TMI Tax Updates - e-Newsletter
February 24, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Withholding of Provisional/ Final refund on the ground that investigation is pending - Part B of Form GST RFD07 is not a form for the purposes of communicating the decision; rather it is a form in which an order has to be passed keeping in view the requirement of section 54(11) of the Act read with Rule 92(2) of the Rules. - The order withholding the refund can be passed only if the prerequisites of recording of the opinion in terms of the aforesaid provision is found present in a particular case. - Matter remanded back to pass an order within 15 days - HC
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Grant of Bail - fake GST challan and GSTR-3B return - CA by profession - The plea of rendering co-operation to the department by the accused appears to be baseless as it is apparent that he tried to avoid investigation under the garb of medical treatment in hospitals. The conduct of the accused is writ large that despite being statutory auditor he misappropriated the GST amount and simultaneously misled M/s Starcrest Services Pvt. Ltd through generation of forged documents. Bail is accordingly denied to the accused. - DSC
Income Tax
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Status of assessee - period of stay in India - Not Ordinarily Resident in India - Since the NOR status and the purchase of stock option of the assessee is a mixed question of fact and law, as rightly suggested by the learned Senior Standing Counsel for the department, in the interest of justice, in order to give one more opportunity to the assessee we are of the considered view that the matter can be remitted back to the Assessing Officer. - HC
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Validity of assessment U/s. 153C - assumption of jurisdiction u/s. 153C - In the instant case, assessee was the attorney holder of the seller. The sale deed was found during the course of search at the premises of the buyer. The sale deed, at best can be said to “relate to” or “refer to” the assessee, but it cannot be said to “belong to” the seller or to the attorney holder. - AT
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Disallowance on account of excess shortage/ breakage to 30% - exceptional inventory loss - the assessee has claimed such loss on account of passing of the of the expiry date of the finished product of the assessee. The value of such goods is as such Nil as having became non-marketable. It is not the case of the revenue that the assessee has derived any revenue from sale of such goods. - Therefore, there is no reason to restrict it at an adhoc figure. - AT
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Penalty u/s 271(1)(c) - Bogus purchases - we are of a strong conviction that in the absence of documentary evidence supporting the genuineness of the purchases claimed by the assessee to have been made from the aforementioned party, the same, though could have been disallowed, however, on the said standalone basis penalty under Sec.271(1)(c) could not have been validly imposed. - AT
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Revision u/s 263 - It is well settled principle of law where A.O. has exercised quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be found to be erroneous simply because Commissioner does not feel satisfied with the conclusion. CIT ought not to have initiated proceedings u/s 263 of the Income Tax Act when already enquiry is made by the Assessing Officer. - AT
Customs
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Seeking provisional release of goods - The respondents are directed to permit the petitioner to have the goods mutilated at the cost of the petitioner, but under the supervision of the third respondent. As agreed by the petitioner, the goods of mutilation will be included in FOB. - HC
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Auction - inaction on the part of the original consignees to submit bills of entry followed by the non-clearance of the goods for home consumption or warehousing - This Court is of the firm view that the action, which has been taken by the respondents, is in accordance with the provisions of the Customs Act, 1962 and therefore, no interference in exercising extraordinary writ jurisdiction of this Court is called for - HC
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Time limit for issue of Notice - Customs Broker - "Issue of Notice" versus "Service of Notice" - The word ‘issue’ in regulation 17 of the 2018 Regulations or regulation 20(1) of the 2013 Regulations would not include ‘serve’ - The time limit prescribed in regulation 17(1) of the 2018 Regulations or regulation 20(1) of the 2013 Regulations is mandatory in nature. - Tri (TM)
Corporate Law
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PIL - Seeking for a direction against respondents No. 1 to 10 therein to forthwith constitute a Multi- Disciplinary Investigation Team to investigate and prosecute respondent No.11 - It is important to note that petitioner's complaint dated March 14, 2017 upon which petitioner has relied is common in the PIL filed before the Delhi High Court and this writ petition - thus, there remains no doubt that petitioner is indulging in forum shopping on the very same cause of action. As held in Udyami2, this amounts to criminal contempt as the core issue in all these writ petitions is one and the same. - This writ petition is not only devoid of merits, but an absolute abuse of process of law. - HC
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Oppression and Mismanagement - Delhi Gymkhana Club - At this stage, interim relief can be granted on the basis of legal considerations justifying such grant to prevent continuance of or further prejudice to public interest in the affairs of the company. Having regard to the nature of allegations and the proof sought to be adduced in support of the same as coming to fore from the Inspection Reports, it can be stated without any fear of contradiction that the Union of India has been able to demonstrate that fair questions requiring probe have been raised in the Company Petition which would entitle it to the final relief of replacement of Directors of the Club with Government nominees to conduct the affairs of the Club in accordance with the provisions of law and its charter. - AT
IBC
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Initiation of CIRP - As per the ‘Companies (Acceptance of Deposits) Rules, 2014’, the term ‘deposit’ is defined under rule 2(1) (c ) in an inclusive fashion. The meaning of ‘deposit’ is elongated by covering receipts of money in any other form. For approaching the jurisdiction of the ‘Tribunal’ as per Section 74(2) of the ‘Companies Act, 2013’, even a partial failure by the Company to repay the deposit was sufficient. - the ‘Respondent/’Corporate Debtor’ squarely comes within the ambit of definition of ‘Financial Debt’ - AT
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Withdrawal from CIRP on the ground that the Applicant is in the process of re-structuring the debt of the Corporate Debtor - As a matter of fact, in this case no application for withdrawal of CIRP has ever been filed by the Interim Resolution Professional before the Adjudicating Authority, rather this IA has been filed by the assignee of financial creditor. As is evident from the records, since CoC has already been constituted in this case, any application for withdrawal of CIRP has to comply with regulation 30A (1) (b) of CIRP regulations read with Section 12 A of IBC-2016. - Tri
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CIRP - Relating parties - As on the date of it becoming a part of the CoC, Respondent No. 2 was purely a Financial Creditor of the Corporate Debtor and hence, it cannot be said that because he was a related party of the Corporate Debtor prior to becoming a CoC member, Respondent No.2 is still a related party and cannot be a part of CoC. - Tri
SEBI
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Debenture Trustees liability in default - Violation of SEBI Act - Proceedings of SEBI are only at the show-cause stage. The petitioners have the opportunity to establish their case before the Board. - the function of the court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that authority. - HC
VAT
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Rectification of mistake - It appears that the order passed by the appellate authority dismissing the rectification petition was also confirmed - That again will not come in the way of Section 55(3-A) of the Act from having its statutory effect. Notwithstanding any of the adverse orders, which the petitioner suffered, the original assessing authority can still exercise the power of rectification, since such a jurisdiction has been specifically conferred under the aforesaid provision. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (2) TMI 930
Applicability of Transitional Provision under Section 142(11)(c), (Chapter XX) of TNGST Act, 2017/CGST Act, 2017 for the remaining installments of Mobilization Advance , which transitioned into the GST regime and to be adjusted/ deducted by them post the implementation of GST (i.e. Post July 1, 2017) - Levy of GST - Input tax Credit (ITC) on Service Tax paid which was transferred from Pre-GST period through TRAN-1 Return filed in terms of the section 142(11)(c), under Transitional Provisions (Chapter XX) of both TNGST Act, 2017/CGST Act, 2017. HELD THAT:- On the applicability of GST on the Mobilization Advance which is transitioned to GST, the lower authority has ruled that the transition provision applicable to the case at hand is as per Section 142(11)(b) of the act and Mobilisation advance to the extent received prior to the implementation of GST towards supply of Works Contract Service is not to be subjected to GST as per the provisions of Section 142(11)(b) of the GST Act 2017 . We find that the appellant seeks a clarification before us as to whether they are liable to pay GST on that portion of the transitioned Mobilization advance on which Service Tax was not leviable/payable under the existing law or there is no GST liability on the entire Mobilization advance received by them prior to the implementation of GST. Thus, we find that the issue to be decided is whether GST is payable on that portion of Mobilization advance transitioned into GST and on which no tax has been paid in the Pre-GST regime Mobilisation Advance has been paid to the appellant by his service receiver against the bank guarantee executed by the appellant for the entire amount. This shows that the amount received by the appellant is consideration towards the supply to be made. It is also to be noted that the appellant holds the amount received as advance and considers as payment towards supply only when he raises the RA bills against the supplies made by him to the receiver, i.e., his client. Further, the transition provision 142 (11) (b) considering such scenario provides for payment of GST on the consideration which has not suffered service tax under Chapter V of the Finance Act and the Non-obstante clause with regard to Section 13 in the said provision also points to the leviability/payment of GST on such consideration which has not suffered Service Tax in the Pre-GST regime - In the case of the appellant, on 01.07.2017, the advance amount received is accounted and maintained as Advance and applying the provisions of Section 142(11)(b) of the Act, GST is liable to be paid on the said amount reduced by the Service Tax paid under Chapter V of the Finance Act 1994 on 01.07.2017. As per Section 101(3), there is no advance ruling issued on the Time of Supply of the Mobilization advance transitioned into GST, which has not suffered any tax in the Pre-GST regime and the applicability of Sec. 142(11)(b) to the facts of this case. Eligibility to credit based on the transitional provisions which has not been answered by the Lower Authority - Scope of Advance Ruling authority - HELD THAT:- The Authority is to rule only on the issues spelt in Section 97 (2) of the Act and only to those who are eligible to seek such ruling under Section 95 of the Act. The lower authority in Para 6 of the ruling, has considered all the three questions raised and found that the question relating to eligibility to credit under transitional provisions is not in the ambit of this authority, to which we do not see any reason to disagree. This authority can rule only on the questions within the scope of the authority. While we understand the appellant s grievance of not answering all the questions raised by them in complete manner, we re-iterate that Advance Ruling Authority has their limits defined and could act only within its authority.
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2021 (2) TMI 928
Violation of principles of natural justice - Detention of goods - Short ground raised in the present petition is that the first notice of the proceeding fixed 10.02.2020 was served on the petitioner, however, the petitioner did not appear on the next date fixed - Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- Though it is not denied that the notice for the date 10.02.2020 had been served on the petitioner, it is admitted on record that no order came to be passed on that date. Further order dated 15.02.2020 makes it clear that the proper officer did not reserve order on 10.02.2020 but kept the proceeding pending till the date 15.02.2020. Even on 15.02.2020 the only order passed was to proceed ex parte - That being the status, though the petitioner may not have filed reply, it cannot be said that he lost his right to be heard before the order dated 20.02.2020 came to be passed. The orders dated 03.06.2020 and 17.07.2020 are set aside and the matter remitted to the proper officer to pass a fresh order in accordance with law - writ petition is thus allowed .
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2021 (2) TMI 927
Attachment of Bank Accounts of petitioner - Section 83 of the CGST Act, 2017 - HELD THAT:- This writ-application disposed off directing the writ-applicant that he shall maintain the minimum balance of ₹ 22 lac in the bank account in question up to 21st September 2021. On this condition, we permit the writ-applicant to operate his bank account. The respondents shall intimate the bank concerned about this order and permit the writ-applicant to operate his bank account. The writ-applicant shall file his undertaking in this regard on oath in writing before the concerned department as well as placed the same undertaking on the record of this case also. The inquiry, if any, initiated, shall proceed further in accordance with law.
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2021 (2) TMI 925
Undue harassment - Dr. Dhavale has assured that the inquiry or investigation that may be undertaken shall be in accordance with law - HELD THAT:- We would not have asked the officers to join the video conference but for the serious allegations which have been levelled in the respective writ-applications. We do not intend to discourage or lower down the morale of all the officers before us. Our endeavour is only to bring it to their notice that they should act and perform their duties within the four corners of law. They should not take law in their hands. On the contrary, this Court has always appreciated the efforts put in by the officers in catching hold of fraudsters and all those persons involved in the huge scam of tax evasion etc. It shall be open for the officers to conduct the search proceedings under Section-67, but, strictly in accordance with law. Post these matters for further hearing on 23rd February 2021.
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2021 (2) TMI 924
Withholding of Provisional/ Final refund on the ground that investigation is pending - Seeking disbursal of provisional refund - section 54(11) of the Central Goods and Services Tax Act, 2017 - Rule 90(2) of CGST Rules, 2017 - non completion of the proceedings to disburse the full refund - HELD THAT:- A perusal of the provision of sub section 11 of section 54 of CGST Act clearly reveals that the appropriate authority of the department is vested with the power to withhold the refund, however, the refund can be withheld by the authority only once he is of the opinion that grant of such refund is likely to adversely affect the revenue in some appeal or any other proceedings because of malfeasance or fraud committed by the applicant. Thus, what we find is that for exercising the authority vested by sub section 11 of section 54 of the Act for withholding the refund, the officer concerned has to form an opinion regarding refund having the tendency of adversely affecting the revenue in some proceedings - It is also relevant to notice that such opinion is to be formed only if the authority opines that refund will adversely affect the revenue on account of some malfeasance or fraud committed. In this view, it is not only that the opinion of the officer concerned needs to be recorded but that opinion regarding refund adversely affecting the revenue has to be based on some malfeasance or fraud. From a perusal of Part B of FORM GST RFD-07 it is clear that the proper officer or Commissioner has to assign the reasons for withholding the refund. Passing of an order in Part B of FORM GST RFD-07 is a statutory mandate which is binding on the department for the reason that different forms appended with the Rules, 2017 are part of the Rules which are statutory in nature having been framed under section 164 of the Act, 2017 - recording of reasons while passing of the order for withholding the refund is not only statutorily requirement as per the provisions contained in Rule 92(2) of the Rules read with Part B of Form GST RFD-07 and section 54(11) of the Act but it is also required so as to make the person, aggrieved by such an order, realize his right of appeal as available under section 107 of the Act. We are unable to agree with the said offer given by Shri Nag for the reason that Part B of Form GST RFD07 is not a form for the purposes of communicating the decision; rather it is a form in which an order has to be passed keeping in view the requirement of section 54(11) of the Act read with Rule 92(2) of the Rules. The said form contains a separate specific column where requirement is to record reasons for withholding the refund and those reasons are to be in conformity with the requirement of section 54(11) of the Act and Rules 92(2) of the Rules. The order withholding the refund can be passed only if the prerequisites of recording of the opinion in terms of the aforesaid provision is found present in a particular case. The decision by the Principal Commissioner, dated 13.10.2020 as is available in the record produced by the learned counsel representing the respondents is hereby quashed. The Principal Commissioner or any other competent authority will take a decision in respect of withholding of the refund amount afresh within 15 days from the date a certified copy of this order is produced before him - Petition disposed off.
