TMI Tax Updates - e-Newsletter
October 8, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Submission of GST TRAN-2 / TRAN-1 return - respondent No. 3, the GST Council will look into the grievance of the petitioner, so that the petitioner may file TRAN -1 form either electronically or manually, as the case may be, which exercise shall be undertaken within a period of three weeks from the date of receipt of a certified copy of this order to be furnished by the petitioner. - HC
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GST:
Cancellation of registration - Validity of SCN - Perusal of the same indicates that to such show cause notice no response can be given by any assessee. The show cause notice is as vague as possible and does not refer to any particular facts much less point out so as to enable the noticee to give his reply. - SCN and cancellation of registration order quashed - HC
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Income Tax:
Deemed dividend u/s 2(22)(e) - The records placed before the assessing officer clearly shows the nature of transaction between the firm and the company and it is neither a loan nor an advance, but a deferred liability. These facts have been noted by the assessing officer. - ITAT rightly deleted the additions - HC
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Income Tax:
Capital Gain or business income - surplus on sale of shares and securities - the assessee has maintained distinction between trading assets and nontrading assets and has treated the transaction in shares and securities as investment then, the Assessing Officer could not have treated the same as business transaction so as to treat the surplus as business income - HC
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Income Tax:
Reopening of assessment u/s 147 - Approval granted by the Ld. CIT is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings issue of notice u/s. 148 and is not in accordance with section 151 thus, the notice issued u/s.148 is invalid - AT
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Income Tax:
Revision u/s 263 - limited scrutiny assessment - Failure to make enquiry in such circumstances would make the assessment order erroneous and prejudicial to the interest of the revenue. - it was a case of lack of inquiry and there was no application of mind by AO on the issues which formed subject matter of revisional jurisdiction u/s 263. - AT
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Income Tax:
Assessment order after expiry of time limit prescribed u/s 153 - AO was under obligation to pass the assessment order within the time specified under 3rd proviso to Sec. 153(1) of the Act i.e. on or before 31/03/2013. Since the order has been passed beyond the period of limitation the same is null and void. The assessee succeeds on the legal ground raised as additional ground of appeal. - AT
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Income Tax:
Income accrue in India - PE in India - nature of income - the distribution revenue earned by the appellant-assessee cannot be taxed as royalty albeit as a business income. Since, assessee has already offered income as business income in terms of the MAP, therefore, the income as declared by the assessee in accordance with the MAP and accepted by the Department in the earlier years has to be accepted. - AT
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Income Tax:
Characterization of income - Revenue receipt or capital receipt - subsidy on account of Octroi refund - the assessee is entitled to treat the Octroi refund as capital in nature and it is not chargeable to tax. - AT
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Income Tax:
Exemption u/s 11 - Accumulation of income equal to 15% - The method of computation of deficit to be truncated artificially 15% based on an entitlement (opposed to an obligation) as suggested by first appellate authority is totally devoid of any logic. - This would tantamount to application of concession conferred on assessee in a reverse manner and thus put the assessee in a worser position in the event of accelerated application of receipts for salutary purposes. - AT
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Customs:
Search and seizure proceedings - Extension of seizure period - The communication issued to the appellants, which is of the Investigating Officer merely informing the extension, again without the reasons being explicitly stated therein - Since the period stands extended to 14.10.2020, even now there could be a service effected, which would satisfy the mandate under the proviso to Section 110(2). There is however, no warrant to issue a direction to effect such service, since there is a deemed service and information conveyed as to the reasons for extension. - HC
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Customs:
Classification of goods imported - whether the goods imported are calcareous stone ‘other than marble’ which could be allowed to be imported only against SIL during the relevant period or the goods are “marble” as claimed by the appellants? - the goods imported by the appellants are not ‘marble’ but ‘calcareous stone other than marble’ which requires specific import licence at the relevant time. - AT
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Service Tax:
CENVAT Credit - the Department has nowhere mentioned in entire proceedings that the amount of Cenvat credit reversed is not proportionate to the value of exempted services or not proper otherwise. The only ground that the appellant have not followed the laid down procedure of availing the option of Rule 6 (3A) like not declaring value of turnover of exempted services in their periodic service tax return etc. can be minor procedural lapses, but same cannot become ground for denying a substantial benefit to the appellant. - AT
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Service Tax:
Delayed payment of service tax - Impact of accounting entries - The manner in which the Appellant was recording the journal entry in its Books of Accounts alone, in the absence of any statutory violation, is not sufficient to conclude that there was a delay in payment of Service Tax on the part of the Appellant - AT
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Central Excise:
Rejection of Petitioner's declaration in form SVLDRS 1 - Section 13 (2) of the General Clauses Act, 1897 can be invoked in terms of which the “words in the singular shall include the plural, and vice-versa” - in the present case the Petitioner's application ought not to have been rejected only on the ground that one declaration, and not four, was filed on 30th December, 2019. - HC
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Central Excise:
When the Hon’ble Supreme Court had rejected the appeal of the Revenue, the order of the Tribunal, which was in favour of the importer, merges with the order of the Hon’ble Supreme Court, under the principle of ‘Doctrine of Merger’ - This Court expresses its disappointment on the conduct of the concerned authorities in having scant respect towards the orders of the Hon’ble Supreme Court - HC
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Central Excise:
Recovery of erroneous refund - Refund of the education cess & secondary and higher education cess - The demand cum show-cause notice is assailed in this writ petition on the ground that the condition precedent to invoke the power under section 11(A-1) is that the refund made must be erroneous - Operation of SCN stayed - HC
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VAT:
Inter-state sale or local sale - The reason given by the learned Tribunal in its impugned order cannot be appreciated, that merely because the two parties viz., the Assessee M/s.National Engineering and M/s.Baynee Industries were located within the State of Tamil Nadu at Chennai, no inter-State sales could have taken place - this view taken by Tribunal also against the well established principles of inter- State Sales as envisaged under Section 3(a) of the CST Act, 1956. - HC
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VAT:
Classification of goods - lever files made of cardboards - when 'folders and file covers', which carries certain prints are brought under 40(iv), 'lever files made of cardboards' with some print on it, will also squarely fall under the same Entry. - HC
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VAT:
Principles of Natural Justice - Levy of Turnover Tax - rate of tax - It is not in dispute that there is no provision for service of notice on the assesses through e-mail, and it is not the case of the respondents that the alleged reminder notice dt.16.11.2019 and final notice dt.06.03.2020 were sent in the manner indicated in the Rules framed under the Act and were served on the petitioner. - Matter restored back - HC
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (10) TMI 259
Submission of GST TRAN-2 return in relation to Part 7A either electronically or manually in terms of the statement made before this Court earlier by the respondent authorities - grievance of the petitioner is that in spite of specific direction by this Court to allow the petitioner to submit GST TRAN-2 either electronically or manually, the authorities have not allowed to file electronically or manually the same on the ground that the petitioner has not been able to show that there was genuine difficulty on the part of the petitioner to upload the form. HELD THAT:- This Court is of the view that if there is a provision made for filing returns electronically and if because of certain technical glitches uploading could not be done in time, on that ground the concerned individual or firm ought not to be put to a disadvantageous position - It is not the case that the petitioner is not willing to file any return or seeking time for filing return on various grounds. The case of the petitioner is that though the petitioner was ready to file TRAN-2 electronically, the same could not be done as the portal was not working, because of which he had approached the authorities for allowing him to submit the form manually also, which in fact was considered by this Court as referred above and directed the authorities to allow the petitioner to file the form, either electronically or manually, as the case may be. Petition disposed off.
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2020 (10) TMI 258
Withdrawal of challenge to vires of Section 171 of the CGST Act, 2017 - HELD THAT:- The effect of this relief being not pressed would be that the transfer application moved by the department before the Supreme Court for all such matters pending in different High Courts challenging the vires of the aforesaid provision would not be applicable in the case of this petition. The application is allowed - this petition be listed for final disposal on 12th October 2020, the date agreed by the learned counsel for the parties.
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2020 (10) TMI 257
Violation of Principles of Natural Justice - Cancellation of registration - Validity of SCN - case of petitioner is that without fixing a date for hearing and without waiting for any reply to be filed by the petitioner, the cancellation order was passed on 31.07.2020 whereby registration of the petitioners with GST department was cancelled - HELD THAT:- Perusal of the same indicates that to such show cause notice no response can be given by any assessee. The show cause notice is as vague as possible and does not refer to any particular facts much less point out so as to enable the noticee to give his reply. We are not entering into the merits of the impugned order as we are convinced that the show cause notice itself cannot be sustained for the reasons already recorded above. Therefore, the cancellation of registration resulting from the said show-cause notice also cannot be sustained. Petition allowed.
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Income Tax
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2020 (10) TMI 256
Rejection of application u/s 197 - Petitioner challenging impugned TDS Certificate - seeking directions to the respondents to pass an order in the revision application filed by the petitioner - petitioner prays for directions to the respondent authorities to issue a fresh Certificate of Tax Deduction at Source at lower rate - HELD THAT:- A perusal of the file reveals that the petitioner has preferred a revision application dated 14th July, 2020 under Section 264 of the Act, which is still pending. Accordingly, the present writ petition and pending applications are disposed of with a direction to respondent no.1 to decide the petitioner s revision application within four weeks, after giving an opportunity of hearing to the petitioner, by way of a reasoned order in accordance with law. All the rights and contentions of the parties are left open. This Court clarifies, at the cost of repetition, that in view of the pendency of the revision application of the petitioner, it has not dealt with the specific prayer for quashing of the order dated 01st July, 2020.
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2020 (10) TMI 255
Deemed dividend u/s 2(22)(e) - whether AO was right in holding that the only exclusion provided by the Statute under Section 2(22)(e) was in the case of money lending business and the payments that are made in the ordinary course of business, as, for doing money lending business, a person is required to obtain a licence from the Reserve Bank of India or whether it is a non banking financial company? - HELD THAT:- As decided in M/S. T. ABDUL WAHID CO. [ 2020 (9) TMI 977 - MADRAS HIGH COURT ] Section 2(22)(e) provision would stand attracted when a payment is made by a company, in which public are not substantial interested by way of advance or loan to a share holder, being a person who is the beneficial owner of the shares. On facts, it is clear that the payment has been made to the assessee, a partnership firm. The partnership firm is not a share holder in the company. The records placed before the assessing officer clearly shows the nature of transaction between the firm and the company and it is neither a loan nor an advance, but a deferred liability. These factshave been noted by the assessing officer. In such circumstances, this Court is of the view that the Tribunal rightly reversed the order passed by the CIT(A) affirming the order of the assessing officer - Decided against revenue
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2020 (10) TMI 254
Exemption u/s 11 - disallowing the investment in gold bullion by the appellant and treating the same as a violation of Section 11(5) - Tribunal came to the conclusion that the purchase of gold by the assessee was not application of funds, but an investment in gold bullion and this investment is in violation of Section 11(5) - HELD THAT:- There is nothing on record to indicate that this opinion was formed by the Tribunal and recorded in its order after the assessee had an opportunity to put forth their contention. Assessee's case is that if such was the view of the Tribunal, then the assessee's case should have been considered as per the proviso (iia) to Section 13(1)(d) - The assessee would contend before us that the asset, not been specified investment, can be held for a period of one year from the end of previous year in which such an asset was acquired, which is the case of the assessee. Since this issue was not dealt with by the Tribunal, rather the assessee appears to have not been put on notice, the above opinion formed by the Tribunal holding that the purchase of gold by the assessee was not application of funds, but an investment in gold bullion, we find that the assessee has been put to prejudice. Therefore, they are required to be granted a fresh opportunity to put forth their contention. Appeal is allowed and the finding rendered by the Tribunal [ 2014 (9) TMI 957 - ITAT CHENNAI] is set aside and the matter is remanded to the Tribunal to consider the said issue afresh.
