2018-TIOL-362-SC-ST-LB
JAMNA AUTO INDUSTRIES LTD Vs CC, CE & ST: SUPREME COURT OF INDIA (Dated: September 17, 2018)
ST - 'Support services of business or commerce' - Section 65(105)(zzzq) read with Section 65(104c) of Finance Act, 1994 - CESTAT had while dismissing the assessee appeal held that Non-compete agreement fee of Rs.5 crores is the consideration for the support service provided to the business and commercial activities of JSSL, who is otherwise a competitor, and is rightly taxable under FA, 1994 - service tax demand of Rs.51,50,000/- along with interest and equivalent penalty confirmed - appeal to Supreme Court. Held: Delay condoned - Notice issued - Appellant directed to make a deposit of tax with interest within six weeks - subject to making this deposit, there shall be stay of penalty amount : Supreme Court
Notice issued
2018-TIOL-1937-HC-DEL-IT + Case Story
RT INDUSTRIES Vs ITSC : DELHI HIGH COURT (Dated: September 13, 2018)
Income Tax - Writ - Section 245D(1).
Keywords - 'Full and true' disclosure - Pre-condition - 'Prima facie' negative finding & Settlement application
THE assessee, a partnership firm engaged in production and trading of mustard oil and related items. A search and seizure operation was conducted in the case assessee and others associated with them as principle assessee and simultaneously, survey operations at some locations were undertaken. During such operations, cash of around Rs. 34.89 lakhs and jewellery worth around Rs. 1.49 Cr were found out of which Rs.34 lakhs in cash and jewellery valued at around Rs.23.53 lakhs was seized. Incriminating documents in the form of loose papers, registers, dairy were also found and seized. Apart from that, one Mr Trilok Chand Jain in his statement had admitted and surrendered undisclosed income of more than Rs. 18 Crores for the entire group in the hands of different assessees. Subsequently, Trilok Chand Jain had retracted the surrender.
Consequent to the search, the assessee's were served with notices u/s 153A for the assessment years 2010-11 to 2015-16. As returns were not filed, notices for prosecution u/s 276CC were also issued and served on the assessees. However, the assessees on the other hand claim that they had filed their returns after seeking extension of time on two occasions. Thereafter, five separate applications u/s 245C (1) were filed by the assessee and other allies before the Income Tax Settlement Commission. However, the Commission rejected the settlement applications, holding that "prima facie" the conditions prescribed in Section 245C (1) were not fulfilled.
In Writ, the HC held that,
Whether legal provisions mandate Settlement Commission to enjoy the luxury of rejecting an application u/s 245D(1) merely on the basis of tentative findings - NO: HC
Whether SETCOM provisions postulate revision of undisclosed income declared in the application - NO: HC
Whether judicial review is generally confined to the decision making process but not merits of the decision - YES: HC
++ the Settlement Commission can examine the questions and issues of maintainability of the settlement application at three different stages. The first is a very initial stage, when it in terms of Section 245D(1) of the Act, examines whether or not to allow an application to be proceeded with. The second stage is after the Principal Commissioner/Commissioner has filed its report before the Settlement Commission and the Settlement Commission passes an order under Section 245D(2C) of the Act. The third stage is when the final order under Section 245D(4) of the Act is passed. In the present writ petition, we are concerned with the first stage, i.e. under Section 245D(1) of the Act;
++ the Settlement Commission should consist of members of integrity and outstanding ability having special knowledge and experience in problems relating to direct taxes and business accounts, who can dwell into intricate issues and questions in a pragmatic and practical way, without being strictly bound by strict rules of procedure. Further, the assessee must fully cooperate, and make "full and true" disclosure and state the manner in which he had derived undisclosed income. The object and purpose is that the undisclosed income, which is brought to tax must be fair and true income of the assessee, which was hitherto not declared and taxed. If an order is obtained by fraud or misrepresentation of fact, it cannot be said that there was true and fair disclosure. Neither will there be a true and fair disclosure in case the undisclosed income is revised upwards. The provisions do not postulate revision of the undisclosed income. Declaration contemplated under Section 245C(1) of the Act is in the nature of warranty that a disclosure made must be true and fair disclosure. This is the necessary pre-condition for invoking jurisdiction of the Settlement Commission;
