three gold bangles in his bag and not concealed the same in his baggage or on his body. Further, there is no declaration slip obtained from the petitioner and there is no specific rebuttal on the petitioner s assertion that no declaration slip is obtained from him. In fact, he was orally declared by the Customs Officers that he is carrying three gold bangles, totally weighing 150 grams for the marriage in his family, is not specifically denied. The petitioner had consistently taken a stand that he has been working in Singapore and got work permit and is also having a Bank Account for crediting his salary. With his earnings, he had purchased three gold bangles. He had also produced the invoice of the gold bangles to the authorities. Further, there is no concealment of gold in a baggage or body, which prima facie, shows that there is no smuggling and at the most, it is seized for non-declaration. Added to it, adjudication proceedings is yet to be completed. Section 125 of the Customs Act, 1962, gives rights to the owner or from whom the goods have been seized to redeem such goods on payment of fine. Further, this Court consistently held that goods can be handed over on executing 50% of the Bank guarantee on the duty amount. In view of the same, this Court directs the petitioner to execute 50% of the Bank guarantee in lieu of customs duty and on execution of the Bank guarantee, the respondents are directed to hand over the gold bangles to the petitioner within two weeks from thereon. It is for the respondents to proceed with the adjudication proceedings to save the revenue to the Nation - petition disposed off. 2022 (8) TMI 339 Levy and collection of Anti-Dumping Duty - Extra Clear Float Glass - benefit of N/N. 4/2009-Cus. dated 6.1.2009 as amended from time to time - prohibition on respondent Nos.1 and 2, their servants and agents from clearing any consignments of Extra Clear Float Glass from any Customs stations without levying and recovering Anti-Dumping Duty thereon under Notification No.4/2009-Customs dated 06.01.2009 - HELD THAT:- As regards the interpretation of the exigibility of the product in question for the purpose of levying Anti-Dumping Duty, we are afraid we can go into it in the present proceedings. We are also of the view that the Tribunal will also not have the jurisdiction to go into such question of interpretation in respect of the exigibility of the product. Since the submissions has been coming forth that the order of the Tribunal holding the product Extra Clear Float Glass to be not liable to be dumping duty as an impact and its own repercussions on the economics of the units of the industry, it is deemed proper to solicit a response on an affidavit from the Department exercising our powers under Article 226 of the Constitution asking the Department to make its stand clear on the said aspect - To be listed on 05.08.2022. 2022 (8) TMI 338 Duty Free Entitlement Scheme - re-validation of the licence as well as bond waiver - duty free import of the goods as per the given norms applicable on the date of issue of licence - Application was rejected - Validity of Single Judge order of HC allowed the appeal of respondent - HELD THAT:- This court is of the opinion that when there is specific instruction by way of executive order, to satisfy the requirement pertaining to reduction of quantity of vitamin mixes, the same cannot be slightly brushed by the learned Judge by observing that there is no requirement to furnish individual consumption details of vitamin mixes, as per the import export policy for 1992-97. The appellant authorities have been all along instructing the first respondent to furnish the consumption details relating to reduction of quantity of vitamin mixes, on the basis of the circular dated 21.01.1999. Since the first respondent failed to comply with the said requirement, their request for revalidation was rejected by the appellant authorities - in view of the settled law that when the authorities are having sufficient reasons to have such a policy decision to impose certain conditions in the circular, power of judicial review would not extend to determine the correctness of such a decision. It has been repeatedly held that courts will not ordinarily interfere with such decisions, when the same are taken in the public interest. Thus, in the absence of consumption details relating to vitamin mixes, as required in the circular issued by the appellant authorities, the request of the first respondent seeking revalidation could not be acceded to; and that, there is no provision in the current foreign trade policy to allow a revalidation of licence pertaining to the period of 1996 and 1997, this court cannot compel the appellant authorities to revalidate the licences of the first respondent - appeal allowed. 2022 (8) TMI 337 Exemption from Customs Duty - actual user condition - imports of Polyester lining material - diversion of same to the local market instead of using the same for manufacture of export garments - recording of statements - inordinate delay in completion of proceedings by the respondent or not - actual transshipment of the imported material to the Appellant s factory in Jaipur or not - receipt of imported material and utilization of the same for manufacturing export goods - diversion of the imported goods or not - disclosure of second factory to the D.R.I. where it claimed to have received the imported material - A.P.E.C. registration certificate in respect of the second factory was issued after the initiation of the investigation by the D.R.I. or not. Whether there was an inordinate delay in completion of proceedings by the respondent and the passing of the impugned order? - HELD THAT:- Inordinate delay in taking the proceedings relating to a show-cause notice to its final conclusion has been held by the Bombay High Court in THE BOMBAY DYEING AND MANUFACTURING COMPANY LIMITED VERSUS DEPUTY COMMISSIONER OF CGST CX, DIV-IX, MUMBAI CENTRAL GST COMMISSIONER [ 2022 (2) TMI 783 - BOMBAY HIGH COURT] to be violative of natural justice. Further, the Gujarat High Court in SUNRISE REMEDIES PVT. LTD. VERSUS UNION OF INDIA [ 2019 (8) TMI 1397 - GUJARAT HIGH COURT] has remarked at paragraph 6 that proceedings cannot be a hanging sword on an assessee without justifiable cause. If proceedings do not culminate within a reasonable period of time then they stand vitiated. Thus, the delay of over a decade here, especially when genuine efforts have been made by the Appellant to participate in them, truly violates the Appellant s right to natural justice and vitiates the entire proceeding. Whether there actually was a transshipment of the imported material to the Appellant s factory in Jaipur? - HELD THAT:- The Department has not been able to advance any counter to the implications of thesedocuments except the refrain of these documents being fake and forged. The respondent has not dealt with these documents at all. Finally, the statements of U.S. Pandey, of Gurpreet Singh, the proprietor of M/s. Sunny Transport, which are to the effect that trucks, bearing Nos.HR 38C 6024 and HR 51 GA 1619, have transported the imported goods from Delhi to Jaipur have not been contradicted by the Department with any level of sufficiency. Even if there are contradictions between the statements of the Appellant s partner Mr. Bihari on 25th June, 2003 and, later, on 16thMarch, 2004, the story of the transportation of the goods from Delhi to Jaipur is consistent. There is simply nothing in the record or in the contentions advanced on behalf of the Department which would give sufficient reason for this Tribunal to disbelieve the evidence of the said persons. Whether the Appellant had received the imported material and utilized the same for manufacturing export goods. Alternatively, whether there was diversion of the imported goods? - HELD THAT:- There are mere assumptions and presumptions based on little to no evidence to buttress the allegation that the goods were diverted - the A.P.E.C. certificate it is found was issued much prior to the date on which the investigation began as found from a perusal of the A.P.E.C. certificate dated 25th August, 1999. The said certificate was renewed from time-to-time and issued afresh on 17th March, 2004. Sales Tax registration certificate dated 16th August, 1999 as well as factory licence dated 24th August, 1999 was issued in favour of the appellant with respect to the factory of the appellant situated at 4-5, Shiv Vihar Colony, Palliwalon Ka Bagh, Sanganer In fact, the said address has been acknowledged by the Textiles Committee, Govt. of India, Ministry of Textiles by its registration renewal certificate dated 09th April, 2001. The appellant got Customs exemption under the notification dated 01st March, 2002 on the strength of the A.P.E.C. certificated dated 25th August, 1999. Whether the Appellant had disclosed the second factory to the D.R.I. where it claimed to have received the imported material and whether the A.P.E.C. registration certificate in respect of the second factory was issued after the initiation of the investigation by the D.R.I.? - HELD THAT:- The certificate issued on 17th March, 2004 was not the first certificate, nor was it procured after the investigation had begun. The factory address of the appellant had been incorporated in the A.E.P.C. certificate on 25th August, 1999. The certificate of that was merely renewed from time-to-time and issued afresh on 17th March, 2004. Hence, there was no attempt by the appellant to make the D.R.I. miss the wood for the trees and invent a new factory belatedly. In fact, material seized by the D.R.I. under the Panchanama dated 25th June, 2003 shows that the said factory at the said address was visited. Material seized on that date also contained both the office address and the factory address of the Appellant. Appeal allowed. 