TMI Tax Updates - e-Newsletter
March 23, 2024
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Refund claim - Period of limitation - Double Taxation - The respondent had also paid tax on the same invoices. - The petitioner sought direction for the refund of Input Tax Credit (ITC) paid on invoices for a specific period, alleging coercion due to the respondent's delayed filing of returns. The respondent argued that the petitioner's claim lacked merit due to the absence of a proper refund application. The court disposed of the petition by permitting the petitioner to file a refund application within one week, considering the exclusion of certain periods for limitation purposes.
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GST:
Cancellation of GST registration of petitioner - failure to file Periodic/GST Return - The petitioner, a Goldsmith registered under the Uttarakhand Goods and Services Tax Act, challenged the cancellation of their GST registration due to failure to file periodic/GST returns. Citing a previous judgment, the petitioner sought an opportunity to apply for revocation, promising to comply with all requirements, including filing outstanding returns and paying dues. The court, finding the issues similar and with no objection from the State, disposed of the writ petition, granting the petitioner two weeks to apply for revocation.
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GST:
Reversal/ Refund of the input tax credit - Principles of Estoppel / principle of res judicata - withdrawal of earlier petition - The High court examines the previous withdrawal of the petition and notes that it was unconditional, with no liberty granted to the petitioner. Additionally, the investigation found the petitioner culpable, leading to a show cause notice being issued. - Referring to relevant legal precedents, the court emphasizes the importance of discouraging bench-hunting tactics and upholding public policy to prevent litigants from withdrawing petitions simply to file them before a different bench.
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GST:
Violation of principles of natural justice - Validity of demand of GST with interest u/s 73 - the Delhi High Court addressed the petitioner's challenge against the order disposing of a Show Cause Notice regarding a tax demand. It found fault with the manner in which the Proper Officer had handled the petitioner's detailed reply, noting a lack of proper consideration and justification for deeming it unsatisfactory. As a result, the court set aside the impugned order and directed the matter to be re-adjudicated, with the Proper Officer instructed to provide the petitioner with an opportunity to clarify and supplement their response.
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GST:
Rejection of petitioner’s application for amendment of the registration, namely, change in address of the petitioner - The court addressed the suspension of the petitioner's registration and the issuance of a show cause notice for cancellation. It noted that these actions were premature and arbitrary since they were based on issues that were subject to the pending amendment application. The court directed the respondent to decide on the pending application within a specified timeframe and allowed the petitioner to file a reply to the show cause notice, reserving their right to challenge any adverse decisions.
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Income Tax:
Reopening of assessment u/s 147 - Reasons to believe - The court examined the reasons recorded for re-assessment provided to the petitioner and compared them with the proforma maintained by the respondent. It noted minor differences in language but found that the substance of the reasons remained consistent. The court emphasized that the material basis for initiating re-assessment was the same in both documents, and minor variations in language did not warrant interference with the proceedings. - The writ petition was dismissed, upholding the validity of the notices issued for re-assessment.
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Income Tax:
Substantial question of law to be made out u/s 260A or not? - Undisclosed income surrendered during the Search and Seizure action - to be taxed at normal rate or tax rate stipulated u/s 115BBE of the Income Tax Act - The court analyzed the provisions of Section 260A of the Act and various judicial pronouncements to interpret the concept of a substantial question of law. It emphasized that a substantial question of law must be debatable and have a material bearing on the decision of the case. - Ultimately, the court concluded that the appeal did not involve any substantial question of law warranting its admission. It dismissed the appeal, affirming the decision of the ITAT regarding the taxation of the undisclosed income at the normal rate instead of the special rate specified in the Act.
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Income Tax:
Computation of Capital Gains - Exclusion of the portion of the sale consideration that was never received - The High court found that the real income (capital gains) should be computed based on the actual sale consideration received by the promoters, i.e., after deducting the amounts withdrawn from the escrow account for liabilities. It held that the initial computation, which included the escrow amount not received by the promoters, was incorrect. The full value of consideration for computing capital gains should reflect the actual amount received post-adjustments for liabilities.
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Income Tax:
Revisional jurisdiction u/s 264 - Application u/s 264 rejected as intimation u/s 143(1) of the Act is not an order amenable to revisional jurisdiction u/s 264 - The court ruled that intimation under Section 143(1) is amenable to revisional jurisdiction under Section 264 of the Act. This was based on precedent in "Diwaker Tripathi v. Principal Commissioner of Income tax – 17 & Ors.", which allowed for such revision.
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Income Tax:
Addition u/s 68 - bogus share application/allotment money - The Court noted the factual examination done by the Commissioner of Income Tax (Appeals) regarding the share capital of the companies involved. It found that the share capital raised by one of the companies in the assessment year 2009-10 had already been added back in the hands of the party, indicating its genuineness. The Court upheld the action of the Commissioner of Income Tax (Appeals) and ITAT in deleting the additions.
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Income Tax:
Claim of Interest on Refund u/s 7 of the DTVSV Act, 2020 - The High court determined that the petitioner was entitled to refunds as quantified in the Rectification Order dated 29.01.2021. However, it was held that interest under Section 244-A of the IT Act, 1961, was not permissible in light of the DTVSV Act, 2020's provisions, particularly the explanation to Section 7 which precludes interest on excess amounts refunded under the Act. - The court noted the petitioner's adjustments of refunds from later Assessment Years towards the payable amounts for earlier years were acknowledged. However, the court declined the recognition of interest on these adjustments as per the DTVSV Act, 2020.
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Income Tax:
Estimation of income - bogus purchases - case of bogus bills arranged from the entities and diamonds purchased from somewhere else at a lower cost - The ITAT noted the absence of crucial documentation, such as delivery challans, to substantiate the purchases. Consequently, the disallowance of purchases was upheld. - Considering the appellant's argument for a lower percentage of disallowance based on the profit margin accepted in other assessment years, the Tribunal decided to restrict the disallowance to 5% of the disputed purchases, consistent with previous decisions in the appellant's case.
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Income Tax:
Revision u/s 263 - as per CIT AO has not examined increase in share capital - The Tribunal noted that the AO had indeed accepted the correct balance sheet filed during the assessment proceedings, and the discrepancies between the original and rectified balance sheets were duly explained by the assessee. Therefore, the assessment order was held to be neither erroneous nor prejudicial to the interests of revenue due to the thorough verification conducted by the AO.
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Income Tax:
Capital gain computation - lease rental expenses are related to the transfer of slump sale business while computing the capital gain u/s 48(1) or not? - The Tribunal upheld the CIT(A)'s decision to allow the deduction of the additional expenditure, emphasizing its relation to the transfer of the business. Additionally, it affirmed the CIT(A)'s authority to recompute deductions and allowed the expenses incurred in the assessment year, despite crystallizing later. The Tribunal's decision was based on the finding that the expenses were integral to the transfer process.
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Income Tax:
TP Adjustment - comparable selection - The issues included the rejection of the CUP method, selection of comparable companies, and rejection of a foreign Associated Enterprise as the tested party. The Tribunal upheld the transfer pricing adjustment but directed the exclusion of one comparable and the inclusion of another based on the arguments presented.
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Income Tax:
Penalty u/s 270A and 271AAB - Defective notice u/s 274 - under reporting of income - search and seizure operation - The Tribunal found that the penalty notices under sections 270A and 271AAB were not in compliance with the legal requirements, as they failed to specify the exact limb under which the penalties were being levied (misreporting or underreporting of income). This lack of specificity was deemed to render the notices vague and legally insufficient to form the basis for penalty proceedings. - The Tribunal underscored that penalty proceedings are independent of assessment proceedings and must stand on their own merits. - The ITAT allowed the appeals filed by the firm, deleting the penalties
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Income Tax:
Assessment proceedings against one of the legal heirs - deceased/assessee had admittedly more than one legal representatives - Despite the legal heir's explicit objection and submission of details regarding all legal heirs, the Assessing Officer proceeded with only one of them for assessment. This action was deemed invalid and against the provisions of the law. Citing relevant legal precedents, the ITAT highlighted that assessments must be made on all legal representatives to ensure proper representation of the deceased's estate. Therefore, the Tribunal quashed the entire assessment due to the failure to include all legal heirs.
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Income Tax:
Exemption u/s 10(26) - Exemption to individual members of Scheduled Tribes - Whether a partnership firm, formed by individual partners who are entitled to an exemption u/s 10(26), can claim the same exemption. - The tribunal observed that under the Income Tax Act, a partnership firm is treated as a separate and distinct entity from its partners. The Act expressly includes firms in the definition of "person" for the purpose of tax assessment, making them separately assessable entities. - The exemption u/s 10(26) of the Income Tax Act, specifically granted to individual members of Scheduled Tribes, cannot be extended to partnership firms, even if they are solely constituted of such individuals.
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Income Tax:
Validity of reopening of assessment u/s 147 - The tribunal sided with the assessee on the key issue of the legality of the re-assessment notice under section 148. It was held that the notice was invalid as it was issued without the required sanction from the competent authority as prescribed under section 151(1) of the Act after the expiry of four years from the end of the relevant assessment year. - The ITAT observed that the argument that the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) extended the time limit for issuing the notice was not applicable in this case.
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Income Tax:
Deemed dividend u/s 2(22)(e) - amount received as part of salary/remuneration paid to the assessee - The ITAT examined the statements recorded during the survey and the impounded trial balance. It noted that while the appellant claimed the amount was received as advance against remuneration, the trial balance showed the amount under the head of short term loan & advance. However, the Tribunal observed that the books of accounts were incomplete at the time of the survey, and entries made by the junior accountant were not approved by management. - The tribunal accepted the argument that the company had deducted TDS on remuneration paid. - The ITAT held that since the appellant had already accounted for the disputed amount in their income tax return and paid tax on it, there would be double taxation if the amount was treated as deemed dividend.
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Customs:
Duty demand - Bonded Warehouse - seizure of 264 cases found outside the warehouse - Unauthorisedly clearance of 27 cases from the notified public bonded warehouse - On the 264 Cases Found Outside the Warehouse: The Supreme Court found that the appellant had acted within their rights under Section 64(d) of the Customs Act, with sanctioned permission from the Superintendent. Therefore, it was incorrect to treat these goods as having been improperly removed. The Court concluded that Sections 71 and 72 of the Customs Act were not applicable to these goods. - On the 27 Missing Cases: The Court agreed with the respondent's view that these goods were unauthorisedly removed from the warehouse, thus justifying the duty demand and interest levy.
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Customs:
Levy of penalty - smuggling of Gold - baggage rules - The case involved the petitioner's challenge against the imposition of a penalty under Sections 112(a) and 112(b) of the Customs Act, 1962, for the importation of gold contrary to prohibition. Despite the petitioner's claims of ignorance, the court found evidence suggesting his knowledge and intent in carrying and concealing the gold. - The court clarified the difference between the strict liability concept u/s 112(a) and the requirement of mens rea u/s 112(b) - The court upheld the imposition of the penalty, emphasizing the petitioner's awareness of the law and the prohibited nature of the goods.
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Customs:
Interest on Delayed Refund - The High court carefully considered the submissions of both parties and found merit in the petitioner's contention regarding their statutory entitlement to interest under Section 27A of the Customs Act. The court noted that even if the petitioner had not explicitly requested interest, it would still be their statutory right to claim it upon allowance of the refund applications. - Consequently, the court directed the Adjudicating Officer to determine the petitioner's interest claim, allowing them a hearing to present relevant documents.
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Customs:
100% EOU - Denial of benefit of exemption - violation of input output norms - excess generation of waste and scrap - The Tribunal, citing precedent and the notification's provisions, ruled in favor of the Appellants, rejecting the demand for customs duty on excess scrap cleared after segregation. - It ruled that excess scrap cleared after segregation cannot be considered as clearance of raw inputs, thereby rejecting the demand for customs duty on excess imported scrap.
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Customs:
Levy / Demand of Countervailing Duty (CVD) - whether the appellant, who purchased software from a subsidiary company and had it directly imported to them, could be considered the importer - As per the precedent, the appellant was considered the importer of the software. - The CESTAT analyzed the circumstances and determined that since the appellant believed in good faith that they were not the importer, the issue was interpretational. Consequently, the Tribunal found no grounds to invoke the extended period for demanding duty payment, as the appellant acted in good faith and did not intend to evade duty. Moreover, the CESTAT ruled in favor of the appellant regarding the imposition of interest on the CVD, aligning with a previous Supreme Court decision.
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Customs:
Refund claim - order of assessment in appeal not challenged - The Tribunal acknowledged the appellants' arguments regarding the contractual agreement and the price variation clause but emphasized that the refund claims were filed without challenging the assessment of the Bills of Entry. - Citing the decision in ITC Limited vs. Commissioner, the CESTAT held that refund claims cannot be entertained unless the order of assessment or self-assessment is modified in accordance with the law. It clarified that refund proceedings are not meant for reassessment and that the conditions of exemption cannot be adjudicated within the scope of refund provisions.
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Corporate Law:
Seeking winding up of respondent company - Failure to pay outstanding dues - section 434 of the Companies Act, 1956 - The court noted the substantial unpaid amount despite demand and found merit in the petitioner's claim for winding up due to the respondent's failure to settle outstanding dues. - Considering the need for liquidation proceedings, the court appointed an Official Liquidator and granted necessary permissions for asset realization and disbursement of dividends. - Upon finding that all assets were realized, creditors were paid, and no further proceedings were feasible, the court ordered the dissolution of the respondent company under Section 481 of the Companies Act, 1956.
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Corporate Law:
Validity of SCN proposing to declare the petitioners as wilful defaulters - Classification of Account as NPA - Impact of CIRP proceedings under IBC - The High Court held that NPA classification was deemed irrelevant to the determination of wilful default, and the Show-cause Notice was deemed valid. - The court ruled that the NPA classification was a separate issue from wilful default and that the petitioners' arguments regarding the classification's invalidity were not sustainable. - The court determined that the petitioners' legal rights were not infringed by the issuance of the Show-cause Notice, as they had the opportunity to respond to it. - The court found that the allegations in the Show-cause Notice provided sufficient grounds for declaring the petitioners as wilful defaulters, as per the Master Circular. - The court clarified that wilful defaulter proceedings were not subject to the moratorium imposed by Section 96 of the IBC.
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Corporate Law:
Declaration of Wilful Defaulter of the petitioner - Liability of Directors - The High Court dismissed the petitioner's arguments regarding the mechanical repetition of decisions by the Review Committee, finding that the RC provided independent findings. - Regarding the defense against wilful default due to the CIRP, the Court held that an OTS does not absolve wilful default, especially if part of the loan is written off. - The Court noted evidence from the borrower-Company's balance sheets suggesting diversion of funds and disposal of assets, supporting the bank's allegations of wilful default. - Directors were held responsible for wilful default, irrespective of ongoing CIRP proceedings or OTS agreements. - The High Court dismissed the writ petition challenging the declaration of wilful defaulter status against the petitioner.
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Indian Laws:
Dishonour of Cheque - vicarious liability of director - The petitioners argued that they had resigned from their directorship well before the cheque was issued and could not be held liable. The court examined the evidence, including resignation letters and company records, and found that the petitioners had indeed resigned before the cheque was issued. Relying on legal precedents, the court ruled that the petitioners could not be held liable for the dishonour of the cheque under the provisions of the Negotiable Instruments Act.
