TMI Tax Updates - e-Newsletter
March 11, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Validity of summary order and SCN - A perusal of the impugned show-cause notice (Annexure-5) issued under section 73 of the Act shows that it completely lacks in fulfilling the ingredients of proper show cause notice under section 73 of the Act. It does not indicate as to the contravention committed by the petitioner. It has been issued in a format without striking off the irrelevant particulars. - HC
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GST:
Cancellation of registration of applicant - We are not able to understand how the Department is functioning, why the Department is acting in such a high handed manner. Over a period of time, this High Court must have passed not less than hundred orders criticising such vague show cause notices and vague final orders cancelling the registration. Why the officers are not ready to understand and improve themselves. - HC
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Income Tax:
Revision u/s 263 by CIT - whether the deduction u/s 10A is to be computed after or before setting off of the losses / depreciation? - this court is of the opinion that the view of the Karnataka High Court that the deduction under Chapter VI A has to be made only after or subsequent to the brought forward depreciation allowances, seems to have been taken depending on that particular case and hence, the same cannot be straight away applicable to all the cases. - HC
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Income Tax:
Disallowance of interest expenses - as observed by AO that assessee-company had advanced interest free loan as advanced out of secured loan availed from the Bank of Baroda - The assessee in fact claimed the interest expenses against the Nil return on investment made. We note that such interest expense is allowable under section 57(iii) - AT
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Income Tax:
Reopening of assessment u/s 147 - Unexplained loan transaction - If it emerges from the reasons recorded, which, in turn, are based on some cogent material, that the AO had prima facie reason to believe about income escaping assessment, the matter ends there insofar as the initiation of reassessment proceedings is concerned. No fault can be found with the jurisdiction of the AO to initiate reassessment. - no hesitation in countenancing the view of the ld. CIT(A) that the assessee received accommodation entry of loan - AT
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Income Tax:
Clubbing of Income - Addition of Rental Income earned by the Spouse of the Assessee, in the hands of the Assessee, U/s 64 - The ld. CIT(A)’s contention that the husband cannot pay rent to the wife is devoid of any legal implication supporting any such contention. - The assessee has paid house rent and the recipient, the assessee’s wife has declared the same under the head “income from house property” in her returns which has been accepted by the revenue. - AT
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Income Tax:
Exemption u/s 11 and 12 - if there is any infirmity in the grant of certificate issued u/s 80G then it is for the Department to look into that aspect otherwise it has no relevance or bearing in interpreting whether subsection (2) of section 115BBC is applicable in this case or not. Otherwise also, similar donations have been accepted not only in the earlier years but also in the subsequent years u/s 143(3) and it has been categorically found that provisions of section 115BBC is not applicable, therefore, in view of the rule of consistency, such donations cannot be disallowed. - AT
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Income Tax:
Penalty u/s 271(1)(c) - Bogus purchases - The assessee has only filed the copy of the ledger of the purchases from one-party. But the assessee failed to file the copies of the bill/invoices for the freight charges, octroi details of the vehicles used in the transportation of the goods. Thus it is clear that the assessee failed to discharge the onus cast upon it under the provisions of law. - the assessee cannot be escaped from the penalty provisions in a situation where the income was determined on estimated basis - AT
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State GST:
GST on Services supplied to Government authority and Government Entity - The amendment came into force on 01.01.2022. The benefit of the reduced tax rate, ie, 12% instead of 18% on works contract supplied to a Governmental Authority or a Government Entity regarding the works contract services mentioned in the corresponding entry, stands discontinued with effect from 01.01.2022. - Applicability of the revised rate of GST - SGST
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State GST:
Instructions for back office processing of online GST Refund applications - SGST
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IBC:
Initiation of CIRP - The Appellant has made a prayer for staying the proceedings under Section 7 of the Code or keeping in abeyance the hearing of Section 7 Application until the final disposal of the Application filed by it before the DRT Chennai - Adjudicating Authority did not commit any error in rejecting the application - AT
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IBC:
Initiation of CIRP - On reading the terms of the Joint Development Agreement, it is clear that in the project there are certain things to be done on the part of the petitioner herein - The revenue sharing concept which is the key to, this JVA makes it very clear that it cannot be turned as a service owed by the Respondent to the petitioner; both will have to sail together or sink, because of the JVA. - The dispute on balance / dues to be paid, should at best be termed as an ongoing business liability which should have been resolved between the parties in terms of the JVA. - Tri
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Service Tax:
Levy of service tax - Clearing services as such Grass, Bush, Jungle cutting at Area-III of ONGC Ank. And regular maintenance as tender documents - There is absolutely no doubt that the said activity amounted to provision of the cleaning services as defined in Section 65 (24b) of Finance Act, 1994 and there could not have been any bonafide doubt to in that regard - there are no merit in the argument that the appellant, harboured a bonafide view. - AT
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Central Excise:
Abatement of duty payable - compounded rate on the basis of the number of cold Rolling mills installed in the factory - It is apparent that the N/N. 17/2007 does not require permanent ceasing of work in order to avail benefit of Clause 8 of N/N. 17/2007. Even temporary ceasing of work after following due procedure can entitle the manufacturer to avail; the exemption - AT
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Central Excise:
Area based exemption - Ready Mix Concrete - it is clear that the assessee’s product i.e. Ready Mix Concrete (RMC) is not eligible for exemption - However, there is absolutely no suppression of fact on the part of the assessee with intent to evade payment of duty - The adjudicating authority had rightly extended the benefit of exemption notification in respect of Ready Mix Concrete (RMC) used by the assessee in their manufacturing premises for construction work - AT
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Central Excise:
Valuation of goods - related party - inter-connected undertakings - They are inter-connected undertakings and hence are related in terms of Clause (i) of Explanation to Section 4 (3) (b), they are not related in terms of Clause (ii) (iii) or (iv). - As Rule 10 (b) squarely covers the transaction, value has to be determined as per this Rule. - it should be assessed as if the assessee and the buyer are not related persons - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (3) TMI 446
Validity of summary order and SCN - Violation of principles of natural justice - Summary Order issued without issuance of any show cause and initiation of adjudication proceedings in terms of Sections 62, 67,70, 73, 74, 76 79 of the Act of 2017 - allegation of the petitioner having claimed excess ITC, without affording any opportunity of hearing to the petitioner company - Input Tax Credit lying in the credit of electronic ledger account has been blocked - HELD THAT:- A perusal of the impugned show-cause notice (Annexure-5) issued under section 73 of the Act shows that it completely lacks in fulfilling the ingredients of proper show cause notice under section 73 of the Act. It does not indicate as to the contravention committed by the petitioner. It has been issued in a format without striking off the irrelevant particulars. In the case of M/s NKAS Services Private Limited [ 2021 (10) TMI 880 - JHARKHAND HIGH COURT ] concerning the SCN issued under section 74 of the Act and also in the case of the same petitioner in W.P (T) No. 2659/2021 relating to a similar vague show cause notice issued under section 73 of the Act, this Court vide detailed judgment dated 06.10.2021 [ 2021 (10) TMI 880 - JHARKHAND HIGH COURT ] and 09.02.2022 [ 2022 (2) TMI 1157 - JHARKHAND HIGH COURT ] quashed the notices impugned in those writ petition and granted liberty to the Respondents to initiate fresh proceeding from the same stage in accordance with law within a period of four weeks from the date of the order. The impugned show cause notice issued under section 73 of the JGST Act and Summary of the Show Cause Notice issued in Form GST DRC-01 are quashed. Since the breach relates to violation of principles of natural justice and mandatory procedure prescribed in law - Writ petition is allowed.
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2022 (3) TMI 445
Detention of goods - e-way bill relating to the consignment in question had expired one day before, i.e. in the midnight of September 8, 2019 - willful and deliberate suppression of facts - HELD THAT:- The respondent could not make out a case against the petitioner that the violation was willful and deliberate or with a specific material that the intention of the petitioner was for evading tax. This writ petition is disposed of by setting aside the impugned order of the appellate authority as well as the order of the adjudicating authority dated September 11, 2019 and as a consequence, the petitioner will be entitled to get the refund of the penalty and tax paid on protest subject to compliance of all legal formalities.
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2022 (3) TMI 444
Refund of GST alongwith interest - it was claimed that the amount was paid under coercion - conduction of enquiry for determination of tax liability - HELD THAT:- The appellants are directed to issue a show cause notice calling upon the writ petitioner/first respondent to produce documents to prove that they are not liable to pay any tax under the Act or they have paid the entire tax due to the department, within a period of four weeks from the date of receipt of a copy of this order - On receipt of such notice, the writ petitioner/first respondent shall submit their objections, if any, along with documentary evidence, within a period of two weeks thereafter. Appeal disposed off.
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2022 (3) TMI 443
Cancellation of registration of applicant - similar two SCN issued in past, were dropped - HELD THAT:- In the past, twice such show cause notices were issued and those were ordered to be dropped or to put in other words, such show cause notices were discharged. The show cause notice referred is as vague as anything. The order cancelling the registration is something beyond vagueness. It is very distressing to note that this is an everyday affair. Scores of petitions of the present type come up before us everyday because of such absurd and vague orders being passed by the officers of the GST Department. Once again, Mr. Sharma with all the embarrassment that is being caused to him everyday while defending such erring officers conceded that the order as vague as anything. We are not able to understand how the Department is functioning, why the Department is acting in such a high handed manner. Over a period of time, this High Court must have passed not less than hundred orders criticising such vague show cause notices and vague final orders cancelling the registration. Why the officers are not ready to understand and improve themselves. The impugned order passed by the Assistant Commissioner, respondent No.2 herein, cancelling the registration, Annexure A to this writ application is hereby quashed and set aside. Application disposed off.
