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CGST RULE NOTIFICATION
21/2018
Notification seeks to make amendments (Fourth Amendment) to the CGST Rules, 2017
CASE LAWS
2018-TIOL-734-HC-MAD-IT
CIT Vs SRI VASAVI GOLD AND BULLION PVT LTD: MADRAS HIGH COURT (Dated: February 20, 2018)
Income Tax - Sections 43(5), 45(5)(d) & 73(4)
Keywords - Business income - Multi Commodity Stock Exchange - Set off - Trading in derivatives
THE assessee-company, engaged in trading of commodities, filed returns for the relevant AY, claiming some loss in open market trading. On assessment, the AO disallowed the assessee's claim to set off such loss against the normal business income, on grounds that the assessee had failed to prove that the transactions had been done through a recognized stock exchange. The AO also noted that such transaction was not supported by proper time stamped contract notes & that the transaction did not qualify as an eligible transaction. The AO also noted that even otherwise, the assessee would be ineligible for claiming such losses in view of Explanation to Section 73, under which the company had to be treated as in the speculative business to the extent of which the income was derived from speculative transaction.
On appeal, the CIT(A) held that the transactions in F&O & derivative segments were made with the support of contracts notices having unique client identity number, and that the transaction were to be carried out through recognised stock exchange. Hence the CIT(A) held such transactions to be eligible u/s 43(5), and that the derivatives could not be treated as shares. Thus the CIT(A) held that such transactions be excluded from the Explanation to Section 73(4). Hence, the CIT(A) directed the AO to delete disallowance of loss incurred. Subsequently, the Tribunal dismissed the Revenue's appeal. Hence the present appeal by the Revenue.
On hearing the matter, the High Court held that,
Whether loss incurred from trading in derivatives can be set off against business income, where the transactions are carried out through Multi Commodity Stock Exchange - YES: HC
++ main issue on which arguments were advanced before this Court is with regard to addition of Rs.60,66,466/- (loss on open market trading) made by the AO to the income of the assessee. According to the AO - (i) as per Section 45(5)(d) of the Income Tax Act, the transaction carried out by the assessee cannot be considered as 'eligible transaction' and the same has to be treated as 'speculative transaction' and (ii) irrespective of the fact whether the transactions are covered by the definition of 'eligible transaction' and the assessee will not be eligible for set off and carry forward of the loss of Rs.60,66,466/- in view of Explanation to Section 73 of the Income Tax Act. Considering the provisions of Section 43(5)(d) and Explanation to Section 73, it must be seen as to whether Section 43(5) of the I.T. Act will apply to the facts and circumstances of the case. Section 43(5) deals with 'speculative transaction' and any income derived from the same will be computed under the head "income from profits and gains of business or profession". Proviso (d) to Section 43(5) gives exemption to an eligible transaction in respect of trading in derivatives carried out in a recognised exchange.
++ on the facts and circumstances of this case, the transaction done by the assessee is not a speculative transaction but it only comes under provios (d) to Section 43(5) of the Act thereby it is only a non speculative transaction and thus exempt from tax. Section 73 of the I.T. Act deals with "losses in speculation business". Explanation to Section 73 categorically states that in the case of a company, business of purchase and sale of shares is deemed to be speculative business. Here, in the instant case, the assessee had suffered loss in trading of derivatives carried through Multi Commodity Stock Exchange. As derivative transactions being separate from trading in shares, provisions of Explanation to Section 73 will not be applicable to such transactions and hence, the loss incurred by the assessee in derivative transactions through recognised stock exchange has to be set off against other business income as per provisions of the Act. Therefore, this Court concurs with the decision taken by the Appellate Tribunal as well as the Commissioner of Income Tax (Appeals) in rejecting the view taken by the Assessing Officer to add Rs.60,66,466/- as loss, on open market trading to the income of the assessee.
Revenue's Appeal Dismissed
2018-TIOL-732-HC-KAR-IT
GOOGLE INDIA PVT LTD Vs DCIT: KARNATAKA HIGH COURT (Dated: April 10, 2018)
Income Tax - Writ - Sections 156, 201(1) & 201(1A).
Keywords - Bank guarantee -Interim order - Notice of demand.
