2019-TIOL-NEWS-048 Part 2, Dated: Tuesday, February 26, 2019

2019-TIOL-NEWS-048 Part 2 | Tuesday February 26, 2019

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	Legal Wrangle \| GST \| Episode 94

CASE STORIES


	I-T - If interest liability accrued during relevant A.Y was not actually paid back and rather adjusted into further bank loan, then it is not eligible for deduction u/s 43B: SC I-T - Imposition of conditional pre-deposit is not necessitated in every case seeking stay of demand: HC CX - Valuation - Even if buyer company is an inter-connected undertaking, it cannot be treated as a 'related person': CESTAT

DIRECT TAX


	2019-TIOL-83-SC-IT Aakash Lavlesh Leisure Pvt Ltd Vs ITO Whether delay in filing of appeals deserves to be condoned if sufficient cause for such delay is established by the applicant - YES: SC - Case disposed of: SUPREME COURT OF INDIA 2019-TIOL-82-SC-ST UoI Vs Coastal Container Transporters Association ST - Cargo Handling Service - Revenue in appeal against the Gujarat High Court decision reported as 2018-TIOL-424-HC-AHM-ST. Held: Controversy in the present case relates to the classification of services rendered by the respondents - It is also not in dispute that if the show cause notices culminate into an order, the appeal would lie to the Supreme Court - Bench is not in agreement with the view taken by the High Court, in entertaining the writ petition against show cause notices, therefore, Court refrains from recording any finding on contentious issues which arise for consideration since if any finding is recorded, same will prejudice either of the parties- it cannot be said that there are no factual disputes - Applicability of the circulars 104/7/2008-ST dated 06.08.2008 and Circular 186/5/2015-ST dated 05.10.2015 is also in serious dispute - Further the classificability of service rendered by a particular assessee is to be considered with reference to facts of each case depending upon nature of service rendered and the contract entered into - There cannot be any general declaration - It is true that circulars issued by the CBEC are binding on the authorities, but at the same time, whether such circulars are applicable or not, is a matter which is to be considered with reference to facts of each case - When it is the case of the appellants that such circulars referred above would apply only in case of road transportation but not otherwise, then it is a case for consideration by competent authority on receipt of the explanation, but same is no ground to quash the show cause notices - Though there is no bar as such for entertaining the writ petitions (by the High Court) at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage - Neither it is a case of lack of jurisdiction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice - High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to this Court - When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices - Revenue appeal allowed by setting aside the judgment and order dated 18.12.2017 passed by the High Court of Gujarat in Special Civil Application No. 6679 of 2016 [2018-TIOL-424-HC-AHM-ST] - four weeks' time granted to respondents to file responses/further responses to the show cause notices dated 08.10.2015 and 30.09.2015 - On receipt of such responses from the respondents or after expiry of the aforesaid time, it is open for the appellants to consider the same on their own merits and pass appropriate orders, uninfluenced by any of the observations made by theSupreme Court in this judgment: Supreme Court [para 16, 18, 19, 20, 21] - Appeal allowed: SUPREME COURT OF INDIA 2019-TIOL-81-SC-IT + Case Story CIT Vs Gujarat Cypromet Ltd Whether once interest liability accrued during relevant assessment year was not actually