2019-TIOL-NEWS-267 Part 2, Dated: Wednesday, November 13, 2019

2019-TIOL-NEWS-267 Part 2 | Wednesday November 13, 2019

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Legal Wrangle | International Taxation | Episode 118

DIRECT TAX


	2019-TIOL-2565-HC-KERALA-IT Beaver Estates Pvt Ltd Vs ACIT Whether prosecution in criminal law & proceedings arising under I-T Act are independent, and there is no impediment in law for criminal proceedings to proceed even during pendency of proceedings under I-T Act - YES: HC - Assessee's petition dismissed: KERALA HIGH COURT 2019-TIOL-2562-HC-MAD-IT Coonoor Club Vs ITO In writ, the High Court holds that the income that has been earned by the assessee club from its investments made with banks is squarely covered by the judgment of Bangalore Club V. CIT & others on all four walls. Hence, following the decision of cited jugdment, all Writ Petitions are thus dismissed. - Assessee's writ petitions dismissed: MADRAS HIGH COURT 2019-TIOL-2268-ITAT-MUM DCIT Vs Abudhabi Ship Building PJSC Whether appeal filed by the assessee before the CIT(A) u/s 195(2) r/w 246A is maintainable if similar issue has already been decided by the Tribunal in favour of Revenue in assessee's own case - NO: ITAT - Revenue's appeal allowed: MUMBAI ITAT 2019-TIOL-2267-ITAT-DEL NTPC Sail Power Company Pvt Ltd Vs DCIT Whether in the light of the precedents of assessee's own case, the claim of the assessee towards corporate social responsibility can be allowed in current AY - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2019-TIOL-2266-ITAT-KOL Divya Secfin Pvt Ltd Vs ITO Whether mechanical adoption of the word accommodation entry from the DDIT(Inv.) report in the re-assessment notice without linking it with the formation of belief that income has escaped assessment, makes the re-opening process illegal - YES: ITAT Whether just on the basis of reasons to suspect that the assessee's income has escaped assessment without recording any reasons to believe, the AO cannot satisfy the jurisdictional condition contained u/s 147 - YES: ITAT - Assessee's appeal allowed: KOLKATA ITAT 2019-TIOL-2265-ITAT-JAIPUR Chemicals India Vs JCIT Whether addition on account of discrepancies in the balance sheet & disallowance towards Coal and Fuel expenses merits being deletion if such additions are merely based on rejection of books of accounts - YES: ITAT - Assessee's appeal partly allowed: JAIPUR ITAT 2019-TIOL-2264-ITAT-JAIPUR Kailash Chand Soni Vs ACIT Whether if the assessee is able to prove that there is a nexus between the interest income earned and amount expended, accrual of profit does not act as bar the benefit of deduction u/s 57(iii) - YES: ITAT Whether merely because the loan is advanced at nil interest rate out of commercial expediency, the benefit of deduction u/s 57(iii) on interest expense does not vanishes if such expenditure is laid out exclusively for earning the income from other sources - YES: ITAT - Assessee's appeal allowed: JAIPUR ITAT

GST CASES

2019-TIOL-2573-HC-MAD-GST

Neeraj Kumar Ojha Vs Additional Director General Directorate General Of GST

GST - Petitioner is seeking a direction to the first respondent to dispose of a representation dated 18.06.2019 sent by the writ petitioner; that in view of some proceedings under the CGST Act, 2017 including criminal prosecution, the Savings Bank account of the writ petitioner has been provisionally attached and which attachment, the petitioner requests be removed/raised; that the said representation has not evoked any response and for which reason, the present Writ Petition.

Held: Writ petition is disposed of with a direction to the first respondent to dispose of writ petitioner's representation dated 18.06.2019 (received by the first respondent on 27.06.2019) on its own merits and in accordance with law as expeditiously as possible and in any event within six weeks - Petition disposed of: High Court [para 7]

- Petition disposed of: MADRAS HIGH COURT

2019-TIOL-2572-HC-P&H-GST

PP Automotive Pvt Ltd Vs UoI

GST - Petitioner submits that respondent-authorities are obligated to permit the corrections in the corresponding clauses of GSTR-1 & GSTR-3B - Assistant Commissioner has produced a letter indicating that the incorrect details furnished by the petitioner-assessee in their GSTR-1 and GSTR-3B for the periods during the assessment year 2017-18, are not covered under the category of IT Glitches, so as to permit the rectification.

