2019-TIOL-NEWS-131, Dated: Tuesday, June 04, 2019

2019-TIOL-NEWS-131| Tuesday June 04, 2019

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Legal Wrangle | Corporate Law | Episode 105

DIRECT TAX


	2019-TIOL-1065-ITAT-DEL Nikhil Agarwal Vs ITO Whether the AO is obligated to consider the DVO's report once he has made such a reference, before proceeding to estimate the fair market value of the subject property under sale - YES: ITAT - Case remanded : DELHI ITAT 2019-TIOL-1064-ITAT-DEL Ralhan Construction Company Vs ACIT Whether failure of taxpayer to discharge his onus to prove genuineness of expenses claimed in his P&L A/c, merits addition on account of unverifiable purchases - YES: ITAT Whether the element of 'personal use' has any significant role to play while granting depreciation on any vehicle - YES: ITAT - Assessee's appeal partly allowed : DELHI ITAT 2019-TIOL-1063-ITAT-MUM Basp Chemical Product Ltd Vs DCIT Whether sales tax demand pertaining to several previous F.Ys, if paid by assessee before due date of filing of return u/s 139(1), is covered by the provisions of Section 43B - YES: ITAT - Assessee's appeal allowed : MUMBAI ITAT 2019-TIOL-1062-ITAT-DEL New City Of Bombay Mfg Mills Ltd Vs ACIT Whether disallowance can be made under Rule 8D(2)(iii) even in absence of any closing stock - YES: ITAT Whether when expenses on stamp duty and other charges were borne by strategic partner under the Tripartite Agreement, as part of capital contribution and not as reimbursement, then it cannot be claimed as revenue expenditure by other joint venture parties - YES: ITAT - Assessee's appeal dismissed : DELHI ITAT 2019-TIOL-1061-ITAT-MUM Wartsila India Pvt Ltd Vs DCIT Whether recording of objective satisfaction by the AO is of crucial importance before making disallowance of expenses attributable to earning of exempt income - YES: ITAT - Assessee's appeal partly allowed : MUMBAI ITAT

INDIRECT TAX

SERVICE TAX

2019-TIOL-1583-CESTAT-MAD

CGST & CE Vs Paypal India Pvt Ltd

ST - The issue comes up for decision is; whether refund of Cenvat credit can be allowed in respect of registered premises of service providers from which the output services are exported; prior to registration - The refund claims filed by assessee had been rejected by adjudicating authority on the ground that the premises from where the export had been effected had not been registered at the time of export - In appeal, Commissioner (A) relying upon the decision of Tribunal in M/s. Textech International Pvt. Ltd. 2010-TIOL-1800-CESTAT-MAD , held that assessee is eligible for refund relating to the period prior to the date of registration - The issue in dispute has been now decided in favour of assessee - In a recent decision in BNP Paribas Sundaram Global Securities Operations Pvt. Ltd . 2018-TIOL-1126-HC-MAD-ST , the High Court of Madras, has interalia held that Rule 5 of CCR, 2004, does not stipulate registration of premises as a necessary pre-requisite for claiming a refund - The High Court has reiterated their earlier decision in M/s. Scioinspire Consulting Services India Pvt. Ltd. and another 2017-TIOL-798-HC-MAD-ST - No merit found in the appeal of the department, for which reason the appeal is dismissed: CESTAT

- Appeal dismissed : CHENNAI CESTAT

2019-TIOL-1582-CESTAT-AHM

Deendayal Port Trust Vs CST & ST

ST - The issue at hand in this case is whether the service tax paid under the heading of Immovable Property Service can be considered as payment of service tax under Port Service on the same service - Also whether the penalty imposed by the lower authority is tenable.

Held: Post 2012, the Negative List of services was introduced, whereupon all taxable services fell under a single account head - Service-wise sub-code is only for statistical purposes - In view of Circular dated 20.11.2012, even if tax was paid under Renting of Immovable Property which is otherwise a port service, a separate demand under Port Service cannot be raised - Hence service tax paid under Renting of Immovable Property service may be considered as payment of service tax against Port Service - The Revenue is free to make any internal adjustment on such account - In such circumstances, the assessee cannot be charged with non-payment of service tax - As the appellant paid service tax with interest & considering that the appellant is a Government enterprise, no mala fide intent to evade payment of duty can be attributed to the appellant - Hence the penalty is quashed - The O-i-O stands modified in such terms: CESTAT

- Assessee's appeal partly allowed : AHMEDABAD CESTAT

CENTRAL EXCISE

2019-TIOL-1580-CESTAT-DEL

Cummins Technologies India Pvt Ltd Vs CGST & CE

CX - The assessee is engaged in manufacture of turbo chargers and they are availing cenvat credit on inputs used in manufacture and packing of final products, capital goods and input services - Department had noticed that they have availed the cenvat credit of CVD cess on the goods received from M/s Indo Schottle - In addition, it was also observed that the assessee have also availed cenvat credit of service tax paid on maintenance charges to M/s MPAKVN - It is apparent from the lease deed itself that the said maintenance charges though are for the maintenance of the industrial area beyond the impugned factory but are calculated at the rate of per square meter of leased factory wherein the final product of assessee has to be manufacture - Availability of suitable industrial plot is an essential requirement for manufacture of goods of the assessee as has also been held by Final Order as passed by the Coordinate Bench of this Tribunal - Thus, the findings are erroneous on the face of the record - The maintenance charges are also the eligible inputs - It is the maintenance charges as input service for the place of manufacture which are in consideration - The Order under challenge is set aside: CESTAT

