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2019-TIOL-NEWS-116 Part 2 | Friday May 17, 2019
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Dear Member,
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TIOL Content Team
TIOL PRIVATE LIMITED.
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DIRECT TAX |
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2019-TIOL-962-ITAT-KOL ACIT Vs Fort Project Pvt Ltd
Whether if the assessee is consistently following project completion method of accounting and has recognized the entire income of the project, then provisions made for expenditure to be incurred to complete the project should also be allowed to arrive at the correct income - YES : ITAT
- Revenue's appeal dismissed: KOLKATA ITAT
2019-TIOL-961-ITAT-DEL
DCIT Vs NHPC Ltd
Whether advance against depreciation included in the sales is taxable income - NO : ITAT
- Revenue's appeal dismissed; DELHI ITAT
2019-TIOL-960-ITAT-AHM
Scarlet T Designs Pvt Ltd Vs ITO
Whether capital loss must be first set-off against income under the same head and thereafter, the resultant gain, if any can be used for set-off of any other losses - YES : ITAT
Whether sec 71 can override the provisions of sec 74 of Act which in itself is a complete code for dealing with "set off" of losses under the head "capital gain" - NO : ITAT
- Assessee's appeal allowed: AHMEDABAD ITAT
2019-TIOL-959-ITAT-MUM
Usha Umesh Mishra Vs ITO
Whether claim of exempt agricultural income can be accepted in the absence of evidences regarding the performance of agricultural activity or expenditure or sale of the agriculture produce - NO: ITAT
- Assessee's appeal dismissed: MUMBAI ITAT
2019-TIOL-958-ITAT-MUM
Welspun India Ltd Vs DCIT
Whether availabilty of surplus funds, leads towards a presumption in favour of the assessee that he has used own interest free funds for making investments if there is no incriminating finding recorded by the Revenue that any specific interest bearing borrowings are used for making investments - YES: ITAT
- Case Remanded: MUMBAI ITAT
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GST CASE |
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INDIRECT TAX |
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SERVICE TAX
2019-TIOL-1417-CESTAT-MUM
Popular Caterers Vs CCGST
ST - Appellant is a provider of Outdoor Catering Services and discharged tax liability in terms of rule 2C of the ST Valuation Rules, 2006 on 60% of the gross bill charged to its customers w.e.f 01.07.2012 and prior to it by an abatement of 50% in terms of notification 1/2006-ST subject to condition that no CENVAT credit was availed - Pursuant to EA-2000 conducted in September 2015 for the period 2010-11 to 2014-15, it is alleged that appellant was required to reverse credit as required under rule 6 of CCR on those 40% non-taxable service which was exempted from taxation - Demand issued and confirmed by lower authorities - appeal to CESTAT.
Held: Catering service includes both sale of food and service for consumption of food - Therefore, the other component of 40% of gross value received from catering services cannot be definitely considered as exempted services to make rule 6(3) of CCR, 2004 applicable and to maintain separate records for availment of CENVAT credit on it including on processed food purchased as raw material - impugned order set aside and appeal allowed: CESTAT [para 7, 10]
ST - Limitation - EA-2000 is a participative audit - It cannot, therefore, be said that only because Audit party had found some credit availed as inadmissible, suppression of fact is made out - impugned order set aside and appeal allowed: CESTAT [para 9, 10]
- Appeal allowed: MUMBAI CESTAT
2019-TIOL-1408-CESTAT-MAD
Tamilnadu Spinning Mills Association Vs CCE
ST - Assessee was an organization comprising of various textile/spinning mills from all over Tamil Nadu as its members and had been collecting about Rs.10,000/- every year from every member mills and not discharging service tax liability under "Club or Association Service" - It also appeared that assessee had collected certain amounts as commission agent under head "Success Fee" @ 5% despite being covered under BAS towards carbon trading by facilitating in getting the Carbon Emission Reduction Certificates under Clean Development Mechanism of United Nation Framework Convention on Climate change (UNFCC) - T he matter is no longer res integra and has been decided in favour of assessee in a number of Tribunal decisions - This decision has been laid down by High Court of Jharkhand in case of Ranchi Club Ltd.