CASE LAWS
2018-TIOL-2658-HC-MUM-IT
GEEKAY SECURITY SERVICES PVT LTD Vs DCIT: BOMBAY HIGH COURT (Dated: December 7, 2018)
Income Tax - Writ - Sections 143(1), 154 & 264
Keywords - Employee's Contribution to PF - Revision petition
The assessee-company filed returns for the relevant AY, which were accepted without scrutiny. The assessee later stated that it had omitted to mention a claim for Employee's Contribution to PF in such returns and that it sought to claim deduction of the same. However, as the return was accepted without scrutiny, the assessee was unable to present its submissions before the AO. The assessee then filed an application for rectification u/s 154 for rectification, explaining that its CA had filed returns on behalf of the assessee and so the PF expenses had erroneously been disallowed. The assessee also placed full details of the payment. The assessee also filed a revision petition before the CIT u/s 264, which was dismissed on grounds that the assessee omitted to claim such expenses in its original returns. It was also held that since the assessee did not file revised returns, it could not have raised such grounds in the revision petition.
In writ, the High Court held that,
Whether a petition seeking revision of assessment order, can be dismissed without delving into the merits of such petition - NO: HC
++ an identical issue was resolved by the High Court of Gujarat in Hitech Analystical Services v/s. Pr. Commissioner of Income Tax wherein it was held that - "...The nonfiling of the revised return by the firm could not have been the ground for rejection of the claim. Even if the powers of the Assessing Officer could be seen to be restricted in absence of any revised return, nothing prevented the Commissioner from examining the issue and if need be to have further enquiries made. In case of C. Parikh & Co. v/s. CIT, the Division Bench of this Court considered the scope of the powers of the Commissioner under Section 264 of the Act. In the said case, after the assessment was completed, the assessee discovered that a mistake had been committed in its books of account in totaling the purchases as a result of which the assessee had undertotalled the purchases and on account of this, the gross profit of the assessee had goneup. When the Commissioner refused to allow the assessee to correct such mistake, the issue reached the High Court. The Court observed that the powers are very wide. Subject to the limitation prescribed in the section itself, the Commissioner in exercise of his revisional powers could pass such order as he thinks fit which is not prejudicial to the assessee. It was further observed that there is nothing in section 264 placing any restriction on the Commissioner's revisional powers to give relief to the assessee in a case where the assessee detects mistakes on account of which he was overassessed, after the assessment was completed even where such overassessment was due to a mistake detected by the assessee after completion of the assessment. The Commissioner could entertain even a new ground not urged before the lower authorities while exercising such revisional powers...";
++ hence the Commissioner was not correct in refusing to exercise assessee's claim on merits. Since the Commissioner has not examined the merits of the assessee's case, the Revision Petition is remanded back to the Commissioner for disposal on merits. All payments towards employee's contribution to the PF were made before the due date of the filing of the return. If that be so, surely, the Commissioner would be guided by the decision of this Court on the relevant issue namely-CIT v/s.Ghatge Patil Transport Ltd. Hence the order passed by the Commissioner is quashed.
Assessee's writ petition allowed
2018-TIOL-2657-HC-MUM-IT
PR CIT Vs RAHUL J JAIN: BOMBAY HIGH COURT (Dated: December 11, 2018)
Income tax - best judgment assessment - loss due to flood - neccesary documents - physical books of account
The assessee company, engaged in the business of trading in ferrous and nonferrous metals, filed its return for the relevant A.Y declaring loss of Rs.18.74 lakhs. During the course of scrutiny, the assessee was unable to produce its physical books of accounts, evidences for sales, purchases and expenses claimed in the view of the same being destroyed due to flood. In support, necessary evidences were filed indicating the destruction of physical accounts due to heavy rains. However, the AO assessed the income of assessee at Rs.57.95 lakhs under the head 'business' as against the loss of Rs.18.74 lakhs as shown by them in their return.
On appeal, the CIT(A) noted the fact that the assessee had produced various documents in support of its claims for expenses, after recording the fact that various confirmation letters from the parties who had made purchases were also filed. However, the AO did not carry out any further verification in regard to it. The CIT(A) also recorded the fact that the return as submitted should be accepted keeping in view of the fact that there was a sharp and continuous fall in nickel prices which was the main ingredient in stainless steel. Further, the assessee had made more than 90% of the sale during the year, out of the opening stock held by it as a carried forward from the earlier year. Moreover, it also took cognizance of the fact that the assessee's book results were also accepted by the Sales Tax and Central Excise authorities. On further appeal, the Tribunal upheld the order of CIT(A).
