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Showing 101 to 120 of 1574 Records
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2024 (12) TMI 1474
Simultaneous issuance of SCN under two provisions - Whether the authorities concerned, can issue show cause notice under Section 18 as well as Section 28 (4) of the Act simultaneously? - HELD THAT:- Annexure-M is a show cause notice issued under Section 18 of the Act and the petitioner is required to reply for the said notice. It is not the case of the petitioner that the said notice has been issued by an Authority / Officer, who has no jurisdiction to issue the said notice. Under the said circumstances, interfering with issuance of the said notice by this Court does not arise. However, in respect of the notice issued under Section 28 (4) of the Act, under the given facts and circumstances of the case, there has to be assessment of the value of the goods and the duty payable by the Authorities concerned before issuance of such notice. Admittedly, the same has not happened insofar as it relates to certain goods mentioned in the said notice.
Petitioner requests six weeks time to issue a reply to the show cause notice at Annexure-M to the writ petition.
Conclusion - The notice under Section 28(4) was set aside, with the possibility of reissuance following the completion of the provisional assessment. The court granted the petitioner six weeks to respond to the show cause notice under Section 18.
The petitioner is granted six weeks time from today for issuing a reply to the show cause notice dated 14.08.2024 issued by respondent No.2 - petition disposed off.
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2024 (12) TMI 1473
Entitlement to claim interest under section 27A of the Customs Act, 1962 from the date of sanction of the refund or from the date of actual refund - HELD THAT:- Section 27A of the Customs Act clearly provides for payment interest up to the date of refund. The order of the Commissioner (Appeals) granting refund has, therefore, to be read in the light of the provisions of section 27A of the Customs Act. What has also to be noted is that the Commissioner (Appeals), in the operative part of the order, also directed that the “payable interest” should be granted to the appellant.
Conclusion - There is, therefore, no reason as to why the appellant would not be entitled to claim interest up to the date of refund of the amount.
The matters are remanded to adjudicating authority to calculate and make the payment of the additional amount of interest in accordance with the observations made above within a period of two months from the date a copy of this order is produced before the adjudicating authority - Appeal allowed.
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2024 (12) TMI 1472
Valuation of imported goods - Enhancement of value of imported glass beads (rockiles) on the basis of assessable value of ‘contemporaneous imports’ of ‘similar goods’ - rejection of the declared value - HELD THAT:- Without access to the relied upon bills of entry, the importer are without wherewithal to subject determination by the original authority to be in conformity with the law. Consequently, and in the light of the decision of the Tribunal in re Dujodwala Products Ltd [2008 (10) TMI 421 - CESTAT, MUMBAI], the impugned orders is set aside and the matter remanded back to the original authority with the direction that relied upon bills of entry be made available to the appellant herein before subjecting the imports to re-assessment and opportunity of hearing be afforded without fail.
The appeals are allowed by way of remand.
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2024 (12) TMI 1471
Recovery of redemption fine from an unpaid seller, for re-exporting the goods, without any contravention having been committed by them under the Act of 1962 - excessive and arbitrary fine imposed - recovery of the penalty amount from the unpaid seller - HELD THAT:- It is an admitted fact that the unpaid seller’s application dated 16.08.2021 for re-export of goods was accepted by the adjudicating authority as he was considered as the owner of goods. Irrespective of the above, it is not disputed by the department as well that the importer M/s. Agricas LLP vide letter dated 30.08.2021 had abandoned the goods and gave their no objection to the unpaid seller to seek reexport of the goods from the Customs department.
It is clear from the observations of the original authority that the unpaid seller’s application for re-export has been allowed by him and the said fact has been accepted by the department, which is evident that no appeal against such order has been filed by the department. The said fact has not been disputed by the learned AR for Revenue as well.
The payment of redemption fine and penalty were made under protest and as such, the right of the appellants to file the present appeal cannot be disputed or questioned by the department.
Imposition of redemption fine - HELD THAT:- The issue regarding imposition of redemption fine on re-exportation of the goods is settled by the judgement of Hon’ble Supreme Court in the case of Siemens Ltd Vs. Collector of Customs [1999 (8) TMI 84 - SUPREME COURT], wherein the imposition of redemption fine by the department was set aside, holding that in case of re-exportation of goods, neither the redemption fine nor the duty is required to be paid and accordingly, ordered for refunding the redemption fine paid by the importer-appellants therein - the Hon’ble Supreme Court have dealt with the issue relating to the same notification and similar set of facts, as involved in the present appeal. However, the only difference being that while we appreciate the submissions of the appellants that the said findings are importer specific, it cannot be lost sight of the fact that the redemption fine has been imposed on redeeming the offending goods under Section 125 of the Act of 1962.
Section 125 of Act of 1962 provides discretion to an adjudicating authority to levy a redemption fine keeping the facts of each case in mind. It is expected of the adjudicating authority to use the said discretion judiciously by levying appropriate fine in deserving cases like the one under consideration. Thus, considering the overall facts and circumstances of the case in hand, the quantum of redemption fine can be reduced in the interest of justice. Therefore, the impugned order is modified, to the extent of reducing the redemption fine to Rs. 5,00,000/-.
