TMI Tax Updates - e-Newsletter
September 30, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. WHETHER A FINANCIAL CREDITOR CAN OPPOSE THE SETTLEMENT PROPOSAL OF CORPORATE DEBTOR?

   By: DR.MARIAPPAN GOVINDARAJAN

2. SEARCH AND SEIZURE UNDER GST LAW (PART-4)

   By: Dr. Sanjiv Agarwal

3. Refund application is not barred by limitation, as period from 1st March, 2020 to 28th February, 2022 to be excluded

   By: Bimal jain

News

1. CCI approves acquisition by Adani Power Limited of share capital of Diliigent Power Private Limited and DB Power Limited

2. CCI approves acquisition of of the share capital of eighteen subsidiaries of Mytrah Energy (India) Private Limited by JSW Neo Energy Limited

3. CCI approves acquisition of Assets of Essar Group by ArcelorMittal Nippon Steel India Limited

4. Shri Piyush Goyal asks Service Sector to utilize the natural advantages and identify the areas of strength to become globally competitive

5. Government Borrowing Plan for Second Half of FY 2022-23

6. Clarification in operation of Senior Citizens’ Savings Scheme

7. Constructive co-operation coupled with trust and transparency is key to tap the trade potential of SCO Member States: Smt. Anupriya Patel

8. Electoral Bearer Bond Scheme September, 2022

Notifications

Customs

1. 51/2022 - dated 28-9-2022 - Cus

Implementation of India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA) - Seeks to amend Notification No. 25/2021-Customs, dated the 31st March, 2021

2. G.S.R. 732 (E) - dated 26-9-2022 - Cus (NT)

Inland Container Depots for loading and unloading of goods - Corrigendum - Notification No. 80/2022-Customs (N.T.), dated the 21st September, 2022

DGFT

3. 37/2015-2020 - dated 29-9-2022 - FTP

Amendment in Foreign Trade Policy (FTP) 2015-2020

GST

4. 20/2022 - dated 28-9-2022 - CGST

Extension of due date for filing of application for refund u/s 55 by notified agencies - Seeks to rescinds the Notification No. 20/2018-Central Tax, dated the 28th March, 2018.

5. 19/2022 - dated 28-9-2022 - CGST

Central Goods and Services Tax (Second Amendment) Rules, 2022

6. 18/2022 - dated 28-9-2022 - CGST

Amendments to certain provision of GST Act - Provisions of sections 100 to 114, except clause (c) of section 110 and section 111, of the Finance Act, 2022 shall come into force w.e.f 1.10.2022

Income Tax

7. 111/2022 - dated 28-9-2022 - IT

Income-tax (32nd Amendment) Rules, 2022

VAT - Delhi

8. F. No. 3(15)/Fin.(Exp.-I)/2022-23/DS-I/780 - dated 28-9-2022 - DVAT

Amendment in Fourth Schedule of Delhi Value Added Tax Act, 2004

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/MRD-RAC-1/P/CIR/2022/131 - dated 29-9-2022

Participation of SEBI registered Foreign Portfolio Investors (FPIs) in Exchange Traded Commodity Derivatives in India

Income Tax

2. F. No. 370133/13/2022-TPL - dated 28-9-2022

Order specifying the Collegium - Explanation to section 158AB of the Income-tax Act, 1961

DGFT

3. 26/2015-20 - dated 29-9-2022

Extension of Hand Book of Procedures, 2015-20

Companies Law

4. 09/2022 - dated 28-9-2022

Extension of time for filing e-form DIR-3-KYC and web-form DIR-3-KYC-WEB without fee upto 15.10.2022

Highlights / Catch Notes

Income Tax

• Court Rules Section 153C Notice Unwarranted; Documents Found Not Incriminating Due to Issuing Authority Status.

  Case-Laws - HC : Assessment u/s 153C - Satisfaction Note for issue of notice u/s 153C - the recovery of the annual report and the share certificate of the Petitioner from premises of Minda Group cannot be considered to be incriminating documents. After all, the Minda Group was not a third party but the issuing authority of the share certificates. I - HC
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• High Court overturns rejection of rectification u/s 154; reassessment ordered for tax liability u/s 143(1).

  Case-Laws - HC : Rectification of mistake u/s 154 - Income deemed to accrue or arise in India - The order of rejection of the application u/s 154 issued by the Centralised Processing Centre (CPC), Bangalore are quashed. Consequently, the order passed by the Assessing Officer computed the tax liability as per the intimation u/s 143 (1) and the assessment stands restored to the file of the AO - HC
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• Court Confirms Directors' Liability for Company Debts u/s 179(1) of Income Tax Act Due to Insufficient Defense.

  Case-Laws - HC : Recovery of the amounts from the company and its directors - Liability of directors - Section 179(1), in itself, grants the Directors the liberty to prove that the non-recovery cannot be attributed to gross neglect, misfeasance or breach of duty on their part in relation to the affairs of the company. In the present case, the replies filed by the petitioners to the show cause notices prior to passing of the impugned orders merely contain a bald assumption to this effect. - Recovery confirmed - HC
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• No Penalty for Non-Compliance u/s 271(1)(b) Due to Proper Assessment Process u/ss 143(3) and 153A.

  Case-Laws - AT : Penalty u/s 271(1)(b) - assessee has made no response to the questionnaire - there was no wisdom in the assessment order in respect of alleged non-compliance - when the AO has framed the assessment order u/s 143(3) r.w.s. 153A of the Act and assessment order has not been passed u/s 144 of the Act, therefore the penalty u/s 271(1)(b) of the Act, for non-compliance should not be levied. - AT
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• Dispute Over Tax Liability Enhancement Under IT Act Section 154; Ownership of Document u/s 69A Contested.

  Case-Laws - AT : Rectification of mistake u/s 154 - enhancing the tax liability of the assessee u/s.115BBE - the impugned addition whether to be made u/s.69A is highly debatable in view of the submissions made by the assessee denying ownership of the document found in the course of search. When the taxability of the addition under a specific section is a point of contention / debatable, the tax levied on the said addition cannot be said to be not debatable. - AT
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• Court Rules 10% Expense Disallowance Unfair, Suggests Lump-Sum for Realistic Profit Rate Alignment in Business Sector.

  Case-Laws - AT : Disallowance being 10% of expenditure - Disallowance of expenditure @ 10% of the expenditure in the instant case appears to be on the higher side since it gives a profit rate of 37.78% which is not possible in the line of business. Considering the fact that the assessee has already declared profit rate of 9.29%, the disallowance on lumpsum basis in the instant case, in our opinion, meet the ends of justice. - AT
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• Taxpayer's Income Increased Due to Typo Error; Classified as Income from Other Sources Without Evidence.

  Case-Laws - AT : Addition made merely on the basis of declaration made in ITR - typographical error - there is neither any allegation that the amount has been received by the assessee or credited in her bank account nor any material has been brought on record in this regard. Merely because the assessee could not explain the balance amount as mention in her computation of income and return, the same was added to the total income of the assessee by stating the same as income from other sources. - AT
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• Assessment Reopening u/s 147 Invalid Due to Irrelevant Facts and Suspicion; Subsequent Actions Nullified.

  Case-Laws - AT : Validity of reopening assessment u/s 147 - the reopening of assessment made by the AO on irrelevant facts and on a mere reason to suspect cannot survive. We hold that the reopening of assessment for the impugned assessment year is invalid. Hence, the subsequent action taken by the Assessing Officer in pursuance thereof resulting in the impugned assessment order is also invalid. - AT
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Customs

• Court Denies Permanent Injunction as Disputed Goods Barred from Entry; Plaintiffs Can Pursue Further Legal Action.

  Case-Laws - HC : Maintainability of suit for permanent injunction - restraining infringement of trademark, copyright, trade dress etc. against unknown Defendants - None of the goods bearing the impugned mark in the said container no. ECNU4006477, have been allowed to enter India. Accordingly, the injunction is also not required to be passed in view of the statement made in the written statement by the customs authorities. The Plaintiffs are free to take action in accordance with law, either in India, or in other foreign jurisdictions. - HC
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• Court Rejects Revenue's Dry Weight Method for Iron Ore Classification Under Tariff Act, Citing Lack of Legislative Intent.

  Case-Laws - HC : Determination of method by which the iron (Fe) content in the iron ore - there is a reason for the Revenue to do so inasmuch as when the legislature has found it appropriate that the goods are required to be classified on dry weight basis, it has been accordingly categorically provided for in the relevant schedule under the Tariff Act. This is clear from the fact that the iron ore as categorized under 2601 and the sub headings thereunder, there is no mention whatsoever of any “dry weight” as being canvassed on behalf of the Revenue. - HC
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• CESTAT Rules Coils and Accessories Under Tariff Heading 8503, Eligible for Duty Refund and Interest.

  Case-Laws - HC : Refund alongwith interest claim - classification of coils and spares and accessories - Once the CESTAT has categorically held that coils would fall under tariff heading 8503, it follows on all counts that accessories to the coil should also be treated under the same head, also eligible for duty refund. - HC
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• Petitioner challenges uncommunicated valuation changes in 95 bills of entry, alleging procedural lapse in notification requirements.

  Case-Laws - HC : Valuation - The final assessment of the bills of entry, whereby a variance is brought about in the valuation of the subject goods, which is adverse to the interests of the petitioner, would have to be communicated to the affected party - Admittedly, in this case, the valuation of the subject goods, which forms part of 95 bills of entry, has been enhanced. The basis for enhancement of valuation, apparently, was not communicated to the petitioner. - HC
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• Helicopter import demand invalidated; exceeded original show cause notice allegations, Commissioner's confirmation overturned due to insufficient notification.

  Case-Laws - AT : Benefit of the exemption - import of the Helicopters into India - This demand is entirely beyond the allegations made in the show cause notice and has, therefore, to be set aside. Thus, the Commissioner could not have confirmed the aforesaid demand since the appellant had not been put to notice on this allegation in the show cause notice. - AT
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PMLA

• Appellate Tribunal errs by not declaring orders illegal, directs appellant to Special Court, allowing illegality to continue.

  Case-Laws - HC : Money Laundering - While the Appellate Tribunal is correct in holding that the provisional attachment order and the order of the adjudicating authority confirming attachment suffered from fundamental flaws, thus being without jurisdiction, it fell short of declaring such orders as illegal; it further fell in error in relegating the appellant to the forum of Special Court to seek release of the attached property as it amounts to abdicating its authority and allowing an illegality to continue. - HC
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• Look-out Circulars in Money Laundering Cases: Valid Only with Active Criminal Complaints or Inquiries Under PMLA.

  Case-Laws - HC : Money Laundering - Validity of look out circular - No action under PMLA can be resorted to unless there is a substratum of a scheduled offence for the same, which substratum should legally exist in the form of a subsisting (not quashed) criminal complaint/inquiry or if it did exist the accused has since been discharged or acquitted by a Court of competent jurisdiction. - HC
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Central Excise

• Court Upholds Duty Demand Based on Trustworthy Private Records in Ingots Case; No Evidence of Furnace Capacity Change.

  Case-Laws - AT : Clandestine removal - Ingots - demands of duty made on account of alleged production based on the number of heats and alleged clandestine removal based on parallel invoices - There is no evidence of any variation of the capacity of the furnace during that period. There are sufficient reason to trust the private records maintained by the appellant itself and hold that the demand on this count is reasonable and needs to be upheld. - AT
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VAT

• High Court Rules TNVAT Act Section 64(4) Prevents Delegation Below Deputy Commissioner Rank; Orders Must Be Passed Personally.

  Case-Laws - HC : Jurisdiction - delegation of power to an Officer not below the rank of Deputy Commissioner (CT) and to conduct the enquiry - Section 64 (4) of the TNVAT Act - it does not empower the Commissioner to delegate the power and to pass orders to any lower authority and the Commissioner himself will have to pass orders. - HC
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Case Laws:

• GST

• 2022 (9) TMI 1333
  Refund of IGST and duty drawback - petitioner was categorised as a risky exporter - CBEC Circular No.131/1/2020-GST - HELD THAT:- The petitioner says, that the petitioner would be satisfied, if the respondents are directed to treat the writ petition as a representation, and determine afresh, as to whether the petitioner falls in the category of risky exporter. The respondent no.3/Commissioner will treat the writ petition as a representation. The said respondent will also examine the stand taken by the petitioner, in its rejoinder - For this purpose, respondent no.3/Commissioner will afford an opportunity of personal hearing to the authorized representative (AR) of the petitioner. Petition disposed off.

