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Showing 241 to 260 of 1551 Records
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2024 (2) TMI 1311
Levy of equivalent penalty imposed under Section 78 of the Finance Act, 1994 invocation of Section 80 of FA - Classification of service - Erection, Commissioning and Installation or not - providing services of fabrication and erection work of cement plant, sugar plant, coal mill, equipment, etc. - period from 10th September 2004 to 31st December 2008 - HELD THAT:- The appellant failed to justify any reasonable cause for non-payment of Service Tax during the relevant period supported by evidences. Ignorance of law or belief of non-applicability of Service Tax to the services rendered for a long duration of five years cannot be considered as a reasonable cause nor difficulty in arranging working capital be considered as sufficient reason for non-payment of Service Tax during the relevant period. Cumulatively, it is not a fit case to invoke Section 80 of the Finance Act; hence, the penalty imposed by the learned Commissioner cannot be interfered with.
The impugned order is upheld and the appeal is dismissed.
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2024 (2) TMI 1310
Recovery of service tax with interest and penalty - entitlement to the benefit of the VCES Scheme - onus to prove - no corroborative evidences - appellant did not appear for personal hearing despite several opportunities granted and the duty demand was affirmed ex-parte - HELD THAT:- The appellant had not been actively participating in the proceedings. Before issuing the show cause notice, the Deputy Commissioner, CGST vide letter dated 13.04.2018, had requested the appellant to submit the documents, i.e., IRRs, Balance Sheets, Form 26AS and ST3 returns for the period 2012–13 to 2014–15 for examination of service tax liability on the services provided by them, however, the appellant never responded thereto nor submitted the requisite documents. Even after issuance of the show cause notice, the appellant did not submit any reply and though several opportunities were granted by the adjudicating authority the appellant did not appear and accordingly proceedings were concluded ex-parte. On appeal, the Commissioner (Appeals) remanded the matter to the adjudicating authority with directions to pass a speaking order after considering the submissions of the appellant in true spirit by following the principles of natural justice and the appellant was directed to produce all related documents to the adjudicating authority.
Normally, the present appeal needs to be rejected considering the conduct of the appellant in not submitting the required documents at any stage, however with all fairness and in the interest of justice, it is felt that an opportunity to produce all the relevant documents in support of the submissions made, needs to be granted to the appellant. The appellant is once again directed to produce the VCES-2 and VCES-3 as the burden of proof is on the appellant. The appellant may also produce the documents in support of his submissions that he is exempted under the threshold limit of exemption for small scale service providers and that the services rendered by them are classifiable as ‘works contract services’ where discharge of 50% of service tax liability under reverse charge by JVVNL is in consonance with the notification.
The adjudicating authority is at liberty to consider all the submissions in the light of the documents to be placed by the appellant and pass a speaking order. The impugned order, is therefore set aside - the appeal is allowed by way of remand.
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2024 (2) TMI 1309
Classification of services - construction/development works in four ventures/ projects - to be classified under works contract service or Construction of Residential Complex Service? - HELD THAT:- Post judgment in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT], CRCS would not be the appropriate classification as this was in the nature of indivisible composite contract and therefore, would be more in the nature of WCS, and since there was no appropriate head i.e., WCS, available prior to 01.06.2007, the demand for this period would fall on this ground itself. In fact, the Board has also clarified vide Circular No. 151/2/2012-ST dt.10.02.2012, that for the period prior to 01.07.2010, construction service provided by the builder/developer will not be taxable in terms of earlier Board Circular No. 108/02/2009-ST dt.29.01.2009. In other words, there would be no liability.
When SCN has proposed demand under WCS post 01.06.2007, whether that demand will still sustain or otherwise? - HELD THAT:- In this case, the SCN has proposed CRCS for the period up to 01.06.2007 but for the same activity, the services have been considered as WCS for the period post 01.06.2007. The rationality is that while services of CRCS continue to be specified service even beyond 01.06.2007, in view of the clear definition of WCS, it will be more appropriately classified under WCS as compared to CRCS, having recourse to Sec 65A.
It is obvious that prior to 01.06.2007, there was no scope for deciding the classification, in view of the fact that CRCS was appropriately covering the activity in terms of its definition and in fact, in terms of Notification, there was a provision for exclusion of value of material involved in providing that service, so that only the service portion is charged to service tax. However, post 01.06.2007, the situation has changed where two different services heads are now available in respect of indivisible composite contract, which is not being denied by either side.