Held: Before any direction is issued for reprograming GST Portal, Bench would like to have the official response of the respondents for which the AC, CCO, GST Zone is directed to verify the corrected claims as projected in the manual annual returns in juxtaposition with the inadvertent mistake already made in the GSTR-1 and GSTR-3B for the months concerned in the assessment year 2017-18 and submit a report in the shape of an affidavit - Matter adjourned to 10.12.2019: High Court

- Matter adjourned: PUNJAB AND HARYANA HIGH COURT

2019-TIOL-2571-HC-ALL-GST

Vikalp Jain Vs UoI

GST - Petitioner has made a prayer to waive or reduce one of the conditions of bail to deposit Rs.1 Crore within three months from the date of release on bail and it is also prayed in the petition to set aside the order dated 26.07.2019 passed by Sessions Judge, Meerut in Criminal Revision No. 103219 of 2019 dismissing the revision - Petitoner contends that he is innocent and has been falsely implicated in the present case due to ulterior motive; that department had not issued any show cause notice to the petitioner in respect of alleged evasion of tax of Rs. 94 Crores; that the petitioner has been released on bail by the Court concerned on a condition that petitioner will deposit Rs.1 Crore towards Goods and Services Tax within three months from the date of release on bail in the Government Treasury; that the condition is harsh and illegal and, therefore, he requests that the High Court reduce the amount required to be deposited in pursuance of the bail order.

Held: Considering the submissions made by both sides, Court is of the opinion that no interference is required in the impugned orders passed by the Courts below - Petition dismissed: High Court [para 5, 6]

- Petitition dismissed: ALLAHABAD HIGH COURT

INDIRECT TAX

SERVICE TAX

2019-TIOL-3295-CESTAT-MUM

Ahire Security Services Pvt Ltd Vs CCE & ST

ST - The assessee is providing security services - During audit, it was observed that the assessee failed to pay service tax on the actual amount billed/ received from their customers under the category of "Security Agency Service" - On being pointed out by Audit party, much prior to the issuance of SCN, assessee paid the amount of Rs.10,90,653/- - The SCN was issued on 13.10.2014 demanding service tax amount of Rs.14,38,063/- with interest and penalty despite the fact that substantial amount has been paid by assessee before the issuance of SCN - From a perusal of the impugned order, it is clear that the demand has been reduced by Commissioner to Rs.12,48,822/- from Rs.14,38,822/- on the ground that the service tax on the amount of Rs.3,19,607/- was not received by assessee from M/s. Radission Resort and Spa Ltd. till the date of passing of the impugned order - The provision of Service Tax P oint of Taxation Rules prevailing during the relevant period specifically provides that the service tax was required to be paid on receipt basis and since this amount of Rs.3,19,607/- was not received by assessee, therefore the assessee was not required to pay the said amount and hence the Commissioner was justified in extending the benefit of point of taxation (till June, 2011) proportionately to the extent of Rs.1,89,241/- - Assessee is a Small Service Provider with turnover below Rs. 60 lakhs and due to financial problem faced by them, service Tax was not paid on time - But this is not a valid reason for non-payment - The allegations of malafide intention and suppression of the value of taxable Service have not been substantiated by department at any stage by producing any evidence - Accounts and statutory records were properly maintained by assessee but still Tribunal can't lose sight of the fact that there is delay in depositing the amount in government exchequer, so interest and penalty are leviable - The Commissioner reduced the amount of Service Tax demanded by the amount of Rs.1,89,241/- alongwith reduced penalty by the same amount - So the amount can be said to be re-determined by C ommissioner and since the assessee has paid the complete reduced amount of service tax with complete interest and 25% of the amount of reduced penalty as determined by the Commissioner, within thirty days from the date of passing of the impugned order, therefore the benefit of second proviso to Section 78(1) of FA, 1994 can be extended to assessee and therefore the impugned order is modified to the extent of reducing the amount of penalty to 25% while maintaining the impugned order: CESTAT

