2019-TIOL-NEWS-178 Part 2, Dated: Monday, July 29, 2019

2019-TIOL-NEWS-178 Part 2 | Monday July 29, 2019

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DIRECT TAX


	2019-TIOL-305-SC-IT DIT Vs National Stock Exchange Investor Protection Fund Trust Having heard the parties, the Supreme Court condoned the delay and dismisses the SLP, thus concurring with the opinion of High Court on the issue of exemption u/s 10(23C). - Revenue's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-304-SC-IT Pr CIT Vs Sicom Ltd Having heard the parties, the Supreme Court condoned the delay and issued notices to respective parties directing their apperance for further hearing on the issue of disallowance u/s 14A on account of dividend income. - Notice issued: SUPREME COURT OF INDIA 2019-TIOL-303-SC-IT Pr CIT Vs Ushdev International Ltd Having heard the parties, the Supreme Court condoned the delay and dismisses the SLP, thus concurring with the opinion of High Court on the issue of factual question. - Revenue's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-1449-ITAT-AHM ITO Vs Satish Laljibhai Bharwadi Whether if the assessee receives possession of immovable property against part consideration which is less than the stamp duty valuation, it is sufficient to satisfy the conditions required for valid transfer u/s 53A of the Transfer of Property Act - YES: ITAT Whether income from transfer of property u/s 56(2)(vii) is chargeable to tax only in the relevant AY in which the transaction is completed and not other AY even if the value in sale agreement is revised subsequently - YES: ITAT Whether where the value of property is revised by the assessee in light of defect in title of property, in absence of anything to the contrary, the Department cannot adopt a different sale consideration than the one adopted by the assessee in the revised agreement to bring the difference of amount to tax- YES: ITAT - Revenue's appeal dismissed/ Assessee's cross-objection dismissed 2019-TIOL-1434-ITAT-MUM BLA Power Holding Pvt Ltd Vs ITO Whether failure to supply the assessee with the information and failure to give opportunity to cross examine the statement on which the reopening notice is served renders the whole reassessment invalid in law - YES: ITAT Whether once the credibility of investor investing in the share capital of the assessee is confirmed, the AO without proving any live link between the information received from the Investigation Wing, Revenue and the formation of belief for escapement of income, cannot reopen an original assessment - YES: ITAT Whether once the primary onus is discharged by the assessee by proving the identity of the shareholder, no addition is sustainable in respect of share capital u/s 68 - YES: ITAT - Assessee appeal allowed: MUMBAI ITAT 2019-TIOL-1433-ITAT-MUM Haware Infrastructure Pvt Ltd Vs ITO Whether expenditure incurred by the assessee developer in removing commercial encumbrances for completion of commercial real estate project to meet the deadlines is in the nature of revenue expenditure - YES: ITAT Whether after the issuance of occupation certificate, if the commercial projects stalls because of a restraining order of Civil Judge, the AO cannot bring the profit in the year when the certificate was issued - YES: ITAT - Assessee's appeal allowed/ Revenue's appeal dismissed: MUMBAI ITAT 2019-TIOL-1432-ITAT-MUM DCIT Vs Imperial Procurement Services Pvt Ltd Whether if assessment is reopened beyond four years from the end of relevant AY and income has not escaped assessment by reason of assessee's failure to make a full and true disclosure of material facts then action u/s 147 is without jurisdiction - YES: ITAT - Revenue's appeal dismissed: MUMBAI ITAT 2019-TIOL-1431-ITAT-MAD DCIT Vs SR Trust Whether in the absence of any incriminating materials found against the assessee trust during the search, Revenue should not assume the jurisdiction u/s 153C of the Act - YES: ITAT - Revenue's appeal dismissed: CHENNAI ITAT 2019-TIOL-1430-ITAT-KOL ITO Vs Dulichand Shreelal Whether deduction can be allowed in respect of damages paid to a Port Trust, where such amount are not expenses incurred for any purpose which is an offence prohibited by law - YES: ITAT - Revenue's appeals dismissed: KOLKATA ITAT 2019-TIOL-1429-ITAT-AHM ITO Vs Anubhuti Ornaments Pvt Ltd Whether when assessee has successfully proved the genuineness of transactions and creditworthiness of parties, Revenue is not permitted to make additions without contravening the supporting documents - YES: ITAT Whether when discrepancies ocurring in books of account stand already reconciled and no excess payment was found, then no addition should be made on ground of inflated purchases - YES:ITAT - Revenue's appeal dismissed: AHMEDABAD ITAT 2019-TIOL-1428-ITAT-COCHIN Arthunkal Village Service Co-Operative Bank Ltd Vs JDIT Whether if there is no reasonable cause furnished by the assessee for non-furnishing of information sought by Revenue u/s 133(6), penalty u/s 272A(2)(c) of the Act can be imposed - YES: ITAT - Assessee's appeal dismissed: COCHIN ITAT

