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Showing 281 to 300 of 14509 Records
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2020 (12) TMI 1133
Appointment of Fresh Valuer - Disputes were raised with regard to the valuation of tangible and intangible assets - HELD THAT:- It appears to us that it was not appropriate to keep shuttling the matter on an issue on which the Resolution Professional has acted after the Orders were passed by the third Hon’ble Member. The Corporation Bank had objections with regard to the valuation done earlier and thereafter another Valuer has been appointed and it appears that Report has been filed. Still Appellant is objecting. When such developments have taken place, on technical issues, we do not intend to interfere with the Impugned Order.
There is no reason to interfere with the Impugned Order. It would further prolong the delayed CIRP proceedings which would not be in the interest of the Corporate Debtor - appeal dismissed - decided against appellant.
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2020 (12) TMI 1132
Resolution by CoC for its Replacement of IRP by RP - scope of Section 22 of the I&B Code and Section 27 of I&B Code - appeal on the ground that there was no occasion for the Adjudicating Authority to have granted time to Interim Resolution Professional to file any objection/ reply to the resolution of Committee of Creditors - HELD THAT:- In the instant case, it is not in controversy that in the first CoC Meeting appointment of IRP as RP failed to garner any support. Thereafter, the bid made by the IRP offering himself for appointment as RP also did not cut any ice with the CoC. Ultimately, IRP was replaced by Mr. Gangaram Agarwal in terms of resolution passed in second CoC Meeting with 78% vote share of the Committee of Creditors. It is indisputable that these actions are permissible only within the ambit of Section 22 of I&B Code. Therefore, invoking of Section 27 and adopting a protracted procedure in that regard, as appears to have been done by the Adjudicating Authority, is unwarranted. This only has resulted in wastage of time and prolonging the CIRP Process. In the face of CoC resolution passed with more than the requisite majority, it cannot lie in the mouth of IRP that any of his legal rights have been infringed. It would have been wise on his part to bow to the commercial wisdom of the Committee of Creditors and quit gracefully. Be that as it may, there was no merit in the case set up by IRP before the Adjudicating Authority and the same was required to be dealt with without insisting upon filing of affidavit by the IRP in regard to the provision of law invoked to pass the resolution.
The Adjudicating Authority is directed to carry forward the Resolution Process in regard to the Corporate Debtor with Resolution Professional – Mr. Gangaram Agarwal discharging functions as the Resolution Professional in terms of resolution passed by the CoC - appeal allowed.
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2020 (12) TMI 1131
Prayer to classify the Applicant as the Financial Creditor - Section 60 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is found that the Applicant has annexed the letter dated 30.11.2018 issued to AMW Motorworks Limited. Vide said letter, the Applicant demanded ₹ 10 Crores from AMW Motorworks Limited paid on 24.10.2007 through Cheques along with 18% interest per annum. The said letter was issued by Chief Operating Officer. Apart from that, no other document such as an agreement or any promissory note is annexed, so as to infer the date of disbursement of the loan - on comparison with the demand notice dated 30.11.2018 (at page no. 43 of the application) with that of the Ledger Account from the period 01.04.2007 to 31.03.2008 (at page no. 52 of the application), it is found that Cheque no. 001291 is of ₹ 4 Crores whereas the date of cheque clearance is of 25.10.2017 and for other two cheques, the clearance date is of 2007 when the Ledger Account is of the period 01.04.2007 to 31.03.2008. Hence, the document so filed by the Applicant is/ are contradictory to the statements made in the application, in as much as, the cheque which was issued in 2007, how it could be cleared in the year 2017.
Under such circumstances, it is difficult to assess the bonafide of the Applicant. Furthermore, apart from these documents, Applicant has annexed the statement of account at page no. 53 of the application showing the period 2005 to 2014. However, on perusal of the said statement, it is found that it is originating from 16.11.2013 to 18.11.2013 only, which in our opinion is an irrelevant document which does not reflect the date of disbursement of loan amount - Evidently and admittedly, as per their own document in the application annexed at page no. 43, reflects the said amount is paid on 24.10.2007 through three cheques. To that effect, no agreement/ promissory note has been entered into.
The claim is not free from iota of doubt. Accordingly, the instant application is rejected. However, with regard to the ₹ 5 Crores which is acknowledged by the Corporate Debtor maybe taken in to account by the IRP, as Claims other than Operational Creditor and Financial Creditor.
Application dismissed.
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2020 (12) TMI 1130
Seeking extension of time limit for completion of Insolvency Resolution Process of the Corporate Debtor - HELD THAT:- Since there is a possibility of getting a resolution plan and since the CoC members have approved extension of 90 days beyond 180 days with 100% voting majority as required under Sec 12(3) of IBC read with Regulation 40 of CIRP Regulations, 2016, it is humbly submitted that an extension of 90 days be permitted along with exclusion of 115 days on account of lockdown - It is submitted that in view of the aforementioned facts and circumstances, the Hon'ble Adjudicating Authority may be pleased to extend the period of the Corporate Insolvency Resolution Process of the Corporate under Section 12(2) of the IBC 2016 by a further period of 90 days from the date of completion of 180th day i.e. from 4th September 2020 to 3rd December 2020.
