2019-TIOL-NEWS-073, Dated: Thursday, March 28, 2019

2019-TIOL-NEWS-073| Thursday March 28, 2019

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	GST on REAL ESTATE \| simply inTAXicating

CASE STORIES


	I-T - Once Department gets hold of information which has potential of undermining its findings previously made in original assessment, then it has powers to initiate reassessment: HC I-T - Only such transactions which involve transfer of trade mark by assignment for a consideration are to be taxed as capital gains u/s 55(2)(a): HC I-T - Advance tax or self-assessed tax paid cannot be set off against tax liability arising IDS declaration for lack of specific provision in Scheme: HC

DIRECT TAX


	2019-TIOL-687-HC-MUM-IT Arcil Retail Loan Portfolio 001-D-Trust Vs Pr.CIT Whether Appellate order in relation to conditional pre-deposit which is in force presently, will have binding effect and the Department cannot ignore the same for purpose of deciding such condition pending Appeal - YES: HC - Case disposed of : BOMBAY HIGH COURT 2019-TIOL-686-HC-DEL-IT + Case Story Max Ventures Investment Holdings Pvt Ltd Vs ITO Whether when the Revenue gets hold of information which has the potential of undermining its findings previously made in original assessment, then invocation of powers to reassess is unquestionable - YES: HC Whether allotment of shares vastly in excess of authorized capital without any SEBI approval and retention of such share application money, triggers provision of Section 68 - YES: HC - Assessee's petition dismissed : DELHI HIGH COURT 2019-TIOL-684-HC-MUM-IT + Case Story Umesh D Ganore Vs Pr.CIT Whether advance tax or self-assessed tax paid by the assessee can be set off against tax liability arising the declaration made under IDS, 2016 even if there is no specific provision to this effect in the Scheme - NO: HC Whether the nature of TDS is different from that of advance tax and self-assessed tax, considering that TDS is always relatable to some income which the assessee would disclose under the Income Tax Declaration Scheme, 2016 - YES: HC Whether the Income Tax Declaration Scheme, 2016 empowers the Revenue to accept or reject declarations for several AYs in entirety - NO: HC Whether therefore benefit under the Scheme can be denied to any declaration made in a certain AY which fulfils all requirements of the Scheme, merely on grounds that such declaration would be ineligible for benefit in another AY - NO: HC - Assessees' writ petitions partly allowed : BOMBAY HIGH COURT 2019-TIOL-680-HC-DEL-IT + Case Story CIT Vs Sunil Lamba Whether only those transactions which involve transfer of trademark by assignment for a consideration will be taxable under the head of capital gains u/s 55(2)(a) - YES: HC Whether the transaction of assignment of trademark by a partner to whom a self generated trademark is vested on devolution for nil consideration is taxable u/s 55(2)(a) - NO: HC - Revenue's appeal dismissed : DELHI HIGH COURT 2019-TIOL-692-ITAT-MUM Reliance Asset Reconstruction Company Ltd Vs ACIT Whether when the methodology adopted by the taxpayer and the bank for providing accrued interest differs, then it is not feasible to implement the provisions of Section 37BA - YES: ITAT Whether when the difference in computation of interest is getting neutralized upon maturity of FDs and the assessee is consistently following same accounting method over years, then no addition is warranted by invoking Rule 37BA - YES: ITAT - Case remanded : MUMBAI ITAT 2019-TIOL-691-ITAT-MUM Sodexo Svc India Pvt Ltd Vs DCIT Whether the increased limitation of 7 years u/s 201(3) as amended by the Finance (No.2) Act 2014 applies retrospectively to cases of TDS deduction in AYs which have become time barred under the old limitation period of 2 years under the un-amended section 201(3) - NO: ITAT - Assessee's appeal allowed : MUMBAI ITAT 2019-TIOL-690-ITAT-DEL Yum! Restaurants Marketing Pvt Ltd Vs ITO Whether while imposing penalty u/s 271(1)(c), it is the duty of the AO to specify the limb of the provision under which the penalty has been imposed - YES: ITAT - Assessee's appeal allowed : DELHI ITAT 2019-TIOL-689-ITAT-AHM Bajaj Foods Ltd Vs ITO Whether an issue of disallowance is fit for remand to the AO, when it was decided without giving a categorical finding elaborating that which forms the foundation of such disallowance - YES: ITAT - Assessee's appeal partly allowed : AHMEDABAD ITAT 2019-TIOL-688-ITAT-MAD GRK Reddy and Sons (HUF) Vs ITO Whether mere reason of selling an agricultural land which is not able to generate the desired agricultural income, disqualifies the character of land from the exemption benefit u/s 10(1) - NO: ITAT - Assessee's appeal allowed : CHENNAI ITAT 2019-TIOL-687-ITAT-MUM DCIT Vs Kuoni Travel India Pvt Ltd Whether once the nature and source of the loan is clear from the records, any disallowance of interest paid by treating such advance as unexplained cash credit is not justified - YES: ITAT Whether when an issue in the relevant AY, indentical to an issue in the previous AY is decided in assessee's favour by the higher appellate authorities, the AO is not to use it own judgment to issue an order otherwise - YES: ITAT Whether the credibility of expenses incurred in order to be allowed, has to be substantiated through proper ducumentary evidences - YES: ITAT - Revenue's appeal dismissed : MUMBAI ITAT