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IBC:
Approval of Resolution Plan by the Committee of Creditors (Coc) and Adjudicating Authority - Group of 77 homebuyers as a class of creditors seeking rejection of plan. - the Tribunal found no merit in the appellant's arguments. It noted that the appellants failed to substantiate their claims regarding the resolution plan's unfairness or the alleged related party influence. The CoC's approval of the resolution plan was deemed to be based on the collective business wisdom of its members. - The Tribunal found no evidence that the CoC was irregularly constituted or that the financial creditor in question improperly participated in the CoC as a related party. - the Tribunal dismissed the allegations against the RP, noting that the RP had acted within the bounds of their duties and responsibilities.
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SEBI:
Rejection of Petitioner’s Settlement Applications - The High court acknowledged the delay on the part of the petitioner in submitting the required documents but considered the peculiar facts of the case. Despite the delay, the court noted that the petitioner should be given an opportunity to have their settlement applications considered, as the delay should not render them inconsequential. The court found that the delay of 15 days in submitting the documents should not prejudice the petitioner. - The court granted the reliefs sought by the petitioner, directing the respondent to restore the settlement applications and consider them afresh. T
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Service Tax:
Recovery of service tax - Validity of instruction issued by the department to the Bank - Restriction from permitting any withdrawal from the accounts held by the appellant until the service tax liability is fully satisfied - The Court noted that the appellant did not challenge the tax authority's order imposing taxes through the statutory appeal process, making it final. Therefore, the appellant could not challenge the same order in the writ petition. - Regarding the freezing of the appellant's bank account, the Court observed that the tax authority had the power to issue such notices to enforce tax liabilities. - Considering the appellant's financial condition, the Court granted permission to clear the service tax liability through instalments. The appellant was required to make an initial payment and subsequently pay the balance amount in 24 equal monthly instalments.
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Central Excise:
Classification of goods - Reusable Insulin Delivery Device - The Tribunal observed that the Reusable Insulin Delivery Device, resembling a 'Syringe without needle,' is correctly classified under Chapter sub-heading 9018 3100. - The specific entry for concessional rate of duty under Serial No. 310 applies to all goods, excluding 'parts and accessories.' Thus, the product cannot be considered a 'part or accessory' of goods under Chapter heading 9018.
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Central Excise:
Area Based exemption in Kutch district - admissibility of exemptions for goods manufactured using plant and machinery installed after the cut-off date of 31.12.2005. - The CESTAT found that the addition of plant and machinery after the cut-off date does not disentitle a unit from the benefit of exemption if the addition is aimed at improving the product's quality. It clarified that there's no restriction on such additions in the notification, and the objective is to promote industrialization and economic development in the Kutch district. - The impugned order was set aside, and the appeals were allowed with consequential relief.
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Central Excise:
Reversal of Cenvat Credit - The Tribunal interprets Rule 6(3A)(c)(iii) to mean that "total Cenvat credit" should only include common input and input services, not those exclusively used for dutiable goods. They find in favor of the appellant on this issue. - Regarding the prospective applicability of Notification No. 13/2016-CE (NT), the CESTAT determines that the amendment to Rule 6(3A) should have retrospective effect, supporting the appellant's argument. - The Tribunal also agrees with the appellant on the treatment of LPG & SKO as by-products, finding no reversal required for these items.
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Central Excise:
Principles of Estoppel against law - Classification of goods - handmade branded unmanufactured tobacco under the brand name of ‘Rajhans’ - classifiable under CETH 24039910 or not - The court analyzed the evidence presented by both parties and found that the appellant had admitted to the classification of their product as manufactured tobacco for a brief period. However, the court emphasized that there cannot be any estoppel against the law in the matter of classification. It cited various judgments to support this principle. The court concluded that the appellant's product should be classified as unmanufactured tobacco, based on the processes involved and relevant legal provisions.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (3) TMI 1030
Violation of principles of natural justice - petitioner was not provided a reasonable opportunity - petitioner states that proceedings were initiated and that the petitioner could not participate in such proceedings on account of being unaware of the same until such proceedings culminated in the impugned order - HELD THAT:- The position taken by the petitioner is that the entire tax liability has arisen on account of an inadvertent error committed while filing the GSTR 1 return for October 2019. It is further stated that such error was corrected by filing the GSTR 3B and GSTR 9 returns. The entire amount due and payable under the impugned order was appropriated from the petitioner's bank account. Therefore, at this juncture, revenue interest is fully secured. In these circumstances, it is just and necessary to provide the petitioner an opportunity. The impugned order is quashed and the matter is remanded to the respondent for reconsideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within a period of two months from the date of receipt of a copy of this order. Petition disposed off.
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2024 (3) TMI 1029
Refund claim - Period of limitation - Double Taxation - The respondent had also paid tax on the same invoices. - Seeking direction to the respondents to grant benefit of Input Tax Credit that was paid by the Petitioner on the same invoices for the period 2019-2020, on which, Respondent No. 3 has also paid the tax - HELD THAT:- This petition is disposed of permitting the petitioner to file an appropriate application as mandated by Section 54 of the Act claiming refund. The period between 19.01.2024 till today shall be excluded for the purposes of limitation. Further, the claim of the Petitioner that Petitioner is covered by Notification No. 13/22 shall be considered by the Proper Officer in accordance with law while entertaining the application for refund filed by the Petitioner.
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2024 (3) TMI 1028
Cancellation of GST registration of petitioner - failure to file Periodic/GST Return - HELD THAT:- The writ petition stands disposed-off with a liberty to the petitioner for moving an application for revocation of cancellation order under Section 30 of the Act of 2017, within two weeks and the petitioner along with his application shall furnish all the GST returns, which he fails to submit and to deposit all the outstanding tax and dues of goods and service tax. If he makes such an application within a period of two weeks, the Proper Officer/Competent Authority shall consider the same, as per law, within four weeks.
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2024 (3) TMI 1027
Reversal/ Refund of the input tax credit - Principles of Estoppel / principle of res judicata - withdrawal of earlier petition - HELD THAT:- In the instant case, it is noted that there was no offer made by the respondents calling for petitioner to come for an amicable settlement. It appears that at the time of hearing of the matter when the bench was not agreeing with the petitioner, petitioner unconditionally sought to withdraw the petition. The observation is being made keeping in view the last line of the last paragraph of the order where the Court had specifically clarified that no liberty has been granted to the petitioner is clearly indicates that when the bench were not agreeing with the petitioner, petitioner sought to unconditionally withdraw the petition. Further, this Court has also noticed that the director of the petitioner was not joining investigation and as such, the department was constrained to take the coercive steps. The petitioner having unconditionally withdrawn the earlier petition and liberty being specifically declined to the petitioner, the petitioner is precluded from filing the present petition seeking the same relief which was earlier withdrawn by the petitioner. No doubt petitioner had withdrawn the proceedings pending investigation. However the said qualification would have only applied in case the investigation had exonerated the petitioner. In the instant case, the investigation has found petitioner culpable and accordingly, a show cause notice has been issued to the petitioner which is pending adjudication. The present petition is barred on the principle of the issue of estoppel and as such the petition is not maintainable and same is consequently dismissed.
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2024 (3) TMI 1026
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - HELD THAT:- The observation in the impugned order dated 29.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was unsatisfactory. He merely held that the reply is unsatisfactory which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that the reply is unsatisfactory and further details were required, the same could have been specifically sought from the petitioner. However, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details. The impugned order records that petitioner s reply is not satisfactory. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents - the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 29.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication. Petition disposed off by way of remand.
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2024 (3) TMI 1025
Rejection of petitioner s application for amendment of the registration, namely, change in address of the petitioner - no opportunity of a hearing was granted to the petitioner before the order is passed - violation of principles of natural justice - HELD THAT:- On a plain reading of Section 28, it is clear that sub-section (1) is an obligation of every registered person and a person to whom a Unique Identity Number (UIN) has been assigned to mandatorily inform the proper officer of any changes in the information furnished at the time of registration or subsequent thereto, in the form as prescribed. Sub-section (2) thereof provides that the proper officer may on the basis of information furnished under sub-section (1) or as ascertained by him, approve or reject amendments in the registration particulars in such manner and within such period as may be prescribed. The mandate of proviso below sub-section (2) of Section 28 as applied to the present facts brings about a consequence that the impugned order would be required to be held to be in breach of sub-section (2) of Section 28 inasmuch as the petitioner was not granted an opportunity of being heard before the impugned order was passed. Such action on the part of respondent no. 3 clearly breached the mandate of proviso below sub-section (2) of Section 28. On such count alone, the impugned order would be rendered bad and illegal. This apart, there are serious consequences which are brought about in rejection of an application for amendment. The impugned order also cannot be sustained for the reason that no reasons whatsoever are furnished in rejecting the petitioner s application for amendment of the registration. It is well settled that in passing any quasi-judicial order, necessarily reasons are required to be attributed, as the reasons would not only demonstrate an application of mind by the concerned officer in taking the decision but also it would enable the person whose application is rejected to know as to what were the reasons which weighed with the authority in rejecting the application. Thus, in the absence of any reason, any quasi-judicial order would be rendered arbitrary, which the law would not recognize to be a valid order. There can be no two opinions that the impugned order dated 3 November, 2023 would be required to be quashed and set aside - Petition allowed. Suspension of registration of the petitioner and issuing show cause notice for cancellation of the registration - blocking of Input Tax Credit of the petitioner - HELD THAT:- There appears to be much substance in the contentions as urged on behalf of the petitioner. It appears that the basis for suspension of the petitioner s registration is on the very issue on the petitioner s place of business, which was subject matter of the amendment application filed by the petitioner. Such amendment application being rejected, has already been set aside by us by the order passed in the aforesaid Writ Petition. Sofar as the blocking of ITC is concerned, the same has clearly arisen from such issues on the place of business of the petitioner in regard to which an amendment application was filed by the petitioner to amend the registration. Respondent no. 3 needs to pass an order on the application of the petitioner for amendment of registration within a period of two weeks and subject to the orders which may be passed thereon further appropriate course of action can be adopted as may be permissible in law on any suspension of the petitioner s registration, as also on the blocking of the ITC if so necessitated - thus, insofar as the show cause notice dated 20 December, 2023 issued to the petitioner by respondent no. 3 is concerned in regard to the cancellation of the registration and considering the reasons as set out in the show cause notice, the fate of the same would certainly depend upon on the orders which respondent no. 3 would intend to pass on the petitioner s amendment application. Petition disposed off.
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2024 (3) TMI 1024
Validity of show cause notice/assessment orders issued by the respondent-GST Department - demand of GST on royalty paid to the respondent-Mining Department towards mining lease - HELD THAT:- In Sudershan Lal Gupta s case [ 2022 (10) TMI 43 - RAJASTHAN HIGH COURT] , the Division Bench of this Court has held that the action of respondents with regard to imposition of GST on royalty is not liable to be interfered with. This writ petition is dismissed in terms of the orders passed by this Court in Sudershan Lal Gupta s case - the stay petition also stands dismissed.
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2024 (3) TMI 1023
Grant of bail - registration under GST obtained on the basis of forged documents - fraudulent evasion of tax - HELD THAT:- The petitioner is directed to be released on bail subject to fulfilment of conditions imposed - bail application allowed.
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Income Tax
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2024 (3) TMI 1021
Claim of long-term capital gains on shares in terms of Section 10(38) - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings but turned around and make such claim of wanting to cross-examine persons - Denial of principles of natural justice - denial of an opportunity to cross examine the entry providers - HC [ 2023 (2) TMI 392 - ORISSA HIGH COURT] held that claim for benefit of Section 10(38) of the Act and denial of an opportunity to cross examine the entry providers, turned on facts. ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO. HELD THAT:- There is gross delay of 298 days/300 days in filing this special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed, keeping open the question of law, if any.
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2024 (3) TMI 1020
Depreciation u/s 32(1)(ii) in respect of intangible assets - Goodwill - Acquisition of business - net assets taken over and the particulars of liability, loans etc - Only contention which has been raised by learned counsel for the revenue is that the assessee has not disclosed the particulars of intangible assets, which have been acquired by it and therefore, it is not entitled for the benefit of depreciation under Section 32(1) - as decided by HC [ 2020 (12) TMI 672 - KARNATAKA HIGH COURT] perusal of the order passed by the Assessing Officer itself it is axiomatic that he has found that the goodwill has been calculated and has been allotted to intangibles - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (3) TMI 1019
Reopening of assessment u/s 147 - Reasons to believe - as alleged there is net reduction of income through misuse of CCM - reliance on information recieved from Ahmedabad Investigation Directorate [Directorate] - Assessee pointed difference and disparity between the information provided to the petitioner and the reasons as existing on the record of the responde - HELD THAT:- Information which triggered the initiation of action was based upon an information received via email from the Ahmedabad Investigation Directorate [Directorate]. The aforesaid report alluded to certain conclusions prima facie arrived at by that Directorate on analysis of data received from the National Stock Exchange, and on the basis whereof the Directorate opined that the Client Code Modification [CCM] system had been used as a tool for tax evasion. Upon receipt of the aforesaid report, the AO while apprising the petitioner of the reasons which warranted re-assessment being undertaken, referred to the report of the Directorate and alluded to an orchestrated misuse of CCM with a motive to evade tax. It also referred to a coordinated limited purpose survey undertaken under Section 133A of the Act at the premises of twelve brokers as well as their clients across India in March 2015. The recordal of facts and reasons in the proforma would clearly indicate that information was identically transcribed on the record of the respondent as well. In our considered opinion, the minor discrepancies in the language employed by the respondent, and as it stands reflected in the reasons provided to the petitioner, and that which exists on the record, would clearly not justify us interfering with the impugned notice and the order impugned for reasons which follow. As would be evident from a perusal of the reasons which were supplied to the petitioner, there is a clear and unequivocal expression of opinion of the AO with respect to the material on the basis of which reassessment was sought to be commenced. The proforma also alludes to the same material and record. There is thus no variation or difference in the foundational material on the basis of which the AO came to form the opinion that income has likely to have escaped assessment. What needs to be emphasized while dealing with challenges like the present is that we would not countenance two separate and distinct set of reasons being maintained by the respondent for commencement of reassessment. The reasons which are conveyed to the assessee must be the same as those which exist on the record. A minor variation in the language in which that information is conveyed to the assessee would not constitute a justifiable ground to interfere with the reassessment power. Decided against assessee.
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2024 (3) TMI 1018
Substantial question of law to be made out u/s 260A or not? - Undisclosed income surrendered during the Search and Seizure action - to be taxed at normal rate or tax rate stipulated u/s 115BBE of the Income Tax Act - ITAT confirming the Order of CIT(A) that the undisclosed income surrendered during the Search and Seizure action, is liable to be taxed at normal rate instead of the tax rate stipulated under Section 115BBE of the Income Tax Act? - HELD THAT:- From a bare reading of the Section, it is apparent that an appeal to the High Court from a decision of the Tribunal lies only when a substantial question of law is involved, and where the High Court comes to the conclusion that a substantial question of law arises from the said order, it is mandatory that such question(s) must be formulated. The expression substantial question of law is not defined in the Act. Nevertheless, it has acquired a definite connotation through various judicial pronouncements. A finding of fact may give rise to a substantial question of law, inter alia, in the event the findings are based on no evidence and/or while arriving at the said finding, relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread. See MADAN LAL VERSUS GOPI (MST.) ANR [ 1980 (8) TMI 204 - SUPREME COURT] , WB. ELECTRICITY REGULATORY COMMISSION [ 2002 (10) TMI 772 - SUPREME COURT] and METROARK LTD. [ 2004 (1) TMI 397 - SUPREME COURT] Thus in the instant case no substantial question of law arises from the order of the Tribunal as the appellant has raised all the question of facts and have disputed the fact findings of the ITAT in the garb of substantial questions of law which is not permitted by the statute itself. This Court refrains from entertaining this appeal as there is no perversity in the order passed by the ITAT since the ITAT has dealt with all the grounds raised by the appellant in the order impugned and has passed a well reasoned and speaking order taking into consideration all the material available on record.