++ an order under Section 245D(1) of the Act has to be passed within a rigid time frame of 15 days. Principal Commissioner/Commissioner is unrepresented at this stage. The scrutiny or the inquiry at this stage, is summary in nature. This however, does not take away or dilute the power of the Settlement Commission to reject the application for settlement which in its opinion does not satisfy the legal requirements and more particularly the two pre-conditions mentioned in Sub-Section(1) of section 245C of the Act. We must affirmatively acknowledge and accept that the Settlement Commission at the stage of 245D (1) can examine and go into the question whether the applicant fulfils the legal requirements and conditions for invoking jurisdiction of the Settlement Commission; like pendency of proceedings, payment of tax and interest on the undisclosed income etc. The Settlement Commission would also without doubt examine the two core conditions, "full and true" disclosure of undisclosed income and the manner in which the said income was derived. Onus to show that the pre-conditions for allowing the application to be proceeded with is on the applicant. Application can be rejected or not allowed to be proceeded with where the Settlement Commission forms an "opinion" that "full and true" disclosure of undisclosed income and manner in which it was derived has not been made or for other grounds and stipulations set out in the proviso or on failure to furnish the particulars prescribed;
++ an order under 245D(1) when allowing an application for settlement to be proceeded with, is interim or interlocutory in nature for there is no finality attached to the preliminary findings recorded as the proceeding do not come to a closure and end, but an order of rejection concludes the proceedings and has different consequences. In this sense the opinion formed by the Settlement Commission in case of rejection under Section 245D(1) is conclusive and final. Notwithstanding that the onus to show and establish that the application should be allowed to be proceeded with, the negative finding cannot be merely a "tentative" or "prima facie" as in case if the proceedings are allowed to be proceeded with. Necessarily and as a sequitur it follows that if the Settlement Commission is unable to form a decisive opinion to give a definitive finding for rejection after the initial and preliminary hearing, proceeding to the second stage is the only option. The deemed approval provision when the Settlement Commission is unable to decide and form an opinion supports the above interpretation;
++ the assessee had declared undisclosed income of Rs.3,20,40,338/-. Order records admission of the first assessee that they had inflated their expenses, i.e. payments made to the farmers/traders to procure oilseeds, and in this manner they had reduced or deflated their gross profits. There was substantial difference in 'moisture content' acceptable and found, 'oil content' acceptable and found, extent of dust in oil seeds, type of bardana used etc. and manipulations of price to inflate the purchases. The assessee had however expressed inability to precisely work out and give an exact figure of the undisclosed income earned in absence of 'duplicate accounts'. Therefore, they had deduced or computed the undisclosed income on basis of the gross profit rate in the comparable or same line of business. The second admission made by the first assessee was that the gross profit rate earlier declared by them was lower when compared with other cases in the same line;
++ the finding of the Settlement Commission that the assessee had not declared and made full and true disclosure is not an affirmative but an inconclusive and plausible view, which required a deeper and detailed scrutiny at the second stage. The Settlement Commission should have as per the statutory mandate called the Principal Commissioner/Commissioner to submit their report as second stage examination under Section 245D(2C) was required. It is at that second stage after the Revenue has submitted their report that more in-depth scrutiny and verification takes place, notwithstanding the earlier preliminary scrutiny under Section 245D(1) of the Act. At each passing stage, the scrutiny and examination becomes more extensive and decisive. The relevance of rejection at the initial stage under sub-section (1) to Section 245D is to throw out frivolous applications and applications palpably not maintainable for want of full and true disclosure and manner in which the undisclosed income was earned;
