TMI Tax Updates - e-Newsletter
December 28, 2020

Case Laws in this Newsletter:

GST Income Tax Corporate Laws Insolvency & Bankruptcy PMLA Service Tax CST, VAT & Sales Tax Indian Laws

Highlights / Catch Notes

• GST:

  Intimation for suspension and notice for cancellation of registration - New GST Form inserted
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• GST:

  Restriction on furnishing of information in PART A of FORM GST EWB-01 - New circumstances included - Rule 138E of the Central Goods and Services Tax Rules, 2017
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• GST:

  Information to be furnished prior to commencement of movement of goods and generation of e-way bill - Validity period of e-way bill reduced to half (other than transportation by Ship) - Rule 138 of the Central Goods and Services Tax Rules, 2017
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• GST:

  Restrictions on use of amount available in electronic credit ledger - Mandatory payment of GST in cash @1% (restriction in utilizing ITC in excess of 99%) in certain specified circumstances - New Rule 86B of the Central Goods and Services Tax Rules, 2017
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• GST:

  Form and manner of furnishing details of outward supplies - New restriction imposed in furnishing GSTR-1 return for failure to furnish GSTR-3B returns in specified circumstances - Rule 59 of the Central Goods and Services Tax Rules, 2017
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• GST:

  Documentary requirements and conditions for claiming input tax credit - The credit of ITC shall be limited to 5% where the invoices were not furnished by the supplier - Rule 36 of the Central Goods and Services Tax Rules, 2017
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• GST:

  Cancellation of registration - consequential amendments corresponding to sub-rule (2A) of rule 21A - Rule 22 of the Central Goods and Services Tax Rules, 2017
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• GST:

  Suspension of registration - Power to Revoke the suspension anytime during the proceedings - Rule 21A of the Central Goods and Services Tax Rules, 2017
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• GST:

  Suspension of registration - During the suspension period under Sub-rule (2) or (2A), no refund u/s 54 shall be granted - Rule 21A of the Central Goods and Services Tax Rules, 2017
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• GST:

  Suspension of registration - before suspension, no reasonable opportunity of being heard shall be afforded - Rule 21A of the Central Goods and Services Tax Rules, 2017
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• GST:

  Suspension of registration - Procedure prescribed for suspension of RC in case of discrepancy is found in the GST returns - Rule 21A of the Central Goods and Services Tax Rules, 2017
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• GST:

  Registration to be cancelled in certain cases - 3 More circumstances included where RC can be cancelled - Rule 21 of the Central Goods and Services Tax Rules, 2017
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• GST:

  Verification of the application and approval - Amendments with regard to procedure and time limit for grant of registration certificate - Rule 9 of the Central Goods and Services Tax Rules, 2017
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• GST:

  Application for registration - Provisions amended for Aadhaar authentication or taking biometric information as the case may be - Rule 8 of the Central Goods and Services Tax Rules, 2017
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• GST:

  Maintainability of application - matter that is being investigated by the Directorate of GST Intelligence - we agree with the decision taken by the lower Authority that the application for advance ruling is inadmissible in terms of the 1st proviso to Section 98(2) of the CGST Act. - AAAR
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• GST:

  Legality and validity of the Provisional attachment of all Bank Accounts - misclassification of products - Merely because there is a proceeding under section 67 would not mean that recourse to such a drastic power as under section 83 would be an automatic consequence, more so when petitioner has cooperated with the investigation. That apart, section 83 speaks of provisional attachment of any property including bank account. The record is silent as to whether any attempt has been made for provisional attachment of any property of the petitioner and instead why the bank accounts should be attached. Besides, by use of the word “may” in sub-section (1) of section 83 Parliament has made it quite clear that exercise of such a power is discretionary.- HC
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• GST:

  Detention of goods alongwith the vehicle - There was no e-way bill accompanying the consignment. - when goods of the same consignment covered by multiple invoices exceed the limit of ₹ 50,000/-, necessarily there should be generation of e-way bill. Otherwise the mandate for generation of an e-way bill would be defeated and rendered redundant enabling the consignors to issue any number of bills having value below ₹ 50,000/- and consign them in one vehicle. - HC
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• GST:

  Profiteering - Construction of flats / property - The DGAP has reported that the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period and therefore it did not qualify to be a case of profiteering - the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. - NAPA
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• GST:

  The advocate of the petitioners are to be allowed to be present during the interrogation of the petitioners. It is further clarified that he/they should be made to sit at a distance beyond hearing range, but within visible distance and the lawyer must be prepared to be present whenever the petitioners are called upon to attend such interrogation. - HC
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• Income Tax:

  Disallowance of operating expenses @ 10% - expenses being of unverified, unreasonable and excessive - without pointing out any defects in the bills and vouchers of operating expenses, the ad-hoc disallowance at the rate of the 10% out of the operating expenses cannot be sustained. - AT
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• Income Tax:

  Disallowance of licence fee - Issue of cash system/mercantile system of accounting is not having any impact on the issue under consideration because the amount of advance licence fees paid during Financial Year 2005-06 was just an advance and it converted into expenditure during Financial Year 2006-07 (Assessment Year 2007-08). - AT
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• Income Tax:

  Denial of registration u/s 12A r.w.s. 12AA - Charitable activity u/s 2(15) - there is no bar in granting registration to a religious institution under the relevant provisions. Moreover, as per the objects of the trust, the trust is also involved in charitable activities as noted above. - AT
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• Income Tax:

  Revision u/s 263 - amount of HUF was deposited not in the account of the HUF but into the account of the individual - CIT has enquired before invoking the provisions of Section 263 of the I.T. Act. Accordingly, the revised grounds of appeal raised by the assessee have no merit and the same are dismissed. We, therefore, of the opinion that the Pr. CIT has taken a right view in quashing the assessment framed by the AO and directing the AO to make fresh assessment. - AT
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• Indian Laws:

  Dishonor of Cheque - The Trial Court has failed to appreciate the burden of proof and drawing presumption. Only on untenable contentions and evidence, the Trial Court has acquitted the accused. Therefore, the judgment of the Trial Court is illegal, perverse and needs interference by this Court and liable to be set aside. - The Criminal Appeal filed under Section 378 (4) of Code of Criminal Procedure by the appellant / complainant is allowed. - HC
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• Indian Laws:

  Dishonor of Cheque - Insufficient Funds - case of appellant is that the alleged cheques were never issued by the petitioner for any legally enforcible debt - The offence under Section 138 of the Negotiable Instruments Act is attracted for whatever reason the cheques are returned. In the case on hand, other circumstances are proved that the impugned cheques were issued by the petitioner for security purpose while borrowing the loan, in the year 2008. Therefore, the impugned complaint is nothing but clear abuse of process of Court - HC
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• Service Tax:

  Manpower recruitment or supply agency service - deputation of employees - To provide general back office and operational support to such group companies situated overseas - The persons seconded to the appellant working in the capacity of employees and payment of salaries etc is made to such employees by group companies only for disbursement purposes and hence employee-employer relationship exist and such an activity cannot be termed as “manpower recruitment or supply agency” - AT
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• Service Tax:

  Admissibility of abatement - availing and utilizing cenvat credit for providing the output services - in this case the appellant had paid the service providers / settled the service providers bill subsequently from March 2006 for the service rendered prior to 01.03.2006 and has correctly claimed the legitimate CENVAT credit available. - AT
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• Service Tax:

  Business Auxiliary Services - The demand of service tax in respect of the amount collected on account of bouncing of cheques and cancellation of orders is also not sustainable. These amount are penal in nature and not towards consideration for any service - AT
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• Service Tax:

  Levy of Service Tax - when such services are provided for marketing of the product in the overseas market to meet the regulatory requirement, the same cannot fall under the category of Scientific or Technical Consultancy Services - the contention of Revenue that the consultancy charges paid to M/s DADA Consultancy and M/s Pharphe Dr. D.R. Iban be taxable under the category of ‘Scientific or Technical Consultancy Services’ is devoid of merit and cannot be sustained. - AT
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• Service Tax:

  Renting of immovable property Service - Bundled services - Appellant had entered into agreements with films Distributors under which the theatrical exhibition rights for exhibition of the films were transferred to the Appellant, either for a specified number of shows and period or in perpetuity - it is not possible to sustain the finding that ‘renting of immovable property’ service had been rendered by the Appellant to the film distributors. - AT
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Articles

• ANALYSIS OF AMENDMENTS NOTIFIED VIDE NOTIFICATION NO- 94/2020 ON Payment of tax, Credit Availment, Restriction on Filing of GSTR 1, Way Bill and Suspension of Registration
• Analysis of S.115BAB- tax @ 15% optional for companies- lot of care and considerations are required.

Notifications

• GST - States

• S.O. 206 - dated 23-12-2020 - Bihar SGST
  Supersession of the notification No. S.O. 199 dated the 18th December 2020

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• S.O. 205 - dated 23-12-2020 - Bihar SGST
  Seeks to recinds the notification No. S.O. 201, dated the 18th December, 2020

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• S.O. 203 - dated 18-12-2020 - Bihar SGST
  Seeks to amend Notification No. S.O. 111, dated the 29th June, 2017

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• S.O. 202 - dated 18-12-2020 - Bihar SGST
  Seeks to amend Notification No. S.O. 388, dated the 14th October, 2019

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• S.O. 201 - dated 18-12-2020 - Bihar SGST
  Prescribe return in FORM GSTR-3B of BGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

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• S.O. 200 - dated 18-12-2020 - Bihar SGST
  Prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021

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• S.O. 199 - dated 18-12-2020 - Bihar SGST
  Seeks to prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year

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• EXN-F(10)-33/2018 - dated 15-12-2020 - Himachal Pradesh SGST
  Corrigendum - Notification No. 74/2018-State Tax dated the 31st December, 2018,

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• EXN-F(10)-15/2020. - dated 15-12-2020 - Himachal Pradesh SGST
  Corrigendum - Notification No. 50/2020-State Tax dated the 27th October, 2020

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• ERTS (T) 65/2017/Pt. II/147 - dated 15-10-2020 - Meghalaya SGST
  Amendment in Notification No. CTAS-65/2017/12, dated the 29th June, 2017

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• ERTS (T) 65/2017/Pt. II/146 - dated 15-10-2020 - Meghalaya SGST
  Amendment in Notification No. 47/2019 - State Tax issued vide No. ERTS (T) 4/2019/452, dated the 9th October, 2019

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• ERTS (T) 65/2017/Pt. II/145 - dated 15-10-2020 - Meghalaya SGST
  Prescribe return in FORM GSTR-3B of MGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

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• ERTS (T) 65/2017/Pt. II/144 - dated 15-10-2020 - Meghalaya SGST
  Prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021

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News

• Rajasthan becomes 6th State to complete ease of doing business reforms ; Additional borrowing permission of ₹ 2,731 crore issued

