2018-TIOL-NEWS-184, Dated: Monday, August 06, 2018

2018-TIOL-NEWS-184 | Monday August 06, 2018

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CASE STORIES


	GST - UPS supplied with external storage battery is a mixed supply-Appellate authority upholds order of AAR GST - 'SIKA Block Joining Mortar' is non-refractory and is not used for preparation of surfaces - correctly classifiable under CTH 3824 - AAR order modified - West Bengal AAAR GST - Definition of 'intermediary' u/s 2(13) of IGST Act is not same as that u/r 2(f) of POPS Rules, 2012: AAAR I-T - If TDS payable to HUF is paid against individual's PAN number and it is now too late to rectify returns, no fault can be found if individual taxpayer takes credit of TDS deposited and pays taxes in HUF capacity: ITAT

DIRECT TAX


	2018-TIOL-1525-HC-MUM-IT PR CIT Vs Sab Miller India Ltd Whether when the HC has ruled against the Revenue on an issue pertaining to a particular AY, it is fair on part of the Revenue to appeal before the HC again on the same issue pertaining to any AY - NO: HC - Revenue's appeal dismissed: BOMBAY HIGH COURT 2018-TIOL-1219-ITAT-HYD + Case Story Sri Gandra Venkata Ramana Reddy Vs ACIT Whether if TDS payable to the HUF is paid against the taxpayer's PAN number and it is now too late to rectify the returns, any fault can be found if the taxpayer takes credit of the TDS deposited and pays taxes in the HUF capacity - NO: ITAT - Assessee's appeal allowed: HYDERABAD ITAT 2018-TIOL-1218-ITAT-DEL Gaursons Realty Pvt Ltd Vs ACIT Whether when investment made and advances given to any company are linked to business purpose, then interest expenditure incurred on funds borrowed is allowable as deduction u/s 36(1)(iii) - YES: ITAT Whether as advance given is far less than the own interest-free funds available with the assessee, no disallowance of interest expenditure incurred on funds borrowed can be made - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2018-TIOL-1217-ITAT-DEL ITO Vs Shree Veer Whether finished product, if processed outside the assessee's work place, is to be considered as 'manufacturing activity' and therefore, will be eligible while calculating benefits u/s 80IC - NO: ITAT - Revenue's appeal dismissed: DELHI ITAT 2018-TIOL-1216-ITAT-KOL DCIT Vs All India Technologies Ltd Whether unabsorbed depreciation of previous years outstanding as on April 1, 2001 is eligible to be carried forward for an indefinite period and set off from current year income as per amended section 32(2) of Act - YES: ITAT Whether assessee company is liable for TDS u/s 194I and 194J, on internet access network server charges when this payment neither falls in category of rent nor fee for technical services - NO: ITAT - Revenue's appeal dismissed: KOLKATA ITAT 2018-TIOL-1215-ITAT-AHM DCIT Vs Niyati Construction Whether under the provisions of TDS, deduction can be made when transport charges are being deposited within the due date by the assessee and hence being retrospective in nature - NO: ITAT - Revenue's appeal dismissed: AHMEDABAD ITAT 2018-TIOL-1214-ITAT-CHD Sant Nischal Singh Santpura Vs ITO Whether excess of expenditure incurred by a charitable organization in a particular AY can be adjusted against income of the immediately succeeding AY - YES: ITAT - Assessee's Appeal Allowed: CHANDIGARH ITAT 2018-TIOL-1213-ITAT-VIZAG ACIT Vs Sri Prakash Educational Society Whether voluntary contributions received from parents of children for creating infrastructure in the school which is specific purpose and the amount is actually spent for the purpose specified is not income u/s 2(24) of Act - YES : ITAT Whether interest accrued on funds which are borrowed for use in capital asset should also be capitalized and can not be claimed as Revenue expenditure - YES : ITAT - Revenue's appeal dismissed: VISAKHAPATNAM ITAT