For the period post 01.06.2007, it is obvious that the definition of WCS covers it more specifically as compared to the CRCS and therefore, by applying principle of classification under Sec 65A, the most specific entry for the nature of service would have been WCS and not CRCS, which existed post 2007 also. Thus, to that extent the Commissioner has not appreciated the true nature of transaction and the scope of Sec 65A and there is no bar in changing classification, especially, in cases where there is scope for classifying it more appropriately under a different classification, post introduction of the levy. Sec 65A, cannot be applied only at the threshold but it can also be applied in the event of any change in classification due to change in definition of existing service or introduction of new services, unless otherwise barred by the Act itself.
Therefore, once the service is rightly covered under WCS post 01.06.2007, the next question is whether they will be entitled for exemption under Circular No.151/2/2012-ST dt.10.02.2012. Learned AR has vehemently opposed that Board Circular clarifying that no taxability on construction service for the period prior to 01.07.2010, would only be applicable in respect of construction services falling under clauses (zzq) & (zzzh) of Sec 65(105) and not in respect of WCS. Therefore, there is no exemption from service tax for WCS, which is the appropriate classification.
This issue has been decided by this Tribunal in favour of the Assessee in the precedent orders in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [2014 (3) TMI 694 - CESTAT AHMEDABAD], holding that though classifiable under WCS, no tax is payable for the period prior to 01.07.2010.
There being no merit in the Appeal of Revenue - Appeal dismissed.
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2024 (2) TMI 1308
Eligibility for exemption under Notification No.25/2012-ST - Works Contract Services (WCS) provided to Andhra Pradesh Education Welfare Infrastructure Development Corporation Ltd (APEWIDC), Andhra Pradesh Medical Services Infrastructure Development Corporation Ltd (APMSIDC), Andhra Pradesh State Police Housing Corporation Ltd (APSPHCL) - exemption for construction of IT tower building by way of Works Contract provided to SEZ Authority - HELD THAT:- The three entities/institutions viz., (i) APEWIDC, (ii) APMSIDC & (iii) APSPHCL have been set up by the State Government and are fully controlled by the State Government for furthering the statutory functions of the State Government like providing health, medical and education and housing facilities. It is further the function of the State Government to provide housing for its staff including the Police staff.
It is found from the copy of the Andhra Pradesh Reorganisation Act, 2014 published in the Gazette of India Extraordinary Part II dated 01.03.2014, wherein Sec 68(1) of the said Act provides that – the companies and corporations specified in the Ninth Schedule constituted for the existing State of Andhra Pradesh shall, on and from the appointed day, continue to function in those areas in respect of which they were functioning immediately before that day, subject to the provisions of this section - the aforementioned three entities are carrying out the activities as mentioned in Article 243W read with Twelfth Schedule of the Constitution of India and thus, the Appellant is entitled to exemption under Notification No.25/2012-ST with respect to services provided to these three entities, being WCS.
Services provided through the main contractor by the Appellant to APEWIDC - HELD THAT:- It is found from the documents produced in the course of Hearing corroborate that the Appellant has rendered WCS being construction of school buildings, which is exempt under Notification No.25/2012-ST, S.No.12(a) & (c) and thus, the Appellant is also entitled to exemption as subcontractor under S.No.29(h) of the said notification.
The demand of Rs.16,91,682/- and Rs.3,80,518/- being services provided to governmental authorities set aside - the demand of Rs.6,26,762/- on WCS provided to APIIC, Kakinada (SEZ), it is held that the same is exempt under the provisions of the SEZ Act (Sec 7 read with Sec 51), which has got overriding effect on the provisions of Service Tax Act, and accordingly, this demand is also set aside.
The demands as well as penalties imposed are set aside - this appeal is allowed.
