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Showing 341 to 360 of 1574 Records
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2024 (12) TMI 1234
Sale u/s 2 (g) (iv) CST Act or not - transfer of right to use - hiring of helicopters - transfer of effective control and possession and right to use the helicopters to its customer - Deemed Sale or not - HELD THAT:- On a consideration of the contractual stipulations, it becomes apparent that while the appellant was obliged to place a helicopter or an equivalent model at the service of the A & N Administration, the right to operate and maintain remained with the appellant. The helicopter was to be maintained, flown and operated by the appellant. The appellant was required to ensure that the requirements of the A & N Administration were duly met. However, at no point of time was the helicopter placed in the hands of the latter to be operated as it thought fit. The pilot and crew who actually worked the helicopter were to be provided by the appellant.
It becomes evident that there was no transfer of dominion or control of the helicopter to the A & N Administration. This was essentially an agreement in terms of which the A & N Administration acquired an exclusive medium of transportation as opposed to an absolute right over an aircraft, helicopter or means of conveyance which could be said to be under its dedicated and undivided control.
There is an occasion to notice a decision of recent vintage rendered by the Supreme Court in Commissioner of Service Tax vs. Adani Gas Ltd. [2020 (8) TMI 789 - SUPREME COURT]. As the Supreme Court succinctly explained in Adani Gas, the key elements which are liable to be found to exist in order to qualify what is spoken of in Article 366 (29A) (d), are a transfer of a right of possession as well as effective control being conferred upon the transferee. It is these precepts on the basis of which the contractual stipulations may now be examined.
There was no contractual relationship that existed between those operators and staff on the one hand and the A & N Administration on the other. Additionally, the obligation to keep the equipment insured was also one which stood placed upon the appellant. There was also no transfer of permits and licenses which were necessarily required in order to undertake the operations contemplated under the agreement. Those permits and licenses undisputedly remained in the hands of the appellant.
The Supreme Court in Aggarwal Bros. [1998 (9) TMI 532 - SUPREME COURT] had on facts found that there was a complete transfer of shuttering for consideration and the same being exclusively placed in the hands of the hirer to be used and utilized as it thought fit.
Article 366 (29A) (d) is not concerned with delivery of goods for use but envisages the levy of a tax on the transfer of a right to use goods. It proceeded further to explain that clause (d) of Article 366(29A) cannot be placed in the same category as that of bailment where goods are left in the possession of the bailee solely for the purposes of use on a hire basis.
The conclusions rendered by the Tribunal cannot be suatained - appeal allowed.
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2024 (12) TMI 1233
Levy of central sales tax on movement of goods from the manufacturing unit of the appellant situated in the State of Rajasthan to its depots in the State of Bihar and the State of Jharkhand - inter-state supply of goods or inter-state stock transfers? - HELD THAT:- A perusal of the facts of these four appeals and the facts of the fourteen appeals decided by the Tribunal on 21.10.2024 [2024 (10) TMI 1124 - CESTAT NEW DELHI] clearly show that they are similar. The Liquor Sourcing Policy framed by the State of Bihar and the Liquor Policy framed by the State of Jharkhand which came up for consideration in the decided appeals has also come up for consideration in these four appeals. The Master Agreement entered into between the appellant and the Corporation at Patna and the Master Agreement entered into between the appellant and the Corporation in Jharkhand are identical.
Demand set aside - Appeal allowed.
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2024 (12) TMI 1232
Interpretation of Section 52A of the Narcotic Drugs and Psychotropic Substances Act, 1985 - mis-interpretation of the provision without recording the findings as mandated in Section 37 of the said Act - HELD THAT:- Section 52A was inserted only for the purpose of early disposal of the seized contraband drugs and substances, considering the hazardous nature, vulnerability to theft, constraint of proper storage space etc. There cannot be any two opinions on the issue about the early disposal of the contraband drugs and substances, more particularly when it was inserted to implement the provisions of International Convention on the Narcotics Drugs and Psychotropic Substances, however delayed compliance or non-compliance of the said provision by the concerned officer authorised to make application to the Magistrate could never be treated as an illegality which would entitle the accused to be released on bail or claim acquittal in the trial, when sufficient material is collected by the Investigating Officer to establish that the Search and Seizure of the contraband substance was made in due compliance of the mandatory provisions of the Act.
It is significant to note that as per Section 54 of the said Act, the courts are entitled to presume, unless and until the contrary is proved that the accused had committed an offence under the Act in respect of any narcotic drug or psychotropic substance etc. for the possession of which he failed to account satisfactorily. Therefore, unless such statutory presumption is rebutted by the accused during the course of trial, there would be a prima facie presumption that the accused had committed the offence under the Act, if he is found to have possessed the contraband drug and substance, and if he fails to account satisfactorily, as contemplated in the said provision of Section 54.
In case of State of H.P. vs. Pirthi Chand and Another [1995 (11) TMI 433 - SUPREME COURT] this Court following the observations made by the Constitution Bench in Pooran Mal case [1973 (12) TMI 2 - SUPREME COURT] held that 'It would be seen that the organised traffic in contraband generates deleterious effect on the national economy affecting the vitals of the economic life of the community. It is settled law that illegality committed in investigation does not render the evidence obtained during that investigation inadmissible. In spite of illegal search property seized, on the basis of said search, it still would form basis for further investigation and prosecution against the accused. The manner in which the contraband is discovered may affect the factum of discovery but if the factum of discovery is otherwise proved then the manner becomes immaterial.'
