Pinkcity Resorts Ltd Vs ITO

On appeal, the Tribunal sustained the findings of the CIT(A), having relied on findings recorded in the case of M/s. Gullu Mal Gulachi Developers Pvt. Ltd. vs. ITO which is the assessee's sister unit, but involving an identical issue, wherein additions made were restricted at a similar figure, considering that the bills pertaining to sale of agricultural produce, were not doubted by the AO and no enquiry was made in this regard.

- Assessee's appeal dismissed: JAIPUR ITAT

Mohamed Mynudeen Vs ITO

Whether the amount paid to the agreement holder for the purchase of a property meets the condition of costs for acquisition of the property - YES: ITAT

- Assessee's Appeal is allowed: CHENNAI ITAT

Sanjay K Shah Vs JCIT

Whether declining to furnish evidence, required under Section 133(6), on bonafide grounds owe to penalty under Section 272(2)(c)- NO: ITAT

- Appeal of the Assessee is allowed: MUMBAI ITAT

Sparsh Procon Pvt Ltd Vs PR CIT

Whether if AO has carried out necessary verification relating to issues raised and passed order then CIT can not exercise power u/s 263 on account of non-verification of facts - YES : ITAT

- Assessee's appeal allowed: AHMEDABAD ITAT

GST - Smuggling of Areca Nuts - Single Judge had held [ 2019-TIOL-2530-HC-GUW-CUS ] that the police authorities would have no jurisdiction and power to investigate as regards violation of the provisions of the taxation laws as the same are governed by the provisions of the CGST Act, 2017  or AGST Act, 2017  under which there are separate investigative agencies; that the power of the police to investigate an offence will commence only on getting information either under Section 154 or 155 of the CrPC, therefore, unless there is information, either during an investigation or otherwise, the police cannot go for a roving inquiry; that since the seized areca nuts and the trucks essentially pertain to the main offence of smuggling coming within the purview of Customs Act, 1962, which are liable to be seized and confiscated under the Customs Act, these ought to be handed over the Customs authorities for their investigation; that if the Customs authorities need the help and assistance of the police, nothing prevents them from doing so - Held that the initial seizure of areca nuts and the trucks by the Assam Police cannot be said to be without authority - Appeal filed against this order before the Division Bench - Appellant submits that in view of specific provision in section 67 of the Act for inspection, search and seizure and the further provisions in the Acts itself providing for the procedure to be followed by the authorities under the GST Act, the refusal of the Single Judge in the judgment dated 25.10.2019 to declare the detention and seizure to be illegal, in respect of the offences under the GST Acts would be unsustainable; that for the alleged violation of the provisions under the Customs Act, Section 100 provides for the power to search the suspected persons and Section 110 provides for the power of seizure and confiscation of any goods that may be involved in such violations.

Held:

+ A reading of Section 67(1) shows that where the proper officer not below the rank of Joint Commissioner has reasons to believe that there is any violation or evasion of tax under the GST Acts, he may authorize in writing any other officer of the department to inspect any of the places of business of the taxable person - Under Section 67(2) where the proper officer either pursuant to an inspection carried out under Section 67(1) or otherwise has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under the Acts, are secreted in any place, he may authorize in writing any other officer to search and seize such goods, documents, books or things - Provisions of Section 67 of the AGST Act contains a clear provision that prior to any inspection, or as a matter prior to any search and seizure, a recording of reasons by the proper officer for such belief is a requirement of the law and only thereupon the process for search, seizure or confiscation can be undertaken: High Court [para 20]

+ A reading of Sections 100 and 101 of the Customs Act shows that if the proper officer or the empowered officer has reasons to believe that a person to whom the provision applies has secreted about his person any goods or documents liable for confiscation, a search may be conducted and pursuant thereto the subsequent actions be taken which may result in arrest, seizure or confiscation - Provisions of Section 100 and 101 of the Customs Act also contains a clear provision that prior to any search, arrest, seizure or confiscation, the proper officer or the empowered officer is required to have a reason to believe that the person concerned was involved in violation of any of the provisions of the Customs Act, and only upon the existence of such reasons to believe, the process for search, arrest, seizure or confiscation can be undertaken: High Court [para 23]