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2024 (2) TMI 1307
Levy of Service Tax - Business Auxiliary Service - contract with its clients to render services in relation to import of goods from abroad - activities undertaken by the appellant are covered within the ambit of Clause (vi) of Section 65(19) of the Finance Act, 1994 or not - scope of SCN - demand in the instant case is sustainable when the Show Cause Notice fails to specify under which sub-clause of Section 65(19) the demand has been raised - HELD THAT:- The services provided by the OLSPs will be taxable under clause (vi) of Section 65(19) mentioned above, only if the services are provided on behalf of the Appellant to the customers of the Appellant. In the present case, the OLSPs are not acting as 'agents' of the Appellant while handling the cargo of the customers of the Appellant. The OLSPs books space on various shipping lines/airlines for the purpose of transportation of the goods from abroad to India. The contract is with the shipping line/airline and OLSPs. The shipping line/airline issues invoice in the name of the OLSPs. In case of defect, the shipping line/airline can sue only OLSPs. OLSPs in turn enter into contract with Appellant. OLSPs charge agreed fixed charges from Appellant. There is no contract between OLSPs and the customers of the Appellant. Accordingly, the OLSPs cannot be taxed under clause (vi) of the business of auxiliary service as there is no contract between the OLSPs and customers of the Appellant.
The expression “on behalf of the client” in clause (vi) presupposes existence of three parties. The services should be provided as an agent of the principal to the customers of the principal. If the services are provided by the agent to the principal, that will be not covered in the scope of clause (vi).
In the case of SAI COMPUTER CONSULTANCY VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [2011 (8) TMI 788 - CESTAT, NEW DELHI] it has been held that When the client of the appellant was UP Power Corporation Ltd., it cannot be held that the appellant served clients of that Corporation on its behalf. Therefore, the appellant goes out of the ambit of sub-clause (vi) of the term ‘business auxiliary service’ defined by law prevailing at the relevant time.
Thus, the services rendered by the OLSPs cannot be categorized under the category of 'Business Auxiliary Services'. Hence, the demand of service tax under the Category of 'Business Auxiliary Services' in the impugned order is not sustainable.
Scope of SCN - SCN has not specified any specific sub-clause of Section 65(19) under which the activities under taken by the OLSPs would fall - HELD THAT:- In the impugned order, the Ld. Adjudicating authority only classified the activities undertaken by the OLSPs under the category of “business auxiliary service” under Section 65(19)(vi) and (vii) read with Section 65(105) (zzb) read with Section 66A of the Finance Act, 1994. Such a categorization is not available in the notice while demanding service tax under the category of 'Business Auxiliary Service'. It is a settled law that the defect in the notice cannot be cured by the observations of the adjudicating authority. Accordingly, the demand of service tax along with interest and penalty confirmed in the impugned order is not sustainable as the Show Cause Notice fails to specify under which sub-clause of Section 65(19) the demand has been raised.
The demand of service tax confirmed along with interest and penalty confirmed in the impugned order under the category of 'Business Auxiliary Service' is not sustainable and accordingly, the same is set aside - Accordingly, the appeal filed by the appellant is allowed.
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2024 (2) TMI 1306
SVLDR Scheme - whether the Appellant has discharged the amounts specified under SVLDRS-3? - whether SVLDRS-4 Certificate was issued by the Department or not? - HELD THAT:- The Department has not issued the SVLDRS-4 Certificate since Rule 7 of SVLDRS Rules, 2019 very clearly states that the amount arrived at under SVLDRS-3 should be paid within 30 days from the date of its issue - there is no provision to extend this time limit and no powers have been conferred to any authority to do so. Therefore, the Appellant is not eligible to get the benefit of SVLDR Scheme.
The Appellant was issued Show Cause Notice based on the Income Tax Returns filed by them. By taking into account the TDS deducted by the clients under Form 26AS, Show Cause Notice has been issued to the Appellant. The Appellant has been maintaining that they have undertaken the services falling under “Works Contract Service” wherein they have provided the materials and also provided the services towards construction services - From the Show Cause Notice, it is seen that the quantification of demand has been made without considering the fact that the Appellant is providing the Works Contract Service. The Service Tax has been demanded @ 10% of the consideration received by them. Admittedly, the evidence provided by the Appellant shows that they were carrying Works Contract Service only.
Matter remanded to the Adjudicating Authority with the following directions:- (i) The demand should be quantified by taking the Service Tax rate as per the Composition rate applicable for Works Contract, during the period under dispute. (ii) The Appellant should be granted opportunity to present all their documentary evidence towards their submission along with details of payments made by them. (iii) The Pre-deposit amounts paid and the amount paid in terms of SVLDRS-3 Certificate should be taken as part of the Service Tax payment against the quantified demand. (iv) In respect of the balance quantified demand, if any, the Appellant should be directed to pay the same. (v) For all the payments done, the interest is to be paid by the Appellant as per the applicable provisions.
