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2024 (7) TMI 1322
Maintainability of the writ petition - petitioner’s account has been declared as Non-Performing Asset - NCLAT observed that since the NCLT had reserved the proceedings filed by the Bank under Section 7 of the Code for passing orders, it was not inclined to entertain the appeal - HELD THAT:- The petitioner having filed the interlocutory application, the interest of justice demands that this application be considered prior to passing any order on the Company Petition preferred by the Bank. This is for the reason that in the interlocutory application, the petitioner has prayed that various subsequent events be taken note of and pronouncement of the order in the Company Petition be deferred. If the interlocutory application as well as the Company Petition are decided together, the apprehension of the petitioner of prejudice being caused to it cannot be brushed aside as unfounded - The interlocutory application now filed before the NCLT seeks consideration of these aspects before adjudicating the Company Petition. This request made by the petitioner ought to be considered by the NCLT before deciding the Company Petition.
The interest of justice demands that the interlocutory application preferred by the petitioner being Interim Application No. 3623 of 2024 be first decided before proceeding to pronounce final order on the Company Petition - Petition dispsoed off.
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2024 (7) TMI 1321
Seeking dissolution of the company (in liquidation) - Prayer that the Official Liquidator be discharged as its Liquidator - Section 481 of the Companies Act, 1956 - HELD THAT:- In view of the prevailing facts and circumstances, it would be expedient to refer to the decision in Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti & Ors. [2007 (8) TMI 447 - SUPREME COURT] whereby the Supreme Court inter alia held that 'When the affairs of the Company have been completely wound up or the court finds that the Official Liquidator cannot proceed with the winding up of the Company for want of funds or for any other reason, the court can make an order dissolving the Company from the date of that order. This puts an end to the winding up process.'
In keeping with the decision of the Supreme Court in Meghal Homes as also the import of Section 481 (1) of the Act, besides the facts and circumstances of the present case, these liquidation proceedings warrant to be brought to an end. Therefore, the present application is allowed. The company (in liquidation) – M/s. Dream City Builders P. Ltd., stands dissolved and the Official Liquidator is hereby discharged as its Liquidator.
The Official Liquidator is permitted to transfer the available balance, if any, to the Common Pool Fund and thereafter, to close the books of accounts of the company (in liquidation) - application allowed.
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2024 (7) TMI 1320
Rejection of application u/s 10 of IBC - Seeking to initiate Corporate Insolvency Resolution Proceedings (CIRP) - It is the case of the Appellant that the Section 10 application was complete in all respect and all statutory prescriptions to file Section 10 application had been met - whether the Adjudicating Authority committed any error in rejecting the Section 10 application? - HELD THAT:- It is noticed that much before the Section 10 application was filed by the Appellant, the Respondent Bank had issued notices to the Appellant for personal hearing before declaring the Appellant to be a wilful defaulter. It is also found that the Adjudicating Authority took notice of the fact that the Appellant Company failed to appear before the Respondent Bank in spite of notices having been issued to them twice and gave a slip to the proceedings initiated by the Wilful Defaulter Identification Committee of the Respondent Bank. Even after being declared a defaulter, the Appellant continued not to respond to the notices issued by the Respondent Bank.
The Appellant Company was selectively approaching the Bank requesting for some reprieve but was deliberately avoiding the Bank in the proceedings being conducted for being a wilful defaulter. This glaring duplicity in the conduct of the Appellant as pointed out by the Respondent Bank has also been taken cognisance of by the Adjudicating Authority in concluding that the Appellant has come before it with unclean hands.
It does not escape notice that the Appellant was trying to embroil the Respondent Bank in multiple layers of litigation. It is an undisputed fact that the Appellant had filed securitization application SA-365 of 2019 before the DRT, Lucknow for stay on the auction of its properties by the Respondent Bank. Apart from moving the securitization application before the DRT, the Appellant had also knocked at the doors of the Hon’ble Allahabad High Court by filing a Writ petition - the Appellant made incessant efforts to put a spanner in the recovery proceedings initiated by the Respondent Bank and finally resorted to filing the Section 10 application.
There is no quarrel over the fact that Section 10 vests rights on the Corporate Debtor to resolve their insolvency. However, one cannot lose sight of the fact that this protective umbrella over the assets of the Corporate Debtor is not misused or abused in a manner so as to become a tool for deriving undue advantage at the cost of insolvency resolution which objective unequivocally resonates in the preambular aspirations of the IBC - the Adjudicating Authority rightly deprecated the Appellant Company for having filed the application under Section 10 of IBC after unsuccessfully trying at pre-empting recovery proceedings undertaken by the Respondent Bank.
