TMI Tax Updates - e-Newsletter
August 27, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Classification of goods - rate of GST - Silicone Insole - Heel Cushion - the products of the applicant namely; Silicone Insoles and Silicon Heel Cushion; being only parts of footwear do not qualify to be termed as footwear satisfying the prescribed condition to be eligible for the concessional rate of GST - liable to GST @18% - AAR
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GST:
Classification of supply - composite supply or mixed supply - works contract or not - Construction and Commissioning of Jetty and the Development of Sites as per the M.O.U - the services rendered by the applicant falls under the definition of “Works Contract” - Liable for GST @12% as an original work meant predominantly for use other than for commerce, industry or any other business or profession - AAR
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GST:
Classification of goods - rate of tax - agricultural implements namely latex collection cup, made of plastic, used exclusively for collection of rubber latex, an agricultural activity - it is exempted from GST - AAR
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GST:
Classification of goods - rate of tax - agricultural implements used for, rubber tapping such as spouts, cup holder and collection cups - goods are covered under the description under HSN 8201 90 00 “other hand tools of the kind used in agricultural, horticulture or forest” and are exempt from GST - AAR
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GST:
Detention of consignment - Lubricant - stock transfer - consignee was shown as an unregistered person in the e-way bill - the mere mention of the consignee as an unregistered person in the e- way bill cannot be of any significance - The reasons for detaining the consignment are not sufficient to attract the provisions of Section 129 - HC
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GST:
Principles of Natural Justice - mode of service / communication of orders - As per Section 169(c) and (d) of the GST Act the service of any communication to the e-mail address provided by an assessee at the time of registration, as also by making available the communication in the common portal of the department, is to be treated as an effective communication under the statute - HC
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GST:
Detention of consignment - non-mention of the IGST payable in the e-way bill that accompanied the transportation of the goods - It is not in dispute that the details of the tax paid were shown in the invoice that accompanied the transportation - Goods and vehicle directed to be released - HC
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Income Tax:
Default u/s 201(1) and 201(1A) - in the instant case, the proceedings under Section 201(1) and 201(1A) of the Act have been initiated after a period of four years. Therefore, the same cannot be held to be initiated within the reasonable time and consequently, the proceedings cannot be sustained in the eye of law. - HC
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Income Tax:
Deduction / exemption u/s 10A - interest on bank deposits is also eligible to be included in the profits of 100% Export Oriented Units for the purpose of claiming deduction under Section 10A / 10B. - HC
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Customs:
Classification of imported goods - Calcite Sand (Calcite Powder) - There is no option but to go by the technical data sheet/description provided by overseas supplier for the products in question. Nowhere the suppliers refer to the product to be of “Precipitated” form at all. In fact, the presence of other minerals, the Oil Absorption Ratio shown in the technical data sheet otherwise show that the product in question is not Precipitated and hence, the classification sought for by the Appellant under CTH 2503 9030 therefore has to be upheld - AT
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Corporate Law:
Oppression and Mismanagement - bogus transactions - siphoning of funds - The allegation is an isolated incident and in order to invoke provisions of Oppression and Mismanagement the acts of oppression must be harsh and wrongful. An isolated incident may not be enough for grant of relief and continuous course of oppressive conduct on the part of the majority shareholders is, thus, necessary to be proved. - AT
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Corporate Law:
Whether Tribunal (NCLT) can impose the compounding fees u/s 441(1) of the Act, less than minimum prescribed for the offence u/s 165 (1) read with Section 165(6)? - the Tribunal has no jurisdiction to reduce the fine less than the minimum fine prescribed for the offence - AT
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IBC:
CIRP process - NPA - relevant date of default - The Admission need not be in regard to any precise amount nor by expressed words. If a defendant writes to the plaintiff requesting him to send his claim for verification of payment it amounts to an acknowledgement. - AT
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VAT:
Grant of subsidy - doctrine of promissory estoppel - merely the heading of a provision/clause cannot be relied upon since the same is not always determinative in the matter of interpretation of the policy and the language of the provision coupled with the policy as a whole must be looked into and if the language employed is clear, unambiguous and unequivocal, it must be given effect to, notwithstanding the fact that certain portion of the heading may be inconsistent with the substantive provision. - HC
Articles
Notifications
News
Case Laws:
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GST
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2020 (8) TMI 631
Constitutionality and Legality of Section 171 of the Central Goods and Services Tax Act, 2017 and Rule 126 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- Since the legality and validity of the aforesaid Section and Rules have been challenged in a batch of connected matters, which have been tagged with the present writ petition, present application is allowed and the amended writ petition is taken on record.
List on 3rd November, 2020 along-with W.P. (C) 10999/2018 and other connected matters for final hearing.
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2020 (8) TMI 630
Detention of consignment - Lubricant - stock transfer - consignee was shown as an unregistered person in the e-way bill that accompanied the transportation of the goods - allegation also that the petitioner had collected CGST and SGST in the delivery challan that was used for stock transfer of the goods - HELD THAT:- The petitioner would submit that although the e- way bill showed the consignee as an unregistered person, the invoice that accompanied the transportation clearly referred to the GSTIN of the consignee and hence, the mere mention of the consignee as an unregistered person in the e- way bill cannot be of any significance - Further, petitioner states that the mention of the tax applicable in the delivery challan was by mistake for it is evident that when the goods are stock transferred and not sold, there need not be a payment of tax at all.
The reasons for detaining the consignment are not sufficient to attract the provisions of Section 129 of the GST Act. The detention in the instant case cannot, therefore, be seen as justified - the 1st respondent are directed to immediately release the goods and the vehicle covered by detention notice - petition allowed.