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2022 (3) TMI 442
Seeking to call for the records pertaining to the impugned order - reversal of CENVAT Credit - filed returns were rejected due to technical glitches - wilful suppression of facts or not - Demand of interest - levy of penalty under Section 122 (2) (a) of CGST Act - HELD THAT:- Since the petitioner has given up his challenge regarding reversal of CENVAT Credit, we need not take up the issue and Central Excise traverse on these issues. However, insofar as the third and fourth clause of the interim order, where, interest was demanded or penalty was imposed are concerned, since there has been a case and counter case projected by the learned counsel for the parties, those issues alone are dealt with. Penalty - Demand of Interest - reason for imposing penalty is that the petitioner has wrongly availed or utilised the Input Tax Credit - HELD THAT:- The fact remains that, the petitioner has never utilised or availed the ITC wrongly. The entire amount has been in the credit till the impugned order is passed, that is the reason, why, the Central Excise respondent revenue was able to appropriate the amount from the credit, that is, the electronic credit ledger of the petitioner. Therefore, since at no point of time, the ITC was either availed or utilised by the petitioner, that is, one of the pre-requisite under which only penalty can be imposed under Section 122(2)(a), such situation, since is not available in the present case, such kind of penalty cannot be imposed against the petitioner - thus, insofar as the demand of interest as well as the imposition of penalty is concerned, which is form part of the impugned order under Clause 3 and 4 of the operative portion, those demand made by the respondents or imposing penalty against the petitioner are untenable and therefore, that are liable to be interfered with. This writ petition is partly allowed.
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Income Tax
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2022 (3) TMI 436
Deduction u/s 54F - investment in a new residential house - HELD THAT:- On a careful perusal of the remand report furnished by the Assessing Officer, it becomes patent and obvious that on physical inquiry it has been found that the new asset purchased by the assessee is a residential house. That being the factual position, assessee s claim of deduction u/s 54F of the Act is certainly allowable. In view of the aforesaid, we do not find any infirmity in the decision of learned Commissioner (Appeals) in allowing assessee s claim of deduction under section 54F of the Act. Commissioner (Appeals) has not adjudicated the issue relating to cost of improvement claimed by the assessee - No such adjudication is necessary as the investment made by the assessee in purchase of new residential house subsumes the entire sale consideration. Therefore, it becomes irrelevant whether assessee s claim of cost of improvement is allowable or not. Accordingly, grounds are dismissed.
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2022 (3) TMI 435
Addition on account of bank deposits during the course of assessment proceedings - HELD THAT:- It is observed that there is no dispute that the assessee has declared his income u/s 44AF of the Act, which has been accepted by the revenue authorities and turnovers have also been accepted as per section 44AF of the Act. Considering the submissions of the ld. AR of the assessee that the deposits are from out of the retail sales and from out of the opening capital and cash balances brought forward from the earlier years and inter bank deposits, we restrict the addition to 10% i.e. ₹ 1,01,251/- as against the addition of ₹ 10,12,510/- made by the AO on account bank deposits. Thus, this ground of the assessee is partly allowed. Addition representing gifts received from assessee s brothers - CIT(A) observed that in the confirmation letter no amount was mentioned and registered gift deed was not produced for perusal. He, therefore, held that the AO had correctly treated the above amounts as unexplained cash credits - HELD THAT:- There is no movement of any cash/kind from the transaction recorded nd the gift which has been executed on 31st May, 2007, but, the assessee has recorded the figure before executing the gift deed, will not attract any cash/kind transactions, as the assessee only inflated the figures. The assessee has made a wrong entry in the books of account, which will not warrant any addition as held by the Hon ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd[ 1971 (8) TMI 10 - SUPREME COURT] . No doubt the assessee has wrongly mentioned the amount and the gift has been materialized in the following Financial Year. In view of our above observations, we delete the addition made on this count. Accordingly, this ground is allowed. Non grant relief of LIC premium paid - HELD THAT:- Before us, assessee has produced LIC premium paid receipts, which are placed on record. We, therefore, direct the AO to allow the assessee s claim towards LIC premium paid, u/s 80C of the Act. Thus, this ground is allowed.
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2022 (3) TMI 434
Maintainability of appeal on low tax effect - assessee submitted that the revenue has come in appeal against the relief given by the ld CIT(A), which is below the monetary limit as per the Circular No.17/2019 issued by CBDT dated 8th August, 2019, i.e. ₹ 50,00,000/-, therefore, the appeal is not maintainable and should be dismissed - HELD THAT:- We find that CBDT vide circular No.17/2019 in F.No.279/Misc.142/2007- ITJ(Pt) dated 8th August, 2019, has further liberalized its policy for not filing appeals against the decisions of the appellate authorities in favour of the taxpayers, wherein tax involved is below certain threshold limits, and announced its policy decision not to file, or press, the appeals, before this Tribunal, against the appellate orders favourable to the assessee in the cases in which overall tax effect, excluding interest except when interest itself is in dispute, is ₹ 50,00,000/- or less. This circular, only enhances the monetary limits and gives further relaxation. The old circular, beyond any dispute or controversy, categorically applied to the pending appeals as on the date of issuance of circular. The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular No. 3/2018 (subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular. The Hon'ble Supreme Court in the case of The Commissioner of Income Tax-5,New Delhi Vs. Keshav Power Ltd.[ 2019 (8) TMI 811 - SC ORDER ] has also applied the Circular No.17/2019 dated 08.08.2019 and has dismissed the appeal holding as follows - Since the tax effect involved in the matter is less than ₹ 2 crores, going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The Special Leave Petition is dismissed, leaving all the questions of law open. Thus the appeal filed by the Revenue is found to be non-maintainable and hence, dismissed.
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2022 (3) TMI 433
Disallowance of deduction claimed u/s 54 - relevant date of taking possession of property - whether CIT(A) erred in not directing the learned AO to allow deduction u/s 54 on the ground that the appellant has made investment in constructed residential house within three from the date of sale of original residential property? - HELD THAT:- The purchaser/Assessee is put in possession only as a licensee and to that extent the purchaser/Assessee acquires interest in the premises/flat on entering into possession. Since by that date the purchaser/Assessee has already paid entire/majority of consideration for purchase, it can be said that the Assessee has, on the date of taking such possession, purchased the property for the purpose of Section 54 of the Act as has been held in that the case of CIT vs. Smt. Beena K. Jain [ 1993 (11) TMI 7 - BOMBAY HIGH COURT] wherein held that for the purpose of determining the date of purchase of new residential house the relevant date in the date when the petitioner paid the full consideration amount on the flat becoming ready for occupation and obtained possession of the flat. We are of the considered view that on the facts of the present case the date on which possession is by the Assessee (i.e. 02.04.2016) should be taken as the date of purchase. The requirement of the Section 54 is that the Assessee should purchase a residential house within the specified period and source of funds is quite irrelevant. Nowhere, it has been mentioned that the funds received as consideration from sale of original asset must be utilized for the purchase of the new residential house - See DR. PS. PASRICHA [ 2008 (1) TMI 649 - ITAT MUMBAI] Since the date of purchase falls within a period of 2 years from the sale of Original Asset (i.e. 21.05.2014), the Assessee is entitled to benefit under Section 54 of the Act. - Decided in favour of assessee.
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2022 (3) TMI 432
Disallowance of interest expenses - income from investment shown as Nil - as observed by AO that assessee-company had advanced interest free loan as advanced out of secured loan availed from the Bank of Baroda - interest bearing secured loan was diverted to advance interest free loan - HELD THAT:- The assessee has proved complete nexus between the amount borrowed and amount invested. We note that assessing officer has not pointed out that the fund borrowed was not diverted for the purpose of making investment with Affem Rolling Pvt Ltd. We note that before lower authorities, the assessee claimed both alternatives that interest expenses is allowable u/s 36(1)(iii) or u/s 57(iii) of the Act. However, we note that assessee has not derived any business income. Therefore, assessee s claim u/s 36(1)(iii) of the Act should not be allowed, and interest expense should be allowed under section 57(iii) of the Act.We note that assessing officer has erred in holding that assessee claimed such expenses u/s 24 of the Act. It is to be noted that assessee claimed only the standard deduction @30% u/s 24(a) of the Act however the assessee did not claim any interest expenses u/s 24(b) of the Act. Based on the above facts, we note that interest expense is allowable u/s 57(iii) of the Act. Assessee has not claimed the interest expenses against the interest on refund received from the income tax department. Interest on refund has been shown in the computation of total income only for disclosure purposes and not for the purpose of set off. This is because the assessee has not lent the money to the income tax department. The assessee in fact claimed the interest expenses against the Nil return on investment made in Affem Rolling Pvt. Ltd. We note that such interest expense is allowable under section 57(iii) as relying on RAJENDRA PRASAD MOODY [ 1978 (10) TMI 133 - SUPREME COURT] - Thus we allow the interest expenses - Decided in favour of assessee. Disallowance of expenses - assessee had claimed expenses of ₹ 9,02,504/- on account of fees of Accountant, audit fees, and general expenses etc. - HELD THAT:- So far disallowance of these other expenses are concerned, we note that assessee is claiming the deduction u/s 57(iii) of the Act. The ld Counsel submits that these expenses are not relating to the property on which the assessee is deriving the rent income, but these expenses are related to the investment made in Affem Rolling Pvt. Ltd. We note that to maintain the investment portfolio the assessee has incurred expenses therefore, we are of the view that it is quite reasonable to allow 50% of these expenses - Accordingly, we allow 50% of these expenses for both the assessment years.
