2019-TIOL-NEWS-175, Dated: Thursday, July 25, 2019

2019-TIOL-NEWS-175| Thursday July 25, 2019

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Legal Wrangle | Corporate Law | Episode 107

DIRECT TAX


	2019-TIOL-1572-HC-AHM-IT Pr.CIT Vs Govind Gopal Goyal Whether notice issued u/s 148 for initiation of reassessment proceedings is valid if proceedings u/s 142 are pending before the Revenue - NO: HC - Revenue's appeal dismissed : GUJARAT HIGH COURT 2019-TIOL-1571-HC-AHM-IT Pr.CIT Vs S N Realty Infrastructure Pvt Ltd On appeal, the High Court holds that when assessee has fulfilled all the conditions as specified u/s 43(5)(d) in respect of speculative transaction from recognized stock exchange, then the writ court need not disturb the concurrent findings of Tribunal in deleting disallowance on account of F&O loss. - Revenue's appeal dismissed : GUJARAT HIGH COURT 2019-TIOL-1570-HC-MAD-IT CIT Vs Computer Age Management Services Pvt Ltd Whether the treatment of Computer Software License with 60% depreciation being allowed on it, is sustainable, where its classification is determined under a specific entry, rather than a general entry - YES: HC Whether non-compete clause in the agreement for a time period of 18 months which neither results in any enduring benefit from the payment of non-compete fee can be treated as revenue expenditure - YES: HC - Revenue's appeal dismissed : MADRAS HIGH COURT 2019-TIOL-1569-HC-KAR-IT Basavaraj C Bayahatti Vs ITO Whether exparte order passed by the Tribunal without delving into merits warrants recall, if the party concerned fails to appear due to having noted the wrong date of hearing - YES: HC - Assessee's appeal allowed : KARNATAKA HIGH COURT 2019-TIOL-1404-ITAT-DEL Nikunj Jajodia Vs ITO Whether loss on foreign exchange fluctuation related to investment activity is allowable expenditure if dividend income from such investment is shown in P & L account - YES: ITAT - Assessee's appeal allowed : DELHI ITAT 2019-TIOL-1403-ITAT-KOL ACIT Vs Asiatic Oxygen Ltd Whether failure to send notice u/s 143(2) within the stipulated time as prescribed in the Act, renders the re-assessment order bad in law - YES : ITAT - Revenue's appeal dismissed : KOLKATA ITAT 2019-TIOL-1402-ITAT-BANG Tata Hitachi Construction Machinery Company Pvt Ltd Vs DCIT Whether exercising power of revision is justifiable where the AO adopts one of two views possible on an issue & so the original assessment order is not found to be erroneous or prejudicial to interests of Revenue - NO: ITAT - Assessee's appeal allowed : BANGALORE ITAT

GST CASE


	2019-TIOL-236-AAR-GST Vidarbha Infotech Pvt Ltd GST - Applicant, a contractor, had applied and was awarded a contract from Nagpur Environmental Services Ltd. (NESL), Nagpur (a 100% subsidiary of the Nagpur Municipal Corporation, Nagpur) for providing services for the management of non-network tanker with the help of GPRS system at Nagpur - the service is basically to provide water supply for domestic, industrial and commercial purposes at various locations in and around Nagpur city - applicant seeks to know as to whether the said services are exempt from GST since it falls under various exempt services in the Article 243W of the Constitution of India. Held: GPRS system is installed for tracking water carrying tanker and to see that the said tracker reaches at the designated location and thus, water is supplied to the identified customers - from the work order issued to the applicant by NESL it is clear that the impugned services qualify as 'pure services' within the description of services at Entry no. 3 of 12/2017-CTR - Nagpur City Municipal Corporation Act, 1948 has established the company in the name of NESL - NMC, Nagpur has entered into a MOU with NESL and allotted the responsibilities for the said works - Thus, NESL is established as per Nagpur Municipal Corporation Act, section 58(B) and thereby permitting corporation to implement their duty allowed by the Government through this body i.e. NESL - Thus NESL is an authority with the control or management with Municipal fund - as such NESL is a local authority as defined under s.2(69) of the CGST Act - applicant is, therefore, providing pure services to local authority and is squarely covered by entry no. 3 of 12/2017-CTR - services are exempted: AAR - Application disposed of :AUTHORITY FOR ADVANCE RULING 2019-TIOL-235-AAR-GST Wilhelmsen Maritime Services Pvt Ltd GST - Supply from bonded warehouse will fall under Schedule III of the CGST Act and is exempted - however, supply from non-bonded warehouse will not fall under Schedule III and, therefore, not exempted - ruling sought as to whether the transaction effected by applicant can be considered as ‘exports' is not covered under the purview of s.97 of the Act, hence application is not maintainable to the said extent and cannot be entertained: AAR - Application disposed of :AUTHORITY FOR ADVANCE RULING 2019-TIOL-234-AAR-GST National Institute Of Bank Management GST - Applicant is a registered society and is an academic cum training institute established by the Reserve Bank of India in consultation with the Government of India as an autonomous apex Institute with the mandate of playing a pro-active role of ‘think-tank' of the banking system - Authority does not agree with the contention of the applicant that their activity would be covered under the Principle of Mutuality - Any contributions collected/received by the applicant will definitely be understood as ‘consideration' as the same has been paid for supply of services - Consideration paid as subscription or contribution towards recurring or capital expenses or reimbursement or by whatever name called, to applicant NIBM, a society registered under the Societies Registration Act, 1860 by its members (being Banks) for its recurring and non-recurring expenses is leviable to GST: AAR - Application disposed of :AUTHORITY FOR ADVANCE RULING