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2020 (10) TMI 253
Reopening of assessment u/s 147 - absence of a notice u/s 143(2) - Department failed to get any confirmation from any authority in support of his decision to re-open the assessment - whether at all an argument is required to be made by referring to Section 292BB? - HELD THAT:- Procedure has been followed, notices under Section 143(2) were issued and the case on hand is not a case where notice was not issued and from the facts recorded, we find that there is no procedural irregularity and the question of applying Section 292BB of the Act would not arise in the facts and circumstances of the case on hand. Furthermore, we noted that the assessee appears to have been well aware of this position and precisely for that reason, the grounds canvassed before us were never canvassed at an earlier stage. We hold that the order passed by the Tribunal does not call for any interference and the substantial question of law (c) has to be decided against the assesseee. So far as substantial questions of law (a) and (b) are concerned, on facts, we have found that there are proper issuance and service of notices under Section 143(2) of the Act and consequently, the substantial questions of law though cannot be canvassed for the first time before this Court, as the assessee was never prejudiced earlier, yet on facts, we found that there is statutory compliance of the procedure under Section 143 of the Act. Contention regarding the applicability of Section 153 of the Act, we find that at the relevant time, the limitation was one year and the order could have been passed on or before 31.03.2013. Therefore, on this aspect also, the assessee's contention has to be rejected. - Decided against assessee.
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2020 (10) TMI 252
Correct head of income - Capital Gain or business income - surplus on sale of shares and securities - HELD THAT:- CIT(A) and the Tribunal both have come to the conclusion that the assessee has continuously treated the transaction in shares and securities as investment and in view of the aforesaid Circulars issued by the CBDT, when the assessee has opted to treat the shares and securities as investment and offered capital gains/loss arising from such transaction to tax then the Assessing Officer cannot dispute the same. When there are concurrent findings of fact that the assessee has maintained distinction between trading assets and nontrading assets and has treated the transaction in shares and securities as investment then, the Assessing Officer could not have treated the same as business transaction so as to treat the surplus as business income.- Decided against revenue. Disallowance of interest expenses u/s 14A - Tribunal deleted the addition - HELD THAT:- The condition precedent of recording the requisite satisfaction which is a safeguard provided in Section 14A should not be overlooked before going to Rule 8. In such circumstances we are not impressed by the submission canvassed on behalf of the Revenue that once there are mixed funds, Rule8 would be attracted automatically. Tribunal committed no error in passing the impugned order. The issues raised in these Tax Appeals are covered by various decisions of the Supreme Court as well as this Court.- Decided against revenue.
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2020 (10) TMI 251
Reopening of assessment u/s 147 - Approach of CIT for granting satisfaction for granting approval - HELD THAT:- Approval granted by the Ld. CIT-5, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings, because from the aforesaid remarks, it is not coming out as to which material; information; documents and which other aspects have been gone through and examined by the Ld. CIT-5, New Delhi for reaching to the satisfaction for granting approval. AO has mechanically issued notice u/s. 148 - we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. Approval granted by the Ld. CIT-5, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings issue of notice u/s. 148 and is not in accordance with section 151 thus, the notice issued u/s.148 is invalid and accordingly the reopening in this case is bad in law and therefore, the same is hereby quashed. - Assessee appeal is allowed.
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2020 (10) TMI 250
Deduction u/s 36(1)(iii) - CIT(A) directing to allow the interest paid to Star India Pvt. Ltd as business expenditure? - Whether a particular expenditure was necessary considering commercial expediency was to be decided from the point of view of businessman alone and not by the Revenue authorities - During the course of assessment proceedings, the assessee submitted that SIPL was not a related party within the meaning of Section 40A(2) of the Act and further, SIPL was a resident in India for tax purposes? - HELD THAT:- It is quite evident that the reassessment proceedings were triggered based on interest disallowance in AY 2005- 06. The said disallowance, has ultimately been deleted by the Tribunal for AY 2005-06. Nothing on record would suggest that the said decision was not applicable to the facts of the present case. No change in material facts have been brought on record. In fact, the reassessment proceedings were triggered in this year on the basis of disallowance made in AY 2005-06. The relief has been given by Ld. CIT(A) by relying upon the appellate order for AY 2005-06 which has finally been affirmed by the Tribunal. In such a scenario, no fault could be found in the impugned order and no disallowance would survive against the assessee for the year under consideration. Therefore, by confirming the stand of Ld. CIT(A), we dismiss the appeal.
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2020 (10) TMI 249
Revision u/s 263 - limited scrutiny assessment - order passed by the AO is erroneous and prejudicial to the interest of Revenue - HELD THAT:- Contention of ld. AR regarding revisionary power exercised by the Pr.CIT in case of limited scrutiny, is not accepted on the basis of recent decision of the coordinate bench of the Tribunal in case of Baby Memorial Hospital Ltd. [ 2019 (11) TMI 703 - ITAT COCHIN]. If there is an escapement of income or potentiality of income involved in the issues which has not been done by the AO while completing the limited scrutiny assessment the AO could have obtained the permission from the ld. Pr.CIT if he finds that there is a potentiality of the income. In the present case going through the assessment order, there is no any whisper in the order of assessment passed by the AO regarding the subject matter of purpose for the scrutiny and he has made addition on the other subjects which was not part of the aforesaid purpose of the limited scrutiny. In these circumstances, the AO should have obtained permission from the ld. Pr.CIT/CIT. In view of this, the order passed by the AO is also erroneous and prejudicial to the interest of revenue. Income-tax Officer is not only an adjudicator but also an investigator. It is his duty to ascertain the truth of the facts stated in the return. When the circumstances of the case are such so as to provoke an enquiry, it is his duty to make proper enquiry. First he should investigate the matters on the basis of which the assessee has prepared income tax return thereafter he should reach to a logical conclusion that the income shown is as per the Income Tax Act. Failure to make enquiry in such circumstances would make the assessment order erroneous and prejudicial to the interest of the revenue. We concur with the submissions of Ld. CIT-DR that it was a case of lack of inquiry and there was no application of mind by AO on the issues which formed subject matter of revisional jurisdiction u/s 263. Therefore, we do not find any illegality in the action of Ld. Pr. CIT in exercising the said jurisdiction - Decided against assessee.
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2020 (10) TMI 248
Exemption u/s. 10B - assessee is engaged in manufacturing activity - beneficiation of chrome ore is not a manufacturing activity ignoring the fact that on the basis of such manufacturing activity the assessee has been issued 100% ECU certificate from the Ministry of Commerce and Industries, Government of India - HELD THAT:- Tribunal has restored the issue to the file of AO for reconsideration of the intention of the assessee to export mineral which is abundantly available in the particular area insofar as an effort in manufacturing the same whether could entitle it to claim deduction u/s.10B of the Act or not. Similar is the position in the assessment year under consideration. Respectfully, following the decision of the Tribunal in own case we set aside the order of the CIT(A) and restore the issue to the file of AO to decide the issue afresh in the light of the observations made by the Tribunal in the preceding assessment year i.e.A.Y.2008-2009. Thus, the grounds No.1 to 3, consisting of one issue, are allowed for statistical purposes. Disallowance u/s.40A(3) - HELD THAT:- We find that the issue involved in the present case has already been decided by the coordinate bench of the Tribunal in assessee s own case for the A.Y.2009-2010 in [ 2015 (5) TMI 1212 - ITAT CUTTACK] wherein the Tribunal has already been decided in favour of the assessee
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2020 (10) TMI 247
Interest on borrowed funds not utilised for business purposes of the assessee - Disallowance u/s.36(1)(iii) or alternatively u/s.14A - interest free funds available with the assessee were much more than the investments made by the assessee in subsidiary companies OR not? - whether borrowed funds were utilised in equity of subsidiaries and thus the assessee is entitled to dividend income therefrom which is exempt u/s.10(34) ? - HELD THAT:- AO has disallowed the interest on the entire investment though according to the assessee, the cash credit account contains both interest free as well as interest bearing funds. As held in SA Builders [2006 (12) TMI 82 - SUPREME COURT ] where the interest free funds and interest bearing funds are mixed and the assessee makes investments in sister concern, it is to be presumed that such investments are out of interest free funds only and there cannot be any disallowance of interest on borrowed funds. Though the assessee has filed before us, the financial statements as on 31st March, 2010 to show that the interest free funds available with it at the time of investments, were much more than the investments made by the assessee, we are of the opinion that it needs verification by the AO. We remit the appeal to the AO for the limited purpose of verification of AO s own and interest free funds available and if the AO finds that the assessee s own and interest free funds were much more than the investments made by the assessee, then no disallowance shall be made by the AO and if it is found that such funds are not sufficient, then, disallowance shall be made only to the extent of funds utilised for investment over and above the own funds available with the assessee. Appeal of assessee is treated as allowed for statistical purposes.
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2020 (10) TMI 246
Assessment order after expiry of time limit prescribed under section 153 - completion of assessment in case a reference has been made u/s 92CA(1) - applicability of newly inserted provisions of Section 144C - HELD THAT:- The third proviso providing revised time limit for completion of assessment in certain cases has been inserted by the Finance Act, 2012 with effect from 01/07/2012. This proviso provides an outer limit of three years from the end of relevant assessment year for completion of assessment in case a reference has been made u/s 92CA(1). The assessee s case is covered by this third proviso. Provisions of section 144C of the Act vide which the assessee was given an option to take the benefit of specialised Dispute Resolution Panel as an alternate mechanism for expeditious disposal of dispute was inserted by the Finance (No.2) Act, 2009 w.r.e.f. 01/4/2009. The Hon'ble Madras High Court in the case of M/s. Vedanta Ltd. [ 2020 (1) TMI 168 - MADRAS HIGH COURT] has considered the issue of applicability of newly inserted provisions of Section 144C and has held that the amendment being substantive in nature would apply prospectively from assessment year 2011-12 onwards. The facts of the case, provisions of Section 153(1) of the Act (as they were applicable in AY 2009-10) and the ratio of judgement rendered in the case of M/s. Vedanta Limited (supra) makes it explicitly lucid that the provisions of section 144C would not apply in the impugned assessment year and hence, the time period for passing the assessment order would not get enlarged. AO was under obligation to pass the assessment order within the time specified under 3rd proviso to Sec. 153(1) of the Act i.e. on or before 31/03/2013. Since the order has been passed beyond the period of limitation the same is null and void. The assessee succeeds on the legal ground raised as additional ground of appeal. The assessment order is quashed and the appeal of assessee is allowed.