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2022 (3) TMI 431
Deduction u/s 54F - assessee failed to produce any evidence to substantiate the claim and hence the exemption was disallowed by the AO - HELD THAT:- We notice that the CIT(A) in his order has admitted the fact that the assessee s representative for the first time produced various details on 21.06.2010 - CIT (A) has infact verified these evidences but had rejected the same merely on the ground that these details should have been available with the assessee during the assessment proceedings itself and should have been produced before the AO. In our view the decision of CIT(A) on a presumptive basis is incorrect and the CIT(A) has disposed off the appeal without considering the merits of the evidences submitted. The assessee s submission that the consultant handled the assessment proceedings in an unprofessional manner also warrants consideration. Under these facts we feel it proper to restore back this matter to the file of AO for fresh decision after admitting the evidences which the assessee may like to bring on record. Appeal of the assessee is allowed for statistical purposes.
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2022 (3) TMI 430
Reopening of assessment u/s 147 - Unexplained loan transaction - AO received information from DGIT (Inv.), Pune giving a list of beneficiaries of accommodation entries provided by Mr. Praveen Kumar Jain group of concerns AND name of the assessee appeared along with its address as beneficiary - HELD THAT:- The initiation of reassessment proceedings requires the AO to form a prima facie view about the escapement of income. There is no need to conclusively establish at that stage itself that such and such income escaped assessment. If it emerges from the reasons recorded, which, in turn, are based on some cogent material, that the AO had prima facie reason to believe about income escaping assessment, the matter ends there insofar as the initiation of reassessment proceedings is concerned. No fault can be found with the jurisdiction of the AO to initiate reassessment. CIT(A) in the impugned order has referred to the judgment of Om Vinyls Pvt. Ltd. Vs. ITO [ 2015 (1) TMI 827 - BOMBAY HIGH COURT] wherein the same Mr. Praveen Kumar Jain group of cases was involved for providing accommodation entries and on the basis of which the AO initiated re-assessment proceedings. The Hon ble High Court dismissed the assessee s writ petition challenging the initiation of re-assessment. CIT(A) has also referred to another judgment of the Hon ble Gujarat High Court in Pushpak Bullion Pvt. Ltd. [ 2016 (7) TMI 69 - GUJARAT HIGH COURT] in which case again, that assessee was one of the beneficiaries of Mr. Praveen Kumar Jain group of cases, who had allegedly received accommodation entries from M/s. Mohit International, being the same concern and the same A.Y., from whom the assessee under consideration received the alleged loan. The writ petition filed by that assessee also came to be dismissed. There is a reference in the impugned order to still another judgment of the Hon ble High Court in Ankit Financial Services Ltd. Vs. DCIT[ 2017 (1) TMI 1041 - GUJARAT HIGH COURT] . That case also involved one of the beneficiaries of Mr. Praveen Kumar Jain group of cases, who approached the Hon ble High Court challenging the issuance of notice u/s.148 but without success. In view of the above overwhelming legal position settled in favour of the Revenue we are of the considered opinion that no interference is warranted in the impugned order upholding initiation of re-assessment proceedings. Bogus loan transactions - M/s. Mohit International was one of the concerns which was apparently engaged in the business of Diamonds trading but actually providing accommodation entries, there remains no doubt that the transaction of loan of ₹ 25.00 lakh received by the assessee is nothing but a bogus loan received from M/s. Mohit International, through a proprietorship concern of Mr. Nilesh Parmar, which was actually controlled by Mr. Praveen Kumar Jain, with whom Mr. Nilesh Parmar was working as an Accountant. Not only that, even Mr. Praveen Kumar Jain also admitted before the authorities that he was engaged in giving accommodation entries through companies under his control and all of such companies were paper concerns with no real business transactions. He also admitted to have provided accommodation entries, inter alia, of unsecured loans/advances, sale and purchase in various commodities including Diamonds etc. He further admitted that his beneficiaries included, inter alia, builders. During the course of search, he provided a list of concerns controlled and managed by him along with name and address of the beneficiaries of accommodation entries. Such a list included the name of the assessee as a beneficiary of a loan of ₹ 25.00 lakh received on 26-02-2007 from the concern controlled and managed by him by the name of M/s. Mohit International. On a specific question, the ld. AR fairly admitted that loan of ₹ 25.00 lakh was received and recorded by the assessee from M/s. Mohit International on 26-02-2007, though he insisted on the genuineness of the transaction. It will not be out of place to refer to the judgment of the Hon'ble Supreme Court in CIT vs. Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] as held that although the apparent must be considered as real, but, if there are reasons to believe that the apparent is not real, as is the case under consideration as well, then the apparent should be ignored to unearth the harsh reality. Thus no hesitation in countenancing the view of the ld. CIT(A) that the assessee received accommodation entry of loan from M/s. Mohit International. Adequate opportunity of hearing was not provided by the authorities below - The assessee was very well aware of the contents of the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain from the stage of the initiation of the reassessment proceedings and the argument of it being unaware to the statements, is nothing but a shield to defend an undefendable case. It is pertinent to mention that the assessee in its last reply dated 21-03-2015 submitted personally to the AO on 24.3.2015, stated all that it was to state by mentioning in para 3 that: we have already filed with you all the relevant papers as Annexure 1 to 5 of our letter dated 27-06-2014. You have also acknowledged the same in Para 3 of your aforesaid letter. Under the circumstances, we fully explained the said loan . There is no reference to any socalled violation of principles of natural justice by the AO not supplying the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain. In view of the foregoing discussion, we are satisfied that the authorities below were justified in deciding the issue against the assessee.
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2022 (3) TMI 429
Validity of Reopening of assessment u/s 147 - mandation of issue of notice u/s. 143(2) - Whether the 143(2) notice has not been issued before framing reassessment order? - HELD THAT:- In this case, since the assessee pursuant to the notice u/s. 147/148 had requested the AO to treat the original return of income filed u/s. 139 of the Act as the return in response to the notice u/s. 147/148 vide letter dated 22.03.2018 means the AO had to issue 143(2) notice before 30.09.2018. Admittedly, the 143(2) notice has not been issued before framing reassessment order dated 26.12.2018 and, therefore, the action of the AO to frame the assessment u/s. 144 of the Act is without jurisdiction and for that we rely on the decision in the case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] wherein it has been held that issuance of notice u/s 143(2) is mandatory for scrutiny assessment even in cases of assessments after search u/s 132 of the Act [Block Assessment]. Since issuance of notice u/s 143(2) is mandatory before scrutiny assessment, even section 292BB of the Act cannot come to the rescue of the AO. And the Hon'ble Madras High Court in the case of CIT vs. C. Palaniapan[ 2006 (2) TMI 103 - MADRAS HIGH COURT] held that issuance of notice u/s 143(2) is mandatory in reassessment cases also. Further, we do not find any merit in the argument of the Ld DR that return of income should have been filed and not the letter requesting the AO to treat the original return as the return of income pursuant to the 147/148 notice. For that we rely on the judgment of the Hon'ble Calcutta High Court in the case of Iqbal Singh Atwal [ 1982 (12) TMI 12 - CALCUTTA HIGH COURT] and Pr. CIT Vs. Shri Jai Shiv Shankar Traders Pvt. Ltd. [ 2015 (10) TMI 1765 - DELHI HIGH COURT] Since no notice u/s. 143(2) of the Act had been issued by the AO before framing reassessment order dated 26.12.2018 it is bad in law because the A.O. had no jurisdiction to frame the reassessment order dated 26.12.2018 without issuing the mandatory notice and therefore, all subsequent action is null in the eyes of the law and therefore we find merit in the appeal of the assessee and the order of the AO dated 26.12.2018 passed u/s. 144/147 of the Act is quashed. Appeal of assessee is allowed.
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2022 (3) TMI 441
Validity of assessment order passed u/s 143(3) - as argued this order has been passed notwithstanding being informed that there is a reference pending before the Dispute Resolution Panel (DRP) - HELD THAT:- In our view, since the order passed under Section 143(3) has been passed notwithstanding petitioner s reference to DRP, that order is required to be quashed and set aside and is hereby quashed and set aside. Respondents to pass fresh assessment order considering the observations of the DRP in its order dated 29th December 2021.