- 2012-TIOL-1031-HC-JHARKHAND-ST and Sports Club of Gujarat - 2013-TIOL-528-HC-AHM-ST - The Division Bench of CESTAT Chennai in a recent decision, in a batch of cases, vide Final Order dt. 06.02.2018 has followed the ratio laid down by High Courts of Jharkhand and Gujarat and held that if a Club provides any service to its members may be in any form, then it is not a service by one to another in the light of decisions as foundational facts of existence of two legal entities in such transactions is missing - It is seen that assessee was an organization and hence the service provided to its own members cannot come within the scope of taxable services for the purpose of FA, 1994 - The demand of service tax in respect of membership fee, admission fee, establishment expenses, membership renewal fee as also amount retained in connection with service provided by assessee to its members for earning 'carbon credits' will not be liable to service tax - Hence, the impugned order demanding service tax on the aforesaid activities of assessee cannot sustain: CESTAT
- Appeal allowed: CHENNAI CESTAT
2019-TIOL-1407-CESTAT-ALL
UP State Industrial Development Corporation Ltd Vs CCE & ST
ST - The assessee is a company wholly owned by State Government of Utter Pradesh - They used to acquire lands in various parts of State of Utter Pradesh, developed the land for industrial purpose, subdivide land into various plots and allot the plots for the purpose of setting up industries - Demand of service tax was raised on four issues - With regard to demand of service tax of Rs.84,22,72,200/-, assessee was getting vacant land on lease of 90 years for industrial purpose and while letting the land they used to collect some lump-sum amount - Renting of vacant land was brought under service tax net w.e.f. 01.07.2010 - Through the impugned order Service tax was confirmed on collection of lump-sum amount received at the time of letting of vacant land by assessee for the period from 01.04.2010 onwards till 31.03.2012 under Renting of Immovable Property Service - Further, equal penalty was also imposed - Therefore, confirmation of service tax is set aside along with interest thereon and equal penalty imposed under Section 78 of FA, 1994 - As regards to Service Tax on rent collected on vacant land/plot, since assessee themselves were not involved in any litigation, they could not establish that they did not have any intention to evade payment of service tax and also that they did not pay service tax during the relevant period - The consideration received by assessee in respect of said service for period from 01.07.2010 to 31.03.2012 was admissible for benefit of cum duty value - The service tax payable by assessee on renting of vacant land needs to be recalculated - For the said purpose, matter is remanded back to the Original authority - As regards to Service Tax on renting of infrastructural facilities, the levy was charged w.e.f. 01.06.2007 though the notification was issued on 22.06.2010 - Therefore, there cannot be any malafide intention for evasion of duty from 01.06.2007 to 22.06.2010 - Therefore, extended period of limitation for the period from 01.06.2007 to 22.06.2010 is not applicable - Therefore, matter is remanded back to the Original Authority - As regards to demand of service tax on Centage charges, it founds appropriate to remand this matter to the Original authority with direction to examine whether the work undertaken for supervision of construction by assessee is in respect of such work which is wholly funded by Central or State Government and if the said construction work is wholly sponsored by Central or State Government then the transaction is within Government and no service tax is leviable - Matter remanded to the original authority: CESTAT
- Appeal partly allowed: ALLAHABAD CESTAT
CENTRAL EXCISE
2019-TIOL-1410-CESTAT-AHM
Standard Greases and Specialities Pvt Ltd Vs CCE & ST
CX - The assessee manufactures Lubricating Oil & also manufactures goods for M/s Castrol India Ltd on job work - During the relevant period, the assessee availed credit of raw material based on bills of entry, which reflected M/s Castrol as the importer - The goods had been consigned from the port to the appellant by attaching declaration by M/s Castrol stating that the goods would be used by the assessee - Based upon audit objections, the Revenue issued SCNs proposing to deny credit on grounds that the bills of entry were in the name of M/s Castrol & so the assessee had wrongly availed credit based on invalid documentation in contravention of Rule 9 of CCR - Duty demand was raised u/r 14 of CCR with interest & penalty was imposed u/s 15(1) - Such demands were confirmed upon adjudication - Hence the present appeals.