- Appeal allowed : DELHI CESTAT

2019-TIOL-1579-CESTAT-MAD

Chemplast Sanmar Ltd Vs CGST & CE

CX - The assessee-company manufactures Caustic Soda Lye falling under Chapter 28 of the CETA - It paid applicable Excise duty on removal of finished goods & availed Cenvat credit of duty paid on inputs, capital goods & input services - The assessee entered into an agreement with M/s IL&FS during the relevant period for lease of Gas-based power plant comprising of various equipment such as diesel engines, alternators, transformers, switchgears, control panels & boilers - The assessee availed Cenvat credit of Excise duty paid on these capital goods - SCN was issued proposing to recover credit wrongly availed - Duty demand was raised with interest & penalty, on grounds that the Captive Power Plant was in fact a turnkey project, which was not Excisable goods as per CBIC Circular No 58/1/2002-CX dated 15.01.2002 and the components, equipment, accessories & spares used for installing the Power Plant were not covered u/r 2b(iii) of the CCR, 2002 - On adjudication, while allowing credit on other items, the Commr. disallowed credit availed on MS Angles, Bars and Channels on grounds that they did not classify as capital goods - Hence the present appeal.

Held: The issue at hand stands settled in a catena of judgments wherein it has been held that Cenvat credit is to be allowed on MS Angles & Channels which are integral components of plant & machinery - Judicial propriety demands that ratio of the jurisdictional High Court be followed - Following the same, the assessee is eligible to avail Cenvat credit - Hence the O-i-O in challenge warrants being quashed: CESTAT

- Assessee's appeal allowed : CHENNAI CESTAT

2019-TIOL-1578-CESTAT-BANG

Carl Bechem Lubricants India Pvt Ltd Vs CCT

CX - The assessee is engaged in manufacture of Industrial Special Lubricating Creases and are availing CENVAT credit on input, capital goods and input services under provisions of CCR, 2004 - During audit, it was observed that the assessee have revenue from sales exports trading - It is not disputed that the assessee has in fact received services of overseas trading partner and the same has been used for export of goods - It is also a fact that assessee has actually paid the service tax as applicable under Reverse Charge Mechanism under Section 66A of FA, 1994 - The assessee has not sought refund or exemption from payment of service tax under any other provisions or Notification and has taken CENVAT credit of the service tax paid - Further, such availment of CENVAT credit of service tax paid on commission should be allowed under CENVAT Credit Rules in view of the Export Policy of Government - Further, the decisions in the cases of Monarch Catalyst Pvt. Ltd. 2016-TIOL-602-CESTAT-MUM and Jotindra Steel & Tubes Ltd. 2014-TIOL-1039-CESTAT-DEL are squarely applicable to the facts of this case - By following the ratio of said decisions, the impugned order is not sustainable in law: CESTAT

- Appeal allowed : BANGALORE CESTAT

CUSTOMS

CIRCULARS

cuscir14_2019

Simplified auto-registration of beneficiaries (IEC holders) on ICEGATE for eSANCHIT and other benefits

cuscir13_2019

Implementation of PGA eSANCHIT-Paperless Processing under SWIFT-Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs

CASE LAWS

2019-TIOL-1581-CESTAT-AHM

Jaisukh Gobarbhai Savalia Vs CC

Cus - The appellants herein are co-noticees in a case booked against two persons who were involved in smuggling of diamonds - These two persons are foreigners, the proceedings against whom were concluded when the Tribunal passed an order in this regard - One of the co-noticees was handling the office of the two persons and also acted as an interpreter for them - The other three appellant either purchased the diamonds or had polished them after taking them from the two foreigners - On adjudication however, penalties were also imposed on the present appellants - Hence the present appeals.

Held: The first, third & second appellants herein admitted to having purchased & polished the diamonds smuggled by the two main noticees - They claimed to be unaware of the foreign origin of the diamonds and claimed to have received no KPC certificate - They also had regular dealings with the two foreigners - Thus, reasonable conclusion can be reached that the appellants regularly dealt in smuggled diamonds of which they knew or had reason to believe, that they were of an illicit nature & hence liable for confiscation - Hence the penalty imposed u/s 112(b) is justified - Nonetheless, considering the degree of involvement, the quantum of penalties is on the higher side and so warrants being reduced - In respect of the second appellant, she acted as an interpreter for the foreigners and so was fully aware of the illicit nature of the activities of both persons - She also admitted the fact that both noticees dealt in smuggled diamonds & that she witnessed the sale & job work of the smuggled diamonds - However, it is also seen that the second appellant merely acted as a witness and was not directly involved in any manner - Hence the penalty imposed on her is unjustified & is liable to be quashed: CESTAT

- Appeals partly allowed : AHMEDABAD CESTAT

2019-TIOL-1577-CESTAT-ALL

CC Vs Sanjivani Non-Ferrous Trading Ltd

Cus - The impugned order of Commissioner (A) is entirely against assessee and as such the Revenue cannot be held to be aggrieved with the same - It seems that the appeal was wrongly filed by the Revenue - Assessee also challenged said order and the same stands set aside by the Tribunal: CESTAT

- Appeal disposed of : ALLAHABAD CESTAT

NEWS FLASH


	RBI imposes bank audit curbs on Batliboi for one year CBDT extends due date for TDS Return upto June 30

GUEST COLUMN


	By Dr G Gokul Kishore GST - Agenda for the second year - Part 40 - Refund - Interference in exercise of quasi-judicial powers AS full-fledged adjudication or appellate mechanism or body apparently is not in place yet, taxpayers are compelled to ...