++ the observation of the Settlement Commission in the last sentence of paragraph 10 that "the very foundation of the surrender made by the two assessees appears to be concocted story" etc. The word "appears" would reflect that the Settlement Commission had not reached or made any firm and final decision. The findings as per the observations were tentative and prima facie. In view of the legal position explained above, the settlement application at the initial stage cannot be dismissed when firm opinion as to frivolousness or concoction is lacking and merits of the settlement application cannot be ascertained and determined;
++ the Settlement Commission was itself uncertain and has not given any firm or conclusive opinion as it has observed that "the role of the HUFs in the transactions, if any, was doubtful to say the least". The Settlement Commission had also observed that the claim was lacking evidentiary backing, notwithstanding the fact that the Settlement Commission itself had recorded that rough sheets seized indicated property dealings and payment of commission. Statement that the two assessees had not made any reference or given particulars of the deals as well as full details of the commission/brokerage earned, is contested. The assessees had accepted that they had not kept complete records of the brokerage/commission earned as the papers were destroyed or torn off after the deal had materialized. However, they had filed details and calculations;
++ uncertainty in the mind of the Settlement Commission is clearly reflected when they had used the word "doubtful" with reference to the role of the HUFs in the transactions. Therefore, it was urged that the claim did have evidentiary backing. Thus, the Settlement Commission was doubtful and uncertain as to whether the HUFs had earned the income by way of commission. We would observe that question could well arise whether the property transactions were sales and purchases made by the two assessees, and not mere earnings as commissions earned. However, this is not an aspect examined and the reason given for rejection;
++ the ''prima facie'' finding of the Settlement Commission that the fourth and the fifth assessee had made a wrong declaration as to the manner of earning undisclosed income, is nothing but a surmise, which is incorrect and baseless. This contention is without prejudice to the contention of the fourth and fifth assessees that the Settlement Commission had erroneously and contrary to law dismissed the application filed by the fourth and fifth assessees on tentative opinion and ''prima facie'' assumption, without forming a conclusive and final opinion. The scope of judicial review and exercise of writ jurisdiction while examining an order of the Settlement Commission is limited and primarily confined to considering whether the Settlement Commission has committed grave or patent error of jurisdiction and failed to abide by and act in accordance with the provisions of the Act;
++ the Settlement Commission is a fact finding body, whose orders have been given finality. A writ court would hesitate and not go into the merit of the decision taken by the Settlement Commission to reappraise disputed questions of facts, specially, in view of the nature of the jurisdiction and questions, which come up before the Settlement Commission. What is amiable and can be scrutinized while exercising power of judicial review is the decision making process and not merits of the decision. While examining and scrutinizing the decision making process, there is a limited scope for the writ Court to appreciate the facts under the grounds of illegality, irrationality and pre-procedural impropriety.
Assessee's writ petition allowed
2018-TIOL-1936-HC-DEL-IT
PR CIT Vs ESCORTS LTD: DELHI HIGH COURT (Dated: September 04, 2018)
Income Tax - Auditor's report - Expert opinion - Prior period expenditure - Qualifying note of auditor & Sales incentive.
The assessee company claimed expenditure of Rs.7.75 crores towards sales incentive to dealers for meeting sales targets. During the assessment proceedings, the AO noted that such expenditure was related to the prior period and also was not incurred in the relevant AY. Therefore, he disallowed the same.
On appeal, the CIT(A) upheld the order of AO. On further appeal, the Tribunal was of the view that sales incentive was paid for meeting sales target in the period of 15 months, ending on 30.6.2004. Thus, the relevant date and payment would relate to the period relevant to the assessment year 2005-2006. It was further held that since such sales incentive was payable only after and when the dealers had met the sales figures in that period and since complete details on account of incentive were furnished, the same should be allowed.
