2020-TIOL-NEWS-041 Part 2, Dated: Tuesday, February 18, 2020

2020-TIOL-NEWS-041 Part 2 | Tuesday February 18, 2020

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DIRECT TAX


	2020-TIOL-55-SC-IT PR CIT Vs Standard Fireworks Pvt Ltd In writ, the Apex Court condones the delay and dismisses the Revenue's Special Leave to Petition. - Revenue's SLP dismissed: SUPREME COURT OF INDIA 2020-TIOL-401-HC-MAD-IT Salem Sree Ramavilas Chit Company Pvt Ltd Vs DCIT Whether treating cash collected by a chit fund ahead of demonetisation period as unaccounted money u/s 69A due to being unusual through e-assessment without giving an opportunity to the assessee to explain the nature of transaction, makes the assessment erroneous & warrants remand of case before the AO- YES: HC - Assessee's writ petition dismissed: MADRAS HIGH COURT 2020-TIOL-387-HC-MUM-IT Procter And Gamble Hygiene And Healthcare Ltd Vs CIT On appeal, the High Court remanded the matter back to the ITAT to hear it afresh, allowing the prayer for condonation of delay. - Case remanded: BOMBAY HIGH COURT 2020-TIOL-386-HC-MAD-IT PR CIT Vs Sree Gopalakrishna Fabrics On appeal, the High Court dismisses the appeal due to low tax value, by following the limits prescribed in CBDT Circular No.17/2019. - Revenue's application dismissed: MADRAS HIGH COURT 2020-TIOL-385-HC-AHM-IT PR CIT Vs Western Agri Seeds Ltd Whether non-refundable upfront fee paid for acquiring license for the purpose of business is a revenue expenditure - YES: HC - Revenue's appeal dismissed: GUJARAT HIGH COURT 2020-TIOL-384-HC-KAR-IT Yamakanmardi Laxmi Vs ITO Whether a cooperative society registered u/s 2(e) of the Karnataka Souharda Sahakari Act, shall obtain the benefit u/s 80P of the Income Tax Act, bearing a similar definition as 'co-operative society' registered u/s 2(19) of the act- YES: HC - Assessee's application allowed: KARNATAKA HIGH COURT 2020-TIOL-260-ITAT-MAD DCIT Vs Ramco Industries Ltd Whether the expenditure incurred for replacing any machinery in the textile mill shall be treated as capital expenditure & not revenue expenditure - YES: ITAT - Revenue's appeals dismissed: CHENNAI ITAT

GST CASE


	2020-TIOL-400-HC-MUM-GST Great Sands Consulting Pvt Ltd Vs UoI GST - Petitioner has challenged the order dated 1 January 2020 cancelling their registration - Petitioner submits that it is apparent from the impugned order that it is primarily based on the ground that the Petitioner has not given any reply to the show cause notice; however, the petitioner states that they had submitted to the State Tax officer a reply on 30 December 2019 and accordingly the Bench had sought ascertainment of the facts involved - Counsel for Revenue confirmed that the reply has been endorsed on 30 December 2019. Held: It is quite obvious that the impugned order has been passed without considering the reply and, therefore, the impugned order will have to be set aside and the proceedings will have to be restored to the stage of show cause notice - Impugned order dated 1st January 2020 is set aside and proceedings are restored to the stage of issuance of show cause notice - Petitioner to appear before the State Tax Officer as on the date specified by the State Tax Officer - if the Petitioner is entitled to in law to take steps to file returns, it is always open to the Petitioner to do so: High Court [para 5 to 8] - Petition disposed of: BOMBAY HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-312-CESTAT-KOL

Indian Institute For Production Management Vs CCE, C & ST

ST - During the relevant period, duty demand was raised under the category of Commercial Training or Coaching Services - Further demand was confirmed under the category of Management Consultancy Services on the value of reimbursable expenses received by the assessee during the relevant period - On appeal, the Commr.(A) sustained the demands with interest and penalties u/s 76 & 78 of the Act in respect of both the categories.

Held - The demand raised in respect of reimbursable expenses clearly is unsustainable since the Service Tax (Determination of Value) Rules, 2006 came into effect w.e.f. 19.04.2006, whereas the period of dispute is Oct 2001 to March 2006 - Since the rules are substantive in nature, they cannot be given retrospective effect, as held by the Apex Court in UOI Vs. Inter Continental Consultants and Technocrats Pvt. Ltd. - Besides, Rule 5 of the Service Tax (Determination of Value) Rules, 2006 has been held to be ultra vires - Hence the demand raised in this regard is set aside: CESTAT

Held - The case of the assessee is squarely covered by the decision in CCE Vs. Ashu Exports Pvt. Ltd. wherein it was held that courses imparted in procedural and practical skill based training in areas such as export-import management, retail management and merchandising would be entitled to exemption under Notification No.9/2003-ST and Notification No.24/2004-ST - In Canan School of Catering & Hotel Management Vs. CCE it was held that assessee engaged in providing Commercial Training or Coaching Services, which are vocational courses in a specific area and are not general academic courses - Hence they were exempted - However, it is difficult to accept the assessee's contention that in absence of validation clause in the Finance Act 2010, the retrospective amendment to Section 65(105)(zzc) would not affect the assessee's case - There is force in the assessee's contentions that no offence and penalty could be treated with retrospective effect and that extended period of limitation cannot be invoked in such facts and circumstances - The appeals be disposed of in such terms: CESTAT

- Assessee's appeals allowed: KOLKATA CESTAT

CENTRAL EXCISE

2020-TIOL-310-CESTAT-DEL

Sona Plastic Udyog Vs Commissioner of CGST

CX - The assessee is engaged in manufacturing various plastic items - Based on certain intelligence, the Revenue searched its premises whereupon another unit was found to be functioning from the same premises - It was observed that both units shared a boundary wall and manufacturing unit - A power connection in the name of the other unit and a tube well were discovered too - The Revenue opined that records of bith manufacturing units was kept in one common office in the premises and there was no segregation of raw material or finished goods - It was thus concluded that the same belonged to more than one entity & was stored at the common shop floor - During search, the Revenue also found loose slips of paper containing details of sale of various products without issuing invoices - Thus the Revenue opined that the assessee indulged in clandestine manufacture and clearance of goods without issuing invoices or without payment of duty - SCN was issued proposing to confiscate such goods seized, impose personal penalty on the Authorised Signatory for both units & raising duty demand with interest and penalty - The proposals in SCN were confirmed upon adjudication.