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• Income Tax

• 2022 (9) TMI 1332
  Reopening of the assessment u/s 147 - nature of jurisdiction conferred by Section 147 - Eligibility of reasons to believe - value of consideration for computation of capital gains - HELD THAT:- In the reasons accompanying the impugned notices, significantly, there was not even an allegation about suppressing or concealing the deed of sale or MOU. The reasons referred to record and based on the records suggested that the Assessing Officer may have erred in deducting because there was no reason to pay Resicom Homes Pvt Ltd. and D Souza Estate Holidays Pvt. Ltd., any compensation. From the reasons furnished, it is apparent that this is a case of change of opinion and not a case of any concealment or suppression of material facts. After the Petitioners raised the objections, the objections were disposed of by order/communication - In this order/communication, there was a reference made to the Petitioners concealing the fact of the sale deed. The order/communication claim that the Assessing Officer had not considered of the sale deed before allowing the deductions under Section 48 of the I.T. Act. Respondents will have to stand or fall based on the reasons recorded by the Assessing Officer at the time of issuing impugned notices for the reopening of the assessment. Those reasons nowhere referred to any concealment of documents by the Petitioners or concealment of sale deed by the Petitioners. The record fairly bears out that there was no concealment. After taking up the Petitioners cases for limited scrutiny, the Assessing Officer considered the material on record and allowed the deductions under Section 48 of the I.T. Act. Therefore, the Respondents cannot now be permitted to add to the reasons recorded by the Assessing Officer at the time of issuing notices for reopening the assessment. There appears to be no merit in the claim of the concealment of documents like the sale deed or MOU. After the Petitioners cases were selected for limited scrutiny, particularly on the aspect of the claim for deductions on capital gains, the Petitioners have stated on oath that all documents, including the sale deed and the MOU, were produced before the Assessing Officer in response to his questionnaire. The record shows that the deductions were granted after considering the relevant documents. This is possibly why, at the time of issuing notice for reopening the assessment, the reasons do not refer to any alleged concealment of documents or suppression of documents. In the present case, it is apparent that reassessment is based on a mere change of opinion. The reassessment based on a mere change of opinion is nothing but a review. Admittedly, no such powers of review have been conferred on the Assessing Officer when purporting to exercise powers under Sections 147 and 148 - the impugned notices issued in excess of the jurisdiction conferred upon the Respondents are liable to be quashed and set aside. They are, accordingly, quashed and set aside. - Decided in favour of assessee.

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• 2022 (9) TMI 1331
  Assessment u/s 153C - incriminating documents / material - Satisfaction Note for issue of notice u/s 153C - HELD THAT:- As in the present case a satisfaction note was drawn up u/s 153C - Consequently, the search year would be the AY 2016-17 and Revenue would be entitled to re-open the returns for the AY 2010-11 to 2015-16. Perusal of the satisfaction note reveals that no document pertaining to AY 2011-12 was seized during search. As in Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] has held that seized material can be considered to be incriminating in terms of Section 153C of the Act only if the said material pertains to the AY in question. This Court is of the view that the recovery of the annual report and the share certificate of the Petitioner from premises of Minda Group cannot be considered to be incriminating documents. After all, the Minda Group was not a third party but the issuing authority of the share certificates. In fact, both the appellate authorities below have given a concurrent finding that no incriminating material had been brought on record by the AO to sustain the additions on merit. Also, the genuineness of the share capital has been accepted both by CIT (A) and ITAT and also there is no live link between seized material and the additions made. This Court is of the view that assumption of jurisdiction in the present cases by the Assessing Officer was erroneous. No substantial question of law arises

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• 2022 (9) TMI 1330
  Assessment u/s 153A - incriminating documents/materials found and seized at the time of search or not? - HELD THAT:- It is settled law that where the assessment of the Assessees has attained finality prior to the date of search and no incriminating documents/materials have been found and seized at the time of search, no additions can be made under Section 153A of the Act, as in that eventuality, the cases of Assessee would be of non-abated assessment. (See: CIT vs Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT] , Principal Commissioner of Income Tax vs. Bhadani Financiers Pvt. Ltd., [ 2021 (9) TMI 902 - DELHI HIGH COURT] and PCIT vs. Meeta Gutgutia[ 2017 (5) TMI 1224 - DELHI HIGH COURT] In the present batch of matters, both CIT (A) and ITAT have given concurrent findings of fact that no incriminating material had been brought on record by the Assessing Officer to sustain the additions. In fact, the ITAT in the impugned order, has held that the allegation of the Assessing Officer that no notices under Section 133(6) of the Act were received by the investors, is irrelevant as the said parties had filed detailed replies in response to the Section 133(6) notices along with the requisite details as required by the Assessing Officer. Upon perusal of the Table reproduced hereinabove, which shows the networth of the investor companies and the investment made in the share capital, this Court is in agreement with the contention of learned senior counsel for the Respondents-Assessees that the investor companies had sufficient networth to make investment in the Assessee s group of companies. Non examination of witness - As in the present cases, as Assessee were denied the opportunity to cross-examine Mr.Rajesh Agarwal, despite a specific request, this Court is in agreement with the ITAT that his statement needs to be excluded and cannot be relied upon as a piece of evidence to make any addition. In fact the Supreme Court in the case of M/s Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] held that not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. This Court is of the view that no substantial question of law arises.

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• 2022 (9) TMI 1329
  Benefit of deduction u/s 80IC - whether the refund of excise duty obtained by the respondent/assessee could have been treated as profit from business and the assessee could have been granted the benefit of deduction under section 80IC ? - HELD THAT:- We find that identical issue was decided in the case of Commissioner of Income-tax vs. Meghalaya Steels Ltd. [ 2010 (9) TMI 679 - GAUHATI HIGH COURT] refund does amount to income in the hands of the assessee, it is a profit or gain directly derived by the assessee from its industrial activity. The payment of Central excise duty has a direct nexus with the manufacturing activity and similarly, the refund of the Central excise duty also has a direct nexus with the manufacturing activity. The issue of payment of Central excise duty would not arise in the absence of any industrial activity. There is, therefore, an inextricable link between the manufacturing activity, the payment of Central excise duty and its refund. In the circumstances, we are of the opinion that question must be answered in the affirmative in favour of the assessee - Also see SHREE BALAJI ALLOYS VERSUS COMMISSIONER OF INCOME-TAX [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] - Decided in favour of assessee.

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• 2022 (9) TMI 1328
  Addition u/s 68 - bogus capital gain generated in penny stock - proceedings u/s143(3) and suspicious transanction in shares cannot be exempted u/s 10(38) - HELD THAT:- It cannot be disputed that an identical issue was considered in a batch of cases in PCIT Vs. SWATI BAJAJ [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] and the appeals filed by the revenue were allowed. There are no distinguishing features in the case on hand to take a different view.

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• 2022 (9) TMI 1327
  Rectification of mistake u/s 154 - Income deemed to accrue or arise in India - substantial questions of law - Whether the subject income could be taken to have accrued in India only for the reason that it was shown in the balance sheet of the assessee? - HELD THAT:- Hon ble Supreme Court in Ishwar Dass Jain Vs. Sohan Lal [ 1999 (11) TMI 863 - SUPREME COURT] under Section 100 CPC, after the 1976 Amendment, it is essential for the High Court to formulate a substantial question of law and it is not permissible to reverse the judgement of the First Appellate Court without doing so - there are two situations in which interference with the findings of fact is permissible. The first one is when material or relevant evidence is not considered which, if considered, would have led to an opposite conclusion. The second situation in which interference with findings of fact is permissible is where a finding has been arrived at by the Appellate Court by placing reliance on inadmissible evidence which is it was omitted, an opposite conclusion was possible. In either of the above situations, a substantial question of law can arise. Applying the ratio laid down in the above decision we have no hesitation to hold that substantial questions of law arise for consideration in this case, more particularly when the orders impugned suffer from utter perversity. As pointed out earlier on the date when the Miscellaneous Application was heard and decided by the learned Tribunal, there This issue has been decided by the Hon ble Supreme Court in the case of ACIT vs. Sourashtra Kutch Stock Exchange [ 2008 (9) TMI 11 - SUPREME COURT] wherein the Hon ble Supreme Court has held that an application for rectification was maintainable in such factual situation. The order of rejection of the application under Section 154 issued by the Centralised Processing Centre (CPC), Bangalore are quashed. Consequently, the order passed by the Assessing Officer computed the tax liability as per the intimation under Section 143 (1) and the assessment stands restored to the file of the Assessing Officer who shall review the assessment in terms of the observation made in the preceding paragraphs and also the law on the subject including the circular issued by the CBDT and grant the relief to the assessee by excluding the foreign income received by the assessee excluding the foreign income under Section 10(6)(viii) of the Act and such order shall be passed by the Assessing Officer within six weeks from the date of receipt of the server copy of this order.

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• 2022 (9) TMI 1326
  Reopening of assessment u/s 147 - show cause notice under Section 148A(b) - claim of the LTCG of the petitioner - Claim of deduction u/s 54 - HELD THAT:- The sale of the residential house by the petitioner and purchase of the New Property by the petitioner within the stipulated time is admitted by Revenue - as further admitted that the entire sale consideration for the New Property as well as the stamp duty has been paid by the petitioner. The respondent has not disputed that this information was available and scrutinised by the AO during the assessment proceedings which resulted in the assessment order dated 07th November, 2017, and the AO was satisfied with respect to the claim of the LTCG of the petitioner. The judgment of this Court in Ravinder Kumar Arora [ 2011 (9) TMI 343 - DELHI HIGH COURT] relied upon by the petitioner as regards his entitlement to claim LTCG is squarely applicable to the facts of the case. Re-assessment has been initiated on the basis of change of opinion, which is not permissible. There is no new information available with the respondent to re-assess the LTCG claim. AO had considered the same documents during the earlier assessment proceedings and was satisfied with the claim of LTCG made under Section 54 of the Act. Petitioner is entitled to claim exemption under Section 54 of the Act on these admitted facts, as the conditions stipulated in Section 54 stand fulfilled. The New Property would be treated as the property purchased by the petitioner in his name and merely because he has included the name of his wife and the property has been purchased in the joint names, it would not disentitle the petitioner from claiming the exemption under the statutory provisions. Accordingly, the order dated 28th July, 2022 under Section 148A(d) of the Act, and notice issued under Section 148 by the respondent with respect to the Assessment Year 2015-16 are set aside. WP allowed.

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• 2022 (9) TMI 1325
  Recovery of the amounts from the company and its directors - Liability of directors of private company u/s 179 - Whether company is presently stated to be undergoing Corporate Insolvency Resolution Process before the National Company Law Tribunal (NCLT) and the Income Tax Department ought to have raised/made its claim before the NCLT without pursuing the demand as against the Directors? - HELD THAT:- Only condition set out under Section 179 is to the effect that attempts should be made by the Income Tax Department to recover the tax dues from the company and such attempts should have been unsuccessful. The measures taken by the Department to recover the dues that have admittedly been unsuccessful. Moreover, the company is itself before the National Company Law Tribunal, which establishes that it does not presently, have the funds to settle the tax dues. The condition precedent under Section 179 stands complied in this case. Section 179(1), in itself, grants the Directors the liberty to prove that the non-recovery cannot be attributed to gross neglect, misfeasance or breach of duty on their part in relation to the affairs of the company. In the present case, the replies filed by the petitioners to the show cause notices prior to passing of the impugned orders merely contain a bald assumption to this effect. They have not, in my view, established, that the petitioners had taken all reasonable efforts to ensure compliance of the company to statutory dues and were not guilty of neglect, misfeasance or breach of duty in that regard. The impugned orders do not suffer from any infirmity and for the reasons set out above, the same are confirmed. No costs. Connected Miscellaneous Petitions are closed.

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• 2022 (9) TMI 1324
  Estimation of income - Bogus purchases - HELD THAT:- Bogus purchases made by the assessee to make addition of the entire purchases u/s 68 as income for the year under consideration. CIT(Appeals) and the Tribunal therefore, considering the possibility of bogus purchases on the basis of documentary evidence produced before the appellate authority have arrived at the concurrent findings of fact by holding that factum of said dealer already being engaged in bogus billing was not ruled out and therefore, sustained the addition by estimating 5% of alleged bogus proceedings i.e. 5% by the assessee for the year under consideration.

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• 2022 (9) TMI 1323
  Assessment u/s 144B - violation of principles of natural justice - HELD THAT:- Assessment order u/s 143(3) r.w.s.144B of the Act as well as the notice u/s 274 read with Section 270A of the Act are hereby set aside. The assessment proceedings are remanded to the AO to be taken up afresh from the stage of the draft assessment order. The AO shall pass appropriate order after giving opportunity to the petitioner to file reply. The entire assessment proceedings culminating into the final assessment order shall be completed within twelve weeks from the date of receipt of this order. We make it clear that we have allowed the petition and quashed the order and notice, as mentioned above, only on the ground of breach of natural justice without going into much less expressing any opinion on the merits of the case of the either side.

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• 2022 (9) TMI 1322
  Penalty u/s 271(1)(b) - assessee has made no response to the questionnaire, only adjournment has been filed, even when two months have elapsed from the date of issue of notice u/s 142(1) - assessment order was passed u/s 143(3) r.w.s. 153A - as per AO assessee has failed to comply with the notice without any reasonable cause and is therefore liable to be penalized u/s 274 r.w.s. 271(1)(b) - HELD THAT:- AO while framing the assessment order u/s 143(3) r.w.s. 153A of the Act, has himself mentioned in the assessment order that assessee submitted details and documents. Assessment order, u/s 143(3) r.w.s. 153A of the Act, was framed by assessing officer after getting the required documents and details. Therefore, we note that when the assessee has submitted the required details and documents during the scrutiny assessment proceeding and based on these details and documents, the Assessing Officer has framed the assessment on merit. In view of this, we note that there was no wisdom in the assessment order in respect of alleged non-compliance. Therefore, we note that when the AO has framed the assessment order u/s 143(3) r.w.s. 153A of the Act and assessment order has not been passed u/s 144 of the Act, therefore the penalty u/s 271(1)(b) of the Act, for non-compliance should not be levied. CIT(A) sustained penalty partly for second default - As penalty sustained by the Ld. CIT(A) is not in accordance with the provision of Section 271(1)(b) and clause (ii) of that Section. We note that Law is well settled that when the statute requires to do certain thing in certain way, the thing must be done in that way or not at all. Other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal proposition is based on a legal maxim Expressio unius est exclusion alteris , meaning there by that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner and following of other course is not permissible. See NAZIR AHMAD VERSUS KING EMPEROR (NO. 2) [ 1936 (6) TMI 11 - PRIVY COUNCIL] ,RAM PHAL KUNDU VERSUS KAMAL SHARMA [ 2004 (1) TMI 675 - SUPREME COURT] and INDIAN BANKS ASSOCIATION AND OTHERS VERSUS DEVKALA CONSULTANCY SERVICE AND OTHERS [ 2004 (4) TMI 73 - SUPREME COURT] - Also see ORISSA RURAL HOUSING DEVELOPMENT CORPORATION LTD.[ 2011 (12) TMI 230 - ORISSA HIGH COURT] Thus CIT(A) has erred in sustaining the part penalty u/s 271(1)(b) of the Act, therefore order passed by the ld CIT(A) is not in accordance with the provisions of law. Appeal of assessee allowed.

