NOTIFICATION
dgft18not001
Export Policy of Edile Oils-Removal of prohibition on export of all varieties of Edible Oils, except Mustard Oil, till further orders
CASE LAWS
2018-TIOL-123-SC-VAT
EMPEE DISTILLERIES LTD Vs CCT: SUPREME COURT OF INDIA (Dated: April 6, 2018)
Tamil Nadu VAT - Writ - Section 3(4), 21, 22, 42(4) & 45(1)(b) and Rules 7(1)(a), 7(1)(b) & 9(4).
Keywords - Collection of tax by dealer - Payment of tax dues in installment
The assessee company was engaged in manufacture of Indian Made Foreign Liquor, duly licensed by the State Govt., and supplying it to Tamil Nadu State Marketing Corporatio, Chennai. During the relevant AY, the assessee company claimed there to be an increase in the cost of the manufacture of liquour, transport charges, electricity consumption charges, and the purchase price of IMFL fixed in November 2007, revised after seven years, was not enhanced. The assessee claimed its sales turnover to be about Rs. 75 crores per month, including excess duty and VAT @ 58%, u/s 21 of the Act. Before the writ Court, the assessee claimed that due to increase in production cost, on the one hand and selling price remaining static for a considerable period, the assessee suffered financial crisis, which led to the delay in payment of tax on the date of filing of returns. Finally, the assessee was made liable to pay Rs. 32,63,17,472/- & interest for the month of March 2017. Failure to pay such amount went on to freeze the assessee company's finances. When the assessee approached Writ Court, it was allowed to pay the tax dues in four installments, considering that the assessee faced severe financial crisis. However, on writ appeal by the Department, it was held that no assessee can seek permission to pay tax dues in installments, if the statute did not permit for such facility.
Having heard the parties, the Supreme Court condoned the delay and issued notice to respective parties directing their apperences for further hearing on the issue of "payment of tax dues in installment".
Notice issued
2018-TIOL-122-SC-IT
PR CIT Vs NTPC TAMIL NADU ENERGY CO LTD: SUPREME COURT OF INDIA (Dated: April 2, 2018)
Income tax -borrowed funds - interest expenditure - nexus with business activity
The Assessee is a power plant. During the relevant year, it had advanced money to the contractors for smooth working out of the interest bearing borrowed funds. The AO however disallowed this payment made to contractors, by holding such expenditure was not related to assessee's business. The matter went on to appeal before before the ITAT where it was held that the interest income return reported during A.Y 2010-2011 was inextricably linked with the object of setting up of assessee’s power plant. When the matter reached High Court, it was opined that an identical question was considered in previous A.Y 2008-2009 in ITA 915/2015 & ITA 66/2015 by a bench of same court wherein the Department's appeal was rejected, and hence no question of law remained for further consideration.
Having heard the parties, the Supreme Court condoned the delay and granted leave to the Revenue Department to defend their case on the issue of "viability of interest expenditure, if incurred in connection with business".
Leave granted
2018-TIOL-121-SC-IT
PR CIT Vs DLF HOTEL HOLDINGS LTD: SUPREME COURT OF INDIA (Dated: April 6, 2018)
Income Tax - Section 14A
Keywords - disallowance u/s 14A - writ interference
The Assessee company had filed its return after making suo moto disallowance of Rs.2,28,777/-. During assessment, the AO however did not expressly record reasons for rejection of that figure and instead proceeded to disallow a sum in excess of Rs. 5,61,02,732/-. On appeal, the DRP reduced this figure to Rs. 2,56,62,215/- which was ultimately rejected by the ITAT by placing reliance upon the judgment of this Court in Cheminvest Limited v. CIT - 2015-TIOL-2070-HC-DEL-IT and ACB India Limited v. ACIT 374 ITR 108 = 2015-TIOL-872-HC-DEL-IT. When the matter reached High Court, it was opined that since the ITAT has relied upon the judgments of this Court which have explained the scope of Section 14A in such circumstances, no question of law arises.
