2019-TIOL-NEWS-180 - Part 2, Dated: Wednesday, July 31, 2019

2019-TIOL-NEWS-180 - PART 2 | Wednesday July 31, 2019

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DIRECT TAX


	2019-TIOL-320-SC-IT Kisan Agro Mart Pvt Ltd Vs ITO Having heard the parties, the Supreme Court condoned the delay and declined to interfere with the order of High Court on the issue of writ remedy. - Assessee's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-319-SC-IT-LB KP Abdul Majeed Vs ACIT Having heard the parties, the Supreme Court declined to interfere with the order of High Court on the issue of peak credit and dismisses the SLP. - Assessee's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-318-SC-IT Pr CIT Vs BMC Software India Pvt Ltd Having heard the parties, the Supreme Court condoned the delay and observed that issue is covered in the Judgment of this Court in Commissioner of Income Tax, Central-III v. HCL Technologies Ltd - 2018-TIOL-167-SC-IT. The counsel for Revenue fairly submitted that the monetary implication involved in this special leave petition is only Rs.44,00,000/-. Therefore, present SLP stands dismissed. - Revenue's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-317-SC-IT CIT Vs Glenmark Pharmaceuticals 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 deduction u/s 80IC. - Revenue's SLP dismissed: SUPREME COURT OF INDIA 2019-TIOL-1621-HC-MAD-IT Sri I M Farvis Ahmed Vs ITO Whether entire unaccounted deposit has to be considered as unexplained income u/s 69, in absence of verifiable evidence - YES: HC -Assessee's appeal dismissed : MADRAS HIGH COURT 2019-TIOL-1620-HC-MAD-IT CIT Vs Raju Ganesan Whether appeals having tax effect less than the monetary limit specified by the CBDT Circular, merits dismissal per se, without deciding case on merits - YES: HC -Revenue's appeal dismissed : MADRAS HIGH COURT 2019-TIOL-1619-HC-AHM-IT Pr.CIT Vs Amit Vasantlal Shah Whether in absence of any incriminating material which was seized as per the provisions of section 153(C), notice u/s 153(C) cannot sustain - YES: HC -Revenue's appeal dismissed : GUJARAT HIGH COURT 2019-TIOL-1453-ITAT-MAD Forbes Campbell Finance Ltd Vs DCIT Whether computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the calculations as contemplated u/s 14A r/w Rule 8D – YES: ITAT - Assessee's appeal partly allowed : CHENNAI ITAT 2019-TIOL-1452-ITAT-DEL Mahle Filter Systems Pvt Ltd Vs Addl.CIT Whether the fact that rental income is accrued because of leave & licence agreement or lease agreement has any bearing in changing the colour of receipts in assessee's hands from income from house property to income from other sources - NO: ITAT Whether once 50% of the tax liability is discharged upon gift & fringe benefit distributed to the employees, the AO cannot bring in to tax the rest of 50% of the balance expenditure - YES: ITAT Whether the AO is vested with the power to brand a scheme of amalgamation approved by the jurisdictional high court as sham and colorable device to escape tax liabilities - NO: ITAT Whether expenses incurred for making royalty payments for use of technical know-how which is indispensable with carrying on the day to day operations of business is revenue expenditure and does not merits disallowance as capital expenditure - YES: ITAT - Assessee's appeal allowed/Revenue's appeal disallowed : DELHI ITAT 2019-TIOL-1451-ITAT-DEL DCIT Vs Sahara Care Ltd Whether before making addition u/s 14A it is mandatory for the AO to first record his satisfaction that explanation of the assessee is incorrect - YES: ITAT - Revenue's appeal dismissed : DELHI ITAT 2019-TIOL-1450-ITAT-MAD Clover Energy Pvt Ltd Vs Pr.CIT Whether order u/s 263 in respect of re-do of assessment is justified, when assessee's claim of depreciation for current AY needs to be examined properly - YES: ITAT Whether matter needs to be remand to AO when the assessee fails to submit relevant documents i.e, sale agreement and letter of possession during assessment - YES: ITAT - Case Remanded : CHENNAI ITAT

MISC CASE


	2019-TIOL-1635-HC-ALL-CT Int Nirmata Sahayak Samiti Vs CTT Whether additions to total turnover are sustainable where based on presumptions & in ignorance of fact that the assessee-society functioned for the benefit of its members & service charges received were included in taxable turnover - NO: HC - Revision Petitions answered in favor of assessee: ALLAHABAD HIGH COURT