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• 2022 (9) TMI 1321
  Adjustments made u/s. 143(1)(a) after issuance of notice u/s. 143(2) - AO taken cognizance of the fact of issuance of notice u/s 143(2) upon removing the demand created u/s 143(1) - HELD THAT:- CIT(A), while adjudicating the appeal totally skipped the issue raised before him in respect to the merger of the 143(1) order dated 25.03.2019 into the subsequent order dated 20.12.2019 passed u/s 143(3). Assessee further submitted that no soon the proceedings u/s 143(2) are commenced the impact and effect of intimation u/s 143(1) totally vanishes and such an intimation becomes nonest. Based on these set of arguments of the assessee submitted that on this score along the order in appeal deserve to be set a side and be declared having merged into the order u/s. 143(3) passed in the case of the assessee. As the issue was technical and of verification of facts, the ld. DR was directed to submit the status report in the matter. DR filed a copy of the letter dated 23.08.2022 written by the ld. AO explaining the status of the intimation as per records Since, the very basis being the intimation dated 25.03.2019 is not reflected on the system and the consequent demand or adjustment already merged into the order of the AO passed u/s. 143(3) of the Act. There cannot remain any grievance on account of intimation dated 25.03.3019. Even the ld. AO has submitted a factual report and submitted that the intimation u/s. 143(1) dated 25.03.2019 is not reflected in to the online system and consequent demand there upon also. Thus, once the intimation which the very cause of the grievance of the assessee is not reflected and existed on records the consequent grievance also not existed and thus the appeal of the assessee becomes infructuous. Appeal of the assessee is allowed.

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• 2022 (9) TMI 1320
  Delayed Employees contribution to ESI/Provident Fund - adjustment and intimation u/s 143(1) - contribution beyond specified date prescribed under laws providing ESI/Provident Fund but these payments were deposited by the assessee well before due date of filing of return of Income Tax prescribed u/s 139(1) - HELD THAT:- We are of the view that the aforesaid additions by way of adjustment and intimation u/s 143(1) were beyond the scope of Section 143(1) and further that the Ld. CIT(A) erred in law in confirming the aforesaid addition on a debatable and controversial issue. Accordingly, we direct the AO to delete the aforesaid addition. By way of abundant caution, we hereby clarify that we have not expressed any view in this order, on whether the aforesaid amendments brought in by Finance Act, 2021 [whereby Explanation-2 was inserted in Section 36(1)(va) of Income Tax Act and Explanation-5 was inserted in Section 43B are prospective or retrospective. In the light of our decision in foregoing paragraph (E) of this order; this issue is merely academic in nature; hence not decided. Interest on TDS, interest on GST and interest on PPF - We restore the issues regarding on account of interest on TDS, interest on GST and interest of PPF; and the issue regarding assessee s claim of credit of TDS to the file of the Ld. CIT(A); with the direction to decide these issues on merits after providing reasonable opportunity to the assessee.

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• 2022 (9) TMI 1319
  Rectification of mistake u/s 154 - enhancing the tax liability of the assessee u/s.115BBE - Scope of debatable issue - additions under the head income from other sources while completing the assessment u/s.143(3) for Undisclosed principle and interest and Unexplained money u/s.69A - rectification as tax on the additions made during the assessment proceedings is computed erroneously under normal rate of tax interest instead of higher rate of tax under Section 115BBE - HELD THAT:- During the assessment proceedings the AO verified the material found during the course of search and also perused the statement recorded u/s 132(4) - It is noticed that the assessee in the statement recorded has explained the assessee receives income from agricultural land and also some interest on hand loans given by the assessee. The assessee while answering Q.No.10 has stated that the source for these hand loans is his agricultural income and the interest income over the years. It can be observed from the order of the AO in para 11.1 where the AO has noted down certain facts as those emerging out of the statement recorded from the assessee wherein the AO himself has stated the fact that the assessee earn income from agriculture and money lending business. It is an admitted fact that the source for the money lending business is agricultural income and the interest income earned by the assessee. In the light of these factual findings we see merit in the argument by the learned A.R. that the decision of the AO to make addition without invoking section 69 /69A and also initiation of penalty proceedings under Section 270A of the Act is taken consciously. It cannot therefore be said that invocation of Section 69A and consequently Section 115BBE of the Act is accidental omission by inadvertence to be termed as prima facie mistake apparent from record for the purpose of rectification under Section 154 of the Act. In the legal issue whether the addition can be termed as made u/s.69A by a rectification order u/s.154, we are of the considered view that the impugned addition whether to be made u/s.69A is highly debatable in view of the submissions made by the assessee denying ownership of the document found in the course of search. When the taxability of the addition under a specific section is a point of contention / debatable, the tax levied on the said addition cannot be said to be not debatable. In the case of PCIT vs. Mphasis Software and Services (India) Pvt Ltd [ 2022 (1) TMI 790 - KARNATAKA HIGH COURT] held that invoking section 154 would be untenable when the matter requires adjudication upon the issue which is debatable issue. We hold that the AO is not correct in passing the order of rectification u/s.154 enhancing the tax liability of the assessee u/s.115BBE and we therefore delete the same. The appeal is allowed in favour of the assessee.

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• 2022 (9) TMI 1318
  Disallowance being 10% of expenditure on the ground that the assessee failed to discharge the onus cast on him by proving the genuineness of the expenditure debited - Onus to prove - HELD THAT:- It is the settled proposition of law that for claiming any expenditure as allowable, the onus is always on the assessee to prove to the satisfaction of the Assessing Officer by furnishing bills and vouchers for such expenditure. However, the assessee in the instant case failed to furnish all the details before the Assessing Officer for which the disallowance of expenditure on estimate basis is justifiable. Disallowance of expenditure @ 10% of the expenditure in the instant case appears to be on the higher side since it gives a profit rate of 37.78% which is not possible in the line of business. Considering the fact that the assessee has already declared profit rate of 9.29%, the disallowance on lumpsum basis in the instant case, in our opinion, meet the ends of justice. We hold and direct accordingly. The grounds raised by the assessee on the first issue of disallowance is partly allowed. Disallowance being 30% of the expenditure (professional services + Contract charges) - As the assessee in its computation of income has suo moto disallowed an amount which includes the amount disallowed by the Assessing Officer. We, therefore, deem it proper to restore the issue to the file of the Assessing Officer with a direction to verify the computation statement and after being satisfied, delete the addition. The 2nd issue raised by the assessee in the grounds of appeal is accordingly allowed for statistical purposes.

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• 2022 (9) TMI 1317
  Deemed dividend u/s 2(22)(e) - advance towards supply of Material Reimbursement of statutory due paid on behalf - HELD THAT:- Though the AO has mentioned that no submissions were filed by the assessee in response to various queries raised during the course of assessment proceedings, however, submissions dated 17/05/2016 and 24/08/2016 were in fact filed by the assessee before the AO on 20/05/2016 and 24/08/2016, respectively. Acknowledged copy of submissions form part of the paper book at page no.15 17 - we deem it appropriate to remand this issue to the file of AO for de novo adjudication after necessary examination/verification of details. We further direct the assessee to produce the bills, delivery challans, agreement etc. in respect of the material supplied by Sri Jaya Jewellery and M/s Alex Jewellery Private Limited to M/s Jaya Jewellery Private Ltd. against the advance given. Since this issue is remanded for adjudication afresh, the assessee shall be at liberty to adduce any other evidence to support its case. AO shall also have the liberty to call for or examine any other documents/detail as may be necessary for complete adjudication of this issue. As a result, grounds no. 1 3 raised in assessee s appeal are allowed for statistical purpose. Income computed for the assessment years before the Income Tax Settlement Commission after taking into account the additional income offered by the assessee - Disallowance as cost of improvement of shop owned by the assessee - HELD THAT:- Since, it is not clear whether the property in Mayur Tower, Mumbai, which is referred in Income Tax Department s report under section 245D(3) of the Act, is the same property, which is sold during the year under consideration, therefore, we deem it appropriate to remand this issue to the file of AO for de novo adjudication after necessary examination/verification of details. We further direct the assessee to furnish before the AO all the material/evidence in support of its aforesaid claim. The AO shall also have the liberty to call for or examine any other documents/detail as may be necessary for complete adjudication of this issue. Further, since, the claim of the assessee is based on the proceedings before the Income Tax Settlement Commission, the record pertaining to same are likely to be also available with the Income Tax Department, the AO may also make necessary endeavour to call for such records for verification of facts relevant for deciding this issue. As a result, grounds no. 4 raised in assessee s appeal is allowed for statistical purpose. Disallowance u/s 14A - AO has mentioned the investment in shares on the basis of which disallowance under section 14A of the Act was computed in the case of the assessee - HELD THAT:- From perusal of the aforesaid balance sheet of the assessee we find that the investment in shares is only Rs. 5,66,752. Thus, from the above, it is evident that the AO has not correctly appreciated the facts of the case, while computing the disallowance under section 14A of the Act read with Rule 8D of the Rules. Therefore, we deem it appropriate to remand this issue to the file of AO for de novo adjudication as per law, after necessary verification of facts available on record. As a result, ground no. 5 raised in assessee s appeal is allowed for statistical purpose. Levy of interest under section 234A - HELD THAT:- As we deem it appropriate to remand this aspect to the file of AO for de novo adjudication after necessary examination of the fact whether the return of income was filed by the assessee within the prescribed time under the Act. While, interest levied under section 234B and 234C of the Act are consequential in nature. Therefore, ground allowed for statistical purpose.

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• 2022 (9) TMI 1316
  Penalty imposed u/s. 271AAA - voluntary admission towards undisclosed income - HELD THAT:- From the perusal of the provisions of section 271AAA(2), we note that upon complying with the three conditions mentioned therein, penalty under section 271AAA(1) is not imposable. The first condition requires that the assessee admitted in the course of search in the statement recorded under section 132(4) of the Act, the undisclosed income and specifies the manner in which such income has been derived. The second condition requires that the assessee substantiates the manner in which the undisclosed income was derived. From the statement recorded of the assessee reproduced above, it is evident that both these conditions had been complied by the assessee. The third condition requires that the assessee pays the tax together with interest in respect of the undisclosed income. Fulfilment of this condition has also been evidently demonstrated by the Ld. Counsel by pointing out that assessment was completed with a tax effect of Rs. 19.50 lakhs which was adjusted with the seized amount of cash and the remaining amount was returned to the assessee. We find ourselves convinced with the conspectus of above factual matrix and the submissions made by the assessee and accordingly have no hesitation in directing the AO to delete the penalty imposed under section 271AAA of the Act in the sum - Accordingly, grounds raised by the assessee are allowed.

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• 2022 (9) TMI 1315
  Deduction u/s 54F - Capital gains Computation of sale of residential flat ad gold ornament - assessee and her son sold jointly owned residential flat - Whether sale consideration credited to the assessee s bank account should not be the basis of addition of capital gains in her hand? - addition on account of error in filing return of income be deleted and deduction u/s 54F be granted in respect of gains arising from sale of gold ornaments - HELD THAT:- From the perusal of the record, we find that there is no attempt on the part of the assessee or her son to rectify the return which is claimed to have been filed with incorrect details - since the AO is common to both the assessee and her son, therefore, in all fairness AO has not brought any excess amount to tax in the hands of the assessee s son but has accepted the amount offered for taxation in his return. AO has accordingly brought to tax the amount which was credited in assessee s bank account, for the purpose of computation of capital gains. We are of the considered view that if the plea of the assessee is accepted then it will result in non-taxation of the entire amount of sale consideration as in the case of assessee s son amount of sale consideration disclosed in his return of income, has already been accepted by the Department and no direction can be passed to enhance son s income in a concluded assessment. Since, it is the claim of the assessee that the entire sale consideration has further been invested by the assessee and her son in another residential flat at Khar, therefore, we deem it appropriate to direct the AO to examine as to how much of the amount of sale consideration received by the assessee has been invested in a new residential property for the purpose of claiming exemption u/s 54 and to grant the exemption to the assessee under the said section if the other conditions laid down therein are satisfied. Sale consideration on sale of gold ornaments, the assessee had claimed exemption u/s 54F - The lower authorities denied the claim of the assessee in absence of any documentary proof of having made investment as per requirement of section 54F. In the present case, AR referred to sale invoices of 2 jewellers, forming part to which jewellery weighing about 541.560 gms was sold during the relevant financial year for a total consideration. The sale consideration has duly been credited through cheque on 26/11/2013 in the bank account of the assessee maintained with Bank of India, forming part of the paper book - Since, the lower authorities denied the claim of the assessee merely on the basis that no documentary evidence has been furnished and there is no allegation regarding the genuineness of the transaction, therefore, we deem it appropriate to direct the AO to examine as to how much of the amount of sale consideration received by the assessee from sale of gold ornaments has been invested in a new residential property for the purpose of claiming exemption under section 54F of the Act and to grant the exemption to the assessee under the said section if the other conditions laid down therein are satisfied. Addition made merely on the basis of declaration made in the ITR- typographical error - In the present case, we find that the Revenue has not disputed the sale consideration of the residential property at Bandra and has computed capital gains in the hands of the assessee by considering amount credited in her bank account. The sale consideration of gold ornaments has also been reasonably satisfied - In the present case, there is neither any allegation that the amount has been received by the assessee or credited in her bank account nor any material has been brought on record in this regard. Merely because the assessee could not explain the balance amount as mention in her computation of income and return, the same was added to the total income of the assessee by stating the same as income from other sources. We find no basis in sustaining the addition which appears to be merely a typographical error on the part of the assessee, while filing the return of income. Accordingly, we direct the AO to delete the addition made to the total income of the assessee. As a result, ground raised in assessee s appeal is allowed

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• 2022 (9) TMI 1314
  Addition on account of share premium treated as income from other sources u/s 56(1) - HELD THAT:- As in assessee s own case for assessment year 2010 11 by following earlier decision for the assessment year 2009 10, rendered similar findings. D.R. could not show us any reason to deviate from the aforesaid decisions and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present appeal is recurring in nature and has been decided by the Co ordinate Bench of the Tribunal in assessee s own case for preceding assessment years. It is also to be noted that during the year under consideration, premium per share was collected in comparison to premium of Rs.490, per share and Rs.466, per share in assessment year 2009 10 and 2010 11 respectively. Thus, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, grounds raised by the Revenue are dismissed.

