TMI Tax Updates - e-Newsletter
February 13, 2023
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Classification of goods - Polypropylene Leno Bags by weaving polypropylene strips (tapes) - to be classified under Chapter Heading 63053300 or not. - Constitutional Validity of impugned circular no. 80/54/2018-GST - the product in question manufactured by the petitioner is made from plastic granules and cannot be treated as textile articles - HC
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GST:
Non-payment of GST - Non getting the disbursement of GST amount from the recipient of services - This petition is disposed of with a direction to the petitioner to make a fresh representation to the respondent no.2 who shall seek a clarification from the Engineer-in-Chief and the respondent no. 1 and then decide the representation of the petitioner by a reasoned and speaking order within a period of two months from the date of making of such representation. - HC
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GST:
Cancellation of registration of petitioner - Necessarily the petitioner will have to submit a reply to the impugned show cause notice, raising the contentions that have been raised in this writ petition. On receipt of the same, it is for the respondents to consider it, on merits and in accordance with law. - HC
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GST:
Rejection of petitioner's request u/s 140(1) of the GST Act, 2017 for carrying forward of unutilized VAT TDS to the new GST regime without giving any reason - being a non-speaking order as no reasons have been given for rejecting the petitioner's request for carrying forward of the unadjusted VAT TDS to the GST regime that too when the law has been well settled now - claim allowed - HC
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Income Tax:
Penalty proceedings u/s 271 (1) (C) or 276C - assessment u/s 153C - if an entity is legally entitled to file a revised return of tax, even in terms of Section 153C, within a period and if it does so within such period, the same cannot attach any further disadvantage to the entity for having done so. In this regard the stand of the Revenue that the assessee tried to evade penalty tax by revising return is also not quite tenable. - HC
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Income Tax:
Credit of TDS - income from interest received in the name of her deceased husband was offered for taxation but credit of TDS deducted against the same was not granted to the petitioner - In such eventuality, instead of denying her, when the Commissioner (A) himself was convinced on reflection of the said amount on 26AS form, TDS could have been credited in the account of the petitioner - Refund allowed - HC
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Income Tax:
Settlement of a Case - receipt of the application u/s 245C(1) - Procedure u/s 245D - Whether full and true disclosure of income while making application under Section 245(C)? - the application before the Commission deserved to be rejected as the respondents had not made true and full disclosure of their undisclosed income. This issue is decided in favour of the revenue. - HC
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Income Tax:
Settlement of case under the Income Tax Act - Misconduct on the part of Doctors of King Georges Medical University - This Court takes a very serious view of the facts placed before it and it is expected that the university concerned and the State Government shall make due inquiries and proceed appropriately against such individuals who are found indulged in blatant private practice and making profits in private companies and also being on their Boards as Directors - HC
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Income Tax:
Denial of deduction u/s 10AA - assessee contended that filing of Audit Report as required u/s.10AA(8) of the Act, is procedural and directory in nature and thus, for non-filing of said Audit Report, deduction claimed u/s.10AA of the Act, cannot be denied - the assessee is not entitled for deduction u/s.10AA of the Act, for non-filing of Audit Report in Form No.56F as required u/s.10AA(8) - AT
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Indian Laws:
Dishonor of Cheque - cheque misused after stealing - Even if the petitioner is to be believed that the cheques went missing way back in the year 2009-2010, it is really shocking that he has failed to lodge a single police complaint regarding the same and has remained silent for so many years. - Petition dismissed. - HC
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PMLA:
Seeking grant of bail - Reliability of retracted statements - In the present case as well, the question is not regarding the admissibility but the reliability. The statements had concretely named the applicant. However, in their subsequent retraction the reliability of the statements themselves become doubtful. Statements of Employees of SBFL, Accommodation Entry Operators (Devki Nandan Garg & Ashok Kumar Goel) are a cut copy paste job with even the punctation marks of commas, full stops not differing - Prima facie in view of the retraction, the reliability of these statements is questionable. - The applicant should be released on bail. - HC
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SEBI:
Arbitration award - Share Purchase Agreement (SPA) - What the law prohibits under Section 18A read with Section 16 read with the SEBI circular of 1st March 2000 is not entering into a call or a put option for sale but as rightly held by the learned Single Judge what it prohibits is trading or dealing in such option treating it as a security - Clauses 8.5 and 8.5.1 are not contract for sale or purchase of securities, but merely an option which the promisee may or may not exercise and entering into such option does not amount to making of a contract in a derivative. Such a contract was never prohibited. - HC
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Service Tax:
Imposition of penalty under Section 78 - Merely because penalty under Section 78 has been imposed for the earlier period, no penalty can be imposed for any subsequent period is a misplace notion. There is nothing in the section 78 to support this view. So long as the element necessary for imposing penalty under Section 78 are present even for the show cause notices issued for the normal period of limitation, the penalty under Section 78 can be imposed. - AT
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Central Excise:
Constitutional Validity of section 9-D - With the final decision on all the appeals arising from the orders of the Tribunal being rendered against the appellants, there is no pending lis where the principles and conditions precedent could be applied. The endeavour of the appellants to have these appeals argued before us is, therefore, of purely academic interest and would not serve any real purpose - Petition dismissed with cost of Rs. 5 Lacs - SC
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VAT:
Refund claim alongwith interest - AO did not accept the VAT returns - it is mandatory that a notice u/s 74(8) of the DVAT Act is issued for triggering the deeming provisions of Section 74(9) of the DVAT Act. - In the given facts, the petitioner’s prayer for refund of the amount along with interest cannot be acceded to at this stage - Respondents directed to pass an appropriate order, in compliance with the order passed by the Tribunal - HC
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VAT:
Refund of the excess tax collected - the time limit prescribed for filing such declarations is directory and not mandatory and in the case on hand the assessing officer having accepted the Form “C” declarations and considered the same, it is deemed that the assessing officer of IOCL was satisfied that there was sufficient cause which prevented the dealer from filing Form “C” declaration within the time stipulated under the Act and the rules framed thereunder. - Refund to be granted with interest - HC
Articles
Case Laws:
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GST
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2023 (2) TMI 397
Classification of goods - Polypropylene Leno Bags by weaving polypropylene strips (tapes) - to be classified under Chapter Heading 63053300 or not. - Constitutional Validity of impugned circular no. 80/54/2018-GST dated 31st December, 2018, issued by the Government of India, Ministry of Finance - change of classification of Tariff head of its same product under the Central Excise Tariff Act after introduction of the GST Act, 2017 The moot point is that the Bags/sacks are not manufactured out of textile material as defined under Chapter sub-heading 6305 of the Tariff Act and is rather made of woven strips manufactured out of Polypropylene (i.e., made of plastics) as defined under Chapter sub-heading 3923. Hence, the impugned goods are clearly classified under Chapter heading 3923. HELD THAT:- All the Learned Appellate Authority of Advance Ruling of the different States have relied upon and followed the decision of the West Bengal Appellate Authority of Advance Ruling in the case of IN RE: MEGA FLEX PLASTICS LTD. [ 2018 (7) TMI 391 - AUTHORITY FOR ADVANCE RULINGS, WEST BENGAL] and decided the issue in favour of the revenue against the assessees by holding that the goods are classifiable under Chapter 39 of the Tariff Act being the plastic articles and the reasoning given by the aforesaid Appellate authorities though being subordinate authorities and not binding upon this Court but the same is found convincing - Petitioner has also failed to produce any judgment or order by any High Court or Supreme Court reversing the order of such Appellate authorities by taking a different view. Merely because no further appeal is provided for or against the impugned order of the Appellate Authority for Advance Ruling the scope of interference under the jurisdiction under Article 226 of the Constitution of India cannot be enlarged and the findings of the Appellate Authority cannot be substituted unless the same is without jurisdiction or there is violation of principle of natural justice or the order is patently contrary to any specific provision of law which factors for invoking constitutional writ jurisdiction of this Court are absent in the instant case - This Court in exercise of its jurisdiction under Article 226 of the Constitution of India is not inclined to allow the petitioner to change the classification of Tariff Heading to avail lower rate of Tariff under GST regime when admittedly the product of the petitioner is Polypropylene Leno Bags manufactured by weaving Polypropylene strips and the major raw material of which is plastic granules and admittedly before the introduction of GST regime, petitioner had been declaring the said product under the Chapter 3923 29 90 of the Central Excise Tariff Act, 1985, and enjoyed the Duty Drawback and never contended before the authority till the introduction of GST law that its classification was wrong. The view that the product in question manufactured by the petitioner is made from plastic granules and cannot be treated as textile articles has found favor by the various authorities - petition dismissed.
