2020-TIOL-NEWS-033, Dated: Saturday, February 08, 2020

2020-TIOL-NEWS-033 | Saturday February 08, 2020

Dear Member,

Sending following links.

Warm Regards,
TIOL Content Team

TIOL PRIVATE LIMITED.

For assistance please call us at + 91 850 600 0282 or email us at helpdesk@tiol.in.

TIOL TUBE VIDEO

TIOLAWARDS.IN

DIRECT TAX


	2020-TIOL-292-HC-KAR-IT South India Assemblies Of God Vs CIT Whether limitation period for condonation of delay is computed from the date of making such claim - YES: HC Whether filing of the exemption form mechanically makes an assessee in default, when the Revenue has failed to instruct the assessee about e-filing of such form - NO: HC Whether exemptions granted for a particular AY cannot be denied in the subsequent AYs - YES: HC - Assessee's application allowed: KARNATAKA HIGH COURT 2020-TIOL-221-ITAT-DEL Torrence Capital Advisors Pvt Ltd Vs DCIT Whether once an assessee realises that deduction is inadvertently not claimed, it has every right to file revised returns declaring the correct taxable income - YES: ITAT Whether therefore, what must be examined as whether the assessee's claim is correct, rather than whether the correct claim is made with the original return or through revised returns - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2020-TIOL-216-ITAT-BANG Sati Exports India Pvt Ltd Vs DCIT Whether while it is true that rectification proceedings u/s 154 cannot be initiated where the issue is debatable, but it is also true that such proceedings can be sustained where there is only one ultimate answer to the issue at hand - YES: ITAT - Assessee's appeal dismissed: BANGALORE ITAT 2020-TIOL-215-ITAT-PUNE Lady Kikabhai Premchand Iyambail Trust Vs ITO Whether registration granted u/s 12AA validates exemption u/s 11 & 12 for any assessment year, preceding the assessment year for which such assessment is pending before the Revenue - YES: ITAT - Assessee's appeal allowed: PUNE ITAT 2020-TIOL-214-ITAT-CUTTACK Mangala Builders Associates Vs PR CIT Whether net profit is to be estimated based on the accounted contractual receipt - YES: ITAT Whether undisclosed sale ipso facto represent the profit of an assessee- NO: ITAT Whether addition is made on the net profit element of the undisclosed sale and not on the entire undisclosed sale - YES: ITAT - Assessee's appeal partly allowed: CUTTACK ITAT

GST CASES

2020-TIOL-310-HC-AHM-GST

Manmohan Lalman Agarwal Vs State of Gujarat

GST - ITC - generating of fake and fabricated documents - Application is filed under Section 438 of the Code of Criminal Procedure, 1973 for anticipatory bail in the event of their arrest in connection with file No.IV/06-Prev/32/Gr.IV/2019-20 with Central GST and Central Excise, Vadodara-II for the offence punishable under provisions of GST Act - Applicants state that they are ready and willing to abide by all the conditions, including imposition of conditions with regard to the powers of Investigating Agency to file an application before the competent court for their remand.

Held: Without discussing the evidence in detail, at this stage, Bench is inclined to grant anticipatory bail to the applicants - application is allowed by directing that in the event of arrest of the applicants in connection with FIR registered, the applicants shall be released on bail on their furnishing personal bond of Rs.10,000/- each with one surety of the like amount on the conditions as detailed - However, it would be open for the Investigating Agency to apply to the competent Magistrate, for Police remand of the applicants - It is clarified that the applicants, even if, remanded to the Police custody, upon completion of such period of Police remand, shall be set free immediately, subject to other conditions of this anticipatory bail order - Application allowed: High Court [para 6 to 8]

- Application allowed: GUJARAT HIGH COURT

2020-TIOL-309-HC-P&H-GST

Sanjay Dhingra Vs DG GST

GST - Petitioner was arrested on 07.10.2019 and seeks regular bail - Allegations are that the petitioner along with Gushan Dhingra were involved in the generation and selling of fake tax invoices without supplying the goods through various firms/companies; that the input tax credit has been availed by the said firms/ companies on the basis of fake invoices issued by various non-existent firms/companies; that by generating and selling fake invoices, the accused have facilitated irregular availment and utilization of input tax credit by various entities leading to substantial and wrongful loss to the government revenue to the tune of Rs.127 crores.