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• 2022 (9) TMI 1313
  Income deemed to accrue or arise in India - PE in India - profit attributable to the PE in India - company registered and incorporated under the laws of Sweden as contemplated under Article 4 of the India- Sweden Double Taxation Avoidance Agreement - HELD THAT:- As we find that the same issue has been decided by the ITAT [ 2022 (2) TMI 1287 - ITAT DELHI] consistently in assessee s favour. The DRP order of AY 2011-12 [ 2020 (10) TMI 1205 - ITAT DELHI] which has been preferred and referred by AO as well as by CIT (A) has not been upheld by the ITAT and the ITAT has reversed the decision and decided the issue in favour of the assessee. Since no distinguishing features on the facts of this year and earlier years were brought to our notice, nor it is the case that any of the orders have been reversed by Hon ble jurisdictional High Court, we follow the order of the coordinate Benches of the ITAT and set aside the orders of the Revenue authorities.

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• 2022 (9) TMI 1312
  Validity of reopening assessment u/s 147 - there was no regular assessment under section 143(3) - approval for scrutiny assessment - whether the reopening of assessment under section 147 of the Act meets legal requirement? - core activities related to software development were undertaken in India on behalf of the assessee, hence, the Hyderabad unit of OIPL for all intent and purposes constitutes the PE of the assessee in India and even in respect of global deals, thus the royalty earned by the assessee would be attributable to the PE - AY: 1997-98 - HELD THAT:- As the reasons recorded for reopening of assessment is without independent application of mind but simply based on conclusions drawn in the subsequent assessment years without having any tangible material. It is further evident, the reasons recorded do not have any live link with material/information in possession of the Assessing Officer which could have establish escapement of income for the impugned assessment year. Thus, it is very much evident, the assessment has been reopened merely on reason to suspect rather than reason to belief. Thus, in our view, the reopening of assessment made by the AO on irrelevant facts and on a mere reason to suspect cannot survive. We hold that the reopening of assessment for the impugned assessment year is invalid. Hence, the subsequent action taken by the Assessing Officer in pursuance thereof resulting in the impugned assessment order is also invalid. Accordingly, we quash the assessment order for the impugned assessment year. Therefore, the impugned order of learned Commissioner (Appeals) having no leg to stand, is hereby set aside. Reasons recorded nor anywhere else the Assessing Officer in specific terms has stated that the alleged escapement of income is on account of failure of the assessee to disclose the particulars of his income truly and correctly - AY: 1998-99 AND AY: 1999-00 - As due to non-fulfillment of the conditions prescribed under the first proviso to section 147 of the Act, the reopening of assessment is invalid. Consequently, the assessment orders passed under section 143(3) read with section 147 of the Act for both the assessment years, being invalid, are quashed. As a natural corollary the impugned orders of learned Commissioner (Appeals) are hereby set aside. No valid issuance and service of notice under section 143(2) - AY: 2000-01 - It is the specific contention of the assessee before us that the Assessing Officer had failed to issue any notice under section 143(2) of the Act in course of assessment proceeding. Though, in the body of the assessment order the Assessing Officer has mentioned that notice under section 143(2) of the Act was issued to the assessee, however, in response to query raised by us, learned Departmental Representative was unable to controvert assessee s allegation that no notice under section 143(2) of the Act was ever issued to the assessee. No contrary evidence was placed before us by the department to establish valid issuance and service of notice under section 143(2) of the Act on the assessee - in absence of a valid issuance and service of notice under section 143(2) of the Act on assessee, the present proceeding has become invalid. All appeal of assessee allowed.

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• 2022 (9) TMI 1311
  Addition of expenditure out of the income disclosed during the survey proceedings - AO also found that the impugned amount of expenditure was incurred in cash and therefore, the same cannot be allowed as deduction by virtue of the provision of Section 40A(3) - AO disallowed the same and added to the total income of the assessee - HELD THAT:- We find that the genuineness of the construction expenses has nowhere been doubted by the authorities below. What has been doubted is this that the assessee will claim the WIP as an express in the subsequent year against the sales. Thus, effectively the assessee will get the benefit representing the construction expenses. Once the undisclosed income of the assessee has been admitted by the revenue then the corresponding expenses incurred out of such income should also be allowed as deduction until and unless claim of the assessee is bogus. However, the case before us is not of bogus expenses. Disallowance made under the provisions of Section 40A(3) - We note that expenses claimed by the assessee were incurred out of the unaccounted income which has already been suffered to tax. Therefore, any further disallowance under the provisions of Section 40A(3) of the Act would lead to the double addition to the total income of the assessee which is unwanted under the provisions of law. Furthermore, if the assessee claims the expenses but at the same time the assessee has also increased its WIP by the said amount which makes the same as tax neutral. Thus, the claim as such was not made by the assessee for any deduction in the year under consideration. In view of the above and after considering the facts in totality, we are not inclined to uphold the finding of the authorities below. Accordingly, we set-aside the order of the Ld. CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.

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• 2022 (9) TMI 1310
  Penalty u/s 271(1)(c) - addition of income being estimated profit on the amount of sale - AO was not satisfied with the amount of income declared by the assessee and therefore he estimated the gross total income of the assessee at the rate of 8% of the total turnover - HELD THAT:- As the quantum proceeding and the penalty proceeding are different. Any addition or disallowances made under quantum proceeding do not ipso facto empower the revenue authority to levy penalty under Section 271(1)(c) of the Act. Further the addition made was based on estimation and it settled position of law by the various Hon ble High court that no penalty under Section 271(1)(c) can be sustained in the case of estimated addition - See M/S. NORTON ELECTRONICS SYSTEMS PVT. LTD [ 2014 (2) TMI 606 - ALLAHABAD HIGH COURT] Also in the case of CIT vs. Modi Industrial Corpn.[ 2009 (11) TMI 891 - PUNJAB HARYANA HIGH COURT] has also held that where the assessment of the assessee was completed on estimated basis penalty under Section 271(1)(c) of the Act was not imposable with respect to the additions made on such estimate by the Assessing Officer. We are of the opinion that no penalty under Section 271(1)(c) of the Act can be sustained on account of addition made by the authorities below based on estimation. Accordingly, we hereby set-aside the order of the Ld. CIT(A) and direct the AO to delete the penalty levied by him - Decided in favour of assessee.

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• 2022 (9) TMI 1309
  Unexplained cash credit u/s 68 - HELD THAT:- The identical issue was raised in the own case of the assessee where the ITAT was pleased to delete the addition made by the authorities below. Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. The doctrines of judicial precedent have been evolved to ensure stability, consistency and conformity in law otherwise a judge could take any view in the interpretation of law resulting in chaos. In view of the above, we set aside the finding of the CIT-A and direct the AO to delete the addition made by him. Thus the ground of appeal raised by the assessee on merit is allowed.

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• 2022 (9) TMI 1308
  Exemption u/s 11 - assessee received substantial amounts from big corporate houses as sponsorship money on the condition of naming the cricket ground/portion of the stadium in their names - means of revenue generation adopted by the assessee are purely commercial activity which are not authorized by the rules of the Association - HELD THAT:- The grants received by the assessee from BCCI represents sharing of advertisement income and is in the nature of income received by the activity of the assessee. According to the AO, the assessee is a full-fledged member of the BCCI and as per the Memorandum of Association the subsidy received by the assessee is not a voluntary contribution. According to AO, the sponsorship received in respect of corporate boxes cannot constitute charity. Further, the conduct of the matches of Celebrity Cricket League Matches are in the nature of business and hit by the provisions of section 2(15) - IPL matches conducted by the assessee are purely on commercial basis. Even though the AO while denying the claim of exemption u/s 11 has given various observations as to why the assessee is not entitled to the exemption, we find the learned CIT (A), in a very cryptic order, has directed the AO to allow the exemption u/s 11 of the Act, merely on the basis of Registration u/s 12AA available to the assessee. A perusal of the order of the learned CIT (A), which have already been reproduced in the preceding paragraph shows that the CIT (A) has not addressed the various observations made by the Assessing Officer while denying the claim of exemption u/s 11. A perusal of the same would show that the Tribunal has categorically held that the receipt of income from activities are subject matter of assessment and has nothing to do with the genuineness of the activities or the activities not in conformity with the objects of the Trust - CIT (A) without properly understanding the directions of the Tribunal while granting registration u/s 12AA of the Act was carried away by the arguments advanced by the assessee and has directed the AO to allow exemption u/s 11 of the I.T.Act, which, in our opinion, is not correct. We, therefore, deem it proper to restore the issue to the file of the learned CIT (A) with a direction to decide the issue afresh after giving due opportunity of being heard to the assessee and pass a speaking order on this issue. Since the issue of exemption u/s 11 is restored to the file of the CIT (A) for fresh adjudication, the issue relating to disallowance u/s 40A(3) is also restored to his file for fresh adjudication. The grounds raised by the Revenue are accordingly allowed for statistical purposes.

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• Customs

• 2022 (9) TMI 1307
  Maintainability of suit for permanent injunction - restraining infringement of trademark, copyright, trade dress etc. against unknown Defendants - HELD THAT:- The import of goods which violate Intellectual Property Rights is governed by the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 (IPR Rules). As per the said rules, import of any counterfeit products or products which violate IP rights of trademark owners, copyright owners, etc., is not permissible. The customs authorities have to, upon complaint received from any IP owner, or on its own accord, form an opinion qua the infringement of the IP rights. Upon forming an opinion, the import or sale of products which violate rights of IP owners including trademark, copyright, etc., would have to be stopped by the customs authorities. The import having been stopped by the customs authorities, ld. counsel for the Plaintiffs does not press for any further relief in this matter. However, if there are any details available with the Customs Department in respect of importer, seller or manufacturer, as per the bill of lading or any other documents, the same may be intimated to the Plaintiffs upon request - The Defendant No. 2 having not permitted imports of the impugned products, paragraph 5 of the prayer clause stands satisfied. None of the goods bearing the impugned mark in the said container no. ECNU4006477, have been allowed to enter India. Accordingly, the injunction is also not required to be passed in view of the statement made in the written statement by the customs authorities. The Plaintiffs are free to take action in accordance with law, either in India, or in other foreign jurisdictions. The present suit is disposed of.