On appeal, the High Court held that,
Whether in the absence of statutory provisions the qualifying note in the audit report is not to be construed as conclusive - YES: HC
Whether the factual findings of the Tribunal are to be put on backburner even if Revenue has no evidence to stand on its legs - NO: HC
++ the auditor in the note had qualified this expenditure as prior period expenditure. Auditor's opinion though relevant and material would not be final and conclusive against the assessee. Auditor's report in a way is a third party and an independent report that can be equated with an expert opinion which may be accepted or rejected or partly accepted and partly rejected but cannot be treated as final or binding on the AO, or for that matter even on the assessee, except when mandated by a statutory provision, which requires an unqualified auditor's report or certification. In the absence of statutory provision it would not be right to hold that a reservation or qualifying note in the audit report would be a conclusive and binding finding against the assessee;
++ the Chartered Accountant in the audit report could have qualified the expenditure claimed, as the sales incentive was also pertaining to sales made in the earlier year. The finding of the Tribunal is that the sales incentive was to be quantified and was due and payable only during the period relevant to the assessment year 2005-2006. The Revenue has not placed on record any material and evidence to show and negate the factual finding of the Tribunal that sales incentive was not payable on the basis of the performance in the last 15 months. This factual finding is not specifically challenged as incorrect or wrong by relying on any document or correspondence exchanged between the assessee and the Assessing Officer or the dealers. Factual finding is not perverse and cannot be regarded as absurd only on the ground of qualifying note of the auditor.
Revenue's appeal dismissed
2018-TIOL-1935-HC-AHM-IT
PR CIT Vs MANISHABEN N MASHRU: GUJARAT HIGH COURT (Dated: September 10, 2018)
Income tax - Section 68
Keywords - banking channel - cash transactions - undisclosed income
The assessee is an individual owner of proprietorship concern namely M/s. Shree Divya Travels which is engaged in providing travel related services; including booking of air tickets for the clients. During the course of its scrutiny assessment, the AO made an addition of Rs. 5.10 Crores to the income of assessee with an aid of Section 68, out of which Rs. 36.50 lakhs was relateable to disclosures made by alssessee during survey operations. On appeal, the CIT(A) granted partial relief and retained only a smaller portion of addition made by AO. On further appeal, the Tribunal deleted entire additions.
On appeal, the HC held that,
Whether when the entire transaction of taxpayer was established to be made through banking channel, on the basis of substantive evidences on record, no additions are plausible u/s 68 - YES: HC
++ it is seen that the assessee used to book domestic and international air tickets of various national and international airlines, and she had voluminous turnover from which she earned sizeable commission. This commission was paid by the Airlines through the banking channel. There was thus no cash element or scope of any cash transactions. She was maintaining her books of account which were duly audited. During the survey, the Revenue authority had a chance upon some such papers in which jottings were made by the employees with regard to financial details with the assessee. They merely contain certain receivable amounts from the customers which could not be construed as cash transactions. The Tribunal accepted such explanation and endorsed substantially the view of CIT [A] who also looked into these very papers and transactions. The entire issue is thus based on factual considerations. When the CIT [A] and the Tribunal, on the basis of materials on record, have come to a definite conclusion, no question of law arises.
Revenue's appeal dismissed
2018-TIOL-1934-HC-AHM-IT
PR CIT Vs AJANTA MANUFACTURING LTD: GUJARAT HIGH COURT (Dated: September 11, 2018)
Income tax - Sections 115JB & 271(1)(c)
Keywords - concealment - capital receipts - excise duty refund - levy of penalty - sales tax exemption
The assessee company is engaged in the business of manufacturing tiles. During the course of its assessment, the AO had made additions in respect of incentives received by the assessee in the form of excise duty refunds and sales tax exemption benefits. In addition, he also levied penalty u/s 271(1)(c). On appeal, the CIT(A) deleted such addition holding that the same were capital receipts and not chargeable to tax. He however, was of the opinion that for the purpose of computation of book profit u/s 115JB, the same had to be included. On appeal, the ITAT also confirmed this view of the CIT(A).
On appeal, the HC held that,
Whether a bonafide interpretation made by the taxpayer out of the two plausible views, will amount to concealment, and hence attracts penalty u/s 271(1)(c) - NO: HC
++ it is seen that while confirming the view of CIT(A) deleting the penalty, the Tribunal observed that the assessee had not concealed any particulars of his income. To the receipts in the form of sales tax and excise duty concessions, the assessee had followed his own interpretation believing that the receipts being capital in nature were not chargeable for computation of book profit u/s 115JB. The Tribunal was of the opinion that clearly two views were possible and the assessee had held the bona fide belief and acted on the same. In any case, there was no failure on part of the assessee to conceal any particulars of income.
