TMI Tax Updates - e-Newsletter
January 8, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Grant of anticipatory bail - GST evasion - The applicant has not given any statement in inquiry till date due to fear of arrest. The personal liberty guaranteed under Article 21 of the Constitution of India is a fundamental right and in every case, arrest is not necessary. Under Section 438 Cr.P.C., where the implication of a person is for a non-bailable offence, he can apply for anticipatory bail - If the applicant cooperates with the inquiry, there is no requirement of his arrest - The applicant shall be enlarged on anticipatory bail for a period of six weeks or till the inquiry is concluded by the Proper Officer - HC
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GST:
Detention of conveyance and seizure of Goods - If during the pendency of adjudicating proceedings, a request for provisional release as contemplated under sub-clause (3) of Section 129 of the Act, is submitted, the same will have to be considered in the light of the provisions of Section 129 read with sub-clause (6) of Section 67 of the Act. If after adjudging confiscation, the option to pay Fine in addition to the tax payable, penalty and other charges is not exercised despite opportunity under section 130(7) of the Act, the Proper officer will have to take and hold possession of the things confiscated subject to consequences as contemplated the re-under. - HC
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GST:
Grant of Bail - Fraudulent Input Tax Credit - allegation that applicant/accused knowingly participated in receipt of only paper invoices - Considering the seriousness of allegations, enormity of charge and the fact that investigation is at crucial stage, the applicant/accused cannot be released on bail - DSC
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Income Tax:
Exemption u/s 12 denied - Condonation of delay in filing the Form no.10B - assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing such exemption - the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause. - HC
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Income Tax:
Accrual of income in India - rendering leadership training to employees of SAPL cannot be said as rendering managerial services so as to fall outside the ambit of fees for technical services under Article 12 (3) of the DTAA between India and Sweden read with its Protocol and the resultant Article 12 of India and Portuguese treaty. - AT
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Income Tax:
Accrual of income in India - Fees for technical services (FTS) - taxability of receipts towards Human Resource and Leadership training provided by the assessee to its Indian affiliate - once two sovereigns have added Protocol to the DTAA between India and Sweden, which contains the Most Favoured Nation (MFN) clause, inter alia, qua Article 12, the sequitur is that the beneficial provisions contained in the DTAA between India and Portuguese is to be read in the DTAA between India and Sweden. - AT
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Income Tax:
TDS u/s 194C OR 194I - Common area maintenance charges paid - the payment for operation/maintenance was made directly to the services providers after deduction of TDS u/s 194C of the Act. - There is a separate agreement between the Owner, Tenant and service provider for common area maintenance - TDS was righly deducted u/s 194C - assessee-not-in-default - AT
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Income Tax:
TP Adjustment - Disallowance of interest paid on ECB loans - the amendment in this proviso was made by the Finance Act, 2015 w.e.f. 01.04.2016 as per which the words "for extension of" were omitted and therefore in our considered opinion, up to Assessment Year 2015-16, the proviso is applicable only in those cases where borrowed funds was used for acquisition of asset for extension of existing business. - AT
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Income Tax:
Deduction made to charitable institutions u/s. 80G - assessee cannot be denied the benefit of claim under Chapter VI A, which is considered for computing ‘Total Taxable Income”. If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature. - AT
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Income Tax:
Correct head of income - income from renting of terrace - erection & installation of Antenna Tower - AO directed to treat the same as income from house property in terms of the claimed made by the assessee - AT
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Income Tax:
Disallowance u/s. 69C - assessee had purchased cutting machine but no freight has been accounted - ssessee explained that it had obtained the delivery of the said machine in its own tempo - revenue authorities have not brought any evidence on record to show that the assessee has actually incurred any expenditure and the entire addition has been made on presumption basis - AT
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Income Tax:
Addition of payment to an unapproved gratuity fund - It is not in dispute that the assessee has actually paid the money. In other words, the money has actually gone out from the hands of the assessee. Therefore, that the money paid towards the gratuity fund would not come to the assessee at any event. - Deduction allowed - AT
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Income Tax:
Deduction u/s. 80IB(11A) - When the statue in section 80 IB of the Act has not made any distinct between export and domestic sales and the profit arising from both the kind of sales is entitled for deduction, then, the profit earned by the assessee in the form of DEPB entitlement amount, which is directly related and calculated on the amount of export sales, cannot be regarded or tagged as income from other sources to take it out from the benefit of deduction u/s. 80IB(11A) - AT
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Customs:
When the High Court had directed release of the goods forthwith, it is beyond comprehension as to how a lower appellate authority can nullify such direction by ordering absolute confiscation of such goods. It is not only unacceptable but contumacious as well which aspect we may deal with at a later stage. - HC
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Corporate Law:
Grant of Bail - siphoning of funds - transfer of funds among different companies - The present case is of an economic offence involving siphoning of public money/investor money to the tune of ₹ 2000 crores. It is settled law that economic offences are considered to be grave offences especially when public money is involved and that the Courts have to be careful in granting bail in such cases - Bail not granted - HC
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Indian Laws:
Importantly, a contract for manufacture simpliciter is not a works contract under the definition provided under Section 2(k) - It is a settled law that the interpretation of contracts in such cases shall generally not be done in the writ jurisdiction. Further, the mere fact that the Gujarat Act might apply may not be sufficient for the writ courts to entertain the plea of Respondent No. 1 to challenge the ruling of the arbitrator under Section 16 of the Arbitration Act. - The High Court erred in utilizing its discretionary power available under Articles 226 and 227 of the Constitution herein- SC
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Service Tax:
Valuation - Business Auxiliary Service (BAS) - Sizing of coal is an incidental and ancillary process to make coal marketable and thus complete “manufacture” of coal and to make it into “excisable goods” as per Section 2(d) of the Central Excise Act. The process of sizing of coal is also therefore outside Section 65(19) of the Act since it is a process in the manufacture of the final product, sized coal. - AT
Articles
Notifications
Customs-
03/2021-Customs (N.T./CAA/DRI) - dated
6-1-2021
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Cus (NT)
Appointment of CAA by DGRI
DGFT-
55/2015-2020 - dated
7-1-2021
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FTP
Amendment in import policy and condition of items classified under Chapter 41 & 43 of ITC (HS), 2017, Schedule - l (Import Policy)
GST - States-
G.O.Ms.No.396 - dated
29-12-2020
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Andhra Pradesh SGST
OFFICERS OF ANDHRA PRADESH STATE DIRECTORATE OF REVENUE INTELLIGENCE (APSDRI) - ASSIGNING POWERS AND FUNCTIONS UNDER THE ACT
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G.O.MS.No. 377 - dated
17-12-2020
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Andhra Pradesh SGST
APGST exemption to Satellite launch services provided by Indian Space Research Organisation, Antrix Corporation Limited and New Space India Limited
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F A 3-51/2019/1/V (85) - dated
30-12-2020
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Madhya Pradesh SGST
Amendment in Notification No. F A 3-51/2019/1/V(29), Bhopal date 04.05.2020
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F A 3-42/2019/1/V(80) - dated
30-12-2020
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Madhya Pradesh SGST
Amendment in Notification No. F A-3-42/2017/1/V/(53) dated 30/06/2017
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POL-41/1/2017-Policy-12421/CT - dated
31-12-2020
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Orissa SGST
Extension of time limit for furnishing of the annual return
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POL-41/1/2017-Policy-11791/CT - dated
15-12-2020
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Orissa SGST
Seeks to rescind Notification No. 9781/CT dated 20.10.2020
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07-F.T. - dated
4-1-2021
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West Bengal SGST
West Bengal Goods and Services Tax (Fourteenth Amendment) Rules, 2020
Income Tax-
01/2021 - dated
6-1-2021
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IT
U/s 280A(1) of IT Act 1961, Central Government, in consultation with the Chief Justice of the High Court of Tripura, designates the courts of Chief Judicial Magistrate, West Tripura Judicial District, Agartala
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (1) TMI 217
Grant of anticipatory bail - GST evasion - Fake firms - bogus invoices - Section 70 of the C.G.S.T. Act, 2017 r/w Section 174 of the C.G.S.T. Act, 2017 - HELD THAT:- Relying upon the judgement of the Punjab and Haryana High Court, in the case of AKHIL KRISHAN MAGGU AND ANR. VERSUS DEPUTY DIRECTOR, DIRECTORATE GENERAL OF GST INTELLIGENCE AND ORS. [ 2019 (11) TMI 942 - PUNJAB AND HARYANA HIGH COURT] , this Court finds that the applicant has no prior criminal antecedents brought on record. His implication can be made under cognizable and non-bailable offences u/s 132 (5) of the C.G.S.T. Act, if the allegations are found to be correct. The applicant has not given any statement in inquiry till date due to fear of arrest. The personal liberty guaranteed under Article 21 of the Constitution of India is a fundamental right and in every case, arrest is not necessary. Under Section 438 Cr.P.C., where the implication of a person is for a non-bailable offence, he can apply for anticipatory bail - If the applicant cooperates with the inquiry, there is no requirement of his arrest. The applicant is having his own address of residence and business. He can give surety ensuring his appearance. He does not appears to be habitual offender, prosecuted or convicted earlier. The applicant shall be enlarged on anticipatory bail for a period of six weeks or till the inquiry is concluded by the Proper Officer under Section 70 (1) of the C.G.S.T. Act, whichever is earlier, on execution of a personal bond of ₹ 5,00,000/- and two sureties of the like amount before the Proper Officer - application allowed.