MISC CASE


	2019-TIOL-1578-HC-DEL-CT Maa Jagdamba Traders Vs Commissioner Value Added Tax Whether there is any justification for the CVAT of one State to retrospectively declare the "C" Form which had already been acted upon by the authority in another State as "obsolete" - NO: HC -Assessee's petition allowed : DELHI HIGH COURT 2019-TIOL-1577-HC-AHM-VAT Raajratna Metal Industries Ltd Vs State Of Gujarat Whether the mandate of section 34(8A) being a non-obstante clause goes beyond the legislative policy to enable the Revenue Officers to re-assess a turnover so as correct an error committed by such AO in the course of passeing the audit assessment order - NO: HC -Assessees writ petitions allowed : GUJARAT HIGH COURT 2019-TIOL-1576-HC-KAR-VAT Canara Interlock And Designer Tiles Vs State Of Karnataka Whether it is sine qua non for the Assessing Authority to clearly quote the relevant provision under which re-assessment is conducted and mere citing of a Supreme Court order will not make the assessment order valid - YES: HC - Assessee's writ petition partly allowed :KARNATAKA HIGH COURT

INDIRECT TAX

SERVICE TAX

2019-TIOL-2104-CESTAT-MAD

V Xavier Amalan Vs CCE

ST - The issue in dispute concerns liability to service tax in respect of construction of residential complex service by assessee - SCN was issued to them inter alia, proposing demand with interest under category of construction of Residential Complex Service - The SCN also proposed imposition of penalty under various provisions of law - It appears to reason that documents evidencing supply of material were not produced before adjudicating authority - This being the case, Tribunal is unable to conclude whether contract was indeed within the fold of works contract service involving supply of both materials and labour - Matter is remanded to the adjudicating authority for the limited purpose of going through the documents that may be produced by assessee in support of the claim that materials had also been supplied by them - In case, it is concluded that the work orders were in the nature of composite contract involving both materials as well as labour, the case laws of L&T Ltd. 2015-TIOL-187-SC-ST and Real Value Promoters 2018-TIOL-2867-CESTAT-MAD will apply to this case and the demand proposed in related notice under the category of Residential Complex Service cannot then sustain - Assessee should be given sufficient opportunity to put forth their contentions in personal hearing, including submission of additional documents, if required - Coming to the matter of penalty, as the said issue was mired in litigation, even if any amount of tax is confirmed in such denovo adjudication, there shall be no penalty under FA, 1994 - Appeal is allowed by way of remand: CESTAT

- Matter remanded : CHENNAI CESTAT

CENTRAL EXCISE

2019-TIOL-2103-CESTAT-HYD

Mylan Laboratories Vs CCT

CX - W hether the assessee is entitled to refund of Cenvat Credit under Rule 5 of CCR, 2004 in respect of supplies made by them from their 100% EOU to a unit in the SEZ - Rule 5 of CCR, 2004 specifically indicates what "export goods" would mean and it requires such goods to be ‘exported out of India' - However, the question is what is ‘exported out of India' would mean - In the normal cases, India includes the territorial waters of India and the export requires goods to be moved to a place outside territorial waters of India - As far as SEZ units are concerned, a special deeming provision has been made in the Act itself and supplying of goods providing services from DTA to SEZ shall be treated as exports - The DTA as defined in SEZ Act includes the whole of India except the SEZs - It is true that in the normal provisions pertaining to 100% EOUs, the unit is expected to export their goods and any supplies by the 100% EOUs for sale within the country is treated as sale to DTA - On such supplies excise duty at a rate equivalent to that of Customs Duty leviable on similar product is charged - In that context, the term "DTA" is taken as not including 100% EOU - However, as far as SEZs are concerned, the definition of DTA under SEZ Act includes everything located outside SEZs - Therefore, 100% EOU located outside SEZ, constitutes DTA as far as SEZ Act is concerned - Sec.51 of SEZ Act also makes it clear that this Act prevails over any other law - It has also been clarified by CBEC in their Circular that refund of accumulated Cenvat Credit is available when goods are cleared from DTA to SEZ - Assessee is entitled to refund of Cenvat Credit under Rule 5 of CCR, 2004 in respect of goods which they have sold to SEZ units: CESTAT

