TMI Tax Updates - e-Newsletter
February 12, 2020

Case Laws in this Newsletter:

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

TMI SMS

• Levy of Fee u/s 234F for default file ITR u/s 139(1) - Classification of all defaulters as one class - constitutional validity upheld

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Highlights / Catch Notes

• GST:

  Supply or not - Levy of CGST and SGST - amount of contribution received from its members - association of apartment owners - there is a supply of service by the Appellant to its members and the same is taxable under GST. - The Circular dated 22.07.2019 only clarified the position and did not bring in any new levy. Hence the question of applying the Circular prospectively does not arise.
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• GST:

  Inquiry proceedings initiated against the petition u/s 70 of GST - Availment of Input Tax Credit (ITC) - The facts of the instant case do not qualify for use of discretion by the writ Court in order to grant the writ petitioner such reliefs as prayed for - The writ petition is liable to be dismissed.
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• GST:

  Confiscation of goods - goods alongwith the vehicle have been released already - section 129 and 130 of CGST Act - As the matter is now at the stage of MOV-10, the writ-applicant shall appear before the authority and file an appropriate reply to make good his case that the notice issued in GST-MOV-10 deserves to be discharged
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• GST:

  Grant of anticipatory bail - input tax credit - generating of fake and fabricated documents availed or to make other availed and illegal input tax credit causing huge loss to the revenue - the applicants, even if, remanded to the Police custody, upon completion of such period of Police remand, shall be set free immediately, subject to other conditions of this anticipatory bail order.
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• GST:

  Grant of default bail - Section 167(2) CrPC - evasion of tax - charge sheet was not filed within sixty days, applicant was enlarged on default bail - applicant is not able to fulfil the said conditions imposed by Court below. - bail granted subject to conditions as modified.
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• GST:

  Grant of Regular Bail - Section 69 read with Section 132 of CGST Act - input tax credit - business of generation and selling of fake tax invoices without supplying the goods through various firms/companies - No justified ground is made out to grant concession of bail to the petitioner
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• Income Tax:

  Procedure of PAN allotment through Common Application Form (CAF) along with registration of Foreign Portfolio Investors (FPIs) with SEBI under Department of Economic Affairs and KYC for opening Bank and Demat Account.
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• Income Tax:

  Refund of seized cash u/s 132(5) - considerable delay and failure to make the payment constitutes and is inseparable from the cause of action as the delay and negligence is on the part of the authorities - Amount to be refunded with interest
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• Income Tax:

  Levy of Fee u/s 234F for default in furnishing return of income u/s 139(1) - The revenue is justified in holding that the object of the provision is thus intended to ensure proper and timely filing of return. The gravamen of the offence is failure to submit the return within a stipulated time. So far as these persons are concerned, they form a class by themselves. Whether a person is richer comparatively than the other has no relevance to this classification.
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• Income Tax:

  Unexplained cash credit u/s 68 - share application and share premium money received from various entities - identification & creditworthiness of the shareholder/ investor company and the genuineness of the share transaction. - assessee has discharged the onus - additions deleted.
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• Income Tax:

  Disallowance of claim u/s 10AA - SEZ unit - Scope of the term "Service" - trading activity - he assessee is eligible for deduction u/s 10AA on the profits derived by SEZ Unit in respect of trading activity of importing the goods for reexport.
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• Income Tax:

  Additions - under pricing to sister concern - This action of the A.O. is unjustified. Hence, the addition on account of underpricing was not warranted. The assessing officer missed the vital point that income was below taxable limit after b/f losses were set off during the current year. Moreover, there was no finding by the lower authorities that sister concerns benefited in any manner.
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• Income Tax:

  Rectification u/s 154 - additional depreciation @20% claimed as per provision of Sec. 32(1)(iia) - it is on record of the AO that the issue is debatable and the issue which has been rectified by the AO u/s 154 is highly debatable and it is the settled legal preposition of law that a debatable issue cannot be rectified u/s 154 and cannot be said mistake apparent on record.
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• Income Tax:

  Deduction u/s 54F - LTCG - Out of these 24 flats, 15 flats are already sold in the present year and remaining 9 flats are likely to be sold within the period of three years from the date of its purchase but the assessee is not claiming deduction u/s 54F in respect of any of these 24 flats but since even these 9 unsold flats can be considered as a part of new asset for deduction u/s 54F, the proviso (a) (i) to section 54F is not applicable because in addition to these 9 flats and one residential house purchased by the assessee for which the assessee is claiming deduction u/s 54F, the assessee is owning only one residential house being self-occupied house and hence, this proviso is not applicable.
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• Income Tax:

  Perquisite or Benefit u/s 28(iv) - Addition for a discount on buy-back of Foreign Currency Convertible Bonds (FCCB) - the benefit has been received in the shape of the money and thus, the said benefit cannot be held as taxable even u/s 28(iv) of the Act.
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• Income Tax:

  Addition of gifts of loans - assessee has also failed to show the genuineness of the transaction of receipt of the sale of land for the reason that there is no sale taken place of any agricultural land by the assessee against the above advance. - Additions confirmed.
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• Income Tax:

  Undisclosed rental income - survey operation u/s. 133A - Needless to say, since this amount is on account of rental income, then standard deduction needs to be granted to the assessee and the AO is directed to do so in accordance to law
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• Customs:

  Implementation of PGA eSANCHIT– Paperless Processing under SWIFT-Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs
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• Customs:

  Liability of bonafide importers who purchased the duty script from the market and used to pay customs duty - Misuse of various Export Promotion Scheme - The adjudicating authority, in the impugned order, has wrongly held that the appellants have utilized forged TRA, although the issue pertained to the utilization of FPS licenses.
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• Customs:

  Date on which Notification coming into force - N/N. 120/2003 dated 01.08.2003 - whether the Notification is effective from the date of publication i.e. 01.08.2003 as proposed by the revenue or from the date of offer for sale of the said notification i.e. 04.08.2003 as claimed by the appellant? - Benefit of unamended notification is available to the importer where BE has been filed before 4.8.2003
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• Corporate Law:

  Restoration of name of the Company in the Register of Companies - name was struck off due to defaults in statutory compliances, namely, failure to file Financial Statements and Annual Returns - unless otherwise the relief sought is granted to the company, grave hardship and irreparable loss and damage shall be caused to the said company - we are satisfied that the prayer sought by the Petitioner company deserves to be allowed.
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• Indian Laws:

  Central Government hereby notifies the Common Application Form for the purpose of registration, opening of bank and demat accounts, and application for Permanent Account Number by Foreign Portfolio Investors (FPIs) in India.
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• Indian Laws:

  Dishonor of Cheque - Though, the Court has the power to quash the criminal complaint filed u/s 138 of the N.I. Act on the legal issues like limitation, etc. Criminal complaint filed u/s 138 against the accused ought not have been quashed merely on the ground that there are inter se dispute between appellant No.3 and respondent No.2. Without keeping in view the statutory presumption raised u/s 139, the High Court, has committed a serious error in quashing the criminal complaint.
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• IBC:

  The scope of Insolvency Code is to proceed in respect of an undisputed debt, the payment of which is defaulted. This Bench under Insolvency Code is not constituted to settle Civil disputes. Only in respect of a defined and unambiguous debt the Insolvency Proceedings are to be commenced.
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• IBC:

  Approval of Resolution plan - assigning nil value to Intangible assets is an error on the face of the two Valuation Reports and hence a fresh valuer needs to be appointed to the limited extent of providing a fair value of Intangible assets - RP directed to to appoint a fresh Valuer with a limited scope of valuing the Intangible asset
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• Service Tax:

  Import of services - reverse charge mechanism (RCM) - constitutional validity - the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed and set aside with all consequential reliefs and benefits.
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• Service Tax:

  Levy of service tax - Valuation - inclusion of cost of FOC material - Benefit of abatement - property in goods which were to be erected and installed by the appellant had not transferred in his favour at the site of construction and erection. - Demand set aside.
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• Central Excise:

  Demand of Interest - CENVAT Credit - The interest must be calculated as per law i.e. up to 16th March 2012 only in respect of CENVAT credit which has been taken but not utilised and thereafter only if CENVAT credit has been taken and also utilised
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• Central Excise:

  Reversal of refund order - principles of unjust enrichment - incidence of duty not passed on - It is not invariably true that when any amount is shown as expenditure or any expenditure is required to be made, the same has to be absorbed in costing of final product unless there is a proof that pricing of the final product has been specifically increased on that score - Refund allowed.
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• VAT:

  Reversal of excesss input tax credit (ITC) - supplier of goods paid VAT @12.5% instead of 4% - there was deliberate ploy on the part of the dealer who sold the capital goods to the petitioner by charging tax at 12.5% to liquidate accumulated credit - But, there is no reason why credit availed by the petitioner should be disallowed particularly in the light of the fact that intention of the legislature is to reduce the cascading effect of the tax the final product.
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Articles

• THE DIRECT TAX VIVAD SE VISHWAS BILL, 2020 – AN OVERVIEW

Notifications

• Customs

• G.S.R. 98(E) - dated 10-2-2020 - ADD
  Corrigendum - Notification No. 2/2020-Customs (ADD), dated the 30th January, 2020

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• 04/2020 - dated 10-2-2020 - ADD
  Seeks to extend anti-dumping duty on import of Acetone originating in or exported from Korea RP till 15th April, 2020 imposed vide Notification No. 05/2015-Customs(ADD) dated 18.02.2015.

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• GST - States

• G.O.MS.No. 33 - dated 6-2-2020 - Andhra Pradesh SGST
  Seeks to notify the class of registered person required to issue invoice having QR Code.

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• G.O.MS.No. 32 - dated 6-2-2020 - Andhra Pradesh SGST
  The Andhra Pradesh Goods and Services Tax Rules, 2017 – Notification of date on which the Andhra Pradesh Goods and Services Tax (Fourth Amendment) Rules, 2019 shall come into force

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• G.O.MS.No. 30 - dated 6-2-2020 - Andhra Pradesh SGST
  Seeks to notify the common portal for the purpose of e-invoice.

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• G.O.MS.No. 28 - dated 6-2-2020 - Andhra Pradesh SGST
  Andhra Pradesh Goods and Services Tax (Seventh Amendment) Rules, 2019.

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• G.O.MS.No. 27 - dated 6-2-2020 - Andhra Pradesh SGST
  Seeks to amend Notification G.O.Ms.No. 301 dated 16.5.2019

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• G.O.MS. No. 31 - dated 6-2-2020 - Andhra Pradesh SGST
  Seeks to notify the class of registered person required to issue e-invoice.

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• G.O.MS. No. 29 - dated 6-2-2020 - Andhra Pradesh SGST
  Andhra Pradesh Goods and Services Tax (Eighth Amendment) Rules, 2019

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• 7/1/2020-LA - dated 10-2-2020 - Goa SGST
  Goa Goods and Services Tax (Amendment) Act, 2020

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• CCT/26-2/2018-19/51/2911 - dated 5-2-2020 - Goa SGST
  Seeks to amend Notification No. CCT/26-2/ /2018-19/48/1771, dated 11th October, 2019

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• 38/1/2017-Fin(R&C)(127) - dated 23-1-2020 - Goa SGST
  Amendment in Notification No. 38/1/2017—Fin(R&C)(43)/433, dated 31st January, 2018

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• 38/1/2017-Fin(R&C)(126) - dated 23-1-2020 - Goa SGST
  Goa Goods and Services Tax (Amendment) Rules, 2020.

