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TMI Tax Updates - e-Newsletter September 19, 2022 Case Laws in this Newsletter: GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles SUPREME COURT ON RECOVERY OF CUSTOMS DUTY UNDER INSOLVENCY CODE LATEST AMENDMENTS TO IBC REGULATIONS News Insolvency and Bankruptcy Board of India amends the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2016 Guidelines for Compounding of Offences under the Income-Tax Act, 1961 Notifications Central Excise 30/2022 - dated 16-9-2022 - CE Exemption to the excisable goods - decrease the Special Additional Excise Duty on Diesel - Seeks to further amend No. 04/2022-Central Excise, dated the 30th June, 2022. 29/2022 - dated 16-9-2022 - CE Decrease the Special Additional Excise Duty on production of Petroleum Crude and export of Aviation Turbine Fuel - Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022. GST - States S. R. O. No. 710/2022 - dated 18-7-2022 - Kerala SGST Seeks to amend Notification G.O. (P) No.34/2022/TAXES, dated 31st March, 2022 S. R. O. No. 709/2022 - dated 18-7-2022 - Kerala SGST Seeks to amend notification G.O. (P) No.66/2017/TAXES, dated 30th June, 2017 S. R. O. No. 708/2022 - dated 18-7-2022 - Kerala SGST Amendment in Notification G.O.(P) No.64/2017/TAXES, dated 30th June, 2017 IBC IBBI/2022-23/GN/REG095 - dated 16-9-2022 - IBC Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Second Amendment) Regulations, 2022 IBBI/2022-23/GN/REG094 - dated 16-9-2022 - IBC Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2022 IBBI/2022-23/GN/REG093 - dated 16-9-2022 - IBC Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2022 Circulars / Instructions / Orders GST - States 176/08/HGST/2022/GST-II - dated 5-9-2022 Withdrawal all of Circular issued vide No. 1879/GST-2, dated 26.07.2019 Highlights / Catch Notes GST Jurisdiction - Power to confiscate goods - The power to detain under Section 129 cannot be converted to a proceeding under Section 130 of the Act since both these provisions operate independently of each other and in completely different contexts. The power to detain is only to stop the transit of the goods and thereby prevent its movement till the tax and penalty is paid. However, the power to confiscate is the process of divesting the owner of the goods of all title to the goods for a contravention of the provisions of the Act and Rules. - HC Visit to Get Source Jurisdiction - Detention of goods alongwith vehicle - confiscation and auction sale of goods - The entire procedure adopted by the proper officer from converting the detention proceedings into a confiscatory proceeding, ultimately leading to the order of confiscation is wholly illegal and contrary to the statutory scheme of the Act. - HC Visit to Get Source Exemption from GST - Renting of an immovable property to a Recognized Educational institution - renting of immovable property to recognized educational institutions registered under Section 12AA are taxable supplies or services attracting CGST & SGST @ 9% each. - AAR Visit to Get Source Classification of goods - rate of GST - HSN Code - printing of leaflets - By amendment the entry was introduced at serial no. 26 with chapter heading 9988 at sub item (iia), it is clarified that where the applicant uses physical input, i.e., paper supplied by their client for the purpose of goods falling under chapter 48 or 49 of customs taxable @6% CGST then the same will be taxable at 6% under CGST. - AAR Visit to Get Source Levy of GST - transfer of land or transfer of 'development rights' to the developer by the landowner - The liable to pay GST by the developer-promoter shall arise at the time of transfers possession or right in the constructed complex or constructed flats and not at the time of receipt of development rights. - AAR Visit to Get Source Income Tax Addition u/s 68 - substantial question of law - The Supreme court has held that, the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Thus no substantial question of law arises for consideration in the present appeal. - HC Visit to Get Source Disallowing interest expenditure - interest paid resulting in loss under the head “income from other sources‟ - even though the assessee has claimed that it has not accepted the disallowance however, nothing has been brought on record to prove that said net excess interest paid fit into the conditions of section 57(iii) or section 36(1)(iii) of the Act. - AT Visit to Get Source CIT jurisdiction u/s 250(4) for direction of verification by Ld. AO. - TP adjustment - In the case in hand, the directions as issued by Ld CIT(A) to the TPO, would in fact would lead to the reopening of reference proceedings, before Ld. TPO, by allowing fresh piece of evidence. Specially, the one, which has not surfaced before any tax authority, so far. - Order of CIT(A) modified - Ld. CIT(A) directed to call for the evidence of assessee at its level and then proceed to decide the matter afresh as per powers u/s 250(4) r.w.s 251(1) of the Act. - AT Visit to Get Source Disallowance of sales promotion expenses - it was observed that most of the expenses are incurred by cash and the provisions of section 40A(3) of the Act are attracted and moreover, the assessee has also not made out his case to show that it falls under Rule 6DD of Income Tax Rules, 1962. - AT Visit to Get Source Revision u/s 263 by CIT - bogus capital gains from the penny stock script - AO should have made enquiry into the genuineness of the claim of exemption of capital gains in respect of purchase and sale of penny stock script of M/s. S.V. Electricals Ltd. in the light of the information received by him from the Investigation Wing of the Department, even if the information is received subsequent to original assessment order - revision order sustained - AT Visit to Get Source Customs Refund of Terminal Excise Duties - deemed export benefits - sub-contractor - the claim of refund of Terminal Excise Duty is dependent upon the name of the Appellant being duly endorsed by the Project Authority, and that the Appellant has been unsuccessful in showing any provision under the Foreign Trade Policy 2004-09 in terms of which endorsement of certification by the main contractor was envisaged sufficient for the purpose of refund of Terminal Excise Duty - HC Visit to Get Source Seeking amendment of shipping bills - MEIS scheme - The mistake if any that has crept in could have been verified and rectified at the earliest. It is very difficult to believe that the same mistake would have been continued over the years without verifying the same, more so, when a request for conversion to MEIS came to be made after the dispatch of the entire goods to foreign countries. - HC Visit to Get Source Levy of penalty on CHA - There is all along denial on the part of the offenders concerning their involvement in the alleged act but in the present case the concern clerk himself had admitted his mistake and sought for a lenient view in the matter. As per Section 58 of the Indian Evidence Act facts admitted by the parties or their agents are not required to be proved in any proceedings - Levy of penalty confirmed - AT Visit to Get Source Levy of penalty - Any person - Scope of Section u/s 114 - Intention of legislature is that it can be any other person howsoever distantly relevant to the exporter or the CHA firm if is found involved in any such act which may render the goods to be exported/imported liable for confiscation, shall be liable to penalty under Section 114 of the Customs Act. - AT Visit to Get Source Refund of Customs Duty - time limitation - relevant date - amendment in the Bill of entry - The period of limitation in the facts of the present case should be reckoned from the date of amendment in the bills of entry. Since the appellant have filed the refund claim within one year from the date of amendment which is well within time accordingly, the refund cannot be rejected on the ground of limitation - AT Visit to Get Source Indian Laws Dishonor of Cheque - compensation should be twice the cheque amount, or not - petitioner withdrew the amount of compensation out of his own volition. - there are no perversity or irregularity in the observation of learned Chief Judge, that the petitioner on one hand challenged the quantum of the sentence and on the other hand received the amount of compensation without the permission from the Court. - HC Visit to Get Source IBC Distribution of proceeds of Resolution Plan - Secured creditors - The conclusion of the committee is that the priority under Section 53(1)(b)(ii) shall be only to the extent of security interest of the secured creditor. The secured creditor cannot claim priority under Section 53(1)(b)(ii) of the whole debt where only part of the debt is secured, the above report of the Committee in no manner helps the appellant to support the submission. - AT Visit to Get Source CIRP - Financial Creditor - Assignment of debt - Requirement of registration of assignment deed - requirement of proper stamping of the assignment deed - There are no infirmity in the opinion of the Adjudicating Authority where it has held that the Assignment Deed dated 01.03.2019 was not in good faith and rather shows that the arrangement was made with a view to get backdoor entry into the COC through the Applicant assignee to have a control over the process of the CIRP as the Reliance Infrastructure Ltd. being the related party to the Corporate Debtor could not be the member of the CoC. - AT Visit to Get Source SEBI Offence under SEBI - Unusual price movement in the shares - when the appellants failed to comply with the directions issued u/s 11C (3) of the 1992 Act and failed to produce the required documents and information, the Investigating Authority, being a delegated Authority of SEBI, was empowered to levy the penalty as provided in Section 15A(a) of the 1992 Act. - SC Visit to Get Source Service Tax Refund of Service Tax - unjust enrichment - seeking refund to customers - there is no provision, whatsoever, in section 11B by which one person who has paid the service tax and who has also passed on the burden to others, to file refund claim and request that the refund may be sanctioned and given to its customers. The scheme of the law is that once the applicant has passed on the burden of service tax to anybody, the amount has to be credited to the consumer welfare fund and not paid. - AT Visit to Get Source Central Excise Cenvat Credit - Capital goods - Guide Car - The ‘Guide Car’ is being used for the purpose of transporting the hot coke after it is processed in the Coke Oven Battery. Therefore, ‘Guide Car’ can be said to be a different equipment distinct from the Coke Oven Battery and cannot be considered to be a part of the Coke Oven Battery. In that view of the matter, the appellant shall not be entitled to the Modvat credit on ‘Guide Car’ as ‘component’ and/or part of Coke Oven Battery as claimed by the appellant. - SC Visit to Get Source Clandestine Removal - Lead Ingots - unrecorded production - demand was dropped in case of 2nd SCN but not against the 1st SCN - both 1st and 2nd show cause notices is identical i.e. clandestine removal - Admittedly, a particular act is required to be done in a particular manner as provided under the statute but an inadvertent mistake to follow the procedural aspect cannot be adopted for arriving at the conclusions against the assessee. - AT Visit to Get Source Clandestine removal of finished goods - third party evidences/corroborative evidences or not - departmental investigating agencies as well as the adjudicating agencies have not yet started observing compliance of mandatory statutory provisions i.e. section 9D of Central Excise Act, 1944 and section 138 B of Customs Act, 1962 without which the statement recorded at the stage of inquiry / investigation will not be relevant for the purpose of proving the truth of requisite facts during prosecution. - AT Visit to Get Source Refund of Cenvat credit - exported without payment of duty but not under the bond or the letter of undertaking (LUT) - The appellant was not entitled to claim the Cenvat credit of duty paid on imports used in manufacture of the product to which nil rate of duty was applicable. In such situation if some credit has been availed Rule 14 should have first been applied by the department - In the present case, it is not coming apparent as to whether said rule 14 has been complied with by the department prior rejecting the impugned refund. - AT Visit to Get Source CENVAT Credit alongwith interest and penalty - input services - There is no requirement as per this rule which provides that input services should have been received in the registered premises of the appellant. Since there is no requirement as per Cenvat Credit Rules which supports the case that the input services should have been received in the registered premises of the appellant, demand cannot sustain - AT Visit to Get Source Case Laws: GST 2022 (9) TMI 786 Jurisdiction - Detention of goods alongwith vehicle - power of Proper Officer for detention of goods which are in transit in the exercise of his power under Section 129 of the Act - power to initiate proceedings to confiscate under Section 130 of the Act and thereafter conduct an enquiry and proceed to order confiscation of the goods? - HELD THAT:- The power to confiscate is the ultimate penal measure provided under the Act and is, therefore, to be exercised with great care and caution and as a last measure. This power to confiscate, given the statutory framework, is a distinct and independent power conferred under the Act which can be exercised only in cases where the power to detain and seize has not been invoked. Once the power to inspect, seize or detain the goods and conveyances is invoked either under Section 67 of the Act or under Section 129 of the Act, the power to confiscate under Section 130 would not be available. This is evident from Section 129 (6) which states that proceedings under Section 130 can be invoked only if the applicable tax and penalty are not paid despite an order being passed in that regard. The power to detain under Section 129 cannot be converted to a proceeding under Section 130 of the Act since both these provisions operate independently of each other and in completely different contexts. The power to detain is only to stop the transit of the goods and thereby prevent its movement till the tax and penalty is paid. However, the power to confiscate is the process of divesting the owner of the goods of all title to the goods for a contravention of the provisions of the Act and Rules. The entire procedure adopted by the proper officer from converting the detention proceedings into a confiscatory proceeding, ultimately leading to the order of confiscation is wholly illegal and contrary to the statutory scheme of the Act. The Appellate Authority has mechanically accepted the reasoning of the order of the proper officer and has dismissed the appeal without examining the statutory scheme of the Act. The impugned orders cannot be sustained and the same are quashed. The question that is framed is accordingly answered in the negative. Since it is stated that the confiscated goods are already sold in a public auction, the respondents are directed to pay the petitioners (the owner of the goods), the sale proceeds of the auction after deducting the penalty prescribed under Section 129(1)(a) of the Act, within a period of four weeks from the date of receipt of a certified copy of this order - the proper officer shall also release the conveyance, if it is not already released. Petition allowed. 