- Appeal allowed : HYDERABAD CESTAT

2019-TIOL-2102-CESTAT-ALL

Paragon Extrusions Pvt Ltd Vs Commissioner CGST

CX - The assessee's factory, who is engaged in manufacture of Aluminium Profiles (hollow) of various sizes and specifications was visited by Central Excise Officers who conducted various checks and verifications - During further search of the factory alleged incriminate documents including one note pad was also recovered - Scrutiny of same lead the officers to believe that the assessee have cleared their final products without payment of duty - Statement of Shri Jagdish Prasad, Authorised Signatory was recorded - The Additional Commissioner in his order has vacated the SCN by observing that apart from the statement of Shri Jagdish Prasad there is no other corroborative evidences on record to establish clandestine manufacture and removal of the goods - On the other hand Commissioner (A) has strongly relied upon the statement of said deponent by observing that he has accepted the clandestine removal - Revenue has made no further efforts to get in touch with the said dispatch and packing staff or to find out who actually is the writer of the entries in the note pad. No enquiry stand made even from the Directors or from any other person/staff of the assessee - The entire case of the Revenue is based upon the not so confessional statement of Shri Jagdish Prasad - Apart from the fact that the statement of Shri Jagdish Prasad was not confessional, even if the said statement is held to be confessional statement accepting clandestine removals the same cannot be made the sole basis for upholding the allegations of clandestine activity of assessee - The deponent of the said statement was never put to Examination-in-Chief or cross examination and as such veracity of his statement has never been teste - The Revenue has failed to produce any evidence to establish clandestine removal on the part of assessee - The Order of Commissioner (A) lacks merits and is accordingly set aside and the order of the Original Adjudicating Authority is restored - Similarly in respect of shortages, it is well settled that mere shortages cannot lead to the allegation of clandestine removal in absence of any other evidences to reflect upon the fact that such shortages has occurred on account of clandestine clearances - Reference can be made to Allahabad High Court's decision in case of Minakshi Castings - Accordingly, that part of the impugned order is set aside vide which the demand stands confirmed on the said ground and restore the order of the Original Adjudicating Authority - Inasmuch as demand has been set aside, the penalties imposed upon assessee is also required to be set aside: CESTAT

- Appeal allowed : ALLAHABAD CESTAT

CUSTOMS

NOTIFICATION

ctariffadd19_028

Seeks to impose definitive anti-dumping duty on imports of 'Purified Terephthalic Acid' originating in or exported from Korea RP and Thailand, in pursuance of sunset review final findings issued by DGTR.

CASE LAWS

2019-TIOL-2101-CESTAT-MUM

Lenovo India Pvt Ltd Vs CC

Cus - The assessee-company filed bills of entry for clearance of 3000 C 100 INE 200 78691 BQ (XPH) Product No 57- 109327 (Computer with CPU, ICB, Mouse & Monitor) and 3000 C 300 INE 100 30121 HQ (XPH) Product No 57- 103484 (Computer with CPU, ICB, Mouse & Monitor) - The assessee classified the same under CTH 84715000 - The Revenue opined that the goods were more appropriately classifiable under Heading 84713010 - On adjudication, the Asst Commr., settled the classification issue, holding that the goods were classifiable under CTH 84713010 - On appeal, the Commr.(A) upheld the findings of the Asst Commr. - Hence the present appeal.

Held - It is held that the imported goods fall within the category of portable computers - The assessee's contentions are unsupported from the technical literature submitted by it - Neither in the entire literature referred to by the assessee it is brought out that the portable computers are only limited to laptops and notebooks - The assessee in its appeal memo agreed with the O-i-A to the extent of rejecting the classification claimed by them in the bill of entry under CTH 84715000 - The assessee also claimed alternate classification under CTH 84714900 - As per this sub-heading note, the items must be segregated as at least a CPU, one input unit and one output unit - It is admitted by the assessee that in their case, CPU and Output Unit (Visual Display Unit) are integrated into one - Since the imported goods satisfy all the terms and conditions for classification under Heading 84713010, there is no fault in the classification as determined by the adjudicating authority and appellate authority - Hence the orders in challenge merit being dismissed: CESTAT

- Assessee's appeal dismissed : MUMBAI CESTAT

2019-TIOL-2100-CESTAT-AHM

Chintan Aluminium Pvt Ltd Vs CC

Cus - The assessee-company imported Aluminium Foil Scrap as per ISRI specifications & declared the assessable value on the strength of bill of entry - On adjudication, the assessable value was enhanced and duty demand was raised accordingly - On appeal, the Commr.(A) dismissed the assessee's appeal for failure to make pre-deposit - Later, the Tribunal remanded the matter to the Commr.(A), who proceeded to confirm the enhancement of value in the O-i-O - Hence the present appeal.

Held - The original assessment in the case of Bill of Entry was done at USD 1500 PMT, but after issuance of SCN, the same was revised to USD 1780 PMT - Both orders were passed by the Deputy Commissioner of Customs - Such actions are not permissible - Hence the value in one bills of entry is fixed at USD 1500 PMT as was done in the original assessment - Besides, the Revenue produced contemporaneous import data & chose to rely on the value of contemporaneous import when fixing the assessable value at USD 1780 PMT in respect of the other bil of entry - Hence the revision of value in this case is upheld: CESTAT

- Assessee's appeal partly allowed : AHMEDABAD CESTAT

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