2018-TIOL-NEWS-183, Dated: Saturday, August 04, 2018

2018-TIOL-NEWS-183 | Saturday August 04, 2018

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	Legal Wrangle \| Income Tax \| Episode 79

CASE STORIES


	CX - Printing names of customers on sacks along with packing of same amounts to manufacture: CESTAT I-T - When valuation of property by stamp authority is higher than actual sale price, then before calculation of capital gain on such higher value, AO should refer capital asset to DVO for valuation even if not prayed for: ITAT

DIRECT TAX


	2018-TIOL-309-SC-IT CIT Vs Hazarilal Goyal Delay condoned. The Special Leave Petition is dismissed. Assessee's SLP dismissed: SUPREME COURT OF INDIA 2018-TIOL-1524-HC-MAD-IT Dubagunta Nagasaila Vs UoI Whether an assessee can be permitted to file income tax returns without complying with the mandatory requirement of first linking PAN & Aadhar details, considering that the validity of Section 139AA mandating such linking of details, is pending disposal before the Apex Court - YES: HC Assessee's Writ allowed: MADRAS HIGH COURT 2018-TIOL-1202-ITAT-MUM + Case Story ACIT Vs Asahi Infrastructure and Projects Ltd Whether primary onus to substantiate the financial results is to be discharged by the assessee and the same cannot be shifted upon AO to provide relief to the assessee - YES: ITAT Whether however, since the assessee is subject to statutory audits and books of accounts cannot be simply disallowed, matter warrants remand back to the file of AO - YES: ITAT Case Remanded : MUMBAI ITAT 2018-TIOL-1201-ITAT-BANG ACIT Vs Kle Academy Of Deemed University Whether since amendment of section 11(6) of the Act by the Finance Act, 2014 is prospective and is not effective for relevant AY 2011-12, claim of depreciation on fixed assets by the charitable trust should be allowed - YES : ITAT Revenue's appeal dismissed : BANGALORE ITAT 2018-TIOL-1200-ITAT-DEL Gail India Ltd Vs DCIT Whether when main order passed by the CIT for reopening the case of the assessee is quashed by the Tribunal, subsequent proceedings become infructuous and hence, should be quashed - YES: ITAT Assessee's appeal allowed : DELHI ITAT 2018-TIOL-1199-ITAT-DEL MP Mehrotra (HUF) Vs DCIT Whether if conversion of shares from stock-in-trade into investment is legally correct then for such transfer of shares no taxable profit or gain arises to the business of assessee - YES : ITAT Assessee's appeal allowed : DELHI ITAT 2018-TIOL-1198-ITAT-DEL Montage Enterprises Pvt Ltd Vs DCIT Whether in the absence of contrary proved by the Revenue, following the order of Tribunal in assessee's own case for previous year, payment of licence fee and royalty is allowed to be claimed as payment from corporate unit - YES: ITAT Assessee's appeal allowed : DELHI ITAT 2018-TIOL-1197-ITAT-KOL Nupur Joshi Vs ITO Whether as non-resident assessee has disclosed the entire sale consideration of property sold in return and has deposited the funds received in bank then additional amount credited in the bank over and above the value of property mentioned in the sale deed is not undisclosed income but it is sale proceeds only - YES : ITAT Whether there is no restriction of having only one house by the assessee before claiming deduction u/s 54F of the Act - YES : ITAT Assessee's appeal allowed : KOLKATA ITAT

INDIRECT TAX

SERVICE TAX

2018-TIOL-2406-CESTAT-DEL

Suyash Exim Pvt Ltd Vs CCE

ST - The assessee recovered commission from their clients on whose behalf transactions were put through by them under NCDEX - In addition, they collected transaction and clearing charges from their clients on the basis of transaction done by them on the NCDEX - Despite, collecting these charges the assessee did not pay service tax to the Deparment instead they paid to NCDEX - Duty demand was raised under Rule 5 of Service Tax Rules - Held - Rule 5 (1) has been held as ultra-vires by the SC in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. - Moreover, clearing & transaction charges cannot be included in the transaction value provided they are in turn paid to NCDEX - Following the ratio laid down in the decision of Multi Mercantile Centre V/s Commissioner, the demand is deleted - Hence, the order challenged is set aside : CESTAT (Para 1, 4, 5, 6)