Held - To allege clandestine removal on part of the assessee and to deny exemption, the Revenue clubbed the clearance of the assessee with that of another unit - It is seen that no SCN was issued to the other unit, even though a notice was served to the individual who is alleged to be its proprietor as well as proprietor of the assessee-company - Considering the settled position of law in this regard, the demand cannot sustain for want of service of SCN to the alleged unit whose clearance is proposed to be clubbed with that of the assessee - Moreover, the other unit cannot be termed as a dummy unit of the assessee, considering that the other unit was in existence much prior to the assessee - Besides, the plastic products manufactured by both are altogether different and involve the use of different raw materials - Moreover, the Revenue also failed to prove the financial dependence of the other entity upon the the assessee - Given the lack of common funding or financial flow back, the two units cannot be treated as one and their clearances cannot be clubbed - All other evidence shows that the two units are distinctly and independently existing irrespectve of being in the same premises and sharing an office room or storage room - Considering that the Revenue failed to prove financial dependence of the other unit upon the assessee or that both units produce common goods, the other unit has wrongly been confirmed as being a dummy unit of the assessee - Hence the clubbing of clearances is not sustainable - As the clearances of both units is lesser than Rs 1.5 crores, the benefit of SSI exemption cannot be denied: CESTAT

- Assessees' appeals allowed: DELHI CESTAT

CUSTOMS

2020-TIOL-399-HC-AHM-CUS

Avon Appliances Pvt Ltd Vs UoI

Cus - Challenge by the writ applicant is with regard to the inaction on the part of the respondents in not issuing a letter / certificate clarifying whether M/s. Electrotherm (India) Limited located within the jurisdiction of the respondent No.3 has utilised the invalidation letter dated 21st October 2004 issued by the respondent No.2 for the supply of High Frequency Induction Heating Equipment to the writ applicant - It is the case of the writ applicant that despite various reminders, no heed has been paid to the requests of the writ applicant.

Held: It appears from the letter dated 22nd October 2019 addressed by the Assistant Director General of Foreign Trade to the writ applicant that the matter is under consideration - However, Bench directs the Additional Director General of Foreign Trade to expedite the matter and furnish the necessary information asked for by the writ applicant at the earliest - Bench hopes and trusts that the entire chapter is over within a period four weeks - writ application disposed of: High Court [para 6, 7]

- Application disposed of: GUJARAT HIGH COURT

2020-TIOL-309-CESTAT-MUM

Shyam Jee Prepaid Services Vs CCE

Cus - The assessee imported hot rolled wire rods and paid 4% SAD leviable on the same by debiting Focus Product Scheme scrips - In terms of notfn 102/2007-Cus, if the imported products are subsequently sold on payment of VAT and the producer of the goods does not avail the CENVAT credit of the same, the importer is entitled to refund of SAD so paid at the time of import of goods - In terms of said scheme, assessee applied for refund - The same was sought to be denied by Revenue on the ground that SAD has not been paid in cash but through scrips and as such the amount cannot be refunded - The said order was challenged by assessee before Commissioner (A) and strong reliance has been placed on Bombay High Court judgement in Allen Diesels India Pvt. Ltd. 2016-TIOL-968-HC-DEL-CUS - The appellate authority has not followed the Delhi High Court decision by observing that the circular no. 06/2008, 10/2010 and 18/2013 stands stuck down by High Court but the High Court has not considered the DGFT public notice no. 6 RE/2013 inasmuch the same was not brought to the notice of the High Court - In a sense, Commissioner (A) is finding fault with the judgment of the Delhi High Court that since the said circular was not brought to the notice, the Judgement is not correct - The said action on the part of Commissioner (A) amounts to contempt of High Court inasmuch as non-following of a judgment of superior courts by finding faults in the same, is admittedly not in accordance with the legal adjudication proceedings - Commissioner (A) being a senior officer of the Revenue should have been aware of the legal precedent of following the higher courts decision irrespective of his personal views of the judgment being correct or otherwise - The impugned order is set aside: CESTAT

- Appeal allowed: MUMBAI CESTAT

HIGHLIGHTS (SISTER PORTAL)

TII

TP - ALP adjustment u/s 92CA(3) cannot claim deductions u/s 10A or 10B: ITAT

TP - Rate of Royalty paid for a Trademark shall be governed by similar rate adopted by assessee in prior period: ITAT

TIOL CORLAWS

Competition: In absence of material evidence, mere imposition of discriminatory conditions ipso facto establishes exercise of dominant position by seller: CCI

IBC - NCLT cannot refuse application u/s 7 filed for realisation of decretal amount on ground that applicant should have taken steps for filing execution case in civil court: NCLAT

Arbitration - Award should be read as whole because unsuccessful party cannot be permitted to draw upon isolated observations in award to infer inconsistencies and infirmities: HC

NEWS FLASH


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