2020-TIOL-NEWS-017 Part 2, Dated: Monday, January 20, 2020

2020-TIOL-NEWS-017 Part 2 | Monday January 20, 2020

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DIRECT TAX


	2020-TIOL-106-ITAT-SURAT DCIT Vs Anupam Organiser Whether when assessee has already disclosed fair amount of income on unaccounted 'on money' receipts then no further addition is required - YES : ITAT - Revenue's appeal dismissed: SURAT ITAT 2020-TIOL-105-ITAT-MUM JCIT Vs Krosslink Infrastructure Ltd Whether if disallowance for bogus bills should be reduced to the extent of profit element embedded, disallowance restricted to 10%, would meet the end of justice - YES: ITAT - Revenue's appeal dismissed: MUMBAI ITAT 2020-TIOL-104-ITAT-MAD Maduranthagam Selvaraj Ravi Vs DCIT Whether it is only land appurtenant to building which can be allowed while computing deduction u/s 54 - YES : ITAT Whether if only 5% of the total plot of land is constructed, it can not be said that rest of plot of land is appurtenant thereto - YES : ITAT - Assessee's appeal dismissed: CHENNAI ITAT 2020-TIOL-103-ITAT-INDORE ITO Vs Ocean Motors Pvt Ltd Whether if assessee has proved all ingredients of section 68 in order to clear the burden of proof, onus shifts on Revenue to rebut which remained unfulfilled - YES : ITAT - Revenue's appeal dismissed: INDORE ITAT 2020-TIOL-102-ITAT-AHM Usharani Dhanraj Veena Vs ITO Whether penalty u/s 271B is sustainable where the assessee fails to get account books audited owing to being under some bona fide belief - NO: ITAT - Assessee's appeal allowed: AHMEDABAD ITAT

GST CASES

2020-TIOL-128-HC-JHARKHAND-GST

Shree Nanak Ferro Alloys Pvt Ltd Vs UoI

GST - Petitioner is aggrieved by the letter dated 26.04.2019, issued by the respondent No.2, Superintendent, CGST, whereby the petitioner Company has been saddled with the liability to pay the short paid IGST, amounting to Rs.41,98,642/-, along with due interest within a period of one week - Petitioner had informed the respondent that the Company had actually paid the amount of the IGST of Rs.41,98,643/-, but inadvertently it was paid under the head of CGST, instead of IGST, and as such it was not a case of short payment, rather, it was the case of payment of IGST under a different head; that this mistake had occurred in the early phase of implementation of the GST, and accordingly, the adjustment of the said amount may be made in the appropriate head - such request was not acceded to and the impugned letter dated 26.04.2019 was issued leading to filing the present Writ petition.

Held: Admittedly, the petitioner Company had discharged their tax liability under the IGST head, but inadvertently or otherwise, the petitioner deposited the amount under the CGST head - It is not the case that the petitioner Company has concealed the transaction or has committed any fraud in discharging its tax liability - It is a plain case in which the tax has been paid by the petitioner to the Central Government, but not under the IGST head, rather under the CGST head - There appears to be substance in the submission of the petitioner, inasmuch as, by deliberately depositing the cash in the electronic cash ledger for the CGST head, at the place of IGST head, possibly no benefit was going to be derived by the petitioner Company - In that view of the matter, Bench is not in a position to doubt the bona fides of the petitioner Company, that due to the initial stage of the CGST regime, there might be some confusion, and the cash was wrongly deposited in the wrong electronic cash ledger - From a plain reading of Section 49 (3) and (4) of the CGST Act, the counsel for the CGST may be right in his contention that under Section 49 (3) of the CGST Act, the 'electronic cash ledger' may be used for making the payment of the tax and the other liabilities under this Act only, i.e., CGST Act, and there is no provision of cross utilization of the fund as in case of 'electronic credit ledger' under Section 49 (4) of the CGST Act, but Section 77(1) of the CGST Act, read with Section 19(2) of the IGST Act, clearly lay down that a registered person who has paid the Central tax, treating the transaction to be intra-State supply, as in the case of the petitioner, but which turns out to be inter-State supply, is entitled to the refund of the amount of tax so paid, under Section 77 (1) of the CGST Act, and at the same time such person cannot be saddled with the liability of interest in view of the provision of Section 19 (2) of the IGST Act - Bench, therefore, does not find any plausible reason whatsoever, to deny the petitioner Company the benefit of the provisions of Section 77(1) of the CGST Act, read with Section 19(2) of the IGST Act - Bench directs the petitioner Company to deposit the amount of Rs. 41,98,642/-, under the IGST head within a period of 10 days, towards the liability of September, 2017 - The petitioner shall not be liable to pay any interest on the said amount - The petitioner shall also be entitled to get the refund of the amount of Rs.41,98,643/- deposited by them under the CGST head, or they may get the amount adjusted against their future liabilities, in accordance with law, as they may choose - Impugned letter dated 26.04.2019 is, therefore, quashed - Writ application is allowed: High Court [para 14, 15, 17, 18, 19]