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2023 (2) TMI 396
Non-payment of GST - Non getting the disbursement of GST amount from the recipient of services - It is the case of the petitioner that it is a partnership firm, which is undertaking several works contracts for the respondents and has been raising running bills which have been paid by the respondents, but the payment of GST on such bills is not being made by the respondents - HELD THAT:- After the enforcement of the GST regime, the respondent no.1 issued a Government Order on 09.11.2017 directing various Heads of Departments that contracts for new works and contracts which were already in existence and were awarded before the GST regime, all were to be governed by the GST regime and the additional tax burden shall be computed with the help of formula with respect to existing contract provided under the Government Order dated 09.11.2017. The amount of additional tax burden so determined had to be paid to the contractor and the said amount of tax was thereafter to be deposited by the contractor with the department. Another clarification was issued in this regard on 26.10.2021 also, a copy of which has been filed as annexure to the petition which is in the nature of explaining liability for payment of GST. The petitioner has made several requests by various means including making representations, details of which have been given in the petition, but the respondents no. 3 to 5 have not disbursed the GST amount to the petitioner. The petitioner consequently could not deposit the huge amount of tax liability with the GST Department and they are in the process of initiating recovery proceedings against the petitioner. The petitioner's last representation dated 31.03.2022 has indicated the grievance made by the petitioner to the Executive Engineers, Provincial Division, PWD of Districts Basti, Pratapgarh and Sant Kabir Nagar. Such representations are pending. This petition is disposed of with a direction to the petitioner to make a fresh representation to the respondent no.2 who shall seek a clarification from the Engineer-in-Chief and the respondent no. 1 and then decide the representation of the petitioner by a reasoned and speaking order within a period of two months from the date of making of such representation.
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2023 (2) TMI 395
Tax due not paid or short paid or refund has been released erroneously or input tax credit has been wrongly availed or utilized - HELD THAT:- The purpose of Show Cause Notice is to enable the noticee to respond to the allegations. In the present case, it is seen that it is a general notice stating that tax has not been paid or short paid or refund has been released erroneously or Input Tax Credit has been wrongly availed or utilised. This, obviously, provides no clue as to the reasons for proposing any action. Since it is stated that the Show Cause Notice dated 06.02.2021 should be confined to the discrepancies as pointed out in the notice dated 01.01.2021, this Court does not consider it apposite to set aside the said Show Cause Notice but to provide an opportunity to the petitioner to file a reply to the notice dated 01.01.2021 and 06.02.2021. The said reply be filed within a period of two weeks from today - Petition disposed off.
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2023 (2) TMI 394
Cancellation of registration of petitioner - the petitioner, being a buyer, had paid the tax liability to the seller and therefore, the impugned show cause notice cannot be issued to them alone - Violation of principles of natural justice - HELD THAT:- Both the Hon'ble Judges of this Court have consistently held that Section 42 of the CGST Act 2017, has to be necessarily adhered to by the respondents. Being a show cause notice, that too when the same has been issued on account of non payment of the GST as per FORM GST DRC-01, this Court cannot entertain this writ petition at this stage. Necessarily the petitioner will have to submit a reply to the impugned show cause notice, raising the contentions that have been raised in this writ petition. On receipt of the same, it is for the respondents to consider it, on merits and in accordance with law. However, the respondents will have to adhere to the aforementioned Sections and also give due consideration to the decisions of this Court referred to supra, before passing final orders. This writ petition is disposed of by directing the petitioner to submit an additional reply raising the contentions that have been raised in this writ petition to the respondents, within a period of three weeks from the date of receipt of a copy of this order.
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2023 (2) TMI 393
Rejection of petitioner's request under Section 140(1) of the GST Act, 2017 for carrying forward of unutilized VAT TDS to the new GST regime without giving any reason - Non-speaking order - HELD THAT:- This Court is of the considered view that being a non-speaking order as no reasons have been given for rejecting the petitioner's request for carrying forward of the unadjusted VAT TDS to the GST regime that too when the law has been well settled, which has attained finality as no Appeal has been filed against the said order as fairly admitted by the learned Government Advocate appearing for the respondents, the impugned order will have to be necessarily quashed and the Writ Petition will have to be allowed. Petition allowed.
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Income Tax
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2023 (2) TMI 392
Claim of long-term capital gains on shares in terms of Section 10(38) - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings but turned around and make such claim of wanting to cross-examine persons - ITAT noted the settled position in law that if an Assessee has wrongly offered an item of income or omitted to make a claim of deduction in the return, he was entitled to correct such a mistake by making a request to the AO to that effect - Denial of principles of natural justice - denial of an opportunity to cross examine the entry providers - Another ground on which the ITAT found fault with the additions made by the AO was that reliance was placed on statement of so called entry operator to justify the additions under Sections 68 and 69 and statements were recorded much before the date of the survey conducted on the Assessee and Assessee did not have an opportunity to challenge such statements and further, no opportunity to cross-examine the so-called entry providers was given to the Assessees. HELD THAT:- Having heard learned Senior Standing Counsel for the Department (Appellant) and having perused the impugned orders of the AO, CIT(A) and the ITAT, the Court finds that both the grounds viz., the claim for benefit of Section 10(38) of the Act and denial of an opportunity to cross examine the entry providers, turned on facts. The ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO. In the considered view of the Court, the ITAT committed no error in concurring with the view of the CIT(A) and in dismissing the Revenue s appeals. No substantial question of law arises from the impugned order of the ITAT that calls for interference by this Court.
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2023 (2) TMI 391
Penalty proceedings u/s 271 (1) (C) or 276C - assessment u/s 153C - Scope of words wilfully attempts to evade tax or evade payment of tax - existence of a prima facie case - Proceedings amounted to double jeopardy vis-a-vis the penalty proceedings - Complain Case was filed against the assessee before the Chief Judicial Magistrate, Alipore under Sections 276 (1) and 276 (2) read with Section 2 (35) of the IT Act for willingly and intentionally concealing its income to evade tax and to evade payment of income tax - KPC College and Hospital had received corpus funds in the guise of donations from the said KPC foundation - offences alleged are covered by the Economic Offences (Inapplicability of Limitation) Act, 1974 - seizure of a sum of money from the residential property of one Bhaskar Ghosh. HELD THAT:- It is settled law that double jeopardy would be attracted only if the two proceedings in question involved the same or similar penal provisions. A penalty proceeding under Section 271 of the Income Tax Act is distinctly different from a prosecution for alleged offences under Sections 276C of the said Act. Not only are the procedures for and the implications of imposition of penalty and for prosecution in a criminal case are different, but the scope and ambit of the purported wrong doings that are contained in the respective provisions are also not similar. Therefore, the instant criminal proceedings cannot be said to be barred under Section 300 of the Code of Criminal Procedure. Also if an entity is legally entitled to file a revised return of tax, even in terms of Section 153C, within a period and if it does so within such period, the same cannot attach any further disadvantage to the entity for having done so. In this regard the stand of the Revenue that the assessee tried to evade penalty tax by revising return is also not quite tenable. Penalty proceedings can continue even after disclosure of concealed income. But, one has to test this in respect of a prosecution and that too, in the particular facts of the case. It is quite clear from the above that something more is required to haul up an assessee under Section 276C of the Act than under Section 271 (1) (C). Wilful is the key word that sets these provisions apart, besides the core ingredients making them up and therefore, there has to be some additional material or averment of fact in this regard. Otherwise, a prosecution would be an automatic fallout of such a penalty proceeding, perhaps depending solely on the generosity of the officer concerned about whether such charges would be pressed. But, this is not what law envisages. It may not be sufficient in the present facts for the Revenue to raise a plea that here presumption under Section 278E would be applicable. A presumption like this is an exception to the general rule of burden of proof and may shift the onus of proof on an accused during trial. But, the initial onus of showing that a prima facie case is made out would still lie on the prosecution. In other words, there has to be some material to invoke such a presumption. Thus, at this stage, a Court has to find out whether a prima facie case is at all made out in this backdrop. It may be germane to mention here that there is a difference between discharging the initial onus of making out a case and shifting of onus of proof during trial by invoking a presumption. Although on different facts and stage, reliance is placed on Baljeet Singh vs. State of Haryana [ 2004 (2) TMI 737 - SUPREME COURT] and Durga Prasad Anr. Vs. State of Madhya Pradesh [ 2010 (5) TMI 955 - SUPREME COURT] With the statements of the two witnesses appearing against the accused having been rendered ineffective, what is left for the prosecution is the purported wrong claiming of exemption by the accused. On the other hand, the accused purportedly retained their status of charitable entities and filed revised return within the stipulated time, waiving exemption and paying tax. It is one thing to suffer a penalty under Section 271 (1) (c) of the Income Tax Act for avoiding to pay tax or penalty. But, it is quite another to be prosecuted for wilfully trying to evade tax or evade payment of tax. The facts of the case as referred to above, for argument s sake, may be at the best sufficient for inviting a penalty under Section 271 (1) (c) of the Act, but appear to be grossly insufficient for making out a prima facie case of an wilful attempt to evade tax or evade payment of tax. As would be evident from the above, the prosecution has even otherwise failed to make out a prima facie case that the opposite parties wilfully tried to evade tax or evade payment of tax, especially considering the fact that the fund was substantially disclosed and only an exemption was claimed, which was waived within the time for filing a revised return. When the opposite parties have been given the benefit of an order of discharge by the first revisional Court, there has to be cogent and convincing grounds on which such an order can be set aside. This Court is not convinced with the points raised by the petitioner in this regard. No merit in these applications. The same are, therefore, dismissed.