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2021 (1) TMI 216
Detention of conveyance and seizure of Goods - proceedings under section 129(3) of Act started and then notice under 130 (4) of the Act issued - subsequent forming of opinion - controversy in the present case is that, after the goods are seized in transit with the conveyance being detained, the respondent, on the basis of the information collected and available, has formed an opinion that there is an effort to evade payment of tax. Whether there cannot be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings under the provisions of Section 129 of the Act, in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit? HELD THAT:- The respondent, who had issued notice under sub-clause (4) of Section 129 of the Act (Show Cause Notice dated 25.08.2020), has issued subsequent notice under sub-clause (4) of Section 130 of the Act (the impugned Show Cause Notice dated 07.09.2020) observing that the earlier notice has abated and calling upon the petitioner to show cause against confiscation and why the tax, penalty and other charges payable in respect of such goods and the conveyance should not be paid by the petitioner. The chief contention is that there cannot be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings under way in accordance with the provisions of Section 129 of the Act in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit. It is settled that a decision is an authority for what it decides. The Hon ble Supreme Court in ROYAL MEDICAL TRUST AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 2017 (9) TMI 1849 - SUPREME COURT] has held that every judgement must be read as applicable to the particular fact proved, or assumed to be proved, since the generality of the expressions which may be found are not intended to the expositions of the whole law, but are governed and qualified by the particular fact of the case inwhich such expressions are to be found - When the decision in Sree Enterprises is examined as against this touchstone, this Court must hold that the question which is presented for consideration in the present case did not come up for consideration before this Court in such case and therefore, this decision is not helpful to the petitioner. If a person transports any goods, or store any goods while they are in transit in contravention of the provisions of the Act or the rules made thereunder consequences would have to follow to ensure there is substantial deterrent in continuing with such contravention. There cannot be any doubt, or quarrel, that the provisions of Section 129 of the Act are intended to achieve this object. The provisions of Section 130 of the Act deals with confiscation. Under Section 130 of the Act, proceedings for confiscation could be initiated if there is reason for the authorities to opine that there is contravention with the provisions of the Act/Rules in the supply or receipt of goods with the intention to evade tax Section 130(1)(i) and (iv) or there is inability to account for the goods Section 130(1)(ii) or goods liable to tax under the Act are supplied without having applied for registration Section130(1)(iv) or if conveyance is used as a means of transport for carriage of goods in contravention of the provisions of the Act Section 130(1)(v) . The object of the provisions of Section 130 of the Act, when seen with the object of the provisions of section 129 of the Act, are wider i.e., it is to curb contraventions of the provisions of the Act/ Rules with a certain intent. The consequences of the proceedings Section 129 and Section 130 are different though there is cross reference as regards the determination of applicable Tax and Penalty. If there has to be determination of penalty as contemplated under Section 129(1)(a) or 129(1)(b) of the Act and payment thereof along with applicable tax for closure of the proceedings under Section 129 of the Act. Even for the completion of the confiscation proceedings under Section 130 of the Act there has to be determination of such penalty and payment of applicable tax. Though, both the owner of the goods and owner of the conveyance, can avoid confiscation by paying different Fine as prescribed, this will be in addition to the liability to pay any tax, penalty and charges payable in respect of such goods/conveyance. In SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] , a Division bench of the Gujarat High Court, whileconsidering the question whether both Sections 129 and 130 of the Act are independent of each other or they could be used interchangeably at the discretion of the authorities, after a conspectus reference to the decisions by the Hon ble Apex Court on different aspects given the specific features of these provisions such as both the provisions beginning with the non-obstante clauses, the cross reference in each of these provisions to the liability to pay the applicable tax, penalty and fine, the conditions attached for initiation of proceedings for confiscation under Section 130 of the Act, the need for restraint in the authorities to initiate proceedings for confiscation for every infraction and to initiate such proceedings only if it could from the circumstances of the case form an informed opinion. Thus, this Court is of the considered view that the it cannot be held that the provisions of Section 130 of the Act could be invoked in cases of conveyance/ goods detained/ seized while in transit only if there is a failure to pay the amount of tax and penalty as provided under section 129 (6) of the Act. This Court, for the reasons discussed hereafter, would also hold that the failure to pay the amount of tax and penalty as contemplated under Section 129(6) of the Act would be just one of the circumstances in which proceedings under Section 130 of the Act could be initiated in cases of conveyance/ goods detained/ seized while in transit - If in the use of conveyance for transportation of goods or storing of goods in transit, the contravention of the provisions of the Act/Rules is established, there can be no doubt, with the provisions of Section 130(1)(v) of the Act, the consequence of confiscation would be visited. If the intention to evade payment of tax in transporting the goods by conveyance is established, would be it outside the purview of the provisions of Section 130(1)(iv) of the Act which stipulates that if any person contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax then there shall be confiscation (without limiting to the goods). Thus, it can be concluded that If after interception of conveyance with goods in transit and detention of the conveyance and seizure of the Goods with issuance of notice under section 129(3) of the Act, and when there is information about the intent to evade payment of tax, it is not open to the proper officer to treat the notice under section 129(3) of Act as having abated or truncate such proceedings and initiate proceedings under 130 of the Act for confiscation with the issuance of notice thereunder. The proper officer, who has detained the conveyance and seized the goods, when he is able to form opinion that there is an attempt to evade payment of tax, will have to determine the applicable tax and penalty under Section 129 of the Act while simultaneously initiating proceedings for adjudging confiscation under Section 130 of the Act. If during the pendency of these proceedings, a request for provisional release as contemplated under sub-clause (3) of Section 129 of the Act, is submitted, the same will have to be considered in the light of the provisions of Section 129 read with sub-clause (6) of Section 67 of the Act. If after adjudging confiscation, the option to pay Fine in addition to the tax payable, penalty and other charges is not exercised despite opportunity under section 130(7) of the Act, the Proper officer will have to take and hold possession of the things confiscated subject to consequences as contemplated the re-under. The writ petition is disposed of restoring the Show Cause Notice directing the respondent to decide, in accordance with law, on the proposed levy of tax, penalty and cess as proposed therein with reasonable opportunity of hearing to the petitioner, who shall have the liberty to seek provisional release of goods/conveyance as provided for under sub-clause (2) of Section 129 of the Act.
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2021 (1) TMI 215
Grant of Bail - Fraudulent Input Tax Credit - allegation that applicant/accused knowingly participated in receipt of only paper invoices to the tune of ₹ 150 crores without any movement of goods and has fraudulently availed/passed input tax credit of approximately ₹ 7 crores to Government exchequer - HELD THAT:- The economic offences are required to be treated as a separate class and bail cannot be granted as a matter of routine - Applicant/accused is Masters in Business Administration. He is reported to be the sole proprietor of M/s Sri Siddhivinayak Ventures and reportedly raised taxable invoices to the tune of ₹ 150 crores without any movement of goods. During the course of investigation, it was revealed that input tax credit of approximately ₹ 7 crores has been fraudulently availed/passed by M/s Sri Siddhivinayak Ventures. Considering the seriousness of allegations, enormity of charge and the fact that investigation is at crucial stage, the applicant/accused cannot be released on bail - bail application dismissed.
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Income Tax
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2021 (1) TMI 214
Exemption u/s 12 denied - Condonation of delay in filing the Form no.10B by public charitable trust rejected - non e-filing of the audit report in the Form no.10B - HELD THAT:- The approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no.2 might be justified in denying the exemption under Section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Limited [ 1992 (9) TMI 67 - GUJARAT HIGH COURT ] wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause. This writ-application succeeds and is hereby allowed. The impugned order passed by the respondent no.2 dated 19th August 2019 (Annexure-A to this writ-application) is hereby quashed and set-aside. The impugned rectification order at page-13 of the paper-book dated 12th February 2020 is also hereby quashed and set-aside. The delay condonation application filed by the writ-applicant before the respondent no.2 is hereby allowed.Writ-applicant is entitled to seek exemption under Section 12 of the Act.
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2021 (1) TMI 213
Entitlement to deduction u/s 54 - built-up area received from the builder as per the JDA - (LTCG) arising from Joint Development Agreement (JDA) - HELD THAT:- In the present case, all the flats for which the assessee is claiming exemption u/s 54 of the I.T.Act are situated in the same premises. Therefore, the judgment rendered in the case of Smt.K.G.Rukminiamma [ 2010 (8) TMI 482 - KARNATAKA HIGH COURT] will squarely apply. In the light of the above judicial pronouncements on identical facts, we are of the view that the assessee is entitled to deduction u/s 54 of the I.T.Act on the entire built-up area received from the builder as per the JDA dated 28.04.2008.
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2021 (1) TMI 212
Disallowance of directors foreign travel expenses - Addition of 50% of the total expenses on the ground that the same was not being incurred for business purposes - HELD THAT:- It is relevant to mention that the assessee s business is of manufacturing of dye intermediate and chemicals. In Dubai they attended the Beauty World expo. In U.S.A. they attended a meeting and discussed business proposal at trade fare. In Thailand they attended meeting of YPO Chapter Retreat. All the relevant documents in support of such tours indicating the business purposes of the assessee company were duly submitted before the authorities below as it appears from the order impugned as well as the Paper Book filed before us - we delete the addition made by the authorities below. Disallowance of interest expenses for providing interest free loan for subsidiary company under Section 36(1)(iii) - HELD THAT:- The said issue was settled in view of the judgment and order passed by the Hon ble Supreme Court in the case of SA Builders Ltd [ 2006 (12) TMI 82 - SUPREME COURT ] whereby and whereunder it was decided that in the event the fund is utilized by sister concerns for business purposes it was allowable. Since we do not find any deviation in the facts as available on record before us we find substance in assessee s counsel s submission and thus allow the ground by deleting the disallowance of interest expenses. Gain on sale of Mutual Funds - STCG or business income - HELD THAT:- In view of the rule of consistency we find no reason in disallowing such sale of Mutual Funds as STCG and hence we delete the same. Assessee appeal allowed.