+ From the provisions of Section 67 of the AGST Act and 100 and 101 of the Customs Act, a process for search, seizure, confiscation etc for violating any of the provisions of the AGST Act or the Customs Act can only be initiated upon having reasons to believe by the proper or appropriate officer that a person concerned was involved in violation of any of the provisions of the GST Acts or the Customs Act - In the instant case, the documents made available on record so far as it relates to violation of the provisions of the AGST Act are not being relied upon by the respondents to indicate any such violation of the provisions of the AGST Act - What is contended is that some such documents are either fraudulent or it contains forged signatures resulting in offences under Sections 120(B)/420/467/471 of the IPC - Bench is, therefore, of the view that if the authorities under the AGST Act of the State of Assam are of the view that the appellants are required to be proceeded with or prosecuted under the AGST Act, it would be appropriate to invoke the provisions of Section 67 of the AGST Act and proceed accordingly - But without invoking the provisions of Section 67 of the AGST Act and following the procedure prescribed therein, it would be inappropriate to allow the police authorities of Assam to continue with the detention and the seizure of the trucks containing the areca nuts on the plea that the appellants have violated some or any of the provisions under the AGST Act: High Court [para 24, 25, 26]

+ If the police authorities of Assam are of the view that the appellants are required to be proceeded with or prosecuted for such fraud or forgery simpliciter, which on its own may be an offence under Sections 120(B)/420/467/471 of the IPC, it would be for the police authorities to proceed against them strictly by following the required procedure prescribed under the CrPC and bring such investigation to its logical end: High Court [para 27]

+ As regards the stand of the police authorities of Assam that they have the power to seize any property under Section 102 of the CrPC, it again has to be circumscribed that any seizure effected by invoking Section 102(1) of the CrPC would have to be subjected to the procedure prescribed under Section 102(3), i.e. to forthwith submit a report of the seizure to the Magistrate having jurisdiction over the matter - Without such procedure being undertaken, any detention of the trucks containing the areca nuts and their resultant seizure would have to be said to be without authority and jurisdiction - In the event the seizures are being followed up with submission of reports to the Magistrate having jurisdiction, it would be subjected to the procedures under the CrPC, including that of Section 451: High Court [para 28]

+ By taking note of the report of the Ministry of Agriculture and Farmers Welfare, Government of India as regards the bio-security aspects of the areca nuts and also the stand of the Customs department that the areca nuts may have been smuggled in from across the Myanmar border in violation of the provisions of the Customs Act, Bench is of the view that if the proper officer or the empowered officer has reasons to so believe, it would be appropriate to initiate proceedings under Section 100/101 of the Customs Act and thereafter follow the procedures prescribed in the Act as regards search, arrest, seizure or confiscation - Without following the prescribed procedure of the Customs Act, it would be inappropriate for the police authorities of Assam to continue with the detention and the seizure of the trucks containing the areca nuts by taking the plea that provisions of the Customs Act had also been violated by the appellants - it is for the appropriate authorities, particularly the authorities under the Customs Department to take a call on the matter as to what further is required to be done in respect of the detained/seized areca nuts, but such call has to be by strictly following the provisions of the Customs Act: High Court [para 29, 30, 31]

Conclusion:

++ Bench directs that the detained/seized goods be retained by the police authorities of Assam for a period of seven days - In the meantime, the GST authorities of the Government of Assam, the police authorities of the Government of Assam and the Customs authority of the Customs Department, Government of India shall take their respective decisions on how to proceed with the matter of the detained/seized trucks of areca nuts within the period of seven days - If any such decision is taken to proceeded against the appellants, the same be done by the respective authorities strictly as per the provisions of the GST Acts, the CrPC/IPC or the Customs Act, as the case may be - if the police authorities of Assam had already initiated and proceeded against the appellants under the CrPC for the offences under the IPC, the same be continued only by following the procedure provided under the CrPC and the appellants also avail the release of the goods, if lawfully seized as per the provisions of the CrPC: High Court [para 32]

++ In the event, no such appropriate decision is taken or the matter is proceeded under the appropriate provisions of law, as indicated above, by any of the aforementioned authorities, it would stand declared at the expiry of seven days that the detention and seizure of the 26 numbers of trucks of areca nuts belonging to the appellants would be illegal and unsustainable - It is again provided that in the event any of the three authorities proceeds against the appellants as per the respective laws indicated above, such proceedings shall be subjected to the logical outcome under the GST Acts, CrPC/IPC or the Customs Act, as the case may be: High Court [para 33]

++ The judgment dated 25.10.2019 in WP(C) No.6762/2019 [ 2019-TIOL-2530-HC-GUW-CUS ] and other connected writ petitions stands modified as indicated above.