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2024 (3) TMI 1017
Revisional jurisdiction u/s 264 - Application u/s 264 rejected as intimation u/s 143(1) of the Act is not an order amenable to revisional jurisdiction u/s 264 - Computation of Capital Gains - Exclusion of the portion of the sale consideration that was never received - HELD THAT:- Since we have held in Diwaker Tripathi [ 2023 (9) TMI 159 - BOMBAY HIGH COURT] that the intimation under Section 143(1) of the Act was amenable to revisional jurisdiction under Section 264 of the Act, we hereby quash and set aside the impugned order dated 23rd March 2016 passed by Respondent No. 1. atter is remanded to Respondent No. 1 to pass a fresh order on the application of Petitioner on the basis that the capital gains on the transfer of shares of the company should be computed after reducing proportionate amount withdrawn from the escrow account from the full value of consideration and allow the refund of additional tax paid with interest. Unless there is any other claim of Revenue against Petitioner that would permit Revenue to legally adjust the refund amount, the refund with interest shall be paid over within two weeks of passing the assessment order. The order shall be passed within six weeks from the date this order is being uploaded, after giving a personal hearing to Petitioner, notice whereof shall be communicated atleast seven working days in advance.
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2024 (3) TMI 1016
Nature of receipt - Addition on account of notional sales tax - treated as revenue receipt by the A.O - HELD THAT:- The issue is covered by the order of the Apex Court in GUJARAT ALKALIES AND CHEMICALS LTD. [ 2023 (6) TMI 1046 - SC ORDER] , INDIAN PETROCHEMICALS CORPORATION LTD. [ 2016 (9) TMI 110 - GUJARAT HIGH COURT] - No substantial question of law arise. Disallowance u/s 14A - Tribunal restricting the expenses u/s. 14A at 0.50% of the exempt income as against disallowance of Rs. 87.85 made by the A.O - HELD THAT:- AO has not given any reasons as to why he was not satisfied with the disallowance of Rs. 3.88 crores made by assessee and, therefore, cannot be faulted for restricting the expenses under Section 14A disallowing at 5% of the exempted income. TP Adjustment - addition of guarantee commission - Tribunal restricting the guarantee commission to 0.38% of the guaranteed amount as against at 2.90%, as determined by the A.O - HELD THAT:- TPO has not given any reasons why according to him the guarantee amount should be 2.90% and not 3.8%. Therefore, we do not find any error finding arrived at by the ITAT. Interest referable to interest free loans and advances to LIBOR - Tribunal restricting the interest referable to interest free loans and advances to LIBOR +1.50% as against at 7.5%, as determined by the A.O. on the basis of RBI Circular - HELD THAT:- Counsels agreed that this question requires to be admitted. Depreciation directing to adopt the WDV of the assets as on 01.04.2007 - HELD THAT:- This question raises an issue which is merely consequential to the final decisions of the earlier years. Assessee is entitled to depreciation on the opening WDV and the additions made to such WDV during the year. The opening WDV is the amount of the closing WDV of the earlier year as finally determined. In this Question, the Revenue is seeking to reduce the value of the opening WDV on the basis of the stand taken by the Revenue in the earlier years. As the issue raised in this question is only consequential and effect will have to be given to the final decision in the earlier years, there is no question of law which arises for consideration in this year. Deduction u/s 80IA - rate to be adopted for determining the profit of the captive power generation unit which is eligible for deduction - Assessee contends that the rate at which electricity is supplied to the customer should be considered whereas the Revenue contends that profit should be restricted to 16% of the investment or capital base - HELD THAT:- This issue is covered in favour of assessee by the decision of this Court in the assessee's own case in the earlier assessment year being Question No. C in M/s Reliance Industries Ltd. [ 2019 (2) TMI 178 - BOMBAY HIGH COURT] as held market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market.AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer. The Apex court in the case of CIT v Jindal Steel Power Limited [ 2023 (12) TMI 417 - SUPREME COURT] as affirmed the aforesaid decision of the Bombay High Court in the assessee's own case. Further, it is not the case of the Revenue that insertion of Section 80A(6) of the Act has made any change in law as the AO in coming to its conclusion has himself relied on the assessment order for the earlier years. For the reasons given in the said judgment, there is no question of law which arises for consideration. Appeal is admitted on the following question of law : Whether on the facts and in the circumstances of the case and in law, Hon'ble Tribunal was right in restricting the interest referable to interest free loans and advances to LIBOR +1.50% as against at 7.5%, as determined by the A.O. on the basis of RBI Circular?
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2024 (3) TMI 1015
Addition u/s 68 - bogus share application/allotment money - genuineness of the share capital could not be established - ITAT deleted addition - HELD THAT:- Tribunal affirmed the order passed by the CIT(A) by recording a factual finding that the three necessary ingredients, namely, identity, creditworthiness of the share applicants and genuineness of the transaction as provided u/s 68 of the Act have been established and there was no ground to interfere with the order passed by the CIT(A) - No question of law much less substantial question of law is arising for consideration in this appeal.
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2024 (3) TMI 1014
Validity of reopening of assessment - prerequisite for reopening assessment - Non disposal of objections given by appellant against reassessment - HELD THAT:- As carefully perusing the materials placed on record, we find that the learned Tribunal on considering the factual position rightly noted that the objections given by the appellant for initiation of re-assessment were not disposed of by the AO. The law on the subject has been rightly taken note by the Tribunal and we find the matter being entirely factual, no question of law much less substantial question of law arise for consideration.
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2024 (3) TMI 1013
Interest on Refund u/s 7 of the DTVSV Act, 2020 - petitioner s right to interest on declared refunds due from the Department, determined in the Final Order passed under the Income Tax Act, 1961 - taxability of the transaction, the amount payable by the petitioner is the amount of tax due sans the penalty and interest in terms of Sl. No.(a) to Table to Section 3 of DTVSV Act, 2020 - refunds ordered in Form-3 for Assessment Year 1999-2000 to 2002-2003 to be re-calculated along with interest u/s 244-A HELD THAT:- Under Section 7 of the DTVSV Act, 2020, any amount paid in excess in pursuance of the declaration is not refundable. However, where the declarant had, before filing the declaration under Sub-Section (1) of Section 4, paid any amount under their Act, 1961 in respect of his tax arrears which exceeds the amount payable under Section 3, shall be entitled to a refund of such excess amount. Such a declarant is not be entitled to interest on such excess amount under Section 244-A of the IT Act, 1961. Section 7 of DTVSV Act, 2020 is a complete code by itself. If the case is to be settled under it, no interest under Section 244-A of the IT Act, 1961 is available. In this case, no amount was paid by the petitioner either along with Form-1 on 31.1.2021 or after Form-3 that was issued on various dates. The petitioner wants the Designated Authority to issue a fresh Form-3 together with interest on refunds under Section 244-A of the IT Act, 1961 on belated adjustment of refunds. This is not available in view of explanation to Section 7 of the DTVSV Act, 2020. Designated Authority while issuing Form-3 has correctly acceded to refund of the amounts to the petitioner for the Assessment year 1999-2000 to 2002-2003. The Designated Authority has declined to order interest under Section 244-A of the IT Act, 1961. It is in accordance with explanation to Section 7 of the DTVSV Act, 2020. Neither the Deputy Commissioner of Income Tax, International Taxation nor the Designated Authority were required to order refund of the amount for the Assessment Year 1999-2000 and Assessment Year 2000-2001 in Form -3, as no amount was paid in excess by the petitioner. There was only adjustment of the refunds due for the Assessment Year 2004-2003 and Assessment Year 2005-2006. In fact, the Deputy Commissioner of Income Tax, International Taxation while passing order dated 29.01.2021 under Section 154 of the IT Act, 1961 was not required to order interest under Section 244-A of the IT Act, 1961 for the Assessment Years 1999-2000 and 2000-2001. The excess amount after adjustment were to be refunded along with interest under Section 244-A for the Assessment Year 1999-2000 and Assessment Year 2000-2001. The excess amount after adjustment were to be refunded along with interest under Section 244-A read with Section 245 of the IT Act, 1961 for the Assessment Year 2004-2005 and Assessment Year 2005-2006. For these two Assessment Years viz., Assessment Year 1999-2000 and Assessment Year 2000-2001, there were mere adjustment of the amounts towards tax liability out of the refunds that were due to the petitioner for the Assessment year 2004-2005 and Assessment Year 2005- 2006. Excess amounts after adjustments of the liability ought to have been refunded together with interest under Section 244-A of the IT Act, 1961 for the Assessment Year 2004-2005 and Assessment Year 2005- 2006, provided no applications were filed for Assessment Year 2004-2005 and Assessment Year 2005-2006 under Sl.No.(a) to Section 3 of the DTVSV Act, 2020. For the Assessment Year 2001-2002 and for the Assessment Year 2002-2003, the petitioner was entitled to interest under Section 244-A of the IT Act, 1961, if no declaration was filed under DTVSV Act, 2020. Interest under Section 244-A of the IT Act, 1961 will not be available to the petitioner in view of explanation to Section 7 of the DTVSV Act, 2020. It makes it clear, that a declarant shall not be entitled to interest under Section 244-A of IT Act, 1961 on such excess amounts. Therefore, the petitioner is not entitled to the relief as prayed for in full. Therefore, to do complete justice and to balance the interest of the petitioner and the Income Tax Department, these writ petitions are disposed with the following directions/orders/ observations:- i. The amounts adjusted and appropriated towards tax liability for the Assessment Year 1999-2000 and Assessment Year 2000- 2001 under the provisions of the Direct Tax Vivad Se Vishwas Act, 2020 from and out of the refunds due for the Assessment Year 2004-05 and Assessment Year 2005-06 are treated as amount paid by the petitioner for the Assessment Year 1999-2000 and Assessment Year 2000-2001 under Direct Tax Vivad Se Vishwas Act, 2020; ii. Consequently, the Designated Authority or any other Authority in its place shall issue Form 5 to the Petitioner and close the pending case of the petitioner for the Assessment Year 1999- 2000 and Assessment Year 2000-2001; iii. Consequently, the Income Tax Department is directed to process the excess amount quantified as refundable in Section 154 orders dated 29.01.2021 for the Assessment Year 1999-2000 and Assessment Year 2000-2001 together with interest under Section 244-A of the IT Act, 1961 for Assessment Year 2004-2005 and Assessment Year 2005-2006, subject to Section 7 of the Direct Tax Vivad Se Vishwas Act, 2020;
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2024 (3) TMI 1012
Estimation of income - bogus purchases - case of bogus bills arranged from the entities and diamonds purchased from somewhere else at a lower cost - CIT(A) restricted the disallowance to 12.5% of the alleged bogus purchases - HELD THAT:- Since the profit margin embedded in the transaction of alleged bogus purchases of cut and polished diamonds has been accepted at 5% in other years in assessee s own case, following the rule of consistency in view of the peculiar facts of the present case, we deem it appropriate to restrict the disallowance to 5% of the disputed purchases in the year under consideration. As a result, grounds raised by the assessee on merits are partly allowed.
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2024 (3) TMI 1011
Penalty levied u/s 271(1)(c) - Estimation of income - bogus purchases - addition of 12.5% of the total purchases - HELD THAT:- As decided in MUKESH SHALIGRAM SHARDA [ 2023 (4) TMI 678 - ITAT MUMBAI] no penalty u/s 271(1)(c) is leviable on estimated additions. Thus the impugned order deleting the penalty levied u/s 271(1)(c) of the Act is upheld. As a result, grounds raised by the Revenue are dismissed.
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2024 (3) TMI 1010
Revision u/s 263 - as per CIT AO has not examined increase in share capital - HELD THAT:- As gone through the entire facts and noticed that the PCIT while revising the assessment has simpliciter gone through the original balance sheet which is part of the assessment record. But the AO has never acted upon on the original balance sheet but he accepted the correct balance sheet filed during the course of assessment proceedings. We find that the assessee has admitted the new balance sheet and the differentials between the original and rectified balance sheet which are part of assessee s paper-book. We noted that on merits also, the assessee has explained the differentials and hence, the assessment order is neither erroneous nor prejudicial to the interest of Revenue because of non-verification of assessment. AO has verified the complete details as it is evident from the assessee s paper-book that the AO asked for the entire details and the assessee replied the same on various dates. In view of the above, we allow the appeal of assessee and quash the revision order passed by the PCIT. Appeal filed by the assessee is allowed.
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2024 (3) TMI 1009
Capital gain computation - lease rental expenses are related to the transfer of slump sale business while computing the capital gain u/s 48(1) or not? - HELD THAT:- It is not in dispute that the company has incurred these charges to complete the transfer of the property as per scheme of agreement and leasehold rights in the land was part of the port undertaking which was transferred as per the scheme of arrangement. When it was a slump sale section 45 48 do not bar the company from claiming expenses. So in order to compute the capital gains provisions contained under section 48 are applicable which provide that while computing the capital gain the value of consideration reduced by the cost of improvement and cost of acquisition and also expenditure incurred for transfers are to be considered. When the income of the assessee is chargeable under the head capital gains qua the years in which transfers was affected, the expenses pertaining to the transfer, they crystallized later on but as per scheme of arrangement it has to be allowed. So when the assessee has incurred the amount in question to complete the transfer as per scheme of arrangement approved by the Hon'ble NCLT, without which transfer could not have been effected, the Ld. CIT(A) has rightly and validly decided the issue in favour of the assessee. Eligibility of deduction claimed by the assessee on account of stamp duty and registration charges for the purpose of computing the gains arising on demerger of port business - In view of the findings returned on the earlier issue when it is proved on record that the assessee is entitled for upfront lease rental expenses incurred in relation to the transfer of slump sale business while computing the capital gains under section 48(i) of the Act the assessee is also entitled for deduction of stamp duty and registration charges. CIT(A) despite thrashing the facts has denied this relief to the assessee on the ground that no request for admission of any additional evidence or additional ground has been raised before him hence this claim cannot be entertained. When the amount has been crystallized in the books of account and facts have been brought on record before the Ld. CIT(A) which have not been disputed the claim of the assessee, otherwise admissible, cannot be denied on the basis of hyper technical reasons. Both the questions framed are answered in favour of the assessee. So the AO is directed to allow the stamp duty and registration charges after due verification. Appeal filed by the Revenue is hereby dismissed and the cross objection filed by the assessee is hereby allowed.
