TMI Tax Updates - e-Newsletter
October 13, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise

Highlights / Catch Notes

GST

• Classification of supply - Supply of Goods or Supply of Job Work Services - promotion of commercial activities relating to Foundry Industry & preservation of environment through its Sand Reclamation Plants - the subject transaction undertaken is a supply of goods, i.e. sale of ready to use sand for the foundry industry and not supply of job work services. - AAR
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• Evasion of GST - Prohibition order on seized goods - The GST officers have made a cool statement in their para wise comments that no allegation has been made against the petitioner on the matter under investigation merely by issuing orders of seizure and prohibition and that the matter would be decided by proper officer under CGST Act only after completion of the investigation of the case. - The respondents ought to release the goods on provisional basis. - HC
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• Filing of Form Trans 1 in order to avail the unutilized credit - transitional credit - The order of the learned Single Judge was a straight, correct and innocuous order. Instead of complying with the same, the Department is seeking to raise all kinds of technical and hyper technical pleas before us in the present intra-court appeal. We strongly deprecate such practices of the Revenue Authorities in wasting the time of the court as well as wasting the resources of the State in filing such frivolous litigation. - HC
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Income Tax

• Revision u/s 263 - AO allowed depreciation at 25% on the right to lease hold land - The Tribunal has held that mere inadequacy of an enquiry or insufficiency of material on record cannot be a ground to invoke powers under Section 263 of the Act. The view taken by the Tribunal is in consonance with well settled legal principles - HC
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• Assessment of income - receipt basis or accrual basis - income received in advance in the nature of interest income on discounting of bills against letter of credit - if the assessee is not permitted to debit interest related to the period beyond the closing date from the interest received account and credited in the advance account, then it would fall foul of the mercantile system of accounting - HC
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• Revision u/s 263 - Whether Tribunal is right in holding that, CBDT Instruction No.3 dated 20.05.2003 is not binding on the AO and as such the AO himself determining the Transfer Pricing adjustment is justified and hence the order of assessment cannot be said to be erroneous - The impugned order passed by the ITAT is clearly unsustainable - HC
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• Non Credit of TDS - Actual beneficiary of TDS - Restore the issue back to the file of the Assessing Officer with the direction to verify whether the recipients (retailers) have claimed TDS in their respective returns or not, and if the AO finds that they have not claimed TDS, then the claim of the assessee should be allowed. - AT
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• TP adjustment made on account of payment of management charges - Proof of availment of services - the payment made by the assessee being cost to cost reimbursement of the services availed from common pool is duly allowable as a business expenditure in the hands of the assessee. - TPO has exceeded his jurisdiction in holding the value of the said international transaction at NIL. - AT
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• TDS u/s 195 - payment made for purchase of licensed software - the assessee cannot be treated as an assessee in default in respect of payments made for purchase of licensed software prior to 15.10.2011, being the date of pronouncement of the decision in the case of Samsung Electronics Co. Ltd. - AT
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IBC

• CIRP process - Permission sought from this Bench for carrying out the assessment proceedings for the assessment years A.Y. 2013-14 to A.Y. 2019-20 - the prayer of the Income Tax Department is accepted to the extent of only doing assessment for the AY 2013-14 to 2019-20. - The IT Department may file their claim, if any, as an Operational Creditor with the Resolution Professional of the Corporate Debtor in time - Tri
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• Permission for change of legal representation in the main Company Petition - The main CP cannot be kept pending until the issue of fees to Counsel is settled. At the same time, we are conscious of the fact that legitimate right of the Advocates on Record for their fee needs to be protected. - Tri
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Central Excise

• CENVAT Credit - w.e.f. 1.4.2008, the word “from” stands replaced by the word “upto”. - Upto the place of removal - the property in the goods passed from the appellant to his buyer only at the port where they have obtained the Let export order and the services in question are such as were availed by the manufacturer prior getting the said order. Hence, the said services as that of CHA, CNF, testing and sampling etc. are eligible to be classified as the input services - AT
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• Extended period of limitation - It cannot be said that the transactions in question were suppressed by the appellant from the department with malafide intention to evade payment of duty or to take wrong credit. If something or anything wrong was there then it was incumbent on the Department to raise objection at the time of audit itself during all those years but the same was not done. - AT
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• Principles of Natural Justice - Levy of Penalty - It is no doubt true that there is no right of cross-examination if sufficient corroborative evidence exists, but in the present case I am unable to find the sufficient corroborative evidence against the appellant and therefore the appellant were justified in asking for cross-examination. Since the cross-examination was denied therefore it vitiates the proceedings qua the appellants. - AT
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Articles

• E-INVOICE UNDER GST
• The Curious Case of Missing Invoices

Notifications

• GST - States

• ERTS(T)2/2020/361 - dated 31-8-2020 - Meghalaya SGST
  Seeks to amend Notification No. 21/2019- State Tax, dated the 23rd April, 2019

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• ERTS(T)2/2020/353 - dated 31-8-2020 - Meghalaya SGST
  Government of Meghalaya appoints the 1st day of September, 2020, as the date on which the provisions of Section 10 of the Meghalaya Goods and Services Tax (Amendment) Act, 2020, shall come into force.

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• ERTS(T)2/2020/341 - dated 30-7-2020 - Meghalaya SGST
  Seeks to amend Notification No. 13/2020 - State Tax, dated the 21st March, 2020

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• ERTS(T)2/2020/340 - dated 30-7-2020 - Meghalaya SGST
  Meghalaya Goods and Services Tax (Ninth Amendment) Rules, 2020

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• 27254 -FIN-CT1-TAX- 0001/2020 - dated 8-10-2020 - Orissa SGST
  Odisha Goods and Services Tax (Eleventh Amendment) Rules, 2020

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• 27250 -FIN-CT1-TAX- 0001/2020 - dated 8-10-2020 - Orissa SGST
  Seeks to amend Notification No. 10654-FIN-CT1-TAX-0002/2020, dated the 31st March, 2020

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• 27246 -FIN-CTI-TAX- 0001/2020 - dated 8-10-2020 - Orissa SGST
  Amendment in Notification No. 10650-FIN-CT1-TAX-0002/2020, dated the 31st March, 2020

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• G.O. Ms. No. 56 - dated 1-10-2020 - Puducherry SGST
  Waiver of late fee for FORM GSTR-10 if filed between 22.09.2020 to 31.12.2020

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• G.O. Ms. No. 55 - dated 1-10-2020 - Puducherry SGST
  Seeks to insert proviso in Notification No. G.O. Ms. No. 2, dated the 3rd January, 2018

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• G.O. Ms. No. 54 - dated 1-10-2020 - Puducherry SGST
  Seeks to insert proviso in Notification No. G.O. Ms. No. 44, dated the 7th September, 2020

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• G.O. Ms. No. 53 - dated 1-10-2020 - Puducherry SGST
  Seeks to extend due date of compliance which falls during the period from "20.03.2020 to 29.06.2020" till 30.06.2020 and to extend validity of e-way bills

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Circulars / Instructions / Orders

