2020-TIOL-822-HC-KAR-IT

CIT Vs Hewlett Packard India Sales Pvt Ltd

Whether entire quantum of non-compete fee paid by a company can be treated as being revenue expenditure, considering that no capital asset is created therefrom - YES: HC

- Revenue's appeal dismissed: KARNATAKA HIGH COURT

2020-TIOL-821-HC-P&H-IT

Madan Lal Bassi Vs CIT

Whether court would interfere if issues involved are pure questions of fact and conclusion drawn by subordinate authorities are based on evidence - NO : HC

- Order passed in favour of Revenue: PUNJAB AND HARYANA HIGH COURT

2020-TIOL-800-HC-AHM-IT

PR CIT Vs Kintech Synergy Pvt Ltd

Whether the entire quantum of purchases made from the grey market is to be disallowed - NO: HC Whether therefore such disallowance can be restricted to the differential amount between the actual price of the goods and the expenditure claimed on the basis of bogus bills - YES: HC

- Revenue's appeal dismissed: GUJARAT HIGH COURT

Whether provisions of Section 41(1) are applicable where the assessee did not claim deduction in respect of unsecured loan obtained by it - NO: HC

Whether the provisions of Section 41(1) are applicable only when the assessee derives any benefit from the waiver of such liability - YES: HC

- Revenue's appeal dismissed: GUJARAT HIGH COURT

PR CIT Vs Mohmed Shakil Mohmed Shafi Mutwali

Whether the writ court's intervention is warranted in respect of well-founded orders passed by the CIT(A) and the Tribunal in respect of factual issues - NO: HC

- Revenue's appeal dismissed: GUJARAT HIGH COURT

2020-TIOL-457-ITAT-MUM

Reliance Forge India Vs ITO

Whether addition on account of bogus purchases is to be restricted to the profit element embedded in such purchases - YES: ITAT

- Assessee's appeal dismissed: MUMBAI ITAT

Dharmandan Diamonds Pvt Ltd Vs ADDL CIT

Whether assessee is entitled to depreciation on enhanced cost at which the assessee acquired the subject assets – YES : ITAT

- Assessee appeal allowed: MUMBAI ITAT

Balaka Vinimay Pvt Ltd Vs ITO

Whether ex parte order can be set aside & appeal be restored if assessee shows sufficient cause for his non-appearance on date of hearing - YES : ITAT

- Assessee’s miscellaneous application allowed: KOLKATA ITAT

UoI Vs LC Infra Projects Pvt Ltd

GST - Assessee had challenged notice of demand dated 4th March 2019 by which a demand for interest in accordance with sub section (1) of Section 50 of CGST Act was made and on which basis, consequential action was taken by the tax authorities on 7th March 2019 by which the account of the respondent-assessee was attached on account of non payment of interest - Single Judge held that issuance of a show Cause Notice is sine qua non to proceed with the recovery of interest payable under Section 50 of the GST Act and penalty leviable under the provisions of the GST Act and the Rules; that interest payable under Section 50 of the GST Act has been determined by the third respondent - Authority without issuing a show Cause Notice which is in breach of the principles of natural justice and, therefore, both the orders dated 4 th March and 7 th March were quashed - Revenue is in appeal against this order of Single Judge and submits that as the tax was payable as per the self-assessment made by the assessee, it was not necessary to issue a show cause notice to the respondent-assessee as the demand was only as regards to payment of interest under Sub Section (1) of Section 50 of the GST Act; that as the demand was not for a tax and only for interest, a notice under Sub Section (1) of Section 73 of the GST Act was not all necessary; that as a consequence of failure to pay interest, consequential action of attachment of the bank account has been taken.