- Appeal partly allowed: MUMBAI CESTAT

2019-TIOL-3294-CESTAT-ALL

Amit Resorts Vs CC, GST & CE

ST - The service tax demand stands confirmed against assessee under the category of 'Mandap Keeper's Services' - During relevent period, assessee was availing the benefit of Small Scale Exemption Notfn 6/2005-ST, inasmuch as the value of services provided by them were falling within the exemption limit - Revenue entertained a view that inasmuch as the assessee was providing services under the brand name of M/s Hotel Garg, the benefit of SSI Exemption Notification cannot be availed by them in terms of proviso to Para 1 of the Notfn - The assessee have not denied the fact that all the services were being provided under the booking slips, invoices and payment receipts of M/s Hotel Garg, which was also located in Firozabad - The said documents were using a letter 'G' designed in a particular font and style - Admittedly 'G' is not the family name or surname so as to enable both the service providers to use the same as rightly pointed out by Lower Authorities - 'G' is nothing but a brand name of Hotel Garg which indicates a connection between M/s Hotel Garg with the general public in question - The mere fact that the partners of M/s Hotel Garg as also assessee are related being members of the same family will not change the situation inasmuch as M/s Hotel Garg has been using the said brand name from 1999 onwards when the same was started - It is thereafter in 2007 when assessee came into existence, they started using the same brand name - The Lower Authorities have rightly held that the assessee was using the brand name of another person while providing services and as such was not entitled to SSI exemption benefit - However, the demand stands raised for the period 2009-10 onwards by invoking the longer period of limitation - The issue involved is a bona fide issue of interpretation and there being no positive evidence indicating any mala fide on the part of the assessee, demand is restricted to the normal period of limitation - For the same reason, no justification found for imposition of penalties upon the assessee - Matter is remanded to the Original Adjudicating Authority for re-quantification of the demand falling within the limitation period - Penalty is however, set aside, in toto: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2019-TIOL-3293-CESTAT-CHD

Gupta Metal Sheets Pvt Ltd Vs CCE & ST

CX - The assessee is in appeal against impugned order wherein the demand has been raised against them under Rule 9 (2) of CER, 1944 for the goods removed due to the dacoity took place in their factory premises at the night of 30.04.1999 and 01.05.1999 which has been intimated by them to the authorities below on 10.05.1999 whereas the SCN has been issued on 21.12.1999 - The SCN is required to be issued within 6 months from the date of intimation - Admittedly, the SCN was issued to assessee beyond the period of 6 months as prescribed under Rule 9 (2) of Central Excise Rules, 1944 - Therefore, the demand raised against the assessee is barred by limitation - The impugned order is set-aside: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

2019-TIOL-3292-CESTAT-MUM

CCT Vs Anuraj Sugar Ltd

CX - The assessee-company manufactures Sugar & Molasses, falling under Chapter 17 of the Schedule to the CETA 1985 - For manufacturing the same, the assessee used sugar cane as main raw material - The assessee extracted the sugar cane juice by crushing the sugar cane and then processing it further and then using the same for manufacturing Sugar & molasses - During the manufacture process, Bagasse, Press Mud and Ash emerged as by products, which are classifiable as other waste of sugar manufacture and attract nil rate of duty - On adjudication, the issue arose as to whether the provisions of Rule 6 of the CCR 2004 would be applicable in case of emergence of by products - Duty demand was raised - On appeal, the Commr.(A) held that Bagasse and Press Mud were non-excisable and so the assessee was not liable to pay any duty - Hence the present appeal by the Revenue. Held - It is seen that such by-products emerge during manufacture of sugar and so cannot be considered as final product since the assessee never intended to manufacture them and they emerged involuntarily during the course of manufacture of the final product - Regarding the consideration of waste/by-products as final product of the manufacturer, the decision of the Bombay High Court in Rallies India Ltd. Vs. Union of India holds that the provisions of Rule 57CC of the Central Excise Rules, 1944 ( in pari materia with Rule 6 of the CENVAT Credit Rules, 2004) apply only for final product and not for waste or by-product - Also the decisions in Union of India Vs. DSCL Sugar Ltd. and in Shivratna Udyog Ltd. &Ors., held that that bagasse and press mud should not be subjected to payment of amount in terms of Rule 6 when cleared from the factory - Hence as Bagasse and Press Mud removed from the factory are excisable and classifiable under Chapter 23 of the CETA, the Circular dated 25.04.2016 relied on by the Revenue is inapplicable in this case - Hence the O-i-A in challenge does not warrant interference with: CESTAT