Conclusion - The unpaid seller has not contravened any provisions of the Act of 1962, which have rendered the goods liable for confiscation. The quantum of Redemption fine reduced to Rs. 5,00,000/-. The penalty is upheld.
Appeal allowed in part.
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2024 (12) TMI 1470
Seeking refund of the amount deposited - refund claim sanctioned but instead of crediting into account of the respondent transferred to the Consumer Welfare Fund in accordance with the provisions of Section 27(2) of the Act - principles of unjust enrichment - HELD THAT:- The original authority has sanctioned the refund but credited the same to the Consumer Welfare Fund by invoking the principle of unjust enrichment whereas the learned Commissioner has considered this issue of unjust enrichment along with other issues and has given detailed findings on each issue.
Since the Commissioner (Appeals) has given reasoned findings as per law and there are no infirmity in the impugned order passed by the Commissioner (Appeals) therefore the impugned order is upheld by dismissing the appeal of the Revenue.
Appeal of Revenue dismissed.
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2024 (12) TMI 1469
Benefit of exemption Notification issued vide N/N. 129/2008 dated 07.12.2008 to the export of Iron Ore Fines made by the Appellant - shipping bill was filed, and duty was paid before the issuance of the notification - HELD THAT:- As per the decisions relied by Learned Authorised Representative, including the judgement of the Hon’ble High Court of Bombay in the matter of Narayan Bandekar & Sons Pvt. Ltd. Vs. Commr. of. Cus & C.Ex., Goa [2010 (8) TMI 234 - BOMBAY HIGH COURT], is held that on a plain reading of Section 51 read with clause (a) of sub section (1) of Section 16 of the Customs Act, 1962, the date for determination of duty is the date on which an order was passed under Section 51 by the proper officer and date on which the actual loading of Iron Ore was started is totally irrelevant.
Even if the date of Notification and the date on which actual loading of ‘Iron Ore Fines’ was carried out are on 07.12.2008, or date of Notification was prior to 10.12.2008, the date on which vessel left territorial water of India, the benefit of Notification cannot be extended to the appellant, since the shipping bill was filed on 05.12.2008, it was assessed on the same day and the appellant paid export duty amounting to Rs. 73,32,383/- on the very same day. Following the ratio of the judgment in Narayan Bandekar & Sons Pvt. Ltd, relevant date for considering the rate of duty in the present case is 05.12.2008 and appellant is not eligible for the benefit of N/N. 129/2008-Cus dated 7.12.2008.
Conclusion - The appellant is not entitled to the exemption benefit under Notification No. 129/2008-Cus, as the relevant date for duty determination was 05.12.2008, prior to the notification date.
Appeal dismissed.
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2024 (12) TMI 1468
Refund claim of excess CVD paid in respect of 133 Bills of Entry - payment was initially made under protest - principles of unjust enrichment - HELD THAT:- In support of the refund claim, appellant have furnished a certificate dated 13.02.2017 issued by M/s. Prakash & Thiagarajan (CA) showing the due amount in the Company’s Balance sheet as ‘Customs Duty Deposit Receivable under Long Term Loans’. Further, appellant also furnished copy of the balance sheet for financial year 2015-16, where they have accounted the said amount under ‘Long Term Loans and Advances’ under ‘Assets’. As per the Final Order of the Tribunal in the matter of M/s. Micromax Informatics Limited [2023 (9) TMI 1267 - CESTAT NEW DELHI], “once the certificate is produced from Chartered Accountant with Balance sheet, onus stands shifted upon the department to falsify those documents before concluding a presumptive finding.
Similarly, Hon’ble High Court of Karnataka in the matter of Commissioner of Customs Vs. Apple India Ltd [2015 (1) TMI 573 - KARNATAKA HIGH COURT] also held that once assessee has produced certificate from Chartered Accountant stating that the assessee has not passed the burden directly or indirectly, it is sufficient to rebut the presumption of unjust enrichment.
Conclusion - Production of a Chartered Accountant's certificate and relevant financial documentation are sufficient to rebut the presumption of unjust enrichment under the Customs Act, 1962. The appellant is entitled to a refund of the excess CVD paid.
Considering the decisions of the Hon’ble High Court and Tribunal the appeal is sustainable - appeal allowed.
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2024 (12) TMI 1467
Classification of goods - Provisionally preserved Areca nut (whole) and Provisionally preserved Areca nut (split) - to be classified under heading 2008 19 20, which pertains to "Other Roasted Nuts and Seeds," or under Chapter 8, which covers dried fruits and nuts? - HELD THAT:- As per HSN Explanatory Notes, Heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specifying what is included in this heading, the explanatory note states that almonds, ground nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives. Dry-roasting, oil-roasting & fat-roasting, as a process, are very much a part of Chapter Heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of these processes are mentioned in the Chapter Note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter Heading 0802.
