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TMI Tax Updates - e-Newsletter June 25, 2021 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise Highlights / Catch Notes GST: Classification of supply of goods/services - rate of GST applicable - composite works contract - The rate of GST on supply of works contract service which is being supplied to M/s SAIL, Rkl for construction of ISPAT Post Graduate Medical Institute and Super Specialty Hospital would merit entitlement for concessional rate of GST @ 12% [CGST @ 6% + SGST @ 6%] - AAR Visit to Get Source GST: Refund of IGST - tax paid on Ocean Freight under the reverse charge mechanism - his Court held that the levy of the IGST under the RCM on the Ocean Freight for the service provided by a person located in a non-taxable territory by way of transportation of goods through vessel from a place outside India to customs frontier of India is unconstitutional. - Refund to be allowed - Period of limitation u//s Section 54 of the CGST Act is not applicable - general provisions provided under the Limitation Act is applicable to claim refund of such duty - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - ALV estimation - We are unable to see application of mind by the AO of the materials available before him. The AO has not recorded any basis or factum gathered by him after application of mind of the assessment already completed which could reflect that before initiation of reassessment proceedings u/s. 147 of the Act, he applied his mind and thereafter reached to a conclusion that he had reasons to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act empowering him to issue notice u/s. 148 - HC Visit to Get Source Income Tax: Validity of assessment - Though the Income Tax Act does not anywhere contemplate issuance of a show cause notice prior to finalisation of scrutiny assessments, as a matter of procedure and good office, the Assessing Authority is expected to crystalise the issues arising from the return of income filed by an assessee, the questionnaires issued under Section 142(1) and notices under Section 143(2) and responses thereto, issue a show cause notice setting out the issues, solicit the response of the assessee and pass orders only thereafter, after hearing the assessee concerned. - HC Visit to Get Source Income Tax: Acceptable ground for the purpose of entertaining a Writ Petition - the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a rowing enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. - HC Visit to Get Source Income Tax: Assessment u/s 153A - Protective assessment while making additions in the hands of son/grandson - interest income arising out of funds - By no stretch of imagination the addition made by Revenue on the interests income on substantive basis in the hands of the assessee holding assessee as the owner of the funds of the account only on relying upon the instructions to transfer the fund solely on the basis of surmise and conjecture cannot be said to be justified in the absence of corroborative evidence - AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 - assessee had shown fixed assets but he had not offered any income from the said property - The reasons recorded by the Assessing Officer do not disclose that the assessee has used any of his assets for any business or rental purposes. The formation of belief by the AO in this case regarding the escapement of income of the assessee view is based on just assumptions and presumptions and there was no reliable material available with the AO to form the belief that the income of the assessee had escaped assessment. - AT Visit to Get Source Income Tax: Exemption u/s 11 - grant of registration u/s. 12AA - the view of the ld. CIT (Exemption) that the appellant company is a commercial organization merely because it is generating huge revenue from year to year with mark-up on the cost of 10% to 12% cannot be upheld. CIT (Exemption) had not considered the matter in proper perspective. - AT Visit to Get Source Income Tax: Exemption u/s 80G - the fair opportunity shall be granted to the assessee trust before coming to the conclusion as directed. Competent Authority shall make every possible endeavor to dispose of the application for approval u/s 80G in question within 3 months from the date of service of this order. - AT Visit to Get Source Income Tax: Penalty u/s 271(1)(c) - Unexplained expenditure u/s 69C - CIT(A) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the AO do not call for initiation of penalty. - AT Visit to Get Source Customs: Seeking restoration of revoked license - customs broker licence - forfeiture of security deposit - levy of penalty - the proceedings were commenced without the metaphorical ‘starter pistol’ and thus renders the subsequent inquiry and impugned order to be stillborn. - Strict adherence to legislated empowerment cannot but be insisted upon even before merit of the detriment can be interfered with. - AT Visit to Get Source Customs: Refund of duty paid - principles of unjust enrichment - The Adjudicating Authority has very comfortably adopted the amount of refund claimed as the amount of duty passed on without demonstrating the specific amount, from the books or the Balance sheet. - The impugned order is not sustainable, is liable to be set aside - AT Visit to Get Source Customs: Interim suspension of the operation of Customs Broker's License - As the respondents could able to establish factually that the offence report was communicated to the License Issuing Authority on 01.07.2016, the action initiated by issuing interim suspension order and show cause notice dated 28.09.2016 are well within the period of limitation as contemplated under the Regulations and there is no infirmity as such - However, the interim order of suspension issued need not be given effect to as the petitioner is operating continuously for about 4 ½ years, after the issuance of interim suspension order. - HC Visit to Get Source Corporate Law: Seeking grant of Anticipatory Bail - Fraud - fraudulently/illegally obtained loan and siphoning off the funds - petitioner (Director of one company out of group companies) was not summoned or arrested by the Investigating Officer during investigation - the petitioner was under obligation to exercise his duties with due and reasonable care, diligence and independent judgement. - the petitioner does not deserve grant of anticipatory bail. - HC Visit to Get Source Corporate Law: Disqualification upon the petitioners for acting as Directors of Companies - Deactivation of DIN - Section 164(2) must be given only prospective operation and the continuous default period of three years should commence from or after 01.04.2014 - the DIN of the petitioners allotted under Rule 10 of the Companies (Appointments and Qualifications of Directors) Rules, 2014, are not liable to be deactivated or cancelled solely for the reason that the petitioners stand disqualified for appointment / reappointment as Directors of Companies by operation of Section 164(2). - HC Visit to Get Source PMLA: Seeking Bail - Money Laundering - proceeds of crime - The fact remains that this appeal is being considered today by this Court only after six months from the date of order of the High Court but, what to say of conclusion, the trial is practically at the very initial stage with even the statement of the first prosecution witness remaining incomplete. Looking to the nature of case and the witnesses to be examined, the trial and is bound to take time. - appellant is ordered to be released on bail on such terms and conditions as deemed fit and necessary by the Trial Court - SC Visit to Get Source Service Tax: Maintainability of SCN - instead of replying to the SCN, petitioner has rushed to this Court by invoking the extra ordinary remedy under Article 226 of the constitution of India - recovery of Service Tax - It is certainly not open to the petitioner to challenge the show cause notice itself before this Court and make an attempt to convince this Court on the factual submissions as to the maintainability of the show cause notice. - HC Visit to Get Source Service Tax: Validity of SCN - Jurisdictional error - reply to SCN not provided - It is always open to the petitioner to convince the Authority as to the invalidity of the show cause notice issued by him and in case the Authority passes any final and adverse order and in such event, it is open to the petitioner to challenge the final order in a manner known to law. - This Court is not inclined to entertain the writ petition and same is to be rejected as premature - HC Visit to Get Source Service Tax: SVLDRS - Since the Scheme has come to an end, this Court is permitting the Committee under Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019, to decide the matter, as directed by the learned Single Judge, within a period of eight weeks from today - HC Visit to Get Source Central Excise: Rebate Claim - export of goods - Though, the conduct of the petitioner was no forthright and was intended to defraud the revenue, fact remains that the petitioner has paid back and compensated the revenue by paying the amount to the credit of the Central Government together with interest on 02.02.2009 - The exports are not be burdened with tax liability. - Revenue directed to grant refund - HC Visit to Get Source Articles LIMITATION ACT WITH HIGHLIGHTS AND GENERAL OBSERVATIONS GST on Ocean Freight in Relation to Import of Goods FORMS/RETURNS UNDER COMPANIES ACT, 2013 Notifications Customs 29/2021-Customs (N.T./CAA/DRI) - dated 23-6-2021 - Cus (NT) Appointment of Common Adjudicating Authority GST - States 13/2021-State Tax - dated 15-6-2021 - Himachal Pradesh SGST Himachal Pradesh Goods and Services Tax (Third Amendment) Rules, 2021. 12/2021-State Tax - dated 14-6-2021 - Himachal Pradesh SGST Amendment in Notification No. 83/2020-State Tax, dated the 14th December, 2020 11/2021-State Tax - dated 14-6-2021 - Himachal Pradesh SGST Seeks to extend the due date for furnishing of FORM ITC-04 for the period Jan-March, 2021 till 31st May, 2021. 641-F.T. - dated 14-6-2021 - West Bengal SGST Seeks to make fifth amendment (2021) to WBGST Rules to provide that (i) companies are allowed to furnish return etc. through EVC till 31.08.2021; (ii) condition of rule 36(4) shall apply cumulatively for the period April, May and June, 2021; (iii) details of outward supplies of May, 2021, using IFF for the month may be furnished from the 1st day of June, 2021 till the 28th day of June, 2021. 640-F.T. - dated 14-6-2021 - West Bengal SGST Seeks to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.07.2021 639-F.T. - dated 14-6-2021 - West Bengal SGST Seeks to amend notification no. 608-F.T. dated 03.06.2021 in order to extend due date of compliances which fall during the period from "15.04.2021 to 29.06.2021" till 30.06.2021, with some exceptions 05/2021–C.T./GST - dated 14-6-2021 - West Bengal SGST Seeks to extend the due date for furnishing of FORM ITC-04 for the period Jan-March, 2021 to 30.06.2021 612-F.T - dated 3-6-2021 - West Bengal SGST Seeks to amend notification No. 555-F.T. dated 29.03.2019 regarding TDR. 611-F.T. - dated 3-6-2021 - West Bengal SGST Seeks to amend notification No 1135-F.T. dated 28.06.2017 regarding rate of taxable services. 610-F.T. - dated 3-6-2021 - West Bengal SGST Seeks to amend notification No. 1125-F.T. dated 28.06.2017 regarding rate of taxable goods. News Government of India signs $32 million loan with World Bank for improving healthcare services in Mizoram Income Tax Department conducts searches in Raipur Case Laws: GST 2021 (6) TMI 829 Classification of supply of goods/services - rate of GST applicable - composite works contract - construction of ISPAT Post Graduate Medical Institute and Super Specialty Hospital - clinical establishment or not - Government Entity or not - concessional rate of tax in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 - HELD THAT:- The work order has been issued by M/s NBCC in their own capacity and the applicant has signed agreement with M/s NBCC for construction of Ispat Post Graduate Medical Institute and Super Specialty Hospital at Rourkela Steel Plant for SAIL. When the contract is made between M/s NBCC and M/s URC Construction (P) Ltd (the applicant), it is necessary to see the legal status of M/s NBCC. From the contract/agreement deed, it is obvious that M/s NBCC is a public limited company incorporated and registered under the Companies Act, 1956 and having its registered office at NBCC Bhawan, Lodhi Road, New Delhi-110003. Thus M/s NBCC is a company and not State Government/Central Government or Union Territory or any Government Entity. The status of M/s NBCC is therefore not disputed. As per the Contract, the Supply is being made to M/s NBCC which is a body corporate and not to any Government or Government Entity. Admittedly, M/s SAIL, RSP, Rourkela is the ultimate service beneficiary but Entry at SI No.3 (vi) of the notification No. 11/2017 is very specific and it cannot be stretched or construed otherwise. Thus, the commercial Supply by the applicant is not to Government/Government Entity but to M/s NBCC, a separate distinct entity and thereby the second pre-requisite is not fu-filled to merit classification under serial no. 3(vi) (a) or (b) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time. Whether M/s SAIL, RSP is a Government Entity in terms of explanation 4(x) to the notification? - HELD THAT:- It is clear that SAIL was formed in 1973 pursuant to approval of the parliament to manage 5 integrated steel plants. Thereafter, the SAIL was restructured as an Operating Company by way of Act passed by the Parliament namely 'The Public Sector Iron and Steel Companies (Restructuring) And Miscellaneous Provisions Act, 1978' for carry out function entrusted by the Central Government. Further, Serial No. 3(ix) of Notification No. 11/2017 as amended by Notification No. 1/2018 provides a concessional rate of GST @ 12% subject to condition provided under Column (5) of the said table, which reads as under; 'Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union Territory or local Authority, as the case may be'. 