TMI Tax Updates - e-Newsletter
December 4, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. ECONOMIC RECOVERY AND GST COLLECTIONS

   By: Dr. Sanjiv Agarwal

News

1. Delhi Customs intercepts Pakistan-origin smuggled cosmetic goods weighing 2800 kg worth ₹1.2 crore

2. DRI to celebrate 64th Founding Day tomorrow 7th Regional Customs Enforcement Meeting (RCEM) to be held on the occasion

3. Income Tax Department conducts search operations in Madhya Pradesh

4. SHARE OF EXPORTS IN ANNUAL GDP

5. CONSOLIDATION OF TRADING RELATIONSHIP WITH USA

6. SHARE OF AGRI-EXPORTS IN GDP

7. PM GatiShakti mission to reduce logistics cost for coal evacuation NITI Aayog reviews Coal India Limited’s bid to produce 1 billion tonnes of coal by 2025-26 Integrated infrastructure and coordinated efforts in line with PM GatiShakti to augment coal production 14 railway infrastructure projects under implementation to enhance coal dispatch in Chhattisgarh and Odisha

8. Exchange rate notification No.96/2021 - Customs (N.T.)

Notifications

Customs

1. 96/2021 - dated 2-12-2021 - Cus (NT)

Exchange rates Notification No.96/2021-Cus (NT) dated 2.12.2021

GST - States

2. 66/2020-State Tax - dated 2-12-2021 - Delhi SGST

Amendment in Notification No. 35/2020- State Tax, dated the 24th March, 2021

3. 13/2021-State Tax - dated 2-12-2021 - Delhi SGST

Delhi Goods and Services Tax (Third Amendment) Rules, 2021.

Circulars / Instructions / Orders

DGFT

1. 40/2015-2020 - dated 2-12-2021

Fixation of two new Standard Input Output Norms (SIONs) at SION A-3680 and A-3681 under ‘Chemical & Allied Product’ (Product Code ‘A’)

Highlights / Catch Notes

GST

• Understanding Goods Release Under GST: Key Stages & Fine Options in Section 130(2) & 130(7.

  Case-Laws - HC : Seeking release of goods - The two different stages in which the goods can be released - during adjudication and post-adjudication are obviously created with a purpose. The purpose of the two-stage release is that, if the owner of the goods, even before being deprived of his title to the goods or conveyance, is ready to pay the fine stipulated by the officer, then without further wrangles, if the goods and or conveyance can be released to the said owner, the same avoids unnecessary procedural formalities. If the fine in lieu of confiscation is paid at the initial stage, no prejudice would be caused to the revenue also, since by virtue of section 130(7) even after adjudication, an option to pay fine in lieu of confiscation is to be offered peremptorily - section 130(2) of the Act applies before the order of confiscation is issued. - HC
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• Deputy Commissioner Needs Proper Notification u/s 6 to Issue Notices; High Court Finds No Power Defect.

  Case-Laws - HC : Jurisdiction - lack of inherent jurisdiction with the Deputy Commissioner to issue a notice - in the context of the Act, any officer of the Central Government who may become an officer under Act by virtue of his appointment thus made, under section 4(1) of the Act, would remain dependent on a further notification that may be issued under section 6 of the Act, regarding function assignment/sub-delegation made in his favour, by the State Government, before he may act as a “proper officer”, under Act. However, that requirement and condition of law would not attach to an officer of the “State tax”. - No defect exists in the exercise of power made by the Deputy Commissioner. - HC
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• IGST Act 2017: Installation and Training Services Not Classified as 'Intermediary', No IGST Levy Applicable.

  Case-Laws - AAAR : Levy of IGST - intermediary Services - SPA has sub-contracted the services like installation/ upgradion of machines sold by SPA, training at customer’s site etc. to the appellant. Such services would be provided by the appellant to SPA as part of sub-contract agreement, by providing services to the customers of SPA. The supply of service by the appellant where it has been subcontracted to it by the recipient will fall under the exclusion part of the definition of ‘intermediary’ as per the provisions of Section 2(13) of the IGST Act 2017. - HC
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• Polypropylene Narrow Woven Fabric Classified Under Tariff Heading 58063990, 5% GST or IGST Applies.

  Case-Laws - AAAR : Classification of goods - narrow woven fabrics manufactured - The product narrow woven fabric of Polypropylene yarn of width not exceeding 30 cms provided with selvedges on both edges manufactured by the appellant merit classification under Tariff heading No. 58063990 of the Customs Tariff Act, 1975, attracting rate of GST @5% or 5% IGST - AAAR
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• ITC Approved for Operation and Maintenance Services of Diving Support and Security Patrol Vessels by AAR under GST.

  Case-Laws - AAR : Input Tax Credit - services procured for the operation and maintenance of Diving Support Vehicle owned and used for supplying port and terminal handling services - services procured for hiring, and for operation and maintenance of Security Patrol Vessel used for supplying port and terminal handling services - ITC is available - AAR
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• Aorom Herbal Smokes Tax Liability: Classified as 'Cigarettes of Tobacco Substitutes' under HSN 20029010 for GST Purposes.

  Case-Laws - AAR : Determination of the liability to pay Tax - Sales of Aorom Herbal Smokes (regular flavour) - The subject goods find their specific description as ‘cigarettes of tobacco substitutes’ at HSN 20029010. The Explanatory notes to HSN have guidance value to classify goods. The Explanatory Notes [ page IV-24-I] to Chapter 24 specifies that this Chapter covers not only unmanufactured and manufactured tobacco but also manufactured tobacco substitutes which do not contain tobacco. - AAR
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• Lump-Sum for 20-Year Healthcare Services Under "Diamond Plan" Exempt from GST, Rules AAR.

  Case-Laws - AAR : Exemption from GST - lump-sum amount received for Health care Services to be provided for 20 years by the applicant as “Diamond Plan” - Benefit of exemption is available - AAR
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• Section 17(5)(d) CGST Act: Input Tax Credit Blocked for Lease Services in Immovable Property Construction.

  Case-Laws - AAR : Input tax credit - input services - Lease Premium paid - The word used by the Legislature in Section 17(5)(d) CGST Act is ‘for’ and not ‘used’, thereby the intention of Legislature was to block the credit of subject lease service received by Taxable person for construction of immovable property. - GST amount born on subject service received is blocked credit vide Section 17(5)(d) CGST Act and thereby ineligible for availment. - AAR
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• R&R Colony construction classified as Works Contract Service, subject to GST; not a composite supply with mining services.

  Case-Laws - AAR : Classification of services - services of construction of the R&R Colony supplied by the Applicant - The construction of R&R colony service is not in any way in combination with mining service as the construction of R&R colony is one time job whereas the mining service is a regular job for longer period, hence both the services are not going together or not depend on one another, supplied independently - the services of construction of R&R colony is not composite supply with mining service. - It covers under the definition of Works Contract Service and GST is leviable on the said service under the Works contract service. - AAR
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• Class Monitor Home Learning Kit classified under HSN 49011020 with 5% GST rate; attracts NIL CGST/SGST/IGST.

  Case-Laws - AAR : Classification of goods - Class Monitor Home Learning Kit - On combined reading of tariff and HSN 49001, the kit box/ book, which is in the form of separate sheets which are designed for binding (though not bound to maintain the use) could be covered. Further, such separate sheets (being integral part of kit box/book) have printed pictures but such sheets also bear text and in one shape, so it appears to be covered under HSN 49011020 and not under HSN 4903 attracting NIL CGST/SGST/IGST. - the GST rate is 5% - AAR
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Income Tax

• ITAT upholds CIT(A) decision: Section 43B disallowance on leave encashment provision reversed, revenue's appeal dismissed.

  Case-Laws - HC : Disallowance u/s 43B - provision for leave encashment written back - ITAT after taking note of the entire facts, came to the conclusion that the final statements drawn by the assessee are in compliance with the statutory requirements, such as, the Companies Act and the computation of the total income has been done in accordance with the Act - Thus the tribunal after re-examining the facts upheld the finding of the CIT(A) - Revenue appeal dismissed - HC
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• High Court Rules Police Notice Unlawful in Tax Search Case Involving Diary Seizure Under Income Tax Act Section 132.

  Case-Laws - HC : Search and seizure proceedings initiated u/s 132 - a diary that was found during the search were seized recordings of various transactions with abbreviations and amounts against each of the abbreviations - Admittedly, search and seizure is performed by the petitioners under the Act. The bar of divulging any information or any document taken into custody during the seizure is available under Section 138(2) of the Act. In the teeth of the said provision in the Act, the notice issued by the Police, on the face of it, would be contrary to law. - HC
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• Income Tax Appeal: Section 263 Assessment Order Upheld as Non-Erroneous; TDS Details Properly Verified and Submitted.

  Case-Laws - AT : Revision u/s 263 by CIT-A - TDS have been deducted and deposited by the assessee in the Government account, therefore, there is no loss caused to the Revenue. In this case of the limited scrutiny assessment the AO could not have travelled beyond such scope to enquire about TDS details which was not the subject-matter of such limited scrutiny. Nonetheless these TDS details were called for by the AO and verified and they were duly submitted by the assessee. DR could not refute these facts on record. In such scenario, the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. - AT
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• Payments to Polish Law Firm Not Taxable in India: No Permanent Establishment Under India-Poland DTAA.

  Case-Laws - AT : Income taxable in India - payments made to the law firm in Poland - nature of Fee for technical services under section 9(1) (vii) of the Act as well as Article 13 of India Poland DTAA - Nothing has been brought on record by the revenue to establish that the non resident payee has any fixed place of business PE in India. In that view of the matter, the income ceases to be taxable in India. - AT
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• CIT(A) Correctly Reverses AO's Disallowance of Interest Expenditure u/s 14A Due to Lack of New Investments.

  Case-Laws - AT : Disallowance u/s 14A - Disallowance made on account of interest expenditure - AO has not made any disallowance on account of interest expenditure u/s 14A of the I.T. Act in the preceding years. Therefore, when no fresh investment is made other than the proceeds of the sale of existing investment then the disallowance of interest expenditure is not warranted. - CIT(A) rightly deleted the disallowance made by the AO u/s 14A - AT
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• Trust Denied Section 80G Approval Despite Meeting Criteria; Religious Activities Under 5% of Total Receipts.

  Case-Laws - AT : Rejecting the application for approval u/s 80G - assessee trust is registered u/s 12AA and is stated to be engaged in carrying out charitable activities including spiritual activities, samuhik prayers, yoga camp, old age home and also owns a temple namely “Balaji Mandir” - CIT(E) erred in denying the approval u/s 80G applied by the assessee in Form 10G since the assessee is carrying out activities both religious and charitable in nature and expenditure of religious nature during the year have not exceeded 5% of the total receipts, assessee should be granted necessary approval u/s 80G. - AT
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Customs

• Extended Limitation Period Under Customs Act Section 28(1) Not Applicable Without Mis-declaration or Suppression of Facts.

  Case-Laws - HC : Extended period of limitation - Once it is found that there was absence of mis-declaration or suppression facts which finding attained finality between the parties pursuant to the order dated 06.10.2005 passed by the Commissioner (Appeals) as affirmed by the Tribunal on 22.02.2005, there would be no occasion to invoke the provisions of Section 28(1) of the Act of 1962 for extending the period of limitation for issuing the show cause notice - HC
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• Appellant Wins Right to Amend Shipping Bills for Brass Artwares u/s 149, Entitled to Differential Drawback.

  Case-Laws - AT : Seeking amendment of drawback serial number in the shipping bills - appellant procured Brass Artwares from local market falling under tariff heading 74199930 and exported the same - rejection of the request without any reasoning - The appellant is squarely covered by the statutory provisions of Section 149 and proviso thereto - the appellant is entitled for amendment in the shipping bills and consequent differential drawback - AT
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Indian Laws

• Handwriting Differences on Cheque Irrelevant if Signatures Are Undisputed, No Evidence of Other Writer Involved.

  Case-Laws - HC : Dishonor of Cheque - There is certainly no evidence to show that the body writing on the cheque in question is in a different hand or ink and has been made by a person other than the person, who had signed on the cheque. But, that as it may, even if there is any such difference in hand-writing, the same would be immaterial once the signatures on the cheque in question are not disputed - HC
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IBC

• Section 61 I&B Code: Appeal Time Limits Not Extended by Rule 50 Copy; Limitation Act Sections Apply.

  Case-Laws - AT : Maintainability of appeal filed belatedly - the scheme of limitation for filing Appeal as delineated by Section 61 does not give any scope to the submission that limitation to file an Appeal under Section 61 shall not begin till free of cost copy under Rule 50 is received by a party. The provisions of the Limitation Act are applicable to the ‘I&B Code’ proceedings which is well settled and is no longer debatable after insertion of Section 238A in ‘I&B Code’. Section 12 of the Limitation Act provides for period which can be excluded in period of limitation. - AT
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Service Tax

• Service Tax Not Applicable on Ready Mix Concrete Supply and Laying; Excluded from Works Contract under Finance Act, 1994.

  Case-Laws - AT : Levy of service tax - works contract service - contract between the supplier of RMC i.e. appellant and buyer of RMC - manufacture of Ready Mix Concrete (RMC) - activity of laying of RMC using of concrete pumping at the site of the buyer of RMC - The activity of the appellant is entirely of excisable activity. Therefore, the same will not fall under Works Contract service in terms of Finance Act, 1994. Accordingly, the demand of service tax raised under Works Contract service is clearly not sustainable - AT
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Central Excise

• CESTAT Upholds CENVAT Credit Eligibility for Inputs in Fabricating Capital Goods Structures, Dismissing Department's Appeal.

  Case-Laws - HC : CENVAT Credit - inputs or not - The CESTAT was justified in dismissing the Department’s appeal since the credit was claimed in respect of the inputs used for fabrication items supporting structures of capital goods - the CESTAT was right in law by allowing CENVAT Credit on the goods used for fabrication of supporting structure for capital goods - Tribunal was right in law in holding that the fabrication goods used for supporting structures were capital goods for which CENVAT Credit was allowable. - HC
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• Waiver of Show Cause Notice for Differential Duty: Unamended Section 11(2B) Applies, Error in Using Amended Provision.

