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2020 (9) TMI 1242
Reservation of Seats for admission in Educational Institutions for Socially and Educationally Backward Classes - High Court reduced the quantum of reservations provided therein from 16 per cent to 12 per cent in respect of the educational institutions and from 16 per cent to 13 per cent in respect of public employment - main contention of the Appellants before the High Court was that the Act is contrary to the law laid down by this Court in Indra Sawhney [1992 (11) TMI 277 - SUPREME COURT] as the reservations provided by the Act are in excess of 50 per cent - HELD THAT:- After observing that Article 16(4) should be balanced against the guarantee of equality enshrined in Article 16(1), which is a guarantee held out to every citizen, it was categorically held that reservations contemplated in Clause (4) of Article 16 should not exceed 50 per cent. The relaxation of the strict Rule of 50 per cent can be made in certain extraordinary situations. People living in far flung and remote areas not being in the mainstream of national life should be treated in a different way. In view of the conditions peculiar to them they are entitled to be given relaxation. It was made clear that extreme caution has to be exercised and a special case made out for relaxation of the Rule of 50 per cent.
Applying the law laid down by this Court in Indra Sawhney, it is opined that the State of Maharashtra has not shown any extraordinary situation for providing reservations to Marathas in excess of 50 per cent. Maratha community which comprises of 30 per cent of the population in the State of Maharashtra cannot be compared to marginalized Sections of the society living in far flung and remote areas. The State has failed to make out a special case for providing reservation in excess of 50 per cent. Neither has any caution been exercised by the State in doing so.
The factors termed as extraordinary and exceptional, justifying reservations in excess of 50 per cent are those required for the purpose of providing reservations. The social, educational and economic backwardness of a community, existence of quantifiable data relating to inadequacy of representation of the community in public services and deprivation of the benefits flowing from reservations to the community are not exceptional circumstances for providing reservations in excess of 50 per cent - Admittedly, reservations provided to the Maratha community were implemented in educational institutions for one academic year only. Implementation of the Act for admissions in educational institutions and appointments to public posts during the pendency of these Appeals will cause irreparable loss to the candidates belonging to the open category.
As the interpretation of the provisions inserted by the Constitution (102nd Amendment) Act, 2018 is a substantial question of law as to the interpretation of the Constitution of India, these Appeals are referred to a larger Bench. These matters shall be placed before Hon'ble The Chief Justice of India for suitable orders - Appointments to public services and posts under the Government shall be made without implementing the reservation as provided in the Act.
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2020 (9) TMI 1241
Maintainability of petition - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was itself in force only till 30.06.2020 - HELD THAT:- The Writ petition has been filed on 08.09.2020 long after the closure of the scheme. This writ petition is hence not maintainable and, dismissed.
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2020 (9) TMI 1240
Dishonor of Cheque - seeking transfer of the proceedings filed by the respondent under Section 138 of the Negotiable Instrument Act pending on the file of Additional Chief Judicial Magistrate, Agra, Uttar Pradesh to the competent Court at Siliguri, Darjeeling, West Bengal - HELD THAT:- If the delivery challan which states that all disputes will be subject to the jurisdiction of courts in Siliguri, is construed by the petitioners to constitute a bar for the courts in any other jurisdiction to entertain the proceedings, it is always open to the petitioners to raise this point before the Agra Court. This cannot be a ground for seeking transfer - the fact that the petitioners have made a prior complaint to the police about the loss that he sustained on account of the poor quality of feed supplied by the respondent herein cannot be a ground to seek the transfer of the proceedings under Section 138.
The fact that the respondent has its Head Office at Siliguri and that there is no reason why it chose to file a complaint in Agra except to harass the petitioners, cannot also be a ground for seeking transfer. Under Section 142(2)(a) of the Negotiable Instrument Act, the court within whose jurisdiction the branch of the bank where the payee maintains the account is situated, will have jurisdiction to try the offence, if the cheque is delivered for collection through an account. Therefore, all the grounds on which the petitioners seek transfer, are unsustainable.
The Transfer Petition is therefore dismissed.
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2020 (9) TMI 1239
Disallowance of expenses as personal in nature - HELD THAT:- the company cannot have any personal expenditure as it is a distinct assessable entity is per definition of person u/s 2 (31) of the act. Such is also the mandate of the decision of Honourable Gujarat High Court in [2001 (7) TMI 70 - GUJARAT HIGH COURT] -CIT-A has also followed the same. In view of this we do not find any infirmity in the order of the learned CIT-A in deleting the disallowance is of expenses. Accordingly ground number 16 of the appeal is dismissed.
Addition on account of carbon credits - HELD THAT:- As decided in case of Andhra Pradesh High Court [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] deleting the addition on account of Carbon credit receipt holding the same to be a capital receipt. Accordingly ground as dismissed.
