NEWS FLASH
GST Council approves Notification permitting 15% Commercial space within residential projects + 80% inward supplies only from GSTN-registered suppliers + tax to be paid under RCM if supplies from unregistered suppliers exceed 20% threshold
GST - Real Estate - Ongoing Residential Projects - Council decides to make it optional - continue with old rate or opt for new one
108 Economists questioning veracity of govt data; FM calls them 'compulsive contrarians'
TOP NEWS
New GST Regime for Real Estate - Council approves 15% cap for commercial space
CASE LAWS
2019-TIOL-28-AAAR-GST
INDIAN INSTITUTE OF MANAGEMENT: AAAR (Dated: March 01, 2019)
GST - The appellant herein is the Revenue - The respondent-applicant is stated to be an educational institution & provides education services to students - It approached the Authority for Advance Ruling, seeking to know whether or not after the introduction of the IIM Act w.e.f Jan 31, 2018, the IIM Calcutta would be considered as an educational institution - It also sought to know whether the IIM Calcutta is eligible for exemption under Entry No 66(a) of the Notfn No 12/2017-CT(R) as well as the date from which it should be effective - Lastly, it sought to know whether it would be eligible to get refund of tax amount already paid - The AAR proceeded to hold that the applicant classified as an educational institution as per Clause 2(y)(ii) of Notfn No 12/2017-CT(R) - It also held the applicant to be eligible for exemption under Entry 66(a) of Notfn No 12/2017-CT(R), being an educational institution.
Held - The IIM Act 2017, which was enacted w.e.f. Jan 31, 2018, granted IIMs the status of "institutions of national importance" and empowered various IIMs to grant degrees, diploma and other academic distinctions - Hence the respondent-applicant classifies as an educational institution as per Clause 2(y)(ii) of Notfn No 12/2017-CT(R) - The Circular No 82/01/2019-GST (F. No. 354/428/2018-TRU) dated Jan 01, 2019 dealt with the applicability of GST on programmes conducted by the IIMs - It clarified that for period between 01.07.2017 to 30.01.2018, IIMs were not covered under definition of educational institutions as per Notfn No 12/2017-CT(R) - Hence they were ineligible fot exemption under Sr No 66 of the Notfn, but were entitled for exemption on specific programmes falling under Sr No 67 of the Notfn - The Circular also conceded that if two or more exemption notifications were available to an assessee, the assessee could claim the one which is more beneficial - Hence from Jan 31, 2018 to Dec 31, 2018, IIMs can avail exemption under Sr No 66 or Sr No 67 of Notfn No 12/2017-CT(R) - Moreover, as the Sr No 67 stands deleted & so w.e.f. Jan 01, 2019, the exemption is available under Entry 66 - The findings of the AAR are modified to such effect: AAAR
Revenue's appeal disposed of
2019-TIOL-645-HC-MUM-ST
CCE & ST Vs BJ SHIRKE CONSTRUCTION TECHNOLOGY PVT LTD: BOMBAY HIGH COURT (Dated: March 15, 2019)
ST - The respondent assessee provides taxable services, such as Commercial or Industrial Construction service, u/s 65(25b) of the Finance Act 1994 - Upon verification, it was noted that during the relevant period, the assessee provided services to a certain Government directorate, for construction of new facilities & upgrading of existing ones at the Shiv Chatrapati Sports Complex - It was observed that such service was covered under Commercial or Industrial construction services considering that the stadium was to be used for commercial purposes - It was also noticed that the assessee did not pay service tax despite being liable for the same - An SCN was issued, raising duty demand with interest u/s 75 of the Act for the relevant period - Equivalent penalty was imposed as well - On appeal, the Tribunal held that the construction activity was non-commercial in nature & was not classifiable under Commercial or Industrial construction services - Thus it was held that no service tax was payable - Hence the Revenue's appeal.