It is an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. The case of Commissioner of Customs & Central Excise v. Phil Corporation Ltd. [2008 (2) TMI 3 - SUPREME COURT] is directly relevant and applicable in the instant case of the applicant. In the judgment of the said case Honourable Supreme Court has held “a number of cases, this Court has clearly enunciated that HSN is a safe guide for the purpose of deciding issues of classification. In the present case, the HSN Explanatory Notes to Chapter 20 categorically state that the products in question are so included in Chapter 20. The HSN Explanatory Notes to Chapter 20 also categorically state that It’s products are excluded from Chapter 8 as they fail in Chapter 20.
From the Apex Court’s foregoing judgments, it is observed that the roasted nuts find specific mention in the then Chapter 20 of the then Central Excise Tariff Act and the Chapter 20 of the Schedule I of the Customs Tariff Act, 1975 as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that, in the above referred HSN explanatory note, a process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance - Hon’ble Apex Court’s conclusions corroborate the finding that the process of roasting is not covered by Note 3 to Chapter 8 and hence these products, roasted betel nuts are not classifiable under Chapter 8 of the Tariff.
Conclusion - The Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 ‘Other roasted nuts & seeds’ of Chapter 20 of the First Schedule of the Customs Tariff Act, 1975.
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2024 (12) TMI 1466
Oppression and mismanagement - allowing the Annual General Meeting (AGM) to proceed, keeping the outcome of Agenda No.1 in abeyance - appealable order under Section 421 of the Companies Act, 2013 or not - HELD THAT:- Looking at the nature of the order, which has been subjected to challenge by invoking Section 421 of the Companies Act, 2013, it takes the shape of an Interlocutory Order, where the right of the Appellant in the context of provisions contained under Section 134 of the Companies Act, 2013, which though being procedural in nature and it’s not being a substantive provision, has been left open to be considered and thus the Impugned Order permitting holding of the AGM as scheduled would be an Interlocutory Order.
Since no material right of the Appellant has been addressed or effected on the merits and all objections of the Appellant have been left open to be considered at the stage of the AGM, it will not fall to be an appealable order under Section 421 of the Companies Act, 2013, as it has been left open for him to agitate all his grievances, when the Company Petition itself is taken up on merits qua the decision taken on the AGM as directed to be held in pursuance to the Impugned Order. Thus, the appeal since being premature as it arises out of an Interlocutory order, it will not amount to be an adjudication of a right to sustain the appeal.
Conclusion - Interlocutory orders that do not affect substantive rights are not appealable under Section 421 of the Companies Act, 2013. The appeal since being premature as it arises out of an Interlocutory order, it will not amount to be an adjudication of a right to sustain the appeal.
Appeal dismissed.
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2024 (12) TMI 1465
Unlawful gains by fraudulent and manipulative strategy made by Reliance Company - responsibility of noticee no. 2 i.e. the Managing Director - violating Section 12A of the SEBI Act r/w Regulations 3 and 4 of the SEBI PFUTP Regulations - vicarious liability on both criminal and civil liability for contravention of the SEBI Act, Rules and Regulations - Liability against violations committed by the company
As decided in RELIANCE INDUSTRIES LIMITED, MR. MUKESH D. AMBANI, NAVI MUMBAI SEZ PVT. LTD., MUMBAI SEZ LTD. VERSUS SECURITIES AND EXCHANGE BOARD OF INDIA, [2023 (12) TMI 260 - SECURITIES APPELLATE TRIBUNAL MUMBAI] the word “complicit” means involvement with others in an activity which is unlawful. On the other hand, the word “implicit” is suggestive though not directly expressed.Thus, in the absence of any specific finding by the AO on noticee no. 2 complicit involvement in the execution of the implementation plan or in the execution of the trades, the AO cannot dwell into surmises and conjectures and base its findings on presumption to hold that the noticee no. 2 was implicitly involved in the transactions on the ground of being a Managing Director and which implies a high level of accountability of knowledge of overall functioning of the Company.
The burden under Section 27 was discharged by noticee no. 2 and the AO has miserably failed to prove that noticee no. 2 was involved in the execution of the trades carried out by two senior executives.
HELD THAT:- As no question of law involved in these Appeals warranting our interference in exercise of our jurisdiction under Section 15Z of the Securities and Exchange Board of India Act, 1992.
Appeals are accordingly dismissed.
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2024 (12) TMI 1464
Interest levied by the SEBI on the appellant - SEBI discretion to decide interest charged on outstanding registration fees - expert committee was constituted under Shri R. S. Bhatt (Bhatt Committee) recommended “turnover” as a fair basis of determination of the registration fee and recommended differential rates of fee for different types of transactions.
HELD THAT:- It cannot be held that this Tribunal had given any discretion to the SEBI for calculating interest deviating from the existing Regulations, which provides for mandatory charging of interest
Respondent is right in his submission that in the given set of facts of this case, the word ‘shall’ cannot be interpreted as ‘may’ as held in the case of Anjum M. H. Ghaswala & ORs [2001 (10) TMI 4 - SUPREME COURT] We find that the Regulation 5 of the Schedule-III of the Stockbroker’s regulations mandatorily provide for charging of interest at the rate of 15%.