Having heard the parties, the Supreme Court dismisses the SLP in view of the decision rendered by this Court in Commissioner of Income Tax 5 Mumbai vs. M/s. Essar Teleholdings Ltd - 2018-TIOL-41-SC-IT and other connected matters, wherein it was held that operation of Rule 8D for allocating expenditure in relation to exempt income is prospective in nature.
Revenue's SLP dismissed
2018-TIOL-635-HC-KAR-VAT + Story
ORIENTAL CUISINES PVT LTD Vs DCCT: KARNATAKA HIGH COURT (Dated: April 2, 2018)
Karnataka Value Added Tax (KNVAT) Act, 2003 - Writ - Sections - 15(1)(c), 39(1) & Rules 9(1), 135, 137, 145.
Keywords: Composition scheme - Composition facility - Composition certificate - Inter-state purchase - Input tax credit - Purchase & sale of liquor - Principal place of business - Specific brand name & VAT scheme.
The Assessee-company, a registered dealer, engaged in the business of hotel industry and running a chain of restaurants specialized in different cuisines operating in various States. The Assessee had filed its return for the relevant AY. In the course of the assessment proceeding, the Revenue noted that the Assessee had opted for Composition Scheme u/s 15(1) relating to only two types of outlets, namely 'The French Loaf' & 'Wangs Kitchen'. In the outlet, run under the brand, 'The French Loaf', the Assessee was selling bakery products whereas in the outlet run under the brand name 'Wangs Kitchen', they cater only to chinese cuisine. The Assessee submitted that in both these outlets, no liquor was served to the customers. In the other two outlets namely, 'Benjarong' which caters to Thai cuisine and 'Entekeralam' which caters to Kerala cuisine and 'Teppan' which caters to Japanese cuisine, alcohol was also served. Further, it was found that the registration certificate was issued to the said effect. The Assessee was duly paying VAT at 14% and regularly filed monthly returns in Form VAT 120 in respect of the said two outlets. However, the said composition facility (COT) which was granted by the Department was cancelled by the Assistant CCT by stating that the Assessee was dealing in liquor either at the principal place of business or branches. Therefore, the Assessee was not entitled to opt for composition scheme u/s 15(1)(c).
Later, the Assessee's place of business was inspected by the Enforcement Wing whereby, it was noticed that the Assessee was filing returns under the COT Scheme. Nevertheless, the Assessee was also engaged in inter-state purchase of capital goods, raw materials and had also effected purchase and sales of liquor against excise license CL-9. Accordingly, re-assessment proceeding was initiated by disallowing the input tax credit (ITC) and enhancing the tax liability with penalty and interest.
In Writ, the High Court held that,
Whether the Department can initiate re-assessment proceeding against a registered dealer under the VAT scheme even if, the Composition tax registration certificate issued u/s 15 of KVAT Act has not been cancelled - NO: HC
Whether the Revenue can impose tax upon a registered dealer under the VAT Scheme during the subsistence of the composition certificate issued u/s 137 merely because it was not carrying its liquor business in other outlets - NO: HC
in the principal place of business where the Assessee was carrying on business of food items, he was also selling liquor, it was thus held that the Assessee did not want to carry his business with liquor in other places, he made a request for a separate registration so that he can have the benefit of scheme of composition. In that context, it was held that the Assessee is entitled to said benefit only when he satisfies the requirement of Rule 47(1). The said judgment would not lend any assistance to the Revenue to levy tax under the VAT Scheme during the subsistence of the composition certificate issued u/s 137;
++ form VAT 7 under the Rule 9(1) was issued to the Assessee permitting it to opt for payment of tax under the composition scheme u/s 15 under the category Hotelier / Restaurateur / Caterer / Sweet meat stall / Bakery/Icecream Parlour. The amendment certificate issued on 30.03.2014 is valid from 01.04.2014. Pursuant to the inspection conducted by the enforcement wing on 16.12.2015, whereby it was noticed that the Assessee was filing the returns under the composition scheme and has effected inter-state purchase of raw-material, capital goods on the strength of "e-Sugam" and 'C' Form and has also dispatched the manufactured goods to other states and the Assessee has effected the purchase and sale of liquor under the excise license CL-9, Re-assessment proceedings u/s 39(1) were initiated and concluded, re-assessing the dealer under the VAT Scheme for the tax period 2014-15. Notice dated 22.06.2015 issued u/s 15(1)(c) indicates that the proposal was to cancel COT facility with immediate effect. Similarly, order of cancellation dated 22.07.2015 indicates COT facility granted is cancelled and Assessee is enabled to file VAT 100 returns w.e.f. 01.08.2015;