The assessee filed writ seeking a direction not to enforce the demand till the disposal of the appeal filed before the Tribunal. The grievance of the assessee was, appeal filed by the Assessee before the Tribunal relating to the AY 2011-12 against the order u/s 201(1) and 201(1A) of the Act had not been disposed of, culminating in the demand raised by the Revenue.
In writ petition, the High Court held that,
Whether a fresh writ petition is maintainable when the interim order of the Tribunal asking for pre-deposit has already merged with the dispoal order of the writ court granting relief to the assessee - NO: HC
+ on the application filed by the assessee for extension of interim order, the Tribunal placing reliance on the Judgment of the Court in Writ Petition modified the extended interim order, to deposit 55% of the demand and to retain the balance of another 20% in the account of the assessee maintained with Citi Bank, M.G. Road Branch, Bengaluru. The said order was challenged by the assessee in Writ Petition and connected matters which came to be disposed of on 13.12.2017, modifying the order of the Tribunal to the effect that the assessee shall pay 20% to the Department since 30% of the outstanding dues has already been paid, for the balance of 25%, the assessee shall furnish bank guarantee on or before 31.12.2017. This order of the Single Judge was affirmed by the Division Bench of Court. Hence the interim order of the Tribunal challenged in this petition merges with the order passed by Court in earlier writ petitions. Hence, present petition deserves to be dismissed.
Assessee's writ petition dismissed
2018-TIOL-733-HC-MAD-CUS
RAVINDRA KUMAR Vs CC: MADRAS HIGH COURT (Dated: April 06, 2018)
Cus - The petitioner seeks for relief directing the respondents to remove the seal affixed at petitioner's warehouse and for a further direction to return the consignments which were illegally confiscated by respondents from their warehouse - The respondent filed a counter affidavit stating that there is a chain of illegal operations and petitioner is playing an important role removal of SIIB detained goods by providing godown for keeping smuggled goods in his rented godown and later taken on delivery in smaller vehicles - In this connection, respondent has issued summons to petitioner to appear for an enquiry - Respondent is directed to issue fresh summon to petitioner and the petitioner is directed to co-operate with the investigation to complete the enquiry: HC
Writ petition disposed of
2018-TIOL-725-HC-MUM-ST
CHETESHWAR ARVIND PUJARA Vs UoI: BOMBAY HIGH COURT (Dated: April 10, 2018)
ST - The petitioner is a businessman and he plays international cricket representing India - An intelligence was gathered, inquiry made and the summons issued, summoning the petitioner for inquiry which culminated in an order against the petitioner, but what the petitioner terms is entirely one sided exercise contrary to principles of natural justice - The petitioner could not attend the hearing on account of his personal difficulties and professional commitments - Issue pertains to SCN issued on 4th November, 2011 and the period covered is 1st October, 2008 to 30th September, 2011 - Thus, this was a demand of service tax - Once the SCN was issued, assessee filed a reply on 30th May, 2012, then, the assessee pointed out that there were certain professional commitments - That is why he sought condonation of delay caused in filing of the appeal - That is how the hearing was scheduled in second week of July, 2012 - After the SCN was issued and petitioner requested that the matter be taken up post second week of July, 2012, then, court do not see how the order was passed, particularly when the petitioner was notified the dates of hearing on 16th, 19th and 20th November, 2012 - It is thus uncalled for and avoidable urgency and expediency in disposal of proceedings, which prompts the court to interfere with the order - When part liability of three lakhs has already been paid by petitioner, rights and equities can be balanced by petitioner being called upon to meet 50% of demand in SCN - The petitioner should, therefore, deposit a further sum of Rs.5 lakhs - On such deposit, order of adjudicating authority would stand quashed and set aside: HC
Petition partly allowed
2018-TIOL-724-HC-MAD-ST
EXECUTIVE OFFICER Vs CCE: MADRAS HIGH COURT (Dated: April 03, 2018)
ST - Finance Act, 1994 - Renting of Immovable Property - demand of Rs.19,75,068/- confirmed along with 25% penalty - petitioner challenging the same.
