2019-TIOL-NEWS-132, Dated: Wednesday, June 05, 2019

2019-TIOL-NEWS-132| Wednesday June 05, 2019

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Legal Wrangle | Corporate Law | Episode 105

DIRECT TAX


	2019-TIOL-1169-HC-DEL-IT Pr.CIT Vs Dabur Invest Corporation Whether any writ interference is warranted against the order of Tribunal, if appeals against such order are pending before the Writ Court only - NO: HC Case disposed of : DELHI HIGH COURT 2019-TIOL-1076-ITAT-AHM Bara Machines Pvt Ltd Vs ITO Whether expenses incurred for maintenance of establishment is eligible for set off as business loss, even if there is temporary cessation of business - YES: ITAT -Assessee's appeal allowed : AHMEDABAD ITAT 2019-TIOL-1075-ITAT-HYD Belij Hydro Power Pvt Ltd Vs DCIT Whether loan & advances received by borrower company cannot be treated as deemed dividend in its hands, if it was not a shareholder of the lender company - YES: ITAT - Assessee's appeal allowed : HYDERABAD ITAT 2019-TIOL-1074-ITAT-DEL Anita Rani Mahajan Vs CWT Whether when original order u/s 16(3) r/w/s 17 of Wealth tax Act is passed without recording any reason showing escapement of wealth from taxation, then revisional order u/s 25(2) of WT Act is not permitted - YES: ITAT - Assessee's appeal allowed : DELHI ITAT 2019-TIOL-1073-ITAT-DEL Raghunandan Infra Projects Pvt Ltd Vs ITO Whether ommission in proper finding of fact on merits by the first appellate Revenue forum, merits restoration of matter while giving sufficient opportunity of being heard to the assessee - YES: ITAT - Assessee's appeal allowed : DELHI ITAT OTHER CASE ITO Vs Firoz Abdul Gafar Nadiadwala Whether delay in deposit of TDS amount within the stipulated time with the UOI without satisfying the parameters of reasonable cause for non-deposit, warrants punishment with rigorous imprisonment & fine u/s 276B - YES: District Court - In favour of Revenue

MISC CASE


	2019-TIOL-1174-HC-MUM-CT GE Power Systems India Pvt Ltd Vs Deputy Commissioner of Sales Tax In writ, the High Court observes that the petition need not be entertained since option of appellate remedy is available to the assessee. However, it is also noted that the assessee faces threat of coercive action. Hence it directs that no such action be taken should the appeal be filed within the time limit prescribed & along with mandatory pre-deposit. -Assessee's writ petition disposed of : BOMBAY HIGH COURT

