2019-TIOL-NEWS-186, Dated: Wednesday, August 07, 2019

2019-TIOL-NEWS-186| Wednesday August 07, 2019

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Legal Wrangle | International Taxation | Episode 108

DIRECT TAX


	2019-TIOL-333-SC-IT DCIT Vs Asset Reconstruction Company India Pvt Ltd In writ, the Apex Court condones the delay and dismisses the Revenue's Special Leave to Petition, finding no reason to entertain the same. - Revenue's SLP dismissed :SUPREME COURT OF INDIA 2019-TIOL-332-SC-IT Pr.CIT Vs Surendra Kumar Jain In writ, the Apex Court directs that notice be issued on the SLP as well as in respect of the application for COD. It also directs that the matter be tagged with SLP (C) No. 15493/2019. - Notice issued :SUPREME COURT OF INDIA 2019-TIOL-1710-HC-PATNA-IT-LB Sri Loknath Goenka Vs CIT Whether a new liability brought under the Income Tax Act by way of amendment, can be given retrospective effect - NO: HC Larger Bench Whether such liability can be fastened on an individual if the same was existing at the time of accrual and not at the time of assessment - YES: HC Larger Bench -Reference in favour of Assessee : PATNA HIGH COURT 2019-TIOL-1703-HC-DEL-IT CIT Vs Rajiv Gupta Whether rejection of books of accounts u/s 145(3) and consequent additions to income are sustainable where the assessee fails to discharge obligation of proving genuineness of transactions or creditworthiness & identity of the parties - YES: HC Whether rejection of books of accounts merits being sustained where the orders of the CIT(A) and the Tribunal to such effect are cryptic and do not properly consider the facts of the case - NO: HC -Revenue's appeals allowed : DELHI HIGH COURT 2019-TIOL-1702-HC-MAD-WT CIT Vs Rajwanti Properties Pvt Ltd Whether where the findings of the ITAT categorically deny existence of inaccurate or false details in the return of the assessee, penalty levied u/s 18 warrants deletion for want of reasonable cause - YES: HC -Revenue's appeals dismissed : MADRAS HIGH COURT 2019-TIOL-1701-HC-AHM-IT Pr.CIT Vs Himanshu Chandulal Patel Whether for issuing notice u/s 153C, it is absolutely essential for the AO to record its satisfaction going by the cogent materials connecting the documents seized with the assessee rather than replacing the satisfaction with surmise and conjectures - YES: HC -Revenue's appeal dismissed : GUJARAT HIGH COURT 2019-TIOL-1700-HC-DEL-IT Biswajit Das Vs UoI Whether fee levied for late submission of TDS statement u/s 234E is unconstitutional merely because the provision attempts to regularize the incidents of belated filings to remove the cascading delay in claiming of tax refund - NO: HC -Assessee's writ petition dismissed : DELHI HIGH COURT 2019-TIOL-1699-HC-KERALA-IT CIT Vs KTP Mohammed Whether the Settlement Commission has got the carte blanche of authority to proceed with the application u/s 245 even when the question of full and true disclosure of income is tainted by the presence of further declaration of additional income in excess of that the one disclosed earlier - NO: HC Whether a disclosure of further income which was not available in the original application u/s 245C leads to an undeniable conclusion that there was no full and true disclosure of undisclosed income in the first place - YES: HC -Revenue's writ appeal allowed : KERALA HIGH COURT 2019-TIOL-1698-HC-KAR-IT Bhurat Sunilkumar HUF Vs ITO Whether if the nexus in respect of jewelleries in VDIS declaration with the value of smelted items declared in income return stood established by the assessee, the Tribunal is not justified to discount its own ratio reached in identical set of facts to reject the connection - YES: HC -Assessee's appeal allowed : KARNATAKA HIGH COURT 2019-TIOL-1499-ITAT-COCHIN ITO Vs Spectrum Soft Tech Solutions Pvt Ltd Whether the onus rests with the assessee to prove that certain landed property is a business asset, where the assessee claims that the same will not attract wealth tax - YES: ITAT - Revenue's appeal partly allowed : COCHIN ITAT