2022 (9) TMI 785 Levy of GST - consideration received on sale of sites - advance received towards sale of site - sale of plots after completion of works related to basic necessities - rate of GST - valuation of GST - If GST is chargeable on any of these transactions, can the applicant collect the GST from the prospective buyers? - ITC on the expenses they incur on development - HELD THAT:- The Applicant is an individual who owns land and planning to convert that land into residential sites and sell them to individuals. CBIC has issued circular No.177 dated: 03.08.2022 and has issued clarification on whether sale of land after levelling, laying down of drainage lines etc., is taxable under GST - Thus CBIC has clarified that land may be sold either as it is or after some development such as levelling, laying down of drainage lines, water lines, electricity lines and sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and accordingly does not attract GST. Thus in view of entry No. 5 of schedule III of CGST Act 2017 and clarification issued by CBIC mentioned, it is held that sale of land does not attract GST. 2022 (9) TMI 784 Exemption from GST - Renting of an immovable property to a Recognized Educational institution (Which is not a commercial Activity) and which is also registered under section 12AA of the Income-tax Act, 1961 - Pre-School education and education up to higher secondary school or equivalent - Education as a part of a curriculum for obtaining a qualification recognized by any law for the time in force - Education as a part of an approved vocational education course - Levy of GST on Renting of an immovable property to a Government School. HELD THAT:- Notification No. 12/2017 at Serial No. 13 exempts services rendered by the charitable or religious trust registered under Section 12AA of the Income Tax Act, 1961. The said entry does not exempt services rendered to such institutions. Therefore renting of immovable property to recognized educational institutions registered under Section 12AA are taxable supplies or services attracting CGST SGST @ 9% each. Similarly there is no exemption for renting an immovable property to Government School and the consideration from such activity is taxable @9% CGST SGST each. 2022 (9) TMI 783 Exemption from GST - services provided by the applicant to TSTDC - Eligibility of concessional rate of GST at 12% as prescribed in of S. No. 3 (vi) of the Notification No. 11/2017-Central Tax(Rate) dated 28.06.2017 - appropriate rate and classification of GST to be charged by the applicant - Government Authority and Government entity or not - HELD THAT:- Telangana State Tourism development corporation limited is a Government entity - The contracts executed by the applicant to this organizations therefore fall under at S.No. 3(vi) of Notification No. 11/2017 taxable @6% under CGST SGST respectively. As per S.No. 3(vi) of Notification No. 11/2017, this service is taxable @6% CGST SGST each - However this entry was amended in Nov 2021 vide Notification No. 15/2021 dt. 18.11.2021 and the phrases Government Entity Governmental Authority were deleted from the Entry at S.No. 3(vi) of Notification No. 11/2017 with effect from 01.01.2022. Thus the works executed for Governmental Entity or Government Authority from 01.01.2022 are taxable @9% CGST SGST each. 2022 (9) TMI 782 Classification of goods - cosmetics and others Ayurvedic medicaments - Whether the products manufactured by him under the licences issued by AYUSH department of Government of Telangana and sold as Ayurvedic products fall under HSN No. 30.04 or under HSN 3304 of the GST Tariff? - HELD THAT:- The products referred by the applicant are classified as medicament or cosmetic based on the following parameters: a) Whether the product has a drug license; and b) Whether the Composition of the product has medical ingredients; and c) The function or purpose indicated in the label and literature of the product. By applying the above parameters, the products which are used for care are treated as Cosmetics and therefore taxed @9% CGST SGST each; the products which are used for cure are treated as Medicaments falling under Serial No. 63 of Schedule II taxable @6% CGST SGST each. 2022 (9) TMI 781 Classification of goods - rate of GST - TS Government, HMWSSB work contracts including material services and services only - Government Authority and Government entity or not - pure services or not - HELD THAT:- The entry S.No 3(vi) of Notification No. 11/2017 covers the services i.e., works contract provided to Governmental Authority upto 31.12.2021. The rate of tax applicable to this service is 6% CGST SGST each - From 01.01.2022, Governmental Authority is excluded from S.No 3(vi) of Notification No. 11/2017 vide Notification No. 15/2021 dt. 18.11.2021. Therefore the work contract provided to Governmental Authority or a Government Entity from 01.01.2022 is 9% CGST SGST each as covered under Entry S.No. 3(xii). Thus, pure services provided by the applicant to HMWSSB are exempt. 2022 (9) TMI 780 Parties to Advance Ruling application - Liability of GST - tax to be paid by the developer with respect to the share of flats given to applicant in pursuance of development agreement? - time of payment of GST - rate of GST - taxable value to be taken for arriving the GST liability - HELD THAT:- The developer who is not represented before this authority. A ruling cannot be given on the back of an effected party to determine his liability to pay tax. Hence the application is rejected. 2022 (9) TMI 779 Classification of goods - rate of GST - HSN Code - printing of leaflets - to be classified under heading 9989 or not - HELD THAT:- The applicant is providing services of printing but this activity of printing does not fall under item (i) of heading 9989 i.e., printing of newspapers, books (including Braille books), journals and periodicals and hence is covered under Heading 9989 (ii) of Notification No.11/2017-Central Tax (Rate), dated: 28-06-2017 as amended and is taxable at 9% CGST 9% SGST. By amendment the entry was introduced at serial no. 26 with chapter heading 9988 at sub item (iia), it is clarified that where the applicant uses physical input, i.e., paper supplied by their client for the purpose of goods falling under chapter 48 or 49 of customs taxable @6% CGST then the same will be taxable at 6% under CGST. 2022 (9) TMI 778 Levy of GST - time of supply - transfer of land or transfer of 'development rights' to the developer by the landowner is to be considered as receipt of consideration by the developer - Applicability of N/N. 04/2018-CT (Rate) dt.25.01.2018 - liability to pay GST or service tax as applicable arises on the developer immediately on receipt of development rights or immediately on conveyance of the flats to be constructed by way of an allotment letter. HELD THAT:- Transfer of development rights by the landowner to the developer is consideration received by such developer for supply of construction service. - The liable to pay GST by the developer-promoter shall arise at the time of transfers possession or right in the constructed complex or constructed flats and not at the time of receipt of development rights. The tax on the portion of constructed area shared with the land owner-promoter has to be paid by developer-promoter . The applicant i.e., the land owner-promoter will claim such tax as ITC as described above whenever he makes further sale of such property before issuance of completion certificate. Further according to the conditions laid down in Notification No. 04/2018 the liability to pay tax on consideration received by the developer-promoter in form of development rights shall arise at a time when such developer-builder transfers possession or right in the constructed complex. That is after the completion of the construction of a civil structure the time of supply arises when the right or possession in such constructed complex is transferred to the land owner-promoter. Income Tax 2022 (9) TMI 777 Validity of re-opening of assessment u/s 147 - re-assessment notice issued to the original assessee who had expired long back - assessee has been addressed through her legal representative - Plea of the respondent authorities that they were not intimated regarding the death of the assessee - HELD THAT:- A perusal of the orders passed in the earlier round of proceedings u/s 143(3) of the Income Tax Act for the assessment year 2015-16 would clearly indicate that the Dy. Commissioner of Income Tax, Circle-2, Udaipur had been intimated regarding the death of the assessee. The assessment order dated 21.12.2017 (Annexure-P/5) was passed taking into account the fact that the assessee had expired. Thus, the plea of the respondent authorities that they were not intimated regarding the death of the assessee Smt. Shobha Mehta, is factually incorrect. It is not in dispute that the notice of re-assessment under Section 148 of the Income Tax Act was issued to the assessee Smt. Shobha Mehta who had expired about 6 years back. No notice whatsoever was issued to the legal representative/s of the assessee before undertaking the reassessment proceedings. Thus, the impugned re-assessment and the assessment order having been passed against the dead assessee, is invalid and the same cannot be sustained in the eyes of law. Hence, the impugned re-assessment notice issued by the respondent under Section 148 are herewith declared invalid and are struck down. - Decided in favour of assessee. 2022 (9) TMI 776 Correct head of income - Gain on sale of shares - business income OR short term capital gains - period of holding of shares rules of consistency - HELD THAT:- It is an undisputed factual position that the assessee has been keeping the shares in the investment portfolio which has been accepted in all the previous years and some of the shares which have been sold during the assessment year under consideration were treated as short term shares where the opening investment shares from that of the previous year and such shares were accepted in the previous year to be under the investment portfolio of the assessee companies. We have also noticed from the chart produced by assessee that the frequency of the transactions is very meagre and the volume of the transaction was within the net worth of the assessee company by utilising their own funds. Further we find that for the assessment year 2004-05, in a scrutiny assessment the assessing officer has treated the investment kept by the assessee in the investment portfolio as an investment in shares and the income thereon was computed under the head of short-term capital gains. We are of the clear mind that the rules of consistency has to be maintained in the case of the assessee for the assessment year under consideration and the assessee rightly relied upon the decision of the Hon ble Supreme Court in Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] - Decided in favour of the assessee. 