Held: Petitioner, Executive Officer of Town Panchayat has not objected to the demand and has accepted to pay the same within thirty days, therefore, no useful purpose would be served in directing the first respondent viz. Commissioner(Appeals) to consider petitioner's appeal petition since the same is hopelessly barred by time as there was a delay of 365 days in filing the appeal moreso since the Commissioner(A) has no power to condone such delay - Petition is, therefore, dismissed - however, taking into consideration that the petitioner is a Selection Grade Town Panchayat, and as of now, there is no elected body functioning and Executive Officer is in charge of the Town Panchayat, the second respondent shall grant reasonable time to enable the petitioner/Town Panchayat, to remit the service tax dues in monthly installments - Petitioner to make representation to Deputy Commissioner and appropriate orders be passed - If the petitioner makes an upfront payment of part of the service tax dues, as determined by the second respondent, the attachment of the petitioner's bank account shall be lifted, as it would hamper the functioning of the Town Panchayat - Miscellaneous petition is closed: High Court [para 3, 4]
Petition dismissed
2018-TIOL-723-HC-MAD-CUS
PNP POLYTEX PVT LTD Vs ACC: MADRAS HIGH COURT (Dated: April 4, 2018)
Cus - The petitioner has impugned an O-I-O despatched on 08.08.2014, rejecting the application filed by petitioner for grant of refund of 4% SAD paid for import of PVC coated cloth for imports effected during 2001 - The only reason for rejection of refund application is on the ground of nonfulfillment of condition 2(b) of Notfn 102/2007-Cus which states that importer, while issuing the invoice for sale of said goods shall specifically indicate in invoice that in respect of goods covered therein, no credit of additional duty of customs levied under sub-Section (5) of Section 3 of CTA, 1975 shall be admissible - The proceedings were communicated to the incorrect address and they had no notice of proceedings - Apart from that, before rejecting the petitioner's claim, it appears that no notice of hearing was issued to petitioner - Though the statute does not mandate an opportunity of personal hearing, as impugned order rejecting the petitioner's claim results in civil consequences, principles of natural justice have to be read into the provisions and the petitioner should have been afforded an opportunity, as the impugned order is an order of adjudication - It has to be seen as to whether mere noncompliance of a condition affixing rubberstamp seal on invoice would defeat the very refund claim - Same was considered by Larger Bench of CESTAT in Chowgule & Company Pvt. Ltd. 2014-TIOL-1191-CESTAT-MUM-LB and the Tribunal considered some what similar case as that of the petitioner pertaining to a commercial invoice and not a tax invoice - It appears that the decision would bind the Revenue, and the decision having been rendered on 24.06.2014, the authority ought to have taken note of said decision - Thus, application filed by petitioner for refund should be reconsidered on merits and in accordance with law: HC
Writ petition allowed
2018-TIOL-722-HC-MAD-CUS
RAJ BROTHERS SHIPPING PVT LTD Vs CC: MADRAS HIGH COURT (Dated: April 11, 2018)
Cus - Appellant assailed the correctness of order-in-original and made submissions, as rightly ordered by the writ Court, facts cannot be gone into when there is an effective and alternate remedy of challenging the order-in-original, before CESTAT, Madras - Plea that on presumption that the order-in-original has been passed by revoking Customs Brokers Licensing Regulations, 2013, cannot be countenanced at this stage - On more than one occasion, Supreme Court as well as this Court, held that when there is an effective and alternate remedy, provided under the taxing laws, writ petitions, should not be entertained - Order of the writ Court made in W.P. dated 10.10.2017, directing the appellant to avail the alternate remedy provided under the statute, cannot be said to be manifestly illegal warranting interference: HC
Writ appeal dismissed
2018-TIOL-577-ITAT-MUM
AMOD SHIVLAL SHAH Vs ACIT: MUMBAI ITAT (Dated: February 23, 2018)
Income Tax - Section 133A.
Keywords: Audited accounts - Estimated income - Incomplete account books - Survey - WIP.