The Adjudicating Authority agreed upon that the bonafide of the Appellant in filing of the Section 10 application was doubtful and that the filing was done for reasons other than insolvency resolution and therefore deserves to be dismissed.
There are no good reasons which warrants any interference in the impugned order - appeal dismissed.
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2024 (7) TMI 1319
Violations committed under FEMA Act - Personal hearing notice issued by the Assistant Director (SRO), directing the petitioner to appear before the adjudicating authority, i.e., the Additional Director, Directorate of Enforcement - Jurisdictional authority of the Additional Director of Enforcement - enhancement of pecuniary jurisdiction by way of notification dated 27.09.2018 to obstruct the proceedings already instituted by the Special Director (adjudicating authority) under the FEMA - HELD THAT:- Once the power to appoint an adjudicating authority is conferred on the Central Government and the Central Government, in exercise of power, issued a notification, no doubt the said notification is to be effected with prospective effect. While giving prospective effect, the cases which all are pending before the other authorities must be transferred to the appropriate authority with prospective effect for the purpose of continuance of further adjudication in the manner known to law. In the present case, such a transfer was effected from the file of the Special Director to the Additional Director of Enforcement.
The present case has been transferred from Special Director to the Additional Director in view of the enhancement of pecuniary jurisdiction by the Ministry of Finance, Department of Revenue, vide notification dated 27.09.2018. Thus, this Court do not find any jurisdictional error or otherwise in the matter of continuation of further proceedings under the FEMA Act, by the Additional Director of Enforcement who is empowered to deal with the cases involving amount up to Rupees Twenty Five Crores, but not less than Rupees Ten Crores. In the case of the petitioner, the allegation is for a sum of Rs.11.27 Crores (Rupees Eleven Crores Twenty Sevel Lakhs) and therefore, the transfer of the case from the Special Director to the Additional Director of Enforcement is well within the provisions of the FEMA Act and the grounds raised by the petitioner fails.
No writ against a Show Cause Notice is entertainable. A writ against a Show Cause Notice can be entertained only if the notice has been issued by an incompetent authority having no jurisdiction or allegations of malafides are raised. In the present case, the learned Senior Counsel made an attempt to establish that there is a jurisdictional error which would disentitle the Additional Director (adjudicating authority) to continue the adjudication. This Court is of the opinion that the ground raised is untenable and respondents have transferred the case to the Additional Director of Enforcement in view of the notification issued by the Government of India in exercise of the powers under Section 16(1) of the FEMA Act and thus, this Court has come to an irresistible conclusion that the petitioners are not entitled to the relief as such sought for in the present writ petitions.
Writ petitions stand dismissed.
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2024 (7) TMI 1318
Seeking grant of regular bail - Money Laundering - scheduled offences - criminal conspiracy - huge amount of money was paid as kickbacks in advance to the public servants involved in the commission of alleged offences and in exchange of undue pecuniary benefits to the conspirators involved in the liquor trade - reasons to believe - mandatory twin condition of section 45 of PMLA satisfied or not - HELD THAT:- Section 45(1) of PMLA lists the twin conditions that must be satisfied before an accused can be enlarged on bail in a case of money laundering. In this context, it will be relevant to take note of the observations of Hon‟ble Apex Court in case of Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT], on the satisfaction of mandatory twin conditions under Section 45 of PMLA, which held that 'The Court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the Court based on available material on record is required. The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of Trial Court. The Court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial'.
Thus, at the stage of consideration of bail of a person who is accused of commission of offence of money laundering under PMLA, the Court is not required to conduct a mini trial for the purpose of returning a finding of guilt, rather the material on record is to be examined to reach a conclusion as to whether there are reasonable grounds to believe that the accused is guilty of offence under PMLA.
It is clear that the present applicant was part of preparation of the old excise policy and thereafter, the new excise policy was made to suit the co-accused(s) who were to pay kickbacks to the present applicant and co-accused(s) and the party concerned, from the profit so generated due to excise policy drafted to suit them and there are specific statements that Rs. 2 crores were paid to Sarvesh Mishra for Sh. Sanjay Singh at his official residence in lieu of the new excise policy made to suit them and generate profit for them, the role at this stage of the applicant cannot completely be ruled out. The specific allegations with time, place and manner when the meetings and conversations took place between Dinesh Arora, Vivek Tyagi, Sarvesh Mishra, Vijay Nair, Sh. Sisodia, Sh, Sanjay Singh etc. cannot be disregarded at this stage.