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2021 (1) TMI 211
Accrual of income in India - taxability of receipts towards Human Resource and Leadership training provided by the assessee to its Indian affiliate having been treated as Fees for technical services within the meaning of Article 12 of the India and Sweden Double Taxation Avoidance Agreement - assessee is a Sweden based company who filed its original return declaring total income of ₹ 4.05 crore, being interest received on ECB loans - Whether benefit of India Portuguese DTAA can be allowed in terms of MFN clause in the Protocol to India Sweden DTAA? - HELD THAT:- There is a substance in the contention of the ld. AR that once two sovereigns have added Protocol to the DTAA between India and Sweden, which contains the Most Favoured Nation (MFN) clause, inter alia, qua Article 12, the sequitur is that the beneficial provisions contained in the DTAA between India and Portuguese is to be read in the DTAA between India and Sweden. The view point of the A.O. in this regard is ex consequenti vacated. Is Training fee a consideration for rendering Managerial services as claimed by the assessee? - case of the assessee before the authorities below has been that the Training fee is a consideration for `Managerial services and going by the Protocol to the DTAA read with the DTAA between India and Portuguese, the fee for managerial services does not fall within the scope of Article 12 - HELD THAT:- Acquainting someone in a formal manner with techniques to boost sales does not stand at par with rendering marketing services. Rendition of marketing services takes place when marketing activities are actually undertaken for and on behalf of an organization by practically plunging into the field or doing some activity concerning the marketing. In fact, doing the activity is synonymous with rendering of service of that nature. Simply equipping or enabling the others for doing an activity is a step anterior to rendition of such services. Coming to the context under consideration, the case of the assessee - that it imparted leadership training to three employees of SAPL, which, in turn, helped them in managing the affairs of SAPL in a better way and hence, it rendered managerial services to SAPL - In our considered opinion is not correct. We are constrained to hold that rendering leadership training to employees of SAPL cannot be said as rendering managerial services so as to fall outside the ambit of fees for technical services under Article 12 (3) of the DTAA between India and Sweden read with its Protocol and the resultant Article 12 of India and Portuguese treaty. The contention of the assessee is ergo dismissed as devoid of any merit. Is Training fee a consideration for rendering Consultancy or technical services as held by the Revenue? - What is pertinent to note here is that the common connotation of Consultancy services as noticed herein does not hold good in the context of the language of Article 12 of the DTAA between India and Portuguese. Even a cursory reading of para 4 of Article 12 of India Portuguese Convention deciphers that the clause (b) is attached to both the technical and consultancy services. Thus the `Consultancy services in the present context would not be of the nature as understood commonly, but draw their colour from the items mentioned after the term `make available , more specifically, when these are also comprehended in the sense of making available experience or skill etc. to the recipient for using it at his own end. This shows that the technical knowledge, experience or skill etc., must be handed over to the acquirer for its later use by self as a pre-condition for falling within the purview of this Article. Coming back to the factual position prevailing before us, we find that the leadership training provided by the assessee did not result in making available any technical knowledge, experience or skill etc. to the employees of SAPL, which could enable them to use it later on. In that view of the matter, it is held that the Revenue authorities were not justified in considering Training fee as a consideration for rendering Consultancy or Technical services within the meaning of Article 12(4)(b) of the DTAA between India and Portuguese. If training fee is not FTS, does it become immune from taxation? - we find that the assessee characterized the receipt of Training fee as a consideration for `managerial services within the overall ambit of Article 12 and the Revenue also accepted the same as falling under that Article but as `consultancy or technical service. We have held supra that the Training fee received by the assessee does not fall within the purview of Article 12 of the DTAA with Portuguese inasmuch as it is neither fees for managerial services on one hand nor consultancy or technical services on the other. Thus, the taxability of the same is required to be tested within the meaning of Article 7 read with Article 5 of the DTAA. Since such an exercise of examining the case under Article 7 has not been undertaken by the AO, we would have ordinarily remitted the matter to the AO for its de novo adjudication. Contention of the assessee that the provisions of Article 7 of taxing the business receipts in India do not apply as the company does not have a PE in India and consequently the profits from receipts from SAPL cannot be taxed as `Business Income is acceptable . Since the AO has himself accepted that the assessee did not have any PE in India, the amount of Training fee will also escape tax net as it cannot be taxed as Business profit under Article 7 in the absence of there being any PE in India in terms of Article 5. - Decided in favour of assessee.
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2021 (1) TMI 210
Rectification of mistake - ITAT has inadvertently mentioned that the ratio of CLC to TLC should not be more than 7.5% instead of 4% - HELD THAT:- The plea of the assessee applicant is indeed correct. The Assessing Officer himself had adopted 4% as CLC/TLC ratio, and the same was, as noted by us required to be adopted this year as well. The mention of 7.5% as adjusted CLC/TLC ratio, in paragraph 7, was clearly an inadvertent error. We, therefore, deem it fit and proper to recall the matter on this point, and refix the matter for adjudication afresh on that point. The Registry is directed to refix the matter for the above purposes, before the regular bench on 29.01.2021. Order accordingly. In the result, the rectification petition is allowed in the terms indicated above.
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2021 (1) TMI 209
TDS u/s 194C OR 194I - assessee-in-default - Common area maintenance charges paid - HELD THAT:- As per revenue that assessee company should deduct TDS on payment made directly to operation/maintenance services providers u/s 194-I of the Act instead of Section 194C of the Act by relying on the judgment of Sunil Kumar Gupta [ 2016 (9) TMI 1198 - PUNJAB AND HARYANA HIGH COURT ] wherein held that maintenance charges must form a part of the rent while calculating the annual value of property u/s 23(1) of the Act for the purpose of Section 22 of the Act. However, in the present assessee company s case, the common area maintenance charges was not forming the part of the actual rent paid to the owner by the assessee company. There is a separate agreement between the Owner, Tenant and service provider for common area maintenance which is distinguishing fact and thus, the decision of the Hon ble Punjab and Harayana High Court will not be applicable in the present case. Therefore, the CIT(A) was not right in confirming the order of the Assessing Officer. Hence, appeal of the assessee is allowed.
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2021 (1) TMI 208
TP Adjustment - adjustment relates to the Software development segment of the assessee - Comparable selection - HELD THAT:- M/s Acropetal Technologies Ltd. - Tribunal chose to exclude this M/s Acropetal Technologies Ltd (seg.) applying revenue filter, even though the assessee has advanced arguments both on employee filter and revenue filter. We also notice that the TPO has considered segmental details only. Admittedly, this company fails on revenue filter. Accordingly, we direct exclusion of M/s Acropetal Technologies Ltd. E-Zest Solutions Ltd. - Comparability of this company requires fresh examination as held in the case of Applied Materials India (P) Ltd [ 2016 (9) TMI 1458 - ITAT BANGALORE] . Accordingly, we restore this company to the file of AO/TPO for examining it afresh. E-infochips Ltd - There is no segmental information available as regards the revenue from sale of products and revenue from software development segment. As the assessee is simply engaged in rendering software development services and there is no sale of any software products, this company, in our considered opinion, ceases to be comparable. See SAXO INDIA PVT. LTD VERSUS. ACIT, [ 2016 (2) TMI 604 - ITAT DELHI] ICRA Techno Analytics Ltd - When this company is engaged in diversified activities of software development and consultancy, engineering services, web development hosting and substantially diversified itself into domain of business analysis and business process outsourcing, then the same cannot be regarded as functionally comparable with that of the assessee who is rendering software development services to its AE. M/s Persistent Systems and Solutions Ltd - No separate segment has been given in respect of software services. Accordingly, the composite data of revenue as well as margins of this company pertaining to the sale of software services and products cannot be considered as comparable with the software development services segment of the assessee. In view of the above facts and circumstances, we do not find any error or illegality in the directions of the DRP in excluding this company from the list of comparables. ALP of the transactions relating to Software segment requires to be re- determined. Accordingly, we restore this issue to the file of AO/TPO with the direction to re-compute the ALP of Software development Services segment. Disallowance of interest paid on ECB loans - Interest claimed by the assessee on the ECB loan has been disallowed by the AO on the ground that the loan has been taken for purchase of an immovable property and the interest has to be capitalized till the asset is put to use as per the proviso to section 36(iii) - HELD THAT:- We hold that the interest disallowance made by the AO is not justified because the funds were borrowed for continuation / expansion of existing business and not for extension of existing business and therefore, the proviso to section 36(1)(iii) is not applicable in the present case because the amendment in this proviso was made by the Finance Act, 2015 w.e.f. 01.04.2016 as per which the words for extension of were omitted and therefore in our considered opinion, up to Assessment Year 2015-16, the proviso is applicable only in those cases where borrowed funds was used for acquisition of asset for extension of existing business. In the present case, the Assessment Year involved is Assessment Year 2009-10 and therefore, in the facts of present case, in the present year, this proviso is not applicable and hence, we delete this disallowance by respectfully following this Tribunal order rendered in the case of AT T Global Network Services (India) Pvt. Ltd. [ 2017 (9) TMI 1257 - ITAT DELHI] . Re-computation of deduction u/s 10A - HELD THAT:- We notice that the addition relating to Transfer pricing adjustment is not eligible for deduction u/s 10A of the Act, in view of the bar provided in the proviso to sec. 92C(4) of the Act. Other disallowances made by the AO would go to increase the Profits derived from the undertaking. Since the prayer of the assessee is supported by Circular no.37/2016 dated 2.11.2016 issued by CBDT, we direct the AO to re-compute the deduction accordingly.
