TMI Tax Updates - e-Newsletter
July 17, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Whether the exemption to a ‘defence formation’ for preparation and generation of E-way bills is applicable to Ordnance factories & other Central Government & Public Sector Undertakings (PSU’s) that function under the Ministry of Defence, Government of India? - Held Yes - AAR
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GST:
Classification of supply - Online tendering will be considered as Supply of Services. - Offline tendering in its entirety involving sale of form, payment of tender fees and submission of bids etc. will be considered as Supply of Services. - Online Tendering / Offline Tendering should get taxed under services heading 9997. - tendering will be considered as ‘miscellaneous services including services nowhere else specified. - AAR
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GST:
Levy of GST - maintenance charges collected by Emerald Court Co-op Housing Society Ltd (CHS) from members of its society - In view of the amended Section 7 of the CGST Act, 2017, it is found that the applicant society and its members are distinct persons and the amounts received by the applicant, against maintenance charges, from its members are nothing but consideration received for supply of goods/services as a separate entity - The applicant is liable to pay GST on maintenance charges (by whatever name called) collected from its members, if the monthly subscription or contribution charged from the members is more then ₹ 7,500/- per month. - AAR
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GST:
Classification of goods - Railway parts such as Brush Holder Assembly and parts, Lead Wires for locomotives and Insulating Rods Locomotives manufactured as per the specification and drawings of Indian Railways - The products Brush Holder Assembly and parts, Lead Wires and Insulating Rods are to be classified under heading 86.07 only when they are manufactured as per the drawings and specifications given to the applicant by the Indian Railways and only when the said goods are used in traction motors meant for Railway Locomotives. - AAR
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Income Tax:
Forex loss - allowable business loss u/s 37(1) or not? - The assessee company has entered into transactions of buying and selling of forex and incurred a loss on the cancellation of the said contract and claimed the same as business loss and debited to P&L A/c as forex loss under the head ‘manufacturing administration expenditure’. - As per accounting standard AS-11, the assessee has rightly, claimed the forex loss as business loss u/s 37(1) - The losses claimed by the assessee are not speculative loss as alleged by the AO - AT
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Income Tax:
Assessment u/s 153C - There are three paragraphs in this note; in the first para, he made reference of the facts, and in the second para he wrote that books of the accounts belonging to the assessee of the alleged seizure referred by the AO be construed as books of accounts belonging to the assessee. These documents do not contain names; even page no.3 of Annexure A/2 did not reflect to whom cash was given. There is no reference to this page. - there is no material with the Revenue to form a belief that action under section 153C is required to be taken against the assessee in these two assessment years. - AT
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Income Tax:
Capital gain computation - allowability of deduction u/s 48 towards cost of improvement with respect to amount paid by the assessee towards his share towards conversion of aforesaid property from leasehold to freehold - the assessee will be allowed as cost of improvement of the amount paid towards his share for conversion of aforesaid leasehold land to freehold. - AT
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Income Tax:
Reopening of assessment u/s 147 - validity of reasons to believe - the reassessment proceeding under section 147 has not been validly initiated because the same has been initiated merely on a change of opinion without any fresh material coming into the possession of the AO - The reason must have live link with the formation of the belief. - AT
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Income Tax:
Revision u/s 263 - Non Verification of cash deposits and purchase of property - The order u/s 263 passed by the ld. PCIT dwelled into the issue of “re-computation of capital gains” which is beyond the mandate of the limited scrutiny issued by the CBDT. Hence, the directions of the ld. PCIT which are beyond the selection criteria of scope of scrutiny for the instant year cannot be held to be legally valid. - AT
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Customs:
The term “smuggled goods‟ means goods of foreign origin and imported from abroad. In the present case, there is no dispute that the goods are of foreign origin. As already discussed, the defacing of serial number on the gold bar itself indicates that it is smuggled gold. The appellants who claim the gold to have been legally procured have to produce documents evidencing payment of duty as well as documents evidencing their legal ownership / possession. At the time of booking the parcel, the appellants have not furnished the required documents for transportation of imported goods - The plea of appellants to permit redemption of the gold also cannot be considered as they have not been able to establish possession / ownership of the gold bar - AT
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Service Tax:
Refund of service tax paid - refund arose as a consequence of introduction of Section 104 of the Finance Act w.e.f. 31.03.2017 - KINFRA has also issued a certificate dated 02.02.2021 certifying that they have not availed any CENVAT credit on the service tax paid by the appellant. Further, these bills/invoices issued by KINFRA clearly show the payment of service tax by the appellant to KINFRA and KINFRA in turn has paid the same to the Government. Though these invoices/bills were not produced before the Original Authority but various Challans issued by KINFRA were produced along with worksheets showing the payment of service tax to KINFRA by the appellant. - Matter restored back - AT
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Service Tax:
Refund of unutilised cenvat credit of service tax - export of services - the appellant have been receiving foreign inward remittances on their export invoices which were coming to the appellant in terms of JV agreement from a designated bank account specifically opened for the said purpose - the appellant cannot be denied the benefit of export of services simply on the ground that payment has been routed through a 3rd party which is also based outside the country. - AT
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Central Excise:
CENVAT Credit of wrongly paid service tax - freight component in relation to transport of goods - If, upon a misconception of the legal position, the assessee had paid the tax that he was not liable to pay and such assessee also happens to be an assessee entitled to certain credits such as CENVAT Credit, the availing of the said benefit cannot be termed as illegal. - The Appellant assessee cannot be asked to reverse the Cenvat credit availed on tax paid under Reverse Charge basis when the payment is not disputed. - AT
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Central Excise:
100% EOU - demand of excise duty on the raw grade oil - In the present case the vegetable oil falling under chapter 15.07 during the relevant period is chargeable to nil rate of duty in view of Notification No.4/2005-CE, predecessor Notification No. 6/2002-CE, as amended by Notification No 37/2003. Accordingly, the clearance of Raw oil by the respondent is not liable for any duty. - AT
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VAT:
Maintainability of petition - availability of alternative remedy of appeal - 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 petitioner is at liberty to approach the Appellate Authority for the purpose of redressing his grievances in the manner known to law - HC
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VAT:
Refusal to permit the petitioner to file ‘F’ forms - interstate transfer to branch unit at Karnataka - While the proviso to Rule 12(7) of the CST Rules gives opportunity to the dealer to make belated submission of declaration/certificate when sufficient cause is shown, the said proviso cannot be permitted to be abused by an indolent and indifferent dealer, who at a belated stage approaches the authorities without proper cause for submission of the declarations/certificates and seeks to reopen a concluded assessment proceedings on such score - HC
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VAT:
Re-classification of goods - rate of tax on hire charges - There is no finding that the assessee had wilfully evaded tax - When the assessee having not been put on notice to respond to the allegation that it had wilfully evaded the tax, the authority could not have been imposed a higher tax liability by invoking its powers under Section 21(5) of the VAT Act. - HC
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (7) TMI 654
Requirement of audit by a Chartered Accountant or Cost Accountant under section 35(5) of the CGST Act, 2017 - F.Y 2017-18 - F.Y. 2018-19 succeeding Financial years - Ordnance factories other Central Government Public Sector Undertakings (PSU s) that function under the Ministry of Defence, Government of India - Applicability of exemption to a defence formation for preparation and generation of E-way bills - goods transported - applicability of exemption on payment of GST on transport of military or defence equipments through a goods transport agency - Input Tax Credit on inputs input services relating - main business activity of manufacturing - food and beverages consumed in industrial canteen - manpower services hired for industrial canteen and LPG cylinders refilled for use in industrial canteen - medicines purchased in factory hospital and other inputs and input services used in factory hospital. HELD THAT:- The applicant factory is a unit of Ordnance Factories Board (OFB) functioning under the Department oi Defence Production and Supply of Ministry of Defence. Government of India. The applicant manufactures various types of ammunitions and explosive and non-explosive components and supplies the same, mainly to Indian defence and military forces and also to sister Ordnance factories that use such goods for their production and manufacturing process - when the output is transferred to sister Ordnance factories units of armed Forces as per order, the consideration for transfer is fixed by OFB and is booked in the financial accounts of OFCh organization and the adjustment is done through book transfer. Money consideration is involved only for a small portion of the produce, where the goods are sold directly to units under Ministry of Home affairs, paramilitary forces like BSF. units of state police. defence PSU s and private entities. The Applicant is fulfilling all the conditions stipulated for being Central Government , as provided under clause (8) of section 3 of the General Clauses Act. 1897 read with Article 53 Article 77 of the Constitution of India, since the Applicant is functioning under the Department of the Defence Production. Ministry of Defence. Government of India, and all its activities are carried out for and on behalf of the President of India. OFB Procurement Manual clearly shows that all defence contracts are in the name and on behalf of the President of India only. Thus, it is adequately evident that the Applicant is covered under the provision of section 2(53) of the CGST Act. 2017 read with clause (8) of section 3 of the General Clauses Act, 1897 read with Article 53 Article 77 of the Constitution of India. Requirement of audit by a Chartered Accountant or Cost Accountant under section 35(5) of the CGST Act, 2017 - HELD THAT:- This issue has been voluntarily withdrawn by the applicant vide written submissions made on 30.12.2019. Whether the exemption to a defence formation for preparation and generation of E-way bills is applicable to Ordnance factories other Central Government Public Sector Undertakings (PSU s) that function under the Ministry of Defence, Government of India? - HELD THAT:- During the course of the hearing it was informed by the applicant that the question pertained only to themselves. Rule 138 of the GST Rules. 