TMI Tax Updates - e-Newsletter
July 7, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Blocking the Input Tax Credit (ITC) - the impugned action of the respondent WBGST Authority taking impugned coercive action of blocking of the petitioner’s Input Tax Credit (ITC) without intimating to the petitioner the recorded reasons for such action is illegal and not sustainable in law and is in violation of the principles of natural justice. - HC
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GST:
Validity of SCN - applicability and binding nature of circular - rate of GST on various goods - in the circular dated 9-8-18 various issues on applicability of GST were clarified - it is true that the circular issued by the CBIC are binding on the authorities, however whether the circular is applicable or not is a matter, which has to be considered on merits of the facts and circumstances of the case. - Petitioner directed to file the reply to the SCN - HC
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Income Tax:
Penalty u/s 271 D - default u/s 269SS - Assessee had accepted the loans in cash - as pe assessee both the entities from whom the cash loan was taken were partnership firms in which the Directors of the Assessee had controlling stake and other partners of the firms were family members and relatives of the Directors of the Assessee-Company - genuineness of the loan transactions were not in doubt - No penalty - HC
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Income Tax:
Reopening of assessment u/s 147 - Period of limitation to issue notice - typographical error in the notice issued wherein the assessment year has been mentioned as 2015-16 instead of 2010-11 - By the said corrigendum, it cannot be said that it has sought to cure a procedural irregularity as contemplated under Section 292- B of the Income Tax Act, 1961 and it has to be held that they have invoked the jurisdiction to reopen the assessment for the year 2010-2011 only after issuance of the said corrigendum on 11.04.2017 which is clearly time barred. - HC
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Income Tax:
Allowable business expenditure u/s 37 - Offence for non-compliance of fire safety provisions is heinous which may result into breakage of fire putting risk to life and limb of residents as well as other public at large. Any payment made by the assessee as compounding fees for such an offence has rightly been disallowed by the lower authorities. The assessee in this case right from the Assessing Officer to the level of the Tribunal has tried to misguide authorities about the nature of payment which act of the assessee is highly deprecable. - AT
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Income Tax:
Capital gain - determination of cost of acquisition - Inasmuch as the legislative language is clear and unambiguous, we do not find anything perverse in the orders of the authorities below, and merely because of some voluntary act of the mother of the assessee in valuing the property on higher side at the time of receiving of the same, we do not accept the contention that the authorities should have accepted such escalated value. Law contemplates only ‘cost of acquisition’ but not ‘fair market value’. Voluntary acts of the parties will not disturb the legal position or affect the impact of law. - AT
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Customs:
Validity and scope of SCN - evasion of duty - clandestine removal of finished goods from SEZ - The goods under dispute are not the specified goods under Section 123 of the Customs Act. In such facts and circumstances, when admittedly it is a case of town seizure, the onus lies on Revenue to prove that the goods/ pipes lying in the premises of this appellant have been received by him in a clandestine manner from SEZ unit, on which Custom duty have not been paid. The General Rule is that the goods which are available in the open market, are presumed to have suffered the duty. - AT
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Corporate Law:
Seeking quashing of complaint and prosecution proceedings - The Court has to consider whether complaint discloses any prima facie offences that were alleged against the respondents. Correctness or otherwise of the said allegations has to be decided only during trial. At the initial stage of issuance of process, it was not open to Courts to stifle proceedings by entering into merits of the contentions made on behalf of the accused. Criminal complaints could not be quashed only on the ground that, allegations made therein appear to be of a civil nature. If ingredients of offence alleged against Accused were prima facie made out in complaint, criminal proceeding shall not be interdicted. - HC
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Corporate Law:
Oppression of minority - The record also would disclose that the Annual Returns were filed by the Company from 2002-2014 and the said returns were also signed by the complainant showing the shareholding of the petitioner in PARPL company. The complainant did not choose to dispute the said Annual Returns and kept quiet for more than a decade. The filing of the complaint after twenty years alleging fabrication from the year 2002 onwards would only show that it was filed with a malafide intention to take revenge against the petitioner. - HC
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Corporate Law:
Oppression and Mismanagement - Issue of Right Shares - subsequent Rights Issue during the pendency of 1st Rights Issue - gross under-subscription of the rights issue - `non-participation’ in the `Legitimate 1st Rights Issue’ - In terms of the ingredients of Section 62 of the Companies Act, 2013, the Directors have to offer further Shares issued, to the Shareholders who are on the Register of Companies and not to anyone else, and in fact, the Offer must be in the same proportion to all the Shareholders. It is to be remembered that there shall be no discrimination among them. - AT
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Corporate Law:
Condonation of delay in filing of Review Application - In view of the fact that Section 14 of the Limitation Act, 1963 applies to the Court / Tribunal whether the exclusion of time bonafide in Court / Tribunal without jurisdiction and in the instant Case, Review Application was filed before the National Company Law Tribunal, Division Bench-II, Chennai to review an earlier, by no stretch of imagination, be said to be Tribunal possessing no jurisdiction, viewed in that light, the invocation of Section 14 of the Limitation Act, 1963 on behalf of the Applicant / Appellant sans merits. - AT
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IBC:
Disqualification of the Successful Resolution Applicant u/s 29A of the Insolvency and Bankruptcy Code, 2016 - It is found that the Resolution Applicant was eligible on 30.11.2019 when it submitted the first Resolution Plan, there are no necessity to enter into other submission raised by learned Counsel for the parties including the submission regarding applicability of the proviso to Section 29A(c). The Resolution Applicant being eligible, was entitled to submit Resolution Plan and was also entitled to revise its Plan from time to time as per the Scheme of the Code. The Plan having approved by 100% vote of CoC, there are no error in the decision of the Adjudicating Authority rejecting the application filed by the Appellant. - AT
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Service Tax:
SEZ unit - Recovery of CENVAT Credit alongwith interest and penalty - the appellant is not claiming the benefit of the Exemption Notification, but is claiming CENVAT credit on the service tax paid on input service received by the appellant - the finding recorded by the Commissioner (Appeals) disallowing CENVAT credit taken on service tax paid on input services received by the SEZ unit on the ground that the SEZ Unit could only have opted for exemption by way of refund of such service tax cannot be sustained.- AT
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Central Excise:
Refund claim of excess duty paid - price revision with retrospective effect - rejection on the ground of unjust enrichment - It is found that adequate entries have been made by the appellant in the Books of Accounts and they have credited the account of Hero Motor Corp. Further, the amount of refund claim have been shown as duty recoverable from the revenue in the Books of Accounts and the financial statements of the appellant being balance-sheet. - Refund allowed - AT
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Central Excise:
CENVAT Credit - bogus invoices - passing on bogus cenvat credit without delivery of the goods - they have received the inputs along with cenvatable invoices and such inputs have been used by them in the manufacture of dutiable outputs, which have been cleared on payment of duty. Further, the payment for such transactions have been done through banking channels. - The suspicion however, strong, cannot take place of evidence - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (7) TMI 227
Blocking the Input Tax Credit (ITC) - recorded reasons for taking such adverse action were not presented - violation of principles of natural justice - HELD THAT:- The action of the respondent, WBGST Authority in blocking the Input Tax Credit (ITC) of the petitioner without intimating the recorded reasons for the same to the petitioner is arbitrary, illegal and in violation of principles of natural justice since it deprives the right of the petitioner to effectively defend or oppose such action of the respondent authority. Petition is disposed of by holding that the impugned action of the respondent WBGST Authority taking impugned coercive action of blocking of the petitioner s Input Tax Credit (ITC) without intimating to the petitioner the recorded reasons for such action is illegal and not sustainable in law and is in violation of the principles of natural justice.
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2022 (7) TMI 226
Validity of SCN - applicability and binding nature of circular - rate of GST on various goods - in the circular dated 9-8-18 various issues on applicability of GST were clarified - HELD THAT:- The petitioner has challenged the impugned show cause notice on the strength of circular No.52/26/2018-GST, dated 09.08.2018 of the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs, New Delhi. The impugned show cause notice, which has been issued by the 4th respondent under Sections 73 and 74 of the GST Act, 2017 cannot be said to be without jurisdiction merely because on merits there is a clarification of CBIC Circular No.52/26/2018-GST dated 09.08.2018. This circular is binding on the authorities as per the decision of the Hon'ble Supreme Court in the case of COLLECTOR OF C. EX., VADODARA VERSUS DHIREN CHEMICAL INDUSTRIES [ 2001 (12) TMI 3 - SUPREME COURT] . These circulars are however not binding on the Courts as per the decision of the Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES [ 2008 (10) TMI 5 - SUPREME COURT] . Thus, it is true that the circular issued by the CBIC are binding on the authorities, however whether the circular is applicable or not is a matter, which has to be considered on merits of the facts and circumstances of the case. This writ petition by directing the petitioner to file a reply before the 4th respondent to the impugned show cause notice within a period of 60 days from the date of receipt of a copy of this order - Petition disposed off.
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Income Tax
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2022 (7) TMI 225
Penalty u/s 271 D - default u/s 269SS - Assessee had accepted the loans in cash - as pe assessee both the entities from whom the cash loan was taken were partnership firms in which the Directors of the Assessee had controlling stake and other partners of the firms were family members and relatives of the Directors of the Assessee-Company - Since the genuineness of the loan transactions were not in doubt and the explanation offered by the Assessee was reasonable, the ITAT declined to interfere with the order of the CIT(A) - HELD THAT:- The Court finds that in P. Baskar v. CIT ( 2011 (4) TMI 1157 - MADRAS HIGH COURT] was not satisfied with the explanation offered by the Assessee for not complying with the provisions of Section 269 SS of the Act. It was specifically observed that the Assessee had not shown any reasonable cause for taking cash loan . However, in the present case, as noted by the CIT(A), the Assessee did offer a reasonable explanation for taking cash loan and the circumstances in which it was required. In Commissioner of Income Tax v. Deccan Designs (India)(P) Ltd. ( 2010 (7) TMI 818 - MADRAS HIGH COURT] where an Assessee accepted cash loans from a sister concern mainly for the purpose of disbursement of salaries to its employees, it was held that the penalty under Section 271D was uncalled for. In Commissioner of Income Tax v. Maheswari Nirman Udyog ( 2007 (7) TMI 216 - RAJASTHAN HIGH COURT] it was found that loans had been taken by the Assessee from a sister concern in cash to make payments to the labourers at site. This was held to be a reasonable explanation which was accepted by the CIT (A) and the ITAT and therefore, did not warrant any interference in appeal. No error has been committed either by the CIT (A) or the ITAT in deleting the penalty imposed on the Assessee. - Decided in favour of assessee.