The extension of CIRP by 90 days is granted and the period of 98 days from March 25,2020 to June 30, 2020 is also considered for being excluded while calculating the number of available days for CIRP calculation.
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2020 (12) TMI 1129
Grant of pre-arrest bail - petitioner submitted that the relief of anticipatory bail sought by the petitioner is not premature and that the petitioner's reliance on a news article of a reputed news agency for apprehension of arrest by the respondent cannot tantamount to being speculative - whether the petition filed under Section 438 of the Cr.P.C. before the High Court without exhausting remedy before the Court of Sessions Court is maintainable or not? - HELD THAT:- It is trite law that in case of economic offences, which is having an impact on the society, the Court must be very slow in exercising the discretion under Section 438 of Cr.P.C. But on perusal of the factual matrix of the case on hand, prima facie, there is no material to come to the conclusion that the act of the petitioner is having impact on the financial status of the country as a whole and in that light the ratio laid down in P.Chidambaram [2019 (12) TMI 186 - SUPREME COURT] is not applicable to the facts of the present case.
The power under Section 438 of Cr.P.C. is an extraordinary power which was incorporated before other provisions for granting of bail under Section 437 and 439 of Cr.P.C. and judicial discretion is a matter regard and required to be exercised with due care and caution. Grant or refusal of bail is entirely discretionary and discretion should depend upon the facts and circumstances of each case. Certain parameters have to be kept in mind while considering or dealing with the application for anticipatory bail.
On perusal of the factual matrix on hand, the allegation leveled against the petitioner has to be considered and appreciated during the course of trial. The only consideration which has to be looked into for the purpose of granting or refusing bail is whether the accused would be readily available for trial and whether he is likely to abuse the discretion granted in his favour by tampering with evidence. If there is no prima facie case, there is no question of considering other circumstances. Even where a prima facie case is established, the approach of the Court in the matter of bail is not that the accused should be detained by way of punishment, but whether the presence of the accused would be readily available for trial or that he is likely to abuse the discretion granted in his favour.
Section 438 Cr.P.C. clearly stipulates in the beginning statement itself that when a person has a reasonable apprehension to believe that they can be arrested on an accusation for commitment of a non-bailable offence, they can move the High Court or the Court of Sessions for grant of an anticipatory bail. The approaching of the petitioner to the High Court has been discussed earlier and held that the petition for anticipatory bail filed before this Court is very well maintainable - The power to grant anticipatory bail must be exercised by the Court in very exceptional cases. The Court must be satisfied that there is a reasonable cause and a reasonable ground for grant of anticipatory bail. Section 438 Cr.P.C. protects the right to life and personal liberty of such persons by providing them with a remedy against frivolous detention. In a country where rifts and rivalries are common, its citizens should have a remedy which prevents disgracing their right to life and personal liberty.
When a person apprehends arrest and approaches a Court for anticipatory bail, his/her apprehension has to be based on concrete facts relatable to a specific or particular offence. Petition seeking anticipatory bail should contain clear and essential facts relating to the offence, and why the applicant reasonably apprehends his/her arrest, as well as his/her version of the facts - In the present case, the apprehension expressed by the petitioner is based on news item and the respondent also admitted that there was news item and they have initiated investigation under the Prevention of Money Laundering Act against the petitioner.
Since the news item appeared in the online news is pursuant to the CBI investigation, in which the petitioner has got anticipatory bail, now the apprehension stated by the petitioner is bona fide and as stated supra, the respondent themselves admitted that they have initiated investigation against the petitioner under the Prevention of Money Laundering Act. Thus, this Court is of the opinion that the apprehension of arrest by the respondent Directorate Enforcement is well founded and reasonable as the petitioner is a public person. This Court cannot lost sight of the fact that the news article had received wide publication/coverage in the media, both electronic and print. In the aforesaid facts and circumstances of the case, the interest of justice warrants grant of anticipatory bail to the petitioner in the investigation being conducted by the respondent under the Prevention of Money Laundering Act. Further, the petitioner is duty bound to co-operate with the investigation by the respondent at all stages.
The petition is allowed - the petitioner is granted anticipatory bail in connection with the respondent investigation.
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2020 (12) TMI 1128
Grant of Bail - Money laundering - fraud with home/flat buyers - siphoning off/diversion of funds - conspiracy and huge loss of public funds - HELD THAT:- But for the Supreme Court's intervention and undertaking painful and strenuous exercise to secure and protect the interest of innocent home/flat buyers, the fraud played by the accused-applicant and other accused in cheating and defrauding thousands innocent home/flat buyers of their hard earned money, could not have been unearthed - The Supreme Court is monitoring the investigation. The Supreme Court had been in pain to note the conduct of the accused-applicant and other accused. They had even violated the Supreme Court orders and did not comply the directions issued on several occasions. The forensic auditors appointed by the Supreme Court had meticulously flagged the fraud and cheating by the accused-applicant and other coaccused in creating bogus and sham companies and diversion of funds of the flat buyers money and creating assets etc.
