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Showing 361 to 380 of 1125 Records
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2020 (11) TMI 765
Scope of limited scrutiny - cash deposits in the Bank accounts being more than the turnover - Profit earned on undisclosed turnover - undisclosed bank accounts - HELD THAT:- Huge deposits were made in the said Bank accounts and since the said Bank accounts were found to be not reflected in the accounts of the assessee, the same were treated by him as the undisclosed turnover of the assessee’s business and estimated profit thereon was added by him to the total income of the assessee.
The impugned addition made by the AO on account of profit allegedly earned by the assessee on undisclosed turnover was directly related to the ground on which the case of the assessee was selected for limited scrutiny and the same being fall-out of the verification made by the AO on the issue on which the case of the assessee was selected for limited scrutiny, we do not find merit in the contention raised by assessee that the impugned addition made by the Assessing officer is beyond the scope of limited scrutiny.
Deposits found to be made in the two Bank accounts maintained with Paschim Banga Gramin Bank and UCO Bank - Serious discrepancies were found in the books of account of the assessee, inasmuch as, the substantial balances in the two accounts maintained by the assessee with Paschim Banga Gramin Bank and UCO Bank were not reflected in the audited balance-sheet of the assessee. Similarly the interest earned by the assessee in one Bank account as well as interest charged in the other Bank account was also not reflected in the accounts of the assessee.
Keeping in view these serious discrepancies seriously doubting the reliability of the audited accounts of the assessee, the onus, in our opinion, was greater on the assessee to establish by furnishing cash flow statement duly supported by the relevant books of account that the deposits found to be made in the Bank accounts maintained with Paschim Banga Gramin Bank and UCO Bank represented the sale proceeds of his business, which were duly reflected in the books of account and included in the total turnover finally declared in the return of income.
Since this exercise was not specifically done by the assessee either during the course of assessment proceedings before the Assessing Officer or during the course of appellate proceedings before the ld. CIT(Appeals), we consider it fair and proper and in the interest of justice to set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter back to the file of the Assessing Officer for deciding the same afresh - Appeal of the assessee is treated as allowed for statistical purposes.
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2020 (11) TMI 764
Disallowance u/s 36(1)(iii) - claim interest expenditure disallowed as investment made in subsidiary companies - sister concerns have invested in capital assets and mutual funds and not utilized the same in commercial activities - HELD THAT:- The assessee company is holding substantial shareholding and also considering the set up of the group companies, we can see that Global Holding company controls the whole group concerns which includes assessee company. The assessee company also under control of Global Holding. Assessee companies invest in other group companies in which holding company controls the majors shares as well as controls composition of directors.
The companies GIL and CNIL are subsidiary companies, which clearly indicates that the investment made by the assessee company in other sister concerns rather we can say subsidiary companies are meant to be for commercial expediency and commercial necessity. Therefore, in our considered view the investment made by the assessee in these companies are for commercial expediency and we also note that apart from it is holding substantial shares and we also notice that substantial portion of their commercial activities are sourced through the subsidiary companies.
These investments made by the assessee will fall within the term business expediency /commercial expediency expressed by the Hon’ble Apex Court in its landmark judgement of S. A. Builders [2006 (12) TMI 82 - SUPREME COURT]. Therefore, the investment made by the assessee are for its commercial purposes hence the interest expenditure borne by the assessee for the investment made by the assessee on its subsidiary company are allowable expenditure under section 37(1) of the Act. Therefore, we are inclined to allow the grounds raised by the Assessee. Accordingly, grounds raised by the assessee are allowed.
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2020 (11) TMI 763
Exemption u/s 11 & 12 denied - addition u/s 68 towards the loan amount received from its members - assessee has not been granted registration u/s 12A/12AA though the assessee has claimed to have submitted an application on 01/10/2003 - HELD THAT:- This is a question of fact regarding submitting of the application on behalf of the assessee as claimed on 01/10/2003 seeking registration u/s 12A - assessee has not filed any record or copy of the alleged application either before the authorities below or before the Tribunal. The assessee is strongly relied upon a letter dated 31/03/2005 issued by the ITO, Dausa wherein it is stated that till application of the assessee is disposed off for grant of registration U/s 12A of the Act, the assessee will get the benefit of exemption u/s 11 and 12
It is no clear that in what capacity, the said letter dated 31/03/2005 was issued by the ITO, Dausa whether he was functioning on behalf of the ld. CIT(Exemptions), Jaipur or not.
Further all these facts require a proper scrutiny of the record and particularly any documentary evidence to be filed by the assessee to show that any application on behalf of the assessee was submitted for seeking registration U/s 12A and which has not been decided till date.
