NOTIFICATION
dgft18not009
DGFT amends FTP to incentivise exports of handlooms, handicrafts, leather & footwear and marine sectors
GST MEMORANDUM
Regarding Guidelines for Refund Processing under the HGST Act - Standard Operating Procedure for manual application and processing
CASE LAWS
2018-TIOL-1000-HC-CHHATTISGARH-VAT
KISHAN LAL AND COMPANY Vs ADDL CCT: CHHATTISGARH HIGH COURT (Dated: May 17, 2018)
Chhattisgarh Value Added Tax - Writ - Section 49(3) & Rule 61 - Entry Tax Act - Section 13
Keywords - Entry tax - Limitation - Suo motu revision - Re-assessment
THE assessee-company was assessed for the relevant AYs. Subsequently, the assessment orders were revised & fresh orders were passed u/s 49(3) of the Act, wherein duty demand for VAT and Entry Tax were raised. Thus, the assessee filed the present writs, challenging the orders passed for the relevant AYs. Further, writ petitions filed earlier by the assessee also remain pending. These earlier petitions challenged the SCN through which the revision proceedings had been initiated. The Single Judge of the High Court set aside such petitions and remanded the matter for fresh hearing. The assessee claimed that the revisionary order was passed after expiry of one year from the date of issue of SCN and so, was invalid.
In writ, the High Court held that,
Whether SCN seeking to revise assessment orders, is sustainable where it is issued beyond the limitation period prescribed in the Act - NO: HC
Whether for SCN seeking to revise original assessment orders, the limitation period would begin from the date on which re-assessment orders are passed - NO: HC
++ it is settled by the Supreme Court in Commissioner of Customs, Mumbai v Toyo Engineering India Ltd. that the Revenue cannot travel beyond the show-cause notice. Thus, the argument advanced by the counsel appearing for the State that as a matter of fact what is sought to be revised was the re-assessment order and not the original assessment order need not be considered, as the same is not permissible in view of what has been held by the Supreme Court; thus it has to be determined whether the notices dated 14-7-2015 seeking to revise the original assessment orders dated 1-5-2009, 1-5-2010 and 22-1-2008, respectively was within the prescribed time period or not;
++ in the proviso (a) to sub-section (3) of Section 49 of the VAT Act an embargo has been created for the purpose that no proceeding initiating suo motu revision u/s 49 (3) shall be initiated after the expiry of three calendar years from the date of the order sought to be revised. Since the orders sought to be revised, as stated in the show cause notices, were passed on 1-5-2009, 1-5-2010 and 22-1-2008, they were clearly beyond the prescribed time period of three years. When once the period of limitation expires, the mandate against being subject to suo motu revision sets in and the right to embark upon and invoke Section 49 (3) get extinguished;
++ even otherwise, the limitation has to be calculated from the date of assessment and not from the date of re-assessment order, as the subject matter of show cause notices dated 14-7-2015 invoking suo motu revisional power under the VAT Act r/w Section 13 of the Entry Tax Act (in the VAT case and Entry Tax case of the assessee, the year is different), refers to the original order of assessment;
++ in this regard, considering the decision of the Apex Court in Commissioner of Income Tax, Chennai v Alagendran Finance Ltd. the show cause notices dated 14-7-2015 for the provincial tax and entry tax for suo motu revision of original assessment order(s) passed on 1-5-2009, 1-5-2010 and 22-1-2008 were barred by limitation, as the same were issued after three calendar years, therefore, the show cause notices deserve to be and are hereby quashed. As a consequence of quashing of show cause notices for provincial tax and entry tax for the assessment year 2006-07, 2007-08 and 2008-09, the final revisional order passed u/s 49 (3) of the VAT Act would be illegal. Thus, the final orders are also quashed.