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2022 (7) TMI 224
Reopening of assessment u/s 147 - validity of corrigenda - Period of limitation to issue notice - typographical error in the notice issued wherein the assessment year has been mentioned as 2015-16 instead of 2010-11 - By way of corrigendum dated 11.04.2017, the authorities have sought to correct the mistake in the original notice and have stated that the same has been issued for the assessment year 2010-2011 and not 2015- 2016 - HELD THAT:- The first notice categorically states that the authorities intend to reopen the assessment to determine to escaped income for the assessment year 2015-2016. The authorities get the jurisdiction to reopen the assessment upon issuance of a notice as contemplated under Section 148 and by the first notice, the authorities have invoked their jurisdiction to reopen the assessment for the assessment year 2015-2016 and not 2010-2011. With regard to the assessment year 2010- 2011, it can be said that the authorities have sought to invoke their jurisdiction by issuance of notice dated 11.04.2017 which is styled as corrigendum. By the said corrigendum, it cannot be said that it has sought to cure a procedural irregularity as contemplated under Section 292- B of the Income Tax Act, 1961 and it has to be held that they have invoked the jurisdiction to reopen the assessment for the year 2010-2011 only after issuance of the said corrigendum on 11.04.2017 which is clearly time barred. Even otherwise as mentioned above, the petitioner has been able to demonstrate that though first notice is dated 31.03.2017, the same has been issued only on 04.04.2017, which is time barred. WP succeeds.
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2022 (7) TMI 223
Deduction of interest charged by the Reserve Bank of India (RBI) - Appellant claimed these amounts in light of the interest charged by the Reserve Bank of India (RBI) under Section 42(3) of the R.B.I. Act - AO disallowed the deduction - whether ITAT erred in holding that the appellant was not entitled to a deduction, in computing its business income under the Act, of the interest of Rs.3.7 crores paid by it to RBI - HELD THAT:- As decided in BANK OF BARODA [ 2011 (2) TMI 1609 - BOMBAY HIGH COURT] interest paid to the RBI was not penalty and accordingly the interest expenditure is allowable - thus the question framed will have to be answered in favour of the Appellant.
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2022 (7) TMI 222
Reopening of assessment u/s 147 - show cause notice issued to the petitioner as the legal representatives of the deceased assessee - HELD THAT:- Section 159 (3) makes it clear that the legal representative shall for the purpose of be deemed to be an assessee and the subsequent communication of the department was received by the petitioner as the legal representative of the deceased assessee, namely, Jeyachandran. See SHRI M. HEMANATHAN [ 2016 (4) TMI 258 - MADRAS HIGH COURT] We allow this writ petition at the stage of admission by giving liberty to the respondent to issue appropriate notice to the petitioner under Section 148 as a legal representative of the deceased assessee, namely, Jeyachandran. The time spent in the impugned proceeding till the date of receipt of this order shall be excluded. Considering the fact that the time for completing the assessment would expire on 31.03.2022, the respondent is given liberty to issue a fresh notice to the petitioner within a period of two weeks from the date of receipt of copy of this order. The respondent shall thereafter proceed to pass appropriate orders on merits and in accordance with law within a period of 75 days. The entire exercise shall be completed by the respondent within a period of 90 days from the date of receipt of copy of this order.
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2022 (7) TMI 221
Rectification of mistake u/s 154 - disallowance u/s 14A - AO made disallowance under section 14A of the Act in the absence of any evidence to prove one to one nexus of funds received and utilized - assessee submitted that details were submitted during the course of assessment proceedings, however, the Assessing Officer failed to take note of the same while passing the assessment order - HELD THAT:- During the hearing before us, the learned A.R. filed copies of follow up letter filed before the Assessing Officer requesting for early disposal of rectification application dated 11/06/2019, filed by the assessee. As the details filed by the assessee were not considered by the Assessing Officer while passing the assessment order and the appeal filed by the assessee before the learned CIT(A) was also dismissed only on the ground of delay, we deem it appropriate to restore this issue of disallowance under section 14A to the file of the Assessing Officer for de novo adjudication, after consideration of all the details filed by the assessee. Needless to mention that no order shall be passed without affording opportunity of being heard to the assessee. Thus, grounds raised in this appeal by the assessee are allowed for statistical purpose.
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2022 (7) TMI 220
LTCG - profit on sale of ancestral agricultural lands in the status of individual instead of assessing it in the status of appellant HUF - only reason for the AO to bring sale consideration received for transfer of impugned land under the head capital gains is land has been sold for non-agricultural purpose and further, impugned land is situated within jurisdiction of Chennai City Municipal Corporation HUF - Whether land which was sold by the assessee, nature of land was agricultural land, same cannot be included within definition of capital asset as defined u/s.2(14)? - HELD THAT:- We find that there is no dispute with regard to nature of land, because in the revenue records, the land has been classified as agricultural land. The assessee has also furnished various evidences to prove that his father has carried out agricultural operations for many years. The only dispute with regard to distance in which such land is situated from the limits of Chennai Municipal Corporation and from which date said distance has been extended to the village in which impugned land is situated. The assessee claims that village in which impugned land situated was included in the Chennai City Corporation limits from 19.07.2011 onwards, whereas the Revenue claims that place has been included within Chennai City Corporation limits on 09.11.2010 itself. In case, the G.O referred to by the AO is correct, then nature of land has to be examined with reference to said G.O. and distance of the place to determine nature of the asset. In case G.O. referred to by the assessee is correct, then impugned land in question is definitely as agricultural land which is outside scope of capital asset as defined u/s.2(14) - This fact needs to be verified by the AO in light of two Government orders referred to above. Hence, we set aside the issue to the file of the AO and direct the A.O to decide the issue after considering necessary facts and also by referring to G.Os brought on record by both the parties and also decide the issue in accordance with law. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (7) TMI 219
Disallowance u/s 40(a)(ia) - amount of TDS not paid to govt. - HELD THAT:- As per assessee that the amount has been added back in the subsequent year and further the explanation given that the amount was not paid during the year but only a book entry was made, however, since there was a dispute, hence, the TDS was not deducted and subsequently, the entry was reversed. It has been claimed that the TDS was duly deducted on the remaining amount of Rs.50,000/- and the same was duly paid to the Government account. We are of the view that the facts need to be verified by the Assessing Officer - the contention of the assessee is found correct then no disallowance to be made by the Assessing Officer on this issue. Computation of amount of tax refund - As per the assessee, the self-assessment tax was paid at Rs.24,41,680/- as against Rs.18,68,745/- calculated by the Assessing Officer. This issue is also restored to the file of the Assessing Officer for verification of the fact and to issue refund to the assessee if found so due as per the contention of the assessee.
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2022 (7) TMI 218
Allowable business expenditure u/s 37 - amount paid by the assessee to West Bengal Fire Service Department - assessee has claimed before the lower authorities that the aforesaid amount was paid to West Bengal Fire Service Department for providing manpower and put in service ten (10) number jets for extinguishing the fire - disallowance made as aforesaid payment was penal in nature being compounding fees for violation of section 11C and 12 of West Bengal Fire Service Act, 1950 which is punishable u/s 11C and u/s 26 of the said Act - HELD THAT:- As specific query was put by us to the ld. counsel for the assessee as to on what account the aforesaid expenditure was incurred. The ld. counsel has stated that the West Bengal Fire Service has charged the aforesaid amount from the assessee without any reason. He has further submitted that the assessee wants to place on the file a paperbook to prove the nature of the expenditure. As it is clearly mentioned in the impugned order of the CIT(A) that the aforesaid payment was made by the assessee by pleading guilty to the charges levelled vide police case no.03 dated 04.01.2013 on account of detection of nonprovision of the Fire Safety Measures in accordance with the West Bengal fire Services Act, 1950 in violation of section 11C and 12 of the West Bengal Fire Service Act, 1950 which is punishable u/s 11C and u/s 26 of the said Act respectively. Even the order dated 26.04.2013 of the DG, West Bengal Fire and Emergency Services has been reproduced. As counsel has placed on file the challan for depositing of money wherein it has been specifically mentioned that the aforesaid payment is for compounding u/s 38B of West Bengal Fire Services Act, 1950. The facts are apparent that the aforesaid payment was made by the assessee as compounding fees by pleading guilty before the competent authority of commission of offences under the West Bengal Fire Services Act 1950. Offence for non-compliance of fire safety provisions is heinous which may result into breakage of fire putting risk to life and limb of residents as well as other public at large. Any payment made by the assessee as compounding fees for such an offence has rightly been disallowed by the lower authorities. The assessee in this case right from the Assessing Officer to the level of the Tribunal has tried to misguide authorities about the nature of payment which act of the assessee is highly deprecable. Appeal of assessee dismissed.
