2018-TIOL-NEWS-221, Dated: Wednesday, September 19, 2018

2018-TIOL-NEWS-221| Wednesday September 19, 2018

Dear Member,

Sending following links.

Warm Regards,
TIOL Content Team

TIOL PRIVATE LIMITED.

For assistance please call us at + 91 850 600 0282 or email us at helpdesk@tiol.in.

TIOL TUBE VIDEO


	Legal Wrangle \| International Taxation \| Episode 81

CASE STORIES

CX - In case of clandestine removal, where secrecy is involved, direct documentary evidence will not be available: HC

I-T - Rule 8D(ii) will have no application if interest income earned on investments outweighs interest expenditure incurred: ITAT

DIRECT TAX


	2018-TIOL-1592-ITAT-AHM + Case Story DCIT Vs Adani Infrastructure And Developers Pvt Ltd Whether inventory of goods is to be valued in accordance with the method of accounting regularly employed by the taxpayer - YES: HC Whether Rule 8D(2)(ii) shall have no application in case the interest income earned by the taxpayer outweighs interest expenditure - YES: HC - Revenue's appeal dismissed: AHMEDABAD ITAT 2018-TIOL-1591-ITAT-DEL Jagat Singh Vs ITO Whether when reasons recorded for reassessment are themselves based on a factually incorrect premise then entire reassessment proceedings are invalid - YES : ITAT - Assessee's appeal allowed: DELHI ITAT 2018-TIOL-1590-ITAT-DEL Tbwa Anthem Pvt Ltd Vs ACIT Whether ex-gratia payment of bonus can be held as bogus without proving the point that the payment was not during the course of carrying on the business or for commercial expediency - NO: ITAT Whether therefore, even if such ex-gratia payment is in excess of the limit prescribed, it cannot be said that the assessee has furnished inaccurate particulars of income to attract the penalty u/s 271(1)(c) - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2018-TIOL-1589-ITAT-DEL Nine Dot Nine Mediaworx Pvt Ltd Vs ITO Whether no tax is to be deducted at source on payment of legal and professional charges made to non-residents as per the DTAA provisions - YES: ITAT Whether AO can make disallowance u/s 14A read with Rule 8D with respect to exempt income earned without recording satisfaction in writing - NO : ITAT - Assessee's appeal partly allowed: DELHI ITAT 2018-TIOL-1588-ITAT-MUM Anil Kumar Dulichand Jain Vs ACIT Whether the date when an additional stamp duty was paid to complete the registration process of a purchase agreement then, the same will be treated to be the date of actual transfer - YES: ITAT Whether therefore, if investment of LTCG arising out of such transfer is made within a period of six months from the date of actual transfer then, the assessee is allowed to claim deduction u/s 54EC - YES: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2018-TIOL-1587-ITAT-KOL Binod Kumar Kheria Vs ACIT Whether having regard to failure of the assessee to justify suspected business promotion expenses for distribution of silver coins to clients, partial relief provided by the CIT(A) is reasonable and no further relief to assessee is warranted - YES: ITAT Assessee's appeal dismissed: KOLKATA ITAT 2018-TIOL-1586-ITAT-VIZAG Battula Anjaneyulu Vs DCIT Whether assessment made by the AO after due enquiry & verification, where he rejected the books of accounts and estimated the income, can be subject to review u/s 263 as prejudicial to the interest of revenue - NO: ITAT Whether lack of enquiry by the AO can be the reason to invoke jurisdiction u/s 263 and not the inadequate enquiry - YES: ITAT - Assessee's appeal allowed: VISAKHAPATNAM ITAT

GST CASE

2018-TIOL-152-AAR-GST

Ankit Tandon And Enterprises And Tollways Pvt Ltd

Facts: An entity M/s Highway Infrastructure (P) Ltd. has been allotted Toll Collection work of certain road by M/s NHAI and they would like to sub-let the toll collection work to the applicant - since the 'service by way of access to a road or by a bridge on payment of toll charges' is exempted service as per notification 12/2017-CTR, applicant seeks a ruling as to whether they too would be entitled for the same exemption.