  Case-Laws - AT : Waiver of SCN - differential duty with interest paid before issuance of SCN - Unamended sub-Section 11(2B) shall apply for waiver of show cause notice. Therefore, there is fundamental error on the part of the Adjudicating Authority for considering wrong provision i.e. amended provision, which is effective by enactment of Finance Act, 2011. We also find that the appellant have paid entire differential excise duty along with interest. There is only minor difference in the interest amount as per Revenue even that is also in dispute as regard the correct calculation thereof. - AT
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• Single Factory Operation: No Need for ISD Registration to Transfer CENVAT Credit, Says Petitioner.

  Case-Laws - AT : CENVAT Credit - transfer of credit - case of petitioner is that there is only one factory and one office there is no need for registration of ISD - - It is seen that appellant has claimed they have only one manufacturing unit. Revenue has not produced any evidence otherwise. In these circumstances there is no need of ISD Registration. - AT
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• Appellant's Duty Payment Post-Violation of Notification No. 39/2001-CE Doesn't Allow Reclaim; Misdeclaration Confirmed.

  Case-Laws - AT : Clandestine removal - IMT Bars - Area based exemption - Though the appellant subsequently paid duty but at time of clearance they have mis-declared and cleared the goods clandestinely. Therefore, the appellant has clearly contravened the condition stipulated under the Notification No. 39/2001- CE. Therefore the re credit of the duty paid subsequently is not admissible to the appellant. - The appellants plea that there is no suppression of fact in the present case is of no help to them - AT
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Case Laws:

• GST

• 2021 (12) TMI 124
  Seeking grant of anticipatory bail - survey and seizure operations - various incriminating material came on record or not - HELD THAT:- The inquiry being conducted by the opposite party authorities, cannot be obstructed and therefore, the applicant may appear pursuant to the summon dated 02.09.2021. It is expected, subject to the cooperation, his arrest may not be enforced unless it is warranted for any cogent reasons. Application disposed off.

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• 2021 (12) TMI 123
  Seeking release of goods, even before orders of confiscation are issued - Scope and ambit of the powers of release of goods while the confiscation proceedings are going on - section 130(2) of Customs Act - Whether the provisions of section 130 of the Act contemplate any provisional release of goods, as directed in the interim order of this Court? - HELD THAT:- When the phraseology of section 130(2) of the Act is examined, it reveals a different set of words employed therein vis-a-vis section 130(7) of the Act. The intention behind the said sub-clause can be gathered from the words: (a) whenever confiscation of goods or conveyance is authorised by this Act (b) the officer adjudging it, and (c) give to the owner of the goods an option - Once the confiscation order is issued, ownership of the goods, by operation of the statute, vests with the Government. The use of the present continuous words officer adjudging it and the words owner of the goods is clearly indicative of the intention behind incorporating section 130(2) of the Act. The intent of section 130(2) of the Act is to provide an option to the owner to redeem the goods before he is divested of his ownership and while the process of adjudication is going on. The two different stages in which the goods can be released - during adjudication and post-adjudication are obviously created with a purpose. The purpose of the two-stage release is that, if the owner of the goods, even before being deprived of his title to the goods or conveyance, is ready to pay the fine stipulated by the officer, then without further wrangles, if the goods and or conveyance can be released to the said owner, the same avoids unnecessary procedural formalities. If the fine in lieu of confiscation is paid at the initial stage, no prejudice would be caused to the revenue also, since by virtue of section 130(7) even after adjudication, an option to pay fine in lieu of confiscation is to be offered peremptorily - section 130(2) of the Act applies before the order of confiscation is issued. Whether the amount payable for release of the goods under section 130 of the Act is fine alone or is it fine, penalty and tax to be paid together for securing release of the goods? - HELD THAT:- At the stage when the fine in lieu of confiscation is paid to obtain release, the adjudication as to whether the goods or conveyance are to be actually confiscated or not, or whether any tax or penalty or other charges are due for the goods or conveyance, have not been ascertained. Similarly the quantum of tax and penalty have also not been ascertained by any form of adjudication. As mentioned earlier, it requires an adjudication. Adjudication requires a hearing. The period within which the adjudication has to be completed, is left to the discretion of the Proper Officer. The words in a statute often take their meaning from the context of the statute as a whole, as is clear from the legal maxim exposition ex visceribus actus . The words cannot be construed in isolation. The words be liable in the context in which it occurs in section 130(3) of the Act only imports a possibility of attracting liability. Merely because the owner of goods or conveyance opts to pay fine in lieu of confiscation does not mean that the facts essential for incurring the liability to order confiscation automatically stands proved. That proof has to come out through the process of adjudication, as otherwise, there would be conferment of unbridled powers upon the Proper Officer to coerce every dealer to pay fine, tax, penalty and other charges without even any adjudication. Such a procedure is against fairness and contrary to the principle of rule of law. In the instant case, if the taxpayer has a dispute on the value fixed tentatively by the Proper Officer, he can dispute the same and during the course of adjudication, get a determination of the market value also. The amount payable is in the realm of a disputed question of fact and this Court cannot determine, in this proceeding, the quantum payable by the dealer. What is the basis or rate for calculating the fine under section 130 of the Act? - HELD THAT:- The basis for calculating the fine in lieu of confiscation under section 130 of the Act is only the market value as defined under section 2(73) of the Act and not the maximum retail price.

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• 2021 (12) TMI 122
  Reopening of portal for filing of Form TRAN-1 - validity of Rules 117 to 120A of the CGST Rules, 2017 - HELD THAT:- Though, it is the case of the respondents that such a technical glitch/error cannot be considered as an error on the GST common portal, yet this Court in the case of SUPER INDIA PAPER PRODUCTS BENLON INDIA LTD., AND OTHERS VERSUS UNION OF INDIA THROUGH MINISTRY OF FINANCE, SECRETARY ORS. UNION OF INDIA ORS. COMMISSIONER, DELHI GOODS SERVICES TAX ANR. [ 2021 (6) TMI 108 - DELHI HIGH COURT] where it was held that In the opinion of this Court, a genuine mistake should not result in the Petitioners losing out on their accumulated credit which is protected by Article 300A of the Constitution. The lack of an effective revisional mechanism would leave the taxpayers remediless, which, to our minds, could not be the intention of the law, and moreover, no provision was brought to our notice which extinguishes the said right of the taxpayer. The present writ petition is allowed in accordance with paragraphs 28 and 29 of the judgment of this Court in Super India Paper Products. However, the date for accepting the TRAN-1 Form electronically or manually shall be read as 15th December, 2021. Petition allowed.

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• 2021 (12) TMI 121
  Reopening of portal for filing of Form TRAN-1 - validity of Rules 117 to 120A of the CGST Rules, 2017 - HELD THAT:- Though, it is the case of the respondents that such a technical glitch/error cannot be considered as an error on the GST common portal, yet this Court in the case of SUPER INDIA PAPER PRODUCTS BENLON INDIA LTD., AND OTHERS VERSUS UNION OF INDIA THROUGH MINISTRY OF FINANCE, SECRETARY ORS. UNION OF INDIA ORS. COMMISSIONER, DELHI GOODS SERVICES TAX ANR. [ 2021 (6) TMI 108 - DELHI HIGH COURT] where it was held that In the opinion of this Court, a genuine mistake should not result in the Petitioners losing out on their accumulated credit which is protected by Article 300A of the Constitution. The lack of an effective revisional mechanism would leave the taxpayers remediless, which, to our minds, could not be the intention of the law, and moreover, no provision was brought to our notice which extinguishes the said right of the taxpayer. The present writ petition is allowed in accordance with paragraphs 28 and 29 of the judgment of this Court in Super India Paper Products. However, the date for accepting the TRAN-1 Form electronically or manually shall be read as 15th December, 2021. Petition allowed.

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• 2021 (12) TMI 120
  Seeking grant of Bail - irregular availment of CENVAT Credit - wrongful utilization of bogus ITC on the strength of fake invoices without physical receipt of the goods - non-existent and fictitious business entities - HELD THAT:- The Hon ble Apex Court in case of NIRANJAN SINGH VERSUS PRABHAKAR RAJARAM KHAROTE [ 1980 (3) TMI 258 - SUPREME COURT] has observed which has also been reiterated in case of SHRI P. CHIDAMBARAM VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2019 (10) TMI 879 - SUPREME COURT] that at the stage of consideration of the matter for granting bail, detailed examination of evidence and elaborate documentation of the merits of the case should be avoided. The prosecution case is mainly based upon the documents in respect of the so-called clandestine business activities. The complaint having already been filed, by now more than four months have already passed. The Petitioner is a permanent resident of the city of Rourkela in the district of Sundergarh and as such hardly there remains the scope for him to flee away from justice. The proceeding for assessment of the GST payable for the transactions may be continuing where the party aggrieved may further carry Appeal and Revision as provided in law. Till such time at the stage of hearing of the application for grant of bail it may be difficult to prejudge the guilt of the Petitioner in ascertaining the exact quantum involved. The assessment in such matter is largely based on documents and relevant records which would take its own time. No other materials are placed to support that further detention of the Petitioner still stands as of necessity for the case. In the meantime, more than four months have passed since the detention of the Petitioner in custody and thus those stages of the investigation here appear to be over when it can be said that the Petitioner being enlarged on bail may stand on the way of proper investigation in collecting all the materials triggering derailment of investigation process with the possibility of the Petitioner influencing the witnesses and absconding on which scores there also stands no material particulars. The Petitioner be released on bail on furnishing bail - Application allowed.

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• 2021 (12) TMI 119
  Jurisdiction - lack of inherent jurisdiction with the Deputy Commissioner to issue a notice, conduct proceedings and pass the impugned adjudication order - Validity of ex-parte adjudication order in exercise of powers vested u/s 74 (9) of the U.P. Goods and Services Tax Act, 2017 - tax period/Financial Year 2018-2019 - HELD THAT:- The statutory scheme appears to be - the legislature has first recognised the Commissioner as the proper officer for all fuctions under the Act. It also recognises the classes of officers who may be appointed officers under the Act. Further, officers of the UP VAT Act have been recognised as officers under the Act, on deemed basis. As to the officers of the Central Government, the State Government has been delegated the power (under section 4(1) of the Act) to appoint them officers under the Act. Second as to the functions to be performed by various officers under the Act, the Commissioner may sub-delegate absolutely, any functions to an officer of State tax [as defined under section 2(104) of the Act]. On the contrary, an officer of the Central Government may not be subdelegated such powers generally. He may be sub-delegated that power and he may act as a proper officer subject to the conditions as the State Government may by notification (under section 6 of the Act), specify, in that regard. Insofar as the present respondent-Deputy Commissioner is an officer under section 3 of the Act, section 6 of the Act has no application. Only with respect to officers appointed under the Central Act, the exercise of jurisdiction would be circumscribed by a notification that would have to be first issued by the State Government, before such jurisdiction may be created in their favour. Upon clear language of the provisions of the Act, the officers appointed under the Act would continue to be governed by the provisions of sections 3 and 4 read with section 2(91) of the Act and the general orders issued by the Commissioner in that regard, issued with reference to the power exercised under section 5 of the Act. Though any officer other than the person of the Customs could be appointed as a Custom Officer by virtue of section 4 of the Customs Act, such an officer could not hold any function jurisdiction in his favour unless a specific entrustment/sub-delegation were first made in his favour by issuance of a notification under section 6 of that Act. Therefore, the Commissioner of Customs (Preventive) and the Additional Director General, Directorate of Revenue Intelligence though became Customs Officers by virtue of Notification dated 02.05.2012 read with earlier Notification dated 07.03.2002 yet, in the absence of any further notification issued under section 6, (it was reasoned), they could not act as a proper officer to adjudicate a dispute under section 28 of the Customs Act, 1962 - in the context of the Act, any officer of the Central Government who may become an officer under Act by virtue of his appointment thus made, under section 4(1) of the Act, would remain dependent on a further notification that may be issued under section 6 of the Act, regarding function assignment/sub-delegation made in his favour, by the State Government, before he may act as a proper officer , under Act. However, that requirement and condition of law would not attach to an officer of the State tax . No defect exists in the exercise of power made by the Deputy Commissioner. The challenge raised in the present petition thus fails - Petition dismissed.

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• 2021 (12) TMI 118
  Attachment of petitioner s credit - self-limiting in terms of under Rule 86A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- Considering the fact that the petitioner s representations dated 09.06.2021 and 04.10.2021 have not evoked any response from the respondents, this Writ Petition is disposed at the time of admission by directing the respondents to consider the representations of the petitioner and pass appropriate orders within a period of forty five days from the date of receipt of a copy of this order in accordance with law and on merits. Petition disposed off.

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• 2021 (12) TMI 117
  Levy of IGST - supply of service of installation/up-gradation training - principal-agent relationship - Composite supply of services - naturally bundled services or not - specified transaction of the Applicant is to be reckoned as being provided to SPA or to the customers of SPA located in India - intermediary Services - HELD THAT:- A composite supply would mean a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. The consideration agreed with SPA is based on hourly rate for activities such as travelling, regular work or overtime hours and based on the time spent for each of the activities. Accordingly, they are providing more than two services i.e. installation or up-gradation of service, training to the customer for the operation of machine and other activities like overtime service. The contention of the appellant that charges for travelling, working hours or overtime are not separate activities and these are the benchmarks or methodology based on which consideration for actual service such as installation / up-gradation of machine or training in respect of machines would be determined but appellant have not put forth any argument how the travelling hours, working hours or overtime are not separate activities - The appellant may received the one consolidated charges for their service provided to customer considering it as one supply and not more than one. However, in the contract held between appellant and SPA hourly rate is fixed for each work i.e. working hours, travelling hours and overtime hours. Therefore, the appellant is providing more than two services and contention of the appellant that they are providing only one service is not correct. Indian customer as service recipient for the present transaction - HELD THAT:- A reading of the definitions given in Section 2(93) and 2(31) of the CGST Act, indicates that the person who is required to make a payment for getting a job done is the recipient of service. Accordingly, the recipients of the service supplied by the appellant will be the manufacturer as it is at their behest that the appellant has undertaken the activity of installation/up-gradation of the machine, service of machines which are under service contract with SPA and machine which are under warranty period to the customer - there is force in their argument and in present case SPA is paying consideration to the appellant for the service provided to the Indian customer. Therefore, in present case SPA is recipient of supply of service in terms of the consideration paid to the appellant and not Indian customer. Qualification of Applicant to be an intermediary - HELD THAT:- Since there is no performance of service by SPA and actual services are performed by the appellant itself they are outside the purview of the definition of intermediary . Further as per CBIC circular dated 20.09.2021 referred above, subcontracting of services whether a part or whole cannot be included within the purview of intermediary services. In the present case, SPA has sub-contracted the services like installation/ upgradion of machines sold by SPA, training at customer s site etc. to the appellant. Such services would be provided by the appellant to SPA as part of sub-contract agreement, by providing services to the customers of SPA. The supply of service by the appellant where it has been subcontracted to it by the recipient will fall under the exclusion part of the definition of intermediary as per the provisions of Section 2(13) of the IGST Act 2017. Non-qualification of the specified transaction as export of service - HELD THAT:- SPG Prints B.V. holding and foreign company of Stovec Industries Ltd. (i.e. is appellant) are two separate legal person and are not merely establishments of distinct person in accordance with Explanation 1 in Section 8 of IGST Act - the appellant service is performance based as such the appellant can perform service only at SPA s customer in India and not outside India. Application disposed off.