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• 03/2020-KGST.CR.01/17-18 - dated 5-2-2020 - Karnataka SGST
  Seeks to amend Notification No. (17/2019) No. KGST.CR.01/17-18, dated the 11th October, 2019

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• 02/2020-KGST.CR.01/17-18 - dated 3-2-2020 - Karnataka SGST
  Notification issued to prescribe due dates for filing of return in FORM GSTR-3B in a staggered manner

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• Income Tax

• 11 of 2020 - dated 7-2-2020 - IT
  Procedure of PAN allotment through Common Application Form (CAF) along with registration of Foreign Portfolio Investors (FPIs) with SEBI under Department of Economic Affairs and KYC for opening Bank and Demat Account.

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• Indian Laws

• F. No. 4/15/2016-ECB - dated 27-1-2020 - Indian Law
  Central Government hereby notifies the Common Application Form for the purpose of registration, opening of bank and demat accounts, and application for Permanent Account Number by Foreign Portfolio Investors (FPIs) in India.

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• SEZ

• S.O. 614(E) - dated 5-2-2020 - SEZ
  Central Government rescinds Notification No. S.O. 1610(E) dated 02nd, July 2008

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Circulars / Instructions / Orders

• DGFT - 61/2015-2020 - dated 11-2-2020
  Amendments in the Appendix 3B, Table 2 of the Merchandise Exports from India Scheme (MEIS)
• Customs - 11/2020 - dated 10-2-2020
  Implementation of PGA eSANCHIT– Paperless Processing under SWIFT-Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs
• Customs - 12/2020 - dated 10-2-2020
  Sanction of Prosecution of Group -'A' Officers in some cases

News

• Regulation of irregularities in GST claims

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• Subscribers in Atal Pension Yojana

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• Loans extended to women under Pradhan Mantri Mudra Yojna

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• Central Board of Indirect Taxes and Customs (CBIC) destroys large quantities of narcotics and psychotropic drugs and substances across the country

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• Reduction of cost of compliance for companies

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• CCI approves formation of a joint venture between Mahindra & Mahindra and Ford Motor and the transfer of the automotive business of Ford India to the joint venture

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• Draft Framework for authorisation of a pan-India New Umbrella Entity (NUE) for Retail Payment Systems

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• National Institute of Financial Management, Faridabad to be renamed as Arun Jaitley National Institute of Financial Management.

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Case Laws:

• GST

• 2020 (2) TMI 435
  Supply or not - Levy of CGST and SGST - amount of contribution received from its members - association of apartment owners - exemption upto ₹ 7500 from each member / flat - benefit of N/N. 12/2017 CT(R) dt 28.06.2017 (SI.No. 77) read with N/N. 02/2018 dt 25.01.2018 - Input tax credit - levy of CGST/SGST on amounts which it collects from its members for setting up a corpus fund - challenge to AAR decision. Whether the activities of the association of apartment owners are liable to tax under GST as a supply? - HELD THAT:- In the instant case, the monthly contribution made by the members to the association is in return for receiving the services of the Association in ensuring the maintenance and upkeep of the residential complex. The money collected by the Appellant from its members is used to procure services and goods from a third party and provide the benefits of such procured goods and services to the members of the association. In terms of Section 2(d) of the Indian Contract Act, 1872, consideration needs to necessarily flow from one person to another. In the Finance Act, 1994, the taxable event in terms of Section 66B was on services provided or agreed to be provided by one person to another . Under GST, the taxable event is the supply of goods or services or both. As already mentioned, supply though not defined has been explained in Section 7 of the CGST Act, 2017 to cover the activities stated therein made in the course or furtherance of business. Under GST law, the term business has been specifically defined in Section 2(17) of the CGST Act to include provision by a club, association, society or any such body (for a subscription or any other consideration) of facilities or benefits to its members. Thus, there is a marked difference in the concept of the levy between the Finance Act and the CGST Act. Thus, there is a supply of service by the Appellant to its members and the same is taxable under GST. Whether in terms of entry No.77 of the N/N. 12/2017- Central Tax (Rate) Dated 28-06-2017 as amended by the N/N. 02/2018-CentraI Tax (Rate) dated 25-01-2018, the contribution received by the association from its members are liable to tax only in excess of the amount of ₹ 7500 per month per member? - HELD THAT:- Exemption notifications are subject to strict interpretation. The Advance Ruling Authority had correctly interpreted this exemption Notification. The Circular No.109/28/2019-GST dated 22.07.2019 issued by the CBIC only clarifies this position. The Appellant has argued that this Circular will apply only prospectively since it is oppressive in nature. This argument does not hold water since the said Circular does not introduce any new levy by its clarifications. The position regarding the exemption from GST was always applicable only when the individual member s contribution per month was within ₹ 7500/-. The Circular dated 22.07.2019 only clarified this position and did not bring in any new levy. Hence the question of applying the Circular prospectively does not arise. Maintainability of Advance Ruling pronounced - time limitation - Appellant has also contended that the ruling pronounced by the Authority after the mandated period of 90 days is unsustainable in law - HELD THAT:- In this case, the Authority was well within its jurisdiction to pass a ruling on the subject matter. Not adhering to the time limit in passing an order can be termed as an irregularity in procedure which can be set right in appeal proceedings - the ruling given by the Authority is correct in law and we do not find reason to interfere with the same. Decision of AAR upheld.

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• 2020 (2) TMI 434
  Inquiry proceedings initiated against the petition u/s 70 of GST - Availment of Input Tax Credit (ITC) - Whether the discretionary jurisdiction of this Court under Article 226 of the Constitution of India can be availed by the writ petitioner in the facts and circumstances of the instant case? HELD THAT:- The series of summonses / notices which have been issued, clearly reveal that the writ petitioner is not interested in cooperating with the enquiry. Apart from a letter dated 24th January, 2020, written by the writ petitioner, addressed to the concerned Senior Intelligence Officer, after almost four months from the date of issuance of the first summons dated 26th September, 2019, there is nothing on record to show as to how the writ petitioner has specifically responded to the summonses / notices dated 26th September 2019, 27th September, 2019, 1st October, 2019, 7th October,2019, 15th October, 2019 and 19th November, 2019. The facts of the instant case do not qualify for use of discretion by the writ Court in order to grant the writ petitioner such reliefs as prayed for - The writ petition is liable to be dismissed. Petition dismissed - decided against petitioner.

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• 2020 (2) TMI 433
  Confiscation of goods alongwith the conveyance - section 130 of CGST Act - HELD THAT:- Form GST MOV-10 has been issued, calling upon the writ-applicant to show cause why the goods in question and the conveyance used to transfer the goods, should not be confiscated under the provisions of Section 130 of the Central Goods and Service Tax Act, 2017 and why the penalty and fine shall not be recovered. As the matter is at the stage of show-cause notice, under Section 130 of the Act, 2017, the writ-applicant should appear before the authority and file an appropriate reply - So far as the release of the goods and the conveyance is concerned, it shall be open for the writ-applicant to prefer an application, under Section 67(6) of the Act, 2017, for provisional release.

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• 2020 (2) TMI 432
  Confiscation of goods - goods alongwith the vehicle have been released already - section 129 and 130 of CGST Act - HELD THAT:- Pursuant to the notice issued under Section-129 of the Act determining the amount to be paid towards the tax and liability, the requisite amount has been paid by the writ-applicant and the conveyance and the goods have been released. It appears that later, a show-cause notice came to be issued under Section 130 of the Act calling upon the writ-applicant to show-cause why the goods and conveyance should not be confiscated. As the matter is now at the stage of MOV-10, the writ-applicant shall appear before the authority and file an appropriate reply to make good his case that the notice issued in GST-MOV-10 deserves to be discharged - Application disposed off.

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• 2020 (2) TMI 431
  Confiscation of goods - Detention of goods alongwith the conveyance - levy of penalty - section 129 and 130 of CGST Act - HELD THAT:- Pursuant to the notice issued under Section-129 of the Act determining the amount to be paid towards the tax and liability, the requisite amount has been paid by the writ-applicant and the conveyance and the goods have been released. It appears that later, a show-cause notice came to be issued under Section 130 of the Act calling upon the writ-applicant to show-cause why the goods and conveyance should not be confiscated. As the matter is now at the stage of MOV-10, the writ-applicant shall appear before the authority and file an appropriate reply to make good his case that the notice issued in GST-MOV-10 deserves to be discharged - Application disposed off.

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• 2020 (2) TMI 430
  Grant of anticipatory bail - input tax credit - generating of fake and fabricated documents availed or to make other availed and illegal input tax credit causing huge loss to the revenue - HELD THAT:- Learned Advocate for the applicants on instructions states that the applicants are ready and willing to abide by all the conditions, including imposition of conditions with regard to the powers of Investigating Agency to file an application before the competent court for their remand. He would further submit that upon filing of such application by the Investigating Agency, the right of the applicants-accused to oppose such application on merits may be kept open. The present application is allowed by directing that in the event of arrest of the applicants herein in connection with FIR registered - the applicants shall be released on bail subject to conditions imposed. Despite this order, it would be open for the Investigating Agency to apply to the competent Magistrate, for Police remand of the applicants. - if, ultimately, granted, and the power of the learned Magistrate to consider such a request in accordance with law. It is clarified that the applicants, even if, remanded to the Police custody, upon completion of such period of Police remand, shall be set free immediately, subject to other conditions of this anticipatory bail order.

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• 2020 (2) TMI 429
  Grant of default bail - Section 167(2) CrPC - evasion of tax - charge sheet was not filed within sixty days, applicant was enlarged on default bail - applicant is not able to fulfil the said conditions imposed by Court below. - HELD THAT:- The application is liable to be allowed and the conditions imposed by the Court below vide impugned order are liable to be modified - bail granted subject to conditions imposed - application allowed.

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• 2020 (2) TMI 428
  Grant of Regular Bail - Section 69 read with Section 132 of CGST Act - input tax credit - business of generation and selling of fake tax invoices without supplying the goods through various firms/companies - HELD THAT:- The allegations against the petitioner are serious and magnitude of fraud is to the extent of ₹ 127 crores. It is to early to conclude that arrest can't be effected or prosecution can't be launched without issuing notice under Section 74 of the Act particularly when the power of arrest has been given under Section 69 of the Act. Furthermore, merely because no police remand of the petitioner was sought and he has been remanded to judicial custody, it cannot be construed as a circumstance which may entitle him to be released on bail. In the instant case, there are serious allegations against the petitioner that fake invoices of approximately ₹ 931 crores involving GST of approximately ₹ 127 crores without movement of goods have been issued and input tax credit has been availed. No justified ground is made out to grant concession of bail to the petitioner - Petition dismissed.