INDIRECT TAX


	SERVICE TAX 2018-TIOL-2413-CESTAT-ALL CCE & ST Vs Indian Herbs Specialties Pvt Ltd ST - Revenue is in appeal against order of Commissioner (A), wherein it is held that there is no suppression on the part of assessee and set aside the penalty under Section 78 of FA, 1994 - It is held that benefit under a Notification cannot be denied for procedural omission and the Adjudicating Authority was directed to re-quantify demand for normal period after giving benefit of exemption under Notfn 42/2012-ST - Assessee has availed the services of foreign agents who procured Orders for export of goods and the assessee exported goods through proper channel - While exporting the goods, ARE-1 & Shipping Bill were issued & the Shipping Bill as well as Form SDF filed to Customs, mentions commission paid to foreign agents, thus condition No. 1 & 3 of Notfn 42/2012-ST are satisfied as rightly held by Commissioner (A) - Further, it cannot be said that there is suppression on the part of assessee and extended period is not invokable - The impugned order is upheld: CESTAT - Appeal dismissed: ALLAHABAD CESTAT 2018-TIOL-2412-CESTAT-MAD Chettinad Cement Corporation Ltd Vs CCE ST - Assessee is engaged in manufacture of cement and clinkers - In course of setting up new cement factories at Gulbarga District of Karnataka, they received various capital goods, inputs/input services and availed credit of the same - On verification of returns, department was of the view that assessee is not eligible for credit, as construction services relating to setting up of factory is not eligible after the period 1/4/2011 - Assessee had immediately reversed the credit and intimated the department - Thereupon, SCN was issued invoking the extended period alleging suppression of facts with intention to evade payment of duty - Demand confirmed alongwith interest and penalty - The assessee is contesting only the penalty imposed - It is brought out from records that they had disclosed wrongly availed credit in their ER 1 Returns - This fact indicates that assessee had no intention to evade payment of duty and the credit was availed under wrong impression of law - The act of assessee immediately reversing the same alongwith interest also establishes their good faith - There is no evidence brought forth to establish suppression of facts or intention to evade payment of tax on the part of assessee - In such circumstances, penalty imposed is unwarranted, same is set aside: CESTAT - Appeal allowed: CHENNAI CESTAT 2018-TIOL-2411-CESTAT-MAD CST Vs Chennai Container Terminal Pvt Ltd ST - Assessee is providing services of container handling, storage and cargo planning within Chennai Port area - The services such as outdoor catering service, rent-a-cab service and transport of goods by road were availed by them for providing output services and therefore qualifies as input service - Commissioner (A) has rightly allowed the credit on these services - Similar view has been discussed by jurisdictional High Court in case of Britannia Industries Ltd. and others 2015-TIOL-750-HC-MAD -CX wherein the High Court has relied upon the decision of Bombay High Court in case of Ultratech Cement Ltd. 2010-TIOL-745-HC-MUM -ST - Impugned order calls for no interference: CESTAT - Appeal dismissed: CHENNAI CESTAT CENTRAL EXCISE 2018-TIOL-1528-HC-KAR-CX Informatics India Ltd Vs CST CX - Assessee submitted that the appeal was preferred with a delay of 307 days due to the fact that the concerned Accountant who was looking after the accounts of firm had resigned from the assessee-Company in August 2014 and it is true that from other employee, who met the said Accountant who had resigned, then he came to know about the impugned tax notice and then he took necessary steps for filing the appeal before Tribunal, but, in process, the delay of 307 days had occurred - Tribunal has erred in rejecting the appeal on preliminary ground of delay - The delay, even though of 307 days, had been reasonably explained by assessee and the Tribunal ought to have decided the appeal on merits - Impugned order set aside: HC - Appeal allowed: KARNATAKA HIGH COURT 2018-TIOL-1527-HC-AHM-CX Diamond Power Infrastructure Ltd Vs Principal Commissioner CX - The assessee had availed several trading on various items such as M.S. Bar, Angles, Channels, Plastic Sheets, Asbestos Sheets and TMT Bars used for erection and commission of machinery - The Audit team visited the assessee's factory and carried out verification of Cenvat documents and gave an opinion that the Cenvat availed on certain goods were not admissible - The order of Tribunal reveals that issue of admissibility of CENVAT credit on items like M.S. Bar, Angles, Channels, Plastic Sheets, Asbestos Sheets and TMT Bars was held in favour of assessee and it was held that the SCN was issued beyond normal period of limitation - Similarly, with regards to Second issue of CENVAT Credit on Consultancy service the issue was also held in favour of assessee, however with regards to admissibility of payment of Secondary and Higher Education Cess from CENVAT credit balance of the Education Cess is concerned, the Tribunal has not accepted the stand of assessee and thereafter, immediately directed the assessee for payment of interest on credit taken in excess on the ground that the same is not taken as a ground in appeal of the assessee - Though the specific contentions with regards to penalty and interest has been taken