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2020 (8) TMI 629
Freezing of petitioner's bank account - the petitioner started depositing the money (as ordered) with the respondent to clear the GST liability, however because of this ongoing pandemic situation the petitioner suffered financial losses as also the petitioner is not receiving its due money from its customers as the pandemic has adversely effected the business of his clients too - HELD THAT:- Though, the learned Standing Counsel for CGST Department/ respondent objected to the extension of the time but considering the pandemic situation the period of the clearing the entire liability is extended to further 120 days from today and the petitioner is directed to clear all its dues, as per order dated 16.03.2020 and in the meanwhile no coercive steps should be taken against the petitioner and its officials during this period.
Application disposed off.
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2020 (8) TMI 628
Principles of Natural Justice - mode of service / communication of orders - It is the case of the petitioner that the assessment orders were not served on him but, immediately on receipt of the demand notices, he took the necessary steps and filed returns for the said period, within thirty days from the date of receipt of the demand notices, so as to get the benefit of withdrawal of the assessment orders - HELD THAT:- As per Section 169(c) and (d) of the GST Act the service of any communication to the e-mail address provided by an assessee at the time of registration, as also by making available the communication in the common portal of the department, is to be treated as an effective communication under the statute - the petitioner, therefore, cannot wish away the fact that the assessment orders were brought to his notice on 25.11.2019 and 27.11.2019 respectively.
Petition dismissed.
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2020 (8) TMI 627
Validity of SCN - direction to the respondents not to proceed with the adjudication proceedings until Rule 142(1A) of the CGST Rules is complied with - HELD THAT:- Issue Notice.
List on 04th November, 2020.
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2020 (8) TMI 626
Principles of Natural Justice - it is the case of the petitioner that before passing Ext.P11 order he was not afforded an adequate opportunity of hearing or an opportunity to respond to the show cause notice, which is mandated as per the Rules - HELD THAT:- The learned Government Pleader would submit, on instructions, that it is a fact that there was no proper hearing afforded to the petitioner pursuant to the issuance of a show cause notice as mandated under the Rules, and the officer is ready to reconsider the matter, after providing an opportunity to the petitioner to take copies of the documents sought to be relied against it in the proceedings, as also to consider any reasonable request for cross examination of persons.
The respondent are directed to pass fresh orders in the matter after hearing the petitioner as mandated under Section 74(1) of the SGST Act - petition allowed by way of remand.
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2020 (8) TMI 625
Detention of consignment - non-mention of the IGST payable in the e-way bill that accompanied the transportation of the goods - Rule 138A of the SGST Rules - HELD THAT:- There are force in the contention of the learned counsel for the petitioner that as per the SGST Act and R.138 A of the SGST Rules, there is no requirement to mention the details of the tax payment in the copy of the e-way bill that accompanies the goods. It is not in dispute that the details of the tax paid were shown in the invoice that accompanied the transportation and there is no dispute raised by the respondents with regard to the accompaniment of the invoice along with the transportation.
The 1st respondent are directed to release the goods and the vehicle to the petitioner on production of a copy of this judgment - petition allowed.
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2020 (8) TMI 621
Profiteering - purchase of flat - allegation that the Respondent had not passed on the benefit of Input Tax Credit by way of commensurate reduction in price - contravention of section 171 of CGST Act - penalty - HELD THAT:- It has been revealed that the Respondent has not passed on the benefit of input tax credit to his buyers w.e.f 01.07.2017 to 30.06.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017.
Penalty - HELD THAT:- Since no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 30.03.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 18.12.2019 issued to the Respondent for imposition of penalty under Section 171 (3A) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
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2020 (8) TMI 620
Profiteering - purchase of flat - allegation that the Respondent had not passed on the benefit of Input Tax Credit by way of commensurate reduction in rice - violation of provisions of Section 171 (1) of the CGST Act, 2017 - Penalty - HELD THAT:- It has been revealed that the Respondent has not passed on the benefit of input tax credit to his buyers w.e.f. 01.07.2017 to 30.06.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017.
Penalty - HELD THAT:- Since no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 30.06.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 15.05.2019 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
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2020 (8) TMI 624
Filing of Form GST-TRAN-1 - extension of cut-off date for filing for filing of form - rule 117 of CGST Rules - HELD THAT:- Issue at hand primarily appears to be on facts, though certain legal issues have also been raised by the petitioner, whether rule 117 of Central Goods and Service Tax Rules, 2017 should be treated as directory in nature. In order to have a considered view of the matter, let Respondents file their response. Accordingly, Mr. Ratnesh Kumar, learned counsel for the GST Council and Mr. Piyush Chitresh, learned A.C to learned Advocate General are allowed four weeks' time to file their counter affidavit. Matter be listed after six weeks so that petitioner, if so advised, may file rejoinder in the meantime.
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2020 (8) TMI 623
Search and Seizure - the petitioner is aggrieved by the action of the respondent which is without any legal basis - it is submitted by the petitioner though the Hon’ble Supreme Court has directed to pay 10% of the liability during the investigation, the petitioners herein are inclined to pay 20% of the alleged liability as of today - HELD THAT:- The learned counsel for the respondent submit the amount stated above is tentative and since the investigation is still going on, the amount of liability may increase. The learned senior counsel for the petitioner submits as and when the amount would increase they shall comply with further directions passed by this Court. It is further submitted the petitioner has paid ₹ 1.50 crores approx. to the department and that the raids are being conducted respondent at the office of the petitioner.
Let the petitioner deposit an amount equivalent to 25% of the amount of ₹ 17.00 crores, the alleged liability as is of today and shall also join the investigation as and when directed by the department. The amount shall be deposited within two weeks from today.
List on 30.09.2020.