2022 (8) TMI 336 Valuation of Vessel - Whether the transaction value of the vessel is to be priced mentioned in the original MOA or the reduced price indicated in the addendum? - HELD THAT:- In light of the statutory provisions, the factum of actual payment of the price in terms of the addendum cannot be ignored while determining the value of the vessel under Section 14 of the Act. In such a situation the genuineness and the necessity of reduction in the price are required to be scrutinised very carefully. In the present matter, it is noticed that the Ld. Commissioner (Appeals) passed the impugned order only by relying the finding of lower adjudicating authority - In the instant case, the Ld. Commissioner (Appeals) has not examined the genuineness of the addendum, and has proceeded to reject the appeal of the appellant. The Commissioner (Appeals) did examine the cogency of the reasons for price reduction. The Commissioner (Appeals) needs to examine the matter afresh - the matter is remitted back to the Commissioner (Appeals) for fresh consideration, particularly in relation to the genuineness of the addendum entered into between the appellant and the supplier - appeal allowed by way of remand. 2022 (8) TMI 335 Smuggling - Gold Bars - gold having been concealed in the embroidery machines and that the entire transaction for purchase and import of the machines was handled by the Appellants herein - statement recorded by the DRI officers, admissible evidences or not - Absolute Confiscation - Penalty - HELD THAT:- In the present case there is no dispute about illicit transaction of gold bars. Therefore impugned order of Ld. Commissioner (Appeals) has rightly upheld the absolute confiscation of the gold bars. As regard the prayer of the appellants that the confiscated goods should have been allowed to redeem on payment of fine, looking to the nature of the case, there are no illegality in the action of the ld. Adjudicating authority for absolute confiscation of the gold bars, therefore absolute confiscation is upheld. It is also found that in the present matter Ld. Commissioner (Appeals) has rightly imposed the penalties on Appellants. Therefore the same is also not required any interference. It is established from the records that Shri Nareshbhai Savaliya masterminded the entire modus of smuggling of Gold bars by concealing the same in the embroidery machine exported by his overseas firm M/s Pali Overseas Trading Co., FZC, UAE to India - Department has produced sufficient evidence to establish that both the appellants were conspirator in the smuggling of goods. Appeal dismissed. 2022 (8) TMI 334 Valuation of imported vessel - substitution of reduced price by addendum - whether the transaction value of the vessel is to be price mentioned in the original MOA or the reduced price indicated in the addendum? - HELD THAT:- The factum of actual payment of the price in terms of the addendum cannot be ignored while determining the value of the vessel under Section 14 of the Act. It is added that in such a situation the genuineness and the necessity of reduction in the price are required to be scrutinised very carefully - In the instant case, the Ld. Commissioner (Appeals) has not examined the genuineness of the addendum, and has proceeded to reject the appeal of the appellant. We may, however, add that the Commissioner (Appeals) did not examine the cogency of the reasons for price reduction. The Commissioner (Appeals) needs to examine the matter afresh. Accordingly, the impugned order is set aside, and the matter is remitted back to the Commissioner (Appeals) for fresh consideration, particularly in relation to the genuineness of the addendum entered into between the appellant and the supplier - Appeal allowed by way of remand. 2022 (8) TMI 333 Levy of penalty under Regulation 18 of CBLR 2018 on the appellant-CHA - revocation of customs broker license - alleged export of glass bangles on highly inflated value by mis-declaring description CTH for claiming ineligible IGST Refund, Drawback MEIS benefit on FOB value - HELD THAT:- The ld. Commissioner has recorded the categorical findings exonerating the appellant from all the allegations made in the show cause notice. Further, the ld. Commissioner has also revoked the suspension of the appellant, which had been issued earlier. It is further found that there is no allegation of any mis-chief either by the appellant or by its staff H Card holder. It is further held that simply assisting the customs as a witnesses or otherwise in the examination of the goods does not amount to mis-conduct. Accordingly, the penalty imposed under Regulation 18 of CBLR 2018 is uncalled for. The penalty imposed under Regulation 18 of CBLR, 2018 is set aside - appeal allowed. 2022 (8) TMI 332 Condonation of delay of 89 days in filing appeal - Appellant has not cited any reasons for the delay in filing the Appeal - HELD THAT:- The Appellant had filed the Appeal beyond the statutory period of 60(sixty) days, but within the condonable period and had also filed a petition explaining the reasons for the delay in filing the Appeal before the Ld.Commissioner(Appeals). On facts as stated and under the circumstances, the delay in filing the Appeal before the Ld.Commissioner(Appeals) is condoned and it is found appropriate to remand the matter to the Ld.Commissioner(Appeals) to decide on merits without going into the aspect of limitation. Appeal allowed by way of remand. Corporate Laws 2022 (8) TMI 331 Seeking quashing of Lookout Circular - providing sufficient causes shown make - HELD THAT:- This Court finds, there is no dispute that the Petitioners include Managing Director, Directors and CFO of the Company, M/s.Utkal Galvanizers Ltd. There is also no dispute that there exists a complain against the Petitioners by a Whistle Blower received by the Competent Authority and there was initiation of inspection of 15 nos. of Companies including that of M/s.Utkal Galvanizers Ltd. in this State under the direction of the Ministry of Corporate Affairs. LOC involved here appears to be on no concrete material and even on prima facie material. On perusal of the documents available at Pages-91 to 115 of the Brief, this Court finds, either the Company or the Petitioners have been several time rewarded for their best performance. Offences entangled the Petitioners as of now remain maximum within the frame working of Section 441 of the Companies Act, as clearly disclosed from Annexure-14 series. This Court finds, even though there involves allegation all through that there is information of the Petitioners fleeing away after taking 600 crores to 700 crores from different banks even after a preliminary counter affidavit and an additional affidavit by the Department, there is even no specific allegation on actual loan involved the Petitioners and their Company and any default therein. It is needless to observe here that there is no declaration of NPA involving any account involving the Petitioners by any bank as of now. Allegation at this stage appears to be speculative and imaginary and in the circumstance, there cannot be taking away liberty of any of the Petitioners - The investigation even after so much lapse of time failed in bringing any concrete evidence to implicate any of the Petitioners or framing any of them charges under any penal law. There is even no material produced as of now in support of assertion of the Department, the Petitioners have flight risk, thus the allegation is bald and without any substance. Considering that investigation involving all Establishments is over and the Department is waiting for the further advice of the Ministry, this Court is imposing certain conditions for the overseas travel involving each of the Petitioners as follows:- I. Each of the Petitioners if undertaking overseas travel, while providing such intimation, has also to produce his overseas travel plan with photocopy of Visa approval with the Company Registrar in the State of Odisha. II. In the event of necessity of foreign visit of any of the Petitioners, he/she while providing the travel plan under Condition-I herein above shall also be required to produce a bank guarantee to the extent of Rs.5,00,000/- (rupees five lakh) in favour of the R.O.C., Odisha to remain valid for a period of six months at least. III. Each of the Petitioners shall co-operate the Department whenever their presence will be sought for by the Department. IV. Each of the Petitioners shall co-operate in any further investigation and/or inspection. Petition allowed. Law of Competition 2022 (8) TMI 330 Contravention of any of the provisions of Section 3 and/or 4 of the Act, causing an investigation into the matter or not - existence of an agreement/ arrangement between the parties is a sine qua non or not - HELD THAT:- It is found that neither informant was competent nor the present appeal was competent to be taken note of. Since both the proceeding were contrary to statutory provisions particularly in violation of Section 35 and Section 53-S of the Act respectively, apart from its dismissal on the ground of non-maintainability of the Information Petition or the present Appeal, the role of Mr. Sumit Jain also appears to be doubtful. During the hearing of the Appeal Mr Jain accepted that he is neither advocate, chartered accountant, company secretary nor cost accountant. Even then pretending to be counsel, he has filed the present appeal as well as information before the CCI. In such view of the matter particularly on the ground that the Appellant has misled the CCI as well as this Tribunal regarding his actual entity i.e. a proprietorship agency, there is no need to examine the Appeal on merit. With a view to preserve sanctity of the court proceeding and confidence of the public in the system, simply dismissal of this Appeal may not serve the purpose. Further to prevent recurrence of such activity, while dismissing the appeal it is appropriate to impose cost on the appellant. The Appeal stands dismissed with imposition cost of Rs.1 lakh on the appellant. The Appellant will deposit the cost of Rs.1 lakh with Delhi High Court Legal Services Committee within twenty days from today and will submit the proof of depositing the same with the Registrar of this Tribunal. In case of non-depositing of cost, as indicated above, the Registrar of this Tribunal will proceed in accordance with law for non-complying the orders of this Tribunal. Insolvency & Bankruptcy 2022 (8) TMI 329 Initiation of CIRP - NCLT admitted the application - NCLAT quashed the proceedings - Financial Creditors - Period of limitation - HELD THAT:- It is