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• Income Tax

• 2020 (2) TMI 427
  Refund of seized cash - deny relief by directing payment in terms of the order under Section 132(5) - HELD THAT:- Direction for refund was applicable if no notice would be issued within the time stipulated. In any case, the learned judges had the option to treat the writ petition as an execution application or could have given liberty to the appellant to file an execution application which as per the law of limitation can be filed within 12 years. This aspect has been completely over-looked and not been given due consideration. The respondents do not and cannot dispute that they have to refund the seized amount. Further, considerable delay and failure to make the payment constitutes and is inseparable from the cause of action as the delay and negligence is on the part of the authorities. The appellant does not seek setting-aside or quashing of an adverse order, no third-party rights are involved and the respondents exfacie would not suffer due to a change of position. Prayer for compliance of a valid and legal order passed cannot be equated with prayers made in repeated representations seeking a change of position. Acquiescence is not apposite to patience as acquiescence is not just standing-by, and refers to assent on being aware of the violation or reflects conduct showing waiver. Laches is this case would require sheer negligence of the nature and type which would render it unjust and unfair to grant relief. When, the liability to pay ₹ 4,99,900/- is acknowledged and accepted, then to deny relief by directing payment in terms of the order under Section 132(5) of the Act would be unjust, unfair and inequitable. Statute mandates the respondents to make payment. To be fair to the counsel for the respondents, it was conceded that an appropriate order may be passed to do justice. For the aforesaid reasons, the appeal is allowed with the direction to the respondent authorities to pay ₹ 4,99,900/- with interest as per law within a period of three months from the date on which the copy of this order is received.

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• 2020 (2) TMI 426
  Penalty u/s 271AAC(1) - total credit as reflected in the bank accounts as unexplained money under Section 69 read with Section 115BBE - HELD THAT:- Affidavit accompanying the writ petition deals solely with the provisions of Section 80P of the Act, whereas the impugned orders of assessment do not relate to the provisions of Section 80P at all. Thus, the writ petitions have been filed mechanically and even without perusing the contents of the impugned orders. Upon a perusal of the impugned orders of assessment, find no merit whatsoever in the challenge before me. As pointed out in counter, the contents of the assessment order and the averments in writ petition are wholly unconnected as the addition made in the impugned order is in terms of the Section 69A 115B of the Act and not Section 80P. Also and more importantly, the petitioner has not co-operated in the least in the framing of assessments and has ignored all communications and notices issued by the Department. It has not even defrayed its statutory responsibility of filing of a return of income for the period in question.

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• 2020 (2) TMI 425
  Levy of Fee u/s 234F for default in furnishing return of income u/s 139(1) - constitutional validity - violation of article 14 - Classification of all defaulters as one class - HELD THAT:- It is well settled that it is not necessary that there must be mathematical precision between the fee paid and service rendered. All that is necessary is a reasonable relationship between fee charged and the services rendered. A burden of fee for an additional exercise by the revenue compels the assessee to exercise promptitude or otherwise pay an additional fee. The legislature intent is not to arbitrarily burden the assessee by realising something extra but to call upon the assessee to share the burden of extra exercise due to delay on his part. The department is correct in contending that the acts of an assessee in discharging his entire tax liability to the Government by way of Advance Tax, TDS, self assessment, etc., is set at naught if the same is not intimated to the Government in time by filing of return of income in order to enable to cross verify the same and complete the assessment within the period of limitation and in order to ensure that such acts of an assessee in discharging his entire tax liability bear fruits, a regulatory mechanism in the form of Section 234 F has been inserted in the statute book and the same cannot be termed as illogical or harsh. Section 234F is not violative of any of the other provisions of Income Tax Act or the Constitution of India. Nothing has been shown as to how the Section is manifestly arbitrary for it to be struck down. It is well settled that if it is a charge for service rendered by the commercial agency and the amount of fee levied is based on the expenses incurred by the Government rendering the fee. Unlike the tax which is compulsory extraction of money, enforceable by law and not in return of any services rendered. The distinction between the tax and the fee is that tax is levied as a part of common burden while fee is payment for a special benefit of privilege. Fee confers some advantage and is a return of consideration for services rendered. The element of quid pro quo strict senso is not always a sine qua non of a fee. Nonetheless, the fee under Section 234 F is charged for delay in submitting the return of income beyond the prescribed time, which is privilege to allow late filing of the return. The revenue is justified in holding that the object of the provision is thus intended to ensure proper and timely filing of return. The gravamen of the offence is failure to submit the return within a stipulated time. So far as these persons are concerned, they form a class by themselves. Whether a person is richer comparatively than the other has no relevance to this classification. Therefore, the classification of all such defaulters as one class is a reasonable classification and does not offend Article 14 of the Constitution of India. W.P. dismissed.

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• 2020 (2) TMI 424
  Unexplained cash credit u/s 68 - share application and share premium money received from various entities - identification creditworthiness of the shareholder/investor company and the genuineness of the share transaction. - HELD THAT:- We are unable to accept the findings of the Assessing Officer that the investors companies are not having sufficient creditworthiness to invest in the assessee company. In light of same, we are of the considered view that the assessee company has discharged the initial onus cast on it in terms of identity and creditworthiness of these two investor companies as well as demonstrating the genuineness of the transaction. The explanation offered and material submitted by the assessee company in support of its explanation is wholesome, credible and verifiable and which has not been correctly appreciated by the lower authorities and in light of the same, the addition so made by the Assessing Officer u/s 68 of the Act is not justified is hereby set aside. In the result, the ground No. 1 of assessee s appeal is allowed. Adhoc disallowance of various expenses by the CIT(A) - HELD THAT:- We find that there are no specific findings by the Assessing Officer in terms of the expenses not been incurred for the purpose of business or bogus in nature. Therefore, in absence of specific defect been highlighted by the Assessing Officer, the adhoc disallowance so made and confirmed by the ld. CIT(A) is hereby deleted.

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• 2020 (2) TMI 423
  Exemption u/s 80G - assessee is running educational institutions by charging fees from the students - HELD THAT:- Observing that both the assessee(s) are running with the main object of carrying out charitable activities as provided u/s 2(15) of the Act and also since Ld. CIT(Exemption) failed to prove that assessee has not fulfilled the conditions u/s 80G(5) (i) to (iv) of the Act, we find no justification in the order of CIT(Exemption) denying approval u/s 80G5(vi) of the Act to both the assessee(s). We accordingly set aside the order of Ld. CIT(Exemption) and direct him to reconsider the application of the assessee(s) u/s 80G of the Act and grant the approval u/s 80G5(vi) of the Act to both the assessee(s) namely M/s Krishna Avanti Educational Society and M/s. Avantika Krishi Gauraksha Trust.

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• 2020 (2) TMI 422
  Disallowance of claim u/s 10AA - SEZ unit - Scope of the term Service - trading activity - The AO viewed that the assessee is not engaged in the manufacturing activity and only engaged in the trading activity . - HELD THAT:- In the absence of instructions and directions to implement the circular of Ministry of Commerce (supra), no deduction is permissible as per the Act. However the Act does not define the term services in section 10AA. The SEZ Rules define the services and the activity of the assessee is covered under the definition of services. Therefore, the argument advanced by the Ld.DR is not tenable. Hence, respectfully following the view taken by this Tribunal in the assessee s own case [ 2017 (4) TMI 867 - ITAT VISAKHAPATNAM] , we hold that the assessee is eligible for deduction u/s 10AA on the profits derived by SEZ Unit in respect of trading activity of importing the goods for reexport. Accordingly, the ground raised by the revenue on this issue is dismissed Addition made by the AO u/s 40(a)(ia) of the Act in respect of Ocean Freight charges paid to the agents of foreign shipping company for non deduction of tax at source - HELD THAT:- In the instant case section 172 is applicable, since the payment is made to Shipping Agents. The department has not called for the return of income of the non resident shipping owners at the time of assessment. Therefore, we are of the considered opinion that the payment is squarely covered by Circular No. 723 of CBDT and there is no case for deduction of tax u/s 194C or 195 and consequent disallowance u/s 40(a)(ia) of the Act. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Transfer pricing adjustment - Arms Length Price on sales and the interest charged on outstanding receivables treating the outstanding receivables as International transactions - Assessee has objected for adopting TNMM as MAM instead of CPM adopted by the assessee - HELD THAT:- In view of the fact that there are no external comparables available in the public domain, we hold that the assessee has rightly bench marked the ALP adopting the internal comparables and hold that the international transaction is at ALP and no interference is called for in the order of the Ld.CIT(A). Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. TP adjustment is with regard to adjustment made by the TPO in respect of interest on receivables - HELD THAT:- In the instant case, the AO made TP adjustment in respect of interest on outstanding receivables that were received beyond the period of 180 days. The receivables are closely linked to the principal transaction of sale of goods. The AO did not consider the circumstances surrounding the receivables and did not consider that the outstanding receivables are not unsecured loans / advances given to AEs. Even if it is considered that the receivables as international transactions, since, the same are to be received in foreign exchange the interest if any required to be applied following LIBOR or LIBRO plus method. However in the instant case, receivables represent the trade receipts but not the unsecured/ secured loans. In the case of trade receipts, the sale price is fixed including the realizable time period and hence, once the transactions are at ALP in respect of sales, no separate adjustment is required to be made in of sales receivables

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• 2020 (2) TMI 421
  Addition on sales to sister concerns on a selective picking of data and representing the difference between cost and selling price - HELD THAT:- Mere surmises and conjectures that the assessees had underpriced the sales value cannot be the basis for a pre-determined approach without bringing any third party transactions on record by the Assessing Officer. The available documentary evidences in the form of purchase invoice, sales invoice, various bills and vouchers have not been found defective by the Assessing Officer at any point of time. When the quantitative details certified by the statutory authorities which are also part of the record subject to scrutiny by the Assessing Officer have not been rejected by him, then the Assessing Officer cannot presume that the assesses had suppressed the profits. It is not the case of the Assessing Officer that there were any material defects noticed at the time of examination of the books of account and also that there was no change in the method of accounting adopted by the assessees from what was regularly adopted. Accordingly, we are of the opinion that the Assessing Officer cannot blow hot and cold at the same time and onus clearly lies on the Assessing Officer to prove that the books of account maintained by the assessees suffers any defects. In the absence of any documentary evidence indicating any lapse on the part of the assessees in maintenance of books of account which were subjected to audit by the statutory authorities, we are of the opinion that the additions made by the Assessing Officer to the profits of the assessees only on the basis of surmises and conjectures of low profits on account of higher cost of production and sales price charged by the assessees sister concerns cannot stand the test of law leave alone the Assessing Officer s own logic - basis adopted by the Assessing Officer for making additions towards lower profits cannot be sustained. Addition under business head ' on the pretext that there was an 'apparent loss' on alleged policy of underselling in which event there was an apparent gain in the books of sister concern(s) - Any addition under the head income from business becomes revenue neutral in nature since any addition towards underselling in the hands of the assessee becomes a corresponding deduction for purchase in the hands of sister concern(s), as held by the Supreme Court in the case of CIT vs. Glaxo Smithkline Asia (P) Ltd. 2010 (10) TMI 21 - SUPREME COURT] . When this judgment was brought to his notice by filing a copy, the Assessing Officer took a dramatic U turn to hold that units were independent. This action of the A.O. is unjustified. Hence, the addition on account of underpricing was not warranted. The assessing officer missed the vital point that income was below taxable limit after b/f losses were set off during the current year. Moreover, there was no finding by the lower authorities that sister concerns benefited in any manner. Being so, in our opinion, these cannot be any additions towards low selling price charged to sister concerns. Interest u/s. 244A - HELD THAT:- We do not find any infirmity in the finding of the CIT(A) that the interest on Income tax refund assessable under the head other sources is to be taxed in the year in which the right to such refund had been recognized by an order or the date on which it is actually received by placing reliance on the decision of the Tribunal in the case of DCIT vs. Seshasayee Papers and Bonds Ltd. [ 2009 (3) TMI 901 - ITAT CHENNAI] wherein it was decided that it has to be taxed in the year of actual receipt. Being so, we dismiss this ground of appeal of the assessee