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2024 (3) TMI 1008
TP Adjustment - comparable selection - assessee is aggrieved with inclusion of one comparable namely Golden Chemical Private Limited having PLI of 8.88% - HELD THAT:- As the relevant financial data of comparable company is available only for 9 months, whereas, the accounting period of the assessee is for 12 months and in absence of non-availability of the data in case of comparable company from 1st January, 2012, to 31st march, 2012, as same being Private Limited company, the above comparable for this reason is required to be excluded. Accordingly, the learned Transfer Pricing Officer is directed to exclude Golden Chemical Pvt. Ltd. from the comparability analysis. The appeal of the assessee on this issue succeeds. Comparable Nilchem Industries Ltd. - We find that in the remand report proceedings, the learned Transfer Pricing Officer included the above comparable company i.e. Nilchem Industries Ltd. having the margin of 10.78%. The assessee did not object to this comparable company for its exclusion but provided the correction in the margin. The learned Transfer Pricing Officer recomputed the margin of (-) 3.23%. Thus, we find that Nilchem Industries Ltd. is a comparable not in dispute between the assessee and TPO, could not have been excluded by the learned CIT (A) when none of the parties contended so. Accordingly, we direct the learned TPO/ Assessing Officer to include the Nilchem Industries Ltd. as a good comparable. Appeal of the assessee is partly allowed.
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2024 (3) TMI 1007
Penalty u/s 270A and 271AAB - Defective notice u/s 274 - allegation of non specification the basis of charge subject to which the penalty is imposed - as submitted allegation of the A.O. in the penalty notice was only regarding under reporting of income post search and seizure - HELD THAT:- In the instant case, on perusal of the penalty notice placed on record it is evident that the Ld. AO had show caused the assessee as to why the assessee should not be imposed with penalty for under reporting of income . The assessee had filed its submissions stating that he had not under reported its income . We are unable to comprehend ourselves to accept to the argument of the Ld. DR that assessee did not make any submissions with regard to mis reporting of income . The assessee could be expected to give reply only in respect of show cause notice that is put to him. Why at all the assessee should infer/ assume/presume that the Ld. AO having recorded satisfaction in the quantum assessment order that offence of both under reporting and mis reporting is committed by the assessee and accordingly the penalty would be levied on the assessee for both in terms of section 270A(9) of the Act? It is well settled that penalty proceedings and assessment proceedings are separate and distinct. Hon ble Supreme Court in the case of Anantharam Veera Singhaiah Co. [ 1980 (4) TMI 2 - SUPREME COURT] wherein it was held that findings recorded in assessment proceedings cannot be taken as conclusive for penalty proceedings. Even the provisions of section 270A(6) of the Act provides for granting immunity from penalty if the case falls in under reporting of income . Moreover different rates of penalty are prescribed for under reporting of income alone and for under reporting in consequence of misreporting of income . Hence it is all the more essential to mention in the show cause notice itself as to which of the offence is committed by the assessee for which explanations are being sought for by the Id. AO. There is no whisper at all in the notice issued u/s 270A read with section 274 of the Act about misreporting of income . In-fact two notices were issued by the Id. AO and in both the notices, the A.O. had only directed the assessee to reply with regard to under reporting of income . But we find that the penalty had been levied ultimately for both under reporting and misreporting of income @ 200% in terms of section 270A(9) of the Act for which show cause notice was never issued to the assessee. Hence we direct the Ld. AO to delete the penalty levied u/s 270A of the Act for the Assessment Year 2017-18. Accordingly, we allow the Appeal of the Assessee on this technical ground. Penalty u/s 271AAB - As no specific charge has been mentioned in the penalty notice issued u/s 271AAB of the Act, we delete the penalty imposed by the A.O. On this technical grounds for the Assessment Years 2018-19 2019-20.u/s 271AAB. Appeals of assessee allowed.
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2024 (3) TMI 1006
Assessment proceedings against one of the legal heirs - deceased/assessee had admittedly more than one legal representatives - deceased father has six sons - Addition u/s 69A - cash deposits made in his bank accounts during the demonetization period - HELD THAT:- As undisputed fact for the Asst. Year 2017-18, the assessee has not filed his Return of Income, since there is no taxable income in his hands and also for the reasons of wound-up of his business activities. However during demonetization period, the assessee made cash deposits in his three Bank Accounts. In the meanwhile, the assessee died on 28.01.2019. Thereafter the final show cause notice was issued by the Ld. A.O. on one of the legal heir namely Shri Vijay Laxmichand Demla filed a detailed letter that his deceased father has six sons and given their details. Further he refused to accept any responsibility, since he is not sole legal heir for the estates of his deceased father and also he was not in possession of any details/documents regarding his father s cash deposits which was rejecgted by AO. Assessing Officer when put to notice about the death of the assessee and the details of the six legal heirs of the deceased assessee, A.O. ought not have proceeded with only one of the legal heir namely Shri Vijay Laxmichand Demla in spite of his specific objection - Admittedly the legal heir Shri Vijay Laxmichand Demla is not only the legal heir on the estate of the deceased. Thus the Assessing Officer having not included all the legal heirs of the deceased assessee and framed the assessment only against one of the legal heir is against the provisions of law and the assessment is invalid in law. Thus the entire assessment is hereby quashed. Assessee appeal allowed.
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2024 (3) TMI 1005
Exemption u/s 10(26) - Exemption to individual members of Scheduled Tribes - Whether a partnership firm consisting of individual partners would be entitled to the same exemption u/s 10(26) of the Income Tax Act, 1961 as any or all of the partners would be in their individual capacity? - As submitted that the partners in the firm were related to each other and both the partners belong to Khasi tribe whose income was exempt u/s 10(26) - HELD THAT:- As under the Income Tax Act, a firm has been specifically included in the definition of person and is treated at par with every artificial juridical person. Under the Income Tax Act, a partnership firm is a separate and distinct person assessable to Income Tax. There are separate provisions relating to the rate of Income Tax, deduction and allowances etc. in relation to a firm as compared to an individual. The benefits in the shape of deductions or exemptions available to an individual are not transferrable or inter-changeable to the firm nor the vice versa. The firm in general law may not be treated as a separate juristic person, however, under the Income Tax Act, it is assessable as a separate and distinct juristic person. The Income Tax Act is a special legislation, therefore, the interpretation given in general law cannot be imported when the special law defines the firm as a separate person assessable to Income Tax. Therefore, the contention of the Ld. Counsel that section 2(23) of the Income Tax Act gives meaning to firm, partner and partnership as defined in the Indian Partnership Act, 1932, in our view, does not, in any way, effect, take-away or exclude the firm from the definition of person as defined u/s 2(31) of the Income Tax Act. Under the relevant provisions of the Indian Partnership Act, 1932, the partnership firm has been defined as a relationship between the persons who have agreed to share the profits of the business carried on by all or any of them acting for all and the persons who have entered into partnership with one another is called individually partners and collectively a firm. The contention of the ld. AR is that the partnership is a relation between persons and that partnership is not a person in itself. The aforesaid contention of the ld. AR in the light of the specific definition given of the word person u/s 2(31) of the Income Tax Act and in view of the discussion made above, in our view, is misconceived and not tenable. Even under the Negotiable Instruments Act, a firm is treated at par with a company. In explanation to section 141 of the Negotiable Instruments Act it is provided that company means any body corporate and includes a firm or other association of individuals; and director , in relation to a firm, means a partner in the firm . The hon ble Supreme court in S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan [ 2022 (9) TMI 846 - SUPREME COURT] has held that for the purpose of Section 141 of the NI Act, a firm comes within the ambit of a company. Therefore, the status of the firm is to traced under the respective special statutes and not under the general law. In the case in hand, even though the partners of the firm are brothers in one case and Husband and wife in another case, but their relation does not affect either the status of the partnership firm nor its taxability in any manner. Partnership arises out from a legal contract of sharing profits of a business and in that case, even in a case of partnership Firm having partners of a Khasi family only, the mother or wife, as the case may be, being the head named as Kur would not be having any dominant position. All the partners, subject to the terms of the contract between them , will have equal status and rights inter se and even equal duties and liabilities towards firm. The profit of the partnership firm are shared as per the agreement/capital contributed by the partners. Neither the capital, nor the profits of the firm can be held to be the joint property of the family. There is no obligation on the partners being related or to say members of the same family to contribute the profits to the other family members or any other obligation towards them. There is a separate proforma of information required in case of firm as compared to an individual. The individual members of the Scheduled Tribe whose income is exempt under the Income Tax Act, are even not supposed to file the Income Tax Return subject to the fulfilment of the relevant conditions as prescribed under law. Though, a firm may consist of partners who belong to the exempted category of Scheduled Tribe in their individual capacity, however, there will be not any mechanism available to the Assessing Officer to know that such a firm consists of the individuals whose income is exempt or not. Thus under the Income Tax Act, the exemption of 10(26) of the Act is available to the individual members of the Scheduled Tribe and that this benefit cannot be extended to a firm which has been recognized as a separate assessable person under the Income Tax Act. The advantages and disadvantages conferred under the Act on separate class of persons are neither transferrable nor inter-changeable. The scope of the beneficial provisions cannot be extended to a different person under the Act, even after liberal interpretation as it may defeat the mechanism and process provided under the Income Tax Act for assessment of different class/category of persons. Proposed questions are answered in negative by holding that a partnership firm being a separate assessable person under the Income Tax Act, would not be entitled to the same exemption u/s 10(26) as any or all of the individual partners would be in their individual capacity and further that the ratio decidendi in the judgment of Mahari Sons ( 1991 (12) TMI 51 - GAUHATI HIGH COURT ) in context of a Khasi family would not be applicable in case of a partnership firm, though consisting solely of partners, who in their individual capacity are entitled to exemption u/s 10(26) of the income Tax Act, 1961. All the captioned appeals of the two assessee-partnership firms are hereby dismissed.
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2024 (3) TMI 1004
Validity of reopening of assessment u/s 147 - Sanction for issue of notice u/s 151 - as alleged illegal approval u/s 151 obtained by AO from inappropriate authority - assessee s stand is that the AO issued notice after expiry of four years from end of relevant assessment-year which could have been done only after taking approval from Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner u/s 151(1) but since the AO has failed to do so, the notice is violative of section 151(1) but it was obtained from Joint Commissioner. HELD THAT:- If the AO wants to issue notice after expiry of four years, this can be done only under the approval of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. The language does not give any scope or flexibility to AO to obtain approval within four years from lower-authority u/s 151(2), keep such approval in file and subsequently issue notice after four years without taking approval from higher authority u/s 151(1). AR is very much correct in submitting that if such an approach is allowed to AO, this would be a clear circumvention as well as defiance and violation of section 151(1) made by Parliament. We may be hastened to add here that although in present appeal, the Ld. DR is supporting AO s approach just to save this case of department but otherwise even the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner would not accept such approach of AO and they would certainly say that such approach of AO is unauthoritative and invalid. We may also add here that the AO was having time to issue notice uptill 31.03.2022, therefore the AO could very well obtain a fresh approval from Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner u/s 151(1) and issue notice to assessee after four years even though he had taken earlier approval u/s 151(2) from Joint Commissioner. In that case, there would have not been any lapse. But the AO has not done so. Therefore, in the present case, we agree with Ld. AR s pleading that the AO was not having a valid approval from a competent authority as required u/s 151(1), hence the notice issued u/s 148 suffers from an invalidity. Applicability of Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 dated 31.03.2020 [ TOLA ], there was an extension of time-limit - As relied on JM Financial and Investment Consultancy Services Private Limited[ 2022 (4) TMI 1446 - BOMBAY HIGH COURT] we are of the considered view that the TOLA is not appliable and in any case, the TOLA has not amended section 151. Hence, the revenue s claim that its case is protected by TOLA is meritless and liable to rejected. Protection of section 292BB - Section 292BB has a limited application, it operates in only one of the three situations mentioned in (a), (b) or (c) which are basically situations of ir-regularity in service of notice. In present case of assessee, the AO has issued notice u/s 148 without having a valid approval u/s 151(1) which is not at all covered by section 292BB. Therefore, the Ld. DR s pleading that the revenue has protection of section 292BB is meritless and liable to be rejected. AO has issued notice u/s 148 without having a valid approval mandated by section 151(1). Being so, we are of considered view that the revenue s case is suffering from jurisdictional defect and the entire proceeding u/s 148 / 147 undertaken by AO is illegal and unsustainable. Decided in favour of assessee.
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2024 (3) TMI 1003
Deemed dividend u/s 2(22)(e) - amount received as part of salary/remuneration paid to the assessee - as per AO date of survey the said amount was not part of remuneration paid to assessee and no TDS was deducted before the date of survey for such salary as no documentary evidence etc. were produced before the AO for the aforesaid salary amount - double taxation on one receipt - as submitted Junior accountant of the company has made the wrong entries of advance remuneration to assessee in the account of short term loan account by mistake HELD THAT:- The contention of the appellant is found to be correct with regard to salary received from WaghadInfraprojects Pvt. Ltd. as salary income as evident from the copy of ledger account of Shri Ashok Jain in the books of assessee company. The Ld. DR failed to rebut the contention of the appellant which were found to be factually correct on record. Therefore, the observation made by the AO that claim of the assessee is not supported by the documentary evidences is factually incorrect observation and cannot be acceptable. In view of that matter we hold that it is established by the appellant that the amount incorrectly shown as loan, was in fact an advance towards remuneration which is adjusted later on and TDS was also deducted by the company. Therefore, in our view, this amount cannot be treated as deemed dividend. As pertinent to mention here that in the present case, there is no loss to the revenue because even if this advance is treated as deemed dividend, then it would be reduced from the salary/remuneration amount being paid to the assessee as the assessee is paying tax at maximum marginal rate and he has not taken any deduction out of salary/remuneration received. It is settled law that there cannot be the double taxation on one receipt/income and therefore, this amount is once treated deemed dividend then it would be reduced from the salary income shown by the assessee in computation of income. In our view, the action of the learned AO was not justified and thus, the addition is rightly deleted by the Ld. CIT(A). Appeal filed by the Revenue is dismissed.
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Benami Property
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2024 (3) TMI 1002
Benami transaction - Beneficial owner of property - Provisional attachment order - scope of Amendment Act of 2016 - Constitutional validity - Amendment to Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 - retrospective or prospective effect - Attachment of property As decided by HC [ 2022 (5) TMI 262 - TELANGANA HIGH COURT] Section 2 (9) (A) and Section 2 (9) (C) can only have effect prospectively. Central Government has notified the date of coming into force of the Amendment Act of 2016 as 01.11.2016. Therefore, these two provisions cannot be applied to a transaction which took place prior to 01.11.2016. Admittedly, in the present case, the transaction in question is dated 14.12.2011. That being the position, we have no hesitation to hold that the show cause notice dated 30.12.2019, provisional attachment order dated 31.12.2019 and the impugned order dated 30.03.2021 are null and void being without jurisdiction. HELD THAT:- Delay of 624 days in filing this special leave petition is condoned. The issues raised in this petition are squarely covered by a judgment rendered by a three-Judge Bench of this Court in Union of India Anr. Vs. Ganpati Dealcom Pvt. Ltd. [ 2022 (8) TMI 1047 - SUPREME COURT] wherein held Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution. In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively. Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016. Hence, the special leave petition is disposed of in the aforesaid terms.