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2020 (10) TMI 245
Income accrue in India - PE in India - nature of income - payment received by the assessee for grant of right or licenses to distribute the channel in India - income declared by the Appellant in its return of income as Business Income on the basis of the MAP order - distribution revenue as Business Income as declared by the Appellant or to be Royalty as per section 9(1)(vi) of the Act and Article 12 of the DTAA between India and the USA - HELD THAT:- Appellant-assessee is a US based Company and is tax resident of US. During the relevant assessment years, it has derived advertisement and distribution revenue from grant of exclusive rights to an Indian Company TIIPL to sale advertisement on the products and to distribute the products as incorporated above. The Indian Company has an exclusive distributor of the said products to the cable operators on principle to principle basis. The distribution agreement allowed the TIIPL to distribute the products to various cable operators and ultimately to consumers in India. The distribution revenue collected by the TIIPL was to be shared between the appellant. Said agreement the appellant had the sole right to determine the content of the products and also the right to change such content from time to time and secondly, all the copyrights and other priority rights in the products and in any promotional material vested in the appellant company alone. It is a copyright of the content in the product which always remained with the appellant-assessee and was never transferred. The clause merely provides right to distribute the product. As brought on record that in all the years and in subsequent years also Assessing Officer has held the advertisement revenue to be the business income following the MAP order. However, during the impugned assessment years, the said position has been digressed by the Assessing Officer without there being any material change in the facts and circumstances or the terms of agreement or the business mutual - as a rule of consistency, the same position should not be altered or should be allowed to be changed. In this case, appellant never granted any licenses to use any copyright, either to distributor or to the cable operator albeit it has only granted right for purpose of selling advertisement on the product that are channels, etc. and distribution of such products in India. The Indian company is carrying out the distribution and selling of the advertisement and it does not have any kind of right to edit, interpret, add the products distributed by it. The assessee company only granted commercial rights in the nature of broadcast reproduction right to the TIIPL, which has been separately defined u/s. 37 of the Copyright Act and therefore, it cannot be held that revenue derived by the assessee for distribution of products is taxable as royalty albeit it is a business income of the assessee. AO has tried to justify the tax the distribution revenue in the nature of royalty by applying the retrospective amendment made in Explanation-6 of Section 9(1)(vi) of the Act. Such an approach cannot be upheld because there is no similar amendment in the definition of royalty under the DTAA and it has been well settled in the case of New Skies Satellite BV [ 2016 (2) TMI 415 - DELHI HIGH COURT] that amendment in the domestic law cannot be imported or read into DTAA. Thus, we hold that the distribution revenue earned by the appellant-assessee cannot be taxed as royalty albeit as a business income. Since, assessee has already offered income as business income in terms of the MAP, therefore, the income as declared by the assessee in accordance with the MAP and accepted by the Department in the earlier years has to be accepted. Accordingly, the additions made by the Assessing Officer are deleted. - Decided in favour of assessee.
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2020 (10) TMI 244
Disallowance of interest u/s 36(1)(iii) in respect of property at Saket and Gurgaon - HELD THAT:- With respect to the interest disallowance pertaining to the Gurgoan property, the Assessing Officer was directed to re-calculate the disallowance by restricting it to interest portion related to ₹ 68.00 lacs. It has been brought to our notice that in AYs 2008-09 and 2009-10, the issue was restored to the file of the Assessing Officer and the Ld. CIT (A) respectively with the direction to re-compute the interest attributable to ₹ 68.00 lacs. We find that a similar direction has been given by the Ld. CIT (A) in this year also wherein the Ld. CIT (A) has directed the Assessing Officer to re-compute the interest attributable to ₹ 68.00 lacs. Thus, there is no error in the finding of the Ld. CIT (A). Disallowances of security charges - HELD THAT:- AR has stated that he is willing to establish with proof before the Assessing Officer that the security charges were paid for different premises utilized by assessee for business purposes. Accordingly, this issue is restored to the file of the Assessing Officer with the direction to re-examine this issue afresh after giving proper opportunity to the assessee to present his case. Addition on account of house property - property at Grand Mall, Gurgaon was lying vacant during the entire Assessment Year and, therefore, no notional rent can be brought to tax on such vacant premises - HELD THAT:- A perusal of the assessment order shows that this plea of the assessee has not been considered while making the addition on account of notional rent. CIT (A) has also not considered this stand of the assessee while upholding the disallowance. Both the Lower Authorities have placed reliance on assessee s communication dated 04.03.2013 wherein the assessee is stated to have submitted that this property was let out. Thus, to our mind, factual verification needs to be carried out on the issue. Therefore, we deem it appropriate to restore this issue to the file of Assessing Officer to decide the issue as per law after recording a clear cut finding as to whether at any point of time either during earlier Assessment Years or during the year under consideration, the property was let out or not. While adjudicating the issue, the Assessing Officer is advised to consider ratio of order of the Tribunal in the case of Sh. Anil Kumar Gupta [ 2019 (3) TMI 893 - ITAT DELHI].
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2020 (10) TMI 243
TP adjustment - Arm s Length Price [ALP] of export of goods - Whether appellant had considered all the transaction with its associated enterprise? - HELD THAT:- TPO picked up only two transactions where the price charged was less than the average market price and also beyond 5% permissible band width to make the addition ignoring other transactions where the average price charged was more. Considering decision of ESSAR STEEL LTD. [ 2014 (11) TMI 254 - ITAT MUMBAI] if the transactions are the interlinked transactions then the ALP should be considered of export of goods on aggregate basis. It can be established in many ways that transactions are interlinked, one of the illustrative way is supply of goods billed separately but the purchase order is common and the rates are also predetermined with adjustments on account of material prices. Before us, no such data is available or any other information by which we can say that the transactions of export to associated enterprise are interlinked transactions - merely because they are the export of the same goods over a period to the Associated Enterprises, they do not become interlinked. There has to be a binding element behind all the transactions to make them one and connected. Such data was also not available before the learned Transfer Pricing Officer or learned Dispute Resolution Panel. If this fact is established by the assessee then the issue is squarely covered in favour of the assessee on this point by the decision of the coordinate bench . Direct the AO to compute the ALP considering the transactions of export to associated enterprise on aggregate basis after assessee establishes before him that all these export transactions of the associated enterprise are interlinked. To this extent, this issue is sent back to the file of the learned AO/TPO with a direction to the assessee to substantiate the argument that the transaction of export of goods to associated enterprise are interlinked. Benefit of tolerance range of +/- 5% in the price charged from the AE vis a vis ALP - HELD THAT:- As relying on THE DEVELOPMENT BANK OF SINGAPORE [ 2013 (8) TMI 175 - ITAT MUMBAI] we direct the assessee to furnish necessary computation and the TPO is directed to examine the same and decide this issue afresh. Credit of TDS denied - AO denied credit of TDS/TCS on the ground that the same pertained to preceding years, i.e. Rs. A.Y. 2007-08 and 2008-09 - HELD THAT:- No error or infirmity in the findings of the Assessing Officer. But, at the same time, the Revenue should not be benefitted unjustly. We, accordingly, direct the Assessing Officer to allow the credit of TDS/TCS as per provisions of law in preceding A.Ys. Adjustment of interest on loan received from AE - Interest is charged on the loan at the rate of 3 moths LIBOR plus 200 basis point - HELD THAT:- As decided in own case [ 2018 (11) TMI 1250 - ITAT DELHI] relying on CIT vs Cotton Naturals [ 2015 (3) TMI 1031 - DELHI HIGH COURT] has already held that the transaction cost of hedging cost is borne and paid by the borrower therefore transaction cost is not applicable in case in question the loan had to be repaid in the foreign currency. Even otherwise according to us the markup towards the transaction cost is exorbitant and comparison with the bank is also untenable. No rational in the impugned in further cost and risk premium on the rate directed by the learned Dispute Resolution Panel - direct the TPO to not to charge any risk premium following the decision of the coordinate bench. In view of this, the transaction cost imputed of 300 basis points cannot be sustained. TPO should have considered for both the years the LIBOR +200 basis points in both the financial year financial year for the benchmarking for the interest income of the assessee. Adjustment on account of corporate guarantee - HELD THAT:- As decided in own case TPO has benchmarked the transaction by obtaining the quote from bankers and Hon Bombay High court in case of THE COMMISSIONER OF INCOME TAX, MUMBAI Vs M/s EVEREST KENTO CYLINDERS LTD [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] Even otherwise the commission charged by the assessee also in conformity with the rates quoted by Indusind bank and ING vasya bank. Further, the reasons given by us with respect to Risk adjustments and margins while deciding the issue of Interest receipt relying on the decision of Bharti Airtel decision [ 2017 (1) TMI 172 - ITAT DELHI] are equally applicable for this transaction too. Addition u/s 14A r.w.r 8D - disallowance should not exceed exempt income - HELD THAT:- We are of the considered opinion that the disallowance should not exceed exempt income - we draw support from the decision of Joint Investment Pvt Ltd [ 2015 (3) TMI 155 - DELHI HIGH COURT]. We direct the Assessing Officer to restrict the disallowance to ₹ 2,37,000/-. This ground is partly allowed. Set off of prior period expenses from prior period income - HELD THAT:- If the Assessing Officer was of the strong belief that the prior period expenses cannot be allowed in the year under consideration, then the AO should have realized that he is taxing prior period income earned during the year under consideration. We do not find any reason why the prior period expenses should not be netted off against the prior period income, which in our opinion is most logical way of treating the same. We draw support from the decision of Exxon Mobil Lubricants (P) Ltd. [ 2010 (9) TMI 36 - DELHI HIGH COURT] , wherein observed that expenses pertaining to prior period were allowable in the relevant year in which the same were crystallized. On facts of the case, we direct the Assessing Officer to allow set off of prior period expenses with prior period income. - Decided in favour of assessee.
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2020 (10) TMI 242
Characterization of income - Revenue receipt or capital receipt - subsidy on account of Octroi refund - revenue receipt treated by AO - Assessee claimed the said subsidy granted by the Government of Maharashtra as per the scheme of PSI-2007 Scheme to set up plant or development of plant in backward areas - HELD THAT:- In the light of decision of Chaphlkar Brothers Pune [ 2017 (12) TMI 816 - SUPREME COURT ] we hold that the assessee is entitled to treat the Octroi refund as capital in nature and it is not chargeable to tax. Thus, the order of CIT(A) fails and it is set aside. - Decided in favour of assessee.
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2020 (10) TMI 241
Estimation of commission income on accommodation transactions - HELD THAT:- Case related to A.Y 2008-09 are similar to the facts decided for A.Y 2009-10 [ 2017 (1) TMI 1728 - ITAT MUMBAI] and moresoever in both such assessment years the commission income was estimated by the A.O @ 1.50% of accommodation transactions. The Hon ble ITAT, in appellant s case, related to A.Y 2009-10 had directed the A.O to estimate the commission income @ 0.10% on accommodation transaction and consequently the A.O had recomputed the commission @ 0.10% on accommodation transactions. Accordingly,direct the A.O to estimate the commission income @ 0.10% on accommodation transactions determined in the assessment order and delete the balance addition. In the result, the appeal for A.Y 2008- 09 is Partly allowed.