++ the Authority has not cancelled the composition scheme certificate retrospectively w.e.f. 01.04.2014, if the Assessee has contravened the conditions specified u/s 15 and Rule 135 or from the date of contravention whichever is applicable. The proposition notice issued u/s 39(1) was issued on 7.9.2016 to which detailed reply was filed by the Assessee. On consideration of the objections and rejecting the same, re-assessment proceedings were concluded, assessing the Assessee under VAT Scheme for the tax period 1.4.2014 to 31.3.2015 subjecting the taxable turnover to levy of tax at 14.5% rejecting the composition scheme;
++ it is beneficial to refer to the Division Bench Judgment of this Court in the case of M/s. IDEAL TRADERS CREAM PARLOUR PVT. LTD. and connected matters dated 4.10.2012, whereby this Court has held that "... the Assessee are registered under the KVAT Act and opted for Composition Tax Registration Certificate. The said certificate has not been cancelled by the competent authority. So long as the Composition Tax Registration Certificate stands in the name of the Assessee, the Revenue cannot levy tax u/s 4(1)(b) ..." ;
++ similarly, in the case of ABIDHEEP INTERLOCK PAVERS PVT. LTD., the Division Bench of this Court has held that "... As the certificate issued under Rule 137 has not been cancelled, the dealer herein would be entitled to continue with the benefit u/s 15 on composition of tax. It is only after the certificate is cancelled by exercise of the power under Rule 145, the assessment or re-assessment can be made in respect of the dealer, who has opted for composition of tax ..." ;
++ in the case of M/S. ASWATI INNS PRIVATE LIMITED, the Division Bench has held that on an application filed by the Assessee exercising the powers u/s 38(6), permission was granted to treat each of the places of business as a separate unit for the purpose of levy assessment and collection of tax and thereupon all the provisions of the Act regarding registration, filing of returns, assessment and collection of tax was made applicable. However, the said provisions made it very clear that where a dealer is a body corporate and has more than one place of business and if it so desires, the Commissioner may on an application from it and on being satisfied that the provisions are likely to cause hardship, by a special order, grant such permission subject to the condition as may be prescribed by him in terms of the Act and its Rules. In the said case, in the principal place of business where the Assessee was carrying on business of food items, he was also selling liquor, it was thus held that the Assessee did not want to carry his business with liquor in other places, he made a request for a separate registration so that he can have the benefit of scheme of composition. In that context, it was held that the Assessee is entitled to said benefit only when he satisfies the requirement of Rule 47(1). The said judgment would not lend any assistance to the Revenue to levy tax under the VAT Scheme during the subsistence of the composition certificate issued u/s 137;
++ therefore, it is clear that unless the certificate issued under Rule 137 has not been cancelled, the Assessee herein would be entitled to continue with the benefit u/s 15 on composition scheme. Indisputably, the order of cancellation of composition scheme facility has been passed on 22.07.2015 with immediate effect. It is also made clear that VAT option is enabled to file VAT- 100 returns w.e.f. 1.8.2015. Even in the notice, for cancellation of composition scheme, it was proposed to cancel the COT facility with immediate effect. The same coming into effect from 22.07.2015, the Prescribed Authority has no power to assess the Assessee under VAT Scheme for the period when the composition certificate issued under Rule 137 was in existence. Rule 137 provides for issuance of certificates. The certificate issued under Rule 137 entitles the Assessee to make payment in terms of composition scheme at 4% unless the same is cancelled in terms of Rule 145. Indisputably, the certificate issued under Rule 137 was not cancelled during the tax period April 2014 to March 2015. Hence, for the period in question, no re-assessment can be made u/s 39(1) subjecting the Assessee to tax under VAT Scheme.