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• 2021 (12) TMI 116
  Classification of goods - narrow woven fabrics manufactured - classifiable under Tariff Heading No. 58063990 or otherwise? - HELD THAT:- To classify the product under HSN code 5806 as narrow woven fabric , its width should not exceed 30 cm and it should have selvedges (flat or tubular) on both edges. The width of the fabric was never in question and from the forgoing paras, it is clear that the product is provided with selvedges on both sides - the product in question satisfy the conditions of narrow woven fabric mentioned in Chapter Note 5 of Chapter 58 of Customs Tariff Act, 1975. The product is to be classified under CTH No. 58063990 and not under CTH No. 54071019 of the Customs Tariff Act, 1975. The product narrow woven fabric of Polypropylene yarn of width not exceeding 30 cms provided with selvedges on both edges manufactured by the appellant merit classification under Tariff heading No. 58063990 of the Customs Tariff Act, 1975, attracting rate of GST @5% or 5% IGST as per Sl. No. 219AA of Schedule-I of Notification No. 1/2017-CT (Rate) dated 28.06.2017 (as amended) and Notification No. 1/2017-IGST (Rate) dated 28.06.2017. Advance ruling modified.

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• 2021 (12) TMI 115
  Rectification of mistake - error apparent on the face of record - name of the authorised representative of the applicant has been incorrectly mentioned - constitution of the applicant has been wrongly mentioned as a Private Limited Company where as the applicant is a Partnership Firm - HELD THAT:- The copies of GST registration certificate of the applicant also the letter of authorization of the applicant authorizing Sri. Shivaram Bhat, Chartered Accountant, enclosed to the instant application is examined and it is observed that the mistakes, though are typographical errors, are apparent or record needs rectification. The aforesaid mistakes that are apparent on record brought to our notice is rectified. The name of the authorised representative of the applicant stands corrected as Sri. Shivaram Bhat at page 1 para 7 of page 3 and also the constitution of the applicant stands corrected as Partnership Firm - application allowed.

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• 2021 (12) TMI 114
  Classification of goods - Rate of Tax - Waste to Energy plants (WTEP) i.e. Renewable Energy Boilers - HELD THAT:- As Per technical literature provided by the applicant, the Fuel varieties in the said 5 boilers are: Argo waste/ Industrial waste/ / plastic waste/ municipal waste/ bricket of biomass - Sample Indemnity cum Undertaking by Buyers of these Boilers reads that that the buyers use Waste as fuel in these Boilers. The applicant s contention is agreed upon that heat energy produced from these fuels: biomass/ waste used in the boilers categorise the said Boilers under Waste to Energy Devices . The said 5 Boilers are leviable to: i. 5% GST [CGST 2.5% + SGST 2.5%] up to 30-9-21. ii. 12% GST with effect from 1-10-21.

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• 2021 (12) TMI 113
  Input Tax Credit - services procured for the operation and maintenance of Diving Support Vehicle owned and used for supplying port and terminal handling services - services procured for hiring, and for operation and maintenance of Security Patrol Vessel used for supplying port and terminal handling services - blocked credit or not - HELD THAT:- Section 17(5)(ab) CGST Act pertains to Blocked credit on services of repair and maintenance in so far as they relate to Vessels. Even this is not the case before us. The services supplied by the said Contractors to M/s Sikka is not limited merely to Repair and Maintenance to Vessels but the essence and substance of the Contracts reads that the Services supplied by the said Contractors pertain to enabling discharge of liquid cargo into the sub sea pipelines and also the Services of Security Patrolling cum Pollution checks by way of operation and manning and maintenance of DSVs and SPVs respectively, by qualified crew - Scope of Contract entered with the said Contractors cannot fall merely under the Repair and Maintenance category on these vessels. Thus Section 17(5)(ab) CGST Act does not come into picture in present case. Section 17(5)(b)(i) CGST Act pertains to blocked credit on renting or hiring of vessels. As already discussed in the aforementioned paragraphs of this Ruling, we find no merit to term and limit the services supplied by the Contractors to M/s Sikka as merely hiring/ renting of vessels, for the services are for the Operation and Maintenance of Vessels to perform and enable, inter alia, i. Transportation/ discharge of cargo; ii. security patrolling services. The bar of blocked credit raised vide Section 17(5)(aa); Section 17(5)(ab); section 17(5)(b)(i) CGST Act is not applicable in subject case - ITC is available for both the cases - application allowed.

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• 2021 (12) TMI 112
  Determination of the liability to pay Tax - Sales of Aorom Herbal Smokes (regular flavour) - relevant HSN Code - rate of tax - inter-state as well as intra-state supply - HELD THAT:- The subject cigarettes have specific entry at HSN 24029010 as Cigarettes of tobacco substitutes. We hold that Classification of goods under GST is based on HSN. The Customs Tariff is based on HSN. The general Interpretative Rules are to be sequentially followed as the way to classify the goods. We are to classify within the confines of law and procedure as laid down in GST scheme of law and procedure. The Section notes of Custom Tariff are part and parcel of the Custom Tariff Act, 1975 which is to say, part and parcel of law enacted by the Parliament and therefore, we are obliged to follow the classification based on Section Notes as per law. As per Rule 1 of the General Rules for the Interpretation of CTA, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any Section or Chapter Notes. The subject goods find their specific description as cigarettes of tobacco substitutes at HSN 20029010. The Explanatory notes to HSN have guidance value to classify goods. The Explanatory Notes [ page IV-24-I] to Chapter 24 specifies that this Chapter covers not only unmanufactured and manufactured tobacco but also manufactured tobacco substitutes which do not contain tobacco. The said goods are leviable to: 1. 28% IGST on inter state supply along with Compensation Cess of Rs. 4006 per thousand. 2. 14% CGST + 14% SGST on intra state supply along with Compensation Cess of Rs. 4006 per thousand.

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• 2021 (12) TMI 111
  Exemption from GST - lump-sum amount received for Health care Services to be provided for 20 years by the applicant as Diamond Plan - Applicability of Sr. No. 74 of Notification No. 12/2017- Central Tax. - HELD THAT:- The scope of supply of services by the applicant is health care services by a clinical establishment and also that the applicant s Partner Dr. P.G.Korodia is an authorised medical practitioner. The subject consideration is received for health care services. Further applicant s tie up with the other hospital for diagnosis does not alter the scope of supply of health care services by the applicant to its service recipients. M/s Divyajivan supplies Health care Services under Diamond Plan which merits exemption from GST vide Sr. No. 74 of said Notification No. 12/2017- CT(R).

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• 2021 (12) TMI 110
  Input tax credit - input services - Lease Premium paid to Ginni Filaments on which they have charged GST under the head miscellaneous receipt under SAC code No. 99979 - Blocked credit or not - HELD THAT:- The expression plant and machinery excludes land. As expounded at para 12 of this Ruling, with this expression of Plant and Machinery excluding land, explicitly incorporated in the Blocked Credit section 17(5) CGST Act, We hold that Legislature has expressed its intent that ITC shall not be available in respect of services pertaining to land received by a taxable person for construction of an immovable property including when such services are used in the course or furtherance of business - The word used by the Legislature in Section 17(5)(d) CGST Act is for and not used , thereby the intention of Legislature was to block the credit of subject lease service received by Taxable person for construction of immovable property. GST Council is seized of the matter that GST borne by a Taxable Person on such leasing is not available for construction of immovable property. GST amount borne by M/s J M Chemicals on subject service received is blocked credit vide Section 17(5)(d) CGST Act and thereby ineligible for availment.

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• 2021 (12) TMI 109
  Classification of services - composite supply of mining service or supply of works contract service - services of construction of the R R Colony supplied by the Applicant - Eligibility to avail Input Tax Credit of tax paid to the sub-contractor on works contract services for construction of R R colony - Section 17(5)(c) of the CGST Act, 2017 - HELD THAT:- As per para 8.2 (c), of agreement signed between the Applicant and APMDC, it is only mentioned that R R activities provided at clause 1B of Schedule 2 of this Agreement. The said para is mentioned under the heading of Mine operator obligation during the development stage of the Agreement - as per the Agreement with APMDC, Applicant as a Mine Operator planning, engineering, financing, construction, development, operation and maintenance of Suliyari coal mine and subsequent delivery of coal to the Owner. It is observed that in the said Agreement mainly the work is given related to mining of Coal and during the development stage of mines, there are certain obligation to the Mine operator including construction of R R colony. In the Agreement, each and every work define separately in the said Agreement/Schedule of Agreement. The construction of R R colony service is not in any way in combination with mining service as the construction of R R colony is one time job whereas the mining service is a regular job for longer period, hence both the services are not going together or not depend on one another, supplied independently - Further, the terms of payment of each service mentioned separately in the Agreement and there is no connection/combination of payment of both the services. Invoices of the services is also raised separately. Hence both the services can be identifiable separately and has no conjunction with each other for qualify the same as composite service. Thus, the services of construction of R R colony is not composite supply with mining service. Works contract service or not - HELD THAT:- As per definition of Works Contract Service, any construction of colony/building wherein transfer of property in goods is involved in the execution of such contract is covers under the definition of Works contract service for payment of GST. In this case as per the submission of the applicant, satisfied the condition for construction of Building and transfer of property in goods is involved inasmuch as the title of the steel, cement, etc. which goes in the construction of the building i.e. R R colony is transferred to APMDC, hence, the construction of R R colony is covers under the definition of Works Contract Service and GST is leviable on the said service under the Works contract service. Whether the applicant will be eligible to avail ITC of tax paid to the sub- contractor on Works Contract Service for construction of R R Colony or the same would be disallowed in terms of Section 17(5) (c ) of the CGST Act, 2017? - HELD THAT:- Section 17(5) of the CGST Act, 2017 deals with blocked credits under the GST law and enlists various circumstances under which the Input Tax Credit cannot be availed by the Recipient of Supply, notwithstanding the provisions of Section 16(1) (1) of CGST Act. The Sub-Section (c) of Section 17(5) deals with blocked/ineligible credit relating to Works Contract Services . The applicant is receiving the Work contract services i.e. construction of R R colony from the sub-contractor in the course of further supply of the same as Works contractor to APMDC, hence the restriction of section 17(5)(C) shall not applicable to the Applicant. Hence, it is found that in respect of the construction of RR colony, the applicant is eligible to take ITC of tax paid to sub-contractor under works contract service which will be used for providing the same to the APMDC - the Applicant is eligible for ITC of the tax paid to the sub-contractor for construction of R R Colony under Works contract service but the said ITC is not allowed to utilize for payment of tax for mining services. The construction of the R R colony by the applicant is supply of works contract service and also eligible for ITC of tax paid to sub-contractor for providing further Works contract service only.

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• 2021 (12) TMI 108
  Classification of goods - Class Monitor Home Learning Kit - rate of GST - classified under HSN code 4903 or not? - HELD THAT:- The kit box/book should be covered under heading 4903 bearing NIL rate of tax, being the kit box/ book is a children s picture books drawing or colouring book wherein the pictures form the principal interest an the text is subsidiary. That it is not in the book form or bounded form. Therefore the said learning kit should not be covered under heading 4903 bearing NIL rate of tax. On combined reading of tariff and HSN 49001, the kit box/ book, which is in the form of separate sheets which are designed for binding (though not bound to maintain the use) could be covered. Further, such separate sheets (being integral part of kit box/book) have printed pictures but such sheets also bear text and in one shape, so it appears to be covered under HSN 49011020 and not under HSN 4903 attracting NIL CGST/SGST/IGST.

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• Income Tax

• 2021 (12) TMI 107
  Transfer of case u/s 127 - transfer of Petitioner s assessment from Mumbai to Bengaluru - why Petitioner s case should not be transferred to Bengaluru for completing the assessment proceedings? - HELD THAT:- There is no case made out for transferring Petitioner s case to Bengaluru. Under Section 127(2) where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, where the Commissioner to whom such Assessing Officers are subordinate are in agreement, then the Commissioner from whose jurisdiction the case is to be transferred may, after giving the Assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order. It is true in this case Petitioner was given a show-cause notice and the personal hearing was granted before passing the order impugned but the reasons recorded in the order are certainly subject to judicial scrutiny and must be reasonable. In impugned order, Respondent No.1 has only narrated the facts but has not given any reasons why in the facts and circumstances of the case, Petitioner s case has to be transferred to Bengaluru. Petitioner is assessed in Mumbai and the firm of which Petitioner is a partner is also assessed in Mumbai. Pending of a case before the learned Addl.CMM cannot be accepted as reason for transfer of Petitioner s assessment from Mumbai to Bengaluru.

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• 2021 (12) TMI 106
  Reopening of assessment u/s 147 - Change of opinion - HELD THAT:- AO has no power to review an assessment which has been concluded unless he has tangible material to come to the conclusion that there is an escapement of income from assessment. But in the reasons to believe in the present case, we do not find even a single ground which can be considered to be tangible basis for re-opening the assessment. AO states that from the partnership deed, audited accounts and Form No.3CD report, it is seen that that the Assessee has 15 partners, one of whom is Dhansukh Nanda HUF. According to the Assessing an HUF cannot become a partner of a firm or enter into a contract with other person and hence the Assessee has not complied with the provisions of Section 184 of the Act and the interest paid to partners cannot be considered for deduction. This is a clear case of change of opinion because Petitioner had filed Form No.3CD in which Dhansukh Nanda HUF is shown as a partner with 10% profit sharing ratio. Form No.3CD also indicates that a sum has been paid as interest to Dhansukh Nanda HUF. These materials were on the face of a document available before the Assessing Officer who passed the original Assessing Order dated 21/10/2015. Mr. Walve states that in the original Assessment Order, there is no mention about Dhansukh Nanda HUF and therefore it is likely that the original Assessing Officer has failed to note that one of the partners in Petitioner firm was an HUF. We do not agree with Mr. Walve because if Assessment Order does not speak about this, we would consider it as having been accepted by the Assessing Officer who passed the original Assessment Order that it was perfectly okay for an HUF to be a partner in Petitioner firm. We would hasten to add that we are not for a moment opining whether an HUF can be a partner in a firm under the provisions of Indian Partnership Act, 1932. Since we have concluded that it is nothing but a change of opinion, we do not propose to go into the issue as to whether the stand of Respondent that Petitioner has not complied with provisions of Section 184 of the Act is correct. - Decided in favour of assessee.