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• 2020 (2) TMI 420
  Rectification u/s 154 - additional depreciation @20% claimed as per provision of Sec. 32(1)(iia) - HELD THAT:- The matter raised before us is debatable as to whether the mining of marble block is manufacturing or not and assessee had also intimated the AO. Therefore, the modus operandi in support of the claim is to be covered under the mining and manufacturing activity. Therefore, the matter being debatable cannot be rectified u/s 154 of the Act. We further noticed that since the issue is debatable as to whether the assessee is manufacturing or not and for purpose firstly it should be decided that whether mining of marble block is manufacturing or not and when the interpretation of manufacturing has not been decided in the case of the assessee, then as to how it can be said that the assessee is not a manufacturer. From the various facts, it is on record of the AO that the issue is debatable and the issue which has been rectified by the AO u/s 154 is highly debatable and it is the settled legal preposition of law that a debatable issue cannot be rectified u/s 154 and cannot be said mistake apparent on record. The issue in hand is debatable, thus the same cannot be rectified by invoking the provisions of Section154 of the Act by the AO and the AO without examining the facts, nature of the business of the assessee and without bringing any material in his support to establish that the assessee was not manufacturer, had disallowed the claim of the assessee which is against the principles of law. We therefore, allow these grounds raised by the assessee and quash the decisions of the lower authorities on this issue. Rejection of books - invoking the provisions of section 145(3) and confirming the trading addition - HELD THAT:- In this case the books of account of the assessee are rejected in spite of declaring better n.p. rate of last 05 years as compared to average of last years. We are of the view that no trading addition is sustainable. Findings by the decision of SHRI KISHAN KUMAR SARAIWALA [ 2017 (8) TMI 1584 - RAJASTHAN HIGH COURT] we restore the matter back to the file of the AO to verify the results declared and attained finality by the assessee by comparing the average results of last 05 years and in case it is found by the AO that the assessee has declared better n.p. rate as compared to earlier years then in that eventuality no trading additionis called for. It is needless to mention that before passing the afresh order on this issue by the AO, the assessee will be provided adequate opportunity of hearing by the AO and the assessee will submit the necessary details before him. Thus this Ground No. 2 of the assessee is allowed for Statistical purposes. Disallowance towards interest on TDS - HELD THAT:- We are of the view that the interest payment for delayed deposit of TDS is in fact in the nature of penalty and the same is not found allowable. The Legislature expects from the assessee to adhere the various laws of land and in case of any violation of same and financial consequences thereof cannot be allowed in the ambit of Section 37 of the Act. The case laws cited by the ld.AR of the assessee are not applicable in the present facts and circumstances of the case of the assessee. It is an admitted fact that disallowance/ addition made by the AO on account of payment of interest on delayed deposit of TDS is penal in nature. The ld.AR of the assessee relied on the decision of Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. vs CIT [ 1998 (3) TMI 2 - SUPREME COURT] which does not find force in this ground of the assessee. Hence, the Ground No. 3 of the assessee is dismissed. Disallowance u/s 40(a)(ia) - assessee paid interest on which no TDS was deducted - HELD THAT:- Keeping in view the facts that the assessee had submitted the certificate from the payees and the AO has not disputed the same. Even otherwise the underlying idea and basic concept of TDS was to ensure an early and fast recovery of the taxes. It is designed so that the payer itself should make a deduction of tax at source on the income of the payee. Thus, it was an advance collection and recovery of the tax for on and behalf of the payee, in whose hand, after including the subjected amount of income, there is going to be a liability of tax thereupon. If either there is no liability to pay tax or because of the tax already stood paid by the payee, there is no further liability of the payer. The very purpose of making deduction of tax at source and depositing with the Govt., stands fulfilled. Hon ble Supreme Court in the case of Hindustan Coca Cola Beverage Pvt. Ltd. v/s CIT [ 2007 (8) TMI 12 - SUPREME COURT] has held that no penalty u/s 271C or interest u/s 201 can be charged in such cases. The principle so propounded equally and squarely applies on the facts of the present case also. Hence the entire disallowance be deleted in full. - Decided in favour of assessee.

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• 2020 (2) TMI 419
  Foreign exchange fluctuation (loss) arising on repayment of ECB Loan - allowable deduction u/s 37(1) - HELD THAT:- Co-ordinate Bench of Cochin in the case of Baby Memorial Hospital Ltd. Vs. ACIT [ 2019 (11) TMI 703 - ITAT COCHIN] after considering various case laws including the decision of Sutlej Cotton Mills Ltd. Vs. CIT [ 1978 (9) TMI 1 - SUPREME COURT] and other decisions has held that foreign exchange loss arising out of foreign exchange fluctuation in respect of loan in foreign currency used for acquiring fixed assets should be allowed as revenue expenditure by charging the same into Profit and Loss Account and not as capital expenditure by deducting the same from cost of respective fixed assets. Revenue has not placed any contrary binding decision in its support nor has demonstrated as to how the decision of Cochin Tribunal in the case of Baby Memorial Hospital Ltd. Vs. ACIT (supra) would not be applicable to the present facts. In such situation, we are of the view that the Assessing Officer was not justified in denying the claim of revenue expenditure. Assessing Officer has allowed depreciation on the amounts capitalized. Since we are holding the amount of expenditure claimed by assessee to be revenue expenditure, we direct the Assessing Officer to withdraw the benefit of depreciation on those assets that was allowed by him to the assessee and re-work the depreciation thereon. Grounds raised by the assessee are allowed.

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• 2020 (2) TMI 418
  Deduction u/s 54F - LTCG - more than one residential house property - as per AO assessee owns a self-occupied house property and these nine unsold flats and therefore, as per proviso a (i) to section 54F (1), the assessee is not eligible for deduction u/s 54F - assessee contended that, as flats were not in existence and hence, it cannot be said that the assessee was owner of these flats on the date of sale of the original asset - HELD THAT:- Out of these 24 flats, 15 flats are already sold in the present year and remaining 9 flats are likely to be sold within the period of three years from the date of its purchase but the assessee is not claiming deduction u/s 54F in respect of any of these 24 flats but since even these 9 unsold flats can be considered as a part of new asset for deduction u/s 54F, the proviso (a) (i) to section 54F is not applicable because in addition to these 9 flats and one residential house purchased by the assessee for which the assessee is claiming deduction u/s 54F, the assessee is owning only one residential house being self-occupied house and hence, this proviso is not applicable. As per paper book where the Revised Computation of Income and Original Computation of Income is available, the assessee is showing Income from Let Out House Property but the objection of the AO that the assessee is owning more than one residential house as per Para 9 of the assessment order is based on ownership of one self-occupied house property and 9 unsold flats and hence, it appears that this let out house property is not a residential house property and therefore, this proviso is not invokable and not invoked by the AO because of ownership of this house property. Therefore, there is no justification of disallowing this claim of the assessee. Hence, we delete this disallowance.

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• 2020 (2) TMI 417
  Disallowance of loss on rate settlement (Contracts) - CIT(A) deleted the addition made by AO by accepting additional evidence without giving opportunity to the AO, which is in contravention of provisions of Rule 46A of IT Rule, 1962 - HELD THAT:- Issue is identical to that of A.Y. 2010-11 [ 2019 (3) TMI 1717 - ITAT DELHI] . In the present assessment year as well the additional evidence was before the CIT(A) and no remand report was called by the CIT(A). Thus, the CIT(A) has not followed Rule 46A of the Income Tax Rule, 1962 and has not called for remand report from the Assessing Officer to prove the revenue s case. Therefore, it will be appropriate to restore this issue to the file of the Assessing Officer and assessee is directed to furnish all the necessary evidences before the Assessing Officer which the Assessing Officer will verify and decide the issue afresh. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. Ground No.1 and 2 are partly allowed for statistical purposes. TDS u/s 195 - Whether non-residents have a PE and Back Office in India - HELD THAT:- AO has not brought on record to show that such nonresidents have a PE or not, in India. In fact, the services of the foreign agents are rendered by the assessee not to use in India but are used for sales outside India. Thus, the commission paid to the foreign agents for rendering services outside India does not come under the purview of Section 195 of the Income Tax Act, 1961. Thus, the CIT(A) was right in deleting the addition made u/s 40(a)(ia)

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• 2020 (2) TMI 416
  Perquisite or Benefit u/s 28(iv) - Addition for a discount on buy-back of Foreign Currency Convertible Bonds (FCCB) - Business income or capital receipt - HELD THAT:- In the instant case, the benefit has been received in the shape of the money and thus, the said benefit cannot be held as taxable even under section 28(iv) of the Act. We set aside the finding of the Ld. CIT(A) on the issue in dispute and hold that the discount received on FCCB is not taxable in the hands of the assessee. The Ground No. 1 of the appeal of the assessee is accordingly allowed. Disallowance under section 40(a)(ia) for non-deduction of tax at source on certain payments made - HELD THAT:- lower authorities have not verified the exact nature of payments and constitution of the entities. In view of the undertaking given by the assessee, we feel it appropriate to restore the issue back to the Assessing Officer for deciding the same afresh. Accordingly, the issue is restored back to the Assessing Officer to decide the issue afresh, after affording adequate opportunity of being heard to the assessee. Thus, this Ground no. 2 of the appeal is allowed for statistical purposes.