GST


	AAAR CASES 2019-TIOL-58-AAAR-GST Sabre Travel Network India Pvt Ltd GST - AAR has held that marketing, promotion and distribution services provided by the applicant to Sabre APAC is subject to tax under the provisions of the GST Act - appeal to AAAR. Held: Entire gamut of activities of appellant is in the nature of composite supply, of which intermediary services is the principal supply - as regards services provided by appellant to their client Sabre APAC, whether the same is export or otherwise, Authority does not have jurisdiction to decide the place of supply of service which is one of the pre-requisites to determine the export of services in terms of s.2(6) of the IGST Act and hence no order can be passed on the same - AAR ruling modified: AAAR - Appeal disposed of: AAAR 2019-TIOL-57-AAAR-GST HP India Sales Pvt Ltd GST - Appellant supplies Indigo Press printing ink (Electro Ink) bundled along with supply of ancillaries comprising of oil, binary ink developer, bip, blanket, print imaging plate and other machine products - They had sought a ruling on the classification of ink supplied along with consumables and determination of the time and value of supply of printing ink with consumables under the Indigo Press contract - AAR has held that supply of ElectroInk with consumables is a mixed supply - appeal to AAAR. Held: In a composite supply, the two or more taxable supplies have to be naturally bundled and one of the indicators of ‘naturally bundled' supply is that it should be an industry practice - appellant has given no evidence that the program given is an industry practice - the fact that the appellant offers his customers the option of a tier programme does not make the same an industry practice - also, what is more important is that the products are to be used on a HP printing machine and, therefore, for the best printing, only HP products have to be used - such requirement does not at all make it a composite supply as it has an element of compulsion in it whereas there is no place for compulsion in a composite supply - no reason to interfere with the order of AAR - Appeal is dismissed: AAAR - Appeal dismissed: AAAR 2019-TIOL-56-AAAR-GST Crown Beers India Pvt Ltd GST - AAR had held that the job work which is a service provided by PIL is liable to be taxed under GST - appeal to AAAR. Held: Activities performed by PIL on the goods of the appellant are in the nature of job work and accordingly attract 18% GST - contention of the appellant that all the activities under consideration i.e brewing, bottling and supplying products are in relation to beer which is classifiable under item 2203 of the CTA, 1975 and, hence liable to 5% GST in terms of entry 26(f) bearing heading 9988 of 11/2017-CTR is untenable because only food and food products of chapters 1 to 22 are eligible for this exemption and although there is no definition of food and food products in the GST Act, the apex Court has in the case of Parle Exports (P) Ltd. has held that non-alcoholic beverages were not eligible to exemption as food products - that everything consumed by human cannot be considered as food or food products for the purpose of exemption under GST and it would never have been the intention of the law to exempt expensive item like ‘alcoholic liquor' under the category of food and food products even though the same is for human consumption - apex court decision in Dilip Kumar [2018-TIOL-302-SC-CUS-CB] also relied upon - benefit of exemption as claimed is not available to alcoholic liquor for human consumption - AAR ruling upheld and appeal dismissed: AAAR - Appeal dismissed: AAAR 2019-TIOL-55-AAAR-GST BHUTORIA REFRIGERATION PVT LTD GST - AAR had held that Fan Coil Unit (FCU) is covered under HSN Code 8415 instead of 8418 as claimed by the applicant - appeal to AAAR Held: FCU is a part of the air conditioning system and does not have anything common with refrigerating unit - Heading 8418 does not include ‘Air conditioning systems', therefore, authority is unable to agree with the contention of the appellant that FCU is covered under Heading 8418 - AAR order upheld and appeal is dismissed: AAAR - Appeal dismissed: AAAR 2019-TIOL-52-AAAR-GST Asahi Kasei India Pvt Ltd GST - AAR held that s ervices