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Case Laws:

• GST

• 2020 (12) TMI 1049
  Maintainability of application - Appellant is aggrieved by the grounds on which the lower Authority has refused to admit the application for advance ruling - Classification of goods - Flavoured Milk - taxable at the rate of 5% under Schedule IV of the GST Act or otherwise? - HELD THAT:- An appeal can be filed before the Appellate Authority only against an advance ruling pronounced in terms of Section 98(4). In this case, there is no ruling given by the lower Authority on the question raised in the application. The application for advance ruling was not admitted and was rejected by order dated 2nd Sept 2020 in terms of Section 98(2) of the CGST Act. Such an order rejecting the application for advance ruling as inadmissible is not an order appealable before us. In the instant appeal, the Appellant is aggrieved by the grounds on which the lower Authority has refused to admit the application for advance ruling which is that, the question on which the ruling was sought is a matter that is being investigated by the Directorate of GST Intelligence and hence the application cannot be admitted in terms of the proviso to Section 98(2) of the CGST Act. The Appellant has assailed this reasoning and argued that it is only when the same question is being investigated by the 'concerned officer' that the provisions of the proviso to Section 98(2) will apply; that investigations conducted by any other agency will not attract the said proviso. The Appellant has gone into great length in analyzing the intention of the legislature in framing the provisions of Section 98 and has put forth the view that it is only proceedings which are pending before the 'concerned/jurisdictional officer' which qualify for rejection in terms of the proviso to Section 98(2) - the statement recorded by the DGSTI pursuant to the summons issued, deals mainly with the classification and rate of tax of the product Flavoured Milk - Therefore, we agree with the decision taken by the lower Authority that the application for advance ruling is inadmissible in terms of the 1 st proviso to Section 98(2) of the CGST Act. The appeal filed against the non-admittance of the application for advance ruling is not maintainable in as much as the impugned order is not an appealable order under Section 100 of the CGST Act, 2017 - Appeal dismissed.

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• 2020 (12) TMI 1048
  Maintainability of petition - effective alternative remedy of an appeal - penalty order - HELD THAT:- Against Ext.P8 order, the petitioner has an effective alternative remedy by way of an appeal before the appellate authority. This is more so because I do not find the impugned order vitiated by any error of jurisdiction or violation of the rules of natural justice so as to warrant an interference with the same in these proceedings. Accordingly, without prejudice to the right of the petitioner to move the appellate authority under the GST Act, the writ petition in its challenge against Ext.P8 penalty order, that was passed as early as in 2019, is dismissed. It is directed that recovery steps for recovery of amounts confirmed against the petitioner by Ext.P8 penalty order shall be kept in abeyance for a period of three weeks, so as to enable the petitioner to move the appellate authority in the meanwhile.

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• 2020 (12) TMI 1047
  Legality and validity of the Provisional attachment of all Bank Accounts - misclassification of products thereby evading payment of due GST - carbonated fruit drinks, such as, Big Cola, Big Orange Cola, Big Lemon and similar other products - HELD THAT:- According to respondent No.2 proceedings have been launched against the taxable person i.e. the petitioner under section 67 of the CGST Act to determine the tax or any other amount due from the petitioner. From the information available it had come to the notice of respondent No.2 that petitioner has three bank accounts as mentioned therein. In order to protect the interest of revenue and exercising power conferred under section 83 of the CGST Act, respondent No.2 provisionally attached the aforesaid bank accounts. Respondent No.3 i.e. the Branch Manager of the ICICI Bank was requested that no debit should be allowed to be made from the said accounts or any other accounts operated by the petitioner without the prior permission of the department. Where the proper officer not below the rank of Joint Commissioner has reasons to believe that a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand or has claimed input tax credit in excess of his entitlement under the CGST Act or has indulged in contravention of any of the provisions of the CGST Act or the rules made thereunder to evade tax under the CGST Act, he may authorize in writing inspection of any place of business of the taxable person - A conjoint reading of the relevant provisions of section 67 and section 83 of the CGST Act would indicate that the proper officer must have reasons to believe that the taxable person has suppressed any taxable transaction to evade payment of tax. It is not necessary for us at this stage to delve into the meaning of the expression reasons to believe employed in section 67 which has its own connotation in fiscal statutes. Suffice it to say, requirement of section 67(1)(a) is that the proper officer should have reasons to believe that the taxable person has suppressed any taxable transaction to evade payment of tax. It is quite clear that petitioner had disclosed the details of its goods and had applied the classification which it thought was appropriate. On that basis it had filed its CGST returns and had been assessed. It is not the case that petitioner has defaulted in payment of tax as per its returns or assessment. On the other hand, respondent Nos.1 and 2 contends that it is a case of misclassification which has led to short payment of GST. Whether recourse to section 83 is warranted at this stage has not been dealt with in the record. Merely because there is a proceeding under section 67 would not mean that recourse to such a drastic power as under section 83 would be an automatic consequence, more so when petitioner has cooperated with the investigation. That apart, section 83 speaks of provisional attachment of any property including bank account. The record is silent as to whether any attempt has been made for provisional attachment of any property of the petitioner and instead why the bank accounts should be attached. Besides, by use of the word may in sub-section (1) of section 83 Parliament has made it quite clear that exercise of such a power is discretionary. When discretion is vested in an authority, such discretion has to be exercised in a just and judicious manner, more so when the power conferred under section 83 admittedly is a very drastic power having serious ramifications. Such power having the potential to adversely affect property rights of persons as well as life and liberty under Article 21 of the Constitution of India has to be exercised in a fair and reasonable manner. The impugned order dated 18th/ 19th November, 2020 is stayed - withdrawal of the provisional attachment of the bank accounts of the petitioner is directed. Stand over to 9th March, 2021 for final hearing.

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• 2020 (12) TMI 1046
  Direction to respondent no.2 and 3 to consider the claim of petitioner Firm who submits their claim for granting the adjustment and credit of Excise duty for the stock which was available on the date when the GST was made applicable in the interest of justice - HELD THAT:- Shri Seth, learned counsel for the respondent Nos.2 and 3 was requested to seek instructions and on instructions, it is submitted that on petitioner's filing a representation to the Central Goods Services Tax Authority, the same shall be considered objectively. The petition is disposed off with a direction to the petitioner to file a representation before the Central Goods Services Tax Authority. In case, the representation is filed within a period of 15 days, the Authority concerned shall consider the representation objectively and decide the same expeditiously, however, not later than 45 days from receiving the representation. It is made clear that we have not expressed any opinion on the merits of the matter.

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• 2020 (12) TMI 1045
  Detention of goods alongwith the vehicle - There was no e-way bill accompanying the consignment. - Individual consignment (out of many) had a value of less than ₹ 50,000/- - goods detained have already been released on Bank guarantee - appellant vehemently argues that the proceedings initiated itself are without jurisdiction - HELD THAT:- Explanation 2 defines the consignment value of goods to be that declared in an invoice, a bill of supply or a delivery chalan including the goods and services tax payable with any Cess charged. Sub-Rule (1) read with Explanation 2 leads to only one inference that the consignment value has to be determined from the invoice. But when goods of the same consignment covered by multiple invoices exceed the limit of ₹ 50,000/-, necessarily there should be generation of e-way bill. Otherwise the mandate for generation of an e-way bill would be defeated and rendered redundant enabling the consignors to issue any number of bills having value below ₹ 50,000/- and consign them in one vehicle. The consignment value is that shown in the invoice. When goods of the same consignor covered by different invoices are consigned together in one vehicle; the value will be the total of that in the multiple invoices. Appeal dismissed.

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• 2020 (12) TMI 1044
  Principles of natural justice - it is the contention of the learned counsel for the petitioners that no such records of personal hearing was maintained, and at any rate no copies of the said record of personal hearing were sent to the petitioners - HELD THAT:- Inasmuch as the procedure for maintaining a record of personal hearing was a formal one that was devised to take care of the compliance with the rules of natural justice during the period when the personal hearing had to be undertaken through video conferencing, taking note of the covid pandemic situation, the respondent Appellate Authority ought to have complied with the said procedure strictly. Inasmuch as in these cases, the said procedure was not complied, it is deemed appropriate to quash the impugned orders and direct the appellate authority to pass fresh orders after complying with the said procedure and after hearing the petitioners - petition allowed by way of remand.

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• 2020 (12) TMI 1043
  Permission to withdraw the present petition - power under section 50 read with section 75(12) of Bihar Goods And Services Tax Act, 2017 - HELD THAT:- The petitioner, under instructions, seeks permission to withdraw the present petition reserving liberty to file a fresh petition on the same and subsequent cause of action. Petition dismissed as withdrawn.

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• 2020 (12) TMI 1042
  Vires of Rule 96(10) of the CGST Rules as amended by Notification No. 54/2018-19 Central Tax dated 9.10.2018 - retrospective effect or prospective effect - HELD THAT:- The Coordinate Bench in COSMO FILMS LIMITED VERSUS UNION OF INDIA 3 ORS. [ 2020 (10) TMI 1099 - GUJARAT HIGH COURT] took the view that the notification No. 54 of 2018 should be made applicable with effect from 23.10.2017 and not prior thereto i.e. from the inception of Rule 97(10) of the CGST Act. Mr. Sheth, the learned counsel has drawn our attention to Annexure A page-20 of the paper book. It is the Notification No. 54 of 2018 dated 9.10.2018. According to Mr. Sheth, the Notification itself makes it clear that the same shall come into force from the date of its publication in the official gazette - According to Mr. Sheth, what has been observed in para-9 of the order passed in the Special Civil Application No. 15833 of 2018 needs to be re-looked, as the Department has started issuing notices indiscriminately on the premise that the Notification would apply with effect from 23.10.2017. Let notice be issued to the respondents returnable on 24.02.2020. Till the next date of hearing, the proceedings pursuant to the notice dated 24.11.2020 Annexure B shall remain stayed.

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• 2020 (12) TMI 1041
  Grant of Regular Bail - wrongful adjudged input tax credit resulting in loss of tax to the Government exchequer to the extent of ₹ 2.24 crores - HELD THAT:- The condition in the impugned order with regard to the payment of ₹ 2,24,46,239/- alongwith interest is set aside and the bail bonds of ₹ 50 lakhs with one surety in the like amount are reduced to ₹ 25 lakhs which may be in the form of immovable property to the satisfaction of the Illaqa Magistrate/Duty Magistrate, Panipat - The impugned order passed by the Additional Sessions Judge, Panipat dated 11.12.2019 is modified only to the extent above and the other conditions therein are ordered to remain intact. Petition allowed in part.