paid back and rather adjusted into further bank loan, is not eligible for deduction u/s 43B - YES: SC - Revenue's appeal allowed: SUPREME COURT OF INDIA 2019-TIOL-80-SC-IT PR CIT Vs Stovekraft India In writ, the Apex Court condones the delay and dismisses the Revenue's Special Leave to Petitions, along with pending applications. Revenue's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-79-SC-IT CIT Vs Lakshmi Vilas Bank Ltd In writ, the Apex Court condoned the delay and dismissed the Revenue's Special Leave to Petition along with pending applications. Revenue's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-78-SC-IT PR CIT Vs Zirconia Cera Tech Glazes In writ, the Apex Court condones the delay and dismisses the Revenue's Special Leave to Petition along with pending applications. Revenue's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-77-SC-IT Rashmi Infrastructure Developers Ltd Vs Income Tax Settlement Commission In writ, the Apex Court dismisses the Revenue's Special Leave to Petition along with pending applications. Revenue's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-479-HC-ALL-IT Pr.CIT Vs Rupesh Kumar and Brothers Whether it is fit for the HC to interfere in case both the lower authorities have recorded the facts in favour of assessee & deleted the additions made by AO - NO: HC - Revenue's appeal dismissed : ALLAHABAD HIGH COURT 2019-TIOL-518-ITAT-DEL Billo Vs ITO Whether reopening of assessment is valid in case of an assessee who not being a tax payer, fails to explain the source of funds despite various opportunities granted - YES: ITAT Whether death of the assessee's counsel's father is sufficient ground for the CIT(A) to admit additional evidence furnished by the assessee- YES: ITAT - Assessee's appeal partly allowed : DELHI ITAT 2019-TIOL-517-ITAT-MUM ITO Vs Rajlaxmi Buildtech Pvt Ltd Whether in the absence of evidence in hands of Revenue, addition u/s 68 can be made if all the three ingredients such as genuineness, creditworthiness and identity of the investors are proved by assessee - NO: ITAT - Revenue's appeal dismissed : MUMBAI ITAT 2019-TIOL-516-ITAT-KOL Sai Working Solutions Pvt Ltd Vs ITO Whether the amount claimed as being difference in tax received & paid as service tax in subsequent AY can be added to income without proper verification- NO: ITAT Whether supervision charges allowed as expenditure by the Revenue in the previous year for the same assessee can be disallowed in the subsequent years- NO: ITAT Whether addition to income made by AO is sustainable on ground of non-furnishing of TDS details & non-explanation to summons u/s 133(6), when there is sufficient proof of assessee's explanation in response to summons- NO: ITAT - Assessee's appeal partly allowed : KOLKATA ITAT 2019-TIOL-515-ITAT-MEERUT DCIT Vs Samco Auto India Pvt Ltd Whether addition u/s 68 is sustainable merely on the ground of non-production of creditors, even when the assessee has discharged its initial onus by proving the identity of creditors by way of ITR copy & Bank accounts- NO: ITAT - Assessee's appeal allowed : MEERUT ITAT 2019-TIOL-514-ITAT-MUM DCIT Vs Tool Tronics Whether loan received from a company can be considered as deemed dividend even on sufficient proof of the transaction being a normal business transaction - NO: ITAT Whether advances received by an HUF would be considered as deemed dividend if the HUF is not a registered shareholder in the lending Company but the Karta is a registered shareholder- YES: ITAT - Revenue's appeal dismissed : MUMBAI ITAT 2019-TIOL-513-ITAT-AHM ITO Vs Accelaris Technologies Ltd Whether an amount of loan waived can be taxed as perquisite u/s 28(iv) or as remission of liability u/s 41(1)- NO: ITAT - Revenue's appeal dismissed : AHMEDABAD ITAT