The penalties imposed under Section 77 & 78 of the Finance Act, 1994 set aside. The Fine imposed under Rule 7(C) of the Service Tax Rules, 1994 is upheld and is required to be paid by the Appellant - appeal disposed off.
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2024 (2) TMI 1305
Recovery of Service tax with interest and penalty - non-inclusion of certain expenses like inspection charges, property evaluation fees, postage charges etc. in the transaction value - period April 2010 to March 2016 - HELD THAT:- In the Review Order, only the statutory principle of law has been reiterated and no evidence has been adduced to negate the specific findings of the adjudicating authority holding that the service tax on all these expenses, by including the same in the gross transaction value has been discharged by the respondent.
In the result, the impugned order is upheld and the Revenue’s appeal being devoid of merit, accordingly dismissed.
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2024 (2) TMI 1304
Classification of service - development of a market at Biocholim and Ponda for the Goa State Urban Development Agency - works contract service or not - HELD THAT:- In the instant case, though it was the contention of the appellant that a new building had been constructed and renovation or restoration was not carried out, but this aspect has not been considered by the Commissioner in the impugned order and the Commissioner proceeded to examine the issue by considering the activity as one of restoration or renovation.
Even if it is assumed that the appellant had carried out renovation or restoration work, then too clause (d) of Explanation clearly provides that the activity should in relation to ‘(b)’ and ‘(c)’. Thus, such activity has to be primarily for the purpose of commerce or industry. According to the Commissioner, the words ‘primarily for commerce or industry’ figuring in clause (b) of the Explanation would not mean that if the construction is not meant for ‘commerce or industry’, it would not fall within the scope renovation or restoration work mentioned in clause (d) of the Explanation.
In the absence of any finding recorded by the Commissioner that the construction was primarily for the purpose of ‘commerce or industry’, it is not possible to sustain the demand under section 65(105)(zzzza) of the Finance Act. For this reason alone, the order dated 18.03.2015 passed by the Commissioner deserves to be set aside.
The order dated 18. 03. 2015 passed by the Commissioner is, accordingly, set aside - appeal is allowed.
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2024 (2) TMI 1303
SSI Exemption - classification of goods - manufacturing articles of rubber - goods conforming to description corresponding to tariff item 4008 1110 of Schedule to Central Excise Tariff Act, 1985 was sought to be re-classified against tariff item 4008 1190 of Schedule to Central Excise Tariff Act, 1985 - HELD THAT:- Taking up the issue of classification as it is contingent upon resolution thereto that the discarding of claim for exemption available to ’small scale industry (SSI) will become relevant. At the outset, particular emphasis laid on the rigours of classification, within the framework of General Rules for Interpretation of the Schedule appended to Central Excise Tariff Act, 1985 and judicial determination, which forecloses admission in statements from having anything but peripheral influence on the exercise.
In the absence of any exposition of description corresponding to the proposed classification, it is well nigh impossible to approve the manner in which the adjudicating authority has proceeded.
Though there is elaborate discussion on the purported evidence, such as formulation found in private records, admission in statements that these reflected reality and samples sent for testing, the key to the findings are the reports of tests from Deputy Chief Chemist, Vadodara on the composition of the ‘end product’ as being polyethylene. This, along with the conclusion that the product is ‘not rubber’, led to the re-classification insofar as the appellant-assessees are concerned. While the presence of ‘polyethylene’ does fulfill the requirements of note 1 in chapter 39 of Schedule to Central Excise Tariff Act, 1985 and has not been controverted, there is abundantly less certainty on the conclusion in the test report of ‘no rubber’ especially when concatenated with the findings in the impugned order that ‘rubber’ was consumed in the production process.
The grounds of appeal preferred in the challenge mounted by Revenue to the impugned order confirms the need for re-determination. On the outcome of fresh determination also rests the appropriateness of penalty imposed on the individual-appellant. For those purposes, the impugned order is set aside and notice restored to the original authority for fresh decision on claim of appellant-assessees.
Matter remanded on issue insofar as appellant - assessee is concerned, the appropriate disposal of this appeal of Revenue too is re-determination of the dispute by the original authority - the appeals allowed by way of remand.