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• 2020 (2) TMI 415
  Unexplained cash credits u/s 68 - Admission of additional ground - cash deposited in savings bank account covered under section 68 or not? - assessee does not maintain the books of account - HELD THAT:- Identical issue has been decided in SHRI JANAK GOEL VERSUS DCIT, CENTRAL CIRCLE-4, NEW DELHI [ 2019 (5) TMI 887 - ITAT DELHI] to hold that the cash deposited by the assessee in his bank account is also covered under section 68 of the income tax act. Thus the additional ground raised by the assessee is dismissed. Enhancement of income by the CIT(A) u/s 251 - Held that:- before making any enhancement to the income of the assessee determined by the learned Assessing Officer, the learned CIT(A) should have granted the assessee an opportunity of showing that the order of the learned CIT(A) making an addition u/s 68 of the Income Tax Act should not be enhanced. - Relief granted to assessee. Addition u/s 68 - According to section 251(2) the learned Commissioner of Income Tax(A) is empowered to enhance in assessment order penalty or reduced the amount of refund. However, there is a basic precondition that the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Before making any enhancement to the income of the assessee determined by AO, the learned CIT(A) should have granted the assessee an opportunity of showing that the order of the learned CIT(A) making an addition u/s 68 of the Income Tax Act should not be enhanced. On careful reading of the order of the CIT(A) we do not find that any such notice has been issued by CIT(A) proposal enhancement of the income of the assessee. In view of this the enhancement made by the learned CIT(A) of the addition is not sustainable in law on the principles of natural justice not followed by him. Therefore we direct the learned assessing officer to restricted the addition to the extent u/s 68 of the Act and assessee is granted relief to that extent. Accordingly ground number 2 of the appeal of the assessee is allowed. Addition of gifts of loans - assessee has also failed to show the genuineness of the transaction of receipt of the sale of land for the reason that there is no sale taken place of any agricultural land by the assessee against the above advance. Further, the learned assessing officer as well as the learned CIT(A) has examined the creditworthiness of each and every credit shown by the assessee. Looking to the meagre income shown by the depositors, absence of any evidence and source of deposit of cash available with them, failure to produce evidence of the consequent sale of land, failure to show the names of the witness to the sale agreement, shows that assessee has failed to show the creditworthiness of the depositors against sale of land as well as of the gift. In view of this we do not find any infirmity in the order of the learned assessing officer in making the addition u/s 68 of the income tax act to the extent of INR 1,975,000 out of the total cash deposit of ₹ 24.50 Lacs in the bank account of the assessee. In view of this ground No. 1 of the appeal of the assessee is dismissed. Addition on account of bank interest - assessee has a savings bank interest income which is chargeable to tax under that income from other sources - HELD THAT:- No arguments were advanced by the assessee on this ground of appeal. We also do not find any infirmity in making the addition in the hands of the assessee as assessee has earned net bank interest of ₹ 22365/-. Accordingly ground No. 3 of the appeal of the assessee is dismissed.

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• 2020 (2) TMI 414
  Rectification of mistake u/s 154 - characterisation of income - HELD THAT:- This fact is very much noted by the Assessing Officer that the date of Agreement itself is not in the period relevant to the Asst. Year in question. But even after noting this aspect of the matter, addition was not made by him on the basis of date of Agreement but on the basis that the amount in question is capital in nature. Hence the contention raised in the present M.P. that there is apparent mistake in the Tribunal order because the Tribunal has not considered the date of Agreement is devoid of any merit. Under these facts and circumstances, we hold that there is no mistake apparent in the Tribunal order on this aspect.

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• 2020 (2) TMI 413
  Undisclosed cash receipts - not giving telescoping benefit to the above income against the income offered during the course of survey - HELD THAT:- As relying on ANANTHARAM VEERASINGAIAH AND CO. VERSUS COMMISSIONER OF INCOME-TAX, AP [ 1980 (4) TMI 2 - SUPREME COURT] since the assessee during survey operation on 16.01.2013 had already offered undisclosed income of ₹ 95 lacs which includes ₹ 45 lacs for this assessment year and since all other entries found in the diary SKS-5 has already been tallied with the cash book, we are of the opinion that the assessee has been able to give a plausible explanation to this amount of ₹ 14,50,000/- dated 18.06.2012 since this amount is entered in the cash book prior to survey and this amount get subsumed in the ₹ 45 lakhs surrendered by the assessee for this assessment year. Therefore, no other addition was warranted and we delete the addition of ₹ 14,50,000/-. Therefore, this ground of appeal of assessee is allowed. Undisclosed rental income - survey operation u/s. 133A - HELD THAT:- We note that the assessee had received rental income of ₹ 3,36,000/- in this assessment year which has been rightly taxed by the AO. However the only limited prayer of the Ld. AR is that the standard deduction on the rental income should be granted. Needless to say, since this amount is on account of rental income, then standard deduction needs to be granted to the assessee and the AO is directed to do so in accordance to law. So, this ground of appeal of assessee is partly allowed.

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• Customs

• 2020 (2) TMI 438
  Confiscation/seizure of imported goods - misdeclaration of description of the goods - goods mis-declared as being procured as waste/ condemned goods of coastal run vessels whereas actually they had been procured as condemned goods/ ship stores of foreign going vessel - HELD THAT:- Undisputedly the goods have been seized, from the godown/premises which are not located in the customs area. Also on the goods seized there are no markings etc., to establish that these goods were of foreign origin. It is also not disputed that these goods were not amongst the notified goods under Section 123 of Customs Act, 1962. In absence of the notification, notifying the goods under Section 123, the burden to prove that the impugned goods were of foreign origin and were imported/ cleared from the customs area illicitly without payment of duty, is on the revenue. From the facts recorded though Commissioner has recorded the existence of such documents he has brushed asides the same stating that the documents could not be co-related with the goods under seizure, without specifying anything further. The department has failed to discharge the initial burden cast on them to prove that the goods were illicitly cleared by the appellants. Confiscation do not sustain - appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 437
  Liability of bonafide importers who purchased the duty script from the market and used to pay customs duty - Misuse of various Export Promotion Scheme - Fake export - duty credit licenses, such as, DEPB/ FPS/DFIA/ VKGUY etc - Legal import or not - forged/fake documents - purchase of forged TRA alongwith DEPBs issued based on forged/fake export documents - whether the appellants had validly imported the consignments duty free on the strength of the licenses involved in these appeals? HELD THAT:- The bona fide of imports which were made under the various export promotion schemes under Chapter 3 and 4 of the Exim Policy has to be examined. The importers purchased these licenses, which were transferrable from the license brokers. After the purchase of license, the importers did not apply for the issue to Telegraphic Release Advice (TRA) from the port of Registration (POR) as was required to be obtained the TRAs from the brokers. Not only that, they also failed to ascertain the veracity of such TRAs from the Port of Registration. Thus, the due diligent that was required to be exhibited by the importer was not carried out. The entire racket has been carefully planned and executed by Paresh Daftary, Prabir Ghosh and Jyoti Biswas. These three persons circumvented all the laws, be it Customs, Foreign Trade or Exim Policy. They attempted to hoodwink all the government agencies and committed a fraud, which could only be detected, subsequently, in the investigation by the DRI. The appellants have not asserted that the exports had not been effect for they only contend that they were not a party to the fraudulent activities. The Adjudicating Authority has taken great pains to evaluate the entire sequence of events. In EAST INDIA COMMERCIAL CO. LTD., CALCUTTA VERSUS COLLECTOR OF CUSTOMS, CALCUTTA [ 1962 (5) TMI 23 - SUPREME COURT] , the Supreme Court noticed that the goods were imported under a valid license and, therefore, it was not possible to hold that the goods imported were prohibited or restricted under Customs Act. This case pertained to Sea Customs Act, 1872, while the present case is under the Customs Act, 1962 - It is manifestedly clear that the case at hand is distinguishable since there was no issue of TRA and the involvement of transferee had not been brought on record in the investigation. Thus, this case would not help the appellants. In TAPARIA OVERSEAS (P) LTD. VERSUS UNION OF INDIA [ 2003 (1) TMI 127 - BOMBAY HIGH COURT] , the original license was obtained by the transferee fraudulently which were subsequently transferred to the transferee. It was held that since the goods had been imported under a valid license, the duty liability would not accrue on the transferee - As the issue of forged TRA was not the issue before the Court, the case would have no application. In COMMISSIONER VERSUS LEADER VALVES LTD. [ 2008 (3) TMI 665 - SC ORDER] , the issue was identical as the DEPB was issued by the DGFT on the basis of forged document, bank realization certificate. The appellant was not a party to the fraud and had purchased DEPB from open market under a bona fide belief that it was genuine. The appellant paid full prices and availed the benefit. Merely because at a later stage the DEPB has been found to be fabricated, the assessee could not have been deprived of the benefit. The adjudicating authority, in the impugned order, has wrongly held that the appellants have utilized forged TRA, although the issue pertained to the utilization of FPS licenses. Thus, the appeals filed by the department are allowed and they are remanded to the adjudicating authority for a fresh decision after granting a hearing to the appellants. Appeal allowed by way of remand.

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• 2020 (2) TMI 409
  Penalty u/s 112 (a) and/or 112 (b) of the Customs Act, 1962 - alleged evasion of duty - fraud - HELD THAT:- The Commissioner has observed that the Petitioner along with other persons aided Mr. Pravin Mody in the evasion of duty and fully aware of the fraud. The Commissioner, after assessing the facts on record held that the deposit was not made by the Petitioner but by Mr. Pravin Mody. If it is the case of the Petitioner that the amount was not deposited by Mr. Pravin Mody, it would be a case of wrong forfeiture of the deposit. Nothing is shown as to why this ground cannot be agitated in the pending appeal filed by the Appellant. Since this remedy of Appeal is available and already availed of, it is not necessary to examine this issue in this Petition. Petition disposed off.

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• 2020 (2) TMI 408
  Maintainability of appeal - Ocean going survey vessel or not - HELD THAT:- The appeal was admitted by the Supreme Court and when it came up for hearing, it was pointed out by the learned Counsel for the Appellant that appeal had to be filed in the High Court in view of section 130 of the Customs Act, 1962 and therefore, the appeal was dismissed giving liberty to the Appellant to approach the High Court. Hence, the present Appeal. Appeal admitted.

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• 2020 (2) TMI 400
  Date on which Notification coming into force - N/N. 120/2003 dated 01.08.2003 - whether the Notification is effective from the date of publication i.e. 01.08.2003 as proposed by the revenue or from the date of offer for sale of the said notification i.e. 04.08.2003 as claimed by the appellant? HELD THAT:- From section 25, particularly from clause (b) it is clear that the notification shall come into force when the notification is issued, published in the Official Gazette and also offered for sale. Therefore, all the three event are necessary i.e. notification should be issued, published in the Official Gazette of Central Government and offered for sale, that means the date on which the notification is offered for sale shall be the relevant effective date of notification, even though, the date of issue of notification and publication is prior to the date of offer for sale. From the perusal of the Gazetted Notification it is clear that the reply is in respect of Notification No. 120/2003-Cus dated 01.08.2003 GSR 622 (E), Serial no. 365 and bearing GI No. 2195 dated 01.08.2003. With the above documents it is clear that the Notification No. 120/2003-Cus though issued on 01.08.2003 and published on 01.08.2003 but offered for sale only on 04.08.2003. Therefore, the same came into effect on 04.08.2003, whereas the Bills of Entry were filed on 01.08.2003 therefore, the benefit of unamended Notification No. 21/2002-Cus dated 1st March, 2002 was available to the appellant. Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 394
  Anti-dumping duty - time limitation - an appeal can be filed before the Tribunal within 90 days of the passing of the order under appeal - Section 9C(i) of the of the Customs Tariff Act, 1975 - HELD THAT:- As the appeal was filed beyond a period of 90 days from 09 April, 2019, it was accompanied by an application for condoning the delay in filing the appeal. The Notification was issued by the Central Government on 09 April, 2019. The appeal should have, therefore, been filed within 90 days from this day as contemplated under Section 9C(2) of the Act. The appeal was, however, filed only on 07 October, 2019. The normal period prescribed for filing the appeal expired on 08 July, 2019. All that has been stated in the application that has been filed for condoning the delay is that, a Writ Petition was filed in the Punjab Haryana High Court against the Notification dated 09 April, 2019 by a related and an unrelated party which Petition was dismissed as withdrawn on 05 September, 2019 - the date of filing of Writ Petition has not been mentioned in the delay condonation application, but even otherwise there is no reason as to why the Appellant could not have filed the appeal during the pendency of the Writ Petition filed by other parties. We are not satisfied with the explanation offered by the Appellant for condoning the delay. The delay condonation application is, accordingly, rejected - Appeal dismissed.