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2020 (10) TMI 240
TP Adjustment - comparable selection - AO applying internal RPM (based on sale price quoted for goods in the tender documents) for benchmarking the payments made - comparability of PAE Ltd. - HELD THAT:- There is no similarity in the products between the appellant and PAE Ltd as gleaned from the activities delineated. Because of lack of similarity, it has impact on functions performed and on gross margins earned. In the instant case, the product differences between the appellant and PAE Ltd. are not at all acceptable in applying the RPM. In RPM, the compensation for a distribution company should be the same. The similar level of compensation is expected for performing similar functions across different activities. In the instant case similar level of compensation is not expected for performing similar functions across different activities. In view of the above factual scenario and principles governing RPM, the AO has rightly excluded PAE Ltd in the final set of comparables. To hold otherwise would be to exalt artifice above reality and to deprive the settled principles in question of all relevant purpose.
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2020 (10) TMI 239
Addition on account of difference in stock - HELD THAT:- The books of accounts at any point of time were not rejected by the AO. There was no denial by the AO that stock was lying outside factory premises and cold storages. AO has not pointed out any defect in the reconciled stock. CIT(A) has also not taken the cognizance of proper GP rate applied by the CIT(A). AO as well as the CIT(A) has not considered the actual material in consonance with the physical stock. The assessee had justified its difference through the documents which was at no point of time doubted by any of the Revenue Authorities. CIT(A) was not justified in directing the AO for making an addition on account of difference in stock for sustaining the same for ₹ 10,66,350/-. The appeal of the assessee is allowed.
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2020 (10) TMI 238
Exemption u/s 11 - 15% of gross receipts allowed to be accumulated u/s 11(1)(a) ought to be reduced from the amount allowed to be carried forward as deficit - whether where a trust has incurred shortfall due to its excess spending on the objects of the Trust in a particular year, such deficit or shortfall could be allowed to be carried forward in full for set off against the incomes generated in the subsequent years or the quantum of carry forward of deficit for set off against income of subsequent years is to be restricted to a recalibrated amount after deduct ion of 15% of receipts contemplated under s.11(1)(a) and Sect ion 11(1) (b)? - HELD THAT:- Where an assessee trust has made excess application of its income, the option or entitlement vested upon an assessee to accumulate 15% for indefinite period in our view cannot operate as an obligation enforceable against it in the absence of accumulation. The method of computation of deficit to be truncated artificially 15% based on an entitlement (opposed to an obligation) as suggested by first appellate authority is totally devoid of any logic. This would tantamount to application of concession conferred on assessee in a reverse manner and thus put the assessee in a worser position in the event of accelerated application of receipts for salutary purposes. The action directed by CIT(A) has the effect of deprivation of concession granted and is repugnant to the intended outcome. The Pune Bench of Tribunal in Maharshi Karve Stree Shikshan Samstha Karvenagar vs. ITO [ 2019 (1) TMI 1260 - ITAT PUNE] has also essentially held that relaxations conferred u/s 11(1)(a) /(b) r.w. Section 11(2) of the Act to the extent of 15% of income would not nullify the entitlement of such absolute nature by way of reduction in quantum of deficit. We thus have no hesitations to quash the observations of the first appellate authority towards exclusion of 15% of income for the purposes of determination of quantum of deficit to be carried forward for set off in ensuing years in accordance with law. - Decided in favour of assessee.
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Customs
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2020 (10) TMI 237
Provisional release of goods - Section 110A of the Customs Act, 1962 - High Court has directed provisional release, subject to the respondent furnishing a bank guarantee quantified at ₹ 10 crores, besides other incidental conditions - HELD THAT:- The quantum of the bank guarantee which has been directed to be furnished by the High Court, should be enhanced from ₹ 10 crores to ₹ 15 crores. Mr Salve has stated on instructions that he has no objection to an enhancement of the quantum of the bank guarantee. The order of the High Court is modified by directing that the quantum of the bank guarantee shall stand enhanced to ₹ 15 crores. The other conditions which have been imposed by the High Court shall continue to govern - SLP disposed off.
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2020 (10) TMI 236
Smuggling - charas - attempt to export illicit substance - whether the provisions of Section 42 of the NDPS Act have been violated? - HELD THAT:- Undisputedly, the provisions of Section 42 of the NDPS Act are mandatory. It is also not disputed that none of the Customs Officers had recorded any reasons for believing that an offence punishable under Chapter IV of the NDPS Act has been committed or that a search warrant or authorization cannot be obtained without affording an opportunity for concealment of the evidence or facility for the escape of an offender. It is also relevant to note that the complaint filed by the respondent also expressly indicates that proceedings were undertaken under Section 42 of the NDPS Act. It is also mentioned in the panchnama (Ex.PW4/E) that the substance was recovered and seized under Section 42 of the NDPS Act - Indisputably, if the provisions of Section 42 of the NDPS Act are applicable then it is apparent that the same have not been complied with. As stated above, the provisions of Section 42 of the NDPS Act are mandatory and therefore, non-compliance of the same would vitiate the proceedings. However, the key question to be addressed is whether the provisions of Section 42 are applicable in the given facts. Notwithstanding the averment made in the complaint that the recovery and seizure was done under Section 42 of the NDPS Act, the same is clearly not applicable since the recovery and seizure was done in a public place. The contention that the provisions of Section 42 of the NDPS Act was not complied with, is irrelevant. Testing conducted on the spot and drawing of samples from the charas allegedly recovered from the appellant s trunk - whether the samples drawn were representative of the substance recovered from the appellant s baggage? - HELD THAT:- Although the panchnama refers to a Customs Officer, it is obvious that the Customs Officer in question is Pawan Kumar (PW-4). The print out of the test result would indicate the number of tests conducted. If the contents of each of the packet was tested separately, there would be four such print-outs or one print-out recording the result of four such tests. However, the print out in question has not been brought in evidence, even though it is stated that it was in the possession of PW-4. It is also material to note that it is not the prosecution s case that any heroin was recovered from the appellant. The CRCL test result also does not disclose any presence of heroin in the sample sent for analysis. But the alleged test had also returned a positive result for heroin - this Court is unable to accept that the prosecution has established that the contents of each of the four packets that were allegedly recovered, were tested and found to be charas prior to the contents of the said packets being placed together. This Court is unable to accept that the prosecution was not required to lead any evidence to establish that the substance recovered from the appellant was charas - Since the prosecution has failed to establish that the sample drawn by PW-4, which was sent for chemical examination, is a true representative of the entire substance recovered, it has failed to establish that the substance allegedly recovered was charas. The appellant is, therefore, liable to be acquitted for the offence for which he was charged and convicted by the Trial Court. Whether the prosecution has failed to establish that the sample sent to CRCL and/or the remnant substance recovered from the appellant s trunk, was not tampered with? - HELD THAT:- Whether the prosecution has failed to establish that the sample sent to CRCL and/or the remnant substance recovered from the appellant s trunk, was not tampered with - it is the prosecution s case in the complaint that he had withdrawn the same by acknowledging its receipt on the detention receipt bearing No. 66564. However, the detention receipt bearing that number (that is, 66564) which has been exhibited as Ex.PW4/C does not mention any such acknowledgment. There is yet another copy of the said receipt, which records the noting that AI sample was received from SDO(A) and handed over to Sh. Prabodh Kumar, Inspector Customs however, that document has not been exhibited. Further, there is no explanation as to how two detention receipts bearing the same number have been placed on record. It is material to note that since the receipt bearing the said acknowledgement has not been exhibited, it is not in evidence - the prosecution has failed to establish the chain of custody of the samples in question. The fact that the polythene bag containing the substance was not packed in a Delhi Duty Free polythene when the pullanda was opened raises considerable doubt whether the substance had been tampered with. Mr. Aggarwala sought to explain this by stating that the case property had been opened while examining PW-2 and the testimony of PW-2 also indicates that a Delhi Duty Free bag was found in the trunk. He submitted that, therefore, it is possible that the Delhi Duty Free bag could have been taken out at that stage. This contention is unpersuasive - Since the seal as well as the recovered contraband continued to be in possession with the Custom Officers, the possibility of the same being opened and re-sealed cannot be ruled out. It is also apparent that the record maintained regarding the movement of case property is not accurate. In this case PW-4 seems to have access to the articles kept in safe custody and could remove them without making any entry in the SDO(A) Register. This is clearly evident as there was no entry made in the Register for removal of the sample A-1. Thus, the contention that there are doubts that the substance recovered could have been tampered, is merited. There are minor inconsistencies in the testimonies of the witnesses including the colour of the substance recovered; however, the same are not material. The appellant is acquitted of the offences punishable under Sections 20(b)(ii)(C) and 23(c) of the NDPS Act. The appellant has been in custody for over eight years and six months. He shall be released immediately if not wanted any other case - Appeal allowed.
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2020 (10) TMI 235
Search and seizure proceedings - Extension of seizure period - validity of the retention of the goods for carrying out the confiscation proceedings - HELD THAT:- As per the pre-amended provision the mandate was that there should be sufficient cause shown in the order of extension, in which circumstance there was a requirement to apprise the person from whom such seizure was effected as to the cause pleaded by the Investigating Officer to extend the time for issuing a notice under sub-section (1) and under clause (a) of Section 124 within the six month period with respect to goods seized under sub-section (1). The amended provision has done away with the words 'sufficient cause shown' and as of now for extension, what is required is only that reasons be recorded in writing - It is also pertinent that the Central Government had come out with the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, which provided by Chapter V that the time limits under certain Indirect Tax Laws, including the Customs Act, which falls during the period from 20.03.2020 to 29.06.2020 or any date after 29.06.2020 shall stand extended to 30.06.2020 or such date afterwards as the Central Government may specify. Hence, the proceedings in the present case, which would have normally expired on 15.04.2020, stood automatically extended to 30.06.2020, which may not be very relevant for our purposes since already there was an extension granted on 11.03.2020. Further in this case, the Investigating Officer had considered a representation made by the appellants, though not statutorily provided for, as per the directions issued by this Court in Ext. P17 judgment. The representation as is revealed from Exhibits P17 and P18, urge that they were in possession of the goods validly and in compliance of statutory formalities. There was no contention as could be urged under Section 110 (1A); which were the aspects; then absent in the statute as highlighted by the Constitution Bench in I.J.Rao to find the requirement of hearing under the un-amended Proviso to Section 110(2). Admittedly the seizure was conducted on 16.10.2019 and the six months period provided under Section 110(2) expired on 15.04.2020. On 11.03.2020, Annexure R1(a) was passed by the Commissioner invoking the power under the Proviso to Section 110(2). However, we notice with some distress that Annexure R1(a) order was never communicated to the appellants. The communication issued to the appellants was by Exhibit P19, which is of the Investigating Officer merely informing the extension, again without the reasons being explicitly stated therein - Since the period stands extended to 14.10.2020, even now there could be a service effected, which would satisfy the mandate under the proviso to Section 110(2). There is however, no warrant to issue a direction to effect such service, since there is a deemed service and information conveyed as to the reasons for extension. The refusal of the learned Single Judge to interfere with the impugned order to be perfectly justified - Appeal dismissed - decided against appellant.