Whether the applicant is entitled to bail on the ground that he is not an accused in the scheduled offence? - HELD THAT:- Recently, in case of Pavana Dibbur v. Enforcement Directorate [2023 (12) TMI 49 - SUPREME COURT], the Hon‟ble Apex Court has held that it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence.
During the course of arguments, learned ASG representing the respondent had pointed out that the Directorate of Enforcement had already communicated and shared, via a letter dated 13.11.2023, under Section 66(2) of PMLA, information about the investigation regarding the facts of this case with the CBI. Further, the CBI had also written a letter dated 22.12.2023 to the ED, stating that the information shared by them has been taken on record for further investigation in the predicate offence case - this Court finds no merit in the argument that applicant herein has not been made an accused in the scheduled offence.
Admissibility and an evidentiary value of statements recorded u/s 50 of PMLA - HELD THAT:- At the present stage of deciding the bail application of the accused, when the trial has yet not commenced, this Court would be required to take into consideration the material collected by the investigating agency including statements of witnesses recorded under Section 50 of PMLA, statements under Section 50 of PMLA can make out a formidable case of money laundering against an accused.
The approver has not come forward to any Court of law to state that the statements so recorded were made under any stress or pressure or threat. The approver and his statements will be put to test of cross-examination and the evidentiary value of the statement will be adjudged on the touchstone of the cross-examination itself. Therefore, a statement recorded by a Magistrate as per law of a person who has now turned approver, was earlier an accomplice or accused, cannot be disregarded at this stage on the ground that his statement is unworthy of credence or there are reasons or motives to falsely implicate the present applicant - This Court, therefore, notes that the sanctity attached to a statement recorded under Section 164 of Cr.P.C., now termed as a statement of the approver, cannot be thrown at the threshold or disregarded for the purpose of consideration as to whether there is material on record, which within the parameters of PMLA, will disentitle the accused to grant of bail when tested on the anvil of Section 45 of PMLA to pass the test of twin conditions for grant of bail.
The law regarding such admissibility and the stage when such admissibility can be examined and adjudicated has not been carved out by this Court, but by the enactment of the provisions of Code of Criminal Procedure and Indian Evidence Act and catena of judgments of the Hon‟ble Apex Court in this regard.
The court is bound by law and cannot be influenced by the position of any petitioner - HELD THAT:- In the eyes of the law, it is of paramount importance to maintain impartiality and treat all individuals equally, regardless of their status as public figures or private citizens. While public figures may wield influence or hold positions of authority, their legal rights and obligations are subject to the same standards and principles as those of any other individual in society - The principle of equality before the law is based on the notion that justice should be blind to factors such as fame, wealth, or social standing. At the same time, orders are not passed only at the asking of the State but through legal proceedings and outcomes are determined solely based on the merits of the case and the application of relevant laws, without favouritism or discrimination.
Thus, no ground for grant of bail is made out, at this stage - application disposed off.
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2024 (7) TMI 1317
Interpretation of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) for service tax demand - Whether petitioner has actually paid the amount as indicated by petitioner in Form 1? - HELD THAT:- If petitioner is given an opportunity to produce the challans/receipt of the payments made to enable respondent to verify whether the payment was actually made against the tax liability pertaining to the concerned Show Cause Notice, the matter could be put to rest. Once petitioner satisfies the consequence thereof will be to consider the same as payment under the SVLDRS.
The Committee constituted under Section 126 of the SVLDRS will give hearing to petitioner within six weeks from today and the notice of hearing shall be communicated atleast five working days in advance - If petitioner is unable to satisfy the Committee that the payment made was against the tax liability pertaining to the impugned Show Cause Notice then respondent may take further steps based on the Impugned Order dated 25th February 2021.
Petition disposed off.
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2024 (7) TMI 1316
Suppression of facts or not - invocation of extended period of limitation - Non-payment of due amount of service tax on manpower recruitment and supply service - gross receipts indicated by the appellant in their ST-3 returns were substantially lower that the amounts shown in 26AS statement - appellant had collected the service tax amount from their clients and did not deposit the same in the Government exchequer - penalty.