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2020 (8) TMI 622
Principles of Natural Justice - opportunity for personal hearing not provided - petitioner contends that when there is a specific request from the petitioner to provide personal hearing, it is the duty of the 1st respondent to provide such a personal hearing - HELD THAT:- The 1st respondent ought to have provided a personal hearing to the petitioner, since the petitioner requested for it specifically in its objections dt.18.02.2020 filed by it to the show cause notice issued on 31.01.2020 to it by the 1st respondent, and that failure of the 1st respondent to do so is a violation of principles of natural justice warranting setting aside of the impugned order.
The matter is remitted back to the 1st respondent for fresh consideration - the 1st respondent shall provide a personal hearing to the petitioner; and then the 1st respondent shall pass a reasoned order in accordance with and communicate it to the petitioner - petition allowed by way of remand.
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2020 (8) TMI 638
Classification of goods - rate of tax - agricultural implements used for rubber tapping namely latex Collection Cup - HELD THAT:- This authority has already issued ruling on the issue vide IN RE: M/S. GEO THOMAS AND COMPANY [2019 (11) TMI 39 - AUTHORITY FOR ADVANCE RULING, KERALA], that latex collection cup is exclusively used as an agricultural implement for rubber tapping. The Rubber Board has accepted that plastic latex collection cups are agricultural implements widely being used in rubber plantations for collection of latex directly from the rubber trees. Therefore, it can be safely classified as agricultural implements manually operated used in the rubber plantations for harvesting the rubber latex - It is not specifically classified in Chapter 82 of Customs Tariff. However, these items comes under the description covered under HSN 8201 90 00 “other hand tools of the kind used in agriculture, horticulture or forest” as it is essentially used for collection of rubber latex by rubber cultivators.
Plastic latex collection cup is an agricultural implement exclusively used for rubber tapping and comes under the classification HSN 8201 90 00 “other hand tools of the kind used in agriculture, horticulture or forest”. As such it is exempted from GST as per Sl.No. 137 of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017.
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2020 (8) TMI 637
Classification of goods - rate of GST - Silicone Insole - Heel Cushion - Whether Silicone Insole and Heel Cushion is classifiable under Tariff 64 at SI.No.225 under Schedule-I as “Footwear of sale value not exceeding ₹ 1000/per pair” of Notification No.01/2017-CT(R) dated 28.06.2017 as amended by Notification No.24/2018-CT(R) dated 31.12.2018? - HELD THAT:- Silicone Insoles & Silicone Heel Cushion are removable insoles and the primary purpose of insoles is to make shoes more comfortable to wear. The removable insoles that come in most shoes vary in type and material ranging from very simple thin cushioning to sophisticated multiple layered arch support inserts. The readymade removable insoles manufactured by the applicant are of different sizes that are compatible with shoe size. The insoles or heel cushions are not customised for correcting orthopaedic conditions that vary from patient to patient. They are of standard shape and size as that of the footwears in which they can be used. As such it cannot be considered as an orthopaedic appliance; i.e; footwear or a special insole designed to correct orthopaedic condition and which is made to measure or designed to fit either foot equally; mass produced and presented singly to fall under HSN 9021.
The HSN 6406 covers “Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof”. The Silicone Insoles and Silicone Heel Cushion manufactured by the applicant are rightly classifiable under HSN 6406 as parts of footwear.
The concessional rate of GST of 5% under Sl No. 225 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 for footwear having retail sale price not exceeding ₹ 1000/- per pair is subject to the condition that such retail sale price is indelibly marked or embossed on the footwear itself. The products of the applicant namely; Silicone Insoles and Silicon Heel Cushion; being only parts of footwear do not qualify to be termed as footwear satisfying the prescribed condition to be eligible for the concessional rate of GST - they are not covered under Sl No. 225 of Schedule - I; but are covered under Sl No. 171 of Schedule III of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 attracting GST at the rate of 18%.
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2020 (8) TMI 636
Classification of goods - rate of tax - agricultural implements namely latex collection cup, made of plastic, used exclusively for collection of rubber latex, an agricultural activity - HELD THAT:- This authority has already issued ruling on the issue vide IN RE: M/S. GEO THOMAS AND COMPANY [2019 (11) TMI 39 - AUTHORITY FOR ADVANCE RULING, KERAL] that latex collection cup is exclusively used as an agricultural implement for rubber tapping. The Rubber Board has accepted that plastic latex collection cups are agricultural implements widely being used in rubber plantations for collection of latex directly from the rubber trees. Therefore, it can be safely classified as agricultural implements manually operated used in the rubber plantations for harvesting the rubber latex. It is not specifically classified in Chapter 82 of Customs Tariff - However, these items comes under the description covered under HSN 8201 90 00 "other hand tools of the kind used in agriculture, horticulture or forest" as it is essentially used for collection of rubber latex by rubber cultivators.
Plastic latex collection cup is an agricultural implement exclusively used for rubber tapping and comes under the classification HSN 8201 90 00 "other hand tools of the kind used in agriculture, horticulture or forest". As such it is exempted from GST as per Sl.No. 137 of Notification No. 02/2017 Central Tax (Rate) dated 28.06.2017.
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2020 (8) TMI 635
Classification of supply - composite supply or mixed supply - works contract or not - Construction and Commissioning of Jetty and the Development of Sites as per the M.O.U - benefit of reduced rate of tax - Liability and rate of GST applicable on the project management service charges, license fees for the building allotted to N.T.R.O. and the supply of electricity and water - Applicability of N/N. 24/2017-IT(R) dated 21.09.2017 and 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended. - HELD THAT:- As per Section 2 (119) of the C.G.S.T. Act, 2017; “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract - From the terms and conditions of the M.O.U. dated 22.12.2016; it is evident that the activity undertaken by the applicant for the Construction and Commissioning of Jetty and the Development of Sites as per the M.O.U. squarely falls within the ambit of “Works Contract” as defined in Section 2 (119) of the CGST Act, 2017. As per Sl.No. 6 of Schedule II of the CGST Act, 2017; the composite supply of works contract as defined in clause (119) of Section 2 shall be treated as a supply of services.