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2022 (7) TMI 217
Revision u/s 263 - Error in computing MAT - as per the provisions of section 115JB in calculating the books profits, the assessee was required to take into account the long-term capital gains from sale of shares, whereas, the assessee has not done so, and had not included the profit on sale of shares in computing book profit u/s 115JB - HELD THAT:- Reopening of assessment u/s 147 of the Act wherein it has been held that apart from the issue on which the assessment is reopened, the Assessing Officer can also look into other issues, as the entire assessment is open for scrutiny before the AO. However, in case of exercising of revision jurisdiction u/s 263 of the Act, the above proposition of law is not applicable as the very condition that the order of the Assessing Officer should be firstly erroneous is to be satisfied. If the order of the AO is not erroneous then the ld. PCIT cannot exercise his revision jurisdiction u/s 263 - As observed above in this case, there was no error in the assessment order, for non-examination of the issue, which the Assessing Officer was not authorised to examine. Therefore, the ld. PCIT did not have jurisdiction u/s 263 of the Act to revise/set aside the order of the Assessing Officer on some other issue. Even otherwise, the ld. counsel has demonstrated that as per the law laid down in the case of Best Trading and Agencies Ltd. [ 2020 (9) TMI 94 - KARNATAKA HIGH COURT] benefit of indexed cost of acquisition is to taken into consideration for computing capital gains while computing book profit u/s 115JB - counsel has demonstrated that if benefit of indexed cost of acquisition is given to the assessee then the resultant figure will be long-term capital loss. Therefore, even otherwise, the order of the Assessing Officer is not prejudicial to the interest of the Revenue. Since none of conditions stipulated u/s 263 of the Act is satisfied i.e. neither the assessment order is erroneous nor prejudicial to the interest of the Revenue, therefore, order passed by the ld. PCIT u/s 263 of the Act being without jurisdiction is wrong and illegal and the same is hereby quashed. Appeal of assessee allowed.
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2022 (7) TMI 216
Applicability of section 115BBE on income to declared in response to notice u/s 139(9) - application seeking admission of additional evidence under Rule 29 of Income Tax (Appellate Tribunal) Rules, 1963 - CIT(A) dismissed assessee's appeal vide ex-parte impugned order - HELD THAT:- It is evident from the record that, in the present case, the documents, now furnished before us by way of additional evidence, could not be filed by the assessee before the lower authorities for the reasons as submitted by the learned A.R. and the impugned addition was made in absence of these details. Further, the learned CIT(A) also dismissed assessee's appeal vide ex-parte impugned order. We deem it appropriate to remand this issue to the file of Assessing Officer for de novo adjudication after consideration of all details, as submitted by the assessee. Needless to mention that, no order shall be passed without affording opportunity of hearing to the assessee. As a result, grounds No. 1 to 3 raised in assessee's appeal are allowed for statistical purpose. Short grant of TDS credit - AO is directed to verify the details and grant the same in accordance with law. As a result, ground No. 4 raised in assessee's appeal is allowed for statistical purpose.
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2022 (7) TMI 215
Capital gain - acquisition of property by the assessee under the gift deed executed by his mother, in terms of section 49(1) - determination of cost of acquisition in the hands of the assessee - HELD THAT:- The language employed by section 49(1) of the Act is unequivocal. It contemplates that where the capital asset becomes the property of the assessee, under a gift or will, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the asset incurred or borne by the previous owner or the assessee, as the case may be. Nowhere in this section, can we find the expression the fair market value . We do not know what prompted the mother of the assessee to offer the capital gains while receiving the flat No. 914, with reference to the fair market value. When the provisions speaks very clearly and unequivocally, there is no reason to read something into it which the legislature did not intend. As in MINOR SHANTHI CHANDRAN [ 1999 (4) TMI 39 - MADRAS HIGH COURT] Hon'ble Court held in unequivocal terms that the cost of acquisition means cost of acquisition but not the value mentioned in the documents. Insofar as the tax law is concerned, it is not open for any one to read into the section what is not to be found in that section or to substitute the expressions with some other words. Cost of acquisition means cost of acquisition but not the cost perceived by the mother at the time of receiving the flat. Inasmuch as the legislative language is clear and unambiguous, we do not find anything perverse in the orders of the authorities below, and merely because of some voluntary act of the mother of the assessee in valuing the property on higher side at the time of receiving of the same, we do not accept the contention that the authorities should have accepted such escalated value. Law contemplates only cost of acquisition but not fair market value . Voluntary acts of the parties will not disturb the legal position or affect the impact of law. With this view of the matter, we are of the considered opinion that there is nothing illegality or irregularity committed by the authorities below. We accordingly uphold the findings of the Ld. CIT(A) and decline to interfere with his findings - Assessee appeal dismissed.
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2022 (7) TMI 214
Penalty u/s 271(1)(c) - additions/ disallowances made on account of corporate guarantee fee, interest on foreign currency, disallowance u/s. 35(2AB) of the Act and donation to SRF Vidyalaya - HELD THAT:- In so far as the addition on account of corporate guarantee fee and interest on foreign currency loans and advances are concerned the impugned addition have been deleted by this Tribunal - Since the addition have been deleted we do not find any justification in the levy of penalty u/s. 271 (1) (c) of the Act and the same has been rightly deleted by the CIT(A) and, therefore, no interference is called for. Disallowance u/s. 35 (2AB) - As claim of the assessee was bonafide the only point of concern was that the department of Scientific and Industrial Research vide letter dated 12.07.2012 has approved the sum of Rs.1282.46 lakhs including additional 50% of revenue expenditure of Rs.1023.53 lakhs whereas the assessee has claimed deduction of Rs.1305.26 lakhs which prompted the AO to make the impugned disallowance. In our humble opinion the assesee s claim is being bonafide levy of penalty u/s. 271 (1) (c) of the Act is not justified in the light of the ratio laid-down by the Hon ble Supreme Court in the case of Reliance Petro Products [ 2010 (3) TMI 80 - SUPREME COURT] We decline to interfere with the findings of the CIT(A). The appeal filed by the revenue is accordingly dismissed.
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2022 (7) TMI 213
Ex-parte order passed by CIT-A - HELD THAT:- Sub Section (6) of Section 250 of I. T. Act mandate the CIT(A) to state the points in dispute and thereafter assign the reasons in support of his conclusion. We are of the view that by dismissing the appeal without considering the issue on merits, CIT(A) has failed to follow the mandate required in Sub Section (6) of Section 250 of the Act. Further it is also a well settled principle of natural justice that sufficient opportunity of hearing should be offered to the parties and no parties should be condemned unheard. We set aside the impugned order of CIT(A) dated 25.06.2019 and restore the issue to the file of AO for re-adjudication of the issues after granting sufficient opportunity of hearing to the assessee. Assessee is also directed to furnish the details called for by the authorities. In view of our decision to restore the issue to AO, we are not adjudicating on merits the grounds raised by the assessee. Thus the ground of assessee is allowed for statistical purposes.
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Customs
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2022 (7) TMI 212
Seeking amendment of Bills of Entries - seeking reflection of rate of tax as 1% as per Sl. No. 263A(ii) of N/N. 12/2012-CE dated 17.03.2012 - Section 149 or Section 154 of the Customs Act - HELD THAT:- The writ petition is disposed of, with a direction to the respondents to decide the petitioner s application(s), seeking amendment of the subject BOEs, in accordance with the law.
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2022 (7) TMI 211
Smuggling of Gold - Baggage Rules - issuance of SCN by DRI - adjudicating authority, without affording an opportunity of cross examining the witnesses, passed the order-in- original - Violation of principles of natural justice - HELD THAT:- The order impugned herein is set aside and the matter is remanded to the learned Judge for passing orders afresh, after deciding the issue relating to statutory violation, on merits and in accordance with law, after affording due opportunity to all the parties, as expeditiously as possible. Appeal allowed by way of remand.
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2022 (7) TMI 210
Jurisdiction - proper officer to issue SCN - competency of the DRI to issue show cause notice under Section 28 of the Customs Act 1962 - correctness of remanding the appeal - Whether Tribunal is empowered to remand the case without deciding the issues raised therein on the ground that jurisdiction of the officer to issue show cause notice is under dispute? HELD THAT:- The issues involved herein have been considered and decided by a Co-ordinate Bench of this Court, in the case of THE COMMISSIONER OF CUSTOMS VERSUS M/S. BOX CORRUGATORS AND OFFSET PRINTERS [ 2020 (5) TMI 475 - MADRAS HIGH COURT] where it was held that in view of the fact that the learned Tribunal has clearly protected the interest of both the Revenue as well as the Assessee by directing the Assessing Authority to keep the matter pending and maintain status quo till the Hon'ble Supreme Court decides the appeal of the Revenue in the case of Mangli Impex, filed against the decision of the Delhi High Court, we do not find any reason to interfere with the decision of the Tribunal, as in our opinion, no question of law arises for consideration in this appeal. All these Civil Miscellaneous Appeals are allowed by setting aside the orders impugned herein and the matters are remanded to the Tribunal with a direction to keep the same pending and await the decision of the Hon'ble Supreme Court in the appeals filed against the decision in Mangali Impex - Appeal allowed by way of remand.
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2022 (7) TMI 209
Condonation of delay in filing appeal - time limitation - sufficient reasons for delay existed or not - power of Commissioner (Appeals) to condone delay - HELD THAT:- The Order in Original dated 10.12.2019 was received by the appellant on 13.12.2019. The Commissioner (Appeals) can condone the delay upto one month for filing the appeal. If such time is also taken into consideration, the appeal ought to have been filed on or before 13.3.2020. The appeal has been filed only on 30.8.2020. As argued by the learned counsel for appellant, the Hon'ble Supreme Court has extended the limitation with regard to COVID 19 with effect from 15.3.2020. Thus, from 13.3.2020 to 15.3.2020, there is a delay of two days beyond the condonable period of Commissioner (Appeals). From the affirmation made in the affidavit as well as the death certificate produced by the appellant, it is established that the appellant could not file the appeal within the time stipulated due to reasons beyond his control and mostly due to the death of his counsel who was affected by corona. The delay of 2 days in filing the appeal ought to be considered leniently. The impugned order rejecting the appeal on the ground of time-bar against this appellant is set aside and remanded to the Commissioner (Appeals) who shall hear the appeal on merits - Application allowed.