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• 2022 (9) TMI 1306
  Determination of method by which the iron (Fe) content in the iron ore is required to be determined for the purposes of levy of duty on the petitioners export under the bills - Legality of the General Alert Circular no. 02/2019 dated 12/15th April 2019 (GA Circular), issued by the Directorate of Revenue Intelligence (DRI) - finalization of assessments of the five Shipping Bills under consideration filed by the Petitioner No. 1 - Seeking declaration that no liability of export duty can be imposed upon the exports of Petitioner No. 1 - enforceability of Provisional Duty Bonds and Bank Guarantees furnished by the Petitioner No.1. HELD THAT:- The petitioners in the present context are correct in contending that in the process of determination of the appropriate rate of export duty on iron ore, it entails a determination of three issues, firstly, the classification of the iron ore under the Second Schedule of the Tariff Act to be undertaken based on the scheme of classification namely the headings and sub headings under the First Schedule to the Tariff Act, secondly, the classification under the First Schedule would enable determination of the appropriate sub headings of classification, which is based on the percentage of Fe (iron) content in the iron ore. This is the stage where the Wet method would be required to be adopted; thirdly, based on the appropriate classification (headings or sub headings), the appropriate prescribed basis of levy under the Second Schedule to the Tariff Act is required to be determined; and fourthly, it would be required to be examined whether there is applicable exemption notification related to either description of the goods and/or the classification (headings or sub headings) of the goods as regards the levy of export duty on the export of iron ore. There are much substance in the contention as urged on behalf of the petitioners that the Fe (iron) content of the iron ore was required to be determined at the second stage as noted above, to be undertaken on the basis the iron ore as it naturally stood at the time of export, namely, on the Wet method as in such condition the iron ore would contain moisture and other impurities. The respondents thus could not have discarded the wet (WMT) method purporting to co-relate the same to the rate of levy namely, the tariff rate being changed which earlier was on a per ton basis to the ad valorem basis. On a comparison of the tariff headings as it stood earlier and at present which we have already noted above, there is no change whatsoever in the description of the goods except for a minor variation in the percentage of iron ore (Fe) classified in different categories. What has undergone a change is only the rate of the duty which, when the Courts decided in Gangadhar Agarwal s case, it was at a rate per ton basis and which has now been changed to an ad valorem duty. Except for such change, not only the classification but the basis of classification as appearing in the different headings and sub-headings appears to have remained the same - there is a reason for the Revenue to do so inasmuch as when the legislature has found it appropriate that the goods are required to be classified on dry weight basis, it has been accordingly categorically provided for in the relevant schedule under the Tariff Act. This is clear from the fact that the iron ore as categorized under 2601 and the sub headings thereunder, there is no mention whatsoever of any dry weight as being canvassed on behalf of the Revenue. The principles of law as laid down in Gangadhar Agarwal s case [ 1995 (8) TMI 73 - SUPREME COURT] were in regard to classification of the iron ore under heading 2601 for the purpose of determination of export duty on iron ore being on the wet (WMT) method basis and the dry (DMT) method would be applicable with effect from 1 May 2022 by virtue of the Finance Act, 2022. The Assistant Commissioner in passing the impugned orders in accepting the dry method, has acted contrary to the settled principles of law as laid down by the Supreme Court in Gangadhar Agarwal s case - the orders-in-original cannot be sustained being contrary to the basic tenets of law as laid down by the Supreme Court in Gangadhar Agarwal s case. Petition allowed in part.

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• 2022 (9) TMI 1305
  Seeking provisional release and re-export of seized goods - goods seized on the ground of non-observance of conditions of Food Safety and Standards Act, 2006 read with Food Safety Standard Rules, 2011 as well as the Food Safety and Standard (Import) Regulation, 2017 and other applicable FSSAI norms and other safeguarding conditions - HELD THAT:- The provisional release is granted in terms of section 110A of the Customs Act. In this regard, it is to be noticed from the contents of the affidavit-in-reply filed by respondent No.3 Customs that the petitioner has already made applications in form of letters dated 4.6.2022 and 1.7.22 seeking provisional release of the goods. The affidavit-in-reply in para 8.9 inter alia mentions that while seeking provisional release, the petitioner has expressed its inability to give bank guarantee as required for safeguarding the interest of the Customs. It is noticed that the decision of this court in Zip Zap Exim (P) Ltd. [ 2020 (2) TMI 1239 - GUJARAT HIGH COURT ] was based on different facts including on the ground of value of the goods, whereas the present controversy involves allegation of serious breaches on the part of the petitioner regarding non-compliance of the Food Safety Standards. Furthermore, there is no gainsaying that under section 110A of the Customs Act, the authorities are empowered to consider the question of release and put appropriate conditions for such release. Therefore, the judgment relied on by learned advocate for the petitioner, which stands true on its own facts, could not be applied in the present case. Thus, it would be a proper course if the letters-cum-applications of the petitioner pending with the authorities seeking provisional release of the goods are decided by the authorities in exercise of powers under section 110A of the Act. It will be for the competent Customs authorities to take a proper decision about the provisional release imposing conditions for such release as may be deemed fit by the authorities - the competent authority of the Customs department shall consider the pending applications/letters containing the prayer of the petitioner for provisional release of the goods by imposing appropriate conditions within a period of one week from today. Petition disposed off.

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• 2022 (9) TMI 1304
  Refund alongwith interest claim - classification of coils and spares and accessories - to be classified under Entry 8544.11 or under Entry 6815.99 under the Schedule to the Customs Tariff Act, 1975 - HELD THAT:- The computation of duty also indicates the duty paid in respect of 4 Bills of Entries, 2 for coils and 2 for accessories. Thus, there is no doubt that claim for refund was made in respect of duty paid for both coils and accessories. It thus follows that the orders-in-original and first appeal, and the order of the CESTAT relate to the refund application as a whole and in respect of all 4 bills of entries. Even on a practical and pragmatic appreciation of the matter, it does not stand to reason that the coils would be classifiable under Entry 8503 and accessories for the coils be classified under a different heading altogether. Clearly, there is an error in the references to tariff heading in the bills of entries and the revenue must not be seen to take advantage of this error in classification. Once the CESTAT has categorically held that coils would fall under tariff heading 8503, it follows on all counts that accessories to the coil should also be treated under the same head, also eligible for duty refund. The conclusion of R2 and the submissions of the revenue to the effect that the refund must be restricted only to the duty paid on account of coils, cannot be disagreed - impugned order to the extent to which it rejects the refund in respect of accessories is quashed. Interest - HELD THAT:- Interest is payable from 3 months from date of receipt of the refund application till date of payment. In this case, the date of refund application is 27.08.1994 and in light of the order passed above holding the refund payable, interest would be applicable on the amount to be refunded on accessories in terms of Section 27A, from 3 months from date of refund application till date of payment. Petition allowed.

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• 2022 (9) TMI 1303
  Classification of imported goods - Seeking release the goods imported by the Petitioner - seeking issuance of detention certificate for waiver of demurrage and detention charges and properly execute the same - what should be the percentage of the differential duty? - HELD THAT:- The petitioner has classified the subject goods under the Chapter Heading 8424 [i.e., CTH 8424] - the classification has been affirmed by the Advance Ruling Authority (ARA). There is no dispute that the respondents/revenue had filed an application for review, which was dismissed by the ARA on 08.08.2022. Ordinarily, the goods should have been released, albeit, provisionally, only against a personal bond - List the matter on 10.03.2023.

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• 2022 (9) TMI 1302
  Seeking grant of interim relief - classification of goods - HELD THAT:- A perusal of the extract of the order dated 24.08.2022 would show that the petitioner has been able to demonstrate, at least before the Customs Authority for Advance Rulings (CAAR), that the subject goods have been correctly classified under the Customs Tariff Heading (CTH) 84248990. It is not disputed by the counsel for the respondents, as noticed in the hearing held on 24.08.2022, that a review application was filed before CAAR, which was dismissed on 08.08.2022. Furthermore, the allegation that the petitioner had employed fraud or misrepresentation was rejected by CAAR. The steps taken by the concerned authority towards adjudication are fraught with legal flaws and/or impediments - till the next date of hearing, the operation of the show-cause notice dated 08.07.2022 shall remain stayed. List the matter on 28.10.2022.

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• 2022 (9) TMI 1301
  Provisional assessment of bills of entry - import of polyester knitted fabric and other fabrics from China - enhancement of valuation - Section 18 of the Customs Act, 1962 - HELD THAT:- It is not disputed, that the power to finally assess the subject bills of entry is contained in sub-section (2) of Section 18 of the Customs Act, 1962 - Although Section 18 of the Act does not specifically advert to issuance of a show-cause notice, it is implicit in the said provision. The final assessment of the bills of entry, whereby a variance is brought about in the valuation of the subject goods, which is adverse to the interests of the petitioner, would have to be communicated to the affected party - Admittedly, in this case, the valuation of the subject goods, which forms part of 95 bills of entry, has been enhanced. The basis for enhancement of valuation, apparently, was not communicated to the petitioner. According to us, that is the first infraction, which has been committed by the respondent/revenue. The impugned order cannot be sustained - Writ petition is disposed off.

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• 2022 (9) TMI 1300
  Benefit of the exemption notification no. 61 of 2007 dated 03.05.2007 - import of the Helicopters into India - rate of duty on import of aircraft for non-scheduled (passenger) services as well as non-scheduled (charter) services subject to Condition No. 104 to the exemption notification - HELD THAT:- The show cause notice had been issued to the appellant alleging that the Helicopters were not being used for NSOP (passenger) purposes as the appellant had entered into various long-term contracts which amounted to a lease . These allegations were rebutted by the appellant by establishing that no Helicopter was hired exclusively to any one party. The Commissioner agreed with the contention of the appellant that the Helicopters were not leased out to any party and, in any event, a wet lease was permitted. However, the demand was confirmed by the Commissioner on a completely new ground that the appellant had in fact transferred its NSOP to a group company, VAPL, who was not a NSOP holder. This demand is entirely beyond the allegations made in the show cause notice and has, therefore, to be set aside. Thus, the Commissioner could not have confirmed the aforesaid demand since the appellant had not been put to notice on this allegation in the show cause notice. The confirmation of demand by the Commissioner against the appellant for the two Helicopters AZU and AZV and for confiscation of Helicopter AZU with an option to redeem the same on payment of Rs. 5 crores under section 125 of the Customs Act cannot be sustained and is set aside - Appeal allowed.

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• 2022 (9) TMI 1299
  Maintainability of appeal - appeal dismissed on the ground of limitation since there was delay of 23 days in filing appeal - HELD THAT:- Condonation of delay by the Commissioner (Appeals) is a discretionary power that can only be exercised favourably in the event sufficient cause is shown for such delay. Therefore, in the absence of proof of delivery of appeal memo allegedly sent through the Postal Department by the Appellant, interference by this Tribunal in the order passed by the Commissioner (Appeals) is uncalled for. Appeal dismissed.

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• 2022 (9) TMI 1270
  Invocation of bank grantee furnished at the time of provisional release of the aircraft - use of aircraft imported by the appellant with benefit of exemption from customs duty under serial 347B of notification no. 21/2002-Cus dated 01.03.2002, as amended by notification no. 61 of 2017 dated 03.05.2007 - providing passenger air transport service to its group company by carrying personnel of the group company for remuneration - whether amounts to violation of Condition No.104 of the said exemption notification or not - whether such use are in accordance with the permit for nonscheduled (passenger) services granted by Director General of Civil Aviation (DGCA). HELD THAT:- Aircrafts and helicopters are classified under Customs Tariff Heading 88 of the First Schedule to the Customs Tariff Act, 1975. The tariff rate of duty till 28.02.2007 on the import of aircraft was 3% / 12.5%. Subsequently, pursuant to the proposal made in the Finance Bill 2007, exemption notification no. 20/2009 dated 01.03.2007 was issued inserting Entry 346B and Condition No. 101 in the earlier exemption notification dated 01.03.2002, whereby, the effective rate of duty on import of aircraft for scheduled air transport service was made nil . No exemption was, however, granted to non-scheduled air transport service and private category aircraft. However, with the issuance of the exemption notification dated 03.05.2007, the effective rate of duty on the import of aircraft for non-scheduled air transport service was made nil . The exemption notification dated 03.05.2007 inserted Condition No. 104 which requires at the stage of import, an approval from MCA to import the aircraft for non-scheduled (passenger) service and an undertaking by the importer to the Customs authority that the aircraft would be used only for non-scheduled (passenger) services and that the operator would pay on demand, in the event of his failure to use the aircraft for the specified purpose, an amount equal to the duty payable on the said aircraft but for the exemption under the notification. The use of the aircraft has been in accordance with the scope of non-scheduled (passenger) services and there is no violation of the undertaking to use the aircraft for non-scheduled (passenger) services. It is not possible to sustain the impugned order dated 31.08.2010 passed by the Commissioner in so far as it concerns the appellant - the penalty imposed upon Sudhir Nayak cannot also be sustained - appeal allowed.

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• Corporate Laws

• 2022 (9) TMI 1298
  Validity of Arbitral Award - seeking winding up of company (Devas) - it was alleged that Devas was formed for a fraudulent and unlawful purpose and its affairs had been conducted in a fraudulent manner - Section 271(c) read with Section 272(1)(e) of the Companies Act, 2013 - HELD THAT:- An independent but concurrent opinion was authored by the other member of the NCLAT, Mr. V.P. Singh, Member (T). Mr. V.P. Singh in his judgment inter alia held Devas could not have delivered Devas Services in India due to the lack of policy framework and licensing regime for a new service like Devas Services - Devas conceded before the NCLAT that the design of DMR and CID was at a conceptual level and were to be developed at a future date. It was also not disputed that DMR and CID were portions of the Devas Device and not the Devas Device itself. It was held that even in 2021 and especially during 2005-2011, Devas did not develop the Devas Device. A product of fraud is in conflict with the public policy of any country including India. The basic notions of morality and justice are always in conflict with fraud and that allowing Devas and its shareholders to reap the benefits of their fraudulent action, would send another wrong message namely that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores. The objections filed by the Petitioner under Section 34 of the Act are allowed and it is held that the Impugned award dated 14.09.2015 suffers from patent illegalities and fraud and is in conflict with the Public Policy of India - Petition allowed.

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• Insolvency & Bankruptcy

• 2022 (9) TMI 1297
  Condonation of delay of 45 days in filing appeal - Appellant failed to apply for certified copy within 30 days period - it is alleged that the Appeal is barred by time as filed beyond extended time of limitation prescribed under Section 61(2) of the Code - Section 12(2) of Limitation Act, 1963 - HELD THAT:- In the facts of the present case, when order was passed on 06.05.2022, the period of 30 days expired on 06.06.2022. 15 days period upto which delay is condonable under Section 61(2) also expired upto 20.06.2022. The appeal by the Appellant having been filed on 06.07.2022 is clearly beyond the 45 days - In the present case, certified copy is claimed to be applied by the Appellant on 15.06.2022 i.e. after expiry of limitation. Thus, the present appeal has been filed beyond 45 days from date of the order dated 06.05.2022 and delay of more than 15 days beyond the period of 30 days cannot be condoned by this Tribunal in exercise of its jurisdiction under Section 61(2) of the I B Code. There are no good ground to allow section 5 application filed by the Appellant. Delay condonation application is dismissed.