Disallowance of legal and professional expenses paid - AO disallowed the above expenditure holding that the assessee has failed to prove the business expediency and further as there is no clause in the agreement which describes the nature of services rendered by that service provider - HELD THAT:- CIT-A following the decision of the honourable Delhi High Court [2001 (9) TMI 48 - DELHI HIGH COURT] allowed the claim of the assessee. He further held that the term commercial expediency is to be judged from the angle of the assessee/businessman. With respect to the provision of the services he also held that services have been availed by the assessee in earlier years also. Accordingly he deleted the disallowance. DR could not controvert the decision of the learned and CIT-A. We also find that when the expenditure has been allowed to the assessee in earlier year, no new facts are coming into the knowledge of the assessing officer which proves otherwise, the agreement supports the payment, the recipient was providing services to the company, he was also an employee of the group concern and the services of that gentleman availed by the assessee during the year the disallowance has rightly been deleted.
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2020 (9) TMI 1238
Supply or not - interest/penalty collected for delay in payment of monthly subscription by the members - classification and rate of duty applicable on the said supply - HELD THAT:- Apart from other services, one of the services rendered in relation to a chit is the collection of instalments from subscribers who defaulted in payment of the same. In addition, the foreman is duty bound to collect interest on such defaulted instalments, which the law under Section 21(1)(c) of the Chit Fund Act, 1982 entitles him to retain. It is pertinent to add that a Chit Fund business survives on the collection of instalments from all subscribers to a chit, which is then given to the Prized Subscriber who succeeds by way of lots or auction, and is repeated month after month till the conclusion of the chit. Any failure in payment of instalment by a subscriber would hamper the foreman in making the payment to the Prized Subscriber and jeopardize the entire flow of the chit. As foreman of the chit, it is his duty to collect and pass on the moneys to the Prized Subscriber. This service of ensuring that all instalments are received from all subscribers to a chit is the service rendered by the foreman in relation to the chit. As per Section 2(d).
Under Section 22(1) of the Chit Fund Act, cited above, the law casts a duty upon the foreman to pay the “Prize amount” to the “Prized Subscriber” as detailed in the said Section 22. The foreman can comply with this provision only if the “chit amount” has been paid by all the subscribers, to constitute the “Prize amount”, which, as defined in Section 2(m) of the Chit Fund Act, is primarily the “chit amount” as defined under Section 2(d). It is extremely clear that unless all instalments of a chit are received by the foreman, the payment of the prize amount would be hampered. This clearly brings out the service that the foreman renders in ensuring that all the instalments of all subscribers is collected - the collection of delayed/defaulted instalments and penal interest thereon is purely a service rendered in relation to a chit and cannot be given any other connotation.
The collection of defaulted instalments and interest thereon by the foreman is a supply of service in relation to the chit and squarely falls under the HSN classification of Heading 9971 as services provided by a foreman of a chit fund in relation to chit under Notification No.11/2017-Central Tax(Rate) Dated 28.06.2017 / Notification No.8/2017Integrated Tax(Rate) dated 28-6-2017 as amended from time to time.
Exemption from GST or not - HELD THAT:- In a Chit floated by a Chit Fund company, there is no concept of extending deposits, loans or advances. On the other hand, it is the subscribers who come together to subscribe towards the prized amount which is aggregated and taken by each member on the basis of lots or auction - the interest realized from the defaulting subscribers is different with that of the interest against loan or advance by the Bankers and other Financial Institutions. Therefore, there is no exemption available under Notification No.12/2017-Central Tax (Rate) as claimed by the appellant.
HSN Rate - HELD THAT:- The collection of defaulted / delayed instalments is a service performed by the foreman in relation to a chit. The appellant has been attempting to divert attention from this fact by bringing in the concept of actionable claims, etc. As seen from the law on Chits cited, it is clearly evident that it is the job of the foreman to collect defaulted instalments for which the penal interest of 18% as per law is collected by him and he is further permitted to retain the same by law. Hence, the interest so collected for the service rendered in relation to a chit, will be liable to GST at the rates applicable under HSN Heading 9971, (Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017) as it is earned in connection with the supply of service by the foreman to the chit.
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2020 (9) TMI 1237
Requirement of two separate Essentiality Certificates (EC) or not - import of drill bits into India under serial no.404 of Notification No.50/2017- Customs dated 30.06.2017 - indigenous movement under Notification No.3/2017- Central Tax (Rate) dated 28.06.2017 - HELD THAT:- EC issued that e import is allowed only for the purpose of consequent supply to ONGC for the purpose of use in specified operations. The goods cannot be put to any other use without seeking necessary permissions and payment of taxes - Unlike, in the case of any other transaction, the import and subsequent supply of impugned goods viz. drill bits, is inextricably linked till the goods are ultimately put to its intended purpose. It can be seen from the EC issued by DGH that it certifies that the goods being imported are required for petroleum operations of execution of projects under Petroleum Exploration Licenses or Mining Leases granted by the Government to ONGC. This certification is given qua the goods and EC is given clearly identifying the goods for which exemption is given. It is also a practice followed by DGH to issue only one EC per consignment.