2021 (6) TMI 828 Grant of regular bail - vires of Section 69 and 132 of the CGST Act - Section 132(1)(c) of the Central GST Act, 2017 and Punjab GST Act, 2017 - HELD THAT:- The interim/regular bail has been granted to the similarly placed persons. The order relied upon the counsel appearing for the State wherein regular bail has been denied to the petitioner therein was primarily on the ground that the investigation was still incomplete. In the instant case, the investigation is already complete and even the challan has also been presented. Therefore, no useful purpose would be served by keeping the petitioner behind the bars. The instant petition is allowed and the petitioner is directed to be released on regular bail on execution of adequate personal/surety bond amounting to ₹ 10 lakhs to the satisfaction of concerned trial Court/Duty Magistrate. 2021 (6) TMI 827 Refund of IGST - tax paid on Ocean Freight under the reverse charge mechanism - Period of limitation - Constitutional Validity of N/N. 8/2017 Integrated Tax (Rate) dated 28.06.2017 and the Entry No.10 of the N/N. 10/2017 Integrated Tax (Rate) dated 28.06.2017 - lack of legislative competency - HELD THAT:- This Court in the writ-applicant s own case for earlier period declared the Notification No.8/2017 Integrated Tax (Rate) dated 28.06.2017 and the Entry No.10 of the Notification No.10/2017 Integrated Tax (Rate) dated 28.06.2017 ultra vires as they lacked the legislative competency. This Court held that the levy of the IGST under the RCM on the Ocean Freight for the service provided by a person located in a non-taxable territory by way of transportation of goods through vessel from a place outside India to customs frontier of India is unconstitutional. In the case of 3E Infotech Ltd. vs. CESTAT, [2018 (7) TMI 276 - MADRAS HIGH COURT], the Madras High Court held that the service tax paid under mistake of law is to be returned to the assessee irrespective of the period covered under the refund application. It was held that refusing to return the amount would go against the mandate of Article 265 of the Constitution of India. Period of limitation u//s Section 54 of the CGST Act is not applicable - general provisions provided under the Limitation Act is applicable to claim refund of such duty This writ-application succeeds and is hereby allowed. 2021 (6) TMI 826 Failure to deposit the GST Liability - GST was collected from the customers - failure to pay interest on the GST deposited/debited - non-filing of returns - issuance of invoice for outward supply or not - Penalty under Section 122(2) (b) of CGST Act - HELD THAT:- The appellant has issued the invoices for his whole outward supply and in the invoices he has charged the GST also. Therefore, it is very much obvious that liability of tax is arised upon the appellant at the time of issue of invoices and accordingly he should have to discharge his tax liability by filing the returns within the stipulated time but he did not do so. Hence he has violated the provisions of GST Act and rules made thereunder. Non-Filing of returns within stipulated time - HELD THAT:- The appellant has filed its returns and discharged his tax liability for the period Dec-2017 to July-2018 only after initiation of investigation. Further, the assessee/appellant was defaulted to file the returns and discharge its tax liability within the stipulated time for earlier period i.e. July 2017 to Nov 2017 also. The appellant did not file the GSTR-3B return for subsequent period August-2018 to March-2019. The continuous failure of filing of returns and not discharging its tax liability within the stipulated time by the appellant itself indicate the ill intention of the appellant. Non filing of returns and non discharging of liability is clear cut violation/ contravention of provisions of Section 37,39,49,50 59 of CGST Act and rules made thereunder - the appellant has issued the tax invoices for its outward supplies to his customers mentioning the tax liability on its and as per provisions of Section 12 13 of CGST Act, tax liability is arise on the date of issuance of invoices only - thus, the appellant failed to discharge his tax liability with intent to evade the same. In the instant case, there is no doubt in the fact that the appellant is regular defaulter of the payment of tax and filing of returns which shows contraventions of the GST laws and rules made thereunder. This act of omission and commission itself establish the charge of suppression - any offence can not be proved without the records/documents of offender/ assessee/tax payer. In the instant case also investigating as well as adjudicating authority has established the demand with documentary evidence which were collected from him. Penalty under Section 122(2) (b) of CGST Act - HELD THAT:- The contravention of the appellant has already been discussed in foregoing paras and it is established that he failed to deposit the tax within the stipulated time as provided in the GST Act and rules hence penalty under Section 122(2) (b) of CGST Act itself attracted in the instant case. The order passed by the adjudicating authority is proper and correct - Appeal disposed off. Income Tax 2021 (6) TMI 825 Reopening of assessment u/s 147 - ALV estimation - income from house property - whether Tribunal was right and justified quashing the reassessment when the assessment has been re-opened even before the expiry of 4 years from the end of the relevant assessment year? - excess relief was allowed by way of deduction of interest on housing loan - HELD THAT:- As the provisions rendered by Hon'ble Supreme Court in the case of Kelvinator of India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT ] is applicable in favour of the assessee and consequently, we hold that the AO proceeded to initiate reassessment proceedings u/s. 147 of the Act and issuance of notice u/s. 148 of the Act without any new tangible material and without application of mind merely on the strength of direction of Ld. CIT(A) that the suitable course of action available to the AO under the Act is application of provisions of section 147 of the I.T. Act as to the appellant excess relief was allowed by way of deduction of interest on housing loan. But there was no new or tangible material before the AO to initiate reassessment proceedings u/s. 147 of the Act. We are unable to see application of mind by the AO of the materials available before him. The AO has not recorded any basis or factum gathered by him after application of mind of the assessment already completed which could reflect that before initiation of reassessment proceedings u/s. 147 of the Act, he applied his mind and thereafter reached to a conclusion that he had reasons to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act empowering him to issue notice u/s. 148 - Decided in favour of assessee. 2021 (6) TMI 824 Deduction u/s 80IA - claim to be allowed to a single Industrial Unit OR all the units taken together - Whether Tribunal was right in law in holding that the assessee is entitled deduction under section 80IA of the Act, even though where a company apart from his regular business and in the business of generation and distribution of power, owning more than one Industrial Undertaking? - HELD THAT:- Having regard to the submissions made by the learned counsel on either side, following the ratio laid down by the Hon'ble Division Bench of this Court in the Judgment reported in Commissioner of Income Tax, Coimbatore v. M/s.Bannari Amman Sugars Ltd. [ 2019 (3) TMI 14 - MADRAS HIGH COURT ] the question of law is decided against the Revenue and in favour of the assessee. 2021 (6) TMI 823 Validity of assessment - whether a show cause notice has to be issued prior to finalisation of assessments under the Act? - Petitioner had relied upon an Instruction issued by the Central Board of Direct Taxes (CBDT) bearing No.20 of 2015 dated 29.12.2015 dealing with the subjects 'Scrutiny assessments some important issues and scope of scrutiny in cases selected though Computer Aided Scrutiny Selection (CASS)' - HELD THAT:- In this case, admittedly, two pre-assessment notices have been issued leading to some exchange of communications inter se the parties. However, no show cause notice crystallizing the issues dealt with in the assessment orders have been crystallised as such and put to the petitioner for rebuttal, prior to completion of proceedings. CBDT has fairly concluded that principles of natural justice which are enshrined in the procedure for assessment mandate the issuance of a show cause notice prior to finalisation of an order of assessment. The Board refers to Instruction No.3 of 2018 dated 20.08.2018, specifically para 6(vi) thereof relating to AY 2016-17 and the 'E-proceeding' facility available during 2018-19, specifically para (iv)d thereof as well as Circular Number 27 of 2019 dated 26.09.2019 that also reiterate the importance of adherence to the principles of natural justice in the finalisation of proceedings. In view of the confirmation by the CBDT, an important issue stands settled. Though the Income Tax Act does not anywhere contemplate issuance of a show cause notice prior to finalisation of scrutiny assessments, as a matter of procedure and good office, the Assessing Authority is expected to crystalise the issues arising from the return of income filed by an assessee, the questionnaires issued under Section 142(1) and notices under Section 143(2) and responses thereto, issue a show cause notice setting out the issues, solicit the response of the assessee and pass orders only thereafter, after hearing the assessee concerned. Writ Petitions are allowed. The orders of assessment in this case shall be treated as show cause notices and the petitioner shall file replies to the same within a period of six (6) weeks from today. 2021 (6) TMI 822 Acceptable ground for the purpose of entertaining a Writ Petition - power of judicial review of the High Court - Reopening of assessment u/s 147 - as contended that the very initiation of reopening the proceedings under Section 147, issuance of notice under Section 148 and the reasons furnished are untenable and therefore, the assessment order is liable to be quashed - HELD THAT:- This Court is of the considered opinion that the mixed question of fact and law is to be decided with reference to the original documents and evidences by the appellate authority in the present case, as statutory appeal is contemplated under the provisions of the Income Tax Act. Preferring an appeal is the rule. Entertaining a Writ Petition before exhausting the appellate remedy is an exception. Undoubtedly, writ proceedings may be entertained before exhausting the appellate remedy. It is to be ensured that there is an imminent threat or gross injustice warranting urgent relief to be granted. Mere violation of principles of natural justice is insufficient to entertain a writ proceedings under Article 226 of the Constitution of India, as every Writ Petition is filed based on one or the other ground stating that the principles of natural justice is violated or statutory requirements are not complied with or there is an illegality or otherwise. Thus, dispensing with an appellate remedy is to be granted cautiously in view of the fact that the very purpose and object of legislation providing an appellate remedy cannot be diluted nor the benefit be denied to the aggrieved person to exhaust the same. The statutory appellate authorities are the final fact finding authorities. Thus, the finding to be made by such appellate authorities with reference to the documents and evidences are of paramount importance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself. Thus, the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a rowing enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. Thus, the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. The 2nd Writ Petition is filed challenging the original assessment order. Thus, the petitioner is at liberty to prefer an appeal contemplated under the statute for redressal of his grievances by following the procedures.The petitioner is at liberty to prefer such an appeal within a period of four weeks from the date of receipt of a copy of this order. 