Assessee's Writ Petitions Allowed
2018-TIOL-993-HC-ALL-IT
ABHA KALA Vs STATE OF UP: ALLAHABAD HIGH COURT (Dated: May 3, 2018)
Income tax - Sections 132 & 153A
Keywords - recovery of seized cash - release of money - undisclosed source
During the relavent year, the Director General of Investigation, Lucknow received information from the Additional Superintendent of Police, Sultanpur, that during road checking on Jan 05, 2005 at Police Station Musafir Khana, District Sultanpur, cash amounting Rs. 55,69,760/- was seized from the accused persons named in the F.I.R and the said persons could not disclose the source and other relevant details about the said amount. Upon receipt of said information, the DG, Lucknow issued warrant of authorization u/s 132A of Income Tax Act, requisitioning the Additional Superintendent of Police, Sultanpur and the SHO, Maharaj Ganj for delivering the cash seized by them to the authorized requisitioning officer. Thereafter, information was received that the two accused, namely Mahesh Patel and Pradeep Kumar Chaube respectively in the instant revision, were produced before the CJM, District Sultanpur along with the recovered amount and on the directions of the CJM, the recovered amount was deposited in the State Treasury. The Department therefore filed an application before the CJM, Sultanpur seeking to have the said amount deposited in the account of the CIT, Lucknow and in the meanwhile, one of the Respondent filed an application for release of the money claiming that the seized amount belonged to him and was duly reflected in the books of accounts maintained by the Firm namely M/S Bhagwati Traders in which he was one of the partners. Upon the said application, the CJM, Sultanpur ordered for handing over of recovered cash on certain conditions, while the application of the revisionist was rejected.
Having heard the parties, the HC held that,
Whether cash seized from third parties who are found to be accused in certain cases, should not be retained by the Department, if the same was accepted to be belonging to someone else in their books of account - YES: HC
++ the counsel for Department invited the attention of this Court to a supplementary affidavit, by which two things have been indicated namely (a) the amount seized was to be assessed u/s 153A of I-T Act, but no proceedings were initiated by the Income Tax authorities which have now become barred by limitation as the said provision could only be invoked within 21 months from the date of authorization u/s 132A and (b) for the A.Y 2005-06 of M/S Bhagwati Traders, nothing adverse was found against them despite scrutiny and the income tax returns have been accepted. In this regard, a perusal of the assessment order for the year 2005-06 indicates that the turnover of the firm M/S Bhagwati Traders has increased from approximately Rs. 7.20 lacs in the assessment year 2004-05 to Rs. 84.19 lacs in the assessment year 2005-06. Placing reliance on the said affidavit, to which no rebuttal has been filed, it is argued that the instant revision merits to be dismissed as being rendered infructuous. However, Department's counsel contended that the question of law involved in the present revision pertaining to an enquiry u/s 132 of I-T Act, as per the judgment of this Court in the case of Union of India Vs. Judicial Magistrate, Mugalsarai and Anr reported in 1982 Law Suit (All) 269 may be decided;
++ the specific averments that the return of income submitted by the respondent’s firm has been accepted by the Income Tax Department itself and the period of limitation prescribed having also come to an end, have not been rebutted by the Department. As such, the instant revision has been rendered infructuous and thus deserves to be dismissed.
Revenue's revision petition dismissed
2018-TIOL-991-HC-KERALA-IT
SUNRISE ACADEMY OF MEDICAL SPECIALITIES INDIA PVT LTD Vs ITO: KERALA HIGH COURT (Dated: May 22, 2018)
Income tax - Writ - Section 56(2)(viib)
Keywords - disclosed sources - income from other sources - share premium
The assessee academy, engaged in teaching martial arts, yoga and other sports, had filed its return disclosing NIL income. Consequent to the same, its case was selected for scrutiny, wherein it was found that assessee had received in the form of share premium a sum of Rs.2,13,92,000/- on allotment of shares of face value of Rs.100/- each at a premium of Rs.291/- per share. According, notices u/s 143(2) were issued asking the assessee as to whether the funds received in the form of share premium were from disclosed sources and whether the same had been correctly offered for tax. In response, it was stated that the funds received by them in the form of share premium were from disclosed sources and that the same have been correctly offered for tax. Later, the assessee was issued notice by the AO stating that the fair market value of share could only be Rs.100/- and that therefore, the share premium received by assessee amounting to Rs.2,13,92,000/- was liable to be assessed as income from other sources as provided u/s 56(2)(viib). Finally, the assessment in case of assessee was revised. The assessee challenged this assessment as one issued without jurisdiction.
On Writ, the HC held that,
Whether share premium received by a company over & above the fair market value which was not correctly offered to tax, is chargeable to tax u/s 56(2)(viib) as 'income from other source' - YES: HC
++ the provisions of Section 56 only defines various incomes to be assessed under the head "income from other sources". Clause (viib) of sub-section (2) of Section 56 deals with one among them. The said clause provides that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares is liable to be assessed as income from other sources. In other words, the issue whether the funds received by a company in the form of share premium have been correctly offered for tax has to be determined and assessed in accordance with the said provision;
++ according to this Court, the issue as to whether the funds received by the assessee in the form of share premium have been correctly offered for tax, is an issue to be examined with reference to Section 56(2)(viib) and if it is found that the share premium have not been correctly offered for tax as provided therein, the assessee has to be assessed in accordance with the said provision. As such, in a case of this nature, the assessee cannot be heard to contend that the AO has exceeded its jurisdiction in the matter of passing the order merely for the reason that the funds received by them in the form of share premium have been assessed as provided for u/s 56(2)(viib). Hence, the issue is answered in favour of Revenue.
