2019-TIOL-NEWS-233 Part 2, Dated: Thursday, October 03, 2019

2019-TIOL-NEWS-233 Part 2 | Thursday October 03, 2019

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Legal Wrangle | Indirect Tax | Episode 114

DIRECT TAX


	2019-TIOL-1944-ITAT-DEL Singhal Sunrise Steels Pvt Ltd Vs ITO Whether share application money has to be treated as 'bogus' calling for additions u/s 68, if share applicant entities are found to be 'shell companies' - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2019-TIOL-1934-ITAT-AHM ACIT Vs Industrial Safety Products Pvt Ltd Whether acquiring any incriminating material during search action u/s 132 is a mandatory pre-condition to initiate proceedings u/s 153A against the assessee, when original or previous assessment is still unabated – YES: ITAT Revenue's appeal dismissed: AHMEDABAD ITAT 2019-TIOL-1933-ITAT-AHM Dharamshibhai H Patel Vs ITO Whether assessment order u/s 158BC r.w.s. 158BD, is void if initiated without applying the provision u/s 127 of the Act and by not issuing notice intimating the assessee regarding transfer of jurisdiction of the AO and by not recording the satisfaction by the jurisdictional AO - YES : ITAT - Assessee's appeal allowed: AHMEDABAD ITAT 2019-TIOL-1932-ITAT-AHM Gujarat Incatel Telecommunication Ltd Vs ITO Whether failure of taxpayer to explain cash deposits renders it unexplained, and hence attracts penalty - YES: ITAT - Assessee's appeal dismissed: AHMEDABAD ITAT 2019-TIOL-1931-ITAT-JAIPUR Jaipur Stock Securities Ltd Vs ACIT Whether mere reflection of certain transaction in Form 26AS is determinative of holding such transaction as taxable in the hands of taxpayer - NO: ITAT - Assessee's appeal partly allowed: JAIPUR ITAT 2019-TIOL-1930-ITAT-MUM Pratibha Pipes And Structurals Ltd Vs DCIT Whether even though copy of approval letter u/s 153D is not available in the assessment record, contents of affidavits filed by the officers coupled with circumstantial evidences available in the assessment folders are sufficient to establish the fact of obtaining necessary approval under such section - YES: ITAT Whether it is justified for the assessee to raise question over approval u/s 153D, which is an administrative procedure, to be complied with by the officers discharging the assessment functions, rather than contending its case on merits, especially, after a lapse of 4 to 5 years - NO: ITAT - Assessee's appeal dismissed: MUMBAI ITAT 2019-TIOL-1929-ITAT-KOL Joshiba Joseph Vs ITO Whether when exemption available u/s 10(26) is not extended by the competent authority to tribes of Andaman & Nicobar Island, then tribes of those reigions cannot claim eligiblity to such exemption - YES: ITAT - Assessee's appeal dismissed: KOLKATA ITAT 2019-TIOL-1928-ITAT-MAD P Sundaramurthy Vs JCIT Whether penalty levied u/s 271E is justified if repayment or acceptance of loan is not found to be genuine u/s 269T and the cause shown was not a reasonable cause - YES: ITAT - Assessee's appeal dismissed: CHENNAI ITAT