clear that any agreement to pay a time barred debt, would be enforceable in law, within three years from the due date of payment, in terms of such agreement. It appears that Section 25(3) of the Indian Contract Act was not brought to the notice of the NCLAT. The NCLAT also did not consider the aforesaid Section. Under Section 25(3), a debtor can enter into an agreement in writing, to pay the whole or part of a debt, which the creditor might have enforced, but for the limitation of a suit in law. A written promise to pay the barred debt is a valid contract. Such a promise constitutes novation and can form the basis of a suit independent of the original debt, for it is well settled that the debt is not extinguished, the remedy gets barred by passage of time - Section 25(3) applies only where the debt is one which would be enforceable against the defendants, but for the law of limitation. Where a debt is not binding on the defendant for other reasons, and consequentially not enforceable against him, there is no question of applicability of Section 25(3). The provisions of the IBC are designed to ensure that the business and/or commercial activities of the Corporate Debtor are continued by a Resolution Professional, post imposition of a moratorium, which would give the Corporate Debtor some reprieve from coercive litigation, which could drain the Corporate Debtor of its financial resources. This is to enable the Corporate Debtor to improve its financial health and at the same time repay the dues of its creditors - The IBC is not just another statute for recovery of debts. Nor is it a statute which merely prescribes the modalities of liquidation of a Corporate body, unable to pay its debts. It is essentially a statute which works towards the revival of a Corporate body, unable to pay its debts, by appointment of a Resolution Professional. IBC has overriding effect over other laws. Section 238 of the IBC provides that the provisions of the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law, for the time being in force, or any other instrument, having effect by virtue of any such law - the IBC is a beneficial legislation for equal treatment of all creditors of the Corporate Debtor, as also the protection of the livelihoods of its employees/workers, by revival of the Corporate Debtor through the entrepreneurial skills of persons other than those in its management, who failed to clear the dues of the Corporate Debtor to its creditors. It only segregates the interests of the Corporate Debtor from those of its promoters/persons in management. When a question arises as to the meaning of a certain provision in a statute, the provision has to be read in its context. The statute has to be read as a whole. The previous state of the law, the general scope and ambit of the statute and the mischief that it was intended to remedy are relevant factors - As per Section 18 of Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgement must be made before the relevant period of limitation has expired. An acknowledgement made in writing within the period of limitation extends the period of limitation. In this case, there was no acknowledgement of debt within three years from the period on which the account of the Corporate Debtor was declared NPA or within three years from the date on which the loan facilities were recalled. This Court is of the view that the Appellate Tribunal (NCLAT erred in closing the CIRP proceedings without giving the Appellant Financial Creditor the opportunity to explain if there was sufficient cause for the delay in approaching the NCLT. An appeal being the continuation of original proceedings, the provision of Section 7(5)(b) of the IBC, of notifying the Financial Creditor before rejection of a claim, would be attracted - The impugned judgment and order of the NCLAT is set aside to the extent that the CIRP proceedings have been closed. Appeal allowed. 2022 (8) TMI 328 De-freezing of bank accounts of the Corporate Debtor - consolidation of assets of the Corporate Debtor which is under liquidation - Adjudicating Authority has refused to exercise the powers vested on it by the IBC to direct the banks/government authorities to de-freeze the accounts of Corporate Debtor and instead directed the Appellant to again approach the appropriate government authorities - HELD THAT:- Section 238 of IBC clearly overrides anything inconsistent contained in any other enactment. The IBC is thus a complete code and prevails over all other laws which are inconsistent with or in conflict with the Code. Given that the persistent efforts on the part of the Appellant to defreeze the accounts of the Corporate Debtor did not bear any result; given that there is sufficient proof of reluctance on the part of Respondents 1 to 4 to defreeze the bank accounts of the Corporate Debtor; given that Section 238 of IBC overrides anything inconsistent contained in any other enactment and also given that Section 60(5) of the IBC vests residuary jurisdiction on the Adjudicating Authority to intervene and, above all, keeping in mind that the cardinal objective of the IBC Code is to obviate uncalled for derailment of the insolvency resolution process, there are sufficient merit in the submission made by the Learned Counsel for the Appellant that the Adjudicating Authority ought to have appreciated the constraints faced by the Appellant/Liquidator and provided relief by exercising its residuary jurisdiction rather than remanding the Appellant once again back in the hands of the government authorities. The Adjudicating Authority erred in not exercising the residuary jurisdiction vested in it under Section 60(5) of the IBC and having failed to provide necessary relief to the Appellant, the impugned order is set aside - Respondents No. 1 and 2 are herewith directed to immediately withdraw the notices issued by them defreezing the Bank Accounts of the Corporate Debtor, Pan India Utilities Distribution Co. Ltd., maintained in IDBI Bank, Khar West Branch, Mumbai and Axis Bank Ltd., Worli Branch, Mumbai - Appeal allowed. 2022 (8) TMI 327 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Debtor owed a financial debt to the Appellant or not - applicability of principles of res-judicata - balance sheet for the years 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 contain acknowledgment of debt as per the meaning of Section 18 of the Limitation Act, 1963 so as to give benefit fresh limitation period to the Appellant - application filed under Section 7 of IBC by the Appellant was barred by time or not. HELD THAT:- The Hon ble Apex Court, recently held that doctrine of resjudicata is applicable to proceedings under IBC also in EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED ORS. [ 2021 (9) TMI 672 - SUPREME COURT ] held that the doctrine of resjudicata is applicable to the proceeding of IBC. Since the adjudication by this Tribunal is in effect right in rem, the Appellant, being shareholder, filed this appeal. The law declared by Hon ble Apex Court is not in dispute, but the Appellant herein is claiming interest through Corporate Debtor. When the Corporate Debtor challenged the same applying doctrine of resjudicata, in view of law declared by Apex Court in Ebix Singapore Pvt. Ltd. and the judgment has attained finality, the Appellant who is claiming interest through Corporate Debtor is debarred from re-agitating the same applying doctrine of resjudicata. In view of the principle of resjudicata, though a part of CPC, it would be applicable to the proceeding of this Tribunal and IBC. Only to prevent the abuse of process of law and give a finality to any proceeding, or orders, and to avoid an endless litigation to frustrate the very object of enacting IBC, the claim of appellants is liable to be rejected. There are no merit in the contention of the Appellants and we find no ground to warrant interference by this Tribunal, while exercising power under Section 61 of IBC - appeal dismissed. 2022 (8) TMI 326 Maintainability of petition - initiation of CIRP - Service of demand notice - whether the Adjudicating Authority was justified in rejecting the Section 9 Application on the ground that the Demand Notice under Section 8 was not duly served on the Corporate Debtor and also that receipt of money in May 2016 is not evidenced by any Banker s certificate or details of cheque? Service of demand notice - HELD THAT:- The contention of the Learned Sr. Counsel for the Respondent /Corporate Debtor that the Section 8 notice was never delivered upon is untenable, specially keeping in view that the address written is the registered Office address, which is undisputed. There are also force in the submissions of the Learned Counsel for the Appellant that the Section 9 Application was also addressed to the same Registered Office. Therefore, they cannot be any ambiguity with respect to the Registered Office address of the Corporate Debtor. Having regard to the fact that the Demand Notice, as mandated under Section 8 of the Code, was duly served upon the Respondent / Corporate Debtor, the requirement under Section 8 of the code, is complete. Whether the claim of receipt of money in May 2016 was not evidenced by any Banker s certificate or details of cheque? - HELD THAT:- A Banker s Certificate is not mandatorily required to trigger CIRP under Section 9 of the Code. It is significant to mention that this Tribunal has not gone into the merits of the matter with respect to debt or default , we only addressed to the issue of the service of Demand Notice on the Corporate Debtor and that a Banker s certificate is not essential to trigger CIRP under Section 9 of the Code. The matter is remanded back to the Adjudicating Authority to decide the Application preferred by the Appellant under Section 9 of the Code, on merits - Appeal allowed. 