GST CASE


	2019-TIOL-1170-HC-ALL-GST Govind Enterprises Vs State of UP GST - Petitioner seeks quashing of first information report (FIR) dated 30.11.2018 lodged by Assistant Commissioner, Commercial Tax at police station Kosi Kalan, District Mathura, under Sections 420, 467, 468, 471, 34, 120-B IPC - thrust of the allegations made in the impugned FIR is that the dealer fraudulently, with a dishonest intention, by submitting false documents, with an intention to evade taxes, obtained registration, thereafter, took inward supply and passed on the goods to end users, without generating outward supply bills, received money in cash and deposited the same in bank account which was not declared at the time of seeking registration - according to the allegations, a bogus firm was got registered by showing false and bogus addresses of business; and, by taking advantage of such registration, inward e-way bills were generated to make purchase of goods worth Rs.35 odd crores and, thereafter, without generating outward supply bills, huge amount of money was deposited in cash in undisclosed bank account, suggesting that goods were sold without proper documentation, with a view to evade taxes - Petitioner submitted that till date no case had been registered under the provisions of the U.P. Act or under the CGST Act and no recovery demand has been raised and, therefore, lodging of the first information report under the provisions of the Indian Penal Code is not legally sustainable; that the Goods and Services Tax Act is a complete code in itself as it contemplates and deals with all kinds of situations and offences relating to registration of firms, tax evasion etc and it prescribes a specific procedure for arrest and prosecution, therefore, lodging of the first information for offences punishable under the Indian Penal Code by taking recourse to the provisions of the Code of Criminal Procedure, 1973 is not legally justified; that the power to arrest is to be exercised only where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 of the U.P. Act, and, by order, has authorized any officer of Sales tax to arrest such person; that, under the circumstances, first a proceeding has to be drawn under the provisions of the U.P. Act and, only, thereafter there could be arrest, that too, after recording satisfaction and hence, lodging of the first information report straightaway is not legally permissible; that even assuming that a first information report can be registered, as no demand for recovery has yet been issued, there is no justification to effect arrest of the petitioner pending investigation. Held: Sections 69, 134, and 135 of the U.P. Act are applicable in respect of offences punishable under the U.P. Act - They have no application on offences punishable under the Penal Code - Further, there is no provision in the U.P. Act which may suggest that the provisions of the U.P. Act overrides or expressly or impliedly repeals the provisions of the Penal Code - There is also no bar in the U.P. Act on lodging an FIR under the Code for offences punishable under the Penal Code even though, for the same act/ conduct, prosecution can be launched under the U.P. Act - Rather, section 131 of the U.P. Act impliedly saves the provisions of the Penal Code by providing that no confiscation made or penalty imposed under the provisions of the Act or the rules made thereunder shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of the U.P. Act or under any other law for the time being in force - argument of petitioner that except for offences specified in sub-section (5) of section 132, sub-section (4) of section 132 of the U.P. Act renders all offences under the U.P. Act non cognizable, therefore no FIR can be lodged, is not acceptable, because sub-section (4) speaks of offences under the U.P. Act and not in respect of offences under the Penal Code - offences punishable under the Penal Code are qualitatively different from an offence punishable under the U.P. Act - Bench is of the considered view that the contention of the petitioner that no first information report can be lodged against the petitioner under the provisions of the Code of Criminal Procedure for offences punishable under the Indian Penal Code, as proceeding could only be drawn against him under the U.P. Goods and Services Tax Act, 2017, is liable to be rejected and is, accordingly, rejected - Prima facie, necessary ingredients of an offence of cheating, by submitting false information and documents, are clearly spelt out in the FIR - It cannot, therefore, be said that a bare reading of the impugned FIR does not disclose commission of cognizable offences punishable under the Penal Code - impugned FIR is, therefore, not liable to be quashed - to ensure that a person's liberty is not jeopardized, on account of false implication, protection from arrest, pending investigation, may be granted by superior courts but that power is not ordinarily to be exercised in matters relating to economic fraud - As, in such matters, stay on arrest may become a hurdle in thorough investigation of the matter, particularly in tracing out the money trail - this is not a fit case where any relief should be granted to the petitioner in the writ jurisdiction - Petition is dismissed: High Court -Petition dismissed : ALLAHABAD HIGH COURT

INDIRECT TAX

SERVICE TAX

2019-TIOL-1597-CESTAT-MAD

Matrimony.Com Pvt Ltd Vs CGST & CE

ST - The assessee is providing information in various fields viz. matrimony, properties, job opportunities and automobiles to both domestic and overseas customers through internet - They had obtained Service Tax Registration under category of "Online Information and Data Base Access and/or Retrieval Service" as well as "Sale of Space or Time for Advertisement Service" other than in Print Media services - It appeared from the nature of services that the activities can be classified under Business Auxiliary Service, Advertisement Service, Online Information Data Retrieval Service and Banking and Other Financial Services - The assessee is not contesting the merits of the case - Their main contention is on the concept of revenue neutrality - It is seen that the assessee is liable to pay service tax in present demand under reverse charge mechanism as per Section 66A of FA, 1994 - It is very much true that in case the assessee pay the service tax on reverse charge basis, they would be eligible to avail credit on said amount as a service recipient - Thus, the situation is truly a revenue neutral one - The assessee cannot be saddled with the allegation of intention to evade payment of service tax - Whatever tax is paid would be eligible as credit for them - The jurisdictional High Court in case of M/s. Tenneco RC India Pvt. Ltd. 2015-TIOL-1579-HC-MAD-CX has observed that when the entire exercise is revenue neutral, the assessee could not have achieved any purpose by evading duty - Taking note of the fact that the situation is a revenue neutral one, this is a fit case for setting aside the penalty imposed under Section 78 of FA, 1994: CESTAT

-Appeal partly allowed : CHENNAI CESTAT

2019-TIOL-1596-CESTAT-MAD

Maxican Exports Vs CCE & ST

ST - The assessee is manufacturer of textile made-ups and had availed service of overseas commission agents for procurement of orders for which commission was paid by them - A SCN was issued to assessee demanding service tax with interest thereon for the period 18.04.2006 to 07.07.2009 - Pursuant to adjudication, the original authority confirmed demand with interest and imposed penalties under Section 77 & 78 of FA, 1994 - The issue in dispute has been decided in favour of assessee in a slew of Tribunal orders - Following the ratio of said decision of this Bench passed in favour of assessee, the impugned order is set aside: CESTAT