Held: There is no restriction regarding the supplier or the recipient of the supply - therefore, even though the supply of service to the user of the Toll Road is by the sub-contractor, GST is not payable on the amount of Toll Charges collected - same is exempted by sr. no. 23 of notification 12/2017-CTR and corresponding notification under MPGST Act, 2017 - However, this ruling has no bearing on the consideration received by the applicant from Highway Infrastructure (P) Ltd. for the supplies made by them: AAR

- Application disposed of : AUTHORITY FOR ADVANCE RULING

2018-TIOL-151-AAR-GST

Indian Institute of Management

Facts: IIM, Indore is one of the nineteen IIMs set up by the Government of India and is providing various types of courses, some of which are explicitly exempted under GST and tax is payable on fees towards other courses including Executive Post Graduate Programme (EPGP) which is a one-year residential programme - Applicant has sought a ruling as to whether the course - Executive Post Graduate Programme in Management (EPGP) after enactment of Indian Institute of Management Act, 2017 notified effective 31.01.2018 is exempted from Goods and Services Tax and in case it is exempted, as to whether the total amount of fees collected towards EPGP for the academic session 2018-2019 is exempted, whether collected before or after enactment of IIM Act, 2017 or only on the amount collected after enactment of IIM Act, 2017.

Held: Executive Post Graduate Programme will not be eligible for exemption from GST as the same has been categorically excluded from exemption under Entry no. 67 to the notification 12/2017-CTR and corresponding notification under MPGST Act, 2017 - it is also clarified that the Executive Post Graduate Programme being conducted by the Applicant shall be chargeable to GST, irrespective of enactment of IIM, 2017: AAR

- Application disposed of : AUTHORITY FOR ADVANCE RULING

INDIRECT TAX

SERVICE TAX

2018-TIOL-2860-CESTAT-DEL

Rohan Motors Ltd Vs CCE

ST - The assessee is a dealer of M/s. MUL in respect of cars manufactured by MUL - As per the agreement with MUL, assessee has received various incentives/ discounts / bonus from MUL from time to time - The income received under these heads was accounted by assessee in their books of accounts as 'miscellaneous income' - Department took the view that such amounts received by assessee from MUL are consideration towards promotion and marketing of vehicles manufactured by MUL and such consideration is liable for payment of Service Tax under category of BAS - The discounts/incentives received by assessee from MUL cannot be made liable for payment of Service Tax under BAS, since the assessee is purchasing the cars from MUL on principal to principal basis and subsequently, reselling the same - By following the decision in case of Tyota Lakozy Auto Pvt. Ltd. 2016-TIOL-3152-CESTAT-MUM demand of Service Tax on incentives and loyalty bonus set aside - A portion of the demand also has been raised under the category of GTA - The assessee has paid the freight expenses in connection with transportation of Cars to their customers - However, they have not issued any consignment notes which are necessary to identify the assessee as a GTA - As per the views expressed by Tribunal in case of South Eastern Coal Fields Ltd., in the absence of consignment notes, the activity of assessee cannot be classified under GTA service - Consequently, demand under GTA service also set aside: CESTAT

- Appeals allowed: DELHI CESTAT

2018-TIOL-2859-CESTAT-AHM

Intertoll Ics Toll Management Company Pvt Ltd Vs CST

ST - The assessee company is engaged in the collection of toll charges on a highway - The Department claimed that the assessee is an SPV to execute a sub-contract entered into with Larsen & Toubro - Hence the Department raised demand under Business Auxiliary Service and also imposed penalties u/s 76, 77 & 78.

Held - An identical issue was settled by the Tribunal in Ideal Road Builders Pvt. Limited vs. CST, Mumbai wherein it was held that such service cannot be construed as Business Auxiliary Service provided to NHAI - Following relevant portions of such decision, the demands are set aside: CESTAT (Para 1,2,5)

- Appeal allowed: AHMEDABAD CESTAT

2018-TIOL-2858-CESTAT-BANG

CCE & ST Vs Ruchi Infrastructure

ST - The assessee entered into an agreement with M/s. Adept Agencies Pvt. Ltd. for renting out of storage tanks located at various Terminals, providing services of handling cargo and loading unloading to the users/importers who have entered into an agreement with the assessee - In lieu of sole rights, assessee charged them Rs. 1,00,000/- per month - A SCN was issued to the assessee demanding service tax and educational cess under category of "Storage and Warehousing Service" while seeking to levy interest and penalties - The agreement nowhere mentions that M/s. Adept Agencies Pvt. Ltd. shall render the services listed therein as agents of assessee - It is clearly seen that the agreement is on a principal to principal basis - M/s. Adept Agencies Pvt. Ltd. is dealing with users of storage and warehousing infrastructure of assessee directly and collecting service charges on their own account and also paying service tax on the same - The clarification given by CBEC vide F.No.B11/1/2002-TRU makes the issue very clear - Assessee cannot be asked to pay service tax under the category of "Storage and Warehousing Service" - Also coming to the bar of limitation, assessee have submitted that they have been issued the service tax registration on 21.11.2000 based on the agreement between them and the Adept Agencies - A SCN has been issued on 11.05.2005 clearly beyond the normal period - Therefore, issue is barred by limitation - Appeal filed by Department does not survive on merits and also on limitation - The order of Commissioner (A) does not require to be interfered: CESTAT

