Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 22, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
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Fintech as a Force Multiplier (Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - September 20, 2022 - at the Global Fintech Festival, Mumbai)
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Policy introduces Unified Logistics Interface Platform, Standardization, Monitoring framework and skill development for greater efficiency in logistics services
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GeM Seller Samvad held in Panaji, Goa
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DRI foils attempts of gold smuggling, seizes 65.46 kg of gold at Mumbai, Patna and Delhi in one of the biggest seizures of Smuggled Gold in recent past
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IBBI amends Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Benefit of exemption / concessional rate of GST - the said works for construction of airport terminal building or greenfield airport are predominantly meant for commerce and hence are not covered under Entry 3 (vi), (ix) and (x). - AAR
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Cancellation of Regular Bail - accused is not cooperating in the investigation and not honouring the summons - hen present application for cancellation of bail has been filed and accused has a right to silence but cannot ignore the summons issued by the department to join investigation especially when accused did not move for quashing of notice/summons himself, therefore, present application is allowed and bail granted to accused is cancelled. - DSC
Income Tax
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Benefit u/s 80-IC - manadation of having separate and distinct Unit - The building where the registered office was started in the assessment year 2009-10, was got vacated and thereafter Unit-III was started in the said premises in assessment year 2010-11. - Tribunal rightly came to the conclusion that the assessee was entitled to claim benefit under Section 80-IC of the Act by treating Unit-III of the assessee - HC
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Reopening of assessment u/s 14/148 - Information received about undisclosed Crypto currency - bank transactions alone are not sufficient to verify the trade in Crypto currency - Even now it would be open for the assessee to satisfy the authority by submitting the relevant Crypto currency ledger to verify the information as was submitted by him before the Assessing Officer in proceedings under Section 148A of the Act, 1961. - HC
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Addition u/s 56(2)(viib) - valuation under Rule 11UA (2) - Even if preferential shares and equity shares are considered to be falling within the purview of Section 56(2)(viib) of the Act, they stand on different footing . While the equity shareholders are the real owners of the company, the preference shareholders are not in fact, the owners of the company, they get preference over the equity shareholders on certain aspects. Hence the Net asset value of the company really represents the value of Equity shares and not "Preference shares" - Additions deleted - AT
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Relief of foreign tax credit u/s 90 - non compliance of procedural requirement - As the assessee has vested right to claim the FTC under the tax treaty and the same cannot be disallowed for mere delay in compliance of a procedural provision. - there were no reasons with the tax authorities for making disallowance when the said Form 67 was very much available with the AO at the time of framing the assessment order. - AT
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Unexplained Cash withdrawn out of bank account - Gap between withdrawal and deposit of the cash - The heafty amount was withdrawn 70 days ago for utilising the same for the business of her son. Unused amount was deposited in the same bank account of the assessee. The source of deposit of cash was well explained before the revenue authorities by the assessee. Therefore, AO was indeed in error in adopting a wrong fact in his order. - AT
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Addition u/s 56(2)(vii)(b) - Whether leasehold rights are covered under the statutory definition of “any immovable property” u/s. 56 (2)(vii)(b) as defined in Explanation (d)(i) as “being land or building or both? - HELD No - AT
Customs
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Levy of penalty u/s 117 of the Customs Act 1962 - Smuggling from Dubai - Gold Bars - the ground on which the penalty has been imposed on Appellant i.e he was keeping silent about the illicit activities of Accused, is not a valid ground for imposition of penalty under Section 117 of the Customs Act. No other evidence attributing knowledge or intention on the part of the Appellant has been relied upon. - AT
IBC
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CIRP - admission of belated claim - financial debt - It is apt to note that one of the most crucial principle is time is essence in any resolution process within which the process has to be completed in a time bound manner as contemplated under the Code - this Tribunal find that the claim of the 1st Respondent herein is belated and cannot be considered and the finding of the Adjudicating Authority in directing the RP to place the claim in Form-C before CoC per se illegal and unsustainable - AT
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CIRP - power to entertain new Resolution Plan after approval of another resolution plan by the CoC - The Appellant has made out a prima-facie case to be interfered with the Order, passed by the Adjudicating Authority, whereby the Adjudicating Authority exceeded its jurisdiction in directing the Resolution Professional to place the Resolution Plan of the Respondents before the CoC is amounts to interference with the Commercial Wisdom exercised by the CoC in its Commercial Decision - AT
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Financial Creditors or not - On looking into the real nature of the transaction entered between the Corporate Debtor and the Landowners, the landowners were entitled to share the constructed area in the ratio of 45:55 and allotment of flats and commercial units in lieu of their entitlement under the Development Agreement does not make the transaction of allotment a Financial Debt within the meaning of Section 5(8)(f). - AT
Service Tax
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SVLDRS - this Court, even though was informed that the Scheme has already come to its conclusion and the auto-populated form has already expired, the Court is inclined to allow the writ petition. - This Court direct that Form SVLDRS-3 is quashed and the Designated Committed to reconsider the claim of the petitioner within a period of three weeks - HC
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Levy of penalty - suppression of facts or not - It is relevant to note that upon being pointed out during the audit, the assessee has promptly made the payment of tax with interest and requested not to issue any show-cause notice. - In the absence of the conditions contained in Section 78 of the Finance Act, the imposition of penalty is not sustainable - HC
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Classification of services - job work in the factory premises - service provider provided the manufacturing activity in the factory of service recipient with the help of his own workers and it was held that service is of not Manpower Recruitment or Supply Agency Service but it is job work. - AT
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Levy of penalty of 75% - Though the appellant have paid 25% penalty but the same was paid after the stipulated time period of 30 days. Since the said period is statutory, same cannot be relaxed. However, it is found that the appellant otherwise paying service tax as per the belief that service tax is payable only in cases where freight amount is exceeding Rs. 750/-. There is only a misunderstanding about the calculation of limit of Rs. 750/- - Taking a lenient view, penalty waived - AT
Central Excise
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Relevant date for consideration of refund claim - unutilized CENVAT Credit - the time limit has to be computed from the last date of the last month of the quarter which would be the relevant date for the purposes of examining whether the claim is filed within the period of limitation prescribed under Section 11-B or otherwise. - HC
VAT
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Jurisdiction of HC to entertain the writ petition bypassing the statutory remedy of appeal - There are serious disputes on facts as to whether the assessment order was passed on 20.03.2020 or 14.07.2020 - No valid reasons have been shown by the assessee to by-pass the statutory remedy of appeal. This Court has consistently taken the view that when there is an alternate remedy available, judicial prudence demands that the court refrains from exercising its jurisdiction under constitutional provisions.- SC
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Binding Judgement of Lager Bench / Majority decision - strength of the Bench - In view of Article 145(5) of the Constitution of India concurrence of a majority of the judges at the hearing will be considered as a judgment or opinion of the Court. It is settled that the majority decision of a Bench of larger strength would prevail over the decision of a Bench of lesser strength, irrespective of the number of Judges constituting the majority. - SC
Case Laws:
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GST
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2022 (9) TMI 937
Principles of natural justice - no personal hearing was given to the petitioner - non-speaking order - difference between the purchase and sale details - HELD THAT:- On perusal of the materials, it is seen that the petitioner has filed this writ petition within a period of appeal. Further, the petitioner in his reply filed an annexure showing the difference of calculation. In the impugned order, there is no reason given for why the petitioner's calculation was not considered. The petitioner s submission in the show cause notice reply is that 'by a technical hitch'. The petitioner requires a personal hearing. Further, from the impugned order, it is seen that department has questioned the classification, which needs personal hearing and perusal of the documents and thereafter, detailed order to be passed. This Court finds that by cryptic non-speaking order, an impugned order cannot be passed. Hence, the impugned order is hereby set aside. The petitioner is to be given an opportunity for personal hearing and thereafter, on the documents submitted by the petitioner, the issue can be decided - Petition disposed off.
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2022 (9) TMI 936
Refund of unutilised Input Tax Credit - rejection on the ground of time limitation - Section 54 of CGST Act - HELD THAT:- In terms of the amendment in the explanation to Rule 54, relevant date for filing the refund application is provided to be two years from the due date of furnishing GSTR 3B returns. In other words, the last date for filing refund application in the month of February 2018 would be 20.03.2020 being two years from the due date of furnishing GSTR 3B returns. In the present case, the refund application was filed on 02.05.2020, however in view of the above notification, in particular clause (iii) thereof, the period from 01.03.2020 to 28.02.2022 was excluded from the limitation period. The petitioner would be entitled to the benefit of the same. The competent authority is directed to reconsider the claim of refund of the petitioner - Petition disposed off.
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2022 (9) TMI 935
Levy of interest on the delayed payment of tax, on the gross tax liability of the petitioners instead of net liability - section 50 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In view of the Notification No. 16 of 2021, the proviso which is substituted vide sub-section 50(1) of the CGST Act w.e.f. 1st day of July, 2017, therefore, would take care of the issue raised in this group of petitions of charging interest on the net GST liability instead of gross GST liability as calculated by respondent No.3. These petitions are disposed of as having become infructuous in view of the amendment of section 50(1) of the CGST Act by substituting the proviso w.e.f. 1st day of July,2017 as per section 112 of the Finance Act, 2021 which has been made effective vide Notification No. 16 of 2021 dated 01.06.2021.