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Customs
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2024 (3) TMI 1001
Duty demand - Bonded Warehouse - seizure of 264 cases found outside the warehouse - Unauthorisedly clearance of 27 cases from the notified public bonded warehouse - clearance in a clandestine manner - Confiscation - Interest - - Import of second hand steel mill machinery and parts - warehousing period expired - HELD THAT:- Since the imported goods covered by the 264 cases were never warehoused inside the notified public bonded warehouse but were unloaded outside the notified area but within the factory premises of the appellant and kept under a shed on permission granted by the Superintendent which permission was neither cancelled nor revoked, question of warehousing the goods covered by the 264 cases within the notified public bonded warehouse did not arise. As a corollary, the further question of improperly or unauthorisedly removing the 264 cases from the notified warehouse to outside the said area but within the factory premises of the appellant attracting Section 71 and the consequences following the same did not arise. Inference drawn by the respondent that the permission granted by the Superintendent was only temporary and therefore, the rigor of Section 71 would be attracted, in our view, would not be a correct understanding of the situation and the law. We find that there is no explanation on the part of the appellant qua the missing 27 cases. Therefore, the view taken by the respondent and affirmed by the CESTAT that those 27 cases were improperly or unauthorisedly removed from the notified public bonded warehouse is correct and requires no interference. Evidently, the circular dated 12.7.1989 would not be applicable to the facts of the present case in as much as it is not the case of the respondent that either the warehousing period had expired or that the warehousing period was extended . As we have seen, the warehousing in the notified public bonded warehouse continued as the Corporation had deposited with the respondent a sum of Rs. 56,10,294.00 in respect of the notified warehouse as custom establishment charges for the period from 1992-1993 to 2007-2008. That apart, we can refer to the fact that respondent had not levied any customs duty on the 304 cases found within the notified area which would mean that the notified warehousing continued. Therefore, this is not a case where Section 15(1)(b) could have been invoked. Thus, having regard to the discussions, we are of the view that the demand raised by the respondent against the appellant and affirmed by the CESTAT qua the 264 cases including levy of customs duty and interest cannot be sustained. Those are accordingly set aside and quashed. Demand of customs duty and interest on the 27 cases is concerned , the same is hereby sustained. The decision imposing penalty on the appellant u/s 112 of the Customs Act is also not disturbed in view of the conduct of the appellant in unauthorisedly removing the 27 cases of imported goods not only from the notified public bonded warehouse but also from the industrial/factory premises of the appellant. Impugned order of CESTAT would stand modified accordingly - Appeal is allowed in part in the above terms.
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2024 (3) TMI 1000
Classification of goods - consignment imported under SKD condition - Exemption for the purpose of assessment for countervailing duty - Import of components for manufacturing colour Doppler SSD-4000 Ultra Sound Scanners - it was held by CESTAT that When the goods are presented in SKD condition, Revenue does not have authority of law to separate different parts and components and classify them differently in view of Rule 2(a) of General Rules for Interpretation of the Customs Tariff - HELD THAT:- The impugned judgment passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai need not be interfered - The Civil Appeals are dismissed.
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2024 (3) TMI 999
Confiscation of Goods - Penalty - Clearance of goods described as Caresmith Wave Body Massager - Commissioner, categorise the item not as a body massager, but an Adult Sex Toy - prohibited for import as per the Customs Notification No. 01/1964-Customs - HELD THAT:- The only relevant portion of the notification is the underscored portion being Clause (ii), as referred by the Commissioner to label the goods as prohibited. Such clause prohibits import of the goods, namely, any obscene book, pamphlet, paper, drawing, painting, representation, figure or article. Necessarily, in our opinion, the different items as set out in Clause (ii) are required to be read ejusdem generis. These machines like massagers certainly cannot be compared with the companion items in the said entries which are in the nature of book, pamphlet, paper, drawing, painting, representation, figure or article, etc. This apart, we are in complete agreement with the findings as recorded by the tribunal that it was totally unwarranted and in our opinion, perverse for the Commissioner to take recourse to clause (ii) of the said Notification to regard the goods in question as prohibited goods, for more than one reason. Firstly, it was clearly the figment of the Commissioner s imagination and/or his personal perception that the goods are prohibited items. This was far from the legal consequence as brought about by the notification that the goods could be so categorized. We may add that such thinking of the Commissioner was beyond anybody s control. The notification also could not have supported such perception of the Commissioner when he regarded the goods as obscene. As rightly observed by the tribunal, and obviously as body massagers being traded in the domestic market, were not regarded as prohibited items, was certainly a relevant consideration. In the facts of the present case, the Commissioner (adjudicating officer) has failed to act as a prudent official who would be expected to act reasonably in deciding the issues of clearance of goods in question, which ought to have been strictly in accordance with law. Any perverse application of law would fall foul of the rules of legitimacy and fairness expected from a quasi-judicial authority. Such approach of the Commissioner has been rightly criticized by the tribunal. If what was observed by the Commissioner in the order-in-original is accepted to be the only test, it would amount to accepting personal views of the officer which would be something unknown to law. Such approach is certainly not permissible. We also say this in the context of the opinions which were gathered by the Commissioner. These experts invited by the department clearly opined that the goods in question were body massagers which could be subjected to other uses. Thus, merely because the goods can be subjected to an alternative use, of the nature, as the Commissioner contemplated, this can never be the test to hold that the goods were prohibited, when they otherwise satisfied the test of goods, which could be imported and sold. Thus, there was no material before the adjudicating officer, to categorize the goods under clause (ii) to be any obscene book, pamphlet, paper, writing, drawing, painting, representation, figure or article, and of objectional description, falling under the notification. Such view of the Commissioner was patently perverse. Thus, we are of the clear opinion that no substantial question of law would arise for our consideration as raised on behalf of the Revenue. The tribunal is correct in its view when it set aside the orders passed by the Commissioner. The appeal is without merit. It is accordingly rejected. Dismissed. No costs. In view of our aforesaid judgment confirming the order passed by the tribunal in the revenue s appeal against the firm, the present appeals are also required to be rejected. They are rejected for the reasons we have set out in deciding the aforesaid appeal against the revenue and in favour of the firm. Dismissed. No costs.
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2024 (3) TMI 998
Levy of penalties - smuggling of Gold - baggage rules - petitioner could not produce any licit document in support of the possession/acquisition or legal importation of the said gold - Absolute confiscation of gold weighing 3203.900 gram - HELD THAT:- Petitioner has imported the gold within the Indian customs waters contrary to the prohibition imposed for its import. The Gold was concealed in medicine packets, which were concealed under several layers of packing. The goods were also not declared in the Indian Customs Declaration Form. On the other hand false declaration was made in the said Form - Consequently, the gold was liable to be confiscated under section 111 of the Act. Petitioner has also conceded to the said position and has not objected to the confiscation of the said gold items. Petitioner has clearly done an act that has rendered the gold liable to confiscation under section 111 of the Act and as such is liable under 112(a) of the Act. Further, Petitioner had carried the gold and had concealed the gold knowing or having reason to believe that the article he was carrying was liable to confiscation under section 111 of the Act and as such he is also liable under Section 112(b) of the Act. There is no merit in the contention of learned counsel for the Petitioner that he was not aware of the gold. Petitioner was carrying the packet containing gold. The gold items were concealed inside two pieces of Medicine Sachets which were kept inside a Multi coloured zipper jute bag further kept in the Black coloured zipper handbag that was carried by the Petitioner. The manner of concealing the gold clearly establishes knowledge of the Petitioner that the goods were liable to be confiscated under section 111 of the Act. The Adjudicating Authority has rightly held that the manner of concealment revealed his knowledge about the prohibited nature of the goods and proved his guilt knowledge/mens-rea - Admittedly, petitioner would always bring back goods for others. Petitioner, who travels internationally so often cannot be permitted to contend that he was not aware of the law and that he was not aware of the contents of the packets that he was carrying. A person carrying any article on his belonging would be presumed to be aware of the contents of the articles being carried by him. The Supreme Court of India in STATE OF MAHARASHTRA VERSUS NATWARLAL DAMODARDAS SONI [ 1979 (12) TMI 78 - SUPREME COURT ] has held that smuggling particularly of gold, into India affects the public economy and financial stability of the country. Penalties - HELD THAT:- For the contravention Petitioner was liable to be imposed penalty not exceeding the value of the goods. Petitioner brought in 24 Karat Gold, collectively weighing 3203.900 gm. totally valued at Rs. 88,42,764/-. Thus the penalty that could be imposed was upto Rs. 88,42,764/- but only a penalty of Rs. 10,00,000/- was imposed on the petitioner. It is found that the penalty imposed is not disproportionate in the facts and circumstances of the case. There are no merit in the Petition. The same is consequently dismissed.
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2024 (3) TMI 997
Interest on Delayed Refund - Refund of additional duty was allowed in the remand proceedings - benefit of provisions of Section 27A of Customs Act - HELD THAT:- There is substance in the contention as urged of behalf of the Petitioner as certainly Section 27A would provide for payment of interest on delayed payment of the refund amounts, which is the statutory entitlement of the Petitioner and which necessarily was required to be considered by the adjudicating officer in considering the Refund Applications on remand. It clearly appears that although a specific prayer was made before the Commissioner of Appeals and the proceedings were remanded in that regard, the Designated Officer has failed to consider such prayers. Even assuming the Petitioner had not made a prayer for interest, however, the fact remains that it would be a statutory entitlement of the Petitioner to seek the interest on the refund amounts when such applications were allowed. The Adjudicating Officer/Respondent be directed to decide the interest claim of the Petitioner on the Refund Applications, after granting to the Petitioner an opportunity of a hearing on the quantum. This be done within a period of four weeks from today and accordingly grant appropriate interest to the Petitioner in accordance with law. Let the Adjudicating Officer call the Petitioner for hearing by issuing seven days notice, so that all the documents whatever necessary can be presented before the Adjudicating Officer so as to enable him to pass appropriate order granting refund to the Petitioner - Petition disposed off.
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2024 (3) TMI 996
Refund of SAD - amount paid by the Appellant was a deposit in lieu of an inquiry or not - applicability of time limitation on the refund of amount of deposit or not - HELD THAT:- The letter dated 20.06.2017 by which refund amount along with interest dated 12/20.06.2017 had been paid by the appellant of amount of erroneous refund along with interest on same having been communicated to them was voluntarily act and which falls within parameter of requirement of Section 28 1(b) and because of which the proper officer was not required to issue any further show cause notice, unless the erroneous refund was found to be short paid. The appropriation of amount of refund and interest once paid voluntarily by appellant is selfappropriation. The amount thus paid was clearly on account of erroneous refund which vide its payment was accepted by the party obviating any necessity of further show cause notice. If for any reason appellant wanted refund of such erroneous refund amount paid by them, then the same had to be within the prescribed limitation which as per the concurrent findings of the lower authorities was not done and therefore, the claim filed in the year 2021 was clearly barred by limitation. Impugned order is therefore maintained and appeal is rejected.
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2024 (3) TMI 995
100% EOU - Denial of benefit of exemption under Notification No. 52/2003-Cus - violation of input output norms - excess generation of waste and scrap - HELD THAT:- The present case is entirely covered by the case of Meridian Impex Vs. CCE ST,[ 2018 (7) TMI 865 - CESTAT AHMEDABAD] , wherein it is held that after segregation of the mixed imported scrap, the segregated scrap, if cleared, cannot be considered as clearance of the 'inputs as such. The same has been affirmed by the Gujarat High Court in the decision of Commissioner of Customs (Preventive) Vs. Monarch Overseas,[ 2019 (1) TMI 1513 - GUJARAT HIGH COURT] . It was submitted that Chapter 6 of the Foreign Trade Policy ( FTP ) nowhere mentions that for the excess generation of waste and scrap, duty equivalent to the duty on proportionate quantity of imported raw material is required to be paid. Chapter 6 of the FTP provides that there should be no duty demand even in case where the waste or scrap is destroyed in EOU. Further, it is also stated that the byproducts included in the LOP can be sold in DTA with the permission of the Deputy Commissioner on the payment of applicable duties. Thus, nowhere it was mentioned that duty amount on proportionate raw materials is to be paid in case, there is excess clearance of waste and scrap and therefore the same cannot be demanded. Further, the only restriction on the excess clearance of the waste and scrap is that the same can be cleared on the payment of full duty which the appellants have already paid. Moreover, as per Chapter 10 of the CBEC's Custom Manual of instruction issued on 11.09.2001 duty on bonded goods can only be demanded in certain specified circumstances. Therefore, the appeal is allowed with consequential relief. Appeal allowed.
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2024 (3) TMI 994
Levy / Demand of Countervailing Duty (CVD). - whether the appellant can be considered as an importer when the software has been imported by SAP India Pvt. Ltd. (subsidiary company) was contentious and reached before the Tribunal? - Validity of show cause notice - limitation - Interest - penalty - intent to evade customs duty or not - HELD THAT:- If the appellant pays CVD on the goods (software imported by them) they would be able to avail credit of such CVD paid by them. The entire situation is revenue neutral and there cannot be any intent to evade payment of duty. Further, the appellant was under bona fide belief that they have not imported the goods as they have only entered into an agreement with SAP India Pvt. Ltd. for purchase of the software. The issue as to whether they can be considered as the importer was contentious and had travelled upto to the Tribunal. Taking these aspects into consideration, the issue is also interpretational in nature. We find that by the Department has not established any positive act on the part of the appellant in regard to suppression of facts with intent to evade Customs duty. Thus, we find that there are no grounds for invocation of extended period. The demand of CVD along with the interest and the imposition of penalties cannot sustain. The issue on limitation is answered in favour of the appellant. The impugned order is set aside on the ground of limitation. The appeal is allowed with consequential relief, if any, as per law.
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2024 (3) TMI 993
Refund application for refund of 4% SAD payment - Non-compliance with the mandatory condition of Notification No.102/2007 - issued a deficiency memo - Whether the Chartered Accountant certificate, is sufficient to meet the requirement of unjust enrichment and compliance of the conditions of Notification? - HELD THAT:- In the present case, only objection made by the adjudication authority to reject the refund application is that the Appellant failed to show the due amount of refund as receivable in the books of account and it amounts to non-compliance of the Notification. In impugned order it is further held that the onus of unjust enrichment also not complied. The issue was considered by various authorities and this Tribunal from time to time as stated in ibid paragraphs and it is well settled that once the Appellant produced certificate from concerned Chartered Accountant, it is sufficient to meet the requirement of unjust enrichment and compliance of the conditions of Notification. The Department have no case that the goods were sold without payment of VAT or Sale Tax as applicable. In the absence of any other objection, impugned order rejecting the refund claim is unsustainable. Following the ratio of the decisions in the matter of Customs, Bangalore Vs M/s Apple India Pvt Ltd [ 2015 (1) TMI 573 - KARNATAKA HIGH COURT] , Chartered Accountant certificate produced by the Appellant is sufficient to allow refund. Appeals are allowed with consequential relief if any in accordance with law.
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2024 (3) TMI 992
Maintainability of Refund claim - order of assessment in appeal not challenged - quantity discount - import of the pre-fixed quantities - foreign supplier for supply of Chrysotile Asbestos Fibre - HELD THAT:- Admittedly, the appellants have not filed any application under Sections 144 149 of the Customs Act, 1962 for rectification or amendment of the Bills of Entry, therefore, the case laws relied by the appellants mentioned are no help. Thus, following the decision of the Hon ble Apex Court in the case of ITC Limited [ 2019 (9) TMI 802 - SUPREME COURT] , the refund claims are not maintainable as neither Bills of Entry were modified nor the assessments of Bills of Entry were challenged by the appellants. Therefore, the appeals filed by the appellants are dismissed by upholding the impugned order.