2021 (6) TMI 821 Adjustment of demand against refund - HELD THAT:- We are informed that insofar as AY 2003-2004 is concerned, the applicant/petitioner is entitled to refund of ₹ 4,92,69,031 and likewise in respect of AY 2004-2005, the petitioner is entitled to refund of ₹ 7,94,89,178. As against this, we are told, that the demand for AY 2005-2006 is approximately ₹ 2.02 crores. The assessing officer should have made the adjustment, and passed an appropriate order, in that behalf. Since this suggestion has not been accepted, the captioned application is disposed of, with the following directions: (i) The concerned officer will ensure that the amount payable on account of refund to the applicant/petitioner for AY 2003-2004 and AY 2004-2005 is remitted to it within 10 days of receipt of a copy of the order, after making adjustment to the demand outstanding against AY 2005-2006. (ii) That being said, we may note that Ms. Vibhooti Malhotra has not able to tell us as to whether, apart from AY 2005-2006, any other demand is outstanding qua the petitioner. Therefore, in case it is discovered that a recoverable demand is outstanding vis-a-vis the petitioner, the same will be adjusted before releasing any amount as indicated in paragraph 3(i) above, albeit, only after serving a prior notice and giving due opportunity to the petitioner to contest the same. 2021 (6) TMI 820 Validity of Draft assessment order passed without issuance of a show cause notice u/s 144B - HELD THAT:- As noted the impugned draft assessment order has been issued under Section 143(3) and Section 144C of the Act. This assessment order concerns the assessment year (AY) 2017-2018. Besides this, the petitioner has also assailed the Standing Order No. 1439(E), dated 31.03.2021, issued by the Central Government, which amended the Standing Order No. 3297(E), dated 25.09.2020, issued by the Central Government in exercise of its powers under Section 250(6C) of the Act. Issue notice. Mr. Abhishek Maratha accepts service on behalf of the respondents/revenue. 2021 (6) TMI 819 Rectification u/s 254 - HELD THAT:- This is a miscellaneous application for rectification of mistake apparent from the record, in a miscellaneous application order passed by the ITAT. In this regard, it may be noted that section 254(2) permitting the rectification of mistake is only with regard to the amendment of any order passed u/s 254(1). The miscellaneous application order passed u/s 254(2) cannot be subjected to an appeal u/s 254(2).In our considered opinion, this miscellaneous application against a miscellaneous application order is not maintainable. In this view of the matter, this miscellaneous application by the assessee stands dismissed. Miscellaneous application by the assessee stands dismissed. 2021 (6) TMI 818 Revision u/s 263 - disallowance of deduction claimed u/s 10B - HELD THAT:- We notice that there is difference of opinion between the parties on the factual aspects of the claim. While the assessee claims that the granite slabs have been exported after undertaking the activities of sawing, cutting and polishing, the revenue has claimed that the finished granite slabs have been purchased from the market. The revenue s stand is that the deduction u/s 10B is available only in respect of manufacture or production activities. The assessee s case is that it has produced cut and polished granite slabs. It is also the case of the assessee that the co-ordinate bench of Tribunal has allowed the deduction on the profit realized on export of granite slabs in AY 2006-07 by following the decision rendered by Hon ble Delhi High Court in the case of CIT Vs. ARR-ESS Exim Pvt Ltd. [ 2015 (2) TMI 413 - DELHI HIGH COURT] CIT(A), after noticing above said observations of the Tribunal, has discussed various other case laws to buttress the revenue s view that the deduction u/s 10B is available in respect of manufacture or production activities. Hence the issue has to be examined independently without having resort to the decision rendered by the co-ordinate bench in AY 2006-07. Assessee has furnished the Profit and Loss account which show that the assessee has incurred expenses on extraction and quarrying, purchase of blocks and purchase of finished goods. Assessee has been doing its own processing of raw blocks and has also purchased finished goods. The Hon ble Supreme Court has held in the case of Arihant Tiles Marbles P Ltd [ 2009 (12) TMI 1 - SUPREME COURT] that sawing of marble blocks into slabs and tiles and polishing activities amount to manufacture or production. Hence the assessee should be eligible for deduction u/s 10B in respect of export of granite slabs, which it has subjected to production process. Since the provisions of sec.10B refers to the activity of manufacture or production , we are of the view that the assessee shall not be eligible for deduction u/s 10B in respect of profits realised export of purchased finished goods (trading items). The break-up details of the export turnover between export of granites processed by the assessee and export of purchased items are not available on record. Rather, none has examined this aspect. Hence, this aspect requires examination at the end of AO. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore this issue to the file of the AO for examining the same afresh. We make it clear that the assessee is eligible for deduction u/s 10B of the Act in respect of profits realized on export of granite slabs, which has been processed by it. It shall not be eligible for deduction in respect of profit realized on export of purchased items, i.e., items which has been exported as it is without undertaking any process of sawing blocks into slabs and tiles and polishing - Appeal of the assessee is treated as allowed for statistical purposes. 2021 (6) TMI 817 Reopening of assessment u/s 147 - AO has expressed the view that the Provision for Standard assets cannot be claimed u/s 36(1)(via) - HELD THAT:- AO having allowed the claim of the assessee in the original assessment proceedings, has reopened the assessment on mere change of opinion. Further, the view expressed the AO on the deduction available u/s 36(1)(via) is also, in our opinion, not a correct view The Hon ble Delhi High Court in the case of Kelvinator of India Ltd. [ 2002 (4) TMI 37 - DELHI HIGH COURT] has held that the reopening of assessment upon mere change of opinion is not valid in law. Accordingly, we are of the view that there is merit in the contention of the assessee that reopening of assessment is not valid. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and hold that the reopening is bad in law. Appeal filed by the assessee is allowed. 2021 (6) TMI 816 Unexplained u/s 68 - fresh funds in the form of share application money and share premium amount in the books of assessee company - HELD THAT:- We find no justifiable basis to interfere with the findings of the lower authority as the assessee has failed to provide necessary explanation to the satisfaction of the AO about the genuineness of the transaction including the related matters of valuation and creditworthiness of the investor company. Therefore, the ground of appeal so taken by the assessee is dismissed and the order of the ld CIT(A) is hereby sustained. Appeal of the assessee is dismissed. 2021 (6) TMI 815 Assessment u/s 153A - Protective assessment - whether the funds lying with the bank accounts as mentioned hereinabove belong to the assessee before us and finally the interest income arising out of those funds can be assessed in the hands of the assessee on substantive basis? - HELD THAT:- The right to make protective assessment is the right to be exercised by the ITO and not the appellate authority. Once addition made on substantive basis in the hands of the sons of the assessee and tax and/or penalty paid thereon the said category of assessment cannot be altered from substantive to protective by indicating the substantive assessment as an error on the part of the Ld. AO merely on the ground that the said income was added on substantive basis in the hands of the assessee. This proposition and conclusion made thereupon by the Ld. CIT(A) at the appellate proceeding is nothing but an afterthought, without any basis arbitrary, whimsical, erroneous and not sustainable in the eyes of law. This observation made by the Ld. CIT(A) thus may to be expunged. From all corners the Revenue has failed to satisfy us to how the addition in the hands of the assessee at all be sustainable. By no stretch of imagination the addition made by Revenue on the interests income on substantive basis in the hands of the assessee holding assessee as the owner of the funds of the account only on relying upon the instructions to transfer the fund solely on the basis of surmise and conjecture cannot be said to be justified in the absence of corroborative evidence and/or clinching evidence in support of the same and also on the ground of assessment already made on substantive basis in the hands of the sons of the assessee on the same amount of interest income as narrated hereinbefore. In that view of the matter, the addition under challenge is hereby deleted. Addition on substantive basis in the hands of the assessee by way of interest on ABN Amro Bank Account bearing NO. 208695A jointly held with grandson of the appellant - HELD THAT:- AO in the assessment proceeding initiated against the assessee added the same income in the hands of the assessee on substantive basis in the similar manner as has been done in respect of the income already assessed in the hands of the sons of the appellant on substantive basis and income was assessed in the hands of the grandson on protective basis. However, the substantive addition made in the hands of Vicky Mehta on this particular amount of income in respect of the year under consideration has not been denied by the Revenue. No evidence is forthcoming so as to substantiate that the income belongs to the assessee and not Vicky Mehta upon whom the income has already been assessed on substantive basis. Needless to mention that in this case also such addition in the hands of the assessee on substantive basis on the same amount already assessed and added in the hands of the grandson Vicky Mehta on substantive suffers from the principle of double taxation. Relying upon the observation made by us hereinabove on this issue in case of the assessment made in the hands of the sons, we find that the addition by way of interest on ABN Amro Bank Account No. 208695A again in the hands of the assessee is not sustainable in the eye of law and, thus, deleted. Substantive income returned by the appellant into a protective income - HELD THAT:- It is a settled position of law that before making such order the person concern should be given an opportunity of being heard. Unless the person in whose hand the income is directed to be added on protective basis from substantive basis the direction issued by the appellate authority is an exercise in futility. The completed assessment cannot be disturbed in the manner as has been done by the Ld. CIT(A) in the case in hand. This direction is, thus, patently incorrect in the absence of providing an opportunity to the effected party while discharging judicial functions by the Ld. CIT(A). The matter relying upon the discussion on the identical issue as narrated hereinabove the assessment made by the Ld. CIT(A) in treating the substantive income returned by the appellant into a protective income in his hands is not sustainable in the eye of law and thus the same is hereby expunged. Addition of interest income from HSBC Account - HELD THAT:- The appellant has applied the exchange rate on the dates the respective interests were credited by the bank and as per the respective ledger furnished before the Revenue. The interest income has been found correct. Thus, the interest income as admitted by the Ld. AO by applying the exchange rate as on 31st March of that year has been rightly rejected by the Ld. CIT(A) and consequently deletion of addition of the difference amount is in our considered opinion just and proper and without any ambiguity so as to warrant interference. Hence, the ground of appeal preferred by Revenue is found to be devoid of any merit and, thus, dismissed. 