2017 provides for information to be furnished prior to commencement of movement of goods and generation of E -way bill. As per para 14(k) of Rule No. 138 of the CGST Rules 2018 (Notification No. 12/2018 (Central tax) e-way bill is not required to be generated when any movement of goods is being caused by defence formation under the Ministry of Defence as a consignor or a consignee - Since the applicant is functioning as a defence formation under the Ministry of Defence we are of the opinion that applicant is eligible for the benefit under Rule 138(14) (k) of the CGST Rules. It is not necessary to issue e-way bills for their supplies whenever movement of goods is being caused by them as a consignor or a consignee. Whether exemption on payment of GST on transport of military or defence equipments through a goods transport agency applicable to goods transported by our organization? - HELD THAT:- Applicant is supplying the subject goods i.e. military or defence equipment through a goods transport agency to the different units of Government. We find that as per clause (h). Heading 9965 or 9967. of Sr. No. 21 of Notification No. 12/2017- Central Tax (Rate) dated 28.6.2017 - In the subject case, the applicant is manufacturing and transporting goods like propellant explosives that are used in the manufacture of ammunition. The aforesaid goods manufactured by the applicant are rightly covered under Entry Sr. No. 21. Heading 9965 or 9967. clause (h) of the Notification No. 12/2017-C.T.- (Rate) dated 28.6.2017 and therefore the said exemption is available to applicant s transaction in respect of transport of military or defence equipments. Whether availing of eligible Input Tax Credit on inputs input services relating to the main business activity of manufacturing is allowed against GST liability on renting of immovable property (which is an ancillary business activity)? - N/N. 3/2018 Central fax (Rate) dated 25.1.2018 - HELD THAT:- Considering the notification and activity and status of the applicant as a Government , it has no liability to pay GST on said supply which is liable to be paid under reverse charge mechanism by the recipient of the service. As there are no taxes payable on outward supply the question of availing ITC does not arise as per the provisions of ITC under Sections 17(2) of the CGST Act. 2017. Therefore, the Applicant is not entitled to avail ITC in respect of such expenditures. Whether Input Tax Credit is allowable in respect of food and beverages consumed in industrial canteen? - HELD THAT:- The Applicant s activities of supply of food and beverages at the industrial canteen inside the factory premises would attract NIL rale of GST. The said supply is held to be exempt supply in terms of Sr. No. 6 of the N/N. 12/2017-C.T.(Rate) dated 28.06.2017. Since the subject supply has been held to be exempt supply by the Applicant, the ITC in respect of the food and beverages consumed in industrial factory canteen of the Applicant will not be available in terms of section 17(2) of the CGST Act. 2017 - in the present case, the applicant s outward supply is exempted by notification. Therefore, provisions of newly amended Section 17 (5) (b) of CGST ACT is not applicable to these specific transactions of applicant. Hence ITC is not available on this transaction to the applicant. Whether Input Tax Credit is allowable in respect of manpower services hired for industrial canteen and LPG cylinders refilled for use in industrial canteen? - HELD THAT:- The Applicant s activities of the supply of food and beverages at the industrial canteen inside the factory premises will attract NIL rate of GST. i.e. since the said supply is exempt supply in terms of Sr. No. 6 of the Notification no. 12/2017- Central Tax (Rate) dated 28.06.2017. Since the subject supply is exempt supply, the ITC in respect of the manpower services hired for industrial canteen and ITC on LPG cylinders refilled for factory canteen of The Applicant will not be available in terms of section 17(2) of the CGST Act, 2017. Similarly the newly amended provision of section 17 (5) (b) of CGST ACT are also not applicable to the transactions of applicant because in the subject case the applicant s outward supply is exempted from taxes and is therefore not taxable - applicant is not eligible for ITC on the inputs and input services (used for exempt outward supply) in industrial canteen i.e. on hired man power services and refilled LPG cylinder. Whether Input Tax Credit is allowable in respect of medicines purchased in factory hospital and other inputs and input services used in factory hospital? - HELD THAT:- Considering the amended provision of Section 17(2) of CGST Act. ITC would be available in respect of medicines purchased in factory hospital and other inputs and input services used in factory hospital with effect from 01.02.2019.
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2021 (7) TMI 653
Classification of supply - supply of goods or supply of services - determination of tariff head - online tendering - offline tendering - If tendering is service then whether it will be considered as administrative services or specific Service? - Registration Activities and their related activities - levy of GST on Registering Fees paid under Rule 73 of the Bombay Dentists Rules, 1951 by the Prospective Dental Practitioners - N/N. 12/20/7-Central Tax (Rate) dated 28.06.2017 as amended. Whether online tending to be considered as Supply of Goods or Supply of Service? - HELD THAT:- As per Section 2(12) of the CGST Act. 2017, services , means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged - Online Tendering does not satisfy the definition of goods - further, IGST Act has defined Online Information and Data Access or Retrieval Services to include different services - In the present case at hand, it is found that the provisions of e-tender, which is intangible has to be delivered through telecommunication network or internet. Thus, the intention of the legislature is very clear, to treat such activities as supply of services. Whether offline tendering to be considered as Supply of Goods or Supply of Services? - HELD THAT:- The difference between online and offline tendering is only that in the case of the former, the tender forms are sold on line and in the case of the latter, the tender forms are sold as printed matter. In offline tendering too, there are intangible products such as application, payment of fees, submission of bids. etc. These services are difficult to be identified individually. In both cases i.e offline and online tendering, forms are sold, collected from the applicant, processed and finally after the entire process of documentation, verification of the applicant s position to perform the contract, tenders are allotted to a particular person to the exclusion of others. In the process, processing fees and other deposits may also be collected from the various persons who are willing to fulfill their requirement for procurement of goods or services. Offline Tendering does not satisfy the definition of goods , in its entirety. The definition of services as mentioned in the Business Dictionary: Intangible products such as accounting, banking, cleaning, consultancy, education, insurance, expertise, medical treatment, or transportation . Sometimes services are difficult to identify because they are closely associated with a goods: such as the combination of a diagnosis with the administration of a medicine. No transfer of possession or ownership takes place when services are sold - Hence offline tendering, will also be considered as rendering of services. Under which tariff head the Online Tendering should get taxed? - HELD THAT:- The GST Tariff for services comprises of Chapter 99. Headings 9954 to 9999. It is seen that online tendering is not specifically mentioned in any of the Headings and therefore it is fell that the Appropriate Heading in this case would be Heading 9997 since the said heading Covers other services - Since Online Tendering as a service is not specified Anywhere, the same should get taxed under Service Heading 9997. Under which tariff head the Offline Tendering should get taxed? - HELD THAT:- The process of offline tendering is also a supply of services. The GST Tariff for services comprises of Chapter 99 Headings 9954 to 9999. It is seen that offline tendering is not specifically mentioned in any of the Headings and therefore it is felt that the appropriate Heading in this case would be Heading 9997 since the said heading covers other services - Since Offline rendering as a service is not specified anywhere, the same should get taxed under Service Heading 9997. If tendering is service then whether it will be considered as administrative services or specific Service? - scope of Advance Ruling - HELD THAT:- This specific question does not fall under the clauses mentioned in Section (97) (2) of the CGST Act. However it is already held the both, online and offline services are classifiable under Service Heading 9997 as other miscellaneous services including services nowhere else specified). Whether the activities conducted by the Maharashtra State Dental Council are the Registration Activities and their related activities laid down in the Act exempted under the N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended and consequently, the receipt of the Registering Fees paid under Rule 73 of the Bombay Dentists Rules, 1951 by the Prospective Dental Practitioners to the Council is exempted from the levy of Goods and Services tax? - HELD THAT:- N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 exempts the intra-State supply of services of description as specified in column (3) of the Table mentioned therein from payment of GST. The services, mentioned in the subject application, as rendered by the applicant does not specifically find mention in the said notification - the activities of the applicant are not exempted under the said notification and consequently, the receipt of the Registering Fees by the applicant is not exempted from the levy of Goods and Service tax.
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2021 (7) TMI 652
Levy of GST - maintenance charges collected by Emerald Court Co-op Housing Society Ltd (CHS) from members of its society - no sale by the Co-operative Housing Societies to their own permanent members - doctrine of mutuality - Serial No. 77 of N/N. 12/2017 C.T.-(Rate) dated 28.06.2017 - HELD THAT:- GST is not liable to be paid on the amounts received by the society them from its members because of the principle of mutuality due to which, the society cannot be considered as an entity, separate from the individual members of the society - there were a lot of litigations and disputes by clubs/associations/ societies on this issue, earlier. However the said issue, with respect to Goods and Services Tax has been sought to be addressed by way of the proposed amendment made to Section 7 of the GST Act in the finance Budget, 2021. The amendment in section 7 has received the assent of the President of India on the 28th March, 2021 and in view of the same the issue of principles of mutuality in the case of cooperative societies like the applicant has been settled. In view of the amended Section 7 of the CGST Act, 2017, it is found that the applicant society and its members are distinct persons and the amounts received by the applicant, against maintenance charges, from its members are nothing but consideration received for supply of goods/services as a separate entity - The principles of mutuality, which has been cited by the applicant to support its contention that GST is not leviable on the maintenance charges collected by them from its members, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received against maintenance charges, from its members. The applicant is liable to pay GST on maintenance charges (by whatever name called) collected from its members, if the monthly subscription or contribution charged from the members is more then ₹ 7,500/- per month.
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2021 (7) TMI 651
Classification of goods - Railway parts such as Brush Holder Assembly and parts, Lead Wires for locomotives and Insulating Rods Locomotives manufactured as per the specification and drawings of Indian Railways - to be classified under HSN Heading 8505, 8544 and 8547 @ 18% or under HSN Heading 8607 @12%? HELD THAT:- As per Note 3 to Section XVII, references in Chapters 86 to 88 to parts or accessories do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part of accessory - Note 3 to Section XVII mentions that references in Chapters 86 to 88 to parts or accessories do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part of accessory. In the instant case, as per the applicant's submissions, it is found that the impugned goods are suitable for use solely or principally with Railway Locomotives falling under Chapter 86 and therefore Note 3 does not exclude the subject products, rather the said Note 3 includes the impugned products - the second condition of Chapter 86.07 is also fulfilled in the subject case. The impugned goods i.e. Brush Holder Assembly and parts. Lead Wires for locomotives and Insulating Rods Locomotives manufactured by the applicant as per the specification and drawings of Indian Railways are classifiable under heading 86.07.
