TMI Tax Updates - e-Newsletter
January 31, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Rate of GST - Works contract services involving predominantly earth work (that is, constituting more than 75per cent, of the value of the works contract) executed to Indian Railways (Central Government) by the Applicant is exigible to GST at 12% if the Applicant is providing the services either as a main contractor or as a sub-contractor to main contractor. - AAR
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GST:
Exemption from GST - providing catering services to Educational Institutions from 1st standard to 2nd PUC - Since the Applicant is providing ready to eat food by way of catering to a Pre University College, the services provided by the applicant under question before us is also covered under entry No.66 of Notification No. 12/2017-Central Tax (Rate) - Benefit of exemption available - AAR
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GST:
The Applicant wants to know whether supply of materials like fertilisers, soil and sand for use of bio centers are exempted under GST. However, there is no specific exemption for supply of materials like fertilisers, soil and sand for use of bio centers as per notification No.2/2017 - AAR
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Income Tax:
Taxability of capital gain - person who sold property as attorney of the owner - It is the owner of capital asset who would be liable for capital gain. In case the sale consideration is credited into the account of third party or the attorney of such owner, in that event also the money which has been credited in the account of the third party or the power of attorney cannot be subjected to tax under the head ‘capital gains’. - the action of the authorities below is contrary to the statutory provisions. - Additions deleted - AT
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Income Tax:
Reopening of assessment u/s 147 - share premium - As the reasons recorded does not quantify even an estimated amount of the alleged income which has escaped assessment and as it is noticed that the reasons recorded do not contain any live link to the alleged illegal mining, the reasons recorded for the purpose of reopening of assessment are invalid and is nothing but fishing enquiry. - AT
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Income Tax:
Exemption from levy of Income Tax - whether assessee shall be held as “State” and thus no tax can be levied on it under the income tax act? - the assessee company falls under the definition of “State” within the meaning of Article 12 of the Constitution of India and, therefore, in our considered opinion entitle for immunity from the taxation under the provisions of Income Tax Act 1961 as directed under article 289 of constitution of India 1949. - AT
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Income Tax:
Deduction u/s 10AA - interest on FDR along with Forward Premium - since the Interest on Fixed Deposits are attributable and incidental to the trading business carried on by the assessee, the same has rightly been claimed as exempt u/s. 10AA - AT
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Customs:
Levy of penalty - The appellant who is a Customs Broker cannot be expected to have knowledge about the goods in the container - On such circumstance, when there is no dispute with regard to the KYC documents submitted on behalf of the importer, the penalty imposed under sec. 112(a) alleging that the appellant has abetted smuggling of misdeclared / undeclared goods is without any factual basis. - AT
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Customs:
Imposition of penalty u/s u/s 112 and u/s 114AA - using fake/fabricated gate passes and on being unsuccessful, have filed bill of entry on forged/fabricated Air Way Bill (AWB) - removal of imported goods on fake gate passes without filing bill of entry - Penalties on different person confirmed or reduced - AT
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IBC:
Initiation of CIRP - It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. What has to be looked into is whether the defence raises a dispute which needs further adjudication by a competent court. - The Corporate Debtor having raised genuine disputes in their detailed replies to the Legal Notice and the Demand Notice, the Adjudicating Authority ought not to have admitted the Section 9 application - AT
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Service Tax:
SVLDR Scheme - meaning of expression ‘tax dues’ occurring in Section 124 (2) of the FA - The tax dues in the present case referred to not just the duty amount, but duty plus interest or to put differently the total amount of duty payable which would include the main duty component and the interest component. This explains why under Section 123(a)(i) FA while defining the expression ‘tax dues’, the legislature has referred to “the total amount of duty which has been disputed”. - HC
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Service Tax:
Export of service - Place of performance / supply of service - The deviation in rule 4(a) of Place of Provision of Service Rules, 2012 and, considering the specific circumstance of determination by tangible presence, it would not be amenable to stretching for coverage of ‘deemed goods’, if any, owing to that limitation of pinpointing ‘service’ which is of essence in the said Rule.- AT
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Service Tax:
Refund - Excess amount deposited SVLDRS as Voluntary Disclosure Scheme - SVLDRS- 2/SVLDRS-2B has not been placed on record. It becomes clear that appellant has failed to prove its disagreement to the amount quantified as payable by the designated authority. The disagreement has been the main contention of appellant’s argument, same stands totally unproved. Otherwise also, it being a case of voluntary disclosure, the appellant had to self assesse the payable amount in SVLDRS-1. The self declaration form has also not been produced by the appellant. - there is no applicability of article 265 of the Constitution of India as is impressed upon by the appellant. - AT
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Central Excise:
CENVAT Credit - input services - Most services will not be amenable to direct use, and absorption, in the manufacture of goods; neither would these be clearly discernable in the product that emerges. The principle of nexus of service should not, therefore, restrict itself to direct use but should encompass indirect deployment and, hence, should be examined also in relation to the main leg of the definition. - AT
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2023 (1) TMI 1165
Percentage of GST input tax - GST paid for the shop on commercial rent to landlord - GST paid on commission to Dunzo and Swiggy for ecommerce online service - GST paid on service charges charged by paytm - GST paid on service charges charged by Banks - Packing material - Printed material - Capital goods like cutting machine, weighing scale, refrigerators, computers and hardware and software goods - GST consequences if goods purchased from unregistered and composition dealers - scope of Advance Ruling. HELD THAT:- The Applicant is into supply of fresh and semi processed meat products like chicken, Mutton, fish, pork and all types of packed cold cut, spices and masala powder. The Applicant is apparently into trading of both taxable and exempted goods - the Applicant wants to know the percentage of input tax credit to be claimed in view of the nature of their business. Since the Applicant is involved in the supply of both taxable and exempted supplies, the Applicant has to avail the input tax credit proportionately in terms of section 16, 17 of CGST Act 2017 read with Rule 42 of CGST Rules 2017; wherein the procedure to be followed is clearly mentioned. What will be the GST consequences if we purchased goods from unregistered and composition dealers? - Scope of Advance Ruling - HELD THAT:- This question is not covered under the issues referred to in section 97(2) of CGST Act 2017, in respect of which an applicant can seek Advance Ruling and hence this Authority refrains from giving any ruling.
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2023 (1) TMI 1164
Percentage of GST output tax to be charged - works contract executed to Indian Railways - On Railway under Bridge works - Construction of Tunnels for Railways - Supply and stacking of ballast - Execution of Earth Works Contract - Subcontract works for the contract works - HELD THAT:- The applicant has stated that they are engaged in supply of works contract services to Indian Railways such as construction of Rail under bridge, construction of tunnels, execution of Earth Works Contract, supply and stacking of ballast and sub-contract of the contract works and wants to know the rate of GST on the same - works contract services supplied by the Applicant to Indian Railways such as construction of Rail under bridge and construction of tunnels are covered under entry No. 3(xii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and is exigible to GST at 18%. Works contract services involving predominantly earth work (that is, constituting more than 75per cent, of the value of the works contract) executed to Indian Railways (Central Government) by the Applicant is exigible to GST at 12% if the Applicant is providing the services either as a main contractor or as a sub-contractor to main contractor. Supply of ballast to railways is exigible to GST at 5% (HSN 2517) as per entry No. 126 of Schedule I of Notification No. 1/2017-Central Tax (Rate), dated: 28.06.2017.
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2023 (1) TMI 1163
Exemption from GST - providing catering services to Educational Institutions from 1st standard to 2nd PUC - applicability of N/N. 12/2017-Central Tax Rate -under Heading 9992 - recipient of service - HELD THAT:- The applicant is billing to the KLE Independent PU College and the consideration is payable by the said college. Hence the recipient of the service in question is the KLE Independent PU College. Since the recipient of service is an institution providing education up to higher secondary school, it is covered under the definition of educational institution for the purposes of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 - Since the Applicant is providing ready to eat food by way of catering to a Pre University College, the services provided by the applicant under question before us is also covered under entry No.66 of Notification No. 12/2017-Central Tax (Rate) dated: 28.06.2017 as amended further and hence exempted from GST.
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2023 (1) TMI 1162
Exemption from GST - works contract service provided to Bio Centers, Department of Horticulture and Center of excellence - other service like data entry operator, security, provided to Horticulture Department - material like fertilisers, soil, sand supplied for use of bio centers - HELD THAT:- The applicant is providing manpower supply for tissue culture production and for handling the process of research on flowers, planting and growing for Horticulture department, Government of Karnataka. Whether tissue culture is covered under 1st entry of eleventh schedule which says 'Agriculture, including agricultural extension'? - HELD THAT:- The tissue culture is not same as agriculture and there is no direct nexus to the items mentioned in eleventh or twelfth schedule of the constitution. Thus supply of manpower for tissue culture production and for handling the process of research on flowers, planting and growing to Horticulture department, Government of Karnataka are not provided by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Hence provision of such manpower services are liable to tax at 18%. The Applicant wants to know whether supply of materials like fertilisers, soil and sand for use of bio centers are exempted under GST. However, there is no specific exemption for supply of materials like fertilisers, soil and sand for use of bio centers as per notification No.2/2017-Central Tax (Rate), dated 28.06.2017.