Held: On the factual aspect, whether there was a failure on the part of the assessee to pay the tax or any part thereof within the period prescribed, the assessee is entitled to be heard as he could always point out on the basis of the material on record produced that there was no delay in payment of tax - On plain reading of sub section (1) of Section 73 of the GST Act, it is applicable when any tax has not been paid or short paid - It contemplates that a show Cause Notice is to be issued to the assessee calling upon him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50 of the GST Act - Assuming that sub section (1) of Section 73 is not applicable, in the view of the Division Bench, before penalizing the assessee by making him pay interest, the principles of natural justice ought to be complied with before making a demand for interest under sub section (1) of Section 50 of the GST Act since consequence of demanding interest and non-payment thereof is very drastic - Therefore, Single Judge rightly held in paragraph 6 of the impugned judgment that issuance of show Cause Notice is sine qua non to proceed with the recovery of interest payable in accordance with sub section (1) of Section 50 of the GST Act - The impugned demand has been set aside only on the ground of the breach of the principles of natural justice by granting liberty to the respondents to initiate action in accordance with law obviously for recovery of interest - Bench concurs with the ultimate view taken by the Single Judge that before recovery of interest payable in accordance with Section 50 of the GST Act, a show Cause Notice is required to be issued to the assessee, hence, no case for interference is made out - Revenue appeal is accordingly dismissed: High Court [para 10 to 14, 16]

- Appeal dismissed: KARNATAKA HIGH COURT

Arempee Compressors Pvt Ltd Vs ACCT

Whether an assessment order stands vitiated if no notice is served to the assessee prior to passing the order & if no opportunity of personal hearing is given to the assessee - YES: HC

- Assessee's writ petition allowed: MADRAS HIGH COURT

SERVICE TAX

2020-TIOL-825-HC-MAD-ST

Suprasesh General Insurance Service And Brokers Pvt Ltd Vs CST

ST - Petitioner is aggrieved by the order rejecting the declaration filed under the ST VCES, 2013 on the following two counts viz. (i) that the petitioner was not entitled to settle the dispute as the declaration filed by the petitioner was not in terms of Section 106(1) of the Finance Act, 2013 inasmuch as notice and orders had been issued to the petitioner for the preceding period on the same issue and, (ii) that the payment made by the petitioner on 09.04.2013 cannot be considered for settling dispute under the aforesaid scheme.

Held: It is noticed that the petitioner has been issued with six different periodical Show Cause Notices for the period commencing from 16.07.2001 to September 2011 - It is, therefore, not open for the petitioner to contend that it was entitled to avail the benefit of the Scheme in the light of 2nd proviso to Section 106 of the Finance Act, 2013 - Further, the scheme under the Finance Act, 2013 is not available to an assessee who has filed returns under Section 70 of the Finance Act, 1994, but had failed to pay tax - It is evident that a person like the petitioner were not in the contemplation of the Service Tax Voluntary Compliance Encouragement Scheme, 2013 - Petition dismissed: High Court [para 26, 27, 32]

- Petition dismissed: MADRAS HIGH COURT

2020-TIOL-588-CESTAT-DEL

Gionee India Pvt Ltd Vs ACGST

ST - The assessee is engaged in providing Business Auxiliary services to their clients located outside India and are also engaged for marketing of their products in India - Appellants had filed refund claim of unutilised Cenvat Credit on 05.09.2017 for the period from January, 2017 to March, 2017 under notfn 27/2017 as was issued under Rule 5 of CCR, 2004 - No doubt, any service if is used for providing an output service by service provider, same is eligible for Cenvat Credit - Hence, there is no question of any doubt qua the case law as relied upon by assessee in the case of Bayer Material Science Private Limited 2014-TIOL-1084-CESTAT-MUM and Vodafone Essar Cellular limited 2013-TIOL-566-CESTAT-MUM - But in the impugned case it is observed that the Services Provider for legal services and professional services in the present case is not the assessee but the Senior Advocate, Shri Sudhir Chandra Aggarwal - Similarly, the travel related services are also not been provided by assessee but were actually received for participating in mobile congress held at Barcelona, Spain for promotion of business - It is observed that it is for these reasons that the Commissioner (A) has denied the eligibility of assessee to claim refund of Rs. 1,67,870/- with respect to these services - No infirmity found in the said findings - The order-under-challenge to that extent is upheld - As regards to the grievance of assessee about his entitlement to claim interest on sanctioned amount as the same was credited to his account after three days delay from the date of its sanction, the refund claim of unutilised Cenvat Credit is neither the refund of excise duty nor of the service tax paid - Applicability of Section 11BB of the Act is, therefore, opined to be not available to the refund of unutilised Cenvat Credit - Further perusal of Rule 5 of CCR, 2004, classified it to be silent about any entitlement of assessee to the interest in case of delay in sanction - Otherwise also unutilised Cenvat Credit is an amount which is lying with the assessee itself as contrary to the excise duty or service tax paid to the department - The order under challenge is hereby upheld: CESTAT