The Appellant imports the goods only for the purpose of supplying to ONGC. The EC is issued on the application / recommendation of ONGC. The said EC clearly identifies the goods for which the exemption is granted with added obligation of specified use. The condition of specified use and obtaining certificate to this effect is a common condition under the customs and the GST law. Thus, when the exemption is attached to the goods and once, for the purpose of Customs law, it is established that the goods are eligible for exemption, thus the very same goods when put to very same use in another but continuing limb of the transaction, should be eligible for exemption on the basis of same EC without insisting on a separate EC, especially since DGH follows the practice of issuing single EC per consignment. The Appellant cannot be put to detriment for the things which heir control.
It is also worthwhile to note that both the notifications do not require EC to be addressed to any entity or require it to be obtained by any specific person. The relevant condition is to produce the EC before a particular officer certifying the specific goods for the specific use. So long as the EC certifies the intended use as envisaged under the GST notification, the other details on the EC should not come in way to disallow the benefit of the GST exemption notification - the Certificate available on record which certifies the specified use of the goods should be sufficient compliance of the Notification under the GST law.
Once the Customs EC carries the same certification that is needed to claim exemption under the GST law, insistence of separate EC for GST exemption purpose is futile and not warranted in law. It is settled position in law that once the Appellant has demonstrated that the goods in question are entitled for exemption, then merely based on the template of the EC, exemption cannot be denied. Once the Appellant establishes their eligibility to the exemption, then the other conditions of the notification have to be liberally interpreted - In the present case, therefore, once it is admitted that the condition under the Customs Act and the GST law are the same, and the Appellant is granted valid exemption under the Customs law, the GST Authorities should not insist on separate EC for GST purpose.
The present issue relates to requirement of Essentiality Certificate for claiming concessional rate of Tax /exemption under different Tax Authorities for distinct and different supplies involved i.e. one at the time of import under Customs and another during the course of local sale/supply under Central and state enactments - In the case of INNAMURI GOPALAM AND MADDALA NAGENDRUDU AND OTHERS VERSUS THE STATE OF ANDHRA PRADESH AND ANOTHER [1963 (4) TMI 18 - SUPREME COURT] the Honourable Supreme Court held that the State was “possibly right in the submission that the object behind the framers of the notification was to avoid double taxation but the operation of an enactment or of a notification has to be judged not by the object which the legislature or the notifying authority, as the case may be, may have had in mind but by the words which it has employed to effectuate the legislative intent”.
Thus, it is concluded that The Essentiality certificates prescribed under the said two notifications have to be furnished separately to avail the benefit of the said notifications.
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2020 (9) TMI 1236
Classification of supply - supply of service of education or not - curriculum prescribed by the statutory authorities/ government to the students of the applicant for obtaining qualifications/ certificates of CA-Foundation, CA-Inter, CA-Final, MA (ICWA)-Foundation, CMA-Inter, CMA-Final and Intermediate duly recognized by the respective statutory authorities/ government are exempted under Notification No.12/2017-CT (Rate) dt.28.06.2017 (entry no.66 (a)), as amended? - charges collected for providing accommodation to the students undergoing the courses are exempt from GST as provided under Notification No.12/2017-CT (Rate) dt.28.06.2017 (entry no.14), as amended read with Circular No.32/06/2018-GST dt.12.02.2018 since the amount charged from the students by the hostel run by the applicant is less than ₹ 1000/- per day? - charges collected by the applicant for catering service by supplying food to the students undergoing the above courses are exempted from GST as provided under Notification No.12/2017-CT (Rate) dt.28.06.2017 (entry no.66(a)),, as amended?
HELD THAT:- The Board of Studies (BOS in short) is a wing created by the Institute of Chartered Accountants of India (ICAI in short). The BOS is imparting theoretical education for CA through online courses, Journals etc., to the enrolled candidates. Similarly the ICWAI is conducting classes through the counselors appointed on Honorarium as well as computer soft skills to the registered candidates.
Basing on the discussions the findings are
1. The ICAI or ICMAI does not affiliate nor recognize any other education institutions for the purpose of Theoretical education, Practical training. The BOS /Counselor is imparting Theoretical education through online lectures, Practical training to the registered candidates.