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2023 (2) TMI 390
Credit of TDS - income from interest received in the name of her deceased husband was offered for taxation but credit of TDS deducted against the same was not granted to the petitioner - refund due to the petitioner along with the interest and compenstion immediately without any further delay - interest on the fixed deposits with banks and companies standing in the name of her late husband - HELD THAT:- The difficulty on the part of the respondent is reflected while recognizing the assessee s right to get the TDS. Credit of the TDS since is being granted on ITBA system, it is also available with the PAN of the assessee who claimed the TDS. In the case of the present petitioner, as the TDS details had not shown of ITBA with PAN of assessee, the credit of the same was not feasible. The amount of TDS was of the husband of the assessee who expired on 3.2.2016. The petitioner was fair enough to offer the interest income received on account of the husband to offer the same in return of income. She has also paid the tax on the same and hence it is reflected in Form 26AS, as specifically ordered by the Commissioner (A). In such eventuality, instead of denying her, when the Commissioner (A) himself was convinced on reflection of the said amount on 26AS form, TDS could have been credited in the account of the petitioner. It was not the case that the petitioner not paid the tax or not having offered the amount which has been accumulated in the account of her late husband. She should have been careful in filing it as a heir, as rightly pointed out by learned counsel Mr.Patel, however, if that was the lapse of her part, she could not have then paralyzed of not getting the refund when Form 26AS had clearly reflected this. The order of Commissioner (Appeals) ought to have been followed by the department. If it the refund was not feasible through the system, the physical grant of refund also could have been possible in any event. The petition is allowed. The order of CIT (Appeals) be complied with without fail within 12 weeks from the date of receipt of this order with interest and with all consequential reliefs.
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2023 (2) TMI 389
Settlement of a Case - receipt of the application u/s 245C(1) - Procedure u/s 245D - Whether full and true disclosure of income while making application under Section 245(C)? - HELD THAT:- A full and true disclosure of income, which had not been previously disclosed by the assessee, being a precondition for a valid application under Section 245(C-1) of the Act, the scheme of Chapter XIX-A does not contemplate revision of the income so disclosed in the application against item No. 11 of the form. By revising the application, the applicant would be achieving something indirectly what he cannot otherwise achieve directly and, in the process, rendering the provision of sub-section (3) of Section 245C of the Act otiose and meaningless. Apart from inadequate disclosure made in the application (SOF), in our opinion, the mere fact that the applicant had sought to revise his income by means of rectification application is demonstrative of the fact that he had not made a full and true disclosure of income, hence the application was bound to be rejected on this ground alone. The above facts clearly demonstrate that the respondents had not made a full and true disclosure before the Settlement Commission. The Settlement Commission should have noticed and examined the fact itself, as it is a pre-condition for an application under section 245C of the Act of 1961 that the applicant makes a true and full disclosure of their income which has not previously been disclosed, or at subsequent stage when further disclosure was brought to their notice at the time of filing of the application for rectification. Accordingly, we are of considered view that the application before the Commission deserved to be rejected as the respondents had not made true and full disclosure of their undisclosed income. This issue is decided in favour of the petitioner. Jurisdiction of the Settlement Commission - Validity of order of settlement commission adjusting the receipts in the account of DR A.K. Sanchan toward the income of applicants - Manipulation by the respondents and the two assessees who were not before the Commission but were part of search seizure operation is evident from the fact that appeal was filed by Dr A. K. Sachan before the Commissioner (Appeal) against the assessment order. The Commissioner (Appeals) set aside the assessment order relying on the impugned order passed by the Settlement Commission. This clearly demonstrates that benefit was granted to entities from the impugned order who were not even before the Commission. Further the order passed by the Commission was still under challenge before this Court. Therefore the manner in which the Commission has proceeded is questionable and is accordingly the impugned order is liable to be set aside. Transparency, fairness, giving reasonable opportunity and adherence to the prescribed procedure are some of the hallmarks of a judicial determination. Absence of any one of them will render an order nullity and invite interference of the High Court exercising its jurisdiction under Article 226 of the Constitution of India. The Commission by not considering the reply of the petitioner/department, by considering and dealing with regards to income of an individual who is not before it and redistributing the same, not considering the objection of the department that the said income has already been assessed during regular proceedings, has clearly proceeded in violation of statutory provisions and has misdirected itself and we have no hesitation is holding the impugned orders to be illegal and arbitrary. Power of the Commission to rectify its orders as per section 245D(6B) - Having noticed the manner in which the Commission has proceeded in the present case without following the basic principles of judicial determination like affording proper opportunity of hearing, duly considering the submissions of parties, we deem it proper to observe that the Settlement Commission in exercise of its powers to settle a matter brought before it is endowed with the jurisdiction of the authority under the Income Tax Act. The purpose of conferment of these powers is to settle the matters concerning undisclosed income expeditiously and finally. Such an application should truthfully and fully disclose the undisclosed income. In such a situation where the applicant is granted exemption on account of the business expenses or takes benefit of any provisions of the Income Tax Act to compute total income then the Settlement Commission would be exercising the powers of the assessing authority and is duty bound to examine the claim of the applicant on the basis of evidence and material before it. The Commission while exercising power of the assessing officer will have to make necessary inquiry or it can also direct the Commissioner of Income Tax to make necessary inquiry and inform the Commission of the outcome of such inquiry. Therefore, it is abundantly clear that the Commission while settling any matter has to do the same in accordance with the provisions of the Act and where required will have to pass necessary orders giving reasons for allowing any release or exemption in favour of the applicants. Waiver off interest in favour of the respondents - The Settlement Commission, in a mechanical manner, waived off the interest without considering whether the matter of the respondents was covered by the circulars of the Board, and waiving off the interest in such a manner, which may indicate that statutory interest payable under sections 234A, 234B and 234C has also been waived which is clearly beyond the competence and jurisdiction of the Commission. Accordingly, this issue is decided in favour of the petitioner. This Court takes a very serious view of the facts placed before it and it is expected that the university concerned and the State Government shall make due inquiries and proceed appropriately against such individuals who are found indulged in blatant private practice and making profits in private companies and also being on their Boards as Directors. Let a copy of this judgment be forwarded to the Principal Secretary, Medical Education, Government of U.P and the Vice Chancellor of King George Medical University, Lucknow by the Senior Registrar of this Court for compliance.