There is no dispute in this appeal regarding the registration U/s 12A of the Act but the assessee is seeking an exemption U/s 11 and 12 of the Act. Since the ld. CIT(A) has decided the appeal of the assessee ex parte and that too by a summary non-speaking order, therefore, we grant one more opportunity to the assessee to present its case before the ld. CIT(A) and also to produce the supporting evidence for the claim of pendency of the application for registration U/s 12A of the Act and consequential claim of exemption u/s 11 and 12 of the Act. - Decided in favour of assessee for statistical purposes.
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2020 (11) TMI 762
Disallowance u/s 14A read with Rule 8D - AR submitted, no disallowance of interest expenditure under Rule 8D(2)(ii) can be made as no interest bearing fund was invested in exempt income yielding asset - HELD THAT:- Claim of the assessee requires factual verification, in case it is found that the assessee had sufficient interest free funds available with it which can take care of investment made in exempt income yielding assets, no disallowance of interest expenditure under Rule 8D(2)(ii) can be made.
AO is directed to factually verify assessee’s claim in this regard. In so far as, disallowance of administrative expenditure under Rule 8D(2)(iii) is concerned, it is the contention of the assessee that for availing loan from a co-operative bank, the assessee mandatorily has to invest in shares of the bank. As submitted, the dividend income earned on such shares are directly credited to the bank account of the assessee and hence, the assessee is not required to incur any expenditure for earning dividend income.
Whether or not the assessee has incurred any expenditure has to be established through supporting evidence. In any case, as per section 14A(3) whether or not the assessee has incurred any expenditure for earning exempt income, a part of the expenditure has to be attributed towards earning of exempt income - assessee has not been able to establish on record that no expenditure is attributable towards earning of exempt income. Therefore, in our considered opinion, disallowance of administrative expenditure has to be made under Rule 8D(2)(iii) of the Act.
However, such disallowance has to be computed by taking into consideration only those investments which have yielded exempt income during the year - Assessee appeal is allowed for statistical purposes.
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2020 (11) TMI 761
Benami transaction - jurisdiction of civil Courts under Section 45 - Whether a civil Court can consider an application when its jurisdiction is alleged to be barred by operation of law - question agitated for the second time before this Court. - HELD THAT:- Substance of the respondent’s case is that he had paid the entire sale consideration for the purchase of plaint ‘B’ schedule property in the name of his sister Mary and that the document happened to be nominally taken in the name of the Mary only due to the fact that the respondent was working in the Merchant Navy.
The Benami Transactions (Prohibition) Act, 1988 came into force on 5.9.1988. The Act was enacted with the objective to prohibit benami transactions and the right to recover property held benami. The Act was extensively amended by Act 43 of 2016, which came into force with effect from 1.11.2016, except Sections 3, 5 and 8 which are deemed to have come into force w.e.f 19.05.1988 (read Section 1 (3) of the Act).
Once it is established in Court that the claim put forth in the suit is a ‘benami transaction’ not falling within the exceptions under Section 2 (9) of the Act, then no suit will lie in view of Section 4 of the Act; that there is a clear bar of jurisdiction of civil Courts under Section 45 of the Act and that pending cases have to be transferred to the Adjudicating Authority or Appellate Authority.
Exhibit P-9 order is erroneous and unsustainable in law and is liable to be interfered with because when the petitioners have raised a specific plea that the suit is hit by the prohibitions under Sections 4 and 45 of the Act, the Trial Court ought to have considered the said question as a preliminary issue as laid down in T.M.Bagasarwalla v. H.R.Industries [1997 (2) TMI 563 - SUPREME COURT] before making an endeavor to decide on Exhibit P-5 application, otherwise as it is commonly said in the idiom it would be like putting the cart before the horse.
Thus remit the matter back to the Trial Court for de novo consideration, to decide on the maintainability of the suit in view of Sections 4 and 45 of the Act, as contemplated under Order VII Rule 11 (d) of the Code or decide whether the suit has to be transferred in light of Section 65 of the Act, in which case the Trial Court shall try the question as a preliminary issue, as provided under Order XIV Rule 2 (2) of the Code. Only if the Trial Court finds it has jurisdiction, it shall decide Exhibit P-5 application.