2022 (9) TMI 775 Addition u/s 68 - unexplained share capital and share premium - assessee company had failed to explain the reasons for high share premium /capital which was not commensurate with the assets owned by the assessee company - difference between question of law and a substantial question of law - ITAT deleted the said additions on the ground that out of the said addition, amount pertained to the earlier year which was not in dispute - HELD THAT:- A perusal of the paper book reveals that both the Appellate Authorities below have recorded concurrent findings of fact that the Assessing Officer did not issue specific show cause notice with respect to the additions made in the assessment order to the assessee during the assessment proceedings and therefore, there was reasonable cause with the assessee in not filing the evidences before the Assessing Officer. The ITAT also noted that though the AO was given due opportunity under Rule 46A(2) of the Income Tax Rules, 1961, yet the Assessing Officer did not make any proper averment with regard to the admission of additional evidences particularly when huge additions had been made which included the amount added under Sections 68 69 of the Income Tax Act, 1961 ( the Act ) which were carried forward from the earlier years. Unexplained share capital and share premium, both the Appellate Authorities below deleted the said addition on the ground that addition under Section 68 of the Act cannot be made because the said amount was being carried forward from earlier years, which is evident from letter dated 04th March, 2015 filed before the Assessing Officer and there had been no increase in paid up share capital and that this fact was not controverted by the Assessing Officer. Addition on account of unsecured loans - CIT (A) while examining the genuineness of fresh loan found that identity and creditworthiness of the lender M/s. DMC Education Ltd. had been substantiated by the assessee by way of various documentary evidences. The ITAT observed that the finding of the CIT (A) based on proper appreciation of facts cannot be tinkered without any contrary material to rebut. Addition on account of unexplained investments - ITAT deleted the said additions on the ground that out of the said addition, pertained to the earlier year which was not in dispute and accordingly the CIT(A) rightly deleted the said amount from the addition made by the Assessing Officer and with regard to the balance amount, there is a clear finding based on material on record that investments had been made by the assessee through proper banking channels and each and every entry had been duly explained from the books of account and bank statement. ITAT further recorded that once the investments have been made through cheques duly disclosed in the books of account, the same cannot be added as investment made outside the books or from undisclosed sources under Section 69 of the Act. Consequently, this Court finds that there is no perversity in the findings of the CIT(A) and ITAT. The Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das (through LRs) [ 1999 (8) TMI 1008 - SUPREME COURT] has reiterated that under Section 100 of CPC, the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Thus no substantial question of law arises for consideration in the present appeal. 2022 (9) TMI 774 Allowable business expenditure - whether the commission paid by the assessee to various agents was allowable as deduction u/s 37? - commercial expediency - due discharge of onus by the Assessee - HELD THAT:- The commercial expediency, the nature of business activity done by the assessee, are all to be taken into consideration while examining the nature of payment which has been effected. The assessee in no uncertain terms has stated that apart from facilitating procuring of raw material, the agents also facilitated in securing speedy payment to the assessee. This factor has not been taken note of by the Tribunal, which, in our opinion, is a very vital factor to decide the sustainability of the claim of the assessee. Tribunal was of the view that most of the companies with which the assessee had business transactions were all Government of India concerns. However, the Tribunal has failed to note that the AO has noted the names of all the 13 customers with whom the assessee had transactions and many of them are private limited companies and are not government entities. When the payments made by the assessee were for the purpose of procuring the business and to get the supplied items to be ensured that they have delivered to the customers and arrangement for speedy payment, the payment is in the nature of commission. That apart, for the earlier and subsequent assessment years the payments were never disallowed by the AO. Appeal of assessee allowed. 2022 (9) TMI 773 Unexplained cash deposits in bank account - explanation for source of cash deposits in his Bank of India account as being out of his share in the sale of land, jointly owned along with members of his family, is duly and satisfactorily substantiated - HELD THAT: - The entire evidences as reasonably and satisfactorily demonstrating the flow of money to the assessee in cash from the proceeds received of land sold we see no reason to disbelieve the assesses explanation of the source of cash deposit in bank being attributable to his share in land sold by family received in cash from his brother . Addition on account of unexplained cash deposits is accordingly directed to be deleted. - Decided in favour of assessee. 2022 (9) TMI 772 Disallowing interest expenditure - interest paid resulting in loss under the head income from other sources‟ - Addition u/s section 57(iii) or under section 36(1)(iii) - Assessee accepted the disallowance - assessee was asked to submit the details of party-wise interest paid and was also asked to prove its nexus with the interest income earned - HELD THAT:- In the present case, the assessee has earned income from business, which comprises of remuneration and interest from the firm in which the assessee is a partner. Further, the assessee has also earned interest which is taxable under the head income from other sources‟. Since the interest paid by the assessee during the year was more than the interest earned under this head, income from other sources was declared at loss - We find that during the course of assessment proceedings, the Authorised Representative for the assessee admitted that the net excess interest paid resulting in loss under the head income from other sources does not fit into the conditions of section 57(iii) or section 36(1)(iii) and agreed for disallowance while computing income from other sources. It is the plea of the assessee that the assessee has not accepted the aforesaid disallowance and the same was challenged before the learned CIT(A). From the perusal of the impugned order we find that the learned CIT(A) has noted that the assessee has filed different balance sheets at different times, which are contradictory in nature. Assessee has claimed that no interest was received on certain loans given by it, and at the same time assessee has also not paid interest on borrowings from certain parties. The assessee has claimed that its own funds and interest free loans are more than loans on which interest has been paid. However, no details were furnished either before the lower authorities or before us, during the course of hearing, in support of the aforesaid claim. Further, even though the assessee has claimed that it has not accepted the disallowance however, nothing has been brought on record to prove that said net excess interest paid fit into the conditions of section 57(iii) or section 36(1)(iii) of the Act. - Decided against assessee. 2022 (9) TMI 771 Revision u/s 263 by CIT - Deduction u/s 80-IC - initial year for claiming 100% deduction - substantial expansion undertaken by the assessee within 10 years period the year of substantial expansion - HELD THAT:- On perusal of the assessment order passed by the Assessing Officer we notice that the assessee firm is engaged in the business of manufacturing battery components and the assessee had set up its unit on 2.06.2006 relevant to the assessment year 2007-08. The assessee subsequently had undertaken substantial expansion during the financial year 2011-12 and continued to claim deduction at 100% on substantial expansion undertaken by the assessee. The claim of the assessee was denied while passing the order pursuant to the order passed under section 263 of the Act. The ratio of the decision in the case of Pr. CIT Vs. Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] applies to the facts of the case as it was held that there can be two initial assessment years and the year in which there was substantial expansion that year is the initial assessment year within the period of 10 years for the purpose of claiming deduction under section 80-IC of the Act. Thus respectfully following the decision of the Hon ble Supreme Court we hold that the assessee is entitled for deduction under section 80-IC of the Act for the assessment years 2012-13 and 2015-16 which are under consideration. We reverse the order of the ld. CIT (Appeals) and direct the Assessing Officer to allow the claim of the assessee under section 80-IC - Decided in favour of assessee. 2022 (9) TMI 770 Addition u/s 68 - treating genuine unsecured loans as accommodation entry/unexplained cash credit - Reopening of assessment initiated against assessee - onus to prove - HELD THAT:- It is well settled that onus is on the assessee to prove the identity and creditworthiness of the creditor and genuineness of the transaction. In the present case, the very fact that M/s Navkar Diamonds, was owned and controlled by Shri Bhanwarlal Jain and his sons, which are held to be an accommodation entry provider in their own case, cast doubt on the genuineness of the transaction. Further, financial position of M/s Navkar Diamonds, as noted above, also raise doubts about the creditworthiness of the lender. Even during the hearing before us, no evidence has been brought on record to controvert any of the information received from the investigation wing of the income tax department, on the basis of which the reassessment proceedings were initiated in the case of the assessee. We find no infirmity in the impugned order passed by the learned CIT(A). Further, no evidence has been brought on record to show that plea of the assessee, as raised was denied by the Revenue. As a result, grounds No. 1 and 6, raised in assessee‟s appeal, are dismissed. 2022 (9) TMI 769 Reopening of assessment u/s 147 - meaning of word reason in the phrase reason to believe - HELD THAT:- AO observed in the impugned assessment It is quite possible that the assessee could have succeeded in its design but for the search in the case of Jain Brothers where complete evidence of colorable mechanism used by the assessee has been seized. - So the present case is not a case where the impugned notice and reasons suffers from non application of mind or change of opinion, rather, rightly argued by DR, it is the previous assessment order, which suffered from non application of mind and escapement occasioned by reason, of overt omission and failure on the part of the assessee to disclose fully and truly all material facts as were necessary for the assessment. In the present facts and circumstances, without going on the merits of the impugned assessment, it was not possible for the first appellate authority to give a finding as to if in the previous assessment proceedings the AO was actually having complete and reasonable opportunity to examine the response of assessee and after having honest response of the Assessee, the then assessing officer concluded the assessment proceedings drawing all reasonable inferences. There is no substance in the propositions and submissions casted out by AR and judicial precedents he has relied are distinguishable on facts. Thus, the ground raised by revenue in the present appeal questioning the order the ld First Appellate Authority for deleting the addition merely on the basis of technical ground without discussing the merits of the case deserves to be sustained. Appeal is allowed for statistical purposes. 2022 (9) TMI 768 Assessment of trust - status as individual or AOP - Tax at the maximum marginal rate - trust created under a will and hence was liable to be taxed as in individual - Whether trustees of a discretionary trust have to be assessed in status of 'individual' and not in status of 'association of persons? - HELD THAT:- We have heard the rival contentions and perused the material on record. We observe that the Ld. CIT(A) dismissed the assessee s appeal in a very summary manner, without considering the impact of the decision the case of Deepak Family Trust supra. Accordingly, the interest of justice, the case is being set aside to the file of the Ld. CIT(A) for de novo adjudication, after giving adequate opportunity of hearing to the assessee and after taking into consideration the impact of the decision in the Gujarat High Court in the case of Deepak Family Trust [ 1993 (12) TMI 20 - GUJARAT HIGH COURT] Appeal of the assessee is allowed for statistical purposes. 2022 (9) TMI 767 Capital gain computation - year in which the transfer of property has taken place - section 50C applicability - transfer development rights in the plot of land to the builder - whether section 50C of the Act is applicable to the facts of the present case for computation of long term capital gains? - whether rights transferred on the date of letter dated 04/10/2000, or on the date of agreement dated 18/02/2010 ? - HELD THAT:- All the essentials of a contract i.e. offer, acceptance and consideration are fulfilled in the present case. In any case, by non fulfilment of any condition of the contract, same becomes only voidable at the option of the parties and it does not render the contract to be void. We find that despite the delay in payment of the advance money, the vendor i.e., the assessee society honoured the initial terms of offer letter and ultimately executed agreement dated 20/05/2009, with the builder. Thus, we do not agree with the view of the learned CIT(A) that the letter of offer was not acted upon between the parties. As on one hand the Revenue did not dispute the fact that the impugned property was purchased by the society in the year 1969 and accordingly computed the long term capital gain, despite the fact that conveyance deed in respect of that transaction was also delayed and was ultimately executed in the year under consideration, while, on the other hand, in respect of the transaction of transfer of development right to the builder, the Revenue is considering the date of registration of the agreement, i.e. 18/02/2010, as the date of transfer for the purpose of computation of capital gains tax. Thus, in view of the aforesaid factual and legal position, we are of the considered view that development rights in the plot of land were transferred to the builder in the financial year 2000 01. Further, since provisions of section 50C of the Act were inserted in the Act w.e.f. 01/04/2003, the same are not applicable in the present case. Accordingly, grounds raised by the assessee are allowed. 