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2024 (8) TMI 1284
Seeking for the reduction of issued, subscribed and paid-up equity share capital of the Petitioner company - Section 66 of the Companies Act, 2013 - HELD THAT:- The necessary compliance of the requirements of Section 66(1) along with its proviso; Section 66(2) & Section 66(3) proviso has been made/satisfied by the Petitioner Company. In the circumstances, it is hereby ordered to confirm the reduction of share capital of the Petitioner Company by approving the Special Resolution dated 10.08.2023 read with the subsequent Circular Board Resolution dated 08.11.2023 where in it was resolved to reduce the issued, subscribed and paid-up equity share capital of the Petitioner Company from Rs.483,66,21,630/- consisting of 48,36,62,163/- equity shares of Rs. 10/- each to Rs. 483,65,81,190/- consisting of 48,36,58,119/- equity shares of Rs. 10/- each by cancelling and extinguishing the paid-up equity share capital of Rs. 40,440/- divided into 4,044 equity shares of Rs. 10/- each held by the non-promoter shareholders of the Petitioner Company representing in aggregate approximately 0.00083% (zero point zero zero zero eight three percent) of the total issued, subscribed and paid-up equity share capital of the Petitioner Company from the non-promoter equity shareholders being the Remaining Identified Shareholders more particularly set out herein below, for an aggregate consideration of Rs. 66,88,776/- being determined for 4,044 (Four Thousand Forty-Four) equity shares at 1,654/-per Equity share to be paid out of the free reserves of the Petitioner Company as per the latest audited financial statements.
The copy of the Minutes approved along with the order shall be delivered to the ROC by filing the e-Form INC 28, within 30 days of the receipt of the copy of the order. Accordingly, the Registry shall prepare an order in Form No. RSC-6 as per the National Company Law Tribunal (Procedure for Reduction of Share Capital of the Company) Rules, 2016 and issue to the Applicant/Petitioner Company. The Petitioner Company shall publish this order of confirmation in The Hindu", English daily, Bengaluru edition and 'Udayavani' Kannada daily, Bengaluru Edition, expeditiously, and not later than 30 days from the receipt of copy of the order, as required under Section 66(4) of the Companies Act, 2013.
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2024 (8) TMI 1283
Validity of criminal proceedings once settlement before the SEBI on the adjudication side concluded - allegation of fraudulent activities committed in the Initial Public Offering (IPO) of the shares - Jurisdiction of Single Judge OR Division Bench - whether the respondent had made out a case for quashing the proceedings will be independently decided by the Division Bench which will now hear the matter on remand? - HELD THAT:- The first round of proceedings arising out of Writ Petition [2018 (2) TMI 2119 - BOMBAY HIGH COURT] was heard and disposed of by the Division Bench, with the Division Bench rejecting the contention of the respondent and dismissing the Writ Petitions. When the matter travelled to this Court, the respondent withdrew the Special Leave Petition with liberty to file a fresh petition.
We feel that on the facts of this case considering the earlier order of the Division Bench and the order of this Court granting liberty to file a fresh petition, the present case in the second-round ought to have been heard by the Division Bench. We are refraining from pronouncing on the aspect whether there was any clever manipulation of the prayers to clutch at jurisdiction since anything said would prejudice the case of the parties. We say nothing more on this at this stage.
Ld. Single Judge, who heard Writ Petition took the view that in view of the consent terms passed by SEBI, it would not be in the interest of justice to continue with the criminal proceedings as it would tantamount to an abuse of the process of the law.
We have now adopted, we are refraining from commenting on the contentions of the parties with regard to the merits of the matter.
As to whether the respondent had made out a case for quashing the proceedings will be independently decided by the Division Bench which will now hear the matter on remand. The Division Bench will not be influenced by the observations of the previous Division Bench, the order of the Single Judge and also by the present order which we have now passed. The Division Bench will independently decide the matter on its own merits and in accordance with law.
Considering that the FIR was registered in 2006, we request the Division Bench to take up the matter and dispose of the two Writ Petitions expeditiously and, in any event, not later than three months from today.
Since we are remitting the matter, we are inclined to grant an interim stay of further proceeding pending before the Special Judge (CBI), Greater Mumbai for a period of four weeks from today. Parties are at liberty to approach the Division Bench hearing the matter for appropriate extension/modification of this interim order and the Division Bench shall after hearing the parties make such order as it deems fit.
We have held above, the impugned order [2022 (1) TMI 1451 - BOMBAY HIGH COURT] is set aside and the matter is remitted to the High Court of Judicature at Bombay.
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2024 (8) TMI 1282
Freezing of demat accounts held by the petitioner with NSDL are freezed at the behest of BSE / NSE under the directives of the SEBI on account of an alleged default of Shrenuj in compliance of the SEBI (LODR) Regulations - HELD THAT:- The petitioner, a practicing gyneacologist, did not exceed his professional position, to take interest in the formation of Shrenuj or to promote or manage its day-to-day affairs. Also, after the incorporation of the company and constitution of the Board of Directors, the status and role of the petitioner as a promoter had come to an end. Hence, the obligation of non-submission of Financial Results and non-compliance with the provisions of SEBI (LODR) Regulations could not have been fastened and imposed on the petitioner.
Now coming to the impugned action of freezing of the demat accounts of the petitioner on the basis of SEBI Circular, it does not contemplate freezing of the demat account of the promoter in the manner as resorted qua the petitioner.