- Appeals disposed of: GAUHATI HIGH COURT

ST - On the income received by appellant for 'maintenance or repair service' by way of motor rewinding charges collected, SCN was issued demanding tax of Rs.1,09,75,228/-  - demand confirmed by Commissioner along with  interest and penalty - it was held that the appellant is ineligible for the benefit of notification 12/2013-ST as amended for having availed credit of Rs.1,06,678/- on inputs as one of the conditions for being entitled to the abatement notification 12/2013-ST is non-availment of CENVAT credit on inputs - appeal filed on the ground that the adjudicating authority has not rendered any finding on the submissions on facts as well as law and for failing to render a finding on the taxability of the impugned transactions and for failing to note that the credit allegedly irregularly availed had been reversed before issuance of SCN.

Held: Appellant has sought to introduce the argument of non-taxability of impugned service but Bench is not inclined to examine that aspect as the appellant has been paying service tax since July 2006 and the present ground appears to have been raised only consequent upon the proposal to tax the gross value of consideration received from customers - There is also no dispute on the reversal of CENVAT credit - in the light of the decision in Beekay Engineering Corporation - 2015-TIOL-2458-CESTAT-DEL  and Punj Lloyd Ltd. -   2016-TIOL-286-CESTAT-DEL , where it is held that reversal of credit is tantamount to non-taking of credit, the impugned order is flawed in having sought tax liability of Rs.1,09,75,228/- when the CENVAT credit stood duly reversed - impugned order set aside and appeal allowed: CESTAT. [para 5, 6]

- Appeal allowed: MUMBAI CESTAT

ST - CENVAT - Except mentioning in the SCN that there has been suppression of facts, no positive act committed by the appellant has been put forth by Revenue to allege suppression of facts in the impugned cases - detection of wrong availment of CENVAT credit is subsequent to audit conducted and, therefore, in view of the ratio of the case laws cited viz. Adecco Flexione Workforce Solutions Ltd. - 2011-TIOL-635-HC-KAR-ST , Lalit Ashok - 2018-TIOL-3658-CESTAT-BANG ,  PepsiCo India Holding P Ltd. - 2019-TIOL-1646-CESTAT-BANG , one cannot allege suppression of facts - provisions of section 73(3) of the Finance Act, 1994 is attracted in the present cases since tax is paid along with interest - there was no reason for issuance of show cause notices - both the appeals are allowed with consequent relief, if any - Revenue appeal seeking imposition of higher penalty is rejected: CESTAT [para 7, 8]

- Assessee appeals allowed/Revenue appeal rejected: MUMBAI CESTAT

2019-TIOL-3565-CESTAT-DEL

BSNL Vs CCE & ST

ST - The issue at hand here is whether service tax is to be discharged on the amount actually received by the assessee or on the amount shown in the trial balance sheet - The assessee was served an SCN based on audit conducted, wherein the figures shown in the trial balance were taken as the amount on which service tax was to be paid by the assessee - The assessee claimed that in relation to the relevant period, the assessee was liable to pay service tax on the amount actually received by the assessee - On adjudication, the Commr held that the assessee was unable to submit a reconciliation statement or a certificate from the CA to explain its position.

Held - The assessee's contention that service tax is payable on the basis of amount received during that particular period, merits being accepted - Though the assessee submitted that service tax was paid on the amount actually received by it during the relevant period, it is appropriate to remand the matter to the Commissioner to examine the issue as to whether the assessee paid service tax on amount actually received by the assessee during the period in question because service tax is required to be paid at the relevant time on the amount actually received by the assessee - Hence the Commr. is directed to pass an order within three weeks' time: CESTAT

- Case remanded: DELHI CESTAT

CENTRAL EXCISE

2019-TIOL-3564-CESTAT-AHM

Bharat Resins Ltd Vs CCE & ST

CX - The assessee-company manufactures both dutiable and exempted products - It availed Cenvat credit in respect of inputs and input services - It also carried out trading activity in which common input service was used - The Revenue opined that since common input service on which credit was availed was used in respect of trading turnover, the assessee is required to reverse 6% credit in terms of Rule 6(3) - Hence demand was raised for reversal of 6% being sale value of trading - Such demand was sustained by the Commr.(A) - Hence the present appeal.