PMLA is a special statute enacted by Parliament for dealing with money laundering. Section 5 of the Cr.P.C. clearly lays down that the provisions of Cr.P.C. will not affect any special statute or any local law. In other words, the provisions of the special statute will prevail over the general provisions of the Cr.P.C. in case of any conflict - The economic crime of such scale and magnitude are carefully and meticulously planned and executed. It is well settled that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. While granting bail, the court has to keep in mind the nature of accusations, magnitude and gravity of offence and nature of evidence in support of the accusations.
The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering. Section 44 of the PMLA confers jurisdiction on special court to deal with the offences under PMLA. Section 45 of the PMLA makes the offence of money laundering cognizable and nonbailable notwithstanding anything contained in Code of criminal Procedure, 1973. Money laundering is a serious economic offence and serious threat to the national economy and national interest and, these offences are committed with cool calculation with the motive of personal gain regardless of the consequences on the society.
The plea for bail is refused and the bail application is rejected.
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2020 (12) TMI 1127
Seeking extension of time limit for compliance of action under the Custom Excise and Service Tax - Failure to make payment against the SVLDRS3 for the purpose of availing the benefit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- The writ applicant should take up this issue with the Chairman, CBIC by filing an appropriate application or representation. Mr. Nainawati, the learned counsel has shown his inclination to deposit ₹ 15 lakh with the Registry of this Court to show his bona fide. We are of the view that the Registry of this Court should not be involved in such type of matters. Let the Chairman, CBIC look into the issue at the earliest and take an appropriate decision.
This writ application stands disposed of
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2020 (12) TMI 1126
Quantification of service tax demand - Sabkha Vishwas (Legacy Dispute Resolution) Scheme, 2019 opted - quantification prior to 30.06.2019 - it is the stand of the Department that such quantification was also served on the Petitioner - HELD THAT:- It is clear that the Petitioner falls within the category of persons who is entitled to approach the authorities under the Scheme. Consequently, the order of rejection would have to be set-aside and the Respondents shall consider and pass orders on the application of the Petitioner, in accordance with the terms of the Scheme, within a period of six weeks from the date of receipt of this order.
Petition disposed off.
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2020 (12) TMI 1125
Levy of service tax - Petitioner is foreman of chit fund business for the period from October 2014 to May 2015 - HELD THAT:- Hon'ble Supreme Court of India in UNION OF INDIA AND ORS. VERSUS M/S. MARGADARSHI CHIT FUNDS (P) LTD. ETC [2017 (7) TMI 224 - SUPREME COURT] has held that service tax cannot be levied on the foreman of chit fund business for the period from 15.06.2007 to 14.06.2015.
Having regard to the said authoritative pronouncement of the Hon'ble Supreme Court of India, which holds the field, it is not possible to sustain the impugned order, which shall stand set aside - Petition allowed - decided in favor of appellant.
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2020 (12) TMI 1124
CENVAT Credit - common input services for taxable as well as exempt goods - maintaining separate accountal of input and input services used in or in relation to manufacture of exempted and dutiable final products - alteration of option exercised under Rule 6(3) of the Cenvat Credit Rules in mid 2012-13 - time limitation - equivalent penalty under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act.
Whether for the purposes of Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules it was obligatory on the part of the appellant to maintain separate accountal of input and input services used in or in relation to manufacture of exempted and dutiable final products prior to manufacture of the final products or reversal of the cenvat credit of the duty and tax involved in respect of exempted inputs and input services on proportionate basis after manufacture of the final products also satisfies the requirement of Rule 6(2) of the Cenvat Credit Rules? - Whether, in the facts and circumstances of the instant case, the appellant is required to make payment of an amount equal to 6% of the value of the exempted goods and 7% of the value of the exempted services in terms of Rule 6(3)(i) of the Cenvat Credit Rules? - HELD THAT:- It is acknowledged both in the impugned order and the show cause notice that the appellant had reversed on proportionate basis the duty/tax paid on inputs and input services which were used, to the extent they related to exempted final products. There is no denial of this fact although issues have been raised regarding alleged discrepancies in the quantum of the reversals made, which we find had been duly attended to by the appellant by way of reversal with interest. It is also acknowledged in the impugned order that in all such cases of reversal, wherever required, the same has been effected along with payment of interest - It is now a settled proposition that reversal of cenvat credit even after manufacture of the goods and/or clearance thereof amounts to not taking of the credit on the exempted goods and that in case of common inputs and input services used in or in relation to the manufacture of dutiable and exempted final products, credit proportionate to use of inputs and input services in exempted products, if reversed, the assessee is not required to make payment of an amount in terms of Rule 6(3)(i) of the Cenvat Credit Rules - The demand of ₹ 58,96,13,230/- confirmed by the impugned order is unsustainable since the appellant has reversed the cenvat credit on input and input services attributable to the exempted product, including in some cases with interest if applicable - Reliance can be placed in the case of M/S GAYA MARKETING VERSUS THE STATE OF BIHAR THROUGH THE PRINCIPAL SECRETARY CUM COMMISSIONER, THE JOINT COMMISSIONER OF STATE TAXES, THE ASSISTANT COMMISSIONER OF STATE TAXES, GAYA. [2020 (1) TMI 1355 - PATNA HIGH COURT].