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• 2021 (12) TMI 105
  Disallowance u/s 43B - provision for leave encashment written back - tribunal upholding the order of the Commissioner of Income Tax (Appeals) in deleting the disallowances - HELD THAT:- The tribunal had re-appreciated the factual position and examined the consistent practice followed by the assessee in obtaining valuation report for ascertaining the incremental leave encashment liability and after taking note of the entire facts, came to the conclusion that the final statements drawn by the assessee are in compliance with the statutory requirements, such as, the Companies Act and the computation of the total income has been done in accordance with the Act - tribunal rightly noted that the liability was contingent in nature and has not crystallised into actual liability and will not be allowed as deduction while computing the total income. Thus the tribunal after re-examining the facts upheld the finding of the CIT(A). Thus, we find that no substantial question of law arising therefrom. Disallowance on account of foreign exchange fluctuation - ITAT deleted the addition - HELD THAT:- Tribunal perused the facts, the profit and loss accounts of the assessee and upheld the finding rendered by the tribunal by taking note of the decision of the Hon ble Supreme Court in Commissioner of Income Tax, Delhi vs. Woodward Governor India (P). Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] . Thus, there is no error in the finding rendered by the tribunal. Characterization of income - sale of factory land at Guindy, Chennai - capital gain OR business profit - HELD THAT:- On this issue, the tribunal after noting the finding rendered by the assessing officer, as to how the CIT(A) reversed the same, on its part, re-examined the factual position and elaborately considered the matter, took note of the decision of the Hon ble Supreme Court in CIT vs. G. Venkataswami Naidu [ 1958 (11) TMI 5 - SUPREME COURT] wherein held that the question whether gain made out of purchase and sale of the land, is an accretion or capital profit which may depend on particular facts and circumstances. After noting the said decision, the tribunal on facts, held that the view taken by the CIT(A) was fully justified. Thus, we find that there is no error in the manner in which the tribunal has approached the matter on all the aforementioned issues and we find that there is no question of law much less substantial questions of law arising for consideration in this appeal.

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• 2021 (12) TMI 104
  Search and seizure proceedings initiated u/s 132 - a diary that was found during the search were seized recordings of various transactions with abbreviations and amounts against each of the abbreviations - disclosure of information in respect of an assessee as per sec 138 - Police Notice issued by the 3rd respondent directing the 1st petitioner [Director General of Income-Tax (Investigation)] to hand over the diary that was seized during the raid conducted on the residence of the complainant - proceedings in FIR in Crime notice issued under Section 91 of the Cr.P.C - police want to secure from the petitioners is the diary for investigation of the allegations of offences by invoking Section 91 of the Cr.P.C., thereby summoning the diary - HELD THAT:- As on a conjoint reading of Sections 132 and 138(2) of the Act, would lead to an unmistakable conclusion that once such seizure proceedings are undertaken by the officials of the Department under authorisation, they are not obliged to furnish any document to any public servant in respect of such matters relating to the assessee against whom search and seizure is taken up. Section 293 of the Act mandates a bar of institution of suits in civil Courts. The entire lis that is now generated between the parties is required to be considered on the touchstone of the aforesaid provisions of the Act. Search and seizure proceedings were initiated against the 2nd respondent/complainant, who is a Member of the Legislative Assembly of the State of Karnataka. The search and seizure proceedings led to seizing of several documents, incriminating materials and a particular diary. The petitioners were empowered to conduct search and seizure of the said documents under Section 132(4) of the Act. Section 132(4-A) also deals with, where any books of accounts, other documents, money, bullion, jewellery or other valuable articles are found in the possession or control of any person in the course of search it is presumed that they belong to the assessee. Therefore, those incriminating documents including the diary were seized by the respondents during search. Section 138 of the Act, deals with disclosure of information in respect of assesses. What the Police wanted was also the diary, which was allegedly seized during the raid. This notice under Section 91 of Cr.P.C., was replied by one of the petitioners on 20-04-2017, clearly indicating that no proceedings can be instituted against the petitioners and not even a notice seeking documents can be issued as confidentiality of such documents is provided under Section 138 of the Act. The Police did not stop at this, but issued another communication on 20-06-2017, directing one of the petitioners to disclose the names and addresses of persons of the Department, who had accompanied the petitioners during search and seizure. Since the communication referred to the FIR for the aforesaid offences, the petitioners immediately replied seeking a copy of the FIR and thereafter, have filed this writ petition challenging the aforesaid action. Admittedly, search and seizure is performed by the petitioners under the Act. The bar of divulging any information or any document taken into custody during the seizure is available under Section 138(2) of the Act. In the teeth of the said provision in the Act, the notice issued by the Police, on the face of it, would be contrary to law. The notice that the Police issued on 13.04.2017, is on the strength of the FIR for the alleged offences as aforesaid. Since the notice emanates pursuant to registration of the FIR, the registration of the FIR itself was bad in law, as recording of FIR against the petitioners, who are officers of Government and have performed certain acts of search and seizure under Section 132 of the Act, cannot be brought to prosecution particularly, for the offences alleged in the FIR. The complaint ought not to have been entertained by the 3rd respondent/Police and registration of FIR ought not to have been done in the light of the aforesaid provisions of the Act. What the complainant wants in the complaint is, the diary and what the Police want to secure from the petitioners is the diary and no other document is required by the Police for investigation of the allegations of offences, which run into 15 in number, but only the diary. It cannot but be held that the 3rd respondent was acting at the behest of the complainant to secure the diary by invoking Section 91 of the Cr.P.C., thereby summoning the diary. Since the FIR could not have been registered against the petitioners in view of the specific bar under Section 293 of the Act, the aftermath of such registration would be rendered without authority of law. What the Police want to investigate is the act of search and seizure done by the petitioners, communication and police notice that are sent to the petitioners. Therefore, it cannot be urged by the learned senior counsel that the FIR names nobody and the writ petition would not be maintainable. This submission deserves to be rejected and is rejected. As per PARMESHWARI DEVI SULTANIA AND OTHERS [ 1998 (3) TMI 3 - SUPREME COURT ] held that the trial Court and the High Court were not correct in rejecting the contention of the revenue and holding that the suit was not barred under Section 293 of the Act. The purport of Section 293 of the Act, is considered in its affirmation. Therefore, the proceedings initiated is rendered unsustainable in view of Section 293 of the Act and the subsequent Police Notice seeking the diary alone is rendered flawed and any further proceedings taken thereto by the 3rd respondent against the petitioners are all rendered unsustainable.

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• 2021 (12) TMI 103
  Deduction u/s 80P - Tribunal holding that the appellant society cannot be considered as Co operative Societies engaged in the collective disposal of labour of its 2016 members as contemplated under section 80P(2) (a) (vi) of the Act and therefore not eligible for deduction under section 80P - contention of the revenue that the appellant society having granted registration under the Kerala Co-operative Societies Act, 1969 and the Rules as a Miscellaneous Society and therefore assessee cannot be treated as a society engaged in collective disposal of labour of its members and therefore is not eligible/entitled for the deduction under Section 80P(2)(a)(vi) - HELD THAT:- The statement is placed on record, accepted and accordingly by following the principle laid down in Peravoor Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham [ 2015 (9) TMI 506 - KERALA HIGH COURT] case the questions are answered in favour of the Revenue and against the assessee. Eligibility of the appellant for deduction under section 80 P (2) (a) (iii) - HELD THAT:- We have taken note of the limited submissions made in this behalf and we are persuaded to accept the second limb of assessee s argument, namely that the matter needs to be reexamined by the Tribunal. For, our examining the question of law independently, the possibility of treading into pure and simple facts cannot be obliterated. Which, for informed reasons in law, we do not want to undertake. Therefore, the question is answered, to the extent indicated above, in favour of the assessee and against the Revenue. Substantial question no.3 is remitted to Tribunal for consideration and disposal, in accordance with law.

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• 2021 (12) TMI 102
  Disallowance of license fee paid by the assessee - Revenue treated the amount to be capital expenditure and not allowable u/s 37 - SLP has been filed by Revenue in some other case on identical facts - HELD THAT:- Agreement pursuant to which the impugned license fee has been paid was entered by the assessee in the year 2006 and assessee has been paying the license fee and in the past the payment of license fee has been accepted by Revenue as no addition by disallowing the same has been made. The addition has been made only in the year under consideration for the reason that Department has filed SLP in the case of Bharti Hexacom Ltd.[ 2013 (12) TMI 1115 - DELHI HIGH COURT] Vodafone Mobile Services Ltd [ 2016 (11) TMI 1702 - DELHI HIGH COURT] - Hon ble Bombay High Court in the case of CIT vs. Forest Development of Maharashtra Ltd. 2017 (7) TMI 1384 - BOMBAY HIGH COURT] has observed that even if the principle of res judicata does not apply in tax matters yet consistency and certainty of law would require the State to take uniform position and not change their stand in the absence of change in facts and /or law. In the present case, admittedly there is no change in the facts and/or law. In such a situation, merely because on SLP has been filed by Revenue in some other case on identical facts, cannot be justification for the disallowance of expenditure. We thus find no justification in the order of AO for disallowing the expenditure. We therefore direct the deletion of addition made by AO. Thus the ground of assessee is allowed

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• 2021 (12) TMI 101
  Revision u/s 263 by CIT-A - Limited scrutiny assessment completed u/s 143(3) of the Act by the Assessing Officer - TDS liability - HELD THAT:- We are of the considered view that as demonstrated from the facts this is case of limited scrutiny in which the AO is bound by such scope - AO had asked for details of TDS and the assessee had complied with by providing all the details with written submission and evidences that the TDS were deducted and deposited also in the Government account. These details have been furnished before CIT - CIT has nowhere in the order has dealt with the merits of these details furnished before him nor he could justify as to how the order of the AO was erroneous so as to be prejudicial to the interest of the Revenue. It is the settled position of law that the CIT-A must point out in his order as to how the assessment order is erroneous and prejudicial to the interest of Revenue. TDS have been deducted and deposited by the assessee in the Government account, therefore, there is no loss caused to the Revenue. In this case of the limited scrutiny assessment the AO could not have travelled beyond such scope to enquire about TDS details which was not the subject-matter of such limited scrutiny. Nonetheless these TDS details were called for by the AO and verified and they were duly submitted by the assessee. DR could not refute these facts on record. In such scenario, the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. We hold that the assumption of revisionary jurisdiction u/s 263 and consequent order passed by the Pr.CIT is bad in law and deserves to be quashed. - Decided in favour of assessee.

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• 2021 (12) TMI 100
  Income taxable in India - payments made to the law firm in Poland -nature of Fee for technical services under section 9(1) (vii) of the Act as well as Article 13 of India Poland DTAA - Criteria for Entities to be considered a tax resident - eligibility of Exception to section 9(1)(vi)(b) / 9(1)(vii)(b) - Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State - Whether the Partnership firm was not eligible for benefit under India Poland DTAA, on the ground that assessee was a fiscally transparent entity not liable to tax in Poland in its own right and Whether the Partners are fully taxable in respect of their shares of income in Partnership Firm as per CIT? - HELD THAT:- Only on fulfillment of either of the two circumstances under Article 15, one could say that the money received by the non resident is taxable in India. Due to non fulfillment of above conditions, taxability under Article 15 does not trigger. In the present case the nonresident payee has given a certificate that there is no fixed place of business/PE in India, more particularly placed at page 40-41 of paperbook. Nothing has been brought on record by the revenue to establish that the non resident payee has any fixed place of business PE in India. In that view of the matter, the income ceases to be taxable in India. - Decided in favour of assessee. Entitled to interest on refund of tax deposited u/s 195 - Hon ble Supreme Court in case of UOI vs Tata Chemicals Ltd. [ 2014 (3) TMI 610 - SUPREME COURT] held that, deductee is entitled for interest on refund tax deposited under section 195. The Ld..AR placed reliance on CBDT Circular No.11/2016 allowing interest on refund under section 244A on excess TDS deposited under section 195 of the Act. Nothing contrary has been brought on record by the Ld.CIT DR. Respectfully following the decision of Hon ble Supreme Court, we hold that the deductee is entitled to interest on refund of tax deposited under section 195 of the Act. Taxability of payment made by assessee in India to the non residents - payee is a non resident and assessee filed application under section 248 seeking declaration that payments made to Zintro is not taxable in India - HELD THAT:- We find the issue to be decided in the grounds raised by the assessee are in relation to taxability of payment made by assessee in India to the non residents. The decision of Hon ble Karnataka High Court in the case of Samsung Electronics Co. Ltd. [ 2011 (10) TMI 195 - KARNATAKA HIGH COURT] on the basis of which the revenue authorities concluded that the payment to non-residents are in the nature of royalty and FTS, now stand overruled by the decision of the Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] and therefore in all fairness, the issue is to be remanded to the Ld.CIT(A) to examine the terms of the agreement under which services were rendered to the Assessee. The Ld.CIT(A) is directed to analyse in the light of the provisions of the DTAA and principles laid down by Hon ble Supreme Court, as to whether the same would amount to Royalty and FTS. We accordingly remand the issue to the Ld.CIT(A). The Ld.CIT(A) will afford opportunity of being heard to the Assessee in the set aside proceedings.

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• 2021 (12) TMI 99
  Estimation of income on investment - estimated notional addition at the rate of 6% on the investment - addition being entry fee @ 6% on the investment by the assessee in the shares of unlisted companies treating the assessee as an entry operator and that the assessee is not showing any income which according to him is against the normal human behavior - HELD THAT:- Considering the fact that no such addition has been made in the preceding or in the subsequent assessment years on account of notional income on investment @ 6% as adopted by the A.O. in the instant case and upheld the Ld. CIT(A), therefore, respectfully following the decision of the Hon ble Supreme court in the case of Excel Industries Ltd.,[ 2013 (10) TMI 324 - SUPREME COURT ] thus hold that the Ld. CIT(A) is not justified in sustaining the addition made by the A.O - Decided in favour of assessee.