2. The registered candidate is eligible to appear for the examinations conducted by the said Institutes at various level of entry points.
3. Age has no bar to pursue the course.
4. There is no prescribed duration of Course to complete like intermediate, Graduation/Post Graduation or technical education like B.Tech, B.E. ETC.,
5. There are no different streams like Regular or Private Students.
6. Regular Attendance is not necessary in any college or Institution. The registered/enrolled candidate need not pay any additional fee in lieu of attendance for appearing examinations in Intermediate, graduation etc.,
The Supreme Court in the case of NIDHI KAIM VERSUS STATE OF MADHYA PRADESH & OTHERS ETC. [2016 (5) TMI 1419 - SUPREME COURT] has held that “for the proposition that the examination is considered as a common tool around which the entire education system revolves”.
As indicated herein, the institution is being run for a specific purpose to the extent to cover the topics in the subjects of the prescribed Syllabus for CA/CMA, namely, to prepare the students for appearing in various level of theoretical examinations for the said qualification, but it itself appears to be not authorized, there for, nor can it be said to be sufficient to complete the Curriculum by the candidates to qualify as CA/CMA - If such a wide meaning is given to the word “education” so as to bring within its purview the coaching institutions, it will defeat the Purpose of the Act.
Added to this, the Chartered Accountants Act as well as the Cost and Works Accountants Act, both clearly do not recognize the “education” imparted by Universities or affiliated bodies towards the award of any degree, diploma or certificate as given by such Institutes. In fact, such Universities and Bodies are not even permitted to use any name or nomenclature which is in any way similar to that of the said Institutes - Section 15 A of the Chartered Accountants Act, 1949 and Section 15 B of the Cost and Works Accountants Act, 1959 regarding imparting education by Universities and other bodies were incorporated in the respective Acts in the year 2006.
The “education” imparted by the Appellate would not lead to the obtaining a qualification recognised by the said Institutes. Needless to say that the Appellant is not an affiliate of the said Institutes and hence would only be referred to as a coaching institute and not an educational institution - the Acts, Rules and Regulations that govern the said two Institutions, ICAI and ICWAI lays down an elaborate system of education, practical training, special courses and multi-level examination system that finally leads to the qualification under the said Acts. As such, the candidate has to even complete the Integrated course of Information Technology i.e. ICITSS and AICITSS and practical training and clear all the Examinations conducted by the BOS.
The Appellant cannot claim the benefit of exemption as an Educational Institution providing Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force under the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017.
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2020 (9) TMI 1235
Seeking grant of Regular Bail - Tripartite Off-take Agreement - misuse of Working Capital Demand Loan - amount transferred to the other sister concerns/shell companies in order to square off its credit facility with the Corporation Bank - HELD THAT:- It is an admitted fact that the co-accused namely Navin Kumar Jain and Hulash Chand Jain were the other Directors and shareholders of SALL as well as LMJIL. They also signed/undertook personal guarantee to the complainant company in their capacity as Directors of the SALL against the “Working Capital Demand Loan”. Navin Jain had also signed the Tripartite Off-take Agreement in the capacity of Director of LMJIL. Both of them were not even arrested and the charge sheet against them was filed without arrest.
During two years of enquiry/investigation, the petitioner joined investigation on multiple occasions. After his arrest, the EOW sought only one day PC remand. Neither in the Status Report nor during the course of arguments, any apprehension was shown that the petitioner is a “flight risk”. The case arises out of a commercial transaction and is based on documents that already stand seized. The petitioner has already approached the NCLT where a moratorium on the assets/properties has been declared and an IRP has been appointed. The complainant has already approached NCLT.
The petitioner is directed to be released on regular bail on his furnishing a personal bond in the sum of ₹ 25 lacs alongwith two sureties of the like amount each to the satisfaction of the trial court and subject to further conditions imposed - the bail is granted - application allowed.
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2020 (9) TMI 1234
Disallowance on account of Fair & Remunerative Price (FRP) in addition to Statutory Minimum Price (SMP) - CIT (A) confirming action of AO treating additional price paid over and above FRP (Fair & remunerative price) to the cane growers amounted to distribution of profits by the appellant - HELD THAT:- Hon'ble Supreme Court in the case of CIT v. Tasgaon Taluka S. S.K. Ltd.. [2019 (3) TMI 321 - SUPREME COURT] held that as per Clause 3 of Control Order 1966, Government in the official Gazette, from time to time fixed the minimum price of sugar cane (SMP) to be paid to farmers. So far as determination of SMP is concerned it is at the beginning of the season. The additional purchase price (SAP) is determined at the end of the season when accounts are settled under Clause-5A. The difference of amount of SMP & SAP has an element of profit and/or one of the components would be profit. The additional price is paid as a matter of incentive. Thus, the entire whole amount of difference between SMP and the SAP per se cannot be said to be an appropriation of profit. Only that part/component of profit, while determining the final price worked out/SAP/Additional price would be and/or the said to be an appropriation of profit and for that an exercise is to be done by the AO by calling upon the assessee to produce the statement of accounts, balance sheet and the material supplied to the State Government for the purpose of fixing the final price/additional price/SAP under Clause 5A of control order 1966.