Whether the appellant had altered the option exercised under Rule 6(3) of the Cenvat Credit Rules in mid 2012-13 and whether the same was not permissible as per “Explanation I” of Rule 6(3)? - HELD THAT:- The materials on record clearly establishes that in this case the appellant had not exercised at any point of time during the period 2012-13 the option in terms of Rule 6(3)(i) of the Cenvat Credit Rules prior to July, 2020. No document to the contrary has been disclosed either in the show cause notice SCN or in the impugned order. In the impugned order it has been acknowledged by the Commissioner also that Explanation I to Rule 6(3) of the Cenvat Credit Rules does not bar exercising option in the middle of a financial year. However, according to him such option has to be exercised by physically writing to the Range Officer with assessee particulars and Cenvat Account Balance, which has not been done in the instant case - there has been no violation of the provisions of Explanation I to Rule 6(3) of the Cenvat Credit Rules.
Whether the demand confirmed is barred by limitation? - penalty - HELD THAT:- At all material point of time the Department was fully aware of and/or was made aware of by the appellant of all relevant facts, including the manner of compliance by the appellant with the requirements in terms of Rule 6(2) of the Cenvat Credit Rules. In these circumstances, as per principles laid down by the Apex Court consistently, there can be no case of suppression of any material fact or wilful misstatement or contravention by an assessee of any provision of the Act or the rules made thereunder with intent to evade duty/tax and hence there can be no invocation of the extended period of limitation in terms of the Proviso to Section 11A(1) or Section 11A(4) of the Act. The demand in such cases can only be for the normal period under Section 11A(1) of the Act - For the same reasons no penalty can be imposed upon an assessee in such cases in terms of Rule 15(2) of the Cenvat Credit Rules or Section 11AC of the Act.
Whether in the facts and circumstances of the case penalty equivalent is imposable upon the appellant under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act? - HELD THAT:- The demand of interest in terms of Section 11AA of the Act and penalty imposed under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act are also unsustainable.
Appeal allowed - decided in favor of appellant.
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2020 (12) TMI 1123
Principles of natural justice - Validity of revision of assessment orders - allegation of petitioner is that without verifying the petitioner's books of accounts, completed assessments were revised - assessment years from 2006-07 to 2014-15 - HELD THAT:- In all the replies sent by the petitioner to the proposal made by the respondent to revise the completed assessment under Section 27 of TNVAT Act, 2006, they have undertaken to cooperate with the respondent by furnishing all the records/books of accounts, called for by the respondent. In all the replies sent by the petitioner to the respondent, they have also referred to the decision of this Court in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [2017 (3) TMI 536 - MADRAS HIGH COURT]. However, as seen from the impugned assessment orders, the respondent has not adhered to the settled procedure laid down by this Court, while passing the impugned assessment orders under Section 27 of the TNVAT Act, 2006.
The counter affidavit filed by the respondent has not answered the grounds raised by the petitioner that the impugned assessment orders have been passed in a mechanical fashion without verification of the petitioner's books of accounts, but, just relying upon the web report maintained by the respondent. While that be so, it is clear that the procedure contemplated as per the decision in JKM GRAPHICS SOLUTIONS PRIVATE LIMITED has not been adhered to by the respondent, while passing the impugned assessment orders. Therefore, the impugned assessment orders have been passed arbitrarily and in gross violation of principles of natural justice and contrary to the settled procedure of law.
The matter is remanded back to the respondent for fresh consideration - Petition allowed by way of remand.
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2020 (12) TMI 1122
Dishonor of Cheque - legally enforceable debt or not - rebuttal of presumption or not - several factual aspects /triable issues which are to be decided by the trial Court on concluding the trial - HELD THAT:- The petitioners are not disputing the signatures on the said cheques. According to the petitioners, the said cheques were issued towards collateral security, but not towards legally enforceable debt. According to the second respondent, the said cheques were issued towards discharge of legally enforceable debt. The said issue is a triable one and the Court below will decide the same on conclusion of trial. The CC is of the year 2016. The present petition is filed under Section 482 of Cr.P.C. is also of the year 2016 and it is pending since then.
The petitioners are not disputing the signatures on the said cheques. According to the petitioners, the said cheques were issued towards collateral security, but not towards legally enforceable debt. According to the second respondent, the said cheques were issued towards discharge of legally enforceable debt. The said issue is a triable one and the Court below will decide the same on conclusion of trial. The CC is of the year 2016. The present petition is filed under Section 482 of Cr.P.C. is also of the year 2016 and it is pending since then.