GST


	HIGH CASES 2019-TIOL-2310-HC-KOL-GST Lexus Motors Ltd Vs Joint Commissioner Of State Tax GST - The present writ was filed seeking a declaration that the petitioner-company is entitled to avail ITC under GST before due date of monthly return and is not required to pay any interest u/s 50 w.r.t. such ITC, for any delay in filing monthly return - During the relevant period, demand for interest was also levied against the petitioner - The petition also assails such order. Held - The hearing is interrupted since the computation sheet of interest issued to the petitioner has not been disclosed - The petitioner is granted leave to file supplementary affidavit, which would be accepted on the adjourned date - The matter be listed for hearing on September 26, 2019: HC - Case deferred: CALCUTTA HIGH COURT 2019-TIOL-2309-HC-GUW-GST Baril Marketing Pvt Ltd Vs UoI GST - The present petition was filed to assail the action of the CGST authority concerned, in not allowing the petitioner to submit the GST TRAN-2 returns in relation to Part 7A, either electronically or manually, in terms of the statements made before this court by the authorities concerned - The petitioner had approached this court on an earlier occasion, raising such grievances, whereupon the authority concerned was directed to do the needful to ensure that the petitioner would be able to submit Form TRAN-2 manually or electronically - Presently, the petitioner claimed that despite such specific directions, the authorities concerned did not allow the petitioner to file such Form electronically or manually, on grounds that the petitioner was unable to show any genuine difficulty in being able to upload the same. Held - If there is a provisioon made for filing returns electronically and because of certain technical glitches, the uploading could not be done in time, on such grounds, the person or entity concerned could not be put in a disadvantageous position - It is not the petitioner's case that it is not willing to file any return or is seeking time to file return - The petitioner was unable to file the Form TRAN-2 because the portal was not working - The petitioner had also approached the authorities seeking permission to submit the same manually and had also secured directives from the High Court to be permitted to file the form electronically or manually - In light of the same, the GST Council, which is a respondent here, is directed to look into the petitioner's grievances and permit manual or electronic filing of the Form TRAN-2, so that the petitioner is not deprived of benefit of ITC - Such exercise be conducted within three weeks' time: HC - Writ petition disposed of: GAUHATI HIGH COURT 2019-TIOL-2308-HC-AHM-GST Gohil Shaktisinh Girvansinh Transporter Vs State Of Gujarat GST - Petitioner submits that as against the amount computed in the order of confiscation made u/s 130 of the CGST Act read with relevant provisions of the other Acts, the petitioner has already deposited an amount of Rs.2,67,236/- with the respondents. Held: Respondent directed to forthwith release truck along with the goods contained therein subject to the final outcome of the present petition - Petitioner to also file an undertaking that he shall pay the differential amount in case he fails in the petition/proceedings under section 130 of the CGST Act: High Court [para 4, 4.1] - Interim relief granted: GUJARAT HIGH COURT 2019-TIOL-2307-HC-AHM-GST Ashok Laxmanbhai Mokariya Vs State Of Gujarat GST - Petitioner submits that they are ready and willing to deposit a sum of Rs.4,00,000/- under protest for the release of the vehicle in question, namely the Truck and to file an undertaking that in case the petitioner fails in the proceedings initiated under section 130 of the Act they shall pay the differential amount. Held: By way of interim relief, respondents directed to release the Truck, upon the petitioner depositing the amount of Rs.4,00,000/- and also filing the undertaking as indicated - Issue rule returnable on 17.10.2019: High Court - Interim relief granted: GUJARAT HIGH COURT 2019-TIOL-2306-HC-AHM-GST Ankit Lokesh Gupta Vs State Of Gujarat GST - Petitioner submits that the provisional attachment of the bank account of the petitioner is totally without any authority of law inasmuch as s.83 does not contemplate provisional attachment in respect of proceedings under section 71(1) of the GGST Act - Notice to be issued returnable on 01.10.2019: High Court [para 3] - Notice issued: GUJARAT HIGH COURT 2019-TIOL-2305-HC-AHM-GST Anil Bapulal Patil Vs State Of Gujarat GST - Petitioner is ready and willing to deposit a sum of Rs.4,00,000/- under protest for the release of the vehicle (truck) in question and to file an undertaking that in case the petitioner fails in the proceedings initiated u/s 130 of the CGST Act, he shall pay the differential amount. Held: Issue rule returnable on 17.10.2019 – By way of interim relief, the respondents to release the truck upon deposit of the sum as agreed and also file the undertaking: High Court - Interim relief granted: GUJARAT HIGH COURT AAR CASE 