On appeal, the HC held that,
Whether best judgment assessment can be arbitrarily resorted to by the AO, when supporting documents justifying loss return was filed before AO but he had completely ignored the same - NO: HC
++ the Tribunal notes that the documents submitted in support of their claim were not disputed by the Revenue. Further, fall in the prices of the steel in the global market which lead to a loss of the sales made by the assessee, is also noted by the Tribunal, and it was observed that the fairness of justice demands that 'best judgment assessment' should not be made as a 'best punishment assessment'. Moreover, both the CIT(A) and the Tribunal on examination of the facts have come to the conclusion that there was material evidence available before the AO for him to carry out necessary investigation to determine whether or not the loss suffered by the assessee was justifiable. The best judgment assessment can certainly be resorted to by AO in the absence of any record, but it cannot be arbitrary. This is more particularly so when various supporting documents justifying their loss return was filed before the AO and he had completely ignored the same.
Revenue's appeal dismissed
2018-TIOL-2656-HC-MUM-IT
PR CIT Vs HAFEEZ S CONTRACTOR: BOMBAY HIGH COURT (Dated: December 11, 2018)
Income tax - Section 271(1)(c)
Keywords - levy of penalty - show cause notice - specific charges
The Revenue Department preferred the present appeal challenging the action of ITAT in holding that no penalty was imposable u/s 271(1)(c) for the reason that at the time of initiating penalty proceedings or even at the time of issuing show-cause notices for imposition of penalty, the AO had not specified whether the penalty proceedings were on account of concealment of particulars or furnishing incorrect details/particulars.
On appeal, the HC held that,
Whether penalty proceedings initiated without specifying exact charges on the assessee for such levy, merits to be quashed - YES: HC
++ relying on the decision rendered by the Karnataka High Court in CIT Vs. Manjunath Cotton and Ginning Factory - 2013-TIOL-536-HC-KAR-IT, it was held by the Tribunal that in the absence of specific charges portrayed in the notices, the entire proceedings were held to be without jurisdiction. Nothing was shown either in that case nor in this case to support a view different from the view taken by the Karnataka High Court. Hence, no substantial question arises for consideration.
Revenue's appeal dismissed
2018-TIOL-2655-HC-MUM-IT
PR CIT Vs HDFC BANK LTD: BOMBAY HIGH COURT (Dated: December 05, 2018)
Income tax - Sections 158BC & 158BD
Keywords - block assessment - depreciation on windmill
The AO during the year under consideration, on the basis of search carried out in case of one REPL Engineering Ltd. and material collected during such search, disallowed Assessee's claim of depreciation on wind mills. The Assessee argued that, as person other than searched person, if the AO wanted to make any assessment in the hands of the HDFC Bank, the same could have been done only in accordance with the provisions contained in Income Tax Act for block assessment. When the matter reached Tribunal, the assessee's contention was accepted and it was held that, any additions or disallowance of claim on the basis of search material, in case of assessee herein, could have been done only in terms of Section 158BD.
On appeal, the HC held that,
Whether in case of the person other than searched person, upon finding of any income belonging to the person during search, the block assessment procedure had to be undertaken - YES: HC
++ as far as depreciation in case of block period is concerned, in terms of the provision of Section 158BD, if the AO has satisfied that undisclosed income belongs to any person other than person with respect to whom search was made u/s 132 or books of account or other documents or assets or requisitioned u/s 132A, than the books of account, other documents or assets seized or requisitioned would be handed over to the AO, having jurisdiction over such other person and that AO would proceed u/s 158BC against such other person and the provision of said Chapter would apply. In terms of such provision, once the AO of the searched person was satisfied that any undisclosed income belonged to the assessee, as in the present case, he would hand over the books of account, other documents or assets seized or requisitioned to the AO of the present assessee who would than proceed u/s 158BC. Accordingly, even in case of the person other than searched person, upon finding of any income belonging to the person during search, the block assessment procedure had to be undertaken. Under these circumstances, there is no error in view of the Tribunal with respect to this question;
++ as far as issue of depreciation on sale & leased back transactions are concerned, the case is admitted for further hearing.
