2020-TIOL-NEWS-078, Dated: Thursday, April 02, 2020

2020-TIOL-NEWS-078 | Thursday April 02, 2020

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DIRECT TAX


	2020-TIOL-717-HC-P&H-IT Huawei Telecommunications India Company Pvt Ltd Vs UoI Whether mere pendency of proceedings u/s 143(2) is enough to withhold refund - NO : HC Whether withholding of refund is justified in the absence of any material and reason for forming opinion that refund is likely to adversely affect revenue - NO : HC - Assessee's writ allowed: PUNJAB AND HARYANA HIGH COURT 2020-TIOL-718-HC-KERALA-IT GCDA Employees Pension Fund Trust Vs CIT Whether mere possibility of two views on any issue can be a ground for review - NO : HC Whether fact that employees of GCDA are contributing to Pension Fund and getting pension, would not constitute a mistake apparent from the face of record and thus would not come within the review jurisdiction of Court - YES : HC - Assessee's review petition dismissed: KERALA HIGH COURT 2020-TIOL-715-HC-AHM-IT PR CIT Vs Pratham Developers On appeal, the High Court observes that the grounds raised by the Revenue do not merit being raised on account of the issues having been settled in favor of the assessee in the assessee's own case for previous AYs. - Revenue's appeal dismissed: GUJARAT HIGH COURT 2020-TIOL-714-HC-AHM-IT PR CIT Vs Nageshwar Enterprises Whether additions are valid if they are based solely on statements taken from the assessee & without any evidence to corroborate the same - NO: HC - Revenue's appeal dismissed: GUJARAT HIGH COURT 2020-TIOL-412-ITAT-SURAT Adinath Textile Vs ITO Whether disallowance of expenses on account of them being unexplained investment or expenditure is tenable, if they are recorded in balance sheet as being capital expenditure & such expenditure has not been claimed in the P&L a/c - NO: ITAT - Assessee's appeal allowed: SURAT ITAT 2020-TIOL-411-ITAT-AHM Dashrathbhai G Patel Vs DCIT Whether AO is not vested with the power to make reference to the DVO u/s 142A to challenge the extent of overstatement in the value of the property adopted by the assessee-seller - YES: ITAT Whether where a property has been acquired in an AY prior to the relevant AY in which the addition u/s 69 is proposed, reference u/s 142A to the DVO to ascertain the correctness of the cost of acquisition of the asset cannot be made - YES: ITAT Whether once a reference u/s 142A is made, the DVO cannot issue notice u/s 55A independently without authorization from the AO to ascertain the fair market value of the property - YES: ITAT - Assessee's appeal allowed: AHMEDABAD ITAT 2020-TIOL-410-ITAT-VIZAG ACIT Vs Sri Lalitha Enterprises Industries Pvt Ltd Whether findings of CIT(A)'s setting aside order passed upon re-assessment, warrant any interference with, where such proceedings are found to be based on change of opinion - NO: ITAT - Revenue's appeal dismissed: VISAKHAPATNAM ITAT 2020-TIOL-409-ITAT-MUM ITO Vs IL And FS Investment Trust V Whether it is a fit case for remand so as to determine the exact status of the assessee, as between being a trust or an Association of Persons, considering that the same is necessary to settle other connected issues - YES: ITAT - Case remanded: MUMBAI ITAT 2020-TIOL-408-ITAT-MUM Abhishri Packaging Pvt Ltd Vs DCIT Whether assessee can follow a different method of valuation for accounting of acquisition of business of erstwhile proprietorship firm or computation of net-worth for different purposes and such a method is prescribed under AS-14 - NO: ITAT - Assessee's Appeal dismissed: MUMBAI ITAT

GST CASE

2020-TIOL-725-HC-KERALA-GST

Pinnacle Motor Works Pvt Ltd Vs State Tax Officer

GST - On account of severe financial crisis, petitioner has defaulted filing of return from November, 2018 - 1st respondent has issued Ext.P1 order of assessment under Sec.62 of the Act fixing the tax liability at exorbitant figures - nonetheless, petitioner has already regularised the return for the defaulted month as seen from Ext.P2 - Petitioner has filed the present petitions seeking quashing of the said order passed by the first respondent and also grant other incidental reliefs including cost of the proceedings.