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2021 (1) TMI 207
Exemption u/s 11 - rejecting registration to Trust u/s.12AA - Assessee submitted that Ld. CIT(Exemption) was not justified in rejecting the grant of registration and the Ld. CIT(Exemption) is only expected to examine whether the objects of the trust are charitable in nature and examine whether the activities of the trust are genuine or not - HELD THAT:- In the present case, the objects of the trust are not doubted by the Department and they have also not disputed the charitable nature of the activities conducted by the assessee trust. In these two areas, in fact, there has been no examination/verification conducted by the Ld.CIT(Exemption). Meaning thereby, all the relevant records were submitted before the Revenue Authorities and they have verified the same and were satisfied on this aspect. As in the case of CIT Vs. Manekji Mota Charitable Trust [ 2019 (8) TMI 1497 - BOMBAY HIGH COURT] has held at the time of the registration of the trust u/s.12A, the question of application of income of the trust is premature. Thus, whether taxes are due to be paid on any income received that issue has to be looked into only at the time of assessment proceeding. We are of the considered view that when all the requirements of registration u/s.12AA of the Act has been satisfied by the assessee trust, registration therein should be granted. In view thereof, we set aside the order of the Ld. CIT(Exemption) and direct the Department to grant registration u/s. 12AA of the Act to the assessee trust. - Decided in favour of assessee.
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2021 (1) TMI 206
Penalty u/s 271(1)(c) - defective notice - AO did not specify the fault/charge on which he proposed to levy penalty against the assessee - Without striking out one of the limbs, the assessee is called upon by the AO to defend both the faults/charges - HELD THAT:- AO has not stricken out the irrelevant portion of the fault/charge which would have spelt out the specific fault/charge against the assessee. According to us, since the proposed show-cause notice itself is a defective, all subsequent proceedings are bad in law and the penalty imposed by the AO u/s. 271(1)(c) of the Act and confirmed by the Ld. CIT(A) should be cancelled. As decided in M/S SSA S EMERALD MEADOWS [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. - Decided in favour of assessee.
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2021 (1) TMI 205
Deduction made to charitable institutions u/s. 80G - Denial of deduction u/s. 80G as not available to the assessee since donations are made as part of the Corporate Social Responsibility (CSR) - HELD THAT:- As decided in ALLEGIS SERVICES (INDIA) PVT. LTD [ 2020 (5) TMI 378 - ITAT BANGALORE] submitted that all payments forming part of CSR does not form part of profit and loss account for computing Income under the head, Income from Business and Profession - some payments forming part of CSR were claimed as deduction under section 80G of the Act, for computing Total taxable income , which has been disallowed by authorities below. In our view, assessee cannot be denied the benefit of claim under Chapter VI A, which is considered for computing Total Taxable Income . If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature. Authorities below have erred in denying claim of assessee under section 80G of the Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) - we are remitting the issue back to Ld.AO for verifying conditions necessary to claim deduction under section 80G of the Act. Assessee is directed to file all requisite details in order to substantiate its claim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility. Considering new claim of the assessee without any revised return by FAA - Non-grant of deduction for gratuity - assessee submitted before the CIT(Appeals) that it had created a provision for gratuity - HELD THAT:- As rightly pointed out by the ld. AR, the first appellate authority has powers to entertain additional claims, even if the same was not made in the return of income. This was fortified by the judgment of the Hon ble Bombay High Court in of Pruthvi Brokers Shareholders [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] - Being so, in our opinion, the assessee in principle is entitled to claim deduction of gratuity paid before the appellate authorities. Accordingly, we remit this issue to the file of AO to quantify the amount of deduction towards gratuity and decide accordingly.
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2021 (1) TMI 204
Deduction u/s 54F - CIT- A restricted claim of deduction and held as regards the payment of registration charges paid amounting the assessee has not produced any proof - CIT(A) held that unutilized amount which was not deposited in the capital gains account would not be entitled to exemption u/s 54F - HELD THAT:- In the light of the judgments of CIT v. Sri.K.Ramachandra Rao [ 2015 (4) TMI 620 - KARNATAKA HIGH COURT] and Sambandam Udaykumar [ 2012 (3) TMI 80 - KARNATAKA HIGH COURT] it is clear that the assessee would be entitled to exemption u/s 54F of the I.T.Act with regard to utilization of sale proceeds for the purpose of construction of a residential property within a period of three years from the date of sale of old asset. In the instant case there is no clarity as regards the date of utilization of the amounts apart from ₹ 1,75,83,000. It is also not clear when the assessee had incurred the expenditure of ₹ 10 lakh for registration of the property. The matter needs to be examined by the Assessing Officer. The assessee shall be entitled to exemption u/s 54F of the I.T.Act with regard to utilization of the sale proceeds which are within three years from the date of sale of original asset, in the light of the dictum laid down by the above judicial pronouncements - Appeal filed by the assessee is allowed for statistical purposes.
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2021 (1) TMI 203
Assessment of society - Transaction of leasing out two premises to its two members - concept of mutuality denied- Addition on account of rent income received by the Appellant from two of its members under section 22 - assessee claimed that these were the contribution of the members, which cannot be treated as income chargeable to tax - A.O. held that payments received from same entity was not offered to tax in one instance and claimed not taxable in another instance which cannot be allowed and not accept the claim of mutuality in respect of the payment received from the two parties - HELD THAT:- Assessee has submitted certain details in support of its claim. These have not been discussed in the orders of the authorities below. CIT appeals has raised certain queries in his appellate order. It is not discernible that he has confronted the assessee with the same. He has written in his order that assessee has not shown factual details - unless CIT appeal puts it across to the assessee, the assessee cannot comply with the learned CIT appeals questions which are in CIT appeals mind - assessee has submitted certain materials including the rental agreements, copies of bylaws , a sketch of the rented portion and certain case laws also. AO has wondered as to how the assessee has not explained how on similar reasoning assessee has not treated the gym charges and rents received from Tata Power as exempt. No explanation in this regard is on record. Furthermore, the assessee has tried to submit that the rental income derived by it is equivalent to rent received by a club from renting its rooms. In this regard, the observation of the CIT appeals is germane that it is not brought on record as to how other members can also take the said premises on rent when the same is let out throughout to the same party. These documents referred herein above need to be remitted to the file of learned CIT appeals to examine the issue afresh - Appeal by the assessee stands allowed for statistical purposes.
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2021 (1) TMI 202
Legality of reference to the Transfer Pricing Officer - case of the assessee was not selected for any scrutiny assessment proceedings and AO made a reference to the Transfer Pricing Officer u/s. 92CA(1) never the less but admittedly while making this reference he did not obtain the prior approval of the Commissioner or the Principal Commissioner of the Income Tax - on receipt of Transfer Pricing Officer s order, he reopened the assessment u/s. 147 and proceeded to make ALP adjustment on the basis of this TPO order - HELD THAT:- We find that the very assumption of jurisdiction to make reference to the TPO is clearly vitiated in law in as much as neither any proceedings were pending before the Assessing Officer nor any approval of the Commissioner or the Principal Commissioner of the Income Tax was taken in the present case. Once we come to conclusion that the assumption of jurisdiction for making a reference to TPO itself was vitiated in law, no other valid legal consequences can flow from the same. The conclusions arrived at by the learned CIT(A), therefore cannot be faulted. We therefore, confirm the well reasoned conclusion arrived at by the learned CIT(A) decline to interfere in the matter.
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2021 (1) TMI 201
Correct head of income - income from renting of terrace - erection installation of Antenna Tower - under the head 'Income from Other Sources' or 'Income from House Property' - AO disallowing claim for deduction under Section 24(a) of-the Act and bringing the same to tax under the head 'Income from Other Sources' - HELD THAT:- Under clause 3C of the Leave Licence Agreement, it is provided licensee shall (b)e responsible to obtain all prior approvals from all concerned authorities, as necessary under the relevant laws in force from all authorities concerned, to carry out installation and erection of and to run and maintain the antenna tower and BTS equipment in the semi permanent structure, or the installation thereof, including work of any other nature . Similarly, under clause 3K of the Leave Licence Agreement the assessee shall (a)t its own costs, charges and expenses keep and maintain the Licensed Area in good condition and wind and water tight. the very foundation of the impugned order of the learned CIT(A), therefore, is unsustainable in law. As relying on MANPREET SINGH case [ 2015 (2) TMI 159 - ITAT DELHI] we uphold the plea of the assessee and accordingly direct the assessing officer to treat the amount received by the assessee on account of renting out of terrace to M/s. Reliance Infratel Limited for the purpose of installation of antenna tower as income from house property in terms of the claimed made by the assessee. The assessee gets the relief accordingly.
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2021 (1) TMI 200
Disallowance of rent expenses - Not been established by assessee that the premise used for business purpose - assessee explained that due to expansion of the business operation of the company it had taken the premise on rent to carry out business and holding meetings with brokers/parties as staying in the hotel was costly and more expensive - HELD THAT:- Looking to the revenue from operation of the assessee company to the amount of ₹ 1,33,38,36,680/- for assessment year 2012-13, the impugned expenses of ₹ 8,80,000/- was only 0.05% of the total revenue from operation and there was increased in the revenue from operation from ₹ 1,33,38,36,680/- for assessment year 2012-13 to ₹ 1,76,28,64,861/- for assessment year 2013-14 which demonstrate expansion in the business operation of the assessee company. It is also undisputed fact that similar rent expenses were incurred by the assessee in respect of same property in subsequent year 2014-15 and 2015-16 and the Assessing Officer had allowed the same while framing scrutiny assessment year u/s. 143(3) of the Act. In the light of the above facts and circumstances, we consider that the action of Assessing Officer in disallowing the rent expenses in the year under consideration is not justified - Decided in favour of assessee. Disallowance u/s. 69C - assessee had purchased cutting machine but no freight has been accounted - assessee explained that it had obtained the delivery of the said machine in its own tempo, therefore, no separate expenditure towards freight was accounted - HELD THAT:- It is observed that Assessing Officer has not brought any evidence before invoking section 69C of the act that assessee has incurred any unexplained expenditure - revenue authorities have not brought any evidence on record to show that the assessee has actually incurred any expenditure and the entire addition has been made on presumption basis. We consider that such addition on presumption basis is not justified, therefore, we direct the Assessing Officer to delete the impugned addition. Accordingly, this ground of appeal of the assessee is allowed.