before the Tribunal, there is no specific finding or reasoning to justify the impugned order in so far as it concerns payment of interests and imposing of penalty on the Director - Proceedings are remitted back to the Tribunal for a fresh hearing and decision on levy of penalty and interest after granting proper opportunity to raise all the contentions and Tribunal shall assign appropriate reasons to such contentions raised: HC - Matter remanded: GUJARAT HIGH COURT 2018-TIOL-2410-CESTAT-KOL CCE Vs Tisco Tube Division CX- The assessee has been availing exemption from capital goods under Notification No.281/86-CE as amended by Notification No. 64/94-CE - Meanwhile, the assessee was required to pay duty during the period when notification benefit for captively consumed goods was not available - Hoeever, the de novo order was passed as per the direction of this Tribunal wherein the Commr. (A) after verifying the records of Modvat Credit available dropped the demand - Hence, the present appeal by Revenue challenged the de novo order wherein case was remanded to original authority for re-determination of the duty liability against the assessee after allowing them duty credit on the input used in the subject goods and also taking into account the credit available in respect of duty paid on them - Held - whatever demand had been raised would be set off against the available Modvat credit - The Revenue contended that Board has filed an appeal in the case of K.V. Rao , however the appeal has been dismissed by the SC in Commissioner Vs. K.V. Rao - Thus, the benefit of modvat credit is available to the respondent assessee against demand raised against them in the period in dispute - Therefore, whole exercise will be Revenue-neutral - Hence, the order challenged is upheld : CESTAT (Para 2, 6) - Revenue's Appeal Dismissed: KOLKATA CESTAT 2018-TIOL-2409-CESTAT-MAD Thiru Arooran Sugars Ltd Vs CCE CX - Assessee is engaged in manufacture of sugar, molasses, rectified spirit, Denatured ethyl alcohol and extra neutral alcohol - They were availing CENVAT credit on inputs and input services - It was noticed that they were using common inputs / input services for manufacture of dutiable products as well as exempted goods - The department was of the view that having not filed the declaration as contemplated in Rule 6 (3A), the assessee is liable to pay 10% / 5% of value of exempted goods cleared during the disputed period from April 2009 to July 2009 - The said issue has been considered by Tribunal in case of Cranes & Structural Engineers wherein it is observed that the condition in Rule 6(3A) to intimate the Department is only a procedural one and that such procedural lapse is condonable and denial of substantive right on such procedural failure is unjustified, therefore, the demand raised by Revenue is not legal and proper - Following the same, demand cannot sustain: CESTAT - Appeal allowed: CHENNAI CESTAT CUSTOMS 2018-TIOL-1526-HC-MAD-CUS CC Vs New Kailash Jewellery House Cus - Revenue's grievance is that the Tribunal remanded the issues for reconsideration by Commissioner in view of previous judgment in case of Mangli Impex Limited 2016-TIOL-877-HC-DEL-CUS - This was on account of a dichotomy of judicial opinion with respect to competence and jurisdiction under amended Section 28 of Customs Act, 1962-one view holding that no jurisdiction laid with the DRI and the other view endorsed in a subsequent judgment of this Court in Vipul Overseas Pvt. Ltd. 2017-TIOL-2478-HC-DEL-CUS - An identical approach is necessary in this case - Accordingly, following the order in Forech India , the appeal is allowed and Tribunal would independently apply its mind to the question of jurisdiction and also decide the appeal on merits including the aspect of imposition of penalty if any: HC - Appeal partly allowed: MADRAS HIGH COURT 2018-TIOL-2408-CESTAT-MAD CC Vs Jsw Steels Ltd Cus - In the present case, BCD liability was imposed on the assessee as the Revenue took a view that exemption could not be imposed under Notification No.12/2012-Cus - The assessee imported coal which was used in the manufacture of steel - The Notification provides exemption from BCD to coal having Swelling Index or Crucible Swelling Number of 1 and above and mean reflectance (MMR) above 0.6 - The Bills of Entry were provisionally assessed u/s 18 of Custom Act, 1962 for want of original documents - Resultantly, the tests revealed that CSN is above 1 and MMR could not be tested due to lack of facilities - Meanwhile, the Asst. Commr. finalized the provisional assessment based on the load port certificate by an independent surveyor extending the exemption under Notification No.12/2012-Cus - It held that the imported coal was eligible for exemption under Notification 910 12/2002 - On appeal, the Commr. (CUS) upheld the order-in-original - Hence, the present appeal by the Revenue. Held - It is highlighted that the Chemical Laboratory did not have facility to conduct necessary tests for determining the MMR - The sample should have been sent to various other Laboratories which have the facility - However, this was not done - Thus, the assessment was finalized by placing reliance upon the report given by independent surveyor - Therefore, due to failure to get the sample tested at the appropriate lab the exemption cannot be denied - Hence, the order challenged is upheld: CESTAT (Para 1, 5, 6) - Revenue's Appeal Dismissed: CHENNAI CESTAT