In State of Punjab Vs. Makhan [2004 (2) TMI 663 - SUPREME COURT], this Court upheld the conviction, where the contraband was recovered during a chance recovery, even though the procedure under Section 52A was not followed.
From the above decisions, the position that emerges is that this Court in catena of decisions, has approved the procedure of spot searches and seizures in compliance with the Standing Orders and the Notifications issued by the NCB and the Central Government, and upheld the convictions on being satisfied about the search and seizure made by the officers as per the provisions of the Act and being satisfied about the scientific evidence of F.S.L. reports etc. - The evidence collected during the course of investigation in legal and proper manner and sought to be used in the course of trial with regard to the seized contraband substance could not be simply brushed aside, on the ground of procedural irregularity if any, committed by the concerned officer authorised in making application to the Magistrate as contemplated under Section 52A of the Act.
The impugned order based on the inferences and surmises, in utter disregard of the statutory provision of the Act and in utter disregard of the mandate contained in Section 37 of the Act, and granting bail to the accused merely on the ground that the compliance of Section 52A was not done within reasonable time, is highly erroneous and deserves to be quashed and set aside. Since, the High Court has not considered the application of the respondent on merits and has also not considered the mandatory requirement under Section 37(1)(b) of the Act, it is deemed appropriate to remand the case to the High Court for deciding the bail application of the respondent afresh on merits and in accordance with law.
The matter is remanded for fresh consideration on merits - appeal allowed by way of remand.
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2024 (12) TMI 1231
Dishonour of Cheque - challenge to order of conviction passed by the Trial Court and affirmed by the Sessions Court for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - authorized signatory of a company falls within the ambit of the expression "drawer" or not - Meaning of the expression "on an account maintained by him" used in Section 138 of the NI Act - Scope of the expression "any debt or other liability" appearing in Section 138 of the NI Act - vicarious liability for the offence said to have been committed by the company.
Whether the accused could be said to be covered by the expression “account maintained by him” as it appears in Section 138 of the NI Act? - HELD THAT:- It is only the drawer of the cheque who can be held liable under Section 138. Section 141 is an exception to this scheme of the NI Act and provides for vicarious liability of persons other than the drawer of the cheque in cases where the drawer of the cheque under Section 138 is a corporate person.
The question as to whether a person who was not the drawer of the cheque upon an account maintained by him could be held to be liable for an offence under Section 138 of the NI Act fell for the consideration of this Court in the case of P.J. Agro Tech Ltd. and Others v. Water Base Ltd. [2010 (7) TMI 280 - SUPREME COURT]. The Court construed the provision strictly and answered the question in the negative.
As per the legislative scheme it is only the drawer of the cheque who is sought to be made liable for the offence punishable under Section 138 of the NI Act. Thus, the next question that requires consideration is whether a Director of a company, who is also the authorised signatory, to sign and issue cheques on its behalf could be said to be the drawer of a cheque drawn upon the bank account held in the name of the company. In other words, whether such an authorised signatory could be said to “maintain” the bank account upon which the dishonoured cheque has been drawn for the reason that such a person has the authority to enter into transactions using the bank account of the company and also look after the day-to-day functioning of the bank account of the company.
Whether authorized signatory of a company falls within the ambit of the expression “drawer”? - HELD THAT:- This Court in one of its recent decisions in the case of Shri Gurudatta Sugars Marketing (P) Ltd. v. Prithviraj Sayajirao Deshmukh and Others [2024 (7) TMI 1308 - SUPREME COURT] had the occasion to consider the issue of whether the authorised signatory of a company who had signed a cheque drawn on the bank account of the company and which got dishonoured subsequently could be held to be liable for the payment of interim compensation under Section 143A of the NI Act. This Court while answering the issue in the negative, applied the doctrine of separate corporate personality and held that it is only the drawer of the cheque who could be held to be liable for the payment of interim compensation under Section 143A of the NI Act and the authorised signatory of a company cannot be said to be the drawer of the cheque.
Meaning of the expression “on an account maintained by him” used in Section 138 of the NI Act - HELD THAT:- Any delegation of authority to manage the account does not alter the intrinsic relationship existing between the account holder and the banker as envisaged under the NI Act. Corporate persons like companies, which are mere legal entities and have no soul, mind or limb to work physically, discharge their functions through some human agency recognised under the law to work. Therefore, if some function is discharged by such human agency for and on behalf of the company it would be an act of the company and not attributable to such human agent. One such instance of discharge of functions could be the authority to manage the bank accounts of the company, issue and sign cheques on its behalf, etc. which may be delegated to an authorised signatory. However, such authorisation would not render the authorised signatory as the maker of those cheques. It is the company alone which would continue to be the maker of these cheques, and thus also the drawer within the meaning of Section 7 of the NI Act.
It is not the case of the complainant that the cheque in question was drawn by the accused on a bank account maintained by him, rather the case is that the cheque was issued in discharge of the personal liability of the accused towards the complainant, and hence there was no occasion for it to implead the company as an accused.