2022 (9) TMI 766 Deduction u/s 10A - set off of loss of STP units against normal business income, while computing deduction u/s 10A - HELD THAT:- We find that this issue is now settled in favour of the taxpayer by the decision of Hon ble Supreme Court rendered in CIT v/s Yokogawa India, [ 2016 (12) TMI 881 - SUPREME COURT] wherein it has been held that deductions contemplated under section 10A of the Act is qua the profits of eligible undertaking of an assessee on a stand-alone basis and without reference to the other eligible or non-eligible units or undertakings of the assessee. Thus grounds raised by the Revenue are dismissed. Deduction u/s 80HHE - setting off brought forward losses for the purpose of computing business profits under the said section - HELD THAT:- We find that the Co-ordinate Bench of the Tribunal in assessee s own case in M/s Zensar Technologies Ltd. [ 2022 (5) TMI 1060 - ITAT MUMBAI] held that CIT grossly held in holding with the profits of the business for the year under consideration has to be reduced by the brought forward losses from earlier year for the purpose of computing profit eligible deduction u/s.80HHE. Computation of deduction u/s 10A of the Act vis- -vis the transfer pricing adjustment - assessee submitted that no deduction under section 10A of the Act has been allowed in respect of transfer pricing adjustment by the AO order passed under section 143(3) and thus, the impugned addition amounts to double addition in the present case - HELD THAT:- We direct the Assessing Officer to comply with the directions of the CIT(A) on this issue and delete the addition in case of double addition after necessary verification. As a result, ground no.2 is allowed for statistical purpose. 2022 (9) TMI 765 Validity of re-opening of assessment u/s 147 - reopening beyond period of four years - absence of failure on the part of the assessee to disclose all material facts necessary for completion of the assessment - HELD THAT:- We hold that the reopening of assessment beyond a period of four years from the end of the relevant assessment year is not in accordance with law. Mere mentioning of the words failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment by the AO, in our opinion is not sufficient in absence of showing which part of the material was not disclosed by the assessee. This view of ours finds support from the decision in the case of Hindustan Lever Ltd. vs R.B.Wadker [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] held that the AO must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year to establish the vital link between the reasons and evidence. We, therefore, hold that the initiation of reassessment proceedings by the AO in the instant case is not in accordance with law and therefore, the same has to be quashed. Accordingly, we quash the reassessment proceedings and the grounds raised by the assessee on this issue are allowed. 2022 (9) TMI 764 Penalty imposed u/s 271D - violation of provisions of section 269SS - Information was received by the A.O. from JDIT (I CI) with regard to the above receipt of cash by the assessee along with the sale deeds provided or not? - proof of reasonable cause as mandated u/s 273B - Whether assessee has not made out a case of reasonable cause as mandated u/s 273B for waiver of penalty? - HELD THAT:- The disposal of the property was also challenging due to the slump in the real estate market pursuant to the introduction of RERA and other factors. When the assessee s father found a buyer, the assessee decided to fly down to Bangalore to complete the formalities. On the date of execution of sale deed, the cash was paid. Considering the age of father, the assessee accepted the cash and closed the deal once and for all. The intention of the assessee was not to defraud the revenue by violating the provisions of the Act or by evading taxes. The same is evident from the fact that the cash receipts have been duly disclosed in the sale deed as well as the income tax returns. The copies of the sale deeds are enclosed in the paper book filed by the assessee. As mentioned earlier, due to paucity of time, the urgency and considering various factors that go into finalizing the transaction, the assessee was forced to accept cash to go ahead with the execution of the sale deed. The above facts clearly stipulated a 'reasonable cause as mandated u/s 273B for violation of the provisions of section 269SS. There is 'reasonable cause as mandated u/s 273B on facts of the instant case. Hon ble Jharkhand High Court in the case of OMEC Engineers [ 2007 (9) TMI 27 - HIGH COURT , JHARKHAND] had deleted the penalty by considering the urgency of the assessee to make payment, who had borrowed money in violation of provisions of section 269SS - Appeal of assessee allowed. 2022 (9) TMI 763 Unexplained money u/s 68 - share application money received from five companies - share holding companies did not personally appear in response to the summons issued u/s 131 - HELD THAT:- We find that during the assessment proceeding as well as proceedings for remand report, the identity and creditworthiness of investor companies could not be established by the assessee and it can rightly be inferred that companies were having existence on papers only. Moreover, behind the payment of premium of share also could not be explained by the assessee neither before the AO nor ld. CIT(A). The assessee even before this Tribunal could not produce any documents or submission in support of its claim to negate the view taken by the AO as well as CIT(A) and examining the facts and circumstances of the case and going through the documents available on record, we find that the order passed by the CIT(A) need not required to be interfere. We accordingly sustain the order passed by the ld. CIT(A) and the appeal of the assessee is dismissed. 2022 (9) TMI 762 Addition on account of advance from customers - Accrual of income - appellant had taken advances in cash from its customers against booking of Hero Honda motorcycles - HELD THAT:- As decided in M/S. DUTTA AUTOMOBILES PVT. LTD. [ 2016 (6) TMI 115 - CALCUTTA HIGH COURT] advance money, in the present case before us, is adjusted the sale price of the motor cycle and sale is disclosed in the return of income i.e. the trading account of the assessee. Accordingly, no ambiguity in the system followed by the assessee. Therefore, the issue is squarely covered by the jurisdictional High Court in the own case of the assessee. There is no merit in these grounds of the appeal of the assessee and the same are accordingly dismissed. Addition u/s 40(a)(ia) - assessee has not deducted TDS on the payments made under the head freights and insurance to various parties - amount had been debited under the head advertisement expenses whereas, the assessee had not deducted the TDS in respect of that payment also - HELD THAT:- As in respect of advertisement expenses the assessee furnished details before the CIT(A) to show that the TDS was duly deducted against such expenses. CIT(A) after going through the documents furnished by the assessee verified the ledger account and held that the TDS was duly deducted on the payments made and accordingly deleted the addition so made by the Assessing Officer. - Decided against revenue. 2022 (9) TMI 761 CIT jurisdiction u/s 250(4) for direction of verification by Ld. AO. - TP adjustment on account of trade receivables - First Appellate Authority had directed AO/ TPO to verify the claim of the appellant that interest is not charged on outstanding receivables either from AEs or Non AEs and accordingly give relief to the appellant - HELD THAT:- Assessee s Contention that payables were exceeding receivables, so no case of benchmarking on interest on trade receivables was discarded and the assessee has not challenged the same in either ways. Directions issued by the CIT(A) to AO / TPO giving rise to the grounds of present appeal of revenue it can be observed that at no stage during the hearing before TPO or even before CIT(A) the assessee had submitted anything factual which required any verification or which could have been examined and a reasonable conclusion drawn by the TPO or by Ld. CIT(A) himself. It was very much in the knowledge and records of the assessee as to which all Non-AE s the assessee had not charged any interest. So same should have been produced before CIT(A) at least in physical form than just a bald averment. No disputed question of fact before the CIT(A) requiring intervention in the form of a direction to ld. AO / TPO to verify the claim of the assessee. In fact if these documents / statements or facts were before Ld. CIT(A) that would only have given jurisdiction u/s 250(4) of the Act for direction of verification by Ld. AO. There is no reference to TPO in Section 254(4) of the Act and it merely mentions of Assessing officer. Thus as such when the appellate powers of Ld.CIT(A) are considered, within the ambit of Section 250(4) read with Section 251(1) of the Act, no such directions could have been issued by the CIT(A) to the TPO, who is exercising independent powers under Section 92CA of the Act. In the case in hand, the directions as issued by Ld CIT(A) to the TPO, would in fact would lead to the reopening of reference proceedings, before Ld. TPO, by allowing fresh piece of evidence. Specially, the one, which has not surfaced before any tax authority, so far. The directions issued by the Ld. CIT(A) cannot be sustained. However, the end of justice will be served by directing Ld. CIT(A) to call for the evidence of assessee at its level and then proceed to decide the matter afresh as per powers u/s 250(4) r.w.s 251(1) of the Act. Consequently, the grounds are allowed and the appeal is allowed for statistical purposes. 2022 (9) TMI 760 Disallowance of sales promotion expenses - Cash expenditure - Applicability of section 40A(3) - Addition made as assessee is selling the liquor products to Tamilnadu State Marketing Corporation (TASMAC) a public sector undertaking of the Government of Tamil Nadu and the products are delivered at the Depots of TASMAC and employees of TASMAC are employees of the Government thus there is no question of incurring any such expenses for promotion of the sale - HELD THAT:- CIT(A) has observed that the payments made to the contract employees of retail/distributing arm of State Government i.e. TASMAC or Kerala State Beverages Corporation (KSBC) fall under explanation to section 37(1) of the Act for the reason that the employees of TASMAC or KSBC are indirectly employees of the Government as TASMAC and KSBC are Government undertakings and any payment made to these person otherwise than a legal remuneration is an offense under the Prevention of Corruption Act. Further, it was observed that most of the expenses are incurred by cash and the provisions of section 40A(3) of the Act are attracted and moreover, the assessee has also not made out his case to show that it falls under Rule 6DD of Income Tax Rules, 1962. Under the above facts and circumstances and since the assessee has not been able to substantiate with any form of evidence towards sales promotion expenses, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed for the assessment years under consideration. Disallowance u/s 14A of the Act r.w. Rule 8D - necessity of recording satisfaction - HELD THAT:- AO was fully satisfied that the provisions of Rule 8D has to be invoked based on the materials available on record. Therefore, it cannot be said that the Assessing Officer has not recorded satisfaction. Under the above facts and circumstances, the ground raised by the assessee is dismissed. Disallowance u/s 14A vis- vis computation of book profits u/s 115JB - Since, the issue is covered by case of ACIT Vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] and by the decision of Sobha Developers Ltd. [ 2021 (1) TMI 378 - KARNATAKA HIGH COURT] . We set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to delete the addition. 2022 (9) TMI 759 Revision u/s 263 by CIT - appellant had made a claim for bogus capital gains from the penny stock script - Assessment u/s 153A - contention of assessee that no incriminating material was found as result of search and seizure action - When can assessment order be termed as an erroneous ? - HELD THAT:- During the course of hearing of appeal before us, AR could not demonstrate that no incriminating material was unearthed as result of search and seizure action relating to the transaction of purchase and sale of penny stock script of M/s. S.V. Electricals Ltd.. The contention that no incriminating material was found as result of search and seizure action is not based on any material or evidence. An assessment order passed after obtaining the approval with the Joint/ACIT is also an assessment order, which is very much amenable to the jurisdiction u/s 263 - It is not the case of the appellant that AO had examined the issue of exemption of capital gains from purchase and sale of penny stock script of M/s. S.V. Electricals Ltd. as to the genuineness of claim. It is settled position of law that when the AO was expected to make an enquiry of a particular item of income of the claim for allowance of expenditure and if he does not make any enquiry as expected that would have certainly ground to interfere the order of assessment in exercise the power of revision u/s 263 as such assessment order is erroneous and prejudicial to the interests of the Revenue. AO should have made enquiry into the genuineness of the claim of exemption of capital gains in respect of purchase and sale of penny stock script of M/s. S.V. Electricals Ltd. in the light of the information received by him from the Investigation Wing of the Department, even if the information is received subsequent to original assessment order. As evident from the statement recorded by the AO about the share transactions undertaken by the assessee. It is settled position of law that the failure on the part of the AO to enquire into the claim of exemption, render the assessment order erroneous and prejudicial to the interests of the Revenue. PCIT has rightly exercised the power of revision u/s 263 - Decided against assessee. 