Also the circular dated 26 October 2016, provided that at the first instance to freeze the entire shareholding of the “promoter” and the “promoter group” in the listed company which is held liable for non-compliance for two consecutive periods, and on a failure to comply with the notice issued by the concerned stock exchange as per paragraph 3 of Annexure II of Circular dated 30 November, 2015. It is significant that the second part of paragraph 2.2 of the Circular provides that in addition to the freezeing of shares in the non-compliant listed company, the holdings in the demat accounts of the promoter and promoter group in other securities shall be frozen to the extent of the liability which shall be calculated on a quarterly basis.
In the present case, there is nothing placed on record that there is a semblance of compliance of paragraph 2.2 of the Circular even assuming that the same is applicable to the petitioner.
No show cause notice or a prior opportunity of a hearing was granted to the petitioner before the letters dated 23 March 2017 and 13 April 2017 were addressed to the SHCIL by NDSL, freezing not only the petitioner’s shares in Shrenuj but also the other shareholding of the petitioner in ITC Limited. For such reason also, the impugned action on the part of NSDL is required to be held to be brazenly illegal, unreasonable and arbitrary.
As applicability of the Circular 26 October 2016 is concerned, in our opinion, this circular cannot make a provision when it provides in paragraph 2.2 that in addition to the freeze of shares in the non-compliant listed entity, the holdings in the demat accounts of promoter and promoter group in other securities shall also be frozen to the extent of liability which shall be calculated on a quarterly basis. This would be contrary to the statutory requirements.
For all these reasons, to generally and/or casually freeze the securities of the promoters in a company other than the defaulter company, is an action in the teeth of the provisions of the SEBI Act as also illegal, arbitrary and unreasonable, violative of Articles 14, 21 and 300A of the Constitution. Circulars cannot have an overriding effect on the statutory provision under which it is issued and cannot be implemented in defiance of principles of natural justice.
Looked from any angle, under none of the provisions of law and regulations, the impugned action of the respondent to freeze the petitioner’s demat account can be sustained.
Even recovery of the amount from the petitioner’s demat account which is held with the depositories would certainly be governed by the provisions of the Depositories Act, 1996 and even if any fine, penalty, is to be recovered, it would be required to be recovered strictly adhering to the provisions of law which we have noted hereinabove. The recovery can also be in terms of what has been provided under Section 19F which necessarily attracts the provisions of Section 19H in regard to adjudication. Thus, looked from any angle, the impugned action of freezing the petitioner’s demat account is grossly illegal, arbitrary and unconstitutional.
For the aforesaid reasons, in our opinion, the freezing of the petitioner’s demat account qua all the shares held by him was unwarranted, unjustified and in patent defiance of the principles of natural justice and brazenly illegal.The petitioner shall be free to deal with all his shares as held in the Demat accounts in question.The SEBI/BSE/NSE are directed to jointly pay to the petitioner cost of Rs.30 lakhs within a period of two weeks from today.
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2024 (8) TMI 1281
Seeking modification of order - Grievance of appellant/ defendant no. 1 is that the application, whereby modification of the order dated 22.10.2019 was sought was not adjudicated and instead, simply notice was issued with a direction to the learned Joint Registrar to record evidence in the matter - HELD THAT:- Mere perusal of the provisions of Section 14 (1) of the IBC would show that once moratorium is declared by the adjudicating authority i.e., NCLT, it prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor, which includes execution of any judgment, decree or order in any Court of law, tribunal, arbitration panel and other authorities. The corporate debtor in this case being the appellant/defendant no. 1, as alluded to above, the appellant/defendant no. 1 has preferred a counter claim.
Clearly, the plain language of Section 14 (1) (a) of the IBC does not prohibit continuation of a counter-claim. The counter-claim, as defined under Order VIII Rule 6 (a) of the Code of Civil Procedure, 1908, typically as against a set off, can relate to a cause of action accruing to a defendant vis-a-vis the plaintiff, either before or after filing of the suit action. Counterclaim needs to be filed, as per the said provision, before the defendant has delivered his defence or before the time limit for delivering his defence has expired. Counter-claim cannot exceed the pecuniary limits of the jurisdiction of the Court concerned, where the suit action is instituted.
Because counter claim can proceed to trial, evidence ought to be permitted to be recorded in the suit claim, is a submission which is misconceived in law. Such submission flies in the face of the plain language of Section 14 of the IBC and what constitutes a counter claim. Therefore, SSMP does not lay down the correction position in law.
The recordal of evidence by the learned Joint Registrar (Judicial) will continue vis-a-vis the counter-claim preferred by the appellant/ defendant no. 1. However, moratorium will operate vis-a-vis the claim made by the respondent no. 1/ plaintiff - Appeal disposed off.
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2024 (8) TMI 1280
Correctness of action where the Plan was approved by the CoC after expiry of CIRP period - HELD THAT:- It is relevant to notice that in IA No.1748 of 2023, the Appellant has prayed for setting aside the minutes of the meeting of the CoC dated 27.07.2023, approving the Resolution Plan. In IA No.1420 of 2024, which has been rejected by the impugned order, the Appellant has again made a prayer to set aside the resolution of the CoC held on 27.07.2023. The Appellant having unsuccessfully challenged the Resolution Plan dated 27.07.2023 in IA No.1748 of 2023, which decision of NCLT was affirmed up to Hon’ble Supreme Court, it cannot be allowed to again question the same decision by filing IA No.1420 of 2024. The Adjudicating Authority while having noticed the order dated 18.10.2023 has concluded that by allowing the extension of 30 days and excluding the period of pendency of the IA filed by RP for seeking extension.