INDIRECT TAX

SERVICE TAX

2019-TIOL-1697-HC-KAR-ST

Neha Enterprises Vs Pr.CCT

ST - The Petitioner No.1 is a partnership firm represented by Petitioner No.2. - Respondent No.1 issued a SCN relating to the period December' 2012 to March' 2016, as to why the service tax amount should not be demanded and recovered from them under the proviso to Section 73(1) of FA, 1994 and for such other action to be taken by authorities under the Act - The grounds urged by petitioners would not absolve the clear admission of tax liability by petitioners to the SCN issued by Adjudicating Authority - All the grounds now urged appears to be an after thought - Even if any objection has to be raised in respect of jurisdiction, the same has to be raised at the first available opportunity - Similarly, no opportunity was sought by petitioner in pursuant to SCN - On the other hand, a letter was addressed accepting the tax liability, which is not disputed by petitioners - Subsequently, in the rectification application it is pleaded that opportunity was prayed but the same was denied but the same is not supported by any material evidence - In the rectification application, a reference is also made to the circular dated 10.03.2017 issued by CBEC to emphasize that fair opportunity of hearing has to be granted to the assessee - It is also the grievance of petitioner that the said point has not been addressed by Adjudicating Authority while dismissing the rectification application - It is well settled that admission of tax liability by petitioners would not entail the authorities to provide any opportunity in terms of Government Order dated 10.03.2017 referred to by the petitioners - Even if there is any typographical error in adjudicating order at Annexure-A, the same has been clarified in the order of rectification dated 19.04.2018 that it was inadvertently mentioned as “24.01.2018” as the date of passing of the order instead of “30.01.2018” - Petitioners cannot take advantage of such typographical error when it is not disputed that personal hearing was given to petitioners on 30.01.2018 and the order was passed on the same day - No good grounds made out by petitioners to interfere with the orders impugned: HC

-Writ petitions dismissed : KARNATAKA HIGH COURT

2019-TIOL-2219-CESTAT-MAD

Srimathy Complex Vs CCE & ST

ST - Renting of Immovable Property service - Four joint owners of the commercial complex rented out the property to various tenants - Department took the view that the total monthly rent so received would be liable to service tax under renting of immovable property for the period 1.6.2007 to 31.03.2012 - original authority confirmed the demand and imposed penalties as well - appeal before CESTAT.

Held: There is merit in the contention of the appellant that SCN not having been issued to joint owners, nonetheless proceedings have been confirmed against four joint owners, therefore, orders of the lower authorities have gone beyond the scope of the SCN and on this technical ground, the impugned order cannot be sustained - matter is already settled by a plethora of decisions of the Tribunal In the case of Sarojben Khusalchand Vs CST Ahmedabad - 2017-TIOL-2284-CESTAT-AHM inasmuch as the benefit of exemption Notification No. 6/2005-S.T. as amended is available to individual co-owners who jointly owned the property and provided the service of renting of immovable property, and received the rent in proportion to the shares in the immovable property - following the same, impugned order is set aside and appeal is allowed with consequential benefits, both on technical grounds as well as on merits: CESTAT [para 4, 5]

- Appeal allowed : CHENNAI CESTAT

2019-TIOL-2218-CESTAT-HYD

CCT Vs UPL Ltd

ST - M/s Advanta Limited was a supplier to the respondent and they have merged with the respondent vide the order of High Court of Gujarat, with effect from 01.04.2015 - The order of the High Court came much after the effective date and as a result, during the interim period, M/s Advanta Limited, who were supplying services to the respondent, were paying service tax on the same - After merger, the respondent filed a refund claim for the service tax paid during the period 01.04.2015 to 23.06.2016 on the ground that since they are effectively the same organisation in terms of the order of High Court of Gujarat, the services rendered by M/s Advanta Limited to them during that period was self service and not the service rendered by one person to the other one, therefore no service tax is payable - lower authority held that the refund was filed within the time limit under section 83 of the Finance Act, 1994 and allowed refund but held that the refund claim is hit by unjust enrichment as the respondent failed to prove that the burden of service tax has not been passed on to their customers either directly or indirectly - Commissioner(A) reversing this order and, therefore, Revenue in appeal.

Held: In the present case, there is no dispute about the eligibility of the refund or the time limit - Chartered Accountant certificate is comprehensive as to how he has arrived at the conclusion that the amount shown as service tax receivable in the books of accounts of the respondent included the disputed amount - On the other hand, no evidence whatsoever, is presented on behalf of the department to show that this certificate is incorrect or doubtful - In this factual matrix, Bench is satisfied that the burden of service tax has not been passed on by the respondents to their customers and, therefore, the appeal needs to be rejected - Revenue appeal rejected: CESTAT [para 8 to 10]