- Appeal allowed : CHENNAI CESTAT

CENTRAL EXCISE

2019-TIOL-1595-CESTAT-MAD

Leo Primecomp Pvt Ltd Vs CGST & CE

CX - The assessee is a manufacturer of Parts of Fuel Injection Pumps and Parts of ATM Machines - The dispute relates to the period from June 2014 to May 2015 - Revenue views that the assessee having not been registered as an ISD, the input Credit was alleged to be ineligible - The very same issue came up in assessee's own case on an earlier occasion before this Bench and this Bench vide 2016-TIOL-2634-CESTAT-MAD had thought it fit to remand the matter back to the file of the adjudicating authority on the doubt raised by revenue as to the non-registration of assessee as an ISD - The Revenue has not disputed as to the maintenance of necessary records, but the Credit is denied only because of non-registration of ISD - Since this Bench has remanded the matter back to the file of the adjudicating authority in assessee's own case, it deems proper to remand this matter for fresh adjudication - In view of the Board's acceptance, however, there shall not be any penalty: CESTAT

- Appeal partly allowed : CHENNAI CESTAT

2019-TIOL-1594-CESTAT-KOL

MA Shakambari Chemicals Pvt Ltd Vs CCE

CX - The assessee was engaged in manufacture of Acid Slurry, Spent Sulphuric Acid and Synthetic Detergent Powder - They procured various goods and availed cenvat credit of duty paid on such goods as inputs - During audit, it was noticed that many of the inputs were cleared from the factory, "as such", without utilizing the same for manufacture of goods - Revenue has taken the view that the inputs procured for manufacture of Synthetic Detergent Powder, cannot be considered as inputs covered by definition in Rule 2(k)(1) of CCR - There is no dispute that at the time of clearance of inputs as such, such reversal, as provided under Rule 3(4)(b) has been carried out - It is well settled position of law that once cenvat credit availed is reversed, it is to be considered as ab initio not availed - Such view finds support in several decisions including the case of Chandrapur Magnet Wires (P) Ltd. 2002-TIOL-41-SC-CX - Similar views have also been taken by Apex Court in case of Bombay Dyeing and Mfg. Co. Ltd. 2007-TIOL-141-SC-CX - The assessee cannot be held to have availed cenvat credit irregularly in respect of inputs cleared as such - The next question for decision is whether the assessee will be liable to pay interest on cenvat credit availed on inputs, which were never utilized in manufacture - Even though the credits availed have been reversed subsequently, the lower authority has taken the view that interest is chargeable in terms of Rule 14 of CCR, 2004 - It is noted that the Adjudicating Authority herself has recorded the finding that the assessee did not utilize the credit taken on the disputed item in payment of duty for the removal of their own manufactured goods - In view of the observations of Adjudicating Authority, assessee did not utilize the credit availed on the un-used inputs before reversal of the same - Under such circumstances, no interest liability will arise on the assessee - This view finds support in decision of Madras High Court in the case of Sri Kumaran Alloys (P) Ltd. 2018-TIOL-1820-HC-MAD-CX - Since the credit availed cannot be held as irregular and no interest liability can be fastened on the assessee, no justification found for imposition of penalty - The appeal filed by Revenue is rejected: CESTAT