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2022 (7) TMI 208
Validity and scope of SCN - evasion of duty - clandestine removal of finished goods from SEZ - it is alleged that SCN have been issued for confiscation on the owner-appellant, as required u/s 124 of customs Act - proper officer to issue SCN - evasion of duty by resorting to clandestine removal of finished goods - it is also alleged that payment for sales made clandestinely was collected in cash, which was deposited in various bank accounts - Confiscation - redemption fine - penalty - HELD THAT:- Confiscation of goods on the basis of mere assumptions and presumptions and without there being any tangible evidence to correlate that the same are received from NTPL on which no duty of customs has been paid by the manufacturer, is contrary to the law propounded by this Tribunal in the case of M/S ARYA FIBRES PVT. LTD., M/S NOVA PETROCHEMICALS LTD. AND OTHERS VERSUS CCE AHMEDABAD-II [ 2013 (11) TMI 626 - CESTAT AHMEDABAD] which is upheld by Hon'ble High Court of Delhi in the case of FLEVEL INTERNATIONAL VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2015 (9) TMI 1151 - DELHI HIGH COURT] . Appellant respectfully relies on the judgement of Hon ble Supreme Court in the matter of OUDH SUGAR MILLS LTD. VERSUS UNION OF INDIA [ 1962 (3) TMI 75 - SUPREME COURT] , holding that duty demand cannot be based on inferences involving unwarranted assumptions. In terms of the law propounded by Hon ble Supreme court in the case of Canon India Pvt. Ltd., only the officer who was authorized to assess the goods cleared from SEZ, during the relevant period or his successor in the same post can issue demand of additional / differential customs duty which escaped levy for any reason, under section 28 of the Customs Act 1962, and no other officer can issue Show cause notice. Thus, the SCN is wholly without jurisdiction. The goods under dispute are not the specified goods under Section 123 of the Customs Act. In such facts and circumstances, when admittedly it is a case of town seizure, the onus lies on Revenue to prove that the goods/ pipes lying in the premises of this appellant have been received by him in a clandestine manner from SEZ unit, on which Custom duty have not been paid. The General Rule is that the goods which are available in the open market, are presumed to have suffered the duty. If it is alleged by Revenue that the goods lying or found in the shop/godown premises of the assessee are not duty paid, it is the onus on Revenue to establish such allegation. I find that save and except assumption and presumption, no cogent evidence has been led by Revenue in support of its allegation - When the transaction is through banking channels there is prima facie proof of genuineness of the transaction. The purchase invoices are supported with Road permit (pre-authenticated) under the Sales Tax/VAT law. Admittedly M/s NTPL manufacturer is situated in the SEZ premises. Such premises are bonded premises under physical control of the officers of Revenue. There is no allegation that the officers who were posted at the said SEZ Pithampur, were hand in glove with M/s NTPL and this appellant. It is nowhere adequately found how the finished goods went out from the factory premises (under physical control) without there being proper documents and entry in appropriate records. Neither it has been explained as to how M/s NTPL received raw material clandestinely. It is found that the show cause notice is prima facie based on bald allegation, which did not stand the test of adjudication. The impugned order of confiscation and penalty is also bad, as no SCN have been issued for confiscation on the owner-appellant, as required u/s 124. The show cause notice is bad as the same has been issued by the Officers of DGCEI, who are not the proper officer as required under Section 28(1)/28(4) of the Customs Act, as has been held 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] which has also affirmed order of Hon ble Delhi High Court in the case of M/S MANGALI IMPEX LTD., M/S PACE INTERNATIONAL AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2016 (5) TMI 225 - DELHI HIGH COURT] . Appeal allowed.
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Corporate Laws
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2022 (7) TMI 207
Seeking quashing of complaint and prosecution proceedings - Validity of Asset Transfer Agreement - vicarious liability - as per Asset Transfer Agreement (ATA), both the parties failed in meeting their respective conditions within the Long Stop Date and consequently the said ATA expired - HELD THAT:- It is not in dispute that respondent Nos.2 and 3 are the shareholders of the said Company having 13.32% shares each. It is also not in dispute that the said Company and respondent Nos.2 and 3 had passed a resolution to sell the property of the Company to M/s. Clininvent Research Private Limited. The only dispute that was raised by respondent Nos.2 and 3 in their complaint is that accused including the petitioners herein did not adhere to the terms and conditions of the ATA dated 24.06.2016 for the reason that in ATA it was mentioned about Long Stop Date i.e., by 22.08.2016, the entire process with regard to the sale of assets of the Company to M/s. Clininvent Research Private Limited should have been completed. In case, the said process could not be completed by the said date, the said agreement would stand terminated. The accused did not complete the said sale process by the Long Stop Date, and there was no extension of Long Stop Date. In view of the same, transfer of the assets of the Company in favour of the Purchaser is nothing but illegal. According to the learned senior counsel, all the said contentions raised by respondent Nos.2 and 3 before the NCLT were rejected in C.P. No.5/241/HDB/2017 vide order dated 11.02.2020. Further, the allegation that the accused did not adhere to the terms and conditions of ATA dated 24.06.2016, whether the Company had obtained the consent of respondent Nos.2 and 3 for extension of Long Stop Date after its expiry, whether the sale process was done in terms of the said ATA dated 24.06.2016 and that the accused never forged and fabricated any document, much less the resolution and that the petitioners herein are only employees of the Purchaser Company and they did not do anything in their personal capacity etc., are all triable issues which are to be adjudicated by the trial Court after full-fledged trial, but not by this Court in a petition filed under Section - 482 of the Cr.P.C. In a given set of facts and circumstances, a contractual dispute, apart from giving rise to cause of action for seeking remedy under Companies Act, may also involve the criminal acts. The nature and scope of civil proceedings are different from criminal proceedings and mere fact that complaint relates to a company s transaction or breach of contract for which a civil remedy is availed, is not by itself a ground to quash the criminal proceedings. The only test which has to be adopted is to find out as to whether the allegations in the complaint disclose the criminal offence or not - The defences that might be available, or facts/aspects which when established during trial, might lead to acquittal, were not grounds for quashing a complaint at the threshold. At that stage, the only relevant question was whether averments in the complaint spell out ingredients of a criminal offence or not. The Court has to consider whether complaint discloses any prima facie offences that were alleged against the respondents. Correctness or otherwise of the said allegations has to be decided only during trial. At the initial stage of issuance of process, it was not open to Courts to stifle proceedings by entering into merits of the contentions made on behalf of the accused. Criminal complaints could not be quashed only on the ground that, allegations made therein appear to be of a civil nature. If ingredients of offence alleged against Accused were prima facie made out in complaint, criminal proceeding shall not be interdicted. The petitioners herein have not made out any ground to quash the proceedings in the aforesaid C.C. Thus, the present petition is devoid of merits and the same is liable to be dismissed - Petition dismissed.
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2022 (7) TMI 206
Oppression of minority - the allegations were made against the Company that the Company had forged, fabricated and manipulated the documents, forms, Annual Reports of PARPL and uploaded in the ROC website it was also alleged that 63,000 shares of PARPL were issued illegally to render the respondent No.1 a minority shareholder and to usurp the management of PARPL - offences under Sections 447, 448 and 451 of the Companies Act, 2013, Sections 628 and 629-A of the Companies Act, 1956 and Sections 405, 415, 420, 425, 464, 468, 471 and 120-B IPC. HELD THAT:- Under Chapter XXVIII of the Companies Act, 2013 establishment of Special Courts and the offences triable by Special Courts are prescribed under Sections 435 and 436 of the Companies Act, 2013. The act gives a comprehensive procedure as to who has to conduct the investigation and how the investigation has to be conducted and deal with the procedure, powers as well as form. A specialized Investigating Agency is established which is empowered to investigate the offences. The offences under Companies Act, 2013 are deemed to be cognizable, except the offences covered under Section 447 (punishment for fraud). The complainants under the Companies Act are restricted to include only Registrar of Companies, a shareholder/member of the company or any person authorized by the Central Government or any person authorized by the Securities and Exchange Board of India. The Special Court shall take cognizance only on the complaint of persons/authorities mentioned under Section 439 of the Companies Act, 2013. Since the punishment for the offence under Section 448 of the Companies Act, 2013 was also under Section 447 of the Act, it was covered by the bar of taking cognizance under Section 212(6) of the Act - Section 451 of the Companies Act, 2013 would reveal that it would apply for repeated defaults and subsequent convictions. Since the petitioner had not been convicted earlier, subsequent conviction under Section 451 of the Companies Act, 2013 would not apply - Thus, the petitioner could not be prosecuted for the offences under Sections 447, 448 and 451 of the Companies Act, 2013 due to bar of cognizance under Section 212(6) of the Companies Act, when a complaint was not given in writing by the Director, SFIO or any Officer of the Central Government authorized in that behalf by the said Government. However, considering the allegations made by the complainant-respondent No.1 about the annual reports of the company being uploaded in the Registrar of Companies website by fabricating the documents and the allegations that about 63,000 shares of PARPL were issued illegally to render the respondent No.1 a minority shareholder, to usurp the management of PARPL, it is considered that the Company is a necessary party to the proceedings and there is no merit in the contention of the learned counsel for the respondent No.1 in the said regard. The record also would disclose that both the petitioner in Crl.P. No.8025 of 2021 and the respondent No.1 (complainant) initiated civil proceedings against each other. The record also would disclose that the Annual Returns were filed by the Company from 2002-2014 and the said returns were also signed by the complainant showing the shareholding of the petitioner in PARPL company. The complainant did not choose to dispute the said Annual Returns and kept quiet for more than a decade. The filing of the complaint after twenty years alleging fabrication from the year 2002 onwards would only show that it was filed with a malafide intention to take revenge against the petitioner. It is considered fit to quash the proceedings against the petitioners in C.C. No.31 of 2021 on the file of VIII Additional Metropolitan Sessions Judge-cum-Special Judge for Economic Offences, City Criminal Courts at Nampally, Hyderabad - petition allowed.