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• 2020 (12) TMI 997
  Permission to allow the petitioners', their employees / representatives to have presence of their Advocate at a visible but not audible distance during the course of interrogation and / or recording of their statement - petitioners are apprehensive that coercive attempts may be made to extort confession from them - HELD THAT:- This Court, in light of the order passed by Hon'ble Supreme Court from time to time, as in similar circumstances the apex Court directed that the advocate of the petitioner should be allowed to be present during the interrogation of the petitioner, is of the opinion that the advocate of the petitioners are to be allowed to be present during the interrogation of the petitioners. It is further clarified that he/they should be made to sit at a distance beyond hearing range, but within visible distance and the lawyer must be prepared to be present whenever the petitioners are called upon to attend such interrogation. Petition allowed in part.

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• 2020 (12) TMI 1040
  Profiteering - allegation that the benefit of reduction in the rate of tax and the benefit of Input Tax Credit which was required to be passed on to the eligible recipients as per the provisions of section 171 (1) of the Central Goods Service Tax (CGST) Act, 2017, not passed on - HELD THAT:- On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period, i.e. after 2017. Hence, the only issue to be examined is whether there was any benefit of ITC to the Respondent upon the introduction of GST. The DGAP has reported that the Respondent had obtained the Commencement Certificate (CC) for the project Golf Meadows Godrej City, Panvel (Phase-II) on 07.09.2018 and for the project EWS on 11.05.2018. The DGAP has also verified that the project Golf Meadows Godrej City, Panvel (Phase-II) was registered on 11.10.2018 by Maharashtra RERA and the first booking in the above project was made on 02.11.2018. The DGAP has further observed that the project EWS was not registered under Maharashtra RERA and the Respondent had not sold any EWS unit as of 31.12.2019. The DGAP has further found that the projects Golf Meadows Godrej City, Panvel (Phase-Il) and EWS had been launched in the post-GST regime and there was no price history of the units sold in the pre-GST regime that could be compared with the post-GST base prices to establish whether there was any profiteering by the Respondent or not. In terms of the provisions of the RERA Act, bookings in the project could not happen till the registration was obtained. Since the registration was obtained for the subject projects post the introduction of Goods and Services Tax only, the provisions of Section 171 dealing with Anti-profiteering could not be made applicable to the said project in the view of the fact that there was no additional ITC that had been utilized by him, which was relevant for establishing any allegation of profiteering. The DGAP has reported that the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period and therefore it did not qualify to be a case of profiteering - the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. The proceedings are dropped.

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• 2020 (12) TMI 1039
  Refund of the tax paid - tax paid under protest - Reverse Charge Mechanism - refund claim rejected on the ground that the appellant has not submitted the final outcome of the referred SCN whether the issue has been finally decided in favour of the assessee or not - HELD THAT:- The refund claims filed by the appellant is not covered by any of the refund category mentioned in Section 54 and claimed under any other category and there is no specific provision for refund of the tax paid under RCM. The appellant bas mainly contested in their appeal memo that the adjudicating authority has passed the ex-parte order and had not granted any opportunity of hearing and rejected the refund claim filed by them. Further, they stated that the show cause notice dated 14.10.2019 for fixing the date of personal hearing in the matter fixed on 18.10.2019 was received on 16.10.2019, since the matters are being handled centrally from their Corporate Centre, Mumbai and not possible at a very short period of time to attend the hearing - But instead of giving some time and accepting the request of the appellant for seeking of time to submit the reply, the adjudicating authority has passed the Orders-in-Original rejecting the refund claims filed by the appellant. Thus, the appellant did not avail the opportunity of personal hearing and without considering his submission the adjudicating authority has passed the order. The adjudicating authority while rejecting the refund claims of the appellant neither considered their first request for seeking 15 days time to submit reply to show cause notice nor granted any sufficient opportunity of time to attend the personal hearing despite their written request dated 22.10.2019 - Also, non-passing of speaking order indeed amount to denial of natural justice. Before passing of orders atleast their request for seeking 15 days time to submit their reply to show cause notice should have been considered and at least speaking order should have been passed by giving proper opportunity of personal hearing to the appellant and detailing factors leading to rejection of refund claims. Such order is not sustainable in the eyes of law and accordingly set aside. Appeal allowed by way of remand.

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• Income Tax

• 2020 (12) TMI 1037
  Rectification of mistake - issue relating to claim of deduction under section 10B - HELD THAT:- It is an admitted fact that the then AR while arguing the matter before the Tribunal had submitted that the appeal for the A.Y. 2009-10 was pending before the CIT(A) and the hearing for the same is also concluded though the order was not received. It was also submitted by him that fresh evidences produced by the AO which is found during the course of the survey on the assessee, were also produced before the CIT (A). It was also his argument that the issue be restored to the file of the CIT(A) for re-adjudication in line with his decision for A.Y. 2009-10. After considering the rival arguments made by both the sides, the Tribunal restored the issue to the file of the CIT(A) for re-adjudication of the issue relating to claim of deduction under section 10B. A perusal of the order shows that there is absolutely no error apparent on record. Various decisions relied by the Ld. AR are distinguishable and not applicable to the facts of the present case. The assessee through this M.A. is requesting the Tribunal to modify / rectify the order of the Tribunal which amounts to review of its own order by the Tribunal which is not permissible in law. As we have held in above paras, that there is no apparent mistake in the order of the Tribunal so far as the ground relating to 6 to 12 by the Revenue, the M.A. filed by the assessee being devoid of merit is dismissed.

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• 2020 (12) TMI 1036
  Unverified purchases from related parties - verification of the fixed assets added during the year under consideration - HELD THAT:- Books of accounts and bills/vouchers were not produced before either the Assessing Officer or the Ld. CIT(A). The assessee has only produced Tax Auditor Report in Form No. 3CD which contains a list of the items of fixed asset added during the year alongwith the amount, that too in respect of Visicoolers and bolltes only. Before us, also the assessee has only referred to few sample copies of the invoices for purchase of the fixed assets and no complete invoices have been produced. In absence of bills/invoices or vouchers for the purchase of the fixed assets, purchase of those assets cannot be verified. For proper verification, it is required that each entry of fixed assets added need to be seen along with the relevant bill/invoice of purchase, installation, delivery note etc. In absence of any such details produced before us, we are not in position to verify purchase of the fixed assets - we feel it appropriate to restore this issue to the file of the Assessing Officer for examining and verifying in view of our observation above. Disallowance of operating expenses @ 10% - HELD THAT:- Without pointing out any such defect in the books of account or vouchers relating to operating expenses, the action of the Assessing Officer in disallowing 10% of the expenses on ad-hoc basis by way of following earlier years and simply mentioning that expenses being of unverified, unreasonable and excessive, is not justified. The action of the Ld. CIT(A) in simply upholding the finding of the Assessing Officer following the finding of his predecessor in earlier years, without noticing the change in facts and circumstances in the year under consideration, is also not justified. In view of the above discussion, we are of the opinion that without pointing out any defects in the bills and vouchers of operating expenses, the ad-hoc disallowance at the rate of the 10% out of the operating expenses cannot be sustained. We also note that in assessment year 2007-08, the Assessing Officer while verifying the operating expenses in compliance to the direction of the Tribunal, has not made any disallowance and accepted the claim of the assessee of the operating expenses. Accordingly, the ground of the appeal of the assessee is allowed.

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• 2020 (12) TMI 1035
  Benefit of telescoping the commission income with the income declared in the return - assessee had pleaded before the ld. CIT(A) by conceding and accepting that it earned commission income on bogus entries but further pleaded that the said commission income should have been restricted only to transactions with outside companies and not to transactions with group companies controlled by Shri Shirish C Shah - HELD THAT:- In view of the decision of this Tribunal for A.Y.2011-12 where the benefit of telescoping is granted, we direct the ld. AO to allow telescoping of commission income against income declared in the books of accounts for all the assessment years. DR agreed that this issue already is decided in favour of the assessee. Increase in investment - HELD THAT:- As assessee company vide its written submissions before the ld. CIT(A) had submitted that amount of increase in investment for the aforesaid two years had been wrongly computed by the ld. AO and there is no increase in investment at all. On the contrary, there is only decrease in investments. The assessee filed some chart before us to drive home the point that there is effectively only decrease in investments in both the years. In the interest of justice and fairplay, we deem it fit and appropriate that the aforesaid chart on investments filed by the assessee requires to be revisited by the ld AO and we deem it fit to remand this issue to the file of ld. AO for denovo adjudication

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• 2020 (12) TMI 1038
  Petitioner locus standi to file present petition - PIL - issuance of a writ quashing Section 194 A(3) (ixa) of Income Tax Act, 1971 which mandates to deduct tax upon the interest accrued upon the award/Compensation granted by Motor Accident Claim Tribunal (MACT) by holding the same as unconstitutional and in the direct conflict with the object and spirit of the social welfare legislation i.e. Motor Vehicle Act, 1988 - HELD THAT:- Settled principle of law is that an aggrieved person must approach the Court. The Standing doctrine characteristic is that a potential litigant must be injured by the action it is challenging. In the opinion of this Court, the petitioner is a stranger having no right and/or fundamental right to any award/Compensation granted by Motor Accident Claim Tribunal (MACT). As the petitioner is not an aggrieved person, this Court is in agreement with the submission advanced by the learned counsel for respondent, that the petitioner has no locus standi to maintain the present petition. Standing for individuals has been relaxed by Indian Courts by entertaining public interest litigation (hereinafter referred to as the PIL) in the event the person aggrieved is too poor or does not have the means to approach the Court. In fact in a PIL case, there need be no litigant, if a problem is deemed by the Court as worthy of attention. The concept of PIL is linked to the enforcement of social and economic rights in India. Accordingly, present writ petition is dismissed. It is clarified that the petitioner may file a PIL in accordance with law in a proper format with necessary disclosures, affidavits and undertakings as prescribed. The rights and contentions of all the parties in the PIL, if any, to be filed are left open.

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• 2020 (12) TMI 1034
  Exemption of income u/s 11 12 - Whether activities of the assessee, like developing/ printing/publishing sale of text books and other teaching material, etc. fall within the expression of education read with definition of charitable purpose as per section 2 (15) ? - HELD THAT:- As decided in own case [ 2017 (5) TMI 430 - DELHI HIGH COURT] the assessee has been engaged in the activity of the education within the meaning of section 2(15) even for the assessment years 2011-12, 2012-13 2014-15 and consequently it is entitled for exemption under section 11. The Assessing Officer is directed to allow exemption under section 11 with all consequential benefits. - Decided against revenue.