Revenue's appeal dismissed
2018-TIOL-1933-HC-MAD-IT
A KAMAL KUMAR Vs PR CIT: MADRAS HIGH COURT (Dated: September 06, 2018)
Income Tax - Writ - Section 264.
Keywords: Ignorance of law - Inordinate delay & Revision petition.
The assessment was completed in the case of the assessee and addition was made. However, the assessee challenged the assessment order by filing a revision before the Pr CIT. However, such revision petition was with a delay of more than five years. The only reason stated by the assessee for filing such revision with such inordinate delay of more than five years was that the earlier Chartered Accountant, who was handling his case, had not advised him to file any appeal or revision before higher authorities. However, the Pr CIT was not satisfied with such reasoning and accordingly, rejected the same on the ground of inordinate delay.
In Writ, the High Court held that,
Whether an inordinate delay of more than five years in fling revision petition before the higher authorities can be overlooked on the ground of ignorance of law - NO: HC
++ the Pr CIT is totally justified in rejecting the revision, since the reasons stated by the assessee for the delay is neither convincing nor acceptable, as ignorance of law is no excuse. No doubt, the counsel for the assessee invited this Court's attention to the communication sent by the ICICI Bank to the assessee on 29.12.2010 to contend that the Assessing Officer has erred in making an addition of Rs.6,58,237/-. I do not think that such communication of the ICICI Bank, in any way, would help the assessee, as the said communication clearly indicates only that no transactions were made for an amount of Rs.6,80,348/- for the financial year 2007-2008 and not that the total transaction made for the said financial year was not for an amount of Rs.6,80,348/-.
Assessee's writ petition dismissed
2018-TIOL-1932-HC-MAD-IT
FATHIMA HARRIS Vs ITO: MADRAS HIGH COURT (Dated: September 04, 2018)
Income Tax - Section 80HHC.
Keywords: Job work & Profits of business.
The assessee is an individual and filed the present appeal challenging the decision of the Tribunal where it was held that the job work charges should be excluded from the profits of the business for the purpose of computation of deduction u/s 80HHC
On appeal, the High Court held that,
Whether for the purpose of computation of deduction u/s 80HHC, job work charges should be excluded from the profits of the business - YES: HC
++ in the light of the decision in ACG Associated Capsules (P) Ltd., and Kadri Mills Ltd., where it was held that "....the processing charges formed part of the gross total income as an independent income like rent, commission, brokerage, etc. Consequently, the Apex Court held that the 90% of the said sum has to be reduced from the gross total income to arrive at the business profits....", the matter remanded to the Assessing Officer for the purpose of computation of the deduction in terms of such decisions.
Assessee's appeal dismissed
2018-TIOL-1931-HC-DEL-IT
PR CIT Vs AMERICAN EXPRESS INDIA PVT LTD: DELHI HIGH COURT (Dated: August 27, 2018)
Income tax - Sections 10B & 271(1)(c)
Keywords - interest on income tax refund - exempt income - income from other sources
The assessee, a 100% export oriented unit, was engaged in business of accounting data processing for its various customers, including American Express World Wide. The assessee did not have any other business income and was claiming deduction u/s 10B from A.Ys 1996-97 to 2005-06. On the question of netting of interest earned on the income tax refund against interest paid, the stand of the assessee was that deduction u/s 10B was to be computed in terms of formula prescribed in the Section. It was however stated that the assessee had to pay interest on account of overdraft facility, which they had to avail only to pay the income tax demand. Ergo, in absence of any income other than exempt income u/s 10B, interest earned on the income tax refund was directly linked and connected with the business income of assessee. The assessee in the quantum/assessment proceedings had succeeded before the CIT(A), which decision was reversed by the Tribunal holding that the interest earned on income tax refund was to be taxed under the head "income from other sources" and was not eligible for deduction u/s 10B.
The AO thereafter, imposed penalty on the ground that while computing deduction u/s 10B, the assessee had wrongly netted the interest earned on the income tax refund of Rs.1,52,29,404/- against the interest paid. This penalty levied u/s 271(1)(c) stood deleted by the CIT(A) on appeal, which decision was upheld by the Tribunal.