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2023 (2) TMI 388
Revision u/s 263 - Unexplained cash deposit in bank account - HELD THAT:- Case of Joshi Enterprises clearly shows that the issue of cash deposit in the account maintained with SBI Joda Branch has specifically been examined by the AO. AO of Joshi Enterprises has also categorically mentioned in the assessment order that the cash deposits are reflected in the cash book. Joshi Enterprises is running a petrol pump, admittedly they are entitled to accept the specified bank notes. Thus these cash deposit does not belong to the assessee and the assessee has given the explanation for the same and it has been examined by the AO of Joshi Enterprises who had also found that the entries to be correct. This being so, the order of the ld. Pr.CIT in respect of cash deposit maintained with SBI Joda Branch, no more survives for revision u/s.263 of the Act and consequently the same stands quashed. Cash deposits in his bank account maintained with Bank of Baroda, Barbil Branch - In respect of Rs.2,50,000/-, admittedly the cash is belonging to the assessee. A perusal of the assessment order in the case of the assessee shows that there is no mention by the AO in respect of the examination of the same. The assessee has not been able to produce any evidence to show that the AO has examined the issue. This being so, the order u/s.263 of the Act is upheld for the limited purpose of the issue to be examined in respect of Rs.2,50,000/ deposited by the assessee in his bank account maintained with Bank of Baroda, Barbil Branch. Appeal of the assessee stand partly allowed.
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2023 (2) TMI 387
Condonation of delay - reasons for delay - delay 923 days in filing of the Misc. Application by the assessee - HELD THAT:- From the reasons for delay , in clear and simple words, is that the assessee never cared to go through the order passed by the ITAT in its case when it was initially received by it on 18.6.2019 and went through the same only when order of the ITAT was followed by the ld.CIT(A) in the case of the assessee in subsequent assessment year i.e. Asst.Year 2015-16 for dismissing the assessee s appeal. We fail to understand, how this lackadaisical attitude of the assessee can justify in any manner the delay in the filing of the appeal. On the contrary such assessees should be heavily penalized for wasting the time of Courts by filing such applications, seeking rectification in the orders, well beyond the period of limitation prescribed for the same. Any delay in making the application beyond the limitation prescribed in law, is to be justified with a reasonable cause for entertaining the application if any. In the present case, in the absence of any reasonable cause forwarded by the assessee for the delay in filing of its MA, we see no reason for entertaining the same, and the MA filed by the assessee is dismissed as non-maintainable, being filed beyond limitation prescribed in law.
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2023 (2) TMI 386
Denial of deduction u/s 10AA - non-filing of Audit Report in Form No.56F by an Accountant as required u/s.10AA(8) - assessee contended that filing of Audit Report as required u/s.10AA(8) of the Act, is procedural and directory in nature and thus, for non-filing of said Audit Report, deduction claimed u/s.10AA of the Act, cannot be denied, when other conditions prescribed thereundere are satisfied - HELD THAT:- From the plain reading of provisions of Sec.10AA(8) of the Act, it is very clear that deduction shall not be admissible unless, the assessee furnishes the report of the Accountant in the prescribed form along with return of income certifying the deduction has been correctly claimed in accordance with the provisions. Hon ble Supreme Court in the case of Pr.CIT v. Wipro Ltd [ 2022 (7) TMI 560 - SUPREME COURT] had considered an identical issue in light of deduction claimed u/s.10B of the Act, and after considering relevant provisions including provisions of Sec.10B(8) of the Act, very categorically held that filing of Audit Report as required under the law is mandatory in nature, but not directory for claiming any deduction under the provisions. The decision rendered by the Hon ble Supreme Court in the case of Pr.CIT v. Wipro Ltd. [ 2022 (7) TMI 560 - SUPREME COURT] which was rendered with reference to sec.10B(8) of the Act, squarely applicable to the facts and circumstances of the case. The plain language used in sec.10A(5) of the Act, is also clear and unambiguous that the condition of filing Audit Report in Form No.56F along with return of income is mandatory for allowing any deduction. In this case, there is no dispute with regard to the fact that the assessee did not satisfy the mandatory condition prescribed u/s.10AA(8) of the Act r.w.s.10A(5) of the Act. Since, the assessee did not file the Audit Report in Form No.56F as required under the law, in our considered view, the AO has rightly disallowed deduction claimed u/s.10AA of the Act. The Ld.CIT(A) after considering relevant facts has rightly upheld the additions made by the AO. Thus the assessee is not entitled for deduction u/s.10AA of the Act, for non-filing of Audit Report in Form No.56F as required u/s.10AA(8) - CIT(A) after considering relevant facts has rightly upheld the additions made by the AO and thus, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the assessee.
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2023 (2) TMI 364
Income deemed to accrue or arise in India - receipts from satellite transmission services - royalty receipts - HELD THAT:- As decided in own case [ 2022 (11) TMI 1315 - ITAT DELHI] amount received by the assessee from Satellite Transmission Services is not taxable in India as royalty - Decided in favour of assessee.
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Benami Property
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2023 (2) TMI 385
Prohibition of Benami Property Transactions - Period of limitation - Petitioner, has filed an application for proposed amendment in the counter claim as rejected on ground of limitation - HELD THAT:- Once a suit is filed only then Court can examine whether pleadings made in the suit is barred by law or not and suit is to be dismissed or not. A person cannot be stopped from filing the suit. Bar is to be examined subsequently. In view of aforesaid facts and circumstances of the case, it is found that trial Court has committed an error in dismissing the application filed under Order 6 Rule 17 of CPC on grounds of delay and on merits of the contents of application, therefore, order dated 20.09.2021 is quashed. Trial Court is directed to permit the petitioner to incorporate the said amendment in the counter claim.
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2023 (2) TMI 384
Benami transaction - whether the present transaction was benami or not? - HELD THAT:- Parties are ad idem that the suit property in question was purchased in the name of petitioner from the funds sent to the petitioner by husband of respondent No.1. A bare reading of Section 4 shows that in order to establish that the present Suit is prohibited thereunder, or falls in the exception carved out under Section 2(9) of the Benami Act, evidence is required to be led. It is an established position in law that under Order 7 Rule 11 CPC, only averments made in the plaint have to be seen and nothing else can be considered while adjudicating upon such an application. In order to establish that the suit property is benami, and it was purchased out of funds sent by son of the petitioner, and it falls under the prohibition of Section 4, or falls in the exception under Section 2(9), evidence will have to be led. As such, in the present case, plaint could not have been rejected under Order 7 Rule 11 CPC. Thus it is clear that there is no error in the order impugned herein. Accordingly, find no merit in the present Revision Petition and the same is hereby dismissed.
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Customs
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2023 (2) TMI 383
Adjustment of pending drawback claims towards the demand - seeking to consider the appeal on merits without insisting pre-deposit required under Section 129E of the Customs Act, 1962 - refund of Duty Drawback alongwith the interest - HELD THAT:- This Court is of the view that the petitioner s grievance may be allayed if directions are issued to the respondent to forthwith release the duty drawback in respect of the five Shipping Bills (out of nine shipping bills that were uploaded by the petitioner on 28.07.2015). The petitioner would, thereafter, be at liberty to utilise the funds received for complying with its obligation to make a pre-deposit to maintain an appeal before the CESTAT. This Court also considers it apposite to direct CESTAT not to reject the petitioner s appeal (diary no. 52123/2021) for want of pre-deposit for a period of four weeks from today - Insofar as the petitioner s claim for other remaining duty drawback is concerned (the duty drawback in respect of other Shipping Bills), the petitioner is at liberty to avail of its alternate remedy for release of the said amount. Petition disposed off.
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Corporate Laws
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2023 (2) TMI 382
Application for interim stay - principal grievance which was urged, when the appeal was taken up, was that while on the one hand, NCLAT noted that urgency has been shown in passing interim order , the appeal has been directed to be listed on 3 April 2023 but there has been no expression of opinion, prima facie, on the merits of the order in appeal with a view to evaluating whether a case for interim stay was made out - HELD THAT:- At the present stage, since the appeal is pending before NCLAT, we are desisting from entering a finding on the merits of the rival submissions which have been urged on behalf of the contesting parties. Any expression of opinion of this Court on the merits would affect the proceedings which are pending before the NCLAT. It would suffice to note that the findings which have been arrived at by the CCI cannot be held at the interlocutory stage to be either without jurisdiction or suffering from a manifest error which would have necessitated interference in appeal. While we are not inclined to interfere with the impugned order of the NCLAT, we would request the NCLAT to dispose of the appeal by 31 March 2023 - we affirm the order of the NCLAT declining to grant interim relief. Appeal disposed off.