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• 2020 (12) TMI 1033
  Reopening of assessment u/s 147 - HELD THAT:- AO was not justified to reopen the case of the assessee in view of the provisions u/s 147/148 - No tangible material is on record for reopening the case on the basis of which the AO formed reason to belief that the income has escaped assessment. Mere mentioning the facts as shown by the assessee about the shares premium nowhere gives the plausible reason to the AO to reopen the case u/s 147/148 - Nothing is on record to which it can be assumed that under which circumstances the income of the assessee has become escaped assessment. The other important thing which came into notice that on the basis of similar facts and circumstances the Hon ble ITAT has decided the issue in case titled as Balbir Ispat Pvt. Ltd. [ 2019 (1) TMI 1840 - ITAT MUMBAI] in which the notice u/s 147 of the Act nowhere justified. AO has absolutely no material to even suspect, forget believe that income has escaped assessment. Hence, we quashed the reopening and accordingly, the issue of assessee s appeal on jurisdiction is hereby allowed.

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• 2020 (12) TMI 1032
  TP Adjustment - payments made for intra-group services received by the Appellant - most appropriate method and Comparability analysis - HELD THAT:- We direct Ld. TPO to judge the requirement of services from viewpoint of assessee as a businessman. Therefore in this regard we are of view that assessee has to substantiate that these services are required by it. We note that assessee has entered into Intra Group Service agreement with AE, which is placed at page 467 of paper book Volume II. This goes to prove that services were required by assessee. We are of considered opinion that for these services, assessee has to demonstrate and satisfy Evidence Test or rendition test and benefit test, as envisaged u/s. 92(2) of the Act, and that, services provided by AE are neither duplicative nor shareholder's activity. Ld. AO/TPO is then directed to determine Arm's length price of these services based on documents submitted by assessee by determining most appropriate method and Comparability analysis. Protective assessment u/s. 40(a)(i) for non deduction of TDS on payment made towards managerial services - We note that Ld. TPO has made adjustment in respect of payments made towards managerial services, which has been remanded for denovo consideration based on evidences/documents filed by assessee. Assessee has deducted TDS on certain payments made to AE. It is the submission of Ld. AR that balance amount, pertains to other services. Ld. AR submits that such other payments cannot be termed as technical in nature. As we have remitted the transfer pricing adjustment on same issues to Ld. TPO for denovo consideration, this issue becomes academic at this stage.

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• 2020 (12) TMI 1031
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- As during the course of original assessment proceedings, on the issue of allowability the assessee had disclosed the information to the AO and thus it would appear that assessee had disclosed the primary facts at its disposal to the Assessing Officer for the purpose of assessment. In such circumstances, it cannot be said that assessee did not disclose fully and truly all material facts necessary for the assessment. Consequently, the AO could not have arrived at the satisfaction that he had reasons to believe that income chargeable to tax had escaped assessment. In the absence of the same, the AO could not have assumed jurisdiction and issued the impugned notice under section 148 of the Act. Even on the reading of the reasons recorded, it cannot be said that it suggests about any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. A claim which has been allowed in the original assessment proceedings after examination of the relevant details and facts cannot be amenable to provisions of Section 147/148. In the present case, notice for re-opening of the assessment u/s 147 of the Act is not as per the mandate of Sec.147 of the Act and therefore the re-opening is not permissible. We are therefore of the view that the notice issued for re-opening has to be set aside and the same deserves to be quashed.

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• 2020 (12) TMI 1030
  Notice u/s. 143(3) in the name of non existent entity - HELD THAT:- The facts of the Assessee s case is identical to the facts of the case decided by the Hon ble Supreme Court in the case of M/s.Maruti Suzuki India Ltd.[ 2019 (7) TMI 1449 - SUPREME COURT] . Since the assessee company ceased to be in existence as on the date when the AO passed the order of assessment, assessment so framed is not sustainable in the eyes of law, being a nullity. Since the assessee company ceased to be in existence as on the date when the AO passed the order of assessment, assessment so framed is not sustainable in the eyes of law, being a nullity. The order of assessment is liable to be annulled and is hereby annulled. Appeal by the Assessee is allowed.

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• 2020 (12) TMI 1029
  Disallowance of licence fee - system of accounting - accrual of expenditure - HELD THAT:- When the assessee was granted the liquor licence for financial year 2006-07 i.e. Assessment Year 2007-08 he has claimed it as expenditure in the Profit Loss Account of Assessment Year 2007-08. We are of the considered view that since the expenditure of licence fees has crystallized during Financial Year 2006-07 (Assessment Year 2007-08), the assessee has rightly claimed it as an expenditure against revenue of assessment year 2007-08. Issue of cash system/mercantile system of accounting is not having any impact on the issue under consideration because the amount of advance licence fees paid during Financial Year 2005-06 was just an advance and it converted into expenditure during Financial Year 2006-07 (Assessment Year 2007-08). Thus Ld. CIT(A) was not justified in confirming the addition made by Ld. A.O. We thus set aside the finding of Ld. CIT(A) and allow the claim of the assessee for the expenditure of licence fees

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• 2020 (12) TMI 1028
  Enhancement of the income by the CIT(A) - AO after hearing the assessee, considered the turnover as per Form-26AS as the gross receipts of the assessee and estimated the Net Profit @8% of such turnover and brought it to tax - HELD THAT:- CIT(A) has not given any notice in writing for enhancement of income to the assessee. DR also confirmed that no written notice was given to the assessee. Taking the same into consideration, we deem it fit and proper to remit the issue to the file of CIT(A) for reconsideration of the issue in accordance with law and if the CIT(A) feels that the assessment has to be enhanced, then, he shall issue a notice to the assessee and after considering the assessee's objections, if any, filed by the assessee in writing, thereafter only, the CIT(A) shall adjudicate the appeal. - Appeal of assessee is allowed for statistical purposes.

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• 2020 (12) TMI 1027
  Denial of registration u/s 12A r.w.s. 12AA - Charitable activity u/s 2(15) - HELD THAT:- Admittedly, the appellant-trust is a registered trust. As per the registration deed, the property of the trust was donated by one goswami Shri Parshotam Lal Ji s/o. goswami Shri Damodar Lal ji for establishment of Shri Goverdhannath Ji temple and for doing other religious and charitable activities. One of the objects is to impart education to the students without any discrimination of caste or religion; to give scholarship and help to needy students for higher education etc. Apart from that, objects of organizing medical camps, blood donations are also part of the objects as per bye laws of the trust. The trust also holds the activity of 'bhandara (free food) to all. As per the provisions of section 11 read with section 12A of the Income Tax Act, 1961, the registration can be granted to the charitable or religious trust or institution. A perusal of the order of the Ld. CIT(E) shows that the Ld. CIT(E) has declined registration mainly on the ground that the appellant trust is pre-dominantly doing the religious activities and that the same do not partake the character of charitable activity. However, as per the relevant provisions of section 11 read with sections12A 12AA of the Act, the registration can be granted to charitable or religious institution. Under the circumstances, there is no bar in granting registration to a religious institution under the relevant provisions. Moreover, as per the objects of the trust, the trust is also involved in charitable activities as noted above. The appeal of the appellant trust is allowed and the Ld. CIT (E) is directed to register the appellant-trust u/s. 12A/12AA of the Income Tax Act. - Decided in favour of assessee.

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• 2020 (12) TMI 1026
  Reopening of assessment u/s 147 - AO had received information from the Investigation Wing about certain entries made/provided by one Shri Vipin Garg, at Tamilnadu, as per the information, the assessee had received an amount from the concern belonging to said Vipin Garg - HELD THAT:- Information, though relevant, but was needed to be examined and verified with the accounts as well as the Income-tax return filed by the assessee. However, the Assessing Officer wrongly recorded that assessee had not filed any return of income. This fact recorded by the Assessing Officer itself shows that the Assessing Officer has not consulted the relevant record pertaining to the Income-tax return of the assessee and without consulting the relevant record, the Assessing Officer formed the belief on the basis of the information received from the Investigation Wing. The said information, should have been verified after correlating with the records of the assessee and thereafter the AO could have formed the belief that the said amount shown to have been received by the assessee from a concern of Shri Vipin Garg was, in fact, an accommodation entry or not. Assessing Officer had failed to properly apply his mind and the belief formed by the Assessing Officer regarding escapement of income of the assessee was based on mere suspicions only. Therefore, the reopening of the assessment without a reasonable belief formed by the Assessing Officer by applying his mind, cannot be held valid. - Decided in favour of assessee.

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• 2020 (12) TMI 1025
  TDS u/s 194H - Default u/ss. 201(1)/201(1A) - non deduction of tds - payment of dhami/commission by the assessee - HELD THAT:- As the requisite purchase bills for A.Y. 2013-14 and A.Y. 2015-16 were not produced by the assessee, therefore, the ITO(TDS) had presumed that the assessee in the said years also must have paid dhami/commission of the same amount as in A.Y. 2014-15, de hors deduction of tax at source. We would mince no words in saying that we are unable to persuade ourselves to subscribe to the basis as per which the assessee had been held to be in default U/ss. 201(1)/201(1A) of the Act, in respect of a presumptive payment of dhami/commission by the assessee in A.Y. 2013-14 and A.Y. 2015-16 It is the claim of the Ld. A.R. that as the respective payees i.e. the dealers in wheat to whom the aforesaid sum had been paid/credited had taken into account the impugned sum of dhami/commission while computing their income in their returns of income filed under Sec. 139 for the captioned years under consideration, and have also paid the taxes on the income declared in such respective returns of income, therefore, the assessee cannot be treated as being in default as per the 'first proviso' to Sec. 201(1). Also, it has been stated by the Ld. A.R., that certificates from the accountant in the prescribed form i.e. 'Form No. 26A' verifying the aforesaid facts had been obtained by the assessee. On the basis of the aforesaid facts, we are of the considered view that the matter in all fairness requires to be restored to the file of the ITO(TDS) for verifying the veracity of the aforesaid claim of the assessee. In the course of the 'set aside' proceedings, the ITO(TDS) shall verify the maintainability of the claim of the assessee that now when the requisite conditions envisaged in the 'first proviso' to Sec. 201(1) of the Act had been complied on its part, it cannot be treated as being in default and consequentially be saddled with the liability U/ss. 201(1)/201(1A) of the Act. Before parting, we may herein clarify that the assessee shall in the course of the 'set aside' proceedings furnish the requisite details as would be called for by the ITO(TDS) for the purpose of giving effect to our aforesaid directions.