There is no infirmity in the order of the Adjudicating Authority rejecting IA No.1420 of 2024. There is no merit in the Appeal - appeal dismissed.
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2024 (8) TMI 1279
Admission of Section 7 Application filed by the Financial Creditor (Respondent herein) - premature application - disbursement of loan or not - Appellant challenging the impugned order submits that no debt was due or payable as the Application was filed on 28.04.2020.
Whether Financial Creditor has able to prove disbursement of loan to the Corporate Debtor? - HELD THAT:- It is relevant to notice that in the present case, this Tribunal has directed the Appellant to file an affidavit and explain the entry of Rs.10,01,16,474. After the order of this Tribunal, an affidavit has been filed dated 17.01.2023, which is nothing but misleading affidavit containing false averments - the amount which was advanced to the Appellant by the Financial Creditor, was duly disbursed, which is proved by the Bank statement and is reflected in the balance sheet of 2010-11. The amount reflected in the balance sheet of year 2010-11 under the heading ‘long term borrowing’ have been increasing in subsequent years, which indicates that interest component was added in subsequent balance sheets, which fully supports the case of the Financial Creditor that loan was with interest @ 12%. The plea of the Appellant that amount of Rs.10,01,16,474/- reflected in the balance sheet of 2016-17 and 2017-18 are amount which was given by loan to the Corporate Debtor by Romell Real Estates Pvt. Ltd. is rejected, which is false and misleading plea.
Time limitation of application filed - Appellant submits that there is no acknowledgement in the balance sheet of the year 2017-18, since name of Respondent No.1 Financial Creditor is not reflected in the balance sheet, hence, there is no acknowledgement within the meaning of Section 18 of the Limitation Act and Adjudicating Authority committed error in reading the acknowledgement - HELD THAT:- The mere fact that name of Respondent No.1 is not mentioned as creditor in subsequent balance sheet including the balance sheet of 2017-18 is of no consequence, since the name of Respondent No.1 was mentioned as under the unsecured/ long term borrowings in 2011-12, which unsecured loan/ borrowings continued to be reflected in subsequent balance sheet of the Corporate Debtor. It is already noted the plea raised by the Appellant that amount of long term borrowings mentioned in balance sheet for the year 2017-18 is borrowing from Romell Real Estates Pvt. Ltd., which plea has not been accepted for reasons given above. The debt, which was reflected in 2011-12 of the Financial Creditor, continued to be reflected under the long term borrowing and there being continuous acknowledgement, the Application cannot be said to be barred by time.
When the Corporate Debtor’s case is that the Loan Agreement is fabricated and forged, it does not lie in the mouth of the Corporate Debtor to contend that as per Loan Agreement, the Application under Section 7 was premature.
From the facts of the present case, as reflected from materials brought on the record, it is clear that the Corporate Debtor, who has not denied the disbursement of the amount in balance sheet of 2010-11 and subsequent balance sheet has not made any pleading or brought on record any material that amount at any time was paid to the Financial Creditor, although some repayment was made to the other family members of the Financial Creditor in 2015. Disbursement, reflection in the balance sheets and repayment to family members, who were part of the same Loan Agreement, are the materials on which conclusion can be drawn that loan was taken by the Corporate Debtor, but was not repaid and now the Appellant is making false and misleading pleas to somehow get out from the liability from the debt and default, which has been committed by the Corporate Debtor.
Appeal dismissed.
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2024 (8) TMI 1278
Exemption from service tax - construction of road for use by the general public - construction of railway siding - Demand of Service Tax amounting to Rs.7,68,021/- - GTA Service - Extended period of limitation.
Exemption from service tax - construction of road for use by the general public - HELD THAT:- The appellant has rendered service in relation to construction of road between NH2 and Aerotropolis Township for M/s. Bengal Aerotropolis Limited. The appellant has pointed out that this road has been certified by the Andal Gram Panchayat as a road meant for ‘public use’. It is observed that construction of road is exempted in terms of Sl. No. 13(a) of Notification No. 25/2012-S.T. dated 20.06.2012 - it is clear that construction of road for use by the general public is exempted. The local authority, namely, Andal Gram Panchayat, has certified that the road constructed is meant for use by ‘general public’. Therefore, the demand confirmed in the impugned order on this count is not sustainable.
Exemption from service tax - construction of railway siding - HELD THAT:- The appellant has also rendered service to RITS in connection with the construction of railway siding. They had also rendered the service of supplying and laying of blanketing material for the project construction of railway, formation of major and minor bridges, laying of railway track including supply of p. way fittings, etc., in connection with new railway siding for Sonepur Bazari Project of Eastern Coalfields Limited, near Pandabeswar, West Bengal to M/s. Bridge & Roof Company (India) Ltd. It is observed that the above said services were rendered by the appellant to the Railways. It is observed that the issue of liability of Service Tax on railway sidings is no more res integra as the same has already been decided in favour of the appellant by the Tribunal, West Zonal Bench, Mumbai in the case of KONKAN RAILWAY CORPORATION LTD VERSUS COMMISSIONER OF CGST & CENTRAL EXCISE [2023 (2) TMI 1175 - CESTAT MUMBAI] holding that any service in relation to railway siding constructed and erected are not liable to Service Tax, which has been affirmed by the Hon’ble Supreme Court in COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS KONKAN RAILWAY CORPORATION LTD. [2023 (8) TMI 128 - SC ORDER].