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2022 (7) TMI 205
Seeking approval of restructuring proposal of Respondent No.2 sought to be implemented to restructure the debt of Respondent No.2 - binding of Restructuring Plan on all stakeholders of Respondent No.2 - termination of the Terminated Contracts and direct that any claim, entitlement, or contingent liability - whether objection can be raised to the Restructuring Plan when the Restructuring Plan is in accordance with the Circular dated 07.06.2019, which has support of 100% lenders? - HELD THAT:- The basis given by ILFS to exclude the transactions is the Forensic Audit Report through Grant Thornton India LLP and 'Report on Forensic Audit of IL FS Tamil Nadu Power Company Limited (ITPCL)' on June 30, 2020 (in short Transaction Review Report ) submitted by Transaction Review Auditor. The case of the ILFS is that in the above reports adverse findings have been given with regard to SEPCO and Shandong. It is also on record that in pursuance of the aforesaid reports, the ITPCL has also filed application under Section 66 of the I B Code before the Adjudicating Authority being CA No. 190 of 2022 dated 06.04.2022. It is for the Adjudicating Authority to consider the Section 66 application and pass appropriate order. However, the fact that Section 66 application is filed and pending consideration, on the basis of certain adverse observations against the Capex Creditors/ Operational Creditors, the outstanding amount which is admitted by the Claim Management Advisor cannot be withheld to be paid relying on any observation in the Forensic Audit Report or Transaction Review Report. Section 17 provides for scheme for search and seizure. Sub-section (4) of Section 17 requires that authority seizing any record or property or freezing any record or property shall, within a period of thirty days from such seizure or freezing, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing, before the Adjudicating Authority. The present is the case where there is no material to indicate that any application under Section 17(4) was filed after the email dated 22.09.2020. In the application which has been filed by ILFS i.e. I.A. No. 59 of 2021 there is no mention of filing of any application under Section 17(4). More so, in the present case, consequent to the investigation Provisional Order has been passed on 05.01.2021 and final confirming order was passed on 24.08.2021, which we have already notice. There is no order of the Adjudicating Authority confirming or continuing the Freezing Order. Thus, directions issued by the Investigating Officer by email dated 22.09.2020 cannot be said to be still continuing so as to inhibit the ITPCL to make payment to Operational Creditors/ Capex Creditors. There being no material on record to indicate that the provisions of Section 17 (1A) have been followed after issuance of email dated 22.09.2020, the Freezing Order issued by the Investigating Officer shall not continue, more so, when Provisional Attachment Order has been passed on 05.01.2021 where there is no reference of the Freezing Order or continuation of the Freezing Order - It is satisfying that the arguments raised by Shri Ramji Srinivasan on the basis of PMLA proceeding cannot be ground for depriving the payments of the dues of SEPCO and Shandong. It is always open for the authority which is making payment to the Operational Creditors to obtain appropriate security before payment, to safeguard the interest on account of any pending proceedings which may have adverse effect on any payments made. When the claims of Capex Creditors/ Operational Creditors has been admitted by the Claim Management Advisor, which is also admitted fact, the prayer of the ILFS for extinguishing the claim of the Capex Creditors and the Operational Creditors, is not acceptable. The admitted claim of Capex Creditors/ Operational Creditors has to be dealt with in the Resolution Plan when it will be drawn. As noted above, the claim of Operational Creditors/ Capex Creditors are sought to be dealt with in a plan of restructuring debt under Reserve Bank of India Circular dated 07.06.2019. For dealing with admitted debts of Operational Creditors/ Capex Creditors, an appropriate Resolution Plan has to be made for addressing the claims. The Restructuring Plan has been arrived between the lenders and the borrower i.e. ITPCL. The ITPCL, who was bound to consider the admitted claim of the Operational Creditors/ Capex Creditors, has to consider the claims appropriately and arrive at a fair and reasonable resolution of the claims. The claim of Operational Creditors/ Capex Creditors has to be appropriately considered in a fair and reasonable Resolution Plan. The effect and consequence of contract entered by it with Operational Creditors/ Capex Creditors cannot be done away with - Application disposed off.
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2022 (7) TMI 204
Oppression and Mismanagement - Issue of Right Shares - subsequent Rights Issue during the pendency of 1st Rights Issue - gross under-subscription of the rights issue - `non-participation in the `Legitimate 1st Rights Issue - additional loans/funds being sanctioned by the SBI and PNB Bank being suppressed from this Hon ble Appellate Tribunal, Hon ble NCLT and shareholders - mismatch in the dates of valuation report of 2nd rights issue and purported email - details regarding status of disbursement of loan, debt equity ratio, defaults, shortfalls, etc. not given to the Hon ble NCLAT, Hon ble NCLT and shareholders - withholding of vital documents/annexures by the Appellant - section 241 and 242 of Companies Act - Increase of Share Capital - HELD THAT:- Section 62 of the Companies Act, 2013, relates to an increase of Share Capital, of course, within the Authorised Capital. In reality, it is aimed to include a matter, where the Directors determined to increase the Capital by issuing further Shares within the Authorised Limit, as per the decision of the Hon ble Supreme Court in Nanalal Zaver And Another vs Bombay Life Assurance Co. Ltd. and others [ 1950 (5) TMI 15 - SUPREME COURT]. Aim of Section 62 - HELD THAT:- The purpose of Section 62 of the Companies Act, 2013, is to increase the Capital for the needs of the Company, the proportionate allotment is coincidental to increase of Subscribed Capital. The Articles of Association of a Company generally / ordinarily specify in the Regulation about the aspect of Rights Issue. As a matter of fact, Section 62 of the Companies Act, 2013, embodies in Statutory Form the rudimentary notions as among the Shareholders inter se and governing them, with power to allot Shares - It is for the Directors to determine how may Shares and of what Value, they will issue the Shares. The enhancement of Capital is purely a matter of an internal Administration of the Company and the Courts do not interfere in such matter in normal course. In terms of the ingredients of Section 62 of the Companies Act, 2013, the Directors have to offer further Shares issued, to the Shareholders who are on the Register of Companies and not to anyone else, and in fact, the Offer must be in the same proportion to all the Shareholders. It is to be remembered that there shall be no discrimination among them. Rights Issue Principle - HELD THAT:- If the increase of Capital was found to be necessary for genuine business purpose, the company as per Section 62 of the Companies Act, 2013, could raise further Capital from public. Member, Shareholder and Holder of Shares - HELD THAT:- The word `Member , `Shareholder and `Holder of Shares are employed in the Companies, Act, 2013, in same sense, meaning; persons holding `Shares in a company and registered as such in the `Register of Members of the company - An Issue of Shares on Rights basis cannot ordinarily be subject of a complaint, as an act of Oppression. In the decision of Hon ble Supreme Court in Worldwide Agencies (P) Ltd. V Margarat T. Debor (Mrs.), [ 1989 (12) TMI 245 - SUPREME COURT] , it is observed and held that in some situation and contingencies the Member may be Holder of Shares, but a Holder may not be a Member. Principles of Natural Justice - HELD THAT:- Undoubtedly, the Principles of Natural Justice are not the edicts of a Statute. An absence of ascribing reasons will give a person, a sense of feeling of injustice whether it is before an Administrative / Judicial / Quasi-Judicial Forum which passes it, in the considered opinion of this Appellate Tribunal. This Tribunal keeping in mind of the fact that the Company Petition No. 98/CTB/2019 was filed in terms of Section 241 242, read with other provisions of the Companies Act, 2013, among other things averring oppressive and mismanagement acts, purportedly committed by the Respondents therein, and considering the observation made by the National Company Law Tribunal, Cuttack Bench, in the impugned order in C.A. No. 45/CB/2021 dated 23.03.2022 that when the ₹ 1st Rights Issue was pending, the subsequent Rights Issue during the pendency of the Application comes very much within the ambit of this Application and when the Tribunal by the impugned order in C.A. No. 45/CB/2021 in C.P. No. 98/CTB/2019 had restrained the Respondents therein, from going ahead with the present Rights Issue in progress or any further Rights Issue till the disposal of the Application and C.P. No. 98/CTB/2019, etc., being an interim order, this Tribunal, without expressing any opinion one way or the other on the merits of the matter in pending C.P. No. 98/CTB/2019, on the file of the Tribunal and also not delving deep into the same, exercising its prudent sound discretion in a subjective manner is not inclined to interfere with the impugned order dated 23.03.2022 in C.A. No. 45/CB/2021 in C.P. No. 98/CTB/2019. Appeal dismissed.
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2022 (7) TMI 202
Condonation of delay in filing of Review Application - applicability of ingredients of Section 14 of the Limitation Act, 1963 - Striking off of the name of the Company by the Registrar of Companies - Non filing of annual returns for 15 years - bona fide belief - since no business activity for such period - Section 252 (3) of the Companies Act, 2013 - HELD THAT:- This Tribunal relevantly points out that Section 14 of the Limitation Act, 1963 clearly envisages that the Legislature has enacted this Section to exclude a certain period covered by a Bonafide Litigant Activity - However, in the instant case, the Review Application in SR No.949 of 2019 filed by the Applicant / Appellant is not before the Tribunal without jurisdiction, to try the subject matter, in issue. In fact, the Applicant / Appellant has filed the Review Application seeking to annul the order dated 30.03.2021 passed by the Tribunal. A clear cut reading of the Section 14 of the Limitation Act, 1963 unerringly points out that the ingredients of Section 14 of the Limitation Act, 1963 applies only in relation to a matter in which the litigant projects his Application before the Court / Tribunal having no jurisdiction to entertain it, but also when the Applicant files the Application in certain Court / Tribunal in a wrong forum consequence of a bonafide mistake of Law or defect of Procedure. In view of the fact that Section 14 of the Limitation Act, 1963 applies to the Court / Tribunal whether the exclusion of time bonafide in Court / Tribunal without jurisdiction and in the instant Case, Review Application was filed before the National Company Law Tribunal, Division Bench-II, Chennai to review an earlier order in CA/1458/2018 passed on 30.01.2019, by no stretch of imagination, be said to be Tribunal possessing no jurisdiction, viewed in that light, the invocation of Section 14 of the Limitation Act, 1963 on behalf of the Applicant / Appellant sans merits. Appeal dismissed.