INDIRECT TAX

SERVICE TAX

2019-TIOL-879-CESTAT-MAD

Sterlite Industries India Ltd Vs Commissioner of GST & CE

ST - The assessee is manufacturer of copper products - Pursuant to audit, it emerged that assessee had received guarantee commission from their associate / subsidiary companies for providing corporate guarantee - It was further noticed that they have also paid consideration to M/s. Vedanta Resources Plc. Inc. London for getting corporate guarantee to secure external commercial loans - The dispute that comes up is whether the commission received / paid by assessee for providing / receiving corporate guarantees (CGs) to/from their associate / subsidiary companies would be exigible to service tax under category of BOFS for purpose of FA, 1994 - There is no allegation that assessee has performed any of the category of services listed in Sl. No. (i) to (viii) under section 65(12)(a) ibid - The activity of 'providing bank guarantee' under section 65(12)(ix) ibid under which head the SCN has premised the proposed demand, is under the residual category of services listed as 'other financial services' - Applying the ratio of Apex Court in Balaji Computers & Others - 2006-TIOL-193-SC-CT, only the services which are listed in Section 65(12)(a)(ix) ibid will be exigible to service tax under that group - It is evident that the assessee did not provide 'bank guarantee' to their associate companies in India, neither did they receive any 'bank guarantee' from parent company abroad - The department has taken the view that Corporate Guarantee and Bank Guarantee are one and the same - It is nobody's case that assessee is doing the business of providing corporate guarantee on a regular basis - Corporate guarantees are issued in order to safeguard the financial health of their associate enterprises and to provide it support - For banks, providing bank guarantee is part of their regular course of business and they charge rate on the higher side - Corporate guarantee is actually an in-house guarantee and is not issued to customers generally - No merit found in the propositions of Revenue that guarantee issued by assessee was only 'providing bank guarantee' by a body corporate and secondly, the commission received / paid for issue / receipt of such guarantees to / from associate / subsidiary companies are exigible to service tax liability under section 65(12)(a)(ix) of FA, 1994 - The assessee succeeds on merits - The assessee has argued on the grounds of revenue neutrality as well as limitation - The assessee has furnished the documents with regard to audits conducted - The audit report conducted from 18.6.2007 to 29.6.2007 has not raised any objection of non-payment of service tax for providing corporate guarantee - Prior to this an audit was conducted from 19.9.2006 to 21.9.2006 and the report does not show any such objection - All these would go to show that assessee has not suppressed any facts with intention to evade payment of tax - On such score, the SCN issued invoking extended period cannot sustain - The assessee succeeds on limitation also: CESTAT

- Appeal allowed : CHENNAI CESTAT

2019-TIOL-878-CESTAT-AHM

Tyco Valves And Controls India Pvt Ltd Vs CCE & ST

ST - The assessee is engaged in manufacture of excisable goods and are also registered as service provider - The demand for service tax under the head of BAS was made by issue of SCN in respect of miscellaneous income received as documentation charges/ other charges - It presumes that assessee is procuring goods for their clients - From the discussion in impugned order, it is apparent that the same has been passed on presumption that the entire transaction is in respect of High Seas Sales of goods imported by assessee to various client of overseas supplier - From the submission made by assessee before original adjudicating authority as well as Tribunal, it is seen that the assessee have claimed that documentation provided by them to their client is in respect of valves manufactured and supplied by them, thus there is contradiction in facts - In this circumstances, Tribunal is unable to uphold the impugned order which is contrary to this presented before original adjudicating authority and before Tribunal and also contrary to the facts recorded in the impugned order itself - Matter is remanded back to the original adjudicating authority to decide the matter afresh clearly stating the facts and identifying the specific Clause of definition of business auxiliary service where the revenue seeks to classify the said service: CESTAT

- Matter remanded : AHMEDABAD CESTAT

CENTRAL EXCISE

2019-TIOL-685-HC-MUM-CX

V H Patel And Company Vs CGST & CE

CX - Whether the Tribunal was justified in taking up the appeal preferred by Revenue and decided the same without verifying whether proper notice was served on assessee especially when there was a cross-objection filed by assessee - The assessee pointed out that though a notice was issued and served upon them informing that hearing of the appeal was fixed on 10th April, 2017, the notice was served on the very day - Hence, the assessee could not appear before the Tribunal - From the order passed in the rectification application, it is apparent it was not disputed that the notice of the date fixed for hearing was served on assessee on the very day on which the hearing of the appeal was fixed - It was the duty of Appellate Tribunal to verify whether a proper notice of the appeal preferred by the respondent was served upon assessee - Moreover, there was a Cross-objections, filed by assessee which has been disposed of by the impugned order - Thus, the impugned judgment and order is in breach of the principles of natural justice and only on that ground, same is set aside: HC