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2021 (2) TMI 921
Refund of IGST - refund has been declined for the reason that the writ applicant had availed drawback at the rate of 1.10% - It is the case of the writ applicant that it has claimed lower rate of drawback in accordance with the Notification No.131/2016 dated 31st October 2016 - HELD THAT:- The writ-applications is disposed off with a direction to the respondent No.1 to immediately look into the matters and pass an appropriate order in accordance with law as regards the claim of the IGST refund keeping in mind the ratio of the decisions of this Court rendered in the case of M/s. Amit Cotton Industries (supra) as well as AWADKRUPA PLASTOMECH PVT. LTD. VERSUS UNION OF INDIA [ 2020 (12) TMI 1116 - GUJARAT HIGH COURT] - Let this exercise be completed within a period of six weeks from the date of receipt of the writ of this order. One copy of this order shall be furnished to Mr. Ankit Shah, the learned Senior Standing Counsel appearing for the respondents for its onward communication. One copy of this order shall also be furnished to Ms. Sancheti, the learned counsel appearing for the writ applicant.
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2021 (2) TMI 917
Provisional attachment of the bank account of the petitioner - Section 83 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- We are left with the situation where till date no notice has been issued under sub-Section (1) of Section 74. In the circumstances, this petition is allowed and impugned order attaching the bank accounts is set aside. It is, however, clarified that the revenue would be at liberty to take appropriate steps after initiating the proceedings in accordance with law.
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2021 (2) TMI 911
Second Bail application - offence under Sections 132(1)(B)(C) read with Section 132(1)(I) of Central Goods and Service Tax Act, 2017 - It is contended that the matter is still at the stage of pre-charge evidence and the witnesses are not turning up - HELD THAT:- Taking note of the period of custody as well as the fact that the maximum sentence provided under the Act is five years, the matter is still at the stage of pre-charge evidence and in similar type of cases, the Coordinate Benches of this Court have granted bail, I deem it proper to allow the second bail application. This second bail application is accordingly allowed and it is ordered that the accused-petitioner shall be released on bail provided he furnishes a personal bond of ₹ 1,00,000/- and two sureties in the sum of ₹ 50,000/- each to the satisfaction of the learned trial court with the stipulation to appear before that Court and any court to which the matter is transferred, on all dates of hearing and as and when called upon to do so.
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2021 (2) TMI 909
Refund of GST and penalty deposited under protest - Circular No. 2021007 dated 09.07.2020 - HELD THAT:- Respondents submits that the respondent authority shall take appropriate steps to decide the claim of the petitioner for which the petitioner has already moved a representation. This writ petition is disposed of and it is expected from the respondent no. 2 to consider and decide the claim of the petitioner expeditiously, preferably within a period of two weeks from the date a copy of this order is filed before him.
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2021 (2) TMI 874
Grant of Bail - fake GST challan and GSTR-3B return - It is submitted that as per the Act the liability of payment of GST amount is of the company who collects GST from its customers and not of statutory auditors - HELD THAT:- In the given facts, accused is a CA and his firm M/s Rampal Company was rendering professional services to M/s Starcrest Services Pvt. Ltd. as statutory auditors and consultants. The facts show that accused used to collect GST amount from M/s Starcrest Services Pvt. Ltd. and instead of depositing it to the full misappropriated a substantial part through creation of forged GST challans and GSTR-3B returns. It appears that M/s Starcrest Services Pvt. Ltd was misled by the said GST challans and GSTR-3B returns as they seem to have believed that the money belonging to government is being deposited by the accused until the department unearthed it. The plea of rendering co-operation to the department by the accused appears to be baseless as it is apparent that he tried to avoid investigation under the garb of medical treatment in hospitals. The conduct of the accused is writ large that despite being statutory auditor he misappropriated the GST amount and simultaneously misled M/s Starcrest Services Pvt. Ltd through generation of forged documents. Bail is accordingly denied to the accused. Application disposed off.
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Income Tax
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2021 (2) TMI 929
Exemption u/s 11 - Rejection of application of registration u/s 12AA - Object of Trust charitable or not u/s 2(15) - Receipt of capitation fee for admission of students found during search - HELD THAT:- As appellant seeks leave to withdraw this appeal in view of the fact that the appellant has resolved its dispute under Vivad Se Vishwas Scheme, 2020. The civil appeal is, accordingly, dismissed as withdrawn.
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2021 (2) TMI 908
Status of assessee - period of stay in India - Not Ordinarily Resident in India - adjustments u/s. 143(1) - error in Form-16 - stock options income accrued and received outside India - perquisites taxable under the Income-tax Act - Whether the gain on sale of stock options in USA that were given to the Indian employee by M/s.Google Inc., USA amounts to perquisites taxable under the Income-tax Act, 1961 or not? - Whether the gain on sale of stock options in USA that were given to the Indian employee by M/s.Google Inc., USA amounts to perquisites taxable under the Income-tax Act, 1961 - Whether the amounts shown in Form-16 as Tax Deducted at Source on such perquisites would be the exclusive gain made by the Assessee on such stock options issued by the Holding Company in USA is sufficient to hold that it is taxable under the head 'salary' as 'perquisites' with reference to the provisions under section 5(1) (c) and 6(6) (a) read with Section 17? - tax imposed by the Revenue under section 143(1) of the Act after issuance of Notice under section 143(2) HELD THAT:- On a reading of the order of the Tribunal reveals that on the basis of the written submission made by the assessee as well as particulars found in Form-16 issued by his employer, the authorities negatived the claim of the appellant. Assessee has to be a non-resident . The word non-resident is defined in Section 115C(e) of the Act. It means an individual, being a citizen of India or a person of Indian Origin who is not a resident . As per the worksheet submitted by the assessee, he was residing in India from 1-4-2002 to 31-3-2009 (i.e.) 7 years. But preceding to the assessment year 2010-11, he had stayed in India only for 401 days. Thus, the learned counsel for the appellant argued that while purchasing the stock option in the year 2005, the assessee was a resident of the USA and out of the income realized in the USA, he purchased those stock options and hence, it will not come under the income earned in India. Appellant replied that the assessee sent particulars of his stay at the USA preceding to the assessment year with a copy of passport to prove his residential status, but without appreciating those documents, the Commissioner erroneously concluded that the stock option purchased by the assessee comes under the income earned in India. Senior Standing Counsel for Revenue fairly submitted that the assessee may be given one more opportunity to establish his claim before the Assessing Officer. Since the NOR status and the purchase of stock option of the assessee is a mixed question of fact and law, as rightly suggested by the learned Senior Standing Counsel for the department, in the interest of justice, in order to give one more opportunity to the assessee we are of the considered view that the matter can be remitted back to the Assessing Officer. Accordingly, the order passed by the Tribunal is set aside and the matter is remitted back to the Assessing Officer for deciding the matter afresh on merits and in accordance with law. The assessee is given liberty to produce all the relevant documents before Assessing Officer for establishing his claim.
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2021 (2) TMI 903
Rectification u/s 254 - period of limitation - HELD THAT:- As noticed that the M.A is filed beyond the time limit prescribed u/s 254(2) of the I.T. Act. The order of the Tribunal was passed on 30.8.2019 and therefore, the M.A. ought to have been filed on or before 28.2.2020, whereas this M.A has been filed on 24.9.2020. Therefore, this M.A is barred by limitation.
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2021 (2) TMI 902
Exemption u/s. 54F - assessee has sold the property situated at 70, Kannamangala Vilalge, Kasaba Hobli, Devanahalli Taluk, Bangalore along with legal heirs - HELD THAT:- In the case before us, the assessee's married widowed daughter is having no independent source of income and is fully dependent on the assessee, on the death of her husband on 20.12.2017. This fact was also clarified by filing a Joint Affidavit by Smt. Shailaja J and the assessee dt.11.12.2018. Being so, in our opinion, the statute should be construed liberally; since the provisions permit economic growth has to be interpreted liberally, restriction on it too has to be construed so as to advance the objective of the provisions not to frustrate it. We are of the opinion that the assessee has invested the sale consideration on transfer of Capital Asset in purchasing a new residential property in the name of Smt. Shailaja J who is being married widowed dependent daughter of the assessee and also legal heir of the assessee. Accordingly, we direct the AO to grant exemption u/s. 54F of the Act on the amount invested in purchase of residential house in his daughter s name. This ground of appeal of assessee is allowed. Disallowance of selling expenses - HELD THAT:- The assessee has not furnished the full details of selling expenses before the lower authorities. Hence in the interest of justice, we remit this issue to the file of Assessing Officer for fresh adjudication and with a direction to the assessee to furnish the details before the Assessing Officer.
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2021 (2) TMI 900
Reopening of assessment u/s 147 - un-reconciled gold of 17.319 kgs of gold - HELD THAT:- AO is well aware of the fact of receipt of gold by the assessee as metal loan from its family members. This fact has been accepted in AY 2005-06 and in the earlier years. Hence, we are of the view that the AO does not have any reason to doubt the genuineness of explanations given by the assessee with regard to the un-reconciled gold of 17.319 kgs of gold. In our view, the expression unreconciled itself is a misnomer, since the revenue is aware of the receipt of gold from family members since 2001 itself, i.e., from the date of earlier survey operations. AO has re-opened the assessment on mere change of opinion, because it is the assessing officer who took a different view at the time of reopening of assessment, i.e., he has entertained an opinion that the family members should have transferred the gold to the assessee firm and then the assessee firm should have held the gold on its own account. There should not be any dispute that there is no material brought on record to support the above said view of the AO. Under these circumstances, we have no other option but to hold that the assessing officer does not have any reason to believe that there was escapement of income in any of the years under consideration. - Decided in favour of assessee.
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2021 (2) TMI 898
Addition on account of the amount credited in the capital account of partner - HELD THAT:- As assessee explained the source of the partner for depositing the amount in the capital account. The said amount was received by the partner from her son who is NRI, the transaction was through banking channel out of the NRE saving bank account of her son, therefore the addition made by the A.O. was not justified. Moreover the amount was received by the assessee firm from the partner who explained the source for the same and if at all any addition was called for that was required to be made in the hands of the partner and not in the hands of assessee firm. On an identical issue in the case of ITO Vs. Nahar Singh Sadhu Singh [ 2001 (7) TMI 62 - PUNJAB AND HARYANA HIGH COURT] held that the partner had the requisite amount to invest towards the capital account of the firm. Since no evidence had been pointed out against that finding the amount could not be assessed as income from undisclosed sources of the firm. - Thus impugned addition was rightly deleted by the Ld. CIT(A). Addition on account of amount received from Shri Ankush Gupta - HELD THAT:- Assessee received a sum from Shri Ankush Gupta through banking channel and the source of source was explained by the assessee by furnishing the documentary evidences to prove the credit worthiness of Shri Punit Gupta and Shri Akash Bansal from whom Shri Ankush Gupta received the amount. The said documents revealed that the amount of ₹ 32,00,000/- was received by Shri Ankush Gupta from his brother Shri Puneet Gupta who is the NRI and settled in UK. The said amount was transferred from the NRE account. The Assessee also explained the source of another amount of ₹ 9,50,000/- received by Shri Ankush Gupta from his cousin Shri Akash Bansal by furnishing the copy of bank account of Shri Akash Bansal, therefore the addition made by the A.O. was not justified and the Ld. CIT(A) rightly deleted the same particularly when the assessee proved the identity and creditworthiness of depositor as well as genuineness of transaction. Addition on account of the transaction with M/s Shree Radha Commodity Services - CIT- A delete the addition - HELD THAT:- As decided in own case [ 2019 (10) TMI 1404 - ITAT CHANDIGARH] as cash deposited in the bank account of M/s Radha Commodity Services was accepted by the Department as genuine while framing the assessment under section 143(3) for the same A.Y. 2013-14; in the case of Shri Kushal Gupta proprietor of M/s Radha Commodity Services from whom the assessee received the loan through banking channel. We therefore do no see any valid ground to interfere with the findings given by the Ld.CIT(A) on this issue.
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2021 (2) TMI 897
Unexplained cash deposits - peak credit theory - HELD THAT:- We find no force in assessee s explanation in entirety. The fact remains neither he has submitted all details of his family members business(es) nor has he denied the fact that the above bank account is maintained in his sole name only. Coming to the point that these deposits are in business nature only, the assessee has failed to prove even a single business receipt in the corresponding span of time in the relevant previous year. We thus find no reason to reverse the impugned addition. As argued that even if impugned addition is to be confirmed in principle, the same must be restricted to peak amount only going by the assessee s bank statements - This clinching fact has gone unrebutted from the Revenue s side since assessee s paper book has also seen multiple number of withdrawals which sufficiently highlight the fact that the impugned deposits are an admixture of credit as well as debit entries. We therefore direct the Assessing Officer to restrict the addition amount to peak amount as per assessee s bank accounts. Amount was part of closing balance as on 31.3.2011 and opening balance as on 01.04.2012 shall also be excluded from impugned addition - As per hon ble Bombay high court s judgement in Ivan Singh vs. ACIT [ 2020 (2) TMI 850 - BOMBAY HIGH COURT ] holds that the statutory expression previous year incorporated in Sec.68 of the Act has to be taken as the relevant previous year in issue only. We thus direct the Assessing Officer to finalise the consequential computation in foregoing terms. Assessee s appeal is partly allowed for statistical purposes in above terms.