There exists no discretion in the hands of the SEBI in the matter. Further, charging of interest is in the nature of compensation for accretion to capital and cannot be compared with penalty which involves discretion based on facts and circumstances and underlying intention.
Respondent should have given credit for the interest accrued from the date of this Tribunal’s order dated December 6, 2006 till the order of the Hon’ble Supreme Court’s order dated November 24, 2015 - We find that vide the aforesaid order, the Hon’ble Supreme Court has upheld the calculation of ‘annual turnover fee’ made by the SEBI, which is in accordance with the applicable Stockbrokers Regulations, 2002. In view thereof, interest is rightly charged on the appellant on the outstanding dues of ‘annual turnover fee’. There is no merit in the claim of interest thereon, since the appellant has already got the credit for interest on the principal amount of Rs. 2.92 Crore for the entire period from 2006 till 2019, since no interest has been charged thereon.
A brief period of September 6, 2003 till October 1, 2003, the appellant was having a credit balance of Rs. 74,55,793/-. No interest has been credited to the appellant for this period. In our view, appellant is entitled for the credit of 15% interest p. a. (simple) for the period from September 6, 2003 to October 1, 2003 on this amount lying in appellant’s credit.
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2024 (12) TMI 1463
Forward Market Commission (FMC) powers to conduct audit/inspection and exercise its jurisdiction on the shareholders of the associates - Fraudulent acts and passing on illegal monetary benefits to the entities controlled/connected - abuse of position and commission of irregularities in the affairs of NMCE by the appellant No. 1, through certain employees of the NMCE, to pass on unlawful benefits to the appellant No. 2.
Forward Market Commission (FMC) - FMC was vested with wide powers by FCRA for observing Forward Market and ‘taking such action in relation to them, as it may consider necessary’, and allows it to make an inquiry in relation to the affairs of any association or the affairs of any of its members’
Since the Central Government’s powers had been delegated to the FMC, it had all the powers with regard to taking action with regard to the forward market, as it deems necessary. The mechanism of inquiry was only for gathering facts for which it was vested with quasi-judicial powers. Section 8 of the FCRA allowed it to take necessary actions for enabling functioning of the Forward market. In view of this, we do not find any infirmity in the authority of the FMC in initiating inquiry into the management of the NMCE and the manner in which its key management persons performed their duties.
With regard to scope of the inquiry, it is evident that Section 4 of the FCRA Act is pari materia to the Section 11 of the SEBI Act and keeping in view the decision of the Hon’ble Supreme Court in the case of Sahara India Real Estate Corporation (supra) and Karnavati Fincap Ltd. (supra), an inquiry which is intended to protect the interest of the investors is wide in its scope. The findings of the inquiry suggest that there was indeed unauthorized use of significant amount of funds belonging to the investors (margin money) of the NMCE (Rs 29 Cr.) without due process claimed to be for software development, which could not be substantiated and for market-making activity, (which was not allowed at the relevant time). Therefore, the inquiry for protecting the interests of the investors, is well within the scope of Section 4 of FCRA.
Other jurisdictional challenge which questions the authority of the Director FMC to direct inquiry, in view of the notification dated March 12, 1964, it is evident that the Central Government had delegated the powers u/s 8(1) and 8(2) of the FCRA upon the director also and hence the plea of the appellant to treat the enquiry as ab initio void, is unsustainable. In view of this, we do not find any merit on the challenge on the grounds of jurisdiction in the matter. Thus, ground Nos. 1 and 2 have no merit.
Legitimacy of Payment made to ATSPL - Undoubtedly, the payment of Rs. 28.80 crore towards software development is a bogus payment made to the related parties. In effect, it is in the nature of embezzlement of funds by manipulation of the financial accounts. This is the finding recorded by the Income Tax Settlement Commission set up under Chapter XIX of the Income Tax Act, 1961, which is the final fact finding Alternative Dispute Resolution Authority in the scheme of direct tax dispute while deciding application of NMCE. In any case, facts reveal that ATSPL did not have VAT service tax No. nor had adequate manpower and the on-site inspection revealed that it did not exist at the registered address. In its accounts, ATSPL showed receipt from NMCE as “loans and advances”. The evidence also shows that payments to ATSPL were sought to be justified through back-dated agreements with retrospective effect and the respondent also brought on record evidence of use of stamp paper from a member, who had ceased to supply stamp papers much earlier to the date of purchase of stamp papers. The directors-shareholders of the ATSPL clearly stated that the family member of appellants were running the company for all practical purposes. Keeping in view these incontroverted facts, we find no merit in the appellant’s plea and hold that payment to ATSPL was bogus and made as per the directions of the appellant No. 1 at the cost of NMCE’s investors
Irregularity in issuance of shares of NMCE to appellant No. 2 (NOL) - The funds of the Exchange were used for allotment of NMCE shares to the Appellant No. 2 at the instance of Appellant No. 1, who was the MD and Vice-Chairman of NMCE. The investigation has revealed that the allotment was made without approval and in violation of provisions of Companies Act, 1956 and without payment of application money at the time of allotment. The allotment was also made without receiving money and out of the running account.