The Assessee is an individual and engaged in the business of builders and developers through a proprietary concern, M/s. Nikita Constructions. A survey action u/s 133A of the Act was carried out at the business premises of the assessee in the course of which a statement of the assessee was also recorded. At the time of survey, it was noted that the return of income for the AY under consideration as well as for AYs 2004-05 and 2005-06 were not filed. It was also found that the development work of residential building situated at Bandra, Mumbai was complete in view of the Occupancy Certificate issued by the Municipal Corporation but no income had been declared by the assessee. In response, the assessee submitted that no return of income for such AYs were filed and that the income from said project could be computed by estimating it on the basis of the Work-In-Progress (WIP) declared for AY 2003-04. Therefore, the assessee declared an income of Rs 1 Crore from the said completed project.
Subsequently, the assessee filed a return of income for AY 2006-07 declaring an income of Rs.25,36,440/-, which was accompanied by the audited Balance-sheet and the P& L Account. Since there was a variation between the income offered at the time of survey and that in the return of income declared by the assessee with regard to the earnings from the project, the AO required the assessee to explain as to why the income was not declared at the amount of Rs 1 Crore disclosed at the time of survey. The response of the assessee was that subsequent to the survey, it compiled its accounts, which were got audited and it showed that the estimation made at Rs 1 Crore was incorrect. During the course of assessment, assessee also furnished the reconciliation between the income estimated at the time of survey and that computed on the basis of audited accounts at the time of filing of the return of income. However, the AO was not satisfied and concluded that the assessee ought to have declared the income from project at Rs 1 Crore as against Rs.25,36,440/- declared in the return of income and thus, he added back the sum of Rs.74,63,557/- to the returned income. The CIT(A) has also affirmed the addition made by the AO, against which the assessee is in further appeal before the Tribunal.
On appeal, the Tribunal held that,
Whether estimated income offered at the time of survey, based on incomplete account books, have any binding force - NO: ITAT
Whether therefore, in case of variation between the income offered at the time of survey and that declared after finalising audited accounts, the latter shall prevail - YES: ITAT
++ there is no dispute that when the survey action took place on 12.03.2007, the account books of the assessee were incomplete and the returns of income for Assessment Years 2004-05 to 2006-07, i.e. including for the assessment year under consideration, were not filed. It is also not in dispute that the project undertaken by the assessee, namely, "Nikita Enclave" was complete in view of the Occupancy Certificate dated 31.10.2005 issued by the Municipal Corporation. It is also not in dispute between the assessee and the Revenue that the income thereof, on completion of the project, was liable to be declared during the previous year relevant to the assessment year under consideration, i.e. 2006-07. The manner in which assessee proceeded to offer the income at the time of survey, on an estimate basis has already been reproduced in the earlier part of this order. Quite clearly, the estimation is based on the value of the WIP as appearing on 31.03.2003, and the expenses have also been estimated for Assessment Years 2004-05 to 2006-07. Assessee adopted the sale proceeds of the project at Rs.3,47,12,500/- and, after computing the total expenditure of Rs.2,49,36,202/- (comprised of WIP as on 31.03.2003 of Rs.2,43,36,202 + expenses for Assessment Years 2004-05 to 2006-07 of Rs.6,00,000), the income of the project was determined at Rs.99,76,298/- and thereby an income of Rs.1,00,00,000/- was declared. Quite clearly, the income offered at the time of survey was on an estimate basis, which cannot be disputed by the Revenue;
++ the return of income was accompanied by the statement of total income, including the audited Balance-sheet and Auditors report prescribed u/s 44AB of the Act. When assessee was show-caused during the assessment proceedings, assessee explained the basis on which the income was drawn-up at the time of filing of return and assessee also explained the reasons for the difference between the income offered at the time of survey and that declared in the return of income. The said reconciliation has been reproduced in the earlier part of this order and it clearly reflects that the difference is on two counts, namely, (i) sale proceeds were adopted at Rs.3,47,12,500/- at the time of survey as against Rs.3,06,97,827/- taken in the audited accounts; and (ii) expenditure for Assessment Years 2004-05 to 2006-07 was estimated at the time of survey as Rs.6,00,000/- as against Rs.45,58,230/- adopted in the audited accounts. Broadly speaking, the explanation of the assessee was that the sale proceeds taken in the audited accounts are based on the registered sale agreements executed with the flat buyers and, therefore, the same could not be doubted. So far as the difference in the expenditure was concerned, it was claimed that the amount taken in the audited account was evidenced by vouchers, documents, etc. and, therefore, could not be flawed;