Case deferred
2018-TIOL-2654-HC-MUM-IT
PR CIT Vs MANGALAM INFRA DEVELOPMENT PVT LTD: BOMBAY HIGH COURT (Dated: December 10, 2018)
Income tax - Section 145(3)
Keywords - bogus purchases - rejection of books
The assessee company is carrying on business of Civil Contractor. For the subject assessment year, the assessee filed its return declaring its income of Rs.36.34 lakhs. The assessment was however finalized u/s 143(3) determining the income at Rs.3.45 crores. This addition was essentially on the ground that the purchases made by assessee in respect of seven parties were found to be not genuine. This led to rejecting the books of account and disregarding the entire purchase of Rs.3.09 croes made from the seven parties.
On appeal, the CIT(A) held that bearing in mind the gross profit/net profit percentage for the earlier years, the addition could be sustained at Rs.1.23 crores and not at Rs.3.09 cores. Not satisfied, the assessee approached the ITAT, wherein the best judgment of CIT(A) came to be substituted.
On appeal, the HC held that,
Whether allegation regarding purchases made from non-genuine parties, is no basis to disallow entire purchases made during relevant year, when the factum of consumption of goods is not disputed - YES: HC
++ the Tribunal noted that it was the case of assessee that since all purchases were made by payment through Banks, an opportunity to cross-examine sought by the assessee ought to have been given. This opportunity of cross-examination was not given only because the AO was running short of time to complete the account. It further holds that the net profit rate of 11 % the entire purchases made during the year was applied by the CIT(A) to determine the addition. Thus, the Tribunal restricted to only 11% out of the purchases of Rs.3.09 crores made from the seven parties. This in view of the fact that consumption of goods is not denied/ disputed. It is therefore clear that the order of the Tribunal has taken a view on facts which is possible view.
Revenue's appeal dismissed
2018-TIOL-2653-HC-MUM-IT
PR CIT Vs PARTH ENTERPRISES: BOMBAY HIGH COURT (Dated: December 11, 2018)
Income tax - Section 68
Keywords - confirmation from creditors - genuineness of transaction - unsecured loans
The assessee company is engaged in the business of builders and developers. For the relevant A.Y, it had filed the return declaring income at Rs.7.72 lakhs, whereas the AO had completed the assessment u/s 143(3) determining the income at Rs.3.40 crores. This enhancement of income was essentially on account of the fact that the assessee had taken unsecured loans from 90 persons, however, confirmations were filed only in respect of seventy seven persons. This resulted in the AO concluding that unsecured loans to the extent of Rs.3.35 crores were hit by Section 68.
On appeal, the CIT(A) found that creditworthiness of the parties were not doubted. On facts, it came to the conclusion that out of 90 parties, loan reflected in the names of 13 parties was hit by Section 68. Accordingly, an addition of Rs.36 lakhs was confirmed against the addition of Rs.3.35 crores made by AO. In regard to the balance of Rs.2.99 crores, the CIT(A) found that the loans were genuine and therefore not hit by Section 68 resulting in its deletion. This decision of CIT(A) was upheld by the Tribunal.
On appeal, the HC held that,
Whether when creditworthiness of parties and genuineness of transaction stands established by concurrent findings of CIT(A) as well as the Tribunal, no additions u/s 68 is permitted on account of unsecured loans - YES: HC
++ the Tribunal has noted that the AO had made no effort to verify the details filed by the assessee before him. He could have at least made preliminary inquiry about them. He made inquiry about the persons directly and on the basis of such inquiry made an addition of Rs.3.55 crores. The provisions of Section 68 do not permit such action, on the basis of specific inquiry general additions cannot be made. No discrepancy was found by the AO in the documents filed by the assessee;
++ there are concurrent finding on facts rendered by the CIT(A) and the Tribunal holding that only Rs.36 lakhs can be added to the declared income and the balance amount of Rs.2.99 crores was not hit by section 68. This finding is premised on the fact that no enquiry was made in respect of 76 creditors out of 77 creditors and the assessee had provided required documentary evidence in respect of the 76 creditors. Thus, these are essentially finding of fact and the view taken by the Tribunal is a possible view on these facts.