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2022 (3) TMI 440
Stay of demand - Attachment made on bank account - HELD THAT:- Admittedly the petitioner suffered with order of assessment as well as the order of first Appellate Authority atleast in respect of three Assessment Years. For AY 2017-18 is concerned, the appeal is pending before the CIT (Appeals). Except AY 2012-13, where they unsuccessfully filed the stay petition, for all other Assessment Years, even that attempt has not been made by the petitioner assessee. Now he has come forward before this Court making a hue and cry against the attachment made in respect of the Bank Accounts of the petitioner with further rider that, the petitioner is ready and willing to make some payment, that is some percentage of demand which may be indicated or stipulated by this Court as a condition precedent for the consideration of grant of stay of the demand, for the time being, enabling the petitioner assessee to approach the appropriate forum namely, ITAT, CIT (Appeals) and Assessing Authority, as the case may be seeking for a stay of the demand in respect of the concerned Assessment Year. In normal course, if an appeal is filed, which is pending, it is open to the assessee to make an application for stay, even before the Assessing Authority, as there is no condition precedent as a prior deposit for entertaining the appeal before the Appellate Authority and in such case, the Assessing Authority can use his discretion, of course by imposing certain conditions, can treat the assessee is not liable to to pay the tax for the present, that means a stay can be granted. The said stay cannot be granted by way of blanket stay, as the provision namely, Section 220 (6) of the Act makes it mandatory that a condition shall be imposed, of course from the discretion of the Assessing Authority. The petitioner has missed to file any such application in respect of three Assessment Years, i.e., 2012-13, 2015-16 and 2016-17. In all these years, the Appeal is now pending before the ITAT. Out of these three Assessment Years, for AY 2012-13, as stated above, the petitioner has made an unsuccessful attempt to seek for stay. Even against the said order passed by ITAT no further appeal was filed by way of Tax Case Appeal before this Court. When that being the situation, the assessee now come forward to make payment, which can be taken as a condition for making some interim arrangement, till the petitioner approaches the appropriate forum, to seek for stay of the demand by filing necessary application. This Court is inclined to dispose of this writ petition with the following orders : (i) That the petitioner shall make payment of 20% of the demand in respect of AY 2015-16, 2016-17 and 2017-18 and 30% of the demand for AY 2012-13, within a period of four weeks from today. (ii) On such condition, there shall be an order of stay for a period of two months, within which, the petitioner shall approach either the ITAT or the CIT (Appeals) or the Assessing Authority as the case may be in respect of AY 2015-16 to 2017-18. (iii) Insofar as AY 2012-13 is concerned, such a course of action can be adopted by the petitioner assessee against the order passed by the ITAT in his earlier application for stay by filing appropriate appeal before the forum concerned, in accordance with law. (iv) In view of the stay granted, after making the payment, as indicated above, the attachment made in respect of the Bank Accounts can be lifted by the respondent Revenue. (v) It is made clear that, if the petitioner assessee has not complied with the payment schedule as indicated above, the stay granted now through this order shall stand automatically vacated without further reference to this Court for any further orders.
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2022 (3) TMI 439
Correct head on Income - rent received by the assessee from letting out business premises - business income or income from House property - claim of the assessee treating the income received from lease/licencing the business centre as 'business income', was disallowed by the assessing officer by observing that the income received from the house property has to be assessed under the head 'income from house property' - Tribunal allowed the appeals filed by the respondent / assessee, after having held that the income received from commercial asset is to be treated as 'business income' and not 'income from house property' - HELD THAT:- Tribunal being fact finding authority, has passed the well considered order after anlaysing the entire facts and circumstances of the case, in the light of the material evidence placed before it and hence, the same does not call for any interference. See M/S. SSM. ESTATES LTD. [ 2015 (3) TMI 320 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2022 (3) TMI 438
Revision u/s 263 by CIT - whether the deduction u/s 10A is to be computed after or before setting off of the losses / depreciation? - Scope of debatable issue - HELD THAT:- This court is of the view that the issue involved herein qua deduction under section 10A, is now, settled by the Hon'ble Supreme Court in CIT and others v. Yokogawa India Ltd [ 2016 (12) TMI 881 - SUPREME COURT] wherein, it was categorically held that though section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI . Further, it is to be noted that though the decision of the Karnatake High Court [ 2006 (8) TMI 125 - KARNATAKA HIGH COURT] referred to above on the side of the appellant / Revenue was appealed by the Assessee therein [ 2013 (10) TMI 823 - SC ORDER] to the supreme court and the said appeal was dismissed by confirming the said view by order, dated 19.09.2013, this court is of the opinion that the view of the Karnataka High Court that the deduction under Chapter VI A has to be made only after or subsequent to the brought forward depreciation allowances, seems to have been taken depending on that particular case and hence, the same cannot be straight away applicable to all the cases. Following the decision of the Hon'ble Supreme Court in CIT v. Yokogawa India Ltd (supra), this court has already decided the similar issue relating to computation of deduction under section 10A in favour of the assessee in the case of CIT v. M/s.Comstar Automotive Technologies (P) Ltd. [ 2022 (2) TMI 710 - MADRAS HIGH COURT] Thus the substantial question of law relating to computation of deduction under section 10A, will have to be answered in favour of the assessee and against the revenue. However, the issue pertaining to the jurisdiction of the CIT to revise the assessment order under section 263, is left open. Accordingly, the tax case appeal stands disposed of
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2022 (3) TMI 437
Reopening of assessment u/s 147 - notice in the name of the original assessee who is no more - HELD THAT:- The contention raised by the learned Standing Counsel for the Revenue has to be accepted because, in none of these communications that have been mentioned herein above dated 09.09.2021 or prior to which ie., in the return submitted pursuant to Section 148 notice, it has been clearly mentioned that the original assessee is no more and therefore the petitioner has stepped into the shoes of the original assessee. Communication of the Revenue dated 14.09.2021 as the reason for reopening under Section 147 had already been stated in the earlier occasion also when the similar Section 147 reopening was made and therefore, the very same reason cannot be stated now is concerned, this Court feels that, whether the same reason had been given by the Revenue in the earlier occasion or not cannot be decided now because no document to that effect has been filed by the petitioner, for which the petitioner's counsel expressed the inability of the petitioner because, this all happened during the lifetime of the original assessee ie., the father of the petitioner. Be that as it may. Now the said plea is raised. It is a valid plea to be considered by the Revenue and in this regard, the assessing authority can very well compare the reasons given by the Revenue for reopening the assessment under Section 147 of the Act on the earlier occasion, which ended in the assessment order dated 27.06.2017, where the return of income filed disclosing an income of ₹ 5,16,710/- was accepted and if it is so, accordingly, whether the further reopening can be made or not, has to be decided by the assessing authority. If there was a different reason given in the earlier occasion, what was the reason given in the earlier occasion, that is no way connected with the present reason, that can also be informed by an interim communication in writing by the assessing authority to the petitioner and thereafter, the assessing authority can proceed. Assessing authority shall give an opportunity to the petitioner to put forth his case, pursuant to the Section 148 notice
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2022 (3) TMI 428
Revision u/s 263 by CIT - PCIT invoked revisional jurisdiction to dislodge assessee's claim of payment of commission to M/s. Toshbro Controls Pvt. Ltd. on the ground that the Assessing Officer has failed to examine genuineness and reasonableness of large commission paid by the assessee - HELD THAT:- The assessee has been paying commission to M/s. Toshbro Controls Pvt. Ltd. since long. Initially the Revenue has been accepting payment of such commission, thereafter, in Assessment Year 2012-13 the Assessing Officer rejected assessee's claim which was subsequently allowed by the CIT(A) and the order of CIT(A) was upheld by the Tribunal. In the impugned assessment year the Assessing Officer has made enquiries with regard to payment of commission by the assessee as is evident from the documents furnished by the assessee in the Paper Book. It is not a case of lack of enquiry. We are of considered view that the twin mandatory conditions as set out in section 263 of the Act i.e. assessment order should be erroneous and prejudicial to the interest of Revenue are not concurrently satisfied in the instant case. Hence, the PCIT has erred in assuming revisional jurisdiction u/s. 263 of the Act. The impugned order is quashed and the appeal by assessee is allowed.
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2022 (3) TMI 427
Revision u/s 263 - Exemption u/s 11 eligibility - as per CIT AO has failed to examine the nature of investment in shares by the assessee - HELD THAT:- Since, the facts in the impugned AY are identical to the facts in AY 2014-15 and the reasons for invoking revisional powers in the impugned AY are similar to the reasons stated in AY 2014-15[ 2020 (12) TMI 1194 - ITAT MUMBAI] the findings given by the co-ordinate bench disapproving the action of CIT(E) in exercising revisional jurisdiction would mutates mutandis apply to the impugned AY. For the reasons stated above, we hold that the CIT(E) has erred in exercising revisional jurisdiction on the ground that the AO has failed to make necessary enquiries with regard to the nature of investments made by the assessee. Ergo, the impugned order is quashed and the appeal of assessee is allowed.
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2022 (3) TMI 426
Revenue estimation - recognition of revenue from BSNL project - application of percentage completion method - non-grant of deduction in respect to excess revenue taxed for its contract with Bharat Sanchar Nigam Limited ( BSNL ) - difference between completed contract method and percentage of completion method - how much revenue from BSNL project is liable to taxation during the relevant period, i.e., AY 2008- 09? - HELD THAT:- We are of the considered opinion that whilst applying the percentage completion method, the estimated revenue of a project would be dynamic year-on-year and would keep on changing over the contract period. Thus, the myopic view taken by the Ld. CIT(A) in comparing the total estimated revenue from BSNL contract vis a vis the assessment order of AY 2005-06 (i.e., sum of INR 1617,62,89,128/-) and as claimed by the Assessee (i.e., sum of INR 1606,85,17,755/-) in the relevant AY 2008-09, is baseless and devoid of merits. Our view is fortified by the judgment of the Hon ble Supreme Court in CIT v. Bilahari Investment (P.) Ltd.[ 2008 (2) TMI 23 - SUPREME COURT] We are of the opinion that the percentage completion method tries to attain periodic recognition of income in order to reflect current performance and, accordingly, the revenue recognized during AY 2005-06 to AY 2007-08 would be relevant for determining the recognizable revenue from BSNL project till AY 2008-09 and not the final figure when the project is actually completed, which would otherwise lead to impossibility of performance. We also note that the Assessing Officer has not disputed that during the relevant period, estimate of revenue under BSNL project was INR 1606,85,17,755/- and 97.76% of the project was completed and, thus, the recognizable revenue of the Assessee from BSNL project was INR 1570,82,26,462/-. Therefore, it was not open for the Ld. CIT(A) to take a contrary view in the remand proceedings without any corroborative evidence on record. This is second round of litigation before this Tribunal and all the necessary factual details are available on record. After duly considering the material evidence on record and the order of the Ld. CIT(A) we observe that the CIT(A) has missed to take into consideration the revenue from BSNL project which was suo moto offered to tax by the Assessee and is also reflected in the audited financials. In this background, we approve the working submitted by the Ld. AR that the total revenue taxed by the Assessing Officer with respect to the BSNL project for AY 2005-06 to AY 2008-09 is INR 1610,60,22,380/- and the recognizable revenue from BSNL project for AY 2005-06 to AY 2008-09 as per percentage completion method is INR 1570,82,26,461/-. Accordingly, the Assessing Officer is directed to grant relief to the Assessee to the extent of sum excessively taxed, so as to avoid double taxation - Decided in favour of assessee.