The activity undertaken by the applicant as per the M.O.U. is for the National Technical Research Organisation, a Technical Intelligence Agency of the Government of India. Since the services rendered by the applicant falls under the definition of “Works Contract” as per Section 2 (119) of the CGST Act, 2017 and the services being rendered to the Central Government for an original work meant predominantly for use other than for commerce, industry or any other business or profession the rate of GST applicable is 12% as per Sl No. 3 (vi) (a) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended. In view of the entry at Sl No. 3 (ix) of the Notification No. 08/2017 Integrated Tax (Rate) dated 28.06.2017 as amended the rate of GST applicable to the contractors / sub- contractors engaged by the applicant to execute the works as per the M.O.U. is also 12%.
Liability and rate of GST applicable on the project management service charges, license fees for the building allotted to N.T.R.O. and the supply of electricity and water - HELD THAT:- It is evident from the terms and conditions of the M.O.U. that the principal supply is the supply of works contract services for construction of Jetty and Development of Sites for N.T.R.O. and the project management service charges, license fees of building, the supply of electricity and water are components of the main supply which are ancillary to the main supply. Therefore, the rate of GST applicable for such supplies are also the same rate as applicable to the main supply as the activities cannot be segregated or vivisected from the main supply for a differential tax treatment.
Thus, the activity undertaken by the applicant as per the M.O.U. dated 22.12.2016 entered with National Technical Research Organisation of the Government of India are covered under “Works Contract” as defined in Section 2 (119) of the CGST Act, 2017 - the rate of GST applicable on the services provided by the applicant as per the said M.O.U. is 12% as per Sl No. 3 (vi) (a) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended - the rate of GST applicable on the services provided by the contractors / sub contractors to the applicant as envisaged in the said M.O.U. is 12% as per Sl No. 3 (ix) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended - applicant is entitled for refund of the excess GST paid if any; subject to the provisions of Section 54 of the CGST Act, 2017 and the Rules made thereunder - supply of electricity and water are components of the main supply and are ancillary to the main supply and hence cannot be segregated or vivisected from the main supply and is liable to G.S.T. at the same rate as the main supply.
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2020 (8) TMI 634
Classification of goods - rate of tax - agricultural implements namely latex collection cup, made of plastic, used exclusively for collection of rubber latex, an agricultural activity - HELD THAT:- This authority has already issued ruling on the issue vide IN RE: M/S. GEO THOMAS AND COMPANY [2019 (11) TMI 39 - AUTHORITY FOR ADVANCE RULING, KERAL], that latex collection cup is exclusively used as an agricultural implement for rubber tapping. The Rubber Board has accepted that plastic latex collection cups are agricultural implements widely being used in rubber plantations for collection of latex directly from the rubber trees. Therefore, it can be safely classified as agricultural implements manually operated used in the rubber plantations for harvesting the rubber latex. It is not specifically classified in Chapter 82 of Customs Tariff. However, these items comes under the description covered under H5N 8201 90 00 “other hand tools of the kind used in agriculture, horticulture or forest” as it is essentially used for collection of rubber latex by rubber cultivators.
Plastic latex collection cup is an agricultural implement exclusively used for rubber tapping and comes under the classification H5N 8201 90 00 “other hand tools of the kind used in agriculture, horticulture or forest”. As such it is exempted from G5T as per Sl. No. 137 of Notification No. 02/2017 Central Tax (Rate) dated 28.06.2017.
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2020 (8) TMI 633
Classification of goods - rate of tax - agricultural implements namely latex collection cup, made of plastic, used exclusively for collection of rubber latex, an agricultural activity - HELD THAT:- This authority has already issued ruling on the issue in IN RE: M/S. GEO THOMAS AND COMPANY [2019 (11) TMI 39 - AUTHORITY FOR ADVANCE RULING, KERALA] that latex collection cup is exclusively used as an agricultural implement for rubber tapping. The Rubber Board has accepted that plastic latex collection cups are agricultural implements widely being used in rubber plantations for collection of latex directly from the rubber trees. Therefore, it can be safely classified as agricultural implements manually operated used in the rubber plantations for harvesting the rubber latex.
Plastic latex collection cup is an agricultural implement exclusively used for rubber tapping and comes under the classification HSN 8201 90 00 "other hand tools of the kind used in agriculture, horticulture or forest". As such it is exempted from GST as per Sl No. 137 of Notification No. 02/2017 Central Tax (Rate) dated 28.06.2017.
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2020 (8) TMI 632
Classification of goods - rate of tax - agricultural implements used for, rubber tapping such as spouts, cup holder and collection cups - HELD THAT:- It is pointed out that spout, cup holder and latex collection cup are agricultural implements used for rubber tapping and the main implements used in the rubber plantations for harvesting the rubber latex.
This authority has already issued ruling on the issue vide IN RE: M/S. GEO THOMAS AND COMPANY [2019 (11) TMI 39 - AUTHORITY FOR ADVANCE RULING, KERALA], that latex collection cup is an agricultural implement exclusively used for rubber tapping. There is no doubt that latex collection cup is an agricultural implement exclusively used for rubber tapping. Hence, this will come under the classification agricultural implements manually operated.