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2024 (2) TMI 1302
CENVAT Credit - duty paying documents - fraudulent transactions - eligibility of the credits availed by the Appellant on the basis of invoices issued towards purchase of sandalwood oil - HELD THAT:- Receipt of inputs as such by the Appellant and duty paying documents in conformity to Section 9 of the CENVAT Credit Rules are material for the purpose of determination of its eligibility to avail the credits. The inputs were supposed to be sandalwood oil but what was being transported/supplied were actually nothing but “plain water”, as noted by learned Commissioner in para 2.4 of his order describing content of search report for the 1475 kg of crude sandalwood oil, which were found in sealed condition and bound in wooden crates with airport security seal intact but when broke open and verified was found to be plain water only.
The sandalwood oil imported by him were of pure variety and there is nothing in trade known as crude sandalwood oil but for the purpose of certain rectification, method of distillation is applied so also in the case of Patchuli Oil. M/s J.G. Spices Ltd. was one of his customer to whom he supplied imported sandalwood oil and Patchuli oils in containers in the same sealed condition without any further processing. Being confronted with the fact that during search and seizure made by DGCEI of the stock of raw materials and finished group available at M/s J.G. Spices Ltd. premises representative sample were drawn from each container and Directorate of Forensic Science report was called for vide letter dated 29.09.2010 and it conformed the material content was nothing but “water” to which the Appellant’s reply was that they used to open the container, upon receipt and even Customs Officer do so before clearance but the cap of the drums were only put back without re-sealing.
There are no hesitation to come to the conclusion that goods were imported in sealed condition, taken to M/s. J.G. Spices Ltd., Meghalaya and kept therein also in sealed conditions and again returned back to different traders including the Appellant in sealed conditions affixing transit permit, railway freight invoices and in the process additional Excise Duty which was VAT component of State’s tax collected by Union and Central Excise duty both were realized at both the points by the supplier and purchasers respectively causing loss to the State exchequer.
The Appellant had not purchased sandalwood oil from M/s J.G. Spices Ltd. through those invoices and the goods transportation documents would not absolve the Appellant from its liability that the inputs against which credits availed were in fact not valid inputs namely sandalwood oil - Appeal dismissed.
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2024 (2) TMI 1301
CENVAT Credit - clearance of inputs as such - recovery of credit alongwith interest and penalty - sub-rule (5) of Rule 3 of Cenvat Credit Rules, 2004 - HELD THAT:- On going through decision of this Tribunal in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [2012 (7) TMI 141 - BOMBAY HIGH COURT]. In the said case, cenvat credit was availed and after processing of inputs, the same was utilized towards payment of duty and subsequently it was held that the process which was undertaken did not amount to manufacture and, therefore, the said clearances did not attract central excise duty. Under those circumstances, it was held that since the duty payment was accepted by Revenue, the availed cenvat credit cannot be reversed. Such circumstances are not available in the present case. Therefore, the ruling in the said case is not applicable in the present case.
Insofar as the impugned order is concerned in respect of the allowance of cenvat credit of Rs.5,63,66,047/- is concerned, there are no infirmity with the same - that part of the impugned order through which cenvat credit of Rs.5,63,66,047/- was disallowed is not interfered and is ordered to be recovered along with interest and equal penalty.
Demand of Rs.1,18,45,107/- - HELD THAT:- The appellant was eligible to debit proportionate cenvat credit attributable to trading activity and we also find that such debited amount of Rs.3,44,773/- was appropriated by the original authority - the impugned order in respect of demand of Rs.1,18,45,107/-, interest and penalty is set aside.
The penalty imposed on Shri Vijay S. Nair, Managing Director is set aside, and there are no omission or commission on his part in causing any loss to the exchequer.
Appeal allowed in part.
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2024 (2) TMI 1300
CENVAT Credit - input services - refilling of gases from bulk containers to retail containers and conversion from liquid state to gaseous state amounts to manufacture or not - credit availed on input services has been denied alleging that the appellant has not been able to establish nexus of the input services with the manufacturing activity - HELD THAT:- When the services qualify as input services, the credit ought to be allowed unless there is discrepancy in the payment of Service Tax or in regard to the documents. There is no such dispute in this case. In the present case, the services availed are in the nature of inward and outward transportation of the goods. This is essential services for the manufacturing activity. Further, there is no requirement for an assessee to furnish one-to-one co-relation of the input services and the credit availed.
There are no merits in the view taken by the Adjudicating Authority in denying the credit availed on input services. Recently, the Larger Bench in the case of M/s. Ramco Cements Limited Vs. Commissioner of Central Excise, Puducherry [2020 (6) TMI 794 - CESTAT CHENNAI] had held that the credit availed on outward transportation services is eligible when the freight charges are included in the taxable value.