2019-TIOL-68-AAAR-GST Bengal Peerless Housing Development Company Ltd GST - Respondent is a JV of West Bengal Housing Board and The Peerless General Finance and Investment Company Limited for developing real estate projects - respondent is developing a residential housing project and supplying construction service to recipients for possession of dwelling units in the year 2023 - they also provide services like preferential location service, which includes services of floor rise and directional advantage - they had sought a ruling from the AAR as to whether such supply constitutes a composite supply with construction service as the principal supply and if so, whether abatement is applicable under sl. No. 3(i) r/w paragraph 2 of notification 11/2017-CTR on the entire value of the composite supply - AAR had held that Construction service is the dominant element in the bundle of services provided; that the buyers of the service of constructing dwelling units in such upscale residential complexes expect, apart from the preferential location (PLC) of the dwelling unit, the right to use car parking space and enjoyment of common areas and facilities like landscaped gardens, gym, conference hall, club with swimming pool etc. and which are usually bought as a bundle while booking the flat; that, therefore, it was reasonable to conclude that such services are naturally bundled and offered in conjunction with one another in the ordinary course of business and the other services are ancillary to the supply of construction service, which is the essential supply; that the applicant (now respondent) is, therefore, providing a composite supply, construction being the principal supply; that the entire value of composite service is to be treated, for the purpose of taxation, as supply of construction service, taxable under Sl. No. 3(i) r/w paragraph 2 of notification 11/2017-CTR - Revenue is aggrieved and before the Appellate authority. Held: Respondent has submitted that they have been paying GST on the charges of floor rise and directional advantage without claiming any abatement in respect thereof - separate invoices have been raised on account of 'Unit sales', 'PLC charges' and 'Floor Rise charges' and which reinforces the conclusion that PLS can in no way be associated with land - PLS comes into being as the builder charges the buyer separately for providing a better location, which may be in relation to the direction in which the flat is constructed, the floor on which it is located and the views from the particular flat opted by the buyer etc. - therefore, abatement which is allowed on the value of construction service, as the plot of land on which construction is done is not liable to GST, cannot be deemed to be applicable in respect of PLS, which is altogether a separate service having no association with the land - Rate of GST and abatement on value of construction service have been stipulated in 11/2017-CTR and rate is provided in Sl. no. 3 of the Table - It is clear from the categorisation that Preferential Location Service (PLS) should come under category 3(iii) as the two other categories are clearly defined - Abatement to the extent of 1/3rd of the total amount charged for supply of the service mentioned under Sl. no. 3(i) of the Rate notification has been allowed under para 2 of the said notification, however, no abatement has been provided for service mentioned under Sl. no. 3(iii) of the Table - Appellate Authority notices that the respondent had sought a ruling only on the entitlement of abatement prescribed for supply of construction service in terms of Sl. no. 3(i) of 11/2017-CTR read with paragraph 2 appended thereto in respect of supply of services of Floor Rise and Directional Advantage being Composite Supply with the principal supply of Construction service, however, the AAR had passed its ruling in respect of right to use car parking space and common areas and facilities also, which was not prayed for in the applicant - Revenue viz. Assistant Commissioner has prayed for suitable order in respect of right to use car parking space along with PLS while filing the present appeal - AAAR holds that decision of AAR in respect of PLS would also hold for 'right to use car parking space' - AAR ruling modified to this effect - Appeal stands disposed of: AAAR - Appeal disposed of: AAAR AAR CASE 2019-TIOL-307-AAR-GST Alligo Agrovet Pvt Ltd GST - Products viz. Autus, SJ-Ninja, SJ-Eraser, Oprax, Telnar, VK's Nemo and Stressout are classifiable under HSN Code 3808 and chargeable @18% GST as per 1/2017-CTR - Product Shyam Samruddhi is an organic fertiliser classifiable under HSN 3105 and liable to GST @5% as per Sr. no. 182D of Schedule I of 1/2017-CTR: AAR - Application disposed of: AAR CGST CIRUCLAR 112/2019 Seeks to withdraw Circular No. 105/24/2019-GST dated 28.06.2019. 111/2019 Seeks to clarify procedure to claim refund in FORM GST RFD-01 subsequent to favourable order in appeal or any other forum. 110/2019 Seeks to clarify the eligibility to file a refund application in FORM GST RFD-01 for a period and category.