2022 (8) TMI 325 Right of second charge holder to claim priority over the first charge holder - bifurcation of the amounts to be distributed to the lenders - waterfall mechanism as provided under section 53 of the IBC for distribution of funds - HELD THAT:- It cannot be gainsaid that the Appellant, who is a stakeholder in the liquidation process, is entitled to know his share in the distribution matrix and how it has been arrived at. The Impugned Order falls short of providing a reasoned answers to the Applicant s (ARSEC (India) Limited) prayers. The Impugned Order falls short in providing a reasoned basis and clarity to the prayers of the Appellant made in MA 520/2019 - the case is remanded back to the Adjudicating Authority for providing an appropriately reasoned and clear order in the light of prayers made in MA 520/2019 after giving due opportunity of hearing to the parties - appeal disposed off. 2022 (8) TMI 324 Initiation of CIRP - Period of limitation - Date of default / NPA is 14 years old - NCLT admitted the application - ongoing default of the corporate debtor under the NCD Facility and suspension of the legal proceedings under SICA and acknowledgment made under the Balance Sheet - Application has been filed after 14 years from the date of default occurred and hence it is hopelessly time barred in view of the provisions of Limitation Act, 1963 - HELD THAT:- It is pertinent to mention that the Respondent continuously in all its Balance Sheets from the year ending 2004-05 till 2016-17 has disclosed and acknowledged the outstanding liability owed by the Respondent to the Appellant. Hence the admission and disclosure of liability in the Balance Sheet of the Corporate Debtor is to be treated as an acknowledgement under Section 18 of the Limitation Act, 1963 which further enlarges and extends the period of limitation and hence the order of Adjudicating Authority is grossly erroneous in this aspect that the Section 7 Petition of the Appellant is barred by limitation especially when the Corporate Debtor voluntarily disclosed and acknowledged the liability towards the appellant. In various cases, the Hon ble Apex Court has already settled the law that Balance Sheet dues so reflected appropriately in the Balance Sheet and that too a duly audited Balance Sheet will act as an acknowledgment of debt under Section 18 of the Limitation Act, 1963 hence initiation of CIRP is permissible under Section 7 of the Code . Keeping in mind the provisions of the Code law laid down on the subject, it is not in dispute that the dues of the CD are falling within the provisions of Section 18 of the Limitation Act and since debt and default is not in dispute dues are payable in fact law is in accordance with the provisions of the Code, so Section 7 of the Code is attracted - appeal allowed. 2022 (8) TMI 323 Initiation of CIRP - Validity of order of NCLT admitting the application - Corporate Debtor failed to make repayment of its dues - Financial Creditors - relief was sought for or pending in another Forum - existence of debt and default or not - HELD THAT:- In the instant case, the reference made pertaining to the Arbitration Proceedings, etc, are not germane for deciding the Application filed under Section 7 of the Code. There is no provision which bars referring to the Code, if already relief was sought for or pending in another Forum. In fact, Section 238 of the I B Code, 2016, shall have effect notwithstanding anything inconsistent therein contained in any other Law for the time being inforce or any instrument having effect by virtue of any such Law. Besides this, to put it pinpointedly, the Execution and Transfer of Money in terms of Inter-Corporate Deposit cannot be disputed. Viewed in that perspective, the emphatic plea taken on behalf of the Corporate Debtor is not acceded to by this Tribunal. Likewise, the stand of the Corporate Debtor that the 1st Respondent/Petitioner/Financial Creditor in its Balance Sheets from 2011-12 to 2018-19 had described the sum in issue as other investments but had not mentioned specifically as ICD, is a futile one, besides, the same being unworthy of acceptance. The twin aspects of Debt and Default as against the Principal Borrower/M/s. Lepakshi Science and Technology Park Private Limited was established clinchingly on the side of the 1st Respondent/Petitioner/Financial Creditor and further in the teeth of the Corporate Guarantee being executed by the 2nd Respondent/Corporate Debtor (M/s. Lepakshi Heritage Wellness Village Pvt. Ltd.) to and in favour of the 1st Respondent/Petitioner/Financial Creditor guaranteeing the repayment of the sum transferred by the 1st Respondent/Petitioner/Financial Creditor to the 2nd Respondent/Borrower (M/s.Lepakshi Science and Technology Park Pvt. Ltd.) in CP(IB)/98/BB/2021 and the factum of same being invoked was established (on the side of the 1st Respondent/Petitioner/Financial Creditor), in the present case, the view arrived at by the Adjudicating Authority in admitting the main CP(IB)/107/BB/2021, declaring Moratorium and appointing the Interim Resolution Professional are free from legal flaws. Resultantly, the instant Appeal is devoid of merits and it fails. Maintainability of application - initiation of CIRP - non-payment of a debt once it becomes due and payable - Financial Creditors - clear cut stand of the Appellant is that but for the transaction and promise of the 1st Respondent/Financial Creditor/Petitioner to pay Rs.238.5 Crores there would have been no necessity to transfer the subject land from LKH to LST and LSW - HELD THAT:- In the instant case, it is pertinently pointed out by this Tribunal that the Memorandum of Understanding dated 07.01.2012 was entered into between the 1st Respondent/Financial Creditor/Petitioner and the Appellant/Lepakshi Knowledge Hub Private Limited. It is latently and patently quite clear that the money received in terms of the Inter-Corporate Deposit dated 19.03.2012, was to deal with the expenses of the 2nd Respondent/Corporate Debtor/LST. Because of the fact that the transfer of money as per Inter-Corporate Deposit was not in controversy/disputed, the stance of the 2nd Respondent/LST that in the Balance Sheets the money in question was not described as Inter-Corporate Deposit , but only mentioned under the caption other investments has no legs to stand, in the considered opinion of this Tribunal . In the instant case, considering the fact that the receipt of Rs. 5 Crores was tacitly admitted by the 2nd Respondent/LST by way of an acknowledgement as per the Balance Sheets of the 1st Respondent/Financial Creditor for the period from 2011-12 to 2018-19, the main CP(IB)/98/BB/2021 filed by the 1st Respondent/Financial Creditor/Petitioner, before the Adjudicating Authority ( National Company Law Tribunal , Bengaluru Bench), is maintainable in Law , based on the filing of the Petition on 06.07.2021 (vide Vol. I - Page 100;Form Iin CP(IB)/98/BB/2021) and signed by the Counsel for the 1st Respondent/Financial Creditor/Petitioner dated 07.07.2021 (vide Page No.98 of Vol. I in CA (AT) (CH) (INS) No. 216 of 2022) and looking at from that angle, the main CP (IB)/98/BB/2021 is not barred by limitation. This Tribunal comes to an inescapable and inevitable conclusion that the 1st Respondent/Petitioner/Financial Creditor had established the aspect of subsisting Debt and Default which are the pre-requisites for an admission of an Application filed under Section 7 of the I B Code, 2016 - The proceedings under the I B Code, 2016, are not adversarial in character and in the instant case, the Adjudicating Authority cannot determine the default sum as per Section 4 of the I B Code, 2016. Looking at from any point of view, the instant Appeal sans merits - Appeal dismissed. 2022 (8) TMI 322 Restraint on Appellants from acting upon or giving effect to any resolution passed at the EGM held on 25.01.2022 till the disposal of the Company Petition - whether the right of the shareholders calling the EGM of the Company in view of the statutory right enshrined in the statute can be interfered with by the Tribunal? - HELD THAT:- In the present case, the requisitionist/shareholder i.e. SGAH admittedly holding 77.04% of shares in SACL, has every right to issue a notice calling for as EGM as per Section 100 of the Companies Act, 2013. However, the Respondents have rejected the requisitionist request on 17.12.2021 on the ground that the Director Mr. Yeap is not authorised to requisition EGM on behalf of SGAH. And the Aapico cannot seek to enforce Singapore Award until Madras High Court uphold its validity and the Aapico cannot unilaterally take law into their own hands. As per the provisions of Section 100(4) of the Companies Act, 2013 if the Board does not within 21 days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than 45 days from the date of receipt of such requisition the meeting may be called and held by the requisitionists themselves within a period of 3 months from the date of the requisition. Failing to call the meeting by the SACL Board, the requisitionist itself convened a meeting of EOGM on 25.01.2022 is in accordance with law - In the present case, the Learned NCLT passed the impugned order restraining the Appellants in giving effect to any resolutions that was passed at the EGM held on 25.01.2022 till the disposal of the Company Petition, in our view is without any proper analysis and no finding recorded with regard to how the outcome of the resolution / decision is prejudicial to the public interest or the company at large. The Learned NCLT merely recorded the pending proceedings before the Hon ble High Court of Madras and UK Court. The NCLT ought to have seen that whether the requisitionist has right to call for an EGM in accordance with law or not. Admittedly, the 3rd Appellant holding 77.04% of shareholding in SACL. This Tribunal is of the view that the right exercised by the requisitionist is in accordance with shareholder agreement dated 29.09.2018 and in accordance with Articles of Association of the SACL. This Tribunal in unequivocal terms hold that validly passed resolution cannot be stayed. This Tribunal comes to an irresistible and inescapable conclusion that the impugned order passed by the Learned NCLT dated 29.03.2022 in CP No. 25/2022 is hereby set aside - Appeal is allowed with a request to the Learned NCLT to dispose of the CP No. 25/2022 within a period of one month from the date of receipt of copy of this order. 