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• Corporate Laws

• 2020 (2) TMI 407
  Approval of the proposed Scheme of Compromise and Arrangement - Mobilisation of funds - HELD THAT:- When a company is ordered to be wound up, the assets of it are put in possession of the Official Liquidator. The assets become custodia legis. The follow-up, in the absence of a revival of the company, is the realisation of the assets of the company by the Official Liquidator and distribution of the proceeds to the creditors, workers and contributories of the company ultimately resulting in the death of the company by an order under Section 481 of the Act, being passed. But, nothing stands in the way of the Company Court, before the ultimate step is taken or before the assets are disposed of, to accept a scheme or proposal for revival of the Company. In that context, the court has necessarily to see whether the scheme contemplates revival of the business of the company, makes provisions for paying off creditors or for satisfying their claims as agreed to by them and for meeting the liability of the workers in terms of Section 529 and Section 529A of the Act. Of course, the court has to see to the bona fides of the scheme and to ensure that what is put forward is not a ruse to dispose of the assets of the company in liquidation. In the present case, the Scheme as a whole is just, fair and reasonable. There is no violation of any statutory provisions. It is in the interest of justice that the Scheme is approved subject to supervision of this court through a retired Judge of this Court. The scheme is approved - application allowed.

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• 2020 (2) TMI 406
  Bail application - investigation by SFIO - Section 212 (6)(ii) of the Companies Act, 2013 - HELD THAT:- The present bail application has to be decided on the basis of its own facts and keeping in mind the proposition of law that economic offences constitute a class part and need to be visited with a different approach in the matter of bail and since these kind of offences cause irreparable harm to the economic system and, therefore, required to be considered seriously. Perusal of Section 212 (7) of the Companies Act, 2013 reveals that limitation on granting bail is in addition to the Limitation provided under Section 439 Cr.P.C. This court has now to decide the bail application in the light of the provisions of bail enunciated in the Companies Act as well as Cr.P.C. This court has, thus, to be satisfied that there are reasonable grounds for believing that petitioner is not guilty of the offences alleged against him and that he is not likely to commit any offence while on bail. It is a settled law that at the time of consideration of bail application, it is neither necessary nor desirable to weigh the evidence meticulously to arrive at a positive finding as to whether or not the accused has committed offence. What is to be seen is whether there is reasonable ground for believing that accused is not guilty of the offence(s) he is charged with. There are serious allegations against the petitioner regarding manipulation and fabrication of financial documents by way of which, the fund was siphoned off to other companies and therefore, it cannot be held that there are no reasonable grounds to believe that accused is not guilty of the offences alleged against him - in view of the allegations appearing on record and active participation of the petitioner in alleged commission of the offence i.e. in fabrication of documents in opening LCs and discounting of the same, manipulation of accounts and siphoning of the funds worth several crores and keeping in mind the fact that all fraudulent activities were allegedly planned in advance and executed carefully and with deliberate design and further taking overall view of the matter, it is difficult to hold that petitioner will not commit any offence under the Act while on bail. On the basis of allegations appearing on record, it cannot be held that there are no reasonable grounds to believe that the accused is not guilty of the offences alleged against him and that he is not likely to commit any offence under the Act while on bail and thus, twin conditions for grant of bail as envisaged under Section 212(6) (ii) are not satisfied. This court is of the opinion that offences alleged against the petitioner are serious in nature which involve fraud to the tune of several crores and the offence being an economic one which affects the economy of the nation, the petitioner is not entitled for bail under Section 439 Cr.P.C. - Petition dismissed - decided against petitioner.

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• 2020 (2) TMI 401
  Quashing of FIR - allegation is that the accused persons have with an intention and conspiracy planned to cheat the people and after opening branch offices and collecting money from the customers they have fled away with some of ₹ 5 Crores approximately - HELD THAT:- Matter referred to the Hon ble Division Bench of this Court for consideration: Whether sub-section (2) of Section 50 of the Bihar Self Supporting Co-operative Societies Act, 1996 may be interpreted to mean and understand that the words other legal proceedings occurring thereunder create a bar in lodgment of a first information report against the co-operative society registered under the said Act, its Director(s), Officer(s), Manager(s) or a member of the society and that it would also cover the criminal proceeding against them? Let the records be placed before Hon ble the Chief Justice for referring the aforesaid questions to the Hon ble Division Bench of this Court.

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• 2020 (2) TMI 393
  Restoration of name of the Company in the Register of Companies - name was struck off due to defaults in statutory compliances, namely, failure to file Financial Statements and Annual Returns from financial year ended 31.3.2015 to 31.3.2017 i.e. for three years - HELD THAT:- On hearing the submissions of the Ld. Counsel appearing on behalf of Petitioner, perusal of the Report of Registrar of Companies, Mumbai and the documents submitted, it is clear that the Company is in operation, company has its Assets Current Liabilities, unless otherwise the relief sought is granted to the company, grave hardship and irreparable loss and damage shall be caused to the said company - we are satisfied that the prayer sought by the Petitioner company deserves to be allowed. The name of company is restored in ROC - appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 390
  Jurisdiction - siphoning of funds - power of Adjudicating Authority to direct the SFIO to investigate about the fraud or siphoning of funds, if any, committed by the Company (Corporate Debtor) - HELD THAT:- Similar issue decided in the case of LAGADAPATI RAMESH AND M/S. COMMUNE PROPERTIES INDIA PVT. LTD. ORS. VERSUS SMT. RAMANATHAN BHUVANESHWARI ORS. [ 2019 (9) TMI 1316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that the Adjudicating Authority was not competent to straight away direct any investigation to be conducted by the 'Serious Fraud Investigation Office'. However, the Adjudicating Authority (Tribunal) being competent to pass order under Section 213 of the Companies Act, 2013, it was always open to the Adjudicating Authority/Tribunal to give a notice with regard to the aforesaid charges to the Promoters and others, including the Appellants herein and after following the procedure as laid down in Section 213, if prima facie case was made out, it could refer the matter to the Central Government for investigation by the Inspector or Inspectors and on such investigation, if any, actionable material is made out and if the Central Government feels that the matter requires investigation through the 'Serious Fraud Investigation', it can proceed in accordance with the provisions as discussed above. Impugned order shows parties have been heard on the charges claimed by the 'Resolution Professional'. The matter remitted to the Central Government for investigation through 'Inspector' or 'Inspectors' to find out whether one or other promoter or officer or employee or any other person related to the company or companies in question have violated the provisions of Section 70 of the 'I B Code' - The matter is referred to the Secretary, Ministry of Corporate Affairs to get the matter investigated by 'Inspector' or 'Inspectors' following the procedure in terms of Section 213 of the Companies Act, 2013 read with Section 70 of the 'I B Code' and Section 447 of the Companies Act, 2013 or any other offence punishable under Chapter VII of the 'I B Code'. Appeal disposed off.

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• Securities / SEBI

• 2020 (2) TMI 436
  Ex parte ad interim order - as directed by WTM of SEBI in the second part of direction no. (iv) the NSDL and NSE were doing their due diligence and in consultation with SEBI effected the transfer of securities to the clients who have paid in full and who were the real beneficial owners of those securities - HELD THAT:- No dispute with the interpretations of the provisions of the Depositories Act and Regulations thereunder. However, while dealing with a case of alleged fraud the implications of the same have to be factored in. The very purpose of an ex parte ad interim order is to deal with the eventualities arising from such alleged fraud or similar major violations. This ex parte ad interim order was issued on [ 2019 (12) TMI 477 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] . Even an oral mentioning was made by the Appellants before this Tribunal only on December 2, 2019 by which time a lot of water has flown under the bridge. Now it is on record before us that after a due diligence by NSE and NSDL securities have been transferred to the account of the clients. Therefore, further rights have been created/restored involving more than 80,000 investors. In this context, a prayer to recall the same or to retain the same as frozen accounts of those clients becomes untenable. As ordered in the matter of Bajaj Finance Ltd. [ 2019 (12) TMI 1271 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] Appellants are at liberty to approach SEBI. If any representations from the Appellants are pending or filed on or before December 6, 2019 before SEBI, the WTM of SEBI, after providing an opportunity of hearing to the Appellants, shall pass an order in accordance with law latest by December 12, 2019.

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• 2020 (2) TMI 386
  Investments made the appellants individually and collectively crossing the limit of 15% under Regulation 10 of the Takeover Regulations 1997 - obligation on the part of the appellants to make separate public announcements of open offer under Regulation 10 read with Regulation 14(1) for acquiring the shares of the Target Company within four working days from July 24, 2006 ignored - HELD THAT:- Direction of compulsorily delisting was only consequential and contingent upon the happening of certain events as stated in the order of WTM. The contention that the delisting has been ordered since the register of members of the Target Company was compromised is baseless. As held earlier, there is no evidence of tampering with the register of members. The open offer was directed because the promoters were fraudulently trying to transfer shares in their names or its entities. Thus the contention raised by the appellants has no merit and is rejected. In the instant case, we are of the opinion that there is no bar under the SEBI Act and the Takeover Regulations 1997 in directing two different persons/entities to make an open offer at different moment of time. The promoters violated the listing regulations and were involved in fraudulent transfer of shares to itself. They were asked to make an open offer. The appellants, on the other hand, violated Regulation 10, 11 and 12 of the Takeover Regulations 1997 and were thus required to make a public announcement. We find that the direction to make an open offer was pursuant to violation of different provisions of law and violation at different point of time. No doubt Regulation 44 of the Takeover Regulation 1997 provides consequences of the breach and gives flexibility to the WTM to enforce Regulation 11 by way of several directions and, one such direction is, to make an open offer for acquiring the shares of the Target Company. The guiding principle for issuance of a direction under Regulation 44 is the interest of the investors and securities market. Had the appellants made the open offer within a period of 4 days from the date of acquisition in accordance with the Takeover Regulations 1997 and complied with the time line specified therein, the formalities could have been complied by October 2006, i.e. from the date of making the public announcement. But alas, the same has not been done till date. We are in agreement with the decision of the Tribunal in Nirvana'sHolding (P.) Ltd case [ 2011 (9) TMI 1169 - THE SECURITIES AND EXCHANGE BOARD OF INDIA] and in the peculiar facts and circumstances of the case, we do not find any reason to interfere or modify the directions given by the WTM.

