2019-TIOL-NEWS-025 Part 2, Dated: Wednesday, January 30, 2019

2019-TIOL-NEWS-025 Part 2 | Wednesday January 30, 2019

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	Legal Wrangle \| GST \| Episode 91

CASE STORIES


	I-T - Proceeds from sale of shares cannot be taxed as revenue receipts in hands of trust, if shares were held in fiduciary capacity and trust had acted as mere SPV of settler company: HC I-T - Urban Improvement Trust performing municipal functions is not part of State Govt - Income is liable to be taxed: ITAT Cus - Refund of SAD - Test of exclusion from 'receivables' is meaningless without examining the corresponding entry for goods lying unsold: CESTAT

DIRECT TAX


	NOTIFICATION it19not05 In exercise of powers conferred by sub section 3 of section 133C of the Income tax Act it19not04 In exercise of the powers conferred by section 133C read with sub section 295 of the Income tax Act CASE LAWS 2019-TIOL-243-HC-MUM-IT PR CIT Vs Atos India Pvt Ltd Whether the liability once crystallized, can be said to be a contingent liability - NO: HC Whether when assessee under a contract had neither disputed nor refuted his liability to pay in case of delayed execution of work, then Section 74 of Contract Act gets attracted - YES: HC Revenue's appeal dismissed : BOMBAY HIGH COURT 2019-TIOL-242-HC-MAD-IT CIT Vs TVS Finance And Services Ltd Whether bifurcation of lease rental income can be done as per ICAI Accounting Standards & Guidance Notes, when the I-T Act itself is silent on treatment of lease equalization charges - YES: HC Case remanded: MADRAS HIGH COURT 2019-TIOL-241-HC-KAR-IT PR CIT Vs Sri Vani Education Centre Whether when a charitable trust applies its income on acquisition of capital assets, then allowance of depreciation on such capital assets will not amount to double deduction - YES: HC - Revenue's appeal dismissed: KARNATAKA HIGH COURT 2019-TIOL-283-ITAT-DEL Elegant Infraworld Pvt Ltd Vs ITO Whether when the execution of Agreement to Sale & the handing-over of possession of the property were done in the preceding AY, then no captial gains can be assessed on such property for the subsequent AY - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2019-TIOL-282-ITAT-DEL Rakhi Parihar Vs ITO Whether addition is valid even if the counsel for the assessee reconciles the difference between Form 26AS and the P&L a/c - NO: ITAT - Assessee's appeal allowed: DELHI ITAT 2019-TIOL-281-ITAT-DEL Ramabagh Palace Hotel Pvt Ltd Vs DCIT Whether expenditure on fabrics and lamps which come under limited useful life & are of recurring nature then such expenditure is to be considered as revenue and not capital expenditure - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2019-TIOL-280-ITAT-DEL Universal Precision Screws Vs JCIT Whether in considering the eligibility of a deduction claimed by an Export Oriented Undertaking, having a close nexus of interest income with the business activity is an essential condition - YES: ITAT - Assessee's Appeal Partly Allowed: DELHI ITAT 2019-TIOL-279-ITAT-DEL B R Associates Pvt Ltd Vs ACIT Whether it is necessary to make additions u/s 153A if incriminating materials found in the course of search are not within the scope of sec. 153A - NO: ITAT - Assessee's appeals allowed: DELHI ITAT 2019-TIOL-278-ITAT-AHM Sai Flipped Coils Ltd Vs ITO Whether when the correspondence between the commission agent and the parties is not substantive then based on conclusive evidence deduction of such commission expenses cannot be allowed - YES: ITAT - Assessee's appeals partly allowed: AHMEDABAD ITAT

GST CASE

2019-TIOL-25-HC-AHM-GST

Philoden Industries Pvt Ltd Vs UoI

GST - Form GST TRAN-1 - Petitioner is allocated to the State Tax authorities under the GST regime - nonetheless, the nodal officer has forwarded the issue of technical glitches raised by the petitioner to the GSTN authorities - whether the issue was raised with the nodal officer of the State authorities, who is the proper officer, is not known - Petitioner submitting that he would make an application to the both the authorities viz. State and Central - Notice issued returnable on 30.01.2019: High Court [para 4]