- Appeal rejected: BANGALORE CESTAT

CENTRAL EXCISE

2018-TIOL-1924-HC-MAD-CX + Case Story

Lawn Textile Mills Pvt Ltd Vs CESTAT

CX - In case of clandestine removal, where secrecy is involved, there may be cases where direct documentary evidence will not be available - if the Department is able to prima facie establish the case of clandestine removal and the assessee is not able to give any plausible explanation for the same, then the allegation of clandestine removal has to be held to be proved - If the assessee had sufficient records to establish their innocence, nothing prevented the Managing Director to say so while making the retraction - allegation of parallel invoicing has not been disproved in the manner known to law – no substantial question of law arises for consideration - Appeal dismissed: High Court [para 30 to 32]

- Appeal dismissed: MADRAS HIGH COURT

2018-TIOL-2856-CESTAT-BANG

CC CE & ST Vs JK Tyre And Industries Ltd

CX - The assessee company is engaged in the manufacture of Tyres, Tubes and Flaps - During the period of dispute, the assessee's clearances were provisionally assessed as depot prices were not readily available - Upon finalization of assessment, the assessee was found to have paid excess duty - The original authority as well as the appellate authority found the assessee eligible for refund and sanctioned the same - The Revenue filed the present appeal on grounds that the test of unjust enrichment ought to have been carried out & failure to do so vitiated such refunds.

Held - An identical issue was resolved by the Tribunal in Indian Telephone Industries - Following relevant findings laid down in such precedent, the orders in contest warrant no interference: CESTAT (Para 1,5.1,6)

- Appeals dismissed: BANGALORE CESTAT

2018-TIOL-2855-CESTAT-MAD

Larsen And Toubro Ltd Vs CCE

CX - The assessee availed credit on repair and maintenance of building – However, the Revenue denied the credit treating it as construction services as they are excluded from the definition of input services w.e.f. 01.04.2011 of Rule 2 (l) of CCR 2004.

Held - Repair and maintainance is included in the definition of input services following the decisions of M/s Red Hat India Pvt Ltd vs. Pr. Comm. ST & M/S Alliance Global Servies vs. CCE the issue is no longer res integra - The dispute whether the work contracts in the present case were for new construction or for repair and maintenance is required to be examined – Hence, the case is remanded for examination of relevant documents : CESTAT (para 1,3)

- Case Remanded: CHENNAI CESTAT

CUSTOMS

2018-TIOL-2857-CESTAT-MAD

Avt Natural Products Ltd Vs CC

Cus - the assessee imported goods declared as Marigold Seeds from China PR - Such goods were accompanied by two Phytosanitary Certificates issued from the port of export certifying that the imported goods were free from Quarantine Weed Seeds - However, on examination of the goods at the port of import, the goods were found be contaminated with quarantine weed - Hence the goods could not be allowed for clearance - Hence the goods were confiscated but permitted for re-export on payment of redemption fine - Penalty was imposed as well.

Held - Goods imported in contravention of the Plant Quarantine Regulations are liable for confiscation u/s 111(d) of the Customs Act 1962 - Hence the confiscation is upheld - Besides, as the assessee was aware that the imported consignment had not been cleared by the Plant Quarantine authorities, in such case, non-issue of an explicit SCN is not a serious contravention of the principles of natural justice - Thus where the confiscation of goods is upheld, the redemption fine is upheld as well - However, considering that the assessee took reasonable steps at the port of export to obtain Phytosanitary Certificates, the penalty is unjustified: CESTAT (Para 1,3-6)