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2023 (1) TMI 1168
Grant of bail - deposit a sum of Rs.70 Lakhs under protest - HELD THAT:- The condition directing the appellant to deposit a sum of Rs.70 Lakhs is not liable to be sustained and is hereby set aside. The rest of the conditions in the impugned order are sustained - appeal allowed.
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2023 (1) TMI 1167
Seeking adjudication by this Writ Court under Article 226 of the Constitution of India - classification of the Customs Central Excise Tariff Act its product and declaration to this effect - Nonwoven Fabric - PSB Bed Sheet manufactured of non-woven fabric - HELD THAT:- This Writ Court in exercise of its Constitution Writ Jurisdiction under Article 226 of the Constitution of India should not act as an expertise to scrutinise the composition and mode of manufacture of a product like of this nature and do the job of classifying a product as to under which classification list of the Customs Tariff Act such product falls since it requires scientific and technical analysis to be conducted by expertise in such scientific and technical field. In exercise of Constitutional Writ Jurisdiction under Article 226 of the Constitution of India Writ Court should not scrutinise an adjudicating authority s decision itself, by acting as an appellate authority over such order of the authority and substitute the findings of an authority by reappreciating the evidence and material and more particularly the nature of a case like this. This is not a case where any violation of principles of natural justice has been committed or any procedural irregularity has been committed by the authority in passing the impugned order or violation of any specific statutory provision of law has been committed by the Appellate Authority concerned in passing the impugned order. Petition dismissed.
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2023 (1) TMI 1166
Legality of search, seizure, actions and prepared panchnama - legality of release of 5 seized trucks which were empty and not loaded with any goods - direction to respondent No.4 to get the goods stored under seized 20 barrels be tested for its characteristics, specification and ingredients by appropriate government laboratory - HELD THAT:- Since a show cause notice dated 04.12.2020 has been issued to the petitioner and others in which the validity of the panchnama is under consideration, hence the petitioner is having efficacious remedy to contest the show cause notice before the adjudicating authority. The petitioner is free to apply to the adjudication authority. The Writ Petition is disposed of with a direction to the competent authority that if such an application is filed by the petitioner, the same be considered in accordance with the law expeditiously. Petition dismissed.
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Income Tax
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2023 (1) TMI 1159
Disallowance of exemption claimed u/s. 80P - deduction claimed by the assessee society under section 80P(2)(a) (iii) and (iv) was wrongly claimed as the assessee society has failed to provide the complete details of its members and its activities between the members and outsiders separately and also failed to prove eligibility of specific deduction against the specific activity claim in the return of income u/s. 80P (2) - HELD THAT:- CIT(A) has partly dismissed the appeal of assessee on the issue of interest income and there is no cross appeal or cross objection by the assessee in this regard. Gross profit - appellate purchase sugarcane seeds, agricultural equipments etc. and supplied them to its members as per objects of the society and profit from such activity was claimed to be exempt u/s. 80P(2)(a)(iv) - CIT(A) was right in observing that there is no evidence suggest that trading in agricultural equipment was done with persons other than the members. It is also not a case of the AO, therefore the Ld. CIT(A) rightly held that the profit earned from said activities deserve to be exempt u/s. 80P(2)(a)(iv) Grants received from State Government it was contended that the same was passed to members of the society and the Ld. CIT(A) directed to the AO ascertain if these grants have indeed been passed to the members of the society. To that extent these grants have been distributed to the members then they should be allowed to be deducted. CIT(A) has directed the AO to verify the claim of the assessee and we are unable to see any ambiguity in this regard. Commission income, entry fee, other income, patte (satte) se income , Upaj Badhotri and Vasooli Kharcha - On a careful perusal of the first appellate order we observe that the AO merely alleged that if the assessee takes sale/purchase of agricultural produce by its members then it must be shown in trading account, while no such transactions has been shown in the trading account maintained by the assessee. AO alleged that the account maintain by the assessee are defective and not audited u/s. 44AB - CIT(A) after considering the explanation and submissions of the assessee that wherein it was submitted that from the details mentioned it is clear that the activity of supply of sugarcane to the sugar mill constitute a marketing activity of sugarcane which is agricultural produce grown by the appellants members and as the appellant is cooperative society duly registered under Cooperative Society Act 1912 all the essential require for claiming deduction u/s. 80P(2)(iii) are fulfilled and thus the assessee is eligible for deduction. Assessee also drawn attention first appellate authority towards order of his predecessor for a immediately preceding year A.Y. 2013-14 which was deleted by the Ld. CIT(A), Aligarh after considering the total facts and circumstances of the case and orders of his predecessor for A.Y. 2013-14 the Ld. CIT(A) concluded that the AO has not given any cogent reason why the claim exemption should not be allowed to the appellant. In view of above we note that principle of res judicata does not apply of tax proceedings, however rule of consistency is always respected therefore the Ld. CIT(A) was right in allowing claim of assessee u/s. 80P(2)(a) (iii) - No ambiguity perversity for any valid reason to interfere with the same. Allowance of cheque book fee - CIT(A) right noted that the appellant is providing credit facilities to its members for that purpose cheque books are issued to the members therefore cheque book fee received by the assessee is incidental to the business of providing credit facilities to the members therefore this amount was also rightly allowed u/s. 80P(2) (a)(iii) . CIT(A) was right in directing the AO to verify the amounts of grants Anudhan Keetnashak and Anudan Krishi Yantra received from State Government to ascertain if these grants have been indeed to passed to the members of the society and the amount so passed was allowed to be deducted. We are also in the agreement with the conclusion drawn by the Ld. CIT(A) that the claim of assessee regarding commission income, entry fee, other income, patte (satte) se income, Upaj Badhotri and Vasooli Kharcha are incidental receipts relating to the business of marketing of agricultural produce of the members therefore the receipt from said heads is eligible for deduction u/s. 80P(2)(a)(iii) Assessee has claimed u/s. 80P(2) only on the net profit amount and not gross commission and other incomes therefore the AO was not right in denying the claim of assessee on the basis of quantum of sale of sugar cane and commission. Such kind of allegation could be made in the case of showing or declaring lesser commission in comparison to the quantum of sale but when the assessee is disclosing entire commission income and simultaneously disclosing sale of sugarcane then as per submissions of the assessee is not only undertaking purchase of sugarcane but also taking care of the entire process right from showing sugarcane seeds to procuring crops grown by its members and for entire activities supervise by Cane Commissioner of State Government who grants required approval and the supply of sugarcane is made to the sugar mills nominated by the Sugar Board. In this situation the showing of higher commission income cannot be basis of denying exemption u/s. 80P(2) of the Act. - Decided against revenue.
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2023 (1) TMI 1176
Transfer of jurisdiction - Validity of notices issued u/s 142(1) by ACIT, Balasore Circle, Balasore - transfer of jurisdiction of the Income Tax Circle of the Petitioner for the said AY from Kolkata to Balesore was without complying with Section 124 (4) of the IT Act - HELD THAT:- The fact remains that merely because the Petitioner hapens to be a Director of M/s. Nabadurga Minerals, Rairangpur, Mayurbhanj which has been assessed in the Balasore Circle would not automatically transfer the jurisdiction as far as Petitioner is concerned from Kolkata to Balasore. What the counter affidavit, however, does not answer is how the transfer of jurisdiction could take place without complying with the mandatory requirement of Section 124(3) of the IT Act. See DEVIDAS VERSUS UNION OF INDIA AND OTHERS (AND OTHER PETITIONS) [ 1991 (9) TMI 18 - BOMBAY HIGH COURT] No convincing answer given by the Department to shift the jurisdiction to the Balasore Circle, when admittedly, the Petitioner has already shifted to Kolkata and has been filing returns there. Accordingly, the Court quashes the impugned notices issued by the ACIT, Balasore to the Petitioner. It is clarified that the Petitioner will continue to be within the jurisdiction of the relevant Income Tax Circle at Kolkata where he has been filing his returns. This order will not preclude the Department from proceeding in accordance with law if it proposes to transfer the jurisdiction of the Petitioner to any other circle.