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2021 (1) TMI 199
Addition of payment to an unapproved gratuity fund - According to the ld. DR, the payment made to approved gratuity fund alone has to be allowed under section 36(1)(v) and in this case, the payment was made to an unapproved fund, therefore, it cannot be allowed - when the assessee paid gratuity funds to SBI Life Insurance, Life Insurance Corporation and Star Union Diachi, whether such payment can be allowed or not? - HELD THAT:- It is not in dispute that the assessee has actually paid the money. In other words, the money has actually gone out from the hands of the assessee. Therefore, that the money paid towards the gratuity fund would not come to the assessee at any event. Hence, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the addition made by the Assessing Officer.
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2021 (1) TMI 198
Levy of penalty u/s 271(1)(c) - gross receipts should not be assessed to tax but only 60% of the gross receipts, which suggests that the income is finally assessed on estimated basis - HELD THAT:- \From the evidence on record, it is clear that the income was assessed on estimated basis i.e. the rate of 60% of the gross receipts, therefore, the income assessed originally by the Assessing Officer had come down whereas the penalty was levied with respect to the original assessed income by the Assessing Officer. The ld. CIT(A) obviously lost sight of the Tribunal s order passed in the quantum appeal, however, without dwelling further on this aspect. It is settled position of law that in case where the income is assessed on estimated basis levy of penalty u/s 271(1)(c) of the Act cannot be upheld. - Decided in favour of assessee.
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2021 (1) TMI 197
Unexplained cash deposits in the bank account - HELD THAT:- Entire issue hinges upon the primary evidence which is Ikrarnama /agreement to sell, wherein the purchaser has made payment of cash. This Ikrarnama was not filed before the Assessing Officer, because the order has been passed ex-parte for which assessee submitted that notices issued by the Assessing Officer were not received by the assessee at all. Before the ld. CIT (A) when Ikrarnama was filed, CIT(A) has called for the remand report and Assessing Officer also did not give any opportunity so as to substantiate the authenticity of the Ikrarnama and the same has been rejected by the Assessing Officer on surmises. AO and Ld. CIT (A) has confirmed the addition merely on the ground that the primary evidence, i.e., Ikrarnama is an afterthought and its authenticity is in doubt. Thus we are of the opinion that the matter should be restored back to the file of the Assessing Officer and the assessee is directed to prove the authenticity of the Ikrarnama and / or produced the purchaser before the Assessing Officer as and when called upon. Appeal of the assessee is allowed for statistical purposes.
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2021 (1) TMI 196
Deduction u/s. 80IB(11A) - Claim denied on DEPB entitlement - as per AO DEPB entitlement amount is not derived from the industrial activities of the assessee, for which, the assessee is entitled for deduction u/s. 80IB(11A) - HELD THAT:- Respectfully following the decision of Meghalaya Steel [ 2016 (3) TMI 375 - SUPREME COURT] , we hold that the DEPB entitlement amount received or receivable by the assessee under the Government of India export promotion scheme is an income includible under the head profits and gains of business or profession as per clause (iiib) and (iiid) to Section 28 of the Act. As we have noted above that the AO himself noted, in the middle para at page 25 of the assessment order for A.Y. 2011-12, that The statute in 80 IB(11A) makes no difference between an export sales and domestic sales, the Act provides same level of deduction for both kind of sales . Thereafter, he noted a complete contradictory finding to his earlier said observations that export is an activity which is different from the scope of works envisaged by the Statute. Thus, no deduction on account export sales and consequent receipt of DEPB premium can be allowed. As we have noted above at the time of passing assessment order, the decisions of Hon ble Supreme Court in the cases of Sterling Foods [ 1999 (4) TMI 1 - SUPREME COURT] and Liberty India [ 2009 (8) TMI 63 - SUPREME COURT] were holding field against the assessee and in favour of the revenue, thus, the AO was bound to follow the same and thus, he denied deduction in respect of DEPB entitlements to the assessee. But thereafter the scenario changed on 9.3.2016, when the Hon ble Supreme Court rendered decision in the case of Meghalaya Steels Ltd [ 2016 (3) TMI 375 - SUPREME COURT] - When the statue in section 80 IB of the Act has not made any distinct between export and domestic sales and the profit arising from both the kind of sales is entitled for deduction, then, the profit earned by the assessee in the form of DEPB entitlement amount, which is directly related and calculated on the amount of export sales, cannot be regarded or tagged as income from other sources to take it out from the benefit of deduction u/s. 80IB(11A) of the Act to the assessee. Thus we hold that DEPB entitlement amount is having direct nexus with the industrial activities of the assessee, which is export oriented entitled for deduction u/s. 80IB(11A) - DEPB entitlement amount is an income derived by the assessee from industrial undertaking of the assessee, thus, the same is also entitled for deduction u/s. 80 IB(11A) of the Act.
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2021 (1) TMI 176
Exemption u/s 11 - Charitable activity u/s 2(15) - as per CIT- A assessee is a Government organization especially formed to implement Rail components of MUTP and has taken projects funded fully by the Government and using all its funds without any profit markup - whether CIT(A) is right in allowing the exemption u/s 11 of the IT. Act in view of proviso to section 2(15) of the I.T. Act, when the receipts from the business of developing, coordinating plants and implementing the rail infrastructure projects, etc. for Indian Railways, exceeded the limit provided in proviso to section 2(15)? - HELD THAT:- Finding given by the Assessing Officer that assessee is engaged commercial and profit motive activity is totally unsustainable. It may not be out of place to mention here that to remove/prevent the mischief which can be caused to the assessee such as the present large State, the present proviso No. (ii) to section 2(15) provides that if the aggregate receipt from such activity or activities during the previous year do not exceed 25% of the total receipts of the entity, the exclusion provision will not apply. In any event, having carefully perused the impugned order of the learned CIT(A) which deals with all the points raised by the Assessing Officer in a fair and comprehensive manner, we are inclined to endorse the well-reasoned findings and conclusions arrived at by the learned CIT(A).In view of these discussions, bearing in mind entirety of the case, and respectfully following decision of the coordinate bench- as referred to above, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. The appeal of is, therefore, dismissed.
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Customs
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2021 (1) TMI 195
Release of petitioner's goods - warehousing of the goods under section 49 of the Customs Act - case of petitioner is that petitioner has complied with the terms and conditions for release of goods but because of warehousing of the goods under section 49 of the Customs Act, petitioner is required to pay a substantial amount to the customs authority - HELD THAT:- The view taken by respondent No.2 that the decision of this court while directing release of the goods was prima facie is not correct. When the High Court had directed release of the goods forthwith, it is beyond comprehension as to how a lower appellate authority can nullify such direction by ordering absolute confiscation of such goods. It is not only unacceptable but contumacious as well which aspect we may deal with at a later stage. The operation of the order dated 24th December, 2020 is stayed until further orders - List on 27th January, 2021, on which date Mr. Jetly shall inform the court about compliance of today s order.
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Corporate Laws
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2021 (1) TMI 194
Disqualification of Directors under section 164(2)(a) of the Companies Act, 2013 - seeking direction to use their Director Identification Number (DIN) and Digital Signature Certificate for the purpose of filing their return - HELD THAT:- This Court, as an interim measure, directs the respondents to reactivate the Director Identification Number (DIN) of the petitioner(s) and Digital Signature Certificate to enable the petitioner(s) to file necessary annual return and also to discharge their statutory obligations - The interim order, passed by this Court, will remain subject to final outcome of the present writ petition.
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2021 (1) TMI 193
Maintainability of application - availability of alternative remedy - Restoration of the name of the petitioner in the Register of the Companies, West Bengal - section 252(3) of the Companies Act, 2013 - HELD THAT:- This Court in exercise of power under Article 227 of the Constitution of India can interfere with an order of a Tribunal or Court if there are violation of principles of natural justice, error of jurisdiction or error on the face of the record or violation of fundamental rights. Just because there may be a mistake in the order impugned or a different view was possible could not be good grounds for interference with under Article 227 of the Constitution of India in the existence of an alternative remedy. In this case, exceptions provided in several judicial decisions with regard to interference under Article 227 of the Constitution of India despite existence of an alternative remedy do not exist. In this case the remedy of the petitioner lies in an appeal. Revision application dismissed.
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2021 (1) TMI 192
Seeking permission to operate and access the website of the Ministry of Corporate Affairs, Government of India - restraint respondents from treating or taking any steps treating the petitioners as disqualified Directors - HELD THAT:- There is no dispute that the Kerala Housing Finance Limited had defaulted in filing its annual returns for three consecutive years. Further, Shrek and Lee Debt Company Private Limited has also been struck off from the Register of Companies on account of its defaults in filing the requisite returns under the Companies Act, 2013 - The petitioner claims that he had resigned from the Board of Directors of Kerala Housing Finance Limited with effect from 26.05.2016. However, he had not filed the necessary form with the Registrar of Companies at the material time. Insofar as the petitioner s prayer that his Director Identification Number (DIN) be directed to be activated is concerned, the said issue is also covered by the decision of this Court in Mukut Pathak Ors. [ 2019 (11) TMI 319 - DELHI HIGH COURT ] . It is not disputed that the petitioner s DIN had been deactivated only on account of his being disqualified to act as a Director. As held in Mukut Pathak s case, the said action is not sustainable. The DIN could be deactivated in terms of Rule 11 of the Companies Act (Appointment and Qualification of Director) Rules, 2014. But admittedly, the petitioner s DIN has not been deactivated in terms of the said Rules. The petitioner s prayer that the respondent be restrained from treating the petitioner as a disqualified director, is rejected. However, the respondents are directed to activate the petitioner s DIN - petitioner s prayer that he be permitted to access the website of Ministry of Corporate Affairs, Ministry of India cannot be acceded to - Petition disposed off.