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2023 (2) TMI 381
Seeking sanction to the scheme of amalgamation of the Transferor Companies with the Appellant Company being the Transferee Company - HELD THAT:- In the present case, it is categorically held that the scheme was approved by the Shareholders with appointed date as 01.04.2019 and hence the appointed date of the scheme fixed as 01.04.2019. Appeal allowed.
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2023 (2) TMI 380
Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), Mumbai - Respondent did not issue any notice under Section 248(1) of the Act which is mandatory in nature and a condition precedent before exercising the power of striking off under Section 248(5) of the Act - delay in filing the Balance Sheet and Annual Returns of the Company for the Financial Year 2016-17 to 2018-19 - delay due to lack of knowledge of the Compliance of the Company. HELD THAT:- In view of the fact that the Balance Sheets of the Company for the Financial Years Year 2015-16, 2016-17, 2017-18 2018-19 and Income Tax Returns of the Company for the Financial Years 2016-17, 2017-18 2018-19 shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations - Hence, the order passed by the National Company Law Tribunal (Mumbai Bench, Court-II) as well as Registrar of Companies, Maharashtra, Mumbai is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the compliances fulfilled - appeal allowed.
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Securities / SEBI
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2023 (2) TMI 379
Arbitration award - Share Purchase Agreement (SPA) - Legality or enforceability of the transaction of repurchase contained in the SPA - rejection of Edelweiss s claim on the ground that the transaction of share purchase option was illegal and/or unenforceable being in breach of SCRA (Securities Contracts (Regulation) Act, 1956) - contracts in derivatives not being traded on stock exchange and hit by Section 18A of SCRA or not - HELD THAT:- We totally agree with the view expressed by the learned Single Judge that the Arbitrator s conclusion that the purchase option contained in clauses 8.5 and 8.5.1 was illegal and unenforceable being a forward contract is an incorrect view. The judgment in MCX [ 2013 (9) TMI 914 - HIGH COURT OF BOMBAY ] squarely deals with a purchase option, such as the present, where the purchaser of securities requires the vendor to repurchase on the occurrence of a contingency - As held in MCX, a contract giving an option to a purchaser to require repurchase of securities by his vendor on some contingency occurring would only mean that there was no present obligation at all but the obligation arose by reason of some contingency occurring. On the date when the SPA was entered into, there was no contract for sale or purchase of shares under clauses 8.5 and 8.5.1. A contract for sale or purchase of shares would come into being only at a future point of time in the eventuality of Edelweiss, which was granted such option, exercising it in future on the occurrence of a stipulated contingency. Section 18A of SCRA does not purport to invalidate any contract. It starts with a non-obstante clause, i.e., overriding effect over any other law for the time being in force. It provides that notwithstanding anything contained in any other law for the time being in force, the contracts in derivative shall be legal and valid, if such contracts satisfy the conditions mentioned therein. Section 18A of SCRA on its own does not make any particular contract illegal or invalid. What the buyer of an option buys is his right to exercise the option, often with a premium; his counter-party, who gives him such option, receives the option premium and in consideration thereof, is obliged to buy or sell the underlying asset against the option exercised by the buyer - What the law prohibits under Section 18A read with Section 16 read with the SEBI circular of 1st March 2000 is not entering into a call or a put option for sale but as rightly held by the learned Single Judge what it prohibits is trading or dealing in such option treating it as a security - Clauses 8.5 and 8.5.1 are not contract for sale or purchase of securities, but merely an option which the promisee may or may not exercise and entering into such option does not amount to making of a contract in a derivative. Such a contract was never prohibited. Appeal dismissed with costs, which we hereby fixed at Rs.5 lakhs. The cost to be paid by way of cheque drawn in favour of advocate on record for respondent within four weeks from today.
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Insolvency & Bankruptcy
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2023 (2) TMI 378
Liquidation of Corporate Debtor - Section 33 of the I B Code read with Rule 11 of the NCLT Rules 2016 - HELD THAT:- It is observed that during the Corporate Insolvency Resolution Process all possible steps as required under the Insolvency and Bankruptcy Code, 2016 were taken and the Committee of Creditors did not receive any resolution plan/proposal for revival of the Company. Further, the Committee of Creditors in its wisdom has resolved with 99.78% voting share in favour of the liquidation of the Company. The impugned order passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court No.-I) is hereby affirmed - Appeal dismissed.
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2023 (2) TMI 377
Violation of principles of natural justice - It is the case of the Appellant that the Adjudicating Authority erred in passing the impugned order ex-parte without hearing him and without giving any opportunity to defend his case - institution of criminal prosecution against various parties i.e including Appellant herein - Outstanding and payable dues or not. Denial of Opportunity of Being Heard/ Ex-parte Order - HELD THAT:- This Appellate Tribunal do not find any error in the impugned order and find that adequate opportunities were made available to the Appellant who has chosen not to respond or defend his case and this cannot be ground of not being heard. Dues Outstanding Payable or not - HELD THAT:- After detailed examination and recording reasons, the Adjudicating Authority came to conclusions that the transactions are covered under Section 66 of the I B Code, 2016 and therefore, gave directions for recovery of money from all the Respondents therein including the Appellant herein and in addition to institute a criminal prosecutions against the Respondent therein including Appellant herein under Section 69 of the I B Code, 2016 - there are no error in the impugned order on this account and the Appellant could not establish that Rs. 23 lakhs were indeed paid by him to the Corporate Debtor. This Appellate Tribunal is of the considered opinion that there is no error in the impugned order dated 13.12.2021 passed by the Adjudicating Authority - Appeal is devoid of any merit is therefore dismissed.
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2023 (2) TMI 376
Rejection of application for replacement of Resolution Professional with one Mr. Sapan Mohan Garg though approved by the Committee of Creditors (CoC) by a voting share of 76.69% - Whether the CoC in passing a resolution to replace the Resolution Professional in the facts of the present case has committed any breach of the IBC and regulations framed thereunder? - HELD THAT:- The statutory provisions and related Regulations framed thereunder having laid down in unambiguous terms the manner and procedure for replacement of the Resolution Professional and the CoC having acted in conformity with those provisions, the CoC was well within its rights to replace the Resolution Professional with a new one of its own choice. There is no disagreement that the replacement of Resolution Professional is complete when the required decision is taken by the CoC in its meeting with requisite majority. Interference would be warranted only if the decision of the CoC was suffering from material irregularities or dehors the statutory provisions and the rules framed thereunder which is not the case - there was no violation of the statutory provisions in bringing about the replacement of the Resolution Professional by the CoC and all procedural compliances having been met, there is no room to hold the process to have been vitiated in any manner. Since the requirements laid down by IBC have been met, the Adjudicating Authority is duty bound to abide by the discipline of the statutory provisions. Whether the decision of the CoC to replace the Resolution Professional being the outcome of the wisdom of the CoC, is not subject to judicial review? - HELD THAT:- CoC had deliberated on the performance of the Resolution Professional before considering to move the resolution and putting the same to vote. Further, since the decision of the CoC to replace the Resolution Professional was taken by exercising of voting rights assigned to the creditors, it was not necessary for Adjudicating Authority to look into reasons or decide whether there were sufficient reasons for change of the Resolution Professional as the Adjudicating Authority cannot don the mantle of a supervising authority. More importantly, the relevant section 27 does not prescribe the need to assess the performance of the Resolution Professional while seeking his replacement - The statutory framework of the IBC also does not mandate that the CoC is required to adduce reasons for replacing the Resolution Professional - in the present case too, the Appellant while filing the application for replacement of the Resolution Professional has desisted from making any adverse observations on his performance and thus cannot be held to have acted in any manner contrary to law. Rejection of application of the Appellant to replace the Resolution Professional by advising the CoC to continue with the same Resolution Professional - HELD THAT:- It is well settled that the IBC does not postulate jurisdiction for the Adjudicating Authority to undertake scrutiny of the justness of the majority opinion expressed by financial creditors by way of voting. The insolvency regime introduced under the IBC has placed fetters on the power of interference by the Adjudicating Authority - the Adjudicating Authority being a creature of IBC Code and the statutory provisions therein not having invested jurisdiction and authority upon it to review the decision exercised by the CoC to replace the Resolution Professional, the rejection of the application for the replacement of the Resolution Professional is a transgression of jurisdiction and therefore deserves to be set aside. The replacement of Mr. Suresh Kumar Jain is allowed by appointing Mr. Sapan Mohan Garg as Resolution Professional, who will act in accordance with law - the impugned order is set aside - appeal allowed.