2022 (8) TMI 321 Initiation of CIRP - Period of limitation - It is the case of the Appellant that the date of default of Non-Performing Assets (NPA) on 05.07.2014 and the Bank/ R2 has filed petition under Section 7 of the Code on 11.12.2019 - NCLT admitted the application - HELD THAT:- It is not in dispute that the Debt has become NPA on 05.07.2014 and Section 7 application for initiation of Corporate Insolvency Resolution Process has been filed on 11.12.2019 by R2/Bank - It is also not in dispute that the bank/ R2 has filed a petition before the Hon ble High Court of Orissa and the same was transferred to NCLT, Cuttack Bench in terms of Notification dated 07.12.2016 of the Central Government. The Bank/R2 has filed multiple proceedings before the DRT-3 Calcutta and simultaneously persuade for recovery against the CD/ Appellant under Section 138 of the Negotiable Instrument Act, 1881 apart from filing criminal complaint which is barred under Section 18 and 34 of the RDDBFI Act, 1993 . When the OA No. 104 /2016 was filed before the DRT then what was necessity of enforcing criminal complaint and approaching under Negotiable Instruments Act, 1881 - The Appellant was not aware of the winding up petition filed before the Hon ble Orissa High Court on 28.09.2016 and came to know about only when the Adjudicating Authority issued notice to the Appellant. The Bank has already received Rs.1.50 Crore from the builder and Rs. 54,13,999.87 from the CD. The deliberation made by all the parties as one feature common with the loan has been directly disbursed to Builder/R3 and the Bank/R2 as failed to be cautious while releasing the money to the builder without taking NOC from their bankers and has initiated in all these legal proceedings. This case finally reflects that this is a forum shopping being done by a private sector bank which is not healthy. The Code cannot be used a recovery mechanism when the Hon ble High Court of Orissa has already taken a particular view and DRT has also taken appropriate decision to get the amount realized to the Bank the Bank/R2 has realized Rs. 1.5 Crore from Builder/R3 and Rs. 54,13,999/- from CD/R1 against disbursal of Rs. 1.34 Crore. CIRP mechanism is not for a debt recovery as Hon ble Supreme Court has already settled the law on this aspect. Hence, CIRP cannot be used for bringing a Corporate Debtor to liquidation thereby enriching Private Sector Bank. Corporate Debtor, Emerald Mineral Exim Pvt. Ltd is released from the rigour of the Corporate Insolvency Resolution Process - Appeal allowed. 2022 (8) TMI 320 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- As per the bank statements of the Financial Creditor, the amount i.e. Rs. 3,30,00,000/- was withdrawn on 22.07.2020, vide Cheque No. 000029, in the name of Sehrawat Associates Pvt. Ltd. who is not the Corporate Debtor in the present petition. But in Part IV of the Application, the Financial Creditor has stated that the total amount of debt due from the Corporate Debtor i.e. Optiemus Infracom Limited is Rs. 3,30,00,000/- and the date of disbursement was 21.07.2020 vide cheque No. 000029 drawn on Bank of Baroda. As sufficient material evidence is not placed before this Tribunal to appreciate the averments made in the Application against the Corporate Debtor and as the Corporate Debtor has also not acknowledged the debt due in any form, this Application under section 7 of the Code is devoid of merits. Hence, it is not a fit case to entertain this application under section 7 of the Code. Hence, the present application is dismissed without cost. 2022 (8) TMI 319 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtor - existence of debt and dispute or not - HELD THAT:- There does not appear any request of the Resolution Professional for issuance of instruction for the purpose of conducting negotiations between the debtors and the creditors for arriving at the repayment plan. Therefore, based on the reasons recorded in the report submitted by the Resolution Professional, the application filed under the provisions of Section 94 of IBC, 2016 is hereby admitted under Section 100 of the IBC, 2016. The Insolvency Resolution Process is initiated against the Applicant/Debtor and the moratorium is declared, which begins with the date of admission of the application and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of IBC, 2016. The Resolution Professional in exercise of the powers conferred under Section 104 shall prepare a list of creditors within 30 days from the date of the notice. The debtor shall prepare a repayment plan in consultation with the Resolution Professional as provided under Section 105 which shall include the provisions for payment of fee to the Resolution Professional. The Resolution Professional shall submit the repayment plan along with his report on the plan to this Authority within a period of 21 days from the last date of submission of claims, as provided under Section 106. Petition filed under Section 94(1) of the IBC, 2016 is allowed admitted. 2022 (8) TMI 318 Seeking appropriate directions against the Respondents to pay the professional fee of the Applicant and to contribute liquidation cost for conducting the Liquidation process of the Corporate Person M/s. Rajpal Autolink Pvt. Ltd. - section 60(5) of the Insolvency and Bankruptcy Code, 2016 r.w. Rule 11 of NCLT Rules, 2016 and Regulation 2A of the IBBI (Liquidation Process) Regulation, 2016 - HELD THAT:- It is noted that as per the order dated 09.08.2021 by this Adjudicating Authority, it was directed to all the financial institutions of the Corporate Person to deposit Rs. 50,000/- each in the account of the liquidator. One of the financial institutions SBI has already deposited the above-said amount. The liquidation value is reported to be less than the liquidation cost. As a result, as per regulation 2A of the IBBI (Liquidation Process) regulation, 2016 the remaining amount of the liquidation cost which is not paid to the liquidator has to be paid by the financial creditor to the liquidator. The liquidation cost as quantified in the application should be paid to the liquidator within 7 days from today - application allowed. 2022 (8) TMI 317 Liquidation of Corporate Debtor - whether the Adjudicating Authority can order liquidation of the Corporate Debtor in terms of Section 33(1)(a) of IBC, when only one out of the two members of the CoC having voting share of only 55.87% present and voted for liquidation of the corporate debtor and the other lone member remained absent, when not less than sixty-six per cent of the voting share is required in terms of sub-clause (2) of Section 32 of IBC? - Section 33(1)(a) 34(1) of Insolvency Bankruptcy Code, 2016, read with Rule 11, 13 32 of NCLT Rules, 2016 - HELD THAT:- No doubt from a plain reading of 33(2) of the Code, it is manifestly clear that the decision of the committee of creditors seeking liquidation of the Corporate Debtor be approved by not less than sixty-six per cent of the voting share, however it is pertinent to note that sub-section 2 of section 33(2) of the Code, is silent as to whether the said 66% of voting share shall comprise of the members present either in person or by video-conference alone or shall include/exclude the other member(s) of CoC who are not present physically or through video conference in the meeting - In so far as the case on hand is concerned, admittedly the voting share of the Financial Creditor who was present and voted for liquidation of the Corporate Debtor, is only 55.87%. It is pertinent to state herein that the other lone Financial Creditor neither present nor cast his vote through it is entitled to vote. As per the submissions made before us there are no chances of the resolving the existing stalemate in near future as the other sole member of CoC is not willing to even attend the meetings of CoC. Therefore, under these circumstances, even if direct the Resolution Professional to once again call for the meeting of members of the CoC to consider the feasibility of going for a fresh EOI or liquidation, the same would only contribute to further delay in liquidating the corporate applicant herein, and thus, defeat the timelines set under the IB Code, hence we do not wish to go for the said option. The liquidation of the Company in the manner laid down in Chapter-III of the Code is allowed - application allowed. 2022 (8) TMI 316 Non co-operation from the Directors of the Corporate Debtor and the Directors - section 425 of the Companies Act, 2013 and Section 60(5) of the Insolvency and Bankruptcy Code, 2016 and Rule 11 of the NCLT Rules, 2016 - HELD THAT:- On 15th February, 2022, when this Contempt Application was listed before this Adjudicating Authority, the Ld. Counsel for the respondent sought 10 days time to file reply and the matter was posted for hearing on 2nd March,2022. On 2nd March, 2022, it was recorded by this Bench that the respondents had handover some documents relating to the Corporate Debtor to the Liquidator and that these documents shall be examined by the Liquidator by the Liquidator and if any other documents are required from the respondents, the Liquidator will send an e-mail to the respondents for such handing over those documents to the Liquidator. The matter was then listed on 22nd March, 2022, the Respondents was present in court and they were directed to meet the Liquidator in the evening at 5 P.M. at his office and give an information required by the Liquidator and if there are any documents to be handed over to the Liquidator, the same can be handed over within two day - Finally the matter was posted on 28th March, 2022 both the suspended Directors were present when the Liquidator informed this Adjudicating Authority that the information given by the Respondents was not to the satisfaction of the Liquidator and that there is much more required to be given by the Contemnors. This Bench thought it proper to give another chance to provide all the information to the Liquidators within three days - the respondents are directed to go to the office of the Liquidator, the next date and handover whatever information they have to the Liquidator in the supervision of one independent person Mr. Rohit Kumar Keshari, Advocate who was appointed as Special Officer. The matter was thereafter posted for 7th April, 2022 - In view of the commitment of Mr. O.P.Pandey, one of the suspended Directors, was directed to hand over the aforesaid items, which he had assured to give but not given so far. Issue notice to the Respondents, namely, Om Prakash Pandey and Shri Prakash Pandey to appear before this Adjudicating Authority personally on 31/08/2022. 