provided by applicant in the nature of research on the matter related to functioning of the holding company would fall under SAC 99859 as 'Other support services'; services in the nature of information on market would fall under SAC 99837 as 'Market Research services'; services provided by the Marketing Services Agreement would qualify as an export of services as defined u/s 2(6) of the IGST Act - appeal to AAAR by Revenue. Held: All the essential ingredients of intermediary have been fulfilled by respondent, the entire gamut of supply is a mixed supply and not composite supply as these services are not naturally bundled - moreover, AAR has transcended its scope and jurisdiction by deciding upon the question related to export of services - AAR order is modified accordingly - services supplied by respondent constitutes a mixed supply of services falling under heading ‘accounting services' having SAC 9982 and under the heading ‘other professional, technical and business services', heading SAC 9983 - services supplied by respondent under Marketing services agreement constitutes a mixed supply of services under the heading ‘Research and Development services', SAC 9981, under heading ‘Other professional, technical and business services', SAC 9983 and under the heading ‘Other miscellaneous services', SAC 9997: AAAR - Appeal disposed of: AAAR 2019-TIOL-54-AAAR-GST Bajaj Finance Ltd GST - AAR has held that ‘Bounce charges' collected by the appellant in case of dishonour of cheque/ECS/NACH or any other electronic or clearing mandate by customers amounts to supply of services under sr. no. 5(e) of Schedule II to the CGST Act and is, therefore, liable to GST - appeal to AAAR Held: Bounce charges collected is not on account of ‘interest' for the delayed payment of the consideration for their supply but for dishonour of the repayment instruments such as bouncing of the cheques issued by the borrowers or the failure of the ECS for non-availability of sufficient fund in the borrower's account - Further, appellant is recovering separate amount at the fixed rate of interest under the head of ‘default interest' as quoted in the loan agreement on the delayed payment of the EMI by borrowers - Bounce charges are, therefore, not covered in the interest meant for the purpose of exemption and thereby not entitled for the exemption as claimed - no reason to interfere with the order of the AAR - Appeal dismissed: AAAR - Appeal dismissed: AAAR 2019-TIOL-53-AAAR-GST Bajaj Finance Ltd GST - AAR held that penal interest/penalty charged by appellant amounts to supply of services under sr. no. 5(e) of Schedule II to the GST Act and is, therefore, liable to GST - appeal to AAAR. Held: Appellant has tried to play with words and coined a new theory of interpreting the law - it is evident from the construction of the entry 5(e) that it contains three expressions and all three expressions namely "agreeing to the obligation to refrain from an act; or to tolerate an act or a situation; or to do an act” are separated with a semi-colon followed by word “or” - it shows that the semicolon and “or” separate the above three expressions showing that they are not inextricably connected - therefore, the theory of interpretation coined out by the appellant by connecting the group of words of first expression “agreeing to obligation” with rest of the two expressions is not the correct legal interpretation - Very activity of tolerating act or situation of delay in payment of EMI is covered under clause 5(e) of the Schedule II - expression ‘to tolerate an act or situation' is clearly distinct and separate - therefore, the group of words ‘agreeing to the obligation' from the first expression of clause 5(e) mandating for agreement and obligation are not applicable to the expression ‘to tolerate an act or situation' - accordingly, the penal charges/penalty recovered by appellant from their borrowers on account of delay in payment of EMI by borrowers are adequately covered under clause 5(e) of the Schedule II of the CGST Act and will attract GST - AAR ruling upheld and appeal dismissed: AAAR Appeal dismissed: AAAR NOTIFICATION 35/2019 Seeks to extend the last date for furnishing FORM GST CMP-08 for the quarter April -June 2019 till 31.08.2019