HELD THAT:- As per the legal provisions prior to 1.7.2012, it is noted that the liability to pay the entire service tax was on the service provider. However, vide notification No. 30/2012 dated 20.06.2012, the service tax liability was shared (25%/75%) in case if any individual or HUF or partnership firm is providing supply of manpower service for any purpose to business entity registered as a body corporate. The adjudicating authority has held that the Form 26 AS/Balance Sheets of the appellant, as obtained from the Income Tax department indicate that during the period 2011-12 to 2014-2015, the appellant was engaged in providing the said taxable services. There is no contrary evidence that has been submitted by the appellant to hold otherwise - the Department has relied on the 26AS statement which is a statement that provides details of any amount deducted as Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) from various sources of income of a taxpayer. This statement gives a consolidated record of every tax-related information associated with a PAN. Therefore, the veracity of the statement cannot be doubted.
It is observed that it has been mostly contended by the ld. counsel to the appellant that the demand for the extended period is not sustainable as there was no intent to evade tax. At the outset, the contention of the ld. counsel that the show cause notice refers to suppression and not mis-statement of facts cannot be accepted - the appellant was aware of his tax liability and chose not to pay his tax correctly.
In the instant case, the appellant did not cooperate with the investigations, failed to submit any documents to substantiate his claim and did not disclose the actual value of taxable services provided by him in the ST-3 returns filed by him. This clearly establishes his intent to evade his liability to pay service tax. Thereafter to appeal to this forum alleging that the demand was time barred, and the finding of suppression of facts was erroneous cannot be accepted.
Extended period of limitation - HELD THAT:- It has been held in the impugned order that as per the chronology of events, during the period in question, the appellant had failed to discharge his liability correctly, as well as suppressed the value of the taxable services realized by them in the ST-3 returns filed by them - the Apex Court in the case of M/S. USHA RECTIFIER CORPN. (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [2011 (1) TMI 12 - SUPREME COURT] held that extended period is invokable for notices where the information has been taken by the Department from the Balance Sheet - there are no hesitation in holding that the extended period was rightly upheld by the adjudicating authority.
Penalties - HELD THAT:- The penalties imposed under Section 77(1)(c)(ii), 77(1)(c)(iii) and Section 78 of the Act upheld.
There are no infirmity in the impugned order - appeal dismissed.
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2024 (7) TMI 1315
Levy of service tax on ‘reverse charge mechanism’ - availing ‘goods transport agency services’ by a manufacturer of ice-cream - HELD THAT:- It is to be placed on the record that negative list introduced under Section 66D w.e.f. 01.07.2012 has clearly excluded under Sub-Clause (p) services by way of transportation of goods by road but not services of a “Goods Transport Agency”. Therefore, if such services are provided by “Goods Transport Agency” then the same is subjected to Service Tax. “Goods Transport Agency” itself is defined under Section 65(50b) of the Finance Act, 1994, which means service in relation to transport of goods by road by any person and issue of consignment note, by whatever name called and Rule, 4B of the Service Tax Rules provides for mandatory issue of consignment notes by “Goods Transport Agency” while providing service in relation to transportation of goods by road in a goods carriage except when wholly exempted under Section 93 of the Act.
It is found that no consignment note was issued by the goods transporter to the Appellant as per the description mentioned above, neither in the invoices raised by the transporter as provided in the second proviso to Rule 4A nor by way of separate consignment note in the form of a document as described in the explanation reproduced and those provisions have not undergone any change in the second amendment of 2012 made to Service Tax Rules, 1994 effective from 01.07.2012.
Thus, procurement of vehicle or hiring of vehicle on kilometre basis without any connection with the destination or quantity cannot bring the nature of service offered through contractual engagement of the vehicles by its owners into the purview of “Goods Transport Agency” service, so as to impose Service Tax on ‘reverse charge mechanism’ on the service recipient.
The impugned order is set aside - appeal allowed.
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2024 (7) TMI 1314
Classification of services - Business Auxiliary Service or not - amount realized by the appellant was ‘commission’ received in the course of providing such taxable service - extended period of limitation - penalty.
HELD THAT:- The appellant has been engaged by their clients for procurement of goods on behalf of them. The goods procured by the appellant were sold to their clients on 'High Sea Basis' on receipt of an amount as determined in the agreement - the appellant has been engaged for the import of goods on behalf of their customers and the appellant is getting a fixed component as their consideration. The consideration is pre-determined in the agreement itself. Thus, it is observed that the contention of the appellant that they sell the goods procured by them to their customers and earn trading profits, is not supported by any evidence - the remuneration received from the customers is pre-determined and hence, it is equivalent to the 'commission' fixed for rendering a service.