The demand of Service Tax confirmed in the impugned order for the services rendered in connection with construction of railway sidings and the services rendered to M/s. Bridge & Roof Company (India) Ltd. are not liable to Service Tax.
Demand of Service Tax amounting to Rs.7,68,021/- - Extended period of limitation - HELD THAT:- The said demand pertains to the period 2013-14. The impugned Show Cause Notice was issued on 19.12.2016 on the basis of the differential value of ITR, 26AS and S.T.-3 Returns. There is no finding in the impugned order that the appellant has suppressed any information from the Department. Thus, it is observed that suppression of facts with the intention to evade payment of tax has not been established in this case and hence, the extended period of limitation is not invokable. Accordingly, the demand of Rs.7,68,021/- confirmed in the impugned order for the period 2013-14 by invoking the extended period of limitation is not sustainable.
GTA Service - extended period of limitation - HELD THAT:- The suppression of facts with the intention to evade payment of tax on the part of the appellant has not been established in this case and therefore, the extended period of limitation is not invokable. Therefore, the demand confirmed under the category of GTA Service by invoking the extended period of limitation is not sustainable.
Appeal disposed off.
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2024 (8) TMI 1277
Classification of services as Works Contract Services (WCS) or Erection, Commissioning, or Installation Services (ECIS) - whether the works carried out by the Appellant fall under the definition of 'Original Works' or not? - exemption N/N. 25/2012-ST dated 20.06.2012 - Management, Maintenance & Repair service.
Classification of services as Works Contract Services (WCS) or Erection, Commissioning, or Installation Services (ECIS) - whether the works carried out by the Appellant fall under the definition of 'Original Works' or not? - exemption N/N. 25/2012-ST dated 20.06.2012 - HELD THAT:- A perusal of the SCN indicates that the department had gathered intelligence that the appellant was executing contracts with different Government agencies and providing taxable services, but not discharging his service tax liability. During investigations, the appellant was asked to submit requisite documents/details for verification such as ST-2, ST-3 returns, copies of contract/work orders executed in respect of maintenance & repair services, Erection & Commissioning Services & Works Contract Services, Balance Sheets, ITR, and other details for the financial years 2007-08 to 2011-12 - the department concluded their investigations purely on the basis of the documents submitted by the appellant. The argument of the Ld Counsel does not carry much weight in the light of repeated instances of non-cooperative attitude displayed by the appellant. This submission of the Ld. counsel cannot be accepted.
A perusal of the said notice makes it clear that the department has sought to classify the activity as Erection & Commissioning and/or Works Contract. This factual issue would have been clear had the appellant shared the details of the contracts and work orders with the department - as per section 65(105)(zzzza), Works Contract means a contract wherein, there is transfer of property in goods involved which is leviable to VAT, and such contract includes, inter alia, erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or construction of a new residential complex or a part thereof; or completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or turnkey projects including engineering, procurement and construction commissioning (EPC) projects etc.
The taxable service provided by the appellant prior to 01.07.2012 will be exempted under clause (b) of the definition of works contract service - the demand for the period 1.07.2012 to 31.03.2013 is liable to be dropped as the same is squarely covered by the exemption contained in Notification no. 25/2012-ST dated 20.06.2012.
Management, Maintenance & Repair service - HELD THAT:- The firefighting equipment installation is exempted from service tax, in view of the fact that the same was undertaken in Government buildings which are non-commercial, hence it is agreed with the submissions of the ld counsel that maintenance services provided to government buildings is covered by the retrospective amendment provided by Section 98 from 16.6.2005 till 28.05.2012. Consequently, the demand for its maintenance is also exempted.
The appellant was not liable to service tax on the provision of services to PWD/CPWD. Accordingly, the impugned order is set aside - Appeal allowed.
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2024 (8) TMI 1276
Service tax on Construction and sale of Complex/Houses/Flats constructed by the appellant - Service tax on certain receipts under taxable category of Real Estate Agent service - Liability to pay service tax under Reverse Charge Mechanism on legal charges, manpower supply and works contract services - extended period of limitation.
Service tax on Construction and sale of Complex/Houses/Flats constructed by the appellant - HELD THAT:- This issue has been decided against the Revenue by the judgment of Hon’ble Orissa High Court in the case of LARSEN & TOUBRO LIMITED VERSUS STATE OF ORISSA AND OTHERS [2007 (10) TMI 579 - ORISSA HIGH COURT], wherein the Hon’ble High Court has held that Circulars or other instructions could not provide the machinery provisions for levy of tax. The charging provisions as well as the machinery for its computation must be provided in the Statute or the Rules framed under the Statute - the service tax is not leviable on ‘Construction of Complex Services’.
Service tax on certain receipts under taxable category of Real Estate Agent service - HELD THAT:- The appellant is not acting as a real estate agent and therefore, the service tax is not chargeable on the amounts/fees received by it in the course of performing of statutory duties - It has been consistently held by the Tribunal that charges collected by the builder for authorizing transfer of allotment of property before sale or as part of the sale agreement is on principle to principle basis and no service is provided to any person in relation to sale, purchase, leasing, renting of any real estate and therefore, such charges are not covered under the head of ‘Real Estate Agent Services’ - none of the receipts/income of the appellant fall under the scope of services defined under Section 65(105)(b) of the Finance Act, 1994; hence, this issue is also decided in favour of the appellant.