INDIRECT TAX

SERVICE TAX

2019-TIOL-2141-CESTAT-MAD

Island Aviation India Pvt Ltd Vs CGST & CE

ST - The assessee is functioning as General Sales Agent of Malaysian Airlines in the territory of South India for cargo transportation and other services provided by Malaysian Airlines - During audit, it was noticed that the assessee had entered in a General Sales Agency Agreement (Cargo) with Malaysian Airlines Systems, Berhad for functioning as General Sales Agent for cargo transportation and other services provided by Malaysian Airlines - Clause 9(1) of the said agreement is crucial for analyzing the issue under consideration - As per clause 9, it is seen that the Malaysian Airlines and assessee has some arrangement with regard to the rates of cargo slots which can be sold by assessee - For slots, for which there is specific rate arrangement between the parties, the assessee is not entitled to any commission - Thus, the assessee purchases the cargo slots and thereafter sells the same to customer / exporters - The difference between sale price and the purchase price of the cargo slot is sought to be brought within the ambit of commission by department - In such transaction, it is specifically stated in clause 9 that the assessee is not entitled to commission - In fact, for transactions as a General Sales Agent, the assessee is entitled to commission as per IATA regulations - In other transaction of sale of cargo space of specific agreed rates, it is not specified that assessee is eligible for any consideration - This means the assessee can sell such cargo slot at any rate - Sometimes the assessee may make profit and sometimes may incur huge loss in such sale also - This kind of transaction indicates that the assessee is not acting as a general sales agent while trading of cargo space in the capacity of an independent buyer - The Tribunal in the case of Airogo Travels and Cargo Pvt. Ltd. had occasion to analyze a similar issue - It was held that the amount received by sale of cargo is only trading of cargo space and is not subject to levy of service tax - The Tribunal therein had followed the decision in case of M/s. Karnam Freight Movers 2017-TIOL-907-CESTAT-DEL - The transaction sought to be brought within the net of service tax levy in the present proceedings does not fall under BAS - The demand therefore cannot sustain: CESTAT

- Appeals allowed: CHENNAI CESTAT

2019-TIOL-2140-CESTAT-DEL

CCE & ST Vs Municipal Council

ST - The Revenue has prayed for withdrawal of appeal pursuant to instructions dated 11.07.2018 issued by CBEC enhancing the monetary limit for filing the appeal before this Tribunal/Courts - The appeal filed by Revenue is dismissed as withdrawn: CESTAT

- Appeal dismissed: DELHI CESTAT

CENTRAL EXCISE

2019-TIOL-2139-CESTAT-BANG

CCT & CE Vs Anna Aluminium Company Pvt Ltd

CX - The amount involved in the present appeal is below the monetary limit and as per CBEC Instruction in their Board's Instruction 390/Misc./116/2017-JC , this appeal should not have been filed before the Tribunal - In view of the Board instructions, the appeal dismissed without going into the merits of the case: CESTAT

- Appeals dismissed: BANGALORE CESTAT

2019-TIOL-2138-CESTAT-HYD

CCE, C & ST Vs Aurobindo Pharma Ltd

CX - The assessee-company manufactures bulk drugs and use Ethanol for manufacturing final products - The assessee purchased Ethanol from an entity, which paid Excise duty on the product for many years - SCN was served to the assessee, alleging that the assessee irregularly availed credit on Ethanol, as the product contained Alcohol and was not classifiable under Chapter 29 - Being non-excisable goods, no duty was payable by the other company - Hence the assessee was found to be ineligible for credit - On adjudication, duty demand was proposed with interest and equivalent penalty - On appeal, such findings were quashed by the Commr.(A) - Hence the present appeal by the Revenue.