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• 2021 (12) TMI 98
  Disallowance u/s 14A r.w.r. 8D - assessee s submission that no exempt income has been earned - HELD THAT:- As in light of the ratio laid down by the Hon ble Supreme Court in the case of South Indian Bank Ltd [ 2021 (9) TMI 566 - SUPREME COURT] in our considered opinion, there cannot be any disallowance of interest for earning exempt income and there is no reason to interfere with the findings of the ld. CIT(A). Disallowance on account of administrative expenses - We find that there is no dispute that all the investments are made in the sister concern in which the assessee has deep business interests and under business expediency, it has invested various amounts in shares of group companies. In our considered opinion, these investments are strategic investments made for furtherance of business of its sister concern. Apart from the investments in Bajaj Corp Ltd and Bajaj Hindustan, all other investments are unquoted investments and any appreciation in the value of shares at the time of sale would be taxable. Assessee has submitted details of each and every item of expenditure and has specifically pointed out that none of the same is incurred for the purpose of earning exempt income. It was brought to the notice of the Assessing Officer that the directors of the company are also employees of the sister concern, who do not draw any remuneration from the company and take care of entire investment work. No error or infirmity has been pointed out by the Assessing Officer who has simply computed the disallowances as per formula given in Rule 8D. In our considered view, such mechanical approach of the Assessing Officer has no legs to stand on. We, therefore, decline to interfere with the findings of the ld. CIT-A. Appeal of revenue dismissed.

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• 2021 (12) TMI 97
  Estimation of income - bogus purchases - HELD THAT:- As decided in M/S. CHORON DIAMOND (I) PVT. LTD. AND VICE-VERSA [ 2017 (11) TMI 184 - ITAT MUMBAI] AO and the CIT(A) after examining the documents furnished by the assessee have concluded that the assessee has obtained bogus purchase bills from suspicious dealer. It is observed that although the dealer from whom the assessee has made alleged bogus purchases has confirmed the sale transactions but no document in the form of stock inward register, delivery receipt, etc. has been furnished by the assessee to prove trail of goods. The assessee has failed to discharge its onus in proving authenticity of purchase transactions. Therefore, the primary contention of the assessee to delete entire addition is rejected. Tribunal in the case of assessee engaged in trading of diamonds restricted the addition to 2% of unproved purchases. Considering the fact that the nature of assessee s business and the nature and manner of addition is similar to the one referred in the aforesaid case, the addition on account of unproved transactions in the instant appeal is restricted to 2%.

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• 2021 (12) TMI 96
  Disallowance u/s 14A - Suo moto disallowance made by assessee - AO has recorded the primary facts regarding the investment made by the assessee in the shares/mutual funds as on 31.03.2013 - AO noted that the working of suo moto disallowance by the assessee u/s 14A was considered but no basis was explained by the assessee to arrive at the said figure - excluding the investment made in the subsidiary company while computing the average investment for the purpose of disallowing the indirect administrative expenses under Rule 8D(2)(iii) - HELD THAT:- No substance or merits in the objection of the assessee regarding non recording of satisfaction by the AO while making the disallowance u/s 14A. Excluding the investment made in the subsidiary company while computing the average investment for the purpose of disallowing the indirect administrative expenses under Rule 8D(2)(iii) of the Income Tax Rules the issue is now covered by the decision of Hon ble Supreme Court in the case of Maxopp Investment Vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT ] AND own case [ 2021 (3) TMI 157 - ITAT DELHI ] Accordingly, this issue is decided against the assessee and in favour of the Revenue and to that extent the order of the CIT(A) is set aside. The AO is directed to re-compute the disallowance by including the investment made in the subsidiary company. Disallowance made on account of interest expenditure - Revenue has not disputed the fact that the assessee has taken the loans for specific purpose and the AO has not brought any material or fact on record to say that the assessee has diverted the loan to the investment made in the shares and mutual funds. Further, during the year under consideration, though there is a change in the investment portfolio, however, the total investment as on 31.03.2013 is less than the investment as on 31.03.2012. Accordingly, there is no extra fund utilized by the assessee during the year for making the investment in shares or securities but the sale proceeds of the existing investment is more than the purchases, if any made during the year. AO has not made any disallowance on account of interest expenditure u/s 14A of the I.T. Act in the preceding years. Therefore, when no fresh investment is made other than the proceeds of the sale of existing investment then the disallowance of interest expenditure is not warranted. Hence, we do not find any error or illegality in the impugned order of the CIT(A) qua this issue of deleting the disallowance made by the AO u/s 14A of the Act on account of interest. Deduction in respect of Education Cess and Secondary and Higher Education Cess - HELD THAT:- We follow the earlier order of this Tribunal in assessee s own case for the AY 2012-13[ 2021 (3) TMI 157 - ITAT DELHI ] - AO is directed to consider the claim of deduction of Education Cess as per law in the same terms as directed by this Tribunal in the earlier decision.

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• 2021 (12) TMI 95
  Addition u/s 40A(3) - payment made in cash by the assessee to its group companies - Revenue s argument in support of Section 40A(3) cash payment disallowance is that the operation thereof ought to be excluded merely because the twin entities herein are group concerns - HELD THAT:- There is hardly any dispute about the basic fact that both the payer and payee(s) herein are group entities only. Overwhelming genuine expenditure payments deserve to be accepted even if they have been made in cash. We further take note of the hon ble apex court s landmark decision in Attar Singh Gurmukh Singh [ 1991 (8) TMI 5 - SUPREME COURT] that this statutory provision comes into play so as to prevent unaccounted cash from being ploughed in the system. Case law Harshita Chordia [ 2006 (11) TMI 117 - RAJASTHAN HIGH COURT] and Anupam Tele Services [ 2014 (2) TMI 30 - GUJARAT HIGH COURT] held that such overwhelming genuine payments ought not to be disallowed in light of the restrictive interpretation of rule 6DD of the Income Tax Rules which is not self-exhaustive. We therefore quote hon ble apex court s yet another landmark decision in CIT Vs. K.Y.Pilliah [ 1966 (10) TMI 35 - SUPREME COURT] to express our complete agreement with the CIT(A) s conclusion deleting the impugned Section 40A(3) disallowance in entirety without delving much deeper in the relevant facts herein. - Decided against revenue.

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• 2021 (12) TMI 94
  Reopening of assessment u/s 147 - addition u/s 68 - eligibility of reason to believe - onus to prove - Whether failure on the part of assessee to disclose full and true material facts? - HELD THAT:- Assessee had filed during original assessment proceedings, copy of PAN card, copy of Bank Accounts of investors, acknowledgment of return of income of investors, confirmation of invest and a copy of such documents. These are all primary evidences which the assessee had filed and there was no further query from Assessing Officer and therefore, there is no failure on the part of assessee as the assessee had disclosed all the material facts which it was bound to disclose and if the Revenue wanted to further investigate the matter at that stage it could have easily directed the assessee to furnish more facts. The above documents filed during original assessment proceedings clearly contains the names, addresses, PAN numbers and copy of returns and copy of Bank account of investors and the Assessing Officer could have investigated further to examine as to whether these entities were entry providers or not. These documents also contain the fact that new shares of Rs. 10/- each were issued to new shareholders at a premium of Rs. 240/- each. The assessee during original assessment proceedings had filed copy of bank accounts of investors also and Assessing Officer could have examined bank accounts of such investors to examine as to whether any funds were rotated to make available funds in these bank accounts for making investment in the assessee s company. Nothing has been done by Assessing Officer and now it cannot be said that there was failure on the part of assessee to disclose full and true material facts - Decided in favour of assessee.

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• 2021 (12) TMI 93
  Rejecting the application for approval u/s 80G - assessee trust is registered u/s 12AA and is stated to be engaged in carrying out charitable activities including spiritual activities, samuhik prayers, yoga camp, old age home and also owns a temple namely Balaji Mandir - HELD THAT:- The assessee trust is providing food to poor, organizing medical camp and so it was not justified on the part of the Ld. CIT(E) to observe that the assessee trust is only running for religious activities. Even in the Income Tax expenditure account apart from the expenses for Pooja Samagri and Poshak trust has incurred other expenses. This facts goes un-rebutted by Ld. DR, therefore, so for as the first observation of the Ld. CIT(E) that the assessee is carrying out only religious activities does not seems to have merit as the evidence placed on record shows that the assessee trust is carrying out other activities also as enumerated in the trust deed. As regards the second observation of the ld. CIT(E) that the assessee trust has violated the provision of section 80G(5B) of the Act, we find that as per the provisions of section 80G(5B) for institutions or fund to qualify for getting approval u/s 80G(5B) of the Act the expenditure of religious nature incurred during any previous year should not exceed 5% of its total income. In the impugned order Ld. CIT(E) has alleged that the expenditure of religious nature incurred by the assessee has exceeded 5% of the total income. We, however on going through the submissions of the Ld. counsel for the assessee as well as facts placed on record, find that during the year total receipts appearing in the income and expenditure account are at Rs. 14,11,089/- and carpus fund received during the year (as shown in the balance sheet end 31st March 2017) is Rs. 7,43,111/-. Thus total receipt of the trust for the year at Rs. 21,54,200/- and against the total receipts the alleged expenditure of religious nature amounts to Rs. 88,262/- which in percentage term comes to only 4.10% of the total receipt. Therefore, in our considered view assessee has not violated the provision of section 80G(5B). CIT(E) erred in denying the approval u/s 80G applied by the assessee in Form 10G since the assessee is carrying out activities both religious and charitable in nature and expenditure of religious nature during the year have not exceeded 5% of the total receipts, assessee should be granted necessary approval u/s 80G. Thus, grounds raised by the assessee are allowed.

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• 2021 (12) TMI 92
  TP Adjustment - adjustment of notional interest on loans and advances - Interest is charged on the outstanding debit balance of debtors with AE - HELD THAT:- As borne out on the record and not disputed that the AE company went into liquidation due to heavy losses and was dissolved as per the Governing Laws of the USA. The explanations were filed with documentary evidence in respect of liquidation of the company in USA - We are of the view that in such circumstances, the recovery of the amount due is doubtful and the TPO charging interest on such outstanding balances and advances cannot be treated as prudent practice. Therefore we considering the overall facts and the circumstances direct the TPO not to charge interest in respect of balance of advances and outstanding receivables of Peacock Diamond System Inc.USA and partly allow the grounds of appeal of the assessee. Additional claim of bad debts written off during the year - AO has not granted the deduction of bad debts written off as it is a fresh claim made in the assessment proceedings without fallowing proper remedy - HELD THAT:- We find as per the explanations submitted, the assessee should not be denied legitimate claim if supported with proper evidences and has to fallow due process of Law. Therefore we considering the facts direct the Assessing officer to verify the claim and examine the evidences. Accordingly, we restore this issue to the file of the A.O. with the above directions and to adjudicate on merits. The assessee should be provided adequate opportunity of hearing and shall cooperate in submitted the information. As in respect of setoff of brought forward losses and unabsorbed depreciation. We find there are conflicting calculations of the assessee which goes back to A.Y. 2008-09 and accumulated business losses and depreciation in the subsequent years which requires proper verification of facts and figures carried forwarded. Accordingly, we remit this disputed issue to the file of the Assessing officer to check and verify the accumulated brought forward claims and grant the setoff in the current year and allow the ground of appeal for statistical purpose. Non grant of TDS credit - HELD THAT:- We direct the A.O. to consider the information of tax credit as reflected in Form no 26AS and grant the TDS credit as per the law. Whereas, the charging of interest u/s 234B of the Act is consequential and requires no adjudication.

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• 2021 (12) TMI 91
  Reopening of assessment u/s 147 - Allegation v/s reason to believe - Fixed Deposits made in the name of Satyasai Educational Trust was not of the Trust but of the assessee - HELD THAT:- There is no dispute to the fact that the amount of the fixed deposit made in the assessment year 1999-2000. But similar addition in A.Y. 1999-2000 was made in the name of the Trust, Satya Sai Education Trust and was already taxed - CIT(A) in the order adjudicating the appeal of the assessee has categorically held that for Assessment years: 2000-2001 and 2001-2002, the fixed deposits were of the Trust and not of this Assessee. Therefore, the impugned addition made by the A.O. and confirmed by the learned CIT(A) is not sustainable, being double addition, has no legs to stand, as such, the same needs to be deleted. Further, the impugned fixed deposits were already assessed in the hand of the Trust much prior to the date of this Assessment, therefore, the contention of ld D.R. that the addition made in the hand of the Trust was on protective basis, hence he added it is added on substantive basis in the name of the assessee is not acceptable. The ld DR did not controvert the very relevant part that on maturity, the amount of FD was received and credited to the account of the Trust not to the assessee When the fixed deposits were of the Trust and treated as income of the Trust, the same amount made in the name of the assessee is directed to be deleted because this amounts to double taxation. In view of above, delete the addition and allow the ground Nos. 1 to 4 of appeal of the assessee. Addition being agricultural income - HELD THAT:- We find no positive substance in the contention of the ld A.R., therefore, same is confirmed.