• Customs - PUBLIC NOTICE NO. 51/2020 - dated 28-9-2020
  Manufacturing and other operations in a Warehouse Regulations (MOOWR) and waiver of interest – Changes in ICES
• Customs - PUBLIC NOTICE NO. 53/2020 - dated 28-9-2020
  Capturing additional details for Certificate of Origin (COO) as per Customs (Administration of Rules of Origin under Trade Agreements) Rules. 2020 in Bill of Entry
• Customs - Trade Notice No. 18/2020 - dated 22-9-2020
  Streamlining of UQCs in Bills of Entry and Shipping Bills & Certain relaxations to License SBs
• Customs - Trade Notice No. 16/2020 - dated 21-9-2020
  Manufacturing and other operations in a Warehouse Regulations (MOOWR) and waiver of interest – Changes in ICES as per ICES Advisory 33/2020
• Customs - Trade Notice No. 17/2020 - dated 21-9-2020
  Capturing additional details for Certificate of Origin (COO) as per Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 in Bill of Entry – Changes in ICES as per ICES Advisory 34/2020
• Customs - PUBLIC NOTICE NO. 33/2020 - dated 18-9-2020
  Manufacturing and other operations in a Warehouse Regulations (MOOWR) and waiver of interest — Changes in ICES
• Customs - PUBLIC NOTICE No. 41/2020 - dated 18-9-2020
  Manufacturing and other operations in a Warehouse Regulations (MOOWR) and waiver of interest - Changes in ICES
• Customs - PUBLIC NOTICE NO. 117/2020 - dated 12-9-2020
  All India roll-out of Faceless Assessment
• Customs - PUBLIC NOTICE No.115/2020 - dated 11-9-2020
  Launch of e-Office in Nhava Sheva–V Commissionerate, JNCH
• Customs - PUBLIC NOTICE No.70/2020 - dated 10-9-2020
  Capturing Additional details for Certificate of Origin (COO) as per Customs (Administration of Rules of Origin under Trade Agreement) Rules, 2020 in Bill of Entry
• Customs - PUBLIC NOTICE No. 114/2020 - dated 10-9-2020
  Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin
• Customs - PUBLIC NOTICE NO. .54/2020 - dated 2-9-2020
  Launch of e-Office in 0/0 the Airport & ACC Commissionerate
• Customs - PUBLIC NOTICE No. 104-2020 - dated 25-8-2020
  ICES Advisory 10/2020 (Project Imports) - Option to debit duty through Duty Scrip for Project Imports Bills of Entry
• Customs - PUBLIC NOTICE No. 105/2020 - dated 25-8-2020
  Refund of amount on account of double-payment of Customs Duty
• Customs - PUBLIC NOTICE NO. -103/2020 - dated 24-8-2020
  Revised guidelines for conduct of personal hearings in virtualmode under CGST Act, 2017, IGST Act, 2017, Customs Act, 1962, Central Excise Act, 1944 and Chapter V of Finance Act, 1994

News

• Finance Minister announces measures of ₹ 73,000 crore to stimulate consumer spending before end of this Financial Year in fight against COVID-19

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Case Laws:

• GST

• 2020 (10) TMI 468
  Classification of supply - Supply of Goods or Supply of Job Work Services - promotion of commercial activities relating to Foundry Industry preservation of environment through its Sand Reclamation Plants - impact of used waste sand which is of the value Nil , on valuation - HELD THAT:- From a combined reading of the definition of job work and the procedure of job work as prescribed u/s 143 of the CGST Act and Rule 45 of Rules, it is the principal who will send inputs to the job worker for undertaking any treatment or process that may or may not amount to manufacture and will bring back same after the completion of job work. Thus the person who send goods to the job worker is a principal and the person who undertakes treatment/ processing is a job worker - In the present case applicants have received waste sand, having no commercial and market value, at their plants from the different foundries under the cover of Rule 55 Challans. Further, there is no commercial use of this waste sand. The used waste sand is stored at common pool Storage Location for production activity and it is not possible to segregate the sand as per the receipt from foundries. The finished reclaimed sand is obtained by applying different processing steps which is narrated by the applicant in their written contention. The finished product is different in character, name and use than the waste sand which is the input supplied. The emerged product has a commercial value, goods quality and is used by the specific foundry industry. The new product is manufactured from waste sand and has market value. The new product is kind of movable property. Considering the quality, composition, distinct character and use of the product emerges from the process and treatment undertaken, we find that the finished product satisfied the definition of the term Goods mentioned u/s 2 (52) of CGST Act. We do not hesitate io treat as this new product as Goods - the input received is waste material which is dumped at applicant s location due to environmental concerns. The foundries/Suppliers have supplied unusable and non-valuable material in the form of waste sand. The intention of the foundries/Suppliers is not to treat the waste sand as semi or finished goods for the purposes of further process. Actually waste sand is a raw material for the applicant and after the processing, usable sand is produced which is then sold to foundries as and when orders are received. The concept of job work already exists in Central Excise, a principal manufacturer can send inputs or semi-finished goods to a job worker for further processing. Applicant does not satisfy the conditions mentioned for the ta rm Job work u/s 2(68) of CGST ACT. Hence the activity carried out by the applicant is not covered under Job work services and is out of scope of supply of services. The applicant cannot be considered as a job worker within the meaning of Section 2(68) and Section 143 of the GST Act and corresponding rules. The real spirit of job work as explained by the court is that where the principal sends minor input to the job worker and all other inputs and goods utilized in the final products belongs to the job worker then the said process cannot be considered as a job work. In the case at hand applicant has accepted as a matter of fact that, the value is only of the material used/ skill and labour applied by them and the value of input supplied by the customer is nil - the subject transaction undertaken is a supply of goods, i.e. sale of ready to use sand for the foundry industry and not supply of job work services. Whether the used waste sand which is of the value Nil (Refer separate Valuation Certificate by Engineer) will have any impact on valuation? - HELD THAT:- The value of input is considered by the applicant to be Nil is probably because they are not paying consideration for receipt of such used sand. In cases like in the subject matter, the value of inward supply will always have a bearing on the value of outward supply. In the subject case, the applicant has themselves admitted that the value of input used sand is NIL and the same has been accepted by the jurisdictional office also and not disputed - it appears from the applicant s submissions that their rate of ₹ 2.50 per kg. on output supply of sand has taken into account the valuation of input sand at NIL value. In normal situations, in the subject case, if there is a price attached to the input supply of used sand, then it may have a proportionate impact on the rate of outward supply of sand.

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• 2020 (10) TMI 467
  Calling for the records pertaining to the Petitioners case - HELD THAT:- As per the administrative instructions issued by the Central Board of Indirect Taxes and Customs, to implement the decision of the GST council it has been decided that for the period 1 st July, 2017 to 31st August, 2020 field formations have been instructed to recover interest only on the net cash liability i.e. that portion of the tax that has been paid by debiting the electronic cash ledger or is payable through cash ledger. In those cases where show cause notices have been issued calling upon the noticees to make payment on gross tax liability, those have been directed to be kept in the Call Book till retrospective amendment is made in Section 50 of the Central Goods and Services Tax Act, 2017. Petition dismissed.

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• 2020 (10) TMI 466
  Levy of GST - Henna leaves and powder - will attract GST at the rate of 5% or 18%? - It is argued that now the respondents without following the procedure as laid under Section 73 of the Central Goods and Services Tax Act, 2017 has straight away started proceedings against the petitioner under Section 132 of the CGST Act, which are illegal - HELD THAT:- Issue notice. Issue notice of stay application also, returnable in four weeks.