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2024 (3) TMI 970
Denial of benefit of the N/N. 52/2003-customs to input/raw material imported by EOU used - denial on the ground that appellant had consumed inputs and generated wastage beyond the norms fixed by norms committee - HELD THAT:- In the instant case for material consumed over and above the SION notification issued by the DGFT, Department views that duty or at least penalty is liable to be charged in case excess wastage comes into play. However, it is found that Hon ble Gujarat High Court in the matter of COMMISSIONER, CUSTOMS (PREVENTIVE) VERSUS MONARCH OVERSEAS [ 2019 (1) TMI 1513 - GUJARAT HIGH COURT] , while dealing with scope of Notification No. 52/2003 Cus. Dated 03.01.2003 31.03.2003 particularly clause (3) construed the non-obstante clause by interpreting that once the material procured are used for the purpose of manufacture of finished goods or services then even if, waste and scrap arises in course of production and manufacture over the norm then same is also exempt from the duty of custom leviable or the additional duty. Appeal allowed.
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Corporate Laws
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2024 (3) TMI 991
Validity of SCN proposing to declare the petitioners as wilful defaulters - Classification of Account as NPA - Impact of CIRP proceedings under IBC - Declaring the petitioners as wilful defaulters in terms of the Master Circular on Wilful Defaulters issued by the Reserve Bank of India (RBI) on July 1, 2015 - whether the injunction order passed by the writ court against the respondent-Bank, on the premise that the NPA classification was de hors the Master Circular, can be a relevant consideration for vitiating the Show-cause Notice? - HELD THAT:- In the present lis, even if the best case of the petitioners is taken into consideration, applying the Pandemic Circulars of the RBI extending the time for making good defaults, on and from November 30, 2020, the petitioner no. 1 was a defaulter. Apparently, no repayment has been made since then. Thus, it cannot be said that merely because the NPA classification is clouded in a writ petition, the respondent-Bank cannot proceed with the wilful defaulter proceeding. However, it is made clear that the purported communications of the petitioners handed over by the Bank at the time of arguments cannot be looked into at this stage, having not been referred to in the Show-cause Notice. The principle laid down in MOHINDER SINGH GILL ANR. VERSUS THE CHIIEF ELECTION COMMISSIONER, NEW DELHI ORS. [ 1977 (12) TMI 138 - SUPREME COURT] is squarely applicable as well, precluding the respondent from furnishing new grounds which were not there in the original Show cause Notice. Show-cause Notice contains reference to the assets of the petitioner nos. 2 to 9, who were Directors of the Company, which assets are not part of the assets of the borrower-Company - HELD THAT:- A Show-cause Notice need no plead in detail the full particulars of the requirements of the Master Circular but is required merely to outline the broad spectrum of offences committed by the borrower, its Directors and the guarantors to be labelled as wilful defaulters. The proper stage for consideration of compliance of Clause 2.6 on all other aspects is the order passed by the Wilful Defaulter Identification Committee on consideration of the Show-cause Notice and the reply thereto. Hence, the merits of the said allegation cannot be considered in detail. Sufficient ingredients to justify the allegations have been spelt out in the Show-cause Notice to bring the same within the broad purview of the Master Circular. The said ingredients, read in conjunction with the FAR and other documents which may be relied on by the Bank, are to be taken in conjunction at the time of consideration by the Wilful Defaulter Identification Committee and not at the show-cause stage. The composite effect of the documents and the broad allegations made in the Show-cause Notice are the subject-matter of adjudication by the said Committee, and thereafter the Review Committee. At the stage of Show-cause Notice, the court cannot adopt a fault-finding approach but such a Notice is to be seen in the perspective of disclosing sufficient ingredients to make the noticee aware of the nature of allegations made against it. Moreover, it is well-settled that under normal circumstances, courts are loathe to interfere at the show-cause stage since the noticee has the remedy of giving a reply thereto available to it. The merits of the allegations and defences can only be gone into by the first committee while deciding the matter. Thus, a wilful defaulter proceeding does not come within the contemplation of Section 14 or Section 96 of the IBC, which primarily pertains to legal actions to foreclose, recover or enforce security interest, or recovery of any property of the debt-in-question. In P. MOHANRAJ ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [ 2021 (3) TMI 94 - SUPREME COURT] , the Supreme Court has repeatedly highlighted, particularly in paragraph nos. 35.2 and 35.3, that the moratorium concerns not merely recovery of debt but any legal proceeding even indirectly relatable to recovery of any debt. Hence, the moratorium applies to recovery proceedings and proceedings which directly or indirectly relatable to such recovery. A wilful defaulter proceeding cannot, by any stretch of imagination, be said to be even remotely relatable to recovery of debt but is merely an off-shoot of the debt. The corpus of debt is not the subject-matter of a wilful defaulter proceeding, unlike a recovery proceeding, but is a mere stimulus to spur the wilful defaulter proceeding into motion. Petition is disposed of by directing the respondent-bank to serve a copy of the Forensic Audit Report and/or any other document, on which the bank intends to rely to substantiate the show-cause allegations, on the petitioners within a week from date.
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2024 (3) TMI 990
Declaration of Wilful Defaulter of the petitioner - Liability of Directors - It is argued that in none of the Committee Orders, any cogent ground has been made out under the Master Circular of the Reserve Bank of India (RBI) for declaration of Wilful Defaulters - HELD THAT:- The petitioner admittedly parked some amounts from its sales realizations not in the cash credit account but in a different account opened with a different Bank, that is, the ICICI Bank, Darjeeling Branch. Hence, at a time when the borrower-Company was duty-bound to channelize its entire funds through the respondent no. 1-Bank due to its agreement with the latter, it failed to meet such obligation, which was a condition of the cash credit facility, and routed some money through a different bank account. Such act is sufficient to come within the purview of diversion of funds as contemplated in the Master Circular. Admittedly, an agreement was entered into in the year 2004 which was much prior to the directions of the Central Government to take over management from the borrower-company. Even the Division Bench order of this Court directed the management to be continued by the borrower-Company. Hence, the lame excuse of the workers interest is mere lip-service in the mouth of the petitioner, since the borrower-company, evidently without knowledge or permission of the lender-Bank, had transferred the security, invoking the umbrella of the Central Government directions - The moratoria contemplated in the IBC were introduced for the protection of the corporate debtor in order to facilitate resolution. Such legal fiction, however, was created only in order to sustain the business of the company in the hands of the successful resolution applicant, inter alia, to protect the interests of the workers and the business of the unit in general. However, even if CIRP commences, the Directors, who were the masterminds in control and charge of affairs of the Company at the relevant juncture, cannot be absolved of any wilful default committed by the borrower-Company at the relevant juncture. In the present case, the petitioner was a Director and at the helm of affairs, responsible for the business operations of the company. The business decisions of the Company are attributable to the Directors, who are the living hands of the company which is a juristic person. Thus, the petitioner cannot be absolved of the wilful default committed by the borrower-Company in his capacity as a director and promoter, irrespective of an ongoing Corporate Insolvency Resolution Process. There are no patent irregularity or perversity in the impugned decisions or the procedure adopted by the Committees for arriving at the same, sufficient to interfere under Article 226 of the Constitution of India. The petition is dismissed on contest without any order as to costs.
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2024 (3) TMI 989
Seeking winding up of respondent company - Failure to pay outstanding dues - section 434 of the Companies Act, 1956 - HELD THAT:- The affairs of the respondent company in liquidation appear to be completely wound up. It is not feasible to proceed further in the winding up company. On perusal of OLR No.6/2024 including the documents on record, no other assets are available for realization of the dues of the creditors. All the assets of the company in liquidation had already been sold by the Bank and realized its dues. No secured creditors are available despite the issuance of notice. Therefore, this Court is of the considered opinion that this company petition deserves to be closed under the provisions of Section 481 of the Companies Act, 1956 and Rule 282 of the Companies (Court) Rules, 1959. Accordingly, it would be just and reasonable in the circumstances to pass the order that the company in liquidation be dissolved from the date of this order. Consequently, the company is in liquidation viz. M/s. STI Phoenix Wear Private Limited stands dissolved - Petition disposed off.
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Securities / SEBI
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2024 (3) TMI 988
Rejection of Petitioner s Settlement Applications - delay on the part of the Petitioner in making compliances of submission of documents and as per the Settlement Regulations, 2018 and more particularly Regulation 6(1)(b) - Petitioner made a representation to the Respondent requesting the Respondent to consider such documents by condoning the delay, which according to the Petitioner was not attributable to the Petitioner and for reasons which where not in Petitioner s control - HELD THAT:- Certainly there was delay on the part of the Petitioner in not complying with the time lines on submission of the documents, which according to the Petitioner were relevant in regard to the Settlement Applications and as demanded by the Respondent in the course of the proceedings. We also find that the Respondent was required to follow the provisions of the Regulations in question. Considering the peculiar facts of the case and the reasons which are set out by the Petitioner, in our opinion in not submitting these documents within the prescribed time, the Petitioner would certainly deserve an opportunity of his Settlement Applications being considered by the Respondent and it ought not to become inconsequential on account of a delay of 15 days in submission of the documents. This would certainly cause prejudice to the Petitioner. We are thus inclined to set aside the impugned order passed by the Respondent and restore the proceedings of the Settlement Applications with the Respondent to be decided in accordance with law. Petitioner submits that the documents are already part of the record of the Settlement Applications, hence, there would not be any impediment for the Respondent to decide the Settlement Applications as filed by the Petitioner expeditiously. Let the decision on the Settlement Applications be taken as expeditiously as possible within period of eight weeks from the date of copy of the order is made available to the parties. All contentions of the parties on the adjudication of the Settlement Applications are expressly kept open.
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Insolvency & Bankruptcy
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2024 (3) TMI 987
Approval of Resolution Plan by the Adjudicating Authority - plan was approved by the Committee of Creditors - constitution of CoC. - Group of 77 homebuyers as a class of creditors seeking rejection of plan. Sustainability of the argument advanced by the Learned Counsel for the Appellant that the constitution of the CoC stood vitiated because of the related party status of the Financial Creditor and Corporate Debtor - HELD THAT:- In view of absence of material placed on record and lack of substantiation of pleadings made by the Appellant of related party status of the Financial Creditor/Respondent No. 2 and the Corporate Debtor, it is not inclined to subscribe to the bogey of related party issue raised by the Appellant. Having failed to adequately demonstrate the related party status of the Financial Creditor/Respondent No. 2, and the Corporate Debtor, there are no irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 as a member thereof. Financial Creditor/Respondent No. 2 was assigned a higher vote share than its entitlement - HELD THAT:- There was discriminatory treatment of the claims made by the Appellant as against what was offered to the Financial Creditor/Respondent No. 2 is clearly misconceived since the RP was diligently updating the claims and the corresponding vote share of the financial creditors. Not having pointed out any irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 having majority vote share prior to the CoC approving the resolution plan, it cannot be agitated now at this belated stage when the resolution plan stands approved. Thus, to answer the second issue, the CoC is found to have been validly constituted based on the duly verified claims of the financial creditors, to which no objections were raised by the Appellant, there are no cogent reasons to hold the decisions taken by the CoC to be either irregular or invalid. Whether the RP was actively following up the TMC reservation issue or not? - HELD THAT:- The CoC was periodically kept apprised of the follow up steps taken by the RP in dealing with this issue which included visit to the TMC office and filing of an RTI application to find out the correct status of the reservation. The Resolution Professional had also taken up the matter through the architect to enquire about the reservation status besides seeking legal opinion on the matter and appointing a legal firm to seek appropriate legal remedy. Thus, the Resolution Professional cannot be held responsible for having suppressed any material fact pertaining to the TMC reservation issue from the CoC members including the AR. Keeping in mind the above-cited multifarious efforts made by the RP, the bonafide of the RP in this regard cannot be doubted. Hence, there are no infirmity or error in the findings recorded by the Adjudicating Authority in respect of the conduct of the Resolution Professional. The RP at all stages had facilitated the Homebuyers in raising their concerns and objections to the resolution plan through the AR and in fact also provided them the window of opportunity of taking up their issues with the SRA. Under such circumstances, but for bald assertions, there is nothing to show that there has been negligence or dereliction of duties and responsibilities cast on the RP which can be said to have caused any serious miscarriage of justice to the Appellant - thus no cause of action survives on this count. Whether the approval of the resolution plan by the Adjudicating Authority deserves to be set aside or the CoC approved resolution plan be sent back for the SRA/Respondent No. 3 to make necessary changes to the plan in the order to cater to the needs and demands of the Homebuyers as has been urged by the Appellant? - HELD THAT:- It is an undisputed fact that the resolution plan of the SRA has been approved by the CoC with requisite vote share. This resolution plan duly approved by the CoC with 89.05% vote share was placed before the Adjudicating Authority which has already approved the resolution plan. In the instant case, we find that when the resolution plan came up for consideration and approval before the Adjudicating Authority, the SRA improvised and upwardly revised its offer by way of an affidavit agreeing to pay 100% of the principal amount of the Homebuyers as against refund of approximately 40% of the claim amount admitted by the RP which was initially contained in the CoC approved resolution plan. This amount was acceptable to the Homebuyers and has not been objected to by any of the 77 Homebuyers. Whether in the given circumstances, the Appellant as a disgruntled solitary homebuyer or at best representing 77 Homebuyers can raise objections against the collective business decision taken by the CoC approving the resolution plan of the SRA? - HELD THAT:- In the present matter at hand, neither any contravention of law nor material irregularity has been brought on record. It is settled law that once the CoC has approved the resolution plan by requisite majority and the same is in consonance with applicable provisions of law and nothing has come to light to show that the RP had committed any material irregularities in the conduct of the CIRP proceedings, the same cannot be a subject matter of judicial review and modification. In any case, quite apart from the fact that the resolution plan is already under implementation it has also not been controverted by the Appellant that all the 77 Homebuyers including the Appellant have accepted the offer of 100% of their principal amount from the SRA. The intent, objective and purpose of IBC being time bound resolution of insolvency of the Corporate Debtor, it clearly does not provide any leeway or scope to dissatisfied individual Homebuyers in a minority like the present Appellant to override the commercial wisdom of the majority in the CoC. There are no merit in the contention of the Appellant to reject the CoC approved resolution plan which has since been approved by the Adjudicating Authority. Any indulgence shown would tantamount to derailing the resolution process and setting the clock back which we cannot countenance. There are no sufficient and plausible grounds made which warrant any interference with the impugned order. There is no merit in the appeal - Appeal dismissed.