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2021 (7) TMI 650
Release of seized vehicle alongwith the goods - validity of one of the e-way bills had expired - for another consignment, no e-way bill was generated - HELD THAT:- The appellate authority has given the first date of hearing in the month of September, 2021. In the meantime, the assessing officer is demanding full recovery of tax and penalty before releasing the vehicle and the goods. The petitioner has therefore approached this Court for release of the same. Considering the facts of the case and in particular, the fact that the petitioner has preferred appeal against the order of assessment after making pre-deposit of ₹ 64,870/-, if the petitioner provides bank guarantee for 25% of the disputed tax and penalty (inclusive of the pre-deposit which is already made), the vehicle and the goods should be released. The petition is disposed of with a direction that the petitioner shall furnish an unconditional bank guarantee of ₹ 2,60,000/- in favour of the department - Petition disposed off.
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2021 (7) TMI 647
Validity of blocking of the electronic credit ledger of the petitioner - benefit of the input credit could not be availed - sub-rule (3) of Rule 86A of the CGST Rules, 2017 - HELD THAT:- There was some technical error on the part of the petitioner in wrongly submitting the details of the input credit in different forms than the requisite form. Be that at it may, such issues are not dwelled upon, suffice it to observe that the primary concern of the petitioner appears to have been redressed by operation of sub-rule (3) of Rule 86A of the CGST Rules, to the effect that the impugned blockage has ceased to have effect, as already a period of more than one year has passed, after the electronic ledger of the petitioner was blocked on January 28, 2020. Petition disposed off.
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2021 (7) TMI 645
Seeking direction to the respondents to carry forward CENVAT credit with interest - direction to open the portal to carry forward the excess credit through TRAN-1 - HELD THAT:- Issue notice. Mr.Ruchir Mishra, Advocate accepts notice on behalf of respondent no.1. Issue notice to respondent nos.2 to 4 through Standing Counsel, returnable for 07th October, 2021.
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2021 (7) TMI 639
Removal of seal of the factory premises with immediate effect - respondents fairly submits that the seal put by the respondent is only on the cigarette manufacturing machines and is no seal put on the factory premises - section 67(5) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Response of respondents is that if the petitioner prefers appropriate application for obtaining copies of necessary records and books, the same shall be provided to them in accordance with law. Learned counsel for the petitioner has no objection - thus, nothing remains to be adjudicated in this petition - the petition is disposed off by holding that there exists no seal on the factory premises and therefore, the petitioner can enter and use the factory premises.
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Income Tax
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2021 (7) TMI 637
Rectification u/s 154 - provision for outstanding derivatives contract written back and the provision for doubtful debts was not added back - non disclosure of MAT computation - HELD THAT:- Admittedly, the provisions for outstanding derivatives contract written back was reduced from the book profits for asst. year 2008- 09 cannot be allowed for the reason that the appellant was assessed to tax under the regular provisions of the act for assessment year 2008-09. It is also a fact that for assessment year 2008-09, AO made additions for the said provision under the normal provisions of the Act - MAT provisions were not applicable to assessee in the asst. year 2008-09. However the argument of assessee to treat it as a deemed disallowance under MAT for asst. year 2008-09 can t be accepted. No infirmity in the view taken by the Ld.CIT(A) that any reversal of such provision in a subsequent assessment year was to be considered as usual treatment in tax, and the same does not fall within the ambit of overlooking of statutory provisions . This under no circumstances could be deemed as failure to compliance of statutory provisions by the Ld.AO which could be rectified u/s 154. - Decided against assessee.
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2021 (7) TMI 636
Concept of mutuality - Payment of interest / compensation to the members - Enhancing the assessed income u/s 251(2) - Interest income earned from bank by holding that the assessee is a mutual society and that non-mutual income is to be taxed in its entirety - assessee-co-operative society is essentially a mutual benefit society with close identity of contributors and beneficiaries - HELD THAT:- As decided in own case [ 2021 (4) TMI 1077 - ITAT BANGALORE] we hold that the assessee is entitled to the claim of deduction of interest expenditure being the amount paid to the members of the assessee-society. Allowability of capital expenditure - HELD THAT:- The learned AR fairly conceded that the expenditure enumerated above are capital in nature. In view of the submission of the learned AR, the expenditure is held to be capital in nature. Accordingly, this issue is decided against the assessee.
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2021 (7) TMI 631
Deduction u/s 80P(2)(a)(i) - interest income received by assessee is not eligible for deduction u/s 80P(2)(a)(i) of the I.T.Act. as the same is not related to any banking activity - HELD THAT:- The Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2021 (1) TMI 488 - SUPREME COURT] had held that when the assessee is registered as a Co-operative Society under the respective State Acts, the interest income received for providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) . We remit the issues raised in this appeal to the file of A.O. The A.O. is directed to examine the deduction u/s 80P(2)(a)(i) of the I.T.Act in the light of the dictum laid down in the case of Mavilayi Service Cooperative Bank Ltd. v. CIT (supra) - Appeal filed by the assessee allowed for statistical purposes.
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2021 (7) TMI 627
Approval to the appellant u/s 80G - non-production of original bills and vouchers for verification of the activities and for verification of expenses having being incurred for objective of the assessee society, non-production of details of donation as well confirmation in the cases where cash donations exceeded ₹ 2000/- as well non-production of details of charitable activities carried on by the assessee - Whether the activities of the appellant trust were not charitable in nature? - whether appellant was not sufficient to prove genuineness of activities and its objects ? - HELD THAT:- In the instant case before us, the assessee s registration certificate had already expired on 23.04.2020 which could not be renewed by assessee in time ostensibly owing to spread of pandemic Covid 19 disease and the same was later renewed on 11.06.2021 with retrospective effect from 24.04.2020, which was after the ld. CIT(E) rejected the application for grant of approval u/s 80G the assessee has also not furnished details as were asked by CIT(E) in exercise of its powers u/s 80G(5) read with proviso of the 1961 Act and Rule 11AA of the 1962 Rules as the assessee did not co-operated with the Revenue and did not furnished original bills and vouchers to enable verification as to activities and also to verify whether the expenses were incurred for attainment of charitable objects of society , details of donations received and confirmation of cash donations exceeding ₹ 2000 received during last three year were also not furnished by assessee before ld. CIT(E) and also the assessee did not furnish evidence to enable ld. CIT(E) in support that activities carried out by assessee are charitable in nature. The aforesaid documents/evidences are also not furnished before us by the assessee , except that renewal of registration dated 11.06.2021 with retrospective effect from 23.04.2020 under Societies Registration Act, 1860 is filed for the first time before tribunal which is a fresh evidence filed for the first time before tribunal which as per ld. CIT-DR requires verification by department. We have already held that inquiry as contemplated u/s 80G(5) of the 1961 Act read with Rule 11AA of the 1962 Rules as to genuineness of the activities of the taxpayer institution is not an empty formality , more-so there is a time gap between grant of registration u/s 12AA in May 2019 and an application filed by assessee on 10.03.2020 with CIT(E) for grant of approval u/s 80G. In the fairness to both the parties and based on facts and circumstances of the case, we are inclined to set aside and restore application filed by assessee for grant of approval u/s 80G back to the file of ld. CIT(E) for consideration afresh of aforesaid assessee s application on merits in accordance with law, as in our considered view it is a fit case of remand back to the file of ld. CIT(E) for fresh consideration of assessee s application and our view is supported by Larger Bench judgment in the case of Commissioner of income tax (Exemption) Lucknow U.P v. Reham Foundation[ 2019 (1) TMI 1634 - ALLAHABAD HIGH COURT] The assessee is directed to appear before ld. CIT(E) and furnish all the relevant details/evidences in support of its application for approval u/s 80G of the 1961 Act, which will be decided by ld. CIT(E) on merits in accordance with law. Appeal of the assessee is allowed for statistical purposes.
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2021 (7) TMI 626
Disallowance of expenditure towards cost of improvement of the property - Computation of LTCG - AO was of the view that the expenditure incurred by the assessee was not towards improvement of the asset but only to maintain the asset - HELD THAT:- AO disallowed this expenditure while computing the LTCG of the assessee because the mode of computation stated in section 48 of the Act only stipulates deduction towards expenditure incurred only and exclusively in connection with the transfer of the property and towards cost of improvement of the property. We do not find it necessary to interfere with the order of the Ld.AO because these expenses are incurred for the purpose of guarding the property and not for the purpose of the improvement of the property and there is no scope for any deduction U/s. 48 of the Act for the same as held by the ld. Revenue Authorities - disallowance of expenditure made by the Ld. AO which was further sustained by the Ld. CIT (A) towards cost of improvement of the property while computing the LTCG of the assessee is hereby confirmed. Disallowance towards expenditure incurred for transfer of capital asset - HELD THAT:- We do not find it necessary to interfere with the order of the ld. Revenue Authorities, because the assessee has not provided any cogent evidence to establish that she had paid the amount for incurring brokerage expenses. The Ld. Revenue Authorities after examining the facts of the case have fairly granted deduction being 50% of expenditure incurred towards travelling for the purpose of transfer of the property. Accordingly, the order of the ld. Revenue Authorities are hereby confirmed. The assessee is a NRI and since she does not have any scope to generate cash in India the payment if at all made has to be by cheque or transfer from her bank account. Neither the assessee nor her counsel has clarified as to how the payments were made with evidence. In this situation the claim of the assessee that the payment were made to certain individuals by obtaining a receipt or affidavit from them cannot be relied upon. Levy of Interest U/s. 234A, B and C - HELD THAT:- Interest U/s. 234A, B and C of the Act are with respect to the default on the part of the assessee. Section 195 of the Act also imposed an obligation to deduct tax at a specified rate on the part of a person responsible for paying any amount to a Non-Resident which is chargeable to tax under the provisions of the Act. However, it does not absolve the non-resident from payment of tax on the pretext that the payer would have deducted tax at source. As per the provisions of the Act, the NRI assessee would also be responsible for remittance of income tax in the Government treasury if the payer fails to deduct tax at source from the payment made to the NRI assessee which is chargeable to tax under the provisions of the Act. Even in the case of the assessee the provisions of section 234A, B and C of the Act are consequential in nature and therefore we do not find it necessary to interfere with the orders of the Ld. Revenue Authorities on this issue.