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2023 (1) TMI 1158
Addition of Long-term Capital Gain on sale of industrial plot - Real owner - owner of the property was Director of the assessee company - benefit of indexation capital gain charged only in the hands of owner or on the name of lender for purchases of HSIDC - whether ownership cannot be transferred to a person without consideration and company cannot become owner who has not made any payment to director? - HELD THAT:- As conveyance deed was signed by the assessee through its director Shri Surender Kumar Gupta. It is also not in dispute that the sale consideration was received by the assessee. In our considered opinion, no purchaser would pay a consideration of Rs. 90 lakhs unless he is satisfied with the title of the property. The title was in the name of the assessee though the assessee has given a different color by referring to Supplementary Agreement. Ownership was changed from Shri Surender Kumar Gupta to the assessee and hence there should not be any dispute in so far as who is the seller of the property is. Facts on record clearly demonstrate that the seller of the property is the assessee and the property has been sold by Shri Surender Kumar Gupta in the capacity of being the director of the assessee company - we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 2 with its sub-grounds is dismissed. Disallowance made of claim of bad debts - short payment received on full and final settlement of debts with M/s Park Non-Woven Pvt. Ltd. the debtor of the company - HELD THAT:- Assessee has written off provision for bad debt and has credited the account of Park Non Woven Pvt Ltd by the said provision. The assessee has clearly written off provision for bad and doubtful debt which is not allowable and interestingly, on 31.03.2015, outstanding debit balance in the account of Park Non Woven Pvt Ltd was Rs. 90,74,626/- from which provision was written off to the tune of Rs. 17 lakhs and balance carried forward was Rs. 51,03,331/-. After provision for bad debt, the assessee has received entire outstanding amount of Rs. 51,03,331/-. We fail to understand, if the debtor was not in a position to pay debt as on 31.03.2015, then how the assessee has received Rs. 51 lakhs after write off. Facts on record clearly go against the assessee and, therefore, Ground No. 3 is, accordingly, dismissed. Disallowance being excess paid which was excise duty written off - HELD THAT:- The undisputed fact is that the assessee was having credit balance with the Excise Department - As the assessee was left with no stock, the assessee could not claim the set off of the said Excise balance and, therefore was left with no choice but to write off the same. We do not find any error in this write off as the same has to be allowed as business loss. The Assessing Officer is directed to allow the claim - Ground No. 4 is, accordingly, allowed. Reversal of excise duty as sales return and service tax - HELD THAT:- We find that on 20.08.2014, there is a reversal entry of sales return amounting to Rs. 2,61,180/- and on 07.01.2015, there is a debit of Rs. 1,36,723/- being service tax transferred to closure of factory. As per Exhibit 104, the assessee has paid basic Excise Duty in the month of May 2014 and as per Exhibit 106 which is ledger account of service tax, the assessee has credited Excise Duty RG -23A Part 2 being balance transfer of closure of factory. Copy of ledger account show that the amount debited earlier has been reversed during the year under consideration. In our considered opinion, when the amounts were debited, they were claimed as expenditure and since now the entries have been reversed, the same become income of the assessee. No reason to interfere with the findings of the ld. CIT(A). Ground No. 5 is dismissed.
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2023 (1) TMI 1174
Exemption u/s 11 - assessee is rendering specific service to its members as well as non-members and charging fees from them which is liable to be taxed under head Profit and gains of Business Profession and as such its activities are not charitable in nature as envisaged u/s 2(15) - CIT-A held that the activities of assessee organization charitable in nature and eligible for exemption u/s 11 - HELD THAT:- It is not in dispute that for the Assessment Year 2006-07 and 2007-08 exemption had been denied on the ground that the assessee was involved in trade, commerce or business since the assessee was receiving fees and other income from known members also. The denial of the exemption has been set aside by the Ld.CIT(A) against which the Department of Revenue had approached this Tribunal and his Tribunal had allowed the exemption but directed the assessee to maintain separate books of accounts u/s 11(4A) of the Act. As against the order of the Tribunal, the assessee preferred an appeal before the Hon ble Delhi High Court [ 2012 (11) TMI 429 - DELHI HIGH COURT ] treated the assessee as charitable institution u/s 11(1) of the Act. Even in the year under consideration the exemption u/s 11(1) has been denied by invoking mischief of proviso to Section 2(15) mainly on the ground that the assessee involved in trade, commerce or business. The Ld.CIT(A) by following the principles of consistency and also orders made in assesses s own case right from the Assessment Year 2006-07 to 2014-15 and also by following orders of the Tribunal, the Hon ble Delhi High Court which treated the assessee as charitable institution u/s 11(1) of the Act and allowed the appeal.
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2023 (1) TMI 1173
Income deemed to accrue or arise in India - CIT(A) treating the amount as non taxable in India, on the ground that the services were rendered outside India - Whether assessee had failed to fulfill all conditions as laid down in clause (b) of section 9(1)(vi) of the I. T. Act - CIT(A) s action in issue reversing the assessment findings holding the assessee s receipts in issue as taxable in India despite the fact that it had rendered the corresponding services in USA only - HELD THAT:- Fact remains that the assessee has not rendered any services in India itself forms the most clinching aspect for us to follow our earlier above extracted order deciding the issue against the department. It is made clear that the Revenue s pleadings nowhere pinpoint any distinction on facts or law; as the case may be, in all these three assessment years. Faced with the situation, we adopt judicial consistency to affirm both the CIT(A) s orders herein under challenge. This Revenue s identical sole substantive ground fails therefore.
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2023 (1) TMI 1172
Income from undisclosed source u/s 68 - creditworthiness genuineness of the transactions remain unproved as the two companies from whom advances have shown to received had meager income not capable to advance such huge amount - AO while making the addition has mentioned that the assessee has not furnished the necessary detail for ascertaining identity of the person and genuineness of advance received, accordingly, made addition u/s 68 - CIT(A) has deleted the addition made by the A.O - HELD THAT:- As found that the assessee had filed loan confirmations with address, bank statement of the two parties i.e Vedanga Vinimoy Pvt. Ltd. and M/s R. R. Dealers Pvt. Ltd. showing the payment to the assessee and the photo copies of the income tax return of the said two parties. During the course of assessment proceedings vide letter dated 16/11/2015. However no enquiries were made by the A.O. during the course of the assessment proceedings. As found that the Ld. A.O. has made necessary enquires during the remand proceedings to verify the genuineness of the advance of 5,00,00,000/- received by the assessee from the above said two parties. The Ld. A.O. has also issued notice u/s 133(6) of the act to the aforesaid creditors. The above said parties have duly acknowledged the notice issued u/s 133(6) of the Act and thereafter they have sent their confirmation, final account and ITR for the Assessment Year 2013-14. There were no adverse comment or finding has been made by the A.O. on the above said parties. Besides the same, the assessee had proved the identity, creditworthiness and genuineness of the two parties in relation to the advance in question. We are of the opinion that there is no error or legal infirmity in the order of the Ld.CIT(A) in deleting the addition made by the A.O - Decided against revenue.
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2023 (1) TMI 1161
Reopening of assessment u/s 147 - validity of order passed u/s 148A issued in the wrong name and PAN number - non consideration of reply sent by the petitioner - HELD THAT:- The respondents have accepted the mistake in the counter affidavit filed by them before this Court but however they had stated that there is typographical mistake. When a categorical stand has been taken by the petitioner that he is not the owner of the subject property which is also disclosed in his reply dated 24.03.2022, which was admittedly received by the second respondent on 30.03.2022 even prior to passing of the impugned order dated 31.03.2022 at 6.30 p.m., this Court is of the considered view that the second respondent ought to have given due consideration to the reply dated 24.03.2022 sent by the petitioner in the impugned order dated 30.03.2022, however since the same has not been given due consideration and that too when the impugned order has wrongly disclosed the name of Muktha Seth and wrong PAN number has been given whereas the petitioner's name is Devarajulu Jayakothandaraman and his PAN number is different, this Court is of the considered view that by total non-application of mind and by violating the principles of natural justice, the second respondent has passed the impugned order u/s 148A(d) of the Act and has erroneously issued the consequential notice dated 31.03.2022 to the petitioner under Section 148 and, therefore, the impugned order as well as the consequential notice will have to be quashed by this Court and remand it back to the second respondent for fresh consideration on merits and in accordance with law. Since the petitioner claims that he was not given sufficient time to send detailed reply to the notice dated 17.03.2022, this Court is of the considered view that the petitioner must be given an opportunity to send additional reply to the one already sent on 24.03.2022 to the second respondent. Thus the impugned order dated 30.03.2022 as well as the consequential order dated 31.03.2022 issued by the second respondent are hereby quashed and the matter is remanded back to the second respondent for fresh consideration on merits and in accordance with law.