Revenue's appeal dismissed
2018-TIOL-2652-HC-MUM-IT
PR CIT Vs PRAKASH MANGILAL JAIN: BOMBAY HIGH COURT (Dated: December 10, 2018)
Income tax - Section 271(1)(c)
Keywords - bonafide claim - levy of penalty - method of accounting - plausible explanation
The assessee is an individual. During the course of his assessment, the AO had made additions on three counts share transactions, House property income and dividend stripping. Since the assessee did not contest the additions, the AO also levied penalty u/s 271(1)(c). In the background, the assessee had shown the income from share transaction under the head capital gains whereas the assessee AO was of the opinion that same had to be taxed under the head business head. Secondly, the assessee had claimed all his three house properties, as self occupied. However, when matter went before the FAA, it was held that mere change of head could not result levy in penalty. Hence, penalty levied by AO got deleted.
Not satisfied, the Department approached the Tribunal, wherein it was opined that following FIFO or LIFO method could not be the basis for levying penalty as per the provisions of section 271(1)(c). Bonafide explanation filed by assessee about the disputed amount plays a vital role in deciding the justification of levying concealment penalty. Secondly, the Tribunal observed that additions made during assessment proceedings could not result in automatic levy of penalty. Secondly, the provisions of the Act dealing with SOP were very clear and they stipulate that the assessee could not claim SOP deduction for more than one property. In the explanation it was stated that in one of the properties his parents were residing and the property at Nasik was used for business purposes. Had the return not been picked up for scrutiny, the assessee would be taken benefit of the provision even though he was not entitled for it. In these circumstances, the Tribunal upheld the deletion of penalty, made by the FAA.
On appeal, the HC held that,
Whether plausible & bonafide explanation of assessee for not offering certain income to tax, may lead to additions, but will not pave way for levy of penalty - YES: HC
++ a perusal of the Tribunal's judgment would show that the penalty comprises of two separate elements. The first was with respect to the question whether the assessee's transactions of sale of shares would result into capital gain or business income. The Tribunal noted that in absence of any concealment of particulars of income, penalty cannot be attached. Likewise, the second issue was with respect to taxing the assessee's house properties which the assessee had not offered to tax. Here also the Tribunal came to the conclusion that the explanation offered by assessee for not offering the notional rental income of such properties was a plausible explanation. The Tribunal, therefore, did not confirm the decision of AO to impose penalty. This Court is broadly in agreement with the view of the Tribunal;
++ the third element of penalty was the assessee's claim exemption on tax pursuant to the dividend stripping activity. In this respect, the Tribunal instead of giving independent findings relied upon completely on its earlier decision in case of Walter Saldanah. The counsel for the Revenue correctly pointed out that the decision of the Tribunal in the said case of Walter Saldanah was challenged by the Revenue and the Revenue's Income Tax Appeal No.62 of 2011 is admitted. Ordinarily, therefore this Court would have entertained the Revenue's present appeal also on this issue. However, it is noticed from the order of CIT(A) that the Revenue implication in connection with this issue is barely Rs.66,500/. Only on this ground of the Revenue impact being small, this appeal is not entertained.
Case disposed of
2018-TIOL-2651-HC-MAD-IT
A SRIDEVI Vs ITO: MADRAS HIGH COURT (Dated: December 03, 2018)
Income Tax - Writ - Sections 147 & 148
Keywords - Cash flow statement - Full & true disclosure of material facts - Re-opening of assessment
The assessee, an individual, filed returns for the relevant AY, declaring total income of about Rs 14.5 lakhs, which comprised of income from salary as well as income from other sources. The assessment for such AY was completed. Thereafter, the AO re-opened assessment for such AY, whereupon the assessee was asked to submit details of her sources and nature of cash deposits made during the previous AY in her savings bank account. The assessee submitted bank details as well as letters showing real estate transactions. The AO completed the re-assessment by making additions of about Rs 10.5 lakhs on account shortfall in cash withdrawal, having treated the same as unexplained income u/s 68. The AO once again re-opened the assessment for such AY to examine some amount of money advanced by the assessee & held that the assessee failed to make full and true disclosure of material necessary for assessment. Later, the assessee filed a writ petition against such findings, but the same was dismissed on grounds that there is no bar on re-opening an assessment more than once during the time period prescribed, if the AO had reason to believe that income had escaped assessment & if such belief was based on tangible material. The Court also sustained such re-opening of assessment, citing that the assessee failed to make full & true disclosure of material facts.