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2021 (7) TMI 625
Assessment of HUF v/s individual members - Reopening of assessment u/s 147 - Capital gain on sale of property three persons, who belong to HUF - notice has been issued in the name of individual capacity and the assessment has also been made in the individual hands - HELD THAT:- As observed that the immovable property which was purchased in the year 1962 was sold on 02/02/2006 for a sum of ₹ 2 crores under a registered agreement of sale-cum-GPA and the sale deed was entered into by three persons. It is fact that the property was sold by aforementioned three persons, who belong to HUF, whereas the notice has been issued in the name of individual capacity and the assessment has also been made in the individual hands. It is clear form the clause as in Agreement of sale-cum-GPA the Special Officer and Competent Authority, ULC, Hyderabad has passed the order that the property belongs to HUF. The AO assessed the capital gains in the hands of the individual assessees, which is not proper. We, therefore, set aside the order of CIT(A) in this case and accordingly, allow the appeal of the assessee. Assessments in the name of three persons - Three appellants names were not found in the agreement of sale-cum-GPA for the impugned property. Therefore, assessments made in these three appellants cases are void-ab-initio. In the result, these three appeals are allowed.
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2021 (7) TMI 624
Forex loss - allowable business loss u/s 37(1) or not? - Whether forex loss claimed by the assessee is not allowable as the said transaction is purely speculative in nature? - As submitted by the assessee, the AO allowed the assessee s claim of forex losses in AYs 2006-07 and 2007-08 - HELD THAT:- In the AY 2008-09, the coordinate bench of this Tribunal dismissed the appeal of the revenue on low tax effect. We find substance on the submissions of the ld. AR. As is evident from the orders of authorities below, facts of the assessee s case are similar with the AY 2008-09 wherein the assessee has entered into a master agreement (ISDA) with four banks and availed forex limits with these banks and claimed that these limits were utilized for hedging forex exposure in connection with import and export of raw sugar/white sugar. The assessee company has entered into transactions of buying and selling of forex and incurred a loss on the cancellation of the said contract and claimed the same as business loss and debited to P L A/c as forex loss under the head manufacturing administration expenditure . Therefore, since the facts in AYs 2009-10 and 2010-11 are similar to the AY 2008-09. As per accounting standard AS-11, the assessee has rightly, claimed the forex loss as business loss u/s 37(1) - The losses claimed by the assessee are not speculative loss as alleged by the AO Assessment u/s 153A - incriminating documents were found during the course of search or not? - HELD THAT:- On perusal of the assessment order nowhere any seized material has been referred by the AO for computing the assessment and made addition only on the basis of the financial statements. Since no incriminating documents found during the course of search u/s 153A, no addition can be made.
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2021 (7) TMI 623
Assessment u/s 153C - whether there was a material belonging to the assessee that authorise the AO to record a satisfaction note for taking cognizance of section 153C? - HELD THAT:- AO has made reference to the statement of Shri Sargam Gupta under section 131(1A) of the Act. His statement was recorded twice. First statement was recorded on 24.3.2014. It could be termed pre-search statement, and second statement was recorded on 13.5.2014. Copies of both these statements are available on page no.23 to 26 and 41 to 46 - CIT(A) while evaluating the evidence for the purpose of arriving at a conclusion, whether a judicial mind can reach on a satisfaction on the basis of the above material for taking action against the assessee under section 153C and make reference to the statement of Shri Sargam Gupta recorded under section 131(1A) on 13.5.2014. It is pertinent to note that this statement cannot be referred for taking cognizance against the assessee. Section 153C contemplates documents seized or requisitioned during the search. It does not talk of information. Otherwise also a statement under section 131 dated 13.5.2014 was not recorded during the course of search; it is after the conclusion of the search. Statement recorded on 24.3.2014 is concerned, it is a presearch statement i.e. before the commencement of search, and in this statement the investigating officer has no where asked any such question, because upto that stage, documents were not discovered i.e. Annexure A/1 and Annexure-A/2. Therefore, Shri Sargam Gupta could not be asked to explain this. These documents were put to him in the statement under section 132(4). We have taken cognizance of that part of the statement. As observed that statement recorded under section 131(1A) of the Act after conclusion of the search i.e. on 13.5.2014 is concerned, this can be an information for evaluating whether any income has escaped assessment or under section 147 for reopening of the assessment; but for taking action under section 153C this statement cannot be used. A perusal of the satisfaction note extracted(supra) would indicate that the AO has vaguly made reference of statement under section 131(1A) of the Act, but he has not referred which statement i.e. pre-search statement or consequent to the conclusion of the search. There are three paragraphs in this note; in the first para, he made reference of the facts, and in the second para he wrote that books of the accounts belonging to the assessee of the alleged seizure referred by the AO be construed as books of accounts belonging to the assessee. These documents do not contain names; even page no.3 of Annexure A/2 did not reflect to whom cash was given. There is no reference to this page. Therefore, on the basis of these documents, adjudicating authority could not goad to reach any firm conclusion that these documents belonging to the assessee - on a detailed analysis of the evidence available on record, we are satisfied that there is no material with the Revenue to form a belief that action under section 153C is required to be taken against the assessee in these two assessment years. Thus, preliminary issue is decided in favour of the assessee in both these assessment years, and it is held that the AO has erred in assuming jurisdiction under section 153C against the assessee in the Asstt.Year 2012-13 and 2013-14. The assessment orders on preliminary issue are quashed in these years. Best judgment assessment - A.Y.2014-15 - AO did not issue any notice under section 143(2), and passed ex parte assessment order under section 144 - HELD THAT:- Best judgment could be passed in case if any person fails to make a return required under sub-section (1) of section 139 of the Act, and has not made a return or revised return under sub-section (4) or 5 of section 139. Similarly, he fails to comply with all the terms of the notice issued under section 142(1) of the Act. In the present case, the Act talk of return filed under section 139(1) and 139(4) or revised return under subsection (5). Similarly, it talks of conditions contemplated in sub-section (1) of section 142 of the Act. In the present case, the AO failed to issue notice under section 143(2) of the Income Tax Act in the Asstt.Year 2014-15, and therefore, respectfully following the decision of the Hon ble Supreme Court in the case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] and case of CIT Vs. Sukhini P. Modi [ 2014 (11) TMI 50 - GUJARAT HIGH COURT] we are of the view that the assessment order is not sustainable, accordingly it is quashed.
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2021 (7) TMI 622
Disallowance u/s 14A r.w.r. 8D - Theory of dominant purpose in making investment in shares - Difference between shares held as stock in trade stand on a different pedestal in relation to the shares that were acquired with an intention to acquire and retain the controlling interest in the investee company - HELD THAT:- As decided in own case [ 2019 (1) TMI 1654 - ITAT DELHI] also confirmed by HC [ 2019 (11) TMI 342 - DELHI HIGH COURT] relying on Maxopp Investment Ltd vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT] whenever dividend is declared by the investee company that would necessarily be earned by the assessee and the assessee alone. Therefore, even at the time of investing into those shares, the assessee knows that it may generate dividend income as well and as and when such dividend income is generated that would be earned by the assessee. In contrast, where the shares are held as stock-in-trade, this may not be necessarily a situation. The main purpose is to liquidate those shares whenever the share price goes up in order to earn profits. Issue held in favour of the respondent assessee that it had earned the revenue on the shares held as stock in trade only by a quirk of fate. Therefore, clear that though not the dominant purpose of acquiring the shares is a relevant for the purpose of invoking the provisions under section 14 A of the Act, the shares held as stock in trade stand on a different pedestal in relation to the shares that were acquired with an intention to acquire and retain the controlling interest in the investee company. We, therefore, while respectfully following the above decision do not find any illegality or irregularity deleting the addition made by the Ld. AO under rule 8D (2) (ii) of the Rules. - Appeals of the revenue are dismissed. Disallowance made by the AO out of contribution to Punjab and Sind Bank Employees Pension Fund Trust - HELD THAT:- As decided in own case [ 2019 (1) TMI 1654 - ITAT DELHI] issue was decided in of the assessee wherein it was held that similar expenses were allowed in the earlier assessments made under section 143(3) of the Act and the decision of Delhi ITAT in the case of DCIT vs Ranbaxy Laboratories Ltd [ 2009 (6) TMI 126 - ITAT DE LHI-I] wherein the expenses towards provision for pension fund were held to be allowable expenses and section 43B has no application, is applicable. The fact that the assessee had actually contributed/paid the amount to pension fund makes the case of the assessee even stronger. Following the above orders, Ld. CIT(A)held that the addition his score has to be deleted. - Decided in favour of assessee.
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2021 (7) TMI 620
Addition of income on substantive basis - Long Term Capital Gain on sale on ancestral land - co- owrenshiop - protective assessment in the name of all co-owners in their individual capacity have been made - CIT(A) has deleted the addition - whether land sold was ancestral and belongs to Mool Chand, HUF?- HELD THAT:- We derive that the Revenue has at least accepted income on substantive basis in the hands of those five individuals. In such circumstances, the same income cannot be assessed on substantive basis in the hands of the assessee. Further, on perusal of copy of land revenue record, which is a copy dated 28/03/2006, wherein name of five individuals is recorded as owner of the land. In view of this document also those five individuals are owner of their respective shares, and no evidence of any ownership in the hands of Moolchand HUF has been filed by the Revenue before us. We are of opinion that the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any error in the same. Accordingly, we dismiss the ground raised by the Revenue.