The service tax has been confirmed in this case under the category of ‘business auxiliary service’. Procurement of goods or services, which are inputs for the client, is specifically covered under sub-clause (iv) of the definition of 'business auxiliary service'. Also, 'undertaking any activity relating to sale or purchase of goods on receipt of commission' is also specifically covered under the definition of “business auxiliary service” - the services rendered by the appellant in connection with procurement of goods on behalf of their clients are specifically covered within the definition of “business auxiliary service’ - the appellant is liable to pay Service Tax under the category of “business auxiliary service”.
The appellant being a canalizing agency, the service charges collected by them have nothing to do with the transaction value of the goods. This view has been held by the Tribunal in the case of Gupta Chemicals Ltd. v. Commissioner of Customs, Jaipur [1999 (1) TMI 429 - CEGAT, NEW DELHI], which has been affirmed by the Hon’ble Apex Court in [1999 (10) TMI 752 - SUPREME COURT].
Extended period of Limitation - penalty - HELD THAT:- The appellant is a Government of India undertaking and there is merit in the submission of the appellant that they have no intention to evade payment of tax. Thus we observe that suppression of facts with intention to evade payment of tax has not been established in this case. Hence, the demand confirmed in the impugned order by invoking the extended period of limitation is not sustainable. It is observed that the demand in this case has been confirmed for the period 2005-06 and 2006-07 and the Notice was issued on 22.12.2009, which is beyond the normal period of limitation of one year. Thus, the entire demand confirmed in the impugned order is barred by limitation and hence not sustainable. For the same reason, no penalty is imposable on the appellant.
The impugned order is set aside on the ground of limitation - appeal allowed.
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2024 (7) TMI 1313
Classification of service - mining services or site formation and clearance, excavation and earth moving and demolition services? - works for drilling operations of wells in oil fields in the state of Assam and Arunachal Pradesh - non-imposition of penalty - HELD THAT:- The respondent has entered into agreements with M/s. OIL and M/s. ONGC to carry out works for drilling operations of wells in oil fields in the state of Assam and Arunachal Pradesh. A perusal of the Work Orders executed by the Respondent reveals that all the activities undertaken by them are in relation to mining service, which was brought into the net of taxable services with effect from 01.06.2007 - the ld. adjudicating authority has examined the work orders and given his findings at paragraph 2.2 and 2.3 of the impugned order wherein it has been categorically recorded that the activities undertaken by the respondent under the 12 work orders were not liable for Service Tax under the category of “site formation and clearance, excavation and earth moving and demolition services”.
The ld. adjudicating authority has given a well-reasoned finding to arrive at the conclusion that the Respondent is not liable for payment of service tax under the category of “site formation and clearance, excavation and earth moving and demolition services”, for the period prior to 01.06.2007. Accordingly, there are no infirmity in the impugned order passed by the ld. adjudicating authority in dropping the demand of service tax for the period prior to 01.06.2007 - the ld. adjudicating authority has rightly dropped the demand of Service Tax under the category of “site formation and clearance, excavation and earth moving and demolition services” for the period prior to 01.06.2007.
Non-imposition of penalty - HELD THAT:- It is observed that the appellant had discharged their entire service tax liability before issuance of the Show Cause Notice. They had also discharged major part of interest liability before issuance of the Show Cause Notice. In view of the above fact, the ld. adjudicating authority has extended the benefit of Section 80 of the Finance Act, 1994 and not imposed penalties under Sections 76, 77 and 78 of the Act - there is no suppression of fact with intention to evade tax established in this case - the ld. adjudicating authority has rightly extended the benefit of Section 80 of the Finance Act, 1994 and not imposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994.
The dropping of the demand of service tax and non-imposition of penalties in the impugned order by the ld. adjudicating authority is upheld - the appeal filed by the Department is rejected.
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2024 (7) TMI 1312
Levy of Excise Duty - Process amounting to manufacture or not - activity of filling and marketing hydrogen gas cylinders - HELD THAT:- In the instant case, the process involved is that the gas received by the appellant through the pipeline has some accumulation of moisture and in order to remove the same from the gas, the compressor has an inbuilt system of drying the moisture. The treatment employed by the respondent-herein is oil filtration for the removal of moisture from gas by drying the inbuilt system of compressing gas into the cylinders. The said process does not amount to a manufacturing process.