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2021 (2) TMI 896
TP Adjustment - delayed payment treated as unsecured loan advanced to AE s - interest cost to be charged from the AEs for delay in payment beyond the stipulated date - TPO benchmarked the international transactions using CUP method on the delayed payment made by its AEs using LIBOR plus 400 basis points and computed interest at the rate of 4.45% and thereby made an upward adjustment - HELD THAT:- When the assessee has already taken in to account the impact of outstanding receivables on profitability while making working capital adjustment of the tax payer vis- -vis of its comparables, then any further adjustment on account of delay payment outstanding to AE cannot be recharacterized as unsecured loan. From the perusal of the audited Balance sheet of the assessee which is placed in the paper book filed we find that assessee has no debts on account of secured or unsecured loans meaning thereby that it is a debt free company. We find that Hon ble Delhi High Court in the case of PCIT vs. Bechtel India Pvt. Ltd. [ 2016 (9) TMI 196 - DELHI HIGH COURT] has upheld the order of ITAT wherein the Tribunal had held that when the assessee is debt free company the question of receivable does not arise. Revenue had relied on the decision of Hon ble Delhi High Court in the case of Cotton Natural [ 2015 (3) TMI 1031 - DELHI HIGH COURT] . We find that the facts in the case of Cotton Natural are different and the question before the Hon ble High Court was different and in such a situation, we are of the view that the ratio of the aforesaid decision in the case of Cotton Natural (supra) will not be applicable to the case of the assessee in the present case. - Decided in favour of assessee.
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2021 (2) TMI 895
Disallowance of deduction u/s 80-IA - other income shown by the assessee was not eligible for deduction - AO was of the view that assessee being in the business of generation and distribution of power, it shall be eligible for deduction only from profits earned from that business and not from other income - HELD THAT:- As decided in own case A.Y. 2010-11[ 2019 (5) TMI 1664 - ITAT DELHI ] If the amounts are not paid at the proper time and interest is awarded or paid for such delay, such interest is only an accretion to the assessee's receipts from the contracts. It is obviously attributable and incidental to the business carried on by him. It would not be correct, as the Tribunal has held, to say that this interest is totally de hors the contract business carried on by the assessee. It is well settled that interest can be assessed under the head 'Income from other sources' only if it cannot be brought within one or the other of the specific heads of charge. We find it difficult to comprehend how the interest receipts by the assessee can be treated as receipts which flow to him de hors the business which is carried on by him. In our view, the interest payable to him certainly partakes of the same character as the receipts for the payment of which he was otherwise entitled under the contract and which payment has been delayed as a result of certain disputes between the parties. It cannot be separated from the other amounts granted to the assessee under the awards and treated as 'Income from other sources - we are of the considered view that the disallowance made while computing the deduction allowable u/s 80-IA of the Act is not justified. MAT Computation u/s 115JB - unascertained liability - interest to beneficiary states, which may have to be paid in case of reduction in tariff as a result of revision order - HELD THAT:- As relying on own case [ 2018 (3) TMI 1589 - PUNJAB AND HARYANA HIGH COURT] we hold that the AO was not justified and in not allowing the claim as unascertained liability. We therefore, direct the AO to treat the amount as ascertained liability for the purpose of computing income under normal tax provisions and also for the purpose of computing book profits u/s 115JB. Thus the grounds of the assessee are allowed. Disallowance made u/s 14A read with Rule 8D - HELD THAT:- We find that identical issue arose for A.Y. 2012-13 [ 2020 (3) TMI 1308 - ITAT DELHI] and the Co-ordinate Bench of Tribunal held that AO was not justified in disallowing the expenditure by invoking the provision of Section 14A r.w.r 8D of the Act. Computing the book-profit in respect of depreciation claimed on amortization of land - HELD THAT:- As relying on assessee's own case n A.Y. 2012-13 [ 2020 (3) TMI 1308 - ITAT DELHI] direction of CIT(A) in deleting the disallowance confirmed.
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2021 (2) TMI 894
Denying double deduction(s) u/s.80HHC and Sec.80I - HELD THAT:-DR fails to dispute that the Revenue s Special Leave Petition [ 2015 (12) TMI 708 - SUPREME COURT] stands dismissed - Thus Corresponding hon'ble high court s order deciding the issue in assessee s favour and against the department has attained finality that the twin claims of Section 80HHC and Section 80-IA raised at the former s behest qua profits of the eligible business undertaking do not amount to double deduction. Revenue s objections that once this tribunal s remand directions had made it clear that the issue had to be decided in view of the Special Bench s decision [ 2009 (6) TMI 124 - ITAT DELHI-C] - On one hand is tribunal s remand order directing the Assessing Officer to follow its yet another Special Bench (supra) which itself stands overruled in ASSOCIATED CAPSULES P. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [ 2011 (1) TMI 787 - BOMBAY HIGH COURT] and on the other hand is the judicial verdict directly on the issue coming from the Hon'ble highest court of land. We thus quote Article-141 of the Constitution of India and hold that judicial discipline requires that all judicial forums must make way for the hon'ble apex court s decision on the relevant issue. It must therefore be presumed that the issue now stands settled upto hon'ble Supreme Court in assessee s favour with retrospective effect in other words. We thus accept the assessee s sole substantive grievance in principle and leave it open for the Assessing Officer to finalise consequential computation as per law. It is made clear that although the assessee has filed its calculation sheet(s) regarding Section 80-IA and Section 80HHC deduction(s) pertaining to the alleged eligible undertakings, this latter component is restored back to the Assessing Officer to arrive at his final conclusion as per law after factual verification of the necessary records.
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2021 (2) TMI 889
Validity of assessment U/s. 153C - assumption of jurisdiction u/s. 153C - Whether no material belonging to the assessee was found? - whether the document i.e. the sale deed, which mentions the assessee as attorney holders of sellers; can be said to belong to the assessee? - HELD THAT:- In the instant case, assessee was the attorney holder of the seller. The sale deed was found during the course of search at the premises of the buyer. The sale deed, at best can be said to relate to or refer to the assessee, but it cannot be said to belong to the seller or to the attorney holder. Before us Ld. CIT(DR) could not place any judgment in its favour against this judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings P Ltd. Vs Asst CIT[ 2014 (8) TMI 898 - DELHI HIGH COURT] - Respectfully following this judgment, we therefore hold that the proceedings u/s.153C are bad in law and therefore the assessments so made deserves to be quashed. This ground of the assessee s appeal is allowed. Undisclosed on money payment - As on 27.11.2010 an amount of ₹ 10,00,000 was paid as per the agreement, and an amount of ₹ 8,00,000 was deposited in the bank account of the sellers. Similarly, upto 10.12.2010, ₹ 40,00,000 was to be paid and ₹ 37,00,000 was deposited nearing to that date. Further, upto 10.04.2011 ₹ 50,00,000 was to be paid as per the agreement; and ₹ 29,99,000 was deposited on 31.03.2011 and ₹ 24,70,000 was deposited between 15 to 18 April 2011. Similarly, upto 10.08.2011 ₹ 4,03,00,000 was to be paid; and between Aug. and Sept. 2011, all payments were done and sale deed was also registered in the favour of M/s. Agrawal Buildcon. Considering the entirety of the facts, so far as the payments made, the nexus between amount received from M/s. Agrawal Buildcon and payment to Smt. Rekha Bai and others can be established. Since it is proved that the consideration of ₹ 4,03,00,000/- which included both the accounted and unaccounted consideration has been paid by M/s Agrawal Buildcon for the purchase of land in question from the sellers namely Smt. Rekha Bai and others, revenue authorities are free to carry out necessary exercise/ verification in the case of M/s Agrawal Buildcon with regard to the balance purchase consideration at Rs..4,03,00,000/-. However, so far as the cash deposits in the account of Smt. Rekha Bai and others in April 2011, to the tune of ₹ 24,70,000 no nexus can be established in respect to amount received from M/s. Agrawal Buildcon. Since there in no direct evidence as to when the amount was actually paid, considering the surrounding circumstances based on agreement and bank accounts of the sellers, we hold that during the current A.Y. 2012-13 the source of payment of ₹ 24,70,000 to Smt. Rekha Bai and others could not be established and therefore ought to be confirmed. Since the share of the assessee Pradeep Sharma was 40% in the land deal, an amount of ₹ 9,88,000 is to be confirmed in the hands of Pradeep Sharma for A.Y. 2012-13. Balance addition of ₹ 1,02,39,401 (₹ 1,12,27,401 ₹ 9,88,000) is hereby deleted.
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2021 (2) TMI 886
Disallowance on account of excess shortage/ breakage to 30% - exceptional inventory loss - disallowance of write off excess shortage of the inventory by the assessee - As argued expenditure incurred by the appellant due to pulling back of inventory from the market on account of expiry of product are normal business expenditure allowable as deduction - assessee is a company engaged in the business of trading of non-alcoholic beverage - HELD THAT:- Assessee furnished the details in respect of loss of finished goods. The BDD policy necessarily applies to the finished goods only. The ld CIT (A) further accepted that possibility of having the inventory loss in the business of the appellant cannot be ruled out. He further considered annual turnover of the assessee and stated that claim of inventory loss is not significant. It was further noted that the ld AO has not brought on record any adverse evidence still he reached at a conclusion to allow only 70% of such loss. Even otherwise, the assessee has claimed such loss on account of passing of the of the expiry date of the finished product of the assessee. The value of such goods is as such Nil as having became non-marketable. It is not the case of the revenue that the assessee has derived any revenue from sale of such goods. Even otherwise, it is not possible. It is also not the case of the ld AO that such losses are claimed by the distributors. Naturally, the distributors will never make such claim on their account when they are clearly distributing stock only. Naturally, that is the risk of marketing company. Therefore, there is no reason to restrict it at an adhoc figure. In view of this, we do not find any justification to restrict allowance of such claim to the extent of 70%. According to us, it should be allowed in its entirety. Such loss is neither stated to be contingent or non-existent. In view of this, we reverse the order of the ld CIT (A) and direct the ld AO to delete the additions/ disallowances being loss on account of passing of the expiry date of the product - Decided in favour of assessee.
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2021 (2) TMI 885
Reopening of assessment u/s 147 - non disclosure of Capital gain on sale of land - HELD THAT:- In the original assessment framed under section 143(3) of the Act by the then Assessing Office categorically stated that assessee s representative submitted details, as called for and the same are tallied with the AIR information, whereas in the reason for reopening of the assessment simply stated that as per the information gathered, the assessee has sold the land of Block No.212 of Shela village for the consideration. In the original assessment framed under section 143(3) by the then Assessing Office categorically stated that assessee s representative submitted details, as called for and the same are tallied with the AIR information, whereas in the reason for reopening of the assessment dated 14.08.2015 simply stated that as per the information gathered, the assessee has sold the land of Block No.212 of Shela village for the consideration of ₹ 71,38,845/- on 14.3.2014 (This is a typographical error in the reason. The correct date is 14.3.2008. We have verified it from sale deed no.1763. It is dated 14.3.2008) vide sale deed no.1763, however, no capital gain has been shown in the return of income. When all the information and details were furnished by the assessee with regard to the information called for by the AO, the then AO satisfied that such information were tallied AIR information. If there is any capital gain arose in such sale transaction, the AO ought to have discussed and weighed such factor in the original assessment order itself. He did not do so, rather accepted the contentions and details submitted by the assessee and framed assessment under section 143(3). There is nothing to suggest that all the primary facts were not disclosed by the assessee at the time of original assessment completed u/s 143(3) of the Act nor any failure on the part of the assessee to disclose fully and truly all the material facts relevant to the assessment, which would otherwise liable to be reopened. When the AO itself stated in the original assessment that details called for by the AO in respect of AIR information are tallied, there is no room for the AO to find a reason for reopening of the assessment. In fact the assessee has not suppressed any facts. There was no new tangible materials, as discernible from the reasons recorded by him for initiation of reassessment proceedings in his hands, thus, it is a case of change of opinion of the present AO. Earlier AO who has framed original assessment under section 143(3) accepted the contentions of the assessee and recorded a finding to the effect that information submitted by the assessee are tallied with the AIR information, but due to change of incumbent, the present AO, on the same set of facts which was decided by the earlier the AO, the assessment was reopened, which is not legally permissible - Thus invoking provisions of section 147 was not valid - Decided in favour of assessee.
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2021 (2) TMI 884
Penalty u/s 271(1)(c) - Bogus purchases - in assessment proceedings had failed to substantiate the genuineness and veracity of its claim of having made purchases - HELD THAT:- As assessee could not substantiate the genuineness of the purchases claimed to have been made from the aforementioned party to the satisfaction of the A.O, the same, for the said reason was disallowed by him - we cannot remain oblivious of the fact that the A.O had at no stage rejected the book results of the assessee and had in fact accepted its sales. We are of a strong conviction that though the failure on the part of the assessee to substantiate the authenticity of the aforesaid purchase transaction would justify an addition/disallowance to the said extent, however, the same by no means would on such standalone basis justify levy of penalty under Sec. 271(1)(c). If an assessee gives an explanation which is unproved but not disproved i.e though the same is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee‟s case is false, then, no penalty under Sec.271(1)(c) can justifiably be imposed. Our aforesaid view is supported by the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Upendra Vs. Mithani [ 2009 (8) TMI 1159 - BOMBAY HIGH COURT] . Accordingly we are of a strong conviction that in the absence of documentary evidence supporting the genuineness of the purchases claimed by the assessee to have been made from the aforementioned party, the same, though could have been disallowed, however, on the said standalone basis penalty under Sec.271(1)(c) could not have been validly imposed. Not finding ourselves to be in agreement with the view taken by the lower authorities, we, thus vacate the penalty. - Decided in favour of assessee.