Held: Allegations against the petitioner are serious and magnitude of fraud is to the extent of Rs.127 crores - It is too early to conclude that arrest can't be effected or prosecution can't be launched without issuing notice under Section 74 of the Act particularly when the power of arrest has been given under Section 69 of the Act - Furthermore, merely because no police remand of the petitioner was sought and he has been remanded to judicial custody, it cannot be construed as a circumstance which may entitle him to be released on bail - allegations against the petitioner are with regard to commission of economic offence of high magnitude - it has been held by the Supreme Court in the cases of Nimmagadda Prasad vs. CBI, 2013(3) SCC (Criminal) 575 and Y.S.Jagan Mohan Reddy vs. CBI, 2013(3) R.C.R. (Criminal) 108 that while granting bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public and the State and other similar considerations - there are serious allegations against the petitioner that fake invoices of approximately Rs.931 crores involving GST of approximately Rs.127 crores without movement of goods have been issued and input tax credit has been availed - no justified ground is made out to grant concession of bail to the petitioner - Petition dismissed: High Court [para 6 to 9]

- Petition dismissed: PUNJAB AND HARYANA HIGH COURT

2020-TIOL-308-HC-AHM-GST

Rifty Vinimay Enterprises Vs State of Gujarat

GST - Petitioner has prayed for quashing and setting aside the order of detention dated 5th January 2020 passed by the respondent No.2 u/s 129(1) of the GST Act, 2017 and notice issued by the respondent No.2 dated 16th January 2019 u/s 130 of the GST Act in Form GST-MOV-10 - Petitioner also submits that the petitioner would file an appropriate application u/s 67(6) of the GST Act, 2017 for provisional release of the goods and conveyance; that they would approach before the authority to proceed with the adjudication process u/s 130.

Held: Petition is disposed of by directing the respondent authorities to consider the application to be made by the petitioner for provisional release of the goods and vehicle in accordance with law; that the respondent authorities will decide such application as expeditiously as possible, preferably within two weeks - Petition disposed of: High Court [para 3, 4]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-298-HC-KERALA-GST

Jilmon John Vs State Of Kerala

GST - Central Goods and Services Tax Act, 2017 - Whether petitioner is liable to pay the tax in terms of the GST as is claimed by the respondents?

Held: There is a stipulation contained under clause 44 of Ext.P1 tender inviting notice that, the Sales Tax as per Rules from time to time is liable to be paid by the petitioner and the rates quoted for various items remain unaffected by any changes that may be made from time to time at which such tax is levied -the case projected by the petitioner is that, as per the special condition, petitioner is liable to pay Value Added Tax at the rate of 4% -however, on a harmonious construction of clause 44 as well as special condition contained under Ext.P1, even though petitioner was only liable to pay tax at the rate of 4% when notice inviting tender was issued, if during the course of proceedings or even after execution of the agreement, if the tax is increased, petitioner is liable to pay the same as per the stipulations contained under clause 44 quoted above without insisting for any rate variation -so also the tender is to be submitted by a bidder taking into account various factors and components and a little bit of speculation is also required -when clause 44 was incorporated in Ext.P1 tender notification and the introduction of GST was under comprehension and in fact it was made without being introduced and, therefore, it cannot be said that, petitioner was not aware of the likelihood of legislation being introduced on and with effect from a future date -therefore, necessarily, petitioner ought to have visualised such a situation and the rates should have been quoted only in accordance with the same -it is also clear from Exts.R3(a) and R3(b), petitioner has quoted less than the probable amount of contract and according to the Special Government Pleader, petitioner wants now to wriggle out of the contract without causing any injury to him -GST is nothing but tax on supply of goods, supply of service and supply of goods and services, however, a homogeneous mixture of several of the indirect taxes under a single umbrella, having uniform rate throughout the country, on any goods or service covered by GST -therefore, the contention advanced by counsel for petitioner that, GST is not tax enabling the respondents to rely upon clause 44 of Ext.P1, is devoid of merits -it is also a condition liable to be undertaken by the petitioner, in order to execute the agreement -which thus means, petitioner is not at liberty to introduce any legal principle to his rescue so as to interfere with the rule of the game provided under Ext.P1 notice inviting tender, having an express stipulation for enhancement of rate of tax from time to time -therefore, evaluating the entire pros and cons and facts and circumstances of the case, the petitioner is not entitled to get any relief as is sought for in the writ petition since there was a clear stipulation that, petitioner is liable to pay tax increased from time to time -the writ petition has no sustenance, accordingly it is dismissed: HIGH COURT [para 15, 17]