Held: It is seen that the matter in issue raised in these cases is fully covered against the petitioners and in favour of the respondent revenue as per the dictum laid down by the Division Bench of this Court in the judgment dated 23.10.2019 in W.A.No.2180/2019 - 2019-TIOL-2452-HC-KERALA-GST and other connected appeals, wherein it has been held in paragraph 4 thereof that against the impugned orders the appellants have got an effective remedy by way of statutory appeal; that there exists no circumstances to quash the impugned orders in exercise of the jurisdiction vested under Article 226 of the Constitution of India, by permitting the appellants to bypass such effective remedy available - since the writ petitions are bereft of any merit, the same are dismissed: High Court [para 8]

- Petitions dismissed: KERALA HIGH COURT

2020-TIOL-724-HC-KERALA-GST

Industrial And Laboratory Equipment Company Vs Assistant State Tax Officer

GST - Petitioner, inter alia, seeks directions for release of goods and vehicle detained by the respondents.

Held: It is ordered that the 1st respondent shall forthwith release the detained vehicle and goods which is the subject matter in the impugned Ext.P5(a), detention order, on the petitioner furnishing bank guarantee to the value of the amounts shown in the impugned Ext.P7 proceedings which comes to a total amount of Rs.66,528/- - Further it is ordered that, thereafter the 1st respondent will ensure that the adjudicated proceedings pursuant to Ext.P5 impugned proceedings may be finalized by the said officer after affording reasonable opportunity of being heard to the petitioner through authorised officers or counsel if any without much delay, preferably within a period of 4 weeks - Petition disposed of: High Court [para 4]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-723-HC-KERALA-GST

Vimal Raj Vs State Tax Officer

GST - Petitioner contends that the impugned orders are illegal and arbitrary as there cannot be any orders passed against a deceased under the statute.

Held: It appears that the respondent does not raise any serious dispute as to the factual assertion made by the petitioner that the assessee concerned (who appears to be the paternal grandfather of the petitioner herein) is said to be one of the legal heirs of the deceased assessee as the petitioner's father who is the son of the assessee has died as early as on 27.03.2018 as evident from Ext.P3 death certificate issued by the Registrar of Births and Deaths, which is much before the rendering of the impugned Ext.P3 series of the assessment orders issued in March 2019 - Since, that appears to be the undisputed position, it is only to be held that Ext.P3 series of assessment orders rendered as late as in March 2019 has been passed as against an assessee who is already dead by then and, therefore, the impugned assessment orders is a nullity in the eye of law - 1st respondent will be at liberty to take fresh action in the said assessment proceedings, after ascertaining from the competent Revenue Officials as to who all are the legal representatives or legal heirs of the said deceased assessee and then the respondent will be at liberty to render reasonable opportunity of being heard to such legal representatives and then finalise the assessment proceedings in the manner known to law - Petition disposed of: High Court [5, 6]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-722-HC-KERALA-GST

R Kavitha Vs Assistant State Tax Officer

GST - Petitioner seeks release of goods and vehicle detained by the respondent.

Held: Taking note of the facts and circumstances of this case as disclosed from the pleadings and materials on record, it is ordered that the goods and vehicle detained pursuant to Ext.P4 series of orders, shall be released by the 1st respondent to the petitioner on the petitioner furnishing bank guarantee for the value of the amounts shown in those orders - Thereafter, the 1st respondent may finalise the adjudication proceedings pursuant to the impugned Ext.P4 series of orders, after affording reasonable opportunity of being heard to the petitioner and orders may be passed finalising the said proceedings, without much delay, preferably within a period of 4-6 weeks - Petition disposed of: High Court [para 4, 5]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-721-HC-KERALA-GST