Held - The plot of land upon which the stadium is constructed, is owned by the Government of Maharashtra - Records maintained by local authorities show that such plot is to be used for public welfare and not for residential or commercial purposes - Even though various rates are specified for different facilities in the sports complex, it is not the Revenue's case that the sports complex is used exclusively or primarily for commercial purposes - The varied rates for different facilities per se do not establish that the sports complex is exclusively or primarily used for commercial purpose - Considering the definition of Commercial or Industrial Construction service, it is seen that construction which is to be used or primarily to be used for commerce, is subject to levy of service tax - It is seen that the dominant user of the sports comples is non commercial - In this case, the construction of the sports stadium cannot attract levy of service tax - Thus the findings of the Tribunal dropping the proceedings, do not warrant any intervention: HC (Para 2,3,4,13,14,16,17)
Revenue's appeal dismissed
2019-TIOL-644-HC-MAD-CUS
SKYLARK OFFICE MACHINES Vs CC: MADRAS HIGH COURT (Dated: February 22, 2019)
Cus - Petitioners seek the issuance of Writs of Mandamus directing the assessment and release of the consignments, all of which comprises several units of old, used Digital Multifunction Print & Copying Machines ("DMPCM").
Held: Limited scope of the matter before the Bench is for a direction to the respondents to release the consignments in question - Some importers have challenged the amendments to the Foreign Trade Policy itself by way of Writ Petitions that are pending in a batch before the Division Bench - provisions of section 110A of the Customs Act, 1962 provides for Provisional release of the goods upon the importer furnishing sufficient security to the authorities - In line with the judgement of the Supreme Court in the matter of Commissioner of Customs Vs. Athul Automations Private Limited in Civil Appeal Nos.1057, 1058, 1060 & 1059 of 2019 dated January 24 of 2019, Bench directs the respondents to release the consignments of DMPCM in those cases, where there is no challenge to the policy, upon the petitioner furnishing a bond for 90% of the enhanced valuation of the goods, and security for the remaining 10%, within one week from the date of furnishing of the aforesaid security - authorities are also at liberty to initiate proceedings for assessment and adjudication of the consignments in question, in terms of the applicable statutory provisions and in accordance with law – Petitions disposed of: High Court [para 20 to 23, 26, 27]
Petitions disposed of
2019-TIOL-643-HC-MUM-IT + Case Story
PR CIT Vs RST INDIA LTD: BOMBAY HIGH COURT (Dated: March 12, 2019)
Income tax - Section 28(ii)(c)
Keywords - capital receipt - compensation amount - principal agent relationship - termination of contract
THE assessee company had entered into an agreement with US based company Sealand Service Inc., during the year under consideration. Under such agreement, the assessee was to solicit business on behalf of the said Sealand Service Inc. After some disputes between the parties, this contract was terminated pursuant to which, the assessee received a compensation of Rs.2.25 crores during the period relevant year in question. The assessee claimed that the receipt was capital in nature and therefore not assessable to tax. The AO however rejected such contention and held that it would be chargeable to tax in terms of section 28(ii)(c).
On appeal, the CIT(A) held that there was no principal agent relationship between the parties and the contract was on principal to principal basis and therefore section 28(ii)(c) would not apply. On further appeal, the Tribunal confirmed the view of the CIT(A), interalia holding that the entire source of income was terminated by virtue of the said agreement and that in view of the fact that there was no principal to agent relationship, section 28(ii)(c) would not apply.
On appeal, the HC held that,
Whether mere reference of term 'agency' in an agreement, by itself would not be conclusive of relationship between the parties and hence Section 28(ii)(c) would not apply to compensation received in case of termination of agreement - YES: HC
++ it is not disputed that upon termination of the contract, the assessee's entire business of soliciting freight on behalf of the US based company came to be terminated. It may be that assessee had, other business. Insofar as the question of taxing the receipts arising out of the contract terminating the very source of the business, the same would not be relevant. The real question is, was the relationship between the assessee and the US based company one in the nature of the agency. Section 28(ii)(c) makes any compensation or other payment due, the receipt of a person holding an agency in connection with the termination of the agency or the modification of the terms and conditions relating thereto, chargeable as profits and gains of business and profession. The essential requirement for application of section would therefore be that there was a corelation of agency principal between the assessee and the US based company;
++ in the present case the CIT(A) and the Tribunal have concurrently held that the relationship was one of principal to principal and not one of agency. The counsel for Revenue however submitted that the agreement itself described the relationship between the parties as one of the agency. Hence, any such reference or the expression in the agreement, by itself would not be conclusive or determinative of relationship between the parties. The true character of the relationship from the agreement would have to be gathered from reading the document as a whole. In such circumstances, there is no error in view of the Tribunal.