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Service Tax
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2024 (3) TMI 1022
Recovery of service tax - Validity of instruction issued by the department to the Bank - Restriction from permitting any withdrawal from the accounts held by the appellant until the service tax liability is fully satisfied - Post GST era - HELD THAT:- Ext. P6 order has been passed after complying with all the statutory formalities and giving sufficient opportunity to the appellant for hearing. It cannot be said that Ext. P6 was passed without jurisdiction or without complying with the principles of natural justice. Without challenging Ext. P6 in appeal, the appellant cannot challenge the same in the writ petition. Hence, the challenge against Exts. P6 and P8 must fail. Appellant submitted that the appellant may be granted instalment facility to clear off the liability, and he may be permitted to operate the bank account on payment of the first instalment. The learned standing counsel for the respondents submitted that the Commissioner has the power to grant a maximum of 24 instalments. Considering the facts and circumstances of the case and the present financial condition of the appellant, the appellant can be permitted to clear off the service tax liability by way of instalments - appellant shall make a payment of Rs. 25,00,000/- towards the service tax liability on or before 31st January, 2024 - Appeal disposed off.
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2024 (3) TMI 986
Works contract service - entitlement to benefit under the Composition Scheme - requirement of first formally informing the department in writing that the appellant is exercising the option to pay service tax under the Composition Scheme - HELD THAT:- This issue was examined by a Division Bench of the Tribunal in M/S. ABL INFRASTRUCTURE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASHIK [ 2015 (2) TMI 801 - CESTAT MUMBAI] and in connection with rule 3(3) of the Composition Scheme and it was held that the appellant was executing work in a new contract from 5-6-2007 and was therefore eligible under the category of Works Contract Service. Subsequently, a Division Bench of the Tribunal in CCE, JAIPUR VERSUS M/S ZUBERI ENGINEERING COMPANY AND (VICE-VERSA) [ 2017 (11) TMI 1334 - CESTAT NEW DELHI] , after referring to the decisions of the Tribunal in ABL Infrastructure and Nagarjuna Construction Company, observed when the appellant/assessee did not pay any tax on such works contract service and starts paying tax after availing concession, such payment of tax under the scheme should be construed as exercising the option. The Calcutta High Court in M/S. LARSEN TOUBRO LIMITED VERSUS ASSISTANT COMMISSIONER, SERVICE TAX COMMISSIONERATE, DIVISION-III, KOLKATA OTHERS [ 2022 (12) TMI 523 - CALCUTTA HIGH COURT] also examined the issue and observed that In the absence of statutory format can the department be heard to say that the option should be exercised in a particular fashion and cannot be by conduct, that is by paying the service tax equivalent to 2% of the gross amount charged for the works contract. In view of the aforesaid decisions of the Tribunal and judgment of the Calcutta High Court, it has to be held that payment of service tax contemplated under the Composition Scheme and filing the return would be sufficient compliance of exercising the option under the Composition Scheme. The impugned order dated 29.03.2017 passed by the Commissioner, therefore, cannot be sustained and is set aside - appeal allowed.
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2024 (3) TMI 985
Levy of service tax - Business Auxiliary Service - arranging the transportation for delivery of goods manufactured by them to their clients/buyers so as to facilitate those buyers, have generated some income by retaining some part of the freight charges as were received from their buyers while making payments to the transporters - HELD THAT:- SCN alleged the said amount to be a consideration for rendering a Business Auxiliary Service. The order under challenge has held the said amount to be a brokerage or commission. This particular perusal is sufficient to hold that Commissioner (Appeals) has gone beyond the scope of show cause notice which is not at all permissible. Confirming a demand on a different count which was not brought to the notice of the assessee/appellant before confirmation of the service tax amounts to confirmation of tax under new categories and the same is not legally permissible as it was held by this Tribunal in the case of M/S BALAJI CONTRACTOR VERSUS COMMISSIONER OF CENTRAL EXCISE JAIPUR-II [ 2017 (3) TMI 181 - CESTAT NEW DELHI] . Hon ble Supreme Court also in the case of COMMISSIONER OF CUSTOMS, MUMBAI VERSUS TOYO ENGINEERING INDIA LIMITED [ 2006 (8) TMI 184 - SUPREME COURT] has held that the department cannot travel beyond the scope of show cause notice. These observations are sufficient to set aside the order under challenge. The buyer of goods manufactured by appellant cannot be held to be the service recipient, he being the party to contract of sale/purchase order. There is no contract between appellant and the transporter. No question of later being the service recipient at all arises. Thus there is no activity of appellant which may be called as Business Auxiliary Service. No question arises of providing Business Auxiliary Service as is alleged in show cause notice by the appellant to the said buyer. The mere activity of sale cannot be called as taxable service. Earning profit in the said arrangement therefore cannot come under the service tax net. Thus, the findings of Commissioner are otherwise not sustainable. The transaction in question is between principal manufacturer to principal buyer. The freight charges are in addition to the value of the goods. The surplus is earned by the appellant by not acting as a service provider to the transporter nor to the buyer. The order under challenge is hereby set aside - Appeal allowed.
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2024 (3) TMI 984
Short payment of service tax - Works Contract Service - composition scheme - cost of materials was not taken into account for payment of the service tax, which is primary condition of works contract - HELD THAT:- In view of the reasoning noted by the Adjudicating Authority that there is a standard practice that the Departmental Audit is conducted for a specified period, which has been clearly mentioned in IAR as April, 2006 to September, 2009 in Col.-9 in Part-I and the appellant has not shown anything that the period specified was extended by the proper officer, there is no merit in the submission of the learned Counsel that IAR No.07/2010 dated 20.04.2010 covered the period from October December, 2009. It is found from the order of the Adjudicating Authority that the appellant though had the opportunity to substantiate their claim and present documentary evidence in their support, however, they have only presented IAR No.07/2010, which is based on the documents produced by the appellant but the short payment of service tax was calculated only for the period under audit, i.e. April, 2006 to September, 2009 as per serial no.9 of IAR No.07/2010. In absence of any documents placed by the appellant, both the Adjudicating Authority and the Appellate Authority have not found favour with the appellant and hence, confirmed the demand. In the interest of justice that the appellant may be granted an opportunity to place on record the requisite documents, as mentioned above before the Adjudicating Authority as the stand taken by the appellant is that the bills of VAT/Sales Tax on materials used in the Works Contract Service have already been provided by the appellant to the Superintendent, Service Tax. From the records of the case, it is found that the ST-3 Returns were filed by the appellant on 24.04.2010 for the period October, 2009 to March, 2010 and the Audit Report No.1192/2010 was dispatched to them on 3.5.2011. Subsequently, the jurisdictional Range Officer sent letters dated 18.05.2011, 13.06.2011, 25.04.2012, 27.04.2012 and 08.01.2013 calling upon them to submit information and documents etc. However, the appellant, after two years of filing the periodical ST-3 Returns submitted that the value of the taxable services in the said returns has been wrongly given. The submission of the appellant was found to be noncorroborative without any documentary evidence and was found to be of no merit. On this aspect also, the learned Counsel for the appellant was required to substantiate his case with the supporting documents, which he failed to do so. The reliance placed by the appellant on the earlier Audit has been found to be distinguishable by the Adjudicating Authority as according to it, the preceding Audit team must have prepared the audit on the basis of the information presented by the assessee themselves. All these facts and submissions can be made by the appellant before the Adjudicating Authority once again along with the necessary and corroborative documents in that regard. It would be just and fair that the matter is remanded before the Adjudicating Authority, granting liberty to the appellant as well as to the Department to place on record the documents and the Adjudicating Authority may consider the same on merits - appeal is allowed by way of remand.
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2024 (3) TMI 983
Demand as proposed in the SCN on the basis of mismatch of ST-3 Returns and Balance Sheets/26AS - Invocation of Extended period of limitation - penalties - HELD THAT:- It has been held in a catena of decisions that only the amount received by the Appellant was liable to Service Tax, amounts reflected in Balance Sheets cannot be used to determine the Service Tax liability. The Hon ble Madras High Court in FIRM FOUNDATIONS HOUSING PVT. LTD. VERSUS PRINCIPAL COMMISSIONER, OFFICE OF THE PRINCIPAL COMMISSIONER OF SERVICE TAX [ 2018 (4) TMI 613 - MADRAS HIGH COURT] held that the reporting of income in the P L is irrelevant for the purposes of determination of service tax payable and thus the basis of the impugned assessment is erroneous. Moreover, income reflected in the Balance Sheet is for Income Tax purposes, which cannot be used for the purpose of service tax without any corroboratory evidence as also supported by M/S LUIT DEVELOPERS PRIVATE LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, DIBRUGARH [ 2022 (3) TMI 50 - CESTAT KOLKATA] . It is found that since the Appellant was filing ST-3 Returns regularly, the Department s stand that it could examine the correct facts only on going through the Balance Sheets cannot be sustained as CBEC Circular No.113/7/2009-S.T., dated 23-4-2009 vide F.No.137/158/2008-CX. 4 and CBEC Circular No.185/4/2015-ST dated 30.6.2015 vide F.No137/314/2012 categorically puts duty on the assessing officer to effectively scrutinize the returns at the preliminary stage, as held in M/S. GANNON DUNKERLEY CO. LTD. VERSUS COMMISSIONER (ADJUDICATION) OF SERVICE TAX, NEW DELHI [ 2020 (12) TMI 1096 - CESTAT NEW DELHI] . Extended period of limitation - HELD THAT:- Extended period of limitation cannot be invoked solely on audit queries and objections. It is observed that the Department has not adduced any positive evidence to show mala fide intention for evasion of service tax and therefore extended period is erroneously invoked. There are no ingredient of fraud or suppression with an intent to evade payment of tax - the demand raised is completely barred by limitation and accordingly the demand is set aside. Penalty - HELD THAT:- Since there is no element of fraud or suppression, penalty under Section 78 is liable to be set aside. Appeal allowed.
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2024 (3) TMI 982
Maintainability of appeal - requirement to make pre-deposit - HELD THAT:- The appellate authority could not have entertained the appeal without noting the compliance with the conditions as laid down as per this section. Since the appellant has failed to comply with the conditions as laid down under this section, Commissioner (Appeal) refused to entertain the appeal and dismissed the same without considering the same on merits. Undisputedly appellant has now made the pre-deposit of 10% for filing this appeal before CESTAT, which is more than 7.5 % of disputed tax amount, which was required to be deposited as pre-deposit for the first appellate authority to entertain the appeal. Taking note of the fact that no order has been passed in the matter on merits and the appeal was dismissed only for the requirement of pre-deposit, it is found that this matter is fit case for being remanded back to the Commissioner Appeals for consideration of the appeal before him on merits. Appeal is allowed by way of remand to Commissioner (Appeals). Commissioner (Appeals) to decide the appeal in de-novo proceedings on merits within 90 days of the receipt of this order.
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Central Excise
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2024 (3) TMI 981
Condonation of delay of 1191 days in filing this appeal - HELD THAT:- The belated manner in which the present appeal has been filed would not call for reiteration. Therefore, accepting the submissions of learned counsel for the respondent the appeal is dismissed on the ground of delay, leaving open the question of law, if any, which arises in this appeal to be agitated in any other appropriate appeal. Application disposed off.
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2024 (3) TMI 980
Process amounting to manufacture or not - raw material fuller s earth lumps were being subjected to undergo a process of getting crushed in job crusher and pulverized in pulveriser - manufacturing and selling of Activated Bleaching Earth and Activated Carbon - excisable goods or not - Whether this process and the resultant product can be classified as activated bleaching earth? - suppression of material facts or not - HELD THAT:- From the finding of fact given by the authority passing the Order-in-Original, what is established is that though fuller s earth is the raw material which is subsequently converted into an Activated Bleaching Earth or an Activated Carbon through a mechanical process which includes a chemical treatment after crushing the fuller s earth lumps altering the clay into powder and by increasing its bleaching potential. The very purpose of subjecting the fuller s earth clay to chemical treatment in a mechanical manner is to alter the nature of the product. Further, the bleaching ability is enhanced by way of mechanical and chemical process and the filtration rate of the product also gets enhanced and becomes faster. Another fact which stands established is that the raw material fuller s earth in itself cannot be used for those purposes which it is subsequently used after the mechanical chemical process is undertaken. Yet another fact which is established from the pleadings is that the use of the Activated Bleaching Earth cannot be achieved if fuller s earth is used as it is without the chemical treatment and the mechanical process which includes the heating process etc. The mechanical process which fuller s earth is subjected to is to increase its bleaching performance and filtration properties and the product is also tailor made as per the specifications required by the client as per use at their plants. The bleaching earth has a set of advanced formula of different combinations and it is applied by the manufacturer by using the production technology to manufacture different grades of Activated Bleaching Earth. All these process put together alters the fuller s earth clay into an Activated Bleaching Earth giving it the properties that increases its bleaching potential. The finding so arrived at by respondent No. 2 which stands affirmed by yet another detailed reasoned order passed by respondent No. 1, both of which again subjected to test before the Tribunal and the Tribunal also giving specific reasons in the course of affirming the orders passed by respondent Nos. 1 and 2 - there are no substantial merit in the arguments advanced by the learned counsel for the appellant calling for an interference to the findings given by the Tribunal. Appeal dismissed.
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2024 (3) TMI 979
Clandestine Removal - Manufacture of Tobacco taking place or not - FFS packing machine was found installed in the unregistered premises during the search on 24.01.2012. Whether the evidences available on record indicate that one FFS packing machine installed in the unregistered premises was in working condition and used for manufacturing of Chewing Tobacco? - HELD THAT:- There is no finding in the impugned order against the claim of the appellant that two vital parts namely, Disc and Suit were not fitted with the machine and it cannot be used to pack Chewing Tobacco. The investigation has not brought in any other evidence such as purchase of raw material, purchase of packing material, excess consumption of power during the period, buyers of the clandestinely cleared material, statements from transporters, etc., to prove clandestine manufacture and clearance of Chewing Tobacco - Mere presence of the packing machine alone is not sufficient to establish manufacture and clandestine clearance of chewing tobacco. In the absence of any other evidence, we hold that the investigation has not established that the packing machine was in operating condition and used for clandestine manufacture and clearance of Chewing Tobacco - question is answered in negative. Whether evidences available indicate that Rule 18(2) of the CTPM Rules is applicable in this case to demand duty in respect of one FFS packing machine, from 08th March, 2010 onwards, as provided in the said Rules? - HELD THAT:- The investigation has not brought in any other evidence such as purchase of raw material, purchase of packing material, excess consumption of power during the period, buyers of the clandestinely cleared material, statements from transporters, etc., to establish clandestine manufacture and clearance of Chewing Tobacco from the unregistered premises - the one FFS packing machine found in the unregistered premises has not been fixed with two vital parts, without which the machine cannot be operationalized. In such circumstances, the investigation must have probed further to establish the manufacture and clandestine clearance of Chewing Tobacco by means of other evidences. Instead, the investigation has relied solely on the mere presence of the machine in the unregistered premises to demand duty. There is no evidence available on record to disprove the claim of the Appellant that the machine was non-operational and not used for manufacture of Chewing Tobacco. Mere presence of the packing machine alone is not sufficient to establish manufacture and clandestine clearance of chewing tobacco - the provisions of Rule 18(2) cannot be invoked in this case to demand duty for the period from 08th March, 2010 to 31st January, 2012 - question answered in negative. Whether penalty under Section 11AC of the Central Excise Act, 1944, is imposable in this case? - HELD THAT:- Penalty is imposable under Rule 18 of the CTPM Rules read with Section 11AC of the Central Excise Act, 1944, only when it is established that Chewing Tobacco was produced and clandestinely removed. In view of the above findings, it is held that the investigation has not established manufacture and clandestine clearance of Chewing Tobacco. Hence, the penalty provisions are not applicable in this case. Accordingly, the penalty imposed on the Appellant is liable to be set aside. Thus, the demand of Central Excise Duty confirmed in the impugned order is not sustainable. As the duty demand of duty is not sustainable, the demands of interest and penalty are also not sustainable - appeal allowed.