Held: There is no dispute about the goods in question being received in the assessee's factory or of finished goods being manufactured from there as well as clearance of such goods on payment of duty - When the goods reach the assessee under cover of declaration by M/s Castrol & there is no dispute about the non-availment of credit by M/s Castrol as well as use of inputs by the assessee to manufacture finished goods, which is evident from lorry receipts, goods receipt note & maintenance of raw material account, then no reason arises to deny credit to the assessee - Hence the orders in challenge warrant being set aside: CESTAT
- Assessee's appeal allowed: AHMEDABAD CESTAT
2019-TIOL-1409-CESTAT-HYD
Terry Gold India Ltd Vs CCE, C & ST
CX - The appellant-company is a 100% EoU engaged in manufacturing dyed terry towels, towel fabrics & bath robes - The DGCEI conducted investigation & issued SCN alleging clandestine removal of terry towels in DTA without accounting for them, raising invoices or payment of duty - On adjudication, duty demand was raised u/s 11A, with interest u/s 11AB and equivalent penalty u/s 11AC along with penalties u/r 25 of CER 2002 & Rule 25 of CER 2002 - Personal penalty was imposed on the MD of the appellant company - On appeal, the Commr.(A) sustained such findings - The Tribunal remanded the matter - On fresh adjudication, the adjudicating authority re-iterated the demands with interest & penalties, albeit of reduced quantum - Both the assesse & the Revenue appealed to the Commr.(A) against such findings, whereupon the Revenue's appeal was upheld & that of the appellant was dismissed - The personal penalty was set aside on grounds that vicarious liability could not be cast on him as he was merely working for the appellant-firm & without establishing that he was party to such offence - Hence the present appeal.
Held: The SCN alleges that the appellant cleared goods without raising invoices, to which it was rebutted that such goods were free samples or were seconds - It is no longer disputed that the goods were cleared by the appellant without raising invoices or payment of duty - In some cases, the recipients of the goods wrote letters stating to have received such goods as free samples or seconds - If such samples are sent to enhance one's business, it is inconcievable that any businessman would send rejected sub-standard samples to promote prime goods - The appellant also did not substantiate its claim that the goods cleared were sub-standard ones - If so, there was no reason to avoid raising any invoice or to not make entries in records - Hence the appellant cleared goods clandestinely & has been unable to justify its claim that the goods were rejects or of sub-standard nature - Hence the matter warrants remand to re-compute value of goods as cum duty value & re-computing penalty if need be: CESTAT
- Assessee's appeal partly allowed: HYDERABAD CESTAT
CUSTOMS
NOTIFICATION
Trade_Notice_16
Prohibition on direct or indirect import and export from/to DPRK (Democratic People's Republic of Korea) in terms of UNSC Resolutions concerning DPRK - Para 2.17 of the Foreign Trade Policy 2015-20
CASE LAWS
2019-TIOL-1070-HC-AHM-CUS
Lubi Industries Llp Vs UoI
FOREIGN Trade (Development and Regulation) Act, 1992 [Foreign Trade Act] - Petitioner seeking quashing and setting aside appellate order dated 14.5.2018 made by the Appellate Committee of the Ministry of Commerce and Industry, New Delhi - petitioner also seeking directions to the Joint DGFT, Ahmedabad to amend two Advance Authorisations by substituting name and IEC number of the petitioner in these Authorisations with extension of export obligation period by 6 months:
Held: from the reasons recorded by the Appellate Committee for rejecting the review application, it is apparent that the Appellate Committee has not applied its mind to the controversy in issue and has merely placed reliance upon the orders passed by the subordinate authorities, without taking into consideration the fact that it was these very orders which had given rise to the review appeal - the Appellate Committee has failed to take into consideration the fact that there is a provision in the Handbook of Procedures for extension of export obligation period - moreover, there are subsequent Public Notices which extend the time of the export obligation period to include even the Advance Authorisations issued under Foreign Trade Policy, 2009-2014 - the Circular dated 16.11.2011 specifically provides for transfer of Advance Authorisation to new IEC number - however, all these provisions have been ignored and the Appellate Committee has mechanically dismissed the review appeal of the petitioner - in the above view of the matter, the impugned order dated 14.5.2018 passed by the Appellate Committee suffers from the vice of non-application of mind to the relevant issues and is contrary to the provisions of the Handbook of Procedures, 2009-14, the Circular dated 16.11.2011 as well as the Public Notices issued in this regard from time to time, which renders the impugned order unsustainable in law - the petition, therefore, succeeds and is, accordingly, allowed to the following extent : the impugned order dated 14.5.2018 passed by the Appellate Committee in respect of Advance