GST CASES

2019-TIOL-54-AAR-GST

Indian Institute Of Science Education And Research

GST - A ruling on whether the decision of GST council granting exemption is binding on the department in the absence of corresponding notification by the Central/State government to give effect to such decision is not within the competence and mandate of AAR.

GST - Notification 51/1996-Cus read with notification 43/2017-Cus is not applicable to OEM suppliers of imported equipment: AAR

GST - Concessional rate of GST @5% under notification 45/2017-CTR and 47/2017-IGST(R) is applicable to supply of all specified goods mentioned in the notification, whether imported or indigenous: AAR

- Application Dispose of : AAR

2019-TIOL-53-AAR-GST

Prabhat Gudakhu Factory

GST - Gudakhu manufactured by the applicant is appropriately classifiable under residual Tariff Heading 2403 99 90 - As regards determination of liability to pay National Calamity Contingency Duty (NCCD), scope of ruling u/s 98 of the CGST Act, 2017 is limited to the extent prescribed u/s 97(2) - NCCD, being not a levy under the CGST Act, 2017 but under the CEA, 1944, it is not within the competence and mandate of the AAR to give a ruling thereon: AAR

- Application Dispose of: AAR

INDIRECT TAX


	SERVICE TAX 2019-TIOL-603-CESTAT-BANG Electronics Technology Parks Vs CCT & CE ST - The assessee is registered for providing mandap keeper, renting of immovable property, management, maintenance or repair, selling of space for advertisement, sponsorship, rent a cab operator and works contract services - The Revenue opined that the assessee opined that the assessee availed and utilized ineligible amount of credit, in respect of rent-a-cab service - Hence duty demand was raised seeking recovery of such credit utilized, along with demand for interest u/s 75 and penalty u/s 78 of the Finance Act 1994 - On appeal, the Commr.(A) sustained such findings. Held: The Tribunal in Marvel Vinyls Ltd. Vs. CCE, Indore considered the issue after the amendment in the definition of 'input service' after April 01, 2011 - It was held here that cenvat credit could be allowed in such cases if the motor vehicle used for providing the service, was registered as 'capital goods' for the service provider - It also held that the same was not to be seen from the service recipient's point of view - Hence following such findings, the denial of Cenvat credit is not sustainable: CESTAT (Para 1,5,5.1) - Assessee's appeal allowed: BANGALORE CESTAT CENTRAL EXCISE 2019-TIOL-474-HC-MP-CX Global Tele Mall Vs UOI CX - The appellants were engaged in selling goods called "Kashyog Oil and Keshyog Herbal Powder Hair Wash/Shampoo" - During period January 2006 to March 2007, the goods were manufactured by vendor M/s. Gurukripa Consumer Care Products - The dispute relates to categorization of these impugned goods either as Ayurvedic medicine or cosmetic / toilet preparation and whether or not the processes undertaken by GTM will amount to manufacture - Assessee has submitted that SCN was issued to them demanding duty by classifying the product in question under Chapter 33 of Tariff as here are - No SCN was ever issued to assessee that the goods in question are Ayurvedic medicine classifiable under Chapter 30 of the tariff and, therefore, the matter has to be remanded to the Original / Adjudicating Authority for deciding the issue a fresh - Such proposal of assessee cannot be accepted because in reply to SCN, the assessee specifically challenged the classification as proposed in said SCN and claimed the same under Chapter 30 of the tariff as medicament - The assessee also gave the details of use of product and ingredients in support of their claim - Adjudicating Authority had not given any finding in respect of claim in reply to SCN and therefore, the order impugned therein was set aside and the matter was remanded to Adjudicating Authority - As per order of Tribunal, the matter was remitted to Original Authority for fresh decision on all issues including classification - Court agrees with the view expressed by Tribunal in its Final Order dated 1.3.2017 that the product of assessee "Keshyog Ayurvedic/Herbal Hair Oil and Keshyog Ayurvedic Shampoo" has to be classified as Ayurvedic medicine under Chapter 30 of CETA, 1985: HC - Appeals dismissed : MADHYA PARDESH HIGH COURT 2019-TIOL-602-CESTAT-MUM CCE Vs Maharashtra State Electricity Board CX - Respondent MSEB entrusted setting up of two power plants to M/s BHEL at their thermal power station, Khaperkheda - During the course of setting up of the said thermal power plant, BHEL procured angles, channels, beams etc. and fabricated the same at site which resulted into structures used for setting up the thermal power station - Alleging that fabrication resulted into emergence of excisable goods classifiable under Ch. 73.08 demand notices were issued