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2021 (2) TMI 883
Characterization of income - interest received u/s 28 of the land acquisition Act, 1894 on the compulsory acquisition of agricultural land - exemption u/s 10(37) of the IT Act or income from other sources u/s 56 - CIT(A) held that the interest received is in the nature of compensation and exempt u/s 10(37) - HELD THAT:- CIT(A) has decided the issue involved in this appeal in favour of the assessee by following the ratio laid down by the Hon ble Supreme Court in the case of CIT vs. Ghanshyam 'HUF' [ 2009 (7) TMI 12 - SUPREME COURT] and SOM NATH [ 2018 (7) TMI 2051 - ITAT CHANDIGARH] and and in a group case of Surinder Kumar [ 2018 (10) TMI 1754 - ITAT CHANDIGARH] - no reason to interfere with the findings of the Ld. CIT (A) - Decided against revenue.
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2021 (2) TMI 880
Revision u/s 263 - disallowance u/s.14A read with Rule - Suo moto disallowance made by assessee accepted - set off / carry forward of the business loss/unabsorbed depreciation of demerged company - HELD THAT:- The appellant-company filed detailed replies supported by relevant documents and other evidences and after considering the facts and circumstances and after full and proper application of mind the Assessing Officer accepted the disallowance suo motu made by the appellant-company U/S.14A read with Rule 8D and also that having regard to the facts and the provisions of section 72A of the I.T. Act, the appellant-company was entitled to set off / carry forward of the business loss/unabsorbed depreciation of demerged company as per the Composite Scheme approved by the Hon'ble Gujarat High Court. As we can see that Ld. A.O. has considered all aspects of aforesaid income and after thorough application of mind the A.O. has accepted the disallowance. Thus, we allow this ground of appeal. It is well settled principle of law where A.O. has exercised quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be found to be erroneous simply because Commissioner does not feel satisfied with the conclusion. CIT ought not to have initiated proceedings u/s 263 of the Income Tax Act when already enquiry is made by the Assessing Officer. - Decided in favour of assessee.
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2021 (2) TMI 877
TP Adjustment - Adopting the Transactional Net Margin Method (TNMM) for benchmarking its International transactions and Operating Profit/Total Cost (OP/TC) as the PLI - Comparable selection - HELD THAT:- Assessee is into international transactions of provision of business support services to its group entities, thus companies functionally dissimilar with that of assessee need to be deselected from final list. As three companies which were included by the TPO/DRP in the final list of comparables for benchmarking the International transactions of the assessee, viz. (i). Mold-Tek Technologies Ltd.; (ii). Eclerx Services Ltd.; and (iii). Accentia Technologies Ltd., in terms of our observations recorded hereinabove, cannot be held to be comparable to the assessee. Accordingly, we herein direct the A.O/TPO to exclude the aforesaid three companies from the final list of comparables for the purpose of benchmarking the International transactions of the assessee for the year under consideration. Before parting, we may herein observe, that the assessee had furnished before us a Chart , wherein it is stated that in case if the aforementioned three companies are excluded from the final list of comparables, then, its International transactions of provision of support services to its AEs would meet the arms length standard and no adjustment would be warranted. It is stated by the assessee that as the value of its International transactions i.e provision of ITeS services is higher than the tolerance limit of +/- 5% as per the erstwhile sec. 92C(2) . As we have excluded the aforementioned three companies from the final list of comparables, the A.O is therefore directed to verify the aforesaid claim of the assessee. In case the value of the International transactions of the assessee is found higher than the value of the tolerance band of +/- 5%, then, no adjustment shall be therein be made by the A.O. Disallowing credit for TDS - HELD THAT:- As despite the fact that the same was claimed in the return of income. As the aforesaid claim of the assessee would require verification of the facts from the records, we therefore, direct the A.O to look into the said issue. In case if the claim of the assessee is found to be correct then the A.O shall allow the credit of the amount of the tax deducted at source. The Ground of appeal allowed for statistical purposes.
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Customs
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2021 (2) TMI 923
Seizure of goods - Mis-classification of imported goods - import and trading of Food Items especially Masalas of different flavours - it was opined by the Officers of Customs that the goods were mis declared in terms of classification in so far as the same were mis classified under CTH 09109100, instead the same shall fall under Customs Tariff Heading 21039040 attracting IGST at the rate of 12% instead of 5%, thus leading to shortfall of Customs Duty - HELD THAT:- The petitioner has made a details representation dated 25.01.2021 (Annexure P-10) and reminder dated 01.02.2021 (Annexure P-11), but no action has been taken thereon till date. Notice of motion. This petition is disposed of by giving direction to respondent No.3-Additional Commissioner of Customs to look into the representation/ reminder dated 25.01.2021/01.02.2021 (Annexures P-10 and P-11) and after affording an opportunity of hearing to the petitioner, pass a speaking order thereon in accordance with law.
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2021 (2) TMI 920
Seeking provisional release of goods - stand of the petitioner is that they have already been mutilated and that therefore, their import is free - HELD THAT:- When the petitioner is entitled to call upon the customs authority to mutilate the goods and clear them thereafter and when the petitioner has not invoked his right under Section 110 of the Customs Act, 1962, the third respondent could not have passed the impugned order. In this view of the matter, the impugned order is quashed. The respondents are directed to permit the petitioner to have the goods mutilated at the cost of the petitioner, but under the supervision of the third respondent. As agreed by the petitioner, the goods of mutilation will be included in FOB. The entire exercise will be concluded within a period of three weeks from the date of receipt of a copy of this order. The petitioner has to comply with the other formalities and the respondents will also facilitate the implementation of this order. Petition allowed - decided in favor of petitioner.
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2021 (2) TMI 919
Service of relied on documents - Levy of penalty under Section 114(iii) and 114AA of the Customs Act, 1962 - principles of natural justice - HELD THAT:- In the impugned order, though it is admitted that the reply was received in response to the show cause notice from the petitioner, this contention as regards the non-supply of the relied on documents was not dealt with or controverted - Nothing stopped the adjudicating authority from averring in the impugned order that the contention taken by the noticee/petitioner herein was false. He could have also furnished proof of having served the documents in question on the petitioner. Such an averment or finding is totally absent in the impugned order. The petitioner's counsel also drew my attention to yet another aspect. At page No.85 of the typed set of papers, the Speed Post cover in which the show cause notice was sent has been enclosed. It is seen therefrom that the said show cause notice was despatched on 26.02.2020. It is seen in the postal endorsement that the weight of the contents was 110 gms. and 50 Rupees stamp was affixed on the cover. The show cause notice runs to 36 pages. It is stated by the petitioner's counsel that the weight of the show cause notice alone would come to 110 gms. If all the 24 documents had been enclosed, the weight would have been much higher and that would have been reflected in the stamp value also. I find this circumstance to be quite interesting and indicative of the truth of the version projected by the petitioner herein. Thus, the writ petitioner was not served with copies of the documents relied upon by the department both in the show cause notice as well as in the impugned order - petition allowed - decided in favor of petitioner.
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2021 (2) TMI 918
Seeking to initiate the proceedings in time bound manner - seeking direction directing respondent no.6 to remove the Import Export Code placed under the Denied Entity List of Directorate General of Foreign Trade - HELD THAT:- This writ-application is disposed off with a direction to the Joint Director General, DGGI, Zonal Unit Ahmedabad, Ahmedabad to immediately look into the representation dated 26th September 2020; Annexure-J; Page-46 to this writ-application and take an appropriate decision in accordance with law with a period of four weeks from the date of the receipt of this order. We also direct the Joint Director General of Foreign Trade, Surat to look into the representation dated 5 th November, 2020 at Annexure-Q; Page-68 and take an appropriate decision in accordance with law with a period of four weeks from the date of the receipt of this order.
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2021 (2) TMI 912
Request of the petitioner for release of goods was directed provisionally after obtaining the bond for the full value of seized goods and after taking the bank guarantee as a security deposit - HELD THAT:- The petition does not call for further adjudication. It is to be noticed that the ground of levy of differential duty of ₹ 1,18,04,236/- is a matter which the petitioner submits is being pursued by way of challenge before the Appellate Authority, which the petitioner intends to pursue. The respondent is directed to permit the petitioner to lift the goods under seizure and such release is however subject to the final outcome of appeal to be filed - Petition disposed off.
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2021 (2) TMI 906
Auction - inaction on the part of the original consignees, who had not come forward firstly to submit bills of entry followed by the non-clearance of the goods for home consumption or warehousing or transhipping within 30 days from the date of unloading the containers at the custom station, as required under Section 48 of the said Act - CBIC Circular No.49/2018-Customs, dated 03.02.2018 - HELD THAT:- The admitted position is that the goods in 113 containers reached at ICD, Sonepat, in the months of May and June, 2020. After the nationwide lockdown because of COVID-19 pandemic, the unlocking of the said lockdown started w.e.f. 08.06.2020. Thereafter, there was ample time for the importers to respond and get cleared the goods. Despite three notices having been sent to each of the importers over a period of time, none of them turned up to clear the goods. Thereafter, the Custodian of the goods proceeded to comply with the requirement of statute and got the proper no objection certificate and clearances with regard to opening of the seal, inspection of the goods, valuation thereof and ultimately no objection for auctioning of the imported goods i.e. waste paper contained in 113 containers. The process of online auctioning through MSTC was conducted on 05.11.2020 by the Custodian. It is, thereafter, the petitioner who is the consignor, for the first time, wrote a letter dated 06.11.2020, which was received in the office of respondent No.3 on 10.11.2020 requesting him for cancellation of the auction process. This clearly shows that the petitioner had been sitting over the matter. The contention of the counsel for the petitioner that the petitioner was required to be informed or intimation was required to be sent prior to proceeding with auction of the goods contained in 113 containers is not based upon any statutory right conferred upon the petitioner, who admittedly is a consignor. Section 48 of the Customs Act, 1962, makes it amply clear that notice for selling the goods has to be sent to the importer prior to the auction of the goods - it cannot be said that the auction of the goods, as carried out by the respondents, is not in accordance with law especially when the same has been so carried out as per the directions given in the Disposal Manual-2019 and the norms laid down under CBIC Circular No.49/2018-Customs, dated 03.12.2018, which relates to the disposal of the imported goods. This Court is of the firm view that the action, which has been taken by the respondents, is in accordance with the provisions of the Customs Act, 1962 and therefore, no interference in exercising extraordinary writ jurisdiction of this Court is called for. Rather the petitioner has approached this Court with an intention to further delay the process of disposal of the goods and to impede the process of collection of revenue which is to be received after the disposal of the imported goods contained in 113 containers which have been auctioned - Petition dismissed.
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2021 (2) TMI 905
Seeking finalization of provisionally assessed bills of entry, beyond a period of 8-9 years - import of Pressed Distillated - Section 18(1)(b) of the Customs Act 1962 - HELD THAT:- In the case of M/S GPI TEXTILES LIMITED VERSUS UNION OF INDIA AND OTHERS [ 2018 (9) TMI 25 - PUNJAB HARYANA HIGH COURT] , it was held that The notices in the present cases having been issued more than decade back and the proceedings having not been concluded within reasonable time, the same deserves to be quashed. The impugned notices for framing final assessment of provisional assessment are hereby quashed - petition allowed.
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2021 (2) TMI 899
Time limit for issue of Notice - Customs Broker - Issue of Notice versus Service of Notice - Third Member Bench - Interpretation of Statute - Regulation 20(1) CBLR, 2013 - Whether the word issue in Regulation 20(1) CBLR, 2013 should include serve ? - time limit prescribed in Regulation 20(1) CBLR 2013 - mandatory or directory in nature? - whether the expression issue of a notice occurring in regulation 17(1) of the Customs Brokers Licensing Regulations 2018 [2018 Regulations] would mean service of notice? - HELD THAT:- The decision of the Supreme Court in RK UPADHYAYA VERSUS SHANABHAI P. PATEL [ 1987 (4) TMI 5 - SUPREME COURT] and COLLECTOR OF CENTRAL EXCISE VERSUS MM RUBBER CO. [ 1991 (9) TMI 71 - SUPREME COURT] and the decision of the Full Bench of the Punjab and Haryana High Court in JAI HANUMAN TRADING CO. PVT. LIMITED VERSUS COMMISSIONER OF INCOME-TAX, PATIALA II AND ANOTHER [ 1977 (4) TMI 27 - PUNJAB AND HARYANA HIGH COURT] were not brought to the notice of the Bench deciding M/S RP CARGO, HANDLING SERVICES VERSUS COMMISSIONER OF CUSTOMS (AIRPORT GENERAL) [ 2019 (5) TMI 80 - CESTAT NEW DELHI] . The Supreme Court in the aforesaid two decisions pointed out that when a statute distinguishes between issue of notice and service of notice by using both the expressions in the statute, the requirement of issue of notice would be satisfied when such notice is actually issued and not when it is served. The Supreme Court also pointed out that when there is a limitation for an authority to make an order, date of exercise of that power is the relevant date for exercise of such power and the decision of such authority comes into force or becomes operative and becomes an effective order on the date when it is signed. Thus, the date of communication of the order to the party is not relevant for the purpose of determination whether the power has been exercised within the prescribed time. However, if the statutory provision protects the interest of the person adversely affected by providing a remedy against the order, the period of limitation would commence from the date of communication of the order. Thus, in view of the aforesaid decisions of the Supreme Court in R.K. Upadhyaya and M.M. Rubber and Company, which have not been considered in R.P. Cargo Handling, it has to be held that the expression issue in regulation 17(1) of the 2018 Regulations would not mean service of notice. It needs to be noted that regulation 17(1) of the 2018 Regulations is in pari materia with regulation 20 (1) of the 2013 Regulations. Whether the time limit prescribed in regulation 20(1) of the 2018 Regulations is mandatory or directory in nature? - HELD THAT:- A perusal of the aforesaid judgment in INDAIR CARRIER PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS (GENERAL) [ 2016 (5) TMI 775 - DELHI HIGH COURT] shows that the period of ninety days prescribed for issuance of a show cause notice under regulation 22(1), which provision is similar to the provisions of regulation 17(1) of the 2018 Regulations, was held to be mandatory in nature and, therefore, the directions issued by the Tribunal to complete the proceedings contemplated under regulation 22 within sixty days from the date of receipt of the order of the Tribunal was held not to be correct since the notice contemplated under article 17(1) had not been issued within a period of ninety days from the date of receipt of offence report - The Delhi High Court and the Madras High Court, while dealing with the provisions of regulation 22(1) of the 2004 Regulations and regulation 20(1) of the 2013 Regulations, which are similar to regulation 17(1) of the 2018 Regulations, have held that time limit prescribed for issuance of a notice within ninety days from the date of receipt of the offence report is mandatory in nature and non-compliance of the notice would result in revival of the License. The Delhi High Court has, in very clear terms, held that the time limit prescribed under the regulations for issuance of the notice within ninety days from the date of receipt of the offence report is mandatory in nature. Such being the position of law, the Licence would automatically stand revived if a notice contemplated under regulation 17(1) of the 2018 Regulations is not issued within ninety days from the date of receipt of the offence report. The answer to the two issues referred by the Division Bench are, therefore, as follows; (i) The word issue in regulation 17 of the 2018 Regulations or regulation 20(1) of the 2013 Regulations would not include serve ; (ii) The time limit prescribed in regulation 17(1) of the 2018 Regulations or regulation 20(1) of the 2013 Regulations is mandatory in nature.