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• 2022 (9) TMI 1296
  Revival of Insolvency Application - whether Application filed by the Appellant under Section 9 was entertainable by the Adjudicating Authority? - time limitation - HELD THAT:- There is no enabling provision in the Code to revive the Application, Learned Counsel for the Appellant has relied on a Judgment of Shree Bhadra Parks and Resorts Ltd. [ 2021 (4) TMI 402 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI ]. This Tribunal had held that the Adjudicating Authority has jurisdiction under Rule 11 of NCLT, Rules to revive the Application. In the above case, the Adjudicating Authority had passed an Order dated 28th January, 2021 restoring the Company Petition. Initiation of proceeding under Section 9 by filing an Application to the Adjudicating Authority has to be made by Operational Creditor which must comply with requirement of Section 4. Part-II of the Code which deals with Insolvency Resolution and Liquidation for Corporate Persons applies only when minimum amount of default is Rs. 1 Crore (w.e.f. 24th March, 2020). Thus initiation of an Application under Section 9 has to conform to the requirement under Section 4. Section 4, as it is in operation with effect from 24th March, 2020, is not a mere procedural provision but provides a substantive condition to be fulfilled by an Applicant to initiate CIRP. The period of default after 25.03.2020 as provided in Section 10-A was entirely for different purpose. The purpose was to protect the corporate debtor from insolvency initiation for default committed on or after 25.03.2020 when whole country was suffering from Covid-19 and all corporate debtors were unable to function effectively, hence default in the said period legislatively was treated to be not giving rise to initiate insolvency. The threshold in Section 4 is entirely different from the protection given under Section 10 A hence Section 10-A has no relevance with regard to interpreting requirement of Section 4. Application filed by the Appellant under Section 9 on 08.09.2021 for an amount of Rs. 46,64,249/- was not entertainable due to not fulfilling the threshold of Rs. 1 Crore as statutorily required under Section 4 of the Code with effect from 24.03.2020 - there is no merit in the Appeal, the Appeal is dismissed.

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• 2022 (9) TMI 1295
  Handing over possession of an asset of immovable property belonging to the Corporate Debtor to IRP - HELD THAT:- The Agreement to Sell, which is relied by the Appellant dated 30.12.2019 contemplated sale of the immovable property of the Corporate Debtor for a consideration of Rs.1.70 crores. In the Agreement, the Appellant claimed to have paid Rs.30 lakhs. There is no proof by the Appellant for making payment of balance amount of Rs.1.40 crores. The Leave and License Agreement, which is relied by the Appellant dated 30.12.2019 is an unregistered document, where the Corporate Debtor claims to have granted the permission to the Licensee to occupy the property together with building till the time Licensor and Licensee execute the Sale Deed - The Leave and Licensee Agreement is thus admittedly without any consideration. The present is a case where ownership of the asset is not denied even by the Appellant. The submission, which has now been pressed by the learned Counsel for the Appellant is that Adjudicating Authority has no jurisdiction to entertain the Application - The Leave and License Agreement under which the Appellant is occupying the assets could not have been cancelled by the Adjudicating Authority, nor the Leave and License could be disregarded by the Adjudicating Authority by directing the Resolution Professional to take possession of the assets. Whether the Appellant has any right to resist for taking possession of the assets by the IRP? - HELD THAT:- The Leave and License Agreement was executed without any consideration. Clause 2 of the Leave and License Agreement clearly contemplated that Licensor shall not charge any License Fee from the Licensee, for grant of Leave and License of the said premises. Section 25 of the Contract Act, 1872 provides that Agreement without consideration are void, unless it is in writing and registered - The present is a case where Leave and License Agreement was executed without any consideration and the document, which has been relied by the Appellant is an unregistered document. Thus, it is not saved by exception as carved out in Section 25, sub-section (1). The document is a void document, which shall not give any right to the Appellant to resist taking up the possession by the RP of the assets belonging to the Corporate Debtor. The Adjudicating Authority has not committed any error in directing the Appellant to handover the possession of the assets belonging to the Corporate Debtor - Appeal dismissed.

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• 2022 (9) TMI 1294
  Seeking direction to the present Appellants to jointly and severally pay the Corporate Debtor the principal amount outstanding alongwith interest as claimed by the Resolution Professional - Sections 60(5) and 25 of the IBC - whether an amount of Rs. 50 lakh is outstanding for recovery from Appellant No. 1 Company and payable to the Corporate Debtor? - lifting of corporate veil - time limitation - HELD THAT:- After proper examination of records and financial statements of the Corporate Debtor and after due diligence, the RP has concluded from the ledger account of Appellant No. 1 company as maintained in the books of account of the Corporate Debtor as placed as at page 178 of the Appeal Paper Book (APB) that an amount of Rs. 50 lakhs was outstanding and due for payment. Following this discovery, we find that the RP/Respondent methodically took up the matter, as obligated under the IBC, by sending emails/letters at regular intervals to the Appellant No. 1 company including the statutory auditor as well as to Appellants No. 2 to 4 being Directors of Appellant No. 1 company to make good the outstanding amount along with interest @18% per annum. There are no reasons to disagree with the findings of the RP/Respondent that the contents of the SPA do not indicate any role of the Corporate Debtor in the entire transaction - in the absence of any established link of the Corporate Debtor with this share related transaction between Appellant No. 1 and the SRS Ltd., the Adjudicating Authority has concurred in the findings of the RP/Respondent that the amount of Rs. 50 lakh remains outstanding and recoverable from the Appellant No. 1 Company and other Appellants jointly and severally. Whether the recoverable amount of Rs. 50 lakhs is barred by limitation? - HELD THAT:- The claim that the share purchase transaction between the Appellant No. 1 company and SRS Limited amounted to recovery of the said sum lacks credence in the absence of any documentary substantiation. It is also an uncontested fact that there is no loan agreement between the Appellant No. 1 and the Corporate Debtor in this regard. Furthermore, nothing has been placed on record to indicate that this amount had to be repaid back within any specific time-line. In other words, the said sum was payable on demand anytime. Given the above, we hold that the applicability of limitation period in the present case does not stand to reason. Once the Corporate Debtor has come under CIRP, the logical corollary is that all actionable claims of the Corporate Debtor must be brought back into the corpus kitty of the Corporate Debtor - the RP/Respondent has rightly issued the demand notice on 29.04.2019 and 09.05.2019 to the Appellant No. 1 company as the said amount is due and payable from it. Whether Appellant No. 1 company is alone liable for the recovery of the outstanding advance or the recovery can be jointly and severally sought against Appellant No.2, 3 and 4? - HELD THAT:- The Adjudicating Authority while disregarding the separate legal entity of the Appellant No. 1 company has also not recorded the reasons for holding the individual members jointly and severally liable for the obligations of the corporate entity. The Adjudicating Authority is no doubt entitled to lift the veil of the corporate entity but in doing so must delineate the reasons for piercing the corporate veil and show as to how and to what extent the individual members are liable. This not having been done by the Adjudicating Authority, we are of the considered opinion that the outstanding amount alongwith interest is recoverable from Appellant No. 1 company and not jointly and severally at this stage. The Adjudicating Authority has not committed any error in holding that an outstanding principal amount of Rs. 50 lakhs along with 18% interest is due and recoverable by the Resolution Professional and to that extent affirm the impugned order - this amount alongwith interest is recoverable only from Appellant No. 1 company and therefore set aside that part of the impugned order which held that this amount is jointly and severally recoverable from Appellants no. 1 to 3 - Appeal allowed in part.

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• 2022 (9) TMI 1291
  Seeking dissolution of the Corporate Debtor - Section 54(1) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- The ultimate objective of the Code is either to resolve by way of a Resolution Plan or to liquidate the Corporate Debtor, as expeditiously as possible. The facts and circumstances of present case justifies that no purpose would be served to keep the Corporate Debtor under CIRP and/ or under Liquidation Proceedings. The Adjudicating Authority is vested with inherent powers under Rule 11 of NCLT Rules, 2016 conferred under the Act, to pass appropriate order(s) in the interests of speedy justice. No useful purpose would be served by placing the Corporate Debtor under the Liquidation Process which will increase the cost without any fruitful result. The State Bank of India, the sole CoC member has already proceeded against the Corporate Debtor by approaching DRT and by taking possession. The Liquidation Process under the provisions of the Code can be considered to have been carried forward and thus it would be just and proper for the Adjudicating Authority to dissolve the Company, as proposed by the Resolution Professional, moreover when the sole CoC member in its commercial wisdom has passed a resolution seeking dissolution of the Corporate Debtor. This is a fit case for dissolving the Corporate Debtor without undergoing the liquidation process - Corporate Debtor, M/s. Nassco Trading India Private Limited is ordered to be dissolved with immediate effect - application allowed.

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• 2022 (9) TMI 1290
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- On perusal of records, it can be seen that while an amount of Rs.2,00,00,000/- was disbursed by the Financial Creditor to the Corporate Debtor on 07.02.2014, there are no documents to prove whether the said amount was disbursed as a loan or ICD to the Corporate Debtor. However, in para 3(v) of the reply affidavit, the Corporate Debtor has admitted to the taking of the loan by the erstwhile director, albeit without the knowledge of the current directors cum promoters - The same has also been admitted by the Corporate Debtor in para 9 and 14 of its supplementary affidavit.. Further, repayments have been made by the Corporate Debtor to the bank account of the Financial Creditor. As such, it can be concluded that a financial debt does exist in favour of the Financial Creditor from the Corporate Debtor. Time Limitation - HELD THAT:- The disputed payments were made in 15.10.2016, 23.02.2017 and 27.02.2017. According to section 19 of the Limitation Act, 1963, when payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period of limitation, by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made. Therefore, taking into account the said dates, the petition is well within the period of limitation. This adjudicating Authority is satisfied that there exists a financial debt, due from the Corporate Debtor to the Financial Creditor and the Corporate Debtor has defaulted in the repayment of the same. Further, the petition is complete in all respects - Application admitted - moratorium declared.

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• 2022 (9) TMI 1289
  Misconduct in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - mistreatment of the Homebuyers as a class of creditors - 368 Homebuyers (applicants) purchased properties from the Corporate Debtor against the Resolution Plan of the Corporate Debtor - whether liquidation value is required to be provided to every individual Home buyer under Section 30(2)(b)(ii) in the capacity of a dissenting Financial Creditor? - HELD THAT:- Individual Homebuyers may have divergent views but ultimately, they vote as a class and individuals therein cannot claim to be dissenting financial creditors if they vote against the Resolution Plan - since Individual Homebuyers cannot be called as dissenting Financial Creditors, the question of providing separate liquidation values to each Homebuyer under Section 30 of the Code does not arise. Whether the e-voting conducted by the RP for approval of the Resolution Plan was carried out following due procedure? - HELD THAT:- In case the Homebuyers are not satisfied with the conduct of the AR, they have the option of replacing him. Since no such steps were taken in the present case, the AR proceeded to vote in favour of the Plan according to the majority votes of the Homebuyers and since he did not change his vote after receiving the communication regarding extension of the voting lines, it is deemed that the AR voted according to the instructions he received from the Homebuyers he represents - this is a belated stage for the Homebuyers to raise allegations against the AR especially after the CoC has voted in favour of the Resolution Plan with an overwhelming majority of 96.14% voting share. Moreover, the AR has already voted in favour of the Plan and a change in this decision would not influence the results in a substantial manner given that the Homebuyers hold 7.45% voting share in the CoC. Environment Clearances - HELD THAT:- It is noted that the Applicants apprehensions related to extension of the EC are legitimate and the EC is a mandatory compliance for the revival of the Corporate Debtor. The RP is cognizant of this fact and has taken several steps to procure the EC as expeditiously as possible. He has approached relevant authorities such as the State Environment Impact Assessment Authority (SEIAA), State Level Expert Appraisal Committee (SEAC), Principal Secretary of the Environment Department (Government of Maharashtra) and has also filed appropriate applications before authorities such as the National Green Tribunal. It is evident from these steps that the RP comprehends the importance of the EC and the gravity of the consequences of its non-procurement. These applications are pending adjudication before the respective authorities and it is clear that the RP has not acted adversely to the interests of the members of the CoC including the Homebuyers. There ate no merit in the present Application - application dismissed.

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• 2022 (9) TMI 1288
  Initiation of Voluntary Liquidation proceedings under IBC - section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On examining the submission made by the counsel appearing for the petitioner and the documents annexed to the petition it appears that the affairs of the company have been completely wound up, and its assets have been completely liquidated. The submissions made by the Liquidator the Company deserves to be dissolved - Petition allowed.