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2021 (1) TMI 191
Grant of Bail - siphoning of funds - transfer of funds among different companies - shell companies or not - allegation is that public money worth ₹ 2000 crores has been siphoned away by the Petitioner pursuant to a deep rooted conspiracy with the promoters of the Complainant Company and others, through a labyrinth of layered transaction - It is further submitted that Petitioner is around 60 years of age and is suffering from Sleep Apnea and his aged parents are also ill - HELD THAT:- The Petitioner received an amount of ₹ 34 crores from Fern Healthcare Private Limited, one of the shell companies, as part of the benefits for working closely with the Promoters. Fern Healthcare is an entity related to petitioner and loans to the same were proposed and approved by him. The chargesheet clearly records that the real source of the said money was the complainant company. The bank statements filed by the I.O. pursuant to Order dated 2-7-2020 shows that the Petitioner used the abovementioned funds to clear his outstanding liabilities towards RHC Holdings on the very same day on which the money was disbursed by the Complainant Company and was finally routed to the Petitioner. It is pertinent to mention here that in order dated 17-6-2020 granting bail to Mr. Anil Saxena, categorically observed by coordinate bench that he was not part of day-to-day functioning of RFL is of no relevance here as the charge sheet records that by virtue of being Chairman and MD of REL, (the Petitioner herein) had a say in the functioning of RFL. Further, loans were disbursed upon Petitioner's instructions and to the entities known to him. Thus, case of petitioner is different from the case of Anil Saxena. Moreover, the Petitioner herein also benefitted by way of the loan amounting to ₹ 34 crores paid to him from the funds of the Complainant Company. The Petitioner also became the Group President of RHC Holding, which is the ultimate beneficiary of the entire fraud - The offences involve complex and layered transactions which will take time to be unearthed by the EOW. Releasing the Petitioner on bail will hamper the tracing of money trail. Additionally, the accused person being influential is capable of tampering with evidence and influencing witnesses who were his subordinates. As apparent from the various documents and the bail applications themselves, there is no denial by the accused persons of the Complainant Company's funds having been siphoned away. There is a higher apprehension of the accused persons absconding as they are aware that they may be convicted - Moreover, the Complainant Company has filed various complaints and FIR and the investigation in still pending. Complainant Company verily believes that the Petitioner has been charge sheet in another case emanating from FIRs No. 189/2019 dated 23-9-2019, which is pending at the stage of cognizance. This is not an isolated instance and there are various other frauds committed by the accused persons. Agencies like SEBI, ED and SFIO are also investigating into the matter. The present case is of an economic offence involving siphoning of public money/investor money to the tune of ₹ 2000 crores. It is settled law that economic offences are considered to be grave offences especially when public money is involved and that the Courts have to be careful in granting bail in such cases - the Hon'ble Supreme Court of India in case of Virupakshappa Gouda v. State of Karnataka [ 2017 (3) TMI 1777 - SUPREME COURT ] has held that filing of the chargesheet does not lessen the allegations of the prosecution in any manner. This Court is not inclined to grant bail to the petitioner - Petition dismissed.
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2021 (1) TMI 190
Permission for withdrawal of petition - the learned counsel for both parties brought to the notice of this Tribunal that the petitioners have filed a withdrawal/settlement memo on 15th December, 2020, stating that the petitioners and 2nd respondent who are the only shareholders of the 1st respondent company have now entered into a settlement to settle all disputes between them vide a Memorandum of Understanding dated 14th December, 2020. HELD THAT:- In view of the settlement of the matter between the parties and filing of withdrawal memo by the learned counsel for the applicant, CP/24/KOB/2020 is allowed to be withdrawn recording the compromise between the parties and CP/29/KOB/2020 is allowed to be withdrawn . Both parties are directed to strictly follow the conditions stipulated in the settlement memo.
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2021 (1) TMI 189
Restoration of name of the company in the register of companies, maintained by the Registrar of Companies, Kochi - whether the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored in the Register of Companies? - section 252 of the Companies Act, 2013 - HELD THAT:- In view of the documents on record and the submissions made by the learned counsel for the appellant, it is held that despite of the fact that the company has no revenue from operations since 2001, the company has the ownership of property registered as Documents in view of the invalidation of Sale Deed. Now, the company has acquired this property and can utilize it to carry on its business activities. The company has been able to show that they owns the property during 2017 when its name being struck off from the Register of Companies. As per the report made on behalf of the RoC, no objection to the restoration of the name of the company, has been raised. The Tribunal is of the opinion that it would be just and proper to order restoration of the name of the company in the register of companies - Application allowed subject to conditions imposed.
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Securities / SEBI
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2021 (1) TMI 188
Whole Time Member restraining the appellant from accessing the securities market - securities of the appellant in its demat account has also been frozen for the same period - appellant is a trader and investor in the capital market - HELD THAT:- Appellant had only executed one trade out of 983 trades, we are of the opinion that the penalty of debarring the appellant for six months is wholly unwarranted and cannot be sustained. Finding that 13 entities were acting as a homogenous group and were connected to each other and had executed the trades in a premeditated manner with a sole purpose of manipulating the price is not applicable in so far as the appellant is concerned. The finding that other notices were taking turns on different trading days with a premeditated motive to raise the LTP of the scrip is not applicable in the appellant's case as he had only executed one trade whereas the other 13 entities were executing several trades on various days in a premeditated manner. Thus, clubbing the single trade of the appellant with the trades executed by other 13 noticees on the ground that he is connected to them is per se erroneous and baseless. No finding to the effect that the appellant was trading either on the buy side or on the sell side with the other noticees. Thus, having common email or address with some of them is redundant in the absence of any trades being executed between them. There is no finding that the appellant had any connection with the buyer, namely, Gajpal. In the absence of any connection, no collusion could be proved with regard to price manipulation or artificially increasing the price or its volume. Appellant has not contributed to the LTP on the basis on one trade executed on the sell side unless connection was established with the buyer which in the instance case is lacking. We find that no proceedings have been initiated against the buyer who had placed orders above the LTP and was thus responsible in the increase in the price of the scrip. Thus, we are of the opinion that the appellant has not indulged in fraudulent or unfair trade practices in securities. In the absence of any connection being found between the buyer and the seller and between the appellant and other entities the finding of a trading pattern being premeditated to manipulate the price is patently erroneous. The impugned order cannot be sustained and is quashed in so far as it relates to the appellant.
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Insolvency & Bankruptcy
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2021 (1) TMI 187
Admissibility of Application under Section 9 of Insolvency and Bankruptcy Code, 2016 - initiation of CIRP - Existence of debt and dispute or not - Appellant claims that there was collusion between the two Respondents and thus the admission Order was bad - grievance of the Appellant appears to be that it was the biggest Financial Creditor and instead of acting on its Application, the Application of Respondent No.2 was admitted. Alleged Collusion - HELD THAT:- The Appellant is banking on such defence recorded in earlier matter. On such basis, collusion and fraud is alleged. We do not find any substance in such averments made by the Appellant. Present Application under Section 9 is undisputedly filed by the Respondent No.2 at a time when CIRP against the Respondent No.2 had been set aside on 13.03.2020, has to be appreciated on its own facts and documents. The definition of Financial Creditor in Section 5(7) and definition of Operational Creditor in Section 5(20) includes any person to whom the debt has been legally assigned or transferred. This, however, does not apply to the definition of Corporate Debtor as found in Section 3(8). Section 3(8) states that Corporate Debtor means a corporate person who owes a debt to any person. Thus, when the definitions of Financial Creditor and Operational Creditor are read with the definition of Corporate Debtor, it is clear that while Financial Creditor and Operational Creditor can assign their debt, the same is not applicable to a Corporate Debtor. Thus no such defence can be taken to show existence of dispute - The claim of the Appellant trying to build a case of collusion and fraud is thus not appealing to us. Even if Respondent No.2, a Corporate Debtor had debts to pay of M/s. Guptaji, it can have debt of its own to recover from Respondent No.1 who is another Corporate Debtor. CIRP against Respondent No. 1 maintainable or not - HELD THAT:- Orris Infrastructure has itself filed Application seeking intervention pointing out proceedings which have taken place before Haryana Real Estate Regulatory Authority and High Court with the prayer that the amounts lying in Escrow Account in view of Orders of the High Court should be used only for the construction of Greenopolis Project. The IRP of the Corporate Debtor who has filed Reply (Diary No.23486) has stated (Reply para 7.8) that it is denied that the development of the Greenopolis Project was in joint venture. IRP claims that there is no document in support. It is the Reply of IRP that Three C Shelters Pvt. Ltd. is the sole developer of the Greenopolis Project. Thus, we find that the contentions raised by the Appellant are not supported by documentary material and as regards the Intervention, Application filed by Orris Infrastructure, and the prayer made, it would be a matter for the IRP/RP to look into in the course of CIRP proceedings. The alleged Bar under Section 11 of IBC - HELD THAT:- If Section 11 of IBC is perused, the incompetency attached is to initiation. Specified person is not entitle to make an application. Thus, the bar under Sub-Section (a) is for making an application when the person who is a Corporate Debtor is undergoing Corporate Insolvency Resolution Process. Under Sub-Clause (b), the bar is to making an application by the person Corporate Debtor having completed CIRP twelve months preceding the date of making of the application. Based on this, the grievance of the Appellant is that when IB 2721/2019 was filed, twelve months had not been completed from the date of 13.03.2020 vide which CIRP in IB 1071/2019 had been set aside. It is argued now when the earlier CIRP has been restored, sub-clause a is also attracted - Date of filing of IB 2721/2019 is not pointed out to us. There is no dispute, however, that it was filed after Orders dated 13.03.2020 in Appeal, in earlier matter. It appears to us that when the IB 2721/2019 was filed, the CIRP against the Respondent No.2 had already been set aside in view of the Orders of this Tribunal dated 13th March, 2020. Thus the bar to making the application was not there. If subsequently on 28.09.2020, the earlier CIRP has been restored against Respondent No.2, that would not hit the making of the application which was already complete and even the Petition was allowed on 20.07.2020. Once the Application in IB 2721/2019 was allowed on 20th July, 2020, (read with continuation Order dated 16th October, 2020), management vests with the IRP/RP and subsequent developments in another matter will not make difference. The appeal is dismissed.