In writ, the High Court held that,
Whether submitting cash flow statement in response to notice directing submission of details of bank transactions, constitutes full & true disclosure of material facts - NO: HC
Whether re-opening of assessment is justified if AO seeks to verify certain transactions not disclosed by the assessee & more so if the assessee does not submit balance sheet or statement of affairs despite directions to file the same - YES: HC
++ the AO has recorded that during the course of hearing, the authorized representative of the assessee was asked to file details of sources and nature of cash deposits made during the previous year in savings bank account to the tune of Rs 93,00,000/-. Further, the assessee was asked to file copies of bank accounts and other evidences in support of her claim. One fact, which is visibly clear, from what has been recorded in the assessment order, is that the details called for pertaining to the savings bank account maintained in Axis Bank, Anna Nagar Branch, Chennai and the details, which were furnished by the assessee also pertain to the said amount. Therefore, merely because a cash flow statement was appended to the letter of the assessee's authorized representative dated 30.12.2011, cannot be taken to be establish that the assessee has made full and true disclosure of the advance paid. One more factor which has weighed in our minds is even in the first reassessment proceedings dated 30.12.2011, there was a short fall of Rs 10,50,000/-. Therefore, the assessee did not fully and truly disclosed all materials necessary for its assessment;
++ perusal of the reasons for re-opening clearly shows that the AO intended to verify the transactions as it was not disclosed by the assessee. Thus, the omission on the part of the assessee has been pointed out and the reason why the AO wants to verify is also clear from reading the reasons for reopening. Therefore, the court does not agree with the assessee's argument that no opinion was formed by the AO for being satisfied that there is a case for reopening;
++ further the assessee has not filed the balance sheet or statement of affairs as noted by the Assessing Officer and in the return of income, the assessee has filed only statement showing computation of income consisting of salary income and interest income from other sources. Even when the reassessment proceedings were commenced by issuance of notice, the assessee did not file a fresh return of income, but informed the Assessing Officer to treat the return of income filed on 30.07.2009, as return in response to the notice under Section 147. Thus, whatever was placed before the Assessing Officer through their authorized representative's letter dated 30.12.2011, cannot be taken to be full and true disclosure pertaining to the transactions in question; therefore the re-opening of assessment is just & proper and cannot be treated as change of opinion.
Assessee's writ appeal dismissed
2018-TIOL-2650-HC-MAD-IT
SABDHAGIRI TELECOM Vs ITO: MADRAS HIGH COURT (Dated: November 14, 2018)
Income tax - Section 80IA(4)
Keywords - commission agent - telecom service provider
The assessee company had filed their return for the A.Ys 2003-04 and 2004-05, admitting a total income of Rs.'Nil'. The assessment was thereafter completed by holding that the nature of service done by assessee was that of commission agent of BSNL and they did not render any telecommunication service. Therefore, the deduction claimed by assessee u/s 80IA, was rejected. On appeal, the CIT(A) on perusal of the terms & conditions of the agreements between the assessee & the BSNL, held that the assessee was operating telephone exchanges and providing basic telecom services to its customers, and therefore, the interpretation of AO that the assessee was not providing 'basic telecommunication services', was incorrect. He therefore held that the assessee was entitled for deduction u/s 80IA(4). On further appeal, the Tribunal held that the assessee was collecting charges on commission basis on behalf of BSNL and therefore, could not be said to be a provider of telecommunication services.
On appeal, the HC held that,
Whether basic telephone services provided by means of transmission or reception of signals, has to be construed as 'tecommunication services' eligible for deduction u/s 80IA - YES: HC
++ it is found that the definition of 'telecommunication service', as defined u/s 2(k) of the TRAI Act, is a very wide and comprehensive definition, which includes services of any description, which is made available to users by means of any transmission or reception of signs, signals etc. Thus, the definition being very wide and inclusive definition, it would encompass all types of services regardless of the description and definitely it would encompass the type of service rendered by the assessee and therefore, there is no hesitation to hold that the type of service rendered by the assessee is a 'basic telecommunication service'. Furthermore, the official website of the BSNL also shows EPABX as one of the enterprises services provided by BSNL. The official website of BSNL also states that it permits telephone subscribers to use their own PABX/EPABX connected to the BSNL network under certain commercial/technical conditions. Thus, this type of service done by the assessee is an authorised 'telecommunication service' in association with BSNL. Thus, the interpretation given by the CIT(A) is perfectly valid and and the interference by the Tribunal to such an order was uncalled for.