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• 2020 (10) TMI 465
  Discrepancy in the return submitted - amount of ₹ 20,31,000/- was not reflected in the return filed by respondent no. 3 - Petitioner was asked to explain the discrepancies found in the return. But instead of appearing before the authority, he has approached this Court - HELD THAT:- The issue at hand is required to be addressed at the level of the respondent no. 2 in the first place. The impugned notice dated 4th May, 2018 issued by the Deputy Commissioner of Estate Tax GST Act, Jamshedpur Circle reflects some discrepancies in the return filed by the petitioner. Petitioner and respondent no. 3 both are ready and bound to cooperate in the inquiry. Respondent no. 2 shall endeavour to conclude the inquiry within a reasonable time preferably 16 weeks from the date of receipt of a copy of this order. Petitioner and respondent no. 3 both should cooperate in the matter. Petition disposed off.

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• 2020 (10) TMI 464
  Evasion of GST - Prohibition order - direction that the dealer not to remove or part with or otherwise deal with the seized goods - primary contention of the petitioner is that there was absolutely no reason to believe that the petitioner had indulged in suppression or otherwise contravened any of the provisions of the Act - HELD THAT:- In the case on hand, bare assertion has been made that the impugned proceedings were initiated based on the intelligence developed by CGST (HPU), Madurai that the petitioner is evading GST by misdeclaring the goods while importing. But not a scrap of material was produced before the court. The recitals set out in the order of seizure and the order of prohibition indicate that the formation of the requisite belief is predicated on the scrutiny of the books of account, registers and documents found during the search. This is sufficient to invalidate the entire proceedings. But I refrain from doing so. Now that the search has been conducted and it has been shown that the stock register was not maintained at the petitioner's place of business, I do not want to quash the order of seizure. However, the order of prohibition has to be necessarily interfered with. The search and seizure had taken place on 21.08.2020. By now, more than 40 days have elapsed. Even, a show cause notice has not been issued till date. The respondents have made a cool statement in their para wise comments that no allegation has been made against the petitioner on the matter under investigation merely by issuing orders of seizure and prohibition and that the matter would be decided by proper officer under CGST Act only after completion of the investigation of the case. The respondents ought to release the goods on provisional basis. The respondents are directed to take personal bond from the petitioner. I wanted to know if the petitioner can offer any security. It appears that the two immovable properties of the petitioner are already under mortgage. The petitioner states that at best he can deposit a sum of ₹ 2.00 lakhs. It is not as if the petitioner is going to run away. He has roots in Madurai. Unless the petitioner is permitted to deal with the goods in question, even if some levy is imposed on the petitioner in future, he will not be able to pay the same. Common sense dictates that the petitioner is allowed to do business. The respondents are directed to release the goods on taking personal bond from him and on payment of a sum of ₹ 2.00 lakhs. Even while the order of seizure is sustained, the order of prohibition is modified in the above terms - Petition allowed in part.

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• 2020 (10) TMI 463
  Filing of Form Trans 1 in order to avail the unutilized credit - transitional credit - case of Revenue is that since the time line for submitting these forms were not maintained by the Assessee, and no such evidence was produced by them, the benefit of credit cannot be availed, and submitting of manual declaration in Tran-1, as done with the communication dated 6 February 2018, cannot be accepted - HELD THAT:- The Assessee had been making bona fide efforts to upload his declaration Form Tran 1. However, having faced technical glitches in the same, he was not only redirected to the help desk of the GST Department in the first communication dated 28 December 2017, where his request was registered as ID No.20171228912950, but the same does not appear to have been responded at all. Instead of solving the problem of their own infrastructure and technical glitches, the authorities created all kinds of problems by remaining a silent spectator and making the Assessee to run from pillar to post, against the clear intention of the Government to allow credit of the un-utilized input credit under the earlier tax regime and the input service tax and excise duty to be set off under the new GST regime, to which a switch over was made with a big aplomb on 1.7.2017 by the Central Government. The authorities should have acted in aid of this clear and unambiguous intention of the Government. But however, what they did was just the opposite of it, by not even accepting the manual submission of the said form Tran-1 by the Assessee, or by not extending the date suitably, once the portal could be accessed by the Assessee. The order of the learned Single Judge was a straight, correct and innocuous order. Instead of complying with the same, the Department is seeking to raise all kinds of technical and hyper technical pleas before us in the present intra-court appeal. We strongly deprecate such practices of the Revenue Authorities in wasting the time of the court as well as wasting the resources of the State in filing such frivolous litigation. Therefore, we are inclined to impose cost on all the Appellants herein. The present Appeal of Revenue is accordingly dismissed with a token cost of ₹ 15,000/-.

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• Income Tax

• 2020 (10) TMI 462
  TDS u/s 195 - disallowance u/s. 40(a)(i) of the Act for non deduction of tax on commission payable to foreign agents - Disallowance of commission to foreign agents assessee was unable to lead evidence to prove the factum of actual rendering of services by such recipients - HELD THAT:- As decided in own case [ 2019 (7) TMI 613 - GUJARAT HIGH COURT ] the questions of law as proposed by the revenue has no longer integreta in view of the decision of this Court in the case PR CIT Vs. MGM Exports [ 2018 (5) TMI 1240 - GUJARAT HIGH COURT] which has been applied saying that a person paying interest or any other sum to a non resident is not liable to deduct tax if such sum is not chargeable to tax under the Act. Tribunal had not erred in law and on facts in upholding the order of the CIT(A) deleting the addition - Decided in favour of assessee.

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• 2020 (10) TMI 461
  Revision u/s 263 - AO allowed depreciation at 25% on the right to lease hold land as classified as an intangible asset by the assessee - Tribunal held that the assessee having furnished the details that the lease hold rights were intangible assets before the Assessing Officer it should be deemed that the details was deemed to have been examined and relief granted in favour of the assessee by the Assessing Officer and the finding recorded by the Commissioner to the contrary was not correct - HELD THAT:- Tribunal has found that the AO on meticulous appreciation of evidence on record has allowed depreciation on intangible assets and the CIT (Appeals) while passing the order u/s 263 has held that the enquiry and verification made by the AO is inadequate and the land cannot be treated as intangible asset. Powers u/s 263 of the Act has been exercised and the order of the AO has been set aside. The Tribunal has held that mere inadequacy of an enquiry or insufficiency of material on record cannot be a ground to invoke powers under Section 263 of the Act. The view taken by the Tribunal is in consonance with well settled legal principles referred to supra. - Decided against revenue.

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• 2020 (10) TMI 460
  Correct head of income - interest income earned from the fixed deposits - income from other source or 'business income' - HELD THAT:- Plea raised by the assessee before us that their business had commenced and therefore, the interest amount should be allowed, appears to be raised for the first time before this Court, as the assessee, before the AO, the CIT(A) and the Tribunal, submitted that the fixed deposits were in the pre-operative period and therefore, it had to be considered as part of the project cost. Thus, the plea raised before us for the first time appears to be contrary to the factual position as pleaded by the assessee themselves. Thus, the said contention raised by the assessee is not acceptable. As rightly pointed out by the learned Senior Standing Counsel appearing for the respondent Revenue, the issue involved has been settled by the Hon ble Supreme Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. [ 1997 (7) TMI 4 - SUPREME COURT] and BOKARO STEEL LIMITED [ 1998 (12) TMI 4 - SUPREME COURT] - Decided against the assessee.