The Apex Court in KAMAL SHIVAJI POKARNEKAR VERSUS THE STATE OF MAHARASHTRA AND ORS. [2019 (2) TMI 1894 - SUPREME COURT] categorically held that quashing criminal proceedings is called for only in a case where complaint did not disclose any offence, or was frivolous, vexatious, or oppressive. If allegations set out in complaint did not constitute offence of which cognizance had been taken by Magistrate, it is open to High Court to quash the same - Defences may be available, or facts/aspects which when established during trial, may lead to acquittal, were not grounds for quashing complaint at threshold. At that stage, only question relevant is whether averments in complaint spell out ingredients of a criminal offence or not. The correctness or otherwise of the allegations had to be decided only in trial. At initial stage of issuance of process, it is not open to Courts to stifle proceedings by entering into merits of the contentions made on behalf of accused. Criminal complaints cannot be quashed only on the ground that allegations made therein appear to be of a civil in nature. If ingredients of offence alleged against accused are prima facie made out in complaint, criminal proceeding shall not be interdicted.
Coming to the facts on hand, the only contention of the petitioners that the cheques in questions were issued by them towards collateral security but not legally enforceable debt, is a triable one. The Court below will decide the said issue basing on the evidence both oral and documentary available on record. Therefore, the proceedings cannot be quashed on the above said issue which is a triable issue in exercising of its powers under Section 482 of Cr.P.C. The petitioners have failed to establish any ground to quash the proceedings on the file of the II Special Metropolitan Magistrate, Cyberabad at Kukatpally.
Petition dismissed.
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2020 (12) TMI 1121
Revision u/s 263 - investment in Tata Sons Ltd - AO allegedly failed to verify the applicability of section 13(1)(c), 13(1)(d) and 13(2)(h) - what is the nature of scope of the provisions of Explanation 2(a) to Section 263 to the effect that an order is deemed to be “erroneous and prejudicial to the interests of the revenue” when Commissioner is of the view that “the order is passed without making inquiries or verification which should have been made”? - HELD THAT:- The true test for finding out whether Explanation 2(a) has been rightly invoked or not is, therefore, not simply existence of the view, as professed by the Commissioner, about the lack of necessary inquiries and verifications, but an objective finding that the AO has not conducted, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant that the Assessing Officer is expected to be.
In exercise of his powers under section 263, the Commissioner may as well direct the Assessing Officer that related addition to income or disallowance from expenditure be made, or remedial measures are taken. The second category of cases could be when the Commissioner finds that necessary inquiries are not made or verifications not done, but, based on material on record and in his considered view, even if the necessary inquiries were made or necessary verifications were done, no addition to income or disallowance of expenditure or any other adverse action would have been warranted. Clearly, in such cases, no prejudice is caused to the legitimate interests of the revenue. No interference will be, as such, justified in such a situation.
That leaves us with the third possibility, and that is when the Commissioner is satisfied that the necessary inquiries are not made and necessary verifications are not done, and that, in the absence of this exercise by the Assessing Officer, a conclusive finding is not possible one way or the other. That is perhaps the situation in which, in our humble understanding, the Commissioner, in the exercise of his powers under section 263, can set aside an order, for lack of proper inquiry or verification, and ask the Assessing Officer to conduct such inquiries or verifications afresh.
In the present case the assessee trust has made investments in Tata Sons Ltd, but that does not mean that Tata Sons Ltd is a property of the assessee trust- a proposition blatantly erroneous in law and in concept. What has been paid to the persons holding office as trustees, though in consideration for other roles played by them such as former directors and employees, has nothing to do with the determination of benefits to the trustees. The pension payments to Ratan N Tata and N A Soonawala, for example, have been held to be wholly and exclusively for the purposes of the business of Tata Sons Ltd and, therefore, the stand that these payments amounted to benefit to the trustees is ex facie incorrect.
In any case, as we have noted earlier, all these aspects were duly examined at the assessment stage, and the defects that the learned Commissioner has pointed out in the said examination during the assessment proceedings, for the detailed reasons we have set out earlier, cannot meet our judicial approval.
We are, therefore, of the considered view that learned Commissioner was not justified in subjecting the assessment order to revision proceedings on the ground that the Assessing Officer did not examine the matter regarding assessee’s control over Tata Sons Ltd, and whether, by virtue of such alleged control, any of the specified persons under section 13(3) received any benefits, and whether the investments made by the assessee trust were in violation of Section 13(2)(h).
Non-verification of accumulation of unspent surplus under section 11(2) was wrongly stated to be allowed though the same was neither asked nor required as the surplus was less than 15%. Learned Commissioner has been fair enough to state that though the order is erroneous on this issue, it is “not prejudicial to the interest of the revenue”. He has, however, also added that “the claim of deduction of 15% of income under section 11(1)(a) is subject to verification of other issues”. That, however, is irrelevant inasmuch as once it is not a legitimate ground on which revision proceedings can be initiated, inasmuch as to subject an order to revision proceedings it should be “erroneous” as also “prejudicial to the interest of the revenue”- which is admittedly not the case, there is no room for any other riders on verifications as a result of revision proceedings. This nonverification also, even if that be the correct position, cannot be ground enough to invoke the revision proceedings.