Revenue's appeal dismissed
2019-TIOL-642-HC-MUM-IT
ARCIL RETAIL LOAN PORTFOLIO 001-D-TRUST Vs PR CIT: BOMBAY HIGH COURT (Dated: March 14, 2019)
Income tax - Writ - recovery proceedings - pendency of appeal - stay
THE assessee is a trust established with the object of acquiring Non-Performing Assets by banks and recover dues from the defaulters. For the A.Y 2016-17, the AO passed an order of assessment making certain disallowances & additions in the hands of assessee which had given rise to a tax demand of Rs. 6.69 crores. Challenging the same, the assessee approached the CIT(A). However, pending such appeal, the assessee requested the AO to keep tax demand in abeyance. The AO thereafter passed an order directing the assessee to deposit 20% of the tax demand, upon which the rest of the recovery would be stayed. The assessee thereupon approached the Pr CIT and requested for full waiver of recovery. The Commissioner however rejected such a petition.
On Writ, the HC held that,
Whether any recovery proccedings pending appeal before the CIT(A) can be undertaken - NO: HC
++ it would prima facie appear that the assessment orders in the present case are based on same additions & disallowances which under similar if not identical circumstances, have been deleted by the CIT(A) which order as of today holds the field. Under the circumstances, it would prima facie appear that no recovery pending the appeal before the CIT(A) could be carried out. This Court in the case of UTI Mutual Fund Vs. ITO - 2012-TIOL-206-HC-MUM-IT had observed that, "If the AO has taken a view contrary to what has been held in the preceding previous years without there being a material change in facts or law, that is a relevant consideration in deciding the application for stay." In the present case, prima facie, the Revenue is unable to point out any material change in the facts or law on the basis of which the AO has made the additions. Under such circumstances, the Department is prevented from carrying out recoveries arising out of the orders of assessment.
Case disposed of
2019-TIOL-641-HC-MUM-IT
PR CIT Vs FIROZ TIN FACTORY: BOMBAY HIGH COURT (Dated: March 12, 2019)
Income tax - depreciated value - long term capital gains - shed for parking vehicle
DURING the relevant year under consideration, the assessee company had sold a piece of land and offered the consideration to long term capital gain. During the survey operation however, the AO recorded the statement of the representative of the assessee indicating that there was a factory building situated on the land. The revenue therefore, contends that such building would be subject to depreciation and for purpose of charging capital gain, the depreciated value of the super structure should be taken into consideration.
On appeal, the Tribunal held that there was no super structure on the land, which could be subjected to depreciation. The Tribunal noted that the property remained as land and minimum structure of as shed and compound wall was constructed when the property was given on rent to L & T for parking their vehicles.
On appeal, the HC held that,
Whether a land property can be subjected to depreciation, once it is factually established that said property did not have any superstructure and no manufacturing activity has been carried there - NO: HC
++ the Tribunal has observed that the CIT(A) himself has given a definite finding that the Kalina property did not have any factory structure. The total value of Kalina Property Rs.29.15 lakhs remained the same since 1995 onwards. There is no controversy on this fact. The assessee has given explanation that the amount of about Rs.26.00 lakhs was spent on land levelling, construction of compound wall and a watchman shed. This explanation of the assessee has not been proved to be false. The fact that the assessee has carried on its manufacturing activities in Kalachowki building was also accepted. Hence, the Ld CIT (A) has held that the assessee did not carry on any manufacturing activity in Kalina Property. Having held so, it is difficult to understand as to how the CIT(A) could hold that the Kalina property could have been subjected to depreciation. This is further fortified by the fact that the assessee has let out the land for container parking and thereafter to Larsen & Toubro. It is an accepted fact that the rent paid by Larsen & Toubro was subjected to tax deduction at source u/s 194I, i.e., as rent only. Thus, the assessee has received rent for letting out the land only. Thus, the Tribunal having considered the relevant materials on record has come to conclusion which has not shown to be perverse.