Scope of the expression “any debt or other liability” appearing in Section 138 of the NI Act - HELD THAT:- Section 138 of the NI Act does not envisage that only those cases where a cheque issued towards the discharge of the personal liability of the drawer towards the payee gets dishonoured would come within the ambit of the provision. The expression “of any debt or other liability” appearing in Section 138 when read with the Explanation to the provision is wide enough to bring any debt or liability which is legally enforceable within its fold. Thus, the requirement under the provision is that the debt or any other liability has to be legally enforceable and the emphasis is not on the existence of such debt or other liability between the drawer and the payee. A number of decisions of this Court have clarified that even those cases where a person assumes the responsibility of discharging the debt of some other person, and in furtherance thereof draws a cheque on an account maintained by him, which subsequently gets dishonoured upon being presented before the drawee, would be covered by Section 138 if the payee is able to establish that there was some sort of an arrangement by way of which the debt was assumed by the drawer.
Section 141 of the NI Act - HELD THAT:- It is the drawer Company which must be first held to be the principal offender under Section 138 of the NI Act before culpability can be extended, through a deeming fiction, to the other Directors or persons in-charge of and responsible to the Company for the conduct of its business. In the absence of the liability of the drawer Company, there would naturally be no requirement to hold the other persons vicariously liable for the offence committed under Section 138 of the NI Act.
The High Court while rejecting the contention of the petitioner therein, adverted to the object of Section 138 of the NI Act to hold that the authorized signatory could be said to be the drawer of the cheque as he was “maintaining” the account held in the name of the proprietorix concern and thus could be held liable under Section 138 of the NI Act.
In the case on hand, the accused was prosecuted in his individual capacity and not in his capacity of being the Director of the Shilabati Hospital Pvt. Ltd. Although it is undisputed that the accused signed the cheque in question, yet as the cheque was drawn not on an account maintained by him with a Banker but was issued on an account maintained by the hospital, the requirement of Section 138 of the Act cannot be said to have been complied with - The High Court rightly held that in the absence of the principal offender having been arraigned as an accused, prosecution for the commission of an offence under Section 138 of the NI Act could not have proceeded against the accused.
It is trite law that an act may constitute an offence under more than one statute. The encashment of the cheque for an amount of Rs 7,00,000/- issued by the complainant in favour of the accused stood proved during the course of the trial. Further, the conduct of the accused in not replying to the statutory notice of dishonour of cheque issued by the lawyer for the complainant and in not taking the plea of the cheque having been drawn on the account of the company in his capacity as a Director during the course of trial undoubtedly raises questions as regards his dishonest intention in not repaying the amount borrowed by him from the complainant.
Appeal dismissed.
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2024 (12) TMI 1230
Dishonour of Cheque - Seeking quashing of the summoning order - challenge to proceedings under Section 138 of the NI Act - vicarious liability of petiitoner - whether proceedings under Section 138 of the NI Act can continue against individuals after the commencement of the CIRP proceedings against the accused company?
HELD THAT:- It is evident that insolvency proceedings against the company were initiated under the provisions of the IBC, and an order under Section 14 of the IBC was issued on 31.10.2019. The IBC explicitly provides that when a corporate debtor is undergoing proceedings before the adjudicating authority (NCLT), the control and management of the corporate debtor are vested in the Interim Resolution Professional.
It is undisputed that the cheques in question were dated 15.01.2020 and 15.03.2020, respectively. However, the IRP was appointed on 31.10.2019, prior to these dates. Consequently, the account was blocked due to the order issued by the NCLT, and this cannot be attributed to the account holder. As a result of the NCLT’s order, the authority and control of the account holder over the account ceased to exist.
A coordinate bench of this Court in Govind Prasad Todi & Anr. V. Govt. of NCT of Delhi & Anr. [2023 (6) TMI 534 - DELHI HIGH COURT], quashed the summoning order in similar circumstances, observing that once a moratorium under Section 14 of the IBC is in effect, proceedings under Section 138 of the NI Act against the corporate debtor cannot continue.
It is reiterated that the cheques in question were dishonoured for the reason ‘Drawer Signature to operate account not received’. In view of this Court, the ingredients for constituting the offence punishable under Section 138 of the NI Act occurred post imposition of moratorium. The petitioners herein therefore cannot be held vicariously responsible for dishonour of cheque.
The impugned order along with any consequential proceedings arising therefrom, is quashed - Petition allowed.
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2024 (12) TMI 1229
Seeking declaration of the arrest of the petitioner as illegal, arbitrary and void - serious accusations of mental, physical, and sexual abuse against the petitioner and his parents, implicating them in acts of coercion and complicity - whether the grounds for the petitioner’s arrest were duly communicated in compliance with Section 50 of the Cr.P.C. and the Supreme Court's judgment in Pravir Purkayastha [2024 (5) TMI 1104 - SUPREME COURT]?
HELD THAT:- The Courts have time and again deprecated the practice of filling up columns in proforma indicating the formal “reasons” for which the accused was being arrested. It is also pertinent to note that Section 50 Cr. P.C. uses the word “forthwith.” which implies that “grounds for such arrest” have to be communicated at the time of the arrest. This requirement is designed to ensure that the arrested individual is promptly made aware of the reasons for their detention, thereby safeguarding their legal rights.