Assessee's appeal allowed
2018-TIOL-2649-HC-MAD-IT
CIT Vs SIMPSON AND COMPANY LTD: MADRAS HIGH COURT (Dated: December 04, 2018)
Income tax - change of opinion - full disclosure - re assessment
The Revenue Department preferred the present appeal challenging the action of ITAT in confirming the order of CIT(A) cancelling the reassessment for A.Y 2001-02 as invalid, even though the assessee had not made a full & true disclosure of the necessary details at the stage of original assessment.
On appeal, the HC held that,
Whether re-assessment proceedings will be rendered invalid, if no new information is available with the AO nor any information is omitted by the assessee to be given to the AO during original assessment - YES: HC
++ the short question posed for consideration, is whether factually the CIT(A) as well as the Tribunal considered the validity of reopening proceedings. At this juncture, it is worthwhile to note that the CIT(A) has observed that the AO has sought clarification regarding technical assistance fee paid to AVL List GMBH, Austria, and only after considering the details & explanation, allowed the claim of assessee. This finding will clearly show that the AO while completing the initial enquiry has sought for clarification from the assessee. Therefore the CIT(A) held that it is a clear case of change of opinion and the correctness of this was tested by the Tribunal and the Tribunal noted that the required breakup details were furnished even at the time of original assessment and therefore, no new information available with the AO nor any information was omitted by the assessee to be given to the AO. Thus, there is no error in the order passed by the Tribunal.
Revenue's appeal dismissed
2018-TIOL-2648-HC-KERALA-IT
CIT Vs CATHOLIC SYRIAN BANK LTD: KERALA HIGH COURT (Dated: December 03, 2018)
Income Tax - Sections 43B, 115JA(2), 143(3), 147 & 234C
Keywords - Interest liability - Lease equalization charges - Payment of Advance tax
The assessee is a bank. It filed returns for the relevant AY, claiming expenses on account of Lease Equalization charges. On assessment, the AO disallowed such expenses. Subsequently, the Tribunal held that the assessee was entitled to claim such expenses. Hence the present appeals by the Revenue, claiming that Lease Equalization charges were provisions made towards future liability & so were impermissible deductions.
On appeal, the High Court held that,
Whether payment of advance tax would absolve interest liability, if any, arising u/s 234C - NO: HC
++ on the first question regarding the pension fund as available under the assessee, the specific question raised is also as to whether the second proviso to Section 43B being brought into the statute book on 01.04.2004, the deduction is impermissible insofar as the payment to pension fund having been made after the due dates. The Supreme Court in Commissioner of Income Tax v. Alom Extrusions Ltd. has found that the amendment by introduction of a proviso to Section 43B has to be read retrospectively to give full effect thereto. Hence, the question stands answered in favour of the assessee and against the Revenue upholding the order of the Tribunal, which affirmed the deduction as granted by the first appellate authority;
++ the second question in ITA No.3/2010 is also covered in favour of the assessee as found by the Supreme Court in Commissioner of Income Tax v. Virtual Soft Systems Ltd. The issue of lease equalization charges arose in the context of the assessee claiming the lease rentals to be adjusted towards the cost of acquisition of the property or machinery, which is leased out. The Guidance Note of the Institute of Chartered Accountants of India providing for separation of capital recovery element and finance income has been approved by the Supreme Court in this decision. Hence, this question also has to be answered in favour of the assessee and against the Revenue;
++ a further question arises as to whether the levy of interest as set aside by the Tribunal is proper or not. The Tribunal merely noticed the fact that the assessee had paid considerable advance tax and, hence, there is no warrant for levy of interest under Section 234C. This court cannot accede to the view that considerable advance tax payment would absolve the liability of interest if it arises under Section 234C. The question, hence, is answered in favour of the Revenue and against the assessee. The order of the Tribunal is set aside and it is directed that the AO would determine the interest payable under Section 234C, in accordance with law.