Revenue's appeal dismissed
2019-TIOL-640-HC-MUM-IT
CIT Vs EXPORT IMPORT BANK OF INDIA: BOMBAY HIGH COURT (Dated: March 11, 2019)
Income tax - Sections 10(23G) & 43D
Keywords - exempt income - interest expenditure - interest on NPAs
A) The assessee is a Public Financial Institution. For the relevant year, the assessee had raised foreign loan from which infrastructure projects were funded. The exempt income was reduced by interest expenditure, however, the same treatment was not given in respect to the local borrowings. The assessee therefore filed its return claiming exemption u/s 10(23G). During the course of assessment, the AO however held that such exemption would be available on net income and not on the gross interest receipt. He therefore, worked out the disallowance of exempt income by adjusting interest expenditure on local borrowings. On appeal, the Tribunal deleted such disallowance primarily on the ground that the assessee had sufficient interest free funds. Hence, present appeal.
B) The Revenue Department under present appeal, also challenged the action of ITAT in allowing penal interest & interest on non-performing assets upto March 31, 1998 without appreciating the fact that the provisions of Section 43D were applicable on the facts of the case and also decision of Supreme Court in the case of UCO Bank Ltd Vs. CIT - 2002-TIOL-697-SC-IT-LB which ruled that such interest become taxable in the year of receipt was also directly applicable on the facts of the case.
On appeal, the HC held that,
Whether exemption u/s 10(23C) is to be denied on grounds of sufficient interest-free funds, when there is no direct co-relation between taxpayer's local borrowings and his investments in infrastructure development projects - NO: HC
++ as far as exemption u/s 10(23C) is concerned, the Tribunal noted that the assessee had substantial own funds which were deployed in bonds and securities which yielded receipts exempt u/s 10(23G). The Tribunal, therefore, correctly applied the decision of this Court in the case of Reliance Utilities & Power Ltd. In the context of expenditure u/s 36(1)(iii), the Court after referring to and relying upon the decision of the Supreme Court in the case of S.A. Builders Ltd Vs. CIT - 2006-TIOL-179-SC-IT had held that when the assessee had made investments in sister concerns out of interest free funds and claimed expenditure of interest on borrowed capital used for business, the same was allowable. It is noticed that the decision of this Court in case of Reliance Utilities & Power Ltd was carried in the appeal by the Revenue, however Supreme Court has confirmed the decision of this Court. Further, the Revenue had not been able to establish any direct co-relation between the assessee's local borrowings and its investments in infrastructure development projects. For such reasons, no question of law arises;
Whether Department can bring the income to tax in the current year simply because exemption was withdrawn relying upon the provisions of Section 43D - NO: HC
++ as far as interest on NPAs are concerned, the counsel for the assessee was correct in pointing out that the income in question would be taxable on the basis of accrual. When such income accrued, it was not taxable. The Revenue now cannot bring the income to tax in the current year simply because such exemption was withdrawn relying upon the provisions of Section 43D. The provision of Section 43D makes special provisions in case of income of public financial institutions, public companies etc and provides that notwithstanding anything to the contrary contained in any other provision of the Act, in the case of a public financial institution or a scheduled bank or a co-operative bank, the income by way of interest in relation to specified bad or doubtful debts shall be chargeable to tax in previous year in which it is credited by such institution to its profit and loss account or the year in which it is actually received whichever is earlier. This provision, thus, makes a receipt of specified NPAs taxable on receipts or crediting in the account whichever is earlier. In this context, the Tribunal correctly observed that though the assessee was not required to or even eligible to file return, it had maintained accounts and the interest income was embedded in the profit / loss. This was during the period which such income was exempt from tax.
Revenue's appeal dismissed
2019-TIOL-639-HC-MUM-IT
DILIPKUMAR VISHINDAS LAKHI Vs JCIT: BOMBAY HIGH COURT (Dated: March 12, 2019)
Income tax - business income - capital gains - period of holding shares
THE assessee, an individual, is mainly engaged in the business of trading of diamonds as well as shares. For the year under consideration, both the AO and the CIT(A) on the basis of the frequency of sale & purchase of shares and duration of holding such shares as also the volume, came to the conclusion that the shares held by assessee for less than twelve months would give rise to business income upon sale. The Tribunal however gave partial relief to the assessee and held that all the shares which were held by assessee for more than 30 days would qualify as capital gain and not as business income.