Khamal Rameshbhai Valabhai Vs State Of Gujarat

GST - Writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount and the proceedings, as on date, are at the stage of show cause notice, u/s 129 of the CGST Act and which proceedings shall go ahead in accordance with law - It shall be open for the writ applicant to point out the pronouncement of this Court in the case of Synergy Fertichem Pvt. - 2019-TIOL-546-HC-AHM-GST and in particular rely on the observations made by this Court in paragraph Nos.99 to 104 of the said judgment - It is now for the applicant to make good his case that the show cause notice, issued in GSTMOV- 10, deserves to be discharged – Petition disposed of: High Court [para 5 to 7]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-720-HC-AHM-GST

Batta Narendrabhai Meghabhai Vs State Of Gujarat

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-63-AAR-GST

Kamalavadani Udayakumar

GST - Applicant has stated that she possesses a piece of land in the State of Tamil Nadu and intends to obtain a GST registration to engage in the business of constructing buildings for commercial use and leasing them to companies - construction work is to be sub-contracted to different service providers such as construction companies, architects and other service providers and some of these contracts would be works contract while others are stand-alone contracts with professionals such as architects etc. - applicant would be receiving GST invoices from service providers and works contractors - Applicant would be charging GST @18% on the activity of leasing - applicant wishes to know as to whether Input Tax credit can be claimed on Works Contract services when the output service is not for the purpose of sale but leasing out.

Held: Vide letter dated 13.12.2019, the State Tax Officer has stated that on verification of the stated address of the applicant, it was found that Tvl.Pifzer Pharmaceuticals were running their business at the address mentioned by the applicant in their application and it was ascertained from the Manager of the concern and the watchman of the building that no such person in the name of Smt. Kamalavadani Udayakumar (the applicant) lived at that place - applicant has sought permission for withdrawal of the application stating that she has gone through the decision of the AAR in Sree Varalakshmi Mahal LLP and which involve similar facts - application is, therefore, disposed of as withdrawn: AAR

- Application disposed of: AAR

MISC CASE

2020-TIOL-719-HC-AHM-VAT

Rajashree Polyfil Vs State Of Gujarat

Whether assessee is entitled to refund of amount of 9% of tax charged by IOCL without giving benefit of remission order - YES : HC

- Assessee's petition allowed: GUJARAT HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-526-CESTAT-BANG

Trinity Arcade Pvt Ltd Vs CCE, C & ST

ST - From 1st June, 2007, the appellant opted to pay Service Tax under "Works Contract Composition Scheme" and admittedly, they have paid Service Tax under the said Scheme, on the gross amount valued, 'including material component' - Revenue disputes the tax paid under Composition Scheme on the ground that as the appellant was paying Service Tax on the same service prior to 01.06.2007 under the head 'Construction of Complex Service', they cannot change their classification w.e.f. 1st June, 2007 - appeal before CESTAT.

Held: Issue is covered in favour of the appellant by the ruling of the Supreme Court in the case of L&T - 2015-TIOL-187-SC-ST - impugned order set aside - appeal allowed with consequential benefits: CESTAT [para 4]

- Appeal allowed: BANGALORE CESTAT

2020-TIOL-524-CESTAT-MUM

NMC Industries Pvt Ltd Vs CST

ST - The grievance of the appellant against the impugned order, which has confirmed recovery of ST amounting to Rs. 53.67 lakhs , along with interest thereon, besides imposing penalty of like amount, is the non-consideration of their claim of exclusion from taxability as provider of 'works contract service' and 'commercial and industrial construction service' for the period from 2009-10 to 2012-13.