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2023 (2) TMI 375
Part rejection of claim made by the Resolution Professional - time limitation - Whether the entire claim was barred by time and the fact the Resolution Professional has accepted part of claim shall not give any extension of limitation to the Appellant? - HELD THAT:- The Adjudicating Authority came to the conclusion that claim is barred by time since the transaction which was entered, was agreement of sale dated 27th June, 2014. The Application under Section 7 was filed in the year 2019 which was admitted by the Adjudicating Authority on 03.10.2019. The claim of the Appellant was submitted on 17.11.2020. The submission which has been pressed by the Learned Counsel for the Appellant is on the basis of part-acceptance of the claim by RP. Reliance placed on Judgement of Bishal Jaiswal [[ 2021 (4) TMI 753 - SUPREME COURT] ]. The law as was laid down by the Hon ble Supreme Court in Bishal Jaiswal that on the basis of is a clear acknowledgment in a Balance Sheet, the limitation under Section 18 extended. The Hon ble Supreme Court in above case was considering the entries in the Balance Sheet for the purposes of acknowledgement under Section 18 of Limitation Act - It is not the case of the Appellant that any acknowledgement by the Corporate Debtor was made in the Balance Sheet or there is any material brought on record by the Appellant which contain any acknowledgement within meaning of Section 18 of the Limitation Act, 1963. It is to be noted that part acceptance of claim was not under challenge before the Adjudicating Authority and Application was filed by the Appellant against the rejection of the rest of the claim. By any statement made in the Affidavit of Reply by the RP while replying the Application, can not be treated to be an acknowledgement within the meaning of Section 18 of the Limitation Act, 1963. In the present case, issue is not as to whether acceptance of the part claim was in accordance with law or not, the issue is as to whether, rejection of the part claim required any interference. Adjudicating Authority having come to the conclusion that claim was barred by time, there has to be material to indicate that Appellant is entitled for benefit of Section 18 of the Limitation Act, there being no material on record for the extension of limitation under Section 18, no benefit can be granted to the Appellant. Appeal dismissed.
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PMLA
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2023 (2) TMI 374
Seeking grant of bail - financial irregularity and siphoning of funds in relation to credit facilities obtained by SBFL from a consortium of banks led by the SBI and thereby causing a loss of Rs. 3269.42 crores - Applicant not named in FIR - compliance with the twin conditions of Section 45 of PMLA - HELD THAT:- The three Judge Bench decision of the Hon ble Supreme Court in its recent decision in the case of Vijay Madanlal Chaudhary [[ 2022 (7) TMI 1316 - SUPREME COURT] ] and connected matters, has upheld the mandatory twin conditions u/s 45 of the PMLA. The twin conditions, are independent of each other and require the Court to weigh each one of them and adjudicate on the potential guilt of the offender based on the material relied upon by the accused and the opposition made to the same by the prosecution - Hence the Hon'ble Court is not required to render a finding of guilt or acquittal at this stage, nor is it required to conduct a mini trial or meticulously examine the evidence but rather is to examine whether the applicant has made out reasonable grounds for believing that he is not guilty. Prima Facie no reasonable grounds for believing that the applicant is guilty - HELD THAT:- The applicant is not named in the FIR. The applicant is also not named as an accused in the ECIR registered by the ED, as the same is simply a replica of the FIR registered by the CBI - the role assigned to the Applicant is that since he was an Internal Auditor of SBFL and statutory auditor of several sister concerns of SBFL, it was through his aid and assistance that Shakti Bhog Foods Limited, borrowed, layered and siphoned off the loan funds using the platform of about 24 known group companies and several shell entities. It is clear from timeline of the applicant with SBFL, that the applicant was not the statutory auditor at the time of the commission of offence i.e., the period between 2013 and 2017. The ED has alleged that the applicant was the mastermind of the whole operation and to prove the same the ED has produced evidence in form of some emails and statements of management and employees of SBFL given u/s 50 of the PMLA - the documents do not support the contention of the ED that the applicant is guilty. Heavy reliance has been placed on section 50 of PMLA statements made by the employees of the SBFL. The only relevant document remaining that prima facie may establish the guilt are the statements u/s 50 of the PMLA. The investigation of the ED is hinged on the statements made u/s 50 of the employees of the SBFL. Reliability of retracted statements - HELD THAT:- In the present case as well, the question is not regarding the admissibility but the reliability. The statements had concretely named the applicant. However, in their subsequent retraction the reliability of the statements themselves become doubtful. Statements of Employees of SBFL, Accommodation Entry Operators (Devki Nandan Garg Ashok Kumar Goel) are a cut copy paste job with even the punctation marks of commas, full stops not differing - Prima facie in view of the retraction, the reliability of these statements is questionable. The retracted statements cannot form the basis of the guilt of the applicant of the offences as alleged. Prima facie, it is found difficult to place the guilt of the offence under PMLA on the applicant, based on these statements. Further, the questions as to why the statements were retracted are questions of trial. In the present case, there is no relevant document to support the allegations. Admittedly the applicant has the 15-year association with SBFL, but despite the allegation that he was the mastermind of the whole operation the ED has relied on 5 documents to show the applicant s complicity. For the reasons as noted, the documents do not show that the applicant is guilty of offences as alleged against him. In addition, there is not satisfactory explanation given by the ED for the lack of documents that directly point to the applicant as the mastermind. Delay in filing chargesheet - Investigating still continuing - HELD THAT:- In the present case, out of a possible 7-year sentence, the applicant in case has already served more than 17 months of pre-trial detention (as of 23.01.2023). It is also important to state that the applicant has been interrogated only once on 13.11.2021 in entire judicial custody of more than 1 year - there can be no arguments on framing charges or initiation of a trial because the investigation is still ongoing. The ED has listed 109 witnesses till date and the Prosecution Complaints run into lakhs of pages in multiple trunks. Without a completion of investigation, no charges can be framed nor can trial cannot begin. In the light of this, the court cannot let the applicant undergo long period of detention. If this court allows the continuing pre-trial incarceration, the same will amount to deprivation of personal liberty as well as travesty of justice as the same is equivalent to punishment without trial. In the present case, although the applicant, has not undergone half of the period, the offence with which the applicant is charged with is punishable with imprisonment upto 7 years but not with life or death. There are no criminal antecedents reported against the applicant. Out of this sentence, the applicant has already undergone 17 months of incarceration - Even though the allegations are serious but the chargesheet is yet to be filed. Assuming that the applicant was the mastermind, the respondent did not name him in the original FIR. The applicant had conducted audit of the company and had certified the fictitious accounting entries in the books of accounts of the company to inflate financials of SBFL, even then during his entire custody he has been interrogated only on one occasion on 13.11.2021. The period of incarceration as well as the delay in investigation along with any reliable material which directly involved the Applicant justifies a prima facie release on bail. The only substantial evidence which is produced are the statements u/s 50 PMLA which too have been retracted - The standing counsel for the ED has been given the opportunity to oppose the bail. Hence the twin conditions as enumerated u/s 45 of PMLA have been met. The applicant should be released on bail. The application is allowed subject to conditions imposed.
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2023 (2) TMI 373
Money Laundering - connivance with the bank officials and private persons entered into a criminal conspiracy to cheat the bank causing huge loss to the bank and corresponding wrongful gain to themselves - HELD THAT:- The petitioner has been enlarged on bail in predicate offences by this Court. The Enforcement Directorate took the investigation in respect of the money laundering. During the course of investigation by the Enforcement Directorate, the role of the petitioner has come in entering into criminal conspiracy with the accused Chandra Prakash Singh and other co-accused. The Enforcement Directorate has found that a Pay Order of Rs.5,10,000/- was issued in favour of the petitioner from Rs.56,40,000/- amount, which was embezzled/misappropriated by Chandra Prakash Singh and other co-accused. It is stated that learned counsel for the Enforcement Directorate and Sri Manoj Kumar Singh are not in a position to dispute that rigour of Section 45 of PMLA, 2002 would not apply in the facts and circumstances of the case inasmuch as the total amount involved in the present case is less than One Crore. The present petition is disposed of with liberty to the petitioner to surrender before the concerned PMLA court within a period of ten days from today and applies for regular bail. If he apply for bail within the aforesaid period, his bail application should be considered and decided preferably on the same day keeping in mind that rigour of Section 45 PMLA, 2002 would not apply in the facts and circumstances of the case.