2022 (8) TMI 315 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- Suffice it to say there is a clear cut admission on the part of the Corporate Debtor regarding the loan amount. The loan was classified as NPA on 28th of July, 2013 - The application is well within the limitation period. It is clear that there is a debt due by the Corporate Debtor and there is a default by the Corporate Debtor. The amount of debt claimed is above the threshold limit of 1 Crore. Further, the debt due and payable by the Corporate Debtor is duly admitted through various communications placed on record - Application admitted - moratorium declared. Service Tax 2022 (8) TMI 314 Maintainability of appeal - monetary limit involved in the appeal - HELD THAT:- As the amount involved is very petty, this appeal should be held to be non-admissible and dismissed. Central Excise 2022 (8) TMI 313 Clandestine removal - undervaluation of Silico Manganese - charges merely on the basis of entries in private diary without other corroborative evidence of flow back of fund etc. - HELD THAT:- We decline to interfere in this appeal being devoid of merits. The appeal is accordingly dismissed. 2022 (8) TMI 312 Maintainability of appeal - HELD THAT:- There are no reason to deviate from the concurrent view taken including by the Appellate Tribunal. The civil appeal is dismissed. 2022 (8) TMI 311 100% EOU - de-bonding - refund of the excise duty previously paid - main focus of the revisional authority was that the EOU unit and the DTA unit were not the same entity, for which purpose, the authority referred to the central excise registration numbers - HELD THAT:- Shorn of legal technicalities what emerges is that the petitioner as a 100% EOU would have made purchases of raw material and inputs from the local market without payment of excise duty as well as not born duty on final product manufactured by it on a promise that the final product would be eventually exported. When it showed the desire to convert itself from 100% EOU to DTA, as per requirement of law, it had to pay up the excise duty on such purchases and final product where duty was previously not collected. Admittedly, such duty was paid at the time of what is referred to de-bonding. However, this would not prevent the exporter from claiming refund of excise duty if the goods are eventually exported. The petitioner as a DTA unit exported the goods and claimed refund of excise duty previously paid in its capacity as an EOU. There is no procedure in law to deprive the petitioner from such benefit. The appellate authority has correctly discussed the legal position. The revisional authority has committed error in reversing the said order. Petition allowed. 2022 (8) TMI 310 Refund claim of unutilised CENVAT Credit - exports as per provision contained in Rule 5 of the CENVAT Credit Rules, 2004 vis. a vis. Notification No. 27/2012-CX (NT) dated 18.06.2012 - grant of cash relief against pre-GST CENVAT Credits - Section 142 of the CGST Act - as per the notification claimant to take back the credit of the difference between the amount claimed and amount sanctioned - HELD THAT:- It is a fact that sub-para (i) of Para-2 of Notification No. 27/2012-CX (NT) permits the claimant to take back the credit of the difference between the amount claimed and amount sanctioned. Here amount sanctioned being zero, the entire credit could have been taken back by the Appellant but such an action can only be initiated upon completion of the entire adjudication and appeal process or by way of its abandonment or else in the event of taking a re-credit, if Appellant Authority allows the refund, it would amount to acceptance of dual benefits in taking advantage of improper wordings in the notification that remained silent as to at what stage the claimant can re-credit the amount back to its account. Such a long waiting by the Appellant in not venturing into such an unethical practice exhibits the bonafideness of a law abiding national. More importantly, going by Section 11 of the CPC if any relief is sought from the Court of Law and it is not expressly granted, it is deemed to have been refused. The Appellant is entitled to get cash refund with applicable interest, if any, against CENVAT Credit available to its credit during pre GST regime as per provision contained in Section 142(3) of the CGST Act. CST, VAT & Sales Tax 2022 (8) TMI 309 Benefit of set off of tax paid on raw materials - Manufacture of iron and steel goods - ambiguity in the Finance Department Notification bearing No.14687-CTA-37/2001 (Pt.) F. (SRO No.149/2001) dated 31.03.2001 - entitlement to claim set off of tax on purchase of raw materials separately indicated on the body of the bill/invoice - scope and authority of Rule 19 of the Orissa Entry Tax Rule, 1999 - validity of claim of set off of entry tax as made by the opposite party - HELD THAT:- The language of Note (i) being unambiguous, there was no scope for the expression selling dealer to include any selling dealer not limited to the immediate selling dealer vis- -vis the Assessee. The purpose of Note (i) was clearly to imply only the person from whom the Assessee purchased the raw materials and not any previous seller. There was no scope for expanding the expression selling dealer to include any selling dealer previous to the involved in a transaction previous to the transaction. Consequently, the Court is not able to agree with the approach of the Tribunal in an interpretation of Note 1. On a collective reading of Clauses (i) and (iii) of Note 2, it is plain that the set off has to be only proportionate to the actual raw material used in production of the finished products of that particular financial year. The approach of the STO as affirmed by the ACST and the interpretation placed on the above clause appears to be correct. Here again, the Court is unable to concur with the view expressed by the Tribunal. Issue answered in favour of the Revenue and against the Assessee. 2022 (8) TMI 308 Violation of principles of Natural Justice - Opportunity of hearing not provided - Validity of assessment orders - Hank Yarn - exempted commodity falling under serial no.44 part B of the IV Schedule of the TNVAT Act, 2006 or not - rejection of claim of the appellant on the sales of hank yarn in respect of interstate sales, stock transfer and outside the State sales and passed the assessment orders, on the ground that the appellant did not file their objections to the notices issued by the respondent - HELD THAT:- The order of the learned Judge in setting aside the assessment orders passed by the respondent, is agreed upon, on the ground of violation of the principles of natural justice, as it is an admitted fact that the appellant / assessee did not file their objections to the notices issued by the respondent and they were not provided any opportunity of personal hearing. The order of the learned Judge dated 02.12.2021 passed in the writ petitions, is modified to that extent. The appellant shall file their reply/objections to the notices dated 22.06.2018 within a period of two weeks from the date of receipt of a copy of this judgment - Appeal disposed off. Indian Laws 2022 (8) TMI 307 Unfair trade practices - failure to deliver possession of the apartment within the time stipulated as per the Apartment Buyers Agreement - interplay between the judicial remedies under the Act and the Real Estate (Regulation and Development) Act, 2016 - Whether the terms of the Apartment Buyers Agreement amount to an unfair trade practice and whether the Commission is justified in not giving effect to the terms of Apartment Buyer s Agreement as laid down in the case of PIONEER URBAN LAND INFRASTRUCTURE LTD. VERSUS GOVINDAN RAGHAVAN AND PIONEER URBAN LAND INFRASTRUCTURE LTD. VERSUS GEETU GIDWANI VERMA ANOTHER [ 2019 (4) TMI 231 - SUPREME COURT] ? - HELD THAT:- On the question of reckoning the date for handing over of possession of the apartment, the Commission recorded the fact admitted by the Developer in Para 2 of its reply that the trigger date for clause 10.1 is 26.12.2012, which is the date of execution of the apartment buyer s agreement . The Commission calculated 42 months from this period, which turns out to be 26.06.2016. Further, adding the grace period of 180 days, the time for delivery would expire on 26.12.2016. It is again an admitted fact that the occupancy certificated was obtained only on 23.07.2018 and notice for possession was issued to the Consumer on 24.07.2018. Given the factual position and having examined the terms of the Agreement, the Commission found the judgment of this Court in Pioneer is a relevant and conclusive precedent. The principle laid down in Pioneer s case has been followed consistently in many cases where the terms of the Apartment Buyer s Agreement were found to be one-sided and entirely loaded in favour of the Developer, and against the allottee at every step - the Commission is correct in its approach in holding that the clauses of the agreement are one-sided and that the Consumer is not bound to accept the possession of the apartment and can seek refund of the amount deposited by her with interest. Whether the Commission has the power under the Consumer Protection Act, 1986 to direct refund of the amount deposited by the Consumer with interest? - HELD THAT:- In view of the clear and categorical principles laid down in Imperia, the submissions made on behalf of the Developer have to be rejected. This position has also been affirmed in IREO GRACE REALTECH PVT. LTD. VERSUS ABHISHEK KHANNA AND ORS. [ 2021 (9) TMI 1154 - SUPREME COURT] . In IREO Grace this Court had an occasion to consider the question as to whether, the provisions of the RERA Act, must be given primacy over the Consumer Protection Act, 1986. It is crystal clear that the Consumer Protection Act and the RERA Act neither exclude nor contradict each other. In fact, this Court has held that they are concurrent remedies operating independently and without primacy. When Statutes provisioning judicial remedies fall for