Bare perusal of the judgments of Joginder Kumar [1994 (4) TMI 385 - SUPREME COURT] and Siddharth [2021 (8) TMI 977 - SUPREME COURT] makes it clear that the Indian Supreme Court has always been very sensitive and conscious about the individual’s rights. The jurisprudence which is being evolved is that the police may not arrest a person only because it’s permissible, the arrest should be justified also and must have grounds of arrest communicated forthwith.
It is a settled proposition that the absence of specific grounds of arrest violates statutory and constitutional rights under Section 50 of Cr.P.C. and Article 22(1) of the Constitution. Any person has a fundamental and a statutory right to be informed about the grounds of arrest in writing and a copy of such written grounds of arrest have to be furnished to the arrested person as a matter of course and without exception at the earliest. The purpose of informing to the arrested person the grounds of arrest is salutary and sacrosanct inasmuch as this information would be the only effective means for the arrested person to consult his advocate; oppose the police custody remand and to seek bail.
It is no longer res integra that grounds of arrest must be communicated in writing to the arrested individual expeditiously. Providing the grounds of arrest to the person being arrested is of utmost sanctity and significance. This information serves as the fundamental basis for the arrested individual to seek legal advice, challenge the remand, and apply for bail - In the context of present case, it is pertinent to mention that Section 50 Cr. P.C. uses the word “forthwith”. The dictionary meaning of the word “forthwith” as defined in the Shorter Oxford English dictionary on historical principles, fifth edition, volume - 01 A-M is (1) Along with, at the same time; and (2) Immediately, at one, without delay.
The court makes it clear that the present order been passed for release of the petitioner on the technical non-compliance of Section 50 Cr.P.C. This court has not gone into merits of the case. The prosecution/victim shall all the necessary liberties to proceed with the investigation and take all the steps for smooth investigation of the case in accordance with law. This court has examined facts of this case only in perspective of Section 50 Cr.P.C., which is akin to Section 47 of BNSS, 2024.
The present petition along with pending applications stands disposed of.
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2024 (12) TMI 1228
Constitutional Validity of N/N. 07/2023, dated 31.03.2023, which is in violation of the Article 14 of the Indian Constitution and Principle of parity - different treatment to the assessee/dealers who had filed their GSTR-9/9C with delay before 01.04.2023 - direction to respondents, its servants, subordinates, agents and successors in office to forthwith withdraw and/or cancel the impugned order dated 30.11.2023 passed by the respondent No. 3 and the show cause notice dated 22.08.2023 issued under Section 74 of the Act imposing late fee.
HELD THAT:- It is evident that the intention of the Government is not to harass the assessee, who come forward to file their return for the assessment years mentioned in the notification within the stipulated period. Thus, it would imply that the benefit would extend to the petitioner as well, who filed the return although belatedly on 13.03.2023, which is before the cut off date mentioned in the above notification - It would be unjust to deny the benefit to the petitioner merely because the petitioner filed the return prior to the issuance of the amnesty notification dated 31.03.2023, confined to amnesty only to those who filed the return between 01.04.2023 and 30.06.2023.
The intention of the government in issuing the aforesaid notification was to encourage filing of returns. Therefore, this Court is of the view that the petitioner is entitled to the benefit of notification dated 31.03.2023.
The impugned order dated 30.11.2023 passed by respondent No. 3 and the show cause notice dated 22.08.2023 issued under Section 74 of the Act are set aside and the case is remanded back to the third respondent with a direction to pass fresh order on merit by extending the benefit of notification dated 31.03.2023 in accordance with law as expeditiously as possible preferably within three months from the receipt of the copy of this order - Petition allowed by way of remand.
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2024 (12) TMI 1227
Contempt of Court - interference with the administration of justice by arresting the petitioner - HELD THAT:- From the Arrest Memo dated 20 December 2024, it is apparent that this Arrest Memo is signed again by the Assistant Commissioner of State Tax. The Arrest Memo shows that the authorisation for this arrest was obtained on 20 December 2024 i.e. today itself and the Petitioner was arrested at 7.55 am today itself - Prima facie this amounts to interference with the administration of justice and consequently, might amount to a Contempt of Court.
The petition is posted on 06 January 2025. Before that date, the Commissioner should consider and dispose of the Petitioner’s objections/representation dated 11 December 2024 made in Form GST DRC-22A under Rule 159(5) of the MGST Rules. For this, the Commissioner, must give a hearing to the Petitioner and pass a speaking order. In this case, we direct Respondent No. 2 to decide these objections/representation.
List this matter on 06 January 2025.
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2024 (12) TMI 1226
Challenge to order passed under Section 129(3) of the Act - Petitioner is owner of goods or not - HELD THAT:- Admittedly, the goods were being transported as stock transfer from Orissa branch to Kanpur, Uttar Pradesh. When the goods were intercepted, the requisite documents required under the GST Act, were found to be accompanied therewith. Further, on physical verification, no discrepancy whatsoever was found with regard to quantity of goods in transit, rather mere a discrepancy was found that in the e-way bill, place of transferee was mentioned as Ghaziabad whereas in tax invoice, it was mentioned as Kanpur.
In the case in hand, petitioner is both i.e. the consignor and consignee as the goods in question is a stock transfer from State of Orrisa to Kanpur, Uttar Pradesh and, therefore, the petitioner ought to have been treated as the owner of the goods.