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2022 (3) TMI 425
Clubbing of Income - Addition of Rental Income earned by the Spouse of the Assessee, in the hands of the Assessee, U/s 64 - Unexplained investment - disallowing the rent paid to spouse by the Assessee, as his investment/funding towards the purchase of the Property - as per CIT-A no substantial taxable income shown by appellant s wife during the above assessment years Through which she can make investment in her own capacity either in the property or in the mutual funds etc. - HELD THAT:- The assessee s wife who has low returned income but received loan from the assessee and she has repaid the loan from the redemption of mutual funds and liquidation of fixed deposits. There is no bar on the part of the assessee to extend loan from his known sources of income to his wife. Similarly, there is no bar on the assessee s wife to repay the loan from her own mutual funds and fixed deposits. The assessee has paid house rent and the recipient, the assessee s wife has declared the same under the head income from house property in her returns which has been accepted by the revenue. The copy of which has been placed before us. The house has been registered in the name of Smt. Shivani Bansal. CIT(A) s observation that the assessee has got meager income hence he cannot afford to purchase a house cannot be accepted as the sources for purchase of the house in the hands of Smt. Shivani Bansal are proved rather never doubted. The ld. CIT(A) s contention that the husband cannot pay rent to the wife is devoid of any legal implication supporting any such contention. Hence, keeping in view the entire facts of the case, we hereby allow the appeal of the assessee.
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2022 (3) TMI 424
Exemption u/s 11 and 12 - assessee had received corpus donation and voluntary donations - activities of the assessee society was by and large socio-spiritual and religious in nature which include organizing spiritual events and creating awareness about various social objects such as water conservation, female feticide, prisoner reforms, employment programmes for blind etc - HELD THAT:- We find that the assessee s activities are mixed of religious, charitable and social activities. The religious activities have to be given a wide treatment and cannot be interpreted narrowly because in the concept of Hinduism there is no line of demarcation between religious or charitable. It is always mixed of both. Hon ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat [ 2014 (3) TMI 652 - SUPREME COURT] held that if the assessee trust is formed with both religious and charitable objects in terms of section 13(1)(b), its claim for registration u/s 12AA cannot be denied and it can only denied in case when such objects are carried out for the benefit of a particular religious community or caste. If the purpose of the assessee trust is not indicative of wholly religious purpose but collectively indicate both charitable and religious purpose then it has to be treated cumulative and would be outside the purview of section 13(1)(b). AO justification invoking the provisions of section 115BBC - Only those anonymous donations are to be disallowed subject to a specific direction if it is for any university, educational institution or medical institution run by such institution which is not the case here. Here it is not the case that any anonymous donation made is with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution. In fact nowhere there is any finding or it is a matter of fact that assessee is running any such educational or medical institution. Accordingly, we do not find any infirmity in the order of the ld. CIT (A). We are also unable to appreciate the arguments of the ld. CIT DR that, since assessee had been granted certificate u/s 80G which cannot be granted if the trust/institution is wholly and substantially for religious purposes. First of all, this was not the ground taken by the AO and secondly, if there is any infirmity in the grant of certificate issued u/s 80G then it is for the Department to look into that aspect otherwise it has no relevance or bearing in interpreting whether subsection (2) of section 115BBC is applicable in this case or not. Otherwise also, similar donations have been accepted not only in the earlier years but also in the subsequent years u/s 143(3) and it has been categorically found that provisions of seciton115BBC is not applicable, therefore, in view of the rule of consistency, such donations cannot be disallowed. - Decided against revenue.
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2022 (3) TMI 423
Revision u/s 263 by CIT - addition in respect of sale consideration of shares u/s 68 and on account of commission paid for taking accommodation entries - HELD THAT:- AO during the course of assessment proceedings has examined in details all these purchase and sale of shares from para No.4 to 9 in almost more than 20 pages. We have failed to understood as to how the Ld. PCIT has invoked this jurisdiction to revise the assessment in order to verify the unsold shares. In our opinion, the issue has been examined by the AO at great length and almost the entire assessment order has been dedicated on this issue only. We are of the considered opinion that the jurisdiction invoked by the Ld. PCIT is invalid as the Ld. PCIT has failed to demonstrate as to how the order of AO is erroneous and what prejudice has been caused to the revenue when there is no sale of shares as observed by the ld PCIT. Besides the AO after examining the share transactions has taken a possible view and made addition in respect of entire sales consideration resulting from shares sold during the year and also made addition in respect of commission on accommodation entries as the entire sales consideration was treated as bogus. We are inclined to hold that the revisionary jurisdiction of the Ld. PCIT is invalid and accordingly the order passed by Ld. PCIT is hereby quashed. - Decided in favour of assessee.
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2022 (3) TMI 422
Disallowing employees contribution to PF ESI - payments made beyond the due date prescribed under respective statutes, but before the due date prescribed u/s 139(1) - Scope of amendment by Finance Act, 2021, to section 36[1][va] and 43B - HELD THAT:- As in Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - Also further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction - Decided in favour of assessee.
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2022 (3) TMI 421
Penalty u/s 271(1)(c) - Additions on estimated basis against the Bogus purchases - recording mandatory satisfaction as contemplated under the Act at the time of framing the assessment order - whether the AO has levied the penalty under the specific charge as contemplated under the provisions of section 271(1)(c)? - HELD THAT:- We refer the penalty order and find that the penalty has been levied on account of furnishing the inaccurate particulars of income which is the specific charge as provided under the provisions of section 271(1)(c) of the Act. Accordingly, we are not convinced with the ground of appeal raised by the assessee. Time limit for passing the penalty order - We find that there was nothing submitted by the assessee to justify that the penalty order has been passed beyond the time prescribed under the law. CIT (A) confirmed the assessment order vide order dated 25 January 2016, thus the financial year end as on 31st March 2016. Hence time limit to frame penalty order expire as on 31st March 2017 whereas penalty order was passed as on 26th March 2017. Therefore the same is within time limit provided under the provision of law. The penalty under the provisions of section 271(1)(c) of the Act can be levied either on account of concealment of income or furnishing inaccurate particulars of income - In this case the assessee has shown purchases from certain parties but failed to support the same based on the documentary evidence. Indeed the primary onus lies upon the assessee to justify the genuineness of the purchases. The assessee has only filed the copy of the ledger of the purchases from one-party. But the assessee failed to file the copies of the bill/invoices for the freight charges, octroi details of the vehicles used in the transportation of the goods. Thus it is clear that the assessee failed to discharge the onus cast upon it under the provisions of law. Admittedly, the assessee against the purchases has shown sales which were not doubted by the authorities below. Indeed, the sales are not possible without the corresponding purchases. Thus, the entire amount of purchases cannot be treated as income despite the fact that the assessee failed to discharge onus with respect to such purchases. ITAT estimated the amount of profit embedded in such purchases. But the estimation of profit does not lead to draw that the assessee cannot be held under the charge of furnishing the inaccurate particular of income. The percentage of profit is one of the method of determining the income in respect of which the inaccurate particulars of income was furnished. Accordingly we hold that, the assessee cannot discharge/ escape from the penalty levied under section 271(1)(c) of the Act. Thus we hold that the assessee cannot be escaped from the penalty provisions in a situation where the income was determined on estimated basis - Decided in favour of revenue.
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Customs
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2022 (3) TMI 419
Exemption from Basic Customs Duty [BCD] or not - imported NIKON brand digital still image video cameras - benefit of exemption under notification dated 01.03.2005, as amended by the notification dated 17.03.2012 or not - doctrine of merger - Whether the order dated 19.12.2017 passed by the Tribunal, as a part of previous round of litigation, can be relied for the purpose of merits in this Appeal? - Difference of opinion. HELD THAT:- It would be appropriate to refer the matter to the President of the Tribunal for constituting a larger bench of the Tribunal for deciding the following issues: (i) Whether the digital still image video cameras imported by the appellant would be entitled to BCD exemption under the notification dated 01.03.2005, as amended by the notification dated 17.03.2012, whereby an Explanation was added; (ii) Whether the Tribunal, in the decision rendered on 19.12.2017, has correctly interpreted the scope of Explanation . The papers may, accordingly, be placed before the President of the Tribunal.
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2022 (3) TMI 418
Confiscation of goods - redemption fine - penalty u/s 112(a) of Customs Act - imported Assorted Deodorant - violation of provisions of the Drugs and Cosmetics Act read with the rules thereunder - HELD THAT:- There is no deliberate violation of the provisions of port of restriction by the appellant as the goods have been imported through Nava Sheva, which is a notified sea port and further ICD, Garhi Harsaru falls under the jurisdiction of Commissioner of Customs, ICD, Patparganj. Further, it is found that the competent authority under the Drugs and Cosmetics Act have issued No Objection Certificate for release of the goods after inspection, and the appellant was registered under the Drugs and Cosmetics Act. Thus, this called for no adverse action against the appellant. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 417
Levy of pealty - absolute confiscation - Smuggling - Gold - non-compliance of section 129 (e) of Customs Act, 1962 - pre-deposit of 7.5% of duty/penalty not complied - HELD THAT:- The original adjudicating authority has not order any demand of duty. However, penalty of ₹ 4,00,000/- has been imposed upon the appellant. The amount of ₹ 75,000 + 40,000 as has already been deposited by the appellant is definitely more than 7.5% of the aforesaid amount of penalty. Hence, it is held that Commissioner (Appeals) has committed an error while not considering the aforesaid amount already deposited by the appellant as the amount of pre-deposit of 7.5 % of the penalty. Commissioner (Appeals) is directed to afford the proper opportunity of personal hearing to the appellant and to decide the appeal on merits of the case - Appeal allowed by way of remand.