We restore the file of the AO for deciding the issue as afresh in accordance with the decision to Hon'ble Supreme Court and will pass the order in accordance with law. Needless to direct that before passing the order the AO will consider the facts already available on record and shall grant opportunity of hearing to the assessee. The assessee is also directed to provide all the necessary details, evidences and information to the AO in accordance with the direction of Hon'ble Apex Court in the case of Tasgaon Taluka (supra). Appeal of the assessee is allowed for statistical purposes.
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2020 (9) TMI 1233
Deduction of TDS from the amount due to applicant - deduction permitted to State/-Central govt organizations, Nagar Nigams, any other govt corporations, State/Central PSUs & Educational Institutions registered under Societies Registration Act or not - section 51 of the CGST/SGST Act read with Notification Nos. 50/2018 dated 13.09.2018 & 73/2018 dated 31.12.2018 - HELD THAT:- The Government has authorized following persons, to deduct tax at the rate of two per cent (1% CGST + 1% SGST) from the value of supply excluding the central tax, State tax, Union territory tax, integrated tax and cess, made to the supplier of taxable goods or services or both w.e.f. 01.10.2018, provided that the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees:-
(a) a department or establishment of the Central Government or State Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) an authority or a board or any other body,-
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with fifty-one per cent, or more participation by way of equity or control, to carry out any function;
(e) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
(f) public sector undertakings.
Further, there will be no TDS deduction if location and place of supply of supplier is different from the place of registration of recipient. Further vide amendment dated 31.12.2018, the provisions of Section 51 of the Act will not be applicable in respect of such supply of goods or services or both which takes place between persons as mentioned above.
Whether the applicant falls under any of the aforesaid categories notified by the Government? - HELD THAT:- On perusal of Memorandum of Association of the applicant, it is found that the applicant is a Company of Government of Uttarakhand within the meaning of Section 617 of the Companies Act 1956 which define “ Government company” as any company in which not less than fifty- one per cent of the paid up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more state Governments and includes a company which is a subsidiary of a Government company.
The Applicant is a State Government PSU in as much as 100 % Shareholding is with Uttarakhand Government and falls under one of the categories notified by the Government under Section 51 of the Act read with Notification Nos. 50/2018-Central Tax dated 13.09.2018 and 73/2018-Central Tax dated 31.12.2008.
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2020 (9) TMI 1232
Classification of supply - composite supply of construction service to the Forest Department - exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 or any other exemption notification or not - if not exempt, then applicable rate of GST - Whether the Forest Department is correct in not giving GST to the applicant on the composite supply as the said department classified the same as exempted service?
HELD THAT:- The applicant is providing composite supply (works contract) like construction of Machan, laying of foundation, construction of pillars etc as well as supply of labour service of clearing paths & areas in forest, loading & unloading of plants etc directly to the Forest Department.
A works contract is essentially a contract of service which may also involve supply of goods in the execution of the contract. It is basically a composite supply of both services and goods, with the service element being dominant in the contract between parties. On perusal of documents submitted by the applicant, it is found that the contracts has been awarded by the Forest Department to the applicant for construction as well as for repair & maintenance of immovable property wherein transfer of property in goods is involved in the execution of such contracts. Thus the said contracts are duly covered under the definition of "work contract" service and thus it is a composite service. Further, as per Para 6 (a) of Schedule II to the CGST Act, 2017, works contracts as defined in section 2(119) of the Act shall be treated as a composite supply of services. Thus, there is a clear demarcation of a works contract as a composite supply of service under the Act.
Taxability of said service provided to Government department - HELD THAT:- There is no exemption is available to the said service provided by the applicant to the Forest Department. However the said service is a taxable event in terms of entry no. 3(vi) (a) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) in as much as the services provided by the applicant to the Forest Department is not for commerce, industry or any other business or profession and attract GST 12%.
Whether the Forest Department is correct in not giving GST to the applicant on the composite supply as the said department classified the same as exempted service? - HELD THAT:- The authority cannot pass the ruling on the same in as much the said question do not qualify for ruling in terms of section 97(2) of the Act.
