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Date Of Article : 07/08/2022

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Delhi HC quashes proceedings since Pre-Notice Consultation was mandatory for Demandsabove Rs. 50 Lakhs

Date Of Article : 10/05/2019

Delhi HC quashes proceedings since Pre-Notice Consultation was mandatory for Demands above Rs. 50 LakhsAMADEUS INDIA PVT. LTD. versus PRINCIPAL COMMISSIONER, CENTRAL EXCISE, SERVICE TAX AND CENTRAL TAX COMMISSIONERATE A two-judge bench of the Delhi High Court, while annulling the Service Tax proceedings, held that since the demand is above Rs. 50 lakhs, a pre-notice consultation was mandatory as per the Master Circular issued by the Central Board of Excise and Customs (CBEC). The Petitioner provides computer data processing software, which is used by travel agents and ticket booking entities in the Airline industry. In consequent to a search conducted by the Anti-evasion Unit of the Service Tax Commisionerate, the departmentsaid that the said services are subject to Service Tax. A show cause notice was issued by the department alleging that the tax was not paid on taxable services rendered by the Petitioner.The petitioner claimed that as per a Master Circular issued by the CBEC on 10th March, 2017, a pre-show cause notice consultation was mandatory in cases involving demand of duty above Rs. 50 Lakhs.A reminder was again sent by the Petitioner on 13th November, 2018. When no response was received, the petitioner approached the High Court for relief.The bench comprising of Justice S Muralidhar and Justice Prateek Jalan found that it was necessary in terms of para 5.0 of the Master Circular for the Respondent to have engaged with the Petitioner in a pre SCN consultation, particularly, since in the considered view of the Court neither of the exceptions specified in para 5.0 were attracted.



ARBITRATION

Date Of Article : 11/05/2021

ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2021-IMPACT. Arbitration Act is a full-fledged, self-containedCode by itself. Arbitral Courts very rarely interfere in arbitral awards, unless and until the arbitral award on the face of it is perverse orprima faciehit by one of the grounds of challenge under Section 34(2) of the Arbitration Act. Arbitral Courts have exercised their discretion to allow an application granting stay of Arbitral Awards under Section 36(3)of the Act,by imposing conditions as the Arbitral Courts deems fit and appropriate.The Arbitration and Conciliation (Amendment) Act, 2021 has now added a proviso under section 36(3) wherein: If the arbitral courts areprima faciesatisfied by the case made out of either (i)The arbitration agreement or contract, which is the basis of the award.(or)(ii)The making of the awardwas induced or affected by fraud or corruption. The Arbitral Court shall stay the arbitral award unconditionally pending disposal of the challenge.New Proviso under Section 36(3) of the Act has a retrospective effect and deemed to be effective from October 23, 2015.Given the fact that Section36(3) of the Act has a retrospective effect, it is now open for parties, whose application under 36(2) of the Act are pending adjudication before a courtto make renewed applications based on the grounds listed inthe new The Arbitration and Conciliation (Amendment) Act, 2021.



CRIMINAL LAW

Date Of Article : 01/04/2021

Compromise or Compounding or Quashing or Acquittal of Accused in a predicate offence does not affect the investigations of Enforcement Directorate. Bombay High Court in Babulal Verma and Ors. Vs Enforcement Directorate and Ors.{MANU/MH/0835/2021} has held as follows:1)The language of Sections 3 and 4 of the Prevention of Money Laundering Act,2002 (“PMLA”)make it absolutely clear that, the investigation of an offence under Section 3, which is punishable under Section 4, is not dependent upon the ultimate result of the Predicate/Scheduled Offence. In other words, it is a totally independent investigation asdefined and contemplated under Section 2(na), of an offence committed under Section 3 of the said Act.2)PMLA is a special statute enacted with a specific object i.e.,to track and investigate cases of money-laundering. Therefore, after lodgementof Predicate/Scheduled Offence, its ultimate result will not have any bearing on the lodgement/investigation of a crime under the PMLA and the offence under the PMLA will survive and stand alone on its own. 3)Predicate/Scheduled Offence is necessary only for registration of crime/launching prosecution under PMLA and once a crime is registered under the PMLA, then the Enforcement Directoratehas to take it to its logical end, as contemplated under Section 44 of the Act.4)Section 44(b) only provides for filing of a complaint or submission of a closure report by the Investigating Agency under PMLA and none else.5)........It is clear that, even if the Investigating Agency investigating a Scheduled /Predicated Offence has filed closure report in it and the Court of competent jurisdiction has accepted it, it will not wipe out or cease to continue the investigation of Enforcement Directorate in the offence of money-laundering being investigated by it. The investigation of Enforcement Directorate will continue on its own till it reaches the stage as contemplated under Section 44 of the PMLA.