- Writ Petition dismissed: KERALA HIGH COURT

MISC CASES

2020-TIOL-294-HC-DEL-MISC

Hetero Healthcare Ltd Vs UoI

DRUGS and Cosmetics Act, 1940 [Act] - The petitioners have filed the present petitions impugning a notification (No.S.O.4429(E)) issued by respondent no.1 dated 7.9.2018, proscribing the Combikit of (i) Azithromycin; (ii) Secnidazole; and (iii) Fluconazole [Combikit] - the impugned notification has been issued in exercise of powers under section 26A of the Act- it is the petitioners' case that Combikit is not a drug or a fixed drug combination [FDC], but comprises of three separate drugs, which are administered at separate times -it is further contended that the Combikit is only a convenient package of three separate drugs in question and, therefore, the same could not have been considered as FDC.

Held: In the present case, there can be no dispute that the Combikit is not a drug - the Combikit comprises of three different types of tablets: (i) One Tablet of Fluconazole 150mg; (ii) one Tablet of Azithromycin 1gm; and (iii) two tablets of Secnidazole 1gm tablet -the four tablets are packaged in a single strip and sold as the Combikit - the petitioner is licensed to manufacture each of the said formulations -it is also relevant to note that the batch number of each of the drugs is separate and is separately written on the strip as well as on the box in which the strip is packed - similarly, the date of manufacture and expiry of each of these tablets has been separately printed - in view of the above, there can be little doubt that the Combikit cannot be classified as a drug - it is also not a fixed drug combination (FDC)- vide letter dated 7.6.1999, the Drugs Comptroller General of India has stated that the Combikit is not a FDC and the petitioner was required to obtain a separate licence for manufacturing the drugs - it is also relevant to note that each of the three drugs forming a part of the Combikit are to be administered at different times and are not to be taken together - this also clearly establishes that the same cannot be treated as single drug or FDC - in view of the above, the provisions of section 26A of the Act are wholly inapplicable to the Combikit -it is apparent that there is a controversy as to whether there is any therapeutic justification for comprising the three drugs which are included in the Combikitand, there may be good reasons not to prescribe such therapy - however, the provisions of section 26A of the Act cannot be pressed into service for proscribing a therapy - as noticed above, the Combikit is not a drug and, therefore, a notification under section 26A proscribing the same is unsustainable -the Combikit cannot be sold except on a medical prescription prescribing all the three drugs, which are packed in a single strip - plainly, if that therapy is irrational for the indication, the necessary action would have to be taken against the medical practitioner prescribing the said therapy, however, recourse to section 26A of the Act is unavailable to prohibit prescription of a therapy -the issue relates to packaging of the three separate drugs in one single package - the said issue may also be addressed in the context of the regulations relating to packaging of drugs, if any - however, the powers under section 26A of the Act cannot be exercised to proscribe packaging of drugs in any particular manner -the impugned notification is, accordingly, set aside : HIGH COURT [para14, 15, 16, 18, 22, 23, 24, 25]