on periodical basis - adjudicating authority CCE, Nagpur dropped the proceedings by concluding that upon fabrication, the structures which emerged, being embedded to earth, become immovable and hence not excisable - Revenue is aggrieved and in appeal. Held: It is not the case of the Revenue that the structures have been fabricated by MSEB at some other site and supplied to BHEL for setting up and erection of thermal power station - Structures came into existence at site itself after fabrication and do not have separate existence as such so that it could be removed and used elsewhere as ‘structurals' - as per entry 7308.80, all goods fabricated at site of work for use in construction work at site attract Nil rate of duty - Revenue could not establish through evidences that the structures which came into existence at the site of thermal power station are movable in nature or could be dismantled and hence marketable - twin test of movablity and marketability required to fall within the scope of definition of ‘manufacture' fails - impugned order is upheld and Revenue appeal is dismissed: CESTAT [para 7, 8] - Appeal dismissed : MUMBAI CESTAT 2019-TIOL-601-CESTAT-BANG Kaynes Technology India Pvt Ltd Vs CCT CX - The assessee was manufacturer of Populated printed circuit boards and they had cleared Solar energy equipment and parts of Wind mill energy equipment which were exempted from payment of duty under Notfn 06/2006 and 12/2012 - They have opted to pay 6% of value of exempted goods as per the option given under Rule 6(3)(i) because they are unable to maintain separate accounts relating to inputs used in exempted goods - Further, by following this option, they have paid the duty to the tune of Rs.46,44,828/- but the Department insisted to maintain the separate account which is contrary to the objective under Rule 6(3) - Further, assessee have taken total credit and in order to buy peace, he has further reversed Rs.10,34,237 along with interest; though, he was not required to pay the same - Assessee is only challenging the imposition of penalty - Once the assessee has paid the amount as per Rule 6(3) of CCR, Revenue cannot insist that assessee should reverse the entire credit - Further, assessee in order to buy peace reverse the entire credit and also paid the interest on remaining amount - It was not justified to impose penalty therefore, same is set aside: CESTAT - Appeal allowed : BANGALORE CESTAT 2019-TIOL-600-CESTAT-MUM Nitco Ltd Vs CCE CX - CENVAT - Input Service - Rule 2(l) of CCR, 2004 - Certification fees, Courier charges, Maintenance and repair of show room/office have no nexus with manufacture of excisable goods as can be inferred from the documents available in the case file, hence no interference required with the order passed by the Commissioner(A) denying the credit, being passed in conformity with the statutory provisions - Appeal dismissed: CESTAT [para 3] - Appeal dismissed : MUMBAI CESTAT CUSTOMS NOTIFICATION dgft18pn076 Amendments in the Appendix 3B, Table 2 of the Merchandise Exports from India Scheme (MEIS) ctariff19_006 Seeks to further amend notification No. 50/2017-customs dated 30th June 2017 to postpone the implementation of increased customs duty on specified imports originating in USA from March 2, 2019 to April 1, 2019 CASE LAW 2019-TIOL-605-CESTAT-KOL Ganges Jute Pvt Ltd Vs CC ) Cus - The assessee has imported six consignments of Raw Jute Cutting (BTC) from Bangladesh and they filed six Bills of Entry for home consumption - They sought clearance of goods so imported i.e. Raw Jute (BTC) - The Bills of Entry were filed for assessment of import duties on goods imported from Bangladesh - Those were classified under CTH 5303.1010 as per declaration supported by relevant invoices the duty liability was Basic Customs Duty @ 2.5% E.Cess on BCD for which SAPTA certificates were produced by importer - The assessee paid duty on the basis of assessment made by assessing officer - Subsequent to clearance of goods, a SCN was issued proposing to classify the raw jute cutting under subheading No.5303.9010 of CTA, 1975 - The issue is regarding classification of raw jute cutting grade imported by assessee from Bangladesh through LCS Petrapole - The issue is no more res-integra in view of order passed by Tribunal in case of Naffar Chandra Jute Mills Ltd. - *2014-TIOL-3241-CESTAT-KOL* - The assessee has appropriately classified the imported goods i.e. raw jute cutting grade under Tariff Heading 53039010 of CTA, 1975 and has rightly claimed the benefit of Notfn 21/2002-Cus and 105/99-Cus: CESTAT - Appeal allowed : KOLKATA CESTAT

FLASH NEWS


	When there is a serious dispute with regard to classification of service, the respondents ought to have responded to SCNs - HC ought not to have entertained WP, more so, when against final orders, appeal lies to the Apex Court: SC