GST CASES


	AAR CASES 2019-TIOL-243-AAR-GST TUI India Pvt Ltd GST - The applicant company is engaged in providing travel arrangement, tour operator and related services - It approached the AAR seeking to know whether in case of accomodation provided only, 18% GST is chargeable on the service fee/convenience fee charged by it, where it satisfies the conditions of being a Pure Agent - It also sought to know if an option is available to a tour operator to charge 5% GST with no ITC or else charge 18% GST with full ITC. Held - The applicant pays 18% GST on service fee & convenience fee or commission received from clients and also on target-based sales commission received from foreign hotel aggregators - Value of hotel accomodation paid by client, which it remitted by them to the foreign hotel/ hotel aggregator cannot be included in such taxable value as long as conditions of pure agent are satisfied - The applicant is required to deposit GST u/s 9(1) on amount received from clients on value of hotel accomodation service while acting as an agent u/s 2(15), as it is taxable person defined u/s 2(107) of the CGST Act and supplier u/s 2(105) of the Act - Moreover, tour operator services are covered under Entry (i) of Sr No 23 of Notfn No 11/2017-CT(R) dated 28.06.2017 - Hence 5% GST without ITC is payable subject to fulfilment of conditions - Option of paying GST @ 18% with ITC is not available: AAR - Application disposed of: AAR 2019-TIOL-242-AAR-GST Indian institute of corporate affairs GST - The applicant is primarily engaged in induction & providing in-service training to Indian Corporate Law Service officers, providing capacity building & training programmes in various fields and in performing policy advisory functions, public outreach & stakeholder consultations through forums and seminars - The applicant approached the AAR seeking to know if GST is leviable on services provided in furtherance of MoU for providing drinking water in covered villages, providing solar street lights in villages & improving village sanitation by building household toilets - The applicant also sought to know if any exemption is available on such activities. Held - The amount received from the other signatory to the MoU is not grant-in-aid and is in fact, consideration for supply of goods or services under such agreement - Hence GST is payable u/s 9(1) of the Act - Such supply of goods or services are not exempted from payment of GST as per Sr No 76 of Notfn No 12/2017-CT(R) dated 28.06.2017: AAR - Application disposed off: AAR AAAR CASE 2019-TIOL-59-AAAR-GST Bengal Rowing Club GST - A pplicant is providing its members privileges and amenities of a club such as swimming facility, gymnasium, indoor games and restaurant service - They had sought an advance ruling on the rate of GST applicable on the services it offers along with the supply of food, services like valet parking, music, decoration and other such services associated with organizing social gatherings and they also wanted to know the admissible proportion of input tax credit for services other than the supply of food - AAR had held that Supply of food, by way of or as part of any service or in any other manner whatsoever, from the applicant's restaurant is classifiable under SAC 9963 and taxable under Sl No. 7(i) or 7(iii) of the Notfn 11/2017-CT (Rate) depending upon the criteria mentioned therein; that if food is supplied by way of or as part of services associated with organising social events at the club premises, together with renting of such premises, it will be classifiable under SAC 9963 and taxable under Sl No. 7(vii) of said notfn; that all other services offered by applicant are classifiable under SAC 9995 and taxable under Sl No. 33 of said rate notification; that the applicant should apply the provisions under section 17(2) & (6) of GST Act, read with rules 42 and 43 of GST Rules, for reversal of input tax credit, treating supplies, if any, taxable under Sl No. 7(i) of said rate notification, as exempt supplies - appeal before AAAR - Appellant submits that the AAR failed to appreciate that food supplied for social gatherings cannot be categorised as composite services and taxable @18% and that all restaurant services are to be taxed @5% with