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Corporate Laws
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2021 (2) TMI 914
PIL - Seeking for a direction against respondents No. 1 to 10 therein to forthwith constitute a Multi- Disciplinary Investigation Team to investigate and prosecute respondent No.11 therein (Mr. A.H. Premji and his Associates) based on the representations dated January 30, 2020 and February 3, 2020 submitted by the petitioner - HELD THAT:- In the PIL filed before the Delhi High Court, petitioner has prayed for a direction against the Ministry of Finance, Ministry of Corporate Affairs and Reserve Bank of India to decide within four weeks that nature of actions required in law to be taken by them in respect of complaints dated November 1, 2016, March 14, 2017 and April 28, 2017. In paragraph No.14 of the said writ petition, petitioner has averred that the very same three Companies namely, Vidya Investment and Trading Company Pvt. Ltd., Regal Investment and Trading Company Pvt. Ltd. and Napean Trading and Investment Company Pvt. Ltd., were registered as non-Banking Finance Companies. In paragraph No.29 of the said writ petition, petitioner has averred that the said three Companies had given large sums of monies to a Private Trust. It is important to note that petitioner's complaint dated March 14, 2017 upon which petitioner has relied is common in the PIL filed before the Delhi High Court and this writ petition - thus, there remains no doubt that petitioner is indulging in forum shopping on the very same cause of action. As held in Udyami2, this amounts to criminal contempt as the core issue in all these writ petitions is one and the same. This writ petition is not only devoid of merits, but an absolute abuse of process of law. Though petitioner was forewarned, he chose to argue this writ petition as a stand-alone petition wasting the valuable time of this Court to deal with such frivolous cases. Therefore, imposition of punitive cost is necessary - Petition dismissed with cost.
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2021 (2) TMI 892
Initiation of Contempt Proceedings - violation of the interim orders - oppression and mismanagement - removal of director - whether the Respondents are guilty of civil contempt - Section 2(b) of the Contempt of Courts Act, 1971 - HELD THAT:- In the case of NIAZ MOHAMMAD AND ORS. VERSUS STATE OF HARYANA AND ORS. [ 1994 (9) TMI 364 - SUPREME COURT] , the Hon ble Apex Court held that while the contemnors had not obeyed the judgment and released the salary, but this disobedience was not wilful so as to amount to a civil contempt and the Court drew a distinction between a Court executing an order and punishing for contempt Thus, in order to hold a person guilty of civil contempt, it has to be established by the person alleging contempt that the alleged contemnor was guilty of a wilful breach or a wilful disobedience of an order or a direction, decree etc. of any Court. The emphasis, therefore, has to be on the word wilful . The word wilful‟ means an act or omission which is done voluntarily and with an intent to do something which is forbidden by law or failing to do something which the law requires to be done. In the present case, the petitioner could not establish that there is any wilful disobedience of the orders passed by this Tribunal on 27.09.2019. In the absence of any wilful disobedience, this Court cannot grant the relief sought for by the petitioner. Petition dismissed.
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2021 (2) TMI 891
Oppression and Mismanagement - regulation of conduct of the company s affairs by directing Union of India to appoint two nominees of its choice as Members in the General Committee to monitor the affairs of the Club along with other General Committee Members and give suggestions to the General Committee - Section 242(4) of Companies Act, 2013 - HELD THAT:- It is indisputable that an order granting interim relief in terms of provision of Section 242(4) of the Act, 2013 is appealable. The scope of such appeal, however, is limited as there are no findings of fact recorded by the Tribunal in a regular trial in the Company Petition. This Appellate Tribunal, while sitting in appeal against grant of interim relief would be within its province to ascertain whether the Tribunal was right in recording the prima facie satisfaction on the basis of material on record. To put it otherwise, this Appellate Tribunal would be acting within its jurisdiction to consider whether the finding or conclusion in regard to existence of prima facie case has been reached on consideration of relevant material and if it is so, whether such finding is justified. The impugned order cannot be set aside without examining the material on record and recording a contrary finding qua the existence of a prima facie case. Examination of material relied upon for grant of interim relief being inevitable in the instant case, it has to be borne in mind that this Appellate Tribunal would be loath in interfering with the finding unless it is demonstrated that the view taken by the Tribunal is capricious or unreasonable and not merely because other view is possible. On a plain reading of the provisions engrafted in Section 241, it comes to fore that while any member of a Company complaining of affairs of company being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company is entitled to apply to the Tribunal for relief, subject to its entitlement under Section 244, the Central Government is empowered to apply to the Tribunal for relief in case of mismanagement only if the affairs of the company are being conducted in a manner prejudicial to public interest. The Central Government is required to record its opinion as regards affairs of the company being conducted in a manner prejudicial to public interest. Recording of such opinion is a sine qua non for applying to the Tribunal under Section 241(2). Formation of opinion by the Central Government in regard to affairs of Club being conducted in a manner prejudicial to public interest - HELD THAT:- In the instant case, it is not in controversy that the order dated 16th March, 2016 came to be passed by the Ministry of Corporate Affairs for inspection of the Club in terms of powers conferred under Section 206(5) of the Act, 2013. This order came to be passed upon receipt of complaints against the Club which, inter alia alleged ineligibility of M/s. S.N. Dhawan and Company for appointment as Statutory Auditors of Club, irregularities in the management of the Club, demand by the Club for revision of registration fee with retrospective effect from some individuals etc. It is also not in dispute that the Inspectors held inspection from January, 2019 to July, 2019 for F.Y. 2012- 13 to 2017-18, in respect whereof report was laid before the Regional Director (Northern Region) of Ministry of Corporate Affairs, who placed the same before the Central Government on 5th August, 2019 - On a plain reading of the letter, it is clear that the Competent Authority has perused the material including the Inspection Reports and it is only upon consideration of such material that directions were given to file petition and take further action as spelt out in the letter. From the nature and character of directions given to Joint Director, it is unambiguously clear that the Competent Authority has applied its mind to the complaints and Inspection Reports. This is clearly gatherable from the directions which include filing of petition under Section 241/242 of the Act, 2013. Sufficiency or otherwise of material for coming to such conclusion would not be subject of review by the Tribunal, more so when no malafides are attributed to Central Government which admittedly has not acted on its own motion but on the basis of complaints pouring in alleging gross irregularities including declining of membership to the aspiring candidates whose funds were allegedly utilized for the benefit of few chosen members, albeit with the blessings of the GC. Existence of a prima facie case - HELD THAT:- It is abundantly clear that misuse of the Club meant for pastime and sports activities and denying access of membership even after accepting the enhanced membership fee and putting them in queue for decades together with utilization of the component of interest admissible on their invested membership fee for the benefit of permanent members and users seriously jeopardized interest of such prospective members and involved public interest. That apart, the interests of general public seeking membership but being made to wait for decades together with membership fee being held up and its interest component being utilized for the recreational and pleasurable activities of permanent members and users of the Club despite the Club being aware of the limited number of vacancies in membership occurring every year would be a predominant consideration concerning the rights of general public to gain access and seek membership of the Club, thus involving public interest - Therefore, the Club would not be operating within its province of activities by merely concentrating on recreational activities or pursuing the same as its major objective since the Club was constituted as a company registered under Section 26 of the Companies Act, 1913 and reference in perpetual lease deed to activities of the Club have to be interpreted as activities concerning the objects for which the company was formed. During the course of arguments, learned counsel for the Union of India vehemently stressed that barely 3% of total expenditure was being incurred by the Club towards sports activity and more than 60% was being spent on maintaining the recreational Club. He has also referred to the Inspection Report which unfolds specific acts of omission and commission attributed to the Club and would submit that the violation of the restrictions imposed by law, in the context of enjoyment of lease hold rights by the Club, are palpably injurious to public interest. The stand taken by Respondent No.18 would corroborate some of the allegations in the Company Petition. The considerations which must be present to the mind of Tribunal at the conclusion of the Inquiry while recording the finding that the acts of oppression and mismanagement complained of are of a degree warranting winding up of the Company but that it would be unfair to any class of stakeholders to wind up the company and therefore, would justify only passing of suitable direction, would not weigh at the stage of grant of interim relief when only Interlocutory order may be required to be passed for regulating the conduct of the Company s affairs. At this stage, interim relief can be granted on the basis of legal considerations justifying such grant to prevent continuance of or further prejudice to public interest in the affairs of the company. Having regard to the nature of allegations and the proof sought to be adduced in support of the same as coming to fore from the Inspection Reports, it can be stated without any fear of contradiction that the Union of India has been able to demonstrate that fair questions requiring probe have been raised in the Company Petition which would entitle it to the final relief of replacement of Directors of the Club with Government nominees to conduct the affairs of the Club in accordance with the provisions of law and its charter. Appeal disposed off.
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2021 (2) TMI 890
Approval of scheme of amalgamation - Section 230 read with Section 232 of the Companies Act, 2013 - HELD THAT:- As required under Rule 16 of the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 paper publication has been made in the Times of India (English) and Deepika Daily (Malayalam) on 28.02.2020 and that no objection received from any one against the Scheme of Amalgamation of the Petitioner Companies. On due appreciation of the facts and circumstances involved in this case and considering, the report of the ROC that the Regional Director, Ministry of Corporate Affairs has not objected to the proposed Amalgamation between the Petitioner Companies, this Bench is of the opinion that the Scheme placed before this Bench on 18.02.2020, can be sanctioned. Hence, this Tribunal Sanction the Scheme of Amalgamation of M/s. Commodity Online (India) Limited ( the 1st Transferor Company) and M/s. Celebrus Capital Limited ( the 2nd Transferor Company) with M/s. Acumen Capital Market (India) Limited ( the Transferee Company ) and the Appointed Date of the Scheme is fixed as opening hours of 31st March, 2019 - application disposed off.
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Securities / SEBI
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2021 (2) TMI 913
Debenture Trustees liability in default - Violation of SEBI Act - Company issued Debentures which are deemed public issues, without complying with the statutory requirements for public issue - Company failed to provide the details as to whether the consent of the Debenture holders has been obtained, for extending the tenure of the Debentures - whether by acting as Debenture Trustees of the Company without having registration as required under Section 12 of the Securities and Exchange Board of India Act, 1992 read with Regulation 7 of SEBI (Debenture Trustees) Regulations, 1993, they have violated law. Section 12(1) of the SEBI Act, 1992? - HELD THAT: - No Debenture Trustee can deal in securities except under, and in accordance with, the conditions of registration obtained from the SEBI, in accordance with the SEBI (Debenture Trustees) Regulations, 1993. Regulation 7 of the said Regulations, 1993 mandates that no person shall be entitled to act as a Debenture Trustee unless he is either - (a) a Scheduled Bank carrying on commercial activity; or (b) a public financial institution within the meaning of Section 4A of the Companies Act, 1956; or (c) an insurance company; or (d) body corporate. The petitioners, who are allegedly acting as Debenture Trustees, are members of Institute of Chartered Accountants of India. The petitioners have no case that they are holding registration to act as Debenture Trustees. Therefore, there is prima facie violation of Section 12(1) of SEBI Act, 1992. Petitioners have a case that the Company being a NBFC, is regulated by, apart from the Companies Act, by RBI Act and Regulations only and is not amenable to the jurisdictional authority of SEBI and hence Ext.P2 show-cause notice is ultravires. This Court is unable to accept the said proposition. Even though the Company is an NBFC, as far as regulation of issue of Debentures and Non-current Bonds is concerned, it is the bounden duty of SEBI to protect the interest of investors in securities. As long as NBFCs are not specifically excluded from the purview of SEBI Act, 1992, the Board will have jurisdiction over securities transactions of an NBFC, including the Debenture Trustees. Proceedings of SEBI are only at the show-cause stage. The petitioners have the opportunity to establish their case before the Board. As rightly pointed out by the Standing Counsel for the SEBI relying on the judgment of the Hon ble Apex Court in Peerless General Finance and Investment Company Limited v. Reserve Bank of India [ 1992 (1) TMI 337 - SUPREME COURT] the function of the court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that authority. This Court does not find any reason to interfere with Ext.P2 proceedings initiated by the SEBI at this stage.