GST CASES

2018-TIOL-04-AAAR-GST + Case Story

Switching Avo Electro Power Ltd

GST - UPS supplied with external storage battery is a mixed supply within the meaning of section 2(74) of the CGST Act, 2017 - Appellate authority upholds order of AAR - appeal dismissed: AAAR

-Appeal dismissed : AAAR

2018-TIOL-03-AAAR-GST + Case Story

Sika India Pvt Ltd

GST - ‘SIKA Block Joining Mortar' is non-refractory and is not used for preparation of surfaces - correctly classifiable under CTH 3824 @9% CGST, Sr. no. 97 of Schedule III of notification 1/2017-CT(R) and not under CTH 3214 - order of Advance Ruling Authority modified - Appeal succeeds: Appellate Authority for Advance Ruling

-Appeal allowed : AAAR

2018-TIOL-02-AAAR-GST + Case Story

Global Reach Education Services Pvt Ltd

GST - Definition of "intermediary" us 2(13) of IGST Act is not the same as that ur 2(f) of the POPS Rules, 2012 - Under GST an "intermediary" is an entity who arrangesfacilitates for the supply of services of another entity, which may include ancillary services, whereas under POPS, 2012, the intermediary arrangesfacilitates for provisions of services of the ‘main service' provider - Fee paid to the appellant was not tied to the promotional activities or expenses incurred to promote Courses of Australian Catholic University (ACU) but as a percentage of fees paid by the students who got admitted to ACU - In other words, no consideration was paid in spite of incurring expenses by the appellants for promoting activities of ACU, if no student joined ACU - services of the Appellant are not ‘Export of Services' under the GST Act and are exigible to tax - appeal dismissed West Bengal Appellate Authority for Advance Ruling

-Appeal dismissed : AAAR

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