no Input tax credit; that a Member's club should be excluded from taxation under the GST Act on the principle of mutuality. Held: Under serial no. 7(v) it is seen that any supply of food or beverage at any event, whether or not served at an outdoor or an indoor function squarely falls under the said category; an ‘event' is a planned or social occasion whereas a ‘function' is an official ceremony or a formal social event such as a party or a special meal, at which a lot of people are usually present - provisions of sr. no. 7(v) is not restricted to exhibition halls or marriage halls and includes all indoor and outdoor functions - qualifying criteria under the notification entry is that firstly, it must be an event based function and secondly, it must be occasional in nature - social get-togethers and parties are special social functions and definitely occasional in nature - services provided by the club at these social get-togethers are not regular restaurant services - so the food supplied at events which are occasional in nature will unambiguously fall under sr. no. 7(v) of the rate notification - therefore, it is held that supply of food at events organised by the appellant in the club premises is taxable under sr. no. 7(v) and taxed @18% - no other infirmity in the order of the WBAAR - Ruling dated 28.03.2019 stands modified to this extent: AAAR - Appeal disposed of: AAAR HIGH COURT CASES 2019-TIOL-1636-HC-PATNA-GST Polycab Wires Pvt Ltd Vs UoI GST - Carrying forward of CENVAT Credit as a transitional credit - Petitioner complains of discriminatory action by the respondent no. 3 and 4 in not extending the benefit of Notification No. 31 of 2018 dated 06.08.2018 - a representation was also made by the petitioner to the Commissioner, the nodal officer, however, the same has remained pending and has not been adjudicated upon - petition filed. Held: Laches is on the part of the Nodal Officer - respondent authority to address on the issue and take all necessary steps for its disposal in accordance with law with opportunity of hearing to the petitioner within a period of six weeks - petition disposed of: High Court - Petition disposed of: PATNA HIGH COURT 2019-TIOL-1634-HC-P&H-GST Vikas Goel Vs Deputy Director GST - Petitioner has filed second petition under Section 439 of the Code of Criminal Procedure, 1973 for grant of regular bail. Held: Perusal of record shows that there are serious allegations against the present petitioner, who is the main accused, that he alongwith co-accused, by falsely showing bogus billing etc., adjusted the amount without any actual transportation of the goods or sale of goods etc. - Only paper transactions were done and the accused have wrongly claimed the relief of more than Rs. 80 crore and the case is at preliminary stage - Apex Court in the case of State of Bihar and another Vs. Amit Kumar @ Bacha Rai has held that the accused charged with economic offence of huge magnitude and alleged to be the kingpin of crime, is not entitled to the benefit of bail - not a fit case where the petitioner is entitled to the benefit of regular bail - no merit in petition, hence dismissed: High Court - Petition dismissed: PUNJAB AND HARYANA HIGH COURT 2019-TIOL-1633-HC-MP-GST Nitin Nikhra Vs State Of MP GST - CGST Act, 2017 - Section 132 of the Act prescribes punishment for certain offences and maximum sentence which can be awarded, is five years - Section 167 (2) of the Cr.P.C provides 60 days time to the investigating agency to submit charge sheet for the offences where investigation relates to any offence other than total imprisonment for life or imprisonment for a term of not less than 10 years - Here the maximum sentence punishable is imprisonment for five years therefore, respondent had to file the charge sheet within 60 days - But admittedly, charge sheet has not been filed, therefore, right of 'default bail' accrued to the applicant after completion of 60 days - It was the duty of the investigating agency to submit charge sheet within the stipulated period, but same has not happened - right has been accrued to the applicant, however, bail can granted to the applicant with certain stringent conditions: High Court [para 7 to 10] - Bail granted: MADHYA PRADESH HIGH COURT