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2021 (7) TMI 619
Capital gain computation - allowability of deduction u/s 48 towards cost of improvement with respect to amount paid by the assessee towards his share towards conversion of aforesaid property from leasehold to freehold - HELD THAT:- Order passed in the case of brother of the assessee [ 2021 (2) TMI 29 - ITAT ALLAHABAD] who is also one of the co-owners of the aforesaid property , shall be applicable in the case of the assessee also , as the facts are identical and the same property was sold by brother of the assessee namely Mr. Sanjay Majumdar (share in the property 25%), wherein the assessee was also one of the co-owner of the aforesaid property with 25% share. CIT(A) erred in holding in the case of the assessee that cost of improvement by way of amount paid for conversion of property from leasehold to freehold in the instant case shall not be available to the assessee in ay: 2012-13. Thus, we allow the appeal of the assessee to that extent by holding that the assessee will be allowed as cost of improvement of the amount paid towards his share for conversion of aforesaid leasehold land to freehold. Chargeability of interest income on NHAI bonds which assessee claimed that the same was offered for taxation on receipt basis - AO brought to tax said income on accrual basis in the year under consideration - HELD THAT:- The assessee has raised this ground specifically before ld. CIT(A) and the learned CIT(A) refers to this issue being raised by the assessee but while adjudicating appeal, the learned CIT(A) did not adjudicate this issue. Thus, keeping in view facts and circumstances of the case and in the interest of justice , this issue is restored to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law. The ld. CIT(A) shall give proper and adequate opportunity of being heard to the assessee while adjudicating this issue. Thus, ground of appeal number 3 raised by assessee before tribunal is allowed for statistical purposes.
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2021 (7) TMI 617
Addition u/s 68 - unexplained cash credit - HELD THAT:- Neither the assessee nor Shri. S. Prasanth has explained the impugned credits neither before the AO nor before the appellate authority as required u/s. 68 of the Act. However, considering the totality of the facts and circumstances, we are of the view that the issues in this appeal are to be remitted back to the AO for a fresh examination. The assessee/Shri. S. Prasanth, as the case may be, shall place all material based on which they rely in support of their contentions before the AO and comply with requirements of the AO in accordance with the law. AO after affording adequate opportunity to the assessee/Shri. S. Prasanth, as the case may be, and after considering the material etc placed before him shall pass an order in accordance with law. Assessee's appeal is treated as partly allowed for statistical purposes.
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2021 (7) TMI 615
TDS u/s 195 - Payments received for sale of software to Indian resellers/distributors/customers - 'Royalty' chargeable to tax under Section 9(1)(vi) - Article 12 of the India-USA Double Taxation Avoidance Agreement (DTAA')- HELD THAT:- In view of the provisions of section 90, agreements with foreign countries (DTAA) would override the provisions of the Act. Once it is held that payment made by the assessee to the non-resident companies would amount to 'royalty' within the meaning of article 12 of the DTAA with the respective country, it is clear that the payment made by the assessee to the non-resident supplier would amount to royalty. In view of the said finding, it is clear that there is obligation on the part of the assessee to deduct tax at source under section 195 and consequences would follow. On facts and circumstances of the case, the Tribunal was not justified in holding that the amount(s) paid by the assessee to the foreign software suppliers was not 'royalty' and that the same did not give rise to any 'income' taxable in India and, wherefore, the assessee was not liable to deduct any tax at source. See SAMSUNG ELECTRONICS CO. LTD. OTHERS [ 2011 (10) TMI 195 - KARNATAKA HIGH COURT] . - Also see NICE LTD. [ 2021 (5) TMI 877 - KARNATAKA HIGH COURT] amounts paid by resident Indian end-users/distributors to non-resident computer software manufacture/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in Section 195 of the Income Tax Act were not liable to deduct any TDS under Section 195 - Decided in favour of assessee.
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2021 (7) TMI 614
Undisclosed production and investment in stock arrived at on the basis of variation in electricity consumption and calculations - HELD THAT:- The issue of variation in electricity consumption stands addressed by M/s. R.A. Castings Pvt. Ltd. [ 2010 (9) TMI 669 - ALLAHABAD HIGH COURT ] wherein the Court was pleased to hold, Therefore, no universal and uniformly acceptable standard of electricity consumption can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations. Similarly it is seen that the deficiency of the Revenue Authorities in not confronting the incriminating statements relied upon and making those persons available for cross examination persists. In the facts of the present case, repeatedly request to this extent has been made by the assessee all along and for unstated reasons, it remains unaddressed, such an action again is unsustainable in law. Accordingly, the appeal of the assessee is allowed and the additions sustained are directed to be deleted.
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2021 (7) TMI 612
Reopening of assessment u/s 147 - validity of reasons to believe - addition on account of suppression of rental income, disallowance of expenditure and undisclosed income - HELD THAT:- The said details were available while completing the assessment u/s. 143(3). It is imperative on the part of the Assessing officer to show that the conditions specified in the first proviso to sec. 147 are complied with before initiating the reassessment proceedings. AO has failed to show that there was failure on the part of the assessee to disclose fully and truly all material facts. Hence, the reassessment proceeding under section 147 has not been validly initiated because the same has been initiated merely on a change of opinion without any fresh material coming into the possession of the AO - The reason must have live link with the formation of the belief. But in the present case, the materials facts which emerged for reopening the assessment u/s. 147 of the Act, that were available during the original assessment. The view of the various Courts is that even after amendment of section 147, mere change of opinion does not confer jurisdiction on the Assessing officer to initiate proceedings for reassessment merely by resorting to Explanation 1 on the basis of change of opinion. reopening of the assessment is bad in law and hence, liable to be quashed. - Decided in favour of assessee.
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2021 (7) TMI 610
Capital gain computation - specific rate applicable qua the stamp duty paid and levied - correct valuation on account of which the specific rate applicable to the undeveloped rural area - rejection of the fresh evidence sought to be raised before the CIT(A) - HELD THAT:- Assessee confined his arguments only to the issue being remanded back to the AO for determining whether the specific property sold was to be governed by the DLC Rates applicable to rural undeveloped area or the DLC rates applicable to an urban area. It is seen that no objection has been posed by the Revenue for enquiry and verification on facts, accordingly, in the light of the submissions of the parties before the Bench and on considering the facts, the request for verification of facts appears to be reasonable and thus, in the interests of substantial justice, the impugned order is set aside and the issue is restored back to the file of the AO with a direction to pass a speaking order in accordance with law after carrying out the necessary verification on facts. The assessee in its own interests is directed to ensure full and proper verification before the authorities.
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2021 (7) TMI 609
Denial of natural justice - CIT-A's order ex-parte without giving proper and reasonable opportunity of being heard to the assessee - HELD THAT:- In the present case, it is noticed that the Ld. CIT(A) decided the appeal ex-parte, he simply stated that notices of hearing on 20/02/2019, 23/04/2019, 26/06/2019 and 15/07/2019 were issued but none attended. However, nothing is brought on record to substantiate that the notices of hearing were served upon the assessee. It is well settled that nobody should be condemned, unheard as per the maxim, audi alteram partem . We therefore keeping in view the principle of natural justice, deem it appropriate to set aside this case back to the file of Ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
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2021 (7) TMI 608
Income chargeable to tax in India - taxation on sale of software as royalty income - HELD THAT:- As decided in own case [ 2021 (5) TMI 877 - KARNATAKA HIGH COURT] relying on ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED case [ 2021 (3) TMI 138 - SUPREME COURT ] amounts paid by resident Indian end-users/distributors to non-resident computer software manufacture/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in Section 195 of the Income Tax Act were not liable to deduct any TDS under Section 195 - Decided in favour of assessee.
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2021 (7) TMI 607
Revision u/s 263 - Non Verification of cash deposits and purchase of property - case has been selected for limited scrutiny under CASS.HELD THAT:- We find that the complete details pertaining to both the issues have been examined by the AO and the replies of the assessee dated 27.10.2017 along with the details of purchase of property and registration document. The entire details of the said two transactions which are the subject matter of scrutiny have been duly provided and examined by the AO and duly accepted after examination and verification. - We find that the ld. PCIT has also mentioned at para no. 2 that the case has been selected for limited scrutiny under CASS. On going through order u/s 263, we find that the order u/s 263 passed by the ld. PCIT dwelled into the issue of re-computation of capital gains which is beyond the mandate of the limited scrutiny issued by the CBDT. Hence, the directions of the ld. PCIT which are beyond the selection criteria of scope of scrutiny for the instant year cannot be held to be legally valid. Appeal of the assessee is allowed.
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2021 (7) TMI 605
Addition of substantive and protective basis - Addition for alleged donation to an educational institution - As submitted by the Ld. AR that since the additions on substantive basis have been settled by the said assessee therefore the additions made on protective basis in the hands of assessee are required to be deleted - HELD THAT:- Admittedly the additions were made in the hands of the assessee on protective basis whereas the additions were made in the hands of Dr. Ahmad Tariq Jameel, on substantive basis. Further it is a matter of record that the tax liability of Dr. Ahmad Tariq Jameel have been settled in the scheme of the revenue and revenue had also issued form 3 in favour of Dr Jameel. As the tax liability on substantive basis have been settled by Dr Jameel, therefore the tax liability on protective basis, cannot stand or sustained in the eyes of law after the settlement of the tax liability on substantive basis in the hands of assessee, as the additions were made on protective basis in the hands of the assessee with a view to protect the interest of the revenue. Once the interest of the revenue is protected by way of settlement of the tax liability in the hands of the right person, there is no occasion to tax the assessee who had been assessed on protective basis. Additions in the hands of the assessee are required to be deleted.
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Customs
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2021 (7) TMI 644
Principles of natural justice - denial of opportunity of cross-examination of six witnesses whose names are referred to in the document - HELD THAT:- The present writ petition is disposed off, by directing the Adjudicating Authority to grant opportunity to the Petitioner to cross-examine the six witnesses, whose cross-examination was sought but was denied during the original proceedings, culminating into the order dated 22.04.2020. The writ petition is allowed.
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2021 (7) TMI 643
Jurisdiction - power of DRI to issue SCN - petitioner relies on the judgment of the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] in which it was held that Additional Director General of DRI is not the proper officer to issue Show Cause Notice under Section 28(4) of the Customs Act, 1962. HELD THAT:- On instructions, learned counsel for the respondents states that the issue of jurisdiction shall be decided as a preliminary issue by the adjudicating authority, after giving an opportunity of hearing to the petitioner - learned counsel for the petitioner does not wish to press the present petition. Keeping in view the consensual agreement, the present writ petition along with pending applications is disposed of with a direction to the adjudicating authority to decide the issue of jurisdiction as a preliminary issue.