Non-verification of interest income details about the entities from which the interest was earned were reported in Schedule VI to the financial statements, and interest income from each of these investments was also separately reported in Schedule XIII and XIV of the financial statements. The details were also before the Assessing Officer in form 26AS. In any event, it is not even in dispute that all the investments made by the assessee trust were in conformity with Section 11(5) requirements. In these circumstances, we are unable to see any reasons for holding the suspicion that some of the interest income may be from sources that are not qualified for exemption under section 11, and, for that reason, the verification about sources of interest income is required to be done extensively. Once all these details were on record, and there is not even a suggestion that any part of interest income is not qualified for exemption under section 11, we are unable to uphold the stand of the learned Commissioner that the subject assessment order was erroneous and prejudicial to the interest of the revenue for want of verifications of interest income sources. We disapprove of the action of the learned Commissioner on this point as well.
Commissioner has also noted that even though the income from dividend was treated as exempt under section 10(34), the Assessing Officer should have nevertheless examined whether the entire income of the assessee trust was applied for the purposes of the assessee trust.The observations so made by the learned Commissioner show that he has not even applied his mind to the undisputed facts of the case.
If he had cared to look at paragraph 8 of the subject assessment order, he would have noticed that the Assessing Officer has already included the dividend income of ₹ 95,63,30,094 in the available gross receipts of the assessee trust and examined the application of the said income. That is beside the point that such an action was contrary to the claim of the assessee that once this income of ₹ 96,63,30,094 is held to be exempt under section 10(34), it cannot be brought to taxation under section 11 of the Act, and the rejection of the said claim is the subject matter of assessee’s appeal before the CIT(A).
What was being directed by the learned Commissioner was already done by the Assessing Officer, and, therefore, these directions clearly show that there was a clear and glaring non-application of mind to even undisputed material facts of the case. We, therefore, cannot approve justification of the subject assessment order being held to be ‘erroneous and prejudicial to the interests of the revenue’ for this reason as well. No other reason is pointed out to us.
We hold the impugned revision order as devoid of legally sustainable merits - Decided in favour of assessee.
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2020 (12) TMI 1120
Indefeasible right vis-a-vis the benefit of the ITC - Rule 86A of the CGST Rules inserted vide the Notification No.75/2019-CT dated 26th December, 2019 in the CGST Rules - power and procedure for blocking the input tax credit (ITC) in the electronic credit ledger of a registered person during any inquiry or investigation - scope of exercise of power under Rule 86A of the Rules - whether the authority concerned is empowered to retain any amount deposited by a registered person during any inquiry or investigation in the absence of any confirmed liability against the assessee and, more particularly, without issuance of a show-cause notice and assessment/adjudication order imposing any tax liability on the assessee?
HELD THAT:- the Supreme Court categorically considered the aspect of availing the credit and utilization of credit as two different stages and declared that the utilization of the accrued credit is a vested right. No vested right accrues before taking credit. - the vociferous submission of Mr. Dave, the learned counsel appearing for the writ applicants as regards the indefeasible right to avail the ITC vis-a-vis Rule 86A of the Rules should fail and hereby fails.
Scope of powers under Rule 86A - Rule 86A talks about “reason to believe” which is necessary to be formed for the purpose of blocking the input tax credit in cases of inquiry or investigation into fraudulent transactions. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion - there must be material, based on which alone the authority could form its opinion that it has become necessary to block the input tax credit pending an inquiry or investigation into the fraudulent transactions of fake/bogus invoices. The existence of relevant material is a pre-condition to the formation of the opinion.
In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of blocking the ITC in exercise of power under Rule 86A of the Rules, then such action would definitely amount to malice in law. Malice, in its legal sense, means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probable cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith.
Thus, it cannot be said that the inquiry or investigation initiated as regards the fake/bogus invoices for the purpose of ITC is malafide or based on absolutely no materials. From what has been stated in the reply affidavit filed on behalf of the respondents, it could be said that prima facie, there is something which the Revenue has noticed and, therefore, are looking into the same before taking any final call as regards the claim of the writ applicants to avail the ITC. Even, otherwise, Rule 86A provides that on expiry of the period of one year, the restriction shall cease to have effect from the date of imposition of such restriction.
Whether Rule 86A of the Rules contemplate any passing of a specific order with an obligation to communicate the same to the affected person so that such person can take recourse to any legal remedy available to him? - HELD THAT:- Section 83 provides for order in writing. In other words, if the Commissioner is of the opinion that for the purpose of protecting the interest of the Government Revenue, it is necessary to attach provisionally any property including bank account, he may, by order in writing, do so. Even Section 83 of the Act talks about order to be passed in writing on the basis of the reasonable belief of the concerned authority - it is clear that the provisional attachment in terms of Section 11DDA and Section 73C could be made only after issuance of a show-cause notice.