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Service Tax
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2023 (2) TMI 372
Seeking review of order - seeking mandamus directing the Designated Committee to accept remittance of tax under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- A conjoint reading of all the Communication dated 15.07.2020 would support the conclusion of the order in Writ Appeal No.2047 to 2098 of 2021 dated 26.08.2021, wherein this Court has extended the time for remittance of outstanding till 30.09.2022, though putting the assessees to terms. The fact that the order dated 26.08.2021, has not been questioned by the revenue would further strengthen this position. The petitioner was granted liberty to remit the balance outstanding along with interest at the rate of 15% by order of this Court dated 09.07.2021. A memo has been filed on 27.10.2022 enclosing challans of payments along with interest at the rate of 15%. A copy of the same along with challans has also been supplied to the learned Senior Standing Counsel for the respondents. Review application allowed.
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2023 (2) TMI 371
Denial of benefit of N/N. 1/2006-ST dated 01.03.2006 - denial on the ground that the appellant has not included the value of free supply given by the service recipient - non availment of cenvat credit on input before allowing the benefit of Notification No. 32/2007-ST dated 22.05.2007 - rejection of amount of excess adjustment mentioned in the show cause notice - penalty imposed under Section 78 of the Finance Act, 1994. If the Commissioner has rightly denied the benefit of notification no. no.1/2006-ST dated 01.03.2006 on the ground that the appellant has obtained some free supplies from the service recipient while executing the Commercial, Industrial Construction Service for the service recipient? - HELD THAT:- The Hon ble Apex Court in the case of BHAYANA BUILDERS (P) LTD. [ 2018 (2) TMI 1325 - SUPREME COURT ] has held that the value of free supplies cannot be included in the gross amount charged for the purpose of levy of service tax - In view of the clear observations of the Hon ble Apex Court, the order of the Commissioner to the extent it demands duty on the value of free supplies is set aside and appeal of M/S. DEEP CONSTRUCTION COMPANY to that extent is allowed. Availment of exemption notification No. 32/2007-ST dated 22.05.2007 - ground on which the benefit of the said notification is sought to be denied is that the appellant has availed the benefit of cenvat credit - HELD THAT:- The Commissioner has examined a few invoices and the ST-3 returns of the year 2009-10 and some worksheets with ST-3 returns to conclude that no input credit has been taken. The revenue has argued that conclusion reached on the basis of a few invoice cannot be sustained. The notifications are to be interpreted strictly and if M/S. DEEP CONSTRUCTION COMPANY has availed any cenvat credit of any inputs used while availing notification 32/2007-ST dated 22.05.2007 then the benefit of said notification cannot be granted. We find merit in the argument of the revenue - the impugned order is set aside and the matter is remanded to the original adjudicating authority for fresh adjudication after verifying the facts fully. Rejection of amount of adjustment mentioned in the SCN - HELD THAT:- The Commissioner in his order has held that the said amount is incorrect. It is seen that while coming to the said conclusion Annexure D to the show cause notice has not been fully examined. Annexure-D to the show cause notice gives month wise list of adjustments made by the appellant - there is merit in the appeal filed by the revenue to the extent that no reasoning has been given by the Commissioner for rejecting the amount mentioned in the show cause notice which is duly supported by Annexure-D to the show cause notice. The order in this regard is set aside and matter is remanded. Imposition of penalty under Section 78 - HELD THAT:- It is apparent that the return for the period 2008-09 and for the first half of the year 2009-10 has been filed belatedly which itself can possibly be a cause for invoking suppression. Merely because penalty under Section 78 has been imposed for the earlier period, no penalty can be imposed for any subsequent period is a misplace notion. There is nothing in the section 78 to support this view. So long as the element necessary for imposing penalty under Section 78 are present even for the show cause notices issued for the normal period of limitation, the penalty under Section 78 can be imposed. Matter remanded to the adjudicating authority to pass a fresh adjudication order - appeal allowed in part.
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Central Excise
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2023 (2) TMI 370
Constitutional Validity of section 9-D of the Central Excise and Salt Act, 1944 - the case is that while deciding the writ petitions afresh on remand, the High Court could not have limited its decision only to the issue relating to vires of section 9-D - breach of essential pre-requisites of section 9-D by the department in the adjudication orders - effect of the principles and pre-requisites laid down by the High Court for invocation of section 9-D vis- -vis the appellants case. Vires of section 9-D of the Excise Act - HELD THAT:- The writ petitions were instituted before the High Court way back in 1992 before any adjudication order was passed praying, inter-alia, for cross-examination of the remaining witnesses whose cross-examination had already been permitted but who were not produced. Pursuant to the liberty given by the High Court, the appellants filed an application for amendment mentioning in detail as to how and for what reasons invocation of section 9-D by the Commissioner was illegal and also challenging the vires of section 9-D of the Excise Act - the appeals carried to this Court by the appellants from the orders of the Tribunal confirming the demands against the appellants also stand dismissed. We are, therefore, left to wonder in which proceedings would the principles and prerequisites and/or the parameters of the conditions precedent in section 9-D, laid down by the High Court, could at all be applied. Even if section 9-D were intra vires, whether the parameters thereof were completely ignored by the excise authorities? - HELD THAT:- With the final decision on all the appeals arising from the orders of the Tribunal being rendered against the appellants, there is no pending lis where the principles and conditions precedent could be applied. The endeavour of the appellants to have these appeals argued before us is, therefore, of purely academic interest and would not serve any real purpose - While dismissing the civil appeals, we endorse the views of the High Court insofar as it spurned the challenge of the appellants to the constitutional validity of section 9-D of the Excise Act. For unnecessarily protracting the proceedings before this Court, although no lis survived for resolution, we impose costs of Rs.5,00,000/- on the appellants. This amount is to be paid to any charitable organization involved in providing help, assistance and relief to children suffering from cancer. Such costs shall be paid within a month from date. Within two weeks thereof, proof of payment shall be produced before the Registrar who shall satisfy himself that the recipient organization is, in fact, providing care to children suffering from cancer. In default thereof, the amount of costs shall be recovered as arrears of land revenue.
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2023 (2) TMI 369
Job-work - revenue contended that the assesse was liable for the job work and after investigation issued a show-cause notice dated 29.9.2006 - HELD THAT:- It is quite evident from the Rules of 2001 that Rule 7AA as framed on 30.4.2001 was superseded/repealed. The new regime brought into force under 2001 Rules described a procedure different from one envisioned under the Rules framed in 1944. Neither the showcause notice nor the order in original has adverted to this change and proceeded instead as if Rule 7AA was still in existence, which was a clear error. That error was noticed by CESTAT and correctly so. This Court is of the opinion that no question of law requiring determination arises in this appeal. The CESTAT order is justified. The Civil Appeal is accordingly dismissed.
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CST, VAT & Sales Tax
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2023 (2) TMI 368
Refund claim alongwith interest - AO did not accept the VAT returns for the quarter 01.04.2017 to 30.06.2017, which was filed on 28.09.2017, and framed a default assessment of VAT for the year 2014-15 and 2016-17 by assessment orders - non-service of notice under Section 74(8) of the DVAT Act - petitioner claims that it is now entitled to refund on the ground that the time for the OHA to pass an order has elapsed and therefore, its return claiming a refund of ₹14,12,185/- stands. HELD THAT:- The provisions of Section 74 of the DVAT Act are applicable. Undeniably, the OHA was required to pass an order within the period as prescribed under Section 74 of the DVAT Act. However, the failure on the part of the OHA to pass an order within the stipulated period does not automatically result in the objections being treated as allowed unless two conditions are satisfied. First, that a written notice requiring the OHA to make a decision within a period of fifteen days has been served in accordance with Section 74(8) of the DVAT Act, and second, the OHA has failed to render the decision within the said period. In the present case, it is not disputed that the petitioner has not served any notice under Section 74(8) of the DVAT Act, therefore, the provisions of Section 74(9) of the DVAT Act have not come into play - As held in Commissioner of Sales Tax v. BEHL Construction [[ 2009 (1) TMI 787 - DELHI HIGH COURT] ], it is mandatory that a notice under Section 74(8) of the DVAT Act is issued for triggering the deeming provisions of Section 74(9) of the DVAT Act. In the given facts, the petitioner s prayer for refund of the amount of ₹14,12,185/- along with interest cannot be acceded to at this stage - however, it is considered apposite to direct the concerned OHA to pass an appropriate order, in compliance with the order dated 17.09.2021 passed by the Tribunal, as expeditiously as possible - it is also clarified that the petitioner is not precluded from issuing a notice as required under Section 74(8) of the DVAT Act. Petition disposed off.