- Appeal rejected : HYDERABAD CESTAT

CENTRAL EXCISE

2019-TIOL-1696-HC-KAR-CX

Pr.CCE Vs Bishen Saroop Ram Kishen Agro Pvt Ltd

CX - The question delves upon for consideration before Tribunal is as to whether the Cenvat Scheme is applicable for the scheme of unutilized credits under Rule 5 of CCR, 2002 on closure of the factory - The submission of assessee is that Rule 5 of Cenvat Credit Rules envisages for unutilized credits wherein the case of assessee is squarely covered by judgment of Court in SLOVAK INDIA TRADING CO. P. LTD. 2006-TIOL-469-HC-KAR-CX , which was again taken to Supreme Court by the Department - Apex Court dismissed the SLP filed by the Department when the very submission by assessee was similar which was raised before this Court in the judgment referred and affirmed - Hence, this Court is of the view that there is no ground made out to issue notice: HC

-Petition dismissed : KARNATAKA HIGH COURT

2019-TIOL-1695-HC-MAD-CX

Tiruttani Cooperative Sugar Mills Ltd Vs CCE

CX - The assessee is engaged in manufacture of sugars - They have made refund claims for the period 1984-1985 to 1986-1987 - Both the Original Authority and Appellate Authority had rejected the refund claims for the years 1984-1985 and 1985- 1986 on the ground of limitation stating that they were well outside the prescribed period of one year of limitation as stipulated under Section 11B of CEA, 1944 - However, the claim for refund for period 19.02.1987 to 30.05.1987 was granted holding that the said claim was within the period of limitation - The claims had been preferred on 02.02.1988 with respect to years 1984-1985 to 1985-1986 - They were clearly beyond the prescribed period of limitation of one year - They had also not been paid under protest to enable extension of period of limitation - However the contention that the period of limitation would commence only when the certificates were actually issued by the Directorate of Sugars cannot be countenanced since they were only enabling certificates and even according to him, the Notfn 130/1983 relating to the incentive certificate had been issued on 27.04.1983 itself - If thereafter, assessee had paid excise duty collected to Department without deducting as per notification then they should have paid the same under protest awaiting the certificate from the by Directorate of Sugar - As laid down, the amended provisions of the Act came into force on 20.09.1991 - The application for refund duty filed on 02.02.1988 was pending before the Original Authority - In that case, the amended provisions of the Act would still be operative and this would prevent the refund since the provisions are retrospectively applicable as stated under Sub-Section (3) of Section 11B of the Act, which had been extracted in the relevant portion - The refund claim for the period 1983-1984 and 1984-1985 are clearly barred by limitation under Section 11-B of CEA, 1944 and no reason found to interfere with order passed by both the fact finding authorities and by the Tribunal: HC

-CMA dismissed : MADRAS HIGH COURT

CUSTOMS

2019-TIOL-1694-HC-MUM-CUS

CC Vs Galaxy Surfactants Ltd

Cus - This application has been taken out for recall of order dated 1 November 2018 passed by this Court - The said order had granted the applicant twelve weeks' time to file the necessary paper book in support of admitted appeals and have the index settled - It is further noted that in case the paper book is not filed and the index not settled within aforesaid period of twelve weeks', the appeal itself would stand dismissed without further reference to the Court for non-prosecution - Assessee states that the paper book is now ready and he would have index settled with the aid of Registry in four weeks - Said order recalled to the extent it dismissed the assessee's appeal for non-filing of paper book and settling of index within twelve weeks - The time extended to file the paper book and to have index settled by period of further four weeks - It is made clear that in case the directions are not complied with by the assessee, the appeal itself would stand dismissed, without further reference to the Court: HC

-Notice of Motion allowed : BOMBAY HIGH COURT

2019-TIOL-1693-HC-DEL-CUS

Amandeep Singh Sehgal Vs CC

Cus - The Petitioner is a Director of a private limited company by the name of M/s. Gardiner Exim Pvt. Ltd. - The liabilities owed by five firms of Petitioner's deceased father have not been shown to be transferred to M/s. Gardiner Exim Pvt. Ltd. - There has to be some basic exercise undertaken by Department before issuing summons to Petitioner in his individual capacity asking him to provide evidence/documents relating to Petitioner's company which has no relation with five firms associated with his deceased father from whom such government dues were actually to be recovered - No machinery provision in Customs Act, 1962 has been brought to the notice of this Court which enables the Customs Department to proceed against the legal heirs of a deceased notice/assessee against whom there may be proceedings for recovery of customs duty - There is no machinery provision in the Customs Act whereby the dues owed by a proprietary concern or a partnership firm can be sought to be recovered from the legal heirs of the proprietor/partner of such concern/firm - The impugned summons issued to the Petitioner is quashed: HC

-Petition allowed : DELHI HIGH COURT

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