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2020 (11) TMI 760
Benami transaction - suit property belonged to father late Yashpal Sain of appellant wherein she is entitled to 1/4th share in the said property - suit was filed by Smt. Savita Anand, (“appellant”) for partition and permanent injunction against three defendants, i.e. her mother Smt.Krishna Sain (who has since expired during the pendency of the appeal and will be referred to for convenience as ‘D1’), her sister Smt.Sarita Mullick (hereinafter referred to as ‘D2’) and her brother Sh.Sanjeev Sain (hereinafter referred to as ‘D3’) - how the plaintiff/appellant could claim a share in the suit property merely on the basis of her late father being a member of the Society in question, given the dicta of the courts? - argument of appellant was that the case ought not to have been dismissed without trial as there were many factual issues that were to be proved by leading evidence
HELD THAT:- The appellant appears to be very eager to establish a vested right in the suit property by claiming it to be an HUF property or in the alternative, joint family property. The purchase of 5 Bighas 10 biswas land at Mathura Road in 1960 cannot be connected with any compensation received as a refugee by late Yashpal Sain in the absence of any document to substantiate payment and receipt of such compensation. Nor can the purchase of the property at Mathura Road by him be accepted as a “restoration” of “ancestral” property, when the existence of any such “ancestral” property at Lahore, Pakistan, is itself completely doubtful in the absence of cogent and clear disclosures in the plaint in this regard.
There is no reason to presume that it was this compensation that he may have received that was invested in the property that was purchased at Mathura Road. Secondly, the said plot of land at Mathura Road was acquired by the Government in 1960, thus extinguishing all rights of late Yashpal Sain in that land. Though compensation for the same amounting to ₹14,101.88 paise was also awarded to him, such compensation did not take the colour of joint family funds. Even if this compensation was thereafter ploughed back into the purchase of a plot measuring 5494 sq yds in the Society, no conclusion can be drawn that this plot was also of the nature of an HUF property in which the appellant could stake a claim
Yashpal Sain failed to complete the requisite formalities as a result of which no plot of land was in fact allotted to him. At the time of his death, no plot stood in his name to which the appellant could stake a claim as his legal heir. Thus on both the threads of arguments, the appellant was rightly held to be not entitled to any share in the suit property.
Whatever may have been the source of the various payments made towards consideration, development charges, electricity charges, all documents that determine the ownership of the suit property stand in the name of D1.The Share Certificate (dated 3rd June, 1964) stands in the name of D1.The receipts for payment of various amounts also stand in the name of D1.
When the partnership was dissolved, the land was not sought to be divided in the shares of the partners in the partnership business clearly establishing that it was the asset not of the partnership but of D1. All these documents were well within the knowledge of the appellant when they were executed between 1963 and 2011 and the admissions contained explicitly in them, as also disclosed in the conduct of all family members including the appellant and her husband, cannot be permitted to be withdrawn by her merely because it is now convenient to claim otherwise, after the filing of the present suit. Through the appellant’s own conduct it is well proven that D1 was the absolute owner of the property and during her lifetime the appellant could not have claimed a share in the same.
We are unable to find any error in the impugned judgement, which we uphold. The appeal is devoid of merit
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2020 (11) TMI 759
Principles of natural justice - rejection of cross-examination of petitioners - Section 138(B) of the Customs Act, 1962 - HELD THAT:- This Court is of the considered view that the petitioner has approached this Court prematurely without allowing the respondents to pass final orders. The petitioner has made it clear before the respondents that they intend to cross examine the witnesses, which were referred to by the respondents in the annexures attached to the show cause notice dated 17.10.2018. The respondents have rejected the request of the petitioner, but till date, final order has not been passed. If the respondents have not followed the statutory provisions as mandated under the Customs Act, 1962 by not allowing the petitioner to cross examine the witnesses, the petitioner is always at liberty to challenge the final order as and when passed by the respondents either before this Court or before the Appellate Authority, as the case may be.
Admittedly, no final order has been passed by the respondents and the respondents have only issued the show cause notice and on receipt of the same, the petitioner has requested the respondents to permit him to cross examine the witnesses mentioned in the annexure to the show cause notice. The said request has been rejected by the respondents under the impugned order - in the case on hand, the petitioner has approached this Court prematurely, without allowing the respondents to pass final order after hearing the petitioner pursuant to the show cause notice issued by them on 17.10.2018 under Section 28 of the Customs Act, 1962.
The petitioner has approached this Court prematurely as the respondents have only rejected the request made by the petitioner for cross examination of witnesses on the ground that the entire case is based on documentary evidence and there is no necessity for cross examination of witnesses. If there is any legal right available to the petitioner, as contended by them in this writ petition to cross examine the witnesses, they are always at liberty to raise the same as and when any adverse order is passed against them by the respondents through its final orders pursuant to the show cause notice dated 17.10.2018 issued under Section 28 of the Customs Act, 1962 - as on date, there is no merit in this writ petition as it has been filed prematurely. Therefore, the writ petition stands dismissed.