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2020 (10) TMI 234
Direction to the Respondent to allow re-export of the goods - Clove - violation of FSSAI Act - HELD THAT:- The order passed by the Commissioner is not what the High Court had intended when it had passed the order dated 03.07.2020. Such disposal of representation is no disposal. This Court had directed the Commissioner to take a decision one way or the other on the representation of the Petitioner to grant permission for re-export of the goods in question in accordance with law. Instead of taking the necessary decision, Commissioner has deferred taking such decision for an indefinite period. The Commissioner is directed to pass a fresh or consequential order in terms of our earlier order dated 03.07.2020 on the prayer of the Petitioner for re-export of the goods in question by taking necessary decision in accordance with law keeping in mind the observations made above. This shall be done within a period of two weeks from today. This order shall be communicated by Mr. Jetly to the Commissioner. Order passed shall be placed before the Court on the next date - Stand over to 06.10.2020.
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2020 (10) TMI 233
Release of imported watch of petitioner - Direction to the respondents to give effect to the order-in-appeal dated 29.11.2019 and to allow clearance of the imported watch covered by bill of entry No.9494939 dated 02.01.2019 on payment of duty on the declared value - whether respondent No.3 is justified in not releasing the imported watch of the petitioner in terms of the order-in-appeal dated 29.11.2019 and insisting on provisional release of the same subject to the conditions mentioned in the letter dated 04.02.2020? HELD THAT:- On going through the order-in-appeal we do not find presence of any departmental representative in the appeal hearing though appellants i.e., the petitioners were duly represented by learned counsel who had also filed written submission. It does not appear that any objection or written submission were filed on behalf of the respondents before the appellate authority. From the affidavit of the respondents it is seen that the order-in-appeal dated 29.11.2019 was received by the respondents on 18.12.2019. Committee of Commissioners took the decision on 05.03.2020 that the Customs Department should file appeal against the order-in-appeal before CESTAT whereafter the appeal alongwith stay application were filed on 09.06.2020 before CESTAT, Mumbai Bench. Be that as it may, since the Customs Department has preferred appeal before the CESTAT, we would refrain from expressing any opinion on merit. That leaves us with the question which we have formulated on the basis of objections raised by the respondents. The period of limitation of three months commences from the date on which the order sought to be appealed against is communicated and not from the date of decision of the Committee of Commissioners. Reverting back to the facts of the present case, according to the respondents themselves the order-in-appeal dated 29.11.2019 was received by the respondents on 18.12.2019. The limitation period of three months therefore commences from this date - The word month is not defined in the Customs Act. We therefore take recourse to the definition of the said word as provided in the General Clauses Act, 1897. Section 3 of the said act provides for various definitions and says that after commencement of the General Clauses Act, 1897, the meaning given to the expressions contained in various sub-sections of section 3 would be applicable to all central acts and regulations unless there is anything repugnant in the subject or context. As per sub-section (35) of section 3, the word month has been defined to mean a month reckoned according to the British calendar. In the present case the limitation period of three months which commenced on 18.12.2019 had expired on 18.03.2020. When the order-in-assessment has been set aside by the appellate authority, the original order no longer survives until and unless the order-in-appeal is either stayed or in the ultimate analysis itself is set aside. Therefore, basing upon the order-in-assessment which no longer survives, it is not open to the departmental authorities to grant provisional release of the good in question that too subject to fulfillment of certain conditions which are clearly beyond the order-in-appeal. When the petitioners themselves sought for provisional release of the imported watch and the same having been granted by the respondents subject to fulfillment of the conditions mentioned in the letter dated 04.02.2020, whether it is open to the petitioners to seek the relief as is being sought in the present proceeding? - HELD THAT:- The only provision in the Customs Act which deals with provisional release of goods etc. is section 110-A. This provision says that any goods, documents or things seized under section 110 may pending the order of the adjudicating authority be released to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require. From the above, it is seen that section 110-A will come into play only if two pre-conditions are fulfilled, namely, there must be seizure under section 110 and the goods, documents or things so seized may be subject to proceeding before the adjudicating authority. Seizure is dealt with in section 110. Sub-section (1) makes it very clear that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. In the instant case, admittedly there was no seizure and secondly, assessment of the good in question was not pending consideration. Assessment was already made by way of the order-in-assessment dated 25.03.2019. It is another matter that even that order-in-assessment has been set aside by the order-in-appeal. Since there is neither any seizure nor pendency of proceeding before the adjudicating authority, question of application of section 110-A does not arise. The objections raised by the respondents are legally and factually unsustainable and thus are hereby rejected - respondent Nos.2 and 3 to release the imported watch of the petitioners forthwith in terms of the order-in-appeal dated 29.11.2019 - Petition allowed.
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2020 (10) TMI 232
Classification of goods imported - whether the goods imported are calcareous stone other than marble which could be allowed to be imported only against SIL during the relevant period or the goods are marble as claimed by the appellants? - Confiscation - Redemption Fine - Penalty - HELD THAT:- In the de novo adjudication, learned Commissioner after considering the report of GSI and evidence of cross-examination of one of the Officer of GSI, held that the imported goods are not marble but other calcareous stone . In arriving at the conclusion, the learned Commissioner heavily relied upon the judgment of the Hon'ble Supreme Court in the case of AKBAR BADRUDDIN JIWANI VERSUS COLLECTOR OF CUSTOMS [ 1990 (2) TMI 50 - SUPREME COURT] - there are merit in the observation of the Ld. Commissioner. No plausible argument was advanced on behalf of the appellants in support of their claim that the judgement of Hon ble Supreme Court in the above case is distinguishable and not applicable to the case. Also, as observed by the ld. Commissioner and submitted by the Ld. AR for the Revenue that even though the appellants have raised an alternative argument that in the common parlance the goods imported by them is known as marble, but they failed to produce any evidence to substantiate the said claim. Thus, in absence of sufficient proof the said alternate plea also cannot be acceptable. Therefore, the goods imported by the appellants are not marble but calcareous stone other than marble which requires specific import licence at the relevant time. Whether there is violation of the relevant provisions of law on import goods? - contention of the appellant is that all these goods imported into India after 8.5.1999, hence insisting specific import licence only for the reason that the shipment were done prior to the said cut off date i.e. 8.5.1999 is not tenable in law - HELD THAT:- There are no merit in the said contention of the appellants in as much as the issue is settled in a series of cases including in the cases by the Hon ble Madras High Court in M/S. ROYAL IMPEX VERSUS THE COMMISSIONER OF CUSTOMS, THE ASSISTANT/DEPUTY COMMISSIONER OF CUSTOMS, GROUP -1 [ 2019 (3) TMI 312 - MADRAS HIGH COURT] , M/S. AGRO 1 STOP REP BY ITS PROPRIETOR VERSUS THE COMMISSIONER OF CUSTOMS, THE ASSISTANT/DEPUTY COMMISSIONER OF CUSTOMS [ 2019 (3) TMI 1343 - MADRAS HIGH COURT] and Bombay High Court in SIDDHI VINAYAK, VERSUS THE UNION OF INDIA THROUGH THE SECRETARY, MINISTRY OF COMMERCE, DEPARTMENT OF COMMERCE, THE DIRECTOR GENERAL OF FOREIGN TRADE, THE COMMISSIONER OF CUSTOMS (IMPORT) , THE DEPUTY COMMISSIONER OF CUSTOMS, (IMPORT) , [ 2019 (4) TMI 344 - BOMBAY HIGH COURT] , whereunder it is held that the date of shipment is relevant for compliance and not the date of import. Confiscation - HELD THAT:- The Ld. Commissioner has held that the imported goods have been declared as marble but on examination found to be not of marble and is liable for confiscation under section 111(m); also since at the time of its shipment the appellant did not have specific import license, the goods are liable for confiscation under section 111(d) of Customs Act, 1962 - This Tribunal considered similar issue in case of M/S JUST MARBLE, M/S VAISHNO MARBLES VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI [ 2016 (12) TMI 823 - CESTAT MUMBAI] and CLASSIC MARBLE VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI-I [ 2010 (11) TMI 920 - CESTAT MUMBAI] and JAI BHAGWATI IMPEX PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE, GOA [ 2017 (3) TMI 490 - CESTAT MUMBAI] , held that in absence of SIL on import of the calcareous stone, the same are liable for confiscation and attracts penalty - there are no reason to interfere with the said finding of Ld. Commissioner Redemption fine - Penalty - HELD THAT:- This Tribunal in similar circumstances, in the case of GURU KRIPA MARBLES VERSUS COMMISSIONER OF CUSTOMS, NHAVA SHEVA [ 2006 (5) TMI 237 - CESTAT, MUMBAI] following the judgement of Hon ble Bombay High Court in COMMISSIONER OF CUSTOMS, NHAVA SHEVA VERSUS MARMO CLASSIC [ 2003 (7) TMI 75 - HIGH COURT OF JUDICATURE AT BOMBAY] , later approved by the Hon'ble Supreme Court reported as COMMISSIONER OF CUSTOMS (IMPORT) VERSUS STONEMAN MARBLE INDUSTRIES ORS. [ 2011 (1) TMI 15 - SUPREME COURT] held that the redemption fine be restricted to 20% of CIF value and penalty to 5% of the said value. In the facts and circumstances of the case, ends of justice would meet if the fine and penalty is reduced to 20% and 5% respectively. The impugned orders are modified to the extent of reduction of fine and penalty to 20% and 5% respectively, and all the appeals are remanded to the adjudicating authority to calculate the redemption fine and penalty accordingly - Appeal allowed by way of remand.
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Corporate Laws
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2020 (10) TMI 231
Principles of Natural Justice - short grievance of the Petitioner, who is an allotee of a flat in the project of Respondent No. 1, is that his application, under rule 11 of the NCLAT Rules, has not been taken up by the NCLAT, and his claims have not been considered by the IRP - HELD THAT:- Irrespective of whether the Petitioner is an allottee or not, and whether the IRP issued notice to them or not, there can be no doubt that the Petitioner being an allottee would have to be heard by the NCLAT, before the settlement is finalised. For the said purpose, the Petitioner s application, that has been filed before the NCLAT, ought to be heard at an early date, in order to ensure that before finalizing the terms of settlement and resolution plan, all allottees are heard and their grievances are properly addressed. Accordingly, in terms of the order dated 13th March, 2020, the IRP shall file the terms of settlement before the NCLAT. The NCLAT shall hear the Petitioner and any other financial creditors and allottees, who may wish to make submissions in respect of the future course of action to be adopted - Upon hearing all the interested parties and addressing the grievances in accordance with law, NCLAT shall pass orders in respect of the settlement, which may be placed before it by the IRP. Until then, the terms of settlement and the further course of action, shall not be implemented by the company or by the IRP. In view of the fact that there is urgency in this matter, it is directed that the applications filed by the Petitioner, and any other allottees or financial creditors, shall be listed before NCLAT, for hearing, on 12th October, 2020 - Petition disposed off.