Assessee's Writ petition allowed
2018-TIOL-506-ITAT-PUNE
VODAFONE CELLULAR LTD Vs DCIT: PUNE ITAT (Dated: March 12, 2018)
Income Tax - 194H, 201(1), 201(1A) & 201(3).
Keywords - Limitation - Non deduction of TDS.
THE assessee-company is a leading provider of telecommunication services. During the relevant AY, the assessee was subjected to Survey proceedings u/s 133A to verify compliance with TDS provisions. The assessee provided both prepaid and postpaid services. On verification, the AO noted that the assessee paid commission to all dealers except distributors. The assessee claimed that sale to the distributors was at MRP less trading margin and there was no commission being paid. However, the AO held the assessee to be in default for not deducting tax at source out of discount allowed to the distributors, which fell within provisions of section 194H of the Act. Thereafter, order was passed u/s 201(1) & 201(1A) raising duty demand with interest. Such demand was confirmed by the CIT(A). Hence the present appeal.
On hearing the matter, the Tribunal held that,
Whether duty demand for non-deduction of TDS can be raised beyond the seven-year statutory period provided u/s 201(3) - NO : ITAT
++ considered the provisions of Section 201(1) and Section 201(3) of the Act. The scheme of the Act provides that no order u/s 201(1) of the Act shall be passed after expiry of two years from the end of financial year in which TDS statement had been filed. The assessee in the present case had filed the first TDS return for the first quarter on 19.07.2008, for the second quarter on 15.09.2008 and for the third quarter on 15.01.2009 i.e. returns were filed in the financial year 2008-09, hence the order u/s 201(1) of the Act had to be passed upto 31.03.2011. However, the AO has passed present order on 15.03.2012 i.e. beyond the period prescribed in section 201(3) of the Act at the relevant time. The said section has been amended by Finance (No.2) Act, 2014 w.e.f. 01.10.2014 and the time limit provided in section 201(3) of the Act is now increased to seven years. The Memo explaining the provisions relating to Direct Taxes has clarified the earlier position of section 201(3) of the Act and it is provided that clause (1) of section 201(3) of the Act provided that no order u/s 201(1) of the Act shall be passed after the expiry of two years from the end of financial year in which TDS statement had been filed. Then, it refers to processing of TDS statement and the computerized environment and TDS defaults in respect of transactions not reported in TDS statements and hence, it was proposed to omit clause (1) of section 201(3) of the Act, which provided time limit of two years for passing the order under section 201(1) of the Act for cases in which TDS statements had been filed. The present section 201(3) of the Act provides the limit for passing the order to be within seven years from the end of financial year in which the payment was made or credit was given. Accordingly, it is held that order passed by the AO raising the demand u/s 201(1) of the Act is beyond the limit provided in sub-section (3) of the Act for quarter Nos.1 to 3. However, the return for quarter No.4 was filed on 15.06.2009 i.e. in financial year 2009-10 and the order raising the demand u/s 201(1) of the Act is passed on 15.03.2012 i.e. before expiry of two years from the end of financial year in which TDS return was filed and hence, the same has been filed within time. Thus, the AO is directed to delete the demand raised for quarter Nos.1 to 3 and sustain the demand for quarter No. 4. However, u/s 201(3) of the Act, no limit is provided for passing order charging interest under section 201(1A) of the Act, hence the assessee is liable to pay interest u/s 201(1A) of the Act and the said order of AO is upheld. The ground of appeal No.1 raised by the assessee is thus, partly allowed.
Assessee's Appeal Partly Allowed