On appeal, the HC held that,
Whether mere demarcation of holding shares for less than 30 days or more cannot be conclusive factor to characterize 'income from sale of such shares' - YES: HC
Whether taxpayer indulged in intraday transactions without taking delivery of shares which gave rise to his speculative income, can be construed as 'pure investor' - NO: HC
++ the counsel for assessee is correct in contending that mere demarcation of holding shares for less than 30 days or more cannot be conclusive or even in a given case the determinative factor. However, in the present case, after noticing the assessee’s activity of buying & selling shares and income generated from such activity, the Tribunal while granting partial relief for the Assessee had recorded that the same was done in peculiar facts of the case. The facts on record would suggest that during the period under consideration, the assessee had executed as many as 106 transactions of buying & selling shares within less than 30 days. The total value of sale transactions was Rs.7.11 crores. The assessee had also engaged in buying & selling shares of sizable volume and value after holding them for a period ranging between two months to upto 200 days. It was also noticed that the assessee was indulging intraday transactions without taking delivery of the shares which gave rise to the assessee’s speculative income. Therefore, there is no fault in the Tribunal’s conclusion that the assessee was not purely an investor in shares.
Assessee's appeal dismissed
2019-TIOL-638-HC-MUM-IT
PR CIT Vs BG SHIRKE CONSTRUCTION: BOMBAY HIGH COURT (Dated: March 12, 2019)
Income tax - Sections 139(1) & 143(3)
Keywords - exclusion of income - proceedings finalized u/s 143(3) - withdrawal of retention money
THE Revenue Department preferred the present appeal challenging the action of ITAT in failing to appreciate that the claim of assessee for exclusion of income on retention money withheld by contractees was rejected as any such income offered in the return of income originally filed u/s 139(1) could not be excluded in proceedings finalized u/s 143(3) of the I-T Act.
On appeal, the HC held that,
Whether assessee is entitled to make fresh claim before the Appellate Authorities, even if the same was not raised before the AO at the time of filing original return u/s 139 - YES: HC
++ the issues relate to the assessee's claim of nontaxability of retention money withheld/deducted by the customers till the deficit liability period is over and arises in the context of the fact that in the original return the assessee had offered the same to tax, but during the course of assessment argued that the same was erroneously done. In case of this very assessee, both these aspects have been examined by this Court in case of Commissioner of Income Tax Vs. B. G. Shirke Construction Technology P. Ltd - 2017-TIOL-490-HC-MUM-IT observing that: "....it is an undisputed position that the pending assessment before the AO consequent to return filed u/s 139(1) for the subject Assessment years had abated. This was on account of the search and as provided in second proviso to Section 153A(1). The consequence of notice u/s 153A(1) is that assessee is required to furnish fresh return of income for each of the six assessment years in regard to which a notice has been issued. It is this return which is filed consequent to the notice which would be subject of assessment by the Revenue for the first time in the case of abated assessment proceedings. Consequent to notice u/s 153A the earlier return filed for the purpose of assessment which is pending, would be treated as non est in law. Further, Section 153A(1) itself provides on filing of the return consequent to notice, the provision of the Act will apply to the return of income so filed. Consequently, the return filed u/s 153A(1) is a return furnished u/s 139. Consequently, the assessee is being assessed in respect of abated assessment for the first time under the Act. Therefore the provisions of the Act which would be otherwise applicable in case of return filed in the regular course u/s 139(1) would also continue to apply in case of return filed u/s 153A and the case laws on the provision of the Act would equally apply...." Hence the issue is answered in favour of assessee.
Revenue's appeal dismissed
2019-TIOL-636-HC-MAD-IT
CIT Vs SHRIRAM INVESTMENTS LTD: MADRAS HIGH COURT (Dated: February 05, 2019)
Income Tax - Section 263
Keywords - NPAs - Mercantile system of accounting - Non-performing assets - Securitization
The assessee is a NBFC and following mercantile system of accounting. For the relevant AY 2005-06, the assessee filed its return and claimed deductions in respect of income from NPAs and securitization income from the return income. The AO then, during the course of scrutiny assessment, allowed the deductions. Such assessment order was pulled up by the CIT by invoking the provisions of section 263. While invoking the revisionary powers, the CIT stated that income from NPA cannot be recognised and included in taxable income on the basis of accrual. The next issue which was felt to prejudicial to the interest of the Revenue was the deduction claimed on account of securitization income made during the course of assessment proceedings and allowed by the AO. The CIT made an observation that the assessee had not included such income both in its statutory book of account and in its income tax books of account and the assessee made a mistake during the computation of total income for which it failed to file revised return. The CIT after considering the replies of the assessee, set aside the assessment order relying on the apex court decision in Goetze (India) Limited. Vs. CIT - 2006-TIOL-198-SC-IT. The Tribunal, however, granted the assessee appeal and held that the decison in Goetz India Ltd was not applicable to the facts of the present case. The Revenue appealed.