The disallowance of credit on input services and the confirmation of the demand in this regard without basis are requires to be set aside - Appeal allowed.
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2024 (2) TMI 1299
Sales tax demand for use of invalid ST-1 Forms, by the selling dealer - it was held by High Court that The rejection of the Forms in the present case and claiming deduction on the basis thereof for the sale of PVC resins at ₹ 9,25,52,964/- was contrary to law. The findings of the Sales Tax Tribunal and the Authorities below are accordingly reversed - HELD THAT:- Leave granted. Hearing be expedited.
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2024 (2) TMI 1298
Rectification of mistake - Refusal to exercise the jurisdiction under Section 31 of the U.P. V.A.T. Act, 2008 - miscarriage of justice or not - failure to exercise a jurisdiction duly vested by the authority of law - HELD THAT:- Perusal of Section 31 of the U.P. V.A.T. Act, 2008 would indicate that there is no such restriction in the learned Tribunal exercising its power of rectifying the mistake in as much as Section 31 of the U.P. V.A.T. Act, 2008 does not provide that such power can only be exercised by learned Tribunal in exparte orders rather Section 31 of the Act 2008 goes to the extent of empowering any officer, authority, learned Tribunal or this Court on its own motion or on the application of the dealer or any other interested person to rectify any mistake apparent on the face of record in any order passed under the provisions of the Act, 2008. Once no such restriction is contained under the provisions of the Section 31 of the Act 2008 as such it is apparent that learned Tribunal has patently erred in law in rejecting the said application vide the order dated 16.04.2018.
The matter is remitted to learned Tribunal to decide the application of the petitioner filed under Section 31 of the Act, 2008 in accordance with law - the revision is partly allowed.
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2024 (2) TMI 1297
Wrongful representation of poor landless slum dwellers - illegal and unauthorised constructions on the government land - U.P. Slum Areas (Improvement and Clearance) Act, 1962 - HELD THAT:- Admittedly, all these showrooms/workshops, engaged in furniture and related businesses, exist on main road or are immediately adjacent to it. They are getting all benefits of any regular area of the city. They have widest road possible in the city. The main road is not filthy or lacks in any possible municipal facility. Their huge showrooms/workshops cannot be called filthy, run-down or unfit for humans. It is only that their address is shown as Akbar Nagar. The actual slum, covered by aforesaid definitions, begins behind these showrooms. Thus, petitioners are not suffering any of the challenges faced by the actual slum dwellers of the said slum. In the given circumstances, it is not possible for this court to accept that the showrooms/workshops of petitioners can be called as existing in a slum area.
The documents were called for and considered to ascertain the status of Kukrail river/water channel next to the slum area and impact of slum on the said water channel. Once it is held that neither the petitioners are slum dwellers nor their establishments fall within the slum area, the said documents do not in any manner have any impact on the rights of the petitioners. Both before the prescribed authority as well as appellate authority petitioners represented themselves to be slum dwellers and did not place correct facts. Both the authorities have held proceedings and passed orders against petitioners on the basis of the said incorrect presumption.
Looking into the entirety of the matter this Court finds no reason to exercise its discretionary jurisdiction in favour of petitioners - Petition dismissed.
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2024 (2) TMI 1296
Dishonour of Cheque - non-application of mind - denial of an opportunity to cross-examine the Complainant by disclosing specific defence in the Application - Preponderance of probabilities - violation of principles of natural justice - HELD THAT:- The Petitioner is an Accused in a complaint filed under Section 138 of the N.I. Act by the Respondent-Finance Company, in which, the Magistrate has issued a summons on satisfaction that a case is made out for summary trial. The Accused appeared before the learned Magistrate and after explaining the substance of accusation as provided under Section 251 of Cr.P.C., wherein the Petitioner/Accused pleaded not guilty and claimed to be tried, filed an Application under Section 145(2) of the N.I. Act for permission to cross-examine the Complainant.
The impugned order shows that the learned Magistrate after considering the objections raised by the Complainant observed in paragraph 5 that such an Application is filed in the most casual manner and without disclosing any valid defence. The vague statements cannot be considered a valid defence to grant leave to the Accused to cross-examine the Complainant. The grounds mentioned in the Application have no substance as there is no denial about the loan transaction and hence, there is no question of cross-examining the witness - The ground regarding misuse of the cheque is again not explained in the Application and thus, Application was rejected.