ARBITRATION

Date Of Article : 01/09/2020

DO ALLEGATIONS OF FRAUD VITIATE THE ARBITRATION AGREEMENT?Hon’ble Supreme Court in the case of Avitel Post StudiozLtd. & Ors. Versus HSBC PI Holdings (Mauritius) Ltd(2020(4)ArbLR1(SC)) has held that cases involving serious and specific allegation of fraud, fabrication of documents, forgery, impersonation coercion etc and the cases involving prosecution for criminal offences shall fall outside the purview of Arbitrationif the specific, serious allegations of fraud fulfil either of the following tests: 1)Does the plea of fraud permeate the entire contract andas a result there of the entire contract/arbitration is void ipso facto?; or 2)Whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain.The first testwill be satisfied only when the Agreement/Arbitration clause cannot be said to exist when the Court finds the agreement itself was void in the first instance (either by way of fraudulent inducement or misrepresentation as defined in Sections 17 and 18 ofthe Indian Contract Act, 1872)The second test can be said to have been met in caseswhere theallegations are made against the State or its instrumentalities are of arbitrary, fraudulent, or malafide conduct, thus necessitating the hearing of the case bya writ court in which questions are raised which are not predominantly questions arising from the contract itself or breach thereof, but questions arising in the public law domain.The aforesaid judgment in Avitel Post Studioz Ltd. & Ors. Versus HSBC PI Holdings (Mauritius) Ltd(2020(4)ArbLR1(SC))makes it clear that: a)if the contract is found to be void in the first instance, the arbitration clause would cease to exist; b)that parties cannot avoid arbitration merely be making allegations that are fraud simpliciter; and c)where there are serious allegations of fraud have a bearing on public law domain, arbitration clause would cease to exist.



COMPANY LAW

Date Of Article : 22-04-2021

STATEMENT OF LIABILITY IN BALANCE SHEET OF THE CORPORATE DEBTOR AMOUNTS TO ACKNOWLEDGMENT OF LIABILITY AND GIVES RISE TO FRESH PERIOD OF LIMITATION U/S 18 OF LIMITATION ACT.Hon’ble Supreme Court of India in the case of Asset Reconstruction Limitedv.Bishal Jaiswal & Anrhasset aside the five-member Bench judgment of the National Company Law Appellate Tribunal (“NCLAT”) in V Padma Kumar v. Stressed Assets Stabilization Fund (the “Padma Kumar case”) and has held that an acknowledgement of liability in the balance sheet of the corporate debtor is an acknowledgment of debt.The Supreme Court also averted to the fact that “the filing of a balance sheet in accordance with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law”. However, what is of importance is that notes that are annexed to or forming part of such financial statements are expressly recognised by Section 134(7) of the Companies Act, 2013. Equally, the auditor’s report may also enter caveats with regard to acknowledgements made in the books of accounts including the balance sheet.It is now apparent that creditors who intend to initiate proceedings under Section 7 and/or 9 of Insolvency and Bankruptcy Code 2016, will need to ensure thata)Borrowers admit the liabilities owned by them to creditors in their balancesheets till the monies along with interest are repaid/settled; andb)There are no Observations/ Objections/Caveats made by the borrowerseither in the notes, auditors report etc with regard to acknowledgment made in the books of accounts including the balance sheet.