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• Customs

• 2021 (12) TMI 90
  Validity of not considering the effect of earlier adjudication, pertaining to the same Assessee - extended period of limitation - correctness of demand of differential duty when the same is available to the appellant as Modvat Credit - Mis-description or suppression in the matter of classification - HELD THAT:- If the challenge to the order of the Tribunal dated 13.12.2016 in Appeal No. C/723/04 passed by the CESTAT, Court No.II impugned in this appeal is considered, it is seen that the order passed by the Tribunal in Appeal Nos. C/499 and 620/2004 on 22.02.2005 as well as the order passed by the Tribunal in Appeal No. C/02/06 also on 13.12.2016 by Court No.1 have attained finality. As regards the aspect of classification of the product in question, its classification under CTH 3824.90 as directed by the Commissioner (Appeals) on 29.03.2004 was accepted by the Assessee by not pursuing Appeal No. C/499/04 preferred by it before the Tribunal. Similarly, classification of the same product by the Commissioner (Appeals) vide order dated 06.10.2005 under Chapter sub-head 3824.90 was not challenged further by the Assessee. The Revenue had challenged the observations pertaining to mis-description in Appeal No. C-02/06 before the Tribunal but that appeal was also dismissed on 13.12.2016. The classification of the product imported is thus under Chapter sub-head 3824.90 which does not require re-examination. Mis-description or suppression in the matter of classification - HELD THAT:- The Tribunal (Court No.1) while passing this order dated 13.12.2016 found that the first appellate Court had relied upon the certificate issued by the supplier of the goods to come to the conclusion that the charge of mis- declaration did not arise. This order dated 13.12.2016 passed in Appeal No. C-02/06 has attained finality between the parties. It is also relevant to note that the allegation of mis-declaration is based on the same material and it is also not in dispute that the Assessee had declared the said goods as being coated with stearic acid 2T SA. The Tribunal in its impugned order has not assigned any independent reason for upholding the show-cause notice dated 30.01.2004. Once it is found that there was absence of mis-declaration or suppression facts which finding attained finality between the parties pursuant to the order dated 06.10.2005 passed by the Commissioner (Appeals) as affirmed by the Tribunal on 22.02.2005, there would be no occasion to invoke the provisions of Section 28(1) of the Act of 1962 for extending the period of limitation for issuing the show cause notice - It is thus found that the Tribunal while passing the impugned order failed to consider the appeal in its proper perspective and ignored the earlier adjudication dated 06.10.2005 when the Commissioner (Appeals) decided the appeal in favour of the Assessee by holding the goods to be classified under CTH 3824.90. A further finding was also recorded that there was no mis-declaration or suppression of correct description of the goods in question by the Assessee. The substantial questions of law are accordingly answered in favour of the Assessee. Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 89
  Seeking amendment of drawback serial number in the shipping bills - appellant procured Brass Artwares from local market falling under tariff heading 74199930 and exported the same - rejection of the request without any reasoning - the request was rejected by the Commissioner (Appeals) on the ground that whatever amendment sought by the appellant is not based on the existing documents and the documents is not in possession of the proper officer - HELD THAT:- These findings are apparently incorrect on the face of documents such as export invoices which clearly contained the correct HS Code 74199930. However, inadvertently in the shipping bills the incorrect drawback serial number 741802B was mentioned. In this position, it cannot be said that the amendment sought by the appellant is not on the basis of documents existing at the time of export and not in the possession of proper officer. The invoices and the packing list is basic documents and these documents are very much in the possession of officer who is supposed to check at the time filing the shipping bills. The appellant is squarely covered by the statutory provisions of Section 149 and proviso thereto - the appellant is entitled for amendment in the shipping bills and consequent differential drawback - Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (12) TMI 125
  Direction to maintain status quo - seeking vacation of stay granted - petitioner submits that the impugned order is wholly without jurisdiction and the Tribunal has failed to appreciate that the petitioner is a secured creditor whose rights are to be governed under the SARFAESI Act - HELD THAT:- There are no reason to stay the impugned order. Once the petitioner has itself approached the Tribunal by way of an application to seek vacation of order of status quo granted on 30.09.2021, which application is pending adjudication before the Tribunal and is now listed on 15.11.2021, the Tribunal will necessarily consider the petitioner s plea that the impugned order was without jurisdiction. Moreover, it is the petitioner s own case that it has already taken possession of the subject properties and therefore merely because it has been directed to maintain status quo, no grave or irreparable loss is likely to be caused to the petitioner if the direction to maintain status quo continues further. While issuing notice in the petition, the application for interim relief being CM APPL. 35687/2021 is rejected - List on 29.11.2021.

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• 2021 (12) TMI 88
  Seeking impleadment of petitioner as a proforma respondent as no direct allegation has been posed against the applicant in the instant company petition - HELD THAT:- The Respondents here and the Petitioners have submitted that the Petitioner is not a Director and he is reportedly a shareholder. The contention of the Petitioner is wrong and he has ceased to be a Director from the year 2005 as per Form 32 filed with the RoC on his resignation as Director. Hence, the Respondents here have not made a Party in the said Company Petition and thereby this IA is not maintainable. It will not be appropriate to entertain the prayer of the Petitioner to implead him as a Proforma Respondent in the Company Petition, without ascertaining the veracity of the allegations and counter allegations, the status of the Petitioner and the reasons mentioned by the Petitioners in the Company Petition for not impleading the Petitioner here as Respondent or Proforma Respondent in the Company Petition. The prayer made in this IA to implead the Petitioner here as proforma Respondent in the Company Petition is hereby rejected.

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• Securities / SEBI

• 2021 (12) TMI 67
  Principles of natural justice - Action under SEBI Act - Attachment and freezing the bank accounts both, savings and term deposits - appellant would contend that no notice was issued to the appellant before issuing the order of attachment of the bank accounts - availability of alternative remedy of appeal to petitioner - HELD THAT:- The appellant seeks to bring his case within the ambit of the exception which has been drawn by the Hon ble Supreme Court in WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. [ 1998 (10) TMI 510 - SUPREME COURT] to show that the order of attachment is in violation of principles of natural justice and this argument is sought to be buttressed by referring to Section 226(3)(iii) of the IT Act. Be it noted that Section 226 of the IT Act deals with other modes of recovery. Sub-Section (1) of Section 226 states that where no certificate has been drawn up under Section 222, the assessing officer may recover the tax by one mode or modes provided in Section 226. From the recovery certificate placed before us by the learned counsel appearing for the appellant, we find that the certificate has been issued under Section 28A of the SEBI Act of 1992 read with Section 222 of the IT Act. Therefore, the provisions of Section 226 of the IT Act cannot be resorted to by the appellant as it deals with cases where no certificate has been drawn under Section 222 of the IT Act. In any event, the certificate of recovery and the consequential attachment and freezing of the bank account and the term deposits is in exercise of the powers conferred under the SEBI Act of 1992. The said enactment is a special statute and it is a self-contained code as that of the IT Act. Therefore, on the facts set out by the appellant, we are not inclined to exercise our jurisdiction under Article 226 of the Constitution of India and we agree with the conclusion arrived at by the learned Single Bench. The order impugned does not call for interference and the appeal stands dismissed.

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• Insolvency & Bankruptcy

• 2021 (12) TMI 87
  Failure to act as per approved Resolution Plan - prayer to reinstate the COC - seeking to direct the resolution professional to ensure that the Corporate Debtor remain as a going concern - prayer made to grant 90 days to the resolution professional to make another attempt for a fresh process rather than forcing the Corporate Debtor into liquidation on account of fraud committed by Liberty - HELD THAT:- Under the approved resolution plan, both the parties have to fulfil their obligations. The Corporate Debtor has also to perform its obligations simultaneously so that the amount of Rs. 500 crores be transferred to the financial creditors/lenders of the Corporate Debtor. It is the case on behalf of the respective parties that the aforesaid obligations are to be performed mutually and simultaneously. It is reported that Implementation and Monitoring Committee (IMC) has been constituted comprising of resolution professional, three identified lenders of the Corporate Debtor and nominee of DVI to supervise the implementation of the resolution plan. The approved resolution plan has to be implemented at the earliest and that is the mandate under the IBC. As per Section 12 of the IBC, subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of 180 days from the date of admission of the application to initiate such process, which can be extended by a further period of 180 days - As per the third proviso to Section 12 of the IBC, which is also inserted by Act 26 of 2019, where the insolvency resolution process of a Corporate Debtor is pending and has not been completed within a period stated hereinabove, i.e., within a period of 330 days, such resolution process shall be completed within a period of 90 days from the date of commencement of the IBC amendment Act, 2019, i.e., 16.08.2019. The entire resolution process has to be completed within the period stipulated under Section 12 of the IBC and any deviation would defeat the object and purpose of providing such time limit. However, by earlier order, the time limit has been condoned in view of the various litigations pending between the parties and in the peculiar facts and circumstances of the case. Therefore, any further delay in implementation of the approved resolution plan submitted by DVI which as such has been approved by the adjudicating authority in the month of July, 2020 and even the appeal against the same has been dismissed subsequently, any further delay would defeat the very object and purpose of providing specific time limit for completion of the insolvency resolution process, as mandated under Section 12 of the IBC. All the concerned parties to the approved resolution plan and/or connected with implementation of the approved resolution plan including IMC to complete the implementation of the approved resolution plan, within a period of four weeks from today, without fail. Appeal disposed off.

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• 2021 (12) TMI 86
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - financial debt or not - acknowledgment of debt within the meaning of Section 18 of the Limitation Act, 1963 - HELD THAT:- On consideration of documents and correspondences including the Balance Sheets, the conclusion is inescapable that the amount of Rs. 40.75 Crores advanced by the Appellant was nothing but was a financial debt within the meaning of I B Code and the Adjudicating Authority committed error in holding that the Appellant is not a Financial Creditor . Whether the acknowledgment contained in the Balance Sheets as noted above, the Appellant will have a fresh period of limitation as per Section 18 of the Limitation Act? - HELD THAT:- Even if 01.09.2012 is treated to be the date of default, the three years period will be there till 31.08.2015 and there being acknowledgment of the debt in the Balance Sheet for the years 2014-15 upto 2018-19 there shall be fresh period of limitation on each acknowledgment and Application filed on March, 2020 cannot be said to be barred by time - It is true that each Balance Sheet has to be examined on a case to case basis to establish whether acknowledgment of liability in fact has been made. It is noted that all the Balance Sheets referred above clearly establish acknowledgment of liability by the Corporate Debtor. Thus, Section 18 is clearly attracted giving fresh period of limitation even in the event, we accept the submission of the Respondent that default was committed on 01.09.2012. The Adjudicating Authority committed error in rejecting the Application filed by the Appellant under Section 7 - Appeal allowed.

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• 2021 (12) TMI 85
  Maintainability of application - disqualification under Section 29(A)(e) of the I B Code, 2016 - it is observed that Appellant is trying to gain a backdoor entry on the guise of presenting themselves as MSME - eligibility to be considered as one of the Prospective Resolution Applicant - Amendment was brought to Section 240-A of the IBC, 2016, whereby some of the clauses of the Provisions of this Code not made applicable to Micro, Small and Medium Enterprises - HELD THAT:- It is a fact that the Appellant stated that he will provide Net Worth Certificate at the time of submission of Resolution Plan. It is also pertinent to note that the Resolution Professional vide his order dated 20.11.2020 also recorded the reason given by the Appellant that the Appellant will be providing suitable Net Worth Certificate issued by the Chartered Accountant at the time of submission of Resolution Plan, as it will be done with other Investors. Further, the Appellant in its Written Submissions at Para 5 has stated the reasons regarding Net Worth criteria of Rs. 2 Crores stated that the appellant was unable to submit the same on account of the wrongful disqualification under Section 29A(e) which rendered the Appellant ineligible to submit the Resolution Plan/EOI. Taking into consideration the Appellant s Averments (as recorded by the Resolution Professional in his order dated 20.11.2020) this Tribunal permits the Appellant to file/submit Net Worth Certificate to the Resolution Professional and the Resolution Professional may consider the same. It is unequivocal that the Corporate Debtor is an MSME and as held by this Tribunal that it is not necessary for the Promoters to compete with other Resolution Applicants to regain the control of the Corporate Debtor - It is apt to mention that the Appellant in Grounds of Appeal stated that the Appellant is ready to bring Rs. 45 Crore in various forms and settle the liabilities and stated that this amount is much more than the submissions made by other two applicants in the first Expression of Interest and submitted that the same has been communicated to the Resolution Professional several times. The Maximization of the Value of the Assets of Corporate Debtor is to be kept in mind in achieving its object. To give an opportunity to regain the control of the Corporate Debtor, the Management/Promoters/Erstwhile Directors of the Corporate Debtor being an MSME, not necessary to compete with other Resolution Applicants - Resolution Professional is hereby directed to consider the Resolution Plan of the Appellant being erstwhile Director/Promoter of the Corporate Debtor (admittedly an MSME). Appeal allowed.

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• 2021 (12) TMI 84
  Seeking permission of the Adjudicating Authority to allow them to auction the ceased goods - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There is no dispute that finished goods of the Corporate Debtor were attached on 31.01.2018. Permission for auctioning of the said goods was sought for by Application I.A. No. 463 of 2020 filed on 12.07.2019 - The order dated 15.01.2019 passed by the Adjudicating Authority which is part of the Appeal clearly indicates that Moratorium was declared by the Adjudicating Authority by para 14 of the order The Adjudicating Authority did not commit any error in not allowing I.A. 463 of 2019 in view of pendency of CIRP - there is no infirmity in the impugned order passed by the Adjudicating Authority rejecting I.A. 463 of 2019. Furthermore, the Appellant has already filed his claim on 04.06.2019 in Form-B. Appeal dismissed.

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• 2021 (12) TMI 83
  Maintainability of appeal filed belatedly - whether the Appeals filed by the Appellant are within time or they are barred by limitation? - HELD THAT:- The question which has been raised before us is that since free of cost copy as required by Rule 50 has not been received by the Appellant, the period of limitation shall not begin to run and the Appeals filed by the Appellant on 20.09.2021 are well within time. When we read Section 61 of the I B Code with Rule 50 of the NCLT Rules, it cannot be said that limitation in filing of an Appeal under Section 61 shall not begin to run unless free of cost copy is sent by Registry and received by a party. The limitation to file Appeal under Section 61 cannot be treated to be under suspension till free of cost copy is received by party as enjoined by Rule 50. Any such interpretation shall not dwell with the statutory scheme. The I B Code has been enacted to speed up Insolvency Resolution Process and there is a timeline fixed for different steps filing Appeal within 30 days to the Appellate Tribunal is also part of the same thread of timeline which run through different provisions of the I B Code . Rule 50 is contained in Chapter IV which deals with the procedure and Rule 50 is a part of procedural law which oblige the Registry to send free of cost copy. However, the scheme of limitation for filing Appeal as delineated by Section 61 does not give any scope to the submission that limitation to file an Appeal under Section 61 shall not begin till free of cost copy under Rule 50 is received by a party. The provisions of the Limitation Act are applicable to the I B Code proceedings which is well settled and is no longer debatable after insertion of Section 238A in I B Code . Section 12 of the Limitation Act provides for period which can be excluded in period of limitation. In the present case, the case of the Appellant is that he applied certified copy of the order twice firstly on 21.01.2019 and secondly on 29.07.2021. Applying the ratio of the judgment of the Sagufa Ahmed [2020 (9) TMI 713 - SUPREME COURT], in the present case, at best Appellant can claim that period of limitation did not start running till he applied for certified copy of the order i.e. till 21.01.2019. The Appeals have been filed on the strength of certified copy of the judgment which was applied on 29.07.2021 which certified copy of the Application is claimed by the Appellant after more than three years of the delivery of the judgment whereas in Sagufa Ahmed s case certified copy of the judgment was applied within 27 days from the delivery of judgment. The Appeals have been filed after expiry of limitation. The Appeals are barred by time and cannot be entertained - appeal dismissed.