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• 2020 (10) TMI 459
  Method of accounting - receipt basis or accrual basis (mercantile system) - income received in advance in the nature of interest income on discounting of bills against letter of credit - HELD THAT:- It cannot be disputed that discounting of bills is being done in one of the modes of finance and the Assessing Officer accepted that the assessee received the amount of interest, which represented interest pertaining to a subsequent year. In such cases, if the assessee is not permitted to debit interest related to the period beyond the closing date from the interest received account and credited in the advance account, then it would fall foul of the mercantile system of accounting. In case of pre-payment of usance import bills, remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed and in cases where interest is not separately claimed or expressly indicated, remittances may be allowed after deducting the proportionate interest for the unexpired portion of usance at the prevailing LIBOR of the currency of invoice. The above directions issued by the RBI would also come to the aid and assistance of the assessee. We hold that the Assessing Officer, the CIT(A) and the Tribunal fell in error while considering the issue framed before us as a substantial question of law.

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• 2020 (10) TMI 458
  Revision u/s 263 - AO himself determining the Transfer Pricing adjustment without referring the matter to the Transfer Pricing Officer - Whether Tribunal is right in holding that, CBDT Instruction No.3 dated 20.05.2003 is not binding on the AO and as such the AO himself determining the Transfer Pricing adjustment is justified and hence the order of assessment cannot be said to be erroneous in order to invoke the provisions of section 263 by the Commissioner of Income Tax? - HELD THAT:- A reference to the TPO is required to be made under Sub section (1) of Section 92CA. There is no amendment to the said Section. Shri Raghavan is right in his submission to the extent that sub section (4) of Section 92CA has been substituted with effect from 01.06.2007. No authority of the Supreme Court of India is cited to show that the position of law stated in S.G.ASIA 2019 (8) TMI 661 - SUPREME COURT has been altered. Therefore, in view of the unambiguous language employed in paragraph No.7 of S.G.ASIA extracted hereinabove, we are of the considered view that Instruction No.3/2003 issued by the CBDT is mandatory. The impugned order passed by the ITAT is clearly unsustainable in law as it runs counter to S.G.ASIA. 2019 (8) TMI 661 - SUPREME COURT Hence, we have considered the first question raised by the Revenue as a substantial question of law and answer the same in favour of the Revenue.

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• 2020 (10) TMI 457
  Rectification u/s 254 - Deduction u/s 80P - HELD THAT:- Tribunal is a creature of the statute. Legislature in its wisdom has laid down the law and the specific provision relating to the powers of the rectification of mistakes in the order of the Tribunal is in section 254(2). Admittedly, the order of the Tribunal is dated 22nd March, 2017. The miscellaneous applications have been filed on 30.09.2019. The six month period in the present case expired on 30th September, 2017. Reading of the provisions of section 254(2) the time limit of six month is binding on the hands of the Tribunal. This is in line with the decision in the case of Principal CIT v. ITAT [ 2020 (2) TMI 129 - BOMBAY HIGH COURT] As six month period from the end of the month in which the order has been passed has expired, the order passed by the Tribunal in [ 2017 (3) TMI 1822 - ITAT COCHIN] cannot be amended by the Tribunal. Consequently, the miscellaneous applications filed by the Revenue stand dismissed.

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• 2020 (10) TMI 456
  Revision proceedings u/s 263 - entitled to claim depreciation - HELD THAT:- As per the decision in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] revision proceedings shall lie, if the assessment order is erroneous and prejudicial to the interests of revenue. Explanation 2 to sec. 263 (1) inserted by Finance Act, 2015 w.e.f. 1.6.2015 deems an assessment order to be erroneous and prejudicial to the interests of revenue if, in the opinion of the Principal Commissioner or Commissioner, the order is passed without making inquiries or verification which should have been made or the order is passed allowing any relief without inquiring into the claim etc. In the instant case, the assessee has furnished a reply with regard to the claim of principal component of lease payment and the treatment given in the books of account for leased assets. As pointed out by Ld Pr. CIT, the AO did not further probe the matter, which should have been made. Before us also, the Ld A.R could not immediately show that the assessee has not claimed depreciation on leased assets. He has submitted that he will furnish the details and accordingly forwarded a reconciliation statement. The very fact that the contention of the assessee could be understood only after examining the reconciliation statement would show that the AO should have also examined the submission of the assessee. Accordingly, we are of the view that the assessment order is rendered erroneous and prejudicial to the interests of revenue in terms of Explanation 2 to sec. 263 - Appeal of the assessee is dismissed.

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• 2020 (10) TMI 455
  Cash found during the course of search - search and seizure action u/s.132 - HELD THAT:- Assessee tried to find an escape route by submitting resignation to the trust of which he was President and further placed before the AO a copy of letter of the trust refusing to hand over books for the purposes of perusal by the income-tax authorities. The contention of the ld. AR that the factum of the existence of trust was established and hence the contention should have been accepted, is without merit. Trust was existing or the trust gave some explanation is irrelevant insofar as the availability of cash of ₹ 10.00 lakh with the assessee is concerned. The only relevant criteria to come out of the rigour of section 132(4A) was to establish to the satisfaction of the AO that cash of ₹ 10.00 lakh found from the residence of the assessee belonged to the trust. Since the primary factor of the availability of cash of ₹ 10.00 lakh remained unproved with the help of books of account of the trust, the other arguments about the existence of trust or tendering resignation etc., pale into insignificance. We, therefore, uphold the impugned order on this score and confirm and addition of ₹ 10.00 lakh. Unexplained jewellery belonging to family members - two types of jewelleries found during the course of search. Jewellery worth ₹ 20,53,987/- was found at the residential premises of the assessee and jewellery worth ₹ 13,27,778/- was found from the two bank lockers - HELD THAT:- Authorities below mixed up the jewellery found from two separate lockers and that at the residential premises of the assessee and proceeded to decide the issue without clarifying themselves about the true factual scenario of the issue. As against that, the ld. AR argued that jewellery found from Locker No.125 of Bank of Maharashtra pertains to Goddess Laxmimata. As regards the jewellery found from Locker No.209 of Bank of Maharashtra and that found physically at the residence of the assessee, she submitted that the same pertained to family members of the assessee, for which no benefit of Instruction No.1916 dated 11-05- 1994 was allowed. Since the issue has not been examined by the authorities below in correct perspective and further the status of assessment of jewellery in the hands of other family members, if any, is not clear, we are of the considered opinion that it will be in the fitness of things if the impugned order on this score is set aside and the matter is remitted to the AO for a de novo adjudication - Appeal is partly allowed for statistical purposes.