On appeal, the HC held that,
Whether the conduct of taxpayer in netting the interest earned on income tax refund against the interest paid, for the purpose of computing deduction u/s 10B, is a bonafide act, and hence does not attract penal punishment u/s 271(1)(c) - YES: HC
++ there is no dispute or debate that the assessee had specifically declared and stated in the income tax return that they had netted the interest received on the income tax refund from the interest paid for the purpose of computing deduction u/s 10B. Material facts were clearly disclosed, and not concealed and withheld. The Tribunal has referred to the decision of Supreme Court in MAK Data Private Limited versus CIT - 2013-TIOL-58-SC-IT and decision of Delhi High Court in CIT versus Zoom Communication Private Limited - 2010-TIOL-361-HC-DEL-IT, to accept that the assessee had discharged the onus to establish its bonafide while making claim for deduction/exemption u/s 10B by netting of interest received from Income Tax Department, from interest paid to the bank to make payment of tax to the Income Tax Department. Clearly, there was a nexus between the interest paid to the bank, which was business expenditure, and interest received from the Income Tax Department. Referring to factual matrix, the Tribunal has accepted the reasoning and finding given by the CIT(A) that the conduct of assessee in netting of income received from interest paid was bona fide. In view of the said factual background, the penalty levied u/s 271(1)(c) was rightly deleted.
Revenue's appeal dismissed
2018-TIOL-1930-HC-AHM-IT
CIT Vs CHARUTAR AROGYA MANDAL: GUJARAT HIGH COURT (Dated: September 11, 2018)
Income tax - Sections 11, 32 & 35AC
Keywords - depreciation - double deduction - exempted grants -
The assessee, a charitable organisation, had filed its return claiming depreciation u/s 35AC in relation to assets purchased for its cardiac center out of the grants received which were covered for exemption u/s 35AC. During the course of assessment, the AO denied the claim of depreciation on the ground that the donees had already claimed exemption in terms of section 35AC on such grants and hence awarding depreciation on the same asset would amount to double deduction.
On appeal, both the CIT(A) as well as the ITAT reversed the decision of AO by observing that in the context of section 11, even if assets purchased by the Trust were allowed deduction as applicable under income, while working out taxable income of the Trust, the depreciation had to be allowed on the value of such assets.
On appeal, the HC held that,
Whether exemption granted to a charitable trust u/s 11 on purchase of tangible asset, will not stand in their way while claiming depreciation on the value of such assets - YES: HC
++ the logic adopted in case of Commissioner of Income Tax v. Rajasthan and Gujarati Charitable Foundation - 2017-TIOL-463-SC-IT would substantially apply to the facts of the present case. In terms of section 35AC, the assessee who incurs expenditure by way of payment directly on eligible project or a scheme, would enjoy exemption of such expenditure during the relevant year. This exemption however would not cast any shadow on the assessee claiming any depreciation u/s 32 which is allowable in respect of any building, machinery, plant or furniture being tangible assets owned wholly or partly by the assessee and for the purpose of business or profession at the specified rates. The requirements thus, are of the assessee owning wholly or partly any building, machinery, plant or furniture being tangible assets and having used them for the purpose of business or profession.
Revenue's appeal dismissed
2018-TIOL-1929-HC-DEL-VAT
EI DUPONT INDIA PVT LTD Vs CVT: DELHI HIGH COURT(Dated: September 13, 2018)
Delhi VAT Act - Writ - Sections 28, 33 & 86(9)(c)
Keywords - deliberate ommission - furnishing of revised returns - inward branch transfers - imposition of penalty
The assessee company had made inter-state inward branch transfers during the relevant period against F-Form. These transfers amounted to Rs. 1.79 crores but were incorrectly reflected in Annexure 2A filed online with the return for June, 2012 in Form DVAT 16. Upon realizing this mistake, the assessee approached the VAT authorities to permit it to revise the returns and include the omitted transfers which could enable it to download the F-Forms. This was based on its understanding of the DVAT provisions which conferred the AO with discretionary powers u/s 33 r/w/s 86(9)(c) of the DVAT Act to impose penalty for failure to furnish the revised returns, by the due date. However, much later, the assessee's request was rejected on the ground that the time period for filing revised returns u/s 28 of the DVAT Act had elapsed. In response, the assessee contended that the revision sought did not cause any prejudice to the Revenue and that its inability to file the revised returns in time was not on account of any deliberate omission but it was because of the very nature of the online facility portal, which automatically reflects in Form F, the inaccurate particulars provided in the corresponding Annexure to the DVAT Forms.