The proceedings under Section 138 of the N.I. Act are special proceedings wherein the Complainant is equipped with a presumption in his favour under Section 139 of the N.I. Act when the signature on the cheque is not denied by the Accused. In such a situation, the reverse burden is on the Accused to disprove such presumption though on preponderance of probabilities. It is also well settled by a catena of decisions that in order to dispel the presumption which arises out of Section 139 of the N.I. Act, the Accused either do so by pointing out the defects, discrepancies and inconsistencies in the case of the Complainant by way of cross-examination of the Complainant and his witnesses - the Accused is entitled to rebut such presumption either by showing that the cheque is not issued for legally recoverable debt through the cross-examination of the Complainant or by leading evidence.
The learned Magistrate committed an error in observing that the defence raised by the Accused/ Petitioner is vague and does not disclose the details and the same is found to be incorrect. There are grounds raised in the Application which only after permitting cross-examination of the Complainant could be ascertained as a specific defence. Such defence raised in the Application could be considered as sufficient to bring the case of the Petitioner in terms of “setting up a specific defence” as held by the Apex Court in the case of Meters and Instruments Pvt. Ltd. [2017 (10) TMI 218 - SUPREME COURT] as at that stage, nothing more is expected from the Petitioner/Accused. Admittedly, the Petitioner/Accused is entitled to have a fair trial which includes cross-examination of the Complainant and his witnesses.
The impugned order therefore suffers from improper exercise of jurisdiction. Hence, needs to be quashed and set aside - Application filed by the Petitioner under Section 145(2) of the N.I. Act is accordingly allowed.
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2024 (2) TMI 1295
Dishonour of Cheque - Liability of a Director - principles of vicarious liability - petitioner had already resigned on 15.03.2014 as Director of the Company and was neither signatory of the cheques, nor Managing Director of the Company - Section 141 of NI Act - HELD THAT:- This Court is of the considered view that present petitions under Section 482 Cr.P.C. are not maintainable since the earlier petitions were withdrawn with liberty to urge all the pleas before the learned Trial Court at an appropriate stage and there has been no change of circumstances thereafter. However, in the interest of justice, present petitions have also been considered on merits since the clarificatory certificate issued by Chartered Accountant dated 07.08.2018 that petitioner was a Non-Executive Director is stated to have been filed with the concerned office on the date of withdrawal of earlier CRL.M.Cs. (i.e. 07.08.2018).
The scope of proceedings under Section 141 of NI Act has been considered by the Hon’ble Apex Court in SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [2005 (9) TMI 304 - SUPREME COURT], wherein, it was observed that persons, who are sought to be made criminally liable under Section 141 of NI Act, should at the time of commission of offence be incharge of and responsible to the Company for the conduct of the business of the Company. Consequently, a Director, merely by holding a designation or office in a Company, would not be liable unless he was in-charge of and responsible for the conduct of the business of the Company. Thus, the liability depends upon role in the conduct of the affairs of the Company and not merely by the designation or status except in the case of Managing Director and Joint Managing Director.
The existence of special circumstances or change of circumstances which is specific to the knowledge of accused needs to be established during the course of trial, if the same is not apparent from the record. Since the object of enactment of Section 138 and 141 of NI Act is to prevent bouncing of cheques and sustain credibility of commercial transactions, the proceedings can be quashed only if the ingredients of the offence are altogether lacking despite the foundational facts laid by the complainant.
The principle of law, as referred in Siby Thomas v. Somany Ceramics Ltd., [2023 (10) TMI 487 - SUPREME COURT], is not disputed, but it may be noticed that in the aforesaid case, the appellant submitted that he had retired from the partnership firm on 28.05.2013, while the cheque in question was issued on 21.08.2015. It was further noticed that the complaint was devoid of mandatory averments required to be made in terms of sub-Section 1 of Section 141 of NI Act.
All the petitions are dismissed with composite cost of Rs. 25,000/- to be paid to respondent No. 1. Pending applications in respective petitions, if any, also stand dismissed.
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2024 (2) TMI 1294
Maintainability of complaint against the petitioner - Dishonour of Cheque - vicarious liability of Non-Executive Director - issuance of a legal demand notice to the accused company and its directors - HELD THAT:- It is trite that the Non-Executive Director is not involved in the day to day affairs of the company or in the running of its business. Further, when a complaint is filed against the Director of the company, who is not a signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contentions in the complaint that such Director was incharge of and responsible for conduct of the business of the company unless such Director is designated Managing Director or Joint Managing Director.