- Appeal Partly Allowed: CHENNAI CESTAT

2018-TIOL-2854-CESTAT-MAD

Hyundai Engineering Plastics India Pvt Ltd Vs CC

Cus - Assessee imported raw materials such as Polypropylene granules for manufacture of "Polypropylene Compound" from M/s.Guangdonge Hyundai SK Advanced Polymer Company Ltd., China - On a prima facie finding that both importer and the foreign supplier are related, the matter was referred to SVB of the Customs for investigation - The SVB by an order held that Hyundai Engineering Plastics India Private Ltd., Chennai and M/s.Hyundai Engineering Plastic Co., Korea and M/s.Guangdong Hyundai SK Advanced Polymer Co. Ltd., China are related to each other in terms of Rule 2 (2) of Valuation Rules - On appeal, Commissioner (A) held that acceptance of invoice value by original authority is not correct; that there is discrepancy in the quantum of addition ordered by the original authority and the lower appellate authority set aside that portion of the adjudication order accepting the declared value in terms of Rule 3 (3) (b) ibid as also the quantum of addition ordered under Rule 10 (1) (c) - Department did not prefer any appeal at the same time against the order of original authority accepting the invoice value - In such circumstances, it was not open to Commissioner (A) to have gone beyond the scope of appeal and set aside a portion of the order which was not appealed against by Department - The order of lower appellate authority to set aside that portion of the original adjudicating authority’s order accepting the invoice price cannot sustain and same is set aside - No doubt, Rule 10 (c) of the Valuation Rules provides for addition to the price actually paid or payable for imported goods royalties and license fees related to the imported goods - However, the Rule 10 (c) also requires that such amounts are those that the buyer is required to pay, directly or indirectly as a condition of the sale of the goods - Thus there has to be a nexus between the goods imported with the royalties or license fees - As already found the nexus is only with respect to manufacturer of the goods, the payment of royalty and licence fees are not a condition of sale with respect to the goods imported from the parent company - The addition of royalties and license fees cannot be related to the imported goods, ergo, these amounts cannot be then made part of the assessable value of such imported goods - The royalty and lump sum fees paid in relation to manufacture of goods in India cannot be padded on to the declared import value of the impugned goods: CESTAT

- Appeal allowed: CHENNAI CESTAT

2018-TIOL-2853-CESTAT-MAD

Suguna Foods Ltd Vs CC

Cus - The assessee-company imported Poultry Dry Mix from Sri Lanka, with full exemption from Customs duties under Indo-Sri Lankan Free Trade Agreement with Sri Lanka (ISFTA) - Two such consignments were detained for discrepancy in date of issue of Certificate of Origin (COO) - On investigation, the Revenue alleged discrepancy in the quantity and description of raw materials between the Cost Statement submitted by the importer to Sri Lankan authorities in support of the claim for exemption under ISFTA and the actual Formulation and Consumption details of Ocean Feeds Pvt. Ltd. which was submitted to DRI by the importer - Such COOs were cancelled - It also appeared that in respect of goods imported under another 25 COO covering 45 containers, either formulation and consumption details were found to be same or third country components were found to be same or higher - Hence the Department alleged that import & clearance of these consignments ahd been obtained by suppression of facts & collusion with importer - Hence benefit under Notfn No.26/2000-Cus was denied - Demand for differential duty was raised with interest & penalties u/s 114A, 112(a) & 114AA of the Customs Act 1962 - On adjudication, the equivalent penalty u/s 114A & u/s 114AA was dropped - Hence the cross appeals.

Held - Free Trade Agreements (FTAs) are articles of faith between the Contracting Countries & provisions & conditions are laid out clearly - As they seek to promote trust & cooperation, all FTAs including the ISFTA provide for consultation in case of doubt about circumvention of Rules of Origin - Considering the many consultations between the DRI & Sri Lankan authorities, the doubts have all been looked into barring two ingredients - Hence the final outcome of the consultations must be accepted & benefit under ISFTA be extended to imports - Thus the demands for differential duty with interest & penalties are not sustainable - Ergo, the Revenue's appeal seeking imposition of penalties u/s 114A & 114AA do not sustain as well: CESTAT (Para 3,9.1-9.4,10)

- Assessee's appeals allowed: CHENNAI CESTAT

NEWS FLASH

Kolkata Airport Customs seizes Euro 1.29 lakh from four pax heading for Bangkok + Chennai Customs recovers gold worth Rs 2.53 Crore

India's first woman IAS officer of 1951 batch, TN Cadre, Ms Anna George Malhotra is no more

Stamp Duty hike by Haryana draws flak from Opposition

ST se GST tak

By Vijay Kumar

GST on IIM

What they don't teach you in Management Schools:

AS per Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate) , dated, June 28, 2017, GST on services provided by an educational ...