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Insolvency & Bankruptcy
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2022 (7) TMI 203
Disqualification of the Successful Resolution Applicant u/s 29A of the Insolvency and Bankruptcy Code, 2016 - Restructuring Settlement Plan claimed to be submitted under Section 12A - NPA classification - What is the purpose and object of expression in the statute that at least a period of one year has elapsed from the date of such classification, as appearing in Section 29A, sub-clause (c)? - HELD THAT:- Section 12A proposal cannot be forced upon the lenders. The Promoters, who led to insolvency process of Corporate Debtor cannot claim to submit a Resolution Plan indirectly by way of proposal under Section 12A and ask the lenders to evaluate their Resolution Plan. Something which is not permissible directly by virtue of prohibition under Section 29A for submitting Resolution Plan by the Promoters, cannot be permitted to be done indirectly. Further, the commercial wisdom of the CoC, which is reflected in its Meeting dated 05.03.2021 and 21.04.2021 is not liable to be judicially reviewed. There is no error in rejection of the proposal submitted by the Appellant claimed to be under Section 12A by the CoC, after due consideration and the Adjudicating Authority has rightly refused to interfere with the commercial decision of the CoC in I.A. No.537 of 2021 filed by the Appellants praying for setting aside the decision of the CoC rejecting their proposal. Ineligibility of the NTPC to submit the Resolution Plan - HELD THAT:- The Resolution Applicant as per the invitation of submission of Resolution Plan was by 31.12.2019 and process documents was issued on 01.10.2019, the Resolution Applicant, that is, NTPC as well as another Resolution Applicant Adani Power Limited have submitted their Resolution Plans by 30.12.2019. The ineligibility of the Resolution Applicant is sought to be questioned on the strength of Section 29A(c) and (j), Explanation (1). NPA classification - HELD THAT:- It is clear that classification of NPA of RGPPL and KLL by SBI and IDBI were on 21.05.2018. The first classification of NPA by the Canara Bank on 21.05.2018 was with effect from 01.04.2009. The submission, which has been pressed by Shri Ramaji Srinivasan is that classification date being 21.05.2018 and from that classification date the period of one year has not elapsed on 27.03.2019, when the CIRP of the Corporate Debtor commenced, hence, there is no disqualification under Section 29A(c). If we take the date 21.05.2018 as the date declared for classification of NPA, one year period has not elapsed on 27.03.2019, but the submission of Appellant is that the classification although declared on 21.05.2018, it was with effect from 01.04.2009 and more than one year period had elapsed, thus, the submission of Resolution Applicant (NTPC) that it was eligible under Section 29A(c) is to be rejected. The statutory provision under Section 29A, sub-clause (c) is plain and clear that grace period of one year has been given and if after expiry of grace period, Resolution Applicant is unable to pay the dues and the NPA continues, the Resolution Applicant becomes ineligible. The question to be answered in the present case is as to what shall be the date of classification of NPA by Canara Bank, whether it is 21.05.2018 or 01.04.2009. From the materials on record, it is clear that classification was declared on 21.05.2018, although with effect from 01.04.2009. So, the date on which classification is declared is relevant or the date with effect from such classification is made to be effective is relevant for the purpose of 29A(c), is the straight question to be answered - the date of NPA classification by the Canara bank shall be treated as 21.05.2018 and it cannot be taken as on 01.04.2009, which is the backdate, as has been given by the Canara Bank, with effect from which date NPA is declared. If the interpretation as put by learned Counsel for the Appellant is accepted, the purpose of statutory prescription under Section 29A(c) can be defeated by the Financial Institutions by declaring NPA on particular date and making it effective from back date, so that no Resolution Applicant can take the benefit of statutory provision as provided under Section 29A(c). The date of classification is to be taken as 21.05.2018 on which date the Resolution Applicant was classified as NPA and the period of one year had not elapsed till 27.03.2019, when CIRP commenced. Since on the date of commencement of CIRP, period of one year has not elapsed, the disqualification under Section 29A(c) shall not attach to the NTPC, who was Resolution Applicant. The submission of learned Senior Counsel for the Resolution Applicant is accepted that Resolution Applicant was eligible on 30.12.2019 when it submitted the Resolution Plan. When Resolution Applicant was eligible on 30.12.2019, it continued to be eligible in entire process of the CIRP. The CoC, which is statutorily authorised to conduct the CIRP with the object of reviving the Corporate Debtor is fully competent to ask the Resolution Applicant to revise its Plan, improve its Plan and submit the revised Resolution Plan. It is found that the Resolution Applicant was eligible on 30.11.2019 when it submitted the first Resolution Plan, there are no necessity to enter into other submission raised by learned Counsel for the parties including the submission regarding applicability of the proviso to Section 29A(c). The Resolution Applicant being eligible, was entitled to submit Resolution Plan and was also entitled to revise its Plan from time to time as per the Scheme of the Code. The Plan having approved by 100% vote of CoC, there are no error in the decision of the Adjudicating Authority rejecting the I.A. No.537 of 2021 filed by the Appellant. The Adjudicating Authority has rightly rejected the application seeking disqualification of the Resolution Applicant as well as praying for setting aside the decision of CoC rejecting the proposal of Appellant under Section 12A - appeal dismissed.
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2022 (7) TMI 201
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether the present application is filed within limitation? - HELD THAT:- It can be seen from the records that the date of default is 01.04.2019 and the present petition is filed vide Diary No. 01959 dated 24.12.2020. Therefore, the present petition is filed within limitation. Whether there is default in payment or not? - HELD THAT:- In the present case, the occurrence of default is evidenced by the copy of the loan agreement and arbitration award and the same are attached as Annexure-A-5 and Annexure-A-7 respectively of the petition. The respondent-corporate debtor has also filed a reply wherein it has been admitted that there is default in respect of financial debt and amount mentioned in the petition is due towards the petitioner and shown its incapacity to pay the liability. The application filed in the prescribed Form No.1 is found to be complete. Another condition is that there are no disciplinary proceedings pending against proposed Resolution Professional. In the present case, in Part III of Form 1, Mr. Pawan Sharma has been proposed as Interim Resolution Professional. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC. Moreso, the respondent has admitted the claim and expressed its inability to pay back the debt - Petition admitted - moratorium declared.
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2022 (7) TMI 200
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantor of the Corporate Debtor - existence of debt and dispute or not - Service of demand notice - HELD THAT:- Under Section 99, such Resolution Professional shall submit his report and based on that report, under Section 100, the Adjudicating Authority, shall pass an order either admitting or rejecting the Application. It is only under Section 100(3) that the Adjudicating Authority shall provide a copy of the order passed under Sub-section (1) to the Creditors. Hence, in terms of Section 97 100 of IBC, 2016 no right of audience can be given to the Respondents at a stage before appointing the IRP - Though time-lines have been prescribed at each stage of the proceeding, leading to acceptance or rejection of the application under section 100, no such time-line has been prescribed for submission of report by the resolution professional, though section 100 provides that the adjudicating authority shall take a decision either admitting or rejecting the application within 14 days from the date of submission of the report. That apart, on a careful examination of section 100, before the adjudicating authority takes a decision to either admit or reject the application upon receipt of report from the resolution professional, the parties to the insolvency resolution process are required to be heard. It was further held that though the legislature itself has provided in Section 99 (10) that a copy of the report of the Resolution Professional should be furnished to the debtor or creditor, thus complying with the requirement of the principles of natural justice, it would be in the fitness of things and in furtherance of principles of natural justice that the parties are also heard before the decision is taken by the Adjudicating Authority one way or the other under Sub-section (1) of Section 100 of IBC, 2016 - it is evident from a reading of the Section along with the Rule, that what the Creditor has to serve is the copy of the application made under sub-section (1) to the Debtor. Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in Form -C and the Creditor will serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be served is the copy of application which has been submitted . What is contemplated is that the application in Form C should be submitted and then the Creditor should serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. The procedure thus prescribed will give the Personal Guarantor, notice of the application already filed before the Adjudicating Authority. Section 95(5) requires the Creditor to provide a copy of the application made under sub-section (1) , to the Debtor. Thus, serving advance copy is not contemplated. The argument that Section 98 provides for replacement of the Resolution Professional and hence the Guarantor should have an opportunity to seek replacement of Resolution Professional and hence he should be heard before appointment of IRP was also considered and held that going through Section 98 of IBC, 2016, it is found that Section 98 is not stage specific. Section 98 itself shows that the section could be resorted to even at stages like implementation of repayment plan which would be a stage beyond Section 116, where implementation and supervision of repayment plan is provided for. It was held that the argument, that before report of Resolution Professional the Debtor must get a chance to seek replacement of Resolution Professional and thus notice was required to be given, has no substance. It is clearly held that, it is only after the Resolution Professional is appointed by the Adjudicating Authority under Section 97(5), that the step under Section 98 is contemplated. From the judgement of the NCLAT, it clear that notice before appointment of IRP is not required to be given to the Respondent. Considering the said facts, this Tribunal is of the considered opinion that there is no hurdle to entertain this application under Section 95 of IBC, 2016, since the application is found to be complete - Petition admitted - moratorium declared.
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2022 (7) TMI 199
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - existence of debt and dispute or not - HELD THAT:- It is observed that the Applicant has filed necessary documents to prove about the debts owed to the Financial Creditor submitting the application for insolvency resolution process as on date of the application, the failure to pay within a period of fourteen days of the service of the notice of demand and relevant evidence of the default failure. The Application filed by the FC shows that the Debt owed by the Respondent to the FC is more than Rs. 1.00 Crore. Evidence of default has been filed. Considering the materials/papers filed by the Applicant on record, the Application filed under Section 95 of IBC is found to be complete for the purpose of appointing the Resolution Professional under Section 97 of IBC, 2016 - application admitted - moratorium declared.
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2022 (7) TMI 198
Maintainability of application - initiation of CIRP - Corporate Applicant has committed a default in repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is noted that the Corporate Applicant is a wholly-owned subsidiary of EIDCL, which is a subsidiary of IL FS. The Corporate Applicant has committed the default in paying the debts, borrowed from the Financial Creditors and Operational Creditors to the tune of Rs. 271,62,98,645/-. The Corporate Application has also served a copy of this application to the IBBI in Form 1A. The name of the IRP has also been proposed as per Section 10(b) of the IBC, 2016 - The default amount meets the threshold limit as prescribed under Section 4 of the IBC, 2016. The default claimed in the application is well within the limitation period to initiate the CIRP proceeding. The application is otherwise complete and defect-free. Application admitted - moratorium declared.