On Writ, the HC held that,
Whether a dealer can be allowed to revise his returns and include omitted inward branch transfers which could enable him to download F-Forms, beyond the period stipulated under VAT Act, if such ommission was not deliberate - YES: HC
++ in the present case, to what the Department was not per se contesting the genuineness of the transactions which the assessee claims to have actually entered into. What is set up as a bar to the relief is that the time period prescribed in Section 28 has elapsed. Section 86(9)(c) facially suggests that if some particulars which should have been disclosed in the return are not disclosed, the tax payer is liable by way of penalty Rs. 200 per day from the date falling the due date until the failure is rectified. The Department's argument that Ingram Micro India Pvt. Ltd. dealt with C-Forms whereas the claim today is in respect of F-Forms, in the opinion of this Court is without merit. Undoubtedly, while F-Forms relate to the stock available with the dealer, which the assessee does not dispute was in its knowledge, nevertheless in argument, it is not disputed that the transactions claimed for which examination is sought are not genuine. No doubt, the assessee might have been aware but its case is that the incorrect particulars were reflected in the final return files. Keeping these broad similarities in mind, this Court is of the opinion that the asssessee is entitled to relief of the kind that Ingram Micro India Pvt. Ltd. provided to the tax payers in the judgment. For these reasons, the Department is directed to issue the concerned F-Forms pertaining to the transactions undertaken by the assessee in the concerned quarter of F.Y 2012-13 within four weeks from today.
Assessee's petition allowed
2018-TIOL-1928-HC-MAD-CT
STATE OF TAMIL NADU Vs LLOYDS INSULATIONS INDIA LTD: MADRAS HIGH COURT (Dated: September 03, 2018)
Tamil Nadu GST Act - Section 7(c)
Keywords - civil works - contractual receipts - compounded rate - insulation material - revisional assessment
The assessee is a registered dealer, who was assessed on a total taxable turnover of Rs.13,46,71,617/- and Rs.6,64,04,744/- respectively for the year 2001-02. Out of the total turnover, a sum of Rs.4,29,03,712/- was assessed at 2% compounded rate u/s 7C of TNGST Act towards civil works contracts receipts. After a lapse of four years, the AO issued the revision notice, wherein it was alleged that there was a transfer of property in insulation material in the works contract executed by the dealer for the Indian Oil corporation, which did not fall within the definition of civil works contract. In response, it was submitted that the contract placed on them by the Indian Oil Corporation was only a pure civil contract for construction of new petrol bunk and that there was no scope for use of insulation material in civil contracts. The CTO however rejected such objections filed by the dealer and revised the assessment confirming the proposal in the revision notice. On appeal, the questions stood answered in favour of the dealer.
On appeal, the HC held that,
Whether CTO can artificially split up a composite contract awarded to dealer for construction of new petrol bunk, just to tax the contractual receipts, when there is no involvement of transfer of insulation material in the contract - NO: HC
++ the short issues which fall for consideration are as to whether the assessment could have been reopened on the allegation made against the dealer and as to whether there was any transfer of property in goods by way of transferring the insulation material while in the process of executing a civil works contract. As rightly pointed out by the Appellate Authority as well as the Tribunal, the CTO did not have any material before her to revise the assessment especially when the first assessment order was passed after considering the entire records. It is found that the revision notice which was issued after four years of the completion of assessment, is bereft of details and that the AO does not state as to how she came to the conclusion that the contract involved transfer of property in insulation material. The dealer denied the allegation by stating that there was no involvement of insulation material in their contract. This explanation was not considered, but was rejected by a single line stating that the contention of the dealer was not found to be correct;
++ when the dealer carried the matter by way of appeal, the Appellate Authority found that there was nothing on the file of CTO to show that there was insulation material involved in the execution of civil contract. Therefore, the Appellate Authority rightly held that there was no case for reopening. Furthermore, the Appellate Authority held that the CTO revised the assessment purely based on surmises without any material evidence to prove that the receipts relate to insulation contract. Thus, it is evidently clear that the revision of assessment made by issuing the revision notice is a clear case of change of opinion. The CTO does not dispute the fact that the Indian Oil Corporation had awarded a contract in favour of the dealer for construction of a petrol bunk. Thus, whatever material was utilized should be treated as a composite contract and the artificial splitting by the CTO is uncalled for.