On consideration of these facts, we hold that the allotment of shares of NMCE to the appellant No. 1 is bogus. Hence, this ground is also liable to be rejected.
Appointment of various consultants on behalf of NMCE was done validly -Appointment of 144 consultants by the appellant no. 1 for NMCE was made without following any due process or documentation. In view of this, this ground is also liable to be rejected.
Misappropriation of money belonging to NMCE for personal and family expenses - As seen that the in show cause notice, allegations have been made in respect of misuse of NMCE funds amounting to Rs. 19.20 lakh for Ms. Anjana Gupta on foreign travel and for purchase of phone / appliances at her flat at Paldi Ahmedabad. An amount of Rs. 3.88 lakh is alleged on account of foreign travel, phone purchased for Mr. Nanak Gupta and amount of Rs. 2.03 lakhs was incurred for foreign travel, mobile phone purchased for Ms. Pooja Gupta and an amount of Rs. 1.38 lakh was spent on foreign travel of Amit Gupta. Further, it was alleged that appellant had purchased three cars out of Exchange’ funds in his own name for an amount of Rs. 20.93 lakhs and also purchased car for his wife Poonam Gupta for Rs. 11.45 lakhs and, another car for Rs. 14.40 lakh for Shri Nanak Gupta from the funds of the NMCE.
Appellant had denied the charges levelled without providing any cogent explanation. Thus, there is no explanation forthcoming on behalf of the appellants to show that these expenses were made for legitimate purposes. Therefore, we find no merit in this ground also.
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2024 (12) TMI 1462
Failure to comply with the provisions of Regulations 15(1)(i) of Debenture Trustees Regulations SEBI (Debenture Trustees) Regulations, 1993 - penalty of Rs. 10 lakhs u/s 15HB of the SEBI Act, 1992 imposed - default of Code of Conduct under the Debenture Trustee Regulations
Appellant has not reported that there were more than 49 investors in the NCDs, though it had received the relevant communication from Karvy on April 1, 2014 along with list of investors. Secondly, that appellant had sought to suppress the receipt of the BENPOS report from Karvy and did not furnish the same till two reminders were sent and finally forwarded the report on August 4, 2020.
HELD THAT:- Undisputed facts of the case are Vaishnodevi Dairy Products Ltd. had proposed to issue Non-convertible Debentures and appointed appelant/IL&FS as the debenture trustee. The said Company was taken over the appellant. Karvy was the sole subscriber of the debentures and it had further sold the debentures to 185 investors. As per the extant Regulations there could not have been more than 49 investors in debentures.
On April 1, 2014, Karvy had sent an e-mail to IL&FS containing a list of 154 investors. This e-mail is produced at page 299 to 303 of the appeal paper book. It is clearly mentioned on the top that it was the BENPOS report as on March 24, 2014. Appellant has fairly conceded that even on receipt of the list of investors from Karvy on April 1, 2014, appellant did not report the same to SEBI. Thus the first charge has been admitted.
Second charge of suppression of the BENPOS report - The total time taken by the appellant in furnishing the BENPOS report is about 13 days. In the meanwhile, two e-mails were exchanged between the parties. It is not SEBI’s case that correct BENPOS report was not submitted at all, but the allegation is that appellant had initially attempted to suppress the correct report.
Appellant has conceded that appellant did not report to the SEBI about the number of investors. Therefore, in our view, appellant is liable to be penalized for not reporting the matter to SEBI. So far as the second charge with regard to suppression of material is concerned, we are of the opinion that the same is not tenable in view of the facts recorded hereinabove.
Ends of justice would be met by reducing the penalty from Rs. 10 lakhs to Rs. 5 lakhs towards the first charge and holding that second charge is not proved.
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2024 (12) TMI 1461
Maintainability of petition - applicability of principle of estoppel - Constitutinal validity - Sections 13 of the SARFAESI Act, 19 of the RDB Act, and Sections 7, 9, 10, and 95 of the IBC - jurisdictional bars under Section 34 of the RDB Act, Section 34 of the SARFAESI Act, and Section 63 of the IBC - benefits of Sections 7 and 8 of the MSMED Act of 2006 - HELD THAT:- All the petitions have been filed by the same counsel and, therefore, the petitioners have full knowledge that such repeated petitions have been filed before different High Courts, with identical prayers. It is further found that although in paragraph nos.77 and 78 of the present petition, such facts have been disclosed, still it can be said that the petitioners are trying to somehow get an order in their favour by filing different petitions, with same prayers before the different High Courts.
The present petition is dismissed, with a cost of Rs.1 lac (Rupees One Lac) upon the petitioners, which the petitioners shall deposit with the Registrar General of this Court within a period of one month from today. On deposit of such cost, it shall be transmitted to the account of the High Court Legal Services Committee, Allahabad.