On hearing the appeal, the High Court held that,
Whether dispersion of income generated from the same set of transactions in multiple AYs without any evidence of reduction or change of total income, is a valid reason to invoke revisional powers u/s 263 - NO: HC
Whether computation of same set of income transactions in two different ways and spread such income over multiple AYs, is valid reason to invoke revisional powers u/s 263 - NO: HC
++ the first substantial question of law relate to whether the Tribunal was right in questioning the revisional order passed by the CIT u/s 263. The crucial phrases in section 263 is that the order of the AO must be erroneous and it must be prejudicial to the interests of the Revenue. The jurisdictional High Court in CIT Vs Elgi Finance Limited- 2007-TIOL-502-HC-MAD-IT, has held that in a case where the AO found that the assessee was following the Mercantile System of Accounting, then both the income as well as the expenditure should be accounted on accrual basis. Following such decision, the Tribunal's order is upheld. The decision in CIT Vs Elgi Finance Ltd was challenged before the Supreme Court but the SLP filed by Revenue was dismissed;
++ with respect to the second substantial question of law, Goetze (India) Limited., Vs. CIT related to a case where for the AY 1995-96, the assessee filed its return and sought to claim a deduction by way of a letter addressed to the AO. This was disallowed on the ground that there was no provision in the Income-tax Act, 1961 allowing an amendment in the return without filing a revised return. The Tribunal confirmed this, as did the High Court. The Supreme Court dismissed an appeal holding that the decision was restricted to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return, and did not impinge on the power of the Appellate Tribunal u/s 254. The facts in the present case are totally different. Here, it had been clearly held that the Income from the relevant transactions, when they were treated as non securitized were spread over the assessment years from 2005-2006 to 2011-2012, whereas the income from the very same transactions had been offered in full for the assessment year 2005-2006. It was clear that there was no reduction of income in view of the fact that though the income reduces in the return year, it goes to increase the income of the assessee in the subsequent years. As there was neither any new income nor any fresh expenditure and it was only computation of income from the same set of transactions in two ways, namely, one treating them as securitized and other treating them as non securitized, no prejudice was caused to the Revenue. Consequently, it is seen that both the pre-requisite requirements for invoking revisional powers u/s 263 were not satisfied namely, an error and a prejudice caused to the Revenue.
Revenue's appeal dismissed
2019-TIOL-635-HC-MAD-VAT
PRATIPA CASHEWS Vs CTO: MADRAS HIGH COURT (Dated: February 27, 2019)
TNVAT Act - proposal of Enforcement Wing - independent enquiry - revisional assessment - stock difference
THE assessments in the case of present dealer were completed on best of judgment basis since the assessee did not file their objections to the respective revision notices. However, later on, the revision of assessments was made pursuant to an inspection conducted by the Enforcement Wing Officials in the business premises of assessee. The allegation made against the assessee was that they did not maintain the input tax credit claim, adjustment and carry forward register and stock difference. The case of the assessee was that the AO, without conducting any independent enquiry, merely went by the proposal of the officials of the Enforcement Wing, which amounted to abdication of his statutory duty as an AO.
On appeal, the HC held that,
Whether when the revision of assessment is based upon the inspection conducted by officials of Enforcement Wing, it is but appropriate that an opportunity should be granted to the dealer so as to put forth their contentions - YES: HC
++ it is to be noted that though the assessments were completed in the year 2015/2017, the CTO has not been able to recover a single pie towards tax or penalty and the assessment orders remained as paper orders. That apart, the revision of assessment was based upon a report submitted by the officials of the Enforcement Wing. Hence, an opportunity can be granted to the assessee to put forth their contentions, since already the assessee remitted tax along with their returns, as the allegation is stock difference. In the considered view, if the revision of assessment is based upon the inspection conducted by the officials of the Enforcement Wing, it is but appropriate that an opportunity should be granted to the dealer so as to put forth their contentions. That apart, the dealer appears to be a small dealer in cashew nuts in Cuddalore District. Accordingly, the assessee is directed to pay 15% of the tax demanded for each of the assessment years within three weeks from the date of receipt of a copy of this judgment. If the said condition is complied with, the assessee is entitled to treat the assessment orders as show cause notices and submit their objections, after which, the CTO shall afford an opportunity of personal hearing and redo the assessments on merits.