++ the stand of the assessee is much more convincing since the original declaration itself is not based on any books of account or supporting documents, but was merely an estimate, whereas the return of income has been filed on the basis of audited accounts and the principal areas of difference, namely, the amount of sale proceeds and the expenditure are duly supported by relevant documents. The Assessing Officer notes in the assessment order that the books of account and the supporting vouchers were not produced, an aspect which has been contested by the assessee. So, however, even if one is to go along with the said observation of the Assessing Officer, yet, thereis no merit because during the course of remand proceedings directed by the CIT(A), assessee had produced the relevant material, which was thus available to the Assessing Officer for verification. There is no adverse finding on the merits of the claim made by the assessee. So far as the sale proceeds adopted in the audited accounts are concerned, the same is based on the agreements of sale entered with the different flat buyers and there is no negation of the same. Therefore, the manner in which the declaration was made at the time of survey, which ostensibly was de hors any supporting documents, was not something which could be conclusively held against the assessee in the face of the claims made by the assessee in the return of income, which were based on audited accounts and the supporting documents. Thus, on this aspect, we are inclined to uphold the stand of the assessee.
Assessee's appeal allowed
2018-TIOL-571-ITAT-DEL
RED ICE PRODUCTIONS PVT LTD Vs PR CIT: DELHI ITAT (Dated: April 03, 2018)
Income Tax - Sections 143(3) & 263
keyword : Erroneous and prejudicial, Proportionate disallowance, proportionate expenses
The assessee company is involved in film-making. It returned an income of about Rs 2.61 Crore. The AO wrapped up the assessment u/s 143(3). However, the CIT issues a notice based on communication received from the ITAT DR, pointing out that no proportionate disallowance out of indirect expenses claimed in P&L account in computing the work in progress was made for the A.Y. 2011-12. Similar disallowance was made earlier in the past in the case of the assessee. Based on the inputs, the CIT invoked powers u/s 263 and made disallowance of over Rs 27 lakh. The assessee filed detailed objections in reply to the SCN issued by the CIT.
On appeal, the ITAT held that,
Whether when the AO has failed to apply its mind about the items that have gone into the valuation of closing stock and also the fact that a similar issue is being litigated by the Revenue relating to other AYs, it makes a fit case for invocation of provisions of Sec 263 - YES: ITAT
++ the necessary enquiries that should have been made by the assessing officer has not been made in the present case. As the order under section 263 of the income tax act has been passed on 8/3/2016 which is after the introduction of explanation 2 to section 263 of the income tax act, we are in agreement with the argument of the CIT departmental representative that the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue as requisites Inquiry which are required to be made for verification has not been made by the assessing officer;
++ we are also fortified by the reason that during the course of assessment proceedings the assessing officer has not made any enquiry about the valuation of the closing stock and has merely asked what is the basis of the valuation of closing stock. There is a subtle distinction between the basis of the valuation of the closing stock and the items, which have gone into the valuation of the closing stock. Furthermore the assessee has only stated that in assessment year 2009 – 10 the issue is pending before the coordinate bench where the issue involved is the valuation of the closing stock of work in progress. Even that does not show that the assessing officer has applied its mind on to determine the cost of the work in progress according to the earlier history of the case of the assessee;
++ as we’ve already held that in the present case the assessing officer has not examined the valuation of the work in progress with respect to the components of the value of the stock. According to us that enquiry has not been made by the assessing officer which are diligent assessing officer should have made more specifically when the identical issue is litigated by the Revenue. In view of this we do not find any infirmity in the order of the CIT in assuming jurisdiction under section 263.
Assessee's appeal dismissed
2018-TIOL-1250-CESTAT-MUM + Story
RAYMOND LTD Vs CST: MUMBAI CESTAT (Dated: March 23, 2018)
ST - Section 66A of the FA, 1994 - Standard Chartered Bank undertook collection of the export proceeds through their office in UK who retained a part of the amount towards collection charges – No ST liability on appellant under reverse charge: CESTAT [para 3]
Appeal allowed