- Revenue's appeal dismissed: MUMBAI CESTAT

CUSTOMS

2019-TIOL-3291-CESTAT-MUM

IG International Vs CC

Cus - Assessee had imported Apples from M/s Dovex Export Co & M/s Oneonta Trading Corporation - Based on intelligence, investigations were conducted in India and USA - These investigations revealed that they had misdeclared the value of imported goods - During investigations, searches were conducted at the premises of importer and incriminating documents recovered - Shipping Documents such as BLs, actual invoices, invoices with lesser values, packing lists, certificates of origin, insurance certificate, etc in respect of these imports were also collected from US Customs through the Consulate General of India, New York (letter dated 13.10.2008) - After recording the statements of importer and related persons in respect of these imports, a SCN was issued to the importer - The documents received from U S Custom through Consulate General in U S A were scrutinized and scrutiny done revealed that assessee had misdeclared the value of goods - It has been held by Tribunal in Ram Kahazana Electronic - 2003-TIOL-305-CESTAT-DEL and Best & Co - 2008-TIOL-2043-CESTAT-DEL that the evidences gathered through Consulate General from the foreign suppliers/Customs, are the documents recovered in terms of international agreements and treaties, and could be relied upon for determination of value of imported goods - The issue in respect of reliance placed by Commissioner on the statement of Shri Gian Chand Arora, is also well settled by decisions in K I Pavunny - 2002-TIOL-739-SC-CUS-LB and D M Mehta & Bros - 2015-TIOL-281-CESTAT-MUM - In fact the statement of Shri Arora is based on documents forwarded by Consulate General and he has seen and admitted those documents by putting his dated signature - In his statement, he has also explained the manner in which instructions were given to the foreign supplier for preparing two sets of invoice and also the manner of making the differential amounts - He has given the names of persons to whom he has made the payments for the supplies received under cover of invoices - By mis-declaring and filing the Bill of Entry on the basis of manipulated invoices, assessee have definitely suppressed the value of goods imported - Their act of suppression with intent to evade payment of duty, extended period of limitation as per the proviso to sub-section (1) of Section 28 of Customs Act, 1962 has been correctly invoked - For this reason, the penalties imposed under Section 114A of Customs Act, 1962 are justified in view of Apex Court decision in case of Rajasthan Spinning and Weaving Mills - 2009-TIOL-63-SC-CX - It is true that for the act of misdeclaration, the goods became liable for confiscation under section 111 (m) of Customs Act, 1962 - Further for their act of misdeclaration making the goods liable for confiscation, assessee is liable to penalty under Section 112(a) - In view of the fact that proviso in Section 114A specifically provides that if the penalty has been imposed under that section, penalty cannot be imposed under Section 112, Commissioner has not imposed any penalty on assessee on whom penalty under Section 114A has been imposed - He has imposed penalty on assessee no 2, which is justifiable in view of decision of Tribunal in case of Pradeep Master Batches Pvt Ltd - 2017-TIOL-167-CESTAT-MUM - However since the goods were not available for confiscation nor released provisionally after seizure to assessee against bond and bank guarantee, the order for confiscation of goods and imposition of redemption fine cannot be sustained in view of decision of Larger Bench of Tribunal in case of Shiv Kripa Ispat Pvt. Ltd. - 2009-TIOL-388-CESTAT-MUM-LB - Since assessee have short paid the duty at the time of clearance, the demand for interest under Section 28AB is justified - The Tribunal is not in agreement with the submissions of assessee that because they have deposited the duty prior to issuance of SCN, no penalties could have been imposed on them in view of decision of Bombay High Court in case of Padmashri V V Patil SSK - 2007-TIOL-419-HC-MUM-CX - The impugned order is upheld except for setting aside the order in respect of confiscation of goods and imposition of redemption fine: CESTAT

- Appeals partly allowed: MUMBAI CESTAT