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2023 (1) TMI 1157
Reopening of assessment u/s 147 - chargeability of capital gains arising out of sale of property - HELD THAT: CIT(Appeals) has passed a non-speaking order without considering the facts in right perspective. The assessing authority computed capital gain purely on the basis of conjectures. AO has recorded that assessee vide letter dated 8.11.2016 intimated that he had not sold any property. He was having power of attorney of his mother in respect of land admeasuring 1288 sq. yards in Shaheed Malkhan Singh Colony, Gharaunda. However, the AO made addition on the basis that the entire sale proceeds had been credited in the account of the assessee, therefore, being the actual beneficiary, addition was made in his hand. We are unable to affirm the view of the Assessing Officer as the law is clear regarding taxability of capital gain arising out of transfer of immovable property. Whether capital gain can be charged from the person who sold property as attorney of the owner ? - In our considered view, there is no ambiguity under the law for chargeability of capital gain in respect of transfer of any capital asset. It is the owner of capital asset who would be liable for capital gain. In case the sale consideration is credited into the account of third party or the attorney of such owner, in that event also the money which has been credited in the account of the third party or the power of attorney cannot be subjected to tax under the head capital gains . Therefore, the action of the authorities below is contrary to the statutory provisions. The money credited to the account of the assessee could not have been subjected to tax as a capital gain earned by the assessee. Addition made by AO under the head of capital gain is not justified. Hence, the Assessing Officer is directed to delete the addition. However, it is clarified that the Assessing Officer would be at liberty to tax the capital gains/business receipts in correct hands - Grounds of appeal raised in this appeal are allowed.
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2023 (1) TMI 1175
Reopening of assessment u/s 147 - income chargeable to tax accrues or arises in India - whether the investment in shares of Agile by the petitioner was a capital account transaction, given the fact that there is no allegation of round-tripping - HELD THAT:- We may note, that there is no reference to Section 115A of the Act, for whatever its worth, either in the show-cause notice or in the impugned order passed by the AO. As to whether the said provisions are, at all, applicable to a non-resident company is a moot point which the AO will have to decide. Having regard to the overall facts, we are of the view, that this writ petition can be disposed of with the following directions: (i) The impugned order passed u/s 148A(d) of the Act and the consequent notice of even date issued under Section 148 of the Act are set aside. (ii) The AO will carry out a de novo exercise. The AO will, inter alia, deal with the petitioner s contention, that the transaction in issue is a capital account transaction, and that no income whatsoever chargeable to tax accrues or arises in India. (iii) The AO will accord personal hearing to the authorized representative of the petitioner. For this purpose, the AO will issue a notice fixing the date and time of hearing.
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2023 (1) TMI 1156
Depreciation on intangible asset being License to Collect Toll - AO following the direction issued by the CBDT s vide its circular 09/2014 dt. 23/04/2014 appears to have amortized the assessee s corresponding cost of construction of development of infrastructure facility over the period of concessionaire agreement - CIT(A) s reversing the findings of Ld. AO in disallowing the claim of depreciation u/s 32(1)(ii) on intangible assets being License To Collect Toll - HELD THAT:- No merit in the Revenue s stand as the very same issue had arisen between these parties in earlier AYs, more particularly in Revenue s appeal [ 2022 (8) TMI 561 - ITAT PUNE ] Co-ordinate bench has adjudicated the matter against the Revenue and in favour of the assessee Revenue is fair enough in its pleadings and not pin-pointing any distinctive facts or law in all these assessment years so far as the assessee s treatment of its right to collect toll as an intangible asset u/s 32(1)(ii) is concerned, consequently we see no reason to deviate from the aforesaid decision of the Co-ordinate bench. Appeals of the Revenue is dismissed.
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2023 (1) TMI 1155
Income from House Property - Addition on account of notional rent - AO observed that in view of the provisions of section 23 of the Act, the deemed rental income of the property in question which remained vacant during the year was required to be taxed under the head Income from House Property - AO, confronted the assessee who stated that the property could not be let out due to poor access and for want of regularisation - HELD THAT:- As decided in SH. KAMAL KUMAR [ 2022 (6) TMI 574 - ITAT DELHI] has considered the property located in similar locality and, after elaborate discussion, has found that there was reasonable cause for not putting the property on rent. Since on similar facts in similarly located property, ITAT has found the reasonable cause for not putting the property on rent, it was sufficient to permit the assessee to get away from the rigors of notional rent. We note that the submissions of the assessee s counsel is that there was a sealing drive in the locality, so, it was difficult to find tenant and this was the reason the property could not be let out. It is the plea that identical facts were appreciated by the ITAT in the aforesaid order. Decide the issue in favour of the assessee. Addition of jewellery found in premises of the assesse - CIT-A held that sources of the jewellery have remained to be explained and accordingly, the ld. AO has rightly taxed it in the Assessment Year 2014-15 - HELD THAT:- We find that on a query as to whether there is any evidence of the source of investment and the mode of payment, the ld. Counsel fairly accepted that these cannot be substantiated. In this view of the matter, in our considered opinion, the assessee has been granted reasonable relief by the AO. The addition sustained is appropriate, hence, we do not find any infirmity in the order of the Revenue authorities in this regard. - Decided against assessee.
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2023 (1) TMI 1154
Reopening of assessment u/s 147 - share premium received was in excess of intrinsic value, which has escaped assessment - HELD THAT:- A perusal of the reasons recorded specifically shows that there is no quantification of the income which is alleged to have escaped assessment much less the estimate of the income that is alleged to have escaped assessment. A perusal of the decision in the case of Khubchandani Healthparks (P) Ltd. [ 2016 (2) TMI 710 - BOMBAY HIGH COURT] clearly shows that the notice for reopening of assessment itself does not indicate the approximate amount of income, which the AO has reason to believe has escaped assessment nor does it quantify the extent of such income, then the reasons recorded is liable to be held to be invalid and reopening quashed. As the reasons recorded does not quantify even an estimated amount of the alleged income which has escaped assessment and as it is noticed that the reasons recorded do not contain any live link to the alleged illegal mining, the reasons recorded for the purpose of reopening of assessment are invalid and is nothing but fishing enquiry. Consequently, the reasons recorded are held to be invalid and notice issued u/s. 148 of the Act for the purpose of reopening stands quashed. Consequently, the assessment also stands quashed.Appeals of the assessee stand allowed.
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2023 (1) TMI 1153
Benefit/perquisite u/s 2(24)(iv) - CIT(A) deleting the addition made on account benefit/perquisite u/s 2(24)(iv) and further holding that provisions of section 115BE provisions of section 115BE - reply of the assessee was dismissed by the AO estimated the benefit by taking rate of interest @ 6% p.a. and made the impugned addition - HELD THAT:- As in the case of Anil Kumar Sharma [ 2020 (2) TMI 1684 - ITAT DELHI] we restore all this issues raised before us to the file of the Assessing Officer for reconsideration as per the direction of the Tribunal.
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2023 (1) TMI 1160
Reopening of assessment u/s 147 - notice has been issued in the name of Assessee who has passed away - curable u/s 292BB - HELD THAT:- As it is quite clear that any notice which has been issued in the name of the deceased person is bad and illegal and here notice u/s 148AB is issued in the name of the deceased. Therefore, even when this aspect has been brought to the notice of the department, subsequent issuance of notice u/s 148 to the legal heir suffers from the initial defect. The defect being fundamental and as it is not curable u/s 292BB of the Income Tax Act (the Act). Resultantly, petition stands allowed quashing and setting aside the notices. Decided in favour of assessee.
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2023 (1) TMI 1171
Unexplained cash credit u/s 68 - Bogus share capital and share premium - genuineness and creditworthiness of the investors could not be verified due to non-production of the managing directors of share subscribing companies - HELD THAT:- Non-production of directors of the investors cannot be a ground for making addition in the hands of assessee u/s 68 when the other evidences relating to the raising share capital and also qua the share subscribers are available on record as furnished by the assessee and also the cross-verification done by the AO on the basis of notices issued u/s 133(6) - The case of the assessee is squarely covered by the decisions in the case of Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. The assesse has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. AO simply harped on the non production of managing directors of the share subscribing companies to make the addition which is not correct. CIT(A) has passed a very reasoned and speaking order discussing all facts and satisfaction of all the ingredients of section 68 while allowing the relief as stated above. We are inclined to uphold the order of CIT(A) by dismissing the appeal of the revenue.
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2023 (1) TMI 1170
Estimation of net profit @ 5% of the turnover - non-filing of books of account - HELD THAT:- Looking to the fact of the case referring to the financial data of preceding two years appearing in the audited financial statements and the assessee being unable to bring any other details on record; and considering the factual matrix as well as past trend of profit earned by the assessee and the fact that ld. AO has not pointed out any specific defect in the details filed by the assessee, we, therefore, in order to bring to an end to this litigation estimate the net profit @ 2.5% as against the net profit rate of 5% confirmed by the ld. CIT(Appeals). Appeal of the assessee is partly allowed.
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2023 (1) TMI 1169
Validity of assessment order passed u/s 143(3) - assessee's revised return of income not been taken into consideration by the AO - HELD THAT:- In the light of the judgment of Mangalore Chemicals Fertilizers Ltd. [ 1991 (1) TMI 70 - KARNATAKA HIGH COURT ] we are of the opinion that since the assessee had filed the revised return of income on 19.03.2015, the original return filed dated 29.09.2013 u/s 139(1) of the Act effaces and obliterates. Since the revised return of income was filed on 19.03.2015 u/s 139(4) of the Act, it was a valid revised return as per the law in force at that time. In such a scenario, the AO ought to have considered the revised return of income for assessing the income of assessee. But, despite assessee filing the same, the AO erred is not considering the same and passed the assessment on 27.03.2015. Therefore, we set aside the order of the Ld. CIT(A) and remand the assessment back to the file of the AO with a direction to frame denovo the assessment. AO frame de-novo the assessment taking in to consideration the revised return of income. Appeal of the assessee is allowed for statistical purposes.