- Writ Petition disposed of: DELHI HIGH COURT

2020-TIOL-293-HC-MAD-VAT

Sangam Motors Vs ACCT

Whether transitional input tax credit of entry tax paid by local dealer who sells motor vehicles to the assessee, is permissible to the latter, as per Section 88(6)(a) of the Tamil Nadu Value Added Tax Act - NO: HC

- Assessee's writ petition dismissed: MADRAS HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-296-HC-MAD-ST

Innovative Security Solutions Vs CGST & CE

ST - Delay in passing the adjudication order - In the instant case, personal hearing was held on 15.11.2016 and the impugned order has been passed on 26.7.2018 (more than 20 months i.e., more than 1 & ½ years later) - in this regard, Circular No. 1053/2/2017-CX dated 10.3.2017 issued by the Central Board of Excise and Customs is of relevance - there is no disputation or disagreement before this Court that this Circular is operating - this Court is of the considered view that this is a fit case to remit the matter back to the respondent for redoing after affording an opportunity of personal hearing afresh to the writ petitioner the order assessing service tax - owing to all that have been set out, the following order is passed:(a) Impugned order being order dated 26.7.2018 bearing reference in Original No.24/2018 (R), made by the sole respondent is set aside -it is made clear that the impugned order is set aside solely on the ground of delay between the dates of personal hearing and the date of the order - in other words, no opinion or view is expressed on the merits of the matter(b) Respondent shall offer personal hearing to the writ petitioner after giving adequate advance notice to the writ petitioner(c) After the personal hearing, the respondent shall take into account the objections and materials placed before the respondent in the personal hearing and pass orders afresh(d) The aforesaid exercise shall be completed as expeditiously as possible and in any event within a period of eight weeks from the date of receipt of a copy of this order - this writ petition is disposed of with the above directions: HIGH COURT [para 11, 12, 13, 14]

- Matter remanded: MADRAS HIGH COURT

2020-TIOL-263-CESTAT-DEL

Satya Narayan Agarwal Vs CCGST

ST - The assessee is registered for providing Works Contract Service w.e.f. 01.06.2007 and regularly filed ST-3 returns and paid service tax - As part of a routine inquiry, the Revenue asked the assessee to produce TDS details pertaining to the relevant period - The assessee filed copy of Form 26AS in reply thereto and also produced copy of TDS certificates relating to the construction of the industrial and civil services and works contract service - Thereupon, the Revenue noted that the assessee had not paid service tax on the part of the turnover achieved through the main contractor - Considering the assessee's contentions, the Revenue opined that the assessee is liable as a sub-contractor to pay the service tax again on the turnover achieved through the main contractor - Hence the Revenue observed that the assessee was liable to pay duty short paid on the total taxable amount - It was also alleged that the assessee deliberately evaded the payment of tax by suppressing vital information from the Revenue - It was observed that the assessee deliberately did not reflect such amount in its return and as such had resulted in suppression of facts - SCN was issued proposing to raise duty demand with interest & imposition of penalties - On adjudication, such demands were confirmed & such findings were sustained by the Commr.(A).

Held - The issue regarding liability of sub-contractor, where the main contractor discharged the service tax liability, being the bone of contention, there were divergent views taken by different benches of the Tribunal - Besides, such issue referred to the Larger Bench was decided later in 2019 - Hence the element of suppression or fraud are not made out against the assessee and as such, the extended period of limitation is not available to the Revenue - Hence the demands raised merit being quashed: CESTAT