Assessee's petition dismissed
2018-TIOL-990-HC-MAD-CT
STATE OF TAMIL NADU Vs CHAKRA MARKETING ASSOCIATES: MADRAS HIGH COURT (Dated: April 19, 2018)
Tamil Nadu General Sales Tax - Sections 12(3)(b) & 12(5)(iii)
Keywords - Penalty - Suppression of facts
The assessee is a dealer of potato chips, soap & cleaning powder. It was assessed for the relevant AY and its turnover for each all the types of goods manfactured by it was determined. Thereupon, penalty u/s 12(5)(iii) of the Act was imposed. On appeal, the appellate authority partly sustained the turnover determined by the AO but deleted the penalty. The assessee's appeal before the Tribunal was dismissed. Hence the present appeal by the Revenue.
On hearing the matter, the High Court held that,
Whether penalty imposed can be deleted, since there is no suppression of facts in the assessee's books of accounts being pointed out by the Revenue - YES: HC
++ In Indira Industries Vs. State of Tamil Nadu, this Court considered a question, as to whether, levy of penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959, was justifiable, particularly, when there was no suppression pointed out by the Revenue that the Claim of the assessee related only to concessional rate of tax;
++ there is no suppression in the books of accounts and this fact has been categorically stated by the appellate authority, in his order, in which event, the assessee is entitled to invoke explanations (i) and (ii) to Section 12(3)(b) of the Act.
Revenue's Appeal Dismissed
2018-TIOL-989-HC-MAD-CT
STATE OF TAMIL NADU Vs VELAN HOTELS LTD: MADRAS HIGH COURT (Dated: April 6, 2018)
Tamil Nadu GST - Section 16(2)
Keywords - estimated turnover - financial assistance - goods - levy of penalty - sale of software
The assessee's place of business was inspected by the Officers of the Enforcement Wing of the Department during the relevant year, pursuent to which the assessee was called for substantiating its books of account. Since the dealer had failed to produce the accounts, the AO determined the total and taxable turnover at Rs.4,31,275/- for the year 1994-95 and also levied penalty of Rs.51,107/- u/s 16(2) of TNGST Act. On appeal, the AAC(CT) deleted the estimation of first sale of software of Rs.2,10,000/- and also dismissed the penalty levied u/s 16(2). On further appeal, the Tribunal found that the software was installed at M/s.Velan Hotels Ltd. only and there was no transfer of this property to Annamalai Finance Ltd. Moreover, M/s.Annamalai Finance Ltd., have also admitted to having given only finance assistance to the assessee. Thus, the software programme could not be considered as goods and it could not be treated as sales made to Annamalai Finance Ltd. This Programme was solely intended to the assessee only and the assessee have raised an invoice only for securing finance from the Finance Company.
Having heard the parties, the HC held that,
Whether formal license given to a finance company to seize the goods from its customer in case of breach of hire-purchase agreement, will not amount to sale, and hence should not be included in estimating turnover - YES: HC
++ it is seen that the Apex Court in the case of Sundaram Finance has held that: "....the goods purchased by the customer remained at all times with him only. This So-called sale letter is merely a formal document. The finance company's right to seize the goods is merely a licence to ensure compliance with the terms of the hire-purchase agreement. The transaction is merely a financing transaction and there is no sale when the rights of the finance company are extinguished by the operation of certain clause, whereby on the customer on paying the entire amounts due, the goods will become the sole and absolute property of the customer. There is no real sale of goods intended by the customer to the finance company. In the case on hand the sale bill is raised only as a security and the goods remain with the dealers all along. There is no seller or buyer, the goods, the consideration for the sales made etc. There is no transfer of material to the Finance Company to treat the same as a sale made. In view of the same, estimating the first sale of software for Rs.2,10,000/- is not sustainable....";
++ it is seen that both the appellate authority and Tribunal have rightly held that there was no sale, warranting levy of tax and consequently, penalty u/s 16(2) of the TNGST Act.
In favour of Assessee