There are no merit in the appeal. Hence, the appeal is dismissed.
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2024 (7) TMI 1311
Denial of CENVAT Credit - ISD invoices issued to the appellant did not contain the particulars prescribed under Rule 4A of the Service Tax Rules, 1994 - appellant had availed credit by splitting the credit as service tax, education cess, secondary higher education cess and utilized the same - entitlement to avail the credit based on the ISD invoices as the appellant unit had not received the input services covered under the said invoices.
Splitting the credit as service tax, education cess, secondary higher education cess and utilising the same - HELD THAT:- It is found that ‘Secondary and Higher Education Cess’, has been made Cenvatable by suitably amending the Cenvat Credit Rules, 2004 vide Budgetary Notification No. 10/2007-CE (NT), whereby the credit of the education cess on excisable goods and the secondary and higher education cess on excisable goods and education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or secondary and higher education cess on excisable goods or for the payment of education cess on taxable services. Hence there was no bar on service tax credit being split and utilized for paying education cess liability.
Availment of credit based on such ISD invoices as the appellant unit had not received the input services covered under the said invoices - HELD THAT:- The issue has been considered by the Hon'ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-I COMMISSIONERATE VERSUS ECOF INDUSTRIES (P.) LTD. [2011 (4) TMI 560 - KARNATAKA HIGH COURT] wherein it was held that 'the assessee is entitled to distribute the Cenvat credit on the input services on its manufacturing unit or other units providing the output services. The view taken in the order in appeal that the distribution of credit is for the advertisement of the product, which is not at all manufactured at Malur Unit, therefore, cannot be accepted. The finding recorded by the Appellate Authority that the assessee is entitled to take credit only in the unit where the product is manufactured is therefore not the mandate of Rule 7 of the Cenvat Credit Rules.'
The appellant was eligible for availing the credit and the demand for duty and imposition of penalty in the impugned order cannot be sustained. The impugned order hence merits to be set aside and is so ordered - Appeal allowed.
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2024 (7) TMI 1310
CENVAT credit on molasses used for the manufacture of rectified spirit and undenatured alcohol - department was of the view that undenatured ethyl alcohol in the form of rectified spirit, extra neutral alcohol and neutral alcohol etc. which is also manufactured in the distillery are not specified in the First Schedule to the Central Excise Tariff Act, 1985 as excisable goods - exemption of Notification No. 67/1995-CE dated 16.3.1995 on molasses used for captive consumption for manufacture of rectified spirit, undenatured alcohol.
HELD THAT:- The reason for denying the credit as well as the eligibility of exemption notification No. 67/95 is that the finished products rectified spirit, undenatured alcohol are non-excisable goods and that these cannot be treated as exempted goods as contended by the appellant. This issue stands covered by the judgment of the Hon'ble Supreme Court as reported in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S. DHARANI SUGARS AND CHEMICALS LTD. [2022 (3) TMI 274 - SC ORDER] where it was held 'We do not find any merit in the present appeal, as the respondent/assessee has enjoyed the benefit of the exemption Notification No. 67/95-C.E., dated 16-3-1995 till financial year 2005-06. The appellant-Revenue has predicated their case on the addition of the item “other” in Heading No. 22.04 made vide sub-heading 2204.90 with effect from 1-3-2005. In our opinion the aforesaid addition is not a substantive change or modification.'
The Tribunal in the case of M/S. DHARANI SUGARS & CHEMICALS LTD. VERSUS THE COMMISSIONER OF CGST & CENTRAL EXCISE, TIRUNELVELI. [2024 (7) TMI 1163 - CESTAT CHENNAI] has considered the issue in detail. The view of the department as to whether rectified spirit and undenatured alcohol are not non-excisable has been considered by the Tribunal in detail, where it was held that 'The Board Circular No. 808/5/2005-CX dated 25.02.2005 was also relied. It has been clarified by Board that rectified spirit and extra neutral alcohol are covered under subheading 22 07 2000 after restructuring of the Tariff. Thus, it will be covered under Chapter 22.'
There are no ground to take a different view since the issue and facts are identical - the demand cannot sustain - appeal allowed.