- Assessee's appeal allowed: DELHI CESTAT

CENTRAL EXCISE

2020-TIOL-297-HC-MUM-CX

CCE Vs Indian Oil Corporation Ltd

CX- (a) Whether in the facts and circumstances of the case, the CESTAT was right in holding that section 11D of the Central Excise Act, 1944 [Act] is not applicable in this case, when it has not controverted the finding of fact by the adjudicating authority that the process undertaken by the assessee amounts to manufacture and whereby, the assessee becomes a person liable to pay duty, in terms of section 11D of the Actread with Rule 4 of the Central Excise Rules, 2002 and as such the finding of the CESTAT is perverse?(b) Whether in the facts and circumstances of the case, the CESTAT was right in holding that section 11D of the Act is not applicable in this case when the evidence on record clearly establishes that the assessee, being a manufacturer of EBP and liable to pay Central Excise Duty, have collected Central Excise duty on the additional quantity of EBP blended and sold, without depositing the same to the Government Exchequer and as such the finding of the CESTAT is perverse?

Held: From the perusal of the impugned order made by the CESTAT, it is clear that the CESTAT has proceeded on the basis that the assessee in the present case had not collected any duty over and above the duty liable to be paid -on this basis, CESTAT concluded that the provisions of section 11D of the said Act, which, even otherwise, are penal in nature, were not attracted -in the present case, there is no consideration of whatsoever of the statement made by Shri Subbaraj, the representative of the assessee, whether in isolation or in the entirety -non consideration of relevant material on record is a ground for interference -this is not a case of re-appreciation or revaluation of material on record but this is a case where the material which both the parties regard as material, has not been adverted to, much less considered by the CESTAT -from the impugned order, it is apparent that there is no consideration of even the assessee's contention that the assessee was not at all liable for payment of any excise duty since the assessee is not at all involved in any manufacturing - since several aspects have also not been considered by the CESTAT or in any case the impugned order does not reflect that such aspects have been considered, the Court is constrained to set aside the impugned order and remand the matter for disposal afresh -accordingly, the Court sets aside the impugned order dated 17.7.2017 and remits the appeal No.E/1450/2007 to the CESTAT for disposal afresh in accordance with law and on its own merits -the CESTAT, is requested to endeavour to dispose of this appeal expeditiously -the appeal is allowed in the aforesaid terms : HIGH COURT [para 8, 11, 12, 13, 14]

- Matter remanded: BOMBAY HIGH COURT

2020-TIOL-262-CESTAT-HYD

HIL Ltd Vs CCT

CX - The assessee-company was served SCN proposing to deny cenvat credit claimed on several items - Demand was raised for recovery of the same with interest - The demand and interest was confirmed by the lower authorities - On appeal, the Tribunal allowed partial relief, disallowing cenvat credit on MS items used for construction of shed - Penalties were set aside, nonetheless - The matter went to the lower authorities for computation of interest, as per mandate of Rule 14 of CCR 2004 - The rule 14 had been amended to the effect that interest became payable on Cenvat credit taken and utilised wrongly instead of taken or utilised wrongly as was applicable prior to amendment - Hence the present appeal assails the demand for interest raised against the assessee.

Held - The order of the Tribunal in the first round of litigation was not challenged by the assessee - Such order set aside the penalties and confirmed the demand partly to the extent of ineligible cenvat credit on MS items used for shed, along with interest - The order does not specify the manner in which the interest is to be calculated or the period for which it is to be levied - This is the usual practice in orders passed by the Tribunal and actual calculations are left to the lower authorities - There is no indication that the interest should be calculated upto Jan 31, 2013 - There is no indication in the order that the interest be calculated only up to March 16, 2012 - A plain reading of the order shows that it was left to the lower authorities to calculate interest applicable - Hence the interest must be calculated as per law up to March 16, 2012 only in respect of Cenvat credit which has been taken but not utilised and thereafter only if Cenvat credit is taken and also utilised - From the records at hand, it cannot be ascertained whether credit has only been taken or if it has also been utilised in the relevant period - Hence the matter is remanded for re-calculation of interest from the due date up to March 16, 2012: CESTAT