INDIRECT TAX

SERVICE TAX

2019-TIOL-2165-CESTAT-MAD

Mohabir Enterprises Vs Commissioner of GST & CE

ST - Assessee is registered for various services with Department - During audit, it was noticed that assessee had entered into an agreement with M/s. Shivani Oil and Gas Exploration Services Ltd. and M/s. Sai Engineering and Drilling for providing Shot Hole Drilling and 3D seismic job services - M/s. Shivani Oil and Gas Exploration Services Ltd. had sub-contracted the shot hole drilling and 3D seismic job services to assessee - Similarly, M/s. Sai Engineering and Drilling had sub-contracted shot hole drilling by rotary type manual drilling sets and seismic job services for 2D seismic survey in Crew B in Bihar to the assessee - According to department, the activities done by assessee under the contracts would fall under the category of Survey and Exploration of Mineral Service and is subject to levy of service tax - From the activities explained by assessee it can be seen that these activities have nothing to do with Survey & Exploration of Mineral Service - The assessee have undertaken mainly the preparation of camps mobilization and also upkeep and maintenance of these camps - The Commissioner (A) for the period from 25.4.2006 to 20.12.2007 has analyzed the very same issue in detail and held that the activities does not fall under Survey & Exploration of Mineral Service - It was held that activity of assessee is not in the nature of seismic services and collection/processing, interpretation of data and drilling or testing in relation to survey and exploration - The CBEC vide its Circular No. 80/10/2004-ST has clarified that the service tax under this category would be limited to the services rendered in relation to Survey and Exploration only and not on the activity of actual extraction after the survey and exploration is complete - The transport, refining, processing or production of the extracted products would also be out of the ambit of service tax - The activity undertaken by assessee is in the nature of mobilization of camps, upkeep and maintenance of camps and such other services that would not fall under definition of Survey & Exploration of Mineral Services - The Tribunal in assessee's own case had remanded the matter to the adjudicating authority to relook into the question whether the activity falls within the category of Survey & Exploration of Mineral Services - For an earlier period, Commissioner (A) has held that the activities undertaken by assessee would not fall under the category of Survey & Exploration of Mineral services and the department has not filed any appeal against that order - Assessee has relied upon the decision in the case of Marsons Fan Industries - 2008-TIOL-59-SC-CX to argue that when the department has accepted the order passed by them on a particular issue they cannot challenge for a subsequent period on the very same issue - The issue has been decided in favour of the assessee for the previous period - The department cannot then agitate the matter - Thus, the demand cannot sustain, impugned order is set aside: CESTAT

-Appeal allowed : CHENNAI CESTAT

2019-TIOL-2164-CESTAT-AHM

Adani Enterprises Ltd Vs CCE & ST

ST - The issue falls for consideration is whether the extended period of limitation for issuance of a SCN under the proviso to Section 73(1) of FA, 1994 could have been invoked - The assessee is engaged in providing services of Clearing and Forwarding Agent, Business Auxiliary Service, Storage & Warehouse Service, Cargo Handling Service, Consulting Engineering Services, Port Services and Transport of Goods by Road Services - An internal audit was conducted and it was observed that the assessee had wrongly taken Cenvat credit on GTA Services in the month of September 2005 and though it had reversed the credit, it did not pay interest - The SCN was issued to assessee on 18 June, 2009 - The SCN was required to be issued within one year from the relevant date but is was not - It is, for this reason that the Department, relying upon the proviso to Section 73(1) of the Act, invoked the extended period of limitation of five years - The SCN does not allege that the suppression was with an intention to evade payment of Service Tax - It was, therefore, pleaded by assessee in reply to SCN that the extended period of limitation could not be invoked - This plea is also mentioned in impugned order - This has, however, not been considered by Adjudicating Authority in impugned Order - The Commissioner completely failed to appreciate that the extended period of five years could have been invoked only when the assessee suppressed facts with an intent to evade payment of Service Tax - All that has been observed by Commissioner is that Cenvat Credit in respect of Goods and Transport Services was wrongly taken by assessee - This would not be sufficient to attract the extended period of limitation - This apart, the benefit of proviso to Section 73(1) could be taken only when there was an explicit averment in SCN that there was suppression of facts with an intent to evade payment of duty - In absence of such an averment, the extended period of limitation could not have been invoked - The impugned order cannot be sustained: CESTAT

- Appeal allowed : AHMEDABAD CESTAT

CENTRAL EXCISE

2019-TIOL-2163-CESTAT-ALL

Tirupati Tubes Vs CCE

CX - The assessee maintained separate accounts and inventory of inputs used for dutiable and exempted final products and took Cenvat credit in respect of only that quantity of inputs which was used in or in relation to manufacture of dutiable final products - However, the assessee also have availed services of Telecom, Chartered Accountant, Business Auxiliary Services, Management Consultancy and General Insurance Services in respect of which during the period of dispute, they have taken the Cenvat credit - The Department's objection is that the assessee have not maintained separate accounts and inventory in respect of use of these services in or in relation to the manufacture of dutiable and exempted final products and, therefore, the provisions of Rule 6(3) will become applicable and they would be liable to pay 5%/10% of the sale value of exempted final products - The view of the Department and impugned order based on the same is frivolous, as even if the assessee want to maintain separate account in respect of the services mentioned, it would be impossible for them - Lex non cogit ad impossibilia is well settled legal principle and therefore, the option of maintaining separate account and inventory in respect of the services cannot be forced upon them - Moreover, Section 6(3) of the Rules, on account of retrospective amendment to this Rule, also gives an option to a manufacturer to reverse the proportionate credit in respect of the Cenvated inputs/input services used in or in relation to the manufacture of exempted final products, which the assessee have done - In fact, the proportionate credit comes only to Rs.13,231/- against which the credit reversed is Rs.88,756/- - The impugned order is not sustainable: CESTAT