The Hon’ble Apex Court in the case of Arviva Industries (I) Ltd. [2007 (1) TMI 6 - SUPREME COURT] has specifically held that the circulars are binding upon the authorities, it is not a case of the respondents that the Circular dated 31.12.2018 has been rescinded or superseded.
In view of the judgment of this Court passed in the case of M/s Riya Traders [2023 (1) TMI 1238 - ALLAHABAD HIGH COURT] wherein it has specifically been held that once the consignor and consignee of the goods comes forward, then the proceedings should have been initiated against the owner of the goods in accordance with the law. Therefore, the authorities were not justified not recognizing the petitioner as the owner of the goods, which is evident from the material available on record.
The impugned orders cannot sustain in the eyes of law and the same are hereby quashed - Petition allowed.
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2024 (12) TMI 1225
Legality of the arrest and detention of petitioner - evasion of GST by falsely claiming ITC - power of the detention under Section 69 of the GST Act - reasons to believe - HELD THAT:- Section 69 of the CGST Act, 2017 confers the power to arrest, where the Commissioner has reasons to believe that the persons had committed any offence specified in Clause (A) or Clause (B) or Clause (C) or Clause (D) of Sub-section 1 of Section 132 which is punishable under Clause (I) (II) of Sub-section (1) for (2) of the said Section, he, the Commissioner may by order authorize any officer of central excise to arrest such a person.
Having notice to the provisions of Section 69 of the Central GST Act, a reference to Section 132 which provides for punishments for certain offences is also necessary for the purposes of this proceedings. Only the relevant portion of this section is referred to. Under Section 132 (1) (c) whoever commits or causes to commit and retain the benefits arising out of input tax credit using invoice and bill referred to in Clause (B) or fraudulently avails input tax credit without any invoice or bill shall be punishable - in cases where the amount of tax evaded or the input tax credit wrongly availed or used the amount of refund wrongly taken exceeds Rs. 500 Lakhs, with imprisonment for a term which may extend to 5 years and with fine.
The records produced before this Court by the learned Standing Counsel of the respondent reveals that pursuant to the summons issued the petitioner had appeared before the investigating authority and his statements have also been recorded. The records also reveal that the authorization as required under provisions of Section 69 has been issued by the Commissioner and the petitioner also does not deny that the grounds of arrest have been supplied to them within the prescribed period under the statute. The investigation still underway and therefore, the respondents have have sought for extension of the remand before the competent court of criminal jurisdiction.
The power of writ court to issue direction to release from custody has been discussed in several judgments of the Apex Court as well as the High Courts of this country. The power although available is to be used sparingly where the facts demand. In THE STATE OF GUJARAT ETC. VERSUS CHOODAMANI PARMESHWARAN IYER & ANR. ETC. [2023 (7) TMI 1008 - SUPREME COURT] while dealing with the proceeding where pursuant to summons issued by the Goods and Services Authority, the assessee, apprehending arrest had approached the Gujarat High Court praying for grant of Pre-arrest bail. The Gujarat High court disposed of the writ petition directing the petitioner to appear before the authority and if any apprehension is necessary, the authority will give further opportunity of two weeks.
Perusal of the records reveals that the authorization required under the statue has been given by the Commissioner on the ground that he has reasons to believe on the materials placed before the authority. However, what is not seen from the materials placed before the court at this stage is the determination of the liability as is required for recovery of taxes from any assessee. No material has been shown that such determination of the liability had been arrived at by the respondent authorities on whom the Commissioner had concluded that he had “reasons to believe” that the person has committed any offence specified under the various Clauses under Section 132.
While there is no quarrel with the proposition that Section 69 does confer power on the Commissioner to order arrest in case any of the specified offences under Section 132 of the CGST Act, the question remains is whether arrest or detention is called for merely because is power is available on the authority to do so.
In ARNAB MANORANJAN GOSWAMI VERSUS THE STATE OF MAHARASHTRA AND ORS. [2020 (11) TMI 965 - SUPREME COURT] it was held that the principles have involved over a period of time and had emanated from the series of decisions and such principles are equally applicable while exercising jurisdiction under 226 of the Constitution of India when the court is call upon to secure the liberty of the accuse/petitioner.
Coming to the present proceedings as discussed from the records produced it is seen that the petitioner has cooperated with the investigating authority and his statement has been recorded there is no material to suggest that he will abscond or not respond to summons issued. There is also no material which prima facie suggests that the determination of the liability has been arrived that by the Commissioner or the investigating officer. Under such circumstances this court of the view that continued detention of the petitioner at the stage of investigation is not required. This therefore court considers that the petitioner can be released on interim bail until further orders.
The petitioner is directed to be released on interim bail subject to furnishing personal bond of Rs. 1 Lakh as well as execute a bail bond of Rs. 1 Lakh with two local sureties of the like amount to the satisfaction of the learned Chief Judicial Magistrate, Kamrup (M) and the subject to fulfilment of conditions imposed - bail application allowed.