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2022 (9) TMI 934
Benefit of exemption / concessional rate of GST - Classification of services - works contract services provided to Government Authority and Government Entity - Airport Terminal Building at Sogane Village in Shivamogga taluk and District, Karnataka - Greenfield Airport at Vijaypur in Karnataka State - Construction of High Security Prison at Central Prison, Parappana Agrahara, Bangalore Karnataka State - Construction of Basava International Center and Museum at Kudalasangam of Hunagunda Taluka in Bagalkot District - Construction of Government School Buildings and Hostels at various places in Karnataka State - Applicability of N/N. 15/2021 dated 18/11/2021-Central Tax (Rate). HELD THAT:- Karnataka State Police Housing and Infrastructure Corporation Limited is a company of the Government of Karnataka incorporated under the companies Act 1956 and all the shares of the company are held by Government of Karnataka. In view of the definitions mentioned in the para 10 supra, Karnataka State Police Housing and Infrastructure Corporation Limited qualifies to be considered as a Government Entity. Karnataka Residential Educational Institutions Society (KRIES) is formed under the societies Registration Act to establish, maintain, control and manage residential institutions to the talented and meritorious children belonging to Scheduled caste, scheduled tribe and other backward classes. As per the rules and regulations of KRIES provided by the applicant, Government of Karnataka may appoint persons to review the progress of the society and to hold inquiries into the affairs of the society and give directions to the society with respect of any matter and the society shall be bound to comply with such directions. After going through the website of KRIES it was observed that it consists of 13 members and all are from the State Government - Karnataka Residential Educational Institutions Society qualifies to be considered as a Government Entity. The works of construction of Airport Terminal Buildings/facilities associated works at Sogane village in Shivamogga Taluk District, Karnataka and the work of Development of Greenfiled Airport at Vijaypur in Karnataka State are the works awarded by the Public Works Department of Government of Karnataka. Thus these are works supplied to State Government. However the said works for construction of airport terminal building or greenfield airport are predominantly meant for commerce and hence are not covered under Entry 3 (vi), (ix) and (x). The said works are covered under entry 3(xii) - N/N. 22/2021-Central Tax (Rate) dated 31.12.2021 has replaced the words Union territory, a local authority, a Governmental Authority or a Government Entity with the words Union territory or a local authority and Governmental Authority or a Government Entity were removed from the notification. The supplies made by the applicant in respect of all the contracts awarded to them as mentioned in para 9 supra are covered under entry 3(xii) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017 further amended vide Notification No.03/2022-Central Tax (Rate) dated: 13.07.2022, and attracts GST @ 18% (CGST 9% and KSGST 9%) with effect from 18.07.2022.
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2022 (9) TMI 933
Cancellation of Regular Bail - accused is not cooperating in the investigation and not honouring the summons - goods declared as handicrafts leather wallets supplied to NADFA Trading FZE - typographical error in the application or not - HELD THAT:- Considering that there is a typographical error in the title of the application and it is well settled that the Court which grants the bail can cancel the hail, therefore, present application is treated as application U/Sec.437(2) Cr.P.C. Considering that accused has admittedly not joined investigation pursuant to summons dated 19.04.2022 and 29.04.2022 and admittedly did not drop the Goggle pin location, therefore, has violated condition No.1 and 2 of bail order dated 17.02.2022 of Ld. Predecessor of this Court. Furthermore, since proper reasoning has been given by the department as to why question pertaining to M/s Zam Zam Exim Pvt. Ltd. has been put to the accused and that accused cannot avoid investigation or ignore summons issued by the department for joining investigation by raising grounds now regarding jurisdiction etc. when present application for cancellation of bail has been filed and accused has a right to silence but cannot ignore the summons issued by the department to join investigation especially when accused did not move for quashing of notice/summons himself, therefore, present application is allowed and bail granted to accused vide order dated 17.02.2022 is cancelled. Therefore, bail bonds of accused is forfeited. Let NBA shall be issued against the accused and notice U/Sec.446 Cr.P.C. to his surety, returnable on 19.09.2022.
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2022 (9) TMI 891
Maintainability of petition - availability of alternative remedy of statutory appeal - lifting of attachment of bank accounts of petitioner - Applicability of time limitation as per Section 83 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Mr Tej Pal Singh Kang, who appears on behalf of the petitioners, says that apart from anything else, since one year has passed, which is the maximum period prescribed under Section 83 of the Central Goods and Service Tax Act, 2017 [CGST Act], the respondent/revenue is required to lift the attachment. The other relief that the petitioner claims is a declaratory relief. The petitioner seeks a declaration that Rule 159 along with Sub-Rules (1), (5) and (6) of the CGST Rules be declared ultra vires the Constitution - list the matter on 15.09.2022.
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Income Tax
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2022 (9) TMI 932
Liability of legal representatives of deceased - Appropriation of Outstanding Demand from the legal heirs of the deceased - HELD THAT:- As per decision of this Court [ 2016 (8) TMI 1367 - ALLAHABAD HIGH COURT] we find that the controversy as to whether the legal representatives of deceased Giri Lal Jain were liable by virtue of Section 159 of Act, 1961 for the Wealth Tax as per the final assessment the orderhas been set at rest, in so far as the heirs and legal representatives of late Giri Lal Jain were concerned. The claim of the petitioners herein is that they are at the same footing as that of Sri Deepak Kumar Jain, (one of the sons of late Giri Lal Jain). And as determined in the judgment and order the petitioners herein are also entitled for the same relief. We find substance in the said submission and hold that nothing remains to be adjudicated on the controversy in question. The claim of the petitioners herein is covered by the judgment and order and the petitioners are entitled to the benefit of the said decision. We, therefore, dispose of the present petition with the observation that the competent authority shall consider the claim of the petitioners strictly in light of the judgment passed in [ 2016 (8) TMI 1367 - ALLAHABAD HIGH COURT] Deepak vs Chief Commissioner of Income Tax and others) and determine the amount to be refunded to both the petitioners herein along with interest as provided therein. The said determination shall be made within a period of four weeks from the date of reciept of copy of this order.
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2022 (9) TMI 931
Benefit u/s 80-IC - manadation of having separate and distinct Unit - Denial of deduction as Unit-III was not a new Unit and it was reconstruction of an existing Unit-II - whether ITAT is right in holding that the assessee has right to get deduction u/s 80IC(4)(i) in respect of the new unit though the same was in fact reconstruction/splitting of old unit? - case of the assessee before the Tribunal that earlier the Company was giving services in relation of one product, i.e. voice chat to its clients, like Airtell, Reliance, Idea Tata - HELD THAT:- Since the business of the company had grown, it found it necessary to start a new Unit with a view to expand its area of service and consequently, a separate Unit was started, giving services to other Non-Telco Companies/Clients in the field of Information, Technology and Software Services. The office building, where Unit-III had been started, was earlier registered office of the company, whereas, Unit-II was being run from another building which was situated at a distance of about 7 kilometers from the registered office. The building where Unit-III was being run had been purchased by the assessee-company on 21.01.2008, but the premises was let-out on rent to some other party. Thereafter, the premises was got vacated and the registered office of the company was shifted to the said premises in assessment year 2009-10. Thereafter, Unit-III was started in the premises after completing necessary formalities. The operation of Unit-III, commenced in the assessment year 2010-11. AO was influenced by the fact that since Unit-III was being run by the assessee in its registered office, therefore, activities done in Unit-III were identical in nature to those done by Unit-II. AO had failed to appreciate that the building, where Unit-III had been started, had in fact been given on rent, whereas, Unit-II was being run in a separate building which was at a distance of about 7 kilometers. The building where the registered office was started in the assessment year 2009-10, was got vacated and thereafter Unit-III was started in the said premises in assessment year 2010-11. It was not a case where plant and machinery of Unit-II had been used for Unit-III. The business of the company had grown and with a view to expand its business, the company started a new Unit by making investment as shown in the Chart reproduced above. New employees were recruited by the assessee for Unit- III. Separate account books were maintained by assessee qua Unit-II Unit-III. Tribunal rightly came to the conclusion that the assessee was entitled to claim benefit under Section 80-IC of the Act by treating Unit-III of the assessee-company as a separate and distinct Unit. - Decided against revenue.
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2022 (9) TMI 930
Reopening of assessment u/s 147/148 - Information received about undisclosed Crypto currency - AO observed that, bank transactions alone are not sufficient to verify the trade in Crypto currency - HELD THAT:- The impugned order as it reads shows that the authority has recorded a finding that the material evidence to verify the transaction regarding Crypto currency is not placed on record. Even in this petition, the petitioner has not submitted the concerned ledger statements relating to trade in Crypto currency. We find considerable force in the submission of revenue that bank transactions alone are not sufficient to verify the trade in Crypto currency rather, the assessee ought to have submitted before the authority the relevant ledger statement evidencing that he had entered into trade of Crypto currency in the manner as has been asserted by him by way of the information stated by him. Whether it was the volume of the trade which is reflected in the total amount or it was an investment made in the Crypto currency without any withdrawal therefrom would essentially be a matter for consideration upon perusal of the Crypto currency ledger. May be because of this reason, the authority was of the view that the information regarding trade in Crypto currency is not verified. The authority has considered, though in brief, the reply of the petitioner at this stage only for the purpose of deciding whether proceedings u/s 148 should be drawn. In our considered opinion, the exercise which has been undertaken by the authority fulfilled the legal requirement of Section 148(A). Even now it would be open for the assessee to satisfy the authority by submitting the relevant Crypto currency ledger to verify the information as was submitted by him before the Assessing Officer in proceedings under Section 148A of the Act, 1961. We are not inclined to interfere with the order as we do not find that the order is either perverse or lacks jurisdiction so as to warrant interference by this court in exercise of writ jurisdiction.