Spout, Cup Holders and Collection Cups are agricultural implements used for rubber tapping and are covered under the description under HSN 8201 90 00 “other hand tools of the kind used in agricultural, horticulture or forest” and are exempt from GST as per Sl.No. 137 of Notification No. 02/2017 Central Tax (Rate) dated 28.06.2017.
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Income Tax
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2020 (8) TMI 619
Default u/s 201(1) and 201(1A) - Period of limitation for initiating proceedings under Section 201(1) and 201(1A) - HELD THAT:- It is not in dispute that for the relevant Assessment years i.e., 2000-01 to 2002-03, the proceedings were initiated after a period of four years. The aforesaid issue is no longer res integra. The Supreme Court in BHATINDA DISTRICT COOPERATIVE MILK PRODUCERS UNION LTD. [2007 (10) TMI 300 - SUPREME COURT]
Reasonable period for initiation of proceedings in respect of the Assessment years in question, at the time where no limitation was prescribed has been held to be four years. It is not in dispute that in the instant case, the proceedings under Section 201(1) and 201(1A) of the Act have been initiated after a period of four years. Therefore, the same cannot be held to be initiated within the reasonable time and consequently, the proceedings cannot be sustained in the eye of law. - Decided in favour of the assessee
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2020 (8) TMI 618
Deduction / exemption u/s 10A - including the interest on bank deposits for the purpose of claiming deduction / exemption - HELD THAT:- It has been brought to the notice of this Court that there is a judgment of the Full Bench of the Karnataka High Court M/S. HEWLETT PACKARD GLOBAL SOFT LTD. [2017 (11) TMI 205 - KARNATAKA HIGH COURT] wherein as held that the interest on bank deposits is also eligible to be included in the profits of 100% Export Oriented Units for the purpose of claiming deduction under Section 10A / 10B. - Decided in favour of assessee.
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2020 (8) TMI 617
Condonation of delay of 1333 days - Appeal to tribunal as against the order of the CIT u/s 263 - HELD THAT:- No substantial questions of law arising in the present appeal - We are of the opinion that the Tribunal could have condoned the delay upon application supported by an affidavit if a reasonable ground for delay was made out by the Assessee.
We are inclined to allow the present appeal and remand the matter back to the learned Tribunal by giving an opportunity to the Assessee to file such application for seeking condonation of delay, along with affidavit of the Assessee or its counsel, subject to payment of cost of ₹ 25,000/- (Rupees Twenty Five Thousand only) by the Assessee to the respondent Revenue Department.
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2020 (8) TMI 616
Rectification of mistake u/s 154 - Deduction u/s 80P - HELD THAT:- Respondent failed to consider the actual issue that was raised in the rectification application, and proceeded on the assumption that what was agitated in the rectification application was the merits of the disallowance of the deduction under Section 80P of the Income Tax Act. The issue urged in the rectification application was the propriety of the observation in the assessment order that the return had been filed beyond time, whereas it is the specific contention of the petitioner that the return was filed within time.
Quash Ext.P12 communication of the respondent, and direct the respondent to consider the rectification application under Section 154 of the Income Tax Act, afresh, after hearing the petitioner. The respondent shall pass fresh orders, as directed, after hearing the petitioner, within an outer time limit of three months from the date of receipt of a copy of this judgment.
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Customs
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2020 (8) TMI 615
Classification of imported goods - Calcite Sand (Calcite Powder) - classifiable under CT 2503 9030 as claimed by the Appellant or required to be classified under CTH 2836 5000 as confirmed vide the impugned order? - HELD THAT:- While in general, it is true that test report of CRCL cannot be brushed aside lightly, however, when CBEC itself categorically admits that for calcite powder, their Labs were not equipped to test the same till 2019, as evident from Circular No.43/2017-Cus dt.16.11.17 as also Circular No.15/2019-Cus dt.7.6.19, the Kandla Customs Chemical Lab reports as relied upon in the impugned order have to be discarded.
The present case is identical to that in the case of C.C. & C.E. & S.T. -NOIDA VERSUS MANIKYA CREATIONS PVT. LTD. [2018 (7) TMI 1227 - CESTAT ALLAHABAD] and M/S PAVAS POLYCHEM PVT. LTD., SHRI PAWAN KHATRI, DIRECTOR VERSUS COMMISSIONER OF CUSTOMS, KANPUR [2018 (2) TMI 1573 - CESTAT ALLAHABAD]. It therefore must be held that in absence of any independent cogent evidence to reject the classification under CTH 2503 9030 as claimed by the Appellant, the claim of the revenue to classify the very goods under CTH 2836 5000 has no support and must fail.
Since the test reports cannot be relied upon in light of the categorical admission in Circular No.43/2017-Cus dt.16.11.17 regarding lack of infrastructure in Customs Labs to test calcite powder, it is not deemed necessary to examine whether the sampling was properly done as per applicable BIS including Clause 4.1- APPEDIX B OFIS : 918 : 1985 or otherwise.
There is no option but to go by the technical data sheet/description provided by overseas supplier for the products in question. Nowhere the suppliers refer to the product to be of “Precipitated” form at all. In fact, the presence of other minerals, the Oil Absorption Ratio shown in the technical data sheet otherwise show that the product in question is not Precipitated and hence, the classification sought for by the Appellant under CTH 2503 9030 therefore has to be upheld - the differential duty demand, interest, fine and penal action is not sustainable - Appeal allowed.
