2019-TIOL-NEWS-307 Part 2, Dated: Tuesday, December 31, 2019

2019-TIOL-NEWS-307 Part 2 | Tuesday December 31, 2019

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DIRECT TAX


	2019-TIOL-2966-HC-DEL-IT RDS Project Ltd Vs ACIT Whether the AO is barred from issuing the reopening notice in respect of the assessment which has been already processed u/s 143(3) - NO: HC Whether if the assessee admits to be in receipt of share application money from companies whose involvement in accommodation entry racket has been proven on record, it makes the re-assessment notice reasonable - YES: HC Whether if the reasons to issue the reopening notice is connected to the material on record which was not fully disclosed by the assessee during the scrutiny assessment, the notice u/s 148 becomes legal - YES: HC - Assessee's writ petition dismissed: DELHI HIGH COURT 2019-TIOL-2965-HC-DEL-IT BPTP Ltd Vs PR CIT Whether a mechanical mention of the expression that the assessee has failed to disclose fully & truly all material facts without specifying the nature of taxpayers default or the live link between the reasons & material on record, is sufficient to make the reassessment proceedings valid - NO: HC Whether External Development Charges payable to an Urban Development Authority as statutory dues for real estate activities comes within the sweep of annual rent as defined u/s 194-I & is thus subject to TDS u/s 194 - NO: HC - Assessee's writ petition allowed: DELHI HIGH COURT 2019-TIOL-2567-ITAT-MUM Harsh Enterprises Vs TDS Whether 'order pass date' mentioned in intimation u/s 200A for TDS statement, has to be construed as date of receipt of such intimation by taxpayer - YES: ITAT Whether late filing fee u/s 234E can be imposed for the period prior to the cut of date from which the amendment enabling levy of fees u/s 234E was made available u/s 200A - NO: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2019-TIOL-2566-ITAT-CHD Loil Continental Foods Ltd Vs Pr.CIT Whether merely because assessment order is brief and does not have elaborate discussion on issues entitles CIT to invoke power u/s 263 when during assessment all relevant details were called for and also submitted by the assessee - NO: ITAT - Assessee's appeal allowed: CHANDIGARH ITAT 2019-TIOL-2565-ITAT-HYD Andhra Pradesh Gas Power Corporation Ltd Vs DCIT Whether provision made by a power generator and supplier towards differential price to the credit of M/s GAIL for supplying Ravva Satellite Gas, is an expenditure which merits being allowed - YES: ITAT - Assessee's appeal allowed: HYDERABAD ITAT 2019-TIOL-2564-ITAT-HYD Charminar Bottling Company Pvt Ltd Vs ACIT Whether assessee cannot singularly deny the unofficial transactions recorded in its books of account - YES: ITAT - Assessee's appeal dismissed: HYDERABAD ITAT 2019-TIOL-2563-ITAT-BANG Sha Thanmal Sukharajji And Company Vs Addl.CIT Whether for reasonable cause for non-compliance with provisions pertaining to deduction of tax at source, no penalty u/s 271(1)(c) can be levied - YES : ITAT - Assessee's appeal allowed: BANGALORE ITAT

GST CASE


	2019-TIOL-499-AAR-GST Kalyan Jewellers India Ltd GST - Applicant is in the business of manufacturing and trading of Jewellery products - as part of sales promotion, the appellant introduced the facility of different types of pre-paid instruments (PPI's) viz. closed system PPIs, Semi-closed system PPIs, Open System PPIs through its retail outlets, third party PPI issuers and online portals to their customers and these are generally called “Gift Vouchers/Gift Cards” in trade - applicant wishes to know whether issuance of these pre-paid instruments are classifiable as goods and taxable and if so, the time and value of supply of goods and determination of liability to pay tax for their pre-paid instruments. Held: It is seen that the applicant issues closed PPIs as defined in the Master Circular issued by Reserve Bank of India - such PPIs are sold to customers on receiving the face value as per the requirement of customer and who can redeem the same in any outlet of the applicant across the country at the time of purchase of jewellery - further, such PPIs are named as 'Gift Vouchers' and the amount received on sale of such vouchers is accounted under 'Other Current liabilities' - once they are redeemed, they are credited to the revenue (sales) account - gift voucher/gift card is an instrument squarely covered under the definition of 'payment instrument' under the Payment and Settlement Act, 2007 - if the holder of the gift card/voucher loses or misplaces it and is unable to produce the same before the applicant's stores before the specified time limit mentioned on the card/voucher, the instrument itself becomes invalid - The customer cannot use it to pay for any other goods, hence it is not an 'actionable claim' as defined in the Transfer of Property Act - PPIs squarely fall under the definition of 'voucher' as defined in s.2(118) of the CGST Act and are, therefore, 'goods' as per section 2(52) of the CGST and TNGST Act - supply of such vouchers qualifies as “supply” u/s 7 of the Act - time of supply being governed by s.12(4) of the Act - gift vouchers issued by the applicant are either in paper form or a plastic card which can be read electronically - paper gift vouchers are classifiable under CTH 4911 9990, chargeable @12%, Sl. No. 132 of Schedule II of 1/2017-CTR; plastic gift cards/vouchers are classifiable under CTH 8523 2100 or CTH 8523 52, chargeable @18%, Sl. No. 382 of Schedule III of 1/2017-CTR - since the third party PPI issuers are based in Bangalore, TN AAR does not have any jurisdiction over the activity undertaken by these entities: AAR - Application disposed of: AAR