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2024 (12) TMI 1224
Validity of SCN issued u/s 74 and 122 of Central Goods and Services Tax Act, 2017 - notice u/s 74(1) of CGST Act, 2017 issued beyond the period of limitation specified in Section 74(2) and 74(10) of the CGST Act, 2017 - generation of fake ITC - HELD THAT:- The search was conducted initially in the premises of M/s Panjon Limited and the material collected from the premises revealed that as many as 5 firms are involved in "circular trading" with a common object to inflate their turnover, increase of valuation of the company in order to take benefit of higher loans from the bank or financial corporation and to avail fake input tax credit. The total period during which these fake ITCs were generated is from 2017 to 2022, therefore, a joint assessment is liable to be conducted of six companies / noticee in the aforesaid period. In such type of circular trading matters, the assessment can be done by calling all the firm / companies involved in trading in the relevant years by the proper office. This matter cannot be proceeded individually in a given facts and circumstances under Section 74 of CGST Act, 2017. Except petitioner, remaining 4 companies have not approached this Court challenging the show-cause notice.
In order to prove the circular trading as explained by way of diagram in the page 20 of the common show-cause notice, said notice has rightly been issued and the joint assessment proceedings are liable to be undertaken u/s 74 of the CGST Act, 2017 by the proper officer. Hence, the petitioners cannot be singled out from this assessment proceedings by entertaining this writ petition.
This Writ Petition being devoid of merit and substance stands dismissed.
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2024 (12) TMI 1223
Challenge to section 174 (2) of the GST Act, 2017 - HELD THAT:- The challenge to section 174 (2) of the GST Act, 2017 would be subject to the final outcome of the decision in the case of T.S. BELARAMAN VERSUS THE COMMERCIAL TAX OFFICER & ORS. [2024 (5) TMI 1498 - SC ORDER].
Till the disposal of the SLP in T.S. Belaraman by the Supreme Court, interim orders passed by this Court in all the respective cases shall continue to operate, which shall be subject to the final decision to be rendered by the Supreme Court in T.S. Belaraman.
Petition disposed off.
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2024 (12) TMI 1222
Cancellation of GST registration of petitioner - devoid of reasons - violation of the principles of natural justice - retrospective cancellaton of registration of petitioner - HELD THAT:- The authority has passed an order dated 31.01.2024 retrospectively cancelling the registration of the appellants.
It is found from the impugned order dated 01.02.2024 that it is in statutory format being Form GST REG-19. However, the statutory format does not give any reasons as to why the appellants’ registration has to be cancelled that too with retrospective effect from 18.12.2021 - the assessee would state that they have not received any enclosures along with Form GST REG- 19.
As the assessee has submitted a reply to the show cause notice, it is for the authority to consider the reply and to record reasons in writing either accepting the reply or rejecting the contentions of the reply to the show cause notice. In other words, the order should be a speaking order - this appeal is disposed off by setting aside the order dated 01.02.2024 in Form GST REG-19 and remanding the matter back to the Original Authority who is directed to afford an opportunity of personal hearing to the appellants assessee, peruse the document produced and take a fresh decision on merits and in accordance with law.
Petition disposed off by way of remand.
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2024 (12) TMI 1221
Challenge to order of the appellate authority - dismissal of appeal - appeal was filed in time but the appellate authority despite opportunity being granted to the appellant to produce the documents in support of his case, he did not produce the same - HELD THAT:- A Division Bench has already held in PURUSHOTTAM STORES VERSUS STATE OF BIHAR AND OTHERS [2023 (8) TMI 1356 - PATNA HIGH COURT] looking at the provisions of the Bihar Goods and Services Tax Act especially sub-sections (8), (9), (10), (11) and (12) of Section 107 of the Act, that the Appellate Authority has a duty and an obligation under the statute to look into the merits of the matter and also examine the grounds raised by the appellant and decide the issue on merits. The Appellate Authority even while considering the appeal ex parte will have to consider the grounds raised in the memorandum of appeal, deciding the appeal on merits, failing which it would be abdicating its powers especially looking at the provisions where the Appellate Authority has been empowered to conduct such further enquiry as found necessary to decide the appeal, which decision also shall be on the points raised.
Petition allowed.
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2024 (12) TMI 1220
Classification of supply - transfer of title of goods stored in FTWZ by the appellant to its customers in DTA or multiple transfers within the FTWZ - to be covered under paragraph 8 (a) or under paragraph 8 (b) of Schedule III of the CGST Act, 2017? - scope of ‘warehoused goods’ used in paragraph 8 (a) of Schedule III of the CGST Act, 2017 - Applicability of IGST on goods stored in FTWZ and supplied to DTA customers - reversal of input tax credit (ITC) under amended Section 17(3) of the CGST Act for supplies from FTWZ to DTA customers.
Classification of supply - transfer of title of goods stored in FTWZ by the appellant to its customers in DTA or multiple transfers within the FTWZ - to be covered under paragraph 8 (a) or under paragraph 8 (b) of Schedule III of the CGST Act, 2017? - HELD THAT:- The ‘transfer of title’ of goods lying in FTWZ takes place admittedly as per the ‘Statement of facts’ of the case furnished by the appellant, whereas the provisions of 8 (b) of Schedule III of the CGST. Act, 2017 talks about “Supply of goods. by the consignee to, any other person, by endorsement of documents of title to the goods”. It is to be noted here that the above phrase specifically refers to the term ‘by endorsement of documents’ in absolute terms, and not just ‘transfer of title to the goods’ in general. It is opined that the term ‘by endorsement’ assumes significance in the context of the instant case.