2021 (6) TMI 814 Disallowance u/s 14A read with Rule 8D(2) - assessee had earned exempt income in the form of dividend and had made suo moto disallowance u/s 14A - CIT-A had deleted the disallowance of interest made under Rule 8D(2)(ii) of the Rules on the ground that the assessee company is having sufficient interest free funds in its kitty - HELD THAT:- It is a fact on record that the assessee is having sufficient interest free funds in the form of share capital and reserves to the tune as on 31.3.13 which is evident from the bare perusal of the financial statements for the respective period and that the same is much more than the investments made by the assessee. Hence by applying the ratio laid down by the Hon ble Jurisdictional High Court in the case of HDFC Bank Ltd [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] and in the case of Reliance Industries Ltd [ 2019 (1) TMI 757 - SUPREME COURT ] we hold that no disallowance of interest need to be made under Rule 8D(2)(ii) of the Rules. Disallowance under Rule 8D(2)(iii) of the Rules, the ld AR argued that the disallowance already made by the assessee was much more than disallowance warranted under third limb of Rule 8D(2) of the Rules. We are inclined to agree with the same. Hence we direct the ld AO not to make any disallowance u/s 14A of the Act other than the suo moto disallowance already made by the assessee in the return of income, both under normal provisions of the Act as well as in the computation of book profits u/s 115JB of the Act. Accordingly, the Ground No. 1 raised by the revenue is dismissed. Disallowance of business loss on account of NSEL and also treating the said loss as speculative loss - whether the loss arising on the impugned transaction could be construed as speculative loss specifically? - HELD THAT:- We hold that the loss arising on account of payment made to NSEL through registered broker towards purchase of commodities (which were never delivered to assessee) , shall be allowable as regular business loss u/s 28 of the Act. We further hold that the said loss cannot be construed as speculative in nature. Accordingly, we do not find any infirmity in the order of the ld CITA in this regard. Interest income on fixed deposits - Addition under the head Income from other sources or assessee s claim to be taxed under the head Income from Business - HELD THAT:- CIT-A had categorically given a finding that the investment in fixed deposit made with ICICI Bank has got an inextricable link with the business activity of the assessee and hence the interest income thereon is required to be taxed only as business income. CIT-A also recorded the fact that the ld AO himself had accepted this fact in Asst Year 2015-16 u/s 143(3) of the Act. With regard to resjudicata in income tax proceedings, we find that the ld CIT-A had stated though the principle of resjudicata does not apply to income tax proceedings, but the principle of consistency cannot be given a go by. Reliance in this regard was placed on the decision of Hon ble Jurisdictional High Court in the case of CIT vs Gopal Purohit [ 2010 (1) TMI 7 - BOMBAY HIGH COURT ] and case of Radhasoami Satsang vs CIT [ 1991 (11) TMI 2 - SUPREME COURT ] Hence we do not find any infirmity in the said order of the ld CITA granting relief to the assessee. Accordingly, the Ground No.1 raised by the revenue is dismissed for the Asst Year 2016-17. Disallowance made u/s 14A of the Act read with Rule 8D(2) of the Rules - HELD THAT:- CIT-A had also recorded a categorical finding that the ld AO had not recorded any objective satisfaction having regard to the books of accounts of the assessee, as to why the claim made by the assessee that no expenditure has been incurred other than for the purpose of earning exempt income, is incorrect. This objective satisfaction with cogent reasons are required to be recorded in terms of section 14A(2) of the Act read with Rule 8D(1) of the Rules. This issue is no longer res integra by the decision of the Hon ble Supreme Court in the case of Maxopp Investments [ 2018 (3) TMI 805 - SUPREME COURT ] thereon. We find that the ld CITA had also granted relief on this count by placing reliance on the decision of Hon ble Delhi High Court in the case of Eicher Motors Ltd vs CIT [ 2017 (9) TMI 1043 - DELHI HIGH COURT ] on which, we find no infirmity. Hence the Ground No. 2 raised by the revenue is dismissed. Adjustment of brought forward business loss and unabsorbed depreciation of Asst Year 2014-15 against the business income of the assessee - HELD THAT:- We have already held in assessee s own case for the Asst Year 2014-15 hereinabove that the business loss would be allowable as business loss u/s 28 of the Act. Hence the said loss would be eligible to be carried forward to subsequent years in terms of section 72 and 32 of the Act to be set off with the business income or other income, as the case may be. We find that the ld AO had primarily dismissed the claim of the assessee since he had already disallowed the business loss in Asst Year 2014-15 - But the said disallowance has already been deleted by us in Asst Year 2014-15. Hence this ground is effectively consequential in nature. The ld AO is hereby directed to allow the set off of losses from Asst Year 2014-15 after giving effect to our tribunal order for Asst year 2014-15 and whatever loss that is available to the assessee thereafter, should be allowed to be carried forward to subsequent years and allowed to be set off against future business income. Accordingly, the Ground No. 3 raised by the revenue is dismissed. 2021 (6) TMI 813 Disallowance u/s 36(I)(iii) - assessee company has advanced huge amounts to related concerns and to many other shareholders and that the assessee did not have any trading relations with the above two companies and also with the shareholders - disallow the proportionate interest paid by the assessee on the ground that the interest free advances were not for the purposes of assessee's business - HELD THAT:- We find that the assessee's contention of its own interest free funds being much more than the advances made as interest free loans needs verification - we deem it fit and proper to set aside the issue to the file of the Assessing Officer for denovo consideration in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing we find that the assessee's contention of its own interest free funds being much more than the advances made as interest free loans needs verification. In view of the same, we deem it fit and proper to set aside the issue to the file of the Assessing Officer for denovo consideration in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing.- Decided in favour of assessee for statistical purposes. 2021 (6) TMI 812 Reopening of assessment u/s 147 - assessee had shown fixed assets but he had not offered any income from the said property except agriculture income - HELD THAT:- As decided in M/S FATEH SOFTECH PVT. LTD. VERSUS INCOME TAX OFFICER, WARD-1 (4) [ 2021 (5) TMI 957 - ITAT CHANDIGARH] merely possession of a fixed asset does not mean that the assessee might have earned any income from the said asset which would have escaped assessment. Admittedly the assessee owns agricultural land where upon certain construction has been made by the assessee. It has been used for its own purposes. The reasons recorded by the Assessing Officer do not disclose that the assessee has used any of his assets for any business or rental purposes. The formation of belief by the AO in this case regarding the escapement of income of the assessee view is based on just assumptions and presumptions and there was no reliable material available with the AO to form the belief that the income of the assessee had escaped assessment. In this view, reopening of the assessment in this case, in my view is bad in law and the same is therefore quashed. Appeal of the assessee is allowed 2021 (6) TMI 811 Exemption u/s 11 - grant of registration u/s. 12AA - appellant company made an application in Form No. 10A for grant of registration u/s. 12A - HELD THAT:- As carefully gone through the MOA, we found that the appellant company is formed to provide reemployment to ex-servicemen etc. On perusal of clause set out in Memorandum of Association, we are unable to discern clause creating an interest in property in favour of the public for any of the object listed u/s. 2(15) which is sine qua non for creation of charity - we may point out that covenant in the MOA does permit the appellant company to distribute the profits in the form of dividend amongst its members and does not set out a condition that the income earned by the appellant company shall be deployed for the objects of the company. - This would make the appellant company a commercial organization. However, the view of the ld. CIT (Exemption) that the appellant company is a commercial organization merely because it is generating huge revenue from year to year with mark-up on the cost of 10% to 12% cannot be upheld. CIT (Exemption) had not considered the matter in proper perspective. The matter should be remanded back to the file of the ld. CIT (E) for de-novo consideration of application on the touchstone of law laid down by in the case of Ananda Social and Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT] after giving due opportunity of being heard to the appellant. Grounds of appeal raised by the assessee are partly allowed for statistical purposes. 2021 (6) TMI 810 Enhancement of income as provided u/s. 251(2) - Power of CIT(A) - Assessee argued as not providing a reasonable opportunity of show cause against such enhancement - HELD THAT:- CIT(A) has not adhered to the provisions of section 251(2) of the Act. The Ld. AO has also passed an ex-parte order due to the non-cooperation of the assessee. We hereby remit back the entire matter back to the file of the Ld. AO for de novo consideration. At the same breath, hereby caution the assessee to promptly cooperate before the Ld. Revenue Authorities failing which they shall be at liberty to pass appropriate order in accordance with law and merit based on the materials on record. Appeal of the assessee is allowed for statistical purposes as indicated. 2021 (6) TMI 809 Exemption u/s 80G - assessee trust is religious in nature in exclusion to other activities - HELD THAT:- Whole conclusion derived on a shaky ground is damp squib in the absence of any definite fact in this regard. Consequently, the second plea raised on behalf of the assessee that certain expenditure tabulated in page 3 of the CIT(E)'s order fall outside the ambit of religious activity is not being examined at this stage. No such plea has been dealt with by CIT(E). If the plea raised on behalf of the assessee having regard to the nature of expenses is found to be true, the threshold limit of incurred expenditure not exceeding 5% of its total income as stipulated u/s 80G(5B) will not be breached and therefore the adverse inference drawn against the assessee trust would not be sustainable in law. The order of the CIT(E) dated 19.06.2018 is set aside and the entire matter is restored back to the file of the CIT(E)/Competent Authority for de novo consideration in the light of facts available on record as well as fresh facts that may come to the light or pointed out to him by the assessee trust. It shall be open to the assessee trust to place all arguments and evidences in corroboration, as may be deemed necessary, in support of its application for approval 80G pending before the Competent Authority. Pertinent here to observe that the fair opportunity shall be granted to the assessee trust before coming to the conclusion as directed. Competent Authority shall make every possible endeavor to dispose of the application for approval u/s 80G in question within 3 months from the date of service of this order. The assessee trust shall extend full co-operation in speedy disposal of the matter without any demur. Appeal of the assessee is allowed for statistical purposes. 2021 (6) TMI 808 Penalty levied u/s 271(1)(c) - Addition on estimated basis - HELD THAT:- AO Imposed penalty under section 271(1)(c) of the Act on ad hoc basis without adducing any evidence on record for concealment of income. Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We find support from the series of decisions by different High Courts as well the decision of the Co ordinate Benches of the Tribunal, wherein it was held that when addition is made on estimate basis, penalty is not sustainable in the eyes of law - Appeal filed by the assessee stands allowed. 2021 (6) TMI 807 Penalty u/s 271(1)(c) - addition made by the AO on the basis of information received from the Sales Tax Department - unexplained expenditure under section 69C - HELD THAT:- AO imposed penalty u/s 271(1)(c) on ad hoc basis without adducing any evidence on record for concealment of income. Penalty u/s 271(1)(c) is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We find support from the series of decisions by different High Courts as well the decision of the Co ordinate Benches of the Tribunal, wherein it was held that when addition is made on estimate basis, penalty is not sustainable in the eyes of law. Departmental Authorities has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that the learned Commissioner (Appeals) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the Assessing Officer do not call for initiation of penalty. Revenue s appeal is dismissed. 2021 (6) TMI 806 Penalty u/s 271(1)(c) - Unexplained expenditure u/s 69C - Commissioner (Appeals) has restricted the addition @ 5% of such purchases/accommodation entries - HELD THAT:- AO imposed penalty under section 271(1)(c) on ad hoc basis without adducing any evidence on record for concealment of income. Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We are of the considered view that the Commissioner (Appeals) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the AO do not call for initiation of penalty. Consequently, we uphold the order passed by the Commissioner (Appeals) by dismissing the grounds of appeal raised by the Revenue. 2021 (6) TMI 805 Levy of penalty u/s 271(1)(c) - Defective notice issued u/s 274 - computation of short-term capital gain - HELD THAT:- We find, the assessee, in the instant case, during the course of assessment proceedings had surrendered an income for the computation of short-term capital gain which amount was received by him on 13th December, 2011 by cheque and which relates to A.Y. 2012-13. The assessee had paid tax on the above amount. As further to be noted that the assessee had surrendered the above income before it was detected by the Department although only statutory notices had been issued. The Hon ble Supreme Court in the case of PricewaterhouseCoopers, [ 2012 (9) TMI 775 - SUPREME COURT] while deleting the penalty upheld that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars. We find, the assessee in the instant case had received an amoun on 13th December, 2011 which relates to A.Y. 2012-13 and, therefore, we find merit in the argument of the ld. counsel for the assessee that non-inclusion of the same while computing the income for A.Y. 2014-15 is only an inadvertent and bonafide error which the assessee came to know later on and had voluntarily offered the income and paid tax. A perusal of the notice issued u/s 274 r.w.s. 271 shows that the inappropriate words in the said notice have not been struck off. The coordinate Benches of the Tribunal following the decisions cited by the ld. Counsel for the assessee (supra) are consistently taking the view that where the inappropriate words in the penalty notice has not been struck off and notice does not specify as to under which limb of the provisions the penalty u/s 271(1)(c) has been initiated, then, levy of penalty u/s 271(1)(c) of the Act is not sustainable and has to be deleted - Appeal filed by the assessee is allowed. Customs 2021 (6) TMI 802 Interim suspension of the operation of Customs Broker's License - Time limitation - HELD THAT:- The date of acknowledgement of the offence report is relevant date to be considered for the purpose of initiation of action for revocation of license by following the procedures contemplated under the Customs Brokers Licensing Regulations - In the present case, the show cause notice issued on 16.09.2015 and the order in original, imposing penalty issued on 22.03.2016, and therefore, the license issuing authority was nothing to do with that proceedings. Only when the penalty imposed was communicated to the License Issuing Authority at Chennai, they are empowered to institute action under the provisions of the Customs Brokers Licensing Regulations - In the present case, admittedly, the interim order of suspension was issued on 08.08.2016 under Regulation 19. Carefully considering the relevant dates and the receipt of offence report by the first respondent / License Issuing Authority, this Court is of an opinion that the period of limitation for initiation of action under the regulation is to be reckoned from 01.07.2016, the date on which the offence report had been received by the License Issuing Authority / the Commissioner of Customs, Chennai. This being the factum, the impugned interim suspension order was issued on 08.08.2016 and the impugned show cause notice was issued on 28.09.2016. These proceedings were instituted within a period of 90 days. Thus, the orders cannot be said to be violative by the time limit prescribed under the Regulations. This Court is of the considered opinion that normally a writ against a show cause notice is not entertainable. As far as the interim order of suspension is concerned, the writ petitioner is continuing its operation for about 4 years and therefore, the interim order of suspension lost its relevance. Thus, the interim order of suspension need not be restored and the respondents are permitted to continue the proceedings based on the show cause notice issued on 28.09.2016 and take a decision and pass final orders. As the respondents could able to establish factually that the offence report was communicated to the License Issuing Authority on 01.07.2016, the action initiated by issuing interim suspension order and show cause notice dated 28.09.2016 are well within the period of limitation as contemplated under the Regulations and there is no infirmity as such - However, the interim order of suspension issued need not be given effect to as the petitioner is operating continuously for about 4 years, after the issuance of interim suspension order. But in respect of the impugned show cause notice, the petitioner is at liberty to submit their explanations along with the relevant documents and evidences and participate in the process of enquiry. The respondents are directed to proceed with the enquiry by affording opportunity to the writ petitioner as expeditiously as possible and dispose of the enquiry proceedings preferably within a period of six months from the date of receipt of a copy of this order. Petition disposed off. 2021 (6) TMI 794 Testing of export goods - whether the goods exported by the petitioner was a rigid spiral or not and hence the sample may be referred to the Central Institute of Plastics Engineering Technology (CIPET), Guindy, Chennai and sealed remanent returned? - HELD THAT:- During the course of proceedings before the Revisional Authority namely, the first respondent, the Central Institute of Plastics Engineering Technology (CIPET) appears to have apparently given a different opinion by its communication dated 12.05.2009 in respect of the same material. Though this has been considered by the first respondent Revisional Authority, it is to be emphasized that the testing authority is not a competent authority to determine the classification. Its role is limited to give indicators of chemical composition for a final determination of correct classification by the assessing officer. The case should be remitted back to the third respondent to re-determine the correct classification for the purpose of grant of duty drawback to the petitioner on the export made by it in terms of the Schedule to the duty drawback - Petition allowed by way of remand. 2021 (6) TMI 793 Review petition/recall order - HELD THAT:- The respondents though submitted that at the time when the writ petition was disposed of on 03.03.2020 there was no such appeal pending except the appeal before the commissioner, but do not deny the fact that in a connected writ petition bearing No.6312/2020 in a review petition No.27/2021 this Court had ordered the arrangement - The order is recalled. 2021 (6) TMI 792 Refund of duty paid - duty element to the extent of which refund was claimed, was passed on to the buyer or not - refund amount to be deposited in Consumer Welfare Fund or not? - principles of unjust enrichment - HELD THAT:- A perusal of the adjudication orders reveals that the Adjudicating Authority has mainly verified the usage of raw materials in the production of the final product between 17.10.2017 and 04.11.2017(19 days) in respect of first BOE/Order and between 27.10.2017 and 04.11.2017 (9 days) in respect of second BOE/Order. However, there is no finding at all as regards the primary contention of the appellant that the Basic Customs Duty itself was not legally payable, but was paid in excess - Further, stock movement is traced from the date of its import, to its usage (19/9 days), but a finding is given to the effect that the same was sufficient to hold the passing on of the duty element. However, there is no finding at all as to what was actually passed on; rather, the exact amount of duty that was passed on is not there which is very vital. The Adjudicating Authority has very comfortably adopted the amount of refund claimed as the amount of duty passed on without demonstrating the specific amount, from the books or the Balance sheet. The impugned order is not sustainable, is liable to be set aside - the matters are remanded to the file of the Adjudicating Authority to determine the above factual matrix after giving sufficient and reasonable opportunities to the appellant - appeal allowed by way of remand. 2021 (6) TMI 782 Seeking restoration of revoked license - customs broker licence - forfeiture of security deposit - levy of penalty - emplacement of offence report within the scheme of revocation - Regulation 18 of Customs Brokers Licencing Regulations, 2018 - HELD THAT:- It is seen that the show cause notices of 2009 and 2010, being the earliest documentation of any allegation that the appellant may have been involved in misuse of authorizations, was the proximate cause of action for recourse to Customs Brokers Licencing Regulations, 2018. In the absence of any other document that claims to be the offence report , these notices must be taken to be the said reports for triggering proceedings thereafter. Leaving aside the issue of the elapse of time between the said show cause notices under Customs Act, 1962 and the notice under regulation no. 17 of Customs Brokers Licencing Regulations, 2018, the erasure of the proposals against the customs broker contained in those very show cause notices as early as September 2019 had wiped the offence reports out of existence well before the notice for revocation was issued. In other words, the proceedings were commenced without the metaphorical starter pistol and thus renders the subsequent inquiry and impugned order to be stillborn. The emplacement of offence report within the scheme of revocation is not intended to be stultified under any circumstance and permitting of any dilution can only be at the cost of perverting the legislative intent of section 146 of Customs Act, 1962. Strict adherence to legislated empowerment cannot but be insisted upon even before merit of the detriment can be interfered with. In the light of the discussion, which takes note of the manifest lack of offence report when notice under regulation no. 17 of Customs Broker Licencing Regulations, 2018 was issued, we are constrained to negate the very proceedings that followed along with the consequences thereon in the form of revocation of licence, forfeiture of security deposit and imposition of penalty - appeal allowed - decided in favor of appellant. 2021 (6) TMI 781 Interest on delayed refund - adjudicating authority failed to record any finding on the issue of admissibility of interest - HELD THAT:- Since the adjudicating authority has not recorded any finding on the issue of admissibility of interest, accordingly, the matter needs to be reconsidered by the adjudicating authority. Consequently, the matter was remanded with direction to decide the issue within two months from the date of communication of the order. Aggrieved by the said observation, the appellant raised the issue before this Tribunal. During the pendency of the appeal before this Tribunal, the adjudicating authority implemented the order of the learned Commissioner (Appeals) sand sanctioned the total interest amount of ₹ 7,98,663/-. The grievance of the appellant assailing the impugned order of the learned Commissioner (Appeals) has now been addressed by the adjudication order dated 28.04.2020 - Appeal dismissed. 2021 (6) TMI 780 Revocation of Customs Broker license - forfeiture of security deposit - levy of penalty - evasion of duty by undervaluation and misdeclaration of quantity - HELD THAT:- Instead of rendering a finding on each of the four articles of charge, on the basis of evidence furnished and response of the customs broker, the enquiry authority has rendered a finding on a charge that was, apparently, not levelled against the appellant. The licensing authority, while sustaining the proposal in the show cause notice on the basis of the report of the enquiry officer, failed to take note of this aberration. That colourable exercise of jurisdiction, thereby, stands transferred to the impugned order. The license of the appellant having been revoked by the first of the impugned orders, the subsequent revocation, and forfeiture of security deposit, should, in normal circumstances, be held as infructuous. However, as the procedure laid down in law, under Customs Broker Licensing Regulations, 2018, have been departed from in the stages leading to the first order of revocation rendering the original revocation to be lacking in legality and propriety, it would be appropriate to set aside both the impugned orders and remand them to the original authority for deciding afresh after instituting a fresh enquiry, as prescribed under Customs Broker Licensing Regulations, 2018, for ascertaining the correctness, or otherwise, of each of the articles of charge appended to the two show cause notices. Appeal allowed by way of remand. 