construction, the choice of the interpretative outcomes should also depend on the constitutional duty to create effective judicial remedies in furtherance of access to justice. A meaningful interpretation that effectuates access to justice is a constitutional imperative and it is this duty that must inform the interpretative criterion. A consumer invoking the jurisdiction of the Commission can seek such reliefs as he/she considers appropriate. A consumer can pray for refund of the money with interest and compensation. The consumer could also ask for possession of the apartment with compensation. The consumer can also make a prayer for both in the alternative. If a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant it, of course subject to the merits of the case. If a consumer seeks alternative reliefs, the Commission will consider the matter in the facts and circumstances of the case and will pass appropriate orders as justice demands - the Commission has correctly exercises its power and jurisdiction in passing the above directions for refund of the amount with interest. Whether the relief granted by the Commission require any modification to serve ends of justice? - HELD THAT:- The interest payable on the amount deposited to be restitutionary and also compensatory, interest has to be paid from the date of the deposit of the amounts. The Commission in the order impugned has granted interest from the date of last deposit. We find that this does not amount to restitution - the interest of 9 per cent granted by the Commission is fair and just and we find no reason to interfere in the appeal filed by the Consumer for enhancement of interest. Appeal allowed. 2022 (8) TMI 306 Recovery proceedings - recovery of excess HRA paid to the officers posted at Indore to look after the work of ISEZ - denial of natural justice - no enquiry was conducted and no show-cause notice was given - as submitted assessee were entrusted the work of ISEZ, Indore which made them entitle to get HRA @ 20% - HELD THAT:- Undisputedly, before making such recovery, no enquiry was conducted and no show-cause notice was given to the respondents. It is also not the case of petitioners / Department that respondents made any misrepresentation or fraud for getting HRA @ 20%. So far as the entitlement of HRA @ 20% is concerned, the respondents have filed various appointment orders (Annexure-A/2) to show that they were given the additional charge of ISEZ, Indore and some of them were regularly posted for three years and the same has not been disputed by the petitioners. The respondents obtained an information through RTI that Audit Memo No.12 on the subject of Review of HRA which is reproduced in paragraph 7 of the impugned order, according to which Custom Officers posted at Pithampur who are also looking into the work of SEZ located at Indore and also some portion of ISEZ located at Indore that has made them entitled to get HRA at higher HRA despite their regular posting at Pithampur. If the petitioners are disputing the entrustment of respondents additional work of ISEZ then an enquiry ought to have been conducted to verify the facts that at the relevant point of time they were posted or not. As observed above, it was an account section of the petitioners who paid HRA @ 20% to the respondents, therefore, the Central Administrative Tribunal has rightly set aside the recovery. Also as argued that respondents gave an undertaking at the time of grant of HRA. It is correct that the undertaking binds them, not to object the recovery if excess amount found to be paid without entitlement. Once the Tribunal has held that the respondents were entitled to get HRA @ 20% and the amount cannot be recovered then undertaking has no effect. We do not find any reason to entertain this writ petition. 2022 (8) TMI 305 Murder - assault of Phuliabai (mother of Appellant and wife of Complainant) twice by lathi - Appellant has not challenged the findings that the deceased Phuliya bai died a homicidal death, and also not challenged the findings that the prosecution has proved its case beyond reasonable doubt, but submitted that the Appellant was lunatic at the time of incident, and his treatment was also done during the pendency of the Trial, therefore, he is entitled for the benefit of Section 84 of IPC - HELD THAT:- Section 84 lays down the legal test of responsibility in cases of crime committed by a person with mental illness. Unsoundness of mind has not been defined in IPC. Even insanity is not exempted under Section 84 of IPC. Every person who is mentally ill is not ipso facto exempted from criminal responsibility. There is a distinction between legal insanity and medical insanity. In order to take benefit of Section 84 of IPC, the accused must prove legal insanity, and not medical insanity. Any person, who is suffering from any kind of mental weakness is called medical insanity, however legal insanity means, person suffering from mental illness should also have a loss of reasoning power - mere abnormality of mind or compulsive behavior is not sufficient to take benefit of Section 84 of IPC. In the present case, the Appellant had given repeated blows on the head of his mother Phuliya Bai and had also assaulted his father/complainant repeatedly on his head, leg, shoulder etc. Phuliya Bai lost her control. The Appellant was arrested from the bus stand with lathi. At the time of arrest, the arresting officer, did not notice any mental illness. Even the Trial Court did not notice any mental illness on the date when he was produced for the first time. Even assuming that he was suffering from psychosis, then it is clear that it was not in continuity but was in intervals. Therefore, the moot question is that whether the Appellant was suffering from unsoundness of mind at the time of incident or not? - The incident took place on 26-3-2010 at 1:00 P.M. The Appellant was arrested on 27-3-2012 at 17:30 i.e., on the next day. No mental unsoundness was noticed by Gahlaut Semliya (P.W. 9),who had arrested the Appellant. Furthermore, the Appellant was arrested on the next day, therefore, it is clear that after committing the offence, he absconded. Thus, it is clear that he was able to understand the gravity of his act. Therefore, it cannot be said that the Appellant was of unsound mind at the time of incident. This Court is of the considered opinion, that the prosecution has succeeded in establishing the guilt of the Appellant beyond reasonable doubt. Accordingly, his conviction under Section 302 and 307 of IPC is upheld - So far as the question of sentence is concerned, the minimum sentence is Life Imprisonment. Therefore, the sentence awarded by the Trial Court doesnot call for any interference. The Appeal fails and is hereby Dismissed . 2022 (8) TMI 304 Smuggling - contraband item - Opium - Ganja - accused-respondent was acquitted of the charges against him under Sections 8/17 20 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- The panchnama in question clearly bears the date of its preparation as 07.11.1987, and the signatories thereof also mentioned the same date in the panchnama, whereas Mr. M.R. Loyal, the then Inspector, has made a deposition before the court that the raid was conducted on 06.11.1987, which apparently, falsifies the deposition made by him before the court - If the search warrant was obtained on 06.11.1987, then why the same was not on record, nor there was any document on record pertaining to the operation of raid, as alleged to have been conducted. The record clearly reveals that the investigation in the present case has been conducted in an inappropriate manner, nor while doing so, the concerned officer, has made strict adherence to the provisions of law - this Court finds that the learned trial court has not committed any error neither in law nor on facts in holding that the prosecution has clearly failed to prove its case against the accused-respondent, beyond all reasonable doubts. This Court does not find it a fit case, so as to warrant any interference in a well reasoned speaking judgment impugned herein - Appeal dismissed. 2022 (8) TMI 298 Seeking permission for ongoing pregnancy through registered medical practitioners - seeking direction to Respondent to include unmarried woman also within the ambit of the Rule 3B of the Medical Termination of Pregnancy Rules 2003 (as amended on 21.10.2021) for termination of pregnancy under clause (b) of sub-section (2) Section 3 of the MTP Act, for a period of up to twenty-four weeks - case of petitioner is that she cannot give birth to the child as she is an unmarried woman and her partner has refused to marry her - HELD THAT:- A perusal of Section 3(2) (a) of the Act provides that the Medical Practitioner can terminate the pregnancy, provided, the pregnancy does not exceed 20 weeks. Section 3(2) (b) of the Act provides for termination in circumstances where the pregnancy exceeds 20 weeks but does not exceed 24 weeks - A perusal of Section 3 (2) (b) of the Act provides that the said sub-Section is applicable only to those women who are covered under the Medical Termination of Pregnancy Rules, 2003. The Petitioner, who is an unmarried woman and whose pregnancy arises out of a consensual relationship, is clearly not covered by any of the Clauses under the Medical Termination of Pregnancy Rules, 2003. Therefore, Section 3(2)(b) of the Act is not applicable to the facts of this case. Learned counsel for the Petitioner states that Rule 3B of the Medical Termination of Pregnancy Rules, 2003 is violative of Article 14 of the Constitution of India, 1950, inasmuch as it excludes an unmarried woman. Whether such rule is valid or not can be decided only after the said rule is held ultra vires, for which purpose, notice has to be issued in the writ petition and has been done so by this Court - As of today, Rule 3B of the Medical Termination of Pregnancy Rules, 2003, stands, and this Court, while exercising its power under Article 226 of the Constitution of India, 1950, cannot go beyond the Statute. Granting interim relief now would amount to allowing the writ petition itself. Application dismissed.
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Newsletter: Where Service Meets Reader Approval.