INDIRECT TAX

SERVICE TAX

2019-TIOL-3662-CESTAT-BANG

Manipal Universal Learning Pvt Ltd Vs CCE

ST - Issue is as to whether VSAT (Very Small Aperture Terminal) fee charged for supply of VSAT equipment is liable for service tax under "franchise service' and as to whether demands are wholly barred by limitation.

Held: It is evident from the records that the appellants are registered with the department and are in continuous correspondence with the department and various visits of Audit teams have taken place - Moreover, the department has issued a Show Cause Notice dated 11.3.08, demanding service tax in respect of (i) Affiliation fee; (ii) Inspection Fee; (iii) Licence Fee, under the category of "franchise service” - The impugned SCN dated 26.05.2008 for the period July 2003 to August 2007 is based on the same set of contracts and other documents - Therefore, Bench holds that the department is not within their right to issue a second show cause notice alleging suppression - SCN and the impugned order is liable to be set aside in view of the apex court ruling in the case of Nizam Sugar Factory - 2006-TIOL-56-SC-CX - Insofar as merits are concerned, nothing in the agreement indicates that the learning centres have been given a franchise by providing the VSAT at the learning centres and nothing is forthcoming from the contracts that the appellant gives permissions to use their names by providing the VSAT facility - appellants are also not receiving any royalty towards the alleged franchise - CBEC Circular 59/8/2003 dated 20.06.2003 relied upon - demand is unsustainable on merits also - at best, the activity could come under the category of 'supply of tangible goods service' w.e.f 16.05.2008 but since SCN pertains to the prior period and also does not demand tax under this category, discussion on the same is not warranted - appeal allowed with consequential relief: CESTAT [para 12, 13, 15, 16]

- Appeal allowed: BANGALORE CESTAT

2019-TIOL-3659-CESTAT-ALL

Manisha Projects Pvt Ltd Vs CCE

ST - The assessee was awarded with contract for construction of residential quarters for defense personnel through M/s RITES Limited and M/s IRCON International Limited and for construction of residential quarters for the staff of Gautam Budh University, through GNIDA - On the basis of audit conducted on the records of assessee, it appeared to Revenue that the assessee was required to pay service tax on providing said service of construction of quarters for Ministry of Defense and Gautam Budh University under the category of construction of residential complex service - The law has very clearly provided that if the residential unit is intended for personal use or it is being used by other persons on rent then such unit is not covered by the definition of residential complex and therefore not eligible to be subjected to levy of service tax under construction of residential complex service - This being a case of demand, the onus was on revenue to establish that the residential units constructed by assessee were covered by definition of residential complex to raise the demand - The said onus was not discharged by Revenue to establish that the residential units constructed were liable to levy of service tax - Therefore, impugned order is not sustainable, same is set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2019-TIOL-3661-CESTAT-CHD

Fujikawa Power Vs CCE & ST

CX - On 29.12.2016, the Tribunal set aside the order of the Commissioner dt.31.3.3014 - The appellant filed refund claim of Rs.27,47,172/- along with interest on 3.3.3017 - On 20.06.2017, the refund was sanctioned by the adjudicating authority but the claim of interest was rejected - The claim of the appellant is that the appellant is entitled for interest from the date of deposit of the amount till the refund of principal amount - Commissioner (Appeals) also did not accept that claim of the appellant, hence they are before the CESTAT.

Held: ITC Ltd. - 2004-TIOL-112-SC-CX-LB decision of Apex Court has been delivered on 02.12.2004 whereas the decision in the case of Sandvik Asia Limited - 2006-TIOL-07-SC-IT delivered on 27.1.2006, therefore, the latest decision of the Apex Court is having persuasive value - On going through the provisions of both Income Tax Act, 1961 [section 243] and Central Excise Act, 1944, [section 35FF] the interest on delayed refund is payable after expiry of 3 months from the date of granting refund or from the date of communication of order of the appellate authority, which are pari-materia - Therefore, the decision of Apex Court in the case of Sandvik Asia Ltd. (supra) is law of land, in terms of Article 14 of the Constitution of India which is to be followed - Apex Court has answered the issue holding that the assessee is entitled to claim interest from the date of payment of initial amount till the date its refunded, therefore, Bench holds that the appellants are entitled to claim the interest on delayed refund from the date of deposit till its realization - Further, the interest on the refund shall be payable @ 12% per annum as held by Kerala High Court in the case of Sony Pictures Networks India Pvt.Ltd - 2017-TIOL-1102-HC-KERALA-CUS - appeals are allowed with consequential relief: CESTAT [para 13, 17, 18, 19, 21, 22]