Liability to pay service tax under Reverse Charge Mechanism on legal charges, manpower supply and works contract services - HELD THAT:- The appellant is not liable to pay service tax on legal charges/fees, on supply of manpower and on execution of work contract, because the appellant is not a business entity. The appellant is admittedly a body corporate but it does not qualify for the criteria of ‘business entity’ nor is it registered as such. Therefore, it cannot be held that the appellant Haryana Housing Board is liable for payment of service tax on reverse charge basis in respect of the services - the demand of service tax under ‘Reverse Charge Mechanism’ is not sustainable.
Extended period of limitation - HELD THAT:- The appellant, which is a governmental authority constituted under the Housing Board Act, 1971, has provided all the information as required by the department. Moreover, being a statutory authority, the appellant is required to maintain proper accounts, which are duly audited by the office of the Accountant General and the audited accounts accompanied by audit report have been forwarded to the State Government as required by the Act. Further, all the figures have been taken from balance sheets. Therefore, in view of this, there is no suppression or fraud with intent to evade the payment of tax - Hon’ble Supreme Court in various cases and it has been consistently held that no suppression or fraud with intent to evade the service tax could be attributed to a government authority as there is no vested interest of the government authority to evade tax - in the present case, the department has failed to establish any of the ingredients which are required to prove in order to invoke extended period of limitation; therefore, the entire demand is barred by limitation.
The impugned orders are not sustainable in law, accordingly, set aside - appeal allowed.
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2024 (8) TMI 1275
Passing on fraudulent Cenvat Credit, for the period from April 2016 to June 2017 - fake invoices without actual supply of goods was investigated - evidence to indicate non supply of goods produced or not - HELD THAT:- The whole chain of evidence as mentioned by the department indicates that the goods did not move from various parties to M/s. Ridhi Sidhi as per testimonial evidence nor were supplied to M/s. Ridhi Sidhi and documents on the record on the Books of Accounts of M/s. Ridhi Sidhi were not genuine. However, the second link in the chain of evidence, which had to indicate that the goods in turn were not supplied to appellants by M/s. Ridhi Sidhi is missing in investigation of the department. As against this, the appellants have produced various documentary evidences including transport receipts, proof of payments, proof of receipt of such goods in their premises and their output indicating that the goods were actually received as per accounts.
The department has not brought on record any worthwhile evidence to indicate non supply of goods from M/s. Ridhi Sidhi to the present appellants despite appellant’s having brought on record various evidence by name of transporters, their receipts, invoice and the receipt of goods as well as payments made to M/s. Ridhi Sidhi. The documentary evidence given by them therefore has not been rebutted by any credible evidence.
The stance of the department in upholding the second link in the chain of evidence is therefore purely based on presumptions and assumptions. Therefore, there is no reason to doubt the documentary evidence indicating receipt of finished material from M/s. Ridhi Sidhi. The same has also been left incomplete due to non-recording of statements of proprietor/director/authorised person of M/s. Ridhi Sidhi and also because of refusal of the adjudicating authority below to allow cross examination to afford opportunity to the present appellant who desired the same for their defence. Cumulatively department has failed to establish a case against the appellants making them eligible for relief.
The impugned order is set aside - appeal allowed.
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2024 (8) TMI 1274
Failure to discharge applicable duty on the samples drawn for internal testing and control purposes - non-maintenance of proper records to account for the samples drawn for internal testing purposes and for control purposes - Extended period of limitation - HELD THAT:- On going through the SOPs that it is mentioned at Para 3.2 that after completion and review of the batch, the samples shall be discarded; a clear procedure for the destruction of samples drawn is given at Para 3.2.1. It is clear from the internal records maintained by the appellants that samples drawn are destroyed and therefore, the same would not have been cleared outside the factory - as long as the samples are not cleared outside the factory premises, no duty is payable by them.
It is found that Department’s contention that the appellants have not maintained appropriate records and therefore, in terms of Para 3 of Chapter 11 of Supplementary Instructions, duty requires to be paid, is not acceptable. Understandably, there are no records prescribed for this purpose. The internal records maintained by the appellants have to be taken into consideration. On the basis of the records available, it is found that the appellants have maintained records as far as the control samples are concerned and as far as internal samples are concerned, it can be gleaned from the Standard Operating Procedures adopted by the appellants that the samples are either consumed in the course of testing or destroyed. In the absence of any contrary proof put forth by the Revenue, the claim of the appellants cannot be brushed aside - as long as the samples are not cleared outside the factory, no duty is payable.
Extended period of limitation - HELD THAT:- The Principal Bench in the case of SHYAM SPECTRA PRIVATE LIMITED (FORMERLY CITYCOM NETWORK PRIVATE LIMITED) VERSUS COMMISSIONER OF SERVICE TAX, DELHI II [2024 (8) TMI 95 - CESTAT NEW DELHI] held, following the decision of the Hon’ble Calcutta High Court, in the case of INFINITY INFOTECH PARKS LTD. VERSUS UNION OF INDIA [2014 (12) TMI 36 - CALCUTTA HIGH COURT], held that when a notice is issued in support of transactions spread over a period of time and it is found that the extended period of invocation has been invoked, the notice cannot be treated as within limitation for some of the same transaction, once it is found that the extended period of limitation is not invocable.
Appeal allowed.
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2024 (8) TMI 1273
Wrongful availment and utilization of CENVAT Credit representing Additional Duty of Customs and CVD on imported goods in the month of September 2011 - contravention of Rule 3(4) of the CENVAT Credit Rules, 2004 and Para 2B of Notification No. 20/2007-C.E. dated 25.04.2007.