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Insolvency & Bankruptcy
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2021 (2) TMI 926
Seeking interim order of attachment - seeking order of injunction against the defendant - HELD THAT:- In the facts of the present case, the plaintiff has claimed a decree for a sum in excess of ₹ 81 crores on the basis of an agreement under which, the defendant was to construct and deliver flats to the plaintiff. The ultimate agreement between the parties, had obliged the defendant to construct and make over unit Nos. 12W, 13W and 14W located on the 12th, 13th and 14th floor on the proposed building Wellside Camac to be constructed by the defendant upon the plaintiff paying the agreed consideration in respect thereof. Admittedly, the plaintiff had paid a sum of ₹ 14,06,70,000/- to the defendant. Apparently, the parties had fallen out of the contract. The parties have claimed differently with regard to the termination of the contract. According to the plaintiff, it has originally terminated the contract and the defendant is obliged to refund the entirety of the consideration advanced along with interest at the rate of 18 per cent per annum. According to the defendant, the termination effected by the plaintiff has been premature therefore entitling the defendant to deduct amounts stipulated in the contract. According to the defendant, it has to pay a sum of ₹ 12,81,22,349/- to the plaintiff after deduction as claimed. The plaintiff has expressed its unwillingness to accept such sum in full and final settlement of its claim. This stand of the respective parties has raised triable issues. The parties to the instant suit have raised triable issues. However, it can be garnered out of the facts of the present case at this stage that, the defendant is liable to pay the plaintiff. The quantum of liability has to be decided - Till such time such quantum of liability is decided and the defendant pays the same, and since, the contract that the parties had entered into related to units Nos. 12W, 13W and 14W on the 12th, 13th and 14th floor of the proposed building, it would be appropriate to grant an order of injunction restraining the defendant from creating any third party rights over and in respect of such units without the leave of the Court. Application disposed off.
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2021 (2) TMI 901
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - clear-cut stand of the Appellant is that the Adjudicating Authority (National Company Law Tribunal) had failed to take into consideration that the amount paid by the Applicants to the Respondent was clearly of Financial Debt - HELD THAT:- It is to be pointed out that Section 3(11) of the Code defines Debt meaning, a liability or obligation in respect of claim which is due from any person and includes a financial debt and operational debt . Section 3(12) of the Code defines default meaning, non-payment of debt when whole of any part or instalment of the amount of debt has become due and payable and is not (paid) by the debtor or the corporate debtor, as the case may be - It is to be remembered that for a default , there must be a subsisting debt. After all, the word default is like not doing something which one should do. In fact, the term default refers to an omission or failure to perform a legal or contractual duty. Suffice it to point that the word default , applies to a sum of money which was promised at a future date as against a sum now due and payable. It cannot be forgotten that Section 5(8) of the Insolvency Bankruptcy Code speaks of time value and these words are interpreted to mean compensation or the price paid for the length of time for which the money was disbursed. An existing obligation to pay a sum of money is the sine qua non of a financial debt . The Financial Creditor has a right to financial debt . Thus, the essence of any debt to be mentioned as financial debt is the time value of money , as borrowing money is for monetary transaction - To determine the plea of occurrence of default is the debt which must be due and become payable. An existence of debt and default are to be met for admission of an Application under section 7 of the Insolvency and Bankruptcy Code. A Debt is/was recoverable from the Corporate Debtor . There is no second opinion of an important fact that distinction between Deposits and Loans may not be a significant factor for interpreting the word, Deposit . One cannot ignore a candid fact that maturity of claim , default of claim or invocation of guarantee has no nexus in regard to the filing of claim before the Interim Resolution Professional under section 18(1)(b) of the Insolvency Bankruptcy Code and the Resolution Professional under section 25(2)(e) of the Code - As per the Companies (Acceptance of Deposits) Rules, 2014 , the term deposit is defined under rule 2(1) (c ) in an inclusive fashion. The meaning of deposit is elongated by covering receipts of money in any other form. For approaching the jurisdiction of the Tribunal as per Section 74(2) of the Companies Act, 2013 , even a partial failure by the Company to repay the deposit was sufficient. Resting on the fact that the Respondent / Corporate Debtor under the Recurring Investment Plan had assured to provide the Investors interest on their investment sum along with the Investment amount, for the time value of money (of course based on the amounts of investments made by the Investors) and in view of the fact that the Respondent / Corporate Debtor failed in its commitment to offer the allotment and/or the possession of the Plots of Land as promised by it or pay the assured returns, or repay the sums collected by it along with interest on the maturity of the schemes etc, this Tribunal comes to a consequent conclusion that the Appellant s position is that of a Financial Creditor as per Section 5(7) read with Section 5(8) of the Insolvency Bankruptcy Code and that there is default in payment of the accepted amounts by the Respondent / Corporate Debtor - the Respondent/ Corporate Debtor squarely comes within the ambit of definition of Financial Debt and the contra conclusions arrived at by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-V) to the effect that the amount which the applicants deposited does not come under the definition of Debt and further that it was unable to accept the contention of the applicants that there was a default in payment of debt, are incorrect, invalid and the same is set aside by this Tribunal to secure the ends of justice. The Impugned Order of the Adjudicating Authority (National Company Law Tribunal, New Delhi, Bench-V) is set aside by this Tribunal for the reasons ascribed in the instant Appeal - the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-V) is directed to restore the Company Petition filed by the Appellants / Financial Creditors / Petitioner (under Section 7 of the Insolvency Bankruptcy Code ) to its file and admit the same and to proceed further in accordance with Law.
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2021 (2) TMI 888
Maintainability of petition - service of notice to Corporate Debtor - Rule 49(2) of NCLT Rules, 2016 - HELD THAT:- It appears that the petition was admitted by this Adjudicating Authority after taking the proper measure to serve the notice of hearing to the Corporate Debtor. Moreover, multiple times notice has been sent to the Corporate Debtor but, the corporate Debtor refused to accept the notice which was itself sufficient to admit the matter in CIRP. Even after, evading the service of notice by the corporate debtor, this Authority has advised the operational creditor for paper publication which has already been made. As per Rule 49(2) of NCLT Rules, 2016, it is clear that averment made by the respondent for non-receipt of notice is not sustained as Corporate Debtor refused to accept the notice, Moreover, Paper publication has also been made. Hence, in view of this, the present application is liable to be dismissed. Further, Rule-49(2) of NCLT Rules, 2016 comes into play only when the matter is disposed of in a summary manner generally for want of prosecution. Otherwise, the said rule is applicable only for the purpose of setting aside the order of Ex-parte hearing. When the matter is decided, though Ex-parte, on mertis after due consideration and material available on record, this rule cannot be pressed into service - application dismissed.
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2021 (2) TMI 887
Validity of CIRP order - ex-parte order - Section 60(5) of the Insolvency Bankruptcy Code, 2016 r.w. Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The Applicant could not produce any material on record to justify its claim for setting aside the Exparte order. Further, it is evident from the conduct of the Applicant that since beginning they remained absent and did not participating at all whish shows that the Applicant was never vigilent. Further, the applicant filed this application on 04.12.2020 after one month of passing of order by the Hon'ble NCLAT on 02.11.2020. The Corporate Insolvency Resolution Process (CIRP) has already been set in motion. During the course of hearing the Learned Counsel for the Applicant argued that the matter should be disposed of after giving an adequate opportunity. We are not in dispute with this proposition of law but the law also says that one should be aware of its responsibilities and must take necessary precaution so that such situation does not arise. Even assuming for a moment that notice of hearing was served on the Applicant, however, no useful purpose would be serve and it will prolonged the litigation, if such Ex-parte order is set aside as there is no case of the Applicant on merits - We are constraint to said this kind of frvioulous litigation as resulted into situation where the main object of the Insolvency Bankruptcy Code, 2016 being timely disposal of matters preferably under the statutory timelines prescribed under the 'Code' is not achieved. The Applicant has failed to make out any case for setting aside the order of Corporate Insolvency Resolution Process (CIRP) - Application dismissed.
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2021 (2) TMI 882
Withdrawal from CIRP on the ground that the Applicant is in the process of re-structuring the debt of the Corporate Debtor - Seeking indulgence and challenging the action of IRP, of not filing the application of withdrawal of CIRP of the Corporate Debtor - section 60(5) and section 12A of Insolvency Bankruptcy Code, 2016 - HELD THAT:- The Bench observed that the Interim Resolution Professional has acted fair and has taken actions as per requirements of the Code judiciously. It is a settled law by the Hon'ble Supreme Court through various judicial pronouncements that Corporate Insolvency Resolution Proceedings (CIRP) are proceedings in rem. On the issue as to which event is crucial for withdrawal of CIRP, as per the law laid down by Hon'ble K.C. Sanjeev v. Easwara Pillai Kesavan Nair [ 2020 (8) TMI 542 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], the relevant date for considering withdrawal of CIRP is the date of application and nothing else. As a matter of fact, in this case no application for withdrawal of CIRP has ever been filed by the Interim Resolution Professional before the Adjudicating Authority, rather this IA has been filed by the assignee of financial creditor. As is evident from the records, since CoC has already been constituted in this case, any application for withdrawal of CIRP has to comply with regulation 30A (1) (b) of CIRP regulations read with Section 12 A of IBC-2016. Application dismissed.
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2021 (2) TMI 881
Violation of principles of natural justice - instead of submitting the data called for by the Resolution Professional, the Applicant filed this Application making various allegations against the Resolution Professional in particular and the CIRP in general - whether the claim put forward by the applicant before the R.P can be entertained by the R.P in view of the facts and reasons stated in the application and the counter filed by the Respondent? - HELD THAT:- On verification of records, it is seen that the applicant claimed that his salary was raised from ₹ 1,05,000/- per month to ₹ 12,05,000/- per month with effect from 01st April, 2016. However, from the records produced by the applicant, it is not clear as to revision of salary and that the ledger do not say that how much amount every month credited to his salary account being the salary for every month. In order to consider and settle the claim of the applicant, the Resolution Professional on 02.11.2020 sent a letter to the applicant - Since the Resolution Professional (R.P) had already received Resolution Plan from the prospective Resolution Applicant and the same is under consideration of the Committee of Creditors; the applicant is directed to submit all the documents requested for by the Resolution Professional through his letter dated 02.11.2020, without fail, in any case within two weeks from today. If the applicant produces the documents sought for by the R.P within two weeks, the R.P is directed to explore all possibilities to settle the claim of the applicant and give a reply to the applicant before finalisation of the Resolution Plan. Application disposed off.
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2021 (2) TMI 879
CIRP - Relating parties - right of representation, participation and voting at the meetings of the Committee of Creditors of the Corporate Debtor - whether the related party status of the Respondent No.2 has to be seen on the commencement date of insolvency process or from the date of initiating CIRP? - Sec.5(24) and 5(24A) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is also pertinent to consider that as per Section 5 (12) the CIRP commencement date is to be taken from the date of admission of the application. It is true that Respondent No.2 had resigned from the position as a Director of the Corporate Debtor on 15.11.2019, that is after initiation of an application for CIRP. However, at that moment it cannot be said that the application will be admitted or rejected. So, this argument regarding eligibility as on the CIRP commencement cannot hold water. In this case, the Respondent No. 2 is participating in the CoC as a Financial Creditor with 45.60 voting percent along with his family members after resigning from the Directorship of the Corporate Debtor. The Respondent No. 2 herein is a Financial Creditor who is exercising its rights after stepping into the shoes of the creditors. Hence, saying that a creditor cannot be included in CoC, merely because the creditor was a related party of the Corporate Debtor before the commencement of CIRP, would be impractical and will prejudice the rights of the Financial Creditor. The matrix to decide whether the Respondent No. 2 is a related party of the Corporate Debtor or not is that what is the position or status of Respondent No.2 as on the date when it stepped into the shoes of the creditor or when he was made a part of CoC. As on the date of it becoming a part of the CoC, Respondent No. 2 was purely a Financial Creditor of the Corporate Debtor and hence, it cannot be said that because he was a related party of the Corporate Debtor prior to becoming a CoC member, Respondent No.2 is still a related party and cannot be a part of CoC. Since the Respondent No. 2 is a Financial Creditor of the Corporate Debtor and Respondent Nos.3 to 5 are his wife and Children, there is no illegality in constitution of CoC with Respondent Nos. 2 to 5. Hence Respondent Nos.3 to 5 will not come under the purview related party . Application dismissed.
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2021 (2) TMI 878
Liquidation Order - section 33 (2) of the Insolvency and Bankruptcy Code, 2016 - Prescribed period for filing application - Appointment of Liquidator - Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) Prescribed period for filing application - HELD THAT:- In the present case, the application under section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted on 22-1-2020 and the present application is filed by the Resolution Professional on 19-8-2020. The period of 180 days were completing on 19-7-2020 but as per Notification No. IBBI/2020-21/GN/REG059 dated 20-4-2020, the period of Lockdown is excluded for the purpose of calculating the timelines in CIR Process. Hence, after excluding the lockdown period, the present application is filed within the prescribed period. Appointment of Liquidator - HELD THAT:- Section 34 (1) of the Code provides that where the Adjudicating Authority passes an order for liquidation of the corporate debtor under section 33, the resolution professional appointed for the corporate insolvency resolution process shall, subject to submission of written consent act as the Liquidator for the purpose of liquidation - The Law Researcher of this Tribunal has checked the credentials of proposed Liquidator and nothing adverse has been found on record. Therefore, Mr. Amarnath is appointed as the Liquidator. Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - HELD THAT:- The COC has not made compliance of Regulation 39B of the CIRP Regulations, 2016 regarding meeting of liquidation costs. The Liquidator is, therefore, directed to take necessary action under Regulation 2A of the CIRP (Liquidation Process) Regulations, 2016 regarding contributions to liquidation costs. Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - HELD THAT:- The COC has not made any recommendation regarding sale of the corporate debtor as a going concern. Therefore, the Liquidator is directed to refer to Regulation 32A of the CIRP (Liquidation Process) Regulation, 2016 and take necessary action. Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) - HELD THAT:- In the 4th meeting of COC, it has been resolved that liquidation fee will be paid to the Liquidator as ₹ 3,00,000/- on lump sum basis for six months. In view of the satisfaction of the conditions provided under section 33(2) of the Code, the corporate debtor Karan Processors Private Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code - That as per section 33(5) of the Code and subject to section 52 of the Code, no suit or other legal proceedings shall be instituted against the corporate debtor.