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• 2020 (10) TMI 454
  Addition of excess share premium u/s 56(2)(viib) - assessee has followed Discounted Cash Flow method (DCF Method) for determining the share price - A.O. did not examine the workings given in the valuation report prepared u/s DCF method - Whether AO cannot change the method of valuation and he has follow DCF method only? - HELD THAT:- The facts are identical in the instant cases, i.e., the AO has proceeded to determine the value of shares in both the years by adopting different method without scrutinizing the valuation report furnished by the assessee under DCF method. Accordingly, following the decisions rendered by the co-ordinate benches, we set aside the orders passed by Ld CIT(A) in both the years and restore the impugned issue in both the years to the file of the AO with the direction to examine this afresh as per the directions given by the co-ordinate bench in the case of Innoviti Payment Solutions P Ltd [ 2019 (1) TMI 688 - ITAT BANGALORE] - Appeals of the assessee are treated as allowed for statistical purposes.

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• 2020 (10) TMI 453
  'Provisions for accrued Expenses' - ascertained liabilities OR contingent liabilities - HELD THAT:- Except electricity charges and payment for other charges, the provision under liability towards payment to contractors is also lesser and in comparison to provision. Thus, the AO is also directed to examine that what treatment has been given to this excess amount of provision by the assessee. With these directions, the issue of provision towards payment to contractors is restored to the file of the AO for verification and examination. In the chart showing provision and another chart showing actual payments, we also note that the assessee has made provision towards interest on Government in India, loan interest on initial investment of Government of India loan but in the actual payment table, these two items are missing and there is no details available on the record about actual payment by the assessee on these two heads. Thus, these two issues ae also restored to the file of the AO to examine and verify the actual amount of expenditure and treatment of excess amount of provision, if any, by the assessee in the books of account. Accordingly, this ground of revenue for A.Y. 2013-14 is restored to the file of the AO and thus allowed for statistical purposes. Accrued interest on investment Replacement, Rehabilitation, Modernisation of Capital Assets Fund - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee s own case for the assessment year 2007-08 [ 2011 (3) TMI 1797 - ITAT CUTTACK] which has been followed by the ld CIT(A) in the impugned order. CIT(A) has relied on the judgment of Sitaldas Tirathdas [ 1960 (11) TMI 17 - SUPREME COURT] wherein, it is held that in deciding on the issue of diversion of income, it is the nature of obligation which is the decision fact and where by virtue of obligation, the income never reaches the assessee, same cannot be brought to tax. Further, ld D.R. has not brought on record any order of the higher forum that the order of the Tribunal in assessee s own case for the assessment year 2007-08 (supra) has been reversed. - Decided against revenue. Depreciation @ 15% on railways and rolling stock treating the same as Plant Machinery - whether such items should be covered under the head Buildings other than those used mainly for residential purpose entitling them to depreciation @ 10% as per Rule-5 of I. T. Rules New Appendixl( Note-1). - HELD THAT:- CIT(A) has allowed the depreciation @ 15% following the decision of this Bench in the case of the assessee for the assessment year 2007-08 [ 2011 (3) TMI 1797 - ITAT CUTTACK] wherein, the Tribunal has followed the decision of CIT vs Dr. B.Ventatrao, [ 1999 (2) TMI 11 - SUPREME COURT] . No other decision was placed on record by ld D.R. to take a contrary view than the view taken by ITAT in assessee s own case (supra). Hence, we are inclined to uphold the order of the ld CIT(A) and dismiss Ground of the revenue.

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• 2020 (10) TMI 452
  Non Credit of TDS - Actual beneficiary of TDS - Credit of the TDS has been allowed by the Department in the hands of recipients of the commission or not - HELD THAT:- Assessee explained that RTL has directly paid commission to the retailers and, therefore, the above commission was never the income of the assessee. Ld A.R. of the assessee that recipients have not claimed TDS in their respective returns. In the case of Sunita Devi [ 2015 (9) TMI 64 - ITAT DELHI] on similar issue has directed the AO to verify whether any credit of the TDS has been allowed by the Department in the hands of recipients of the commission or not and if the same is not allowed, then the credit of this amount should be given in the hands of the assessee Restore the issue back to the file of the Assessing Officer with the direction to verify whether the recipients (retailers) have claimed TDS in their respective returns or not, and if the AO finds that they have not claimed TDS, then the claim of the assessee should be allowed. With these directions, the issue is restored to the file of the AO for fresh verification - Decided in favour of assessee for statistical purposes

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• 2020 (10) TMI 451
  TP adjustment made on account of payment of management charges - Proof of availment of services - determination of arm's length price by the TPO at Nil - HELD THAT:- Assessee was availing specialized services which were provided by the AEs from common pool and the evidences in this regard have been filed by the assessee and where the services were charged on cost to cost basis, there is no merit in the order of the AO in questioning the availment of services and the benefit derived by the assessee. AO in the alternate held that there was duplication of services. CIT(A) in the final analysis held it to be shareholder activity. All the above said observations of the authorities below, establish the availment of services. We have also perused the data of evidences filed by the assessee to establish its case of availment of services; under law the benefit, if any, arises to the assessee or not cannot be questioned. Hence, the payment made by the assessee being cost to cost reimbursement of the services availed from common pool is duly allowable as a business expenditure in the hands of the assessee. TPO has exceeded his jurisdiction in holding the value of the said international transaction at NIL. The Hon ble Delhi High Court in CIT v. EKL Appliances Ltd.[ 2012 (4) TMI 346 - DELHI HIGH COURT] had held that benchmarking of cost to cost reimbursement of expenses was not within the jurisdiction of the TPO while computing the arm s length price of the international transaction u/s 92CA of the Act. In such facts, we direct the Assessing Officer/TPO to allow the claim of the assessee in entirety. The Ground of appeal Nos. 1 2 are allowed.

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• 2020 (10) TMI 450
  TDS u/s 195 - payment made for purchase of licensed software - Demand raised u/s 201(1) and interest charged u/s 201(1A) - HELD THAT:- Assessee was under bonafide belief that there was no required to deduct tax at source from the payments made for purchase of software, since there were certain decisions holding so. We hold that the assessee cannot be treated as an assessee in default in respect of payments made for purchase of licensed software prior to 15.10.2011, being the date of pronouncement of the decision in the case of Samsung Electronics Co. Ltd. [ 2009 (9) TMI 526 - KARNATAKA HIGH COURT] . Accordingly, the demand raised in the hands of the assessee u/s 201(1) and 201(1A) for assessment years 2009-10 to 2011-12 could not be sustained and the demands raised in respect of payments made prior to 15.10.2011 in assessment year 2012-13 could also not be sustained. Direct the AO to delete the demands raised u/s 201(1) and 201(1A) - Decided in favour of assessee.

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• 2020 (10) TMI 449
  Ex-parte order - assessee submitted before us that the notice of hearing though issued, the directors of those companies could not appear before the Revenue - Counsel undertakes to produce the directors of those companies before the Ld. AO and, therefore, prays for a direction for setting aside the issue to the file of the Ld. AO to re-adjudicate the issue - HELD THAT:- As in the matter of Vriddhi Power Pvt. Ltd. vs ITO , [ 2019 (8) TMI 1558 - ITAT KOLKATA] in the identical situation the Coordinate Bench has been pleased to pass order directing the ld. A.O to adjudicate the matter afresh by providing a further opportunity of being heard to the assessee. Taking into consideration the entire aspect of the matter, the undertaking given by the Ld. AR for producing the director of the investing companies before the Revenue and particularly upon considering the judgment relied upon, respectfully relying upon the same, find it fit and proper to restore the issue to the file of AO for deciding the same afresh upon giving an opportunity to the assessee to substantiate its case and also taking into consideration the presence of the ld. Directors of the companies and the evidence on record or any other evidence which the assessee may choose to file at the time of hearing of the matter and to pass order in accordance with law. - Appeal of the assessee allowed for statistical purposes.