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2022 (9) TMI 929
Addition u/s. 56(2)(viib) - Whether method adopted for determination of FMV of the equity share by the assessee is not as per the method prescribed under Rule 11UA of the I.T.Rules? - HELD THAT:- Qualifications in the report by the auditors, while valuing the shares, it can be safely said that it is only a piece of paper with no evidentiary value - This is a colorable device applied by the assessee for inflating the value of its share. The valuation of the company in our opinion should be done based on the basis of fundamentals and economic conditions of the assessee and must be in accordance with the method prescribed for that purpose. It should be independently done as, the valuation of holding company shares done on the basis of DCF method cannot be yardstick to determine the valuation of shares of assessee company. Valuation made by the assessee of NAV method is not in accordance with law. Neither market value of shares of the sister concern had been taken into consideration nor the valuation of sister concerns had been independently examined by the ld.CIT(A). Hence, the same is required to be rejected. Therefore, the approach of ld.CIT(A) is incorrect and contrary to law laid down in the case of CIT vs. Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT ] - It cannot be said that no fault was found in such valuation report by the AO or that the AO has not found any defect in the valuation of shares arrived at by the assessee. We find the CIT(A) in the instant case without properly understanding the facts of the case was merely carried away by the submissions of the assessee and deleted the additions, which in our opinion is not justified under the facts and circumstances of the instant case. The various decisions relied on by the CIT(A) are not applicable in the facts of the present case. Since, the AO has given valid reasons while making the addition, therefore, the order of CIT(A) which is contrary to facts cannot be upheld. We therefore set aside the order of the CIT(A) on this issue and the grounds raised by the revenue is allowed. Loss claimed by the assessee - Whether no commercial expediency for charging lower interest rate on loans advanced than the rate at which funds are borrowed? - HELD THAT:- In the instant case disallowed the interest expenses on the ground that assessee has borrowed funds at a higher rate and used the same for advancing loans and making investment in its subsidiary company and charged lesser rate of interest. CIT(A) deleted the disallowance, the reasons of which have already been reproduced in the preceding paragraph - assessee that the interest paid and received are at the same rate i.e at the @12% p.a and the difference arose due to the holding period only. It is the submission of assessee that the funds are kept in fixed deposits till they are advanced as ICD's. Interest income from fixed deposits are also offered to tax. In our opinion, the matter requires a revisit to the file of the AO to verify as to whether the assessee has charged the interest at the same rate at which it has obtained loans. If the interest paid on borrowed funds and charged from the subsidiary are at the same rate and the difference is only due to the period of holding only then the AO is directed to allow such interest expenditure from such interest income. The ground raised by the revenue is accordingly allowed for statistical purposes.
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2022 (9) TMI 928
Penalty u/s 271(1)(c) - Addition was made on basis of the contravening section 25B of the Act related to arrear rent received duly assessment year which was not declared in the return of income for A.Y. 2012-13 - HELD THAT:- The arrear rent which was not declared in return of income in earlier years said amount would be taxed in year of receiving the amount. But the assessee declared the rent in earlier years and paid the tax accordingly. In this issue the DR was unable to bring any contrary fact before the ITAT. The penalty was levied u/s 271(1)(c) on basis of the income which was concealed or stated inaccurate particulars of income. But the assessee never concealed nor stated any inaccurate particulars of income related to rental income. The arrear rent was not taken during the assessment year 2012-13 because the rent was already declared in the year in which it was related. The application of section 25B in itself clarificatory in nature. The assessment order is debatable in nature. There is no deliberate attempt on the part of the assessee and it is not a fit case to impose penalty u/s 271(1)(c) on the assessee as the conduct of the assessee if seen in context of preceding years as set-out above does not warrant imposition of the penalty u/s 271(1)(c) - we find that no attempt has been made by the assessee in the preceding years to conceal the rental income. The penalty levied by the AO amount is liable to be quashed. Assessee appeal allowed.
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2022 (9) TMI 927
Addition u/s 56(2)(viib) - valuation of preferential shares - Rule 11UA (2) - estoppel against a statute - assessee submitted as had merely issued preferential shares and as for the purpose of Section 56(2)(viib) of the Act, the Rule 11UA (2) is not applicable - HELD THAT:- As observed from the assessment order that AO was carried away by the fact that assessee has taken two different pleas with regard to valuation of preferential shares and that the assessee was itself not convinced Rule 11UA should be applicable or not. However, the assessment orders shows that even the Ld. AO was not convinced of applicability of Rule 11UA. As it applies to unquoted equity shares but he applied the valuation method of Rule 11UA upon the preferential shares considering them to be similar. Bench is of firm opinion that AO had fallen in error as it is settled proposition of law that there cannot be any estoppel against a statute. Reliance in this regard can be placed on the judgment of Hon ble Calcutta H.C. in the case of Mayank Poddar (HUF)[ 2003 (2) TMI 45 - CALCUTTA HIGH COURT] as held There cannot be any estoppels against statute. A property which is not otherwise taxable, cannot become taxable because of misunderstanding or wrong understanding of law by the Assessee or because of his admission or on his misapprehension. If in law an item is not taxable, no amount of admission or misapprehension can make it taxable - Department cannot rely upon any such admission or misapprehension if it is not otherwise taxable. Thus, it is jurisdictional error where AO not being convinced himself about applicability of Rule 11UA proceeded to make the valuation according to method of 11UA on the basis that at some stage assessee itself had applied the method. Even if preferential shares and equity shares are considered to be falling within the purview of Section 56(2)(viib) of the Act, they stand on different footing . While the equity shareholders are the real owners of the company, the preference shareholders are not in fact, the owners of the company, they get preference over the equity shareholders on certain aspects. Hence the Net asset value of the company really represents the value of Equity shares and not Preference shares - As held Mumbai Bench in case of ACIT 16(1) Vs. M/s. Golden Line Studio Pvt. Ltd [ 2018 (10) TMI 1393 - ITAT MUMBAI] Now, the Rule 11UA(2), applied by the Ld Tax authority, is specifically applicable for the valuation of shares for the purpose of section 56(2)(viib) but covers only unquoted equity shares within its ambit and there in no reference to the preference shares. Tax authority below had fallen in error in applying method of valuation of unquoted equity on preferential shares and the possible correct method was to apply Rule 11UA(1)(c)(c) only. This bench of the considered opinion that on the counts, AO had fallen in error in making the addition and the Ld. CIT(A) has fallen in further error in confirming the same while observing that the appellant assessee was not able to lead any argument as to why valuation of shares cannot be done in the manner provided in sub-clause A and Rule 11UA. Assessee appeal allowed.
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2022 (9) TMI 926
Foreign tax credit u/s 90 denied - non compliance of procedural requirement - Disallowance of claim as relevant form 67 prescribed under section 128(8) was not filed within the time stipulated under sub rule 9 of Rule 128 - HELD THAT:- It is important to mention here that section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and such income is also taxable in India. In this regard Article 22 of India Finland DTAA provides for credit for foreign taxes. Since as per section 90 of the Act read with Article 22 sub clause (2) provides that Finland Income Tax paid shall be allowed as a credit against the Indian Tax but limited to proportion of Indian tax. In my view, neither section 90 nor DTAA provides that FTC shall be disallowed for non compliance with any procedural requirements. Since FTC is assessee s vested right as per Article 22(2) of the DTAA read with section 90 and thus same cannot be disallowed for non compliance of procedural requirement that is prescribed in the Rules. The procedural law is always subservient to and is in aid to justice. Even otherwise, since there are no conditions prescribed in DTAA that FTC can be disallowed for non compliance of any procedural provision, therefore, the provisions of DTAA override the provisions of the Act. As the assessee has vested right to claim the FTC under the tax treaty and the same cannot be disallowed for mere delay in compliance of a procedural provision. See Sambhaji Ors. vs. Gangabai Ors. [ 2008 (11) TMI 393 - SUPREME COURT] Even otherwise, the said Form 67 filed by the assessee before the tax authorities was available before the AO when the intimation under section 143(1) of the Act dated 25.11.2021 was passed. Therefore, in such circumstances, in my view, there were no reasons with the tax authorities for making disallowance when the said Form 67 was very much available with the AO at the time of framing the assessment order. Thus assessee is entitled for the credit of FTC under section 90 - Decided in favour of assessee.
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2022 (9) TMI 925
Revision u/s 263 by CIT - unexplained cash deposits - when an order can be termed as erroneous ? - HELD THAT:- PCIT, before holding an order to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous, the Ld. PCIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, PCIT has failed to do so and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him. Such a course of action of the Ld. PCIT is not in accordance with the mandate of the provisions of sec. 263 - CIT has taken support of the newly inserted Explanation 2(a) to sec. 263 of the Act. The said explanationwas inserted by Finance Act 2015 w.e.f. 1.4.2015. If that be the case, then the PCIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. Hon'ble Supreme Court has held in the case of Parashuram Pottery Works Co. Ltd. [ 1976 (11) TMI 1 - SUPREME COURT] that there must be a point of finality in all legal proceedings and the stale issues should not be reactivated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld. PCIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld. PCIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquiries or verification that would have been carried out by a prudent officer. During the notice u/s 142(1) the assessee submitted the relevant documents before the revenue authorities. On basis of these documents the order was passed by the ld. AO. It cannot be said that the issue was untouched and unverified by the assessing authority. Mere change of opinion an order cannot be called as erroneous. We directed that the order passed by the PCIT is unjust for, and the order is setting aside. Appeal of assessee allowed.
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2022 (9) TMI 924
Unexplained Cash withdrawn out of bank account - Gap between withdrawal and deposit of the cash - withdrawn and deposit of cash with a gap of 70 days - HELD THAT:- The withdrawn and deposit of cash with a gap of 70 days which was considered by the ld. AO as seven months. The ld. Counsel clearly stated that the sufficient cash was withdrawn in same bank account and after part utilization of the same; the amount was deposited in same HDFC Bank account. Appellate authority without considering the proper fact and submission of the assessee had passed the order ex parte. CIT(A) was failed to dispose the appeal on merits and has not contended the explanation of the assessee. As stated in the submission that the assessee was not able to present before the CIT(A) due to the fact that the appellant expired on 23.10.2020 thereafter her husband also expired on 03.11.2020. The copy of the death-certificate of the assessee and her husband are being enclosed - In these circumstances here the genuine cause for non-appearance before the CIT(A). We are in opinion that the assessee has sufficient cause during the depositing of cash in her bank account. The heafty amount was withdrawn 70 days ago for utilising the same for the business of her son. Unused amount was deposited in the same bank account of the assessee. The source of deposit of cash was well explained before the revenue authorities by the assessee. Therefore, AO was indeed in error in adopting a wrong fact in his order. The grievance raised by the ld. Sr. Dr. in this appeal, is, therefore, devoid of any legally sustainable merits. We reject the addition amount of made by the ld. AO. - Decided in favour of assessee.