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2021 (2) TMI 876
Seeking permission to contest the case before the Adjudicating authority, since, earlier, the appeal was dismissed as withdrawn - grievance of the Applicant/Appellant is that the Applicant/Appellant had approached the Adjudicating Authority in a bona-fide manner as an 'Operational Creditor' and in the absence of liberty, by Tribunal, the Applicant/Appellant will be barred by limitation to approach the Hon'ble Adjudication Authority under section 7 of the I B Code, which in turn will cause grave prejudice to it - HELD THAT:- This Tribunal, after going through the withdrawal order dated 18-2-2020 passed in the instant Appeal is of the considered view that Applicant/Appellant was permitted to withdraw the present Company Appeal (AT) (Insolvency) No. 746 of 2019 and the same was dismissed as 'withdrawn' but without costs. This Tribunal makes it abundantly clear that it is open to the respective parties to raise all factual and legal pleas before the 'Competent Authority'/'Adjudicating Authority' when the necessary 'Application seeking appropriate relief is filed by the concerned party and further that said 'Authority' shall determine the said 'Application' on merits, of course, after providing due opportunities to the contesting parties to air their the views, by adhering to the 'Principles of Natural Justice' - Application disposed off.
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2021 (2) TMI 875
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors or not - existence of is debt and dispute or not - HELD THAT:- On a careful perusal of the documents it is noticed that there were two work orders given to the Operational Creditor by the Corporate Debtor as sub-contract, i.e. HVAC works was given by way of Work Order MMC/COGS/378 dated 17.10.2018 for a total consideration of ₹ 7,62,71,187 and electrification work for the same project was also given to the Operational Creditor by way of Work Order MMC/CO/GS/379 dated 26.10.2018 for a total consideration of ₹ 5,53,50,852. It appears from the record that the time period for completion for work was for a period of 11 months i.e. from 01.01.2019 to 30.11.2019. The Corporate Debtor also admit that the work order was provided to the Operational Creditor - It is reiterated that testing. commissioning. providing guarantee/warranty cards arise only at the final stage when handing over is done. The reliance on clause 46 of the work order is also blatantly Wrong as same comes into effect only at the final stage of testing, commissioning and handing over. It in denied that the Operational Creditor did not supply materials of the approved make and that defective materials were supplied. It is nothing more than an unsubstantiated contention taken after receiving the entire amount from the principal contractor. In respect of the definition of dispute , the law is now very much settled by several courts, most importantly the decision of the Hon ble Supreme Court in Mobilox (supra) in which it is clearly observed that the Adjudicating Authority is to examine at the stage of admission whether there is a plausible contention which requires further investigation and on assertion of fact a dispute is supported by evidence. The expression used in Section 8(2) of the Insolvency Bankruptcy Code existence of a dispute, if any is very significant, because the Legislature is deemed not to waste its words or to say anything in vain, hence every word is significant - A view has also been expressed that the definition of dispute as per Section 5 of Insolvency Bankruptcy Code is illustrative and not exhaustive. It is held that a dispute must not be spurious, hypothetical or illusory, quoted verbatim So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application . This Tribunal is also expected to see whether there is a plausible contention of dispute and not a feeble argument. Therefore, all that this Tribunal is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. Finally, a conclusion is hereby drawn that this is not a case where the impugned Debt and the alleged default was free from existence of plausible dispute or merely a feeble argument; but duly supported by corroborative evidences. Therefore, it cannot be proceeded under the Insolvency Code so as to commence CIRP by declaring the Debtor insolvent or bankrupt. It is worth to put on record that the scope and jurisdiction of this Tribunal is limited and also confined to the provisions of Insolvency Code while dealing with application filed under Section 9. Therefore, the impugned debt in question does not fall within those ambits. However, the claim under any other law, if permissible, can be pursued by the applicant as prescribed under that law. Any observation, legal or factual, shall not prejudice the rights of the applicant, if to be exercised under any other law. Application dismissed.
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2021 (2) TMI 873
Professional Misconduct - Validity of accepting the assignment as the Liquidator in the Corporate Insolvency Resolution Process (CIRP) of M/s The Jeypore Sugar Company Limited (CD) after 31st December, 2019 without holding a valid Authorisation for Assignment (AFA) from his IPA - Regulation 7A of IP regulations - HELD THAT:- It is clear from the said Regulation that one of the essential condition for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake any assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019 - The bye-laws of Indian Institute of Insolvency Professionals of ICAI defines in para 4(1)(aa) the expression authorisation for assignment as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made by the IPs to the IPA under para 12A of said bye-laws. An IP who is more than seventy years of age is ineligible to make an application for AFA under para 12A (2)(e) of the said bye-laws. In the present matter it is observed that, Mr. Sivakumar was appointed as Liquidator of the CD vide order of the AA dated 29th May, 2020. The date of Public Announcement of the Liquidation is 29th May, 2020. The notification published on 23rd July, 2019, inter alia, amended the IP Regulations and holding of AFA has been made one of the essentials for conducting various processes under the Code, to be effective from 1st January, 2020. Thus, adequate time was given to the Insolvency Professionals to obtain AFA. The DC notes that Mr. Sivakumar did not hold valid AFA even after more than four months from the date of enforcement of the provisions. The submission of Mr. Sivakumar that liquidation of the CD is not a new assignment is not tenable as the order for liquidation is separately passed under section 33 of the Code and liquidator is appointed subject to his consent as per section 34 of the Code. The CIRP and Liquidation process are entirely separate and require separate consent from the Insolvency Professionals - The DC finds that an order has been passed against Mr. Sivakumar on 1st December, 2020 by the Disciplinary Committee of IPA for accepting assignment as Liquidator after 31st December, 2019 without holding a valid AFA in the CIRP of the CD and it has been decided that Mr. Sivakumar is guilty of Professional Misconduct and a penalty of ₹ 10,000/- has been imposed. In view of the fact that the Disciplinary Committee of the Indian Institute of Insolvency Professional of ICAI has already passed order in this matter, the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction - SCN disposed off.
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2021 (2) TMI 872
Professional misconduct - Validity of accepting the assignment as the Interim Resolution Professional (IRP) in the Corporate Insolvency Resolution Process (CIRP) of MLP Developers Promoters Private Limited after 31st December 2019 without holding a valid Authorisation for Assignment (AFA) issued to him by his IPA - Regulation 7A of IP regulations - HELD THAT:- It is clear from Regulation 7A that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs - The bye-laws of Indian Institute of Insolvency Professionals of ICAI defines in para 4(1)(aa) the expression authorisation for assignment means an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws. An application for grant of AFA can be made to the IPA under para 12A of said bye-laws. The credibility of the processes under the Code depends upon the observance of the Code of conduct by the IRP/RP/Liquidator during the process. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP Regulations enumerates a list of code of conduct for insolvency professionals including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with mala fide or with negligence - In the present matter it is observed that, Mr. Sawhney had provided his consent to accept the assignment in Form-2 on 5-4-2019 prior to the amendment made to IP regulation for acceptance of assignment in matter CIRP of MLP Developers Promoters Private Limited before 31-12-2020. However, it is observed that the date of commencement of the CIRP is 27-1-2020. In view of the fact that the Indian Institute of Insolvency Professionals of ICAI has already taken disciplinary action against Mr. Sawhney, the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction against Mr. Romesh Chander Sawhney - SCN disposed off.
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2021 (2) TMI 871
Professional misconduct - Validity of the assignment as the Liquidator in Liquidation process of M/s. Bansal Refineries (P.) Ltd. (CD) after 31st December, 2019 without holding a valid Authorisation for Assignment (AFA) from his IPA - Regulation 7A of IP regulations - HELD THAT:- It is clear from the said Regulation that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs - The bye laws of ICSI Institute of Insolvency Professionals defines in para 4(1)(aa) the expression Authorisation for Assignment as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made to the IPA under para 12A of said Bye laws. The credibility of the processes under the Code depends upon the observance of the Code of conduct by the IRP/RP during the process. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP regulations enumerates a list of code of conduct for insolvency professionals including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with malafide or with negligence - In the present matter, the CoC took a decision to liquidate the CD on 19th December, 2019 and thereafter, Mr. Sircar filed his written consent to act as Liquidator on 2nd January, 2020. The application for liquidation was considered by the AA and order for liquidation was passed on 17th January, 2020. The consent to act as a Liquidator has been given by Mr. Sircar on 2nd January, 2020 which is after 31st December, 2019. The DC notes that Mr. Sircar did not hold a valid AFA either on the date of consent to act as liquidator i.e. 2nd January, 2020 or on the date of passing of liquidation order i.e. 17th January, 2020. This is in violation of the provisions of regulation 7A of the IP Regulations. In view of the fact that ICSI Institute of Insolvency Professionals has already taken disciplinary action against the IP, Mr. Pinaki Sircar for accepting assignment as Liquidator after 31st December, 2019 without holding a valid AFA in the matter of M/s. Bansal Refineries (P.) Ltd., the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction against Mr. Pinaki Sircar. SCN disposed off.
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FEMA
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2021 (2) TMI 915
Offence under COFEPOSA ACT - detention order - respondents desired to unlock the mobile phone instrument of the petitioner to retrieve the materials/ documents therefrom but petitioner did not co-operate in the opening/ unlocking of his mobile phone instrument - HELD THAT:- As timeline satisfactorily explains and justifies the time taken by the Respondents in undertaking investigation, which finally culminated in passing of the impugned Detention Order. The initial proposal sent by the Sponsoring Authority in February, 2019 was not found sufficient to justify the petitioner s detention under Section 3 of the COFEPOSA Act. The Sponsoring Authority, therefore, continued with its efforts to conduct further investigation and, for that purpose, retrieval of the contents of the mobile phone of the petitioner was crucial. Vide his letter dated 23.04.19, the petitioner desired that the forensic examination of his phone be done in his presence. Vide summons dated 21.05.19, he was asked to appear on 30.05.19. He did not appear. Another summons dated 06.06.19 was issued on 12.06.19. He appeared on 12.06.19. However, the petitioner did not cooperate. He did not provide the code to unlock his mobile phone on his own. He feigned ignorance and loss of memory with respect to the password/ code that left the respondents with no other option but to look for avenues to unlock the mobile phone even without the petitioner providing the password/ code. The respondents have stated that, ultimately, it was found that the mobile phone of the petitioner could be unlocked at the Cyber Laboratory of DRI, Mumbai. The respondents have stated that DRI, Mumbai is not a part of Air Customs. Thus, the submission that the respondents ought to have been aware of the existence of its facility at DRI, Mumbai to unlock the mobile phone of the petitioner, cannot be accepted on the basis of assumptions that the petitioner would like us to draw. The petitioner was sent a letter dated 20.11.2019 informing that Forensic Examination of his mobile phone would be conducted at DRI, Mumbai on 25.11.2019. That letter could not be served on the petitioner, since he was not found residing on the given address. The fact that the petitioner did not intimate the change of his address or his definite address where he could be found, itself shows that the conduct of the petitioner was evasive. The petitioner was sent another letter dated 17.01.2020 at his new address in Ramesh Nagar informing him that forensic examination of his mobile phone would be undertaken at DRI, Mumbai on 20.01.2020. He was put to notice that, in case, he did not appear, either himself, or through his authorized representative, the forensic examination of his mobile phone would be conducted in the presence of other witnesses. Despite receipt of this notice, the petitioner failed to appear in the office of the DRI, Mumbai and, therefore, the forensic examination got conducted in the presence of other witnesses on 20.01.2020 In case, the petitioner was really interested in participating in the forensic examination, he should have appeared at DRI, Mumbai on 20.01.2020. His non-appearance on that day, and non-appearance of even his authorized representative shows that the endeavor of the petitioner was merely to drag the matter and delay the forensic examination of his mobile phone for as long as it could be done. Thus, the delay in the forensic examination of the petitioner s mobile phone is primarily attributable to the petitioner, and not to the respondents. We, therefore, reject the submission of the petitioner that there was any unexplained delay on the part of the respondents in the forensic examination of his mobile phone between 1-2.02.2019 and 20.01.2020. We are also of the view that in the facts and circumstances of this case, it cannot be concluded that the livelink between the prejudicial activity in which the petitioner was found involved on 1-2.02.2019 and the purpose and object of detention, when the detention order was passed on 05.06.2020, was broken. Mere passage of time between the date of the prejudicial activity and the date on which the detention order came to be passed when the said passage of time has been sufficiently explained by the respondents, cannot lead to the definite conclusion with regard to the snapping of the nexus between the two. The petitioner also cannot take shelter of the argument regarding the time lapse between the detention order passed against his brother Mr. Gaganjot Singh, and the detention order passed against himself. The brother of the petitioner is purported to be the kingpin of the smuggling ring which allegedly caused immense economic loss to the country. The CSC and the Detaining Authority found the evidence against him to be sufficient to proceed against him in 2019 itself, which resulted in the passing of the Detention Order dated 11.03.19 against him. To justify the preventive detention of the petitioner in the assessment of the Detaining Authority, the Respondents had to collect evidence against the present petitioner, including recovering the relevant data from his mobile phone instrument, which took considerable time for reasons attributable primarily to the petitioner himself. No merit in the assertions of the petitioner. We, accordingly, dismiss the petition
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2021 (2) TMI 904
Offences under FEMA Act - whether show cause notice has been issued without considering the amendments made in various regulations framed under FEMA Act, 1999? - HELD THAT:- There is no dispute that there are transactions in foreign exchange either as derivatives or in the form of currency futures. The issue in this matter is as to whether the transactions have been made in accordance with Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 or not. The issue can be sorted out only after all the relevant documents are placed before the authorities. Thus, not entering into the merits of the case. Considering the pandemic situation, the authorities are requested to allow the petitioners to submit their record within 8 (eight) weeks from today. The oral submissions of the petitioners be recorded by way of video conference. This exercise should be concluded within a period of 4 (four) months from date and it is expected that the authorities will conclude the proceeding within 6 (six) months.