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2022 (7) TMI 197
Time Limitation - Seeking the exclusion of 147 days from 10.12.2021 (visit of registered office by RP) to 07.05.2022 (statutory auditor provided some financial information) from the CIRP period of 180 days as envisaged under IBC on account of time consumed due to non cooperation by the suspended directors and management of the corporate debtor - HELD THAT:- The Applicant/Resolution Professional could not function because of non-cooperation of the Promoters of the Corporate Debtor. The records were not supplied to applicant nor the management was handed over to the applicant, moreover the whereabouts of the corporate debtor is not known corporate debtor is maintaining a dummy registered office - it is observed that the applicant had made all the possible endeavours in discharging his duties as a resolution professional and after the documents from the statutory auditor were received, the applicant is in a position to run the Corporate insolvency resolution process of the corporate debtor including preparation of the information memorandum, invite expression of Interest and other duties as envisaged in the code. The exclusion of 147 days is allowed for the purpose of counting the period of 'Corporate Insolvency Resolution Process' of 180 days from 10.12.2021 (visit of registered office by RP) to 07.05.2022 (statutory auditor provided some financial information) from the CIRP period of 180 days as envisaged under IBC on account of time consumed due to non cooperation by the suspended directors to enable the 'Resolution Professional'/'Committee of Creditors' to complete the 'Corporate Insolvency Resolution Process'. Petition allowed.
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PMLA
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2022 (7) TMI 196
Seeking grant of regular bail - Money Laundering - illegal mining - Sections 379, 420, 465,467, 468, 471 of the IPC and Sections 21(1) 4(1) of the Mines Minerals (Regulation of Development) Act, 1957 - triple test laid down under Section 45 of the PMLA passed or not - HELD THAT:- The three conditions laid down under Section 45 are that the public prosecutor should be given an opportunity of hearing, which has been given in the present case; secondly, if the public prosecutor opposes the application, a reasoned order be passed that the person is not guilty of offence and not likely to commit offence while on bail and thirdly that in addition to provisions of PMLA, the provisions of Cr.P.C., regarding grant of bail, shall apply. Section 45 (1) (ii) is akin to Section 37 of the NDPS Act, wherein the Court, while granting bail, has to form an opinion. In a case under the NDPS Act, it is easy for an accused, who has been released on bail to repeat such offence, however, in a case under the PMLA like the present case, it is not easy for an accused to commit the offence again as he will always be in radar of E.D. It is the admitted case of ED that after registration of the aforesaid FIR in 2018, a complaint has been filed by ED in 2022 i.e. after a period of about 04 years and in the intervening period, there was no further complaint or FIR regarding illegal mining to suggest that the petitioner is a habitual offender and is involved in any other case even prior to registration of the aforesaid FIR, especially when he is not named either in FIR No. 26 or report submitted under Section 173(2) Cr.P.C. - As per own investigation of ED, the petitioner was helping Kudratdeep Singh @ Lovie, who was allotted the lease license, in his mining work and there is no direct allegation against him that he was looking into the finance of the Kudratdeep Singh @ Lovie, therefore, the Court is convinced that the petitioner qualify the triple test laid down under Section 45 of PMLA as the Court has nothing to presume adverse to the conduct of the petitioner and since all the documents are already in the custody of the investigating agency, therefore, there is no possibility for the petitioner to tamper with the same. It is well settled principles of law that when the investigation is complete and charge sheet is filed in the Court, conclusion of trial is likely to take a long time, a person/accused like the present petitioner, who is aged about 36 years old, can be released on bail, subject to his furnishing bail/surety bonds and with a condition that his passport shall remain deposited with the Court/Prosecuting Agency and he will not leave the country without seeking prior permission of the Court - As per record of the Medical Officer, Central Jail, Kapurthala, the petitioner is under treatment for his heart ailments and he needs further treatment from specialized doctors, which itself is a ground for releasing the petitioner on bail. Even otherwise, the petitioner is in custody since 03.02.2022 and in judicial custody w.e.f. 11.02.2022, as per custody certificate filed in Court, and a period of about 05 months has lapsed, therefore, the petitioner cannot be kept in judicial custody for unlimited period. Accordingly, it is held that the petitioner qualifies the triple test under Section 45 of the Act and, therefore, the present application is allowed - The petitioner is ordered to be released on regular bail, subject to conditions imposed - petition allowed.
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2022 (7) TMI 195
Seeking grant of regular bail - Money Laundering - scheduled offences or not - siphoning off of funds - misappropriation of funds and fraud committed in connection with the affairs of Sri Guru Raghavendra Sahakara Bank, Netkallappa Circle, Bengaluru - cases under other acts were filed earlier also - HELD THAT:- Admittedly, a case has been registered earlier in Crime No.69/2020 and he has been enlarged on bail, wherein, PMLA offences are not invoked and one more case was registered in Crime No.37/2020, wherein, an offence under Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishments Act was invoked. The matter was also earlier referred to CID and got it deleted Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishments Act and also a case has been registered and numbered as C.C.No.28892/2021 which is pending before the Court. It is also important to note that the Assistant Director, Directorate of Enforcement, Bengaluru Zonal Office has collected the source of information and the report was also received from the office of the Registrar of Co-operative Societies and collected all information and issued summons invoking Section 50 of the PMLA Act and a case was registered in ECIR/BGZO/09/2020. The allegation that this petitioner did not co-operate and the allegation is that the Crores of rupees more than 1000 Crores was misappropriated and the said amount was depositors money. Without obtaining the mandate from the depositors created advances and allowed to withdraw over and above the actual deposits and also an allegation is that the loans were sanctioned by just obtained partial coverage of mortgages and the Bank did not create charge in respect of the said properties in favour of whom, the loans were advanced. This petitioner is in custody. No doubt, the provisional order has been passed and the same has been confirmed and also questioned, which is pending. Having taken note of the allegations made in the complaint and also analysis of Bank Statement held by this petitioner and his family members and the fact is that he is the Chairman and earlier he was the Vice-President, is not in dispute and collected the source of information having acquired the deposits made by this petitioner and his family members i.e., son, wife and daughter. The main allegation is that while advancing the loan amount to 24 borrowers, the properties were not taken as security and the fictitious loan accounts are opened and money laundering to the tune of Crores of rupees utilized and depositors money has been siphoned by creating the fictitious loan. When such being the factual aspects, it is not a fit case to exercise the powers under Section 439 of Cr.P.C. No doubt, the learned senior counsel brought to the notice of this Court the orders passed by this Court. The factual aspects to be kept in mind while passing an order of granting bail and exercising the discretion and those two judgments will not comes to the aid of this petitioner instead of the judgment referred by the learned counsel for the respondent of the Apex Court while canceling the bail comes to the conclusion that the High Court failed to take note of the fact that the huge amount of money belonging to the investors has been siphoned off has not been considered. There are no merit in the petition to enlarge him on bail - petition dismissed.
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Service Tax
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2022 (7) TMI 194
Recovery of CENVAT Credit alongwith interest and penalty - input services received by SEZ unit - benefit of exemption notification not sought - demand of under proviso to Section 73(1) of the Finance Act,1994, with interest and penalty on rent-a-cab service - reverse charge mechanism - Penalty imposed under section 73(4A) of the Finance Act - Recovery of amount of CENVAT credit taken on various input services along with interest - Disallowance of CENVAT credit taken on service tax paid on input services received by the SEZ unit - HELD THAT:- In the present case, the Exemption Notifications dated 01.03.2011 and 30.06.2012, granted only conditional exemption from payment of service tax. The appellant could, therefore, forego such exemption and claim benefit of CENVAT credit on the same amount of service tax paid on input services as would have been available as refund to an SEZ Unit - It is true that the Notification dated 10.07.2013, which superseded the earlier Exemption Notifications dated 01.03.2011 and 20.06.2012, contained similar provisions as in the earlier Notifications and also extended similar benefit by way of refund of the service tax paid on input services used for authorized operations of an SEZ Unit and that it also expressly clarified in paragraph 5 that an SEZ Unit shall have the option not to avail this exemption and instead take CENVAT credit on the specified services in accordance with the Credit Rules, but this Notification merely clarifies the position and would, therefore, be applicable retrospectively for the period when the appellant had taken the CENVAT credit of service tax paid on input services. In this connection, reliance can be placed on the judgment of the Supreme Court in BELAPUR SUGAR ALLIED INDUS. LTD. VERSUS COLLR. OF C. EX., AURANGABAD [ 1999 (4) TMI 79 - SUPREME COURT] . The issue involved was whether an assessee would be entitled to duty reduction available under an amending Notification before the date of issue of that Notification. The Supreme Court held that denial of the Exemption Notification for the period prior to the date of the amending Notification shall defeat the object and purpose of the Notification itself since the purpose of both the original and the amending Notifications was to give incentive for increasing production of goods which would be effectively served only if the amending Notification was made available to the prior period as well. In the present case, the appellant is not claiming the benefit of the Exemption Notification, but is claiming CENVAT credit on the service tax paid on input service received by the appellant - the finding recorded by the Commissioner (Appeals) disallowing CENVAT credit taken on service tax paid on input services received by the SEZ unit on the ground that the SEZ Unit could only have opted for exemption by way of refund of such service tax cannot be sustained. Service tax liability under reverse-charge mechanism on rent-a-cab services - HELD THAT:- The appellant pointed out that the expenses relating to rent-a-cab services were initially accounted in the ledger named 211402 STF-WEL HIRE OF VEHICLES and later transferred to the relevant heads of expenses by way of re-classification. According to the appellant, this re-classification of expenses has no bearing on the total value of rent-a-cab services which had been correctly computed and duly offered to tax by the appellant, as would be evident from the Service Tax returns filed by the appellant for the period April to September 2013 and October 2013 to March 2014. It needs to be noted that the total value of taxable services indicated in the chart submitted by the appellant to the Audit team was Rs. 3,44,67,299/-, and 40% of this amount for the purpose of abatement is Rs. 1,37,86,920/-, which is the amount on which the appellant had paid the applicable service tax - It is, therefore, clear that additional demand of service tax is claimed on the amount on which service tax has already been