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2020 (10) TMI 230
Oppression and mismanagement - approval of sale of shares - Sections 241 and 242 of the Companies Act, 2013 - HELD THAT:- The Resolution of the IL FS and its group companies was ordered by the Hon ble NCLAT and a Resolution framework has been approved. Though the Resolution of the Company and its group entities is not strictly under the Insolvency and Bankruptcy Code, 2016 (the Code) the principle underlying the Code for Corporate Resolution of a Company is required to be kept in mind while going about the Resolution of the IL FS and its group entities. The purpose of Resolution is to see that the Company and its assets are not wasted under an inefficient management. The Resolution aims at putting the Company and its group entities in better hands - True it is that the provisions of the Code would not be strictly applicable in the instant case, but the underlying object and principle thereof, in resolving a debt-ridden Corporate Debtor, cannot be lost sight of. The adherence to specific timeline for resolution is the essence, which in effect would bring about successful resolution of a beleaguered Company, like CPG or for that matter other entities in the IL FS conglomerate. The UoI represented by the Regional Director, MCA (WR), Mumbai has no objection to the divestment of IL FS shares in CPG, as the same has been done in accordance with the approved Resolution Framework. On hearing the counsel for the Applicant in CA No. 1011 of 2020 as well as the Regional Director and having perused the pleadings and the documents attached thereto, we are satisfied and of the considered view that the sale of stake of IL FS (59.18%) in CPG has been done within the Resolution Framework and the same needs to be approved and recorded. Application disposed off.
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2020 (10) TMI 229
Sanction of Scheme of Amalgamation - Section 230-232 of Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Directions are issued with respect to calling, convening and holding of the meetings of the shareholders, secured and unsecured creditors or dispensing with the same as well as issue of notices including by way of paper publications - application allowed.
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2020 (10) TMI 228
Sanction of Scheme of Arrangement and Demerger - Sections 230 to 232 read with Section 66 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Notices for various meetings to be served - The authorities, who desire to make any representation under sub-section (5) of Section 230 shall send the same to this Tribunal with a copy of the same to be supplied to the Applicant Companies within a period of 30 (Thirty) days from the date of such service. Application disposed off.
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2020 (10) TMI 227
Restoration of name of the Company in the Register of Companies, maintained by the Registrar of Companies - Section 252 (3) of the Companies Act, 2013 - HELD THAT:- The Registrar of Companies, Kerala, who is respondent herein has filed a Report stating that Chapter XVIII of the Companies Act, 2013 containing Section 248-252 which deals with removal of names of companies from the Register of Companies had been brought into force by the Central Government vide notification No. S.O.4167(E) on 26.12.2016. In exercise of powers conferred by Sub Sections (1), (2) (4) of Section 248 read with Section 469 of the Companies Act, 2013 Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 have also been brought into force by Central Government vide Notification No. GSR 1174E on 26.12.2016 - Ministry of Corporate Affairs vide communication dated 17.02.2017 had instructed all Regional Directors and Registrars of Companies to take strike off action against companies which have failed to file Financial Statements or Annual Returns for immediately two preceding Financial years and have also not filed application under Section 455 (1) of the Companies Act, 2013 for making them as Dormant . It would be just and proper to order restoration of the name of the Company in the Register of Companies - The Company is directed to file all the statutory document(s) along with prescribed fees/additional fee/fine as decided by Registrar of Companies within 30 days from the date on which its name is restored on the Register of Companies by the Registrar of Companies. The appellant is directed to submit a declaration from the Directors regarding the deposit during the demonetization period with the Registrar of Companies - Dated the 31st day of January, 2020.
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2020 (10) TMI 226
Restoration of name of the Company in the Register of Companies, maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- On 17-09-2019, this Bench directed to obtain the NOC from the Income Tax Department and notice was issued to the Tax Recovery Officer (Central), Income Tax Department, Ernakulam. Sufficient time was given to the appellant to obtain the same vide Orders dated 11.11.2019, 28.11.2019 and 30.12.2019 and on 16-01-2020, this Bench directed the appellant to file an affidavit to show that they will file all the pending Income Tax arrears due for the Assessment Years 2002-03 to 2008-09, once it is restored. On 17-01-2020, the appellant had filed an affidavit and stated that immediately upon restoration of the appellant Company, they shall file the Income Tax Returns with the Income Tax authorities and to make such filings up to date. This 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 disposed off. Dated the 17th day of January, 2020.
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Insolvency & Bankruptcy
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2020 (10) TMI 225
Increase in the number of settlement claim - Revision of Resolution Plan - revision and improvements in the settlement of claim amount to be offered to the Applicant and the 2nd charge holders as the offer of 0.5% on principal outstanding envisaged under the proposed Resolution Plan is very low - HELD THAT:- Admittedly the liquidation value payable to the Applicant is NIL . However, in the distribution mechanism as provided in the Resolution Plan, the Applicant is getting a sum of ₹ 1,81,676/- - Even though the Resolution Applicants have agreed to consider the improvement of payment for the second charge holders, the Resolution Applicants after consideration informed the CoC that any improvement has to be made by CoC only and they are not in a position to improve offer of payment to creditors of ₹ 11,03,24,869/-. So, the request of the second charge holders was not considered by the Resolution Applicants as well as the CoC while deciding the distribution pattern. The decision of the CoC in allocating 0.5% of the debt due to the second charge holders cannot be questioned and the same is not justiciable - application dismissed.
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2020 (10) TMI 224
Liquidation of Corporate Debtor - Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Without going into the fact that whether the CoC passed the resolution with requisite percentage of voting or not, based on the mandate of Section 33(1)(a), since no Resolution Plan was received within CIRP period and also considering the fact that 270 days of CIRP period are over, this Bench hereby orders the liquidation of the Corporate Debtor. Corporate Debtor is allowed to be liquidated - application allowed.
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2020 (10) TMI 223
Maintainability of claim of applicant filed against Corporate Debtor -enlisting the Applicant in the list of Operational Creditor or Corporate Debtor - claim was made after CIRP period of 270 days got over - HELD THAT:- We are unable to accept the contentions of the Counsel for the Applicant that Resolution Professional is bound to send notice to the Creditors requiring them to file their claim. In fact, it is the responsibility of the creditor concerned to file claim within the time after the issue of public notice inviting claims by the Resolution Professional. In this regard, Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Regulation Process for Corporate Person) Regulation, 2016 provides that the Insolvency Professional shall make public announcement in Form-A within 3 days from date of his appointment as IRP, inviting claims from the public and the claimant should file claim within the stipulated time. Admittedly, in this case the Applicant has filed claim after the completion of CIRP period of 270 days and also the after the approval of the Resolution Plan by this Tribunal. The Counsel for the RP submits that the Applicant has filed the claim after a long delay that too after the approval of the Resolution Plan and in these circumstances the Application cannot be entertained by this Tribunal. Application not maintainable and is dismissed.
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2020 (10) TMI 222
Rejection of part of the claim submitted by the Appellant against M/s. East Coast Energy Pvt. Ltd., (the Corporate Debtor herein) towards idle charges as a part of termination payment due under the contract between the parties - HELD THAT:- The claim of the applicant has arisen out of the contract and amended contract entered into between the applicant and the Corporate Debtor on 30.01.2010 and 4.10.2013 respectively. It is also a fact on record that the amount claimed relates to the period between 01.06.2015 and 30.11.2015 covered under Progressive Payment Certificates (PPCs) 46 to 51. It is also not in dispute that the applicant herein has written several letters dated 13.8.2015, 18.9.2015, 12.12.2015 and 25.01.2016 and reminder emails dated 19.8.2015, 15.10.2015 and 23.01.2016 to the Corporate Debtor calling for payment of outstanding amounts as per the contract - between them. Thereafter, since no reply was received to any of the letters or reminder emails, it appears that the Applicant herein issued termination notices dated 26.01.2016 and 27.02.2016 intending to terminate the contract that existed between the applicant and the Corporate Debtor - However, it was only on 06.04.2016, the Corporate Debtor had responded to the Applicant herein with regard to the payment of outstanding amounts. But even thereafter since nothing concrete materialized, the contract between the applicant and the corporate debtor came to be terminated on 04.06.2016 as per Article 15.2 of the Contract dealing with termination due to non payment of dues by the owner, i.e., the Corporate Debtor herein. It is a matter of record that the order of admission of the Corporate Debtor for CIRP was passed on 03.04.2018 and, subsequently, order of Liquidation was passed vide order dated 22.04.2019. However, in between the last PPC raised and the date of admission of CIRP (i.e. December, 2015 to March, 2018) the corporate debtor has neither disputed nor whispered anything contrary to the demand raised by the Applicant herein including the claim of 'idle charges'. From the records, it is also observed that the Corporate Debtor had not, at any point of time during the period December, 2015 to March, 2018, objected to the termination of Contract on 04.06.2016 by the applicant herein or raised any objection that such termination was not proper or was not as per the terms of the Contract. In the absence of any material to show that the Corporate Debtor during the period between the date on which the last PPC was raised and the date of admission of CIRP, had either disputed or objected to the amounts claimed including the idle charges as part of termination payments under Article 15.7 or opted for any other legal recourse available against such claim, the Liquidator ought not to have rejected the claim under the caption 'idle; charges' on the basis of his own interpretation of the such claim to be of nature of 'consequential damages'. Application allowed.
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2020 (10) TMI 221
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 manifests that the corporate debtor has tried to create and establish a preexisting dispute by asserting the substandard quality of goods. However, no documentary evidence or correspondence is placed on record by the corporate debtor to support the contentions, that there is a pre-existing dispute but the said dispute was raised for the first time only after notice under Section 8 of IBC was issued. In reply only statements are made by Corporate Debtor which has not been substantiated with any proof. The corporate debtor has not placed on record any document which exhibits the plausible dispute between the parties. There is no merit in the so-called dispute raised by the corporate debtor as mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature. On the contrary the issuance of various cheques by the corporate debtor belies its story of dispute and confirms the admission of liability. This leaves no doubt that the default has occurred for the payment of the operational debt for which the invoices were raised by the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute - thus, it can be concluded that the dispute raised by the corporate debtor, is spurious, plainly frivolous and unable to categorize as genuine dispute as reproduced above. Hence, contention of the corporate debtor, of a pre existing dispute without any evidence and merit is a clear after thought to defeat the claim of the applicant. Time Limitation - HELD THAT:- The date of default is 25.01.2018 and the present application is filed on 29.01.2019. Hence the application is not time barred and filed within the period of limitation. Application admitted - moratorium declared.
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2020 (10) TMI 220
Implementation of award passed by Sole Arbitrator - HELD THAT:- This Adjudicating Authority observes that the R1 itself undertook not to implement the Award passed by the Sole Arbitrator till the end of moratorium as imposed under section 14 of the IB Code, 2016 by admission order dated 25.02.2019 issued by this Adjudicating Authority. The undertaking given by way of an affidavit dated 22.11.2019 is taken on record. Since R1 itself has undertaken not to implement the Award as aforesaid, the prayers made in the instant Application have become infructuous. Application dismissed.
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2020 (10) TMI 219
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt- Operational debt or not - existence of debt and dispute or not - HELD THAT:- On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no denial of the operational debt and/or any preexisting dispute regarding the operational debt from the corporate debtor - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt to the Applicant. On perusal of the records it is also found that the corporate debtor has never raised any dispute on issuance of notice u/s 8 of the I B Code nor have ever raised any dispute prior to the issuance of notice - the respondent has defaulted the debt and has admitted the operational debt. On the basis of material available on record it is evident that the corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - application admitted - moratorium declared.