Held: Determination of this dispute is limited to the exclusion from tax, under either one of the entries resorted to in the impugned order, claimed as available to railway construction - the projects pertained to 'railway construction'; however, according to the adjudicating authority, who placed reliance on the definitional distinction between 'government railways' and 'non-government railways' in Railway Act, 1989 and through circuitous reasoning derived from selective rejection of the lexical meanings of some of the expressions in the definition, the exclusions intended by Parliament could not be extended to private operations - the Authorised Representative of Revenue urged the Bench to endorse the proposition of the adjudicating authority that the exclusions were intended to ensure that the said tax was levied from all commercially oriented construction apparent in the description of the taxable service - the Bench cannot concur with the Authorised Representative of Revenue as the conclusion of the adjudicating authority lacks legal soundness - the Bench is unable to comprehend the resort to Railways Act, 1989 for a broader understanding of expression 'railways' in the absence of permissible referral in section 65(105)(zzzza) or (zzp), or, for that matter, anywhere in section 65, of Finance Act, 1994 - in the absence of such authority, it is the common parlance understanding that should have been adopted - even if a conscientious disposal of the allegations did prompt such recourse, it should have been appreciated by the adjudicating authority that statutes are framed with distinct objectives and that the definitions contained therein cannot have application de hors the operative provisions of such statutes - the distinction between 'government railways' and 'non-government railways', that is the pivot of the conclusions in the impugned order, has been embodied in Railway Act, 1989 as that is the statutory basis for the structure and composition of railway administration - to read down any distinction, other than that as enacted, would be a foray into impermissible, and unknown, territory - the 'constructions' excluded from taxability under both the entries in section 65(105) of Finance Act, 1994 are, plainly, unqualified - the legislative intent, therefore, cannot be circumscribed by encroachment, or restrictive interpretation, ventured upon by tax authority - this breach of jurisdiction by the adjudicating authority does, for that very reason, not find favour with the Bench - the conclusion of the Bench is, therefore, consistent with the stand of the Tribunal in the decisions cited by Counsel for the appellant - in the circumstances, the Bench has no hesitation in setting aside the impugned order and allowing the appeal: CESTAT [para 4, 6, 7, 8, 9, 10]

- Appeal allowed: MUMBAI CESTAT

CENTRAL EXCISE

2020-TIOL-523-CESTAT-KOL

MSP Sponge Iron Ltd Vs CCGST, CE & C

CX - Allegation of clandestine manufacture and removal without payment of central excise duty - Central Excise duty demand of Rs.48,81,921/- is confirmed along with interest and equivalent penalty and the said order is affirmed by Commissioner(Appeals), hence appeal to CESTAT.

Held: In the present case, no such investigation has been conducted by the department qua purchase of raw material, use of electricity, sale of final products, payment, realization of sale proceeds, mode and flow back of funds - mere deposit of money at the time of investigation would not amount to acceptance of allegations of clandestine manufacture and removal as alleged by the department. It is well settled law that, payment of money at the time of investigation would be treated as a deposit under protest - statement recorded under Section 14 of the Central Excise Act cannot be relied upon as an evidence unless the learned Adjudicating Authority follow the procedure prescribed under Section 9D of the Act - allegation of clandestine manufacture and removal in the present case is based on the (a) computer generated sheets and (b) loose papers which cannot be relied upon as evidence, inasmuch there is no indication in the orders passed by the lower authorities that the appellant was maintaining computerised records of their production and clearance of goods and whether any other computerised sheets were traced out in the files withdrawn - there is no compliance of Section 36B of the Act - burden to prove allegation of clandestine manufacture and removal is heavily on the department and has to be discharged by producing clinching evidence on record, which has not been discharged by the department in the present case - impugned order is set aside and appeal is allowed: CESTAT [para 7 to 11]

- Appeal allowed: KOLKATA CESTAT

CUSTOMS

2020-TIOL-716-HC-MAD-CUS

Vas Noorullah And Company Vs CC

Cus - Vide impugned order, the Tribunal upheld the imposition of redemption fine and applicable export duty and recovery of drawback in the case of the Assessee - appeal to High Court.