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2023 (1) TMI 1152
Exemption u/s 11 - application for registration u/s 12AA rejected - whether assessee shall be held as State and thus no tax can be levied on it under the income tax act? - As per Commissioner (Exemption) appellant was carrying on activities in the nature of commerce the object of the appellant were not to be treated as for Charitable purpose u/s 2(15) - HELD THAT:- As per the definition of State , if we check under which head the assessee company would fall, the probable answer is Local or Other Authorities . But, the definition of Local or Other Authority was not defined in the constitution or any other statute, however, a fundamental guidance was accorded by Som Prakash Rekhi vs Union Of India [ 1980 (11) TMI 113 - SUPREME COURT ] wherein the Hon‟ble Apex Court has prescribed certain tests to determine as to whether an institution is State‟ within the meaning of Article 12 of the Constitution of India or not. We have carefully perused the submissions of the assessee (supra) regarding fulfillment of the aforesaid tests/conditions carved out by the Apex court and found that the assessee company has satisfied the said tests, thus, we hold that the assessee company falls under the definition of State within the meaning of Article 12 of the Constitution of India and, therefore, in our considered opinion entitle for immunity from the taxation under the provisions of Income Tax Act 1961 as directed under article 289 of constitution of India 1949. WATCO, the assessee company hold the status of State within the meaning of Article 12 of the Constitution of India and entitle for immunity from taxation under the provisions of Income Tax Act 1961 as declared by Article 289 of the Constitution of India 1949. Consequently, the additional ground of the assessee stands allowed.
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2023 (1) TMI 1151
Deduction u/s 10AA - interest on FDR along with Forward Premium, Bank Charges and Interest paid - These activities are inextricable part of the business of the assessee or not - CIT (A) treating the income from Fixed Deposit as income from other source where in the nexus of business transaction was already proved - HELD THAT:- The assessee in the ordinary course of business had to furnish fixed deposits on the Import Export transactions to banks for the purpose of availing loans and making payments to the suppliers. A new Fixed Deposit is given to the Banks for each and every import export transaction who after completing all the formalities gives fresh loans to our clients. Thus each and every Fixed Deposit has a corresponding Bank Loan for each and every Import Export trading transactions undertaken by our clients. Therefore none of the Fixed Deposits are independent of business. The Banks charges interest/processing charges etc on all such loans given. Net residue (difference between the Interest Earned and the Finance Loan and other Charges etc) if any, by our clients is nothing but an outcome of undertaking an Import Export Transaction which is in the normal course of trading business of diamonds eligible for exemption u/s. 10AA - The above income can be compared to the Forex Gains which is earned due to Currency Fluctuations. Fluctuations in Forex Gains is considered to be a part of the business activity and is treated as a resultant of the Import Export Activity undertaken, thus exempt u/s. 10AA of the Income Tax Act. On similar lines, since the Interest on Fixed Deposits are attributable and incidental to the trading business carried on by the assessee, the same has rightly been claimed as exempt u/s. 10AA - In the result, the results declared by the assessee after netting off the FDR Interest with interest paid and Forex loss are eligible to be adjusted against Business Profit. Ground raised by the assessee are allowed.
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Customs
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2023 (1) TMI 1149
Levy of penalty of various persons - Allegation of abating the Smuggling - Detention of goods - illegal removal of the container using forged documents from the customs area - creation of forged out of charge (OOC) and Pass- out documents and handing over documents for clearance to Karthikeyan and told him to take delivery - HELD THAT:- There is much contradiction as to the dates on which the container was removed. The investigation of the removal of this container was taken up along with alleged illegal removal of containers in respect of five other bills of entry. However, the date of removal of the container of this case is not satisfactorily established. That apart from the statement of Shri Karthikeyan, there is nothing to establish that the appellant had any role in forging documents or removing the container from the CFS area. The contradiction pointed out by the learned counsel also shakes the case put up by the department. The department has failed to establish the allegations raised against the appellants. The penalties imposed therefore require to be set aside - Appeal allowed. The allegation is that the goods have been misdeclared. Though the adjudicating authority has absolutely confiscated goods under Annexure II, the reason for such confiscation is that the goods have violated IPR / BIS Rules. In regard to goods imported under Annexure I and III, the adjudicating authority has given an option to the importer to redeem the goods on payment of redemption fine. The appellant who is a Customs Broker cannot be expected to have knowledge about the goods in the container - On such circumstance, when there is no dispute with regard to the KYC documents submitted on behalf of the importer, the penalty imposed under sec. 112(a) alleging that the appellant has abetted smuggling of misdeclared / undeclared goods is without any factual basis. The penalty imposed on the appellants alleging abetment, that they have rendered the goods liable for confiscation, is totally unwarranted. The penalty imposed on the appellants require to be set aside - Appeal allowed.
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2023 (1) TMI 1148
Imposition of penalty u/s under Section 112 and Section 114 AA of the Act - using fake/fabricated gate passes and on being unsuccessful, have filed bill of entry on forged/fabricated Air Way Bill (AWB) - removal of imported goods on fake gate passes without filing bill of entry - HELD THAT:- Shri Dhananjay Kumar Singh is the kingpin in the attempted removal of valuable cargo from Customs-Custodian by resorting to forgery and other acts of omissions and commissions. It is he, who received instructions from Ms. Sonia of Hong Kong for removal of cargo from the Customs Department of India without filing bill of entry. For this work, Ms. Sonia agreed for giving remuneration @Rs.750/- per kg. or Rs.7,00,000/- approximately. Thereafter, Shri Dhananjay Kumar Singh, who was handling the clearance for Shri Mohit Jain of M/s.Shankeshwar Impex, used the IEC of M/s. Shankeshwar Impex for import of the goods. Shri Mohit Jain has allowed the use of his IEC in good faith, not knowing about the illegality or attempt to smuggle the goods by Shri Dhananjay Kumar Singh - Shri Dhananjay Kumar Singh had also admitted that on earlier two occasions also, he had cleared the valuable consignment by resorting to smuggling, as the earlier two consignments were cleared without filing bill of entry by resorting to forgery and delivery without actual gate pass. Accordingly, penalty imposed on Shri Dhananjay Kumar Singh of Rs.5,00,000/- under Section 112 and Rs.20,00,000/- under Section 114 AA are confirmed and his appeal is rejected. Penalty on Shri Upendra Kumar Chaubey - HELD THAT:- He has actively connived in the whole episode of smuggling, morefully described hereinabove. He has knowingly used forged documents like gate pass etc. having knowledge of its forged nature. However, he is a person of small means and employee of the importer - M/s.Shankeshwar Impex. The penalty imposed upon him is disproportionate. Accordingly, this appeal is allowed in part. The penalty of Rs.4,00,000/- under Section 112 reduced to Rs.1,00,000/- and penalty of Rs.15,00,000/- under Section 114 AA to Rs.3,00,000/-. Penalty on Shri Abhishekh Mishra - HELD THAT:- He is H-Card Holder employed with CHA firm viz. M/s Aeroship Logicare Pvt. Ltd., being engaged in the Customs clearance work for the last few years, was aware of the basic Customs procedure. Further, he was promised for Rs.10,000/- for abetting in the smuggling done by Shri Dhananjay Kumar Singh. Normally, this high amount of remuneration is not given for simple delivery of the import consignment. Thus, connivance on the part of this appellant is evident on the basis of the record - penalty for falsification of the documents and its use, having knowledge of false/or forged nature of the documents is not attracted. Accordingly, the penalty of Rs.1,00,000/-under Section 112 is confirmed and the penalty under Section 114 AA of Rs.5,00,000/- is set aside. Accordingly, the appeal is allowed in part. Penalty on M/s. Krishna Logistics Management - HELD THAT:- They have acted bonafidely as a CHA and there is no lapse on their part in taking instructions and filing the bill of entry. Further, they have filed the bill of entry on first check basis and also requested for examination of the goods and the documents before the Customs Department. Further, there is no allegation of any connivance on their part in the attempted smuggling of the imported goods on 28.07.2017. Accordingly, appeal is allowed and the penalties imposed is set aside. Penalty on M/s. Celebi Delhi Cargo Terminal Management India Pvt. Ltd. - HELD THAT:- It is evident that they are not party to the attempted removal by other appellants in the nature of smuggling, particularly, Shri Dhananjay Kumar Singh. However, there appears to be lack of internal control procedures in their office/warehouse, and taking advantage of such loop holes in the procedures/mechanism, Shri Dhananjay Kumar Singh and others in collusion have attempted to remove the imported goods without filing bill of entry by using forged documents - M/s Celebi Delhi Cargo Terminal Management India Pvt. Ltd. have immediately informed the Customs of the incident, which had happened on 28.07.2017 as 29th and 30th July, 2017 were holidays in the Customs Department, and on 31.07.2017, the whole episode was brought to the knowledge of the Customs along with evidences collected by them as well as the statement of Forklift driver. The penalty of Rs.5,00,000/- imposed under Regulation 12 (8) of the Handling of Cargo in Customs Areas Regulations, 2009 is reduced to Rs.1,00,000/-. Penalty of Rs.5,00,000/- under Section 112 of the Act is set aside - Appeal allowed in part.