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2022 (3) TMI 420
Levy of Anti-Dumping Duty (ADD) - petition challenged primarily on the ground that even before a final order is passed, pursuant to the issuance of the show cause notice dated 15.07.2017, the writ petition at the instance of the writ petitioner is not maintainable - whether the appellant has power to issue a subsequent notification dated 05.01.2015, after the period of validity of the earlier notification dated 16.12.2010 lapsed on the expiry of five years on 07.12.2014? - HELD THAT:- This issue is no longer res integra as it was decided by the Honourable Supreme Court in the case of UNION OF INDIA AND ANOTHER VERSUS M/S. KUMHO PETROCHEMICALS COMPANY LIMITED AND ANOTHER [ 2017 (6) TMI 526 - SUPREME COURT] where it was held that the notification extending anti-dumping duty by five years i.e., upto January 1, 2014 was in the nature of temporary legislation and validity thereof could be extended, in exercise of powers contained in second proviso to sub-section (5) of Section 9A of the Act only before January 1, 2014. Appeal dismissed.
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Insolvency & Bankruptcy
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2022 (3) TMI 416
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - application barred by time limitation or not - HELD THAT:- It is well settled that on acknowledgment by Corporate Debtor of the debt limitation is extended as per Section 18 of the Limitation Act, 1963. Learned counsel for the Appellant submits that confirmation of account sent by the Corporate Debtor from 01.04.2010 to 31.05.2016 were on the record of the Adjudicating Authority where the debt of ₹ 30,27,622/- was mentioned while confirming the account by the Corporate Debtor. The last confirmation of account being issued on 31.05.2016 for the period 01.04.2016 to 30.05.2016, thus the Appellant can clearly claim the benefit of Section 18 of the Limitation Act and application having been filed within three years from the last letter of acknowledgment on 31.05.2016 the application was well within time. The Adjudicating Authority has not referred to the acknowledgment i.e. confirmation of accounts, which letters were issued by the Corporate Debtor and which were on the record of the Adjudicating Authority. The confirmation of account letters issued by the Corporate Debtor to the Operational Creditor clearly extend the period of limitation for the Appellant to file application under Section 9 - the Adjudicating Authority committed error in rejecting the application as barred by time - appeal allowed.
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2022 (3) TMI 415
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - rejection of plaint/ suit filed by the Appellant on the ground that suit is barred by Section 34 of the SARFAESI Act - HELD THAT:- The Hon ble Supreme Court dismissed the Appeal filed by the Appellant, however, the Hon ble Supreme Court observed that it shall be open for the Appellant to initiate appropriate proceedings before the DRT under Section 17 - It was on the prayer of the Appellant that liberty was granted by the Hon ble Supreme Court to file an Application under Section 17 of the SARFAESI Act before the DRT. The Hon ble Supreme Court has also noticed that in fact proceedings before DRT were initiated by the Appellant under Section 17, which fact has been noticed. Before the Hon ble Supreme Court, there was no issue regarding Application filed under Section 7 of the Code by the Respondent against the Appellant, which was pending at the time when Hon ble Supreme Court decided the Appeal. No observation has been made by the Hon ble Supreme Court with regard to Section 7 Application of the Code, nor it can be held that judgment of Hon ble Supreme Court even impliedly interdicts the Application under Section 7 filed by the Respondent against the Appellant. The Appellant has made a prayer for staying the proceedings under Section 7 of the Code or keeping in abeyance the hearing of Section 7 Application until the final disposal of the Application filed by it before the DRT Chennai - Adjudicating Authority did not commit any error in rejecting the application - appeal dismissed.
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2022 (3) TMI 414
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of demand notice without authorization or not - HELD THAT:- It is also an admitted fact that clause 32 of the Agreement dated 10.11.2017 arrived between the parties, shows that such dispute has not been amicably settled within 90 days, then such a question or dispute shall be referred to any finally resolved by arbitration with arbitration rules of arbitration and conciliation act 1996. Instead of invoking Arbitration, the Appellant has filed this Application under Section 9 of the IBC. The Board Resolution passed by the Board meeting of ICI Healthcare Pvt. Ltd on 31.02.2020 (page 142 of the Appeal) authorizes Mr. Naveen Jain to represent the Company and take necessary action before the Hon ble Court of Ahmedabad. The demand notice under Section 8 of the IBC sent by the Appellant to the Respondent on 21.08.2019 and further Application under Section 9 of the IBC was filed on 01.10.2019 much before the Board Resolution. There is no illegality in the impugned order while dismissing the Application filed by the Appellant under Section 9 of the IBC, therefore, the impugned order passed by the Ld. Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad is hereby affirmed - Appeal dismissed.
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2022 (3) TMI 413
Legal expenses in defending the compliances instituted by the 1st Respondent before the Insolvency Bankruptcy Board of India and ICAI - grievance of the Appellant is that his remuneration on being appointed as Interim Resolution Professional of the Corporate Debtor was fixed at Rupees one lakh only, out of which Rupees Fifty Thousand Only was paid by the 1st Respondent - HELD THAT:- The fee payable to the Appellant/Applicant and as such the balance of claim, this Tribunal comes to a consequent conclusion that the Instant Company Appeal stands Sans merits. It is of the earnest opinion that the Adjudicating Authority (National Company Law Tribunal, Chennai Bench-1, Chennai) had rightly opined by the COC had not approved the legal expenses payable to the Interim Resolution Professional and the legal cost incurred by him as required, in terms of the ingredients of the Regulation 33 that the Resolution Professional Regulations and further that the claim of the IRP could not be considered at this stage. Appeal dismissed.
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2022 (3) TMI 412
Directions to comply with the resolution plan - sale of shares - HELD THAT:- Resolution Plan provides two structures (methods) for allotment of equity shares to the Resolution Applicant. As per first structure (method) Resolution Applicant has to subscribe 75% of equity shares that is 89,70,44,238. The Existing Promoter Group equity share is 2.14% that is 256,53,813 was to be in rest 25% shareholding. The first structure was to take place in event erstwhile Existing Promoter Group shareholding is not counted towards promoter shareholding for the purposes of Regulation 2015. It is noticed the relevant provisions of Regulation 2015 as well as the provisions of Securities Contracts (Regulation) Rules, 1957. The Securities Contracts (Regulation) Rules, 1957, Rule 19A provided that Every listed company other than public sector company shall maintain public shareholding of at least twenty five percent . The Bhushan Steel being listed company, it was obliged to maintain public shareholding of at least 25%. The Regulation clearly prohibit public shareholding of Promoter pursuant to reclassification to be counted towards achieving compliance with minimum public shareholding requirement under Rule 19A as noted above. Thus, shareholding of 2.14%, which was held by erstwhile Promoter Group, even if they were treated as public shareholding cannot be counted towards 25% shareholding, which is statutory requirement to be maintained. Thus, Structure one on 15.05.2018, on the date when Plan was approved ok on 18.05.2018, did not permit subscribing of 75% shareholding by the Tata Steels - there are no error in the action of Respondents in proceeding to opt to acquire the equity shares of the Promoter Group by asking them to sell the equity shares @ INR 2/- after subscribing 72.65% of equity shares, so that after purchase of the equity shares of Existing Promoter Group, the Respondent may have 75% of shareholding leaving 25% to the public shareholding. The Resolution Plan as per Section 30(2) (e) of the Code has to be in accordance with law for the time being in force. Section 30(2) sub-clause (e) mandates does not contravene any of the provisions of the law for the time being in force . The implementation of the Resolution Plan has to be thus in accordance with the existing law and the Respondent could not have implemented the Plan following Structure one in para-3, which could have been in contravention of Regulation 31A(7)(b) of 2015 Regulation. Thus, the implementation of Resolution Plan by following Structure two as provided in para 3 of Annexure 5 was fully permissible and no exception can be taken by the Appellants when they are asked to sell their equity shares as per Plan itself - there are no error in the judgment of the Adjudicating Authority allowing the Application filed by Respondent while holding that erstwhile Promoters have to sell their shares to the Applicant (Tata Steel) @ INR 2/- per share. The Appeal is dismissed.
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2022 (3) TMI 411
Seeking dissolution of Corporate Debtor - section 59 of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- There is no legal impediment in allowing the prayer of the applicant. The Prayer of Liquidator to dissolve the Company U/S 59 of the Code and the said company is hereby dissolved with effect from the date of the present order - Liquidator is directed to preserve a physical or electronic copy of the reports, registers, books of account referred to in Regulation 8 and 10 for at least eight years after the dissolution of the corporate person, either with himself or with an information utility.