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2020 (11) TMI 758
Smuggling - Gold - Baggage Rules - Conspiracy - absolute confiscation - levy of penalty u/s Section 112(a) - HELD THAT:- At the outset the Government observes that the officers of AIU have acted impulsively, and somewhat prematurely the passenger Shri Sahubar Sathik Hithayadullah was intercepted as soon as he stepped out of the Aircraft, at the aerobridge. It is therefore clear that the passenger was prevented from filing a declaration as required under Section 77 of the Customs Act, 1962. As a plan/conspiracy was in existence, the officers having specific intelligence could have made the interceptions after the transfer of the gold near the lifts.
Further, the seizure of the gold took place at the aerobridge and according to the mahazar, the Respondent has not received the gold from the passenger nor has he come into contact with him or the gold. The entire case on the respondent has originated from the statement given by Shri Sahubar Sathik Hithayadullah in which he has stated that he was to proceed to lift to handover the gold to the Respondent. To put it shortly, there is no tangible involvement of the Respondent leading to seizure of gold. The passenger with gold was intercepted at the aerobridge itself, before the entire conspiracy took place. The officers along with the passenger contacted the respondent and intercepted him at the lift. However, by then the gold was already taken into possession by the officers, the intended plan of smuggling the gold out of Airport as a part of conspiracy did not take place, as the plan has not been executed. As the gold was seized before the respondent came in the picture, the offence associated with the mens rea was not allowed to happen.
The Respondent never came in contact with the gold. It is thus evident that the Respondent has not done anything in relation to the gold that was seized. The Respondent never came in touch with the gold at all, as it was seized before he came into the conspiracy, and therefore there was no cogent act of commission or omission by the Respondent, which rendered the goods liable for confiscation - The subsequent actions of unravelling the conspiracy and implicating the applicant did not take place and therefore there is no reason for invoking Section 112(a) of the Customs Act, 1962.
Penalty - HELD THAT:- The Government holds that Section 112(a) cannot be invoked in the case and penalty is not imposable. The penalty imposed is therefore rightly set aside.
The impugned Appellate order is therefore to be upheld - Revision Application is liable to be dismissed.
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2020 (11) TMI 757
Oppression and Mismanagement - Extraordinary General Meeting held or not - It is the case of the petitioner that there was no extraordinary general meeting for passing resolution for sale of a major portion of the land held by respondent No. 1-company - HELD THAT:- The alleged agreement of sale was not produced before the Advocate Commissioner. Not only the said document was not produced before the Advocate Commissioner, but even before the Tribunal it was not furnished. It is not known why respondents Nos. 1 to 4 are withholding the said document from being produced. The petitioner being a shareholder is entitled to have the information related to sale of a big chunk of land of respondent No. 1-company. The majority shareholders are running the company. Thus, the petitioner, a minority shareholder is being oppressed. Thus, neither proof of extraordinary general meeting nor proof of notice of service to the petitioner, nor copy of the alleged agreement of sale is filed.
The next contention of the petitioner is that respondents Nos. 1 to 4 have not filed any documents showing any settlement with the secured creditors of respondent No. 1-company. No proof about terms of settlement with the secured financial creditors. It is the case of respondents Nos. 1 to 4 that in order to meet the one-time settlement proposal entered with secured financial creditors, respondent No. 1-company was forced to sell the land. It is the case of respondents Nos. 1 to 4 that respondent No. 1-company owed ₹ 612 crores to the secured creditors. Besides there were other liabilities to other creditors. There was absolutely no difficulty for respondents Nos. 1 to 4 to produce all the documents connected with the one-time settlement proposal entered with the secured creditors. The purpose behind the sale of a big chunk of land of respondent No. 1-company was to meet the commitments of one-time settlement proposal entered with the financial creditors. If this is the reason, then why respondents Nos. 1 to 4 have not submitted the relevant documents - No resolution approved by the extraordinary general meeting that the land in question was allowed to be sold for meeting the commitments of one-time settlement proposal entered with the secured financial creditors.
The contention of learned counsel for respondents Nos. 1 to 4 is that there was no procedure prescribed that notice should be published in newspapers for sale. In all prudence, when the company proposes to sell 400 acres of land, notice could have been published in newspapers in order to get an attractive price for the land. Thus, respondent No. 1-company has not properly conducted the sale transaction and the procedure adopted by respondent No. 1-company is not in tune with the established practice. This is also one of the grounds to set aside the sale entered with respondent No. 14.