- Application allowed: JHARKHAND HIGH COURT

2020-TIOL-11-AAR-GST

SLN Tech Fabs Bengaluru Pvt Ltd

GST - Applicant is engaged in providing services in the area of Transport solutions, in the field of fabrication and truck body building area for transport equipments such as Tippers, Trailers, Containers and Tankers - at present they are charging GST @28% as per Sl. no. 169 of Schedule IV to 1/2017-CTR by treating their supply as “goods" - however, the CBIC by its Circular 52/26/2018-GST dated 09.08.2018 clarified that in the case as mentioned at paragraph 12.2(b), if the body is fabricated on chassis provided by the principal then the supply would merit classification as 'service' and attract GST @18% - applicant, therefore, desires to know the correct GST rate.

Held: Charging of GST @28% as per Sl. no. 169 of Schedule IV of 1/2017-CTR is correct if the activity of the applicant is treated as supply of goods falling under CH 8707; however, the activity of fabrication of body building on Tippers, Trailers etc. merits classification under SAC 998881 under ‘Motor vehicle and trailer manufacturing services' in terms of Sl. no. 535 of 11/2017-CTR and applicant can starting charging GST @18% as per Sl. No. 26(ic) of 11/2017-CTR in view of amendment by 20/2019-CTR r/w Explanation under 26/2019-CTR: AAR

- Application disposed of: AAR

2020-TIOL-07-AAAR-GST

Parker Hannifin India Pvt Ltd

GST - AAR held that Filters manufactured solely and principally for use by/in Indian Railways and supplied directly to Indian Railways (IR) are classifiable under HSN Heading 8421 and not under HSN 8607; that classification would not be altered if the filter are supplied to a distributor instead of Indian Railways directly and the distributor in turn effects supply to IR - Aggrieved, the appellant is before the AAAR.

Held: Ruling given by the UP Authority for Advance Ruling in the case of G.S Products is not applicable to any other taxable person within the State of Uttar Pradesh leave alone a taxable person outside the State of Uttar Pradesh - nevertheless, the ruling given by UP AAR has not examined the provisions of note 2(e) to Section XVII and the General Notes on Parts and Accessories in Section XVII while determining the classification of Air Filters, hence no weightage is required to be given to the said ruling - Appellate Authority also finds that the Circular no. 80/54/2018-GST dated 31.12.2018 issued by CBIC, Paragraph 12 thereof deals with classification of Turbo Charger supplied to Railways - It has been clarified that Turbo Charger is specifically classified under CH 8418 8030 and continues to remain in this code irrespective of its use by Railways - This substantiates the stand of the AAAR that goods which are excluded by virtue of Note 2(e) to Section XVII and specifically classified elsewhere in the nomenclature cannot be classified as parts of Railway locomotives under Chapter 86, irrespective of their use by Railways - Filters manufactured by the appellant solely and principally for use by the Indian Railways and supplied directly to the IR or through a distributor are, therefore, rightly classifiable under CH 84.21 and not under CH 86.07 - AAR Ruling upheld and appeal dismissed: AAAR

- Appeal dismissed: AAAR

2020-TIOL-06-AAAR-GST

Chromachemie Laboratory Pvt Ltd

GST - Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff is covered under Entry no. 80 of Schedule II to 1/2017-ITR attracting a levy @12% GST - Interpretation given by the AAR that the Entry no. 80 covers only diagnostic kits and diagnostic reagents is not correct - principles of ejusdem genesis applied by the AAR while interpreting the Entry Sl. no. 80 is misconstrued - rule of ejusdem genesis has no inverse application inasmuch as general words preceding the enumeration are not governed by this rule - AAR ruling set aside and appeal allowed: AAAR

- Appeal allowed: AAAR

MISC CASE

2020-TIOL-129-HC-MUM-CT

Tata Steel BSL Ltd Vs UoI

CST - Petitioner was purchasing natural gas by paying Central Sales Tax - The Petitioner was registered under the Maharashtra Value Added Tax Act, 2002 - A SCN was issued to the Petitioner for cancellation of registration under the Central Sales Tax Act, 1956 - The Petitioner submitted its replies on 30 June 2018, 1 September 2018 and 15 January 2019 and placed various contentions on record, however, Petitioner received an order of 18 March 2019 cancelling the registration certificate w.e.f 01.07.2017 and this order is impugned under the writ petition.

