2018-TIOL-NEWS-271 Part 2, Dated: Wednesday, November 21, 2018

2018-TIOL-NEWS-271 Part 2 | Wednesday November 21, 2018

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CASE STORIES


	I-T - Department should wait for disposal of appeal & stay petition, before initiating recovery proceedings: HC ST - When value has been fixed as per Rule 6(7) of STR, 1994, can Incentive be subjected to service tax as 'Commission' under BAS - matter referred to LB: CESTAT I-T - Section 80IC benefit cannot be denied if revised return is filed within stipulated period as per Sec 139(5): ITAT

DIRECT TAX


	2018-TIOL-2443-HC-MAD-IT + Case Story K Pondurai Vs ACIT Whether Revenue Authorities should refrain themselves from initiating recovery proceedings, during pendency of appeal & stay petition against order of assessment & demand - YES: HC - Case disposed of : MADRAS HIGH COURT 2018-TIOL-2208-ITAT-DEL Dalmia Cement Ventures Ltd Vs DCIT Whether an assessment order can be passed against an entity which becomes non-existent on account of its merger - NO: ITAT Whether therefore, the matter warrants remand to the AO to determine whether a letter filed by the assessee mentioning its merger, was examined during original assessment - YES: ITAT - Case remanded: AAR 2018-TIOL-2179-ITAT-KOL ACIT Vs PS Group Realty Ltd Whether the value of cost of medical treatment mentioned in the RBI circulars being not a perquisite, chargeable to tax and, hence deduction of TDS will be covered u/s 192 - NO: ITAT - Revenue's appeal partly allowed: KOLKATA ITAT 2018-TIOL-2178-ITAT-HYD Gocl Corporation Ltd Vs DCIT Whether it is inevitable for the Tribunal to remand a case if the assessee furnishes new evidences for the first time before the Bench and the same were not examined or scrutinised by the Revenue earlier - YES: ITAT - Case remanded: HYDERABAD ITAT 2018-TIOL-2177-ITAT-DEL ITO Vs Narender Kumar Handa Whether when the AO has not doubted the quantum of cash sales and accepted the deposits, out of those sales in current account and overdraft account maintained then the same cannot be doubted on the part of saving bank account also - YES: ITAT - Revenue's appeal dismissed: DELHI ITAT 2018-TIOL-2176-ITAT-DEL DS Doors India Ltd Vs ITO Whether when the issue of agricultural income is debatable but if the assessee pays up a major chunk of the tax demand, the Tribunal will have no reservation in granting stay - YES: ITAT - Stay application allowed: DELHI ITAT

GST CASES

2018-TIOL-272-AAR-GST

Punjab Small Industries & Export Corporation Ltd

GST - Applicant, M/s Punjab Small Scale Industries and Export Corporation is engaged in providing lease (of 30 years or more) of industrial plots against one time upfront amount called as premium, salami, cost, price, development charges or by any other name to the industrial units and the same is exempted by virtue of point no. 41 of notification 12/2017-CTR - applicant seeks a ruling as to whether the ancillary services relating to the industrial plots of Transfer fees, Extension fees, Conversion fees, Processing fees, Bifurcation fees, Tower Charges are also exempted under the said notification.

Held: The additional services provided by the applicant although are in respect of the same plots but entry no. 41 (even after amendment by notification 32/2017-CTR dated 13.10.2017) does not provide exemption to all services related to plots covered therein as is evident from the description of the entry - Other subsequent services rendered by the appellant are liable for CGST and UTGST, same are classifiable under ‘Other Miscellaneous Services” - Service Code 999799 and chargeable to CGST @9% and UTGST @9% [Sr no. 35 to Notification 11/2017-CTR, 11/2017-UTTR refers] - Application disposed of: AAR

- Application disposed of: AAR

2018-TIOL-168-HC-KERALA-GST

Pioneer Polyleathers Ltd Vs Assistant State Tax Officer

GST - Goods belonging to the Petitioner, a registered dealer, were detained u/s 129(3) and tax demanded of Rs.5,28,834/- - petitioner paid the amount through the portal and obtained payment receipt but the State Tax officer refused to release the goods and he insists that the tax and penalty ought to have been paid through cash or demand draft - Therefore, the present petition is filed - counsel for Revenue submitted that the amount must be apportioned between the Centre and state as the liability is under the head IGST; that it is not within the State's purview to effect the apportionment and that if the Court could have before it the GST Network, the problem would be solved - Counsel for GST Network submitted that they are only an infrastructure provider and have no statutory role to play in apportionment of taxes between Centre and State.