- Appeal allowed : ALLAHABAD CESTAT

2019-TIOL-2162-CESTAT-AHM

Trend Plast Pouch Pvt Ltd Vs CCE & ST

CX - The assessee is engaged in manufacture of printed plastic pouches - For the manufacture, first they have to purchase cylinders and thereafter they issue debit notes to the buyers of the plastic pouches, accordingly, the ownership of the cylinder remained with the buyer of plastic pouches - The case of the department is that duty is required to be paid on the total value of the cylinder - As per Rule 6 of Central Excise Valuation Rules, since the cylinder was owned by the buyer of finished goods which were used by assessee, its amortization cost is to be added in the value of goods i.e. plastic pouches - As per the facts of the case, Revenue has demanded the duty on the entire value of the cylinder, which is not correct and legal, and only amortised cost of each product is to be added and on that basis first, amortized cost according to capacity of cylinder has to be worked out and the said authorized cost can only be added in respect of number of products manufactured and cleared by assessee - Therefore, the method adopted i.e. demand on the entire value of cylinder is incorrect - The impugned order is set aside and matter is remanded to Adjudicating Authority to decide the matter afresh after ascertaining the correct amortized cost of the cylinder - Accordingly, the appeal is allowed by way of remand: CESTAT

- Matter remanded : AHMEDABAD CESTAT

CUSTOMS

NOTIFICATION

dgft22pn019

Automatic Reduction/Enhancement upto 10% Duty saved amount and pro rata Reduction / Enhancement in export obligation

cnt53_2019

CBIC upwardly revises tariff value of edible oils

CASE LAWS

2019-TIOL-2161-CESTAT-BANG

Composite Technologies Pvt Ltd Vs CC

Cus - The assessee had imported capital goods claiming exemption under EPCG Scheme in terms of Notfn 49/2000 against EPCG Licence with the duty foregone - The said goods were imported vide Bill of Entry through ICD, Bangalore as per the provisions of Para 6.11 of Handbook of Procedure Volume 1 (1997- 2002) - As assessee failed to submit the Installation Certificate in respect of the capital goods as per Customs Notfn 92/2004 and also did not submit the Export Obligation Discharge Certificate (EOD certificate) issued by JDGFT, the Department issued a SCN proposing to demand customs duty foregone on the imported goods along with applicable interest and penalty under Section 117 of Customs Act, 1962 on assessee - The assessee could not fulfill the export obligation on account of reasons beyond his control as he has suffered huge financial loses and his factory was closed in 2007 - Further, assessee have paid the entire customs duty foregone as on date - Further, no force found in the contention of assessee that they had fulfilled the export obligation by earning foreign exchange because both the authorities have not considered the same as export - There is no deliberate default in fulfilling the export obligation and therefore there is no justification for confiscation of goods and imposition of redemption fine in terms of Section 125 of the Act - The confiscation, redemption fine of Rs.5 lakhs in lieu of confiscation and penalty of Rs.2.5 lakhs is set aside - Assessee is liable to pay interest on the delayed payment of customs duty foregone - For that purpose, matter is remanded back to the original authority for quantification of interest which the assessee would be liable to pay: CESTAT

- Appeals disposed of : BANGALORE CESTAT

HIGHLIGHTS (SISTER PORTALS)


	TII TP - Ommission while deciding adoption comparables for purposes of benchmarking, is 'mistake apparent on record' and hence calls for rectification: ITAT I-T - Interest income received by Non-resident HO from its Indian Branch is taxable in its hands, if it is of nature of 'payment made to self': ITAT I-T - Nature of foreign payment cannot be determined without examining agreement entered into with non-resident recipient: ITAT TIOL CORPLAWS Arbitration & Conciliation Act, 1996 - Parties are not at liberty to invoke arbitration clause subsequently after settling their dispute by way of compromise deed : SC NI Act, 1881 - Pre-conviction direction to pay 20% of cheque amount as per mandate u/s 143A is applicable only prospectively after September 2018: SC Competition Act, 2002 - Defect in constitution of Adjudicating Body of CCI due to vacancy does not vitiate final hearing process: HC

NEWS FLASH


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