2021 (6) TMI 779 Revocation of Customs Broker License - forfeiture of security deposit - imposition of penalty - export of Pseudo Ephedrine concealed in the declared cargo, namely Chow Chow - violation of Regulations 11(a), 11(d) and 11(n) of CBLR, 2013 - HELD THAT:- The employees of the appellant Customs Broker at the time of investigation of attempt to export illegally white crystalline powder suspected to be Pseudo Ephedrine by the ACIU, in their respective statements voluntarily disclosed that they had not obtained proper authorization from the exporter and the export documents were handed over by the elder brother of Shri M. Amrithalingam. The said statements were not retracted nor assailed by requesting cross-examination particularly when charge of contravention of Regulation 11(a) of non-receipt of authorization from the exporter was framed against the appellant. The authorities below have also observed that not only in connection with the present consignment but also in the past five export consignments the appellant had not obtained proper authorization from the exporter - much importance cannot be placed on the said authorization letter at this stage when the statements furnished remained unchallenged. In these circumstances, it is to be accepted that the appellant contravened the provisions of Regulation 11(a) of CBLR, 2013. Contravention of Regulation 11(d) - HELD THAT:- The learned Commissioner reasoned that since the appellant could not produce the valid authorization for whom they were transacting the business or whom he has represented, the question of advising the said client to comply with the provisions of the CBLR, 2013 is out of question, therefore, the violation of Regulation 11(d) on the part of the Customs Broker has been established. Also, in support of the said finding, the learned Commissioner observed that the appellant had not only filed the shipping bill in question without obtaining authorization but also had filed five such shipping bills in the past of the said exporter without any authorization or verification of the antecedents of the exporter - as per Regulation 11(d), the Customs Broker is required to advise his client to comply with the provisions of the Customs Act, whereas in the present case, since Customs Broker has not interacted with the exporter advising him to comply with the provisions of Customs Act, 1962 does not arise. Consequently, the learned Commissioner has correctly concluded that there is violation of Regulation 11(d) of CBLR, 2013 also. Violation of Regulation 11(n) - HELD THAT:- There are merit in the observation of the learned Commissioner as verification of antecedents, identity etc. be required to be done using the reliable independent authentic documents, data or information by the CB. Mere claim in this regard cannot suffice the requirement of production of authentic documents, data, information etc. in support of their claim of verification as required under the said Regulation particularly when the export documents were not directly handed over to the appellant and the same was received through a third party i.e. the elder brother of Shri M. Amrithalingam. Therefore, violation of Regulation 11(n) of the CBLR, 2013 as concluded by the learned Commissioner also does not call for interference. There are contravention of the Regulations by the appellant Customs Broker, but no evidence is brought on record establishing the involvement of or in the knowledge of the Appellant Custom Broker the attempt to export the crystalline white powder suspected to be Pseudo Ephedrine by the exporter concealing the same in the declared export cargo namely, Chow-Chow (vegetables). In these circumstances imposition of harsh penalty by revoking the license of the appellant is not warranted and hence deserves to be set aside. The impugned order is modified to the extent of setting aside the direction of revocation of license under Regulation 18 of the CBLR, 2013; the imposition of penalty and forfeiture of security deposit and imposition of penalty of ₹ 50,000/-as directed is upheld - Appeal allowed in part. Corporate Laws 2021 (6) TMI 800 Disqualification upon the petitioners for acting as Directors of Companies - Sections 164(2)(a) and 167(1)(a) of the Companies Act, 2013 - Constitutionality of Section 164 and Section 167 - Section 164 and the Principles of Natural Justice - Section 164(2) whether retrospective - Impact of provisos to Section 164(2) 167(1)(a) - Whether notice under Section 455(4) a sine qua non - Deactivation of DIN whether justified - case of petitioners is that the disqualification is mainly due to personal reasons. Constitutionality of Section 164 and Section 167 - HELD THAT:- The disqualification of Directors of a defaulting company for appointment as Directors in other companies, offends Article 19 of the Constitution, it was urged on behalf of the petitioners. The purpose of disqualification of defaulting Directors in other Companies is to make the Directors answerable to the corporate sector. The purpose is to save the corporate community from the consequences of mismanagement. It is intended to increase the standards of corporate governance. It is intended to protect creditors and the general public from mismanagement of Companies. Therefore the provisions Section 164 and Section 167 will fall within the exceptions under Article 19(6). Section 164 and the Principles of Natural Justice - HELD THAT:- In the case of non-filing of Annual Returns / Financial Statements by a company, the facts speak for themselves. No amount of explanation can alter the facts. As long as the statute does not provide for any exceptions in the matter of filing of Financial Statements / Annual Returns or in the matter of disqualification under Section 164(2), grant of opportunity of hearing would be nothing but an empty formality. The law imposes a strict liability on Directors - this court hold that the Companies Act, 2013 does not contemplate extension of opportunity of hearing to Directors of a Company while incurring disqualification under Section 164(2), and going by the scheme of the Act the principles of natural justice cannot be read into Section 164(2) or Section 167(1). Section 164(2) whether retrospective - HELD THAT:- There was no provision for disqualification of Directors of defaulting private Companies under the Act,1956. Such disqualification of Directors of private Companies was brought into force for the first time by the Act, 2013 with effect from 01.04.2014. Since the disqualification of Directors of defaulting private Companies is brought about for the first time, the provision Section 164(2) must be given only prospective operation and the continuous default period of three years should commence from or after 01.04.2014. This would be especially so because up to 31.03.2014 the provisions of Section 274(1)(g) of the Act,1956 were governing the field - this Court holds that Directors of private Companies cannot be disqualified for appointment / re-appointment as mandated under Section 164(2) if any of such three consecutive defaults in filing Annual Returns/Financial Statements, is before the financial year 2014-'15. Impact of provisos to Section 164(2) 167(1)(a) - HELD THAT:- When some of the petitioners herein had to vacate the office on 02.11.2015, it could have been only from the defaulting Company. The legislature, when realised that it would create an anomalous situation where there will be no Directors in a defaulting Company, introduced the proviso to Section 167(1)(a). Taking into consideration the purpose of incorporating the proviso, it should necessarily be given retrospective operation - The proviso however also contemplates that such Directors would vacate the office of Directors in all other Companies. Such a consequence was not contemplated originally under Section 167(1)(a). The proviso if applied retrospectively in its entirety, it would result in some of the petitioner-Directors vacating their offices in other companies retrospectively. Whether notice under Section 455(4) a sine qua non - HELD THAT:- Every company which has not filed Financial Statements / Annual Returns for two years cannot be invariably treated as a dormant Company. Companies which are active and having significant financial transactions may fail to file Financial Statements/Annual Returns for two consecutive years. Such companies cannot be treated as dormant Companies for that reason, for the purpose of being included in the Register of dormant Companies. It is evident from Section 455 that the provision is intended for an altogether different purpose. Section 455 cannot be construed as a provision to issue notice to defaulting Companies before their Directors become amenable to disqualification under Section 164(2). This court therefore hold that a notice under Section 455(4) is not a sine qua non for applying the provisions of Section 164(2) or 167. Deactivation of DIN whether justified - HELD THAT:- On an analysis of Rules 9 to 11 of the Rules, 2014 the Hon ble High Court of Madras in Meethelaveetil Kaitheri Muralidharan [ 2020 (10) TMI 595 - MADRAS HIGH COURT ] has also held that DIN of Directors of a defaulting Company cannot be cancelled or deactivated solely on the basis of disqualification of Directors under Section 164(2). For all the afore reasons, this court hold that the DIN of the petitioners allotted under Rule 10 of the Companies (Appointments and Qualifications of Directors) Rules, 2014, are not liable to be deactivated or cancelled solely for the reason that the petitioners stand disqualified for appointment / reappointment as Directors of Companies by operation of Section 164(2). Striking off and Disqualification - HELD THAT:- Section 248 of the Companies Act, 2013 empowers the Registrar of Companies to strike off the name of a Company from the Register of Companies if the Company is not carrying on any business or operation for a period of immediately preceding two financial years and has not made any application within such period for obtaining the status of a dormant Company. Name of defaulting Companies in which some of the petitioners are Directors, have been struck off by the Registrar of Companies and the petitioners have been disqualified for being appointed as Directors in other Companies - Striking off of Companies would not automatically result in disqualification of their Directors. Disqualification would entail only if the conditions in Section 164 are satisfied. The Directors in such cases will have whatever remedies available to them under law, to challenge their disqualification, irrespective of striking off of the Companies from the Register of Companies, because irrespective of striking off of the defaulting Company, their disqualification will subsist for the purpose of their appointment in other Companies. 2021 (6) TMI 795 Seeking grant of Anticipatory Bail - Fraud - fraudulently/illegally obtained loan and siphoning off the funds - petitioner (Director of one company out of group companies) was not summoned or arrested by the Investigating Officer during investigation - Constitutional Validity of Section 212(6) of the Companies Act, 2013 - HELD THAT:- In the present case the petitioner has been summoned vide order dated 03.06.2019 passed by learned Sessions Judge, Gurugram to face trial under Sections 58-A, 211(7), 227 and 628 of the Companies Act, 1956, Sections 74(3), 147, 447 and 448 of the Companies Act, 2013 and Section 477-A of the Indian Penal Code, 1860 - By virtue of power conferred by Section 212(8) of the Companies Act, 2013 the Director, Additional Director or Assistant Director of Serious Fraud Investigation Office authorized in this behalf by the Central Government by general or special order can arrest any person whom he believes on the basis of material in his possession and for reasons to be recorded in writing to be guilty of any offence punishable under sections referred to in Section 212(6) of the Companies Act, 2013 but use of word 'may' in Section 212(8) of the Companies Act, 2013 by the Parliament makes it discretionary for him to arrest or not to arrest such person and it is not mandatory for him to arrest such person. Therefore, the mere fact that the petitioner was not summoned or arrested by the Investigating Officer during investigation does not entitle the petitioner to grant of bail. The question of bail is primarily a matter of judicial discretion and not any right of the accused. The question of grant of bail to the accused has to be decided by the Court on the facts and circumstances of the case in accordance with the provisions regarding grant of bail contained in Chapter XXXIII of the Cr.P.C. and the relevant statute creating the offence and well settled principles guiding exercise of judicial discretion. The provisions of Section 212(6) of the Companies Act, 2013 are pari materia to Section 45 of the Prevention of Money Laundering Act, 2002, Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985, Section 20(8) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 and Section 21(4) of the Maharashtra Control of Organised Crime Act, 1999 - Constitutional validity of Section 20(8) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 was upheld by Hon'ble Supreme Court in Kartar Singh Vs. State of Punjab [1994 (3) TMI 379 - SUPREME COURT]. Admittedly, petition challenging constitutional validity of Section 212(6) of the Companies Act, 2013 is pending before Hon'ble Supreme Court but mere pendency of the petition challenging constitutional validity of the same does not make the said statutory provision inoperative and does not exclude applicability thereof to the case of the petitioner - In view of the fact that Section 212(6) of the Companies Act, 2013 is pari materia to Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985, the judicial precedents considering the scope and effect thereof are relevant in considering the scope and effect of Section 212(6) of the Companies Act, 2013. Clause (39) of Section 2 of the Companies Act, 2013 defines financial institution as including a scheduled bank and any other financial institution defined or notified under the Reserve Bank of India Act, 1934. Prima facie, ACCSL does not fall within the definition of financial institution. Therefore, statement regarding taking of loan from financial institution in all the above-said balance sheets was false in material particulars. Since in balance sheets for the financial years 2013-14, 2014-15 and 2015-16 ending on 31.03.2014, 31.03.2015 and 31.03.2016 name of ACCSL, from which the term loan was taken, was not mentioned, the facts which were material were omitted - the petitioner having no reasons to doubt him accepted his explanation at face value due to lack of knowledge and inability to understand the intricacies involved in financial matters/accounting process but in view of Section 166(3) of the Companies Act, 2013, the petitioner was under obligation to exercise his duties with due and reasonable care, diligence and independent judgement. No doubt, the petitioner is not accused of having committed the offence of fraud punishable under Section 447 of the Companies Act, 2013 as the investigation did not reveal any role of the petitioner in actual fraudulent loan taking process by Fracton Technologies Pvt. Ltd., but the petitioner has prima facie signed and filed financial statements containing false information knowing it to be false and omitting material information as to material facts knowing it to be material and to have thereby committed offence under Section 448 punishable under Section 447 of the Companies Act, 2013 to which the rigors of twin conditions laid down in Section 212 (6) (ii) of the Companies Act, 2013 are applicable. The Court can not presume absence of guilty mind/mens rea at this stage. Considering serious nature of the economic offences involved, nature of accusation against and role attributed to the petitioner who is alleged to have signed and filed financial statements which were false in material particulars and also omitted material facts, there being no reasonable ground to believe that the petitioner has not committed offence under Section 448 punishable under Section 447 of the Companies Act, 2013 - the petitioner does not deserve grant of anticipatory bail. Application dismissed. 2021 (6) TMI 790 Seeking direction for redemption of the debentures issued by the Respondent - Section 71(10) of the Companies Act, 2013 - HELD THAT:- It is not in dispute that the R1 by letter dated 27.04.2019 informed the BSE NSE that the repayment of principal to various banks have been delayed due to the ongoing securitization and monetization proposals considered by the financial institutions. It is also not in dispute that by letter dated 29.06.2019, the R1 informed the BSE NSE that due to severe liquidity crisis in the housing sector, the maturity of certain debentures has been extended till 31.10.2019 - The R1 s inability to pay the material debts is independent of other conditions / circumstances specified in clause 7.3 (f), (h) (l) of the DTD. Therefore, the default in servicing the other material debts and the failure of the R1 to pay the interest due on the extant secured NCDs clearly constitutes events of default as agreed to between the parties under the DTD - there are no hesitation in holding that the R1 committed default in respect of the payment of interest on the debentures in terms of Section 71(10) of the Act. Sub-rule 3 indicates that the Tribunal shall pass appropriate order within 60 days from the date of receipt of the Application under Section 71(10) of the Act. However, before making an order reasonable opportunity of being heard has to be given to the Company or any other person interested in the matter. In our considered opinion reasonable opportunity has been granted to the R1 Company and the Company has been heard at length in the matter - their prerogative in timely receipt of interest against their investment (debentures) cannot be sacrificed at the altar of public interest. The submissions regarding consideration of the Resolution bids would have no bearing in the instant Company Petition. The amount of debentures is substantial and the R1 having taken the deposit, there is no reason why any indulgence should be shown to the Respondents on the ground that any Resolution Process is underway. The Petitioner / debenture trustee represents 18,959 debenture holders who are the members of the public. Therefore, under the garb of public interest their interest cannot be foregone nor the mandate under sub-section 10 of Section 71 of the Act can be diluted - application allowed. 2021 (6) TMI 788 Appointment of an independent auditor/professional - conducting an audit/investigation into the affairs of the Respondent No. 1 company - Rule 11 r/w Rule 32 of NCLT, Rules 2016 - HELD THAT:- Since pleadings in the main CP are already in progress, ordering investigation as prayed for in these CAs would render the main CPs infructuous, at least to the extent of the allegations of misappropriation are concerned. This would not be in order. The issues raised in the present CAs cannot be ignored once having been brought to our notice. They are accompanied by specific details and evidences that need to be examined after giving due and fair opportunity to the Respondents - Also, since it seems to be a family dispute and about exercising influence/control over the business, and there are allegations and counter allegations, we are deprived of an objective view of the goings on in the company's day to day affairs. For example, allegations regarding issue of self cheques, unwarranted payments without any explanation for the same, delay in issue of cheques due to the Petitioner's interference etc are allegations that have to be checked on a real time basis, as resultant losses, if any, would be difficult to recover on a subsequent date. Interest of the company is paramount and if the company suffers, all Directors and stakeholders suffer. This cannot be permitted. Mr. K. Dushyantha Kumar, practicing Company Secretary is appointed - petition disposed off. 2021 (6) TMI 785 Approval of Scheme of Amalgamation - seeking appropriate directions for convening and dispensing the meetings of shareholders and creditors of both the Applicant companies for approval of the proposed Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- The certificates of statutory auditors of all the applicant companies confirming that the accounting treatment in the scheme is in compliance of and in conformity with Section 133 of the Companies Act, 2013 have been placed on record. Various directions regarding holding and convening of various meetings issued - directions regarding issuance of various SCN also issued - the scheme is approved - application allowed. 2021 (6) TMI 784 Approval of scheme of amalgamation - Reduction of the share capital - reorganisation of reserves of the Transferee Company and their respective Shareholders - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The Scheme appears to be fair, reasonable and is not violative to any provisions of law nor is contrary to public interest. Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petition are made absolute in terms of prayer clauses. The said Scheme of Arrangement is hereby sanctioned and declared the same to be binding on the Transferor Company and Transferee Company - Application allowed. Insolvency & Bankruptcy 2021 (6) TMI 789 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Homebuyer/Flat Allottee - existence of debt and dispute or not - time limitation - seeking extension of time period based on subsequent payments - HELD THAT:- The applicant had entered into an agreement on 13.10.2007 for purchase of a flat and accordingly, he was allotted Flat No. 06 of Jasmine-I, Upper Ground Floor in the project Hindon Heights - A bare perusal of the Sections 18 and 19 of Limitation Act show that for the purpose of extending the period of limitation under both the provisions, the acknowledgement of debt or payment of debt amount, must be made only before the expiration of the prescribed period of the limitation and not thereafter. Mere plain reading of the provision shows that the application must be filed within three years from the date when the right to apply accrues - when the case in hand is considered, it is noticed that the first date of default is 02.11.2013 and therefore, the application should have been filed within three years from the first date of default of 02.11.2013, i.e., on or before 01/11/2016. Similarly, part payment of debt or acknowledgment of debt should have been made within this period, i.e. on or before 01/11/2016. Admittedly, the subsequently part amount of ₹ 200000/- is paid after the expiry of three years from the limitation period - in view of Section 19 of the Limitation Act, on the basis of the subsequent payment, the period of limitation cannot be extended. The present application is barred by limitation - the present application stands dismissed on the point of Limitation. 2021 (6) TMI 787 Liquidation of the Corporate Debtor - section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Though initially some of the prospective Resolution Applicants shown interest, however, the same could not fructify and no formal Resolution Plan is in the hands of CoC to decide on the same - the Liquidation of the CD is by virtue of natural consequence of operation of law as the COC could not gather requisite voting 66% for extension and hence the application is allowed. The application of Corporate Debtor for liquidation is admitted - application allowed. 2021 (6) TMI 786 Approval of the Resolution Plan - Section 30 (6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39 (4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 - HELD THAT:- The RP has complied with the requirement of the Code in terms of Section 30(2)(a) to 30(2)(f) and Regulations 38(1), 38(1)(a), 38(2)(a),38(2)(b), 38(2)(c) 38(3) of the Regulations - The RP has filed Compliance Certificate in Form-H along with the Plan. On perusal the same is found to be in order. The Resolution Plan includes a statement under regulation 38(1A) of The Regulations as to how it has dealt with the interest of the stakeholders in compliance with the Code and the Regulations - The Resolution Plan has been approved by the CoC in the 7th meeting held on 17.09.2020 with 100% votes. In K Sashidhar v. Indian Overseas Bank Others [ 2019 (2) TMI 1043 - SUPREME COURT] the Hon'ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon'ble Court observed that the role of the NCLT is 'no more and no less' - In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] the Hon'ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39 (4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - Application allowed. PMLA 2021 (6) TMI 804 Bail application - Money Laundering - proceeds of crime - possession of moveable and immoveable assets - misuse of official position - Section 13(2) read with Section 13(1)(e) of the P.C. Act - HELD THAT:- Continuing with the detention of the appellant to face the trial in the present case would not serve the cause of justice. Even if the appellant had earlier not appeared, the fact of the matter remains that he had faced trial in the P.C. Act matter and his appeal remains pending. The High Court, in the impugned order dated 25.11.2020, declined the bail at the given stage but directed the Trial Court to proceed with the trial on day-to-day basis and also gave liberty to the appellant to apply for bail afresh, if trial did not conclude within six months from the date of production of copy of its order. The fact remains that this appeal is being considered today by this Court only after six months from the date of order of the High Court but, what to say of conclusion, the trial is practically at the very initial stage with even the statement of the first prosecution witness remaining incomplete. Looking to the nature of case and the witnesses to be examined, the trial and is bound to take time. On the other hand, the appellant is said to be in custody since 27.11.2019. While setting aside the impugned order dated 25.11.2020, the appellant is ordered to be released on bail on such terms and conditions as deemed fit and necessary by the Trial Court - appeal allowed. 