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2020 (9) TMI 1231
Seeking grant of Bail - wrongful availment of Input Tax Credit on the basis of fake transaction of sales and supply which never took place - HELD THAT:- It is found that after initial arrest of the applicant, there is not enough material on record to show that the applicant was put to interrogation time and again. The records do not show as to what purpose is going to be served to get the applicant in custody any more at this stage when he has remained in custody for about a month before grant of ad-interim bail - It is also revealed that after arrest of the applicant and during the period he remained in custody for about 30 days, no further interrogation had taken place. There is hardly any cogent material placed before the Court to show that the applicant misused his liberty either by tampering with prosecution witnesses or attempting to flee away from justice except one solitary incident of refusing the summons which he has denied and which is disclosed for the first time during argument.
In the absence of there being specific material placed before this Court, at this stage that the applicant had made any attempt to tamper with the prosecution witnesses or in any manner indulged in adversely affecting investigation or that he is at flight risk or that keeping him in jail would serve any purpose and last but not the least, there are no serious allegations of he misusing liberty while on interim bail and that the maximum punishment which could be awarded is five years, this Court is inclined to allow this application - Bail is granted subject to conditions imposed.
Application allowed.
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2020 (9) TMI 1230
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It can be said that the amount which the petitioner claimed or mentioned in the application was paid by the petitioner lastly in the month of June 2014 and according to the petitioner, the last payment was received by the petitioner on 15.03.2016 and we further noticed that the present application is filed on 20.03.2020 and the contention of the petitioner is that since the respondent in its balance sheet for the Financial Year 2016-17, which ended on 31.03.2017 acknowledged that amount therefore, from that period the debt is not barred by limitation and in support of its contention, the petitioner has not placed any law before us that the amount mentioned in the balance sheet comes under the definition of acknowledgement of debt under Section 18 of the Limitation Act.
In view of Section 18 of the Limitation Act, there must be any acknowledgement in writing and signed by the person by the borrower or any person authorised on his behalf, the statement made in the balance sheet, in our considered view does not comes under the purview of Section 18 of the Limitation Act, therefore, on this ground, petitioner is not entitled to take the advantage that since the acknowledgement is made in the balance sheet, therefore, the date of default runs when the balance sheet was signed for the Financial Year 2016-2017 - the date of default is 11.06.2015 and the last payment was received on 15.03.2016, hence, the petitioner was required to file application if any within 3 years from 11.06.2015 which comes to end on 10.06.2018, whereas the present application was filed on 20.03.2020 that is beyond the 3 years, when the right to apply accrues under Article 137 of the Limitation Act.
Mere plain reading of the provisions shows that the debt means a liability or obligation in respect of a claim, which is due from any person and includes a financial debt and operational debt and when we shall read the definition of debt and financial debt together then, the debt includes the Financial Debt and Operational Debt but all the debts are not Financial Debt or Operational Debt, only debt defined under Section 5(8) of the IBC, comes under the definition of Financial Debt and debt defined under Section 5(21) of the IBC comes under the definition of Operational Debt.
The present application is not maintainable - Application dismissed.
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2020 (9) TMI 1229
Seeking extension of time limit for completion of Insolvency Resolution Process of the Corporate Debtor - Section 12 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 40 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution process for Corporate Persons) Regulations, 2016 - HELD THAT:- It is submitted that since there is a possibility of getting a resolution plan and since the CoC members have approved extension of 90 days beyond 180 days with 100% voting majority as required under Sec 12 (3) of IBC read with Regulation 40 of CIRP Regulations, 2016, it is humbly submitted that an extension of 90 days be permitted along with exclusion of 115 days on account of lockdown.
The extension of CIRP by 90 days is granted and the period of 98 days from March 25, 2020 to June 30, 2020 is also considered for being excluded while calculating the number of available days for CIRP calculation.
Application allowed.
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2020 (9) TMI 1228
Determination of time of supply - upfront payment made by the applicant to the State Government is in the nature of Deposit in terms of Section 2(31) of the MP GST Act, 2017 or is in the nature of advance paid? - section 13(3) of the MP GST - HELD THAT:- Section 2(31) of MP GST Act is in respect of definition of “consideration” and Section 13(3) of MP GST Act is in respect of time of supply of service. The definition of consideration is speaks about the value of service and proviso to section 2(31) of CGST Act, is about the deposit not about advance. The liability to pay GST on services shall arise on the basis of time of supply of service not from the definition of consideration given in Section 2(31) of MP GST Act. In this case, the applicant is liable to pay GST on the amount of revenue share under reverse charge mechanism as applicable in terms Si.No.5 of of Notification No.13/ 20017-CT(rate) DATED 28.06.2017 and there is specific section 13(3) of MP GST Act in respect of time of supply of service for the person who are paying GST under the reverse charge mechanism. Hence, as per Section 13(3) of MP GST, the time of supply is date of payment as entered in the books of account of the recipient i.e. Government or the date on which the payment is debited in his(Applicant) bank account whichever is earlier.