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2020 (10) TMI 218
Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - appointment of Liquidator - HELD THAT:- The Resolution was passed with 100% in terms of voting power of CoC. The same is recorded in the Minutes of the 7th Meeting of COC, which are placed on record - Ld. RP, Sh. Arun Chadha has given his written consent to act as a Liquidator of the Corporate Debtor which forms part of the Application. Thus, there being no other alternative, the Ld. RP vide his application has prayed for allowing liquidation of the Corporate Debtor under Section 33 of the Code - Liquidation of the Corporate Debtor namely, M/s. Pawan Buildwell Private Limited is ordered in the manner as laid down in Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 - application allowed.
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2020 (10) TMI 217
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 has complied with the provision of Section 10 of the Code, there is a debt and default has occurred, the application is complete, and the Corporate Applicant is not ineligible under Section 11. Petition admitted - Moratorium declared.
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2020 (10) TMI 216
Liquidation of Corporate Debtor - contention of the Liquidator that the claim filed by the applicant was beyond the period prescribed in the announcement and as such it cannot be admitted - HELD THAT:- Admittedly, the applicant had not submitted the claim on merits. We are aware, it is for the Liquidator to decide on merits whether the claim of the applicant to be admitted or rejected. We only direct the Liquidator to examine the claim of the applicant on its merits and could decide whether to admit or reject. We cannot direct the. Liquidator to admit the claim. It is for the Liquidator to decide the claim on its merits. We can only condone the delay in filing the claim before the Liquidator. The applicant will be put to inconvenience if the same is not entertained at the threshold. We are convinced that the delay in filing a claim before the Liquidator can be condoned. In order to meet the ends of justice, we can condone the delay which will not in any way affect the liquidation process already started. Therefore, there are grounds to allow the application. Application allowed.
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PMLA
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2020 (10) TMI 207
Validity of provisional order of attachment - statutory appeal before the first respondent, along with the petition for condonation of delay - HELD THAT:- This Court directs the appellate Tribunal/Prevention of Money Laundering, New Delhi, to accord priority and give disposal to petition and the connected petitions, in accordance with law, as expeditiously as possible and not later than three months from the date of receipt of a copy of this order. Petition disposed off.
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2020 (10) TMI 200
Money Laundering- proceeds of crime - It has been alleged that Sri Manoj Singh had acquired proceeds of crime and placed the said proceeds of crime in the form of fixed deposit and other deposits - HELD THAT:- In course of investigation by the Vigilance Bureau, it was detected that so far as the valuation of gold and diamonds are concerned, the jewellery was not physically taken to the Valuer, but instead the Valuer had given a back dated valuation report and in lieu thereof, he was given an amount of ₹ 1,26,042/-. Sri Ramesh Kumar Soni, the Valuer in his statement under Section 15 of the Prevention of Money Laundering Act has specifically stated about the valuation being made after the gold and diamonds were brought before him by the accused which is contrary to what has been stated by him before the Vigilance Bureau. In course of investigation, it has also come that the petitioner Manoj Kumar had submitted some invoices in support of his claim regarding sale of diamonds worth ₹ 8,17,21,664/- to one M/s. Star Traders, Mumbai/Surat which was a proprietorship firm of Raj Kumar Patodia. However, the income tax return does not indicate regarding the claim of Sri Manoj Kumar about the sale of diamonds as stated above. It has also come during course of investigation that the address of M/s. Star Traders has been given in the invoices submitted by Sri Manoj Kumar which is apparently false as there is no firm in existence in the name of M/s. Star Traders at Surat. In fact the son of Raj Kumar Patodia had denied being aware of any purchase of diamond or of the residential address of his father which had been provided by the petitioner Manoj Kumar. In fact, with respect to the agricultural income for which reliance has been placed on various documents by the learned counsel for the petitioner, but in course of investigation, the statements of several persons who were said to have purchased the agricultural produce have stated otherwise which also contradicts the claim of the petitioner Manoj Kumar Singh regarding his explanation with respect to the income from agricultural produce. An economic offence is a grave offence and considering the role played by the petitioner in which he had misused his position of being the Private Secretary of the then Speaker as well as the then Minister while amassing a huge wealth which is disproportionate to his known source of income and having miserably failed to submit any appropriate explanation for such income from the proceeds of crime, bail cannot be granted - The prayer for bail of the petitioner is hereby rejected - the petitioners in B. A. No. 2806 of 2020 above named are directed to be released on bail on furnishing bail bond of ₹ 10,000/- with two sureties of the like amount each. Petition allowed in part.
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Service Tax
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2020 (10) TMI 201
Classification of services - port services or not - stevedoring services - contention of the petitioner's counsel is that they had not been authorised by the port - HELD THAT:- Whether the petitioner was authorised by the port or not is a pure question of fact. He highlighted the fact that the petitioner did not even reply to the show cause notice issued by the first respondent. Of course they took part in the personal hearing. In the personal hearing also, the petitioner did not take the stand that they were not authorised by the port to render the stevedoring service. Penalty - HELD THAT:- Since a question of law has been raised and the same is still pending consideration before the Principal Seat, it may not be fair to impose penalty on the petitioner - Penalty imposed on the petitioner is set aside. In all other respects, the order impugned is sustained. Petition allowed in part.
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2020 (10) TMI 199
Delayed payment of service tax - case of Revenue is that the Appellant herein was debiting its Books of Account every six months, the Appellant had deliberately delayed the payment of service tax and therefore, was liable to pay interest on such delayed payment under Section 75 of the Finance Act, 1994 - HELD THAT:- The Appellant discharges its service tax liability by debiting its Cenvat credit account. The Appellant debits its Cenvat register every month, however, in its Books of Accounts, the Appellant passes the relevant journal entry only every six months. Further, I find that the Appellant maintained sufficient credit balance in their Cenvat credit account at all times. Therefore, the Appellant had no intention to evade the payment of service tax. Since, the Appellant duly debited its Cenvat register as per Rule 6 of the Service Tax Rules, 1994, the corresponding entry being made by the Appellant in its Books of Accounts cumulatively for six months, can at best qualify as a procedural irregularity and can in no way constitute a statutory violation, as alleged by the Department - the Appellant had filed the statutory returns within the stipulated time period and the monthly liability had been properly disclosed in such returns. The manner in which the Appellant was recording the journal entry in its Books of Accounts alone, in the absence of any statutory violation, is not sufficient to conclude that there was a delay in payment of Service Tax on the part of the Appellant - Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 198
CENVAT Credit - exempt services or not - Storage and Warehousing Service, Cargo Handling Service and Business Auxiliary Service in respect of agricultural produces - common input services used in taxable as well as exempt goods - HELD THAT:- It is a matter of record that the appellant have been providing both taxable and exempted output services in respect of which they have been availing credit of common input services. It is also a matter of record that the appellant have fulfilled the requirement of Rule 6 (3) (ii) of the Cenvat Credit Rules, 2004 readwith Rule 6 (3A) and have been reversing the amount of common Cenvat credits, proportionate to value of exempted output services. In this regard we take note of the fact that appellant have furnished Cenvat credit register for the period April 2009 to June 2012 which indicate that they have regularly been reversing the proportionate amount of the Cenvat credit taken on the common inputs which have gone into exempted output services. Once the appropriate reversal have been made under Rule 6 (3A) of the Cenvat Credit Rules any procedural violations of minor nature would be of in-consequential nature and will not dis-entitle the assessee from availing the Cenvat credit of the common inputs for which they have already been making a regular reversal of proportionate credits - the Department has nowhere mentioned in entire proceedings that the amount of Cenvat credit reversed is not proportionate to the value of exempted services or not proper otherwise. The only ground that the appellant have not followed the laid down procedure of availing the option of Rule 6 (3A) like not declaring value of turnover of exempted services in their periodic service tax return etc. can be minor procedural lapses, but same cannot become ground for denying a substantial benefit to the appellant. Once the proportionate reversal of the Cenvat credit has taken place, that tantamount to not availing of the input services credit of the common inputs which are going into the exempted services - Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (10) TMI 214
Recovery of erroneous refund - Refund of the education cess secondary and higher education cess - HELD THAT:- The education cess secondary and higher education cess were required to have been calculated on the basis of the excise duty payable. In the circumstance, a question had arisen as to whether in view of the exemption granted to the excise duty the petitioner would also be entitled to an exemption to the payment of education cess secondary and higher education cess. The said question was decided by the Supreme Court in its pronouncement in SRD Nutrients Pvt. Ltd. Vs. Commissioner of Central Excise, Guwahati [ 2017 (11) TMI 655 - SUPREME COURT ] wherein in paragraph 27 of the said judgment it was held that the appellants therein were entitled to refund of education cess and higher education cess which was paid along with the excise duty once the excise duty itself was exempted from levy. The demand cum show-cause notice dated 06.08.2020 is assailed in this writ petition on the ground that the condition precedent to invoke the power under section 11(A-1) is that the refund made must be erroneous - the condition precedent of section 11(A-1) of the Excise Central Act, 1944 is not satisfied. - Operation of SCN stayed
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2020 (10) TMI 213
Rejection of SVLDRS-1 Form submitted by the petitioner on 29.12.2019 by making a Remark of rejection thereon - HELD THAT:- This writ petition stands disposed of by requiring the petitioner to submit an application before the respondent authorities for the correction to be made in the information provided in the Form SVLDRS-1 as regards the disclosure of the dues from them and upon such application being made, the respondent authorities would pass a reasoned speaking order thereon. The requirement of submitting application be made within a period of 15 days from obtaining the certified copy of the order and upon receipt of the application, the respondent authorities shall pass an order on the same within a period of 2 (two) months from the date of receipt of the application. The order dated 29.12.2019 passed by Designated Committee (Respondent No.3) is set aside and the respondents are directed to pass the required orders afresh on the declaration/application form that may be submitted by the writ petitioner - Petition disposed off.
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2020 (10) TMI 211
Dismissal of the appeal by the Revenue - Doctrine of Merger - Exemption from Customs Duty - benefit of N/N. 125/84-C.E. - exemption from payment of duty against the sales effected by them against the Domestic Tariff Area (DTA) against foreign exchange - HELD THAT:- The writ petitions are on a very narrow campus as to the effect of the dismissal of the appeal by the Revenue. The Tribunal, in the petitioner s case reported in JUMBO BAG LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [ 2005 (3) TMI 188 - CESTAT, CHENNAI] , had held that the supplies made are not covered by Notification No.2/95 at all and the Commissioner was in error in invoking Notification No.2/95, for the purpose of demanding excise duty. The Revenue s appeal before the Hon ble Supreme Court was dismissed, in view of the earlier decision of the Hon ble Supreme Court in COMMISSIONER VERSUS GINNI INTERNATIONAL LTD. [ 2007 (8) TMI 649 - SC ORDER] . The notable wordings of the Hon ble Supreme Court is that the matter before them are covered against the Revenue , in view of Ginni International Limited and accordingly dismissed. Incidentally, the petitioner had earlier claimed pre-deposit made by them for availing their right of appeal before the CESTAT and when the amount was paid belatedly, they had claimed interest on the same, which came to be refunded by both the original authority and the Appellate Commissioner. As against the rejection, they had preferred an appeal before the CESTAT. The Tribunal, in its order dated 29.08.2016, had rightly rejected the Revenue s claim, holding that the order of the Tribunal had merged in the dismissal order of the Hon ble Supreme Court and therefore, the CESTAT has no jurisdiction to touch upon the merits of the case again and there is no further scope for the Revenue to open its case - It is rather unfortunate that these Quasi Judicial Authorities have disregarded the underlying principle of judicial decisions and its binding effect. When the Hon ble Supreme Court had rejected the appeal of the Revenue, the order of the Tribunal, which was in favour of the importer, merges with the order of the Hon ble Supreme Court, under the principle of Doctrine of Merger . Judicial discipline mandates Quasi Judicial Authorities to extend sanctity to the binding precedents, more so, when such orders are from the highest Court of the Country. This Court expresses its disappointment on the conduct of the concerned authorities in having scant respect towards the orders of the Hon ble Supreme Court - Petition allowed.