- Revenue's appeal rejected : KOLKATA CESTAT

2019-TIOL-1593-CESTAT-AHM

CCE & ST Vs Reliance Industries Ltd

CX - Assessee is engaged in manufacture of both dutiable goods namely, Motor Spirit, High Speed Diesel, Liquefied Petroleum Gas, Petrochemical and exempted goods namely, SKO for PDS and LPG for PDS - The limited issue to be decided is that for the purpose of calculating Cenvat credit for reversal in terms of Rule 6(3A), whether the total Cenvat credit means it is including the Cenvat credit of input services exclusively used for dutiable product should be taken or total Cenvat credit of only common input service should be taken - If the whole Rule 6(1)(2)(3) is read harmoniously and conjointly, it is clear that "Total Cenvat Credit" for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input service and will not include the Cenvat credit on input/ input service exclusively used for manufacture of dutiable goods - If the interpretation of Revenue is accepted, then the Cenvat credit of part of input service even though used in manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of CCR, 2004 - When anomaly was noticed, the Government has substituted the sub-rule (3A) - The legislators very consciously substituted the Rule with intention to give a clarificatory nature to the provision of sub-rule (3A) so as to make it applicable retrospectively - It was all along not the intention of Government to deny Cenvat credit on the input/ input service even though used in the dutiable goods - Keeping the said view in mind, the substitution in sub Rule (3A) of Rule 6 was made - Therefore, the substituted provision of sub-Rule (3A) shall have retrospective effect being clarificatory - As regards jurisdiction, since now in GST regime, there is only one registration for a State and all the units within that State are covered under one registration, the Board has issued Circular 1056/05/2017-CX , which is especially meant for LTUs in the GST regime - In view of clarification which is categorically for the LTUs, the refund claims, even though pertaining to different units, the common jurisdiction lies where the assessee has registration for their principal business location - Therefore, assessee have rightly filed the appeal before Commissioner (A) Rajkot who has the correct jurisdiction over the principal business location of the assessee - Accordingly, the objection raised by Revenue as regards jurisdiction, is not sustainable - No infirmity found in findings of impugned order, same is up held: CESTAT

- Appeal dismissed : AHMEDABAD CESTAT

CUSTOMS

2019-TIOL-1592-CESTAT-DEL

Rohit Bhasin Vs CC

Cus - The Department recovered the LED TVs during search conducted in the premises of assessee - It is thereafter that summon was served upon assessee to get his statement recorded under Section 108 of Customs Act - In the statement, it is observed that there is a clear admission on part of assessee that the LED TVs are purchased by him from the local sales without bills as the local sellers were offering the hefty discounts - These local sellers works through selling agents - Names of such few agents were disclosed by assessee himself in said statement - He again was summoned and a subsequent statement was recorded where he, after acknowledging the correctness of his previous statement, signed the same adding to the previous statement that the purchased TVs were cheaper as compared to those purchased against the regular bills - He clearly acknowledged that it was in his knowledge that these goods were smuggled in nature and the same were smuggled by the syndicates of those agents - Despite being summoned for more than four times and despite being recorded twice there is no retraction on part of assessee for the admission of impugned LED TVs to have been procured by way of improper imports - Rather the statement of the co-noticees goes on to further corroborate the admission of assessee - Thus, no infirmity found in the order under challenge while directing the confiscation of goods being the result of improper import.

As regards to BIS Certification, it is an acknowledgement on the part of assessee that BIS Certification is required for all such LED TVs, which are measuring 32 Inches and above - Perusal of Panchnama having the details of TVs recovered from the assessee shows that LED for Samsung brand as well as for Sony brand are mentioned to be of 32 Inches - The assessee could not produce any other document to support that the dimension thereof was 31.5 Inches - In absence thereof and in view of noticed acknowledgement on part of assessee, adjudicating authority has committed no error while holding these LED TVs of 32 Inches for which mandatory BIS Certification is required as per Electronic and Information Technology goods (Requirement of Compulsory Registration) Order, 2012 as was notified on 3rd October, 2012 - Impugned order is upheld: CESTAT

- Appeal dismissed : DELHI CESTAT

2019-TIOL-1591-CESTAT-MAD

Jay Dev Industries Vs CC

Cus - The assessee remains unrepresented despite service of several notices for hearing - Hence the appeal is dismissed for non-prosecution: CESTAT

- Assessee's appeal dismissed : CHENNAI CESTAT

HIGHLIGHTS (SISTER PORTALS)


	TII TP - Adjustment on account of working capital is mandated if it has an effect over pricing & profitability of comparable instances: ITAT TP - 'Benefit test' is not applicable to international transaction relating to intra group services between associated concerns: ITAT DTAA - Income arising from testing & other services performed abroad is taxable in India if payment received is not for process itself but for results of testing which are used in India: ITAT I-T - Treaty provisions will have overriding effect over provisions of Sec 206AA by virtue of Sec 90(2) to extent they are beneficial to taxpayer: ITAT CORPLAWS IBC, 2016 - Moratorium issued by NCLT in resolution process, does not mean that interest accrued from fixed deposit attached under suit of corporate debtor also comes under complete control of resolution professional: HC PMLA - Objections to SCNs issued u/s 17(4) as well as seizure memos are more appropriately raised before adjudicating authority: Tribunal

NEWS FLASH


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JEST GST


	By Vijay Kumar The lady Finance Minister - New Chairperson of GST Council THE Finance Minister who launched GST, Mr. Arun Jaitley is succeeded by Ms. Nirmala Sitharaman, fondly referred to as the second lady Finance Minister of the Country. When the idea ...