- Appeals allowed: CHANDIGARH CESTAT

2019-TIOL-3660-CESTAT-ALL

Vishvakarma Paper And Boards Ltd Vs CCE & ST

CX - The assessee was engaged in manufacture of Paper and Paper Board - As a consequence of passing of O-I-A dated 10.08.2004 refund of Rs.13,56,813/- was granted to assessee through the Order dated 11.01.2005 - It appeared to revenue that the said refund was erroneously granted to assessee - Therefore, assessee was issued with SCN for recovery of allegedly, erroneously paid refund - The Original Authority dropped the proceedings initiated through the said SCN - On appeal, Commissioner (A) decided the said appeal and resulted in confirmation of demand of Rs.13,56,813/- against the assessee - The assessee submitted that the duty confirmed through the order dated 15.06.2004 on finalization of assessment for the period from 25.07.2003 to 31.05.2004 was Rs.1,85,35,232/- which is now subject matter of proceedings before Supreme Court - He further submitted that the amount of Rs.13,56,813/- was paid by assessee against the order dated 15.06.2004 and the said amount was refunded to assessee after the Commissioner (A) through the O-I-A dated 01.08.2004, set aside said assessment order dated 15.06.2004 - He further submitted that the amount paid as per the directions of Supreme Court on 23.04.2012 was Rs.1,02,67,350/- - Further, he has submitted that Supreme Court on 16.07.2012 directed not to take any crucial steps against the assessee, recovery of balance demand of Rs.51,50,305/-, as the said amount was stated to have been available in Cenvat credit - Further, he submitted that out of the amount of Rs.13,56,813/-, amount of Rs.77,590/- was duty paid under the protest for the period from 17.06.2004 to 30.06.2004 which was a period beyond the period covered by finalization of assessment on 15.06.2004 and that balance amount of Rs.12,79,223/- was covered by the matter pending before Supreme Court - He further submitted that the said amount of Rs.77,590/- which pertains to subsequent period stands paid by them - He, therefore, contended that by the impugned order passed by Commissioner (A), there will be double recovery of Rs.13,56,813/- from the assessee and therefore, he prayed for setting aside the confirmation of demand of Rs.12,79,223/- and submitted that he was prepared to establish before the lower authorities that amount of Rs.77,590/- stands paid by him in respect of the said payment under protest for the period from 17.06.2004 to 30.06.2004 - At Sl. No. (xvii) of the written submissions filed by assessee, there were payments of Rs.30 lakhs, Rs.1,02,67,350/- and Rs.1,17,577/- - Further, Rs.51,50,305/- are available in the Cenvat credit account - Therefore, by confirmation of demand of Rs.12,79,223/- there is duplication of payment of duty, thus same is set aside - Further, matter remanded back to the Original Adjudicating Authority for verification of payment of Rs.77,590/- for the period from 17.06.2004 to 30.06.2004 and thereafter to pass appropriate order in respect of demand of Rs.77,590/-: CESTAT

- Appeal partly allowed: ALLAHABAD CESTAT

CUSTOMS

2019-TIOL-3658-CESTAT-MAD

Infinity Industries Pvt Ltd Vs CC

Cus - Refund of SAD – Notification 102/2007-Cus – claim rejected by lower authorities on the grounds that (i) invoices do not bear endorsement as required under condition 2(b) of notification No.102/2007; (ii) the wordings used in the endorsement by the appellant does not correlate with the wordings of the endorsement as required under condition 2(b) of the notification;(iii) the Chartered Accountant certificate was not accepted by the authorities below alleging that it is factually incorrect and (iv) the description of the goods in the Bills of Entry and the sale invoices do not match – appeal before CESTAT.

Held: In Chowgule & Company - 2014-TIOL-1191-CESTAT-MUM-LB the very same issue was analysed by the Larger Bench of the Tribunal and it was held that – ' A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus., notwithstanding the fact that he made no endorsement that "credit of duty is not admissible" on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein' – therefore, non-fulfilment of condition 2(b) cannot be a ground for rejecting the refund: CESTAT [para 7, 8]

Since condition 2(e) to produce Chartered Accountant certificate so as to correlate VAT and SAD paid has been furnished by the appellant, rejection of the same on the ground that it certified that the sale invoices are endorsed as per the condition 2(B) and since the sale invoices do not bear endorsement, the Chartered Accountant certificate is factually incorrect and, therefore, it cannot sustain, is untenable: CESTAT [para 9]

As regards mismatch of the description of the goods in sales invoices and the Bills of Entry, it is evident that the importer has used description of the goods as known in the trade in India and the Department does not have a case that the description shown in the invoices are not the goods known in the local market in India - goods sold are paper of different grades, thus, no major discrepancy is found in the description of the goods in the Bill of Entry and the sale invoices - rejection of refund claim on the ground of mismatch in description of the goods cannot be sustained: CESTAT [para 10, 11]

- Appeals allowed: CHENNAI CESTAT