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2024 (12) TMI 1460
Institution of a civil suit claiming a relief by way of a title over the 100 equity shares of the MRF - simultaneous pursuit of a civil suit and a company petition by the Appellant was permissible under the Companies Act, particularly in light of Section 430 of Companies Act or not - HELD THAT:- The dismissal of the Company Petition on 10.08.2022, cannot be legally faulted, because admittedly on that date the Appellant was pursuing two simultaneous remedies, one by way of the Company Petition and the other, by way of a civil suit, which was pending despite of the undertaking given by the Appellant to withdraw the same. Though the withdrawal memo was filed, but no orders were passed till the Company Petition was taken up by the Ld. Tribunal on 10.08.2022 and orders were passed dismissing the company petition, on the ground that civil suit is being simultaneously pursued.
It is a settled preposition of law constitutionally mandated, that a right to judicial remedies is a right which is safeguarded by Article 21 of the Constitution of India, and under this right, nobody could be deprived of availing the judicial remedies before the competent Court of Law for redressal of his grievances, which in the instant case falls to be within an ambit of Section 59 of the Companies Act. But the same was denied by the Ld. Adjudicating Authority on account of the pendency of the civil suit, but we cannot ignore the fact which has been brought on record, that when this company appeal was being considered, it is a fact which is not denied, that on the withdrawal memo was filed in the civil suit except that the Lok Adalat dismissed the suit as withdrawn only on 13.08.2022 after the Company Petition got dismissed.
Owing to the implications of the order passed on 13.08.2022, since in the light of the undertaking given by the Appellant before the Ld. Adjudicating Authority to withdraw the suit, the same has been withdrawn though marginally at a later stage, in that eventuality, minor procedural technicalities should not create any hurdle as such against the Appellant for, depriving him for all times to come, from resorting to his judicial remedies. Therefore, as the suit has been withdrawn on 13.08.2022, the Company Petition No. 106(CHE)/2021, as preferred by the Appellant under Section 59 of the Companies Act, ought to have been considered on its merit.
Conclusion - A right to judicial remedy, is a right envisaged under the Constitution, which cannot be deprived of, merely because of a minor procedural error or procedural technicalities.
Petition allowed.
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2024 (12) TMI 1459
Seeking grant of bail - appellants are in custody for about one year and one month but charge has not been framed in a complaint filed under the Prevention of Money-Laundering Act, 2002 - delayed trials - role of the Public Prosecutor in opposing bail applications - HELD THAT:- It is well settled that a Public Prosecutor has to be fair. If a case is covered by a binding precedent, it is his duty to point out the said aspect to the Court. Perhaps what the learned Judge intended to was that when the Public Prosecutor is satisfied that the trial has been delayed on account of default or conduct on the part of Enforcement Directorate, the Public Prosecutor should take a fair stand. However, the aforesaid observations will not prevent Public Prosecutors from opposing a bail petition on the ground that act or omissions on the part of Enforcement Directorate are not responsible for the delay of trial. Therefore, this order cannot be read to mean that the Public Prosecutors are not entitled to oppose the bail petitions.
Conclusion - Undue delay in trial proceedings, particularly without charges being framed, can justify granting bail.
Application disposed off.
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2024 (12) TMI 1458
Money Laundering - predicate offence - proceeds of crime - petitioner is a bona fide purchaser or not - petitioner can be subjected to proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) based on the alleged predicate offences committed by the vendor or not - HELD THAT:- The link in the chain of events and undisputed dates are taken note of, what could be unmistakably gathered is, that the petitioner is a bona fide purchaser. Having purchased the property long before the crime even being initiated against the vendors of the petitioner would not mean that the axe should fall on the petitioner, that too for attachment of properties which have changed hands after they are purchased by the petitioner. The proceedings instituted by the Enforcement Directorate, though civil in nature or the petitioner is having alternate remedy to challenge the orders of attachment would not mean that this Court could permit such an action to be taken against the petitioner, without him being involved in any manner. If that would be permitted, every purchaser who has purchased the property from a person who gets indicted in the crime at a later stage would have to face the proceedings for no fault of him.
In somewhat identical circumstances, the Apex Court in the case of Pavana Dibbur v. Directorate of Enforcement [2023 (12) TMI 49 - SUPREME COURT] upturning the order passed by this Court holds that unless conspiracy is alleged, all and sundry cannot be drawn into the web of proceedings under the Act.
Though in the case at hand, in one of the crimes so registered there is offence punishable under Section 120B of the IPC, but that cannot drag the petitioner into the web of those proceedings, as all the transactions that the petitioner is projecting have happened long before initiation of predicate offence even. Therefore, there are no hesitation to hold that the impugned proceedings are unsustainable, in the peculiar facts of this case.
Conclusion - A bona fide purchaser who acquires property before any predicate offence is registered cannot be subjected to proceedings under the PMLA without evidence of conspiracy or direct involvement.
Petition allowed.