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• 2021 (12) TMI 82
  Irregularity in the e-auction process in terms of Regulation 33 and Schedule 1 of the IBBI (Liquidation Process) Regulations, 2016 or not - existence of whiff of any short of collusion between the highest bidder and other bidders - validity of cancellation of present auction - HELD THAT:- Regulation 33(3) of the Liquidation Process Regulation casts a duty upon the Liquidator not to proceed with the sale in the circumstances mentioned therein. Regulation 33(3) is not an exhaustive provision applicable only in the specific circumstances stated therein. Thus, it cannot be said that the Liquidator can cancel an auction only if Regulation 33(3) is attracted. Clause 1(11) of Schedule-I specifically authorises a Liquidator to conduct multiple rounds of auctions to maximise the realisation from the sale of assets. Multiple rounds of auctions can be conducted because the Liquidator is competent to hold successive auctions. In the instant case, R-2 have issued the certificate of sale in favour of R-1 in compliance with the directions of the Learned Adjudicating Authority. All steps taken by the Liquidator in compliance with the impugned Order will stand reversed subject to the outcome of this Appeal - there is no concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids. Public auctions are held to get the best possible price. Once those aspects are recognised, there appears to be no basis for contending that the owner who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate. It is clear that the learned Adjudicating Authority proceeded on the wrong assumption, i.e. the sale was successfully concluded; therefore, arriving at the wrong conclusion that the sale has been successfully concluded; could not have been cancelled by the learned Liquidator - It is well-settled law laid down by Hon ble Supreme Court in the catena of decisions that the successful bidder in the auction sale does not acquire any vested right in law to enforce the auction, more particularly, when the auction notice confers power on the Authority conducting the auction to cancel the auction in its discretion. An auction sale is not completed under Clause 12 merely because the person has been declared the highest bidder. Instead, the sale is concluded only on full payment of the amount envisaged under Clause 13 of Schedule 1 - it is clear that the auction bidder has no vested right to claim the auction in its favour in a liquidation sale. Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 81
  Seeking to appoint M/s. Thomas VM and Co. or any other Chartered Accountant to reconcile the accounts of the Applicant and the Corporate Debtor, in terms of the directions of this Hon ble Tribunal - seeking direction to Respondents to cooperate in reconciliation of the accounts of the Applicant and the Corporate Debtor - HELD THAT:- Mr. Thomas VM and Co. Chartered Accountants is appointed, and since no Chartered Accountant was proposed by the CD/Liquidator, GC Chopra Co Chartered Accountants, is appointed as Chartered Accountants, to reconcile the accounts of the Applicant and the Corporate Debtor and to furnish their report to this Hon ble Tribunal within four weeks from the date of the report. The cost payable to the Chartered Accountant appointed by this Tribunal shall be Rs. 1,00,000/-. Both the Applicant and the Respondent have to share the costs equally. The Respondent is directed to co-operate with the Chartered Accountants in reconciliation of Accounts - application disposed off.

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• PMLA

• 2021 (12) TMI 80
  Grant of pre-arrest bail - laundering of proceeds of crime - economic offences or not - HELD THAT:- Economic offences constitute a class apart and need to be viewed with a different approach in the matter of bail, as such offences are normally sourced in deep-rooted conspiracies involving huge loss of public funds and need to be looked at seriously, being grave offences that affect national economy as a whole and posing a serious threat to the financial health of the country. The irrefutable fact is that the present case originated from FIR No.5(3) 2018 dated 24.03.2018 and the evidence seized in connection therewith is already in the custody of the authorities. The petitioner has also been granted anticipatory bail in relation to the said FIR in August, 2019. Documentary evidence, which would be the fulcrum of the case, having already been secured and given the passage of time since registration of the earlier case, there is no manifest risk of the petitioner tampering with evidence or witnesses at this late stage. Further, his status and firm roots in society being undisputed, the petitioner is not shown to be a flight-risk. This Court finds no tangible reason to believe that he would abscond or try to evade the law and, in any event, the same can be guarded against by imposing restrictions. The petitioner shall be released on bail forthwith in the event of his arrest, subject to conditions imposed - bail petition allowed.

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• 2021 (12) TMI 79
  Money Laundering - siphoning of funds - petitioner being vexed for two times - offences punishable under Sections 409, 420, 468, 471 and 477 IPC and Section 13(2) r/w 13(1)(c) and (d) of Prevention of Corruption Act - HELD THAT:- Merely for the reason that clause (a) of Section 44(1) states that Special Court is constituted for trial of offence under Section 4; it cannot be construed that the case has to be committed to the Special Court in accordance with Section 209 Cr.P.C. In the expression, without the accused being committed, the word committed does not take the meaning as can be ascribed to it in the context of Section 209 Cr.P.C. Here expression takes the meaning that even without production of accused before the court or even in the absence of the accused, the Special Court can take cognizance. The petitioner being vexed two times - HELD THAT:- The CBI prosecuted the petitioners for the offences which are not same as offences under Section 4 of PMLA Act. Article 20(3) of the Constitution of India as also Section 300 of Cr.P.C. are applicable only when prosecution is launched for the second time for the same offence or offences in relation to a particular incident of crime, which is not the factual position here. Therefore this ground also fails. Bar envisaged under Article 20(2) of the Constitution of India - HELD THAT:- Although the Supreme Court in STATE OF BOMBAY VERSUS KATHI KALU OGHAD [ 1961 (8) TMI 34 - SUPREME COURT] has held that the interest of an accused is protected under Article 20(2) of the Constitution of India if his statement is taken during investigation, it is also held that such statement must have been outcome of compulsion during the time the accused is in police custody. Para 20 of the judgment which Sri. M.S. Shyamsundar referred to, states that the protection under Article 20(3) is available to accused in the court room and also outside the court during investigation if it is a compelled testimony. By applying the conclusions drawn by the Supreme Court in Kathi Kalu Oghad, the position that becomes clear is that if a person is examined under Section 50 of PMLA during investigation, he cannot seek protection under Article 20(3) of the Constitution unless he was an accused at the time of investigation. If it is assumed that protection under Article 20(3) is still available even if a person is not shown as accused during investigation, the prosecution can still prove its case based on other evidence. In this view, third point of argument of Sri. M.S. Shyamsundar also fails. Petition dismissed.

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• 2021 (12) TMI 78
  Seeking grant of bail - smuggling of drugs - MDMA pills - possession of the contraband exceeding the permissible limit - generation of proceeds of crime by collecting money from their customers in exchange for supply of illegal Narcotic Drugs, Psychotropic Substances, Controlled Substances and Conveyances - HELD THAT:- There is huge difference of cash deposits and declaration of income by the petitioner in his income tax returns. There is suppression of fact regarding the amount transferred in favour of accused No. 1. The conduct of the petitioner in getting the loan by paying interest from the banks by mortgaging the property and transferring the said amount to accused No. 1 is also suspicious - information that are collected from accused No. 1, the petitioner and other witnesses disclose that there is regular and huge transfer of amount from the petitioner to the bank account of accused No. 1. However, there are stray instance of payment of amount in cash. The explanation given by accused Nos. 1 4 regarding transfer of these amounts as financial assistance to run the Restaurant or to withstand the loss in the business or for undergoing surgery etc., appears to be not probable and the transfer of the amount even though appears to be unusual as the same are not said to have disclosed while filing income tax returns, the same cannot be the sole basis for recording the finding the guilt of the petitioner at this stage. Even though the statements given by the petitioner under Section 50(3) of PMLA is admissible in evidence, the veracity of such statements will have to be judged at the time of trial and a conclusion cannot be drawn at this stage that the money transferred between accused Nos. 1 4 are the proceeds of crime as contended by the prosecution. Section 19 of PMLA deals with the power to arrest the accused by the Director or other officer authorized in this behalf. Such power to arrest could be exercised only on the basis of the material with a reason to believe that such person is guilty of an offence punishable under PMLA - Section 439 of Cr.P.C., deals with special power of High Court or the Court of Sessions regarding bail. Even though, this section is general provision under Cr.P.C., Section 65 of PMLA enables the provisions of Cr.P.C., to apply to the offences under the Act insofar as they are not inconsistent with the provisions of the Act with regard to arrest, search seizure, attachment, confiscation, investigation, prosecution and all other proceedings under PMLA. Admittedly, there are no other provisions under PMLA which is inconsistent with Section 439 of Cr.P.C. Therefore, filing of the petition by the petitioner under Section 439 of Cr.P.C. cannot be find fault with. The petitioner is not required to be detained in custody for any other purpose except to ensure his presence before the Trial Court and to see that he will not commit such offence while on bail. Under such circumstances, his further detention in custody would amount to infringement of his valuable right to life and personal liberty. Therefore, the petitioner is entitled to be enlarged on bail - Petition allowed.

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• Service Tax

• 2021 (12) TMI 77
  Levy of service tax - works contract service - contract between the supplier of RMC i.e. appellant and buyer of RMC - manufacture of Ready Mix Concrete (RMC) - activity of laying of RMC using of concrete pumping at the site of the buyer of RMC - case of the department is that it is a composite contract for supply and laying of RMC to the laying of RMC falls under works contract and liable to service tax - calculation of service tax - time limitation - HELD THAT:- As per the contract, the entire transaction is of Works Contract. However, the appellant is mainly engaged in the manufacture of Ready Mix Concrete and selling the same to various buyers. As per the nature of product, it is necessary to supply RMC in a specialized container and after reaching at the customer s site RMC is delivered by carrying out the process of pouring, pumping and laying of concrete at the customer s place. The RMC cannot be unloaded at a particular place and thereafter shifted the same to the particular place at site. Due to peculiar nature of RMC, it is unavoidable to deliver at particular place where the RMC is required to be laid-down. It is also the fact that appellant being manufacturer of RMC, paying excise duty not only on the value of the goods but also on the value of service of pumping, laying of concrete and the same is included in the sale value. Therefore, no value is escaped from payment of excise duty. Accordingly, the entire activity right from the manufacturing of RMC and delivery at the site of the customer is excisable activity. Merely because the contract says that it is works contract, the actual nature of transaction cannot be over looked. The appellant is treating the transaction of Works Contract in terms of VAT Act only - it is clear that manufacturing activity of RMC cannot be covered under Works Contract by any stretch of imagination. Therefore, even though there is contract of Works Contract basically for the purpose of VAT Act, cannot be applied in the present transaction of manufacture and sale of goods in terms of Section 2(f) of Central Excise Act, 1944. The department has very much accepted the activity of the appellant as manufacturing and collected the excise duty on the entire value of RMC which includes the pumping and laying of RMC at site. Therefore, the department cannot take two stands, in one hand manufacturer for demanding excise duty and on the same activity, on the other hand demanding service tax under Works Contract. The activity of the appellant is pre-dominantly of manufacture and sale of goods. Accordingly, the same cannot be charged with service tax under Works Contract service. Calculation of service tax - HELD THAT:- The value should be in terms of Rule 2A(i). Therefore even by any stretch of imagination Rule 2A(ii) is applicable, in such cases the value should be determined as per clause (A) of rule 2A(ii). Accordingly, the value at the most should have been arrived at by allowing 60% abatement and only 40% of the gross value should be chargeable to service tax. Therefore, the calculation of service tax is incorrect. T ime Limitation - HELD THAT:- The appellant admittedly paid the excise duty on the entire transaction and this excise duty paid by the appellant was charged and collected by the Revenue. Therefore, the entire activity of manufacture, supply and manner of delivery of goods is very much on record. Accordingly, no suppression or mis-declaration can be attributed to the appellant for invoking extended period of demand. Accordingly, the demand for longer period in the show cause notice dated 03.05.2016 is not sustainable on the ground of limitation also. The activity of the appellant is entirely of excisable activity. Therefore, the same will not fall under Works Contract service in terms of Finance Act, 1994. Accordingly, the demand of service tax raised under Works Contract service is clearly not sustainable - appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 76
  Application for early hearing - monetary amount involved in the appeal - levy of service tax - testing charges received by it in respect of the services rendered in India to its foreign client - whether Revenue s appeal be decided on merit or monetary limits in the light of Circular No. 390/MISC/116/2017-JC dated 22.08.2019? - scope of the Circular - HELD THAT:- On careful reading of the Circular, it is found that at para 4 of the said Circular it is stated that issues involving substantial questions of law as described in para 1.3 of the instruction dated 17.8.2011 would be contested irrespective of the prescribed monetary limits. Whether the appellant is liable to pay Service Tax on testing charges received by it in respect of the services rendered in India to its foreign client? - HELD THAT:- As per the said issue involved, it does not fall under any of the two categories, which are specified in para 1.3 of Circular dated 17.8.2011. Therefore, merely if any substantial question of law involved, the Revenue is not allowed to file appeal before this Tribunal. Since the amount involved is less than Rs. 50 lakhs, therefore, as per the clear positions from both the above Circulars, no substantial question of law related to constitutional validity of law and/or ultra vires of notification/instruction/circular/order etc. involved in the present case. Therefore, the present case does not fall under the exclusion category as prescribed in para 1.3 of the Circular dated 17.8.2011. As per the issue involved in the present case, the Revenue is not supposed to file appeal before this Tribunal being amount involved is less than Rs. 50 lakhs. Therefore, the appeal filed by the Revenue is dismissed on monetary limits vide Circular dated 22.08.2019.