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2021 (7) TMI 640
Maintainability of petition - disputes raised are not existing as of now - petitioner contends that due to efflux of time, the goods imported is highly perishable - HELD THAT:- No further adjudication needs to be entertained in respect of the grounds raised in the writ petition. This writ petition stands disposed of as infructuous. Further proceedings if any required to be made by following the procedures as contemplated under law.
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2021 (7) TMI 634
Jurisdiction - power of DRI to issue SCN - Levy of penalty - violation by a Customs House Agent or Customs Broker under the respective regulations - seizure of Red Sanders on seven noticees - HELD THAT:- The penalty levied is invalid, since the Notice issued by the DRI is held to be invalid, by the Hon ble Supreme Court in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . The Board had thereafter issued an Instruction No. 04/2021-Customs dated 17.03.2021 in F.No.450/72/2021-Cus-IV stating that the said instruction is issued specifically in respect of the Show Cause Notice against Shri Anil Aggarwal and 11 others and, in any case, the Instruction cannot override the decision of a three Judge Bench of the Apex Court, which is binding as the law of the land. Clearly therefore, there was no jurisdiction with the DRI to issue the Show Cause Notice in question and consequently, the whole proceedings become ab initio void. No demand, much less any penalty, can sustain - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 630
Smuggling - Gold Bar - mis-declaration of goods - burden of proof u/s 123 of Customs Act, 1962 - right to claim ownership / redemption of the goods - It is argued by the ld. Counsel that due to tampering of the serial number on the gold bar, it cannot be ascertained whether the gold has suffered Customs duty - HELD THAT:- There is no dispute that the parcel was mis-declared. Although the appellants knew that the parcel contained gold bar, they did not give proper instructions to declare the goods correctly before the Customs authorities. So also they did not furnish necessary documents for transportation of such gold by airlines. Only after the goods were detained by the airlines and coming to know that the airlines has informed the Customs authorities, a mail was sent by Sri Ravi Nakath along with sales invoice dated 23.12.2016. If the gold bar was legally purchased by the appellants, they ought not to have shied away from declaring the goods and furnishing necessary documents while booking the parcel itself. Undisputedly, the gold bar has foreign markings and is an imported gold bar. The serial number on the gold bar was seen hammered / tampered. Such serial number helps the Customs authorities to trace whether the gold bar has suffered Customs duty. The serial number having been defaced and tampered would raise a strong inference that it is smuggled gold. Further, the serial number is not mentioned in any of the invoices - there is no explanation why VAT was collected as per invoice instead of CST. Sri Sunil Cherian of Kerala Fashion Jewellery has not able to explain why the serial number on the gold bar is seen tampered. It is also stated by him that he has not sold any gold bar with tampered serial number. Though this invoice is issued to Venus Creation, Kolkata, Sri Sunil Cherian says that he handed over the gold bar to one Vimal. Sri Sunil Cherian has not been able to identify whether the gold bar is the same one sold by him as per invoice 875 on 21.12.2016. The term smuggled goods‟ means goods of foreign origin and imported from abroad. In the present case, there is no dispute that the goods are of foreign origin. As already discussed, the defacing of serial number on the gold bar itself indicates that it is smuggled gold. The appellants who claim the gold to have been legally procured have to produce documents evidencing payment of duty as well as documents evidencing their legal ownership / possession. At the time of booking the parcel, the appellants have not furnished the required documents for transportation of imported goods - The appellants have not been able to discharge their burden of proof required under section 123 of Customs Act, 1962. The plea of appellants to permit redemption of the gold also cannot be considered as they have not been able to establish possession / ownership of the gold bar. The seller Kerala Fashion Jewellery stated that he has not sold any gold bar with tampered serial number. The accounts of Sri Rishi Nakath show that he has sold only gold jewellery to Sri Ravi Nakath. So as per these accounts there is no sale of gold bars by Venus Creation to Sri Ravi Nakhat - the department has succeeded in establishing the allegations in the Show Cause Notice. The appellants have not been able to establish the defense pleaded by them or their claim of ownership over the gold bar. Appeal dismissed.
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Corporate Laws
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2021 (7) TMI 621
Oppression and mismanagement - stay on subscription of rights issue - Whether right issue could be cancelled on the ground of breach of fiduciary duty and relationship between directors? - balance of convenience - HELD THAT:- It is a settled law from judicial precedents that while considering interim relief, the Tribunal has to look into the aspect of balance of convenience between the parties. The interim relief is discretionary and the Court is also required to consider whether Petitioner/Applicant has established prima facie case and it is not frivolous or vexatious - The Company is a private limited company and is in practice of obtaining loans from friends, social circles and relatives. The genuineness of loans is not disputed by any party. Under Section 241 and 242 being an Equity Jurisdiction, the interests of the Company are paramount and to be given prime consideration. Balance of convenience - HELD THAT:- The Respondent No. 1 Company is raising and would require that their loans to be paid immediately. The Petitioner has defaulted in payment of loan taken in personal capacity and Petitioner has chosen to not to subscribe to the right issue having been offered to them on the same terms and conditions as well. Thus, requirement of raising funds for the purpose of running business of the Company appears to exist - there is no justification for staying or keeping the right issue in abeyance at this initial stage. The prayer made by the Petitioners for interim relief is rejected. It is made clear that this interim order cannot be construed as an expression of any opinion on the merits of other issues, if any, raised in the present petition filed under Section 241 and 242 of the Companies Act, 2013.
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2021 (7) TMI 616
Sanction of scheme of amalgamation - seeking dispensation of the meeting of Equity Shareholders, creditors of the Applicant Companies for the proposed scheme of amalgamation - Section 230-232 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions regarding holding and convening as well as dispensation of various meetings issued - directions regarding issuance of various notices also issued. Application allowed.
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Insolvency & Bankruptcy
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2021 (7) TMI 618
Seeking approval of sale of Corporate Debtor as a going concern - section 60(5) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- There are no disputes regarding the basic facts of the case such as Advertisement for sale of Intangible Assets viz. Credentials, Arbitration Receivables, Work-in-Progress (Contracts) of the Company under Liquidation as well as the Special Terms Conditions stated in the Tender Documents and the process of e-auction conducted by the Liquidator in which the Impleading Respondents were declared as Successful Auction Purchasers. This Adjudicating Authority while dismissing the prayer of the Successful Bidder regarding adjustment of all the amounts received from the arbitration receivables, work-in-progress from the date of declaration of Respondents as Successful Bidder till date towards the balance bid consideration payable by the respondents, gave a specific direction to the Liquidator to provide Audited Financial Statements of the Company upto 30.09.2020 and also to provide copies of Agreements relating to ongoing projects and details of receivables until 30.09.2020 to the Respondents. It appears that the Successful Bidder, who is the Impleading Respondent herein has already paid 25% of the total bid value of ₹ 12.43 crores but has not made further payments to the Liquidator so as to complete the sale - both sides directed to take necessary steps for completion of the sale in terms of the Insolvency Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the terms of sale as advertised by the Liquidator in respect of the intangible assets of the company under liquidation. Application disposed off.
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2021 (7) TMI 613
Seeking to declare communication as null and void - seeking to direct the Resolution Professional to reject the claim submitted by the 1st Respondent - seeking declare the 1st Respondent's claim as erroneous - seeking reconstitution of CoC - HELD THAT:- There is no dispute between the parties that the terms of the Exit Agreement could not be fulfilled and the Claimant/1st Respondent continued to remain invested. In para 9.60 of the Award, it is also discussed that the Respondent/Corporate Debtor had committed a breach of the terms of the Exit Agreement which constituted an event of default under the SSA in and by which the Claimant is entitled to require the promoter to pay to the Claimant the Total Investment with an IRR of 30%. In pursuance of the same the Claimant/1st Respondent issued a notice on 02.02.2016 - In para 9.63 of the Award, it has been stated that in view of the notice dated 02.02.2016 issued by the Claimant/1st Respondent, the 1st Respondent is entitled to a sum of ₹ 143,40,00,000/-. The crux and gravamen of the contention being raised by the Applicant in the present Application is that as per the Award the 1st Respondent is entitled only to the Remainder Amount in terms of para 9.66. However, a perusal of the operative portion of the Award posits the fact that the 1st Respondent is entitled to a sum of ₹ 155,32,56,626/- and that the manner in which the said amount is required to be paid as set out in para 9.64. It is to be noted that the claim of the 1st Respondent is not in any manner linked with the Remainder Amount. The concept of the Remainder Amount in the SSA only sets out the details of the amount, how the payments are required to be made to the 1st Respondent when the project is being developed and it does not in any manner change the position, either in fact or in law that as per the said Award the Corporate Debtor is bound and liable to repay the amount which is due to the 1st Respondent - from a conjoint reading of the award and the definition of the term 'claim', and viewed from the said perspective, the contention of the Learned Counsel for the Applicant the extent payable by the Corporate Debtor could be paid only from the Remainder Amount as per the Award, would render the entire Award otiose and thereby it would amount to material change in the Award dated 31.01.2018. The contention of the Learned Counsel for the Applicant that as on date the Remainder Amount is NIL would be of no relevance since it does not dilute the claim of the Applicant in any manner - Application dismissed.
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Service Tax
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2021 (7) TMI 648
Validity of appellate order - applicability of decision in the case of M/S ICS FOOD PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, NOIDA [ 2018 (7) TMI 1061 - CESTAT ALLAHABAD] - the department had elected to carry the said order in an appeal before the Supreme Court and hence the said decision had not attained finality - HELD THAT:- There are no reason to relegate the petitioner to the appellate remedy at this stage. In our opinion, interest of justice would be sufficiently served if a limited remand is ordered to the Commissioner (Appeals-III) for revisiting his decision based on the circumstance that the decision of the Customs, Excise and Service Tax Appellate Tribunal in M/S ICS FOOD PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, NOIDA [ 2018 (7) TMI 1061 - CESTAT ALLAHABAD] has since attained finality. If indeed the said decision has applicability to the facts and enures to the benefit of the petitioner, the Commissioner (Appeals-III) shall be at liberty to pass an appropriate order reversing his earlier decision which is impugned. Petition disposed off.