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• 2020 (12) TMI 1024
  Revision u/s 263 - amount of HUF was deposited not in the account of the HUF but into the account of the individual - as per assessee there is no demand against the assessee as the assessed income and returned income are same - HELD THAT:- CIT has rightly directed the AO to frame the assessment afresh as he found that the office note recorded by the then ITO Ward-5(3), Amritsar is factually incorrect. CIT also found that the amount of ₹ 29,69,855/- belonged statedly to the HUF was deposited not in the account of the HUF but into the account of the individual. During the course of hearing the AR was also unable to substantiate that this issue was examined by the AO and there is any conclusive findings by the AO as per law. From the order of Pr. CIT, it is clear that this issue was not examined by the AO. It was expected from the AO that he has assessed the taxable income as per law. Firstly, the Assessing Officer is investigating officer thereafter he is an adjudicating officer. If the AO failed to carry out adequate enquiry about the alleged transactions in the name of the assessee, which are present in this case, therefore, the Pr. CIT has rightly invoked the provisions of Section 263 of the I.T. Act to reopen the completed assessment. In the revised grounds of appeal the assessee has challenged only one issue for invoking the revisionary proceedings by the Pr. CIT u/s. 263 without application of mind by the Pr. CIT. It is clear from the order of the Pr. CIT at page 2 that the Pr. CIT before invoking the revisionary power u/s. 263 of the Act has asked for the report of the AO and receipt of the report from the AO the same has been confronted to the counsel of the assessee. CIT has enquired before invoking the provisions of Section 263 of the I.T. Act. Accordingly, the revised grounds of appeal raised by the assessee have no merit and the same are dismissed. We, therefore, of the opinion that the Pr. CIT has taken a right view in quashing the assessment framed by the AO and directing the AO to make fresh assessment. Accordingly, we uphold the findings recorded by the Pr. CIT and dismiss the appeal of the assessee.

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• 2020 (12) TMI 1023
  Addition u/s 41(1) - treating of the outstanding liability of the assessee towards M/s. Aakshi Electrical Sys Pvt. Ltd., as a ceased liability within the meaning of Sec. 41(1) - whether liability has ceased to exist and the appellant has claimed the amount as an expenditure when the liability was created? - HELD THAT:- A.O. had failed to discharge the 'onus' that was cast upon him as regards proving the satisfaction of the aforesaid requisite conditions prior to invoking of the provisions of Sec. 41(1) - Not only that, we find that even otherwise there is nothing discernible from the record which could persuade us to conclude that the benefit, if any, obtained by the assessee by way of remission of cessation of the aforesaid liability could be related to the year under consideration. Lower authorities had shirked from making necessary verifications, which could have safely be done by calling for the requisite details from the aforementioned party i.e. M/s. Aakshi Electrical Sys Pvt. Ltd. But then, we also cannot remain oblivious of the fact that the assessee had also failed to do the bare minimum in order to establish that the liability towards the aforementioned party, though disputed, was however outstanding. Apart from that, except for harping on the fact that the payment to the aforementioned party was towards an advance in lieu of a contract for installations to be carried out in a hospital i.e. a capital expenditure, nothing had been placed on record by the assessee which could irrefutably substantiate the said factual position to the hilt. In the backdrop of the aforesaid facts, we are of the considered view that in all fairness the matter requires to be restored to the file of the A.O. for fresh adjudication - Decided in favour of assessee for statistical purposes..

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• Corporate Laws

• 2020 (12) TMI 1022
  Restoration of the name of the Company in the Register of Companies - section 252 of the Companies Act, 2013 Read with Rule 87A of the NCLT Rules, 2016 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(3) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. The impugned order striking off the Company was in accordance with law, the Tribunal has to take into consideration the bona fide contentions of Petitioner seeking to restore the name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. It is also not in dispute that the instant Company Petition is filed in accordance with law - The Registrar of Companies, Karnataka, the Respondent herein, is directed to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register, with restoration of all consequential action taken by Registrar of Companies, which includes restoration of DINs of its Directors. Application allowed.

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• Insolvency & Bankruptcy

• 2020 (12) TMI 1021
  Direction to release and make over the proceeds of account lying with State Bank of India, specialized institutional banking branch, Kolkata with the accrued interest thereon in favour of respondents award/decreeholders - Failure to discharge the obligation of agreement and liability of making reimbursemnt by way of refund of amount collected earlier. Whether an awarded claim deposited by the award-debtor with the executing court can be realised and received by the award-holder to the satisfaction of the award, when the said awarded claim was not a part of the resolution process of the award-debtor, after the resolution plan is approved by the relevant adjudicating authority under the provisions of the said IBC? HELD THAT:- The provisions under Order XXI of the Code of Civil Procedure, it is settled that, is a complete code within the code of 1908. A crystallised decree when remains unsatisfied, to enforce the same, the provisions of the said complete code is available to the beneficiary of the decree to initiate a proper execution proceeding before an executing court having competent jurisdiction. It is equally settled and the time tested proposition that the executing court cannot travel beyond the decree - In the facts of this case, the arbitral award having acquired the character of decree and having been crystallised, the beneficiary of the said award, namely, the respondents award-holders had every right to institute as many as execution proceedings in all possible manners to execute the award until the same is satisfied in its favour. Therefore, the filing of the execution proceeding by the respondents award-holders for execution of the said award is just, proper, lawful and valid. In the present case, the respondents whole-heartedly embrace the order dated March 16, 2009 passed by the appellate court here. There is no impediment to the respondents being permitted to collect the money and receive the same on their undertaking to abandon the appeal. The red herring that has been shown by the appellants herein is the failure on the part of the respondents to lodge a claim pursuant to the advertisement being issued in the insolvency proceedings. Indeed, the respondents could not have lodged any claim, unless the respondents were to exercise any rights pertaining to the Shakespeare Sarani property and such property was still a part of the assets of the insolvent company. Upon the original award-debtor tendering the awarded amount in court, such award-debtor ceased to have any right over the money or the amount tendered and remaining in court. Such money could never revert to the award-debtor and, if the award-holders did not ultimately receive the same, the award-debtor would still have no right to obtain refund thereof. It is for such reason that the judgments cited are of no avail to the appellants herein. The judgment and order impugned does not call for any interference. This court is of the considered opinion that the appeal preferred by the appellants is not maintainable, and devoid of any merit and as such the same is dismissed with costs assessed at ₹ 50,000/-.

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• 2020 (12) TMI 1020
  Maintainability of petition - CIRP proceedings still going on - validity of proposed declaration of the petitioners as wilful defaulters under the RBI Master Circular dated July 1, 2015 - HELD THAT:- CIRP proceedings are going on in respect of the company-in-question vide order dated February 7, 2020 passed by the National Company Law Tribunal, Kolkata, thus, disabling the company itself from preferring the writ petition. That apart, since the show-cause notice was issued to the petitioners themselves and the petitioners were held to be wilful defaulters, the present challenge at the behest of the petitioners, without impleading the company separately, is valid in law. Although the respondents have pleaded public interest in the matter, the mechanism of declaring wilful default was put in place to prevent corrosion of the economy and financial malpractices. However, lack of transparency in the mechanism of declaring wilful defaulters would itself be a major disincentive to commerce, which would adversely affect the economy at large. Even if not a stigma by itself, such declaration has far-reaching effect, since the concerned persons would not get any loans or other financial benefits and incentives in future due to such declaration. Hence, the respondents argument, as to the irregularity committed by them being minor and without prejudice to the petitioners, does not hold water - Not only did the respondents arrive at conclusive findings in the show-cause notice itself, thereby hinting at a predetermined and closed mind-set, having pre-decided that the petitioners were wilful defaulters even prior to the orders of the two committees, no copy of the Identification Committee order was handed over to the petitioners at all. The flimsy pretext that the said order was a virtual reiteration of the initial order of the committee defies logic since, after such order, a coordinate bench of this court had specifically directed fresh order to be passed, thereby rendering the previous order infructuous. The admission of the respondents that the subsequent order was a mere reiteration of the previous order itself vitiates the sanctity of the latter order for lack of application of independent judicial mind in the second adjudication. The Identification Committee permitted the petitioners to file their reply directly before the Review Committee, which deprived the petitioners of a hearing before the first committee. The scope of consideration by the Review Committee would only arise once the Identification Committee decides the matter of declaration of wilful defaulter upon considering the stand of the alleged delinquent. Without such opportunity, the order of the Identification Committee would be incomplete, being bereft of the delinquents version, leaving no scope for the Review Committee to consider the petitioners defence - the argument, that the Review Committee had no option but to confirm the Identification Committee order in its entirety, is based on faulty logic, since the petitioners had, in fact, specifically asked for a copy of forensic report and other relevant documents, which was denied to them. Thus, it was impossible for the petitioners to put their representation on fact and law before either of the Committees. The petitioners had no opportunity to refute the observations of the forensic report, to show its inherent contradictions and/or point out the irrelevance of the report in the context of declaration of willful default, although the report was virtually the sole basis of the show cause notice and the impugned orders. The committees acted contrary to logic befitting a prudent person in relying on the same as sacrosanct to hold the petitioners to be wilful defaulters - the entire effort of the Identification Committee and the Review Committee was to somehow label the petitioners as wilful defaulters, in the process violating all norms of natural justice and the provisions of the RBI Master Circular, 2015. The impugned orders are patently illegal and de hors the RBI guidelines - Petition allowed.

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• PMLA

• 2020 (12) TMI 1019
  Money Laundering - Attachment of properties - Agricultural Land - right of the appellants to the properties in question - SCN not issued to appellant - whether there is any violation of the provisions of law as enunciated in Prevention of Money Laundering Act (PMLA), 2002? - HELD THAT:- On perusal of the plain copies of the chain of documents, copy of the impugned order, reply made by the respondent it is prima facie that the appellants are the owners having interest in the properties in question as they had only made-over agreements to different persons for cultivation. A decision cannot be made on assumption presumption that as the appellants have leased out the aforesaid properties for cultivation purposes for a long period amounts to lose of the ownership. It can only be decided by Competent Civil Court. Nothing has been submitted during the course of hearing that Shri P.K.M. Selvam or Shri S. Sankaranarayanan or the transferors of cultivation rights to these two persons have ever raised any dispute that the present appellants are not the owners of the aforesaid properties in question. There is a clear violation of principle of natural justice. The appellants ought to have noticed by the respondent (ED) and Adjudicating Authority before deciding on attachment of the aforesaid properties - The Adjudicating Authority shall, in accordance with the provisions of sub-section(2) of Section 8 of the PMLA, 2002, record finding whether all or any of the properties mentioned above are involved in money laundering and pass appropriate orders in accordance with law. Matter remanded to the Adjudicating Authority for re-adjudication of the case qua the appellants within 150 days from the date of receipt of this order or from the date of the order when either of the parties brings it to the knowledge of this order, before the Adjudicating Authority - appeal allowed by way of remand.