-Appeal allowed : BOMBAY HIGH COURT

2019-TIOL-877-CESTAT-AHM

DCM Shriram Ltd Vs CCE & ST

CX - Appeal filed by assessee against denial of CENVAT Credit on Mobile services used by their executives - The issue is squarely covered by decision of coordinating bench vide order dated 25/04/2018 wherein it is held that the assessee is eligible to Cenvat Credit to Service Tax paid on Bus Service/Rent-a-Cab service: CESTAT

- Appeal allowed : AHMEDABAD CESTAT

2019-TIOL-876-CESTAT-HYD

Ravi Foods Pvt Ltd Vs CC, CE & ST

CX - Assessee is manufacturer of biscuits and is subject to valuation under Section 4A of CEA, 1944 - In terms of Notfn 3/2007, as amended by Notfn 22/2007, the biscuits with MRP of less than Rs 50/- and Rs 100/- per kg were exempted from payment of excise duty when cleared for domestic market - Assessee availed the said exemption Notfn when they cleared the biscuits in domestic market but in the case of export of goods, they valued the same as per the provisions of Section 4 and claimed rebate of excise duty paid as exemption was not available for export of goods - The SCN is issued to assessee for denial of CENVAT credit on inputs, input services and capital goods on the ground that biscuits which were cleared for export are exempted if they are cleared locally - The adjudicating authority has come to a correct conclusion that CENVAT credit available on inputs and input services on the biscuits which are cleared for export has to be extended to assessee as export clearances are not covered by any of the provisions under Rule 6 (1), (2) and (3) of CCR, 2004 - To that extent, adjudicating authority was correct in upholding the contentions of assessee - At the same time, impugned order has traversed beyond the allegations in SCN, wherein the adjudicating authority was directed for further consequential action under Rule 5 of CCR, 2004 - This part of the order of adjudicating authority is clearly beyond the scope of SCN as these were the reasons given for seeking rejection of refund claims - When factually it is undisputed that assessee had exported capital goods on which CENVAT credit was availed and used the said capital goods for manufacturing of biscuits, which are dutiable and exempted - They are also using the same for biscuits which are dutiable when they are cleared to domestic tariff area - This factual position is admitted by adjudicating authority - If that be so, the provisions of Rule 3 (4), will apply in favour of assessee which discusses about the eligibility to avail CENVAT credit on capital goods if they are used for manufacturing of dutiable as well as exempted goods: CESTAT

- Appeal disposed of : HYDERABAD CESTAT

CUSTOMS

NOTIFICATION

cnt26_2019

CBIC appoints authority to adjudicate SCN issued to M/s Procter & Gamble Home Products Ltd in Customs matter

CASE LAWS

2019-TIOL-875-CESTAT-AHM

Cadila Healthcare Ltd Vs CCE

Cus - The appellant de-bonded its 100% EoU on payment of duty on capital goods, raw material and finished goods - The appellant paid some amount of duty on the capital goods - The Revenue claimed that the appellant was liable to pay Customs duty after allowing depreciation on such capital goods - Hence duty demand was raised.

Held: The issue at hand is whether the amount paid by the appellant as Excise duty can be adjusted against the total amount of Customs duty - It is seen that the lower authority did not consider the appellant's contentions in this regard - Hence the matter warrants remand - After considering the amount of Excise duty paid, the adjudicating authority must re-compute the demand along with corresponding interest - Besides, there is no mala fide intent of the appellant & the de-bonding as well as payment of duty was known to the Revenue - Hence no penalty is liable to be imposed - Thus the penalty imposed u/s 117 of the Customs Act is liable to be set aside - Appeal is disposed off on such terms: CESTAT (Para 1,4)

- Assessee's appeal partly allowed : AHMEDABAD CESTAT

2019-TIOL-874-CESTAT-AHM

CC Vs SI Group

Cus - The assessee claimed notfn 53/2003-Cus issued under DFCE Scheme where the assessee is liable to pay SAD leviable under section 3(5) of CTA, 1975 - The Commissioner (A) dropped the demand invoking notfn 20/2006-Cus against which the Revenue filed the appeal - Initially though the assessee had claimed exemption from SAD under notfn 53/03-Cus but, subsequently, they made a claim under notfn 20/06-Cus which this Tribunal in the first round prima facie held that the exemption should be available and for eligibility of said notification, matter was remanded - Accordingly, though the Adjudicating authority, once again confirmed the demand, but the Commissioner (A) set aside the demand holding that the assessee is entitled for exemption under notfn 20/06-Cus. - Once the notfn 20/06 was made applicable, the only condition to avail such exemption is the imported goods are exempted from payment of basic Custom Duty and CVD - As per the notfn 53/03, the basic Custom Duty and CVD are exempted - Accordingly, the goods are eligible for exemption notfn 20/06-Cus - Therefore, no infirmity found in impugned order and the same is upheld: CESTAT

- Appeal dismissed : AHMEDABAD CESTAT

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