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• Insolvency & Bankruptcy

• 2020 (2) TMI 398
  Approval of Resolution plan - Whether the adjudicating authority has the jurisdiction of judicial review and appoint an independent valuer to conduct fresh valuation of Intangible assets of CD? - Whether there is any error apparent on the face of valuation reports submitted by the two registered valuerscontrary to the accounted balance sheets of the CD for the year 2018? HELD THAT:- Upon perusal of the warning letters supra, it can be said that warning letters contemplate corrective actions and state that the compliances with CGMP, FDA may withhold approval of any new applications or refusing admission of articles manufactured by CD at Bavla and Vapi units. No record has been placed that these bans were actually imposed and in the absence of the ban, the value of the Intangible assets cannot be zero. The warning letters were only pertaining to drugs export to US and the CD has been exporting drugs to other countries worldwide. It is not the case that CD is exporting the drugs manufactured only to US. The reasoning of the two registered valuers in assigning a NIL value to the intangible assets of CD is absolutely untenable. The Valuation exercise was conducted on certain assumptions that warning letters negate the value of such assets. There was no reasoning provided by the Valuers whether these warning letters prescribe the risk factors and are subject to certain remedy or curative measure/precautionary steps envisaged to be carried out by the proposed Resolution applicant. The Valuers has not referred to any method of valuation in their report, no comparison was drawn of valuing the intangible assets of other Pharmaceutical Companies particularly in relation to the Domestic and International standard of valuation of such Intangible assets worldwide. A critical assessment of risk faced by warning letters ought to have been carried out in the light of available market expectation - Valuation is not exact science and court cannot disregard such report, unless there is a patent error. Thus, assigning nil value to Intangible assets is an error on the face of the two Valuation Reports and hence a fresh valuer needs to be appointed to the limited extent of providing a fair value of Intangible assets. There is no element of fraud but only compares the value assigned to the intangible assets in the financial statement for the year 2017 2018 with the Information Memoranda and claims that this is an error apparent on the face of it. I conclude that the Warning letters issued by the USFDA is curable and entails the steps for compliance therein - it is ordered that the Resolution Professional take steps to appoint a fresh Valuer with a limited scope of valuing the Intangible asset considering the International standard of Valuation of a Pharmaceutical Company and submit his report within a period of two weeks of receipt of the order copy and the COC is directed to reconsider the valuation submitted by the third Valuer. Application disposed off.

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• 2020 (2) TMI 396
  Admissibility of petition - CIRP process - corporate debtor failed to make repayment of its debt - period of limitation - HELD THAT:- Admittedly, the 1st Respondent / Bank has filed OA 576/2016 before the Debt Recovery Tribunal , New Delhi in which the Corporate Debtor had remained absent and a decree was passed on 21st May, 2019. In fact, an application for execution of decree is pending before the Debt Recovery Tribunal . After passing of the decree by the Debt Recovery Tribunal in OA 576/2016 the Corporate Debtor projected a counter claim of ₹ 111.75 crores on 27.06.2019 claiming damages, loss of profit (including loss of opportunity) on the basis of non-restructuring of its dues. In view of the fact that the default made by the Corporate Debtor took place in June, 2015 and that the application u/s 7 of the I B Code was filed by the 1st Respondent of the Bank before the Adjudicating Authority on 30.01.19 and that the account of the Corporate Debtor was declared as NPA on 30.09.15, it is held by this Tribunal that the application filed by the Bank before the Adjudicating Authority is barred by Limitation. The Corporate Debtor M/s Kew Precision Parts Pvt. Ltd. is released from the rigour of the Corporate Insolvency Resolution Process . All actions taken by the Interim Resolution Professional / Resolution Professional and Committee of Creditors , if any, are declared illegal and set aside. The Resolution Professional is directed to hand over the records and assets of the Corporate Debtor to the promoter/Directors of the Corporate Debtor forthwith - the matter is remitted to Adjudicating Authority ( National Company Law Tribunal ) New Delhi Bench to determine the Fee and Cost of Corporate Insolvency Resolution Professional as incurred by him, which is to be borne and paid by 1st Respondent / Bank - appeal allowed.

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• 2020 (2) TMI 392
  Conducting the Corporate Debtor's insolvency resolution to admit the Applicant's claim - disqualification/removal of such members from the purported Committee of Creditors with voting share proportionate to its amount of claim - HELD THAT:- A Financial Creditor is to submit a claim in respect of a Financial debt which is an ascertained liability due from the debtor. There are several types of financial debts , as defined in section 5(8) of the Code. There should be an apparent default for non-payment of an ascertained and definite liability. Therefore a debt should be a clear, definite and ascertainable and must not be in dispute or doubtful. A doubtful or disputed debt is a subject matter of Civil Proceedings and therefore, within the domain of Civil Courts to decide the dispute about the debt contested by both the sides. As far as the scope and ambit of Insolvency Code is concerned, this Bench is not having jurisdiction to settle a disputed debt. The scope of Insolvency Code is to proceed in respect of an undisputed debt, the payment of which is defaulted. This Bench under Insolvency Code is not constituted to settle Civil disputes. Only in respect of a defined and unambiguous debt the Insolvency Proceedings are to be commenced. In the past on several occasions the alleged claim of this Applicant had already been rejected by several Judicial Forums, therefore, respectfully following the reasoning of rejection already assigned therein, we hereby conclude that this transaction has rightly been rejected by the RP and as a consequence this Application is also rejected - Application rejected.

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• 2020 (2) TMI 391
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - moratorium declared.

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• 2020 (2) TMI 388
  Approval of distribution of amounts - approved resolution plan - sub-section (4) of Section 30 of I B Code - HELD THAT:- Amended sub-Section (4) of Section 30 came into force since 16th August, 2019. It has not been given retrospective effect but is prospective. Therefore, if the distribution is to be made by the 'Committee of Creditors', it is not necessary to follow the amended sub-section (4) of Section 30, though it was open to the 'Committee of Creditors' to follow the same principle. Therefore, the distribution cannot be alleged to be in violation of the amended sub-section (4) of Section 30 - As per amended Section 30(2)(b)(ii), the distribution is to be made in the manner as prescribed under Section 53(1) giving preference to the secured creditor. However, even at that stage no discrimination can be made between two similarly situated 'secured creditor'. If the 'Financial Creditor' do not accept the 'feasibility' and 'viability' of the plan and holds that the 'resolution plan' is discriminatory or against the provision of law, it has right to dissent during the voting and can be treated as a 'dissenting financial creditor' - a 'secured creditor' cannot claim preference over the other 'secured creditor' at the stage of distribution out of the 'resolution plan on the ground of 'dissenting' or 'assenting', 'secured financial creditor' otherwise the distribution would be held to be arbitrary and discriminatory. Section 30(2)(b)(ii) cannot be interpreted in a manner to give advantage to a 'dissenting secured financial creditor'. In fact Section 30(2)(b)(ii) has been amended only to ensure that 'dissenting financial creditor' should not get anything 'less than liquidation value' but not for 'getting maximum of the secured assets'. Appeal dismissed - decided against appellant.

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• 2020 (2) TMI 385
  Approval of the resolution plan for the Corporate Debtor - extension of CIRP extended - Section 30(6) of IBC, 2016 - differential treatment inter se the secured financial creditors - HELD THAT:- In the resolution plan of Patanjali it is specifically stated that the resolution plan is submitted after considering and evaluating several factors such as including the assets, liabilities, future cash flows of the business, tracking of developments taking place post CIRP Date etc. and not alone the amount of claims made by the creditors of a company under insolvency . Referring to the decision of this Tribunal directing repayment of the ₹ 65.98 crores, it is stated that the resolution plan was submitted after considering the said amount. Therefore, it follows that the resolution applicant has appropriated this ₹ 65.98 crore in its resolution plan in case it is reversed and repaid to the Corporate Debtor. Since the CoC has approved the resolution plan with a 96.95% majority; it can be safely presumed that CoC considered, evaluated and approved every clause of the resolution plan individually as well as the resolution plan as a whole in its entirety. Therefore, the appropriation of the said ₹ 68.98 crores by the resolution applicant is approved by the CoC and can be taken as the decision of the CoC upon the said amount as per our order dated 12.03.2019. The Resolution Professional has cited the judgment of Hon'ble Supreme Court in the case of Managing Director, ECIL, v. Karunakar [1993 (10) TMI 310 - SUPREME COURT] , wherein the Five Judge Bench of the Hon'ble Supreme Court has held that while a court of law promulgates a new principle, its application is made prospective. The resolution plan approved with modifications, which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors, Resolution Applicant and other stakeholders involved in the resolution plan - List on 1.8.2019 for filing additional affidavit of Resolution applicant regarding acceptance of the modifications in the Resolution Plan and submitting the other informations.

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• Service Tax

• 2020 (2) TMI 410
  Import of services - reverse charge mechanism (RCM) - Vires of Section 66C (2) of the Finance Act, 1994 read with Rule 10 of the POPS Rules - levy of Service tax on services provided by a person in a non-taxable territory to a person in a non-taxable territory - HELD THAT:- It is not necessary to adjudicate this petition in view of the decision of this Court in case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] where it was held that N/N. 15/2017- ST and 16/2017-ST making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse charge N/N.30/2012-ST is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed and set aside with all consequential reliefs and benefits. Petition disposed off.

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• 2020 (2) TMI 405
  Refund of deducted amount of service tax from the bill of the petitioner - Clause 13(a) of the Notification No. 12/2012-Service Tax dated 17th March, 2012 - HELD THAT:- Reliance can be placed in the case of M/S RISHI BUILDERS INDIA PVT. LTD., VEENA SINGH, VALLABHANENI CONSTRUCTION PVT. LTD, M/S SVSVS PRAJECTS PVT. LTD., M/S NARAYANI NIRMAN, M/S NIRANJAN SHARMA, M/S SAJ INFRACON PROJECT INDIA LIMITED, M/S SAJ INFROCON PROJECT INDIA LIMITED VERSUS THE STATE OF BIHAR OTHERS [ 2015 (7) TMI 1345 - PATNA HIGH COURT] where it was held that the concerned respondents are directed to refund the entire amount of service tax deducted from the bills of the petitioners after the issuance of the aforesaid Notification dated 17.3.2012. Respondents are directed to consider the representation dated 09.09.2019 filed by the petitioners, as contained in Annexure-5, in the light of the aforesaid order - petition disposed off.

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• 2020 (2) TMI 397
  Refund of service tax - time limitation - Section 11B of the Central Excise Act, 1944 - HELD THAT:- In this case it is an admitted fact that appellant has filed refund claim within one year from the date of the order of the Hon ble High Court wherein the appeal filed by the Revenue has been dismissed. In that circumstances, at this stage, the appellant has become entitled to claim refund claim of amount paid by them during the course of litigation. The appellant has filed refund claim in time in terms of Section 11B of the Act itself. Therefore, no question for rejection of refund claim as time barred by the learned Commissioner (Appeals) - appeal allowed - decided in favor or of appellant.

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• 2020 (2) TMI 389
  Levy of service tax - Valuation - inclusion of cost of FOC material - Benefit of abatement - Works contracts services through competitive bidding - appellant provided various services to customers like NTPC, NHPC, Nuclear Power Corporation, Power Grid Corporation and some other customers and electricity boards - period covering April 2013 to March 2015 and April 2015 to June 2017 - HELD THAT:- Reliance placed in the case of M/S BHARAT HEAVY ELECTRICALS LTD. VERSUS COMMISSIONER, CENTRAL EXCISE, NOIDA-II [ 2018 (12) TMI 378 - CESTAT ALLAHABAD ] where it was held that Prior the appellant started Civil Construction, Errection or Installation at the agreed site, the equipments to be erected/installed at that site were agreed to be supplied to the appellant vide a separate agreement. This particular fact makes it abundantly clear that property in goods which were to be erected and installed by the appellant had not transferred in his favour at the site of construction and erection. Appeal allowed.