There is a difference between advance money and deposit amount. The advance is received toward goods or services to be supplied in future. On the other hand deposit money is received only as a security. It is generally not used by the supplier in the course of supply of goods or services. The upfront payment made by the applicant is adjusted toward the services to be supplied in future after commencement of excavating minerals which clearly shows that the said payment is and advances against the future payment, hence the section 2(31) of MP GST Act which speaks about the deposit is not applicable in the case of applicant.
In this case the upfront payment is payable in three installments and after payment of third installment, the State Government shall grant the mining lease to the successful bidder - there is no clause of refund of that amount after allotment of mines on lease, hence the payment made to the state government is no more deposit after allotment of mines but is advance which will be adjusted against the future payment of revenue share amount. In this case, the mining lease is granted after the payment of third installment. The upfront payment made to the state government is treated as advance against the revenue share from the date of allotment of mines and the GST is payable on this advance from the date of allotment of mines to the applicant.
As per the proviso to 2(31), a deposit would be consideration if the supplier applies the deposit as consideration. This is not same as application of the deposit towards consideration. Thus, an amount would attain the character of “Deposit not attracting tax” where the amount is not to be adjusted against the consideration unless an event occurs or does not occur. In this case, the upfront payment is to be adjusted against consideration at the first available opportunity. Thus the supplier, i.e. GoMP is applying the deposit as consideration - dominion over an amount of payment or liability to refund back a sum received in case of cancellation of a contract does not alter the nature of the money given. As per the terms of a contract, both the security deposit and advance may have to be paid back. Therefore, dominion over moneys advanced does not change the character of the amount paid upfront.
There is clear provision in law for liability of GST in case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis in case of applicant under the provision of Section 13(3) of MP GST Act, 2017 - the applicant is liable to pay service tax from the date of allotment of mines on lease by the government as the payment made by the Applicant to state Government is an advance.
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2020 (9) TMI 1227
Levy of Entry Tax - Tran-I provision of MPGST - proviso to Section 98 (2) of the GST Act 2017 - HELD THAT:- A plain reading of Section 97(2) of GST Act clearly implies that the any question relating to Input Tax in TRAN-1. which falls under transitional provision, shall be out of purview of Advance Ruling. Admissibility of input tax credit, as given in section 97(2) of GST Act relates to ‘input tax credit’ as defined in Section 2(63) of GST Act 2017 read with Section 2(62) ibid and not the Input Tax in TRAN-1 carried forward in TRAN-1. which categorically pertains to pre-GST regime. Thus, the question placed does not fall within four corners of issues defined for seeking advance ruling under Section 97(2) ibid. Hence the application does not hold ground to be admitted on this count.
It is important to mention here that Deputy Commissioner, Commercial Tax, Sagar Division Madhya Pradesh had already decided the issue of getting credit of Entry Tax in TRAN-1 in his order dated 24.02.2020 in the applicant’s case of Entry Tax Act pertaining to period 01.04.2017-30.06.2017.
Proviso to Section 98 (2) of the GST Act 2017 - HELD THAT:- The applicant had not only raised this particular issue, in respect of which Advance Ruling is sought vide application under consideration, before the jurisdictional officers but also the issue has been already decided in the applicant’s Entry Tax Act case for the period 01.04.2017-30.06.2017.
Application rejected.
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2020 (9) TMI 1226
Input Tax Credit - recovery of expenses from DISCOMs as well as UPPTCL and other power companies by way of book entries - inclusion of incidental expenses in value of supply - recovery against certain expenses such as interest cost, salary, depreciation etc. - transfer of miscellaneous incomes of applicant Corporation to DISCOMs, UPPTCL and other power companies will attract GST - HELD THAT:- The relationship between Applicant Corporation and its subsidiaries is undoubtedly commercial. The fact that subsidiaries i.e. DISCOMs are providing exempt supply is immaterial for the purpose of determination of nature of activity between Corporation and its subsidiaries. The activities which are listed in para 5 of the Application and for which “Operational & Management Expenses” are being incurred and passed on are apparently carrying a 'Consideration.' There is also no denying in the fact that it is for the furtherance of business. Thus, the activities squarely meet the twin test laid down under Section 7(1) of the CGST Act for the purpose of being identified as 'Supply'. The activities for which O & M Expenses are being passed on and collected are 'Supplies' for the purpose of Section 7(1) of CGST Act, the same would be liable to be charged to GST as per the applicable rate laid down under the law and in accordance with the provisions of Section 15 of CGST Act.