HELD - It is seen that though the assessee availed Cenvat credit on common input service attributed to both exempted and dutiable goods as well as trading activity, the assessee reversed the credit along with interest after adjudication - In such circumstances, the situation becomes as if no cenvat credit was taken right from the date of taking credit by the assessee - This follows from the decision of the Apex Court in M/s. Chandrapur Magnet Wires (P) LTD. V/s COLLECTOR OF C. EXCISE, NAGPUR - This tribunal in various subsequent cases held that once the Cenvat Credit along with interest has been paid, no demand of 6% can be made - Though it is the assessee's claim that the Cenvat Credit attributed to the trading activity along with interest has been paid and the copy of Cenvat account for the credit reversal as well as challan for the payment of interest has been enclosed - Hence, the demand of 6% duty reversal is not sustainable: CESTAT

- Assessee's appeal allowed: AHMEDABAD CESTAT

2019-TIOL-3563-CESTAT-AHM

Hardcastle Petrofer Pvt Ltd Vs CCE & ST

CX - The assessee-company manufactures dutiable and exempted products - It availed Cenvat credit of input goods and services - It also carried out trading activities in which common input services were used - The Revenue opined that since common input service on which credit was availed was used in respect of trading turnover, the assessee is required to reverse 6% credit in terms of Rule 6(3) of CCR - Hence demand was raised for reversal of amount equivalent to 6% of sale value of trading - Such demand was sustained by the Commr.(A) - Hence the present appeal by the assessee.

HELD - It is seen that though the assessee availed Cenvat credit on common input service which is attributed to both dutiable manufacturing goods as well as the trading activity, the assessee after adjudication of SCN, reversed the cenvat credit with interest, attributed to the trading activity - In such circumstances, the situation is such as if no cenvat credit was taken right from the date of taking the credit - This follows from the decision of the Apex Court in M/s. Chandrapur Magnet Wires (P) LTD. V/s COLLECTOR OF C. EXCISE, NAGPUR - Hence the O-i-A seeking reversal of credit is liable to be quashed: CESTAT

- Assessee's appeal allowed: AHMEDABAD CESTAT

CUSTOMS

2019-TIOL-2823-HC-P&H-COFEPOSA

Sreet Saini Vs UoI

COFEPOSA - The petitioner's spouse was working at the Amritsar airport in the Fire Services - He was detained by the Customs authorities on allegations of having indulged in smuggling gold by taking benefit of his position at the airport - The petitioner's spouse was also found to have constructed a hotel, for which he had been unable to explain the source of funding - Besides, the petitioner's son had been apprehended with foreign currency in his possession - It was alleged that the petitioner's spouse had masterminded the entire network and on his instruction, other persons were also indulging in smuggling - It was found that about 4Kg of Gold was smuggled in this manner, which was also established through recovery of a bill of export showing that consignment of 1Kg of Gold from Dubai airport was issued in the name of the petitioner's son - The present petition assailed the order passed by the Competent Authority u/s 3 of the COFEPOSA.

Held: Perusal of the order shows that the competent authority had concluded that the petitioner's spouse had a general habit and propensity to indulge in fraudulent activities through smuggling of goods, abetting smuggling, engaging in transporting or concealing or keeping smuggled goods and also harboring persons engaged in smuggling at the cost of the Government's revenue - The petitioner's spouse was also found to have provided lodging for other offenders at Dubai and in his own hotel - Thus it is seen that the authority passed the detention order after providing various reasons for arriving at such conclusion - It is seen that the not only the detaining authority but also the Advisory Board formed an opinion that there is sufficient cause to detain the petitioner's spouse and the same is affirmed by the Central Govt - Hence the court finds no grounds for interference within its limited jurisdiction of judicial review: HC

- Writ petition dismissed/In favor of Revenue: PUNJAB AND HARYANA HIGH COURT

DTAA - P roject office acting as communication channel to support Non-resident entity's main activity of fabrication & installation of platforms, cannot be construed as PE: HC

TP - Company engaged in rendering highly technical service cannot be compared to captive service providers engaged in rendering mere support services: ITAT

TP - Losses suffered by entity in a particular assessment year, will not be construed as persistent losses so as to refer it as unfit for purposes of comparison: ITAT

TIOL CORPLAWS

Depositories Act - Direction to transfer funds from depository to clients account in fraud case cannot be recalled if the right of financial lenders as bona fide pledgees of securities was brought after delay: SAT

IBC - Without discharging obligations arising under one time settlement, section 7 application cannot be withdrawn on basis of negotiation reached between corporate debtor & financial creditor: NCLAT

IBC - If evidences filed by RBI as Appropriate Regulator establishes existence of financial debt payable by NBFC, it calls for admission of insolvency application: NCLT