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2024 (12) TMI 1457
Money laundering - scheduled offence - loan borrowed by the companies have facilitated mis-appropriation, manipulation of books of accounts through fictitious accounts and conversion of property of SIL by way of No. (1) Capital advances to potentially related party, (2) Sales and purchase with potentially related properties (3) bilateral transactions with properties related amongst themselves - petitioner mainly contended that the respondent cannot proceed under PMLA in view of the quashment of predicate offence - legal grounds on which FIR pertaining to the scheduled offence was quashed - scheduled offence of section 447 of the Act is still pending against the petitioner - PMLA is a sui-generis legislation - section 3 of PMLA is a standalone provision - ECIR cannot be equated with FIR - deliberations on the principle of automatic quashing of ECIR once FIR stands quashed.
Legal grounds on which FIR pertaining to the scheduled offence was quashed - HELD THAT:- It is not in dispute that complaint under Sections 44 and 45 of PMLA has been filed. Thereafter, supplementary complaint was also filed invoking Section 447 of the Companies Act, 2013 on 12.06.2024. The FIR was challenged before the High Court of Karnataka. The High Court quashed the FIR on the ground that the investigation pertaining to the same allegation against the petitioner and other accused was entrusted to the Serious Fraud Investigation Office (SFIO), and the SFIO after investigation submitted a report and thereafter filed a chargesheet / complaint before the Special Court and the same is pending before XV Additional City Civil Court, Chennai. Therefore, the Court quashed the FIR No. 11/2019 dated 01.11.2019 on the ground that SFIO alone has jurisdiction to try the said offences.
Scheduled offence of section 447 of the Act is still pending against the petitioner - HELD THAT:- The proceedings under section 447 of the Companies Act, 2013 is a scheduled offence under PMLA, 2002. It is not disputed that already chargesheet / complaint has been filed under Section 447 of the Companies Act, 2013 on 09.09.2022 and the same is pending before the XV Additional City Civil Court, Chennai. Further, it is submitted that the Petitioner was arrested by SFIO and is under judicial custody from 02.08.2022 - the action of Respondent Department does not stand vitiated as the predicate offence under Section 447 of the Companies Act, 2013 is still pending and not quashed. Therefore the prayer of quashing of the ECIR and all subsequent proceedings appears to be misplaced one.
PMLA is a sui-generis legislation - HELD THAT:- After investigation of the crime, the Respondent Department has to investigate into whether the offence, as enunciated under Section 3 of PMLA has been committed or not, and the adjudication, prosecution and trial under PMLA is independent of the scheduled offence. The Respondent is the notified Investigative Authority for PMLA only and not for the scheduled offence - In a case where based on the scheduled offence Enforcement Directorate initiated PMLA proceedings, conducted investigation, identified “proceeds of crime” and filed statutory complaint under Sections 44 and 45, then it is to be construed as Standalone Process within the parameters laid down by the Hon'ble Apex Court in the case of Vijay Madanlal [2022 (7) TMI 1316 - SUPREME COURT (LB)].
Section 3 of PMLA is a standalone provision - HELD THAT:- The authority under PMLA, is to prosecute a person for offence of money laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of “ Proceeds of Crime”. Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process. Therefore, the live link between the scheduled offence and PMLA proceedings would be relevant for initiation of proceedings under PMLA. The Hon'ble Supreme Court elaborately considered initiation of PMLA proceedings, for which it is a pre-condition that a scheduled offence is to be registered.
ECIR cannot be equated with FIR - HELD THAT:- ECIR is born from FIR, but once the ECIR is born, the umbilical cord that connects the ECIR with FIR losses its relevance and the ECIR becomes an independent document in itself. Consequently, a new life in the form of ECIR emerges, which can breath on its own without the support of FIR. So, the FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other.
Deliberations on the principle of automatic quashing of ECIR once FIR stands quashed - HELD THAT:- It shocks the conscience of the Court that in recent cases involving money laundering, a certain pattern has emerged, whereby, the FIR quashed through minor technical glitches or procedural irregularities and with that as a ground they seek for quashing of ECIR also - Any application of principle, even if in its literal form paves way for injustice, then the Court is allowed to take a detour to expound the law in such a way which serves the cause of justice. If the principles of automatic quashment of ECIR is adopted arithmetically, the very purpose and objective of PMLA is defeated.
This Court is not venturing into the grounds of quashing an FIR as the principles pertaining to the same has already been laid down elaborately by the Hon’ble Supreme Court. But the rationale here is to cull out the level of bearing that a quashed FIR has on an proceedings challenging the ECIR. This Court feels that all cases where FIR is quashed shall not automatically become a ground for quashing an ECIR. Instead a case to case analysis is a pre requisite for deciding on the sustenance of an ECIR - keeping in line with the explanation to Section 44 of the PMLA, 2002, this Court comes to the irresistible conclusion that cases where FIR pertaining to the scheduled offence is quashed it does not automate the exoneration of the accused from the predicate offence. Rather FIR quashes on grounds of mere technicalities or procedural irregularities in the FIR, cannot by itself form a basis to grant an automatic quash of ECIR. Also in the aforementioned instance, there needs to be a case to case examination of the offence registered under the PMLA before the offence is rendered ineffectual.