Revenue's appeal dismissed
2018-TIOL-1927-HC-AHM-CX
KLJ PLASTICIZERS LTD Vs CCE GUJARAT HIGH COURT (Dated: September 12, 2018)
CX - Assessee is in appeal against order of Tribunal refusing to condone the delay of 1233 days - The Commissioner (A) passed an order asking the assessee to deposit a sum of Rs. 80,000/- by way of predeposit - The very next day of the order of predeposit, company deposited such amount - However, such compliance was not reported to Appellate Commissioner who therefore dismissed the appeal only on this ground - The company was required to have such order set aside by filing proper appeal and such appeal was filed after a long delay before the Tribunal - Before the Tribunal, case put forth by company was that the manager had not brought these facts to the notice of the company and there was no intention on their part to delay the proceedings - The company should be heard by Commissioner (A) on merits - The company had fulfilled predeposit requirement. Such compliance was however not brought to the notice of the Commissioner - This was an oversight or a technical flaw: HC
Appeal disposed of
2018-TIOL-1926-HC-AHM-CX
MANGALAM ALLOYS LTD Vs CCE: GUJARAT HIGH COURT (Dated: September 5, 2018)
CX - Assessee is a manufacturer of goods - During inquiries in cases of two of suppliers of such inputs, the department noticed certain clandestine transactions - Since the assessee was also one of the recipient of goods, assessee's record was checked - Tribunal confirmed duty and penalty demands in respect of such transactions - The Revenue authorities and the Tribunal concurrently came to the conclusion that the transactions in question were non-existence - The assessee was not able to establish the actual movement of goods - When the RTO report strongly suggested that the vehicles in which the goods were stated to have been transported were incapable of doing so, the burden would be on the assessee to dislodge these primary findings particularly when the report of RTO was not challenged - The assessee's stand that it had merely ordered goods on FOR value and therefore was not obliged to explain the manner of transportation is too simplistic in background of facts on record - When RTO report as it remained unexplained by the suppliers of the goods clearly establish that the goods could not have been transported in the vehicle stated to have been done, the assessee called a greater explanation - The findings of Tribunal are based on evidence suggesting no movement of goods and the quality cannot be claimed in negative: HC
Appeal dismissed
2018-TIOL-1925-HC-MAD-CX
CCE Vs THANGAVEL AND SONS PVT LTD: MADRAS HIGH COURT (Dated: August 30, 2018)
CX - Appellant has placed before this Court a communication sent by Assistant Commissioner (Legal), Office of Commissioner of GST and Central Excise stating that on account of the monetary limit in this appeal, which is lesser than the threshold fixed by the Board's circular dated 11.7.2018, he seeks permission to withdraw the appeal - Miscellaneous appeal is dismissed as withdrawn and the substantial questions of law raised in this appeal, are left open: HC
Appeal dismissed
2018-TIOL-2867-CESTAT-MAD + Case Story
REAL VALUE PROMOTERS PVT LTD Vs CGST & CE: CHENNAI CESTAT (Dated: September 18, 2018)
ST - In respect of any contract which is a composite contract, service tax cannot be demanded under CICS / CCS for the periods also after 1.6.2007 – Impugned orders set aside and appeals allowed: CESTAT [para 7.7, 7.10, 7.13, 8, 9, 10]
Appeals allowed