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• Central Excise

• 2020 (2) TMI 399
  Reversal of refund order - principles of unjust enrichment - incidence of duty not passed on - HELD THAT:- First, there is no rule prescribed that in adjudication proceedings, documentary evidence that to of a public nature, was not to be accepted without examining the source, on the basis of which such documents has been prepared. Second, if the said document is not to be accepted, then there is no point in throwing the blame on the appellant for its failure to produce the same before him which, admittedly was a departmental report and could not be possibly accessed by the appellant unless supplied to it by the Department - It is not invariably true that when any amount is shown as expenditure or any expenditure is required to be made, the same has to be absorbed in costing of final product unless there is a proof that pricing of the final product has been specifically increased on that score, since there are various mechanisms available before the manufacturer to absorb the cost, say, by way of reducing profit margins of its sale, overhead expenditures of the company etc. In the case on hand, it is acknowledged that there was no change in the price structure of the product immediately after payment of duty on protest - The appellant is entitled to get refund of ₹ 10,17,419/- alongwith interest as per Section 11BB of the Central Excise Act, 1944 to be calculated from three months after filing of the application of refund - appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 395
  Demand of Interest - CENVAT Credit taken and utilised wrongly instead of taken or utilised wrongly - HELD THAT:- It is true that the order of the Tribunal in the first round of litigation was not challenged by the appellant. This order had set aside the penalties and confirmed the demand partly to the extent of ineligible CENVAT credit on MS items used for shed amounting to ₹ 14,06,621/- along with interest. The order does not specify the manner in which the interest should be calculated or the period for which interest should be levied - There is no indication that the interest should be calculated up to 31st January 2013. There is also no indication in the order that the interest should be calculated only up to 16th March 2012. A plain reading of this order, therefore, shows that it was left to the lower authority to calculate interest as applicable under the Law. The interest must be calculated as per law i.e. up to 16th March 2012 only in respect of CENVAT credit which has been taken but not utilised and thereafter only if CENVAT credit has been taken and also utilised - in respect of CENVAT credit which has been taken but not utilised and it should be calculated beyond this period only in respect of CENVAT credit which has been taken and also utilised. The appeal is remanded to the original authority for the limited purpose of this computation.

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• 2020 (2) TMI 387
  Rectification of mistake - time limitation - Section 35C (2) of the Central Excise Act 1944 - plea of limitation ignored by Tribunal - HELD THAT:- There is no denial of the fact that the points raised concerning non-application of extended period of limitation has not been specifically dealt with and findings have not been placed on record on the same - Perusal of show cause notice would reveal that for contravention of provision of Rule 2 3 of Cenvat credit rule and Rule 4, 6, 8 11 of Central Excise Rules 2002, the demand was raised and it was confirmed in the OIO and OIA on the ground that appellant had suppressed the fact that they were availing Cenvat Credit of service tax on such service which was not rendered by them. This being to the findings of the Tribunal, allowing rectification of mistake application so as to bring debatable points of law and fact for re-appreciation and analysis would defeat the purpose of the provision contained in the Central Excise Act for rectification of mistake and defeat the appeal procedure prescribed in the Statute too. The application filed for rectification of mistake, being devoid of merit, is rejected.

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• CST, VAT & Sales Tax

• 2020 (2) TMI 404
  Transitional credit of entry tax paid - whether the petitioner was entitled to avail transitional credit of entry tax paid by a local dealer under section 88 (6) (a) of the TNVAT Act, 2006? - HELD THAT:- While selling the vehicles to the petitioner and paying the tax under TNGST Act, 1959, the local dealer would have set off the entry tax paid against the TNGST and passed on only the net of the tax paid under TNGST Act, 1959 to the petitioner - Therefore, if at all, the petitioner would have been entitled to transitional credit under Section 88(6)(a) of the TN VAT Act, 2006 of only the net of the tax paid under TNGST Act, 1959 by such dealer and not on the burden of entry tax which was purportedly collected by the dealer from the petitioner illegally. Even otherwise having purchased the motor vehicles from a local dealer in Tamilnadu, transitional input tax credit of entry tax paid under Tamil Nadu Tax on Entry of Motor Vehicles Into Local Areas Act, 1990 under section 88(6)(a) of the T.N. VAT Act, 2006 cannot be countenanced. Transitional input tax credit of Entry tax on the closing stock is not permissible under Section 88(6)(a) of the TN VAT Act, 2006 even if the petitioner had actually imported motor vehicles and paid the entry tax on import of the motor vehicles from other state. If such tax was paid, such tax at best would be available for adjustment in terms of Section 4 of the Tamil Nadu Tax on Entry of Motor Vehicles Into Local Areas Act, 1990 - the petitioner had wrongly availed credit of the Entry tax paid by the local dealer who sold the motor vehicle to the petitioner. The entry tax paid by the selling dealer would have got subsumed into the TNGST Act 1959 paid by the dealer and only net of the TNGST would have been passed on to the petitioner. There are no infirmity in the impugned orders passed by the 2nd respondent on 16.4.2015 and by the 1st respondent on 29.09.2015 - petition dismissed.

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• 2020 (2) TMI 403
  Reversal of excesss input tax credit - capital goods - supplier of goods paid VAT @12.5% instead of 4% - whether the respondent was justified in directing the petitioner to reverse the input tax credit availed on capital goods in excess of 4% vide the impugned order? - Section 2(11) of the TNVAT Act, 2006. HELD THAT:- The purpose of allowing input tax credit on capital goods and inputs are to reduce the cascading effect of the tax on the products / goods sold by a dealer under the provisions of the said Act. Under Section 19 (3) of the Act every registered dealer, is allowed into tax credit in the manner prescribed on the purchase of capital goods for use in the manufacture of taxable goods. The only restriction that is contained under the provision of Sub Section (6) of the Act. In this case, it is not the case of the respondent that there was deliberate ploy on the part of the dealer who sold the capital goods to the petitioner by charging tax at 12.5% to liquidate accumulated credit - whether the tax was paid at 4% or 12.5% as the case may irrelevant as far as the respondent is concerned as the issue is revenue neutral. Thus there is no reason why credit availed by the petitioner should be disallowed particularly in the light of the fact that intention of the legislature is to reduce the cascading effect of the tax the final product - impugned order do not sustain - petition allowed - decided in favor of petitioner.

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• 2020 (2) TMI 402
  Rejection of Samadhan Application - settlement of arrears of tax under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 - HELD THAT:- The object of the scheme under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 is to give a quietus to an assessee to settle the disputes and therefore to the extent an assessee is in arrear of tax as defined under Section 2(b), the benefit of such scheme cannot be denied to the petitioner merely because the petitioner was also operating under the Interest Free Sales Tax Deferral Scheme. The said Scheme contemplates payment of liability which is deferred. Therefore, to that extent it cannot be said that the petitioner was in arrears of tax within the meaning of Section 24 of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002. However, to the extent the petitioner was in arrears of tax outside deferral scheme, the petitioner is entitled to the benefit thereof. The Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 also does not expressly preclude an assessee from availing the benefit of the Samadhan Scheme, who were under the Interest Free Sales Tax Deferral Scheme for the amounts which were outside deferral period. Since the petitioner was in arrears of tax determined by the assessing officer for the non-deferral period, benefit of Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 cannot be denied to the petitioner. The petitioner is entitled to settle the arrears of tax qua non deferral amount alone - Petition allowed in part.

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• Indian Laws

• 2020 (2) TMI 412
  Dishonor of Cheque - offences u/s 138 of NI Act - alleged forgery of four receipts - HELD THAT:- On the application filed by appellant No.3 in the said Summary Suit No.105/2015, four receipts filed in the suit were sent to the handwriting expert. The handwriting expert has opined that signatures in all the four receipts did not tally with the sample signatures which were of respondent No.2-Mahendra kumar. It was only thereafter, complaint was filed by Mahendrakumar, based on which, FIR No.I-194/2016 was registered on 28.12.2016 against the appellants for the offences punishable under Sections 406, 420, 465, 467, 468, 471 and 114 IPC. As rightly contended by the learned counsel for the appellants, in the Summary Suit No.105/2015, issue No.5 has been framed by the Court whether the defendant proved that the plaintiff has fabricated the forged signature illegally and created forged receipts . When the issue as to the genuineness of the receipts is pending consideration in the civil suit, in our view, the FIR ought not to have been allowed to continue as it would prejudice the interest of the parties and the stand taken by them in the civil suit. It is also to be pointed out that in terms of Section 45 of the Indian Evidence Act, the opinion of handwriting expert is a relevant piece of evidence; but it is not a conclusive evidence. It is always open to the plaintiff-appellant No.3 to adduce appropriate evidence to disprove the opinion of the handwriting expert. That apart, Section 73 of the Indian Evidence Act empowers the Court to compare the admitted and disputed writings for the purpose of forming its own opinion. Based on the sole opinion of the handwriting expert, the FIR ought not to have been registered. The High Court erred in quashing the criminal case filed by appellant No.3-Hasmukhbhai under Section 138 of N.I. Act. As pointed out earlier, Yogeshbhai has admitted the issuance of cheques. When once the issuance of cheque is admitted/established, the presumption would arise under Section 139 of the N.I. Act in favour of the holder of cheque that is the complainant-appellant No.3. The nature of presumptions under Section139 of the N.I. Act and Section 118(a) of the Indian Evidence Act are rebuttable - Though, the Court has the power to quash the criminal complaint filed under Section 138 of the N.I. Act on the legal issues like limitation, etc. Criminal complaint filed under Section 138 of the N.I. Act against Yogeshbhai ought not have been quashed merely on the ground that there are inter se dispute between appellant No.3 and respondent No.2. Without keeping in view the statutory presumption raised under Section 139 of the N.I. Act, the High Court, has committed a serious error in quashing the criminal complaint in C.C.No.367/2016 filed under Section 138 of N.I. Act. Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 411
  Dishonor of Cheque - offences u/s 138 of NI Act - complaints filed by the petitioner company against respondent no.2 were dismissed due to non-appearance and non-prosecution on behalf of the petitioner company - HELD THAT:- The present petitions were filed on 23.01.2017. The same were also accompanied by applications under Section 378(3) of the CrPC read with Section 482 of the CrPC, seeking leave to file appeals. The learned counsel appearing for respondent no.2 is correct that an appeal could not be filed without seeking special leave to appeal under Section 378(4) of the CrPC. Further, the caption of the applications seeking leave to appeal are also erroneous inasmuch as, the petitioner has captioned those as applications under Section 378 (3) of the CrPC. It is well settled that the Courts would examine the substance in preference over form and therefore, this Court is unable to accept that the present petitions should be dismissed only for the reasons that they are defective in their form. The petitioner ought to have styled the present petitions as application for leave to appeal. However, this Court does not consider it apposite to dismiss the present petitions on this ground. This Court is also of the view that the petitioner has adequately explained the delay in filing the present petition - This Court is of the view that the said explanation provided by the learned counsel for the petitioner ought not to be rejected. This is considering that the petitioner has been diligently pursuing its complaint and had promptly filed the process fee for issuance of NBWs as well. The present appeals are allowed and the complaints are restored on the board of the concerned MM at the same position as obtaining on 21.02.2015.

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