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• Customs

• 2020 (10) TMI 448
  Refund of SAD - sanctions were reviewed under Section 129D(2) of the Customs Act and found to be incorrect - N/N. 102/2007 dated 14.09.2007 - HELD THAT:- The CESTAT, had earlier passed orders in favour of the dealers, holding that, so long as appropriate VAT/Sales Tax was paid, the SAD refund was admissible. These CESTAT orders were referred to by the learned Standing Counsel for the department and had conceded that the issue of refund of SAD was in favour of the importer and accordingly, this Court, in the cases of M/S. GOYAL IMPEX AND INDUSTRIES LIMITED VERSUS THE ASSISTANT COMMISSIONER OF CUSTOMS CHENNAI (REFUNDS-SEA) [ 2019 (9) TMI 1331 - MADRAS HIGH COURT ] and M/S. ADITYA INTERNATIONAL LTD, M/S. GOYAL IMPEX INDUSTRIES LTD, M/S. AACHI MASALA FOODS PVT. LTD, VERSUS THE COMMISSIONER OF CUSTOMS (APPEALS-II) , THE ASSISTANT COMMISSIONER OF CUSTOMS (REFUNDS-SEAPORT) , THE ASSISTANT COMMISSIONER OF CUSTOMS [ 2020 (4) TMI 317 - MADRAS HIGH COURT] , had allowed the writ petitions and ordered for refund of the SAD in favour of the importer. Petition allowed.

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• Corporate Laws

• 2020 (10) TMI 446
  Maintainability of petition - Oppression and mismanagement - Fraudulent transfer of shares - section 241 of the Companies Act, 2013 - petitioner is shareholder of company or not - name to be entered into the registers of members or not - validity of board meetings on December 10, 2014, January 6, 2015 and January 16, 2015 - appointment of respondents Nos. 4 to 7 as directors of the company. Whether the company petition is maintainable? - Whether the petitioner is a shareholder of the company? - HELD THAT:- The petitioner has not been able to establish the nexus between respondent No. 2 and Data Pro. Though memorandum of transfer in respect of those shares indicate that they have been transferred to the petitioner, the petitioner has not been able to prove satisfactorily that the shares of the company were held by respondent No. 2 and they were duly transferred under section 56 of the Act to him. The board resolution dated March 7, 2014 does not speak of transfer of any shares by respondent No. 2 in favour of the petitioner. Therefore, the transfer of 53,69,520 + 11,50,000 (65,19,520) can only be approved. The contention of the respondent that the petitioner did not clear the whole of the loan amount would not have any consequence since as per the declaration dated November 6, 2011 the petitioner was entitled to transfer of share in his favour on clearing of 50 per cent. of the outstanding dues of the bank. There is no dispute that the petitioner has cleared more than 50 per cent. of the bank dues. As against 1,85,00,000 shares, the petitioner is held to have owned 65,19,520 shares. The petitioner accordingly is share- holder of the company holding 35.24 per cent. of the paid-up share capital - Issue is answered in the affirmative. Whether his name deserved to be entered into the registers of members? - HELD THAT:- The name of the petitioner ought to have been entered in the register of members of the company in terms of section 2(55) read with section 88 of the Act - answered in the affirmative. Whether the conduct of the board meetings on December 10, 2014, January 6, 2015 and January 16, 2015 is valid? - HELD THAT:- Admittedly the annual general meeting of the company was not held within that date. The petitioner as an additional director of the company did not take any steps to see and ensure that the annual general meeting was held on or before September 30, 2014. The plea that he was ignorant of legal provisions to that effect would not come to his rescue. Directorship having not been ratified by the annual general meeting on or before September 30, 2014 he cannot claim to hold the office of the director of the company beyond that date. Therefore, the petitioner was not required to be notified of any subsequent meetings. His absence or lack of notice in the board meetings dated February 1, 2014, January 6, 2015 and January 16, 2015 would accordingly have no consequence. The board meetings could not be invalidated on that score - answered in the negative. Whether appointment of respondents Nos. 4 to 7 as directors of the company is valid? - HELD THAT:- Respondents Nos. 4 to 7 were appointed as directors of the company in the annual general meeting held on February 21, 2015. Notice of the annual general meeting was required to be given in less than clear 21 days either by writing or through electronic means in terms of section 101(1) of the Act. No material is placed on record by the respondents that a notice of the meeting was sent to the petitioner who held 35.24 per cent. of shares in the company. The meeting held on February 21, 2015 accordingly cannot be held to be valid. Consequently, actions taken therein would necessarily be invalid. Appointment of respondents Nos. 4 to 7 as directors accordingly would not be valid - answered in the negative. Despite holding 35.24 per cent. shares in the company the name of the petitioner was not shown in any of the annual returns as required under section 92(1) of the Act, subsequent to March 7, 2014. The investment made by the petitioner in the nature of clearing of liabilities of the company with the bank have not been shown in the annual returns. But the mala fides of the auditor cannot be inferred merely from the fact that the payments made by the petitioner were not reflected in the annual returns. Therefore, the allegation that respondent No. 8 perpetrated fraud cannot be accepted - The petitioner is declared as the owner of 65,19,520 shares of respondent No. 1- company. His name shall be entered in the register of members and the register shall accordingly be rectified. The annual general meeting dated February 21, 2015 is held to be invalid. Appeal allowed in part.

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• Insolvency & Bankruptcy

• 2020 (10) TMI 447
  Permission sought from this Bench for carrying out the assessment proceedings for the assessment years A.Y. 2013-14 to A.Y. 2019-20 - CIRP process - HELD THAT:- The Insolvency and Bankruptcy Code, 2016 was enacted with a view to bring about a complete reorganization and insolvency resolution of Corporate Debtors in a time bound manner and to inspire life into a Corporate Debtor struggling to repay its debts, Section 238 was inserted in the Code. Provisions of this Section 238 override other laws as decided by the Hon'ble Supreme Court in Duncans Industries Ltd. v. A J. Agrochem, [ 2019 (10) TMI 301 - SUPREME COURT ]. The present application has been preferred by the Applicant to seek permission from this Adjudicating Authority to carry out the assessment proceedings under Section 153A read with 281B of the Income Tax Act. Considering the necessity of the assessment of tax, the prayer of the Applicant is accepted to the extent of only doing assessment for the AY 2013-14 to 2019-20. The Income Tax Department may file their claim, if any, as an Operational Creditor with the Resolution Professional of the Corporate Debtor in time - Application disposed off.