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• PMLA

• 2022 (9) TMI 1287
  Money Laundering - continuation of attachment of the property of the appellant - seeking direction to the respondent to release the said property from attachment - validity of SCN - Non-application of mind - HELD THAT:- It is evident that Appellate Tribunal found that the notice under Section 8(1) was not in conformity with the requirement of the statute and that the adjudicating authority did not form any reason to believe that the noticee had committed an offence under Section 3 or is in possession of proceeds of crime. Therefore, the very foundation for issuance of notice under Section 8(1) was absent. Various other flaws vitiating the order of the adjudicating authority were pointed out by the Appellate Tribunal observing that the same reflected non-application of mind. Appellate Tribunal opined that no purpose would be served by continuing with the attachment. Since the trial before the Special Court may take a number of years, therefore, the State Government may take a stand about the project. However, despite saying so Appellate Tribunal adverted to Section 8(8) of PMLA including the second proviso and relegated the appellant to the Special Court to seek release of the attached property holding that till such time attachment would continue. Though Appellate Tribunal extracted Section 8(8) of PMLA, it did not say that it had passed the order of relegation on the basis of the aforesaid provision. On going through the findings returned by the Appellate Tribunal vis- -vis the provisional attachment order and the order of the adjudicating authority on one hand and the conclusions of the Appellate Authority on the other hand, it is evident that the conclusions are not consistent with the findings returned by the Appellate Tribunal; rather wholly inconsistent. Appellate Tribunal has held that while carrying out the provisional attachment, the attaching authority did not record reason to believe that the petitioner is in possession of any proceeds of crime and that such proceeds of crime were likely to be concealed, transferred etc., which may frustrate any proceedings relating to confiscation of such proceeds as is the mandatory requirement under Section 5(1) of PMLA. Appellate Tribunal also found fault with the approach adopted by the adjudicating authority in overlooking the above conditions. The show cause notice under Section 8(1) of PMLA was issued in a mechanical manner without application of mind and without forming any reason to believe that the noticee had committed an offence under Section 3 or was in possession of proceeds of crime. The adjudicating authority did not record any reason that the provisional attachment should continue. While the Appellate Tribunal is correct in holding that the provisional attachment order and the order of the adjudicating authority confirming attachment suffered from fundamental flaws, thus being without jurisdiction, it fell short of declaring such orders as illegal; it further fell in error in relegating the appellant to the forum of Special Court to seek release of the attached property as it amounts to abdicating its authority and allowing an illegality to continue. The respondent are directed to release the attached property i.e., 855.7130 acres of land in Prakasham and Guntur districts of Andhra Pradesh as per Annexure L2 enclosed with the provisional attachment order, to the appellant - appeal allowed.

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• 2022 (9) TMI 1286
  Money Laundering - Validity of look out circular - proceeds of crime - Constitutional Validity of Section 2(1)(u), Section 50 and Explanation to Section 44 of the Prevention of Money Laundering Act, 2002 - scheduled/predicate offences or not - HELD THAT:- The Hon ble Supreme Court in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] has been clear and categorical in its reasoning. The undeniable sequitur of the reasoning is that firstly, authorities under the PMLA cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed; secondly, the scheduled offence must be registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum; thirdly, in the event there is already a registered scheduled offence but the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or quashing of the criminal case of the scheduled offence, there can be no action for money laundering against not only such a person but also any person claiming through him in relation to the property linked to the stated scheduled offence. No action under PMLA can be resorted to unless there is a substratum of a scheduled offence for the same, which substratum should legally exist in the form of a subsisting (not quashed) criminal complaint/inquiry or if it did exist the accused has since been discharged or acquitted by a Court of competent jurisdiction. The relief sought regarding constitutionality or vires of various provisions of the Prevention of Money Laundering Act, 2002 is infructuous having been decided by the Hon ble Supreme Court in Vijay Madanlal Choudhary Ors. Vs. Union of India Ors. - All proceedings set aside - application disposed off.

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• 2022 (9) TMI 1272
  Seeking grant of Interim Bail - applicant had suffered an incident on 14th July, 2022 of fainting and frothing from mouth with numbness of his limbs - whether the treatment in jail was unsatisfactory or inadequate? - HELD THAT:- The Supreme Court in State of UP [ 2020 (10) TMI 1281 - SUPREME COURT] was dealing with an appeal against an order passed by the Allahabad High Court, Lucknow Bench granting interim bail to an accused on medical grounds for a period of two months while directing the listing of the regular bail application for hearing. Here too the regular bail application has been listed for hearing on 26th September, 2022 in which bail has been sought on the merits of the case along with the interim bail application moved on grounds of ill health. This application as noted above is the second one pleading medical grounds. The decision of the Supreme Court has a direct bearing to this case. From the Status Report, it is amply clear that even the incident of 14th July, 2022 was dealt with promptly and effectively by the jail authorities and neither the doctors at DDU Hospital nor at the RML Hospital considered his condition to be of such a serious nature to call for hospitalisation. They rather advised review in Neurology and Medicines OPD. The Neurologist at GB Pant Hospital has advised neurosurgery evaluation, which it appears is yet to be carried out - there is nothing in the Status Report which would suggest to this Court that treatment was unsatisfactory or inadequate. No case has been revealed justifying directions for treatment of the applicant at any other hospital/medical institute. The documents that have been placed on the record by the applicant, are of doctors at Indore and in the application, he has sought interim bail to get himself neurologically evaluated in his home town Indore Madhya Pradesh . While not doubting the capabilities of the doctors at Indore nor the standard of medical care available at Indore, it would be absurd to hold that the otherwise able doctors at GB Pant Cardiology and Neurology Departments would have a lower degree of skill than the doctors at Indore, to evaluate the condition of the applicant and prescribe adequate treatment. The present condition of the applicant is also reported to be stable - No ground whatsoever has been made out for grant of interim bail. The present application is dismissed.

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• 2022 (9) TMI 1271
  Transfer petition - Constitutional validity and interpretation of certain provisions of the Prevention of Money-Laundering Act, 2002 - procedure followed by the Enforcement Directorate (ED) while inquiring into/investigating offences under the PMLA - effect of amendment in Section 45 of the 2002 - HELD THAT:- The Transfer Petition is disposed of in terms of the judgment in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] .

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• Service Tax

• 2022 (9) TMI 1285
  CENVAT Credit - duty paying documents - debit note suffices for the documentation requirements prescribed in rule 9 of CENVAT Credit Rules, 2004 or not - whether such debit notes/invoices pertaining to reimbursements of diesel and electricity costs incurred by the service provider on which tax under Finance Act, 1994 has been duly discharged enables the recipient to take credit? HELD THAT:- The availment of credit, whether against invoices or against debit notes that contain substantially the same information as prescribed in rule 9 of CENAT Credit Rules, 2004 stands settled by the decision of the Tribunal and of the several High Courts. It is seen from the debit notes, as well as the invoices in question, that, while the adjustments reflect the separate charges as provided in the master service agreements, discharge of tax liability therein under Finance Act, 1994 by the provider of service and raising of the amount as due from the recipient of the service is not in doubt. It is settled law that once the tax has been collected, it is not within the jurisdiction of the tax authorities governing the recipient to contend that such payment of tax was not in consonance with the law. Also, the competent authority has not been able to draw a distinction between diesel as goods and any duties paid thereon being ineligible for availment of credit and a charge raised upon the recipient of the service as value of the service on which tax liability under Finance Act, 1994 has been duly discharged. Appeal dismissed - decided against Revenue.

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• 2022 (9) TMI 1284
  Levy of penalty u/s 78 of FA - Short payment of service tax - Short payment found during the course of audit - HELD THAT:- The appellant has accepted the demand with regard to non-payment of service tax under various categories of services. One of the issue was whether the amount that has to be paid under works contract services was to be treated as original works or maintenance work. Other issue was whether the tax has to be paid under manpower supply services or works contract service. It is seen that there are interpretational issues. There is no iota of evidence adduced by the department that the appellant has committed any positive act of suppression of facts with intention to evade payment of service tax. Further, the appellant is an undertaking under the State Government of Tamil Nadu and for these reasons, it is a fit case to set aside the penalties imposed u/s 78 of the Finance Act, 1994. All the penalties imposed under section 78 requires to be set aside - the impugned order is modified to the extent of setting aside the penalties imposed under sec. 78 of the Finance Act only without the disturbing the confirmation of demand or the interest thereon - appeal allowed.

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• Central Excise

• 2022 (9) TMI 1293
  CENVAT Credit - input services - Repair and maintenance of factory/ office premises/plant and machinery - GTS Services - credit availed on the strength of invoices for freight for receipt of input/ fuel, issued by the supplier / trader - HELD THAT:- Admittedly appellant have received the construction service towards repair and maintenance carried out in the factory premises. The repair and maintenance have been specifically provided as input service in the in the inclusive clause of the definition, which provides for credit with regard to services received for repair of a factory or office relating to such factory. Further, this issue is squarely covered by the precedent order of this Tribunal in appellant s own case M/S. BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL GOODS SERVICE TAX AND CENTRAL EXCISE, ALWAR. [ 2021 (7) TMI 1383 - CESTAT NEW DELHI] , where it was held that the appellant is entitled to cenvat credit on repair and maintenance services received for repair and maintenance of plant and machinery, in the factory premises. GTA Service - HELD THAT:- Admittedly it is the appellant manufacturer who are the receiver of the input service in question. It is immaterial as to who deposited the service tax, as it is specifically mentioned in the invoice of the supplier that service tax of GTA service has been deposited on the freight element. It is also found that the Court below has held that service tax has been deposited in respect of GTA service in question. Accordingly, the appellant is entitled to cenvat credit on the same. The appeal is allowed - decided in favor of appellant.

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• 2022 (9) TMI 1283
  Recovery of the irregularly availed Cenvat credit alongwith interest and penalty - appellant paid excess service tax on inward freight under the category of Transport of Goods by road in a goods carriage , and subsequently availed excess Cenvat credit on input services - HELD THAT:- From the impugned order and the arguments as recorded the fact of payment of service tax is not in dispute. Once the fact of payment of service tax is not disputed the CENVAT Credit availed by the appellant which is equal to the tax paid cannot be disputed. In the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] , the Hon ble High Court of Mumbai held that during the relevant period, that is, during the period from 2 nd March 2005 to 31st December 2005, it could not be said that the issue was settled and that the assessee paid duty on decoiled HR/CR coils knowing fully well that the same were not manufactured goods. If duty on decoiled HR/CR coils was paid bona fide, then availing credit of duty paid on HR/CR coils cannot be faulted. In view of the decision of the Hon ble High Court of Mumbai, there are no merits in the impugned order and the same is set aside - appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1282
  CENVAT Credit - input services have been used in or in relation to the manufacture of the said dutiable final products as well as exempted goods - non-maintenance of separate records - period from July, 2010 to March, 2014 - requirement to pay an amount equal to 5% (effective up to 16.03.2012) and 6% (w.e.f.17.03.2012) of the value of exempted goods or not - HELD THAT:- This Tribunal in the case of M/S PHILIPS CARBON BLACK LTD., M/S PROMODE KUMBHAKAR VERSUS CCEX SERVICE TAX, DURGAPUR AND CGST EXCISE, BOLPUR VERSUS M/S PHILIPS CARBON BLACK LTD. [ 2020 (1) TMI 530 - CESTAT KOLKATA] had held that non-compliance of the procedure prescribed under Rule 6(3A) of the Cenvat Credit Rules, 2004 does not result in loss of substantive right of the assessee to avail the option of reversing proportional credit and such non-compliance is at best a procedural lapse, which can be condoned. Further, Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] has held that reversal of credit along with interest amounts to a situation, which is akin to as if the assessee had never availed such credit at the first place. Also, Hon ble Calcutta High Court in the case of COMMISSIONER OF SERVICE TAX-1, KOLKATA VERSUS M/S. SURYA VISTACOM PRIVATE LIMITED [ 2022 (7) TMI 719 - CALCUTTA HIGH COURT] has held that if according to the adjudicating authority, the assesse did not abide by the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, it was open to such adjudicating authority to reject the assessee s claim as regards the disputed Cenvat Credit and it could not mechanically invoke the 6% Rule on the assesse. The demand cannot sustain and is accordingly set aside - appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1281
  Reduction in the amount of refund, which was in the nature of predeposit - whether interest have been rightly allowed under Section 35FF of the Act? - principles of unjust enrichment - time limitation - HELD THAT:- A Division Bench of this Tribunal in the case of Parle Agro Ltd [ 2021 (5) TMI 870 - CESTAT ALLAHABAD ], under similar facts and circumstances, have held that interest is payable also on the amount paid during investigation/audit as well as the amount of pre-deposit and further such interest is payable @ of 12% per annum, following the ruling of Hon ble Supreme Court in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] . Hon ble Madras High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, COIMBATORE VERSUS M/S. PRICOL LTD., THE CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL [ 2015 (3) TMI 735 - MADRAS HIGH COURT ] have held that any amount deposited during investigation has to be treated as pre-deposit and the same is neither hit by limitation nor by the clause of unjust enrichment for the purpose of refund. Thus, the learned Commissioner (Appeals) have erred in holding that the amount of Rs. 50,000/- is hit by limitation and unjust enrichment, and further interest is not payable under section 35FF - the appellant is entitled to refund of the balance amount of Rs. 50,000/- which was deposited on 30th January 2003 - further appellant is entitled to interest on the full amount of Rs. 8.5 lakhs from the date of deposit till the date of refund @ of 12% per annum under the provisions of Section 35FF of the Act - appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1280
  CENVAT Credit - duty paying documents - case of Revenue is that the invoices of GMIPL are not valid documents for taking credit as they do not pay the service tax after taking credit of the tax paid by the broadcaster - suppression of facts or not - extended period of limitation - HELD THAT:- From the perusal of the invoices issued by the broadcaster, it is quite evident that the name of the appellant appears on each and every invoice of the service provider as recipient of the service. That being so the credit taken by the appellant on the basis of the invoices issued by the broadcaster cannot be denied as the invoices clearly show the recipient of service as appellant. Further now the appellants have received these services through M/s Group M Media India Pvt. Ltd., who have enclosed the invoices of the broadcaster alongwith their invoices. M/s Group M Media India Pvt. Ltd. have facilitated the provision of Broadcasting services by the Broadcaster to the appellant and have definitely acted as pure agents , for the provision of these services. The denial of the credit on the invoices of M/s Group M Media India Pvt. Ltd, taken along with the invoices of the Broadcasters, is not justified. There are no substance in the manner in which Commissioner has sought to distinguish the case of Zapak [ 2018 (9) TMI 759 - BOMBAY HIGH COURT ]. On perusal of the sample invoices it is already concluded that the name of the appellant appear as client (service recipient) on the invoices issued by the Broadcaster, that being it is held that M/s. Group M Media India Pvt Ltd., is pure agent in the provision of the service. Commissioner has not recorded any finding in this order to the contrary. Since it is held in favour of the appellant on merits itself, no findings are recorded on the issue of interest, limitation and penalties. Appeal allowed.