- Case remanded: HYDERABAD CESTAT

CUSTOMS

2020-TIOL-295-HC-MP-CUS

Kirit Shrimankar Vs CCGST & CE

Cus- SCN cum demand notice was issued to the petitioner alleging that the petitioner in association with others had exported fabrics and ready-made garments by inflating the export value so as to avail undue and otherwise inadmissible export benefits - it was also alleged that said exports were made in proxy dummy, the petitioner was the actual exporter the same - it was proposed to reject the declared FOB value of such exports and to re-determine the same and to hold the petitioner as exporter of said goods in terms of section 2(20) of the Customs Act and to recover exports benefits i.e. duty drawback granted towards the past exports as well as to impose penalty - Aggrieved by the Order passed by Commissioner, petitioner is before High Court.

Held: In the SCN cum demand notice, the material on the basis of which the custom authorities have relied was set out and it was also given to the petitioner to give a suitable explanation -it is nobody's case that the petitioner was not permitted to participate in the proceedings -he has appeared before the authorities on numerous occasions -all his objections have been considered and, thereafter, a very exhaustive order has been passed in the matter -the counsel for the petitioner has vehemently argued that principles of natural justice and fair play have not been followed and his contention is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them -the apex Court in the case of Kanungo & Company - 2002-TIOL-252-SC-CUS-LB has dealt with a similar controversy and at paragraph no.12 of the aforesaid judgment held that " …………. the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed lo be cross-examined by them on the statements made before the Customs Authorities……….." - the judgment delivered in the case of Kanungo& Company (supra) holds the field good as on date -the Commissioner has dealt with the issue of summoning all the witnesses before the adjudicating authority and he has assigned cogent reasons in the matter -the petitioner wanted to examine as many as 263 individuals from the different parts of the country and by a detailed reasoning assigned by the Commissioner, he has justified his action in not summoning the witnesses as prayed by the petitioner -this Court is not commenting upon the aforesaid issue and upon the findings given by the Commissioner, as the petitioner is having an alternative remedy of preferring an appeal before the CESTAT - this Court is of the opinion that as the order has been passed by an authority competent under the statute to pass an order and as the order has been passed after hearing the petitioner in detail, the present petition deserves to be dismissed on the ground of availability of alternative equally efficacious remedy -no case for interference is made out in the matter - accordingly, the writ petition stands dismissed -in the present case, the petitioner has referred to a writ petition filed before the Bombay High Court and the respondent while submitting reply has not commented upon the writ petition preferred by the petitioner before the Bombay High Court -resultantly, the respondents are directed to ensure in future, the complete parawise reply is filed in all the matters in respect of the specific allegations and averments made in the writ petition -with the aforesaid, writ petition stands dismissed : HIGH COURT [para15, 16, 18, 19, 20, 22, 23, 24]

- Writ Petition dismissed: MADHYA PRADESH HIGH COURT

2020-TIOL-264-CESTAT-MUM

Noble Marine Traders Vs CCE

Cus - Goods have been seized from the godown/premises which are not located in the customs area - Also on the goods seized there are no markings etc., to establish that these goods were of foreign origin - It is also not disputed that these goods were not amongst the notified goods under Section 123 of Customs Act, 1962 - In absence of the notification, notifying the goods under Section 123, the burden to prove that the impugned goods were of foreign origin and were imported/ cleared from the customs area illicitly without payment of duty, is on the revenue - Department has failed to discharge the initial burden cast on them to prove that the goods were illicitly cleared by the appellants - impugned order set aside and appeals allowed: CESTAT [para 4.2, 5.1]

- Appeals allowed: MUMBAI CESTAT

NEWS FLASH

Telangana to submit fresh proposals on Hyderabad-Warangal and Hyderabad-Nagpur Industrial Corridors: Goyal

FM speculates over 80% individual taxpayers may opt for new scheme

Goyal says India not negotiating comprehensive trade pact with USA