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Corporate Laws
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2020 (8) TMI 614
Reduction of Share Capital - Section 66(1)(b) of the Companies Act - pre-mordial plea of the Appellant is that the ‘National Company Law Tribunal’ had failed to appreciate the creeping in of an ‘inadvertent typographical error’ figuring in the extract of the ‘Minutes of the Meeting’ characterising the ‘special resolution’ as ‘unanimous ordinary resolution’ - HELD THAT:- ‘Reduction Of Capital’ is a ‘Domestic Affair’ of a particular Company in which, ordinarily, a Tribunal will not interfere because of the reason that it is a ‘majority decision’ which prevails. The term ‘Share Capital’ is a ‘genus’ of which ‘Equity and Preference share capital’ are ‘species’ - Section 66 of the Companies Act, 2013 mentions the term ‘reduction Of Share Capital’. For a valid resolution, it must satisfy the relevant provisions contained under the Companies Act. A ‘special resolution’ is required to determine those matters for which the Act requires a ‘special resolution’ and except these matters in all other situations an ‘Ordinary Resolution’ is to be passed.
This Tribunal, after subjectively satisfying itself that the Appellant/Company has tacitly admitted its creeping in of typographical error in the extract of the minutes and also taking into consideration of the 1st Respondent’s stand that the Appellant/Company had filed the special resolution with it, which satisfies the requirement of Section 66 of the Companies Act, 2013, allows the Appeal by setting aside the impugned order passed by the ‘National Company Law Tribunal, Bench - Application disposed off.
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2020 (8) TMI 613
Oppression and Mismanagement - maintainability of petition - application was filed preliminary objection that in terms of Section 244(1) (a) of the Act - HELD THAT:- Admittedly, the Appellants instead of filing reply to the Petition, filed preliminary objection that in terms of Section 244(1) (a) of the Act the petition is not maintainable because the Respondent No. 1 and 2 has not paid the consideration towards the shares allotted to them.
It is settled law that an objection as to maintainability of the Company Petition is only to be allowed at an initial stage if there is absolutely, no doubt that the Petition is not maintainable. It is general principle that a Petition is to be thrown out at an initial stage if it is unarguable on the demurrer. The issue of qualification was a mixed question of fact and law and the correct position is required to be ascertained on hearing the parties on merits.
Respondent No. 1 and 2 at an initial stage satisfied that they hold 19.38% of the paid up share capital and therefore, they satisfy the requirements under Section 244(1) (a) of the Act. It is however made clear that issue of qualification in the present Petition is a mixed question of fact and law and therefore, the correct position is required to be ascertained on hearing the parties on merits as well - the issue of maintainability of the Petition is still open and it will be decided finally after hearing the parties on merits.
Appeal dismissed.
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2020 (8) TMI 612
Principles of natural justice - no service of SCN - contention of the Appellant is that before passing an order against the Company, no show cause notice has been served and the Tribunal had no jurisdiction to inflict any damages against the alien Company, while deciding the inter-se dispute between two directors of a TL Company - HELD THAT:- It is seen that the MTS Company was Respondent No. 3 before the Tribunal. However, it choose not to file reply of the Petition. Therefore, it can’t be said that before passing of the order against the MTS Company, no opportunity of hearing was given by the Tribunal.
Whether the Tribunal had Jurisdiction to inflict damages against the MTS Company? - HELD THAT:- It is admitted fact that Parvesh is a director in the MTS Company since 15.10.2012 and he is also a promotor director of TL Company since incorporation of the TL Company i.e. 01.05.2016. Parvesh being a director entered into a vehicle hiring agreement with MTS Company on 25th June, 2016. As per this Agreement all five trucks of TL Company were under the exclusive hiring contract with MTS Company and the same were run by them till their possession was taken over by the financier, ICICI Bank Ltd on 05.01.2017 - thus, it is clear that both the Companies have close business relations and Appellant Parvesh is a Director in both the Companies. Hence, it cannot be said that the Tribunal had no Jurisdiction to inflict any damages against the MTS Company. Therefore the Tribunal held that Parvesh and MTS Company are jointly and severally liable to pay compensation to Brijesh.
It is proved that Parvesh has not account for the earnings of the trucks from 20.8.2016 to 5.1.2017. However, Learned Tribunal without considering the above referred circumstances ordered Parvesh and MTS Company to pay ₹ 20 Lakhs is not justifiable - Brijesh has not produced any voucher for the amount ₹ 3,71,5000/- and has not satisfied how the advance amount of ₹ 2 Lakhs received under agreement from MTS Company was adjusted.
The capital of ₹ 5 Lakhs in four and half months would earn ₹ 2.25 Lakhs. Hence, Brijesh is entitled for capital ₹ 5 lakhs plus 2.25 lakhs total ₹ 7.25 lakhs which is just and proper compensation. It shall be paid by Parvesh and MTS Company jointly and severally within a month from today and in default, they have to pay interest on ₹ 7.25 Lakhs at the rate of 8% p.a from the date of the order of the NCLT till realization.
Parvesh entered into an agreement with the consent of Brijesh therefore, he is not guilty u/s 188 of the Companies Act, 2013. Hence, the direction of the Tribunal for initiation of action against Parvesh is quashed - Appeal allowed.
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2020 (8) TMI 611
Oppression and Mismanagement - bogus transactions - siphoning of funds - HELD THAT:- The records of Appellant attending the meeting and the signatures put on the entry register shows that Appellant No. 1 was present at the registered office of respondent No. 1 Company, where the meeting was conducted. In that meeting the resolution was passed by the majority directors to regulate the procedure pertaining the signatories to the bank accounts of Respondent No. 1 Company, which is in no way oppressive as the decision relating to the Operation of bank account is within the domain of the Board of Directors - after the authority to sign the cheques has been revised we do not have any fact whether after the revision of the authority the appellant has been totally excluded or not from the operation of the account. In case a person is excluded positively not to have signed even a single cheque after the revision this could be colourable exercise. No evidence has been brought forth to make the change in authorisation to operate the bank account as a colourable exercise. Therefore, this contention has no weight.