Appeals Allowed : DELHI CESTAT

2018-TIOL-2405-CESTAT-MAD

Parry Enterprises India Ltd Vs CST

ST - The issue for consideration is; whether the assessee is liable to pay service tax on the incentive received for use of AMADEUS systems; whether the assessee is liable to pay service tax on the remuneration / commission received from insurance companies; whether the assessee is eligible to avail CENVAT credit for period from October 2006 to January 2008 or whether the demand is hit by limitation - Levy of service tax on incentive received for use of AMADEUS software has been settled by decision of Tribunal in D. Pauls Consumer Benefit Ltd. 2017-TIOL-908-CESTAT-DEL - Following the same, assessee is liable to pay service tax - However, said issue was under litigation before Tribunal, assessee was under bonafide belief that they are not liable to pay service tax - Penalties imposed cannot sustain and set aside - The assessee has received incentive / commission from insurance companies for medi-claim policy availed for the clients while booking international air tickets - The contention of assessee that they are not liable to pay service tax since only when the commission is received by insurance agent, it would be liable to levy of service tax is not acceptable - Assessee is liable to pay service tax on this count - However, the issue being an interpretational one and the Board has also issued clarifications, penalty is set aside - The third issue is with regard to the demand of credit which was availed by assessee on common inputs - Under Rule 6(3)(c) of CCR, 2004, assessee being provider of output service ought to have utilized only 20% of credit availed on common input services - The assessee having availed credit both on taxable as well as non-taxable services are not eligible to utilize the credit exceeding 20% of amount of service tax payable on taxable output service - When availing the credit, assessee ought to have taken of the fact that they are availing credit on common input services for both taxable as well as non-taxable service - Impugned order is set aside to the extent of setting aside the penalties on all the three issues without disturbing the demand of service tax or interest thereon: CESTAT

Appeal partly allowed : CHENNAI CESTAT

2018-TIOL-2404-CESTAT-MAD

Pricol Travels Ltd Vs CST

ST - The assessee is engaged in business of travel agency with IATA certification - They were using integrated computer reservation system as developed by Amadeus Global Travel Distribution, Spain - Department views that the assessee is liable to pay service tax on incentive received for use of AMADEUS CRS software - SCN was issued proposing to demand the same along with interest and for imposing penalty - The issue whether assessee is liable to pay service tax for use and promotion AMADEUS software was settled by decision in D. Pauls Consumer Benefit Ltd. 2017-TIOL-908-CESTAT-DEL - By judicial discipline, same is followed and the levy of service tax is legal and proper - Assessee has put forward the argument on the ground of limitation also - The issue whether the assessee is liable to pay service tax on the incentive for use of AMADEUS software was under litigation and being an interpretation one, assessee had put forward reasonable cause for not discharging the service tax - Taking into consideration the facts being interpretational one, by invoking section 80 of Finance Act, penalties set aside - Impugned order is modified to the extent of setting aside the penalty imposed without disturbing the demand of service tax or interest thereon: CESTAT

Appeal partly allowed : CHENNAI CESTAT

CENTRAL EXCISE

2018-TIOL-2407-CESTAT-MAD + Case Story

CCE Vs DEEPAM PACKAGINGS

CX - Assessee supplied raw materials namely poly propylene granules, filler materials and colour batches to M/s. PPP under job work challans for conversion of raw materials into PP packs / sacks under Notfn 214/1986-CE - The department was of the view that fully finished PP bags / sacks were received from job worker namely M/s. PPP Ltd. and the same were not subjected to any process in premises of assessee other than from operation of printing the names of customers on the sacks and that this activity not amounting to manufacture, assessee is not eligible for the benefit of SSI exemption as per Notfn 8/2003 - On perusal of records it is found that the activity includes not only printing the names of customers on the sacks but also packing of sacks - In impugned order, Commissioner (A) has clearly stated that the assessee is doing operation of printing the names of customers on the sacks and also packing of the sacks - So also the very same allegation has been raised in SCN to allege that the assessee is not eligible for exemption under said Notfn - Following the decision of Apex Court in Fitrite Packers 2015-TIOL-235-SC-CX, order passed by Commissioner (A) requires no interference: CESTAT