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2022 (9) TMI 923
Delayed deposit of the employee s share of contributions towards Provident fund (PF) and Employee s State Insurance (ESI) - Scope of amendment - HELD THAT:- We find that the issue herein involved is squarely covered by the order passed by the Tribunal in the case of M/s Ind Synergy Limited [ 2022 (4) TMI 36 - ITAT RAIPUR ] as held as the employees contributions to PF and ESI was deposited by the assessee before the due date of filing of its return of income for the year under consideration, therefore, the same being saved by the provisions of Sec. 43B of the Act could not have been disallowed by the A.O. The insertion of Explanation-2 to Section 36(1)(va) of the Act as had been made available on the statute vide Finance Act, 2021 would not assist the case of the revenue as the same is applicable w.e.f. 01.04.2021 and, thus, would not be applicable to the case of the assessee before us. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Delhi in the case of Pr. CIT-7 Vs. TV Today Network Ltd. [ 2022 (8) TMI 361 - DELHI HIGH COURT ] We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) and direct the AO to vacate the disallowance made by him u/s.36(1)(va) of the Act qua the delayed deposit of the employees share of contribution of EPF/ESIC. Assessee appeal allowed.
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2022 (9) TMI 922
Rejection of books of accounts - NP estimation - addition made by applying net profit (Declared by the assessee) @ 4.42% on suppressed sales - additional net profit earned by applying the net profit rate of 3.64% in place of 4.19% - HELD THAT:- As undisputed that no corroborative evidence has been found from the business premises of the assessee and the Income Tax Authorities have simply relied on the contents of the e-mail and the statement of Shri Manish Jain without leading further evidence which could strengthen the case of the Department and, therefore, we are unable to agree with such action of the Department in placing its entire reliance on such third party evidence without there being any corroborative evidence to make the impugned additions. Once again, we would like to refer to the statement of Shri Shiv Charan Lal, an Ex-employee, who has categorically stated that the assessee company used to destroy the alleged parallel invoices once the consignment was delivered. This statement of Shri Shiv Charan Lal goes contrary to the fact of invoices being recovered during the search at the residential premises of Shri Sanjay Dhawan. As also worth noting that as per the e-mail print out for June 2015, the bill numbers are running into series of 200 whereas as per the regular books of account the serial numbers of the invoices for the month of June 2015 is in the series of 700 onwards. Thus, this apparent contradiction castes a doubt on the veracity and the evidentiary value of the invoices recovered from the premises of Shri Sanjay Dhawan. Accordingly, on an overall view of the factual matrix of the case and for the various reasons as aforementioned in the preceding paragraphs, we are of the considered opinion that the Department could not have validly made the impugned additions by placing sole reliance on the invoices recovered from the residence of Shri Sanjay Dhawan as well as on the statement of the various third parties viz. S/Shri Gulshan Gaba, Naveen Salley and Sudhir Sethi which were recorded at the back of the assessee without giving the opportunity to the assessee to cross examine them. For the reasons mentioned in the preceding paragraphs, the impugned additions could not have been made on the basis of the statement of Shri Manish Jain and the electronic record discovered from the premises of the M/s. B.M Paper Mart, Delhi because the origin of the e-mail was not established. We have no option but to direct the deletion of the impugned additions in all the five years under consideration. As far as the issue of rejection of books of account is concerned, since we have already allowed the relief to the assessee on merits of the case by holding that the impugned additions are not sustainable, the question of rejection of books of account assumes only academic interest, and therefore, it is not being adjudicated at the present juncture.
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2022 (9) TMI 921
Unexplained investment in purchase of house property - Source of investment from realization of closing stock and debtors as on 31st March, 2011 - HELD THAT:- As regards the claim of realization from debtors it is apparent from the balance-sheet filed by the assessee during the proceedings before the CIT(A) for the preceding assessment year showing closing balance of sundry debtors therefore, this claim of realization is contrary to the balance of debtors as on 31st March, 2011. However, without going into these unreliable claims and figures which are not matching to each other if this amount is considered as available to the assessee for making the investment after realizing the closing stock as well as debtors, then the estimation made by the CIT(A) on this account of Rs. 5,00,000/- would be unjustified and without any basis. Hence, in the facts and circumstances of the case, when the CIT(A) has accepted the correct figure of Rs. 9,08,300/- as shown in the return of income, then to that extent, the source from realization of closing stock and debtors ought to have been accepted. Accordingly, the addition sustained by the CIT(A) of Rs. 6,00,000/- is restricted to Rs.1,81,700/- - Appeal of the assessee is partly allowed.
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2022 (9) TMI 920
Exemption u/s 11 - Assessee carrying out religious activities - CIT-A refusing the grant of registration 12AA to appellant trust - Temple Trust admittedly has been acquired by the State Government - HELD THAT:- Admittedly the assessee Trust has not come into existence by way of a Trust Deed. It is an ancient temple and its administration in the public interest has been taken over by the HP State Government. For the said purpose, the temple premises and properties appurtenant to it were notified under the Act. As seen that the assessee temple has been added to the list of the Temple Trust (Sr. No. 21 of Schedule-I of the Himachal Pradesh Hindu Public Religious Institution and Charitable Endowment Act, 1984 (Act No. 18 of 1984) vide Notification dated 12.12.2007. On the Note on Activity from Sr. No. I to IV of the specific assessee is seen vis- -vis the activities of the Shri Shani Dev Temple Trust at Sr. No. I to IV (extracted in para 5.2 of this order) it is seen that these are ad idem. Accordingly, we find that as far as the activity of the present assessee Trust is concerned, these are identical to the Shri Shani Dev Temple Trust wherein Registration u/s. 12AA has been granted by the CIT (E). We have also seen that like the Shri Shani Dev Temple Trust the present assessee has also been acquired under the Himachal Pradesh Hindu Public Religious Institution and Charitable Endowment Act, 1984 at Sr. No. 33 vide Notification dated 04.03.2016. The present assessee has been included in the list vide Notification dated 12.12.1997. The properties of the assessee Trust atleast as on 01.07.2014 stood acquired by the State Administration as the Management of the assessee Trust as from this date was constituted in terms of the Himachal Pradesh Hindu Public Religious Institution and Charitable Endowment Act, 1984. There is no doubt that the Temple Trust admittedly has been acquired by the State Government. For establishing the date of acquisition, no specific document has been placed by the assessee on record. The said date may be verified. Accordingly, for this limited purpose, the issue is remanded directing the ld. CIT (E) to grant registration to the assessee Trust. Appeal of the assessee is allowed for statistical purposes.
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2022 (9) TMI 919
Addition u/s 56(2)(vii)(b) - Whether leasehold rights are covered under the statutory definition of any immovable property u/s. 56 (2)(vii)(b) as defined in Explanation (d)(i) as being land or building or both? - HELD THAT:- We note that the legislature has used an identical expression in section 50C(1) of the Act wherein various judicial precedents in CIT Vs. Greenfield Hotels and Estates Pvt. Ltd.[ 2016 (12) TMI 353 - BOMBAY HIGH COURT] , KancastPvt. Ltd. [ 2015 (4) TMI 588 - ITAT PUNE] , GVK industries Ltd. [ 2011 (3) TMI 1 - SUPREME COURT] hold that such a leasehold right does not come under either of the twin specified categories of land or building or both ; as the case may be. We adopt the very reasoning herein as well to conclude that the learned lower authorities have erred in law and on facts in invoking section 56(2)(vii)(b) addition qua assessee s acquisition of leasehold rights in issue. The impugned addition stands deleted in above terms. Appeal of assessee allowed.
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2022 (9) TMI 892
Reopening of assessment u/s 147 - time limit for issuing notice under unamended Section 149 - Notice deemed to have been issued under Section 148A - Addition u/s 68 - survey as conducted at the premises of the assessee resulted in impounding of incriminating documents and one of the modus used by the said companies is to provide bogus share capital and bogus share premium to other companies - HELD THAT:- Since the time period for issuance of reassessment notice for assessment year 2013-14 stood extended until 30th June, 2021, the first proviso of Section 149 (as amended by the Finance Act, 2021) is not attracted in the facts of this case. Time limit for initiating assessment proceedings for AY 2013-14 stood extended till 30th June, 2021. The petitioner does not dispute the said facts, consequently, the reassessment notice dated 29th June, 2021, which has been issued within the extended period of limitation is not time barred. The petitioner s challenge to the paragraph 6.2. (i) of the CBDT Instruction No. 1/2022 dated 11th May, 2022 is not maintainable. The contention of the petitioner that assessment for AY 2013-14 became time barred on 31st March, 2020 is incorrect. The time period for assessment stood extended till 30th June, 2021. The initial reassessment notice for AY 2013-14 has been issued to the petitioner within the said extended period of limitation. The Supreme Court has declared that the said reassessment notice be deemed as a notice issued under Section 148A of the Act and permitted Revenue to complete the said proceedings. In this case, the income alleged to have escaped assessment is more than 50 lakhs and therefore, the rigour of Section 149(1)(b) of the Act (as amended by the Finance Act, 2021) has been satisfied. Accordingly, the present writ petition along with the pending application is dismissed.
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Customs
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2022 (9) TMI 918
Seeking issuance of writ of mandamus - release of Seized articles - Gold Jewellery weighing 2294.840 gm - onus to get the review application listed before the Allahabad High Court - Jurisdiction of Customs Department - HELD THAT:- The Tribunal has reversed the order of the Commissioner of Customs (Appeals), on the ground that the Customs department was not invested with requisite jurisdiction, albeit, within the Special Economic Zone established under SEZ Scheme framed by the Ministry of Commerce, Government of India - It is on this score, that the Tribunal concluded that the proceedings initiated against the petitioner were beyond the jurisdiction of the Customs department. In order to secure the interests of the respondents/revenue, the petitioner is directed to furnish a personal bond - Petition disposed off.