A bare reading of para 3 of the complaint shows that in the complaint it has not been substantiated that in what manner the petitioner/accused no. 4 was incharge of and responsible for conduct of the business of the accused company, which elaboration was mandatory since the petitioner is neither a signatory to the cheque nor was he the Managing Director or Joint Managing Director of the accused company. This being the position, the complaint is not maintainable against the petitioner.
In view of the undisputed status of the petitioner as a Non-Executive Director and further regard being had to the fact that the petitioner is neither signatory to the cheque nor Managing Director or Joint Managing Director of the accused company, making him stand the trial would be an abuse of process of Court.
Appeal disposed off.
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2024 (2) TMI 1293
Maintainability of petition - impugned order is an appealable order and the appeal would lie to the Appellate Tribunal under Section 86 of the Finance Act, 1994 - HELD THAT:- Under Section 174(2)(f) the repeal and savings clause under the GST Act, the makers of the statute have categorically held, that the repeal of the Act shall not affect any of the proceedings including that relating to an appeal instituted before on or after the date under the said amended act or repealed act and as such the proceedings shall be continued under the said amended act or repealed acts as if this act had not come into force and the said acts have not been amended or repealed.
When the statutory authority themselves has entertained an application under Section 85 of the Act for the purpose of availing an appeal before the Commissioner, the natural corollary that would follow would be the next appellate forum under the same provision of law i.e., under Section 86, to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) which undisputedly is functional as on date and is also entertaining the appeals arising out of orders passed by the Commissioner under Section 85 of the Act.
Since the petitioner has a forum of appeal available before the CESTAT, the present writ petition is rejected, reserving the right of the petitioner to avail the remedy of appeal. However, there shall be no order as to costs.
Petition dismissed.
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2024 (2) TMI 1292
Addition u/s 69A - cash deposit in bank during demonetization period - as per assessee cash deposits are the amount as originated from the sale of stock - HELD THAT:- The assessee deposited cash by claiming that the amount was originated from the sale of stock. It is never a question that the assessee has never controverted that assessee has in sufficient stock and purchased on the date of announcement of demonetisation on dated 08.11.2016. The assessee sold goods from his shop. Before that date, the assessee was sufficiently covered by the stock. The assessment was completed by the Sales Tax Authority and the turnover and purchased was duly accepted.
As further submitted that from the documentary evidence the source, purpose and sequence of event duly established that there was direct nexus of cash deposit in bank account out of sales realization in cash. It is settled position of law that when the ld. AO had not doubted the sales, purchases, stock and gross profit declared by the assessee then the cash deposit out of such sales cannot be doubted. The authority below had treated the normal transaction in respect of business receipt as something unusual and out of the ordinary only as undiscerningly which is against the principle of natural justice.We respectfully, relied on the order of Anand Metal Corporation [2004 (7) TMI 49 - MADRAS HIGH COURT]
Assessee’s books was rejected u/s 145(3) for non maintenance of stock register -The assessee claimed that the assessee is dealing with the items which are not possible for her to maintain stock register. The ld. AR respectfully relied in the order of the Hon’ble Jurisdictional High Court in the case of Malani Ramjivan Jagannath [2006 (10) TMI 145 - RAJASTHAN HIGH COURT]
We also respectfully followed the order of the Hon’ble Jurisdictional High Court in the case of non maintenance of stock register cannot be the reason for rejection of books of account. The assessee was eligible to prove the stock, the purchased and the assessment order of the Sales Tax Authority. There are no discrepancies on purchase and stock of goods. On mere suspicion the sale of goods cannot be treated u/s 69A of the Act. The ld. DR was unable to submit any contradictory orders / judgments before the bench. Accordingly, the ground of the appeal is allowed.
Discrepancy of the stock valuation in survey team with the declared in the books of accounts - assessee filed a retraction letter for non-accepted the valuation of the revenue as assessee in reconciliation placed that the parties had accepted that the goods sale for approval, so, the same goods are not entered into the stock of the assessee and affidavit was also filed during the assessment and appeal proceeding but none of the revenue authorities had rejected the affidavit of the parties - HELD THAT:- In our considered view, the assessee was filed a proper calculation of stock and with the details of approval of goods which are not entered in the stock of the assessee. Accordingly, we set aside the impugned appeal order. The addition of amount is quashed.
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