Case disposed of
2019-TIOL-634-HC-MAD-CT
STATE OF TAMIL NADU Vs INGRAM MICRO INDIA PVT LTD: MADRAS HIGH COURT (Dated: February 21, 2019)
Tamil Nadu GST - Writ - Section 12A & Rule 18C
Keywords - best judgment assessment - lower sale price - prevaling market price - willful non disclosure
THE Commercial tax Department had preferred the present appeal chalenging the action of Sales Tax Appellate Tribunal in accepting the claim of assessee dealer that due to downward trend of the market, the mobile phones were sold at lesser value in the absence of any evidence to show that the said goods were sold in a price which was correct price in prevailing the market/trade. The Department therefore pointed out that the Tribunal had erred in not appreciating the section 12A of the TNGST Act r/w Rule 18C which envisaged the AO to make a best judgment assessment if a dealer selling the goods at price which abnormally low compared to the prevailing market, when the dealer in the present had sold the goods at the prices which was lesser than the purchases.
On revision, the HC held that,
Whether the provision of Section 16(2) of the TNGST Act is attracted only in case of willful non-disclosure by the dealer - YES: HC
++ the question, which falls for consideration is whether the provisions of Section 16(2) of the TNGST Act would stand attracted to the case on hand, or not. The FAA held in favour of the dealer and set aside the assessment made by the AO under the provisions of the TNGST Act for the A.Y 2003-04. A clear factual finding has been recorded that what has been done by the AO is purely based on guess work and without conducting necessary work as mandatory under the statute. When the matter was taken up on appeal before the Tribunal, the Tribunal re-examined the factual position and observed that when the AO has not taken into account the factors mentioned in the Rule and he has made assessment of guess by adding 10% to the purchase value, the finding of the FAA that the assessment made on the disputed turnover on guess work without making any investigation as to the prevailing market rate is liable to be set aside, is sustainable. Since the assessment on the disputed turnover is liable to be set aside, and Section 16(2) of the TNGST Act is attracted only in case of willful non-disclosure, the consequential levy of penalty is also liable to be set aside.
Revenue's Revision dismissed
2019-TIOL-821-CESTAT-BANG
SHIRUGUPPI SUGAR WORKS LTD Vs CCT & CE: BANGALORE CESTAT (Dated: March 11, 2019)
CX - The appellant company manufactures Sugar & Molasses falling under Chapter 17 of the CETA 1985 - It availed Cenvat credit on various input goods & services under CCR 2004 - Upon audit, it was noted that the appellant availed credit on Erection and Commissioning service, Consultancy service & Site supervision service, in connection with setting up of its sugar factory - The Department claimed that these services were ineligible for availment of credit as they were not within the ambit of the definition of 'input service' & that such availment of credit had not been brought to the notice of the Department - Thus an SCN was issued raising duty demand seeking reversal of such irregularly availed credit - Demand for interest was raised as well & equivalent penalty was imposed - On appeal, the Commr.(A) sustained such duty demands.
Held - The appellant availed credit on Erection/Commissioning of machinery which was used for manufacturing sugar - Besides, these services fall within scope of input service even after 01.04.2011 - It has consistently been held by the Apex Court that the words 'in relation to manufacture' have been used to widen and explain the scope, meaning and content of the definition and applying the same ratio, CENVAT credit of service tax paid on input services is admissible so far as input services have been used directly or in directly, in or in relation to the manufacture of final product even if the term setting up has been deleted from the inclusive portion of the definition - In light of the settled legal position, the denial of cenvat credit on Erection, Commissioning & Installation of machinery is unsustainable - As the appeal is allowed on merits, the issue of limitation need not be looked into: CESTAT (Para 2,6)
Assessee's appeal allowed