- Notice issued: GUJARAT HIGH COURT

INDIRECT TAX


	SERVICE TAX 2019-TIOL-341-CESTAT-DEL Austrian Airlines Vs CST ST - The assessee-company is a leading airline operator - The Department claimed that the assessee collected fares under five heads, namely basic fare, fuel surcharge, insurance surcharge, Passenger Service Fee & (PSF) Airport taxes - The Department alleged that the assessee did not pay service tax on the PSF & airport taxes - Hence duty demand was raised with interest & penalty. Held: The issue at hand is no longer res integra and a similar issue was settled by the Tribunal in Lufthansa German Airlines vs. Commissioner of Service Tax - In this case, it was held that Airport tax is collected in keeping with Section 22 of the AAI Act - It was also held that PSF is charged as per the Aircraft Rules 1937 - It was further observed that such tax was shown separately on the tickets - This was found to be in compliance with provisions of Rule 6 of the Service Tax (Determination of Value) Rules, 2006 - Hence the Tribunal held that they were not to be included in the assessable value of the service - Following the findings laid down in this case, the demands raised in the present case merit being set aside: CESTAT (Para 1,4) - Assessee's appeal allowed: DELHI CESTAT 2019-TIOL-340-CESTAT-DEL Association Of Petroleum Geologists Vs CGST CC & CE ST - vide present application, the applicant does not want to incorporate a new ground of appeal - He only wishes to add explanation in form of settled legal position to the grounds already taken in main appeal memo - It is opined that explanation as mentioned in present application qua already existing grounds will not cause any prejudice to the Department - The contents allowed to be treated as the part of Appeal memo - It is observed that tax amount relating to Club and Association Service, Convention Service and Import of Service were paid by assessee on 01.04.2014 - The SCN was issued on 22.04.2014 - Thus, the said payment of service tax was much before the date of issuance of SCN - The explanation to Section 73(3) of FA, 1994 becomes relevant which clarifies that no penalty shall be payable under any provisions of FA, 1994 or Rules made there under - It becomes abundantly clear that where the tax has been paid by assessee before the issuance of SCN, the very ground of issue of notice is ultra vires to the Act which calls for penalty, if any imposed, to be vacated - Hence, the Order under challenge qua imposing penalty is set aside - As regards to another grievance qua demand on account of service tax for rendering sponsorship service, except the delay in payment, there is no other positive act proved nor even alleged by Department to hold that assessee had an intention to evade tax - On the contrary, record is clarifying sufficiently that assessee was under bonafide belief of having no tax liability - The liability qua Sponsorship Service was otherwise not sustainable: CESTAT - Appeal allowed: DELHI CESTAT CENTRAL EXCISE 2019-TIOL-339-CESTAT-HYD Deepak Galvanising And Engineering Industries Pvt Ltd Vs CCT CX - The main asessee had availed CENVAT credit of duty paid on various goods purchased from first stage registered dealers - During verification of records, it was noticed that description mentioned in original duty paying documents issued by registered dealers was different from description mentioned in original duty paying documents of manufacturer - SCN was issued for demand of amount availed as CENVAT credit with interest and also for imposition of penalties - There is a correlation between goods ordered, delivery challan, commercial invoices and the first stage registered dealer invoice conforms of mentioning the purchase orders and the invoice numbers - The description given in registered dealer invoice in column of manufacturer tallies in description given in the excise invoice in registered dealers invoice and the description given in commercial invoice is in accordance with purchase order number reflected on all the documents - Assessee cannot be put to any further strict proof as to call for documents received by dealer from the manufacturer and tally the description mentioned in invoices raised by registered dealer - This law is now fairly settled by judgment of High Court of Allahabad in case of Juhi Alloys Ltd. - 2014-TIOL-2693-HC-ALL-CX and various other decisions of Tribunal - On this point itself, the impugned order is set aside - As regards to limitation, Adjudicating Authority has recorded that even if records are audited, audit party will confine its findings to cenvatable invoice and would not go into the documents like inward register and delivery challan and the audit party presumed that CENVAT invoice would tally with the physical description of goods - Suffice to say that these findings are not in consonance with the law as laid down by High Court of Karnataka in case of MTR Foods Ltd. - *2011-TIOL-696-HC-KAR-CX* and followed by Trans Engineers India Pvt. Ltd. - *2015-TIOL-1947-CESTAT-MUM, question of limitation has to be held in favour of main assessee - Appeal is acceptable on merits as well as on limitation, accordingly, demands raised on main assessee is unsustainable and is set aside: CESTAT - Appeals allowed: HYDERABAD CESTAT 2019-TIOL-338-CESTAT-BANG Indian Sugar Manufacturing Company Ltd Vs CCT & CE* CX - The assessee is engaged in manufacture of Sugar - They are availing CENVAT credit of inputs such as clarifying agent, lubricating oil for sugar machinery, PP bags and Sulphur and input services such as GTA service, manpower supply service and repair and maintenance service used in manufacture of sugar - The assessee was issued earlier SCN for period up to February 2015 proposing to demand 6% on value of electricity wheeled out and Bagasse in terms of Rule 6 of CCR on the ground that assessee has availed credit of common inputs and input services for use in manufacture of dutiable final product namely, Sugar and exempted goods, Electricity and Bagasse - The issue is no more Res integra as far as demand of 6% on the amount of electricity sold outside the factory during relevant period is concerned - This issue has been settled by Allahabad High Court in case of Gularia Chini Mills - 2013-TIOL-568-HC-ALL-CX and the same has been affirmed by Apex Court wherein it has been held that there cannot be a demand of 6% of value of exempted electricity sold outside the factory in terms of Rule 6(3) (i) of CCR simply on the ground that assessee has failed to maintain separate account on receipt of input or input services used in the manufacture of dutiable goods, namely, Sugar and exempted goods, namely electricity - The assessee has not taken any credit on input services used in generation of electricity - Further, no input or input services has been used in manufacture of exempted goods i.e. Bagasse/electricity - Therefore, demand of 6% on value of electricity sold to Karnataka Electricity Board is not sustainable in law: CESTAT - Appeal allowed: BANGALORE CESTAT CUSTOMS NOTIFICATION Trade Notice 43 Applications in ANF- 2D submitted for seeking policy /procedure relaxation in terms of Para 2.58 of the FTP CASE LAW 2019-TIOL-342-CESTAT-DEL Desert Exim Vs CC Cus - The assessee had imported Waste Nylon Rope and filed bills of entry - The issue is; whether the goods under import are restricted items, whether the confiscation is justified along with imposition of penalty under Section 112(a) of Act with further direction to re-export the goods - The assessee is a first time importer of Waste Polyester Ropes and have bonafidely filed the Bill of Entry under First Check Basis - As per the report of CRCL, goods under import are old, dull white ropes of assorted length and sizes - The said ropes are composed of Polyester Plastic other than Polymide (Nylon) - Thus, the goods are more appropriately classifiable under Chapter 63 - Accordingly, no case of mis-declaration or conscious effort to import restricted goods is made out - Further, the goods are directed to be released forthwith within seven days of deposit of duty: CESTAT - Appeal partly allowed: DELHI CESTAT

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