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2022 (9) TMI 917
Principles of natural justice - documents referred in the SCN not produced - relied upon documents or not - opportunity to cross-examine the persons whose statements are relied upon, were not provided - jurisdiction of the authority which raised SCN - HELD THAT:- T he writ petitions are disposed of with the following directions: (i) The respondent/revenue will furnish copies of all such documents referred to in paragraph 79, which are in their physical possession. The respondent/revenue will indicate, clearly, to the petitioners, as to which of those documents are not available in their record. This exercise will be completed within the next two weeks. (ii) Upon receipt of the documents referred to in clause (i) above, the petitioners shall file their final reply within two weeks thereafter. (iii) Once replies are filed, the adjudicating authority will fix a date for cross-examination of witnesses referred to in paragraph 79 (B-H). (iv) As soon as the aforementioned exercise is over, the concerned authority will proceed to adjudicate the SCN. (v) While adjudicating the SCN, the concerned authority will bear in mind, the objection raised by the petitioners, as regards his jurisdiction. The adjudicating authority will deal with this aspect of the matter, while passing the final order, concerning the aforementioned SCN.
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2022 (9) TMI 916
Levy of penalty u/s 112(b)(i) of the Customs Act 1962 - smuggling of Gold activity - incriminating documents against the Appellant to show prima facie that the Appellant financed money for smuggling of gold into India, present or not - malafide intent or not/mens rea - third party evidences - corroborative evidences or not - HELD THAT:- The role of the Appellant in the whole episode has been derived only from the printout sheet retrieved from the pen-drive seized from the residential premise of Ms. Nita Chunilal and statements of persons. Statements of said persons remained uncorroborated during the investigation. Of course, no offence should be established merely based on the statement of third party and without corroborative evidence and without granting cross examination of person whose statement alone is relied upon. As per the department Shri Rutugna being the mastermind of the smuggling racket, however during the investigation Shri Rutugna has nowhere stated the name of Appellant as connected to his alleged activity of smuggling of gold. He nowhere stated that Appellant has funded the amount for smuggling of gold. On going through the statements of Shri Mehul Bhimani and Shri Jitendra Rokad recorded on 28.06.2019 and 29.06.2019 in impugned matter, it is nowhere found that the Appellant had knowledge about the use of fund in smuggling of gold. The Appellant himself has not financed the fund to Mehul Bhimani but on his garuntee it was financed by Shri Nilesh Dhakan. Except this the department nowhere produce any evidences to show that Appellant was involved in smuggling of gold activity. From the evidence available on record and statement of Appellant it is clear that he was in normal course lending the fund. However, the activity of financing of fund has been turned by the Ld. Commissioner into direct participation in the conspiracy to smuggle gold. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge on the part of the person has to be established. In the present matter department failed to do so - The Appellant had nowhere stated that this fund used by persons for import of smuggling of gold. During the investigation officers did not find any documents/ piece of paper or any other evidence against the Appellant to show that the Appellant financed money for smuggling of gold into India. Clearly, the Appellant did not have knowledge of use of fund financed on his pretext, if any. The appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned in any of the activities mentioned in the Section or any measure dealing with any goods which the appellants knew or had reason to believe are liable to confiscation. In the absence of the department having not proved the knowledge of the appellant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him. It is now well established that mens rea is an important ingredient for imposing a penalty on the persons enumerated in Section 112(b) of the Customs Act. The evidence brought out by the department nowhere suggests that the appellants were aware that the goods in question were smuggled into the India. The penalty imposed on Appellant, therefore, cannot be sustained. The appellant is not liable imposition of penalty under Section 112(b) of the Customs Act, 1962 - appeal allowed - decided in favor of appellant.
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2022 (9) TMI 915
Levy of penalty u/s 117 of the Customs Act 1962 - Smuggling from Dubai - Gold Bars - allegation of abetting the accused in execution of his work of taking the gold out of Airport - allegation is that the appellant was aware the illicit activity, but remained silent - HELD THAT:- On plain reading of Section 117 of the Customs Act, it becomes clear that the said provision provides for imposing penalty if a person contravenes any provision of Act or abets any such contravention. In the impugned order there is no mention as to which provision of law was contravened by the appellants. For a penalty under Section 117, there must be finding of contravention of some legal provision and, further, a finding to the effect that such contravention was not covered by any other penal provisions of the Act. These pre-requisites are missing in the impugned order. In the present case the ground on which the penalty has been imposed on Appellant i.e he was keeping silent about the illicit activities of Shri Jignesh, is not a valid ground for imposition of penalty under Section 117 of the Customs Act. No other evidence attributing knowledge or intention on the part of the Appellant has been relied upon. The Order of the Commissioner in so far as the same relates to imposition of penalty under Section 117 on Appellant is not sustainable - Appeal allowed.
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Insolvency & Bankruptcy
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2022 (9) TMI 914
Rejection of claim of the appellant by the liquidator - delay of submission of claim during the Liquidation process - HELD THAT:- Present is a case where after initiation of CIRP, the IRP himself has written a letter to the Appellant on 10.08.2017 asking the Appellant to make payment of dues to the Corporate Debtor in the Escrow Account of the Corporate Debtor, which letter was replied by the Appellant on 06.09.2017. The Appellant has clearly informed the IRP that Appellant is claiming a sum of Rs.12,20,72,608 from the Corporate Debtor. It is noted by Adjudicating Authority in its impugned order that there was no response by the IRP to the letter dated 06.09.2017, thus, the claim of the Appellant was communicated to the IRP. The Appellant s case is that they were not aware of the liquidation process and the publication made by the Liquidator. They could not file the claim within the period prescribed by the Liquidator vide publication dated 23.01.2020 and on 15.06.2021, the Liquidator sought balance confirmation from the Appellant, when they came to know about the liquidation proceedings. The present is a case where the Appellant has informed about its claim to the IRP as early as on 06.09.2017 and the Liquidator himself sent letter dated 15.06.2021 asking the Appellant to make payment to the Corporate Debtor. The claim of the Appellant was forwarded to the Liquidator vide letter dated 21.07.2021 and 02.08.2021. Thereafter, the Liquidator wrote to the Appellant proposing settlement of old outstanding amount. The claim, thus, raised by the Appellant was under active consideration of the Liquidator and the view subsequently taken by the Liquidator on 07.01.2022 that claim was not filed within the time period is unsustainable. In the present case Adjudicating Authority committed error in simply rejecting/ dismissing the Appeal of the Appellant without taking into consideration the detailed correspondence, which were exchanged between IRP/Liquidator and the Appellant. Furthermore, no process regarding auction of the assets of the Corporate Debtor has yet been initiated. Hence, in the facts of the present case and to meet the ends of justice, the Liquidator is directed to consider the claim of the Appellant herein - Appeal allowed.
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2022 (9) TMI 913
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor or not - Financial Debt or not - amount was transferred to the personal account of the intermediary as well as the personal account of the directors but failed to establish that the amount was given to the corporate debtor - restraint from selling or alienating any third party rights on the assets till the disposal of the Appeal - Section 5(8) (a) to (i) of the IBC - HELD THAT:- Limited protection till the next date of hearing, be granted to the Appellant in the interest of justice. Hence, status quo is directed to be maintained on the subject property in the instant matter till the next date of hearing.
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2022 (9) TMI 912
Seeking consideration of belated resolution plan submitted by the Respondents No.6 to 8 - Section 31 of the I B Code, 2016 - HELD THAT:- The Appellant rightly invoked the jurisdiction of the Adjudicating Authority seeking approval of Resolution Plan of the 5th Respondent which was approved by the CoC on 11.02.2020. The CoC in their commercial wisdom and by exercising the powers under sub-section (4) of Section 30 of the I B Code approved the Resolution Plan with 100% voting share, though as per the provision 66% of the voting share of the CoC, meets the requirement for approval of Resolution Plan. After approval of the Resolution Plan by the CoC, the Resolution Professional shall submit the resolution plan to the Adjudicating Authority for its approval under sub-section (6) of Section 30 of the Code. The power vested in the Adjudicating Authority, that it shall approve the Resolution Plan if it is satisfied that the plan has been approved by the CoC and meets the requirements or reject the Resolution Plan under sub-section (2) of Section 31 of the Code. Other than this the Adjudicating Authority simply cannot dispose of the application without considering the same on merits. The Adjudicating Authority miserably failed in exercising the powers vested in it and passed a cryptic and unreasonable order, this Tribunal is of the view that the said order is illegal and without application of mind. This Tribunal does not find any justification in passing the above impugned order when an application is pending for considering before the same Adjudicating Authority for approval of resolution plan. When an application is filed before the Adjudicating Authority seeking approval of Resolution Plan, meaning thereby the resolution process with respect to Corporate Debtor is in advance stage by overcoming the engrossing process as enshrined under the I B Code from the date of initiation of CIRP against the Corporate Debtor till the approval of Resolution Plan - It is apt to note that the once Resolution Plan is approved by the CoC with requisite voting share i.e. 66%, in the present case, the CoC voted with 100% voting share in approving the Resolution Plan and the same is binding and irrevocable as between the CoC and the Successful Resolution Applicant. This Tribunal unequivocally comes to a resultant conclusion that the impugned order passed is per se illegal, without application of mind, the same is set aside - Appeal allowed.
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2022 (9) TMI 911
CIRP proceedings - Financial Creditors - Corporate Debtor submitted that Corporate Debtor is now ready to deposit the entire amount within 45 days - HELD THAT:- In the present case, Section 7 Application was filed claiming an amount of Rs. 15,79,41,658/-. On the earlier date, when the Company Petition was taken i.e. on 06th July, 2022, Corporate Debtor came with an offer of Rs. 12.75 Crores to be paid within 45 days on which, Court directed the Financial Creditor to obtain instructions. Amount of Rs. 12.75 Crores which was offered on 06th July, 2022 by the Corporate Debtor was not the entire amount claimed by the Financial Creditor in the Application. But on the next date i.e. 11th July, 2022, when the case was taken, Learned Counsel for the Corporate Debtor submitted that Corporate Debtor is now ready to deposit the entire amount within 45 days. Submission of the Appellant is that since the Appellant expressed its unwillingness to settle the matter, the course adopted by the Adjudicating Authority is impermissible. The present is a case where the Adjudicating Authority has not directed the Financial Creditor to enter into settlement with the Corporate Debtor, the Adjudicating Authority has only recorded the statements of the Corporate Debtor that they are ready to deposit the entire defaulted amount within 45 days and has permitted the Corporate Debtor to deposit the amount within 45 days. The Adjudicating Authority by the same order has also granted liberty to the Financial Creditor to revive the Company Petition if the amount is not paid within 45 days. In the facts of the present case, the Adjudicating Authority has only given an opportunity to the Corporate Debtor to deposit the entire defaulted amount for which Section 7 Application was filed, within 45 days with liberty reserve to the Financial Creditor to revive the Section 7 Application in event the amount is not deposited - in consequence of the Order of the Adjudicating Authority, the Corporate Debtor deposits the entire defaulted amount whether still the Adjudicating Authority was required to necessarily admit the Section 7 Application. Appeal dismissed.