HELD THAT:- The Respondent has received capital goods in four bills of entry and they had taken the credit of CVD on the dates on which the goods were received. However, due to ignorance, they did not take the credit of the additional duty of customs, and when they came to know that such credit was admissible, they took credit of the entire amount in the month of September 2011.
Rule 4(2)(a) of the CENVAT Credit Rules, 2004 prescribes the availability of CENVAT Credit on capital goods and it stipulates that CENVAT Credit in respect of capital goods shall be taken only for an amount not exceeding 50% of duty; as per Rule 4(2)(b) of these Rules, the balance amount of credit may be taken in any subsequent financial year. In terms of Rule 4(2)(a) of these Rules, in respect of capital goods received at any point of time in a given financial year, the CENVAT credit shall be taken only for an amount not exceeding 50% of duty paid on such capital goods in the same financial year - there are no provision under the CENVAT Credit Rules, 2004 which debars a manufacturer from taking the credit if by some reason they fail to avail the credit immediately on receipt of the capital goods.
Since the Respondent has availed the credit belatedly, they have utilised this credit for payment of duty after September 2011. Thus, they got less refund for the period after September 2011. Thus, there is no violation of condition 2B of the Notification No. 20/2007-C.E. dated 25.04.2007. Accordingly, there is no merit in the allegation of the Revenue that the Respondent has received excess refund during the period prior to September 2011.
The alleged inadmissible credit taken in September 2011 has been proposed to be recovered under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 - the alleged credits taken by the Respondent belatedly were not in contravention of any of the provisions of CENVAT Credit Rules, 2004. the Credit availed can be considered as irregular only if it is taken in contravention of any of the provisions of CENVAT Credit Rules, 2004. Since the credit taken is not found irregular, Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 cannot be applied for recovery of the credit in this case.
There are no merit in the submissions made by the Revenue that the Respondent has availed wrong/irregular credit - there are no merit in the contention of the Revenue that the Respondent has received excess refund as they have availed the credit belatedly - the ld. adjudicating authority has rightly passed the impugned order allowing the belated credit availed by the Respondent - the appeal filed by the Revenue is dismissed.
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2024 (8) TMI 1272
Interpretation of statute - term ‘gross turnover’ as contained in the Composition Scheme 2006 - Composition Scheme for Gem and Stones, 2006 - exclusion of export amount from gross turnover for calculation of Composition Amount - N/N. F.12(63)FD/Tax/2005-37 dated 06.05.2006 - the High Court held that 'the assessee was rightly excluding the export sales form the gross turnover and was accordingly paying composition amount on gross turnover of local sales' - HELD THAT:- It is not required to interfere with the impugned judgment and order passed by the High Court.
Hence, the Special Leave Petitions are dismissed.
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2024 (8) TMI 1271
Recovery of dues - priority of the secured creditor or the Sales Tax Department for recovering its dues from the borrower / entity - HELD THAT:- While the secured creditor seeks to rely upon the Deed of Equitable Mortgage dated 7th March 2007 as well as the orders passed in Company Petition No.119 of 2013 that was filed against the borrower, the Sales Tax Department seeks to rely upon the communication dated 7th September 2013 that was issued by it to the Talathi not to record any sale transaction in the Revenue Records on account of steps being taken by it for recovering its dues.
This very issue based on the provisions of Section 26E of the SARFAESI Act as well as Section 38 of the Act of 2002 was the subject matter of consideration before the Full Bench of this Court in Jalgaon Janta Sahakari Bank Ltd. and Anr. [2022 (9) TMI 163 - BOMBAY HIGH COURT]. After considering the provisions of the Code as well as the Rules of 1967 along with other relevant provisions, it was held that 'if the immovable property of the defaulter is shown to have been attached in accordance with law prior to Chapter IV-A of the SARFAESI Act, or for that matter Section 31B of the RDDB Act, being enforced, and such attachment is followed by a proclamation according to law, the ‘priority’ accorded by Section 26E of the former and Section 31B of the latter would not get attracted.'
In the light of the aforesaid law it would be necessary to consider as to whether the Sales Tax Department has undertaken the attachment of the secured assets in the manner prescribed by the Code and the Rules of 1967. In the affidavit-in-reply filed on behalf of the Sales Tax Department it has stated that notices under Section 38 of the Act of 2002 came to be issued on 22nd July 2013 - Since the steps for attachment were taken prior to the provisions of Section 26E being brought on the statute book, the Sales Tax Department had the necessary priority to sell the assets in question.
There is no material on record to indicate that an order of attachment was duly passed under the Code and the proclamation thereof was made in accordance with the Rules of 1967 prior to 24th January 2020 when Section 26E of the Securitization Act came into force or 1st September 2016 when Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was enforced, the Sales Tax Department would not have priority over the dues of the secured creditor. In absence of any valid order of attachment as well as a proclamation in that regard, the Sales Tax Department cannot claim precedence over the dues of the secured creditors in view of Section 26E of the Securitization Act. Mere issuance of communication to the Talathi not to permit sale of a secured assets would be of no consequence as the law requires passing of a valid order of attachment and issuance of a proclamation in accordance with the Rules of 1967 to claim priority.
The communication dated 7th September 2013 issued by the 2nd respondent to the Talathi, Asangaon, Taluka Shahapur, District Thane would not preclude the petitioner from taking steps to enforce its security interest. Accordingly, the petitioner would have priority over the Sales Tax Department in respect of the secured assets referred to in the aforesaid communication.