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2023 (1) TMI 1150
Violation of principles of natural justice - non-speaking order - HELD THAT:- It appears that communications continued on the part of the petitioner to comply with the directions, after considering all the judgements on all the issues raised by the petitioner, but, to no avail. Let the Assessing Officer/ Adjudicating Authority decide all these aspects and pass a detailed speaking order within a period of two months, without fail - Petition disposed off.
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Corporate Laws
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2023 (1) TMI 1177
Legality of the impugned order passed by the National Company Law Tribunal, New Delhi Bench whereby the winding up petition filed against the Respondent company was dismissed - HELD THAT:- In view of the Judgment passed by Hon ble three Member Bench of this Tribunal in the case of REGISTRAR OF COMPANIES NCT DELHI AND HARYANA VERSUS APOORVA LEASING FINANCE INVESTMENT CO LTD, UNION OF INDIA, THROUGH THE SECRETARY, MINISTRY OF CORPORATE AFFAIRS, NEW DELHI. [ 2019 (12) TMI 1634 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.] which has attained finality as the Civil Appeal has also been dismissed by the Hon ble Supreme Court in UNION OF INDIA VERSUS APOORVA LEASING FINANCE AND INVESTMENT CO LTD AND ANOTHER [ 2021 (1) TMI 1293 - SC ORDER] , it is found that facts of the instant Appeal are same and identical to the case which was dismissed by this Appellate Tribunal in the case of Registrar of Companies Vs. Apoorva Leasing Finance Investment Company Limited and Another - It was held in the said case that Under the provisions of Section 423, this Court is empowered to condone a delay (beyond the original period of limitation of 60 days) only to the extent of a further period of 60 days. Hence, since the appeal has been filed beyond the maximum period that can be condoned under the proviso to Section 423, the appeal cannot be entertained and is accordingly dismissed on the ground of limitation. There is no merit in the Appeal, the instant Appeal is hereby dismissed.
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Insolvency & Bankruptcy
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2023 (1) TMI 1147
Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - demand notice was defective or not - service of demand notice - existence of debt and dispute or not. Whether the demand notice was defective? - HELD THAT:- The rival contention of the Operational Creditor is that the acronym LI stands for Lex Innova and the Corporate Debtor have themselves used the word Lex Innova in the letter-head of the Appointment Letter dated 02.08.2018 issued by them to the Operational Creditor. Thus, the Corporate Debtor is also clearly associated with the name LexInnova - even in the Settlement slip at page 117 of Appeal Paper Book (APB), the word Lexinnova has been used by the Corporate Debtor Company. Further the forwarding email from the HR Team of the Corporate Debtor to the Respondent No.1 also uses the word Lexinnova as may be seen at page 116 of APB - thus there are no cogent reasons to disagree with well-considered findings of the Adjudicating Authority that there was no deficiency in the Demand Notice with regard to nomenclature of the Corporate Debtor Company. Effective service of the Demand Notice - HELD THAT:- This aspect has also been dwelled upon at length by the Adjudicating Authority and that after taking due cognisance of the address mentioned on the Letter-head of the Settlement Slip issued by the Corporate Debtor to the Operational Creditor it has been correctly held in the Impugned Order that the said slip clearly depicts that the aforesaid address 4th Floor, Plot No.30, STPI Building, Electronic City, Udyog Vihar, Sector 18, Gurgaon-122015 belongs to the Corporate Debtor. The postal tracking report has also been perused by the Adjudicating Authority and thereafter it has been rightly held at Paras 28 and 29 of the Impugned Order that the service having been done on the Gurgaon address, the demand notice has been correctly serviced without defects. In the circumstances, the reasoned findings of the Adjudicating Authority are agreed upon that the Demand Notice was not defective and that it had been both despatched and serviced properly. Existence of pre-existing dispute or not - HELD THAT:- A plain reading of the FIR reveals that the Operational Creditor does not appear to figure in the list of the accused. Going by the contents of the said FIR, the inference drawn by the Adjudicating Authority after perusing the said FIR that the Operational Creditor was not an accused party in the FIR and that no consequential investigation was going on against him is factually in order and stands to reason. Moreover, the clear admission of operational debt as evidenced in the revised Full and Final Statement of settlement of dues as sent by the Corporate Debtor to the Operational Creditor on 21.11.2019 which notably is post filing of FIR also corroborates that there was no pre-existing dispute at the time of admission of liability of the operational dues. It is pertinent to add here that the issue of the Settlement Slip has not been denied by the Appellant - there are no hesitation in observing that in the present case, all the requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled with operational debt having been acknowledged and a default having been committed thereto; demand notice served but remained un-replied; and there being no real pre-existing dispute discernible from the given facts. The Adjudicating Authority has not committed any error in admitting the Section 9 Application for initiation of CIRP of the Corporate Debtor. We are satisfied that the impugned order does not warrant any interference - Appeal dismissed.
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2023 (1) TMI 1146
Seeking to condone the delay of 17 days in preferring the instant Appeal - Rule of Construction - HELD THAT:- It is latently and patently quite clear that the period of Limitation as per Order of this Tribunal dated 21.10.2022, shall be calculated from the presentation of the Appeal, in the instant case, the Appeal, having been presented by the Appellant, (submission of Appeal papers, through physical mode (on 12.12.2022), on the 47th day, which is beyond the 45 days (30 + 15 days), clearly barred by Limitation - the further delay of 2 days, after 45 days, is beyond a period of Limitation (30 + 15 days), which cannot be condoned, by this Appellate Tribunal, and in this regard, this Tribunal has no power to excuse the same. This Tribunal, on a careful consideration of divergent contentions advanced on either side, and also taking into account of the facts and circumstances of the present case in an encircling manner, comes to a consequent conclusion that the instant Comp. App (AT) (CH) (INS.) No. 13 of 2023, is barred by time, and further that the IA No. 34 of 2023 in CA (AT) (CH) (INS. No.) 13 of 2023, seeking to condone the delay of 14 days, in filing the instant Appeal, is per se, not maintainable, and the delay in question, is not a condonable one. Application dismissed.
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2023 (1) TMI 1145
Seeking refund to the Corporate Debtor s Account in the Corporate Insolvency Resolution Process - existence of sufficient cause and non-appearance of the parties or not - the grievance of the Appellant / Bank / Petitioner is that the Application came to be dismissed by the Tribunal on 18.10.2022 without taking into consideration Rule 49 of the NCLT Rules, 2016 - HELD THAT:- Rule 49 (2) of the NCLT Rules, 2016 under the caption, Ex parte Hearing and Disposal points out that if a Notice was not duly served or the concerned person was prevented by any sufficient cause for appearing at the time when the Petition / Application was called for Hearing, the Tribunal (Adjudicating Authority) can pass an Order, by setting aside the Ex parte Hearing, as against it / him or them, (after being satisfied with the reason (s) assigned, of course) on such terms, as it thinks fit. In the instant case, although the Appellant / Bank, has come out with a specific plea that only due to Covid-19 Pandemic, the Appellant / Bank / Petitioner had skeletal staff operation, both at the Corporate Office, Branch Office, etc. and that were the only reasons for the Petitioner / Appellant / Bank was not quite enough to enter its appearance in the subject matter of the case before the Adjudicating Authority (Tribunal). Although the Plea of Covid-19 Pandemic, appears to be a persuasive one, at the first blush, on acceptable one, on going through the spirit and tenor of the Counter filed by the Respondent, this Tribunal without any haziness, comes to an inevitable and inescapable conclusion that there is no Sufficient Cause / Good Cause for Allowing the application - this Tribunal is in Complete Agreement with the Conclusion, arrived at by the Adjudicating Authority (Tribunal) in the impugned order which is free from any Legal Flaws. Application dismissed.