INDIRECT TAX

SERVICE TAX

2019-TIOL-2303-HC-MUM-ST

Cargocare Logistics India Pvt Ltd Vs UoI

ST - During the relevant period, two Orders-in-original were issued against the assessee-company, seeking to recover duty in respect of freight charges - Hence the present writ petition against such orders.

Held - It appears that the two orders passed are prima facie contrary to each other - One of the orders holds that service tax on freight is a taxable service and so confirms recovery of tax - The other order holds freight charges to be exempted service and proceeds to hold that the petitioner is ineligible for cenvat credit and so confirms duty demand - The Revenue can be right only on one of the two counts and not on both counts - Only one of the two orders is correct - In fact, passing such contrary orders simply suggests that the adjudication proceeds are farcical - The attitude of the Revenue even at the level of the Commissioner is that the demand has to be confirmed and the relief if any, the party has to obtain from Appellate Authorities - Such attitude brings to a naught to claim of the State that it is business friendly - In such circumstances, there is no question of the petitioner being driven to file an appeal to the appellate authorities - Both the orders-in-original are quashed: HC

- Assessee's writ petition allowed: BOMBAY HIGH COURT

2019-TIOL-2817-CESTAT-KOL

CCE & ST Vs Jagdamba Tyres Retreading Company

ST - The assessee is engaged in service of retreading of tyre - Assessee is ancillary of M/s Bharat Cooking Coal Ltd. and almost 98% of the transaction are with the Government companies - It was alleged in SCN that the assessee is providing maintenance or repair service and management, maintenance or repair service by way of retreading of old and used tyre of various customers under contract but they did not pay proper service tax and also failed to file ST-3 returns - The Commissioner (A) has relied on the earlier orders which was subject matter of appeal before this Tribunal - The issue now stands decided - It is seen that the Commissioner (A) has passed the order on 18.3.2010 - However the review order has been passed on 10.6.2011, which is after the passing of appellate order from the Commissioner (A) - The Section 84 restricts the Commissioner to exercise the revisionary power under Section 84 when the matter is pending before Commissioner (A) - In this case the Commissioner (A) order was available with the revisionary authority and has been acknowledged by him in his order, which indicates that so far as the noticee's contention is concerned, the Commissioner (A) has set aside the said order in original, the department has preferred the appeal against said order before CEATAT which is pending for decision - Further the noticee No. 1 has also contended that as per Section 84(2) of the said Act every order has to be appealed before Commissioner (A) within three months, if he is not satisfied with the order, therefore, revision of the instant case cannot be passed - The Commissioner has not given any reason for passing this order knowing fully well that the order of the lower authority has been set aside by the Commissioner (A) - This is purely a non- application of mind and abuse of the revisionary power and hence colourable exercise on his part - In any case the main ground for review of this order was pendency of appeal before the CESTAT, which now stands affirmed by CESTAT and therefore the revision order is required to be dismissed on this ground alone: CESTAT