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2021 (7) TMI 646
Condonation of delay in filing claim - failure to remit the amount due under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 even after repeated extensions provided - HELD THAT:- In the present case, the Writ Petitions are presented only on 30.04.2021, 10 months after the last date for remittance of the amounts. No plausible reason is set out in the affidavit justifying the delay except to state that the assessees were facing hardships on account of the COVID-19 pandemic. In the light of the long delay sans explanation, there is no merit in these Writ Petitions and the same are dismissed.
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2021 (7) TMI 633
Refund of service tax paid - refund arose as a consequence of introduction of Section 104 of the Finance Act w.e.f. 31.03.2017 - rejection on the ground of non-submission of necessary documents - requirements under Section 11B of the Central Excise Act, 1944 as made applicable to Finance Act, 1944 vide Section 83 of the Act not complied with - N/N. 41/2016 dated 22.09.2016 - HELD THAT:- N/N. 41/2016 dated 22.09.2016 has exempted taxable service provided by the State Government Industrial Development Corporation/Undertakings to industrial units by way of granting long term lease on industrial plot from so much of service tax leviable thereon under Section 66B of the said Act, as is leviable on the one time upfront amount payable for such lease. Vide Section 104 (1), exemption was provided from said services for the period from 01.06.2007 to 21.09.2016 and it was provided that the refund claim should be filed within a period of six months from the date from which Finance Act, 2017 is promulgated and come into force. In the present case, the appellant filed the refund claim within time and the only ground for which the refund was rejected by the Original Authority and upheld by the Appellate Authority is that the appellant did not produce sufficient documents in the form of invoices/bills showing that they have paid the service tax to KINFRA. During the pendency of the appeal, the appellant filed various invoices/bills issued by KINFRA showing the payment of service tax by the appellant for which the refund claim has been filed by the appellant. Further KINFRA has also issued a certificate dated 02.02.2021 certifying that they have not availed any CENVAT credit on the service tax paid by the appellant. Further, these bills/invoices issued by KINFRA clearly show the payment of service tax by the appellant to KINFRA and KINFRA in turn has paid the same to the Government. Though these invoices/bills were not produced before the Original Authority but various Challans issued by KINFRA were produced along with worksheets showing the payment of service tax to KINFRA by the appellant. In view of the facts that now the appellants have produced sufficient documents to prove the payment of service tax, there are no justification for rejection of the refund claim - appeal allowed - decided in favor of appellant.
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2021 (7) TMI 629
Maintainability of appeal - non-compliance of pre-deposit under Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - It is argued by the Ld. Consultant that amount deposited by the appellant towards the service tax should be considered as payment towards mandatory predeposit and the appeal ought to have been considered on merits - HELD THAT:- The appellant has not been given the benefit of Sabka Vishwas Scheme as there was delay in payment of the service tax under the said scheme. Since the amount paid by the appellant is towards the service tax confirmed under the Order-in-Original dt. 24.06.2019, the said payment ought to have been considered towards compliance of pre-deposit having been made before the appeal is taken up for hearing. The Commissioner (Appeals) has issued reminders to the appellant to make pre-deposit by online on several dates even though they have made deposit of more than ₹ 5 lakhs which would suffice 7.5% of total tax demand as required under Section 35F of the Central Excise Act ibid. Needless to say that even if debit is made in Cenvat account, the same can be considered as sufficient compliance of pre-deposit. This being so, the Commissioner (Appeals) should not have insisted on making further pre-deposit over and above ₹ 5,74,103/- already paid by the appellant. The view taken by the Commissioner (Appeals) that the appellant has not complied with mandatory pre-deposit cannot sustain - matter is remanded to Commissioner (Appeals) with a direction to decide the case on merits without insisting on any further pre-deposit - Appeal allowed by way of remand.
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2021 (7) TMI 628
Refund of unutilised cenvat credit of service tax - export of services - receipt of convertible foreign excahnge through third party - rejection of refund on the ground of non-fulfilment of conditions prescribed under Rule 6A of Service Tax Rules, 1994 - ineligible input services or not - HELD THAT:- The appellant have entered Sourcing Service Agreement with WMGS Services Ltd. Located in British Virgin Island and WMGS Netherlands located in the Netherlands and as per the JV agreement, the appellant was directed to raise the invoices in the name of WMGS China JV and accordingly the appellant have been raising invoices directly to WMGS China JV. Further after perusing the terms of both the agreements placed on record by the appellant, it is found that the appellant is providing services to WMGS BVI and WMGS Netherlands in accordance with the Sourcing Agreement without any deviation as per the JV agreement. The appellant has complied with the conditions prescribed under Rule 6A(1)(b) of Service Tax Rules, 1994 because the service recipient is located outside India and further as per Rule 3 of Place of Provision Rules, place of provision of the impugned services will be the location of the service recipient. Also, the appellant have been receiving foreign inward remittances on their export invoices which were coming to the appellant in terms of JV agreement from a designated bank account specifically opened for the said purpose - the appellant cannot be denied the benefit of export of services simply on the ground that payment has been routed through a 3rd party which is also based outside the country. Denial of refund on Works Contract Service - HELD THAT:- It is found from various invoices submitted by the appellant that the said input service was used towards renovation of the premises occupied by the appellant and the said premises was used towards provision of output services and therefore eligible for the purpose of claiming cenvat credit - Further the Board s circular dt. 29/04/2011 relied upon by the appellant has clarified that the input service used in modernisation, renovation or repair is eligible for credit and the same thing has been held in the case of M/S ION EXCHANGE I LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, SUARAT-II [ 2017 (12) TMI 151 - CESTAT AHMEDABAD] . Refund on Insurance Auxiliary Service - HELD THAT:- The learned counsel did not press for the same as the amount involved is small. Interest on delay in refund - HELD THAT:- As per the decision in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] , appellant is also entitled for grant of interest on delayed refund claim beyond the period of three months - the appellant is entitled for the interest on the delayed sanction of the refund. Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 606
Maintainability of appeal - time barred in terms of Section 85(3) of the Finance Act, 1944 - HELD THAT:- As the issue has already been decided by this Tribunal in the case of M/S DEEP COMMUNICATION AND M/S LALLI COMMUNICATION, M/S CHIK SHACK CABLE NETWORK, M/S DJ COMMUNICATION, M/S UNITED COMMUNICATION VERSUS C.C.E S.T. LUDHIANA [ 2021 (3) TMI 1227 - CESTAT CHANDIGARH] where it was held that if we consider the time consumed by the appellants before the Hon ble High Court is to be excluded than also appeals have been filed before the Ld. Commissioner (Appeals) beyond the time limit prescribed in statute, in that circumstances, I hold that the appeals filed by the appellants are highly time barred. The appeals are rightly dismissed as time barred by the Ld. Commissioner (Appeals) - Appeal dismissed.
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Central Excise
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2021 (7) TMI 635
CENVAT Credit - freight component in relation to transport of goods from non-taxable territory to India - as per the lower authorities the said service was exempted from levy of Service Tax during the period when such import of goods took place - appellant was not liable to pay the tax, but he paid erroneously - reverse charge mechanism - penalty - HELD THAT:- It is an admitted fact that the first Appellant was not liable to pay Service Tax on the transportation of goods by vessel services. However, the tax was paid and accordingly the Appellant had availed Cenvat credit of the same. The issue above is no longer res integra in view of the judgment of the Hon ble Madras High court in the case of THE COMMISSIONER OF CENTRAL EXCISE, AND SERVICE TAX LARGE TAXPAYER UNIT VERSUS M/S TAMILNADU PETROPRODUCTS LTD, THE CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [ 2015 (11) TMI 840 - MADRAS HIGH COURT] where it was held that If, upon a misconception of the legal position, the assessee had paid the tax that he was not liable to pay and such assessee also happens to be an assessee entitled to certain credits such as CENVAT Credit, the availing of the said benefit cannot be termed as illegal. The Appellant assessee cannot be asked to reverse the Cenvat credit availed on tax paid under Reverse Charge basis when the payment is not disputed. Penalty - HELD THAT:- Revenue has not been able to prove beyond reasonable doubt, the presence of fraud, collusion, willful misstatement or suppression of facts on the part of the appellant assesse. Therefore, imposition of penalty under section 11AC of the Act is unwarranted. Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 632
100% EOU - demand of excise duty on the raw grade oil - LOP, raw oil (not allowed for export) - demand on the ground that the respondent have wrongly availed benefit of Serial No. 20 of the Notification No. 23/2003-CE since raw oil cannot be considered as a mere waste even though it may be of no use to the Respondent but it is a main raw material used for manufacture of refined oil. Can the said raw oil be treated as if manufacture in a DTA Unit and can be cleared under exemption N/N. 4/2005-CE dated 01.03.2005 and predecessor N/N. 6/2002-CE dated 30.04.2003 as amended by N/N. 37/2003-CE dated 30.04.2003 which is applicable to a DTA Unit? HELD THAT:- From the remand order of the tribunal, this tribunal has given clear direction to the Learned adjudicating Commissioner that he shall consider the clearance of raw oil as if cleared by DTA unit and examine whether any duty is liable to be paid. With this clear observation, the Learned Commissioner in de-novo adjudication order bound to decide the duty liability treating the clearance of oil by the respondent as if cleared by the DTA unit. The Learned Counsel for the respondent submits that the remand proceeding was kept in abeyance awaiting the Hon ble Supreme Court judgment in the revenue s appeal COMMR. OF CENTRAL EXCISE-III, AHMEDABAD VERSUS M/S GUJARAT AMBUJA EXPORT LTD. [ 2015 (11) TMI 156 - SUPREME COURT] filed against the Mumbai tribunal order in COMMISSIONER OF C. EX., AHMEDABAD VERSUS GUJARAT AMBUJA EXPORTS LTD. [ 2006 (9) TMI 391 - CESTAT, MUMBAI] . This fact also clearly indicates that revenue was of clear view that the issue in present case and that of revenue appeal in Supreme Court were one and the same but surprisingly even if Supreme Court dismissed the revenue s appeal, revenue has tried to re-open the issue by filing this appeal which was dismissed by the Supreme Court. By following the principles laid down by Hon ble Supreme Court held that the product vegetable raw oil cannot be treated as product of 100% EOU and the same is eligible to clear as if the same is product of DTA and consequently the duty applicable to the DTA unit shall apply to the clearance of raw oil - In the present case the vegetable oil falling under chapter 15.07 during the relevant period is chargeable to nil rate of duty in view of Notification No.4/2005-CE dated 01.03.2005 (serial no 1) predecessor Notification No. 6/2002-CE dated 01.03.2002 as amended by Notification No 37/2003 dated 30.04.2003. Accordingly, the clearance of Raw oil by the respondent is not liable for any duty. Appeals filed by revenue are dismissed.