2022 (9) TMI 749 Continuation of proceedings in respect of dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 of IBC, once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code - HELD THAT:- A reading of the provisions under section 13 and 14 of the Code along with the decision in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] , clearly shows that once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code, the continuance of the pending proceedings is prohibited and when once they reach the logical conclusion with due approval of the resolution plan by the Adjudicating Authority under sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. At any rate, for the time being, this appeal cannot be proceeded with during the continuance of the proceedings under the Code. However, depending upon the result of such proceedings before the adjudicating authority in respect of the corporate debtor, appropriate steps if any, may be taken by the appellant/respondent. The appeal of Revenue is dismissed in limine. Customs 2022 (9) TMI 758 Refund of Terminal Excise Duties - supply of equipment and materials towards the establishment and setting up of Bakreswar Thermal Power Project, West Bengal - deemed export benefits - appointment of the Appellant as a sub-contractor by the Project Authority/WBPDCL for the supply of materials to the Project in pursuance of the Main Contract, in light of the provisions of the Foreign Trade Policy 2009-14 - HELD THAT:- In order to be ordained eligible for claiming deemed export benefits, clause 8.6.2 of the FTP 2009-14 lays down the condition of inclusion of a party s name as a sub-contractor under the Main Contract only. The Appellant through the course of proceedings in multiple adjudications before concerned authorities has relied on a slew of documents to support and advance their claim of eligibility for refund of payment of TED. However, none of the documents submitted can confirm the Appellant s status as that of a sub-contractor under the Main Contract, and appointed in such capacity by the Project Authority. Secondly, clause 8.3(c) of the FTP 2009-14 in clear terms exempts the requirement of payment of terminal excise duties for supplies made under ICB contracts for projects sponsored by foreign agencies. The Main Contract was signed under the process of International Competitive Bidding, and the Project at Bakreswar Thermal Power Plant was sponsored by a notified foreign agency, being the JBIC. The finding of the Ld. Single Judge in W.P.(C) 1712/2021 that the claim of refund of Terminal Excise Duty is dependent upon the name of the Appellant being duly endorsed by the Project Authority, and that the Appellant has been unsuccessful in showing any provision under the Foreign Trade Policy 2004-09 in terms of which endorsement of certification by the main contractor was envisaged sufficient for the purpose of refund of Terminal Excise Duty and, therefore, in the absence of such certification, the benefits as contemplated in Clause 8.6.2 of the FTP 2009-14 cannot be extended to the Appellant herein does not require any interference. Application dismissed. 2022 (9) TMI 757 Seeking amendment of shipping bills - MEIS scheme - it is urged that the Petitioner has not sought for any benefit under the MEIS as they have ticked No box in all the 59 shipping bills filed during the period 2017-18 to 2019-20 - Section 149 of the Customs Act, 1962 - HELD THAT:- The request for amendment of shipping bills came to be made nearly three years after submission of shipping bills. It is also an admitted fact that, the amendment is sought after the entire consignment/vessel has been dispatched from the port. As seen from the record, the request of the petitioner for availing Scrip benefit under MEIS came to be made four years after the goods were dispatched. It is no doubt true that the petitioner in their application expressed their intent to claim rewards under Merchandise Exports Forex Bank, but, in the reward column namely as to whether they intend to claim reward on the scheme, the petitioner has ticked the box as No - here is a case where these 59 bills were submitted online on various dates covering a period of three years. The mistake if any that has crept in could have been verified and rectified at the earliest. It is very difficult to believe that the same mistake would have been continued over the years without verifying the same, more so, when a request for conversion to MEIS came to be made after the dispatch of the entire goods to foreign countries. Basing on the N/N. 26/2015-20 dated 16.09.2021, it is urged that the exports made during the periods 01.07.2018 to 31.03.2019 and 01.04.2019 to 31.03.2020 and 01.04.2020 to 31.12.2020 alone gets benefit, if an application is made before 31.12.2021. The record reveals that the petitioner herein did make a request for the benefit under MEIS not only for the period referred to above but also for the earlier period in the month of February, 2021 and for the subsequent periods. It is deemed proper to remand back the matter to the first respondent to examine the request of the petitioner in view of the Notification and pass orders in accordance with law - petition allowed by way of remand. 2022 (9) TMI 756 Levy of penalty u/s 114(iii) of the Customs Act, 1962 - Penalty on CHA - export without Let Export Order - intentional order or not - HELD THAT:- The penalties are provided under the CHA Licencing Regulation in case of violation of the obligations by the Customs Broker as contemplated in para 10 of the said Regulation. CHA Licencing Regulation is an offshoot of the Customs Act and Customs Act is broad enough to encompass all kinds of violations. Further Section 114 starts with the word any person and there is no non-obstinate clause in the Customs Broker Licencing Regulation at para 10 to exclude application of the Customs Act. There is all along denial on the part of the offenders concerning their involvement in the alleged act but in the present case the concern clerk himself had admitted his mistake and sought for a lenient view in the matter. As per Section 58 of the Indian Evidence Act facts admitted by the parties or their agents are not required to be proved in any proceedings - thus, for act of the employee direct responsibility is fixed on the Customs broker for which the findings of the Tribunal at Bangalore in the case of AS GOPINATH VERSUS COMMISSIONER OF CUSTOMS, COCHIN [ 2006 (12) TMI 386 - CESTAT, BANGALORE] cannot help the Appellant in getting the desired remedy. The order passed by the Commissioner of Customs (Appeals), Mumbai, Zone-III in imposing penalty under Section 114(1) of the Customs Act for Rs.50,000/- on the Appellant CHA is hereby confirmed - Appeal dismissed. 2022 (9) TMI 755 Smuggling - Detention of export goods - misdeclaration of goods - prohibited goods or not - wooden pallets - red sanders or not - onus/burden to prove - section 123 of Customs Act - penalty u/s 114 of Customs Act, 1962 - HELD THAT:- Since, there is no denial that the goods which were concealed in the impugned export consignment were the prohibited goods and under the garb of mis-declaration were tried to being smuggled. It is Section 123 of the Customs Act, 1962 which comes into picture. The said section makes it clear that where any goods which are seized under the reasonable belief of being smuggled, the burden of proof shifts upon the exporter to prove that the goods were not the smuggled goods. Hence, in this case it was the burden of the appellant to produce the positive evidence proving his innocence beyond reasonable doubts - It has been brought to the notice that Shri Ahmed Ali is wanted in several other cases for similar kind of illegal acts. Accordingly, the appellant has failed to discharge the said burden. Levy of penalty u/s 114 of Customs Act, 1962 - HELD THAT:- The said Section opens up with word any person , the intention of legislature becomes absolutely clear that the imposition of penalty for any such act or omission which would render any good liable for confiscation is not confined merely to the concerned exporter or anyone working under him or to the CHA including anyone working under him. Intention of legislature is that it can be any other person howsoever distantly relevant to the exporter or the CHA firm if is found involved in any such act which may render the goods to be exported/imported liable for confiscation, shall be liable to penalty under Section 114 of the Customs Act. Appeal dismissed. 2022 (9) TMI 754 Refund of Customs Duty - denial on the ground of refund claim filed after one year from the date of payment of duty - time limitation - Section 27 of the Customs Act, 1962 - HELD THAT:- There is no dispute on the fact that the appellant have paid the excess duty on the excess quantity of goods not lifted from SEZ and subsequently, the department has amended the bills of entry in respect of actual quantities lifted by the appellant. The amendment was made under Section 149 of the Customs Act. It is the undisputed fact that the refund arises only after the amendment of bills of entry therefore, the relevant period of one year should be reckoned from the date of amendment and not from the date of actual payment of duty. The similar issue has been considered by this tribunal in the case of KESHARI STEELS VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1996 (9) TMI 154 - HIGH COURT OF JUDICATURE AT BOMBAY] wherein, it was held that if the refund is arising out of correction of clerical or arithmetical error under Section 154 of the Customs Act, the period of one year provided under Section 27 is not applicable to such case. The period of limitation in the facts of the present case should be reckoned from the date of amendment in the bills of entry. Since the appellant have filed the refund claim within one year from the date of amendment which is well within time accordingly, the refund cannot be rejected on the ground of limitation - Appeal allowed. Securities / SEBI 2022 (9) TMI 753 Offence under SEBI - Unusual price movement in the shares - penalty imposed under Section 15A(a) of the 1992 Act - non-compliance of summons - Non-cooperative attitude of the appellants during the course of the investigation - monetary penalty of rupees one crore on each appellant under Section 15A(a) for failing to comply with the summons issued to the appellants for the production of documents and furnishing of information during the course of certain investigations being carried out by SEBI during the period of 2000-2007 in relation to suspicious purchase and sale of scrip and manipulation of share prices of STIL - HELD THAT:- By not responding to the fresh summons and by not appearing before the Investigating Authority when directed to appear, the appellants statements could not be recorded and this has hampered with the investigation. The appellants had failed to produce the documents and information as required vide summons dated 01.04.2003 and 09.04.2003 respectively and had, thus, affected the conduct of the investigation. The appellants compliance, if any, to one summons dated 02.07.2001 and 26.07.2001 respectively, in no way, absolves the appellants of their responsibility to comply with the summons issued thereafter on multiple dates. The appellants were bound to fully co-operate with the Investigating Authority and promptly produce all documents, records, and information as were required for the investigation from time-to-time. In failing to do so, the appellants clearly obstructed and hindered the investigation. Taking into consideration the severity of offences found to have been committed by the appellants and other entities, and the non-cooperative attitude of the appellants during the course of the investigation in attempting to obstruct the same, the quantum of penalty imposed under Section 15A(a) of the 1992 Act is justified and with effective consideration of the factors listed in Section 15J of the 1992 Act. A bare reading of Section 11C (3) of the 1992 Act makes it clear that an Investigating Authority appointed by SEBI to investigate the affairs of any persons may require such person associated with the securities market in any manner to furnish such information to, or produce such books, or registers, or other documents, or record before him or any person authorized by it, in this behalf as it may consider necessary, if the furnishing of such information or the production of such books, or registers, or other documents, or record is relevant or necessary for the purposes of its investigation . In the present case, the appellants were under investigation by SEBI for its alleged involvement in aiding and abetting Ketan Parekh and his companies in manipulating the securities market. In view of the