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2024 (7) TMI 1309
Challenge to attachment orders - Priorty charge over dues - Respondent No. 2 (The Deputy Commissioner of Sales Tax) will have priority charge over the secured assets sold by Petitioner bank (secured creditor) under the SARFAESI Act or not - HELD THAT:- Section 26E of the SARFAESI Act very clearly mentions that the secured creditors shall be paid in priority over all other debts and taxes. In the present proceedings it is Petitioner Bank who has registered its claim against the secured assets with CERSAI earlier i.e. 4/10/2022, in view of the law as laid down by the Full Bench of this Court, in Jalgaon Janta Sahakari Bank Ltd. [2024 (5) TMI 188 - BOMBAY HIGH COURT] and as per Section 26E of the SARFAESI Act, the Petitioner Bank (secured creditor) will have priority over the revenues and taxes of the State Government.
The present Writ Petition filed by Petitioner Bank (secured creditor) deserves to be allowed - the Respondent No. 2 (the Deputy Commissioner of Sales Tax, Pune) would be free to take such steps as they deem fit against the Respondent No.6 for recovery of Sales Tax dues as per law.
Petition allowed.
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2024 (7) TMI 1308
Dishonour of Cheque - vicarious liability in criminal law - Whether the signatory of the cheque, authorized by the "Company", is the "drawer" and whether such signatory could be directed to pay interim compensation in terms of section 143A of the Negotiable Instruments Act, 1881 leaving aside the company? - HELD THAT:- The High Court's interpretation of Section 7 of the NI Act accurately identified the "drawer" as the individual who issues the cheque. This interpretation is fundamental to understanding the obligations and liabilities under Section 138 of the NI Act, which makes it clear that the drawer must ensure sufficient funds in their account at the time the cheque is presented. The appellants' argument that directors or other individuals should also be liable under Section 143A misinterprets the statutory language and intent. The primary liability, as correctly observed by the High Court, rests on the drawer, emphasizing the drawer's responsibility for maintaining sufficient funds.
The general rule against vicarious liability in criminal law underscores that individuals are not typically held criminally liable for acts committed by others unless specific statutory provisions extend such liability. Section 141 of the NI Act is one such provision, extending liability to the company's officers for the dishonour of a cheque - The High Court rightly emphasized that liability under Section 141 arises from the conduct or omission of the individual involved, not merely their position within the company.
The High Court’s decision to interpret 'drawer' strictly as the issuer of the cheque, excluding authorized signatories, is well-founded. This interpretation aligns with the legislative intent, established legal precedents, and principles of statutory interpretation. The primary liability for an offence under Section 138 lies with the company, and the company’s management is vicariously liable only under specific conditions provided in Section 141. The appellants' submissions are thus rejected, and the High Court’s judgment is upheld.
Appeal dismissed.
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2024 (7) TMI 1307
Suit for permanent injunction - outstanding dues and arrears of storage charges - Order VII Rule 11 CPC - HELD THAT:- The case in hand stands on a better footing, inasmuch as, the plaintiff-respondent had specifically reserved its rights in the first suit regarding claim against warehousing charges, damages for illegal use and occupation etc. and further had applied for leave before the Trial Court for filing a separate suit, which leave had been granted. There was neither any relinquishment at any stage, nor omission to claim relief. Both the causes of action being separate, the second suit was clearly maintainable. The appellant, who is facing recovery of more than Rs.8 crores, is unnecessarily trying to delay the progress in the suit, which is pending since 2016.
The impugned order does not suffer from any infirmity - Appeal dismissed.
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2024 (7) TMI 1306
Maintainability of petition - availability of efficacious remedies under the SAEFAESI Act, 2002 - issuance of notices issued under Section 13(2) and 13(4) of the SARFAESI Act, 2002 - HELD THAT:- The writ petition was filed on 20th July, 2022 i.e. after issuance of the notice under Section 13(4) of the said Act. It appears from the writ petition that the respondent no. 1 filed the writ petition challenging the issuance of notices issued under Section 13(2) and 13(4) of the SARFAESI Act, 2002, including the illegal and arbitrary action on the part of the appellant bank for alleged non-compliance of the letter of arrangement dated June 28, 2021.
The Hon’ble Supreme Court in Phoenix ARC Private Limited [2022 (1) TMI 503 - SUPREME COURT], after taking note of the various decisions, held that writ petitions at the instance of borrowers against the proposed action to be taken under Section 13(4) of the SARFAESI Act, 2002 is an abuse of process of the Court in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act. It was further held that under such situation the High Court ought not to have entertained the writ petitions - The Hon’ble Supreme Court in Phoenix ARC (supra) held that the remedies available to an aggrieved person against the action taken under Section 13(4) of the SARFAESI Act by way of appeal under Section 17 of the Act is both expeditious and effective and the High Court while exercising its jurisdiction under Article 226 is dutybound to consider whether the petitioner has any alternative or effective remedy for resolution of dispute.