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• Central Excise

• 2021 (12) TMI 75
  CENVAT Credit - inputs or not - items used for fabrication items of supporting structures of the capital goods - supporting structures, fabricated and embodied to the earth - constitute as Goods under the statute or not - Rule 2 of the CENVAT Credit Rules, 2004 - HELD THAT:- The Respondent Company had obtained a Central Excise Registration under Section 6 of the Central Excise Act, 1944 (CE Act) for the purposes of manufacturing of sponge iron and its derivative products. For manufacturing, the Respondent constructed/installed 4 100TPD Sponge Iron Plant and availed CENVAT Credit on input on various items during the relevant period i.e. from May to August, 2004. A part of the inputs included construction materials. The Court finds that in the present case the categorical finding on fact concurrently both by the Commissioner and the CESTAT is that the iron steel and items were in fact used in the fabrication of identifiable capital goods which were in turn used for manufacture of excisable goods. Further, the circular dated 2nd December, 1996 issued by the CBEC fully supports the case of the Respondent. Reference could also be made to the decision in Commissioner of Central Excise, Jaipur v. M/s. Rajasthan Spinning Weaving Mills Ltd. [ 2010 (7) TMI 12 - SUPREME COURT ] where the Supreme court allowed MODVAT credit on steel plates and M.S. channels used in the fabrication of chimney for the diesel generating set. The CESTAT was justified in dismissing the Department s appeal since the credit was claimed in respect of the inputs used for fabrication items supporting structures of capital goods - the CESTAT was right in law by allowing CENVAT Credit on the goods used for fabrication of supporting structure for capital goods - Tribunal was right in law in holding that the fabrication goods used for supporting structures were capital goods for which CENVAT Credit was allowable. Appeal dismissed - decided against appellant.

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• 2021 (12) TMI 74
  Waiver of SCN - differential duty with interest paid before issuance of SCN - Sale of goods with brand name as well as goods without brand name - invocation of Section 11A(2B) of Central Excise Act, 1944 - HELD THAT:- The Adjudicating Authority has quoted Section 11A(1)(2) of Central Excise Act, 1944 which is duly amended as per the amendment made by Finance Act, 2011. However, in the present case, the period involved is March 2008 to January 2010 therefore, the un-amended provision shall be applicable Unamended sub-Section 11(2B) shall apply for waiver of show cause notice. Therefore, there is fundamental error on the part of the Adjudicating Authority for considering wrong provision i.e. amended provision, which is effective by enactment of Finance Act, 2011. We also find that the appellant have paid entire differential excise duty along with interest. There is only minor difference in the interest amount as per Revenue even that is also in dispute as regard the correct calculation thereof. The case needs to be reconsidered - matter is remanded to the Adjudicating Authority for reconsideration and for passing de-novo order - Appeal allowed by way of remand.

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• 2021 (12) TMI 73
  CENVAT Credit - transfer of credit - appellant have entered into service agreement with clients of different countries - requirement of ISD registration, for their Mumbai office from which they have transferred the credit - case of petitioner is that there is only one factory and one office there is no need for registration of ISD - time limitation - period from April 2011 to October 2015 - HELD THAT:- It is seen that appellant has claimed they have only one manufacturing unit. Revenue has not produced any evidence otherwise. In these circumstances there is no need of ISD Registration. There is no categorical finding of Commissioner on the nature of services and where the same are used. In the statement of Shri Minesh Gupta Manager, Warehousing and Stores, he has not clarified where these services have been used and the purpose of availing these input services. The manner of distribution of expense on the fixed percentage basis has also not been elaborated in the order or in the notice. In these circumstances we constrained to remand the matter relating to appeal no. E/10987/2016 back to Adjudicating Authority to give clear finding in respect of each of this service disputed for the purpose of Cenvat credit. Appeal disposed off.

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• 2021 (12) TMI 72
  Rejection of refund of the amount of penalty deposited - penalty was imposed under Rule 173Q of Central Excise Rules, 1944 - HELD THAT:- It is admitted fact on record that the Hon ble Supreme Court in the case of Hans Steel Rolling Mills [ 2011 (3) TMI 2 - SUPREME COURT ] has held that penalty under Rule 173Q is not imposable where an assessee is operating under the compound levy scheme which is a complete code in itself. The order of Hon ble Supreme Court is binding on all sub-ordinate Courts including the Adjudicating Authority (under the taxation law) as provided in Article 141 of the Constitution of India. The observation of the Commissioner (Appeals) for denying the refund for amount of penalty under Rule 173Q, is erroneous and bad - the impugned order-in-appeal is modified and penalty of Rs. 25,000/- deposited under the provisions of Rule 173Q is held refundable - Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 71
  Clandestine removal - IMT Bars - Area based exemption - contravention of re-credit facility available as per N/N. 39/2001- CE date 31.07.2001 - suppression of fact in making clandestine removal or not - time limitation - HELD THAT:- is an undisputed fact that the appellant at the time of clearance of the goods under area based exemption Notification No- 39/2001- CE dated 31.07.2001 has not paid the duty. Moreover, the clearance of goods was made under the guise of that waste coal and accordingly goods were clandestinely cleared and evaded the payment of excise duty. Though the appellant subsequently paid duty but at time of clearance they have mis-declared and cleared the goods clandestinely. Therefore, the appellant has clearly contravened the condition stipulated under the Notification No. 39/2001- CE. Therefore the re credit of the duty paid subsequently is not admissible to the appellant. The appellants plea that there is no suppression of fact in the present case is of no help to them - there is clear contravention with malafide intention of Notification No 39/2001-CE. Therefore the appellant is not entitled for re- credit of the amount of duty paid in respect of goods clandestinely removed. Appeal dismissed.

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• CST, VAT & Sales Tax

• 2021 (12) TMI 126
  Classification of goods - local sales of stainless steel wires as well as the inter-State sales not supported by C forms - Entry No.85 of Schedule II of the VAT Act - HELD THAT:- The petitioners are hopeful of making a request for the similar stand to be taken by the Tribunal. 9.1 Without entering into the merit and without endorsing anything that has been done in the past years by the Tribunal as no such challenge solely is before this Court on the ground of absence of the Presiding Officer and for want of forum as the parties litigating must not suffer, the Court first has chosen to intervene and presently would direct the respondent not to pursue any coercive recovery till the appointment of Presiding Officer is made. Acceding to the request for present, without entering into the merit of the matter and without deciding also on the propriety of the earlier order of the Tribunal waiving the pre-deposit and of remanding the matter to the concerned authority, the impugned recovery notice dated 11.10.2021 is being stayed till the appointment of either the President or Member of the Tribunal. The additional two weeks time shall be given to the petitioners as taking up his matter may take some more time. Petition disposed off.

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• 2021 (12) TMI 70
  Principles of natural justice - impugned order passed without furnishing the copy of the report which was directed to be furnished by this Court - HELD THAT:- Though the petitioner is correct in stating that the order dated 03.09.2014 in W.P.No.23785 of 2014 was not fully complied, it is noticed that the order passed by the respondent which is challenged in this writ petition was not based on the aforesaid report which was directed to be furnished. Therefore, the petitioner cannot challenge the impugned order passed by the respondent on merits The petitioner did not take advantage of the personal hearing afforded by the respondent. Therefore, the petitioner cannot challenge the impugned order stating that the impugned order is either a non-speaking order or was passed without following the Principles of Natural Justice. Further, what is evident is that the petitioner has scuttled the proceedings by filing frivolous writ petitions twice and this is the third attempt. The petitioner is given liberty to workout the remedy before the Appellate Commissioner by filing an appeal within a period of thirty days from the date of receipt of a copy of this order - Petition disposed off.

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• 2021 (12) TMI 69
  Application for rectification of the order - Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The petitioner has filed the rectification application under Section 84 of the TNVAT Act, 2006 on 01.10.2021. The respondent has proceeded to pass the impugned rectification order on 12.10.2021 without calling upon the petitioner to furnish the documents even after no personal hearing was granted by the respondent. The respondent should have called upon the petitioner to file the documents and thereafter passed appropriate orders for rectification of the order. This Writ Petition is allowed by directing the respondent to pass appropriate orders within a period of thirty days from the date of receipt of a copy of this order.

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• Indian Laws

• 2021 (12) TMI 68
  Dishonor of Cheque - rejection of prayer for waiver of pre-deposit under Section 148 of the Negotiable Instruments Act, 1881 - power of Appellate Court to order payment pending appeal against conviction - Whether in the facts and circumstances, is it a fit case for making an exception for waiver of minimum pre-deposit of 20% of compensation awarded by the trial Court? - HELD THAT:- It is settled law that general rule under Section 148 of the Act is of pre-deposit and waiver is only an exception for which special reasons need to be assigned - It would not be appropriate to pre-judge the appeal at the stage of deciding the waiver of pre-deposit. The petitioners have filed Criminal Miscellaneous Applications annexing their bank account statements and their concerns to support the contention that they are not financialy capable to make the pre-deposit. The trial Court considering the facts and appreciating the evidence adduced convicted petitioners under Section 138 of the Act. The difference in the amount of cheque and the figure mentioned by the petitioners was duly explained by the complainant. The defence raised that it is a case of misuse of cheque for security, was met by the complainant by producing documents. The contention raised on behalf of Sarabjeet Singh Wadhawan that he is neither a partner nor signatory to the cheque, does not enhance the case for waiver of pre-deposit. He stated that he was looking after the day-to-day affairs of firm. In cross-examination, he admitted his signatures on balance confirmation. The resignation of Simarpal Singh Wadhawan was found to be self-serving document. He deposed that after his resignation, Manjit Kaur and Sarabjeet Singh Wadhawan were partners whereas earlier Manjit Kaur and Simarpal Singh Wadhawan were partners - contention that conditions under Section 141 of the Act are not satisfied qua Simarpal Singh Wadhawan and Sarabjeet Singh Wadhawan was dealt with by the trial Court and would be subject matter of the appeal. It is not the stage to re-appreciate the evidence and to deal in detail with fulfilment of pre-requisites of Section 141 of the Act. SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [ 2005 (9) TMI 304 - SUPREME COURT] is the case dealing with the liability of the Director of the company. It was held that mere holding designation is not enough. As per Section 141, the person should be incharge and responsible for conducting the business. In the present case, the trial Court has relied upon the evidence adduced which indicates participation of Simarpal Singh Wadhawan and Sarabjeet Singh Wadhawan in day-to-day working of the business. No case is made out for waiver of pre-deposit, criminal revision petitions are dismissed. However, time granted for making the pre-deposit is extended by thirty days.

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• 2021 (12) TMI 66
  Dishonor of Cheque - existence of legally enforceable liability upon the petitioner or not - cheque in question had been issued in discharge of any legal liability or not - drawing of presumption or not - Section 138 of NI Act - HELD THAT:- Though the complainant during her cross-examination has not been able to state anything regarding the income of her husband and has even feigned ignorance about the Income Tax Returns, but the complainant, who is a widow, may not be knowing about the financial details of her husband and may not be having access to income tax record maintained by her late husband. In any case, even if it is presumed that the amount advanced by the complainant s husband to the petitioner was not shown in the Income Tax Return, the same itself would not wash off the liability of the loanee (petitioner) to repay the loan amount when there is nothing to doubt the factum of issuance of cheque and the story put forth by complainant regarding loan having been advanced by her late husband. The facts of the present case do make out for drawing a presumption as regards the existence of a legal liability in terms of Section 139 of the Act particularly when there is nothing on record to rebut the same. There is a mandate of presumption of existence of liability and upon proof of issuance of cheque the onus shifts to the accused/petitioner to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of Section 138 of the Act. In the instant case, the petitioner has only recorded his statement under Section 313 Cr.P.C. and has not adduced any evidence to rebut the presumption that the cheque was issued for consideration - Once the facts on record remained unrebutted with no substantive evidence of defence of the petitioner to explain the incriminating circumstances appearing in the complaint against him, no error can be said to have been committed by the Courts below. There is certainly no evidence to show that the body writing on the cheque in question is in a different hand or ink and has been made by a person other than the person, who had signed on the cheque. But, that as it may, even if there is any such difference in hand-writing, the same would be immaterial once the signatures on the cheque in question are not disputed - Hon ble the Supreme Court in BIR SINGH VERSUS MUKESH KUMAR [ 2019 (2) TMI 547 - SUPREME COURT] , has held that if a signed blank cheque is voluntarily presented to a payee towards some payment, the payee may fill up the amount and the other particulars and that such difference in hand-writing ipso-facto would not invalidate the cheque or render its authenticity doubtful. This Court does not find any infirmity in the findings recorded by the trial Court and as upheld by the lower Appellate Court and the same, thus, do not warrant any interference - Revision petition dismissed.

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• 2021 (12) TMI 65
  Dishonor of Cheque - petitioners were declared as proclaimed persons, without due service having been effected - even a clear period of 30 days was not given from the date of affixation - principles of natural justice - HELD THAT:- From a comparison of the address of the petitioners mentioned in the complaint under Section 138 of the Act of 1881 (Annexure P-1) and the address of the petitioners which has been mentioned in the memo of parties in the present petition, it is clear that the address of the petitioners as has been mentioned in the complaint is not correct. A perusal of the zimni orders which have been annexed with the present petition would also show that the petitioners were never served. The proclamation dated 09.03.2018 (Annexure P-5) would show that the date fixed in the same was 30.04.2018 whereas, as per the statement of Makhan Singh, PHG dated 30.04.2018 (Annexure P-6), affixation had been done on 23.04.2018 and thus, clear period of 30 days has not been given to the petitioners for appearance. It is, thus, apparent that the proceedings declaring the petitioners as proclaimed persons are bad on the said account alone and thus, the registration of the FIR under Section 174-A of the IPC is illegal. It is further clear that the petitioners had joined the proceedings in the complaint case under Section 138 of the Act of 1881 and had been granted the benefit of bail as is apparent from order dated 09.07.2021. Petition allowed.

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• 2021 (12) TMI 64
  Withdrawal of the captioned writ petition - pendency of the proceedings persuaded by the petitioners - HELD THAT:- The order challenged on the ground that after hearing all the parties the matters were reserved for judgment vide order dated 19.01.2021 and thereafter the matters were not notified in the cause list published by the Tribunal for pronouncement. It is only when the petitioners received the email from Resolution Professional intimating the uploading of the order dated 01.03.2021, the petitioners came to know about the order. According to the petitioners, in absence of the listing of the matters for pronouncement of judgment, the pronouncement cannot be construed to be pronouncement in the realm of law. Clearly, the matter was remitted back to the Tribunal only for the limited purpose of requesting for stay of the order pronounced for the interregnum period and to prefer an appeal by the aggrieved party. Accordingly, the Tribunal has listed the application and passed an order dated 29.10.2021 whereby, the request of the stay of order was acceded to and the order dated 01.03.2021, was kept in abeyance for a period of two weeks in order to enable the concerned parties to prefer appeal. The present writ petitions are nothing but an attempt on the part of the petitioners to abuse the process of Court, relitigating the same subject matter - the petitions are disposed of as withdrawn.

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