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2021 (1) TMI 186
Service of notice - Direction to the Respondent (who was not yet served) to settle the issue - HELD THAT:- If the Respondent is not served, it has to be ensured that the Respondent is served with the Notice. If the Respondent has been served and does not appear, the Adjudicating Authority would be required to consider if the Application under Section 9 of IBC is complete and if there is debt due and default as required by the law. If application is complete, it has to be admitted. The present order however directs the Respondent to settle the issue who had not appeared before the Adjudicating Authority, which is most inappropriate. Petition is restored to the file of Adjudicating Authority (NCLT Bengaluru Bench) - appeal allowed by way of remand.
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2021 (1) TMI 185
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - delivery of demand notice - impugned order assailed primarily on the ground that the delivery of demand notice sent by the Appellant to Respondent-Corporate Debtor was refused by the Corporate Debtor - Appellant submits that refusal to accept demand notice would not amount to non-delivery of notice - HELD THAT:- An application under Section 9 of the I B Code can be filed by the Operational Creditor for initiation of CIRP only after expiry of period of 10 days from the date of delivery of notice contemplated under Section 8(1) of the I B Code which obligates upon the Operational Creditor to deliver a demand notice of unpaid operational dues upon the Corporate Debtor, once default occurs. The delivery of demand notice is intended to put the Corporate Debtor on notice so that in the event of there being a pre-existing dispute like in the form of a Civil Suit or arbitration proceedings pending in regard to the amount in respect whereof default is alleged to have been committed, the Corporate Debtor can bring such pre-existing dispute to the notice of the Operational Creditor. It is also aimed at providing the Corporate Debtor with an opportunity of clearing the liability in case he does not dispute the claim. It is by now well settled that delivery of demand notice in terms of Section 8(1) of the I B Code is a sine-quanon for initiation of CIRP at the instance of Operational Creditor who is entitled to file the application under Section 9 of the I B Code only after complying with the statutory requirements. In the instant case, the Appellant has been able to demonstrate that the Appellant issued the demand notice but the postal article was returned undelivered as the Corporate Debtor refused to accept delivery. In view of the material relied upon by the Appellant, which does not appear to have been projected before the Adjudicating Authority to demonstrate that it was not a case of non-issuance/non-delivery of mandatory statutory notice under Section 8(1) of the I B Code on the part of the Appellant- Operational Creditor but a case of refusal on the part of the Corporate Debtor to acknowledge the notice, the learned Adjudicating Authority has erred in arriving at a finding that the demand notice was not served on the Corporate Debtor as the same was returned unserved. Had the notice been returned unserved on account of the addressee being not available on the given address or the venue of addressee being non-existent or the delivery of notice being frustrated because of some reason other than that attributed to the Corporate Debtor, the fact of notice having been returned unserved would amount to non-delivery of notice but in a case like the present one where it is the Corporate Debtor who refused to accept delivery of notice, the Adjudicating Authority would not be justified in coming to conclusion that notice has not been served on the Corporate Debtor. The finding recorded by the Adjudicating Authority in regard to delivery of demand notice cannot be supported. The finding is erroneous, to say the least. The impugned order suffers from grave legal infirmity and is required to be set aside - matter remanded back to the Adjudicating Authority who may, after providing the Corporate Debtor an opportunity of settling the claim, pass an order of admission or otherwise of the application under Section 9 of the I B Code filed by the Appellant- Operational Creditor upon recording of satisfaction in regard to its completion and other legal requirements. Appeal allowed by way of remand.
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2021 (1) TMI 184
Approval of Resolution Plan - impugned order is assailed primarily on the ground that the Appellants were kept unaware of the CIRP qua the Corporate Debtor, thus being wholly unaware of the progress of Resolution Process with no details provided by the Resolution Professional as regards disbursal of fund towards their claims and that their claims have not received a fair and equitable treatment - HELD THAT:- Admittedly being Operational Creditors cannot claim that they have been treated unfairly or inequitably as regards distribution of funds provided under the approved Resolution Plan. It is not the case of the Appellants that they have been completely ignored or left out of consideration while distributing the upfront money provided under the plan approved by the Committee of Creditors with the requisite majority and finally passing the muster under Section 30(2) of the Insolvency and Bankruptcy Code, 2016, which stands approved by the Adjudicating Authority. Infact what emerges from the record and is borne out from page 45 of the Appeal paper-book (Financial Terms of the approved Resolution Plan) is that the Operational Creditors other than related parties and Statutory Creditors (the Class to which the Appellants belong) have been allocated 19.62% of the upfront payment of ₹ 3,720 crores while the Financial Creditors have been paid only 10.32% of the upfront payment. This factual position being undisputed, it should not lie in the mouth of the Appellants that they have been discriminated against and treated unfairly. The approved Resolution Plan ensures restructuring and revival of the Corporate Debtor. The Appellants are also not justified in claiming that they have been excluded from the Resolution Process proceedings. Admittedly they have filed claims during CIRP proceedings and their claims have been partly admitted. In the face of this factual position, it is of no avail on their part to allege being excluded from CIRP proceedings - It is by now well settled that equitable treatment can be claimed only by similarly situated creditors. Operational Creditors stand at a different footing as compared to Financial Creditors. They are entitled to receive a minimum payment being not less than liquidation value, which does not apply to Financial Creditors. Admittedly, Appellants are Operational Creditors and being different from the Financial Creditors and Secured Creditors, they were not entitled to the same treatment. Their claim to proceeds of sale of preference shares, not being part of the assets value or a component of upfront payment is not warranted as the Corporate Debtor has been restructured and revived and protected from being pushed into liquidation. It is futile to contend on their behalf that the Financial Creditors being lenders having huge financial resources can take a bigger hair cut as compared to the financial condition of the Appellants. The distribution mechanism adopted in the instant case being not only conformable to the mechanism envisaged under Section 53 of the I B Code but also according priority in upfront payment to Operational Creditors cannot be termed unfair or inequitable qua the Appellants Operational Creditors. Appeal dismissed.
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2021 (1) TMI 183
Release of attached property - Inconsistency between IB Code and Gujarat VAT Act - attachment of raw materials, stock, machinery, factory building and land of the Corporate Debtor, during the period of CIRP - Applicant's contention is that if the assets/ properties are under charge/ attachment, then in that case, Corporate Debtor's asset/ property cannot be auctioned under Liquidation process and as such the very object of the IB Code will get frustrated - HELD THAT:- Admittedly, the assets/ property of the Corporate Debtor is under attachment/ charge of the Respondent. In view of Section 238 of the IB Code, when there is/ are any inconsistency between IB Code and any other law, IB Code will prevail - Under the facts and circumstances, the application so filed is partially allowed and Respondent No. 1 is hereby, directed to release the property of the Corporate Debtor so attached, in favour of the Liquidator and further directed to claim their dues before the Liquidator. Applicant is hereby directed to file an application before the competent authority i.e. Mamlatdar cum Executive Magistrate, Taluk Seva Sdan, Nr. Vanikar Club, Mehsana for appropriate order, as records are required to be rectified by the revenue authorities for which this Bench has no jurisdiction, relying upon the judgement of Hon'ble Supreme Court in PR. COMMISSIONER OF INCOME TAX VERSUS MONNET ISPAT AND ENERGY LTD. [ 2018 (8) TMI 1775 - SC ORDER] as Section 238 of IB Code shall prevail, whenever there is any inconsistency between IB Code and any other law. Application disposed off.