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• Service Tax

• 2020 (12) TMI 1018
  Manpower recruitment or supply agency service - Non-payment of service tax - agreements entered into by the appellant with its group companies located in the USA, UK, Dublin (Ireland), Singapore etc. and provide general back office and operational support to such group companies - certain employees who were seconded to the appellant by the foreign group companies - amounts are remitted by the Appellant in foreign currency and accounted in their financial statements - Demand alongwith interest and penalty - Circular F.No. B1/6/2005-TRU dated 27.07.2005 - HELD THAT:- The definition of Manpower Recruitment or Supply Agency seeks to bring under its ambit, two types of activities i.e. recruitment of manpower and supply of manpower and further the service becomes the taxable service only if provided by a manpower recruitment or supply agency but in the present case, we are concerned only with the supply of manpower. Further, it is found that after the post July 2012, the definition of service specifically incorporated seeks to exclude certain transactions from the ambit of service and provision of service by an employee to the employer in the course of or in relation to his employment stands excluded from the definition of service. Also, the legal position post negative list regime does not make any departure from the settled position of law as existed before 2012 with respect to the service tax implications on deputation of employees. In fact, the above exclusion in the definition of service amplifies the position of law to keep employees providing service to the employer in the course of their employment out of the purview of service tax. We have also examined the agreements entered into by the appellant with a group company which are specifically for provision of certain specialized services and are not related to supply of manpower which is evident from various clauses in the Agreements and we also find that group companies are not in the business of supplying manpower. The persons seconded to the appellant working in the capacity of employees and payment of salaries etc is made to such employees by group companies only for disbursement purposes and hence employee-employer relationship exist and such an activity cannot be termed as manpower recruitment or supply agency and the whole arrangement between the appellant and its group companies does not fall under the taxable service of manpower recruitment or supply agency service as defined under the Finance Act, 1994 - Also, there is no service provider-recipient relationship in the present case, as required by Section 65(105)(k). The method of disbursement of salary cannot determine the nature of the transaction and this issue was considered in the case of M/S VOLKSWAGEN INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2013 (11) TMI 298 - CESTAT MUMBAI] which has been upheld by the Hon ble Apex Court in the case of COMMISSIONER VERSUS VOLKSWAGEN INDIA (PVT.) LTD. [ 2016 (1) TMI 1320 - SC ORDER] . The Hon ble High Court of Gujarat in the case of COMMISSIONER OF SERVICE TAX VERSUS ARVIND MILLS LTD. [ 2014 (4) TMI 132 - GUJARAT HIGH COURT] has held that even if the actual cost incurred by appellant in terms of salary remuneration and perquisites is only reimbursed by group of companies, there remains no element of profit or finance benefit. The arrangement is that of the continuous control and the direction of the company to whom the holding company has deputed the employee, such an arrangement is out of the ambit to be called manpower supply service. As such, there is no supply of manpower service which is rendered to the appellant by the foreign/holding company. As far as short payment of service tax of ₹ 41,11,742 and the interest of ₹ 16,82,810 is concerned, the learned Counsel has submitted that the entire amount totaling ₹ 47,17,537/- (service tax and interest) has been paid vide GAR Challan and the challans have also been annexed but the learned Commissioner has not considered the same and appropriated the same also - For this discrepancy, matter remanded to the learned Commissioner to examine the payment of service tax paid by the appellant through various challans and thereafter determine the demand of service tax and interest due from the appellant, if any. Appeal allowed by way of remand.

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• 2020 (12) TMI 1017
  Condonation of delay in filing appeal - recovery of CENVAT Credit - construction services other than residential complex - HELD THAT:- It is a fact that the appellant had taken loan from the banks and ultimately the loan was declared as NPA and proceedings were initiated against the appellant under the provisions of the SARFAESI Act. Possession was also taken by the bank on July 26, 2013. After the impugned order was passed by the Commissioner on February 10, 2014, the appellant has reversed the CENVAT credit. It also needs to be noticed that the mall was ultimately auctioned by J.M. Financial Assets Reconstruction Company. It also transpire from the records that the Department had written letters to J.M. Financial Assets Reconstruction Company and the auction purchaser for compliance of the order passed by the Commissioner. The appellant in the present appeal has satisfactorily explained the delay in filing the appeal. The delay condonation application is allowed subject to payment of cost of ₹ 25,000/-, which the appellant shall deposit within the period of one month from today in the Prime Minister s CARES Fund - matter shall be listed on January 8, 2021 for a report regarding compliance of the order.

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• 2020 (12) TMI 1016
  Commercial Coaching or Training service - the contention of the Appellant/Applicant that the retrospective amendment in the definition of Section 65(105)(zzc) of Chapter V of the Finance Act, 1994 without a validation clause would not affect pending proceedings, was rejected - time limitation - HELD THAT:- The clarification sought for by the Appellant/Applicant in the Miscellaneous Applications is wholly unnecessary for the reason that on a bare perusal of Para 8 and 9 of the Final order alongwith Para 12 and 13 thereof, it is amply clear that the Service Tax demand of ₹ 19,02,103/- on reimbursable expenses for the period of October, 2001 to March 2006 is already set aside and further in respect of Service Tax demand of ₹ 78,12,418/- for the period of 01.07.2003 to 31.03.2008 under the category of Commercial Coaching or Training service, the appellant is extended the benefit of exemption under Notification No. 9/2003-ST dated 20.06.2003 and Notification No. 24/2004-ST dated 10.04.2004. Further, on limitation it is held that demand upto March, 2006 is barred by normal period of limitation. When the tax demand for the entire period in dispute has already been set aside and benefit of exemption under Notification No. 9/2003-ST dated 20.06.2003 and Notification No. 24/2004-ST dated 10.04.2004 has been extended on merits, no demand survives and while dealing with the contentions of the Appellant/Applicant, on points of limitation, it has been held that demand upto March, 2006 is barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 1015
  Admissibility of abatement under the Notification dated March 1, 2006 - impugned order has denied the abatement availed by the appellant during the month of March, 2006 on the ground that the appellant availed and utilized credit for providing the output services of CIC for the month of March 2006, which is not permitted under the Notification dated March 1, 2006 - HELD THAT:- CENVAT credit availed by the appellant of the service tax paid by the service providers for the services rendered prior to 01.03.2006 cannot be faulted with as availment of CENVAT credit by service recipient is subject to the condition that payment for such service rendered as the provisions. Undisputedly, in this case the appellant had paid the service providers / settled the service providers bill subsequently from March 2006 for the service rendered prior to 01.03.2006 and has correctly claimed the legitimate CENVAT credit available. The Commissioner has held in the impugned order that the agreement between the Principles and the Consortium Members is a composite contract for provision of services and supply of goods. According to the appellant, the composite contract has the essential character of a works contract , as it involves both supply of goods as well as provision of services. Hence, the various services provided by the appellant under the agreement will more appropriately being classified under works contract service which became taxable w.e.f June 1, 2007 - The impugned order also records a finding that the contract involves provision of services as well as supply of goods. Thus, the demand raised for a period prior to June 1, 2007 is not sustainable. Even for the period post June 1, 2007, the demand cannot be sustained as it has been raised under CIC and ECI and not under works contract service. The demand raised under CIC and ECI for the period July 1, 2007 and post June 1, 2007 cannot be sustained - Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 1014
  Business Auxiliary Services - service tax on the incentives received by the appellant - tax on incentives prior to July, 2012 - HELD THAT:- The appellant purchases vehicles from MUL and sells the same to the buyers. It is clear from the agreement that the appellant works on a principal to principal basis and not as an agent of MUL. This is for the reason that the agreement itself provides that the appellant has to undertake certain sales promotion activities as well. The carrying out of such activities by the appellant is for the mutual benefit of the business of the appellant as well as the business of MUL. The amount of incentives received on such account cannot, therefore, be treated as consideration for any service. The incentives received by the appellant cannot, therefore, be leviable to service tax. The demand of service tax in respect of the amount collected on account of bouncing of cheques and cancellation of orders is also not sustainable. These amount are penal in nature and not towards consideration for any service - The issue relating to demand of service tax on income earned by the appellant from registration charges and number plate charges under BAS and freight expenses under GTA has also been decided in favour of the appellant in ROHAN MOTORS LTD. VERSUS C.C.E., MEERUT-I [ 2018 (7) TMI 29 - CESTAT NEW DELHI] . Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 1013
  Levy of Service Tax - Banking and other Financial Services - amounts/value charged by the foreign bankers while delivering their inward remittance in foreign currencies to the Indian Bankers of the Appellant - services received by the appellant from M/s Dada Consultancy and M/s Phara Dr. D.R. Ivan - demand under Scientific or Technical Consultancy Services - time limitation. Banking and other Financial Services - amounts/value charged by the foreign bankers while delivering their inward remittance in foreign currencies to the Indian Bankers of the Appellant - HELD THAT:- The export sale proceeds from their overseas customers are collected by the Appellant s Indian Banker. The Indian Banks, who collect the said amount for the appellant, in the process are required to pay certain charges to the foreign banks who transfer the funds to Indian Banks - following the principles laid down in GREENPLY INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I [ 2015 (12) TMI 80 - CESTAT NEW DELHI] and also in the case of M/S RAJ PETRO SPECIALITIES P LTD VERSUS C.C.E. S.T. - SILVASA [ 2018 (8) TMI 1179 - CESTAT AHMEDABAD] in identical facts and circumstances, we do not find merit in confirming the Service Tax demand for the charges deducted by the foreign banks under the category of Banking and other Financial Services , where it was held that Any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was debited to the appellant, the service tax liability does not lie on the appellant. Scientific or Technical Consultancy Services - services received by the appellant from M/s Dada Consultancy and M/s Phara Dr. D.R. Ivan - HELD THAT:- The learned Commissioner in the impugned order, even though accepted that the overseas firms are providing consultancy services, which meant to be used in obtaining marketing right of the appellant to their manufactured pharmaceutical products, but proceeded to observe that the said consultancy of clinical and non-clinical overviews of the literature were scientific in nature, therefore, the consultancy service provided fall under the category of Scientific and Technical Consultancy Services - Tribunal in the case of M/S IPCA LABORATORIES LTD. VERSUS COMMISSIONER OF CE ST, LTU, MUMBAI [ 2018 (5) TMI 34 - CESTAT MUMBAI] on similar circumstances held that when such services are provided for marketing of the product in the overseas market to meet the regulatory requirement, the same cannot fall under the category of Scientific or Technical Consultancy Services - the contention of Revenue that the consultancy charges paid to M/s DADA Consultancy and M/s Pharphe Dr. D.R. Iban be taxable under the category of Scientific or Technical Consultancy Services is devoid of merit and cannot be sustained. Extended period of limitation - HELD THAT:- The demand is barred by limitation as during the course of audit by the Department, specifically the issue of applicability of Service Tax for payments made to M/s DADA Consultancy and M/s Pharphe Dr. D.R. Iban have been examined by the Department to which the appellant filed a reply enclosing the opinion of legal experts on the subject - Also, it is not in dispute that the appellant has started discharging Service Tax on the said services w.e.f. 01.06.2007 under the category of Management and Consultancy Services to which the Department did not raise any objection and the ST-3 returns have been assessed from time to time - there are merit in the contention of the learned Advocate that since they would be eligible to avail credit of the Service Tax paid on reverse charge mechanism, hence there could not be any incentive/intention to evade payment of Service Tax - the demand for the period 2006-07 is not sustainable being barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 1012
  Renting of immovable property Service - Bundled services - Appellant had entered into agreements with films Distributors under which the theatrical exhibition rights for exhibition of the films were transferred to the Appellant, either for a specified number of shows and period or in perpetuity - HELD THAT:- The agreements entered into between the Appellant and the film Distributors clearly indicate that the film Distributors had granted theatrical exhibition rights to the Appellant and in return of transfer of such rights, the Appellant had agreed to pay certain amount to the Distributors, fixed generally as a percentage of Net Box Office Collection. The Principal Commissioner found that the Appellant had provided renting of immovable property services. For an activity to fall under renting of immovable property services, the nature of the activity should be that of renting or letting or leasing or licensing or other similar arrangements of immovable property, for use in the course or furtherance of business or commerce - A perusal of the agreements between the Appellant and the Distributors would also make it abundantly clear that it is the Appellant who makes payment to the Distributors for grant of theatrical rights. This clearly indicates the flow of service and the consideration. Thus, as it is the Appellant who pays a fixed consideration to the Distributor, no service tax can be levied on the Appellant - it is not possible to sustain the finding recorded by the Principal Commissioner that renting of immovable property service had been rendered by the Appellant to the film distributors. Renting of Immovable Property - amount received by the Appellant under miscellaneous receipts and license fee from Snack Bar - demand of service tax - HELD THAT:- The confirmation of demand of ₹ 36,000/- covered under renting of immovable property service is much below the threshold exemption of ₹ 10,00,000/- provided in the notification dated June 20, 2012 and hence not liable to service tax. The income received by the Appellant under Shots and Slides Hire income is on account of exhibition of advertisement films and slides of vendors, during the showcasing of movies. This income is not taxable w.e.f July 1, 2012 as it covered under the negative list provided under section 66 D(g) of the Finance Act, which relates to selling of space or time slots for advertisement, other than advertisement broadcast by radio or television. Even for the period prior to July 1, 2012, this service is in the nature of exhibiting shots/graphic films, still slides and cannot be classified as renting of immovable property service - interest amount income shown by the Appellant in its books of account represents the income earned by the Appellant from the deposits held in bank account and is not towards the renting of immovable property service. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (12) TMI 1011
  Provisional attachment of Bank Accounts - Section 45 of the VAT Act, 2003 - HELD THAT:- Sub-clause (2) of the Section 45 of the VAT Act, 2003 makes it very clear that the provisional attachment would cease to have effect after the expiry of period of one year from the date of the order made under sub-section (1). It appears that no fresh order has been passed after the first order dated 15.06.2016 came to be passed. It is very unfortunate that the HDFC Bank also has not permitted the writ applicant to operate her account, despite the fact that the provisional attachment cannot be said to exist on this date. This writ application succeeds and is hereby allowed.