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2022 (3) TMI 410
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- On reading the terms of the Joint Development Agreement, it is clear that in the project there are certain things to be done on the part of the petitioner herein, who has given the land as part of the bargain and there is conjoint role on the part of the developer the Respondent herein for completion of the project. No doubt clause 4.5 deals with the period for which the project should be completed but on a perusal of other clauses of JDA, it is clear that both the parties have agreed to certain terms for sharing, on completion of the project and also to take over the property, if it is not sold. In that situation the reading of these clauses makes it clear that the percentage of sharing has already been determined by both the parties and it is evident that they stand as one in the promotion of these project except to the extent that sharing of the revenue has been demarcated in respect of each project according to their terms of agreement. On reading the various clauses of the JDA, which is almost identical in all the three JVAs (Joint Venture Agreement), it appears to be a case of joint Development by proportionate participation of both the parties and sharing of the profits or the built-up area in the manner specified in the JVA. Nowhere, in the JVA, there is an indication to the effect that Respondent has to provide services to the Petitioner, if both are to share the project by putting the land and development works and sharing the land and technical support for development and share the profits, it can be only termed as a case of JV Project and not a case of service provider by one party or the other - The revenue sharing concept which is the key to, this JVA makes it very clear that it cannot be turned as a service owed by the Respondent to the petitioner; both will have to sail together or sink, because of the JVA. Furthermore, we also notice that at page 136 to 145, are the statements given by the respondent in the normal course of business, stating details of the property under development and the share of the petitioner under the JVA. In terms of the JVA a substantial amount of ₹ 23,44,53,000/- has been received by the petitioner from the respondent/corporate debtor and there is a balance of ₹ 03,92,18,660/-. This should at best be termed as an ongoing business liability which should have been resolved between the parties in terms of the JVA. This makes it clear that it is not a case of debt but is a case of liability as between one partner and the other partners in the JVA. There are no merit in this case for admission under Section 9 as an Operational Creditor and the same is dismissed.
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2022 (3) TMI 409
Seeking to discharge/replace the Respondent as the Resolution Professional of the Corporate Debtor - HELD THAT:- This Adjudicating Authority vide its order dated 10.03.2021 though disposed of the said IA as premature, however directed the RP to carry out the basic enquiry of all surrounding facts to make out his case, make enquiries from all concerned parties with reference to the transactions highlighted in the Forensic Report, and come to some definite conclusion before referring the matter to this Tribunal under section 66 of the Code and then he may consider adding the parties to the transactions as Respondents and to revive the same application or to file a fresh application u/s. 66 of the Code. But the Respondent-RP failed to comply with the said direction of this Adjudicating Authority and hence he filed the instant Application. It is to be seen that this Adjudicating Authority while disposing of the IA No. 133 of 2020 vide order dated 10.03.2021, though not fixed any specific time to the RP to revive the said IA or to file a fresh petition after complying with the directions of this Adjudicating Authority, but the Respondent-RP cannot postpone the implementation of the directions issued by this Adjudicating Authority beyond a reasonable period - no further orders are required to be passed in the instant IA. Application disposed off.
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2022 (3) TMI 408
Seeking to direct the Respondent to not accept any resolution plans which propose a composite Scheme - seeking to grant a stay on the voting of the resolution plan - whether without permission of this Authority a Composite Scheme can be considered? - HELD THAT:- It is the case of the Applicant that there are no other provisions for creating any interest whatsoever in favour of a third party, other than the ones that are provided in the Lease and the Sub-Lease Deeds, therefore, the Respondent has violated the terms provided under the Lease Deed as well as the Sub Lease Deed as the Lessee had to take prior permission of the Lessor for transferring the Plot to a third party or for creating any interest of a third party in the Plot. Further, no permission from the Applicant was taken to enter into the Collaboration Agreement; therefore, it is non-est in the eyes of law and is an instrument of fraud to deprive Applicant of the rights over the Plot as a Lessor - The Clause II (h) of the Lease Deed provides for construction of the building and development on the property had to be done as per development norms and controls prescribed under the Scheme/Building regulations and as per the directions of the Lessor. The Applicant has referred to the Clause III of the Lease Deed and other clauses which provide for obtaining prior approval from the Applicant. The Clause provides that the Lessee was entitled to sublease the sports, other facilities and instrumental activity only after obtaining the prior approval of the Lessor and the commercial, residential area can be leased after executing a tripartite agreement between the Lessee, the proposed Sub-Lessee and the Lessor, as per prevailing transfer policy, at time of such transfer. In terms of Clause 111(3) of the Sub-lease Deed, in case of breach by the Lessee of any of the terms and conditions of the Sub-Lease Deed, building bye laws or other rules framed or directions, the Lessor had the rights to cancel/terminate the sub-lease Deed and forfeit the deposits paid by the Sub-lessee. The Corporate Debtor has violated the terms of the lease agreement, when a sublease has been created between the parties, the Corporate Debtor ought to have taken permission from NOIDA, since there is no such permission, the contention of the Applicant is correct - application is allowed.
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2022 (3) TMI 407
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT:- It is the case of the applicant that the Corporate debtor had issued cheque towards the outstanding due payment which has been bounced and was returned bank unpaid by their Bank. Further, issuance of the cheque indicates admission of debt by the corporate debtor towards the applicant. This leaves no doubt that the default has occurred for the payment of the operational debt to the applicant - in the given facts and circumstances, it can be concluded that the applicant has established its claim which is due and payable by the corporate debtor. The present application is admitted. Application admitted - moratorium declared.
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PMLA
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2022 (3) TMI 406
Seeking grant of bail - Money Laundering - reasonable grounds for believing that he is not guilty of such offence - confiscation of proceeds of crime - Twin conditions of section 45 of PMLA was fulfilled or not - HELD THAT:- Principal object of the PML Act is 'Confiscation' of proceeds of crime. In the present case, ED has already attached properties of the applicant worth ₹ 80 Crores. Hence, part of the object has been already fulfilled. Further everything has been documented in eight huge volumes with the complaint. Co-accused are behind bars since more than a year. There is no certainty that the trial will begin and conclude in near future. In this background and in view of above detailed discussion, it is held that there are reasonable grounds for believing that applicant is not guilty of such offence in order to attract rigours of Sec.45(1)(i) and (ii) of PML Act. Even if the rigours of twin conditions under Sec.45(1) of PML Act are applied, yet the case of applicant is qualified under Sec.45(1)(i) and (ii) of PML Act. Applicant has various immovable properties, establishments and companies in India. If certain conditions are imposed on him, he will not flee from India nor would commit any offence while on bail. Applicant Mr. Sachin Joshi S/o Jagdish Mohanlal Joshi be released on bail, by executing PR bond of ₹ 30,00,000/- and one or two sureties of like amount, and on conditions imposed - application allowed.
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2022 (3) TMI 405
Seeking grant of Bail - rigours of twin conditions under Sec.45 (1)(i) and (ii) of the PML Act - HELD THAT:- The case of accused No.5 is qualified under Sec.45(1)(ii) of the PML Act. Once the conclusion is arrived on merit that, the applicant is entitled to bail, it is not proper to suspend/stay the said order for such a long time of three weeks by making the order fruitless. Same will cause hardship to the applicant, who is held entitled on merit for the liberty. Already stringent conditions with heavy bail of ₹ 30 lakhs has been directed against the accused No.5. It is necessary to note that, accused No.5 was previously on temporary bail on medical grounds as per order of the Hon'ble Supreme Court and the Hon'ble High Court. ED could not point out a single instance that he had misused his liberty during the said period. Application dismissed.
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Service Tax
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2022 (3) TMI 404
Business Auxiliary Services - quantification of service tax on the basis of third party evidence is not correct - extension of benefit of SSI exemption - HELD THAT:- The appellant is entitled to pay service tax on receipt basis and admittedly their gross receipt from services provided during the period under dispute is ₹ 58,451/- which is supported by their bank statement, same has not been found to be untrue by the Court below - the appellant is entitled to SSI exemption and are not liable to pay service tax for the financial year 2012-13. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 403
Levy of service tax - Cleaning services such as up-keeping/environmental services - HELD THAT:- It can be seen that the appellants were engaged in all kind of activities relating to up keep of the residential colony. It involved cleaning of not only open spaces but also various facilities located within the residential colony - It is seen that the terms premises in the definition of cleaning activity does not cover the premises of service recipients but it covers only the premises of commercial or industrial building or factory, plant or machinery, tank or reservoir of such commercial or industrial building only. It is not as if all the premises on the service recipient would be covered in the definition. The definition of input services is very vast and uses words like in or in relation to and also has inclusive parts which covers services received at places other than the main office. Moreover the CBEC Circular No. B1/6/2005-TRU, dated 27-7-2005 at www.cbec.gov.in has also clarified that such cleaning services in respect of non-commercial buildings and premises thereof would not be covered within the purview of Service Tax under this category. The residential Colony would therefore not be covered under the description premises appearing in Section 65 (24b). Cleaning services or horticulture - Cutting of trees, grass shrubs etc. and maintain it over a period of time in the Gas collection Centre of the service recipient namely ONGC - HELD THAT:- The activity of the appellant cannot be treated as horticulture. It is apparent that the activity undertaken by the appellant is in the nature of cleaning activity and therefore covered under the definition of this service as defined in Section 65 (24b) of the Finance Act, 1994, the demand of this ground is therefore upheld. Clearing services as such Grass, Bush, Jungle cutting at Area-III of ONGC Ank. And regular maintenance as tender documents - HELD THAT:- There is absolutely no doubt that the said activity amounted to provision of the cleaning services as defined in Section 65 (24b) of Finance Act, 1994 and there could not have been any bonafide doubt to in that regard - there are no merit in the argument that the appellant, harboured a bonafide view. Penalty - HELD THAT:- Penalty under Section 78 has been imposed amounting to double of the total duty confirm. The said penalty is excessive needs to be revised to equivalent to the duty confirm and thus the penalty is revised to ₹ 2,25,803/- only under Section 78. The penalty under section 77 is upheld as the appellant had not taken registration or filed ST-3 return. Appeal allowed in part.