Authorisation No.0810086954 dated 3.3.2010, is hereby quashed and set aside - the impugned order dated 22.8.2017 passed by the Policy Relaxation Committee refusing to accept the petitioner's request to change IEC and name in the Authorisation and extension of time for fulfilling the export obligation in respect of Advance Authorisation No.0810090670 dated 21.7.2010, is also hereby quashed and set aside - the second respondent - Joint DGFT is hereby directed to forthwith amend both the Authorisations, viz., Advance Authorisation No.0810086954 dated 3.3.2010 and Advance Authorisation No.0810090670 dated 21.7.2010, by substituting the name and IEC number of the petitioner, that is, M/s.Lubi Industries LLP in both the Authorisations with extension of export obligation period by six months from the date of such substitution : HIGH COURT [para 21, 22, 23]
- Special Civil Application allowed: GUJARAT HIGH COURT
2019-TIOL-1069-HC-DEL-CUS
Jindal Poly Films Ltd Vs DGFT
FOREIGN Trade (Development and Regulation) Act, 1992 [FTDR Act] - Petitioner has filed the present petition, inter alia, impugning an order dated 14.10.2014 passed by respondent no.3 (Assistant Director General of Foreign Trade) declaring the petitioner to be a defaulter and placing the petitioner under the "Denied Entry List" - in addition, the petitioner also impugns orders dated 25.11.2011 (communicating the decision of 1.11.2011), 1.10.2012 and 30.4.2013 passed by the Policy Relaxation Committee (PRC) of DGFT, wherein the petitioner's request for extension of the period of discharging export obligation under advance authorization No.510136637 dated 27.8.2004 and for clubbing of the said license with two other licenses-one dated 22.7.2003 and the other dated 21.6.2010 were denied
Held: Paragraph 4.20.4 of the Handbook of Procedures (Volume-1) [HoP v1 ] makes it explicitly clear that wherever the exports are effected beyond the export obligation extension period of earlier authorization, no clubbing would be permitted - in the present case, the petitioner had made no application for extension of the export obligation period under the license dated 22.8.2004 at the material time - the export obligation period had expired - further, the maximum period for which extension could have been granted under paragraph 4.22 of the HoP v1 had also expired - the petitioner made an application for extension on 23.08.2011, which is much after the said period had expired - in view of the above, the facility of clubbing of the licenses in question under paragraph 4.20 of the HoP v1 is unavailable to the petitioner - it is in the aforesaid context that PRC had considered the petitioner's request at a meeting held on 1.11.2011 and had decided to reject the same as "the gap between the above authorization is substantial" - no infirmity found with the aforesaid decision - the PRC considered the petitioner's representation at a meeting held on 1.10.2012 and reiterated its decision taken on 1.11.2011 - the said decision cannot be faulted - the observations made by the PRC on 30.4.2013 cannot by any stretch be interpreted to mean that the PRC had considered the petitioner's request on the basis of paragraph 4.20 of the HoP v1 as amended by the Public Notice dated 13.10.2011 - in view of the above, no infirmity found with the decision of the PRC in rejecting the petitioner's application for clubbing of advance licenses - with regard to the petitioner's challenge to the order dated 14.10.2014, the petitioner had contended that the said order is proceeded on the basis that the petitioner had not provided any documents to prove that export obligations had been fulfilled against the advance authorization dated 27.08.2004 and the said conclusion was patently erroneous - the petitioner claims that large number of documents were filed by it under the cover of its letter dated 23.8.2011 - although, there is some dispute with regard to the said letter, however, without going into the said controversy, it is apparent from the plain reading of the letter dated 23.8.2011 that it was not in response to the show cause notice but an independent request for providing clubbing facility and approval for extension of the export obligation - thus, concededly, the petitioner had not discharged its export obligations as required - in view of the above, the decision of DGFT to pass an order under Rule 7.1(k) of the Foreign Trade (Regulation) Rules, 1993 cannot be faulted - thus, no interference with the impugned order dated 14.10.2014 is warranted - in view of the above, the petition is unmerited and is, accordingly, dismissed - the pending application is disposed of : HIGH COURT [para 10, 11, 15, 18, 20, 21, 22, 23]
- Writ Petition dismissed: DELHI HIGH COURT
2019-TIOL-1411-CESTAT-AHM
Bharat Ship Breakers Corporation Vs CC
Cus - The O-I-O was received on 11.07.2014 and the appeal before Commissioner (A) was filed on 21.11.2014 i.e. after almost four months - As per statutory provision, the appeal filed over and above 60 days, Commissioner (A) has power to condone the delay of not more than 30 days - Accordingly, he rightly dismissed the appeal on time bar - The impugned order is upheld: CESTAT
- Appeals dismissed: AHMEDABAD CESTAT
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