Revenue's appeals partly allowed
2018-TIOL-2647-HC-AHM-CT
COROMANDEL AGRICO PVT LTD Vs CTO: GUJARAT HIGH COURT (Dated: October 29, 2018)
Gujarat GST Act, 2017 - Writ - Section 83
Keywords - attachment of machinery - discharge of tax liability - financial crisis
The assessee dealer under present petition, was unable to discharge its GST liabilities for the past several months. According to them, tax of Rs.97.00 Lacs was collected but, could not be deposited with the Government on account of severe financial crisis. Out of such amount, the assessee had, by now, paid about Rs.33.00 Lacs, leaving a residue of about Rs.64.00 Lacs. According to the assessee, since it was unable to pay the tax, the returns could not be filed. The GST authorities, therefore, in exercise of powers u/s 83 of Gujarat GST Act, 2017 passed an order attaching the assessee's plant, machinery & stock.
On Writ, the HC held that,
Whether the dealer having collected GST from the customers, deserves liniency from recovery proceedings, if the unpaid taxes are not deposited in the Government revenue - NO: HC
++ according to the assessee, the outstanding dues are in the vicinity of Rs.64.00 Lacs. This does not account for possible interest or penalty or late payment charges. The assessee must clear the dues as soon as possible. The assessee, having collected such taxes, would not get any sympathy, if the unpaid taxes are not deposited in the Government revenue. The Revenue's counsel may also be correct in pointing out that the figures of unpaid taxes are based on assessee's self-assessment and this would be subject to verification. The law permits the authorities to carry out best judgment assessment in case the Returns are not filed. The assessee shall place before the Authorities the material regarding its purchases & clearances in order to enable the authority to form the best judgment assessment, if so found necessary. All these procedures can continue;
++ in the meantime, however, subject to certain strict conditions, the dealer can be permitted to operate the factory and clear the goods manufactured. The attachment on the assessee's stock, shall stand suspended. In other words, while maintaining the attachment on the plant and machinery, the dealer is permitted to carry out its manufacturing activities and clear the manufactured goods. Upon breach of any of the stipulated conditions including failure to deposit any of the installments, such restrictions shall stand restored.
Case disposed of
2018-TIOL-2646-HC-MUM-CUS
GRANITE INDIA Vs UoI: BOMBAY HIGH COURT (Dated: December 13, 2018)
Cus - The petitioner imports segments and blades - Issue relates to correct value of imported goods - The petitioner submitted that the authorities on one hand are not finalizing the assessment of the past imports and for the future, provision clearance would be permitted only upon depositing duty on computation of value of goods at the rate of Rs.1,200/- per kg. - The Court as far as back in May, 2018 had desired that the assessment be completed within 8 weeks from the date of receipt of the copy of the order - Whatever be the legal defect, fact remains that so far the assessment has not been completed - In fact, the SCN is also not issued - If, as was pointed out, the Department had already passed an order of assessment without notice to the petitioner, court do not understand why the Department cannot at least be ready with full material to enable the adjudicating authority to issue SCN - On one hand, there is thus considerable delay in finalizing the assessment of the past import and on the other hand, the petitioner's future imports are allowed to be cleared under strict conditions - It would be open for the respondent to issue SCN for finalizing the past assessment of the imports - Subject to the petitioner cooperating with such SCN proceedings, final order of adjudication shall be passed within three months of the petitioner filing reply to the SCN - The future consignments of petitioner of the same goods may be released upon the petitioner furnishing bond of 100% of value of goods and further furnishing 25% bank guarantee for the differential duty payable thereon: HC
Petition disposed of
2018-TIOL-2645-HC-MAD-CX
CCE Vs STEEL AUTHORITY OF INDIA LTD: MADRAS HIGH COURT (Dated: December 03, 2018)
CX - The letters produced by appellant are placed on record - This civil miscellaneous appeal is dismissed as withdrawn and the substantial questions of law raised in this appeal are left open - In the event the tax effect is above the threshold limit fixed in the said circular under exceptional clauses mentioned in the circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits: HC
CMP dismissed