On a conjoint reading of the phrases, along with its properties and specifications, i.e., “by endorsement” and “documents of title to the goods”, it becomes clear that the activity relating to “Supply of goods, by endorsement of documents of title to the goods” as enumerated under para 8 (b) of Schedule III of the CGST Act, 2017 refers to the mode of transaction for a specific activity, as against the practice adopted for normal sale transactions - paragraph 8 (b) of Schedule III is conceptually linked to ‘High Sea Sale’.
The appellant raises invoices to transfer the title of the goods to the customer while the goods are lying within the FTWZ unit in the instant case, and that they are not into endorsement of any ‘document of title to goods’ in the nature of a bill of lading, dock-warrant, warehouse keeper’s certificate, multimodal transport document etc. - The document in the instant case being a commercial invoice, the same is to be treated as a proper document for sale, and it cannot be treated as a case of “Supply of goods, by endorsement of documents of title to the goods”, by any means whatsoever. Accordingly, it becomes clear that the transaction involved in the instant case is to be considered as a mere ‘transfer of title’, and thereby it does not get covered under paragraph 8 (b) of Schedule III of the CGST Act, 2017, as it is meant to cover a specific situation/activity.
Once the application of paragraph 8 (b) of Schedule III of the CGST Act, 2017 to the instant case is effectively ruled out, it becomes imperative to examine as to whether the provisions of paragraph 8 (a) of Schedule III of the CGST Act, 2017, viz., “Supply of warehoused goods to any person before clearance for home consumption”, applies to the instant case or not.
A ‘Free Trade Warehousing Zone’, as the name suggests, is a bonded premises providing warehousing facility, much in parity with the bonded warehouse under the Customs Act. Further, when the goods are imported and brought into a FTWZ unit, they are basically warehoused first and then traded or subjected to other authorized operations as the case may be - the provisions of 8 (a) of Schedule III of the CGST Act, 2017, viz., “Supply of warehoused goods to any person before clearance for home consumption” applies to the instant case, and there are no reason to modify the ruling pronounced by the AAR.
Applicability of IGST on goods stored in FTWZ and supplied to DTA customers - HELD THAT:- This query is not answerable, since the first query is answered in the affirmative., and therefore the ruling does not require any modification.
Whether any reversal of ITC is warranted in the instant case in view of the recent amendment to Section 17 (3) of the CGST Act, 2017? - HELD THAT:- The reversal of proportionate input tax credit of common inputs/input services/Capital goods is not warranted at the hands of the Appellant in terms of the amended Section 17 (3) of the CGST Act, 2017 read with Explanation 3 of Rule 43 of the CGST Rules, 2017, even when the activity/transaction in question is covered under paragraph 8 (a) of Schedule III of the CGST Act, as long as it does not relate to supplies from ‘Duty Free Shops’ at arrival terminal in international airports to the incoming passengers.
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2024 (12) TMI 1219
Offence punishable u/s 276CC - mens rea of the petitioner - rebuttal of presumption u/s 278E - non filing of the income tax return for the assessment year 2012-2013 - Appellant submitted that the revised income tax return was filed belatedly as the concerned records were seized in pursuance to the seizure - respondent submitted that in view of the non-compliance of the mandate in not filing the revised income tax return within time, the criminal proceedings have been initiated against the appellant.
HELD THAT:- We are of the view that continuing the criminal proceedings would be unnecessary. We are dealing with a case where the appellant did in fact file the revised income tax return, and penalty proceedings which were initiated against the appellant itself have been dropped. As a consequence, refund was also ordered.
We are further supported by the reasoning given in the decision of this Court in ‘Guru Nanak Enterprises and Ors Vs. ITO [2004 (11) TMI 15 - SUPREME COURT]
Thus, considering the facts of the case in its totality, we are inclined to set aside the impugned order.
The impugned order stands set aside. Consequently, the criminal proceedings initiated under Section 276CC against the appellant stands quashed.
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2024 (12) TMI 1218
Addition u/s 56 - interest income earned on surplus fund deposited in the bank during pre-commencement of the business - It is the Assessee’s case that income by way of interest is not chargeable to tax under the head ‘income from other sources’ as it was inextricably linked to acquisition of coal mine – a capital asset. The Assessee claims that the amount of interest payable on the funds borrowed for acquiring such asset is required to be added to the total cost of the asset
HELD THAT:- Plainly, if the interest is earned on the amounts which were temporarily kept in fixed deposits in the course of acquisition of the coal mine to set up its business, the interest earned would require to be accounted for as the part of the capital value of the business/asset.
We may, however, add a caveat that this accounting treatment is or will be applicable only if the nature of the asset is such that requires time for construction or for putting it in use. Illustratively, the same would be applicable where the asset is to be constructed, developed or is of a nature that requires considerable time to bring it to use. Illustratively, in case where a plant is being set up in a factory and the requisite funds for setting up the same are deployed for a period of time, the interest paid on the amount borrowed for the said purpose and interest earned on temporary deposits during the course of deployment are required to be accounted for as a part of the capital costs.
This is not true for an off the shelf product. Illustratively, if a motor vehicle is purchased from borrowed capital, neither the interest paid nor the interest earned on the funds borrowed for payment of consideration of the same can be accounted for as a part of the cost of the said asset.