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• 2020 (12) TMI 1010
  Refund of DVAT - it appears that the petitioner is praying for refund of the DVAT for 4th quarter of the assessment year 2013 - period 01.01.2014 to 31.03.2014 - HELD THAT:- The respondents authorities are directed to decide the claim of refund of the petitioner in accordance with law, rules and regulations and in accordance with the provisions of the Delhi Value Added Tax Act, 2004 as expeditiously as possible and practicable. Petition disposed off.

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• 2020 (12) TMI 1009
  Principles of Natural Justice - Revision of assessment - revision on the ground that the petitioner has not furnished the certificates in the specified form with regard to the sales effected by them to Government Departments - further contention of the petitioner is that no sufficient opportunity was granted to them by the fourth respondent for production of the required certificates with regard to the sales effected by them to the Government Departments - change of opinion - HELD THAT:- This Court, after giving due consideration to the revision notice dated 31.12.2019 issued by the fourth respondent and the impugned assessment orders dated 28.08.2020 passed by the same fourth respondent, is of the considered view that, no sufficient opportunity has been granted to the petitioner to produce the required certificates, with regard to the sales effected by them to the Government Departments. If the same was intimated to the petitioner in the revision notice dated 31.12.2019 itself, the petitioner might have placed the required certificates before the fourth respondent during the assessment proceedings. However, without any request being made to the petitioner, arbitrarily, the fourth respondent has passed the impugned assessment orders, dated 28.08.2020 revising the assessment on the ground that the petitioner has not produced the required certificates for the sales effected to Government Departments, to enable them to avail concessional rate of tax. The learned counsel before this Court on instructions has also submitted that the petitioner is willing to produce all the necessary certificates before the fourth respondent, if the matter is remanded back to the fourth respondent for fresh consideration. This Court is of the considered view that the impugned assessment orders dated 28.08.2020 passed by the fourth respondent are arbitrary and the principles of natural justice has been violated by the fourth respondent while passing the impugned assessment orders - petition allowed by way of remand.

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• Indian Laws

• 2020 (12) TMI 1008
  Dishonor of Cheque - appreciation of evidence in cases arising out of 'Cheque Bounce under Negotiable Instruments Act, 1881 - legally enforceable debt or liability or not - HELD THAT:- The findings of the learned Trial Court that the complainant has failed to prove the debt and the accused has substantiated his defence by preponderance of probability is totally illegal, perverse and not based on the evidence on record or the settled principles regarding appreciation of evidence. The accused has failed to rebut statutory presumption in favour of complainant. The Trial Court has not appreciated the principles stated by the Hon'ble Supreme Court and this Court in the cases under Negotiable Instruments Act, particularly cheque bounce case. The Trial Court has failed to appreciate the burden of proof and drawing presumption. Only on untenable contentions and evidence, the Trial Court has acquitted the accused. Therefore, the judgment of the Trial Court is illegal, perverse and needs interference by this Court and liable to be set aside. It is crystal clear that, the accused has committed an offence punishable under Section 138 of Negotiable Instruments Act and he needs to be sentenced accordingly - The Section 138 of Negotiable Instruments Act, 1881 provides punishment both imprisonment which may extend two years or with fine which may extend to twice the amount of cheque, or with both. The offences under Negotiable Instrument Act, are regulatory offences intend to give sanctity to the negotiable instruments. Keeping in mind the settled principles regarding imposition of sentence in cheque bounce case, the accused needs to be imposed the fine double the cheque amount. In this case the cheque amount is ₹ 9,80,000/-. The case of the year 2012. Now we are in the end of the year 2020. So, nearly eight years the case is pending. Therefore, the imposition of double the cheque amount as a fine is a proper sentence. The Criminal Appeal filed under Section 378 (4) of Code of Criminal Procedure by the appellant / complainant is allowed.

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• 2020 (12) TMI 1007
  Dishonor of Cheque - Funds Insufficient - specific defence was taken that the cheque was given to the brother of the complainant and the same was misused - HELD THAT:- No suggestion was made to P.W.1 that those two letters Exs.D.1 and 3 are served on him. But he categorically admits that Ex.D.1 was not sent through registered post and also admits that the cover was also not returned. But he claims that Ex.D.1 was sent to the office address of the complainant. He also admits that he has not given any reply through his counsel. It is also important to note that he categorically admits that he has not given any stop payment. The complainant disputes the documents Exs.D.1 to 3. When the accused admits the signature on Ex.P.1, he has to rebut the evidence of the complainant. It is also elicited from the mouth of D.W.1 that he has not given any letter to the bank and also not given any notice to Ashok, when he did not return the other cheque. Though he claims that he gave the complaint, he categorically admits that no endorsement was given by the police. It is also important to note that earlier also he had availed loan from Ashok, but while availing the loan earlier, he has not given any cheque to Ashok for security. There is no dispute that the accused has to place the material of preponderance of probabilities. In the case on hand, I have already pointed out that though an attempt is made by the accused to place the preponderance of probabilities, those documents are not worthwhile to accept the defence and the evidence of D.W.2 is also not worthwhile. The Appellate Court while reversing the findings of the Trial Court has assigned the reasons that the handwriting available in Ex.P.1 are in different ink. P.W.1 in the cross-examination admits the same. But the fact that he has signed the cheque and handed over the same, has not been explained. D.Ws.1 and 2 in their cross- examination categorically admits that they went to the office of the complainant - If no transaction was taken place between them, what made them to go to the house or the office of the complainant, is not explained. On perusal of 313 statement of the accused also, nothing is stated with regard to availing of loan from the brother of the complainant and handing over the cheques to Ashok. The defence in the cross-examination got elicited that loan was given on 05.10.2006 and though in the complaint and legal notice, the complainant has not stated the date of loan transaction, the answers elicited from the mouth of P.W.1 is clear that loan was given on 05.10.2006. P.W.1 categorically says that in the early morning, the accused and his brother came to his office and took the money. The accused did not dispute the signature found on Ex.P.1 and notice issued against him. Though he claims that he gave reply in terms of Exs.D.1 and 3, the same cannot be accepted - The judgment of the Hon'ble Apex Court in the case of RANGAPPA VERSUS SRI MOHAN [ 2010 (5) TMI 391 - SUPREME COURT] , is clear that if the accused has not given any reply to the notice and not disputed the signature found in Ex.P.1, the Court must draw the presumption under Section 139 of the N.I. Act. Hence, the very contention of the accused counsel cannot be accepted. Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 1006
  Dishonor of Cheque - funds insufficient - rebuttal of presumption - acquittal of the accused - Section 118 and Section 139 of Negotiable Instrument Act - HELD THAT:- The accused contended that cheque in question was a post dated cheque issued for security purposes. Which means accused admitted his signature on cheque and its issuance to complainant. Consequently presumption under Section 118 and 139 of N.I. Act would be available to complainant as per KISHAN RAO VERSUS SHANKARGOUDA [ 2018 (7) TMI 101 - SUPREME COURT] and RANGAPPA VERSUS SRI MOHAN [ 2010 (5) TMI 391 - SUPREME COURT] . As accused failed to substantiate his contention by cogent evidence, it has to be held that he failed to rebut presumption in favour of complainant. The reasons assigned by the trial Court firstly that complainant has failed to prove passing of consideration amount to accused for issuing cheque. The trial court observed that no man of ordinary prudence would lend huge amount of rupees two lakhs, without obtaining any document for security of said amount. The said reason is ex-facie perverse. When there is no dispute about signature on cheque and its issuance, the complainant is entitled for presumption about the same being issued towards discharge of existing debt, and therefore, the complainant is not required by law to prove the said fact. Further, it is the complainant's case that the money was lent against receipt of cheque in question, which was a post dated cheque. The impugned judgment passed by trial Court is set aside, accused is convicted of offence punishable under Section 138 of Negotiable Instruments Act, 1881 - appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 1005
  Dishonor of Cheque - acquittal of the accused - maintainability of complaint filed by a power of attorney without making specific assertion about his knowledge about transaction with accused - HELD THAT:- From a perusal of examination-in-chief of PW1, it is seen that deponent has clearly averred that he is working as Assistant Manager of complainant- company and knows facts of the case. During cross- examination, there are no elicitations or admissions that deponent is not aware of transactions between complainant and accused. In this case, accused contended that cheque in question was a post dated cheque issued for security purposes only. Which means that accused admitted his signature on cheque and its issuance to complainant. Consequently presumption under Section 118 and 139 of N.I. Act would be available to complainant as per KISHAN RAO VERSUS SHANKARGOUDA [ 2018 (7) TMI 101 - SUPREME COURT] and RANGAPPA VERSUS SRI MOHAN [ 2010 (5) TMI 391 - SUPREME COURT] . As accused failed to substantiate his contention by cogent evidence, it has to be held that he failed to rebut presumption in favour of complainant. The accused is convicted of offence punishable under Section 138 of Negotiable Instruments Act, 1881 - Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 1004
  Dishonor of cheque - petitioners are said to have misused the cheques representing that the said cheques belong to the account of Kiran @ Kirankumar and those cheques were issued to the 2nd respondent herein by the present petitioners - HELD THAT:- The charge sheet, which are almost identical in both the cases would go to show that the Investigating Officer during the course of investigation is said to have recorded statements of some of the material witnesses. Among them, the more pertinent and material witness is CW4 - Shashikant Dharmanna Mopagar. According to the complainant, the place of offence is said to be the office of the said CW4, who claims himself to be the bond writer. He is shown to have given his statement before the police, wherein he shown to have stated that, on the alleged date of incident, all the three petitioners/accused came to his office and the complainant was also there, where the accused are claimed to have received the loan amount from the complainant. He has stated that, for the said transaction as a bond writer, he was requested by the petitioners to prepare documentation in the form of two promissory notes. As such, when the Investigating Officer is said to have collected certain materials to proceed against all the three accused in the charge sheets for the alleged offences, I do not consider that it is a fit case where the Court can interfere by exercising its power under Section 482 Cr.P.C - Petition dismissed.