The other allegation regarding the construction of buildings and superstructures using the funds of the company, without any approval of the Board and the competent authority was also rightly been dealt by the NCLT as Appellant had not placed any evidence on record to prove the construction. This is an isolated incident and in order to invoke provisions of Oppression and Mismanagement the acts of oppression must be harsh and wrongful. An isolated incident may not be enough for grant of relief and continuous course of oppressive conduct on the part of the majority shareholders is, thus, necessary to be proved.
The NCLT, Chennai has rightly held that the allegations made by the Appellants are baseless - impugned order upheld.
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2020 (8) TMI 610
Compounding application - resignation from the Directorship of four Companies - Directorship in more than 20 companies (10 in public companies) as on 31.3.2015 - section 165 of the Companies Act 2013 - contravention of provisions for a period of 01.04.2015 to 21.02.2016 i.e. 326 days - HELD THAT:- Admittedly, in this case, the Respondent has violated the provisions under Section 165(1) read with Section 165(3) of the Act, for a period 01.04.2015 to 21.06.2016 which is punishable under Section 165(6) of the Act.
In this case, the Respondent was conscious that after coming into force the provisions under Section 165(1) of the Act, he cannot hold Directorship in more than 20 companies and Directorship in more than 10 Public Companies, at the same time. As per the Section 165 (3) of the Act, till 31.03.2015 Respondent was required to resign from the Directorship of the Companies more than the limits specified in sub- Section 1 of Section 165 of the Act, within the specified period. The Respondent has vacated the Directorship of three Companies. However, after receipt of the notice from the Appellant the Respondent has resigned from the Directorship of four Companies on 22.02.2016 and there is nothing on record to presume that the Respondent violated the provisions on a bonafide belief. The conduct of Respondent shows that he acted in conscious disregard of its obligation.
Whether Tribunal can impose the compounding fees under Section 441(1) of the Act, less than minimum prescribed for the offence under Section 165 (1) read with Section 165(6)? - HELD THAT:- From the impugned order its manifest and clear that the Tribunal failed to notice the minimum fine prescribed under Sub-Section 6 of Section 165 of the Act, which was applicable at relevant time i.e. before the amendment - In view of the error apparent in the impugned order dated 11.07.2018 passed by the Tribunal, thus, the order cannot be upheld.
The Respondent has contravened the provisions of 165(1) of the Act, which is punishable under Sub-Section 6 of Section 165 of the Act - the minimum fine at the rate of five thousand rupees for every day for the period 01.04.2015 to 21.02.2016 i.e. 326 days imposed - penalty quantified to ₹ 16,30,000/-.
Appeal allowed.
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Insolvency & Bankruptcy
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2020 (8) TMI 609
Maintainability of application - CIRP process - NPA - relevant date of default - Principles of Natural Justice - Appellant submitted that the Adjudicating Authority did not observe the principal of Natural Justice and had passed the order for commencement of CIRP in nearly three days without even providing an opportunity to file written submissions or objections on application under Section 7 of I&B Code - HELD THAT:- The Bank has declared it as NPA on 30.06.2015. We are agreed with the finding of Adjudicating Authority that the NPA date is 30.06.2015. The Application under Section 7 of I&B Code is filed on 15.03.2019 i.e. after three years from the date of default. Therefore, the question for consideration is whether the Corporate Debtor has acknowledged the debt as per the requirement of under Section 18 of limitation Act, only then, the date of default can be forwarded to a future date.
It is now well settled that a writing to be an acknowledgement of liability must involve an admission of subsisting Jural relationship between the parties and a conscious affirmation of an intention of continuing such relationship in regard to an existing liability. The Admission need not be in regard to any precise amount nor by expressed words. If a defendant writes to the plaintiff requesting him to send his claim for verification of payment it amounts to an acknowledgement.
Corporate Debtor has acknowledged the debt within three years i.e, before the expiration of the prescribed period for a suit or application. Thus, the Learned Adjudicating Authority has rightly held that the Application under Section 7 of I & B Code is well within limitation - Therefore, no interference is called for in this Appeal.
Appeal dismissed.
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Central Excise
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2020 (8) TMI 608
Exemption from education cess & secondary and higher education cess - area based exemption availed - whether in view of the exemption granted to the excise duty the petitioner would also be entitled to an exemption to the payment of education cess & secondary and higher education cess? - HELD THAT:- The said question was decided by the Supreme Court in its pronouncement in SRD Nutrients Pvt. Ltd. Vs. Commissioner of Central Excise, Guwahati [2017 (11) TMI 655 - SUPREME COURT] wherein it was held that the appellants therein were entitled to refund of education cess and higher education cess which was paid along with the excise duty once the excise duty itself was exempted from levy.
The demand cum show-cause notice dated 09.06.2020 is assailed in this writ petition on the ground that the condition precedent to invoke the power under section 11(A-1) is that the refund made must be erroneous - It being so, condition precedent of section 11(A-1) of the Excise Central Act, 1944 is not satisfied.
A question for determination would be as to whether the proposition of law laid down in Unicorn Industries [2019 (12) TMI 286 - SUPREME COURT] would render the refund made to the petitioner to be erroneous - As agreed upon list the matter on 06.10.2020 for further consideration. Till the next date fixed, the recovery of the higher education cess already refunded by the department to the petitioner shall not be recovered.
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CST, VAT & Sales Tax
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2020 (8) TMI 607
Levy of entertainment Tax - petitioner got itself registered under the said Act on the rolls of the 1st respondent w.e.f. 01.08.2008 - demand of tax for the tax period 2011-12, 2012-13 and 2013-14 on three entities - HELD THAT:- The impugned Stay rejection order dt.30.05.2020 passed by the 3rd respondent deserves to be set aside on the ground of nonconsideration of contentions of petitioner by the 3rd respondent, and that the matter ought to be remitted to 3rd respondent for fresh consideration.