Held: Such ex-post facto obtaining of a fresh Report by the Assessee/Exporter, is of no relevance, because the fact remains that on the basis of the CLRI Report obtained in the contemporary period of actual export by the Assessee/Exporter, it was found that what was exported by the Assessee was not 'Nubuck Leather' as the process of snuffing to make 'Nubuck Leather' was not carried out - the subsequent change of declaration given by the Assessee to treat the same as 'Softy Upper Leather' vide letter dated 8.4.2011, all the more confirms the earlier mis-declaration in the relevant documents at the time of actual export - the findings of facts by the Tribunal based on the aforesaid material are binding on this Court and cannot be said to be perverse in any manner and, therefore, no error found in the order passed by the Tribunal - consequently, the Appeal filed by the Assessee is without any merit and the same is liable to be dismissed and is, accordingly, dismissed: High Court [para 4, 5]

- Appeal dismissed: MADRAS HIGH COURT

2020-TIOL-682-HC-MUM-CUS

GKB Ophthalmics Ltd Vs CC

Cus - The present appeal contests duty demand raised in respect of wastage/brokerage available within the factory premises of the assessee, which is an EoU - The Revenue alleged that the assessee had violated the SION norms - The assessee claimed that the wastage was neither exported nor removed from the bonded warehouse - Such demands were sustained by the Tribunal - Hence the present appeal.

Held - The assessee raised the plea that the demand was premature, considering that the wastage was not removed from the warehouse and was lying therein and that such fact was also acknowledged in the SCN issued to the assessee - The assessee also claimed that the SION norms applied only to advance license holders and not to the assessee since it was an EoU - It is seen that such issues were not considered by the Tribunal - Moreover, the assessee filed rectification applications pointing out that the Govt had enhanced the wastage percentage limit to 15% from 9% - The Tribunal observed that such directions of the ministry were not issued when the original judgment and order was passed and so no case for rectification was made out - Hence it is seen that the two main contentions of the assessee were not considered by the Tribunal - Hence the subject order of the Tribunal merits being set aside and the matter is restored to the Tribunal for reconsideration: HC

- Assessee's appeals allowed: BOMBAY HIGH COURT

HIGHLIGHTS (SISTER PORTAL)

TII

TP - Safe harbour rules can be applied retrospectively to AYs earlier than 2014-2015: ITAT

TP -If there is reasonable belief that income has escaped assessment, statement obtained on survey proceeding need not be proved to hilt for issuing notice for reopening assessment u/s 148: ITAT

TP - it is fit case for remand so as to enable TPO to examine additional evidence furnished by assessee in respect of services availed from AEs outside India: ITAT

TIOL CORPLAWS

IBC - Proceedings are pending before DRT or any other forum, it will not extend period of limitation : NCLAT

IBC - If parties in dispute arrive at settlement and Committee of Creditors is not constituted till date then admitted application can be dismissed: NCLAT

NEWS FLASH

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March month manufacturing PMI predictably down to 51.8 from Feb month's 54.5

Addl charge of Member (Customs) goes to Mr S M Bhatnagar

COVID-19 - Indian tally moves close to 2000 including 143 cured & discharged + Lockdown partly defeated with detection of 386 positive cases from Tablighi Jamaat's Delhi gathering

Govt permits more time for payment of third party insurance premium for motor vehicles & also health insurance premium

COVID-19 - Latin America canvas dominated by Brazil with 7000 cases; Chile 3000; Ecuador 2800 & Peru 1323 cases

COVID-19 - Global tally jumps to 9.36 lakh cases with 47300 deaths + Confirmed cases gallop to 2.15 lakh in USA & 30,000 in UK + S Korea reaches 10,000-mark with 169 deaths

Govt notifies Production Linked Incentive Scheme for large-scale electronic manufacturing + incentive for manufacturing of electronic components & Semiconductors + Cluster Scheme + addition of product categories to Schedule

India reports 386 new cases - Tally goes up to 1637 with 38 deaths; Maharashtra accounts for 322 cases

Non-subsidised LPG cylinder price reduced by Rs 61.5 in Delhi

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