- Revenue's appeal dismissed: KOLKATA CESTAT

CENTRAL EXCISE

2019-TIOL-2820-CESTAT-AHM

Borsad Tobacco Company Pvt Ltd Vs CCE & ST

CX - The appellant is engaged in processing of raw-tobacco, i.e. sieving, cleaning, and packing of same - M/s SEPL, another group company is also engaged in processing of tobacco for exports - The Appellant was issued SCN alleging that the Appellant factory was visited by preventive officers and it was found that the Appellant is engaged in manufacture and clearance of excisable goods, viz. "Afzal" brand Snuff tobacco products - The appellants and M/s SEPL were group companies and during the course of proceedings, they had produced the lease agreement copy, in which M/s SEPL had taken a part of the factory premises on lease - The seized goods itself were ordered to be released to M/s SEPL by the Joint Director (Preventive), Central Excise, Ahmedabad - This clearly shows that even the Department had accepted the fact that M/s SEPL are the owner of that goods - It is also not in doubt that the goods were ultimately for exports for which the relevant Bond/LUT were filed by M/s SEPL and evidence of exports was produced duly certified by the jurisdictional Superintendent of M/s SEPL before the adjudicating authority, which shows that otherwise also the goods were for export purpose and not liable for duty - Since the chemical examiner report being inconclusive and the appellants were not granted re-test of samples, therefore the goods cannot be considered as chewing tobacco - It is coupled with the fact that no machines used for mixing of katha, calcium oxide or flavouring agents were found to be installed in the factory of the appellant, even though the factory was in running condition - The Appellant is merely getting the raw leaves and grinding them and after making powder putting them into 50 Kgs pack which is a bulk pack - The intention is not to market - Hence the nature of product would not take it into category of manufacture - Thus, the goods cannot be considered as manufactured chewing tobacco and would merit classification as unmanufactured tobacco falling under CTH No. 2401 since the only operation undertaken in respect of tobacco leaves was drying, cutting and seining - Thus, the impugned order holding classification of goods under CTH No. 2403 99 10 is not sustainable and the confiscation of goods, demand of duty and penalty imposed upon all the Appellants are not sustainable: CESTAT

- Appeals alowed: AHMEDABAD CESTAT

2019-TIOL-2819-CESTAT-ALL

CA Chewing Fragrances Pvt Ltd Vs CCE & ST

CX - Issue relates to payment of interest on the refund which is of amount of pre-deposit made by assessee in terms of Stay Order passed by Tribunal - The refund application was filed on 07.09.2015, after the receipt of Tribunal’s order dated 22.07.2015 allowing their appeal - The refund was sanctioned by Revenue on 06.11.2015 i.e. before the expiry of period of three months, thus, the question of any claim of interest does not arise: CESTAT

- Appeal rejected: ALLAHABAD CESTAT

2019-TIOL-2818-CESTAT-CHD

Coromandel International Ltd Vs CCE & ST

CX - The assessee initially filed refund claim before adjudicating authority, they applied for fixation of special rates on items manufactured by them before Commissioner - Before deciding the said special rates, adjudicating authority sanctioned the refund claim upto the value addition as per notification, but the amount of refund claim was more than the value addition as per said special rates, the refund claim was rejected by adjudicating authority - That order was challenged before Commissioner (A) only on the ground that as their application for special rate of duty has been pending before Commissioner, therefore, the adjudicating authority is to be directed to keep pending the refund claim till disposal of their application for special rates - But, the Commissioner (A) passed the order by exceeding his jurisdiction as the ground on which the order is passed - As the issue has already been settled by this Tribunal in assessee's own case for the earlier period, therefore, the matter is remanded back to the adjudicating authority: CESTAT