Rule 86A casts an obligation upon the authority concerned to form an opinion but is silent with regard to passing of any specific order assigning prima facie reasons for invoking Rule 86A. To this extent, the Government needs to look into the matter and issue appropriate guidelines and also lay down some procedure to be followed for the exercise of power under Rule 86A of the Rule - In the case on hand, the inquiry, so far, has revealed a prima facie case for the respondents to exercise the power under Rule 86A of the Rules. Although, no specific order has been passed and communicated to the writ applicants in this regard, yet in the facts of the present case, it cannot be said that exercise of power under Rule 86A for the purpose of blocking the ITC is mala fide or without any application of mind.
There are highly disputed questions of fact as regards the debit of the ITC from the electronic credit ledger. Indisputably, the investigation is in progress. A prima facie case could be said to have been made out against the writ applicants. However we may only say that the investigation cannot continue for an indefinite period of time. Almost more than a year has elapsed and, in such circumstances, the authorities concerned should arrive at some conclusion or the other. Even Rule 86A of the Rules prescribes one year time limit - the respondents are directed to complete the investigation within a period of four weeks from the date of the receipt of this order and take an appropriate decision whether any case has been made out for issue of show-cause notice under Section 74 of the Act or not.
Application dismissed.
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2020 (12) TMI 1119
Grant of Bail - allegation of bogus input tax credit, secured on the strength of fake and fabricated invoices without supply of any physical goods to such other existing and non-existing firms - Section 132(1)(i) of the OGST Act, 2017 - HELD THAT:- The evidence is largely based on documentary evidence. Once the charge-sheet has been filed unless antecedents to the contrary can be demonstrated, the presence of the accused may not be required to take the prosecution to its logical conclusion. The object of the law in question is to act as a deterrent in blocking loopholes in an otherwise nascent law which concerns itself with the collection of revenue for the State. Section 132(1)(i) of the Act provides that in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken, exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine. Similarly, Section 132(ii) of the Act provides a punishment with imprisonment for a term which may extend to three years and with fine when the amount in question is greater than ₹ 2 crores but does not exceed ₹ 5 crores.
There is no hard and fast rule and no inflexible principle governing the exercise of such discretion by the Courts. There cannot be an inexorable formula in the matter of granting bail. The facts and circumstances of each case will govern the exercise of judicial discretion in granting or refusing bail. The answer to the question whether to grant bail or not depends upon a variety of circumstances, the cumulative effect of which must enter into the judicial verdict. Any one single circumstance cannot be treated as of universal validity or as necessarily justifying the grant or refusal of bail.
For the purpose of granting or refusing bail there is no classification of the offences except the ban under Section 437(1) of the Criminal Procedure Code against grant of bail in the case of offences punishable with death or life imprisonment. Hence there is no statutory support or justification for classifying offences into different categories such as economic offences and for refusing bail on the ground that the offence involved belongs to a particular category. When the Court has been granted discretion in the matter of granting bail and when there is no statute prescribing a special treatment in the case of a particular offence the Court cannot classify the cases and say that in particular classes bail may be granted but not in others - Several High Courts have also opined that while granting bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public and the State and other similar considerations and have granted bail to the persons accused under section 132 of the CGST Act.
The petitioner is directed to be released on bail on furnishing a bail bond of ₹ 5,00,000/- with one surety for the like amount to the satisfaction of the learned trial court with the conditions imposed - petitioner shall co-operate with the trial and shall not seek unnecessary adjournments on frivolous grounds to protract the trial - bail application allowed.
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2020 (12) TMI 1118
Jurisdiction - proper officer to issue SCN - argument canvassed is that the proper officer under the provisions of the CGST Act, 2017 is the Joint Commissioner, Central GST, Delhi South Commissionerate, who not only issued summons to the writ applicant under Section 70 of the CGST Act, 2017, but also granted the permission to search the business premises of the writ applicant on the basis of his reasonable belief - HELD THAT:- Let Notice be issued to the respondents, returnable on 11th January 2021. Till the next date of hearing, the respondents Nos.2 and 6 respectively shall not take any coercive action against the writ applicant.
Mr. Chetan Pandya, the learned counsel on record appearing for the writ applicant shall serve one copy of the entire paper book to Mr. Devang Vyas, the learned Additional Solicitor General of India so that appropriate instructions can be obtained and the Court can proceed with the hearing of the matter on the next date i.e. 11th January 2021.
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2020 (12) TMI 1117
Refund of ITC of CGST and SGST - N/N. 26/2017 Custom, dated 29.06.2017 - HELD THAT:- After the present writ-application was filed on 20th December 2020, Section 49 of the CGST came to be amended w.e.f. 01/02/2019 and new Section49A and Section49B were inserted in the said Act. By virtue of power under Section49B, Rule88A was inserted w.e.f.29/03/2019 in the CGST Rules vide Notification No.16/2019CT, dated 29/03/2019. In such circumstances, w.e.f. 01/02/2019, the ITC available on account of IGST has to be first utilized for the payment of IGST or CGST or SGST. This provision was amended w.e.f.01/02/2019, but the GST portal started functioning as per the amended provisions w.e.f.01/06/2019. Therefore, w.e.f. 01/06/2019, the accumulated ITC of IGST of ₹ 4,47,43,682/- (Additional Customs duty paid by the writ-applicants, EPCG holder) started getting utilized automatically during the pendency of the petition.