same, the appellants would squarely fall under the scope of persons associated with the securities market in any manner under Section 11C(3) of the 1992 Act. The authority of the Investigating Authority to direct such persons to appear before him and furnish information or produce documents as is required for an investigation is provided in Section 11C (3) of the 1992 Act. As also pertinent to mention that Section 19 of the 1992 Act provides that the SEBI may delegate to any member, officer of the SEBI or any other person, such of its powers and functions under this Act (except the powers under Section 29) as it may deem necessary. Thus, when the appellants failed to comply with the directions issued u/s 11C (3) of the 1992 Act and failed to produce the required documents and information, the Investigating Authority, being a delegated Authority of SEBI, was empowered to levy the penalty as provided in Section 15A(a) of the 1992 Act. Hence, we find no merit in these appeals. The appeals are dismissed. Insolvency & Bankruptcy 2022 (9) TMI 752 Distribution of proceeds of Resolution Plan - Appellant-dissenting Financial Creditor is entitled to claim distribution of proceeds of the plan as per value of the security interest of the Appellant or as per the debt of the Appellant (voting share) or not - whether distribution as approved by the CoC to the Appellant as per voting share of the Appellant contravenes the Section 30(2)(b) as contended by Learned Counsel for the Appellant? - HELD THAT:- The financial creditors who do not vote in favour of the resolution plan shall receive an amount that is not less than the liquidation value of their debt. The above statement of objects and reasons also makes it clear that the entitlement of dissenting financial creditor is to receive liquidation value of their debt and not the distribution as per their security value as is sought to be contended by the Learned Counsel for the Appellant. The statement of objects and reasons by which amendments in Section 30(2)(b) has been made, makes it clear that entitlement of dissenting financial creditor is the liquidation value of their debt which also clearly negate the submissions raised by the Learned Counsel for the Appellant. The conclusion of the committee is that the priority under Section 53(1)(b)(ii) shall be only to the extent of security interest of the secured creditor. The secured creditor cannot claim priority under Section 53(1)(b)(ii) of the whole debt where only part of the debt is secured, the above report of the Committee in no manner helps the appellant to support the submission. The decision of the Committee of Creditors and the Adjudicating Authority deciding to distribute the proceeds of the plan value as per voting share of the secured creditor in no manner contravenes the provisions of Section 30(2)(b) of the Code - appeal dismissed. 2022 (9) TMI 751 Seeking reversal of transactions of appropriation of the margin money against the Letters of Credit (LC) - seeking to credit the same amount of the margin money into the Current Account of the Corporate Debtor - breach of the Moratorium imposed under Section 14 of the Insolvency and Bankruptcy Code, 2016. Whether margin money deposited by way of an FDR against a Letter of Credit (LC) is an asset of the Corporate Debtor? - Whether margin money construes, a Security as provided for under the Code? - Whether this margin money can be appropriated by the Appellant Bank during the period of Moratorium on the ground that it does not form a part of the asset of the Corporate Debtor. HELD THAT:- Admittedly, the amount of margin money is not debited to make any recovery or adjustment towards the dues of the Bank, but the payment is made to the supplier of the material to keep the Company as a going concern. It is also seen that the payment under the LC along with the margin money cannot be said to be an appropriation of the Corporate Debtor s funds towards the dues of the issuing Bank. A perusal of the Clause 8 of Form-C as provided for under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons), Regulations, 2016, the Claim submitted by the Banks specifically provides for the list of securities and it is pertinent to mention that there is no mention of margin money in this list of securities - In the instant case, the FDRs cannot be said to be a property of the Corporate Debtor as the date of default is much prior to the date when the Moratorium was invoked. A perusal of the material on record also shows that the entries which have been justified against the LCs and the payment loans are not shown as assets of the Corporate Debtor in its Balance Sheet and Moratorium can be applicable under Section 14 of the IBC only to the assets of the Corporate Debtor. Margin money is construed as substratum of a Trust created to pay to the beneficiary to whom Bank Guarantee is given. Once any asset goes into trust by documentation for the benefit of beneficiary, the original owner will not have any right over the said asset unless it is free from the Trust. As it is observed that margin money has the character of Trust for the benefit of the beneficiary, it cannot be said to be an asset of the Corporate Debtor. These FDRs cannot be realized by the Corporate Debtor as and when it desires. The margin money is deposited in the FDRs which the Corporate Debtor becomes entitled to only when the Margin Money is free from the obligations of the terms of the LC. This Tribunal is of the view that in terms of its functions, a Performance Guarantee is similar to that of an LC. Further, having observed so, the contention of the Respondents that the Banks have erroneously invoked the LCs and liquidated the margin money during the period of Moratorium, cannot be sustained - the material on record does not establish that any Security Interest was created by the Corporate Debtor with margin money. The provision of Section 14(3)(b) specifically excludes the Application of Section 14 to a surety in a contract of Guarantee to a Corporate Debtor. This Tribunal is of the earnest view that LC is basically akin to a contract of Guarantee, as it a contingent liability of the Corporate Debtor which gets crystallized on the happening of a future event. The margin money can in no manner be said to be a Security Interest as defined under Section 3(31) of the IBC. Section 14(1)(c) prohibits any action to foreclose, recover or ensure any Security Interest created by the Corporate Debtor in respect of its property - a conjoint reading of Section 3(31) and Section 14 of the Code makes it abundantly clear that margin money is not included as a Security and is not an asset of the Corporate Debtor. Appeal allowed. 2022 (9) TMI 750 CIRP - Financial Creditor - Assignment of debt - Requirement of registration of assignment deed - requirement of proper stamping of the assignment deed - Appellant is related party to the Corporate Debtor or not - HELD THAT:- It is relevant to notice the transactions entered between the Reliance Infrastructure Ltd. and the Corporate Debtor according to which the Inter-Corporate Deposit of Rs.2500 Crores was given to the Corporate Debtor by Reliance Infrastructure Ltd. The Hypothecation Deed dated 07.03.2018 was executed between the Corporate Debtor and the Reliance Infrastructure Ltd. Borrower has availed from the Lender various financial assistance with regard to Master Restructuring Agreement which was entered earlier. At request of the Borrower, the Lender has agreed to give financial assistance in the form of Inter-Corporate Deposits of an aggregate amount not exceeding Rs.2500 Crores. The assignment of debt was alongwith the relevant rights and liabilities of the Assignor with the consent of the Confirming Party (Corporate Debtor). The Assignment Deed which contains all rights and liabilities indicates that the assignment was not of only actionable claim. Whether Registration of Assignment Deed was necessary? - HELD THAT:- The assignment by the Assignor to the Appellant was alongwith relevant rights and liabilities. We have noticed above that for securing the repayment of Inter-Corporate Deposit, Corporate Debtor and Reliance Infrastructure Ltd. entered into Hypothecation Deed as well as an Indenture of Mortgage dated 11.07.2018. The assignment in favour of the Appellant by the Assignor of entire debt was with relevant rights and liabilities of the Assignor, which has now been assigned to the Appellant - the Adjudicating Authority did not commit any error by coming to the conclusion that the Assignment Deed dated 01.03.2019 required registration. Whether Assignment Deed was insufficiently stamped? - HELD THAT:- Reliance Infrastructure Ltd. had given Inter-Corporate Deposit for which Deed of Hypothecation and Indenture of Mortgage was entered on 07.03.2018. Application under Section 7 by the IDBI Bank against the Corporate Debtor was filed in September, 2018 and after filing of the application within six months Assignment Deed dated 01.03.2019 was executed by the Assignor in favour of the Assignee. The purpose and object was obvious that Reliance Infrastructure Ltd. being related party could not have participated in the CoC of the Corporate Debtor, hence, Assignee has been brought into for the sole purpose of participating in the CoC which Assignee as per the case of the Appellant is not a related party. Further, the debt of Rs.2538 Crore has been assigned for amount of Rs.114.93 Crores speaks for itself. Further, the Reliance Infrastructure Ltd. had Hypothecation Deed and Mortgage. The time and manner in which assignment has been made clearly indicate that Assignment is not bonafide and was made only to put the Appellant in the CoC with ulterior motive to watch the interest of the related party. There are no infirmity in the opinion of the Adjudicating Authority where it has held that the Assignment Deed dated 01.03.2019 was not in good faith and rather shows that the arrangement was made with a view to get backdoor entry into the COC through the Applicant assignee to have a control over the process of the CIRP as the Reliance Infrastructure Ltd. being the related party to the Corporate Debtor could not be the member of the CoC. The Adjudicating Authority further held that an act of this kind done with malafide intention cannot give an equivalent right with that of the unrelated financial creditors. There are no error in the order of the Adjudicating Authority rejecting the application of the Appellant as a Financial Creditor. The submission of learned counsel for the Appellant that even if it may not participate in the CoC, claim of the Appellant should be admitted as Financial Creditor, also could not be accepted - appeal dismissed. 2022 (9) TMI 748 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - whether the demand notice in Form 3 dated 19.02.2022 was properly served? - HELD THAT:- The demand notice dated 19.02.2022 was sent through courier on the registered office of the respondent/corporate debtor and the same was delivered on 21.02.2022. Demand notice was also sent through e-mail on 07.03.2022 at the registered e-mail address of the corporate debtor as available on the master data of the MCA. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The petitioner/operational creditor has filed an affidavit under Section 9(3)(b) of the Code, wherein it has been deposed that the it has not received any reply to the demand notice dated 19.02.2022 and that no notice has been given by the corporate debtor relating to a dispute of the unpaid operational debt and there is no pre-existing dispute between the parties. Whether this application was filed within limitation? - HELD THAT:- A perusal of the case file shows that the application was filed vide Diary No.00757 dated 22.04.2022 (refiled on 20.05.2022), whereas the date of default is 17.12.2019, therefore, this Adjudicating Authority finds that this application has been filed within limitation. There is a total unpaid operational debt (in default) of ₹1,35,15,157/-. As noted above, the operational creditor has provided the details of the debt due and has also annexed with the petition copy of ledger account statement, and invoices. Accordingly, the petitioner/operational creditor has established the debt and the default, which is more than Rupees one lakh i.e. the threshold limit - It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIRP in the case of the corporate debtor, Sarv Awas Housing Bhiwadi Private Limited is admitted. Petition admitted - moratorium declared. 2022 (9) TMI 747 Seeking liquidation of the Corporate Debtor - Section 33 of IBC - HELD THAT:- Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the Resolution Professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors approved by not less than sixty-six percent of voting share to liquidate the corporate debtor. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code - Application allowed. 