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2023 (1) TMI 1144
Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - pre-existing dispute or not - Appellant has contended that the Section 9 application was wrongly admitted by the Adjudicating Authority on the sole ground that there was no ground for pre-existing dispute between the parties though there was strict evidence proving the contrary and that aggrieved by the impugned order. Whether the operational debt claimed by the Operational Creditor was admitted by the Corporate Debtor as due and payable and not surrounded by pre-existing disputes? HELD THAT:- The Adjudicating Authority while noting that the Corporate Debtor has denied their obligation to pay pending dues to the Operational Creditor, it has further held that the disputes raised by the Corporate Debtor in denying the claims is an after-thought and that there is no evidence presented to demonstrate their dissatisfaction with the work done by the Operational Creditor. The very fact that the Operational Creditor had issued a Legal Notice is suggestive of a pre-existing dispute between the two parties. That the contentions raised in the Legal Notice were countered by the Corporate Debtor reinforces the existence of dispute between the parties. It is also pertinent to note that the Legal Notice was issued much before the issue of Demand Notice. That the reply to Legal Notice clearly predates the Section 8 Demand Notice by nearly five months has somehow managed to escape the attention of the Adjudicating Authority. Thus to hold that the disputes raised in the reply to the Legal Notice is an after-thought is fallacious and hopelessly misplaced on the part of the Adjudicating Authority. It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. What has to be looked into is whether the defence raises a dispute which needs further adjudication by a competent court. The Corporate Debtor having raised genuine disputes in their detailed replies to the Legal Notice and the Demand Notice, the Adjudicating Authority ought not to have admitted the Section 9 application - the impugned order are set aside - appeal allowed.
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Service Tax
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2023 (1) TMI 1142
Export of service - Place of performance / supply of service - Classification of services - Video Production Agency service or not - scope of Video Production Agency and Video-Tape Production - Palace of performance services on Goods - HELD THAT:- The inclusive leg of the definition pertains to the post-recording activity on video or transfer to another media by provider of service to qualify as video-tape production ; there is no evidence that the material received by the respondent was recorded in video or that the respondent had, at any time, handled video as media. The definition of an element contained in a particular taxable service is not to be drawn upon, as a lexicon may be, for stretching of another service beyond legislatively intended limits. Even if it could, it would be a leap of faith by service tax authorities to conclude that visual dissemination is always of a programme and, therefore, on video as media. No evidence is forthcoming either that such is the case in the present factual matrix. Export of services - Place of Provision of Service - HELD THAT:- It appears that service tax authorities have not appreciated the purpose, elucidated supra, and the context of Place of Provision of Service Rules, 2012. These Rules do not operate as a charging provision within the narrow field of taxing imports or exempting exports; they are intended for taxing all manner of services within the frame of section 66B of Finance Act, 1994. The Hon ble Supreme Court, in ALL INDIA FEDERATION OF TAX PRACTITIONERS ORS VERSUS UNION OF INDIA ORS [ 2007 (8) TMI 1 - SUPREME COURT] has held levy under Finance Act, 1994 to be destination-based consumption tax and, therefore, requiring consummation of the service to be linked to acknowledgement by recipient of the service. Consequently, by default, rule 3 of Place of Provision of Service Rules, 2012, holds the service to have been rendered at the place of the recipient and other rules substitute in specific circumstances. The deviation in rule 4(a) of Place of Provision of Service Rules, 2012 and, considering the specific circumstance of determination by tangible presence, it would not be amenable to stretching for coverage of deemed goods , if any, owing to that limitation of pinpointing service which is of essence in the said Rule. The impugned order is sustained to the extent of determination that the respondent herein has exported services in accordance with Export of Service Rules, 2005 and rule 6A of Service Tax Rules, 1994 for the relevant periods - Appeal of Revenue dismissed.
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2023 (1) TMI 1141
SCN for recovery of tax - deemed recipient of service - service rendered in taxable territory owing to operation of rule 3 of Place of Provision of Service Rules, 2012 - HELD THAT:- It is trite that show cause notice proposes recovery that claims to be valid in accordance with specific provisions of the taxing statute and it is for the noticee to rely upon factual submissions and judicial decisions in its defence. The test of applicability of such decisions is not on record until raised in reply to notice; proceedings which accept such judgements as precedent may not necessarily have subjected the rigour of case law to contraindicated case law in the absence of rejoinder from tax authorities - Appeal is the first stage for countering the precedent value and it has been placed on record by Learned Authorized Representative that contrary decisions are not only on similar facts but also that certain relevant judgments had not been considered in the decisions cited before the adjudicating authority by the assessee. It would be appropriate for the original authority to take a fresh look at the facts that have not been subjected to detailed scrutiny for proximity to the several decisions cited by both sides - the impugned order is set aside in its entirety - direction to restore adjudication of show cause notice to the original authority with the direction that the judicial decisions and other submissions, if any, be disposed off after detailed consideration. Application disposed off.
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2023 (1) TMI 1143
Interpretation of statute - meaning of expression tax dues occurring in Section 124 (2) of the FA - Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 - case of the Petitioners throughout has been that for the purpose of Section 124 (2) FA, which applies to the SVLDR Scheme, it had already paid in excess of the amount shown as payable - HELD THAT:- When the legislature usages two different expressions viz. 'duty' and tax dues , it is obviously done with a purpose. If the intention was that these expressions are interchangeable then the wording of Section 124(1) (a) FA would read differently. The tax dues in the present case referred to not just the duty amount, but duty plus interest or to put differently the total amount of duty payable which would include the main duty component and the interest component. This explains why under Section 123(a)(i) FA while defining the expression tax dues , the legislature has referred to the total amount of duty which has been disputed . The Court is unable to agree the stand taken by the Department in the present case that notwithstanding the Petitioners having deposited already Rs.56,37,449/- as tax dues as defined under Section 123(a) of the FA i.e., duty plus interest, it has still to pay a further sum of Rs.13,05,125/- for its application under the SVLDR Scheme to be considered - the impugned intimation dated 27 th February, 2020 issued by the Joint Commissioner, GST Central Excise Commissionerate, Bhubaneswar (Annexure-11) is hereby set aside and direction is issued to the Department to now take up for consideration the Petitioners application under the SVLDR Scheme without insisting on any further amount to be deposited by the Petitioners. Petition disposed off.
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2023 (1) TMI 1140
Refund - Excess amount deposited SVLDRS as Voluntary Disclosure Scheme - grievance of appellant is that the tax dues which were already paid by the appellant have not been adjusted by the designated authority - HELD THAT:- It is observed from the record of this appeal that this bench gave an opportunity to the appellant to submit Forms SVLDRS 1 to 4 so as to prove that he raised his disagreement before the designated authority but the appellant has filed SVLDRS-1, 3 and 4. SVLDRS- 2/SVLDRS-2B has not been placed on record. It becomes clear that appellant has failed to prove its disagreement to the amount quantified as payable by the designated authority. The disagreement has been the main contention of appellant s argument, same stands totally unproved. Otherwise also, it being a case of voluntary disclosure, the appellant had to self assesse the payable amount in SVLDRS-1. The self declaration form has also not been produced by the appellant. Rejection of refund in terms of Section 124(2) and 130 of Finance Act, 2019 - HELD THAT:- Since the tax liability for the period in question is actually either 70% or 50% higher than the amount estimated as payable under the scheme, any deposit prior payment of such estimated amount is made nonrefundable. In case of voluntary disclosure also it is an uncalculated amount as per tax payers choice which is declared and paid by the appellant. The liability of tax payer in such case is much more than what used to be mentioned in SVLDRS-1 under Voluntary Disclosure. Hence, there is no applicability of article 265 of the Constitution of India as is impressed upon by the appellant - there are no justifiable reason for ordering refund of the amount which was paid over and above the payable amount as estimated by the designated committee. Appeal dismissed.
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Central Excise
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2023 (1) TMI 1139
SSI Exemption - dummy companies/firms or not - clubbing of clearances - HELD THAT:- For the earlier period after detailed investigation and relying of various evidences, the adjudicating authority had confirmed the demand clubbing the clearance value of all other alleged dummy firms/ companies in the clearance value of the respondent. The same was challenged before this Tribunal, this Tribunal vide judgment reported at M/S. KICH INDUSTRIES AND OTHERS VERSUS CCE RAJKOT [ 2013 (9) TMI 650 - CESTAT AHMEDABAD] allowed the appeal of the respondent. In the present case, no fresh investigation has been carried out, only the earlier proceeding of the aforesaid case has been followed. The Tribunal s decision has been upheld by the Hon ble Gujarat High Court in COMMISSIONER VERSUS KICH INDUSTRIES [ 2013 (10) TMI 1251 - GUJARAT HIGH COURT] . Revenue s appeal is dismissed.
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2023 (1) TMI 1138
Maintainability of petition - failure to comply with pre-deposit requirement - availment of CENVAT Credit - telecom services in connection with telephones installed at homes of senior functionaries - air travel agent service for booking of airline tickets of senior officials - mandap keeper service for certain conventions and employee sessions - pandal/shamiana service for some functions and event management service - denial on the ground of nexus - HELD THAT:- Notices for recovery are issued under the authority of substantive and procedural provisions of Acts and Rules framed thereunder. A noticee is made aware of the detriment in judicial decisions only upon incorporation in the consequent adjudication orders and the specifics mandated in such decisions cited in the adjudication order could not have been factually countered except at the appellate stage. Opportunity had not been afforded to the appellant for doing so in the earlier round that was carried to the Tribunal for dismissal at threshold. Doubtlessly, the appellant did not take advantage of the opportunity to present the applicability, or otherwise, of the decision in CCE VERSUS MANIKGARH CEMENT [ 2010 (10) TMI 10 - BOMBAY HIGH COURT] and their claim of the impugned order having been passed before they could so is not credible defence as the timelines had not been adhered to by them. Nonetheless, several judgments and decisions have been brought to our notice which, owing to lack of finding on fact by lower authorities, cannot be adjudged by us as conforming to, and proper in accordance with, law. Appeals are allowed by way of remand to original authority.