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2022 (9) TMI 910
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Person - existence of debt and dispute or not - HELD THAT:- As the Corporate Debtor is not carrying any business and has huge losses also, therefore, the Adjudicating Authority has rightly passed the impugned order in admitting the Application filed by Bihar State Construction Corporation Limited- the Corporate Person under Section 10 of the IBC. Also keeping in view of the facts that the seventh meeting held on 30.10.2021, the CoC rejected to reissue Form G again as no EOI had been received till date, the Corporate Debtor is not carrying any business and huge losses also. Hence, CoC decided to liquidate the Corporate Debtor. In the same meeting, the resolution for filing of liquidation application and confirming the Resolution Professional as Liquidator was approved by the CoC with 100% voting and as such the liquidation application was filed before the Adjudicating Authority on 01.11.2021. Appeal dismissed.
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2022 (9) TMI 909
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - initiation of proceedings under Sections 13 and 14 of the SARFAESI Act under which possession of property was handed over - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Appellant in application has given the details of events from 19.06.2015 to March, 2020 and has given details of the Deed of Mortgage entered by Corporate Debtor to secure the loan granted to the sister concern. Details of SARFAESI proceedings initiated against borrower as well as complaint filed under Maharashtra RERA Act was referred to. Details of the order passed by MRERA dated 04.05.2018 and other details were given. The application filed by the Appellant was an application under Section 60(5) of the Code r/w Rule 11 of NCLT Rules, 2016 and under Section 65 of the Code seeking appropriate directions. The Appellant/ Applicant has come up in the application as an assignee of the Financial Creditor to whom the subject property is mortgaged and possession has already been taken under Section 13(4) of SARFAESI Act much before the filing of Section 7 application. Application also notice in detail the proceedings initiated against the Corporate Debtor prior to the application under Section 7 and allegations have been made in the application that the application has been filed fraudulently and maliciously to save the Corporate Debtor. Allegations made in the application are the allegations which are made in reference to Section 65 of the Code. The application by the Appellant was competent application filed under Section 60(5) of the Code r/w Rule 11 of NCLT Rules, 2016 and under Section 65 of the Code and the Adjudicating Authority was obliged to look into the allegations to find out if there is any ground to grant any of the prayers made in the application. The finding of the Adjudicating Authority that the Appellant has no locus cannot be sustained. When the Appellant claims to be the Financial Creditor who is assignee of the Financial Creditor and the application records sequence of events and various proceedings prior to the application under Section 7, the allegations ought to have been looked into and could not have been brushed aside by observing that the applicant has no locus. Appeal allowed.
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2022 (9) TMI 908
CIRP - admission of belated claim - financial debt - NCLT allowed the claim and issued direction that the claim filed by the Respondent/State of Karnataka in Form-C, shall be put up by the RP to the CoC for its consideration - mandatory requirement of filing a claim - whether the Appellant has made out any case warranting interference by this Tribunal in the order passed by the Adjudicating Authority? - HELD THAT:- Admittedly, the Corporate Debtor availed a special scheme / incentive from the 1st Respondent and there is no actual disbursement of money. The said fact was not denied by the 1st Respondent herein. The loan was interest free and towards unpaid Value Added Tax for a period of 10 years which is a benefit issued by the Respondent as a promotion policy of the State Government - it is seen that there is no actual disbursement of money that has made to the Corporate Debtor. Further, there is no enhancement of money after a particular time period. It is pertinent to note that the policy / scheme was to enhance / boost industrial production by providing some monitory incentive/concession and not to earn interest and the interest payment in case of default in repayment is purely in the nature of a penalty. It is reiterated that there is no actual disbursement of money. While so, the contention of the Appellant that since there is no interest factor as per the definition of the financial debt, the claim of the 1st Respondent cannot be considered as financial debt. It is apt to note that one of the most crucial principle is time is essence in any resolution process within which the process has to be completed in a time bound manner as contemplated under the Code - this Tribunal find that the claim of the 1st Respondent herein is belated and cannot be considered and the finding of the Adjudicating Authority in directing the RP to place the claim in Form-C before CoC per se illegal and unsustainable accordingly, the point is answered against the 1st Respondent. Whether the RP has power to admit the claims suo-motu? - HELD THAT:- The code prescribes the duties to be performed by the Interim Resolution Professional and the Resolution Professional, as per Section 18 and Section 25 of the I B Code, 2016. The IBBI (Insolvency Resolution Process for Corporate persons) Regulations 2016, prescribes the procedure to be adopted/followed. As per Chapter IV Regulation 7 of the Regulations, the Claims by the Operational Creditor to be submitted with proof to the Interim Resolution Professional in Form-B and as per Regulation 8 of the Regulations, the Financial Creditors shall submit the Claims to the Interim Resolution Professional in Form-C - There is no such provision that the Interim Resolution Professional, shall admit the Claim without filing a Claim Form either in Form-B or in Form-C. Therefore, this Tribunal, is of the considered view, that the Interim Resolution Professional, suo-motu cannot admit the Claims without their being a Claim by the Claimants viz. Operational Creditors, Financial Creditors and Claims by other Creditors. Every Claim shall be submitted by the Claimant with proof. This Tribunal comes to a resultant conclusion that the order passed by the Adjudicating Authority is per se, an illegal and an unjusticiable - Appeal allowed.
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2022 (9) TMI 907
CIRP - power to entertain new Resolution Plan after approval of another resolution plan by the CoC - whether the Respondents after expressing their inability to submit the Resolution Plan vide their e-mail dated 06.11.2019 can again submit the Resolution Plan after lapse of more than 5 months and that to after approval of the Resolution Plan by the CoC in accordance with law? - HELD THAT:- From the provisions of law and the Regulation the procedure for submission of resolution plan and the powers of the Committee of Creditors in approving the resolution plan by a vote of not less than 66% of voting share of the Financial Creditors after considering its feasibility and viability may approve the plan. Once the plan is approved by the Committee of Creditors, the Adjudicating Authority empowered to approve the plan under Section 31 which was approved by the Committee of Creditors and meets the requirements as referred to in sub-section (2) of Section 30. Further, the procedure encapsulated under the regulations and as per Regulation 39(1-B) the Committee shall not consider any resolution plan received after the time as specified by the Committee under Regulation 36B. In view of the reasons every Resolution Applicant shall comply with the procedure as prescribed under the law and regulations. The due procedure and the scrutiny are a continuous process and cannot be considered as a simple contractual negotiation between two parties. In the instant case, the Respondents have failed to submit the Resolution Plan within the time therefore there is no immunity to the respondents to file beyond the time prescribed. The RP rightly rejected the request of the Respondents - the Respondents failed to establish that the RP violated the CIRP process. It is only the case of the Respondents such averments allegations have been made and the Adjudicating Authority without going into the reality simply ratified the submissions of the Respondents, which this Tribunal highly deprecate the said stand. It is not in dispute that the CIRP period has been expired prior to submission of plan by the Respondents and the Respondents have not evinced any interest in submitting of resolution plan, after they backed out from the submission of plans vide letter dated 06.11.2019. It is not in dispute that the Respondents backed out and submitted its plan beyond the CIRP period by levelling baseless allegations against the RP to pressurise the RP to place its plan before the CoC . Such conduct of the Respondents is unwarranted. The Adjudicating Authority vide its impugned order had directed the CoC to consider the 2nd settlement offer of the 1st Respondent therein, when the resolution plan after approval from CoC was pending adjudication under Section 31 before the Adjudicating Authority. The Appellant has made out a prima-facie case to be interfered with the Order, passed by the Adjudicating Authority, whereby the Adjudicating Authority exceeded its jurisdiction in directing the Resolution Professional to place the Resolution Plan of the Respondents before the CoC is amounts to interference with the Commercial Wisdom exercised by the CoC in its Commercial Decision, more particularly, in the absence of any material irregularity and violation of any law for the time being inforce - this Tribunal comes to a resultant conclusion that the impugned order passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) is illegal, exceeded its jurisdiction and hence, the same is set aside. Appeal allowed.
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2022 (9) TMI 906
Financial Creditors or not - Appellants are allottee within the meaning of the Real Estate (Regulation and Development) Act, 2016 or not - admission of claim of the landowners as Financial Creditors, by Resolution Professional - allotment of flats and commercial shops consequent to the Development Agreement - Financial Debt or not - HELD THAT:- The present is a case where on the land which was offered by the landowners including the Appellants the development was proposed to be undertaken by the Corporate Debtor. A Development Agreement was entered between the parties where area sharing was in the ratio of 45:55 percent. The Landowners has also received a refundable security deposit of Rs.1.75 Crores from the Corporate Debtor. Learned counsel for the Appellants has much emphasized on the fact that as per the Development Agreement 117 flats and 20 commercial shops have been allotted to the landowners and they are allottee within the meaning of RERA Act, 2016. From provision of Section 5(8)(f) Explanation (i) and (ii), it is clear that pre-condition for a debt being a Financial Debt is disbursement against the time value of money and when any amount is raised from an allotment under real estate such transaction is also covered under Section 5(8)(f). The pre-condition for application of Explanation (i) of Section 5(8)(f) is raising of an amount from allottee. The present is not a case where an amount has been raised from the Appellants the Landowners - On looking into the real nature of the transaction entered between the Corporate Debtor and the Appellants Landowners, the landowners were entitled to share the constructed area in the ratio of 45:55 and allotment of flats and commercial units in lieu of their entitlement under the Development Agreement does not make the transaction of allotment a Financial Debt within the meaning of Section 5(8)(f). There are no error in the decision of the Adjudicating Authority holding the Appellants-Landowners as not Financial Creditors - appeal dismissed.