The Hon’ble Supreme Court in Baghora Polylab (P) Ltd. [2008 (9) TMI 864 - SUPREME COURT] held that a contract may be discharged by the parties to the original contract either by entering into a new contract or by acceptance of performance of modified obligations in lieu of the obligations stipulated in the contract.
In the case on hand it is evident from the records that the respondent no.1 having executed documents in terms of the letter of arrangement dated 11.10.2021 have entered into a new contract in substitution of the original contract i.e. the restructuring of accounts vide letter dated 28.06.2021. Therefore, the original contract vide restructuring letter dated 28.06.2021 gets discharged by the subsequent act of the parties - The issue of non service of letter of arrangement dated 28.06.2021 which weighed with the learned Single Judge pales into insignificance in view of the aforesaid observations of this Court.
This Court is of the considered view that after the respondent no. 1 accepted the letter of arrangement dated 11.11.2021, the cause of action for seeking specific performance of the letter of restructuring dated 28.06.2021 no longer survives. This Court, therefore, holds that the direction passed by the learned Single Judge upon the Bank to give effect to the letter of arrangement dated 28.06.2021 and to give the benefit of the same to the writ petitioner/respondent no. 1 herein calls for interference.
The impugned judgment and order dated November 3, 2021 stands set aside and quashed.
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2024 (7) TMI 1305
Penalty u/s 271(1)(c) - disallowance of depreciation on non-compete fees - HELD THAT:- In quantum proceedings, the Ld. CIT(A) has relied on the decision of Sharp Business System [2012 (11) TMI 324 - DELHI HIGH COURT] and the said Judgment is under challenge before the Hon'ble Supreme Court.
As decided in Pepsico India Holding Pvt. Ltd. [2024 (4) TMI 1154 - DELHI HIGH COURT] allowed the claim of depreciation on non compete fee after considering the Judgment of Sharp Business System Vs. CIT [ supra].
As observed above, there are different views by the Jurisdictional High Court and other High Courts on the issue of allowability of claim of the depreciation on non compete fees which is highly contentious and the lis is pending before the Hon'ble Supreme Court. Therefore, in our considered opinion, the provisions of Section 271(1)(c) cannot be attracted against the Assessee. - Assessee appeal allowed.
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2024 (7) TMI 1304
Exemption under Notification No. 12 of 2017 dated 28 June, 2013 - Sr. No. 54(e) of N/N. 12 of 2017 dated 28 June, 2013 pertaining to loading, unloading, packing, storage or warehousing of “agricultural produce” namely “tea” - it was held by the High Court that 'This Hon’ble Court be pleased to issue a Writ of Certiorari or any other appropriate writ, order or directions under Article 226 of the Constitution of India calling for the records of the Petitioners’ case and after examining the legality and validity thereof quash and set aside the impugned order dated 10.12.2018 passed by Respondent No. 6 under Section 101 of the CGST Act and the MGST Act'.
HELD THAT:- Delay condoned.
Issue notice to the respondents.
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2024 (7) TMI 1303
Levy of penalty - goods detained on the ground that E Tax Invoice was not generated as per Rule 48 of the Goods and Services Tax Rules, 2017 - existence of mens rea or not - HELD THAT:- It is admitted that while transiting the goods in question all documents as required under Rule 138 A of the Rules were accompanying with the goods. Only a technical error has been committed by the petitioner for not generating E Tax Invoice before movement of goods in question. It is not in dispute that Waybill was generated. It is not the case of the Revenue that there was any discrepancy with regard to quality and quantity of the goods as mentioned in Tax Invoice, E Waybill as well as G.Rs accompanying the goods. The error committed by the petitioner for not generating E Tax Invoice before movement of goods is a human error. It is also not in dispute that prior to 1st August, 2022 the dealers who were having annual turn over of more than Rs. 20 crores was required to issue E Waybill.
In absence of any finding with regard to mens rea the proceeding under section 129(3) of the Act cannot be initiated. The impugned order dated 26.12.2022 passed by respondent no.4 as well as the order dated 26.5.2023 passed by respondent no.3 are hereby quashed.
The writ petition is allowed.
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