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• 2020 (12) TMI 1003
  Dishonor of Cheque - funds insufficient - acquittal of accused - rebuttal of presumption - Whether the Trial Court has committed an error in acquitting the accused? - HELD THAT:- It is clear that though P.W.1 was examined in the month of March 2009, the complainant had not appeared before the Magistrate. Hence, taken as 'no cross'. Subsequently, an application was filed and the same was considered by the Trial Court and passed an order on 29.05.2010. In spite of the Magistrate being lenient in considering the application filed under Section 311 of Cr.P.C, again the complainant did not choose to appear before the Magistrate. However, an opportunity was given till October 2010. No application was filed to recall the earlier order and the Magistrate proceeded to pass an order on merits and acquitted the accused. The main contention of the learned counsel for the complainant is that the Magistrate ought to have dismissed the complaint for non-prosecution ought not to have proceeded to pass an order. The fact that P.W.1 has been examined before the Trial Court is not in dispute and documents-Exs.P1 to P8 are also marked - On perusal of the order sheet, it shows that the trial Judge has taken as 'no cross' when P.W.1 did not appear before the Trial Court and there is no order for expunging the evidence of P.W.1 and the same is only the submission made by the learned counsel for the accused before the Trial Court that the evidence was expunged. In spite of sufficient opportunity was given to the complainant for about two years, the complainant did not make any efforts to recall the earlier order and even though once the order was recalled and again, an opportunity was given, she did not appear before the Trial Court. The Trial Court proceeded to pass an order since the evidence of P.W.1 remains but only not rendered for cross- examination. The matter has not been decided on merits and the complainant has filed the complaint against the accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. When the matter is not decided on merits, the reason assigned by the complainant is also that her son due to fall he has sustained the injuries and she was taking care of her son. This Court can set aside the order and remand the matter for fresh consideration and to decide the matter on merits - Appeal allowed by way of remand.

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• 2020 (12) TMI 1002
  Dishonor of Cheque - discharge of the legally enforceable liability - Section 138 of Negotiable Instruments Act, 1881 - HELD THAT:- The complainant in support of her cases, she examined herself as PW.1 and got marked the documents as Exs.P1 to P5. The accused did not choose to lead any defense evidence rebutting the evidence of the complainant. Before re-appreciating the material available on record both oral and documentary evidence, firstly, this Court would like to consider the evidence of the complainant, who has been examined as PW.1. No explanation on the part of the complainant regarding what made the accused to demand her to return those cheques if the amount has not been paid. It is also important to note that PW.1 categorically admits that when the amount of ₹ 2,04,000/- was lent to the accused and not collected either the cheques or any documents and this transaction is the only one transaction without any document of cheque or any documentary proof for lending the money also cannot be accepted and the same is also un-natural - This Court has already held that the case of the complainant can be rebutted by two modes i.e., by effective cross-examination and also entering into the witness box. Though, the accused did not choose to enter into the witness box and in the cross-examination of PW.1 effectively cross-examined with regard to creating a doubt with regard to lending money to the tune of ₹ 2,04,000/-. There are no grounds to interfere with the findings of the Trial Court and there is no material to reverse the finding of the Trial Court - appeal dismissed.

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• 2020 (12) TMI 1001
  Maintainability of appeal - appeal was dismissed for not paying process fee - whether this is legal and proper or not - HELD THAT:- The First Appellate Court had admitted the appeal for hearing. In such cases, Section 385 of Cr.P.C., requires that the appeal shall be disposed of by notifying the date of hearing. Since in this case the appellant was the convicted accused, if his advocate failed to appear, the trial Court should have secured the presence of the appellant by following due process of law and proceeded with the appeal. Therefore, the impugned order of dismissal of the appeal is contrary to Section 385 of Cr.P.C., and unsustainable. Learned counsel for the complainant submits that the complainant is fighting a litigation since 2012. Therefore, if at all the matter is to be remanded, the complainant may be permitted to withdraw the amount deposited by the accused and time may be fixed for disposal of the appeal.The matter is remanded to the First Appellate Court for fresh consideration - Appeal allowed by way of remand.

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• 2020 (12) TMI 1000
  Dishonor of Cheque - insufficiency of funds - difference between a firm and a proprietary concern - HELD THAT:- In this case, A1 M/s.Varshini Traders is a Proprietorship concern, A2 N.Jai Ganeshen is the Proprietor of A1 and A3 is the wife of A2. A proprietary concern is not a firm. A firm is a partnership concern consisting of partners. In this case, the first accused is not a firm. It is only a proprietary concern. Only the drawer of the cheque can be prosecuted. In this case, the drawer of the cheques is A2 - Further, there is a basic and fundamental difference between a firm and a proprietary concern. The first accused is only a Proprietary concern, its proprietor being A2 N.Jai Ganeshen. A1 and A2 are one and the same person. The issuance of the cheque by A2 as Proprietor of A1 M/s.Varshini Traders would amount to issuance of the cheque by A2. The complaint of the respondent is not maintainable against A3. On the ground that A1 and A2 are same persons and that A1 is not a firm as per Section 141 of the Negotiable Instruments Act - Petition allowed.

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• 2020 (12) TMI 999
  Dishonor of Cheque - accused not paid the cheque amounts within 15 days from the date of receipt of the notice and thereby, committed the offence under Section 138 r/w 141, 142 of the Negotiable Instruments Act, 1881 - petitioner submitted that the petitioner is A3, since being a Director of A1 company and wife of A2, she is roped in this case as accused and she is not incharge of the management and affairs of A1 company - HELD THAT:- It is not in dispute that the petitioner/A3 is the Director of A1 company. In order to discharge the liability, the said two cheques were issued to the respondent, which were returned in the Bank viz., HSBC Bank, Rajaji Salai, Chennai and the same were returned as 'Payment Stopped by Drawer' - On an overall reading of the complaint, it is seen from the complaint that except the bald averments that the the petitioner/A3 was in charge of and responsible to A1 company at the relevant point of time, nothing has been stated as to what part was played and how she was responsible regarding the issuance of cheque. This Court finds that there is no factual averments to show how the petitioner is responsible for the business and conduct of A1 company to invoke provision under Section 141 of the Negotiable Instruments Act. Admittedly, the petitioner is not a signatory to the cheque in issue. Petition allowed - decided in favor of petitioner.

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• 2020 (12) TMI 998
  Dishonor of Cheque - Insufficient Funds - case of appellant is that the alleged cheques were never issued by the petitioner for any legally enforcible debt - Sections 138 and 142 of NI Act - HELD THAT:- The petitioner is an accused on the complaint lodged by the respondent herein for the offences punishable under Sections 138 and 142 of NI Act. According to the respondent, the petitioner borrowed a sum of ₹ 3 lakhs and towards repayment of the same, the petitioner issued two cheques for a sum of ₹ 1.5 lakhs each. Both the cheques were presented for collection and initially both the cheques were returned for the reason Insufficient Funds . Again on the instruction given by the petitioner, the cheques were presented for collection and again and it was dishonored for the reason that Code-5:Kindly contact Drawer/Drawee Bank . After issuing statutory notice, the respondent initiated proceedings for the offence under Sections 138 and 142 of NI Act. On receipt of the statutory notice dated 21.03.2019, the petitioner issued reply notices on 03.04.2019 and 05.04.2019. In the reply notice, she stated that the respondent's father, who was practicing advocate at Pondicherry, is well acquainted with the husband of the petitioner herein. Therefore, in the year 2008, the petitioner borrowed a sum of ₹ 5 lakhs by mortgaging her property to the respondent's father for monthly interest. Thereafter on 12.03.2009 the entire loan amount was discharged by the petitioner with interest. The respondent's father also issued receipt for discharging the entire loan amount - After discharging the loan amount, the respondent's father also issued acknowledgment that entire loan amount settled by the petitioner. Thereafter the respondent's father failed to return the two cheques, which were received from the petitioner as security. It is also evident from the endorsement made by the respondent's bank while returning the cheques, it is mentioned as Code- 5:Kindly contact Drawer/Drawee Bank . Since the alleged cheques are non-CTS cheques and as such, it cannot be cleared by the banker as per the Reserve Bank of India guidelines from 01.01.2019 onwards. It is also evident from the letter issued by the petitioner's banker dated 21.02.2020, stating that the cheques were issued to the petitioner herein on 06.06.2008. Now, after a period of 11 years the cheques were presented for collection and both the cheques were returned dishonored and directed the respondent to contact Drawer/Drawee Bank. The offence under Section 138 of the Negotiable Instruments Act is attracted for whatever reason the cheques are returned. In the case on hand, other circumstances are proved that the impugned cheques were issued by the petitioner for security purpose while borrowing the loan, in the year 2008. Therefore, the impugned complaint is nothing but clear abuse of process of Court and it cannot be sustained as against the petitioner - Petition allowed.

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