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2020 (10) TMI 209
Permission for withdrawal of appeal - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - It is stated that though the application has been accepted by the respondents and all the dues have been paid by the appellant, appropriate order has not been passed on the application only on the ground of pendency of the present appeal. HELD THAT:- The appeal is allowed to be withdrawn - However, there shall be no order as to cost. Refund as per Rules.
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2020 (10) TMI 208
Rejection of Petitioner's declaration in form SVLDRS 1 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- It is seen in the present case that as on 30th June, 2019, the four SCNs were not pending. In fact, these had been adjudicated and one consolidated order was passed in the four SCNs by the Additional Commissioner, Central Excise. Likewise, one consolidated order was passed by the Appellate Authority in the combined appeal. This has further led to one appeal being filed before the CESTAT. The Petitioner is, therefore justified in contending that in relation to the single pending appeal before the CESTAT one declaration is required to be filed even in terms of Rule 3 (2) of the SVLDRS Rules. The Court is, therefore, unable to appreciate why on a hyper-techincal ground that four separate declarations were not filed, the Petitioner's application under the SVLDRS should have been rejected. The Court finds merit in the plea of Mr. Amar Pratap Singh, learned Counsel for the Petitioner that in the above circumstances Section 13 (2) of the General Clauses Act, 1897 can be invoked in terms of which the words in the singular shall include the plural, and vice-versa - Viewed from any angle, this Court is of the considered opinion that in the present case the Petitioner's application ought not to have been rejected only on the ground that one declaration, and not four, was filed on 30th December, 2019. The impugned order dated 21st February, 2020 is hereby set aside - Petition allowed.
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2020 (10) TMI 204
Permission for withdrawal of appeal - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - It is stated that though the application has been accepted by the respondents and all the dues have been paid by the appellant, appropriate order has not been passed on the application only on the ground of pendency of the present appeal. HELD THAT:- The appeal is allowed to be withdrawn - However, there shall be no order as to cost. Refund as per Rules.
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2020 (10) TMI 203
Rectification of mistake - amnesty scheme - Grievance of the petitioner is only limited to the finding recorded by the CESTAT that petitioner had played fraud on the court - HELD THAT:- Having regard to the settlement of tax liability of the petitioner through the amnesty scheme, we would not examine the grievance or otherwise as to the ultimate decision of the CESTAT. We are issuing notice only on the limited issue on the finding recorded by CESTAT that petitioner in the appeal had played fraud and the rejection of the rectification application on this point. Issue notice, returnable within six weeks - Stand over to 3rd November, 2020.
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CST, VAT & Sales Tax
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2020 (10) TMI 215
Rejection by respondent authorities of petitioner s request for correction of the return filed for first quarter of Year 2017-18 - refusal to give statutory forms under Central Sales Tax (Delhi) Rules - HELD THAT:- This Court is of the view that no useful purpose would be served by keeping the petition pending. Consequently, this Court directs the respondent no.2 to allow the amendment sought by the petitioner in its return of first Quarter for the Financial Year 2017-18. However, this direction shall remain suspended till the Civil Appeals pending before the Supreme Court, taken note of hereinabove, are decided and this direction shall abide by the decision that the Supreme Court renders. Petition disposed off.
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2020 (10) TMI 212
Principles of Natural Justice - Levy of Turnover Tax - rate of tax - SCN proposed to tax the turnovers pertaining to certain transactions at higher rate of tax of 14.5% alleging that the transactions are inter- State transactions, and are not supported by any documentary evidence / statutory forms - opportunity of hearing not provided to petitioner - HELD THAT:- A perusal of the impugned assessment order passed by the 1st respondent indicates that there are no reasons contained in the said order except that it is recorded that petitioner did not avail personal hearing and did not respond to the show-cause notice or the reminder notice dt.16.11.2019 or the final notice dt.06.03.2020 - There is no consideration by the 1st respondent of the legal contention raised by the petitioner that the said commodity being dealt with by the petitioner in the course of its business is exempted from tax under Section 7 of the Act read with Entry 47(b) of Schedule I thereof and that there is no statutory requirement of submission of statutory forms for claiming exemption - It is not in dispute that there is no provision for service of notice on the assesses through e-mail, and it is not the case of the respondents that the alleged reminder notice dt.16.11.2019 and final notice dt.06.03.2020 were sent in the manner indicated in the Rules framed under the Act and were served on the petitioner. There has been a violation of principles of natural justice, and that the petitioner did not have adequate opportunity to defend itself in the proceedings contended by the 1st respondent - the matter is remitted to the 1st respondent for fresh consideration - petition allowed by way of remand.
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2020 (10) TMI 210
Classification of goods - lever files made of cardboards - whether taxable under the Residuary Entry No.40, Part-B of the First Schedule of the TNGST Act or under Section Entry 40(iv) of the First Schedule to the TNGST Act, which is taxable at 10%? - HELD THAT:- The lever files dealt with by the petitioner, which also contains print, would squarely fall under the Entry 40(iv). The reasoning of the respondents that printing of just a few words alone in the file is unacceptable, since the Entry does not define what the nature of print should be. Moreover, when other materials like folders and file covers have been brought under the purview of Entry 40(iv), the claim by the respondents that lever files made of cardboards has to be brought under the Residuary Entry under 40 Part (B) is far-fetched. The intention of the legislature while bringing them in certain categories of goods under Entry 40(iv) alone requires to be seen and I am of the view that when 'folders and file covers', which carries certain prints are brought under 40(iv), 'lever files made of cardboards' with some print on it, will also squarely fall under the same Entry. Thus, the commodity lever files made of cardboards with any print on it, will fall under Entry 40(iv) of the First Schedule of the TNGST Act - petition allowed.
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2020 (10) TMI 206
Maintainability of petition - availability of alternative remedy under the Tamil Nadu Value Added Tax Act - interpretation of Section 63A and furnishing of Form 'WW' by the Chartered Accountant - HELD THAT:- The present writ appeals do not have any merit and deserve to be dismissed. The well settled legal position about exercising writ jurisdiction against appealable assessment orders has been settled by a catena of decisions by the Hon'ble Supreme Court and various High Courts. While alternative remedy is not a bar to the jurisdiction of the High Court under Article 226 of the Constitution of India, it is certainly a rule of discretion given to the Writ Courts and therefore if the learned Single Judge has not entertained the writ petitions even on the grounds, interalia, raised before the Writ Court viz., the breach of principles of natural justice, we are of the considered opinion that the said order does not require any interference. All these grounds or grievances including breach of principles of natural justice can obviously be raised before the appellate authority. Interpretation of Section 63A - furnishing of Form 'WW' by the Chartered Accountant - HELD THAT:- We do not want to express any opinion on the same as it may prejudice the case of the Assessee as well as the Revenue before the appellate authorities below. Nor on the question of rate of tax applicable on UPS, we intend to express any opinion, because it is a question of fact and deserves to be established by the Assessee and admittedly on 02.03.2020 the Assessee has filed a Rectification Application before the authority concerned, who is now seized of the matter. Therefore, expressing any opinion on the merits of the contentions raised by the learned counsel for the Assessee will unnecessarily prejudice the case of the parties before the authorities below. Impugned order need not be interfered with - petition dismissed.
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2020 (10) TMI 205
Inter-state sale or local sale - inter-State sales to other States by the petitioner, in pursuance to agreement of sales - assessable under CST Act, 1956 or TNGST Act, 1959 - fall under section 3(a) or 3(b) of the CST Act? HELD THAT:- The Seller in the present case is only M/s.Baynee Trading Company, who made the inter-State Sales and as per the pre-existing contract only the goods were transited by the Assessee to M/s.Gayathri Trading Company of Pondicherry and freight was also borne by the Assessee. In view of this admitted and clear facts, we are of the clear opinion there is nothing to establish that the sales in question are intra-State Sales leviable with local sales tax under TNGST Act and when the same transaction having already been taxed under the previous CST Act in the hands of M/s.Baynee Trading Company at 4% against 'C' Forms issued by the purchaser M/s.Gayathri Trading Corporation of Pondicherry cannot be taxed again as local sales in the hands of the Appellant M/s.National Engineering Industries. The reason given by the learned Tribunal in its impugned order cannot be appreciated, that merely because the two parties viz., the Assessee M/s.National Engineering and M/s.Baynee Industries were located within the State of Tamil Nadu at Chennai, no inter-State sales could have taken place - this view taken by Tribunal also against the well established principles of inter- State Sales as envisaged under Section 3(a) of the CST Act, 1956. Appeal allowed - decided in favor of assessee.
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Indian Laws
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2020 (10) TMI 202
Release of attached bank accounts of petitioner - dishonor of Cheque - HELD THAT:- Since Respondent No.3 in his email dated 02.03.2020 has relied upon Section 44(6) of MVAT Act and which is the basis for attachment of the bank account of the Petitioner, it would be apposite to advert to the said provision at the outset - Sub Section (6) of Section 44 of MVAT Act is subject to the provisions of Companies Act, 2013. When a provision is made subject to another provision or another statute, it would mean that the other provision or the other statute would prevail over the provision in question, in case of any conflict or inconsistency between the two. When the draftsman uses the expression subject to in a statute in contradistinction to the expression notwithstanding , it means that the other provision or the other statute would have an overriding effect over the provision under consideration. Also, there is a clear distinction between public company and private company in law. Companies Act, 2013 makes this distinction explicit - Since Sub Section (6) of Section 44 of the MVAT Act is subject to the Companies Act, 2013 the definitions and distinctions laid down in the Companies Act, 2013 vis-a-vis public company and private company would be applicable to Section 44(6) of the MVAT Act as if by way of incorporation. It is an admitted position, at least no dispute has been raised, that M/s. Birla Electricals Limited is a public company. If that be so, the fact that Petitioner was a director of the said company for the relevant period, though in a non-executive character and stated to have resigned, would have no bearing on fastening of liability on the Petitioner for the alleged default of M/s. Birla Electricals Limited. In such circumstances, attachment of the bank account of the Petitioner does not appear to be justified and is without any legal sanction. Respondent Nos.5 and 6 are directed to unfreeze the bank account of the Petitioner in HDFC Bank, Goregaon (E), Mumbai forthwith - petition allowed.
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