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2022 (9) TMI 905
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - existence of debt and dispute or not - HELD THAT:- In the present case, the occurrence of default is evidenced by the copy of Certificates of all financial creditors issued by the corporate debtor (Annexure B), establishing the relationship between the parties and date of redemption as promised by the Corporate Debtor. Whether the present application has been filed within limitation? - HELD THAT:- It can be seen from the records that corporate debtor had to pay back the invested amount to Mr. Dhan Kunwar Verma on 05.11.2019. Further, details with respect to other Financial Creditors about the allotment, amount paid and date of default is mentioned at pages 37-50 of the petition. True Copy of the Certificates of all financial creditors has been attached at Annexure B, whereas the present petition has been filed vide Diary No. 0902109003652021 dated 18.06.2021. Therefore, the present petition is filed within limitation. Whether the present petition 'by investors who are the creditors of same class is maintainable? - HELD THAT:- In the present case, more than 132 creditors of same class who have approached this Authority for the redressal of their grievances. In view of The Insolvency and Bankruptcy Code (Amendment) Act, 2020 dated 16.08.2019 by which 1st Proviso to Sec. 7(1) was added which was upheld by judgment of the Hon'ble Supreme Court of India in MANISH KUMAR VERSUS UNION OF INDIA AND ANOTHER [ 2021 (1) TMI 802 - SUPREME COURT] , the petitioners being more than one hundred of such creditors in the same class are eligible to file the present petition under Section 7 of the IBC, 2016. Moreover, no such objection on the maintainability of the petition has been raised by respondent as it proceeded against ex-parte. Thus, the application filed in the prescribed Form No. 1 is found to be complete. The present petition being complete and having established the default in payment of the Financial Debt and default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Petition admitted - moratorium declared.
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Service Tax
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2022 (9) TMI 904
Waiver under Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 - amount paid by the petitioner, under protest, towards interest , prior to issuance of show cause shall be considered as pre-deposit, or not - Section 24 of the Finance Act - HELD THAT:- Sub-section (2) of section 124 is relevant for this case. It is noticed, on plain reading of the same, that the relief calculated under Sub-section (1) shall be subject to the condition that any amount paid as pre-deposit at any stage of appeal proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit shall be deducted when issuing the statement indicating the amount payable by the declarant. Thus, it is clear that statute itself do not make any distinction between payment of taxes, interest thereon or any penalty in amount which has been deposited during enquiry, investigation or audit shall be deducted while issuing the statement and shall be adjusted while calculating relief to the declarant. This Court is of the opinion that Section 124 of the Finance Act, 2019, is a benevolent provision. The Parliament in its wise discretion thought it proper to grant one time relief to all tax payers under the GST Scheme so that disputes can be resolved amicably and restrictive parochial interpretation of the provisions should be avoided by the Courts and also by the Authorities so that objects of the beneficial scheme can be Achieved. Therefore, this Court, even though was informed that the Scheme has already come to its conclusion and the auto-populated form has already expired, the Court is inclined to allow the writ petition. This Court direct that Form SVLDRS-3 is quashed and the Designated Committed to reconsider the claim of the petitioner within a period of three weeks from the date of receipt of certified copy of this order, after adjusting the amount paid towards interest to be specific RS. 3,19,69,680/- in accordance with law - Petition allowed.
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2022 (9) TMI 903
Levy of penalty - suppression of facts or not - Non/Delayed payment of service tax - Cenvat credit wrongly taken on account of clerical mistakes or not - suppression can be alleged merely on audit objections or not - Service Tax with interest paid before the issue of Show Cause Notice - applicability of benefit of Section 73(3) of the Finance Act, 1994 - whether payment of service tax, which was not made by the assessee falls within the conditions prescribed in the Act? - HELD THAT:- The assessee has given two reasons for non-payment. Firstly, that it had occurred due to clerical mistake committed by the employee, who was handling the service tax and he had passed away. Secondly, that the Finance Manager had also resigned. These reasons have been accepted by the CESTAT. It is relevant to note that upon being pointed out during the audit, the assessee has promptly made the payment of tax with interest and requested not to issue any show-cause notice. In order to reverse the decision of the CESTAT, nothing is pointed out from the record to demonstrate that there was either fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of the Act and Rules. In the absence of the conditions contained in Section 78 of the Finance Act, the imposition of penalty is not sustainable. Hence, no interference is called for with the impugned decision of the CESTAT - appeal dismissed.
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2022 (9) TMI 902
Levy of Service Tax - Off-shore Engineering and Technical services - composite engineering, procurement and construction (EPC) contract on a turnkey basis - independent contract or not - whether no part of the contract could have been separately subjected to levy of service tax by treating it to be a service rendered by a consulting engineer? - Extended period of limitation - HELD THAT:- A works contract means a contract for the purpose of carrying out, amongst others, turnkey projects including EPC projects. The Commissioner did record a finding, after perusal of the five contracts, that the Guarantee Agreement for EPC contract on turnkey basis is the base contract for the other four contracts, but observed that since the scope of work in all these four contracts is different for different prices, the four contracts are independent of each other and, therefore, would individually be subjected to levy of service tax. The Supreme Court in Larsen and Toubro [ 2015 (8) TMI 749 - SUPREME COURT] held that works contract service became taxable w.e.f. 01.06.2007 and that any segment of works contract service was not taxable under a different category. The submission advanced by the Revenue that service tax was payable on the amount earmarked for drawing, design, etc., activities in a works contract under the category of consulting engineer service was repelled. Such being the position, it would not be necessary to examine the remaining contentions advanced by learned counsel for the appellant that the Off-shore services could not have been taxed in India or that the extended period of limitation could not have been invoked. The impugned order dated 31.01.2007 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed - decided in favor of appellant.
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2022 (9) TMI 901
Classification of services - job work in the factory premises - engineering works as per drawings on the machines, tool provided by the contractors - Manpower Recruitment or Supply Agency Service or under job work service - responsibility of the appointed workers on the assigned work - HELD THAT:- It is found that in the present dispute whether the service is of Manpower Recruitment or Supply Agency Service or job work can be decided only on the basis of the agreement entered between service provider and service recipient. As per the agreement in the present case, the service recipient is having their factory and carried out various manufacturing activities. The present appellant was assigned job work related to manufacturing on the basis of charges which is per piece basis and the item being manufactured by the appellant. As per terms and conditions of the agreement, the service recipient will provide all the facilities such as machines, tools, place etc. - whenever there is work, the charges will be paid by the service recipient to the appellant as per the rates decided i.e. per piece basis. Responsibility and control - HELD THAT:- The entire control of workers deputed by the appellant for the job work is with the appellant only and the service recipient has no obligation as regards the number of workers, man-hour etc. for the job assigned to the appellant. In these terms of contract, we are of the clear view that contract is for job work carried out by the appellant for the service recipient. Therefore, there is no activity of providing the service of Manpower Recruitment or Supply Agency Service. In the case of MESSERS SUREEL ENTERPRISE PVT. LTD., M/S. SUREEL ENTERPRISE P. LTD. VERSUS C.C.E. S. T- AHMEDABAD-III [ 2019 (10) TMI 1245 - CESTAT AHMEDABAD] wherein the similar facts are prevailing inasmuch as the service provider provided the manufacturing activity in the factory of service recipient with the help of his own workers and it was held that service is of not Manpower Recruitment or Supply Agency Service but it is job work. The appellant have not provided service of Manpower Recruitment or Supply Agency Service, hence the demand does not sustain - Appeal allowed - decided in favor of appellant.
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2022 (9) TMI 900
Levy of penalty of 75% - late payment of part penalty - demand under GTA Service in respect of freight amount exceeds to Rs. 750/- and Rs. 1500/- - appellant, complying with the option given by Adjudicating Authority, though paid 25% of penalty but after the stipulated time of one month - HELD THAT:- Though the appellant have made ground against confirmation of demand also but learned Counsel Shri Paresh Sheth fairly concedes that the appellant is contesting only for 75% penalty imposed under Section 78 of Finance Act, 1994. Though the appellant have paid 25% penalty but the same was paid after the stipulated time period of 30 days. Since the said period is statutory, same cannot be relaxed. However, it is found that the appellant otherwise paying service tax as per the belief that service tax is payable only in cases where freight amount is exceeding Rs. 750/-. There is only a misunderstanding about the calculation of limit of Rs. 750/-. Moreover, the appellant have paid entire service tax, interest and 25% penalty. A lenient view can be taken particularly for waiver of penalty of 75% - penalty of 75% under Section 78 of Finance Act, 1994 invoking Section 80, is set aside - demand of service tax, interest (if any) and 25% penalty under Section 78 is upheld. Appeal allowed in part.
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Central Excise
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2022 (9) TMI 899
100% EOU - Time Limitation - relevant date for consideration of refund claim - whether the initial date of submission of the subject refund claim on 31.03.2008 is the relevant date for computation of the period of limitation under Section 11B of the Central Excise Act, 1944 for refund of unutilized CENVAT Credit for the period 2006-07? - HELD THAT:- In appellant's own case M/S. SURETEX PROPHYLACTICS INDIA PRIVATE LIMITED, M/S. MACH AERO COMPONENTS PVT. LTD., M/S. CONTINENTAL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX BANGALORE I [ 2020 (5) TMI 225 - KARNATAKA HIGH COURT] this Court has held that the application for claiming refund of unutilized CENVAT Credit should be within the limitation or time prescribed under Section 11-B of the Central Excise Act, 1944. It has been further held that the time limit has to be computed from the last date of the last month of the quarter which would be the relevant date for the purposes of examining whether the claim is filed within the period of limitation prescribed under Section 11-B or otherwise. In the instant case, for the financial year 2006-07, which ends on 31.03.2007, the application has been filed on 31.03.2008 - In view of the admission by the Revenue in the statement of facts that the application was filed on 31.03.2008, the assessee's argument is accepted that the application was filed on 31.03.2008. This appeal merits consideration so far as the refund claim for the last quarter is concerned - Appeal allowed in part.