Held: Government both at the Centre and in the State, have ushered in the GST Tax regime to ensure that everything is made online with minimum manual interventions - Yet strangely, the authorities still insist that the payment should be by physical means i.e. either in cash or through Demand Draft - Such insistence seems to be archaic and out of tune with the very spirit of the GST regime - In apportionment, there may be delays and difficulties, but the taxpayer cannot be made to suffer, on that count - applying the ratio of the judgment in Fashion Marbles and Granites Pvt. Ltd. 2018-TIOL-62-HC-KERALA-GST, the Assistant State Tax Officer is directed to release the goods and the vehicle forthwith - Petition disposed of: High Court [para 5, 6]

- Petition disposed of: KERALA HIGH COURT

INDIRECT TAX

SERVICE TAX

2018-TIOL-3503-CESTAT-HYD

Sparsha Logistics Vs CCT

ST - Assessee was paying service tax and filing ST-3 returns - However, during investigation, it is found that there was a difference between value of service charges reflected in their profit and loss accounts and the value declared in their ST-3 returns - The amount in Profit and Loss accounts was higher and hence, the entire SCN and demand was based on profit and loss accounts - Having relied on the profit and loss accounts to compute the differential tax liability, the departmental officers cannot brush aside some elements of the same profit and loss statements which are not convenient and consider only the other elements to fasten the liability on assessee - Profit and Loss statements show the amounts indicated in SCN as the values of services rendered and also show the corresponding breakup on the other side - The breakup shows the various components in which the amounts received were divided - These include various forms of expenses incurred by them with respect to those services as well as their profit and service tax amounts - A plain reading of Profit and Loss statement shows that service tax receipts shown therein are inclusive of service tax - Assessee is eligible for calculation of differential tax reckoning the amounts shown in Profit and Loss statements as inclusive of service tax - The demand of differential duty gets reduced correspondingly and so does any mandatory penalty imposed on them - Matter remanded to the original authority to recalculate the differential duty payable and penalty, taking the amounts shown in the Profit and Loss statements as service charges and also the corresponding service tax indicated therein: CESTAT

- Matter remanded: HYDERABAD CESTAT

2018-TIOL-3502-CESTAT-BANG

Bangalore International Airport Ltd Vs CCT

ST - Assessee is engaged in providing airport services - During audit of records, it was observed that assessee had identified the non-usable inventory from the stock and had made provision for write-off of the same in their book of accounts - The assessee have reversed the CENVAT credit availed on being pointed out by the audit and this fact has been admitted even in the SCN itself - Further, in O-I-O also, it has been noted that the assessee has reversed the service tax credit vide CENVAT register - Further, assessee has also submitted a Chartered Accountant certificate which is on record and the Chartered Accountant has certified the reversal of credit in the month of February, 2016 and he has also certified the extract of CENVAT credit register as well as the Service Tax returns for the period October 2015 to March 2016 - Further, from the CENVAT register, a copy of which is produced on record, the assessee had sufficient credit balance during the relevant period - Assessee has disclosed this fact in ST-3 returns itself - In the case of Bill Forge Pvt. Ltd. 2011-TIOL-799-HC-KAR-CX , the High Court of Karnataka has held that if the credit availed is revered without utilization then interest and penalty cannot be levied - Similarly, in the other decisions, this issue has been settled in favour of assessee and it has been held that if an assessee reverses the CENVAT credit before utilization and he has sufficient balance in his CENVAT credit account, then interest and penalty is not to be imposed - By following the ratios of said decision, the impugned order is not sustainable in law and therefore, same is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE

2018-TIOL-3501-CESTAT-CHD

Shree Balaji Alloys Vs CCE

CX - The assessee is manufacturing excisable goods; enjoying area based exemption under Notfn 56/2002-CE - As per the scheme of notfn, assessee is eligible for exemption equivalent to duty payable on value addition made on the final products cleared by them - There are two disputes and first one is with reference to eligibility of assessee for refund of education/ higher education cess paid by them on such final products - The second issue is with reference to valuation of excisable goods manufactured and cleared by assessee - The assessee considered the transaction value for their final products inclusive of outward freight up to the place of delivery of their finished goods - The assessee is claiming that the goods were sold on FOR basis and as such the place of removal is the delivery point to the buyer - The freight element incurred by assessee should form part of assessable value in such FOR sale - The impugned order records that assessee have not produced anything on record which would show that they had cleared the goods from factory gate to a warehouse, any other premises, a depot, consignment agents premises from where such excisable goods were sold - Admittedly, the goods sold by assessee delivered at the buyers premises will not make the place of removal as buyers premises - Following the ratio of Apex court in Ispat Industries Ltd. 2015-TIOL-238-SC-CX , there is no justification for assessee to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory - As such, the question of paying duty on such value addition to be covered by exemption under Notfn 56/2002-CE does not arise - Accordingly, the claim of assessee in is not sustainable - The appeals filed by assessee contesting the eligibility for refund of education cess are allowed and the appeals regarding assessable value with inclusion of freight element are dismissed: CESTAT