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• 2020 (10) TMI 445
  Rejection of claim submitted by the applicant as a financial creditor under regulation 18 read with Form-D of the IBBI (Liquidation Process) Regulations, 2016 - condonation of delay in filing present application - HELD THAT:- Because the liquidation proceedings are yet to be finalised in the present case, no prejudice will be caused if the claim of the applicant is adjudicated. Also, section 238A of the I B Code makes applicable the provisions of Limitation Act, 1963 on this Code, the delay in filing of this application by the applicant deserves condonation. Further, it cannot be said that the requirement of sufficient cause is not met out in this case as the applicant was not sleeping over its rights, but was continuously following up with the liquidator for the perusal of its claims and this process caused the delay in filing this application - the delay is condoned. The loan agreements are executed between applicant and the borrower. It is worth to notice that the corporate debtor is not a party to the Loan agreement. It is also noticed that under Master Restructuring JLF Agreement dated 29th June, 2015, the Pledge Agreement dated 2nd August, 2016 was executed, among other things, by Varan Corporation Ltd. in favour of SBICAP Trustee Company Ltd., a security trustee, acting as agent and security trustee for various lenders including for ICICI Bank Ltd. (Applicant). The corporate debtor has not undertaken any counter-indemnity obligation by the said pledge agreement dated 2nd August, 2016 in respect of any guarantee, indemnity, bond, documentary letter of credit or any other instrument given/issued by ICICI Bank. As per liquidator, ICICI Bank has also confirmed that there is no guarantee given by the corporate debtor - The corporate debtor has only given security in the form of a pledge of shares of borrower for the loan facilities granted by the applicant to the borrower. Therefore, it is worth to make a mention that the corporate debtor being not part of the loan agreement but only a facilitator to provide security by pledging the shares cannot be said to be a borrower. The terms of the deed of pledge are quite clear in this regard. Therefore, it can be said that the said security given for the above loan is merely collateral security. In the present case, what is denied by the RP is not the existence of security in the form of pledge of shares towards the debt granted by the applicant to borrower, but the applicant's status as a guarantor/financial creditor of the corporate debtor in the light of section 5(8) of the Code. Hence, being a secured creditor of the corporate debtor, the option to move under section 52(1)(b) of the I B Code is always open to the applicant for realising the security interest on its own. Thus, liquidator has rightly rejected the claim of the applicant on the ground that the applicant is not a financial creditor of the corporate debtor and the liability of the corporate debtor is restricted to the pledge of shares only which has already been meted with - petition dismissed.

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• 2020 (10) TMI 444
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- On careful examination of the Board Resolution, it is clear that the Board of the Financial Creditor never authorised the Director to initiate CIRP against the Corporate Debtor but to represent the company, concerning the business affairs relating to property of the company. The Corporate Debtor has rightly argued that the present petition is filed without any authority - This Bench has consistently taken the stand that for initiating CIRP against a corporate debtor, specific board resolution is required rather than a general one. It is in the interest of justice that consistency in approach is maintained. Therefore, without proper authorisation CIRP cannot be initiated against the Corporate Debtor. As per petition, date of default is 15.05.2019. However, the first Demand Notice was issued on 06.05.2019 and the second Demand Notice was issued on 13.05.2019. Both of these dates are before the actual date of default - As per Demand Notices dated 06.05.2019 and 13.05.2019, the balance amount of ₹ 12.39 crore is to be repayable within 24 hours of receipt of the notice. We are of the view that recalling such a huge amount within 24 hours is not a normal business practice. The Financial Creditor has failed to establish that there was a debt due and payable and that a default has occurred. Further, the Financial Creditor has failed to produce proper authorisation to initiate CIRP against the Corporate Debtor. The petition also has inconsistencies and inaccurate information and documents such as the Demand Notices being issued before the date of default, the disbursement details include payment made to other companies whose relationship with the Corporate Debtor has not been established, no corresponding Bank Entry or evidence of making payment to Corporate Debtor etc. The petition fails and CIRP cannot initiated against the Corporate Debtor as prayed for.

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• 2020 (10) TMI 443
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT:- It is a settled principle, that any proceedings under Section 7, 9 and 10 of IBC, 2016 before this Tribunal is summary in nature and this Tribunal, like a Civil Court, cannot indulge in the luxury of taking evidence, oral or otherwise as to its existence - Further, in the present case, the debt fell due on 22.11.2012 and for the sake of argument, if the acknowledgement of debt is taken to be obtained from Corporate Debtor on 31.03.2016, the same falls beyond the 3 years period of limitation and as such the same has not been obtained before the expiration of the prescribed period. The debt which is being claimed to be in default from the Corporate Debtor is barred by limitation - petition dismissed.

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• 2020 (10) TMI 442
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor vide notice dated 05.05.2018, in reply to the Legal Notice issued by the Operational Creditor, has categorically stated that the Operational Creditor has not completed the implementation of the software as required by the Corporate Debtor at the time of placing the work order and also point out certain lapses which are attributable on the part of the Operational Creditor in completion of the installation of the DOCC 99 Software and the same was not done to the satisfaction of the Corporate Debtor. There exists a 'dispute' between the parties before the issuance of the Demand Notice itself and the defence raised by the Corporate Debtor on the grounds of existence of a dispute cannot be considered as spurious, hypothetical, illusory or misconceived. Further, the filing of C.S. No. 563 of 2018 which came to be transferred to Additional City Civil Court and renumbered as O.S. No. 2545 of 2019, which is pending before the appropriate Civil Court demonstrates that the Operational Creditor is also not remediless and the pending proceedings itself shows that there is a pre - existing dispute between the parties. This Tribunal in exercise of summary jurisdiction cannot also venture as to whether installation of the concerned software was done properly and whether it is working, all of which the Civil Court will be in a position to ascertain based on oral evidence, if found necessary. Application dismissed.

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• 2020 (10) TMI 441
  Permission for change of legal representation in the main Company Petition - dispute arose between the Applicant/Corporate Debtor and M/s. Taurus Legal, Advocate, as a result of which the Applicant wishes to seek change of legal representation before this Tribunal - HELD THAT:- Considering the willingness of the Advocates on record to give their NoC subject to payment of the balance fee, we are of the considered view that the interests of both parties would be met by allowing the present application for discharge of the Advocates on record, subject to payment of the fee for which invoices have been raised. The main CP cannot be kept pending until the issue of fees to Counsel is settled. At the same time, we are conscious of the fact that legitimate right of the Advocates on Record for their fee needs to be protected. The Advocates on Record for the Applicant/ Corporate Debtor shall give discharge in the matter of legal representation of the Applicant/ Corporate Debtor within two days from the date of this order - Independently of such discharge, the Applicant/ Corporate Debtor shall resolve the issue of fee amicably with the Advocates on record, failing which the Advocates on Record are at liberty to initiate appropriate proceedings to recover their legitimate fee in accordance with law. Application disposed off.

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• 2020 (10) TMI 440
  Maintainability of application - Dishonor of Cheque - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The petitioner has initiated the instant proceedings with an intention to recover alleged outstanding amount in question. The claim relates to the period 1 April, 2017 to 16th May, 2019 covering about 18 invoices. The petitioner has not produced any Purchase order/Contract issued by the Respondent in support of supply of goods in question but produced invoices along Petition. At bottom of invoices, there is un-signed declaration by declaring that @ 18 % Per annum shall be charged if payment is delayed beyond 30 days from the date of supply or Credit terms agreed up on in writing. However, the Petitioner has not produced any evidence in support of supply of goods in question or Credit terms in question - The Petitioner has not initiated any legal action for the cause of action started from 12th February, 2018 except issuing a legal notice dated 23rd January, 2019 under the provisions of Code. The Petitioner has also not explained the delay in initiating proceedings. In view of the Respondent coming forward to settle the issue and paid Rs. Eight lakhs by way of Cheque, the Petition is to be disposed of by directing the Respondent to honour the cheque in question, when it is presented for realisation of amount, without fail - petition is disposed of by directing the Corporate Debtor to honor the cheque as mentioned above, when it is presented to the Bank by the Petitioner, without fail, failing which, the Petitioner would be at liberty to approach this Tribunal by filing fresh Petition, in accordance with law.