paid by the appellant. This demand has been computed by wrongly interpreting an internal ledger item. The Commissioner (Appeals) failed to appreciate this factual position - demand cannot be sustained. Penalty imposed under section 73(4A) of the Finance Act - Amount of service tax with interest paid before issuance of SCN - HELD THAT:- Section 73(4A) and the Explanation to Section 73 of the Finance Act provide that no penalty shall be imposed if the assessee has paid the amount of service tax along with interest before the service of the show cause notice, whether on the basis of his own ascertainment or on the basis of ascertainment by the Department - The demand of penalty under section 73(4A) of the Finance Act is, therefore, without any basis and the confirmation deserves to be set aside. Penalty imposed under rule 15(3) of the Credit Rules and interest under rule 14 of the Credit Rules - appellant had not made the payment in respect of this invoice till it accepted this mistake and reversed the CENVAT credit taken by voucher - show cause notice contained demands of interest under rule 14 of the Credit Rules read with section 75 of the Finance Act and penalty under rule 15 (3) of the Credit Rules read with section 78 of the Finance Act - HELD THAT:- It is not disputed by the Department that the appellant had reversed the CENVAT credit wrongly taken by the appellant through voucher dated 01.07.2014, and this fact is reflected in the show cause notice. It cannot also be disputed three months from the date of the invoice would expire on 01.0.2014. The appellant had, therefore, complied with the provisions of rule 4 (7) of the Credit Rules - when rule 4 (7) of the Credit Rules has been complied with, there is no question of any delay warranting payment of interest by the appellant under rule 14 of the Credit Rules. Similarly, the provisions of rule 15 (3) of the Credit Rules have no application for two reasons. The first is that there is no wrongful taking or utilisation of credit by the appellant, and secondly there is no allegation raised or material relied upon with respect to fraud, collusion, wilful mis-statement, suppression of facts or intent to evade payment of service tax on the part of the appellant - the demand of interest and penalty on the CENVAT credit taken and later reversed by the appellant in accordance with the provisions of rule 4 (7) of the Credit Rules could not have been confirmed. Recovery of amount of CENVAT credit taken on various input services along with interest - inadmissible input services - nexus with out put services or not - Management or Business Consultant services - Maintenance or repair services - Courier services - Storage and warehouse services - Technical Testing and Analysis services - HELD THAT:- The disallowance of CENVAT credit appears to be in respect of five input services namely, Management or Business Consultant services, Maintenance or repair services, Courier services, Storage and warehouse services and Technical Testing and Analysis services - Learned counsel for the appellant pointed out how the five input services were used in provision of Information Technology services to the customers and also demonstrated the nexus between the input services and the output service. Learned counsel also pointed out that the definition of input service in rule 2 (l) of the Credit Rules, as applicable for the relevant period, is an inclusive definition, and that none of the five input services utilised by the appellant fell within any of the exceptions in this rule. The Order-in-Original or the Order-in-Appeal have not considered the submissions made by the appellant and in fact merely reproduce the words of the audit letter dated 14.10.2014 and the show cause notice dated 31.03.2016. There is no mention of the nature of the input services on which credit has been disallowed, nor any reason has been given why these services do not have a nexus with the output service of the appellant - This issue would, therefore, have to be remitted to the Commissioner (Appeals) to decide the same in the light of the reply submitted by the appellant. Appeal allowed in part and part matter on remand.
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2022 (7) TMI 193
Levy of service tax - Business Auxiliary Service (BAS) - receipt of commission / incentive from CRS companies (computer reservation service - Performance linked bonus (PLB) from the Airlines - HELD THAT:- The issue herein is squarely covered by the ruling of Larger Bench of this Tribunal in the case of KAFILA HOSPITALITY TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [ 2021 (3) TMI 773 - CESTAT NEW DELHI] . The decision answered the question relating to taxability of target incentives/ Performance Linked Bonus(PLB) received from airlines and commission received from CRS companies. Following the ruling of Larger Bench decision in the case of Kafila Hospitality Travels Pvt. Ltd., it is held that the impugned order is bad and the same is set aside - Appeal is allowed
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Central Excise
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2022 (7) TMI 192
Maintainability of appeal - threshold monetary limit involved in the appeal - HELD THAT:- The show-cause notices were contested by the respondent/assessee and the Commissioner of Central Excise passed a common order dated 31 st August, 2006 on all the show-cause notices. As a result the sum total of the total demand made was Rs.1,05,00,205/-. However, as against the said order the assessee preferred five appeals before the Tribunal and the Tribunal by the common order without going into the merits of the matter had merely followed the decision of the Gujarat High Court, in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] and allowed the appeals filed by the assessee. As rightly pointed out by Mr. Bhattacharyya, learned Standing Counsel for revenue the decision of the Gujarat high Court in the matter of INDSUR GLOBAL LTD. has been challenged before the Hon ble Supreme Court and the Hon ble Supreme Court has entertained the appeal and granted an order of interim stay. It is required to be considered what has to be done in this appeal even assuming that revenue was successful before the Hon ble Supreme Court and the decision of the Gujarat High Court was reversed and the matter has to be heard, the best that can be done is to remand the matter to the Tribunal to take a decision on merits. This appeal can be disposed of by directing the interest of the revenue by living the questions of law open for adjudication at an appropriate state and an appropriate manner.
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2022 (7) TMI 191
Refund claim of excess duty paid - price revision with retrospective effect - rejection on the ground of unjust enrichment - HELD THAT:- There is no real dispute with respect to the facts and circumstances. In the course of hearing before the Tribunal, the learned Counsel for the appellant have reconciled the said debit note and its breakup with the invoices, as well as the detailed chart annexed to the appeal paper book - It is further that there is no good reason to doubt the transaction between the appellant and their buyer Hero Motor Corp Ltd. It is further noticed that Hero Motor Corp Ltd, Haridwar Unit, to which the goods have been supplied is operating under Area Based exemption during the relevant period. Thus, there is no chance of Hero Motor Corp having taken Cenvat credit and utilised the same. There is no doubt as to genuineness of the transaction as well as the debit note in question issued by Hero Motor Corp Ltd, and accepted by the appellant-assessee. It is found that adequate entries have been made by the appellant in the Books of Accounts and they have credited the account of Hero Motor Corp. Further, the amount of refund claim have been shown as duty recoverable from the revenue in the Books of Accounts and the financial statements of the appellant being balance-sheet. Appeal allowed - decided in favor of appellant.
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2022 (7) TMI 190
CENVAT Credit - bogus invoices - passing on bogus cenvat credit without delivery of the goods - HELD THAT:- The appellant have brought on record cogent evidence in support of their contentions and they have supplied inputs along with cenvatable invoices and have received the payment through banking channels. It is further found that in the investigation at the end of Continental Engines, they have led evidence by way of books of accounts and records, they have actually received the goods. Further, in the statement of Shri Sharma ( of Continental Engines) recorded by Revenue, he has categorically stated that they have received the inputs along with cenvatable invoices and such inputs have been used by them in the manufacture of dutiable outputs, which have been cleared on payment of duty. Further, the payment for such transactions have been done through banking channels. The suspicion however, strong, cannot take place of evidence - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (7) TMI 189
Purchase of goods at a concessional rate exclusively for the manufacturing purposes - Acceptance of Form IV - Whether the Petitioner is entitled to purchase goods for use in processing/manufacturing of transformers against declaration Form No.IV? - HELD THAT:- Once it is clear that the Department s notification i.e. S.R.O. No.149 of 2001 was merely clarificatory, the Tribunal erred in holding that this is prospective in nature. The Court is satisfied therefore that the Tribunal has erred in proceeding to dismiss the appeal filed by the Petitioner. The question framed is accordingly answered in favour of the Assessee and against the Department. The impugned orders of the Tribunal and the corresponding orders of the ACST and the STO are hereby set aside - revision petition allowed.
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2022 (7) TMI 188
Eligibility for concessional rate of tax - Entry 81 of List C of the Schedule of rates under Section 5(1) of the Orissa Sales Tax Act - sale of size wood by the petitioner against declaration Form IV to a registered dealer - Whether subsequent change in use of goods purchased against declaration Form IV by the registered purchasing dealer will disentitle the petitioner s claim of concessional rate of tax under the aforesaid Entry 81 under the OST Act? - HELD THAT:- In the declaration the purchasing dealer disclosed that the intention behind purchasing the size wood from the Petitioner was for manufacturing/ processing of goods for sale in mining/generation or distribution of electricity or any form of power. There was no mention of the goods having been purchased for being used as packing materials. As pointed out, even assuming the purchasing dealer was going to use the goods so purchased for any other purpose i.e. a purpose other than that disclosed in the above declaration in Form IV, the Revenue s interest would not be prejudiced since in any event the purchasing dealer would be liable to pay the differential rate of tax as per the 2nd proviso to Section 5 (1) of the OST Act. In TILAKRAJ MEDIRATTA VERSUS STATE OF ORISSA [ 1992 (2) TMI 338 - ORISSA HIGH COURT] this Court explained that once the buying/purchasing dealer furnishes the declaration in Form IV that he intends to use the size goods for manufacture/processing of goods for sale, the legal obligation of the selling dealer ceases. Any contravention by the purchasing dealer of the above declaration would result in the purchasing dealer being made liable and not the selling dealer. Applying the ratio of the above decision to the case on hand, it is seen that the declaration in Form IV does not disclose the intention of the purchasing dealer to use the size goods purchased as packing materials . Consequently, the selling dealer cannot be saddled with any liability of tax. If indeed, the Department finds that the purchasing dealer has used the purchased goods for the purpose other than that disclosed in the declaration form, it would be open to the Department to proceed against the purchasing dealer. It is, therefore, not justified on the part of the Department to pass on that liability to the selling dealer. The sale of size goods by the Petitioner against the declaration in Form IV to the registered dealer is eligible for concessional rate of tax @ 4% under Entry 81 of Schedule C of rates under Section 5 (1) of the OST Act - a subsequent change in the use of goods purchased against declaration in Form IV by the purchasing dealer will not disentitle the selling dealer s claim for concessional rate of tax. The questions are answered in favour of the Assessee and against the Department - revision petition allowed.
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