The serious contention of the petitioner is that the land was allegedly sold for ₹ 4 lakhs per acres bringing the total sale consideration at ₹ 16 crores. Learned counsel for the petitioner would contend that the sale price as per the Ready Reckoner was ₹ 15 lakhs per acre. This extent of land, if sold at ₹ 15 lakhs per acre, it would have fetched ₹ 60 crores - the sale is hit on the ground that it was entered with a related party. It is not in dispute that respondent No. 14 is owned and controlled by Ravi Sanghi, who was promoter and ex-director of respondent No. 1-company. Thus, it is nothing but a related party transaction. Therefore, the sale transaction with respondent No. 14 suffers from several irregularities and it is nothing but an act of oppression and mismanagement on the part of respondents Nos. 1 to 4. The sale transaction therefore, deserves to be set aside being an act of oppression and mismanagement.
The next contention of learned counsel for the petitioner is that there was an irregular conversion of partly-paid shares into fully-paid shares. Two crore shares were given as partly-paid shares. ₹ 4 was collected for each share of the value of ₹ 10 at the first instance. Thus, the partly-paid shares were converted into fully-paid shares after receiving balance of ₹ 6 per share. This was done only to meet with the one-time settlement proposal requirements - The petitioner cannot question the conversion of partly-paid shares into fully-paid shares, because need arose for conversion in order to raise money for clearing debt liabilities of respondent No. 1-company. Therefore, this cannot be held as an act of oppression and mismanagement. In fact, the partly-paid shares were issued long prior to the petitioner acquiring the shares in respondent No. 1-company. Therefore, he cannot question issuance of partly-paid shares when he was not a member of respondent No. 1-company. As there was need to raise money, partly-paid shares were converted into fully-paid shares by collecting balance. How this conversion can be said to be oppressive against the petitioner.
The case of the petitioner is that he wants to exit from respondent No. 1-company and for the said purpose valuation to be done. If respondent No. 1-company is not ready to purchase shares after taking valuation, then the petitioner may be permitted to sell the shares to a third party. In the alternative to this prayer, the petitioner further asked relief that respondent No. 1-company may be wound up - valuation cannot be done at this stage. Valuable assets of respondent No. 1-company consist of possessing of vast extent of land. Land Ceiling proceedings are pending against the lands possessed by respondent No. 1-company. Whether the lands belong to respondent No. 1-company or the lands to be surrendered to the Government under the Land Ceiling Act is the matter yet to be determined in the Land Ceiling Proceedings started against respondent No. 1-company. Therefore, valuation cannot be taken unless ownership of the lands of respondent No. 1-company is decided.
Thus, sale of land by respondent No. 1-company to respondent No. 14 is an act of oppression and mismanagement and as such sale transaction with respondent No. 14 is liable to be set aside. Secondly, the petitioner is allowed to sell its shareholding to the existing shareholder at the price offered by him and in case the existing shareholders of respondent No. 1-company do not wish to purchase the shares at the price offered by the petitioner, then the petitioner is entitled to sell the same to third party. Respondent No. 1-company is further directed to return the sale price to respondent No. 14 along with interest at 12 per cent. per annum from the date of sale till the date of payment.
The petition is allowed by cancelling the sale agreement entered with respondent No. 14 for the sale of lands of respondent No. 1-company - petitioner is permitted to sell its shareholding to the existing shareholder of respondent No. 1-company at the rate offered by him.
Petition disposed off.
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2020 (11) TMI 756
Transfer and registration of shares - deletion of entries made in furtherance to conversion of 2,00,00,000 partly up equity shares into fully paid-up equity shares - It is submitted that the petitioner is coercing the respondents to buy at exorbitant price, its 2,40,70,000 shares which were purchased by the petitioner from various banks during 2011-12 at an average price of ₹ 1.11 per share - HELD THAT:- Partly paid-up shares were issued in 2003-04, which was long prior to the applicant purchasing the shares of respondent No. 1-company from the banks. The petitioner is aware of the authorised capital of respondent No. 1-company. There is no irregularity in calling for conversion of partly paid shares into fully paid shares, because respondent No. 1-company needed money for payment to the banks to avoid proceedings under the SARFAESI Act, 2002. Partly paid shares were issued prior to the petitioner becoming shareholder of respondent No. 1-company. Even assuming that the petitioner purchased shares in 2011-12 though transfer was effect on May 20, 2015 yet 2 crores partly paid shares of ₹ 10 were issued prior to 2011-12. Absolutely the petitioner cannot have any grievance for conversion of partly paid-up shares in to fully paid-up shares on March 16, 2015. The partly paid-up shares were issued prior to passing of restraining order, then how order dated March 20, 2008 of the Company Law Board is violated. Only conversion of partly paid shares into fully paid shares has taken place after interim order - this is not in violation of any interim order. The applicant is therefore, not entitled to challenge such conversion and the applicant is not entitled to any relief for forfeiture or for cancellation of the shares.