The ITC of CGST and SGST started accumulating correspondingly. In such circumstances, as on date on account of such amendment in operation, the writ-applicants have Nil balance of IGST in its electronic credit ledger and the IGST balance is converted into CGST and SGST. In other words, the balance of CGST and SGST got artificially inflated as a result of the appropriation of IGST credit.
The respondents are directed to sanction and pay the refund of ₹ 4,47,43,681/after first reversing the entries of utilization of the subject credit and debiting the said amount from the credit ledger consequently available to the writ-applicant - Application allowed.
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2020 (12) TMI 1116
Refund of IGST - Zero Rated Supplies - it appears that the writ-applicant had claimed higher duty drawback - Interest on the amount of refund from the date of shipping bill till the date on which the amount of refund is paid to the petitioner - Circular No.37/2018 Customs dated 09/10/2018 - stance of the respondents is that the condition no.7 of the notification dated 31/10/2016 mentions that if any exporter claims drawback under Column (4) and (5), it means that the drawback includes the Customs, Central Excise and Service Tax component and it's called the Higher drawback - HELD THAT:- The Circular No.37/2018 Customs, dated 09/10/2018 referred by the Competent Authority would apply only to the cases, where the exporters have availed the option to take drawback at the higher rate in place of the IGST refund out of their own volition. In the instant case, the assessee had never availed the option to take drawback at higher rate in place of the IGST refund. In such circumstances, the Circular is not applicable to the facts of the present case - Even as per the Condition No.7 of the Notification 131/2016–Cus. (N.T.) dated 31/10/2016, if the rate indicated in the columns (4) i.e. higher duty drawback and (6) i.e. lower duty drawback are the same, then it shall necessarily imply that the same pertains only to the Customs component and is available irrespective of whether the exporter has availed of the CENVET facility or not.
The petitioner had exported Rope Making Machine HSN Code 84794000 which attracts the same rate under both the columns (4) & (6) respectively i.e. 2 per cent. Thus it is evident that the petitioner has claimed drawback of the customs component only for their exports and there arises no question of denying the refund of IGST.
In the case of the writ-applicant, the drawback rates being the same, it represents only the Customs elements, which did not get subsumed in the GST and thus, the writ-applicant cannot be said to have availed double benefit i.e. of the IGST refund and higher duty drawback.
The respondents are directed to immediately sanction the refund towards the IGST paid in respect to the goods exported i.e.'Zero Rated Supplies' made vide the shipping bills - Petition allowed - decided in favor of petitioner.
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2020 (12) TMI 1115
Reopening of assessment u/s 147 - notice was issued on the deceased person - applicability of section 292BB - Whether notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission? - HELD THAT:- In the present case Notice as well as assessment orders both for all these three years were passed in the name of the Deceased assessee.
In view of above facts and the decision in SAVITA KAPILA, LEGAL HEIR OF LATE SHRI MOHINDER PAUL KAPILA [2020 (7) TMI 441 - DELHI HIGH COURT] respectfully following the same, we quash the assessment orders passed in all these three appeals and allow Ground No. 1 and 2 of all the three appeals.
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2020 (12) TMI 1114
Allowability of claim - additional claim by way of letter, which are not claimed in the return of income by the assessee - Deduction towards forex loss - HELD THAT:- There is a distinction between revised return and correction of return. If the assessee files some application for correcting the return filed or making amends therein, it would not mean that he has filed a revised return. It will retain the character of the original return. But once a revised return is filed, the original return must be taken to have been withdrawn and could have been substituted by a fresh return for the purpose of assessment.
In the present case, the assessee filed a letter seeking the deduction towards forex loss. A.O. outrightly rejected it without discussing anything about it. On the contrary the CIT(A) observed that the claim is not relates to the assessment year under consideration and it relates to the earlier assessment year. As gone through the computation statement of forex loss furnished by the assessee, which is placed in paper book page 32 as per which, loss up to 31.3.2013 is at ₹ 20,63,782/- and for the year ended 31.3.2014 cumulatively it is ₹ 62,60,284/-. Thus, it mean that the loss relate to the assessment year under consideration is only ₹ 41,96,702/-.
Income Computation Disposal Standard-6 has relevance to the year under consideration and the placing of reliance by A.R. on this standard is misplaced. Coming to the allowability of deduction, in our opinion, assessee is entitled for forex loss relevant to the assessment year under consideration only to the tune of ₹ 41,96,702/- and not entire amount of ₹ 62,60,285/-.
Accordingly, we direct the A.O. to grant deduction towards forex loss to the tune of ₹ 41,96,702/- only. This ground of assessee is partly allowed.
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