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• Service Tax

• 2020 (10) TMI 439
  Levy of Service tax - Club or Association Services or not - contribution paid by the members to the Appellant i.e. Co-operative Housing Society towards maintenance and common expenses - HELD THAT:- The issue involved in the instant appeal is no more res integra and is very much covered by the appellant own case TAHNEE HEIGHTS CO-OPERATIVE HOUSING SOCIETY LIMITED VERSUS COMMISSIONER OF CGST, MUMBAI SOUTH [ 2018 (10) TMI 901 - CESTAT MUMBAI] where it was held that the purpose for which the appellant's society was incorporated, clearly demonstrate that it is not at all provides any service to its members and the share of contribution is to meet various purposes. The case of the appellant is not confirming to the requirement of 'service', as per the definition contained in Section 65B(44) of the Act. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (10) TMI 438
  CENVAT Credit - input services or not - appellant availed various services at Kandla Port as that of C F, Testing, Sampling, etc. as were necessary in relation to the export of goods - rejection on the ground that the services which are availed only upto the place of removal are input services eligble to credit - contravention of the provisions of Rule 3 4 of Cenvat Credit Rules 2004 - period January 2008 to September 2008 - HELD THAT:- The availability of cenvat credit to the manufacture of goods floats from rule 3 (1)(2) of CCR Rules which provides that the manufacturer or producer of final product or provider of taxable service shall be allowed to take credit of any input service received by the manufacturer of final product or by the provider of output service. This rule clarifies that to avail Cevnat Credit the services received by the manufacturer or by service provider should be such as may be covered under the definition of input service - It is relevant to point here that the original definition of input services used the expression from the place of removal . It is w.e.f. 1.4.2008 that, the word from stands replaced by the word upto . Thus it is only upto the place of removal that the input services availed are eligible for Cenvat Credit. This amendment no doubt had changed the entire scenario as the benefit which was earlier admissible even beyond the place of removal now gets terminated at the place of removal and the availability of Cenvat Credit of input tax paid gets closed at that place. Whether the services availed by a manufacturer at the port are the services availed by him upto the place of removal i.e. as to whether at the port is included in upto the port ? - HELD THAT:- The definition of Place of Removal makes it abundantly clear that the place where sale takes place or from where the property in goods passes from the seller to the buyer is called the place of removal. Though this definition is not specific for the exports but the above interpretation is clearly applicable to exports as well. Applying the same it becomes clear that in case of export of goods the property in goods passes from manufacturer to the buyer only after shipping bill is filed by the manufacturer, either by himself or through is representative, and there is a LeT export order issued. Since both these activities happen only at the port i.e. inside the port and not at the gate of the port, the port as such gets included in the word upto . To technically clarify the silence in the provision about exports, the Board has also issued a circular no. 999/6/2015-CX dated 28.2.2015. The circular clarified that in case of exports for the purpose of Cenvat Credit of input services the place of removal is the port or the airport from where the goods are finally exported. Handing over of the goods to the carrier /transporter for the further delivery of the goods to the buyer with the seller not reserving the right of the disposal of the goods, would lead to passing of property from the seller to the buyer. As per the definition of place of removal as mentioned above, it generally happens at the factory gate or the warehouse or the depot of the manufacturer, hence any service availed by the manufacturer beyond this point will not be eligible for cenvat credit on input tax paid by him. In the present case, the property in the goods passed from the appellant to his buyer only at the port where they have obtained the Let export order and the services in question are such as were availed by the manufacturer prior getting the said order. Hence, the said services as that of CHA, CNF, testing and sampling etc. are eligible to be classified as the input services Resultantly the appellant is entitled to avail the cenvat credit for the tax paid on such input services. The observation of learned commissioner in para 8 of the order and the examples cited therein are therefore, held to be not applicable to the given facts, and circumstances. The findings are therefore held to be false. These are rather observed to be mere literature or language oriented than being technical in nature. The findings with respect to the period from April 2008 to September 2008 are therefore set aside. Appeal allowed - decided in favor of appellant.

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• 2020 (10) TMI 437
  Extended period of limitation - it has been argued by Revenue that the extended period of limitation has been invoked as the appellant neither disclosed the facts to the department voluntarily that they were undertaking the trading activity nor they paid the amount as per the provisions of Rule 6(3) ibid - reversal of CENVAT Credit - HELD THAT:- It was detected by the officers of the department on scrutiny of their records and this lead to the inference that the facts were suppressed and in the absence of detection by the officers of the department, they would have gone unnoticed. So far as suppression is concerned after going through the case records I do not find any suppression on the part of the appellants. As per records, audit of their records has been regularly done by the Central Excise Department during the years in question and during the course of the audit all the transactions including the transactions in question i.e. alleged trading transactions were also got regularly audited as mostly those transactions were done under the cover of proper Central Excise Invoices and it was also reflected in the books of accounts/RG-1/ER-1 returns of the appellant. As per the appellant despite disclosing everything, no objection was raised by any of the Central Excise Department official who conducted the audit during all those years. It cannot be said that the transactions in question were suppressed by the appellant from the department with malafide intention to evade payment of duty or to take wrong credit. If something or anything wrong was there then it was incumbent on the Department to raise objection at the time of audit itself during all those years but the same was not done. The entire demand in the present case is barred by limitation - Appeal allowed - decided in favor of appellant.

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• 2020 (10) TMI 436
  Principles of Natural Justice - Levy of Penalty u/r 26 of the Central Excise Rules, 2002 - Appellants submits that there is gross violation of the principle of natural justice and despite the remand by this Tribunal for denovo adjudication, the cross-examination was not permitted by the revenue - HELD THAT:- The writer of the chits/private documents was not examined therefore it raises doubt whether the same can be used against the appellants. Mere recovery of private records is not sufficient to prove clandestine removal and a concrete and clinching evidence is required to prove such allegation and it is for the department to discharge the burden and prove the charges of clandestine removal against the appellants. The department has to prove the allegation on the basis of cogent corroborative evidence which in the facts of the present case the department has failed to produce, so far as the appellant is concerned. From the records it is apparent that from the day show cause notice was issued, the appellants were asking for cross examination. Even despite the order of this Tribunal, the adjudicating authority did not permit the cross-examination and brushed aside the same while observing that the request is without any specific reason and is routine in nature. It is no doubt true that there is no right of cross-examination if sufficient corroborative evidence exists, but in the present case I am unable to find the sufficient corroborative evidence against the appellant and therefore the appellant were justified in asking for cross-examination. Since the cross-examination was denied therefore it vitiates the proceedings qua the appellants. Appeal allowed - decided in favor of appellant.

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