2022 (9) TMI 746 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Upon perusal of the records, specifically the letter dated 29th September 2019 and its reply dated 2nd August 2019, it is clear that there were preexisting disputes in the instant matter. Further, annexure R-3 to the reply affidavit, being the master data of the Proxichem LLP i.e the company which manufactures Miteshot reveals that the representatives of the Operational Creditor, being Mr. Kailash Dhaundival and Mr. Ishan Dhaundival are the directors of Proxichem LLP. Even though the letter containing such disputes was issued after the demand for the debt was made by the Operational Creditor vide email dated 3rd July 2019, it appears that the Corporate Debtor s contentions regarding the relation between the Operational Creditor and Proxichem LLP is not baseless and need to be looked into further. However, the same can only be adjudicated in an evidentiary proceeding and not by a summary proceeding under the Code. The pre-existing disputes in the instant case are not mere feeble arguments and need to be adjudicated upon by a court of competent jurisdiction. As such, in presence of pre-existing disputes, the instant petition is not maintainable. This Adjudicating Authority is satisfied that the instant petition is liable to be rejected. Service Tax 2022 (9) TMI 745 Rejection of petitioner s application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that petitioner was ineligible - excluded person under Section 125 (1)(f) of the Finance Act, 2019 - HELD THAT:- This letter cannot be considered commencement of investigation or enquiry. The letter has to be read to mean only because petitioner has obtained service tax registration for providing taxable services, the department in that regard want to verify the documents. In any event, even for a moment, it is held that this letter amounts to commencement of investigation or enquiry as submitted by Mr. Adik, still this letter having been issued only on 26th August 2019 though dated 20th August 2019, petitioner would be said to be subjected to enquiry or investigation only after 30th June 2019 and as held by this court in New India Civil Erectors Private Limited vs. Union of India and Others [ 2021 (3) TMI 545 - BOMBAY HIGH COURT ] , it would not be a ground for declaring application filed by petitioner under the SVLDRS as ineligible. The impugned order dated 21st June 2022 is set aside - it is declared that petitioner will be eligible to file declaration under the scheme - petition disposed off. 2022 (9) TMI 744 Refund of Service Tax - unjust enrichment - seeking refund to customers - rejection of service tax on the ground of time limitation and unjust enrichment - section 11B of the Central Excise Act, 1944 as made applicable by section 83 of the Finance Act, 1994 to Service Tax matters - HELD THAT:- The impugned order has partly sanctioned the refund and credited it to the consumer welfare fund and partly rejected on the ground of time bar. It is true that the law laid down by the Hon ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] , was that no refund to be sanctioned at all unless the assessments (including self assessments) are first assailed before the Commissioner (Appeals) and modified. However, the sanction of refund by the Commissioner (Appeals) has not been assailed by the Revenue either by an appeal or by a separate memorandum of cross objections. The refund claim can be made by the person who paid the excise duty or from whom the excise duty is collected and who has not passed on the incidence to any other person. Since these provisions are made applicable to the service tax by virtue of section 83 of the Finance Act, 1994, refund can also be claimed of service tax by the person who has either paid the service tax or the person from whom the service tax has been collected provided such person has not passed on the incidence to any other person. After examining the refund claim, if it is found admissible and if it is found to have been filed within time, the refund so sanctioned has to be credited to the consumer welfare fund. However, if the claimant proves that it has not passed on the burden to any other person then it shall be paid to the claimant - there is no provision, whatsoever, in section 11B by which one person who has paid the service tax and who has also passed on the burden to others, to file refund claim and request that the refund may be sanctioned and given to its customers. The scheme of the law is that once the applicant has passed on the burden of service tax to anybody, the amount has to be credited to the consumer welfare fund and not paid. The part of the refund claim was filed beyond a period of one year and hence was found to be inadmissible and was rejected by the Commissioner (Appeals) - there are no infirmity in the impugned order - appeal dismissed. 2022 (9) TMI 743 Valuation - pure agency services or not - Octroi Charges - amount received after 14.05.2015 towards electricity charges from the assessable value of the service provider - exclusion of the electricity charges from the assessable value for the period prior to 14.05.2015 - exclusion of octroi charges from the assessable value for the entire disputed period from the assessable value - if electricity consumed by the appellant for providing the services of managing IMP watch packing units and warehouse for accessories and sunglasses can be called as expenses incurred as pure agent? HELD THAT:- It is obvious that the electricity is consumed in the said operation as a primary input. The entire warehouse and packing activities are located in the premises located at Hosur. A large number of people work in the said premises and activity of packing, de-packing sorting etc. goes on within the premises. Inclusion of octroi charges for the period prior to 14.05.2015 - HELD THAT:- Considering the observation of Commissioner (Appeals) in the impugned order, no merits found in the appeal filed by Revenue for inclusion of value of electricity charges into the assessable value by invoking Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 for the period prior to 14.05.2015. For the same reason, there are no merit in the appeal filed by SLP in respect of inclusion of electricity charges for period after 14.05.2015 - the appeal of Revenue on the count of inclusion of octroi charges for the period prior to 14.05.2015 by invoking Rule 5 of Service Tax (Determination of Value) Rules, 2006 cannot be upheld. Inclusion of the octroi charges collected by SLP from TIL for the period after 14.05.2015 - HELD THAT:- Any payment of octroi by SLP has to be treated as payment done by SLP on behalf of the owner of the goods, namely, TIL. The question raised by Revenue in its appeal regarding inclusion of octroi has been adequately answered by SLP in the above arguments. Under these circumstances, there are no merit in the appeal filed by Revenue for inclusion of the octroi paid by SLP and recovered from TIL in the assessable value. The appeal of revenue on this count is therefore, rejected. There are no merit in the appeals filed by Revenue as well as that filed by SLP and therefore, both are rejected. 2022 (9) TMI 742 Maintainability of appeal - monetary limit involved in the appeal as per litigation policy Circular F. No. 390/Misc/116/2017-JC dated 22.08.2019 - Levy of Service Tax - Business Auxiliary Services - on behalf of overseas clients facilitated in the process of transportation of consignment from taxable territory to final destination - mark-up i.e. the difference between the value of the services received by the service provider and charged by the respondent from their clients abroad - HELD THAT:- The issue involved in the matter is no longer res integra and has been covered by the Board circular in favour of the respondent. In the case of M/S BVC LOGISTICS PVT. LTD. VERSUS CCE ST, JAIPUR [ 2017 (9) TMI 709 - CESTAT NEW DELHI] , it was held that CBEC vide Circular No.197/7/2016-ST dated 12.08.2016 has clarified that a freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outside India. The appeal filed by the Revenue is dismissed. 2022 (9) TMI 741 Taxability - contractual obligations enforced by the appellant, to the monetary detriment of their buyers, contractors and material suppliers - declared service or not - HELD THAT:- The facts in the present dispute are identical to that in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] where it was held that It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act. An acceptable, and judicially distinguishable, alternative has not been brought before us by Revenue. Central Excise 2022 (9) TMI 740 MODVAT Credit - Capital goods - Guide Car - classifiable under Chapter subheading 8603.00 or under Chapter sub-heading 8428.90 of the Central Excise Tariff Act, 1985 or not - whether the appellant is entitled to Modvat credit under Rule 57Q of the Rules 1944 on Guide Cars treating the same as components of Coke Oven Battery, as claimed? HELD THAT:- The test would be whether the Guide Car can be said to be an integral part necessary to the constitution of the whole article, namely, Coke Oven Battery and whether without it, the Coke Oven Battery shall not be complete? Considering the process and the manner in which and/or for the purpose for which the Guide Car is used, by no stretch of imagination, it can be said to be a component of Coke Oven Battery. It cannot be said that without the Guide Car the Coke Oven Battery shall not be functional. The Guide Car is being used for the purpose of transporting the hot coke after it is processed in the Coke Oven Battery. Therefore, Guide Car can be said to be a different equipment distinct from the Coke Oven Battery and cannot be considered to be a part of the Coke Oven Battery. In that view of the matter, the appellant shall not be entitled to the Modvat credit on Guide Car as component and/or part of Coke Oven Battery as claimed by the appellant. The Adjudicating Authority as well as the learned Tribunal have rightly confirmed the demand of Modvat credit availed by the appellant on Guide Cars . Levy of penalty - HELD THAT:- The penalty was not justified at all. The appellant bonafidely believed that the goods would fall under Chapter sub-heading 8428.90 and/or that the Guide Car can be said to be a component of the Coke Oven Battery. Therefore, the order of penalty of Rs.1,00,000/- imposed by the Tribunal is required to be quashed and set aside. Whether classification of the Guide Car under Chapter sub-heading 8603.00 shall be applicable prospectively and shall not be applicable retrospectively with respect to supply in the month of November, 1999? - HELD THAT:- It is required to be noted that it was a case of self-assessment by the supplier and the supplier classified the Guide Car under Chapter subheading 8428.90, though it was classifiable under Chapter sub-heading 8603.00. That thereafter the appropriate authority classified the Guide Car under Chapter sub-heading 8603.00. Therefore, it will relate back to the original claim and/or relate back to the date of supply/selfassessment. The present appeal with respect to Modvat credit claimed by the appellant on Guide Car is hereby dismissed. The Adjudicating Authority as well as the learned Tribunal have rightly denied the Modvat credit to the appellant on Guide Car . The learned Tribunal has rightly confirmed the demand of Rs. 45,86,664/- being the Modvat credit availed by the appellant on Guide Car - Appeal dismissed. 2022 (9) TMI 739 Clandestine Removal - Lead Ingots - department allegedly found evidences regarding unrecorded production and clandestine clearances of Lead Ingots - demand based on assumptions and presumptions - corroborative evidences or not - Confiscation - redemption fine - penalty - HELD THAT:- Admittedly the order of the Commissioner (Appeals) in the 2nd show cause notice, by which demand has been dropped, has been accepted by the department. The order of Adjudicating Authority in the 1st show cause notice has been reversed by the learned Commissioner only on that basis without discussing about any tangible evidence, as according to him in the 2nd show cause notice as well as in the order of Commissioner (Appeals) therein, nothing has been recorded regarding the goods seized at the factory premises i.e. 44531.50 kgs. of Lead Ingots, which in my opinion is totally misplaced. A perusal of the 2nd show cause notice as well as the order of the learned Commissioner (Appeals) therein would show that the issue in both 1st and 2nd show cause notices is identical i.e. clandestine removal of goods and both the notices are based on the search conducted on 16.7.2013. It can safely be said that the further investigation as well as the issuance of 2nd show cause notice is the result of seizure of 44531.50 Kgs. of Lead Ingots from the premises of the Appellant on the premise that the appellant is into clandestine removal of the goods - when the learned Commissioner while dropping the demand in the 2nd show cause notice has examined the chart regarding the manufacturing activity under taken by the Appellant for the period from April, 2012 to July, 2013 then that would also include the Lead Ingots, which according to revenue must have been produced somewhere between May, 2013 upto the date of search i.e. 16.7.2013 and which is the core issue in the 1st show cause notice herein. A perusal of the 1st Show cause notice, which is presently in issue, would show that it is based on the statements of Mr. Mukesh Maheshwari as well as the statement dated 23.7.2013 of Shri Shyam Singh Jadon, Excise Assistant of the appellant coupled with RG-1 register - Admittedly, a particular act is required to be done in a particular manner as provided under the statute but an inadvertent mistake to follow the procedural aspect cannot be adopted for arriving at the conclusions against the assessee. In view of the fact that in the 2nd show cause notice, the Commissioner (Appeals) has held in favour of the appellant herein and dropped the demand coupled with the discussions made in preceding paragraphs, this case would not fall within the four corners of either Section 34 or Rule 25. Therefore, the confiscation or redemption fine or penalty are not sustainable and the impugned order is liable to be set aside. Appeal allowed. 