The grievance of the applicant is that calling for conversion of partly paid shares into fully paid shares is in contravention of the order passed by the then Company Law Board, whereunder the Company Law Board directed that shareholding to be in status quo. This order dated October 23, 2008. No fresh shares were issued by the company after passing of the interim order. Partly paid shares were issued prior to the interim order. They were only converted into fully paid shares after the interim order. It cannot be said that there is violation of the interim order passed by the Company Law Board under section 179(3)(a) of the Companies Act, 2013. The board of directors are entitled to make calls on shareholders in respect of money unpaid on their shares. So, the board of directors are well within the powers to make a call on the shareholders in respect of unpaid shares to make them as fully paid. The company is entitled to issue partly paid shares. The petitioner became shareholder long after the company issued partly paid equity shares. Therefore, there is no irregularity in converting the partly paid shares into fully paid shares.
The applicant has not filed any material warranting for appointment of auditor for auditing the accounts. In fact, the petitioner was supplied financials for the financial years 2014-15, 2015-16, 2016-17. When such is the case there is no need for ordering auditing of the accounts of respondent No. 1-company. The petitioner has also filed one more application against the respondents under section 241 of the Companies Act, 2013 - there are no grounds to grant any relief in favour of the petitioner.
Petition dismissed.
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2020 (11) TMI 755
Money Laundering - Modification of the ex parte ad interim order - maintenance of status quo in respect of attached properties - acquittal of the accused - it was alleged that the present applicants with other accused were intentionally aiding and facilitating the payment of alleged quid pro-quo of ₹ 200 crores as a reward for alleged undue favours shown to company - HELD THAT:- The plea of petitioner/ED raised in these applications for early hearing was that since this Court is to demit the office on 30th November, 2020 and arguments on behalf of petitioner in Crl.L.P. 185/2020 stand concluded and part arguments on behalf of respondents have already been advanced, the leave petitions should, therefore, be heard expeditiously and in case, the arguments remain inconclusive, the petitioners will have to address all the arguments afresh. The said applications for early hearing were strongly opposed by learned counsel for the applicants and other respondents on various grounds i.e. the Courts are hearing only urgent matters through video conferencing as per the Roster and non-urgent matters shall be taken up by the Roster Benches on resumption of regular hearings. It was also argued as to why these petitions be given preference in hearing over the appeals in which accused persons are in jails.
The leave petition was set down for day to day hearing from 5th October, 2020, while the orders in these applications stood reserved. It goes without saying that Coordinate Bench of this Court after preliminary hearing and being satisfied, had passed ex parte ad interim order dated 21st March, 2018 directing the parties to maintain status quo in respect of the attached properties. Perusal of instant applications and replies reveals that disputed and complicated issues have been raised which require analysis of evidence and judgment of learned trial court which is voluminous in nature and is, no doubt, subject matter of leave to appeal also which this Court intended to decide at the earliest and had even directed listing of the same for hearing on day to day basis from 5th October, 2020 onwards.
Since the subject matter of present applications required thorough examination of the impugned judgment, this Court had, therefore, made an earnest effort to hear and decide the leave to appeal as expeditiously as possible. However, this Court has to say with a heavy heart that limited time available at its disposal was consumed in hearing and disposal of miscellaneous applications and writ petitions filed one after another on behalf of the respondents, which have been dismissed vide detailed orders/judgments on merits. Had the leave to appeal been heard on merits, a clear picture would have emerged and this Court could have arrived at a conclusion whether the properties at all are required by the prosecution or these should be released to the applicants - In the absence of any arguments on merits, this Court is of the opinion that the order dated 21st March, 2018 vide which status quo in respect of attached properties was directed to be maintained, need not be interfered with at this stage.
This Court is of the opinion that it will be in the interest of justice if these applications are decided only after hearing arguments in criminal leave to appeal. However, if there is inordinate delay in disposal of leave to appeal, the applicants/respondents are at liberty to approach this Court by filing fresh application for release of attached properties, which will then be considered in accordance with law.
Application disposed off.
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2020 (11) TMI 754
Maintainability of petition - only point of dispute is that Assessee could not file the Appeal within the prescribed time limit of 4 weeks as granted by the learned Single Judge due to overriding reasons and indulgence is now sought to file the said Appeal before the Commissioner within 4 weeks from now - HELD THAT:- The time limit given by the learned Single Judge does not deserve to be extended except subject to the condition of deposit of 50% of the demand under the impugned order dated 27.9.2010.