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2024 (3) TMI 978
Classification of goods - Reusable Insulin Delivery Device bearing the brand name All Star - classifiable under Central Excise Tariff Heading 9018 3100 availing the benefit of concessional rate of duty as per Notification No. 12/2012-CE dated 17.03.2012 under Serial No. 310 or under Serial No. 309? - Department is of the view that appellant have wrongly availed Cenvat credit on the inputs and input service used in the manufacture of their finished products i.e. Reusable Insulin Delivery Device - HELD THAT:- It can be seen that Reusable Insulin Delivery Device is nothing but a Syringe without needle and is rightly classifiable under Chapter sub-heading 9018 3100. So far as the availability of Notification No. 12/2012-CE is concerned, the entry at Serial No. 309 covers only parts and accessories of goods of heading 9018 and 9019 whereas we find more specific serial number for concessional rate of duty under the exemption Notification No. 12/2012-CE for the product will be under Serial No. 310 which reads as All goods (other than parts and accessories thereof) . The impugned manufactured product is Syringes without needle and the same cannot be classified as parts and accessories of the goods of heading 9018. Therefore, the impugned product will be entitled for concessional rate of duty under Serial No. 310 of exemption Notification No. 12/2012-CE dated 17.03.2012. Accordingly, the appellant have rightly been paying excise duty at the concessional rate of 6% and they are entitled for Cenvat credit on the inputs and input services availed by them. There are no merit in the impugned orders-in-appeal and the same are set-aside - appeal allowed.
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2024 (3) TMI 977
CENVAT Credit - credit denied on the ground that the appellant have taken credit on Aluminium ingots and thereafter it was removed without payment of duty as the same was not used in the manufacture - allegation solely based on the statements of transporter - transporter was not cross-examined - violation of principles of natural justice - Time limitation - Imposition of redemption fine - HELD THAT:- The allegation is solely based on the statements of transporter however, the transporter was not cross-examined and as per section 9D of Central Excise Act, 1944. It is mandatory on the part of the Adjudicating Authority to do examination in chief and thereafter allow the noticee for cross-examination for the witness which in the present case was not done by the Adjudicating Authority. Therefore, the statement of transporter cannot be relied upon. Moreover, the entire investigation and the witnesses were used for issuing show cause notice dated 30.08.2011 to Hiren Aluminium wherein the charge was that M/s. Hiren Aluminium has not received ingots sent by the appellant. Accordingly, the Cenvat credit availed by Hiren Aluminium on the same ingots was sought to be denied. The entire chain, right from procurement of aluminium ingots from NALCO upto the delivery of aluminium conductors, the transaction was established and accepted by the Settlement Commission. This finding was given by Settlement Commission after considering the investigation and all the evidences which were also relied upon in the appellant s present case. Therefore, once all those investigation and evidence have been appreciated and Settlement Commission has come to the conclusion as reproduced above, there is no scope for the Adjudicating Authority to rely upon the same evidences for taking contrary view to the findings given by the Settlement Commission and to confirm the demand of Cenvat credit. Therefore there is no material evidence with the department to establish their charge of clandestine removal of ingots on which the appellant has taken Cenvat credit. Time Limitation - HELD THAT:- There is no dispute that the present case relates to period February 2008 to March 2008 and entire investigation was carried out in a case made out against Hiren Aluminium in the show cause notice dated 30.08.2011 for denial of Cenvat credit on standard wires wherein there was no allegation that the credit taken on ingots by the appellant was made. Thereafter the appellant was served a show cause notice dated 06.03.2013. In these facts, it is absolutely clear that entire information about the transaction were available with the department way back in October 2008 even then the department took five years to issue show cause notice to the appellant. Therefore, the demand is clearly time-barred. Imposition of redemption fine - HELD THAT:- As it is held that the appellant have not cleared aluminium ingots clandestinely and demand on that count is not sustainable consequently, no confiscation can be made and no consequential redemption fine will sustain. Secondly, without prejudice, the goods on which redemption fine was imposed was not available for confiscation - It is settled legal position by the Larger Bench of this Tribunal in the case of SHIV KRIPA ISPAT PVT. LTD. VERSUS COMMISSIONER OF C. EX. CUS., NASIK [ 2009 (1) TMI 124 - CESTAT MUMBAI] as well as in COMMISSIONER OF CUSTOMS, MUMBAI VERSUS RISHI SHIP BREAKERS [ 2008 (8) TMI 650 - CESTAT, MUMBAI] that in case goods are not available, no redemption fine can be imposed therefore, on both counts, redemption fine imposed on the appellant is not sustainable. The impugned order is not sustainable hence, the same is set-aside - Appeal allowed.
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2024 (3) TMI 976
Area Based exemption in Kutch district - admissibility of exemptions for goods manufactured using plant and machinery installed after the cut-off date of 31.12.2005. - Wrongful availment of benefit of N/N. 39/2001-CE dated 31.07.2001 by availing re-credit/refund of duty paid on finished excisable goods manufactured by both the oil splitting units - Penalty on managing director. HELD THAT:- It is pertinent to note that the exemption under the Notification was limited to twice the value of the investment, for each year, in cases where the original value of the plant and machinery installed in the factory was below Rupees 20 crores on the date of commencement of the commercial production and in cases where the original value of investment in plant and machinery was in excess of 20 crores, there was no limitation with respect to the extent of the exemption available under the Notification. The Notification, as initially enacted, did not provide for any time period within which the commercial production had to commence, being the date relevant for reckoning the original value of investment in plant and machinery as also for reckoning the 5 year period for which the exemption was to be available. All that was required was that any civil construction work in the factory premises and any installation of plant and machinery therein commences only after 31st July 2001 but before the cut-off date. It is impermissible to read in any condition or word into an exemption notification, especially a benevolent one which has been issued with the objective of encouraging investment in the earthquake ravaged region of Kutch. In our view there is neither any legal basis nor rationale for reading in the word 'ALL' in the exemption notification and with reference to the same construe that since some machinery was installed after the cut-off date, the benefit of the exemption would not be available, to goods manufactured using the said machinery. This Tribunal has also in the case of M/S WELSPUN LTD. VERSUS C.C.E. S.T. RAJKOT [ 2019 (1) TMI 371 - CESTAT AHMEDABAD ] held that in the context of this very notification that there is no bar in installing Plant and Machinery post 31.12.2005 as long as the unit has commenced commercial production not later than 31.12.2005. The reasoning of the adjudicating authority that under the Himachal/Uttarakhand exemption scheme, exemption was even extended to existing units, undertaking substantial expansion, which was missing in Kutch, would in our view make no difference, to the question whether any addition of plant and machinery after the cut-off date would dis-entitle the unit to the benefit of the exemption. The aspect regarding the unit commencing commercial production by a cut-off date equally applies to the Kutch as also the Himachal/Uttarakhand exemption notification - the clarification issued by the CBEC vide Circular No. 939/29/2010-CX dated 22.12.2010 to the effect that there is no bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible unit after the cut-off date and during the exemption period of ten years, would apply equally in the context of the Kutch notification. The presumption of the adjudicating authority that this second splitting column was installed within 7 days of the same having been shipped by the manufacturer in October 2006, which does not seem to be logical and reasonable especially when viewed in light of the statement recorded under Section 14 of the installation agency, as per which the column was installed in March 2007. The combined production achieved even after the installation of the second Splitter seems to be lesser than what could have been achieved by a single Splitter alone. Further the 200 TPD capacity as explained by the appellant is the output guaranteed by the supplier of technology at 99% degree of split. Obviously the production numbers clearly show that the daily production was higher than 200 TPD and that the plant was functioning operating at a lesser degree of Split and was able to achieve a production of around 15000 MT per month - the second Splitter was installed with a view to improve the quality of the output and not to increase the production, which fact seems to be vindicated by the production data. We are therefore of the view that, applying the TRU clarification dated 10.7.2008 the additional plant and machinery having been installed with a view to improve the quality of production and not with a view to increase the production, the benefit of exemption cannot be denied to goods manufactured using the second Splitting Column. The imposition of penalty on the Managing Director, Mr.Rustom Joshi is also not sustainable. The impugned order is set aside. The appeals are allowed.
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2024 (3) TMI 975
Manner of computation of proportionate reversal of credit determined under Rule 6(3A) of the Rules - Interpretation of statute - Rule 6(3A)(b)(ii) of CCR - Cenvat credit on inputs and input services used for manufacture of LPG SKO - contention of the department is that for the purpose of reversal, the Total Cenvat Credit Taken on Input and Input services should be considered while the contention of the appellant is that Total Cenvat credit taken on Input and Input services should include only common Input and Input services used in exempted manufactured goods - HELD THAT:- It would be clear from a conjoint reading of sub-rules 6(1), (2) and (3) of Rule 6 that the total Cenvat credit for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input and input service and cannot include Cenvat credit on input and input service exclusively used for the manufacture of dutiable goods. If the interpretation of the Revenue is accepted, then the Cenvat credit of part of Input and Input service even though used in the manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. The Government has substituted the sub-rule (3A). The legislators very consciously substituted the Rule with intention to give a clarificatory nature to the provision of sub-rule (3A) so as to make it applicable retrospectively. It was all along not the intention of the Government to deny Cenvat credit on the input/input service even though used in the dutiable goods. Keeping the said view in mind, the substitution in sub-rule (3A) of Rule 6 was made. Therefore, the substituted provision of sub-rule (3A) shall have retrospective effect being clarificatory. In the case of GOVERNMENT OF INDIA VERSUS INDIAN TOBACCO ASSOCIATION [ 2005 (8) TMI 113 - SUPREME COURT] , the Hon ble Supreme Court held that the word substitute ordinarily would mean to put (one) in place of another ; or to replace - As per the interpretation of the Hon ble Supreme Court, the sub-rule (3A) being substitution shall have a retrospective effect and will be applicable for all time since when the Rule was enacted. Therefore, for this reason also, for the purpose of calculation of Cenvat credit reversal, in the formula, total Cenvat credit shall mean credit of only common input and input service and not of input and input service exclusively used for the manufacture of dutiable product on which the Cenvat credit is eligible to the appellant in its entirety. Availment of Cenvat credit on inputs and input services used for manufacture of LPG SKO - HELD THAT:- The issue is no more res integra in view of the Hon ble High Court of Gujarat decision in the case of RELIANCE INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2022 (11) TMI 923 - CESTAT MUMBAI] , wherein the Hon ble High Court has held that LPG is a by product generated in the process of refining and no reversal is required in this matter. Since the issue decided in respect of above by-products in above terms, it is not required to deal with issues of what value to be considered for reversal. The impugned order is set aside. Appeal is allowed.
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2024 (3) TMI 974
Principles of Estoppel against law - Classification of goods - handmade branded unmanufactured tobacco under the brand name of Rajhans - classifiable under CETH 24039910 or not - demand confirmed on the ground that appellant had agreed to classification of the said products as manufactured product - purchase of certain perfumeries etc. for mixing the same - HELD THAT:- The finding of the Commissioner (Appeals) to the effect that appellant has admitted the product as manufactured tobacco cannot be the reason for holding against them. It is settled in law that there cannot be any estoppel against the law in the matter of classification. Reliance placed in the case of ELSON MACHINES PVT. LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1988 (11) TMI 107 - SUPREME COURT] where it was held that Plainly there can be no estoppel against the law. The claim raised before us is a claim based on the legal effect of a provision of law and, therefore, this contention must be rejected. No evidence has been brought on record either in the impugned order or in the Order-in-Original to show that the goods cleared by the appellant were classifiable under CETH 2403. What operation was undertaken, what was the nature of the products has not been examined and recorded. Nothing is available on record as to what made the finished goods cleared by the appellant during this period different from what was being cleared by them in past and post the brief period of February 2012 to August 2012. The impugned order itself hold that the products produced and cleared by the appellant during the entire period of demand was unmanufactured tobacco. In the case of YOGESH ASSOCIATES VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT-II [ 2005 (9) TMI 173 - CESTAT, MUMBAI ] Bombay Bench has held The explanatory notes to HSN especially when pari materia are binding to arrive at the classification and the law on this issue is well settled. We, therefore have no reason to take out the product impugned in these appeals, from the Heading 2401.10 as arrived by us and place it elsewhere under Chapter 24. There are no merits in the impugned order to this extent - appeal allowed.
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CST, VAT & Sales Tax
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2024 (3) TMI 973
Reduction of turnover - cement imported from outside the State of U.P. - Rule 9 of the Value Added Tax Rules - HELD THAT:- Upon perusal of the order of Tribunal it is patently clear that the goods were imported from outside the State of U.P. and were used in one project in the State of U.P. There does not appear to be any perversity in the finding of the Tribunal with regard to the above factum. Such being the case, Rule 9 (1)(e) of the Rules would definitely apply and the petitioner would be entitled to the benefit thereunder. The general rule of law in taxing statutes is that in case of any doubt the benefit should be given to the assessee. However, in case of exemption and deduction to be given, a stricter approach may be followed, as per catena of judgments of the Supreme Court, to examine whether the assessee is eligible for such benefit. In the present case, there is no factual dispute of goods having been imported from outside the State of U.P. and, therefore, the assessee clearly qualifies for the said benefit. The question of law is answered in favour of the assessee and against the Department - Application dismissed.
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2024 (3) TMI 972
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - HELD THAT:- The observation in the impugned order dated 23.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply is not clear and unsatisfactory. He merely held that the reply is not clear and satisfactory which ex-facie shows that the Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that reply was unsatisfactory and further details were required, the same could have been specifically sought from the petitioner. However, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details. The order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 23.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication - the impugned order records that petitioner s reply is not satisfactory. The Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Petition disposed off.
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Indian Laws
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2024 (3) TMI 971
Dishonour of Cheque - vicarious liability of director - petitioner argues that he had resigned and had ceased to be a Director of the accused company w.e.f. 10.08.2017 and thereafter, he had no concern with the day-to-day affairs and decisions of the company qua its business transactions - HELD THAT:- In the present case, one handwritten line has been added in the complaint i.e. accused no. 2 to 4 are responsible of day to day affairs of accused no. 1 , and even the complete language of Section 141 of NI Act has not been reproduced, let alone any specific detail about any role played by either of the petitioner in issuance or dishonour of cheque in question or as to how were they-in-charge of or responsible for the day-to-day affairs of the accused company when the cheque in question had been issued or dishonoured. Even before the learned Trial Court, the complainant had submitted the copies of Articles of Association and Memorandum of Association of the accused company, in which the details of Directors, as they were at the time of formation of company in the year 2015, were mentioned, and the updated data of the company available in the records of Registrar of Companies or Ministry of Corporate Affairs website was not placed before the learned Trial Court. The petitioners had resigned much prior to the issuance of cheque and the complainant has not disputed the factum of their resignations. The Director who had signed the cheque in question i.e. Nikhil Mehta (accused no. 3) continues to be the Director of the accused company till date, whereas the records show that the present petitioners had resigned in the year 2017 itself. Thus, the petitioners cannot be made liable under Section 138/141 of NI Act, in such facts and circumstances. Petition allowed.
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