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Service Tax
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2021 (2) TMI 893
Site Formation and Clearance Excavation and Earth Moving and Demolition Services - benefit of the mega Exemption Notification No. 25/2012-ST dated 20 June, 2012 - availability of exemption under Serial Number 13(a) and 14(a) could not be taken up before Commissioner due to lack of proper representation by the Advocate - HELD THAT:- From the description of the contracts in the Show Cause Notice as well as order in original, it is found that it is quite likely that many of them may relate to roads, canals and railways. If that is the case then the Appellant might be entitled to benefits under Serial Number 12, 13 and 14 of the Service Tax Notification in respect of services provided by them subject to fulfillment of the other necessary conditions. The learned Counsel for Appellant has pointed out that the matter was not represented properly before the lower authority by Advocate. These exemption granted in entries at Serial Number 12, 13 and 14 of Notification No. 20/2012-ST dated 20 June, 2012 could not be examined by the original adjudicating authority as the Advocate failed to point them out. Provision of service directly to the Government - Reliance on the decision of Tribunal in case of M/S SARITHA INFRA GEO STRUCTURES VERSUS PRINCIPAL COMMISSIONER OF CENTRAL TAX VISAKHAPATNAM CENTRAL GST COMMISSIONERATE [ 2019 (5) TMI 75 - CESTAT HYDERABAD] - HELD THAT:- The said decision was not before the original adjudicating authority. The matter also needs to be re-examined in light of the decision cited by the Appellant. The matter needs to be re-examined and, therefore, in the interest of justice, the impugned order is set aside and matter is remanded to the Commissioner for fresh adjudication keeping all the issues open - Appeal allowed by way of remand.
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Central Excise
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2021 (2) TMI 922
Refund of excess amount of excise duty paid - appeal has been rejected by the learned CESTAT on the sole ground that petitioner had not been able to produce the clearance certificate from the Committee on Disputes (COD) - HELD THAT:- The learned CESTAT proceeded on an erroneous understanding that the appeal instituted by the appellant could not be entertained since the COD permission had not been obtained. Learned Tribunal gave a liberty to the appellant to seek restoration of the appeal after obtaining the COD permission. However, that requirement has been done away with by virtue of the judgment rendered by the Apex Court. The reasoning of the learned Tribunal in dismissing the appeal does not exist. The matter is remitted to the learned CESTAT for hearing the appeal on merits - Petition allowed by way of remand.
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2021 (2) TMI 910
Principles of Natural Justice - after long 15 years of the remand by the Appellate Tribunal, respondent No.2 scheduled personal hearing of the show cause notice - petitioners not put to notice of transfer of call book at any juncture in the interregnum is permissible under the law - grievance on the part of the petitioner is that the inordinate delay of 15 years in purported adjudication of the said show cause notice in the post remand period of the order of the appellate Tribunal is ex facie without jurisdiction, without authority of law and in clear breach of the principles of natural justice and such action is liable to be set aside on the various grounds raised before this Court. HELD THAT:- In the case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA 2 [ 2017 (3) TMI 1534 - GUJARAT HIGH COURT] , this Court extensively examined the maintainability of writ petition in wake of the existence of alternative remedy, where there was a delay of adjudication of show cause notice after 17 years. The department's contention was that the show cause notice remained undecided as it had been consigned to call book in view of CBEC Circular 162/73/95-CX dated 14.12.1995 to await outcome of a similar case. The Court held that consistent approach adopted by different High Courts is that the revival of the proceedings after long time gap without any proper explanation is unlawful and arbitrary. The Court also held that the said circular cannot be said to have issued in exercise of powers under section 37B of the Central Excise Act as concept of call book did not relate to uniformity in classification of excisable goods, or to levy of excise duties on such goods. Instructions to consign a case to call book relatable to adjudicatory process, and do not provide for any incidental or supplemental matters, consistent with the Act or Rules thereunder. The Court held that the CBEC is not empowered to issue instructions to any adjudicatory authority in relation to matters pending for adjudication before it. Consignment of matter to call book were on grounds extraneous to proceedings and not due to impossibility of authority to decide the case and hence the Court held that transferring the matter to call book is contrary to the provisions of law and explanation put forth by Department for delay is not plausible explanation for not adjudicating upon show cause notice within reasonable time. It is, therefore, held that the revival of the proceedings after long gap without discussing any reason for delay is unlawful and arbitrary. This very issue came up for hearing in the case of MESSRS MEGHMANI ORGANICS LTD. VERSUS UNION OF INDIA [ 2019 (7) TMI 1409 - GUJARAT HIGH COURT] , where there was a 13 years of delay in deciding the show cause notice. Following the decision of Siddhi Vinayak Syntex Pvt. Ltd. and other decisions, the Court did not find explanation offered by the respondent as convincing and hence, allowed the writ application and the order of Commissioner GST Central Excise (Appeal) was quashed and set aside. It is, thus, quite clear that the Courts have not approved transfer to the call book for number of years and pendency of adjudication for a protracted period. The Courts have always given primacy to the public interest and also have heavily curbed the attempts to economic offence and dealt with the offenders in stringent manner. At the same time, it has also struck a balance by upholding the cause of litigant that if there is unexplained delay in proceeding with the adjudication of the show cause notice without any cause attributable to the petitioner for such tiring delay and inaction on the part of the respondent. In absence of any kind of malice on the part of the petitioners, there is no justification for enormous delay to have a march over the principles of natural justice on permitting such belated adjudication of the show cause notice. The Courts have, in no unclear terms, held that this results into deep prejudice to the assessee, inasmuch as in the interregnum period the position of the assessee would have changed substantially and therefore, hearing that takes place may affect its right adversely. Adverting to the facts of the instant case, it is not the case of the respondent that the petitioner had been, in any manner, formally communicated by way of the notices or otherwise of the matter being transferred to the call book. There is nothing to indicate of the petitioner having been made aware of such transfer or the reason of such move in all these years. The show cause notice issued in the year 2004 had been decided ex parte on 08.08.2005 and the challenge to the same was made by the petitioner by two separate appeals before the CESTAT. The same resulted in favour of the petitioner on 02.12.2005, whereby the Tribunal waived the pre-deposit of the amount demanded and set aside the impugned order and remanded the matter to the Commissioner for once again deciding by clearly holding that it was in breach of the principles of natural justice - The transfer to the call book was on the ground that there was yet another matter on the very legal issue, which was pending before this Court, being Special Civil Application No. 537 of 2007, which came to be decided by this Court in the year 2017. However, from 26.06.2006 till the issuance of notice in the month of November, 2020, at no stage, there had been any intimation given to the petitioner on the part of the respondent. Least that could be expected from the authorities, more particularly, in wake of the circular of CBEC Circular No.1053/2/2017-CX dated 10.03.2017 as provided in paragraphs 9.4 of the said circular is to formally communicate to the party about transferring the matter to the call book. The Court also notices that not only the factory of the petitioner had been closed, but the registration also had been surrendered with the permission of the respondent authority and the factory has been sold off in the year 2012. It is virtually impossible for anyone to then defend as the respondent itself does not have the papers and it was asking for the reply of the respondent. Even if that aspect is not considered, expecting the petitioner to adduce the evidence of the closed factory after 15 years is virtually impossible. This would amount to serious prejudice and breach of principles of natural justice and, therefore, also this petition deserves to be allowed - petition allowed.
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2021 (2) TMI 870
CENVAT Credit - denial of credit mainly on the ground that there was no service rendered by ABMCPL to the appellant which could be defined as input service for them as the arrangement between ABMCPL and its member companies (including appellant) was merely sharing of common expenses and there was no concrete proof that these expenses were made for such services provided by ABMCPL which were used by the appellant in manufacture of their final product - HELD THAT:- The confirmation of the demand has been made on the pretext of having no nexus, direct or indirect, between the impugned services and the manufacturing activities of the Appellant. The Adjudicating Authority has observed that the impugned bills/ invoices have been issued on the basis of performances of previous years of the user companies and not on the basis of actual services rendered by the service provider and hence the nexus of input services being used by the manufacturer breaks. The bills/ invoices being issued on the basis of previous years performances, the same may still be issued by the service provider when the user company does not avail or utilise any service. The Adjudicating Authority has further observed that there is no provision in the CCR to avail credit on notional input service and such services cannot be stated to be services used by the manufacturing company - the observation of the Adjudicating authority is neither supported by law nor even is followed in actual prevalent practices. It is a general prevalent practice that the service recipients enter into an annual maintenance contract with their service providers. In such cases the service recipients may or may not have the situation to utilise the services of the service provider but have co pay the contracted sum. If any service tax is paid by the service provider in such cases and is realised from the service recipient, no bar can be put on the availment of Cenvat credit. CESTAT in the case of M/S AMARA RAJA POWER SYSTEMS LTD. ANOTHER. M/S AMARA RAJA ELECTRONICS LTD. VERSUS THE COMMISSIONER C C. E, TIRUPATHI [ 2015 (12) TMI 1558 - CESTAT HYDERABAD] has answered the identical issue in favour of the appellants assessee taking plea that when the department has accepted the tax on the services provided by sister concern to appellants, then they cannot deny credit alleging that no services were rendered - Now in the instant case it is submitted by the appellant that ABMCPL are separate legal entities incorporated under the Companies Act, 1956 and they are separately assessed to Income tax. ABMCPL, being independent legal entities, such money collected from appellant for the services provided to them and also expenses recovered to compensate the cost of sourcing the services, would be taxable under BSS. There is no evidence to establish that there is no intention to provide service and it was mere understanding with the sister companies for sharing of common expenses. The demand of irregular availment of cenvat credit on input services which were utilized by the appellant in production of their final product is unjustified - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (2) TMI 907
Rectification of mistake - compounding scheme under Section 7-C of the Tamil Nadu General Sales Tax Act, 1959 - According to the authority, the act of the petitioner fell foul of 7-C of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT:- Section 55(3-A) of TNGST Act categorically states that the power of rectification can be exercised by the assessing authority even though the original order of assessment was subject matter of an appeal or revision. It is true that the appeal filed by the petitioner was dismissed and the same was also confirmed. It appears that the order passed by the appellate authority dismissing the rectification petition was also confirmed - That again will not come in the way of Section 55(3-A) of the Act from having its statutory effect. Notwithstanding any of the adverse orders, which the petitioner suffered, the original assessing authority can still exercise the power of rectification, since such a jurisdiction has been specifically conferred under the aforesaid provision. In the case on hand, the assessing authority has declined to exercise her jurisdiction by citing the earlier orders. This in my view amounts to abdication of the statutory jurisdiction vested in her. In this view of the matter, the order impugned in the writ petition is set aside and the matter is remitted to the file of the second respondent to pass orders afresh in accordance with law - Petition allowed by way of remand.
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Indian Laws
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2021 (2) TMI 916
Dishonor of Cheque - honourable acquittal - full exoneration - conviction of the respondent u/s 138 of the Negotiable Instruments Act - claim for backwages - HELD THAT:- It has been averred in the complaint before the Labour Court that during the period of his conviction and acquittal, the respondent was not gainfully employed. The fact of acquittal of the respondent by this Court, was made aware to the petitioner, in March, 2011 itself, which is indicated from the application for amendment filed before the Labour Court (Annexure-B/pg.13), pursuant to which the petitioner, ought to have reinstated the respondent in service, in March, 2011 itself, since the reason for his termination, did not survive and could have availed the benefit of the services of the respondent till the time of his superannuation. The petitioner, for reasons, best known to it, did not do so and forced the respondent to continue with the litigation before the Labour Court, which resulted in the direction for his reinstatement with continuity in services and 50% back wages. Not only this, the petitioner, challenged the said judgment before the Industrial Court by way of a revision during which period, the respondent retired having crossed the age of superannuation. In spite of the dismissal of the revision, as filed by the petitioner, and stay to the effect, operation and execution of the orders passed by the subordinate Courts, except to the extent of the direction to pay 50% back wages, being declined, and a direction to process the claim of the respondent for other retiral benefits, the order dated 11/9/2015, records that this has not been done. This conduct, on part of the petitioner clearly defies logic. In Baldev Singh Vs. Union of India and others, [ 2005 (10) TMI 600 - SUPREME COURT ], relied upon by Mr. Mehadia, learned Counsel for the petitioner, the Hon'ble Apex Court has held that merely because there has been an acquittal, it does not automatically entitle the employee to get salary for the period concerned. Thus, the award of 50% back wages, to the respondent, in light of the above position of law, is not sustainable. However, the claim for back wages from the date of acquittal till the date of superannuation, is clearly sustainable in law. The impugned judgement is modified as follows: (A) The direction as passed by the learned Labour Court for reinstatement of the respondent with continuity of service is maintained. (B) The direction as passed by the learned Labour Court to pay 50% back wages is hereby set aside. (C) The petitioner is directed to pay full back wages to the respondent from the date of acquittal, i.e., from 22/2/2011 to the date of superannuation. (D) All the above payments should be made within three months from the date of this order, subject to adjustments of any amounts which may have been received by the respondent earlier.
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