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2021 (7) TMI 611
Refund of excess Excise Duty paid - erroneous adoption of higher price - denial on the ground that appellant has failed to prove payment of excess duty - documentary evidences not considered - violation of principles of natural justice - HELD THAT:- The appellant filed refund claim of the excess duty paid along with various documents in support of his claim but both the authorities have not examined the documents and the statements submitted by the appellant in support of their claim so much so the Chartered Accountant Certificate issued by the CA of the appellant as well as of the M/s Welspun Corp. Ltd have not been considered - The impugned order has simply observed that the appellant has failed to prove the payment of excess duty without considering the plethora of documentary evidences on record, the CA Certificate produced on record have been totally ignored without any reason. The documents produced in the Appeal Paper book and few sample invoices shows the payment of excess duty but the same have not been considered and verified by the authorities below - this case needs to be remanded to the original authority with a direction to pass a fresh order after examining the various documents placed on record or which may be submitted by the appellant in support of their claim and thereafter pass a reasoned order in accordance with law. Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2021 (7) TMI 642
Maintainability of petition - availability of alternative remedy of appeal - Validity of Original Assessment Order - appealable order or not - Violation of principles of natural justice - no opportunity of hearing was provided to the writ petitioner - HELD THAT:- Admittedly, the Original Assessment Order is an appealable order under the provisions of TNVAT Act, more specifically, Section 51. Section 51 contemplates appeal to the Appellate Commissioner, Section 58 provides appeal to the Appellate Tribunal and Section 59 and 60 provides appeal and revision to the High Court, respectfully as the case may be - the Statutory remedy contemplated are to be exhausted. High Court cannot adjudicate the disputed issues with reference to the documents or evidences as the Appellate Authorities are the Final Fact Finding Authorities. Thus, the petitioner has to exhaust the remedy which is efficacious. Opportunity of hearing - HELD THAT:- In view of the fact that the petitioner had not availed all the opportunities provided by the respondents, the respondents were framed the issues and passed orders. Therefore, the mere contention raised in this regard is contrary to the findings made in the impugned order. However, writ petitioner is of an opinion that further more opportunity is to be provided. He is at liberty to prefer an appeal in a prescribed format and by complying with the provisions of the statutes. However, the High Court adjudicate the issues on merits which requires scrutinization of documents and evidences. 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 - 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 roving 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. 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 petitioner is at liberty to approach the Appellate Authority for the purpose of redressing his grievances in the manner known to law - Petition disposed off.
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2021 (7) TMI 641
Reopening of assessment proceedings - Refusal to permit the petitioner to file F forms - interstate transfer to branch unit at Karnataka - HELD THAT:- Instant case relates to the assessment year 2012-13. Hence, the dealer was required to file the declaration forms within June, 2013 as per the amended rule. Admittedly, he failed to submit the declaration forms within the said period. In 2015 show cause notice was issued and ex-parte assessment order was passed on 31.10.2015, as the petitioner did not participate in the said proceedings. Thereafter, demand notice dated 09.11.2015 was issued and as the petitioner did not pay the tax liability, notice of attachment of land was issued on 09.02.2018. The dealer was required to submit F declaration forms with regard to interstate branch transfer by June, 2013, but he failed and neglected to do so. Only after the recovery proceedings being initiated in respect of assessment order, he approached the 1st respondent in 2019 for enlargement of time to submit the declaration forms - plea of closure of business for the delay in submission of declaration forms is extremely facile and evasive. The forms related to interstate transportation of goods between the Head office of the assessee to its branch office in the assessment year 2012-13. Under such circumstances, it is not understood why the assessee failed to obtain the declaration forms from its branch office and submit the same since 2013. Even if one accepts the assessee s version that he was unaware of the assessment proceedings and the order passed therein in 2015 due to closure of business, it does not give sufficient explanation for its failure to furnish declaration forms since 2013. While the proviso to Rule 12(7) of the CST Rules gives opportunity to the dealer to make belated submission of declaration/certificate when sufficient cause is shown, the said proviso cannot be permitted to be abused by an indolent and indifferent dealer, who at a belated stage approaches the authorities without proper cause for submission of the declarations/certificates and seeks to reopen a concluded assessment proceedings on such score - the factual matrix of the case does not disclose any justifiable or sufficient cause for the inordinate delay in submission of the declaration forms. There is no illegality or irregularity in the impugned order passed by the assessing authority - Petition dismissed.
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2021 (7) TMI 638
Re-classification of goods - rate of tax on hire charges - petitioner had been initially served with a show-cause notice calling upon him to respond why tax at the rate of 1% on the hire charges be not imposed but subsequently, by invoking Section 21(5) of the VAT Act a revised show-cause notice levying tax at a higher rate i.e., 14.5% was proposed. HELD THAT:- Section 21 of the VAT Act provides for the procedure for assessment of tax in respect of a VAT or TOT dealer, who fails to file return within the prescribed time. Sub-section (4) of Section 21 inter-alia provides that such assessment shall be made within a period of 4 years from the end of the period for which the assessment is made. Sub-section (5) thereof enlarges the period of limitation to 6 years for making such assessment to 6 years from the date of filing of the return in the event there is wilful evasion of tax - Hence, a finding there is wilful evasion of tax is a condition precedent to invoke powers under Section 21(5) of VAT Act. In the present case, the assessing authority initially proceeded to issue show-cause notice upon the petitioner for payment of tax at the rate of 1% on the hire charges for the assessment year 2014-15. Subsequently, a revised show-cause notice calling upon the petitioner-assesse to pay tax at the rate of 14.5% was issued on 31.08.2020 i.e., beyond the period of 4 years from the year of assessment - This being a jurisdictional fact for invocation of powers of assessment under Section 21(5) of the VAT Act, the Writ Petition is entertained to examine the legality of the assessment order notwithstanding existence of alternative remedy. There is no averment in the revised show-cause notice that there was wilful evasion on the part of the assessee to pay the higher rate of tax. Incorrect application of a lower rate of tax per se would not amount to a wilful evasion of tax unless and until factual averments disclosing wilful evasion of tax are made out in the show-cause notice. Moreover, impugned order is also completely silent on this score. There is no finding that the assessee had wilfully evaded tax - When the assessee having not been put on notice to respond to the allegation that it had wilfully evaded the tax, the authority could not have been imposed a higher tax liability by invoking its powers under Section 21(5) of the VAT Act. In the absence of any factual averment in the show-cause notice that the assessee had wilfully evaded the tax and since the order impugned is completely silent on such issue, the entire proceedings and the impugned order dated 16.11.2020 passed therein are without jurisdiction and liable to be set-aside. The impugned order is set aside - the consequential penalty and urgent notices set aside - petition allowed.
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Indian Laws
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2021 (7) TMI 649
Dishonor of Cheque - insufficient fund - it was argued that the cheques were issued as security and not in discharge of any debt - crystallization of cause of action on the date of filing of the complaint case under section 138 of the Negotiable Instruments Act, 1881or not - complainant itself was pre-mature or not? HELD THAT:- This court is of the considered view that the learned trial court completely failed to consider that the cause of action for filing a complaint case under Section 138 of the N.I. Act is not counted from the date of dispatch of legal notice, but is counted from expiry of 15 days from the date of service of legal notice. Thus, the timeline for filing the case, even if it is assumed that the legal notice having been sent through registered cover on 04.03.2008 and not return back unserved or returned back for any other reason , the date of service would be 03.04.2008 i.e expiry of 30 days from dispatch of the legal notice and thereafter 15 days was required to be counted i.e., till 18.04.2008 for the cause of action to mature in order to file a complaint case under section 138 of the Negotiable Instruments Act, 1881 - However, in the instant case, the complaint was filed on 10.04.2008 and thus, the cause of action for filing the complaint case under Section 138 of the N.I. Act had not matured on 10.04.2008, which is the date of filing the complaint case. This Court also finds that the learned trial court has not recorded any finding in connection with the service of legal notice much less of finding of deemed service of notice after expiry of the 30 days period from dispatch of legal notice under registered cover. This Court finds that there is no material on record regarding service of legal notice dated 03.03.2008 dispatched by registry on 04.03.2008 upon the petitioner and it is not the case of the complainant that the legal notice was returned unserved or returned for any other reason. This court is also of the considered view that presumption regarding service of notice sent through registered cover can be drawn only upon expiry of 30 days from the date of dispatch of notice - This Court finds that the law has been well settled that the cause of action for filing a complaint case under Section 138 of the N.I Act could not arise prior to expiry of 15 days from the date of service of legal notice on the accused. The condition precedent for filing the case under Section 138 of the Negotiable Instruments Act, 1881, having not been satisfied, the complaint itself was not maintainable on the day it was filed and accordingly, the petitioners could not have been convicted under the said Section. The question of any presumption regarding existing debt under Section 139 of the Negotiable Instruments Act, 1881 also could not arise as the complaint itself was not maintainable - Petition allowed.
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