It is directed that subject to deposit of ₹ 1,50,000/- by the Petitioner/Assessee within 4 weeks from today and filing of the Appeal within 4 weeks from today, the Appeal may be heard and decided on merits in accordance with law by the Commissioner of Service Tax (Appeals) - appeal disposed off.
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2020 (11) TMI 753
Non-payment of service tax - Management or Business Consultant Service or Information Technology Software Service? - modification and customization of software, install the software for use on the equipment for trading, providing support through remote access using the internet as a medium, sending engineers to the site of customers, provide additional training required by the customer from time to time - HELD THAT:- The learned Commissioner after examining the services rendered by he appellant has come to the conclusion that the activities carried out by the appellant is covered under the category of Enterprise Resource Planning (ERP) Software Application and the same is rightly classifiable under the category of Management or Business Consultant service and are liable for service tax - After carefully considering the definition of Management or Business Consultant Service and Information Technology Software Service, it can be concluded that Enterprise Resource Planning implementation would not be covered under Management or Business Consultant service.
Further, as per the terms of the Agreement entered into between the appellant and their clients, the activities undertaken by the appellant are covered under the definition of Information Technology Software Service as specifically covered under the Information Technology Services as taxable under Section 65(105)(zzzze) with effect from 16.5.2008. Further, the activities alleged in the show-cause notice clearly fall within the ambit of Information Technology Software Service as defined in the Finance Act, 1994.
The issue involved in the present case is no more res integra and has been settled by various decisions of the Tribunal and the apex court. In this regard, it is pertinent to mention that this Tribunal in the case of IBM India Pvt. Ltd. [2009 (4) TMI 314 - CESTAT, BANGALORE] has specifically held that implementation of Enterprise Resource Planning does not attract service tax under the category of Management or Business Consultant Service.
Time Limitation - HELD THAT:- The period involved in the present case is from 1.3.2006 to 15.5.2008 whereas the show-cause notice was issued on 8.4.2011 by invoking the extended period of limitation alleging suppression of facts with intent to evade payment of tax by the appellant - the appellant has been regularly filing the returns and was under bona fide belief that their activities are not liable to service tax under Management or Business Consultant Service. It is not disputed that the appellant is paying service tax with effect from 16.5.2008 under the category of Information Technology Software Service. Moreover, the department was very much aware of the activities of the appellant as the department conducted audit of the accounts of the appellant from time to time and the last audit was conducted in December 2009 but has not raised any objections regarding the activities of the appellant, hence, allegation of suppression of material facts against the appellant is not sustainable.
Appeal allowed on merits as well as on limitation.
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2020 (11) TMI 752
Stay on recovery steps - Section 55 of the Kerala Value Added Tax Act, 2003 - HELD THAT:- This Court find that Exts.P1, P1(a) and P1(b) orders of assessment made by the 1st respondent are under challenge in Exts.P3, P3(a) and P3(b) appeals filed before the 2nd respondent appellate authority, which are accompanied by Exts.P4, P4(a) and P4(b) stay applications.
This writ petition is disposed of directing the 2nd respondent appellate authority to consider and pass appropriate orders on Exts.P4, P4(a) and P4(b) stay applications within a period of two months from the date of receipt of a certified copy of this judgment, with notice to the petitioner - Till such time, any recovery steps pursuant to Exts.P1, P1(a) and P1(b) assessment orders shall be kept in abeyance by respondents 1and 3.
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2020 (11) TMI 751
Validity of Summon Order - High Court refused to entertain the request that there is power to issue summons but the partner of the petitioner be exempted from personal appearance - HELD THAT:- The SLP need not be interfered with. - However, it will be open to the petitioner to request the concerned authority to defer the recording of statement of the petitioner until the lockdown period is over.
SLP dismissed.
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2020 (11) TMI 750
Carry forward of transitional credit - vires of Rule 117 of the CGST Rules, 2017 - no evidence of error of submission/filing of TRAN-1 by the petitioner - HELD THAT:- Sri C.B. Tripathi, learned special counsel for the respondent no.1 states on instruction of the Commissioner, Income Tax, Lucknow dated 19.11.2020 that time was extended under Rules 117 (1A) of UPGST Rules, firstly by order dated 17.09.2018, upto 31.01.2019, thereafter by order dated 31.01.2019, upto 31.03.2019 and lastly by order dated 07.02.2020, upto 31.03.2020. There is nothing on record to show that petitioner has ever attempted to file TRAN-1 during the extended period.
There are no good reason to entertain the writ petition - writ petition is dismissed.