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Central Excise
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2022 (3) TMI 402
Process amounting to manufacture - whether conversion of Crude Sulphur Lumps/Granules into Sulphur Powder, would amount to manufacture , as per the definition of said phrase contained in Section 2(f) ibid? - extended period of limitation - HELD THAT:- The appellants have amply demonstrated that the conversion activities undertaken by them do not fall within the scope and ambit of the definition of manufacture , provided in Section 2(f) ibid. In this context, it is noticed that the appellants have filed various declarations from time to time and also different correspondences were exchanged between them and the department, conveying the fact of manufacture of Pesticides, Fungicides Sulphur Powder; that the letter dated 04.01.2007 was addressed to the department, explaining that the process of pulverizing of Crude Sulphur into powder form etc. would not amount to manufacture, as there is no change in characteristic, properties, quality, grade, etc.; that on 20.10.2008 again, the process of manufacture of Sulphur Powder was explained to the Preventive Officers, during their visit to the factory; that the appellants filed further declaration before the department on 08.04.2009, explaining inter alia, with the help of drawings designs that the process undertaken for conversion of Crude Sulphur into Sulphur Powder by pulverization process will not amount to manufacture. It can safely be concluded that the ingredients itemized in the proviso clause appended to Section 11A ibid have no application in the case of the present appellants for invocation of the extended period of limitation for confirmation of the adjudged demands. The present appeals are allowed by way of remand to the learned Commissioner of Central Excise, having jurisdiction over the factory of the appellants to decide and adjudicate on the subject issue, whether the disputed goods emerge as a result of manufacturing activity and confirm to the definition of manufacture contained in the definition clause provided under Section 2(f) ibid.
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2022 (3) TMI 401
A batement of duty payable - compounded rate on the basis of the number of cold Rolling mills installed in the factory - benefit under N/N. 17/2007- CE dated 01.03.2007 - HELD THAT:- N/N. 17/2007- CE dated 01.03.2007 prescribes a fix rate of monthly duty on the maximum number of Cold Rolling Machines installed in the factory. The notification provides for manufacturer to declare and the authorities to accept the Number of machines installed. The joint reading of Clause 3 and 8 of the Notification indicates that the observation of lower authorities that there is no provisions for abatement of duty for cease of work is misplaced. Clause 8 of Notification deals with the situations where the factory ceases to work or reverts to the normal procedure. The Clause 8 does not anywhere indicate if the ceasing of work of the factory is temporary or permanent. The explanation to Clause 8 clearly indicate that the partial ceasing of work will not about to ceasing of work. The clause 8 also the prescribed the manner in which the duty for the month in which the ceasing of work happened is to be calculated i.e. in terms of clause 3 of the notification. The clause 3 of the notification prescribed proportionate duty on the basis of Number of days of operation. It is apparent that the N/N. 17/2007 does not require permanent ceasing of work in order to avail benefit of Clause 8 of N/N. 17/2007. Even temporary ceasing of work after following due procedure can entitle the manufacturer to avail; the exemption - the impugned order cannot be sustained - Appeal allowed.
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2022 (3) TMI 400
Area based exemption - Ready Mix Concrete - exemption Notification No.12/2012-CE dated 17.03.2012 - period April, 2014 to September, 2015 - larger period for confirmation of demand in terms of Section 11A(4) of the Central Excise Act, 1944 - concessional rate of duty at the rate of 2% in terms of Notification No.1/2011-CE dated 01.03.2011 - Notification No.12/2016-CE dated 01.03.2016 - Ready Mix Concrete (RMC) manufactured and used at their site - period April, 2016 to June, 2017 - extended period of limitation - suppression of facts - HELD THAT:- There were contrary judgments on the issue however, finally the hon ble Supreme Court in the case of M/S LARSEN TOUBRO LTD. ANOTHER, ECC CONSTRUCTION GROUP VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD [ 2015 (10) TMI 612 - SUPREME COURT] held that the exemption under Notification No.4/97-CE which is identically worded to Sr.No.144 of Notification No.12/2012-CE dated 17.03.2012 is inapplicable to Ready Mix Concrete - the Apex Court held that RMC is not the same as Concrete Mix and exemption is granted to Concrete Mix only and not to the Ready Mix Concrete. In view of the above judgment, it is clear that the assessee s product i.e. Ready Mix Concrete (RMC) is not eligible for exemption under Notification No.12/2012-CE dated 17.03.2012 (Sl.No.144) which is pari materia to the exemption entry provided in Notification No.4/97-CE involved in the case of LARSEN TOUBRO. Extended period of limitation - Suppression of facts - HELD THAT:- There is absolutely no suppression of fact on the part of the assessee with intent to evade payment of duty therefore, the judgments relied upon by the Revenue are not applicable in the facts of the present case. Accordingly, the entire demand is under extended period i.e. from April, 2014 to September, 2015 and April, 2016 to June, 2017 whereas, the Show Cause Notice was issued on 15.04.2019 therefore, the entire demand is time barred. The adjudicating authority had rightly extended the benefit of exemption notification in respect of Ready Mix Concrete (RMC) used by the assessee in their manufacturing premises for construction work hence, the demand for the period April, 2016 to June, 2017 was rightly dropped by the adjudicating authority on the ground of its merit - other issues such as claim of exemption N/N. 67/95-CE and N/N. 2/2011-CE dated 01.03.2011 (Sl.No.46) not dealt with. Appeal allowed in part.
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2022 (3) TMI 399
Valuation of goods - related party - inter-connected undertakings - goods sold at a lower price - HELD THAT:- The assessee has an interest indirectly in the business of the buyer Ashutosh as the directors of the assessee are also two of the four directors of the holding company of the buyer Ms/ Ashutosh Structurals Pvt. Ltd. However, there is no evidence to show that the buyer Ashutosh also has an interest in the business of the assessee. Therefore, while the interest has been established in one direction there is no evidence of business interest in the other direction namely that there is no evidence that the buyer was interested in the business of the assessee. Therefore, it is found that they are not related persons in terms clause (iv) of section 4(3) (b) - thus, the assessee and M/s Ashutosh are inter-connected undertakings and hence are related in terms of Clause (i) of Explanation to Section 4 (3) (b), they are not related in terms of Clause (ii) (iii) or (iv). Which is the correct valuation rule to be applied for the period prior to 2013 and which is the correct valuation rule to be applied for the period after 2013? - HELD THAT:- The changes which have been brought in w.e.f. 2013 are only in Rules 8, 9 and 10 and not in the remaining rules. In Rule 8, which deals with captive consumption, making mandatory the assessable value to be 115% of the cost of manufacture which was reduced to 110% and 2013. Rules 9 and 10 dealt with only situations where goods were not sold except (ii) or (iii) to a related person prior to 2013. After 2013 these Rules are applicable where either whole or part of goods sold by the assessee to or through related persons. There is no other material change w.e.f. 2013 The prayer of the Revenue that the goods cleared by the assessee and sold to M/s Ashutosh should be valued under Rule 4 cannot be accepted. Rule 4 deals with goods which are sold but not at the time of removal. In such a case the value should be as per the transaction value at any time nearest to the time of removal of goods under assessment subject to adjustment on account of the difference in the dates of delivery of goods. In this case, there is no dispute that the goods were sold at the time of removal. The only allegation is that the assessee and M/s Ashutosh are related persons - the appropriate rule to be applied is Rule 10 (b) both for the period prior to 2013 and after 2013. As Rule 10 (b) squarely covers the transaction, value has to be determined as per this Rule. For the goods cleared to Ashutosh, it should be assessed as if the assessee and the buyer are not related persons. In other words, the transaction value has to be accepted. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (3) TMI 398
Validity of assessment order - benefit of concessional rate of tax under Section 8(1) of the CST Act - sales made against the C Form declaration - HELD THAT:- Having regard to the fact that in the first round of litigation, an amount of ₹ 25 Lakh was deposited towards pre-deposit, it is now too much for the Tribunal to ask the Corporation to make a pre-deposit of the requisite amount only for the purpose of entertaining the Second Appeal. The Tribunal should well remember that at one point of time, it had quashed the assessment order and had thought fit to remit the matter to the Assessing Officer. Against the fresh order of assessment, the First Appeal also came to be entertained. Even the first appellate authority did not insist for any pre-deposit. The matter is remanded to the first appellate authority for the appeal to be heard on its own merits without insisting for any pre-deposit - appeal allowed by way of remand.
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2022 (3) TMI 397
Realization of the amount of VAT and CST - resolution plan was approved - Section 30 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Similar issue relating to realization of Jharkhand Value Added Tax Act and CST for the period 2011-12 and 2012-14 of the petitioner s company were under challenge in the writ petition in ELECTROSTEEL STEELS LIMITED VERSUS THE STATE OF JHARKHAND, RANCHI JOINT COMMISSIONER OF STATE TAX (ADMN.) , DEPUTY COMMISSIONER OF STATE TAX, ASSISTANT COMMISSIONER OF STATE TAX, [ 2020 (5) TMI 39 - JHARKHAND HIGH COURT] and analogous writ petitions for the respective period. The petitioner having lost before this Court went in Special Leave Petition before the Apex Court. The Apex Court in a batch of appeals along with Civil Appeals of the petitioners led by appeal in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] considered the issue and held that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. The impugned demand notice based on the assessment order dated 28.03.2018 (Annexure-3) cannot be realized from the petitioners - Petition allowed.
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