Appeals dismissed: CHENNAI CESTAT

2018-TIOL-2403-CESTAT-MUM

Gopaldas Visram and Company Ltd Vs CCE

CX - During the Audit, it was pointed out to the appellant that they are not eligible to avail CENVAT credit of an amount of Rs.11,06,321/- on the service tax paid on PIN for MPA sticker - appellant accepted the alleged error and reversed the credit along with interest and also paid penalty of 15% of the amount involved - subsequently they filed refund claim stating that the reversal was done under mistake of law -as claim was rejected, appellant is before the CESTAT.

Held: Claim of the appellant of their misunderstanding of the law is without any substance - appellant had accepted the audit objection by payment of the amount involved and not contested the said reversal before any authorities - in the absence of any contest to the same, both the lower authorities were correct in rejecting the refund claim - appeal rejected: CESTAT [para 4, 5]

Appeal rejected : MUMBAI CESTAT

2018-TIOL-2402-CESTAT-BANG

Karnataka State Forest Industries Corporation Ltd Vs CCE

CX - Assessee is a wholly owned public sector undertaking of Government of Karnataka and Department conducted audit for period June 2003 to Jun3 2005 and all the documents were supplied to audit party and the audit party did not find that assessee has wrongly availed the exemption - Subsequently, assessee paid the entire duty when they realized that they are not entitled to exemption - Further, assessee has not suppressed any facts from the Department and they have filed all the documents including the balance sheet, Profit & Loss Account and other documents - Since they have paid the duty and there was no intention to evade and demand is also within the normal period of limitation and the provision to Section 11AC(1) has not been invoked, it is found that ingredients of Section 11AC of CEA, 1944 are not present to impose penalty equal to duty - Consequently, impugned order set aside: CESTAT

Appeal allowed : BANGALORE CESTAT

2018-TIOL-2401-CESTAT-MAD

Ecof Industries Pvt Ltd Vs CCE & ST

CX - Assessee was receiving detergent powder in bulk on payment of duty which was being packed in various pouches of various weights - Along with detergent powder, assessee was also packing free detergent cakes inside the pack of 900 gms of detergent powder having a total MRP rate of Rs. 30/- - The said goods were being cleared under brand name "Kite" - In as much as the assessee was availing Cenvat credit of duty paid on detergent cakes, Revenue entertained a view that such credit was not admissible to assessee as the same cannot be considered to be an input for the manufacture of detergent powder - An identical issue came before the Tribunal in case of Dynavista Industries (P) Ltd. 2015-TIOL-1760-CESTAT-MAD wherein a detergent cake was being supplied in pack of detergent powder cleared under the same brand name "Kite" wherein it stands held that the assesse is entitled to Cenvat credit of duty paid on detergent cake soap, which is packed in pouch of detergent powder, which is being cleared on payment of duty on MRP basis - As such, by following the said decision, impugned orders set aside: CESTAT

Appeals allowed : CHENNAI CESTAT

CUSTOMS

NOTIFICATIONS

cnt70_2018

CCE, Aizawl + CCE, Dimapur + CCE, Imphal receive charge as Commr. of Customs (Appeals), Kolkata

cnt69_2018

CBIC restricts MEIS benefit for courier imports of notified goods of FOB value up to Rs 5 lakhs

cnt68_2018

Courier Imports and Exports (Clearance) Regulations, 2018 amended

ctariff18_056

Seeks to further amend notification No. 50/2017-customs dated 30th June 2017, to give effect to serial number 14A and the second proviso to the notification from the 18th day of september, 2018 to delay the implementation of retaliatory duties against US till 18th September, 2018.