Petition disposed off.
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2024 (8) TMI 1270
Challenge to assessment order - required period of seven (07) days for hearing was not granted to the petitioner - violation of principles of natural justice - HELD THAT:- This Court would have to accept the fact that the notice of assessment was sent by the 1st respondent only on 25.06.2021 and the period of seven (07) days mentioned in the said notice was not granted to the petitioner before an assessment order was passed on 28.06.2021. There also remains the question of whether the petitioner received this notice as the petitioner has denied the receipt of notice.
The petitioner had not been granted adequate opportunity to set forth his case.
This Writ Petition is allowed setting aside the assessment order of the 1st respondent, dated 28.06.2021 and the matter is remanded back to the 2nd respondent, who is the assessing authority to the petitioner now, for completing the assessment for the year 2017-2018 after giving due notice and opportunity to the petitioner.
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2024 (8) TMI 1269
Legality of the High Court's order granting bail to respondent no.1 - High Court vide the Impugned Order has released him on bail noting that the material on record is not sufficient to establish his complicity - HELD THAT:- The High Court, there are no hesitation in saying so, erred in law. Ergo, for reasons recorded above and upon circumspect consideration of the attendant facts and circumstances, we hold that the discretion exercised by the learned Single Judge of the High Court to grant bail to the respondent no.1 was not in tune with the principles that conventionally govern exercise of such power, a plurality of which stand enunciated in the case-law supra. Moreover, though respondent no.1 had already suffered incarceration for a period of about six months at the time when bail was granted, yet in view of the nature of the alleged offence, his release on bail can seriously lead to dissipation of the properties where investments have allegedly been made out of Society funds. At the end of the day, the interests of the victims of the scam have also to be factored in.
The impugned order stands set aside. Respondent No.1 is directed to surrender within a period of three weeks from today, failing which the trial Court shall proceed in accordance with law - appeal allowed.
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2024 (8) TMI 1268
Shifting and demolition of the school by DSGMC - whether the appellant-DSGMC has any valid ground so as to assail the impugned judgment of the High Court dated 9th December, 2009, whereby the NDMC was directed to reimburse the pay and perquisites including the pension and other benefits accruing to the staff of the school and “then to recover the same from the appellant-DSGMC”? - HELD THAT:- Admittedly, the school in question being run by the appellant-DSGMC was receiving 95% grant from NDMC, and the same was closed down without due approval of the Director (Education), NDMC. As a consequence, the appellant-DSGMC cannot be allowed to take the shield of Rule 47 of the Delhi Education Rules so as to claim that the burden of re-employment and payment of salaries of the surplus teachers and the nonteaching staff upon closure of the school would be that of the NDMC. The question of absorption only arises when the closure of the school is done in accordance with law, which requires a full justification and prior approval of the Director as per Rule 46 supra. Since the closure of the school in question was undertaken de hors Rule 46, the argument advanced on behalf of the appellant- DSGMC that the onus to absorb the surplus teaching and nonteaching staff would be that of the NDMC, has no legal sanction and cannot be sustained.
There are no merit in Civil Appeal preferred by the appellant-DSGMC, which are hereby dismissed.
Seeking reimbursement of the entire amount from the DSGMC to staff - HELD THAT:- Since the principal amount has already been paid by the appellant-NDMC, there is no reason for this Court to interfere with the direction given by the Delhi High Court for payment of interest to the respondents, i.e., staff of the school, in terms of the impugned judgment - it is directed that appellant-NDMC shall pay all remaining dues including interest to the respondents-staff of the school, within a period of eight weeks from today - It is clarified and reiterated that the appellant-NDMC shall be entitled to take recourse of the appropriate remedy for reimbursement of the amounts paid to respondents-staff of the school from the DSGMC, in case the DSGMC voluntarily fails to reimburse the said amount.
Appeal disposed off.
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2024 (8) TMI 1267
Dishonour of cheque - seeking quashing of summoning order and complaint under Section 138 read with Sections 141 and 142 of the NI Act - vicarious liability of a Director - HELD THAT:- There is unanimity in judicial opinion that necessary, specific and unambiguous averments ought to be made in a complaint under Section 138 of the NI Act, before the person accused of the offence is subjected to criminal prosecution and it is not enough to make a general and bald allegation that the person was in charge of the day to day affairs of the company. The least that is required is to ascribe a specific role to a person before any criminal liability can be fastened on him/her and from the complaint itself, a reasonable and plausible inference must be discernible that the person accused was in charge of and responsible to the firm for the conduct of its business, with a caveat that a hyper-technical approach should not be adopted in quashing the complaints since the laudable object is to prevent dishonour of cheques and sustain the credibility of commercial transactions, for which avowed purpose Legislature has enacted Sections 138 and 141 of the NI Act.
In SABITHA RAMAMURTHY & ANR. VERSUS RBS. CHANNABASAVARADHYA [2006 (9) TMI 490 - SUPREME COURT] the Supreme Court restated the requirements of Section 141 of the NI Act and held that the complainant must make a clear statement of fact to enable the Court to arrive at a prima facie opinion, even if the allegations are that the accused is vicariously liable. Section 141 of the NI Act raises a legal fiction where a person although not personally liable for commission of an offence, would be vicariously liable but before a person can be made vicariously liable, strict compliance with statutory requirements is to be insisted.