- Matter remanded: CHANDIGARH CESTAT

2019-TIOL-2816-CESTAT-KOL

Arunachal Wood Based And Chemical Industries Pvt Ltd Vs CCE & ST

CX - The assessee is a manufacturer of excisable goods and were making use of facility of cenvat credit - During month of March 2012, the duty liability was discharged partly making use of the cenvat credit - The balance amount which was required to be paid in cash, was not paid by due date - This resulted in default for payment of Central Excise duty - Revenue was of the view that during the default period, the assessee was required to make payment of Central Excise duty on goods cleared on consignment to consignment basis only in cash, without making use of the credit accumulated in cenvat credit account - The Jurisdictional High Court at Calcutta, in case of Goyal MG Gases Pvt. Ltd, while taking note of the fact that the decision in Indsur Global - 2014-TIOL-2115-HC-AHM-CX has been stayed, observed that the Revenue cannot take a stand contrary to that taken in other High Courts and accordingly declared the rule to be invalid - At this juncture, Tribunal also take note of the observations made by Bombay High Court in HDFC Bank Ltd - 2016-TIOL-408-HC-MUM-IT, that once there is a binding decision of High Court, the same continues to be binding on all the authorities within the State till such time as it has been stayed or set aside by the Apex Court - Till such time as the decision of High Court stands, it is not open to the Tribunal or any other Authority in the State to disregard it while considering a like issue - The Bombay High Court also observed that it is not open to Tribunal to sit in appeal from the orders of High Court and not follow it - In case the doctrine of precedent is not strictly followed there would be a complete confusion and uncertainty - Tribunal is inclined to follow the decision of jurisdictional High Court of Calcutta in case of Goyal MG Gases Pvt. Ltd, which has not been stayed and has a binding force as on date - Accordingly, there is no bar in making use of accumulated Cenvat Credit in making payment of Central Excise Duty even during default period: CESTAT

- Appeal allowed: KOLKATA CESTAT

CUSTOMS

2019-TIOL-2302-HC-MUM-CUS

Hyundai Merchant Marine India Pvt Ltd Vs CCC

Cus - The petitioners herein are agents of owners of containers, in which goods were imported into India - The petitioners sought the release of these containers which are under the custody of the Customs Department - The petitioners state that the containers were not released despite passage of five years and that the reason furnished for their detention was that the goods stored in these containers were subject to investigation.

Held - It is seen that the containers were detained despite the petitioners having nothing to do with the imported goods - They only made available the containers to the importers for importing goods into India and also executed a bond to re-export the containers within six months from date of import - Therefore, all the stakeholders and authorities involved in the detention of the containers are directed to assist the Customs Department in ensuring the expeditious release of the containers to the petitioners: HC

- Writ petitions disposed of: BOMBAY HIGH COURT

HIGH LIGHTS (SISTER PORTAL)


	TII I-T - Tax withholding obligations gets attracted only when recipient has tax liability in India: ITAT CORPLAWS PMLA - If accused entity undertakes to deposit entire proceeds of crime, then attachment of property merits being lifted only when the entire amount is received: Tribunal Arbitration & Conciliation Act, 1996 - Acceptance of application for typographical correction of arbitral award filed after delay will not extend limitation period to bring section 34 application: HC PMLA - Confirmation of provisional attachment order is invalid if it lapses due to non-filing of prosecution complaint within 90 days from date of it being issued: Tribunal

NEWS FLASH


	USA calls India protectionist; prefers limited trade deal INX Media case - Chidambaram moves SC for bail Multiple worlds of international taxation (See 'TII Edit')

NOTIFICATIONS


	INCOME TAX it19not77 CBDT notifies details of authorities competent to conduct e-assessment proceedings Order 2 Setting up of ReACs under E-assessment Scheme, 2019 CUSTOMS cnt72_2019 CBIC notifies exchange rates for export and import purposes cnt71_2019 Warehoused Goods (Removal) Amendment Regulations, 2019 cnt70_2019 New regulation added in the Warehouse (Custody and Handling of Goods) Regulations, 2016 to exclude warehouses operating u/s 65 of the Customs Act cnt69_2019 Manufacture and Other Operations in Warehouse (no.2) Regulations, 2019 cuscir35_2019 Amendment in Import and Export Policy of electronic cigarettes cuscir34_2019 Customs - Bonded Warehouse - Procedures liberalised to promote 'Invest India' NDPS In pursuance of rule 5 of the Narcotic Drugs and Psychotropic Substances Rules, 1985 In pursuance of rule 8 of the Narcotic Drugs and Psychotropic Substances Rules, 1985, the Central Government hereby

OFFICE ORDER


	Order No 213 CBDT issues posting order for four recently promoted Pr CCITs

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