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2023 (1) TMI 1137
Denial of benefit of Deemed Credit - It is the case of the revenue that appellants had received Cotton Printed Fabrics, therefore as per Explanation 3 to the said Notification benefit of said Notification cannot be extended to the appellants - HELD THAT:- From the finding of tribunal it is clear that the tribunal has given direction to verify the facts that Appellants have received grey fabrics or not if received grant the benefit of notifications. However ongoing through the finding of both adjudicating authority and documents submitted by the appellants we find that appellants have failed to produce authentic documents regarding the receipts of grey fabrics. No original copies of bills/ invoices and transport documents related to the receipts of grey fabrics are available with any of the appellant. Further, ongoing through the relevant Explanation of the Notifications it is found that it has been expressly provided therein that, where processed fabrics itself is used as an input for further processing then, the provisions of the notification are not applicable. The denial of deemed credit to the appellants by the lower authorities in absence of the proper documentary evidence appears to be prima facie correct. However, to meet the end of justice, one more opportunity can be given to the appellants for production of all the documents which prove that they had received the grey fabric and consequently eligible to deemed credit. The matter may be reconsidered once again - Appeal allowed by way of remand.
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2023 (1) TMI 1136
Clandestine removal - PP Rolls/ Tubes - recovery of illicit documents from transporter - existence of evidence to indicate the involvement of the appellant in illicit clearance - HELD THAT:- The entire case was made out on the basis of certain LRs recovered from the transporters. The transporters stated in their statement that they used to supply the goods from Shreejee Packaging Company as well as some other companies also. All the LRs do not show the name of the appellant. However, in some of the LRs the name of the appellant is appearing. As regard all the other transactions where the appellant s name is not appearing, no other corroborative evidence was brought on record, therefore, in those cases demand cannot be sustained. The demand of duty on the LRs where the appellant s name is appearing which comes to Rs.57,222.17 is sustained and remaining demand of Rs.4,29,399 is not sustainable, hence the demand of Rs.4,29,399 is set aside. The appellant is liable to pay equal amount of penalty i.e. Rs.57,222.17 and interest thereon - Appeal allowed in part.
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2023 (1) TMI 1135
Denial of CENVAT Credit - input services - construction service - security service - maintenance and repair service - works contract service - manpower recruitment and supply service - it was contended by central excise authorities that such availment was not permissible under rule 3 of CENVAT Credit Rules, 2004 owing to non-conformity with the definition of input service in rule 2(l) of CENVAT Credit Rules, 2004 - HELD THAT:- From a plain reading of the germane definitions in CENVAT Credit Rules, 2004, it is found that the distinction drawn between input and input service for deploying the expression whether directly or indirectly also appears to have been overlooked by central excise authorities. The relevance of the expression in the latter, by reason of intangibility and solely for manufacturing entities, is crucial enough to be the essence of the test for conformity to the definition. Most services will not be amenable to direct use, and absorption, in the manufacture of goods; neither would these be clearly discernable in the product that emerges. The principle of nexus of service should not, therefore, restrict itself to direct use but should encompass indirect deployment and, hence, should be examined also in relation to the main leg of the definition. The lack of finding in the impugned order on the applicability of the main leg of the definition and its nexus with the final output hinders the exercise of appellate determination. It would be appropriate to have that undertaken to enable which we set aside the impugned order and restore the proceedings before the original authority to take note of the submissions of the appellant herein on the direct/indirect use of the impugned services procured by the appellant and determine nexus or lack thereof. Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2023 (1) TMI 1134
Levy of Sales tax liability - Transportation charges/freight charges - freight charges forms part of the sale price as per Section 2(xlviii) of the JVAT Act or not - the claim of the revenue is that separate invoices for transportation cost would not be a ground to deduct from the total GTO and that there is no illegality in the order of the tax authorities - HELD THAT:- It appears that in the present facts of the case the Petitioner performs a dual role, one as the seller of the goods and other as carrier of the goods, having collected freight charges separately from the buyer. Clause (3) of the purchase order (Annexure-4 series) specifically indicates that the freight will be payable at actual; meaning thereby, the price of the goods is not inclusive of the transportation cost/freight. The freight charges were recovered by the petitioner in the capacity as carrier of the goods and did not form part of the sales turnover of the petitioner. Even as per purchase order if the goods are delivered to SMD Jamshedpur, the same needs to be delivered free of delivery charges. Thus, the real intention can also be gathered by the Act of the seller and buyer. After going through the orders passed by the tax authorities it appears that the tax authorities as well as the learned tribunal misdirected themselves in reading only Explanation-II to Section 2(xlviii) of the JVAT Act and ignored Explanation-III which categorically indicates that the sale price shall not include the cost for transport of goods from the seller to the buyer provided such cost is separately charged to the buyer. Thus the orders of tax authorities as well as the learned tribunal suffer from illegality and incorrect application of the provision of the JVAT Act to the facts of the present case. The matter is remitted back to the Deputy Commissioner of Commercial Taxes, Singhbhum Circle, Jamshedpur to pass a fresh order on the claim of the petitioner to the extent it relates to freight charges realized by the petitioner from its purchasers and shown and charged separately in the invoices after considering the materials and after hearing the petitioner - Application allowed.
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2023 (1) TMI 1133
Seeking waiver of tax on the steel purchased which according to the petitioner was not converted into grills - It is the case of the petitioner that there was no conversion of steel purchased, because, the steel was used as such and since the steel was purchased from a registered dealer within the State, it could not be subjected to tax once again - scope for interference / judicial review of an order of Tribunal - HELD THAT:- The petitioner was engaged in civil contract work. Thus, the petitioner would have been liable to tax under Section 3-B of the Tamil Nadu General Sales Tax Act, 1959 as a works contractor. The facts on record indicate that the petitioner had declared the total of Rs.62,63,932/- and taxable turnover of Rs.35,00,132/- in his return. However, the taxable turnover was re-determined as Rs.39,93,764/- by the Assessing Officer. The Assessing Officer namely, the third respondent has treated the Steel purchased by the petitioner as sale of Steel Grills liable to tax under Section 3-B of the TNGST Act, 1959 - As per Section 3-B(2)(b) of the Tamil Nadu General Sales Tax Act, 1959, the taxable turnover of a dealer for the transfer of property involved in the execution of works contract shall be arrived after deducting the value of goods used in the execution of works contract which were purchased from a registered dealer and were liable to pay tax at the rate specified in the First Schedule or the Second Schedule of the Act. The Tribunal has not committed any error while reversing the decision of the second respondent Appellate Assistant Commissioner as the petitioner did not produce any documents to substantiate that the steel that was purchased from a registered dealer within the State of Tamil Nadu was not used in the execution of works contract. Further, the scope for interference / judicial review of an order of Tribunal is very limited. Unless the order suffers from violation of principle of natural justice or is found to be ex-facie perverse or arbitrary , the Writ Petition ought not to have been entertained. The impugned order passed by the Tribunal does not suffer from any infirmity and cannot be set aside. Petition dismissed.
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2023 (1) TMI 1178
Refund of the excess amount of CST paid - HELD THAT:- Notice for final disposal returnable on 11.1.2023. Direct service to Respondent Nos. 2 and 3 is permitted.
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Indian Laws
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2023 (1) TMI 1132
Dishonor of Cheque - income tax officer can be called as a witness on an application filed by the present petitioners/original accused in a proceeding under Section 138 of the Negotiable Instruments Act or not? - HELD THAT:- This Court finds that the accused had right to establish his case and for that purpose he can certainly make a prayer for summoning a witness. It is specific case of the accused that he suspects that the copies of the balance-sheet and the ITR filed by the complainant on record are not genuine. It is for that reason, he has filed an application praying for summons to the proper authority so that the copies of the documents, which are actually submitted to the authorities would be produced on record. This Court finds that the application ought to have been allowed by the learned trial Judge and while dismissing such application, erred in holding that under Section 91 of the Cr.P.C., the matter was not for deciding authenticity of any document. It was necessary to consider that when the defense wants to examine the officer and wants to rely upon the documents which are submitted by the complainant to the authorities, it was necessary to allow the same considering that the accused has right to prove his case. This Court finds that a case is made out to call for interference by entertaining a Writ Petition. The Writ Petition is therefore, allowed.
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