Coming to the facts of the present case, perusal of Form No. DIR-12 of the accused company BTIL reflects that Petitioners No. 1 and 3 were Independent Non-Executive Directors while Petitioner No. 2 was Non-Executive Director at the time of commission of the alleged offence. In view of Section 141 of NI Act and Section 149 of Companies Act, 2013, Petitioners could be held vicariously liable only if it was shown that they were in charge of and responsible for the conduct of the business of the company at the time of commission of offence and not otherwise and complainant was required to specifically aver in the complaint as to how the Petitioners were in charge of day to day affairs of the company BTIL as well as conduct of its business, as per settled law - There are no allegations that Petitioners had any role in the dishonour of the cheque on presentation and admittedly, Petitioners were not the signatories.
It is settled that Section 141 is a penal provision creating vicarious liability and must be strictly construed and therefore, bald cursory statements in the complaint in the absence of a specific role being ascribed to a Director and without spelling out how and in what manner the accused were in charge of or responsible to the accused company for the conduct of its business, vicarious liability cannot be fastened. It is also settled that it is not enough to state in the complaint that a particular person was a Director, Managing Director, CEO, etc. As held by the Supreme Court in S.M.S. Pharmaceuticals [2005 (9) TMI 304 - SUPREME COURT] it may be that in a given case, a person may be a Director but may know nothing about the day to day functioning of the company and there is no universal rule that a Director is in charge of its everyday affairs.
Sections 138 and 141 of the NI Act were introduced in the Act to encourage the wider use of a cheque and to enhance the credibility of the instrument. The intent of the Legislature in carrying out the amendment was to encourage people to have faith in the efficacy of banking transactions and use of cheques as negotiable instruments. To balance, a penal provision was enacted to ensure that the drawer of a cheque does not misuse the provisions and honours his commitment. The issue herein concerns the criminal liability arising out of dishonour of a cheque. Normally, the criminal liability is not vicarious i.e. one cannot be held criminally liable for the act of another. Section 141 of NI Act is, however, an exception where the offence under Section 138 is committed by a Company but the liability extends to the officers of the Company, subject to fulfilment of the conditions under Section 141, as a caveat - The present complaint fails to pass muster and basis the same, no criminal liability can be fastened on the Petitioners.
Since the contents and averments in the complaint are insufficient to attract the provisions under Section 141 (1) of NI Act, the impugned order dated 14.12.2017 passed by learned MM (NI Act), Patiala House Courts, New Delhi, in CC No. 16632/2017 is set-aside to the extent of issuing summons to the present Petitioners for alleged commission of the offence punishable under Section 138 of Negotiable Instruments Act, 1881.
Petition allowed.
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2024 (8) TMI 1266
Jurisdiction to resolve dispute with regard to payment of outstanding dues, if any, by the Respondent to the Corporate Debtor - Admissibility of claims under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - recovery of admitted dues - HELD THAT:- The Respondent has candidly and unequivocally admitted in the email dated 04.06.2022 its liability to pay a sum of INR 12,36,28,455/- to the Corporate Debtor. Therefore, there is not even a semblance of dispute so far as this amount is concerned.
In Gujarat Urja Vikas Nigam Ltd [2021 (3) TMI 340 - SUPREME COURT], it has been held by the Hon’ble Supreme Court that one of the important objects of the Code is to bring the insolvency law in India under a single unified umbrella with the object of speeding up the insolvency process. It was further observed in the aforesaid case that the non-obstante clause in Section 60(5) of the Code is designed for a purpose i.e. to ensure that NCLT alone has the jurisdiction when it comes to applications or proceedings by or against the Corporate Debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings and therefore, NCLT has jurisdiction to adjudicate disputes which arise solely from or which relate to the insolvency of the corporate debtor.
If the Applicant is relegated to civil court(s) or arbitral proceedings even in respect of admitted dues, it would definitely defeat the objects of the Code and the objective of concluding the process in a time bound manner would never be possibly adhered to. Even otherwise, in the context of this case, undisputedly, the Corporate Debtor continued to render services to the Respondent despite initiation of CIRP against it and against those services, the Liquidator is seeking to realize the dues. Therefore, it cannot be said by any stretch of imagination that there is no nexus of the dues sought to be recovered or the relief(s) being claimed in the application with the insolvency/liquidation process.
This application deserves to be partly-allowed directing the Respondent to pay the admitted liability of INR 12,36,28,455/- to the Applicant forthwith. For the remaining amount, permission is hereby granted to the Liquidator u/s 33(5) of the Code to initiate appropriate legal proceedings - Application allowed in part.
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2024 (8) TMI 1265
Challenge to impugned order passed u/s 130 read with Section 122 of UP GST Act - excess stock found during inspection - proceedings u/s 73/74 of the GST Act or u/s 130 of the GST Act, read with rule 120 of the Rules framed under the Act - HELD THAT:- It is not in dispute that survey was conducted at the business premises of the petitioner on 14.9.2018. It is also not in dispute that excess stock was found, which triggered the initiation of the present proceedings against the petitioner. On various occasions, this Court has held that if excess stock is found, then proceedings under sections 73/74 of the GST Act should be pressed in service and not proceedings under section 130 of the GST Act, read with rule 120 of the Rules framed under the Act.
The law is clear on the subject that the proceedings under section 130 of the GST Act cannot be put to service if excess stock is found at the time of survey.
The impugned order dated 26.12.2023 passed by the respondent no. 1 under Section 130 read with Section 122 of UP GST Act, cannot be sustained in the eyes of law and same is hereby quashed.
Petition allowed.
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