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2020 (11) TMI 749
Violation of principles of Natural Justice - Grievance of the petitioner is that while raising the demand of tax vide summary of order dated 18.09.2020 vide Annexure P/2, the foundational show-cause notice/order No.12 dated 10.06.2020 qua financial year 2018-2019 and tax period April, 2018 to March, 2019, was never communicated to the petitioner who is an individual registered under GST Act - Rule 142 of Central Goods and Services Tax Act, 2017 - HELD THAT:- A bare perusal of the aforesaid provision reveals that the only mode prescribed for communicating the show-cause notice/order is by way of uploading the same on website of the revenue.
The State in its reply has provided no material to show that show-cause notice/order No.12 dated 10.06.2020 was uploaded on website of revenue. In fact, learned AAG, Shri Mody, fairly concedes that the show-cause notice/order was communicated to petitioner by Email and was not uploaded on website of the revenue - It is trite principle of law that when a particular procedure is prescribed to perform a particular act then all other procedures/modes except the one prescribed are excluded. This principle becomes all the more stringent when statutarily prescribed as is the case herein.
This Court has no manner of doubt that statutory procedure prescribed for communicating show-cause notice/order under Rule 142(1) of CGST Act having not been followed by the revenue, the impugned demand dated 18.09.2020 vide Annexure P/2 pertaining to financial year 2018-2019 and tax period April, 2018 to March, 2019 deserves to be and is struck down - Petition allowed.
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2020 (11) TMI 748
Principles of Natural Justice - no prior opportunity of hearing was given to the petitioner - Rejection of Refund application of IGST - HELD THAT:- Since refund in similar facts and circumstances has been allowed for the period December, 2017 to March, 2018, this Court sets aside the impugned order and remands the matter to the respondent No.3 for fresh consideration/determination in accordance with law within six weeks. All the rights and contentions of the parties are left open.
Petition allowed by way of remand.
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2020 (11) TMI 747
Grant of Bail - creation of bogus firms in the name of various persons - vicarious liability - case of applicant is that he has been falsely implicated in this matter and has also been illegally arrested - HELD THAT:- It is a case where the allegation against the present applicant/accused is that he, being the mastermind behind establishing and registering bogus firms in the name of various persons, was also involved in the issuance of invoices without the actual movement of the goods. In this manner, such transactions were carried out to earn commission out of them. The investigation so far points out that such transactions have caused loss to the tune of ₹ 13.08 Crores to the Government Exchequer. The contention of the applicant that there is nothing on record to show that he had received or obtained any kind of benefit from the aforesaid bogus firms is not sustainable at this stage because not only the investigation is pending but the investigating team has received documents/records showing cash entries in the name of the applicant.
It is a matter of common understanding that no prudent person would derive any benefit directly from a bogus firm/entity as it would easily bring out his guilt. Such transactions are naturally done in a clandestine and discreet manner, and, therefore, discovering the direct/tangible evidence may not be possible in each and every case. Since the transactions in questions have been carried out for the last few years, it is natural that investigating agency needs more time to dig out all the relevant record in the case.
The entire manner of commission of offence clearly points towards an economic offence squarely covered under Section 132 of CGST Act. The investigation is still pending and, there, has been material recovered reflecting connivance/participation of the accused in the commission of offence and receiving cash from the bogus firms in the form of cash entries in the record. In these circumstances, this court is of the opinion that granting concession of bail to the accused at this stage will definitely prejudice the fair investigation into the matter.
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2020 (11) TMI 746
Territorial jurisdiction of high court - settlement application - Second Respondent is a resident of Hyderabad in the State of Telangana and aggrieved by the action taken against him by the Petitioner, whose office is also situated at Hyderabad in the State of Telangana, he made an application in Settlement Application in Madras high court - HELD THAT:- Reason stated by the Petitioner for having approached this Court instead of High Court of Telangana at Hyderabad is that the 'seat of authority' of the First Respondent is situated at Chennai within the territorial limits of jurisdiction of this Court. Even if it is assumed that in addition to the High Court of Telangana, this Court would also have territorial jurisdiction, the principle of forum conveniens would come into play as held by the decision of the Division Bench of this Court in C. Ramesh E, [2013 (6) TMI 888 - MADRAS HIGH COURT].
There does not appear to be any justification to entertain the Writ Petition in this Court, which would not, however, preclude the Petitioner from filing fresh Writ Petition for the same relief before the High Court of Telangana. See M/S. ZEENATH INTERNATIONAL SUPPLIES [2014 (3) TMI 676 - MADRAS HIGH COURT] and M/S. MULBERRY SILKS LTD.[2020 (9) TMI 771 - MADRAS HIGH COURT].
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