The impugned passed by the 3rd respondent for the Assessment period 2010-11 to 2013-14 is set aside - the Stay application filed by the petitioner in the Appeal filed by it before the 3rd respondent is restored to the file of the 3rd respondent - Petition allowed.
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2020 (8) TMI 606
Grant of reimbursement equal to the amount of taxes deposited by the petitioner by way of subsidy - Industrial Incentive Policy, 2006 - transfer the funds on the head of subsidy towards admitted tax paid on account of Bihar VAT Act, Bihar Entry Tax Act as also the Central Sales Tax Act to the Sales Tax Department - It is the submission of the learned senior counsel for the petitioner that the clarification to clause 2 (vi) of the Industrial Incentive Policy, 2006 read with Annexure-III of the said Incentive Policy makes it amply clear that the subsidy/ incentive is to be granted both on VAT as also on Bihar Entry Tax.
HELD THAT:- It is found from a bare perusal of the Industrial Incentive Policy, 2006 and the Annexures thereto that the said Policy, as notified in the gazette on 25.07.2006, under clause-2(vi) provides for availing 80% reimbursement by the new units, against the admitted VAT amount deposited in the account of the Government, for a period of ten years and the clarification thereof admittedly postulates that incentive would not be payable on the amount imposed as penalty and the difference of amount between tax assessed and accepted under the Central Sales Tax/Bihar Value Added Tax Act, 2005 and Bihar Entry Tax Act, meaning thereby that the incentive would be payable on the rest of the amount under the aforesaid three types of taxes i.e. Central Sales Tax, Bihar Value Added Tax and the Bihar Entry Tax. Moreover, Annexure-III to the Industrial Incentive Policy, 2006 contains the format of pass-book to be maintained for the purposes of claiming the incentive under clause-2(vi) and the same takes into consideration the amount of tax admitted under the Bihar Value Added Tax Act as also the amount paid against the amount of tax admitted under the Bihar Entry Tax Act, hence, there is nothing left for either speculation or determination or adjudication and the plain meaning thereof would definitely have only one connotation i.e. subsidy/ incentive would not only be available on VAT but also on Entry Tax.
It is amply demonstrable that the State Government has envisaged to give subsidy/incentive, under the Industrial Incentive Policy, 2006, qua the amount of admitted VAT, which apparently also includes Bihar Entry Tax. This Court is of the view that merely the heading of a provision/clause cannot be relied upon since the same is not always determinative in the matter of interpretation of the policy and the language of the provision coupled with the policy as a whole must be looked into and if the language employed is clear, unambiguous and unequivocal, it must be given effect to, notwithstanding the fact that certain portion of the heading may be inconsistent with the substantive provision.
Thus, upon a wholesome reading of the entire Industrial Incentive Policy, 2006 along with its Annexures, this court finds that the provisions contained in the Industrial Incentive Policy, 2006 regarding grant of subsidy/incentive on VAT/Entry Tax is clear, unambiguous as also unequivocal and the only meaning and effect thereof is that subsidy/incentive is to be granted on payment made towards admitted Tax on account of Bihar VAT Act, Bihar Entry Tax Act as well as the Central Sales tax Act - It is a well settled law that the doctrine of promissory estoppel is applicable against the government in exercise of its governmental, public or executive functions and the doctrine of executive necessity on the freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel.
The writ petition stands allowed with a direction to the respondents to grant subsidy / reimbursement to the petitioner under the Industrial Incentive Policy, 2006, qua the payments made by it towards admitted Tax under the Bihar VAT Act, Bihar Entry Tax Act and the Central Sales tax Act, for the relevant period for which the petitioner is entitled to, within a period of three months of receipt/production of a copy of this Order.
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2020 (8) TMI 605
Mechanism for settlement of disputes - validity of Bihar Tax on Entry of Goods into Local Area For consumption, Use and Sale Therein Act, 1993 - validity of notification enhancing rate of tax - N/N. SO 95 dated 31.07.2008 - enactment of yet another legislation, i.e., Bihar Settlement Taxation Disputes Act, 2019 - HELD THAT:- The Act does not postulate any settlement subject to the outcome of any order/judgment passed by any judicial or quasijudicial authority. It is complete and independent legislation with a specified object and purpose of settlement of disputes of different nature and categories - It is not in dispute that under such statutory right, Petitioner, within the prescribed time, applied for the settlement of a dispute in Form-I. It is also not in dispute that specific queries were raised by the Prescribed Authority, which also was answered by the Petitioner vide detailed response annexed to the Petition (s). However, the Petitioner application stands rejected vide impugned order dated 25.06.2020.
The Hon’ble Apex Court in M/S. DHARAMPAL SATYAPAL LTD. VERSUS DEPUTY COMMISSIONER OF CENTRAL EXCISE, GAUHATI & OTHERS [2015 (5) TMI 500 - SUPREME COURT] has elaborately discussed and laid down different facets of principles of natural justice, including the requirement of passing a reasoned order. Of course, such principles need to be applied to attending facts and circumstances, which in the instant cases, we find to apply with equal force.
The Prescribed Authority does not assign any decipherable reason in rejecting the application. Hence, in our considered view, there is non-application of mind, much less consideration of material placed by the party in support of its claim for settlement under the Act - We may observe that with intent to put an end to the entire litigation, spread over more one and a half decades, and Petitioner sought to exercise its right under Law, which, unfortunately, appears to have been scuttled by the Prescribed Authority without application of mind.
The Prescribed Authority are directed to decide the Petitioner's application afresh by assigning reasons - petition allowed.
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