Held: On the face of it, there are no reasons given in the order and the ground is "other reason, please specify" - Section 7(4) of the Central Sales Tax Act, 1956 was invoked against the Petitioner alleging that the Petitioner had not effected sale of any of the goods specified therein in the year 2016-17 - However, the impugned order refers to Section 7(5) of the Act - Section 7(5) of the Act deals with the contingency where registered dealer himself seeks cancellation of the registration - As the Petitioner has not made such application, the order is unreasoned and without application of mind - The contention of the Petitioner of breach of principles of natural justice will have to be accepted - Since it is not clear as to whether the Respondent-Authority was aware that the show cause notice was under Section 7(4), hearing be given to the Petitioner afresh - Order dated 18 March 2019 is quashed and set aside - Proceedings initiated by the Respondent No.4 pursuant to show cause notice dated 19 June 2018 stand restored - The Respondent No.4 will give hearing to the Petitioner and pass an appropriate order as per law - Petition disposed of: High Court [para 7, 9, 10]

- Petition disposed of: BOMBAY HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-131-CESTAT-BANG

Bhavani Erectors Pvt Ltd Vs CCT

ST - The assessee-company is engaged in providing ECIS and other services - Based on intelligence that the assessee wrongly availed credit on Additional Customs Duty u/s 3(5) of the Customs Tariff Act, an enquiry was conducted - Investigation by the Department revealed that the assessee had wrongly availed some amount of Cenvat credit - SCN was issued proposing to recover the same with interest and penalty - On adjudication, the duty demand was confirmed - Such findings were sustained by the Commr.(A) - Hence the present appeal.

Held - The assessee reversed the credit availed on SAD, as shown in the relevant returns furnished by the court - Such reversal was made before issuing of SCN - The assessee filed ST-3 returns for various periods to show that they have enough balance as unutilized Cenvat credit to cover the availment of credit, which includes the credit Customs cess wrongly taken - Of the total demand raised, the assessee furnished proof of reversal for part of the amount and for the remaining amount, the same is to be reversed with interest - Hence the appeal is allowed by way of remand top verify the quantum of reversal allegedly made by the assessee and to verify whether the assessee had sufficient balance of unutilized credit during all periods from date of availment till date of reversal - The interest not reversed is to be quantified as well: CESTAT

- Case remanded: BANGALORE CESTAT

2020-TIOL-130-CESTAT-KOL

Adhunik Fuels Pvt Ltd Vs CCE & ST

ST - The assessee was liable to pay Service Tax under Reverse Charge mechanism, being recipient of taxable service - During audit for the relevant period, the Revenue observed that the assessee had short paid duty - On pointing out such irregularity, the assessee deposited the Service Tax amount along with interest - However, the Department initiated show cause proceedings against the assessee, seeking for confirmation of the Service Tax demand along with interest and imposition of penalties - The demands were confirmed upon adjudication - Such findings were then sustained by the Commr.(A) - Hence the present appeal.

Held - Admittedly, based on the books of accounts maintained by the assessee, the Audit wing of the Department observed discrepancy of non-payment/short payment of Service Tax by the assessee - The ingredients for invoking penalty u/s 78, namely fraud, suppression, willful misstatement have been established by the Department - The adjudicating authority specifically mentioned that based on records maintained by the assessee, short payment of service tax on GTA service was detected - In such circumstances, the charges of suppression, misstatement could not be levelled against the assessee to invoke provisions of Section 78 - Regarding demand of late fee for delayed filing of ST-3 returns, the SCN does not specifically invoke provisions of Section 74 and the same was invoked for the first time before the adjudicating authority - Hence the O-i-O has gone beyond the scope of the SCN owing to which the imposition of late fee is not sustainable: CESTAT

- Assessee's appeal partly allowed: KOLKATA CESTAT

CENTRAL EXCISE

2020-TIOL-132-CESTAT-MUM

Saikrupa Sugar And Allied Industries Ltd Vs CCT & CE

CX - Appellant is aggrieved against the impugned order wherein demand under Rule 6(3) of CENVAT Credit Rules, 2004 @ 6% of the value of electricity has been confirmed in respect of electricity sold outside the factory - matter is settled by the Tribunal in the case of Jakarya Sugars Ltd - 2018-TIOL-1845-CESTAT-MUM - Following the same, it is held that the provisions of Rule 6(3) of CCR, 2004 are not applicable to the facts of the case - Accordingly, demand of 6% of the value of electricity on the appellant is not sustainable - impugned orders set aside and appeals allowed with consequential relief: CESTAT [para 7 to 9]

CX - Show cause notice is the foundation of the case and if there is a lacuna in the show cause notice, the same cannot be rectified at the appellate stage or in remand proceedings - request made by the AR for remanding the matter is rejected: CESTAT [para 6]

- Appeals allowed: MUMBAI CESTAT

CUSTOMS

2020-TIOL-137-CESTAT-KOL

CC Vs Shyam Enterprises

Cus - The Revenue's appeals are dismissed as withdrawn as sought for by it: CESTAT

-Revenue's appeals dismissed : KOLKATA CESTAT