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2023 (2) TMI 367
Maintainability of petition - refund of the excess tax collected - concessional rate of tax filing of Form C declaration - HELD THAT:- The writ petitioner/purchasing dealer has locus standi to maintain the claim for refund of the excess tax collected directly to them and the writ petition is maintainable - To be entitled to concessional rate of tax filing of Form C declaration is mandatory. However, the time limit prescribed for filing such declarations is directory and not mandatory and in the case on hand the assessing officer having accepted the Form C declarations and considered the same, it is deemed that the assessing officer of IOCL was satisfied that there was sufficient cause which prevented the dealer from filing Form C declaration within the time stipulated under the Act and the rules framed thereunder. Having held that the rejection of the Form C declarations was erroneous, unsustainable and illegal - the writ petitioner is entitled to the concession rate of tax as they have fulfilled the conditions in Section 8 of the Central Sales Tax Act, 1956 and the Form C declarations having been verified and found to be in order by the concerned authority of the State of West Bengal. Thus, the writ petitioners are entitled to claim refund of tax directly from the State of West Bengal and they are not required to make the claim through the selling dealer, IOCL. The order and directions issued by the learned Single Bench stands affirmed and the appellants/State of West Bengal is directed to effect the refund of the excess tax collected directly to the writ petitioner within 45 days from the date of receipt of the server copy of this order together with interest at the statutory rate as stipulated under the WBST Act, from 01.07.2020 that is the day after the date on which the assessment order in the case of IOCL was passed that is 30.06.2020 till the date on which refund is effected. If there is any discrepancy in the date, it is clarified that interest shall be payable from the next day after the date of the assessment order till the date of payment.
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Indian Laws
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2023 (2) TMI 366
Maintainability of petition - Levy of Loss of transportation charges - In contradiction to Government pricing orders dated 30.01.1987, 31.12.1991, 18.09.1997, 30.09.1997 and 20.06.2005, whereby the price of natural gas was fixed - whether the present case is a fit one for this Court to exercise jurisdiction under Article 136 of the Constitution of India, albeit leave having been granted? - HELD THAT:- Although the dispute arises from a commercial contract, it is found that the writ petition challenging the clauses was maintainable. It is not disputed that GAIL is a Public Sector Undertaking and thus qualifies under the definition of State as per Article 12 of the Constitution. At the time of entering into contract, GAIL was enjoying a monopolistic position with respect to the supply of natural gas in the country. IPCL, having incurred a significant expense in setting up the appropriate infrastructure, had no choice but to enter into agreement with GAIL. Thus, there was a clear public element involved in the dealings between the parties. Further, writ jurisdiction can be exercised when the State, even in its contractual dealings, fails to exercise a degree of fairness or practices any discrimination - it cannot be said that merely because an alternative remedy was available, the Court should opt out of exercising jurisdiction under Article 226 of the Constitution and relegate the parties to a civil remedy. Validity of the clauses under which loss of transportation charges were levied - HELD THAT:- It would be extremely unfair and unjust, apart from being an arbitrary action in violation of Article 14 of the Constitution of India that IPCL is charged for loss of transportation charges when it is mandated to lay down its own pipelines and not to transport the gas through the HBJ pipeline. This action also violates the principle of non-discrimination enshrined in Article 14. IPCL, which is using its own pipelines, is being treated at par with other commercial entities who are carrying gas through the HBJ pipeline laid down by GAIL. This is more so when the pricing orders by the concerned authority, i.e. MoPNG stipulate a fixed price for natural gas. What is of most significance is that IPCL was bound to follow the allocation terms provided by the principal authority, i.e., MoPNG. Thus, as pleaded by IPCL, they were faced with a Hobson s choice , where they had to either give up the contract or accept the clauses levying transportation charges. On a conspectus of the above factors, it can be said that GAIL exercised an unequal bargaining power at the time of signing the contract. GAIL may have made a huge investment in constructing the HBJ pipeline, but at the same time IPCL had also made a huge investment in constructing its own pipelines. This was not an option but a mandate of the allocation letter issued by the MoPNG. Thus, it is difficult for us to accept that on the one hand IPCL must lay down its own pipelines, and simultaneously pay for loss of transportation through the HBJ pipeline even without using it - GAIL s contention cannot be accepted that the charges could be levied merely because GAIL had laid the HBJ pipeline for users generally - further the direction for refund vide order dated 11.04.2007 arose as a consequence of quashing of the clauses. It was in the nature of a sequitur and, thus, we do not find any reason to interfere with the same. Time limitation - HELD THAT:- No doubt the issue of loss of transportation charges was flagged by IPCL in various communications exchanged inter se the parties subsequent to the signing of the contract. That, however, cannot grant a license to IPCL to approach the court as and when it considers proper. Thus, while upholding the quashing of the clauses, we are of the view that the refund should be restricted to a period of three years prior to the date of the filing of the writ petition on account of IPCL s delay in approaching the court - strength drawn from judgement in Lipton India Limited Ors. [ [ 1994 (9) TMI 309 - SUPREME COURT] ] , which observed that the writ petition was entertained because of the plea of discrimination but then the relief was restricted to what would have been claimed in the suit. The appeal(s) dismissed qua the aspect of maintainability of the writ petition and the quashing of the clauses dealing with loss of transportation charges in the case of IPCL. However, it is deemed fit to restrict the relief to period of three years insofar as refund is concerned from the date of filing of the writ petition, i.e., 09.03.2006 - also, this refund should be made within a period of two months from today, failing which it will carry interest at 8 per cent per annum from the date it became due. If the refund is made within the stipulated time, we are not inclined to levy interest on the amount due. Appeal allowed.
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2023 (2) TMI 365
Dishonor of Cheque - cheque misused after stealing - It has been mainly argued by the petitioner that the complaint filed by the complainant under Section 138 of Negotiable Instruments Act, against the petitioner is false and frivolous and the same has been made after making forged signatures on the cheques in question - HELD THAT:- The Negotiable Instruments Act, provides sufficient opportunity to a person who issues the cheque. Once a cheque is issued by a person, it must be honoured and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he is bound to face the criminal trial and consequences. It is seen in many cases that the petitioners with malafide intention and to prolong the litigation raise false and frivolous pleas and in some cases, the petitioners do have genuine defence, but instead of following due procedure of law, as provided under the N.I. Act and the Cr.PC, and further, by misreading of the provisions, such parties consider that the only option available to them is to approach the High Court and on this, the High Court is made to step into the shoes of the Metropolitan Magistrate and examine their defence first and exonerate them. The High Court cannot usurp the powers of the Metropolitan Magistrate and entertain a plea of accused, as to why he should not be tried under Section 138 of the N.I. Act. This plea, as to why he should not be tried under Section 138 of the N.I. Act is to be raised by the accused before the Court of the Metropolitan Magistrate under Section 251 of the Cr.PC under Section 263(g) of the Cr.PC. In view of the procedure prescribed under the Cr.PC, if the accused appears after service of summons, the learned Metropolitan Magistrate shall ask him to furnish bail bond to ensure his appearance during trial and ask him to take notice under Section 251 Cr.PC and enter his plea of defence and fix the case for defence evidence, unless an application is made by an accused under Section 145(2) of N.I. Act for recalling a witness for cross-examination on plea of defence. If there is an application u/s 145(2) of N.I. Act for recalling a witness of complainant, the court shall decide the same, otherwise, it shall proceed to take defence evidence on record and allow cross examination of defence witnesses by complainant. Even if the petitioner is to be believed that the cheques went missing way back in the year 2009-2010, it is really shocking that he has failed to lodge a single police complaint regarding the same and has remained silent for so many years. - Petition dismissed.
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