Implications of automatic quashing of ECIR based on FIR quash - HELD THAT:- Since the SFIO was already entrusted with the investigation by the Central Government vide order dated 09.04.2019 on the same set of allegations, the present FIR registered by the CBI was quashed by the High Court citing the aforementioned reason. Hence, it is amply clear that the High Court has quashed the FIR only on the ground that another Investigating Agency is seized off the matter. The Court has not dealt with the allegations nor tested the merits of the offences charged in the FIR. The Court restricted itself only to the ground of want of jurisdiction. Hence the FIR was quashed purely on this technical or procedural issue and not on substantive grounds and has not made any findings as to the offences or the prima facie allegations in the FIR. Therefore, the quashing of the FIR shall not warrant an automatic quashing of ECIR. All the more, the predicate offence under Section 447 of the Companies Act, 2013, which is also a scheduled offence under the PMLA still stands good and requires further investigation. Therefore, in view of the above ECIR is not liable to be quashed.
Conclusion - i) The Court quashed the FIR No. 11/2019 dated 01.11.2019 on the ground that SFIO alone has jurisdiction to try the said offences.
ii) The action of Respondent Department does not stand vitiated as the predicate offence under Section 447 of the Companies Act, 2013 is still pending and not quashed. Therefore the prayer of quashing of the ECIR and all subsequent proceedings appears to be misplaced one.
iii) The Respondent is the notified Investigative Authority for PMLA only and not for the scheduled offence. The live link between the scheduled offence and PMLA proceedings would be relevant for initiation of proceedings under PMLA.
iv) If the principles of automatic quashment of ECIR is adopted arithmetically, the very purpose and objective of PMLA is defeated. The FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other.
v) keeping in line with the explanation to Section 44 of the PMLA, 2002, this Court comes to the irresistible conclusion that cases where FIR pertaining to the scheduled offence is quashed it does not automate the exoneration of the accused from the predicate offence.
vi) The quashing of the FIR shall not warrant an automatic quashing of ECIR. All the more, the predicate offence under Section 447 of the Companies Act, 2013, which is also a scheduled offence under the PMLA still stands good and requires further investigation. Therefore, in view of the above ECIR is not liable to be quashed.
Thus, the petitioners have not made out any case for quashing of ECIR filed by Enforcement Directorate. However, the Trial Court shall proceed uninfluenced by the observations if any made on factual aspects and decide the issues based on documents and evidence available on record and by following the due process - petition dismissed.
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2024 (12) TMI 1456
Maintainability of the present appeal before the Court - appropriate forum - taxability - appeal ought to be preferred before the Supreme Court or not - HELD THAT:- Since the issue is one of taxability, the decision of CESTAT would have to be assailed before the Supreme Court in view of Section 35L of the Central Excise Tax as the question of law involved is regarding the taxability of the said service. This is the settled position in law as per a series of decisions including a recent order of this bench in Commissioner of CGST and Central Excise, Delhi v. M/s Spicejet Ltd. [2024 (12) TMI 1408 - DELHI HIGH COURT]. This Court dismissing a similar appeal preferred under Section 35G, from the decision of CESTAT observed 'In view of Sections 35G and 35L of the Central Excise Act, 1944 which applies in respect of Service Tax, whenever issues of determining taxability are involved, the appeal would lie to the Supreme Court.'
The present appeal is rejected with liberty to avail remedies under Section 35L of the Central Excise Act, 1944 in accordance with law. Needless to state that the Appellant is free to claim benefit under Section 14 of the Limitation Act, 1963 for the period during which the present appeal was pending before this court - Appeal disposed off.
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2024 (12) TMI 1455
Cash refund of accumulated cenvat credit on input services used in providing output service - export of services - appellant is an intermediary or not - refund claims rejected solely on the ground that the services rendered by the appellant to Microsoft Corp, USA is not an ‘Export of Service’, which are in the nature of ‘intermediary service’ - HELD THAT:- The appellants had entered into an agreement with Microsoft Corp. for providing various services viz., online technical support service to the customers of Microsoft Corp. through mail, over phone, etc. In other words, they rendered services in the nature of after sales support or product warranty support services by an agreement with MS Corp. Thus, there is an agreement between the appellant and MS Corp and nowhere, they are connected with the customers of the Microsoft Corp in rendering such services.
This issue has been considered by this Tribunal more or less in a similar circumstances in the case of CCT vs. M/s. Informatica Business Solutions Pvt. Ltd. [2024 (11) TMI 922 - CESTAT BANGALORE], where it was held that 'The basic requirement to be an intermediary is that there should be at least three parties; an intermediary is someone who arranges or facilitates the supply of goods or services or securities between two or more persons. There is main supply and the role of the intermediary is to arrange or facilitate another supply between two or more other persons and, does not himself provide the main supply.'.
The refund cannot be denied - the impugned order is set aside - appeal allowed.
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