2022 (9) TMI 738 Classification of foods - micronutrients - classifiable under Chapter subheading No.38089340 of the Central Excise Tariff Act, 1985 or not - demand of duty alongwith interest and penalty - extended period of limitation - HELD THAT:- Clearly, macronutrients, micronutrients and plant growth regulators are three distinct known to agricultural experts, as known in the market and as clarified by the CBEC. The show cause notice proposed to classify the micronutrients manufactured by the appellant as plant growth regulators. Learned Authorized Representative for the Revenue also admits that such classification is not sustainable. Therefore, the impugned order upholding such classification and demanding differential duty cannot be sustained and needs to be set aside. One of the basic principles of natural justice is that no man shall be condemned unheard . If the proposal is to classify the goods under a different tariff heading than one proposed in the show cause notice, a show cause notice must be issued and adequate opportunity should be provided to the appellant to explain why such classification should not be adopted. The argument of the learned Authorized Representative is that although they were present in these formulations they were not essential. There are no basis to hold as to which of these elements in the products are essential and which are not. It is his submissions that they were only chelating agents. Nothing is found in the Chapter note 6 to Chapter 31 which says that Nitrogen, Phosphorous Potassium cannot be part of chelating agents or the chelating agents are not essential ingredients. There are no reason to go merely by the assertion of the learned Authorized Representative in this regard. Since one of these elements is available, the classification of the goods under Chapter heading 3105 is clearly sustainable. The alternative classification as plant growth regulators is not sustainable. Extended period of limitation - penalty - HELD THAT:- There are considerable force in the argument of the learned counsel for the appellant that the dispute is regarding classification viz., opinion of the assessee versus the opinion of the Revenue and it is not a case of fraud or collusion or wilful misstatement etc. No ground, whatsoever, exists for invoking extended period of limitation. Similarly, there is no ground, whatsoever, to impose any penalty. There are favour of the assessee both on merits and on limitation - appeal allowed. 2022 (9) TMI 737 Clandestine removal of finished goods - suppression of production - duty paying invoices - third party evidences/corroborative evidences or not - Department observed that the appellant has cleared sponge iron, Billets and TMT Bars and coal without issuing invoices with the sole intention to not to pay the requisite Central Excise Duty on those clearances - HELD THAT:- There are no admission as has been observed by Commissioner (Appeals) in any of these statements, as far as the allegations in Show Cause Notice are concerned. None of these statements amounts to corroboration of DCS or of the recovered loose sheets. The findings of Commissioner (Appeals) confirming the demand holding the DCS/ loose sheets admissible into evidence in the light of the statements on record, are not sustainable. It thus becomes clear that for the support of those documents, Commissioner (Appeals) has laid utmost emphasis upon the statements recorded during the investigation but it is observed that the procedure as prescribed under Section 9 D of Central Excise Act has not been followed. The plain reading of sub section (1) of section 9D of the Act makes it clear that clause (a) and (b) of the said section sets out following circumstances in which a statement made and sanctioned by a person before Central Excise Officer of a gazetted rank during the course of inquiry or proceedings under the Act, shall be relevant for the purpose of proving the truth of the facts contained therein - departmental investigating agencies as well as the adjudicating agencies have not yet started observing compliance of mandatory statutory provisions i.e. section 9D of Central Excise Act, 1944 and section 138 B of Customs Act, 1962 without which the statement recorded at the stage of inquiry / investigation will not be relevant for the purpose of proving the truth of requisite facts during prosecution. It is observed that the documents recovered at the investigation stage are nothing but third party evidence for want of their author not being investigated / examined by the Department. Third party evidence cannot be relied upon to confirm the allegations as that of clandestine removal - Otherwise also there is no corroborative evidence as is required to prove the charges of clandestine removal. The demand based on the documents, also has wrongly been confirmed by Commissioner (Appeals) - appeal allowed. 2022 (9) TMI 736 Refund of Cenvat credit - denial of refund on the ground that since the goods were exported without payment of duty but not under the bond or the letter of undertaking, that appellant was denied to claim the benefit of Rule 6(1) of Cenvat Credit Rules, 2004 - Denial also on the ground that claim of refund pertains to the period from 30.10.2014 to 29.10.2015 during which the appellant was not having any central excise registration - Rule 6(1) of Cenvat Credit Rules, 2004 - HELD THAT:- As per Rule 6 (1) of CCR, 2004 no Cenvat credit will be available in respect of inputs used in manufacture of exempted products. Though Rule 6 (6) (v) creates an exemption inter alia in respect of excisable goods removed without payment of duty for export but only for those exports as were made under bond in terms of Central Excise Rules, 2002. The export in the present case has not been made under bond - Sub-rule 6 also though relied upon by the appellant as an exception, but as already observed the said exception is applicable though in case of excisable goods removed without payment of duty but only when they are cleared for export under bonds in terms of provisions of Central Excise Rule, 2002. Hence the exception as prayed for are found not available to the appellant. The appellant was not entitled to claim the Cenvat credit of duty paid on imports used in manufacture of the product to which nil rate of duty was applicable. In such situation if some credit has been availed Rule 14 should have first been applied by the department - In the present case, it is not coming apparent as to whether said rule 14 has been complied with by the department prior rejecting the impugned refund. Matter remanded back to the original Adjudicating Authority to check for the compliance of Rule 14 CCR, 2004 and then to freshly adjudicate the impugned refund - appeal allowed by way of remand. 2022 (9) TMI 735 CENVAT Credit alongwith interest and penalty - input services - Revenue was of the view that these services received in the unregistered premises does not qualify as input services for and the credit not admissible - HELD THAT:- A plain reading of Rule 3(1) shows that requirement of the receipt in the premises of the manufacturer or the provider of output service is in respect of the of inputs and capital goods. There is no requirement as per this rule which provides that input services should have been received in the registered premises of the appellant. Since there is no requirement as per Cenvat Credit Rules which supports the case that the input services should have been received in the registered premises of the appellant, the case made out cannot be sustained. Appeal allowed. CST, VAT & Sales Tax 2022 (9) TMI 734 Condonation of delay in filing the revision - delay of two years seven months and eight days for filing the revision - HELD THAT:- The delay in filing revision has been considered by this Court in the case COMMISSIONER COMMERCIAL TAX U.P. LKO. VERSUS M/S R.C. AND SONS RAKABGANJ LUCKNOW [ 2022 (9) TMI 533 - ALLAHABAD HIGH COURT ], where the delay of 163 days was sought to be explained on the basis of the casual and lethargic attitude of the officials which prevails in the Department, on the part of the Officers concerned. The delay in the instant case of two years seven months and eight days and there being no plausible and cogent reasons for condoning the delay, the application for condonation of delay is rejected - revision dismissed. 2022 (9) TMI 733 Validity of assessment order - reversal of Input Tax Credit (ITC) - Allegation is that annexures-I II accompanying the returns filed by the selling dealers do not correspond to the e-return filed by the petitioner for the month of April, 2015 - HELD THAT:- The impugned order of assessment insofar, as it relates to reversal of ITC of an amount of Rs.43,755/- alone, is set aside to be re-done in light of the procedure stipulated under Circular No.5/2021, dated 24.02.2021. The petitioner shall be called upon for a hearing, the details culled by the Department shall be furnished to the petitioner, their reply/response solicited and an order of assessment de novo on this issue passed within a period of four (4) weeks from date of issue of this order - Petition disposed off. 2022 (9) TMI 732 Removal of attachment in the records of the Sub- Registrar in respect of the properties - creation of charge by the petitioner in respect of the schedule properties - fixation of priority of charges by the Court - HELD THAT:- The sale certificate in favour of R4 has been kept apart in a separate interest bearing marked account. Let this position continue for the present since the report filed by the Official Liquidator brings to notice of the Court that while the balance sheet of R2 as on 31.03.2014 reveals the outstanding loan amount at Rs.8,03,56,460/-, the claim of the consortium is of a sum of Rs.114.27 crores, together with future interest - The Official Liquidator has requested that a break-up of the demand be supplied by the Consortium and the discrepancy in the amounts be clarified. Though this report of the Official Liquidator has been supplied to learned counsel as early as on 03.12.2019, no objection has been filed till date in this regard. Thus, clearly the aspect of quantification has to be looked into to determine the exact amount to be appropriated by the petitioner. Fixation of priority of charges and such priority has been fixed by this Court - HELD THAT:- The question of quantification is left to be decided by the petitioner and the Official Liquidator appearing for R2 for which purpose the petitioner will furnish the break-up as sought for. Necessary orders be passed by the Official Liquidator within a period of twelve (12) weeks from today. It is directed that the sale consideration remain untouched and in suspense, till such time, the exercise of quantification is complete - petition allowed. Indian Laws 2022 (9) TMI 731 Dishonor of Cheque - compensation should be twice the cheque amount, or not - Section 138 of the Negotiable Instruments Act - HELD THAT:- Nowhere in the four corners of the application the petitioner has stated that he intends to withdraw the amount of compensation deposited in court by the opposite party-accused without prejudice to his rights to seek enhancement. It appears from order dated 28.09.2016 of the trial court that the petitioner has not made any submissions that he intends to withdraw the compensation amount without prejudice to his right to seek enhancement. Thus, the aforesaid materials clearly indicate that the petitioner withdrew the amount of compensation out of his own volition. Accordingly, there are no perversity or irregularity in the observation of learned Chief Judge, that the petitioner on one hand challenged the quantum of the sentence and on the other hand received the amount of compensation without the permission from the Court. The facts and circumstances of the present case does not merit enhancement of the compensation imposed by the learned trial court - Application dismissed. 2022 (9) TMI 730 Dishonor of Cheque - date of issuance of statutory notice - It is the contention of the learned Counsel for the Petitioner that before expiry of 45 days from the date of return of cheques the complaint had been filed - Section 138 of Negotiable Instruments Act - HELD THAT:- It is found that the Petitioner herein had appeared before the trial Court and the Trial Court had proceeded till the stage of 313 Cr.P.C., and at that stage, these Petitions had been filed. When the trial had commenced, it is the guidelines issued by the Hon'ble Supreme Court in the case of STATE OF HARYANA VERSUS BHAJAN LAL [ 1990 (11) TMI 386 - SUPREME COURT] that the High Courts shall not exercise the discretion under Section 482 of Cr.P.C. to quash the proceedings and only it can be exercised such discretion before commencing of the trial. On perusal of the typed set furnished by the Petitioner herein/the Accused before the trial Court, it is found that he had not replied to the statutory notice issued by the Respondent. If the accounts of the Petitioner had been blocked by the Income Tax Authorities, he ought to have informed the Respondent/Complainant regarding the blocking of the account by the Income Tax Authorities. Therefore, the cheques need not be presented. In the alternative, after issuance of the cheques by the Petitioner herein when the accounts of the Petitioner were blocked by the Income Tax Authorities, the Petitioner herein as Accused before the Trial Court ought to have informed the Respondent/Complainant to return the cheques as the accounts had been blocked - the Petitioner herein/Accused before the trial Court is not liable for the dishonor of the cheques. If that warning had been given by way of reply by the Petitioner herein, the Respondent would not have filed the Criminal Complaints under Section 138 of Negotiable Instruments Act. The Petitioner herein remained silent after receipt of statutory notice from the Respondent/Complainant. Petition dismissed.
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