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• 2022 (9) TMI 1279
  Clandestine removal - Ingots - demands of duty made on account of alleged production based on the number of heats and alleged clandestine removal based on parallel invoices - demand based on the private production records of the appellant - demand based on the 12 parallel invoices recovered from the appellant s office. Demand based on the number of heats of manufacture every day and the average quantity of MS Ingots produced per heat - HELD THAT:- According to the appellant itself the cross-section of the ingots is 3.5 inches X 4.5 inches. If the total volume of the ingots per inch is converted into cubic centimeters and the weight of 1.96 kg. per inch is considered, the density of the MS Steel ingots produced by the appellant is consistently around 7.59 gms. per cubic centimeter which is consistent with the density of the mild steel. Therefore, there are no inconsistency in the production records for the three days. The data is reliable and robust. How much quantity of ingots were produced during the previous three months? - HELD THAT:- There is no evidence that it had been modified during the three month period. Therefore, the quantity of MS Ingots produced in one batch/heat will be more or less be similar to the quantity produced in another batch. At any rate, there cannot be a very large variation - the average quantity of 8.447 tons of ingots per batch reckoned by the Adjudicating Authority for confirming the demand is correct and calls for no interference. The submission of the learned Counsel that only 6 or 6.5 M.T. can be produced per heat is inconsistent with the data which is undisputed and is available on record. The duty of central excise is leviable for the manufacture of the goods although it is payable on removal or at the end of the month. If there is no manufacture there cannot be any demand of duty. To the extent the manufacture was shown by the appellant in its excise returns, duty has already been paid. It is this excess manufacture which has not been reflected in the excise returns which is in dispute. This manufacture has not been determined by the Revenue out of thin air but has been worked out on the basis of the records of the appellant themselves - Merely, because the buyers of clandestinely removed goods and the transporters could not be found the manufacture of these goods cannot be denied when the appellant s own records indicate the manufacture. There is no evidence of any variation of the capacity of the furnace during that period. There are sufficient reason to trust the private records maintained by the appellant itself and hold that the demand on this count is reasonable and needs to be upheld. Demand on the basis of 12 parallel invoices - HELD THAT:- There cannot be two invoices with the same number with different dates and different quantities and with paying duty on the one and not paying duty on another. Maintaining a parallel sets of invoices is a well known modus operandi for clandestine removal of goods. If the parallel invoices are not detected, they can be destroyed by the assessee after clandestinely removing goods against them without paying duty or even indicating duty and then and recovering the duty from the customers and not paying the duty to the Revenue. However, Revenue can only book a case against the appellant to the extent it finds evidence. In this case, only 12 invoices were detected and duty was demanded only on such invoices. It is undisputed that there were another set of invoices of the same number, but with different details. The impugned order is correct in demanding duty to the extent it did. Consequently, the demand of interest and penalty under section 11AC also need to be upheld - It is undisputed that Shri Singh was a Director. He was directly responsible for the operations of the assessee. Accordingly, the penalty of Rs. 50,000/- imposed upon him is fair and just and no interference is required. Appeal dismissed.

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• 2022 (9) TMI 1278
  Grant of interest on the amount deposited during investigation which has subsequently been ordered to be refunded - interest at the rate of 6 per cent under the notification dated 21.08.2014 issued under section 35FF of the Central Excise Act, 1944 - HELD THAT:- The Allahabad High Court in Pace Marketing Specialties v/s Commissioner of Central Excise [ 2011 (8) TMI 796 - ALLAHABAD HIGH COURT ] while granting interest at the rate of 12 per cent had relied upon the decision of the Supreme Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] - the view taken by the Allahabad in Pace Marketing is followed by the Division Bench of the Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] . The appellant would, therefore, be entitled to interest at the rate of 12 per cent instead of 6 per cent from the date of deposit till the date of payment - appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1277
  Area Based Exemption - activity of the appellant of making nail polish from base liquer and colour solution - process amounting to manufacture or not - eligibility of Notification dated 10.06.2003 - HELD THAT:- The issue involved in this appeal was considered and decided by a Division Bench of the Tribunal in GS PHARMABUTORS PVT. LTD. (UNIT-II) VERSUS ADDITIONAL DIRECTOR GENERAL, (ADJUDICATION) [ 2022 (2) TMI 615 - CESTAT NEW DELHI] . It was held that the appellant was entitled to the benefit of the area based notification dated 10.06.2003. The appellant, therefore, for all the reasons stated in the aforesaid Division Bench decision of the Tribunal in GS Pharmabutors, would be entitled to the benefit of the area based exemption Notification dated 10.06.2003 - Appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1276
  CENVAT Credit - duty paying documents - Revenue was of the view that availment of Cenvat credit on the basis of order-in-original was not proper as per Rules 3 9 of the Cenvat Credit Rules - HELD THAT:- In the present case the appellant has not paid any excise duty for which they are required to make claim for refund of duty. It is the case where certain credit taken by them was sought to be denied and during the course of the proceedings for denial of such Cenvat Credit, the appellant reversed the entire credit sought to be disallowed to them. Subsequently major portion of such credit has been allowed to them. If Revenue had any objection to the order-in-original they should have preferred an appeal before the appropriate authority. By way of issuing second show cause notice they could not have denied the benefit granted to the appellant in the first round of proceedings. Appeal allowed.

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• 2022 (9) TMI 1275
  Eligibility for concessional rate of duty in terms of Notification No. 6/2011-CE dated 01.03.2011 - Perforated Nickel Cylinders (Screen) - HELD THAT:- The very same issue has been decided by this Tribunal in STOVEC INDUSTRIES LTD VERSUS C.C.E. -AHMEDABAD-I [ 2021 (12) TMI 240 - CESTAT AHMEDABAD] where it was held that the appellant has classified the impugned goods under CTH 844250 which includes Plates,cylinders and other printing components; . The appellant is entitles for benefit of Sno. 41 in list 2 of notification no. 06/2011-CE dated 01/03/2011. The appellant are entitled for the exemption Notification 6/2011-CE dated 01.03.2011 and subsequent exemption under Notification No. 12/2012-CE dated 17.03.2012 - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (9) TMI 1274
  Jurisdiction - delegation of power to an Officer not below the rank of Deputy Commissioner (CT) and to conduct the enquiry - Section 64 (4) of the TNVAT Act - HELD THAT:- The issue that has been raised in the present appeal is no longer res integra and the Division Bench of this Court has settled the issue in Joint Commissioner (CT), Chennai and others Vs. M/S. Original Vel Sporting News, Rep. by its Manager, Mr. Dinesh Kumar Soman [ 2019 (6) TMI 1586 - MADRAS HIGH COURT ], where it was held that the order of the learned Commissioner under Section 64(4) of the Act is a quasi-judicial order, requiring a prior notice of hearing to the assessee and passing of a reasoned speaking order in individual cases of registered dealers for conducting audit by the specified Authority as directed by the Commissioner. Thus, it is clear from the above that under Section 64(4) of the Act, it does not empower the Commissioner to delegate the power and to pass orders to any lower authority and the Commissioner himself will have to pass orders. Appeal allowed.

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• 2022 (9) TMI 1273
  Works contract - inter-state trade - Benefit u/s 3F(2)(b) of the U.P. Trade Tax Act - contract in question was individual in nature or not? - whether the value of goods received by the assessee from its manufacturing unit situated at Vadodara outside U.P. to the State of U.P. in pursuance of contract entered by the assessee with Bharat Petroleum Corporation is covered by Section 3 of Central Sales Tax Act and is deductible from the net taxable turn over? - HELD THAT:- The U.P. Trade Tax Act not only covers the field of levies on sale and purchase of the goods in U.P. but also of transfer of rights to use any goods which has been covered by definition of sale. Section 3-F of the Act of 1948 imposes liability upon every dealer to pay tax on the net turn over of transfer of property in goods involved in the execution of work contract. Sub-section (2) of Section 3-F of the Act provides certain deduction in calculating net turn over for the purpose of charging tax under Section 3-F of the Act. From the reading of sub-section (2) of Section 3-F, it is clear that every dealer who is involved in execution of work contract, but the amount representing the sale value of the goods which are covered by Section 3, 4 and 5 of the Central Sale Tax Act are deductible from the said turn over in determining the tax liability. In the present case, the assessee has an office in U.P. and has a manufacturing unit outside the State of U.P. The work contract was to be executed in U.P. and the goods have been received from outside the State after manufacturing was done by the dealer at its plant at Vadodara, thus, the goods received in the execution of work contract has resulted in movement of goods from one State to another attracting Section 3 of the Central Sales Act and thus assessee is liable for the benefit under Section 3(F)(2)(b) of the U.P. Trade Tax Act, 1948. The goods received by the assessee in U.P. after the same having been manufactured at its site at Vadodara and consumed for execution of work contract would amount to sale of goods in the course of inter-state trade or commerce which is covered under Section 3 of the Central Sales Tax Act and the value of such goods is therefore liable to be deducted under Section 3(F) (2)(b) of the 1948 Act from the net turn over of the assessee. The matter is no more res integra and co-ordinate Bench of this Court in case SANTOSH AND COMPANY VERSUS COMMISSIONER OF TRADE TAX [ 1999 (7) TMI 670 - ALLAHABAD HIGH COURT] , COMMISSIONER, TRADE TAX, UP., LUCKNOW VERSUS DHARMEX PVT. LTD. [ 2008 (12) TMI 689 - ALLAHABAD HIGH COURT] and COMMISSIONER, TRADE TAX, UP., LUCKNOW VERSUS ADVANCE SPECTRA TEC (P) LTD. [ 2010 (7) TMI 920 - ALLAHABAD HIGH COURT] had held that where the assessee dealer had brought goods in and consumed them in U.P. in execution of work contract, it would be a case of inter-state trade on which no tax is chargeable in U.P. There is no error in the judgment and order passed by the Tribunal partly allowing the appeal of the assessee. The question raised in the revision is answered accordingly, in favour of the assessee and against the revenue - Revision dismissed.

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• Indian Laws

• 2022 (9) TMI 1292
  Enforcement of Foreign Arbitral Award - contempt of the order of court or not - acts of commission or omission on part of Contemnor Nos.9 and 10 and the entities controlled by them - control on assets of entity - banks and financial institutions sold the shares which were pledged with them, purely as a matter of commercial expediency or whether there was any deliberate act of defiance to defeat the rigour and width of the orders passed by the High Court and this Court ? - deliberate attempt to defeat the processes of Court or not - Whether the acts of commission or omission on part of Contemnor Nos.9 and 10 and the entities controlled by them, were calculated to put the assets of the companies under their control beyond the reach of Daiichi? - Having given clear assurances to the High Court and this Court, whether such acts of commission and omission on part of Contemnor Nos.9 and 10 amount to contempt of the orders passed by the High Court and this Court? HELD THAT:- On these two questions raised hereinabove need no further elaboration as the conduct of contemnor Nos.9 and 10 was considered and they were held guilty of having committed contempt of the orders passed by the High Court and this Court. While holding them guilty, by its judgment and order dated 15.11.2019 this Court had given them an opportunity to purge themselves of contempt. Therefore, insofar as the role played by Contemnor Nos.9 and 10 is concerned, the matter rests in a narrow compass i.e., whether they have purged themselves of contempt or not? The kind of assets that have been offered by said Contemnor Nos.9 and 10 in their affidavit are so inadequate that it is impossible to satisfy the amount awarded in favour of Daiichi in the foreign arbitral award - there are no alternative but to hold that said Contemnor Nos.9 and 10 have failed to purge themselves of contempt. As a matter of fact, there is no genuine attempt on their part. The question then comes up is about the quantum of sentence. Considering the enormity of their actions, in our view, the maximum sentence that can be awarded, must be imposed. Role played by the noticee banks and financial institutions - HELD THAT:- With the assistance of the learned counsel appearing for the parties we made an attempt to go through the documents placed on record but find ourselves unable to come to a definite conclusion whether there were antecedent arrangements which enabled said banks and financial institutions to keep attaching the shares and keep on converting large quantity of shares from the compartment of unencumbered shares to that of encumbered shares and thereafter keep disposing of said shares. Contemnor Nos. 9 and 10 are sentenced to suffer six months imprisonment and pay fine in the sum of Rs.5,000/- each within four weeks from today. In case of default of payment of fine, the contemnors shall undergo further imprisonment of two months - Applications disposed off.

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