CASE LAWS

2018-TIOL-2400-CESTAT-KOL

Krishna Gopal Malpani Vs CC

Cus - the assessee claimed refund of additional Customs duty @ 4% paid on import of Cotton waste from Bangladesh - Such claims were allowed by the Adjudicating authority - However, such claims were later denied by the Commr.(A) on grounds that the assessee did not produce any relevant documents like C Forms or VAT returns - Held - The appellant's contentions that it is required to submit evidence to substantiate that the imported goods were sold on payment of sales tax or VAT as the case maybe, is not acceptable - Besides, the decisions relied upon by the assessee are inapplicable to the present cases because in those cases, the importer therein had submitted CST returns - Hence the O-i-A in contests merits no interference: CESTAT (Para 3,5,6)

Appeals Dismissed : KOLKATA CESTAT

2018-TIOL-2399-CESTAT-DEL

Fle Fast Line Express Pvt Ltd Vs CC

Cus - The assessee is an authorised courier who had filed 15 courier bills of entry on behalf of three importers and declared the goods as sample shoes - The goods were seized under Section 110 of Customs Act, 1962, being a case of mis-declaration and were being liable for confiscation under Section 111 of Customs Act - The matter is still at the stage of investigation - No doubt, it is apparent that Shri Balvinder Singh, proprietor of one of importers has admitted the intentional mis-declaration on his part vide his initial statement - It is after his statement that statement of proprietors of remaining two importers was recorded who tried to shirk their responsibility on the ground of handing over of KYC and other documents to the assessee on their behalf also but through M/s BS Imports - Accordingly, to finally conclude the investigation, subsequent statement of Shri Balvinder Singh is important. His unavailability on account of being hospitalised, is a sufficient cause of delay in not concluding the investigation within the span of six months required under Section 110 of Customs Act - It is rather opined to be a non cooperation on the part of importer with the investigation agency - Support drawn from M/s Durga Trading Co. 2015-TIOL-2308-CESTAT-MAD - No doubt the non cooperation at this stage is not apparent on the part of assessee but keeping in view his duties and the apparent admission of mis-declaration by importers on the postal parcels to be imported by assessee, the assessee cannot absolutely be absolved from facing the investigation and the subsequent adjudication - Commissioner of Customs has rightly invoked Section 124 of the Act while considering the absence of Shri Balvinder Singh as a sufficient cause for permitting the extension of six months, beyond the period of six months expiring from the date of seizure: CESTAT

Appeal rejected : DELHI CESTAT

MISC CASES

2018-TIOL-1523-HC-MAD-VAT

MRF Ltd Vs DCCT

Whether input tax credit on purchase of inputs can be availed under the TNVAT Act where the assessee fails to fulfil the statutory requirement of informing the Department about commencement of commercial production - NO: HC

Whether a provision being a complete code in itself, can be divided into parts, so as to interpret any one part as a stand alone provision enabling availment of input credit - NO: HC

Assessee's Writ dismissed: MADRAS HIGH COURT

2018-TIOL-1522-HC-MUM-VAT

Deepak Fertilisers And Petrochemicals Corporation Ltd Vs State Of Maharashtra

Whether an assessee can claim benefit of reduced rate of tax for a particular period by relying upon a Trade Circular, considering that such circulars are only meant to provide internal guidance or clarify queries raised by members of the Trade & by officials - NO: HC

Whether the language of a trade circular can be relied upon to grant any benefits to an assessee for a particular period - NO: HC

Assessee's Writ dismissed: BOMBAY HIGH COURT

2018-TIOL-1521-HC-KERALA-CT

Bharat Petroleum Corporation Ltd Vs State Of Kerala

Whether an assessment can be retrospectively revised suo motu & tax demands can be raised under Section 55C of the Kerala Goods & Sales Tax Act where it enables such recovery irrespective of the year to which the tax arrears or interest pertain to - YES: HC

Whether in such circumstances, can demand for interest arrears be raised under the Act, where the same was not taken note of earlier - YES: HC

Assessee's revision petition dismissed: KERALA HIGH COURT

FLASH NEWS


	DRI ropes in BSF, Assam & Tripura Police to seize 3878 kg ganja and two persons GST - GoM on incentivizing digital payment decides to recommend tax sop of 20% of applicable tax rate or maximum of Rs 100/- per transaction