TMI Tax Updates - e-Newsletter August 9, 2022

Articles

1. Arbitrary valuation of goods not subjected to BIS specifications is invalid

2. Multiple registrations all over India on account of singular RCM provision (i.e. renting of residential dwelling Services) and Time to revisit tax compliance strategy:

3. Customs Authorities have no jurisdiction to initiate the proceedings for violation w.r.t. Foreign Trade/ Exchange

4. Actions taken by the department during enquiry need not necessarily be termed as harassment

News

1. 1,00,255 claims paid amounting to Rs. 1,990.57 crore under PMSBY 5,93,316 claims paid amounting to Rs. 11,866.32 crore under PMJJBY

2. Various measures taken by Government contribute to increase in tax collection

3. Measures taken by the Government to protect the interest of investors/account holders in the bank

4. “Jan Samarth” Portal eases loan application and disbursement process for applicants

Notifications

1. 25/2015-2020 - dated 8-8-2022 - FTP

Highlights / Catch Notes

GST

Court Orders Unblocking of Input Tax Credit; Show Cause Notice to be Issued for Fraudulent Registration and Misstatement.

Project Misclassified: Applicant's Project Doesn't Qualify as "Other Than Ongoing" per Notification No. 03/2019.

Builder Violates CGST Act by Denying Input Tax Credit on Flats, Liable for Penalties u/s 171 (3A).

Construction Firm Fails to Pass Input Tax Credit Benefits to Buyers; Profiteering Amount Set at Rs. 1,07,67,330.

Income Tax

Taxpayer's Unexplained Cash Deposit Under Review; Will's Authenticity to be Verified for Father's Signature.

Unexplained Cash Deposits During Demonetization Confirmed As Income; Taxpayer's Business Claims u/s 44AD Deemed Ungenuine.

Income Tax Commissioner Revises Assessment Due to AO's Oversight of Cash Expenses Exceeding Rs. 20,000 u/s 40A(3.

Shares Sale: Are They Investment or Stock-in-Trade? AO's Classification Disputed for Capital Gain, Not Business Income.

Customs

High Court Suggests Quashing 24-Year Delayed Show Cause Notice u/s 28 of Customs Act for Unfair Adjudication.

Court Rules No Duty or Interest Payable Without Section 28 Notice; Section 28AB Interest Also Not Applicable.

Refund of Security After EODC: Application Must Be Filed Within 6 Months, Avoid Dismissal Over Technicalities.

Court Orders Return of Gold Bangles; Petitioner Must Execute 50% Bank Guarantee Under Customs Act Section 125.

Court Rules on License Re-validation and Bond Waiver under Duty Free Entitlement Scheme; Stresses Compliance with Executive Orders.

Court Rules Decade-Long Delay in Customs Duty Case Violates Natural Justice Rights, Invalidates Proceedings.

Vessel Valuation Dispute: Original MOA Price vs. Reduced Addendum Price Under Scrutiny; Case Remanded for Further Review.

Customs Agent's Penalty Overturned: Assisting as Witness Not Misconduct Under Regulation 18 of CBLR 2018.

Indian Laws

Consumers Can Seek Refunds or Compensation for Delayed Apartment Possession from Commission Under Unfair Trade Practices.

IBC

Supreme Court Rules No Debt Acknowledgment Within Limitation Period; NCLAT Quashes Insolvency Proceedings Against Debtor.

NCLT admits CIRP application despite 14-year-old default due to ongoing default, SICA suspension, and balance sheet acknowledgment.

Private Bank Misuses Insolvency Process for Debt Recovery, Raising Concerns of Forum Shopping, Says Appellant u/s 7.

Central Excise

High Court Grants Refund of Excise Duty to De-bonded Export Oriented Unit for Goods Exported as DTA Unit.

Cash Refund and Interest for Unutilized CENVAT Credit in Pre-GST Era Confirmed u/s 142(3) of CGST Act.

Case Laws:

GST

Income Tax

Customs

Corporate Laws

Law of Competition

Insolvency & Bankruptcy

Service Tax

Central Excise

CST, VAT & Sales Tax

Indian Laws

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TMI Tax Updates - e-Newsletter
August 9, 2022