In the present case, there is no dispute that the Assessee was set up to acquire resources to ensure supply of coal. At the material time it was in the process of negotiation for acquiring a coal mine, to set up its business, and thus called for capital from its shareholders for the purpose of payment of the acquisition costs. It is the part of the said funds that were kept in the short-term fixed deposit in the bank for pending payment of the construction.
The attempt to acquire the coal mine was aborted and thus the amounts borrowed were repaid to RINL. It is not disputed that the funds in question were not surplus funds of the Assessee, the same were called for and were earmarked for acquisition of a coal mine overseas. The said coal mine was to be the Assessee’s undertaking as the Assessee was formed for the purpose of acquiring and operating a coal mine overseas.
We find merit in the Assessee’s contention that the interest received on borrowed funds, which were temporarily held in interest bearing deposit, is a part of the capital cost and is required to be credited to CWIP.
The question of law as framed refers to the funds deposited in interest bearing account as ‘surplus funds’. However, as noted above, the funds in question were not surplus funds but funds that were called for and earmarked for a specific purpose of acquiring a coal mine. To that extent the use of the term ‘surplus’ in respect of the funds, in the question of law as framed, is not apposite and ought to be deleted. Decided in favour of the Assessee.
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2024 (12) TMI 1217
Reopening of assessment u/s 147 - reasons to believe - Notice issued beyond period of four years - HELD THAT:- AO in issuing the impugned notice u/s 148 has clearly acted without jurisdiction. AO was reopening an assessment beyond the period of four years and in such context the first proviso to Section 147 was strictly applicable inter alia to the effect that when the petitioner/assessee had not defaulted in fully and truly disclosing all material facts necessary for his assessment for the assessment year in question, AO would not have jurisdiction to reopen the concluded assessment.
Reasons as furnished to the petitioner, in no manner whatsoever make out a case on the failure on the part of the petitioner to fully and truly disclose all the materials.
Reasons demonstrate that the entire basis for such reopening is on the materials which was already available with the AO in finalizing the petitioner’s assessment u/s 143 (3). If this be so, the AO was acting on a complete change of opinion on the same material and / or intending to have a review of the assessment order passed by him.
This was certainly not permissible applying the settled principles of law as discussed by us hereinabove.
It was, hence, clearly not permissible for the AO to reopen the assessment on the very material on which the assessment order was passed. The law does not permit such course of action and if permitted, it would not only fall foul of the mandate of the first proviso below Section 147 but also it would amount to manifest arbitrariness and illegality resulting in drastic and unwarranted consequences being brought about to unsettle settled/concluded assessments, which the law would certainly not recognize.
This is certainly not a case where on the materials which are already produced before the AO, AO has gathered or discovered further material evidence so as to construe that there was failure on the part of the assessee to make a disclosure of such materials. Moreover, there is no further tangible material which has been gathered on due diligence from the existing material and hence it is quite futile for the respondents to take recourse to this provision.
When the impugned reopening itself lacks compliance of the jurisdictional requirements, as ordained by the provisions of Section 147 considering the settled principles of law, such Writ Petition under Article 226 of the Constitution certainly needs to be entertained and adjudicated. Courts have exercised its power of judicial review, to interfere in the cases of reopening of assessment. We accordingly reject such contention as urged on behalf of the revenue.
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2024 (12) TMI 1216
Rejecting the petitioner’s application for compounding of the offences u/s 276B and 278B - main accused (respondent no. 5 – M/s Adel Landmark Limited) had not filed any application for the compounding of the offences before the competent authority [Chief CIT(TDS)] as the said authority was of the view that the petitioner’s application for compounding could not be considered on a stand alone basis.
HELD THAT:- Co-accused are now entitled to apply separately for compounding of the offences.
Revenue states on instructions that the impugned order may be set aside and the parties be remanded to the competent authority to consider it afresh in the light of the guidelines dated 17.10.2024. The said course commends to us.
We accordingly set aside the impugned order and remand the matter to the competent authority to decide afresh in the light of the current guidelines. Petition is disposed of in the aforesaid terms.
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2024 (12) TMI 1215
Revision u/s 263 - AO having allowed claim of employers contribution to staff provident fund in excess of 27% of the salary, which was contrary to Rule 87 of the Income Tax Rules, 1962 - HELD THAT:- We find that the assessee had explained no excess claim to have been made and had pointed out the demonstration of this fact to the AO with details during assessment proceedings. He had also explained how the excess had been erroneously calculated by the Ld. PCIT by considering contribution to funds which were not covered u/R87 of the Rules.
PCIT however we find completely ignores these submissions and goes on to record a contrary finding, of the assessee having contributed to PF in excess of the limits specified under Rule 87 of the Rules. There is nothing in his order mentioning why and how he contradicts this factual contention of the assessee.
Depreciation on addition of new plant and machineries while the same ought to have been limited to the amortized value of the assets - PCIT notes in his order that the assessee had contended that this depreciation had been claimed on new assets created by it and the circular no. CBDT Circular No. 9 of 2014 dated 23-01-20214 did not apply. Without dealing with the contentions of the assessee, the ld. PCIT holds the assessment order erroneous on this count simply by noting the impugned assets ought to have amortized and depreciation ought not to have been allowed to the assessee.
Thus, the impugned order passed by the ld. PCIT is in gross violation of the principles of natural justice, passed without considering the contentions of the assessee before him and a completely non-speaking order. Assessee appeal allowed.
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