Held - A similar issue stands settled in the assessee's own case for a previous period - Following the same, Revenue's appeal is unsustainable: CESTAT

- Revenue's appeal dismissed: HYDERABAD CESTAT

2019-TIOL-2137-CESTAT-MAD

Bray Controls India Pvt Ltd Vs CCE

CX - The assessee informed the adjudicating authority that they cancelled its ARE-1 pertaining to export of goods on payment of duty - The assessee filed refund claim for such amount on grounds that it was erroneously paid and that the export made under ARE-1 was cancelled & so the export duty was erroneously debited in the Cenvat a/c had to be refunded - The assessee also pleaded that the goods had been cleared under the ARE-1 after payment of Excise duty - The assessee claimed refund of duty by its application before adjudicating authority u/s 11B - SCN was issued proposing to reject the refund claim - Such findings were upheld by the Commr.(A) on grounds that the assessee produced no substantial evidence against the allegations levelled - Hence the present appeal by the assessee.

Held - The Revenue should have enquired into when the assessee made refund claim or thereafter, when the reason for making the refund claim was the cancellation of the first ARE-1 - When the SCN itself refers to the fact of intimation about the non-clearance/cancellation of ARE-1 coupled with lack of enquiry and no finding as to clearing manufactured goods in any other way than reported, the fact of non-clearance of first ARE-1 must be sustained - Besides, if the Revenue harbors doubts regarding the daily stock account, it is all the more expected to make appropriate enquiries at the relevant point of time - Hence, without any contrary evidence regarding procurement of additional raw materials, the allegations, howsoever strong, cannot suffice - Hence the O-i-A merits being quashed – Appeal allowed with consequential benefits: CESTAT

- Appeal allowed: CHENNAI CESTAT

CUSTOMS

NOTIFICATION

dgft19not012

Export of Red Sanders wood by Directorate of Revenue Intelligence (DRI), State Governments of Andhra Pradesh, Maharashtra, Tamil Nadu and Karnataka -Extension of time regarding

Trade Notice 27

Import policy of 'Ethyl Alcohol and other spirits, denatured, of any strength'

CASE LAW

2019-TIOL-2136-CESTAT-AHM

CJ Shah & Company Vs CC

Cus - The assessee have imported two consignments of Propylene Glycol from USA and filed two Bills of Entry - In respect of said import, the anti dumping duty was levied as per notfn 117/2009-Cus extending the notfn 105/2004-Cus - The Supreme Court in case of M/s Kumho Petrochemicals Co. Ltd. 2017-TIOL-232-SC-CUS observes that once a notification enforcing anti dumping duty is expired and non-existent, such non-existent notification cannot be extended - The notfn 105/04-Cus, admittedly expired on 08/10/2009 - Thereafter, the said notification was extended vide notfn 117/09-Cus - Since the notification 105/04-Cus was expired on 08/10/2009, on 13/10/2009 the notfn 105/04-Cus was not in existence - Accordingly, on 13/10/2009, it could not have been extended - Therefore, the result is that no anti-dumping duty can be levied in view of notfn 105/04-Cus which was extended vide notfn 117/09-Cus during the period after 08/09/2009 - Accordingly, the demand is not sustainable - Consequently, the impugned order is set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

HIGHLIGHTS (SISTER PORTALS)


	TII I-T - Failure to justify allocation of expenses in foreign currency, merits exclusion of those expenses from ambit of Section 44C: ITAT TP - Appellate Revenue Authority must not mechanically follow findings of predecessors, without considering concerns regarding non-scrutiny of segmental results: ITAT TP - If there is no similarity of factors fixing price between AE & Non-AE transactions, then comparability for non-AE transactions has to be examined after undertaking FAR analysis: ITAT CORPLAWS NI Act, 1881 - Complaint against partners for dishonour of cheque is not tenable without adding Partnership Firm, even if unregistered, as accused: HC Trade Marks Act, 1999 - Raising false claim before court to oust territorial jurisdiction of writ court in order to delay hearing in trade mark violation case, warrants prosecution u/s 209 of IPC, 1860 : HC IBC, 2016 - Issue of moratorium does not bar hearing of counter-claim if issues and facts arising are intermingled with recovery suit from which counter suit arises : HC

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