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PMLA
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2021 (1) TMI 182
Maintainability of appeal - competency of Assistant Director to file the appeal - scope of Deputy Director - section 2(1)(c),2(1)(j) 2(1)(k) of PMLA Act - It is submitted by respondent that no other person or authorities other than authorized authority under the Act can prefer an appeal and that reference has made to the title of the appeal and the affidavit thereto - HELD THAT:- Section 2(1)(c) has defined the word the Assistant Director whereas section 2(1)(j) defined the word Deputy Director and section 2(1)(k) has defined the words Director, Additional Director and Joint Director. They are being defined as the authorities appointed under sub-section 1 of 49 of the said Act. Section 48 of the said Act specified the classes of authorities for the purpose of the PMLA, 2002(the said Act.). The Director or Additional Director or Joint Director have been put under the same class in sub clause (a) whereas the Deputy Director, and Assistant Director have been placed under sub-clause (b) and (c) of the section 48 of the said Act. If the section 2(1)(k) is read with section 48(a) of the said Act, it is clear that the Director, Additional Director and Joint Director are put in the same classes of authority for the purpose of this Act, so the decision taken by the Joint Director with the approval of the Special Director (Special Director is higher in rank than Additional Director in the hierarchy of the Enforcement Directorate) to file appeal is not contrary to the provisions of PMLA, 2002. It is not that for each and every case to file appeal before this Appellate Tribunal the Director who is the head of Enforcement Directorate is to take a decision to file appeal. If any of the officers in the same class of officer (section 48(a) of the said Act) has taken a decision to file an appeal then in my considered view there is no illegality. In this particular appeal, it is the department who is aggrieved and who has filed the appeal. Since, the decision has been taken at the level of Special Director, Kolkata, that the Assistant Director/I.O. to file the appeal, it is nothing but a ministerial work to be performed by the Assistant Director. The ld. counsel for the respondent no. 2 has raised strong objection to the statement mentioned in para 2 of In the Affidavit to the memo of appeal and submitted that Assistant Director is not competent. I do not agree with the aforesaid submission of the ld. counsel for the respondent no. 2 on the ground that the Assistant Director, Mr. Sudarshan Ghosh, who is the investigating officer of this case has been duly authorized with the approval of the authority of the level of Special Director to file the appeal vide internal note dated 22.11.2019. The ld. counsel for the respondent nos 2 14 have not disputed the genuineness of the said internal note. The only dispute they have raised is that the Assistant Director ought not to have been authorized to file the appeal. Right from beginning from the stage of the registration of case till its logical conclusion it is the Enforcement Directorate, the investigating agency under PMLA, is involved. Merely saying that since the filing of appeal by an Assistant Director is contrary to law and therefore they are prejudiced is not sufficient - Raising of objection without showing substantial prejudice being caused on account of procedural lapse as prescribed under the Act is not sufficient in the given present facts and circumstance of the case particularly when the department itself has filed the appeal through its authority i.e. the Assistant Director, who is being duly authorized by the competent authority of the same class of the Director . The PMLA, 2002 has provided two forum of appeal relating to have attachment, one forum is Appellate Tribunal constituted u/s 25 of the said Act and the second appeal lie to High Court u/s 42 of the said Act - Under section 26(1) of the said Act, the word the Director is appearing where as no authority is specifically named under section 42 of the said Act. That does not mean neither the Director nor any of the other classes of authorities as prescribed under section 48 or 49 of the Act are eligible to file appeal before the Hon ble High Courts. Appeals are being filed by the ED under section 42 of the said Act before High Courts through either of the class of authorities as specified under section 48 of the said Act read with the notification GSR. 441(E) dated 01.07.2005. It is not that always the director is signing the appeal and the affidavit therein. The appeal is maintainable - With the consent of both the parties list the appeal on 18th January, 2021.
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Service Tax
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2021 (1) TMI 181
CENVAT Credit - input services - deposit insurance service provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC) - HELD THAT:- In the decision of the Larger Bench of the Tribunal in South Indian Bank vs. The Commissioner of Customs, Central Excise Service Tax-Calicut [ 2020 (6) TMI 278 - CESTAT BANGALORE ] it has been held that insurance service provided by the DICGC to the Banks for insuring the deposits of the public with the Banks is an Input Service in terms of Rule 2(l) of CCR and Cenvat credit for the service tax paid by the banks for this service can be availed by the banks for rendering output service. In view of the decision of the Larger Bench of the Tribunal in the matter of South Indian Bank, it can be concluded that the issue involved in the instant Appeal is no longer res integra. Credit is allowed - appeal allowed - decided in favor of appellant.
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2021 (1) TMI 180
Refund of unutilized Cenvat Credit - refund rejected on the ground of nexus, formula prescribed under Rule 5 ibid as well as Notification No.27/2012-CE (NT) dated 18.6.2012 while calculating the amount of refund was not properly applied, on the ground that maximum amount of eligible refund cannot be greater than the unutilized Cenvat Credit for the quarter and also on the ground that the value of services are not paid to the vendor within the limitation period as prescribed u/r 4(7) ibid. HELD THAT:- There is no discussion about the contentions raised by the appellants and in the impugned order there are no proper reasonings/ findings as to how the part of the refund claim was disallowed. From the impugned order it is not possible to know the reasoning for rejection of the part of refund claim. Learned Commissioner ought to have discussed the relevant facts and given reasonings while rejecting part of the refund amount claimed by the appellants but there are no such discussions in the impugned order. Matter remanded back to the learned Commissioner for deciding afresh limited to the issues raised in the instant Appeals because for the refund allowed by the learned commissioner no appeal was filed and it attained finality - appeal allowed by way of remand.
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2021 (1) TMI 179
Valuation - Business Auxiliary Service - inclusion of value of sizing in assessable value - Commissioner held that sized coal is an excisable product and sizing operation is an activity incidental and ancillary to the completion of a manufactured product and since the value of sizing is includible and has been included in the assessable value of coal sold to the customers - HELD THAT:- Sizing of coal is an incidental and ancillary process to make coal marketable and thus complete manufacture of coal and to make it into excisable goods as per Section 2(d) of the Central Excise Act. The process of sizing of coal is also therefore outside Section 65(19) of the Act since it is a process in the manufacture of the final product, sized coal. It is also found from the records of the present proceedings that in respect of exactly the same work undertaken by ICML at the said mines, right from the beginning when central excise duty became payable, ICML has been paying central excise duty on the coal manufactured/produced in the mine, upon determination of assessable value/transaction value by including all expenses incurred, including sizing and transportation right up to the place of removal, as per the provisions of the Central Excise Act, for which it was duly registered under the provisions of the Central Excise Act with the jurisdictional Central Excise authorities. Returns under the Act have also been submitted by ICML, which have been finally assessed and differential duty, if any assessed, have also been paid by ICML. The proceedings under the said show cause notices have resulted in adjudication orders, passed by the Commissioner of Central Excise, Kolkata-I Commissionerate/Principal Commissioner of Central Excise, Kolkata-I, dated 16.12.2014, 14.10.2015 and 27.05.2016 respectively. There the stand of the Central Excise Department is that ICML is engaged in the manufacture of bituminous coal classifiable under Chapter Sub-Heading 27011200 of the First Schedule to the Central Excise Tariff Act, 1985, for which it is holder of central excise registration number, and that ICML had manufactured and cleared the said goods on payment of central excise duty computed on the assessable value/transaction value that included the base price, sizing charges, washing charges and transportation charges, but had not paid central excise duty by not including cesses/fees, royalty and stowing excise duty, resulting in short payment of excise duty payable of amounts confirmed by the respective adjudication orders. Even for the periods pertaining to years 2015-16, 2016-17 and 2017-18 (upto June 30, 2017) the assessments under the Central Excise provisions have been finalised by the jurisdictional proper officer and differential central excise duty, as finally assessed, along with interest, were demanded and paid by ICML. There are no infirmity with the impugned order of the Commissioner - appeal of the Revenue against the same has no merit - appeal dismissed.
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CST, VAT & Sales Tax
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2021 (1) TMI 178
Recovery of tax - seeking stay on recovery - deemed stay - pre-deposit as contemplated under Section 62 of the Act - HELD THAT:- As the appeal is stated to be filed along with application for interim stay, the respondents-authorities will not take further action pursuant to Annexure-B until consideration of the petitioner s application in such appeal. Petition disposed off.
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Indian Laws
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2021 (1) TMI 177
Jurisdiction of sole Arbitrator to adjudicate the preliminary issue of jurisdiction - whether the arbitral process could be interfered under Article 226/227 of the Constitution, and under what circumstance? - Section 34 of the Arbitration Act - HELD THAT:- The Arbitration Act is a code in itself. This phrase is not merely perfunctory, but has definite legal consequences. One such consequence is spelled out under Section 5 of the Arbitration Act, which reads as under Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. The non-obstante clause is provided to uphold the intention of the legislature as provided in the Preamble to adopt UNCITRAL Model Law and Rules, to reduce excessive judicial interference which is not contemplated under the Arbitration Act - The Arbitration Act itself gives various procedures and forums to challenge the appointment of an arbitrator. The framework clearly portrays an intention to address most of the issues within the ambit of the Act itself, without there being scope for any extra statutory mechanism to provide just and fair solutions. In any case, the hierarchy in legal framework, mandates that a legislative enactment cannot curtail a Constitutional right. It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear bad faith shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient - In the instant case, Respondent No. 1 has not been able to show exceptional circumstance or bad faith on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage. It is brought to our notice that subsequent to the impugned order of the sole arbitrator, a final award was rendered by him on merits, which is challenged by the Respondent No. 1 in a separate Section 34 application, which is pending. Respondent No. 1 did not take legal recourse against the appointment of the sole arbitrator, and rather submitted themselves before the tribunal to adjudicate on the jurisdiction issue as well as on the merits. In this situation, the Respondent No. 1 has to endure the natural consequences of submitting themselves to the jurisdiction of the sole arbitrator, which can be challenged, through an application under Section 34. It may be noted that in the present case, the award has already been passed during the pendency of this appeal, and the Respondent No. 1 has already preferred a challenge under Section 34 to the same. Respondent No. 1 has not been able to show any exceptional circumstance, which mandates the exercise of jurisdiction under Articles 226 and 227 of the Constitution. The Gujarat Act was enacted in 1992 with the object to provide for the constitution of a tribunal to arbitrate disputes particularly arising from works contract to which the State Government or a public undertaking is a party. A works contract is defined under Section 2(k) of the Gujarat Act. The definition includes within itself a contract for supply of goods relating to the execution of any of the works specified under the section. However, a plain reading of the contract between the parties indicates that it was for both manufacturing as well as supply of bricks. Importantly, a contract for manufacture simpliciter is not a works contract under the definition provided under Section 2(k) - It is a settled law that the interpretation of contracts in such cases shall generally not be done in the writ jurisdiction. Further, the mere fact that the Gujarat Act might apply may not be sufficient for the writ courts to entertain the plea of Respondent No. 1 to challenge the ruling of the arbitrator under Section 16 of the Arbitration Act. The High Court erred in utilizing its discretionary power available under Articles 226 and 227 of the Constitution herein - appeal is allowed - decided in favor of appellant.
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