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2022 (9) TMI 898
Refund of unutilized CENVAT credit - relevant date for computation of the period of limitation of one year for submission of the refund claim by a manufacturer of goods - Section 11B of the Central Excise Act, 1944, Rule 5 of the CENVAT Credit Rules, 2004 - Interest on delayed refund - HELD THAT:- The appellant has filed the refund application for the period of January, 2005 to March, 2006. The application has been submitted on 31.03.2007 - In the case of M/S. SURETEX PROPHYLACTICS INDIA PRIVATE LIMITED, M/S. MACH AERO COMPONENTS PVT. LTD., M/S. CONTINENTAL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX BANGALORE I [ 2020 (5) TMI 225 - KARNATAKA HIGH COURT] , it has been held that limitation is applicable for refund claims - In view of the law laid down in Suretex, the period of limitation will be applicable for refund claims of accumulated CENVAT Credit. Payment of interest - HELD THAT:- As held in COMMISSIONER OF CENTRAL TAX, BENGALURU VERSUS NETAPP INDIA PVT. LTD. [ 2019 (3) TMI 1750 - KARNATAKA HIGH COURT] the assessee shall be entitled for the interest. Appeal allowed in part.
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2022 (9) TMI 897
CENVAT Credit - input services - invoices issued by the principal importers from whom the appellant purchased the inputs on high sea import basis - whether the principal importer was not an agent for the purpose of passing on such credit of service tax paid before the date of the agreement? - HELD THAT:- The issue involved herein is no more res integra in view of the decision of the Tribunal in appellant s own case for the earlier years i.e. December, 2010 to December, 2015 in the matter of M/S REVEX POLYMERS PVT. LIMITED VERSUS COMMISSIONER (APPEALS) , DGGSTI, JAIPUR [ 2019 (2) TMI 2048 - CESTAT NEW DELHI] in which this Tribunal while deciding the issue whether the appellants are entitled to Cenvat credit on such storage or warehousing charges paid on inputs, it was held that the appellant is entitled to avail cenvat credit on storage or warehouse charges incurred in the course of acquisition of inputs. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (9) TMI 896
Jurisdiction of HC to entertain the writ petition bypassing the statutory remedy of appeal - Validity of assessment order - belated notice of demand - AO called upon the assessee to produce relevant documents and also to show cause as to why it should not be assessed under the relevant provisions of Section 23 of the MVAT Act - HELD THAT:- It is required to be noted that against the assessment order passed by the Assessing Officer under the provisions of the MVAT Act and CST Act, the assessee straightway preferred writ petition under Article 226 of the Constitution of India. It is not in dispute that the statutes provide for the right of appeal against the assessment order passed by the Assessing Officer and against the order passed by the first appellate authority, an appeal/revision before the Tribunal. In that view of the matter, the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the assessment order in view of the availability of statutory remedy under the Act. There are serious disputes on facts as to whether the assessment order was passed on 20.03.2020 or 14.07.2020 - No valid reasons have been shown by the assessee to by-pass the statutory remedy of appeal. This Court has consistently taken the view that when there is an alternate remedy available, judicial prudence demands that the court refrains from exercising its jurisdiction under constitutional provisions. The High Court has seriously erred in entertaining the writ petition against the assessment order - the High Court ought to have relegated the writ petitioner assessee to avail the statutory remedy of appeal and thereafter to avail other remedies provided under the statute - The writ petition filed before the High Court challenging the assessment order and consequential notice of demand of tax is hereby dismissed.
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2022 (9) TMI 895
Binding Judgement of Lager Bench / Majority decision - strength of the Bench - Levy of sales tax - Classification of goods - Pan Masala, which contains tobacco and gutka - covered by an Entry in the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act 1957, or not - taxability by the State under the Delhi Sales Tax Act 1975 and/or the Uttar Pradesh Trade Tax Act 1948 and/or the Tamil Nadu General Sales Tax Act, 1959? As per INDIRA BANERJEE J. HELD THAT:- It is well settled that once goods are chargeable under the ADE Act, the State cannot levy sales tax on the same goods under a State enactment. In KOTHARI PRODUCTS LTD. VERSUS GOVERNMENT OF ANDHRA PRADESH [2000 (1) TMI 823 - SUPREME COURT] , the question was, tobacco being specified in the First Schedule to the ADE Act, and exempted from Sales Tax under Section 8 of the Andhra Pradesh General Sales Tax Act 1957, whether gutka could be taxed by the State of Andhra Pradesh. The Court found that gutka being tobacco, covered by an Entry in the First Schedule to the ADE Act and liable to be taxed under the ADE Act, it was covered by the exemption in Section 8 of the Andhra Pradesh General Sales Tax Act . The State Act could not have been amended to tax gutka . In COMMISSIONER OF SALES TAX, UP. VERSUS AGRA BELTING WORKS, AGRA [1987 (4) TMI 82 - SUPREME COURT] , the majority of the threeJudge Bench of this Court, by ratio of 2:1, inter alia, held When power for both the operations vests in the State and the intention to levy the tax is clear we see no justification for not giving effect to the second notification. We would like to point out that the exemption was in regard to a class of goods and while the exemption continues, a specific item has now been notified under Section 3A of the Act. There is no conflict between the Kothari Products line of cases and the Agra Belting line of cases. The Kothari Products line of cases was on the question of whether tobacco or other goods specified in the First Schedule to the ADE Act and hence exempted from Sales Tax under State sales tax enactments, can be made exigible to tax under the State enactments by amending the Schedule thereto. On the other hand, Agra Belting Works line of cases was on the question of interplay between general exemption of specified goods from sales tax under Section 4 of the U.P. Sales Tax Act and specification of rates of sales tax under Section 3A of the said Act. This Court held that goods exempted from sales tax under Section 4 would be exigible to tax by virtue of subsequent notification under Section 3A specifying the rate of sales tax for any specific item of the class of goods earlier exempted under Section 4. There being no conflict, the reference to Constitution Bench is incompetent. The cases may be placed for decision before the regular Bench. In view of Article 145(5) of the Constitution of India concurrence of a majority of the judges at the hearing will be considered as a judgment or opinion of the Court. It is settled that the majority decision of a Bench of larger strength would prevail over the decision of a Bench of lesser strength, irrespective of the number of Judges constituting the majority. The conclusion is that a decision delivered by a Bench of largest strength is binding on any subsequent Bench of lesser or coequal strength. It is the strength of the Bench and not number of Judges who have taken a particular view which is said to be relevant. As per HEMANT GUPTA, J. A reference was made to insertion of Article 144A in the Constitution by the 42nd Amendment with effect from 01.02.1977 - The said amendment was undone by 43rd Amendment when Article 144-A was omitted with effect on and from 01.02.1977. Though the said insertion of Article 144-A stands repealed, but it shows that the legislature also considered majority of not less than 2/3rd of Judges should determine the question as to the constitutional validity of law. Therefore, even such amendment contemplated dissent and a minority view. The conclusion makes it absolutely clear that a Bench of lesser quorum cannot disagree or dissent from the view of law taken by a Bench of larger quorum. Quorum means the bench strength which was hearing the matter. Thus, it has been rightly concluded that the numerical strength of the Judges taking a particular view is not relevant, but the Bench strength is determinative of the binding nature of the Judgment.
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Indian Laws
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2022 (9) TMI 894
Validity of Arbitral Award - seeking grant of stay of Award - section 36 of Arbitration and Conciliation Act, 1996 - seeking to furnish security against the amount awarded by the Arbitral Tribunal u/s 9 of the Act - HELD THAT:- Under Section 36, where the time for making an application to set aside arbitral award has expired, the award might be enforced in accordance with the provisions of the CPC in the same manner as it were a decree of the Court. Section 36(2) makes it clear that filing an application for setting aside of an award under Section 34 is not to render the award unenforceable, unless the Court expressly grants an order of stay of operation of the arbitral award in accordance with the provisions of subsection (3) of Section 36, on a separate application made for that purpose - Section 9 of the Arbitration Act confers wide power on the Court to pass orders securing the amount in dispute in arbitration, whether before the commencement of the Arbitral proceedings, during the Arbitral proceedings or at any time after making of the arbitral award, but before its enforcement in accordance with Section 36 of the Arbitration Act. All that the Court is required to see is, whether the applicant for interim measure has a good prima facie case, whether the balance of convenience is in favour of interim relief as prayed for being granted and whether the applicant has approached the court with reasonable expedition. It is not in dispute that there is an award of Rs. 142 Crores in favour of the Respondent. No cogent ground has been made out even prima facie, for interference with the impugned award - Order 41 Rule 5 of the CPC provides for stay of decree upon furnishing of cash security. The High Court acted within the scope of its powers under Section 9 in passing the impugned judgment and order. There are no ground at all to interfere. The Appeals are dismissed - the High Court is requested to dispose of the pending applications of the Appellant under Section 34 for setting aside the award as expeditiously as possible, preferably within 3 months from the date of communication of this judgment and order.
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2022 (9) TMI 893
Dishonor of Cheque - compliance with the condition of deposit of 20% of the fine amount or not - Section 148 of NI Act - HELD THAT:- The contention sans substance as this Court in SYED ISHRATHULLA HUSSAINI VERSUS MR. NOOR AHMED N.M. [ 2022 (6) TMI 1306 - KARNATAKA HIGH COURT] , has clearly interpreted Section 148 of the Act and has directed payment of 20% of the fine amount, is mandatory. The contention of the learned counsel for the petitioner deserves to be rejected and is rejected - Petition dismissed.
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