Quantum of O & M Expenses chargeable to GST - HELD THAT:- Most of the expenses on individual basis are taxable e.g. expenses passed on for the employees benefit or salary or for re-imbursement purpose are not relatable to normal employer-employee relationship, thereby covered under Schedule III under Section 7 of the CGST Act. The employees recruited by the one office and working in another office does not have any employer-employee relationship with the office where they are actually working. The expenses incurred on such employees claimed from the actual employer would constitute supply and accordingly liable to pay GST. Same is the case with 'Medical Expenses' or 'Recruitment Expenses'. Accordingly, the expenses incurred on account of heads claimed to be exempted are also liable to be charged to GST.
Transfer of miscellaneous income of the Applicant Corporation to DISCOMs - HELD THAT:- The recovery of expenses are classifiable as 'Supply', so would be the 'Income'. The same is also classifiable as 'Supply' and would be chargeable to GST.
Availability and admissibility of Input Tax Credit of GST paid on the supplies - HELD THAT:- The provisions governing Input Tax Credit are separately mentioned under CGST Act. Whether ITC is admissible on any Input Supply of Goods and Services has to be examined with reference to provisions of Section 16 & 17 of the CGST Act read with Rule 36 of CGST Rules. Therefore, at this stage it can only be said that the admissibility of Input Tax Credit of GST paid on supplies mentioned would depend upon meeting on the criteria / conditions specified under Section 16 & 17 read with Rule 36.
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2020 (9) TMI 1225
Classification of goods - solar power generating system - classified under chapter 85 or not - What constitutes solar power generating system under chapter 85, what are the various components and technical requirements that together constitutes solar power generating system under chapter 85? - HELD THAT:- As per Rule 2b of General Rules for interpretation of the first schedule (Import Tariff), any reference in a heading to a material / substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. As per Rule 3a of the said Rules of interpretation, the heading which provides the most specific description shall be preferred to heading having more general description. According to Rule 3b of the Rules of interpretation, in case Rule 3a is not applicable, the goods shall be classified as if they consisted of the material/ raw material which give their essential character. In the applicant's case, the essential character to Solar Power Generating System is Solar Panel consisting of multiple solar cells - Chapter Note 9 of Chapter 85 states that for the classification of the articles defined in this Note, headings 8541 and 8542 shall take precedence over any other heading in this Schedule, except in the case of heading 8523. As such, the four digit HSN of Solar Power Generating System is 8541.
What constitutes solar power generating system under chapter 85, what are the various components and technical requirements that together constitutes solar power generating system under chapter 85? - HELD THAT:- The Ministry of New and Renewable Energy (MNRE) in various instances has also approved entire BOQ consisting of various parts e.g. cables, module, monitoring structures, spares etc. as essentials of “Solar Power Generating System” - Solar Panel, Inverter, Controller and Battery are essential components of 'Solar Power Generating System'. But, we also hold that cable & monitoring structures are supplementary components of 'Solar Power Generating System'.
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2020 (9) TMI 1224
Seeking extension of time for implementation of plan which was granted by Committee of Creditors (CoC) for 180 days - HELD THAT:- The Resolution provides for appointment of RP as the person incharge to look after the implementation of Resolution Plan. The Resolution Plan has also addressed the issues which resulted into Insolvency of the Corporate Debtor and future business plan so as to such situation does not arise.
The revised ‘Resolution Plan’ filed with the Application meets the requirements of Section 30(2) of 1&B Code, 2016 and Regulations 37, 38, 38(1A) and 39 (4) of IBBI (CIRP) Regulations, 2016. The Resolution Plan’ is also not in contravention of any of the provisions of Section 29A. The Resolution Professional has also certified that the Resolution Plan’ approved by the CoC does not contravene any of the provisions of the law for the time being in force. The Compliance Certificate is placed on record. The ‘Resolution Plan’ has been approved by the CoC with 100% voting share.
The revised ‘Resolution Plan’ is hereby approved, which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan including Resolution Applicant - Application disposed off.
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2020 (9) TMI 1223
Validity of entire action of the Resolution Professional - seeking direction to Resolution Professional to call the Suspended Management in the CoC meeting after giving the Agenda and to supply/provide the copy of Resolution Plan received by the RP before taking any decision of the Resolution Plan whether being accepted or not - HELD THAT:- On perusal of the records, it is found that the Hon’ble Gujarat High Court has passed the order on 18.06.2019 on the application so made by the Applicant, wherein certain conditions were imposed by the Hon’ble High Court - That itself shows that the Applicant cannot meet the Bank officials since they are the consortium of Bank and CBI is still investigating further.
In view of such order passed by the Hon’ble High Court, Applicant again moved a modification application for modification of the conditions. The said application was disposed of by the Hon’ble High Court on 13.11.2019. However, by that time all the meetings of the CoC was/were concluded.
Application dismissed as being not maintainable.
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