2021 (6) TMI 803 Scope of review petition - error apparent on the face of the record or not - validity and/or legality of the registration of Enforcement Case Information Report (ECIR) in proceedings - effective alternative remedy under Section 8 of The Prevention of Money Laundering Act - territorial jurisdiction - HELD THAT:- It has to be observed that the scope of the Review petition is very limited. The learned Additional Solicitor General appearing for the respondent-Enforcement Directorate submitted that under the guise of Review, the review applicants are only trying to re-argue the case. Therefore, we are not traversing into the submissions made by the parties. For the purpose of reviewing the matter, the matter has to fall within Order 47 of CPC. In the guise of seeking review, it cannot be reargued. This Court has dismissed the writ petition on the ground that there is alternative remedy and there is no jurisdiction vested with this Court. If at all the petitioners are aggrieved, an appeal has to be filed against the order passed in the writ petition even if the review applicants feel that the conclusion is erroneous in nature. The Review Applications are nothing but an attempt to re-argue the case, which cannot be permitted. The High Court is designed under the explanation to Section 42, which means, the place where the aggrieved party ordinarily resides or carries on business or personally works for gain. The criteria is not the place where the properties are situated and the jurisdiction is person centric and not property centric. If the appeal is filed by the Central Government, then the jurisdiction will be where the respondent resides or carries on business. Thus, Section 42 is purely person centric whereas a writ petition challenging an order passed under Section 5 of PMLA is based on cause of action and not where the person resides. Therefore, the appeal filed under Section 42 of the PMLA will be filed before this Court and this Court has jurisdiction. Such provision cannot be applied for challenging the provisional order of attachment or ECIR in this case. Therefore, we are not inclined to accept the submission made by the Review Applicants. The scope of review application is limited and it cannot be entertained only if there is an error apparent on the face of the record - the Review Applications are dismissed. 2021 (6) TMI 801 Seeking pre-arrest Bail - Money Laundering - cheating gullible depositors by attracting them towards different schemes of money investment with false promise of providing high returns - creation and growth of ponzi firms - HELD THAT:- Existence of a prima-facie case regarding nexus of the petitioner with the Saradha Group cannot be denied. Grant of bail to him by the Supreme Court of India in another case also cannot afford him a ground to seek pre-arrest bail in the present case, inasmuch as he was granted bail in the said case solely on health ground while he was admitted in Apollo Hospital, Bhubaneswar. Admittedly, he has since been discharged from the said hospital. There is no reproach on contention of the counsel for the petitioner with regard to invoking the jurisdiction under Section 438 of Cr.P.C. in respect of the person accused of committing economic offences, inasmuch as there is no such prohibition to entertain such prayer in respect of the accused persons indicted in economic offences in Section 438 of Cr.P.C., provided the offence committed is non-bailable one. It is only in respect of the offences as enumerated under Section 438(4) of Cr.P.C. and also in respect of offence under special statute wherein jurisdiction under Section 438 of Cr.P.C. has been specifically ousted, even if the offences are non-bailable, a person cannot invoke the jurisdiction under Section 438 of Cr.P.C. seeking prearrest bail. Since in this case the petitioner has been indicted in an economic offence which is of serious in nature and the larger angle of conspiracy with regard to patronage of political and other persons in growth of such ponzi firms are required to be unearthed, no effective investigation can be made by the police by enlarging the petitioner on pre-arrest bail, even if he is ready and willing to cooperate with the investigation by remaining on pre-arrest bail. The allegation being serious in nature and the offence committed being economic offence and the petitioner is being investigated, custodial interrogation is much more fruitful as held by the Apex Court in the case of P. Chidambaram [ 2019 (9) TMI 286 - SUPREME COURT ], this Court is of the view that the petitioner has made out no case for his release on pre-arrest bail, more particularly when present is prima-facie not a case where the allegations brought against the petitioner can be said to be frivolous or groundless. There are no merit in the application under Section 438 of Cr.P.C. filed by the petitioner - petition dismissed. Service Tax 2021 (6) TMI 798 Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 - tax was paid by petitioner but the same has not been considered by the Committee - HELD THAT:- In the considered opinion of this Court, the order passed by the learned Single Judge does not warrant interference. The respondent herein has contended before the learned Single Judge that all the documents have not been looked into by the Committee and in those circumstances, the matter has been remanded back to the Committee. Since the Scheme has come to an end, this Court is permitting the Committee under Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019, to decide the matter, as directed by the learned Single Judge, within a period of eight weeks from today. 2021 (6) TMI 797 Validity of SCN - Jurisdictional error - reply to SCN not provided - petitioner would submit that in view of the notice suffering from jurisdictional error, any reply to the show cause notice would not serve any purpose - declared service or not - Capacity Charges - late payment fees - HELD THAT:- This Court is unable to appreciate the argument for the reason that even the jurisdictional aspect can be canvassed before the Authority concerned and it is not necessary that such issue has to be dealt with by this Court directly. Whatever be the objections of the petitioner in regard to the maintainability of the show cause notice, nothing precludes the petitioner from agitating the same before the Authority - It is always open to the petitioner to convince the Authority as to the invalidity of the show cause notice issued by him and in case the Authority passes any final and adverse order and in such event, it is open to the petitioner to challenge the final order in a manner known to law. But it is certainly not open to the petitioner herein to challenge the show cause notice even on the ground of challenge to the very jurisdiction of the authority who issued the notice - This Court finds that number of grounds have been raised in respect of the challenge in the writ petition but this Court is not inclined to give any legal finding on the grounds raised in the writ petition for the present, as it is for the Authority to apply his mind to the legal objections raised on behalf of the petitioner. This Court is not inclined to entertain the writ petition and same is to be rejected as premature - Petition dismissed. 2021 (6) TMI 796 Maintainability of SCN - instead of replying to the SCN, petitioner has rushed to this Court by invoking the extra ordinary remedy under Article 226 of the constitution of India - recovery of Service Tax - electricity charges collected from the petitioner's lessees - demand of interest and penalty as well - HELD THAT:- This Court is unable to appreciate as to how the present writ petition is maintainable for the simple reason that the impugned proceedings is only a show cause notice calling upon the petitioner to show cause as to why the Service Tax is not recoverable from them. Instead of responding to the notice, the petitioner has rushed to this Court by invoking the extra ordinary remedy under Article 226 of the constitution of India. It is trite in law to hold that when a show cause notice is issued, the petitioner is legally bound to answer to the show cause notice and only when the explanation of the petitioner is not considered favourably and any adverse order is passed, then it is open to the petitioner to work out their remedies in a manner known to law. It is certainly not open to the petitioner to challenge the show cause notice itself before this Court and make an attempt to convince this Court on the factual submissions as to the maintainability of the show cause notice. Petition dismissed. 2021 (6) TMI 791 CENVAT Credit - input services - Association Membership fees - constructions services - rent-a-cab services - general insurance services of vehicles - repair services - catering services - civil work services - time limitation - period April, 2012 to March, 2016 - HELD THAT:- It is an admitted fact that records of the appellant were audited regularly as mentioned in the Audit Report of the Auditor General by the ld. Counsel and also mentioned in the grounds of appeal. In view of the fact, the audit had been regularly conducted by the Audit Authority, of the books of accounts of the appellant for the period in April, 2013, July, 2014 and also July, 2016, it is evident that the affairs of the appellant regarding taking of cenvat credit were also in the knowledge of the Department. As such, invocation of extended period of limitation is not available to the Revenue. The ground with regard to limitation is allowable - Appeal allowed - decided in favor of appellant. Central Excise 2021 (6) TMI 799 Rebate Claim - export of goods - rebate claims were filed during May, June and July 2009 on the exports made between July 2008 and January 2009 - time limitation - HELD THAT:- Even if the petitioner was not entitled to rebate, the petitioner would have been entitled to exclude such goods under bond under Rule 19 of the Central Excise Rules, 2002. The issue is Revenue Neutral. Though, the conduct of the petitioner was no forthright and was intended to defraud the revenue, fact remains that the petitioner has paid back and compensated the revenue by paying the amount to the credit of the Central Government together with interest on 02.02.2009 - The exports are not be burdened with tax liability. The petitioner was not entitled for rebate, the alternative benefit of export under bond without payment of duty under Rule 19 of the Central Excise Rules, 2002 cannot be denied to the petitioner. Considering the fact that the petitioner has squared up the liability and exported the goods and also has received exports proceeds, the impugned orders rejecting the rebate claims cannot be sustained. Penalty for the wrongdoing was the subject matter of the order of the Settlement Commission dated 27.09.2010. It brings curtain down, as far as the wrongdoing is concerned. The settlement commission has not only accepted the case of the petitioner but also awarded a minor penalty of ₹ 10,000/. - there is no scope for denying the refund of the amount which was wrongly debited in advance and paid by the petitioner as was pointed out by the Superintendent of Central Excise vide letter dated 10.11.2008. The petitioner took about three months to pay the amount together with interest. The second respondent/Assistant Commissioner of Central Excise is directed to refund the balance rebate claim together with interest thereon in accordance with law within a period of three months from date of receipt of this order - Petition allowed - decided in favor of petitioner. 2021 (6) TMI 783 CENVAT Credit - inputs - Bars and Rods which were used in annealing process - process amounting to manufacture or not - credit availed on the inputs received from sister concern, in case the supplier has paid duty - HELD THAT:- In terms of Rule 3 of Cenvat Credit Rules, 2004, that a manufacturer or producer of final products or a provider of taxable services shall be allowed to take credit of (various taxes mentioned there in suffered on the inputs) 3(i) any input or capital goods received in the factory of manufacture of final products; in terms of Rule 9 of CCR, 2004 the inputs must be accompanied by proper documents evidencing duty payment and that the same should be utilized for manufacture of final products cleared on payment of duty. It is not the case of the department that the respondents did not receive the said inputs; the same were not duty paid and the same were not utilized for manufacture of final dutiable products. Going by the facts of the case it is found that none of the essential conditions have been violated to deny the credit to the appellant. The department has not taken any steps to dishonor the duty payment made by the supplier of respondents. A show cause was issued alleging that their availment of Cenvat Credit was incorrect as the process undertaken by them did not amount to manufacture. The availment of Cenvat Credit by the respondents cannot be held to be illegal as it was found to be otherwise in order - Appeal dismissed - decided against Revenue.
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