- Appeals partly allowed: CHANDIGARH CESTAT

2018-TIOL-3500-CESTAT-CHD

Swaraj Automotive Vs CCE & ST

CX - The assessee is engaged in the manufacture of "Seat & Seat Components', ‘Tractor Parts', ‘Railway parts' and Combine parts - The assessee manufacture both dutiable as well as goods chargeable to NIL rate of duty - During audit, it was found that the assessee was availing Cenvat credit on common input services without maintaining separate records and thereby violating the provisions of Rule 6 of CCR, 2004 - Assessee has reversed the proportionate credit as per Rules 6 (3A) (ii) along with interest and informed the Department vide letter - Once the assessee has reverse the proportionate Cenvat credit availed on common input services attributable to exempted goods then it is not required to pay 10% or 5% as the case may be as demanded by the Revenue - Assessee's case is squarely covered by the decision of Cranes & Structural Engineers and Hindustan Antibiotics Ltd. - Therefore, following the said decision, impugned order is not sustainable and the same is set aside: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

2018-TIOL-3499-CESTAT-MAD

Ransar Industries Ltd Vs CCE

CX - The assessee company manufactures single phase & three-phase submersible pump sets & paid Excise duty - The issue at hand pertains to control panel & capacitor boxes supplied separately with the single phase pumps - Normally such pumps are sold with capacitor boxes while some are sold without them - Nonetheless, such control panels can be procured separately - The issue pertains to the classification of such capacitor boxes - The Commr.(A) classified the same under heading 8413 which is the classification favored by the assessee.

Held - Considering the relevant section notes & nature of items, it is seen that the control panel is not intended to contribute to a clearly defined function of the pump sets - It manages the power supply required to operate the pump - It is not functionally contributing to main operation of liquid pumping - It does not contribute to the defined function of a pump either as a combination of machine or as an individual component of such machine - Hence the control panel is more appropriately classifiable under heading 8537, which is the heading favored by the Revenue - Hence the O-i-A in challenge is set aside: CESTAT (Para 1,2,11,13)

- Revenue's appeal allowed: CHENNAI CESTAT

CUSTOMS

2018-TIOL-3498-CESTAT-MAD

Sri Lalkamal Enterprises Vs CC

Cus - The assessee filed bill of entry for clearance of goods declared as Copper Scrap, Lead Scrap & Insulation material purchased on high sea sale basis - However, the seller had further purchased these goods from another seller, wherein the goods had been declared as 'Copper Cable Scrap' - On examination the goods were found to be 'High Voltage Electrical Cables' with sheathing - It appeared that the goods were cut pieces of used & dismantled insulated high voltage electrical cables under the grade 'Copper Scrap Druid Grade' which were classifiable under a different heading & which also happened to be restricted for import - The Department also opined that such product had to be approved by the Ministry of Environment & Forest - As the import license as well as the Ministry's certification were absent, the goods were seized - The Department alleged that the assessee misdeclared the goods by splitting them into three different items - The goods were directed to be re-exported - Penalty was imposed u/s 112(a).

Held - When the goods were allowed for re-export, no redemption fine is imposable for enjoyment of goods in the manner of home consumption even when law is violated - Redemption fine redeems the violation committed by the importer & allows unencumbered enjoyment of the goods - But this is not so where the goods are cleared for home consumption - Hence the redemption fine is an over-kill - Regarding penalty, even though the goods were mis-declared, other documents required under the Hazardous Waste Rules were furnished on import - Thus the high sea buyer & the original importer deserve being penalized for wrong declaration - Nonetheless, quantum of penalties are reduced in interests of justice - Consequently, penalties imposed on their proprietors be set aside considering that the proprietorship firms themselves have suffered penalty: CESTAT (Para 1,5.2,5.3)

- Assessees' appeals partly allowed: CHENNAI CESTAT