- Appeal dismissed: DELHI CESTAT

Inductotherm Pvt Ltd Vs CST

ST - The assessee-company claimed that duty demand was raised against it on reverse charge basis in respect of technical know how obtained by it from its foreign principal - The assessee claimed that the Revenue did not point out as to whether the technical know how is registered or patented in India - Hence it was canvassed that the demand could not be confirmed without such evidence, as was held in the case of Sicpa India Pvt. Ltd. vs CCE & ST Siliguri and in Asea Brown Boveri Ltd. vs CCE & ST, LTU, Bangalore.

Held - It is seen that an identical issue stands resolved in the decision in Sicpa India Pvt. Ltd. vs CCE & ST Siliguri wherein it was held that to be categorized for service tax purpose under IPR, such right should be registered with the trade mark/patent authority - It was also observed that in the circumstances therein, there was no right recognized as IPR under any law for the time being in force in India and as such there could be no provision for IPR service for tax liability on reverse charge basis - In the present facts and circumstances too, there is no evidence of any regulation in India of technical knowhow as being IPR - Hence technical know-how cannot be treated as IPR under the present legal framework and the demands raised merit being set aside: CESTAT

- Assessee's appeal allowed: AHMEDABAD CESTAT

CENTRAL EXCISE

CX - Issues involved are (i) Whether, on finalization of provisional assessment, the Respondent was entitled to deduction of discounts known at the time of clearance of goods from the depot but quantified later on? & (ii) Whether request for provisional assessment has rightly been rejected.

Held: Issue is no longer res integra in view of the Supreme Court decision in Bombay Tyres International - 2002-TIOL-33-SC-CX-LB followed in the case of Madras Rubber Factory Ltd - 2002-TIOL-49-SC-CX-LB and which is also clarified in the Board's Circular - 354/81/2000-TRU dated 30th June, 2000 clarifying that the discounts are permissible, even if, quantified subsequent to the clearances of the goods through the sales taking place from depots/ consignment agents - Insofar as the request for provisional assessment, at the time of clearance of goods, since there is no quantification of demand, provisional assessment needs to be resorted to - This is also in line with the Board's Circular dated 30.06.2000 - Thus, Bench is of the opinion that rejection of the request for provisional assessment was incorrect and unsustainable in law and the Commissioner (Appeals) had rightly set aside the order passed by the Asstt. Commissioner - no infirmity in the order under challenge - Revenue appeals are rejected: CESTAT [para 9, 12]

- Appeals rejected: DELHI CESTAT

Elgi Sauer Compressors Ltd Vs CGST & CE

CX - Appellants are engaged in manufacture of air compressors - The appellant imported the goods and supplied the same to the Navy after mere inspection and availed exemption as per notification 64/95-CE - During the period 2011 and 2012, on the premise that common credit has been availed on these goods and that they have to reverse 6% of the value of the goods supplied to the Navy being exempted goods, the appellant made debit in their CENVAT credit account as required u/r 6(3A) of CCR, 2004 - Later, they realized that since no manufacturing activity had taken place in respect of the goods supplied to Navy and since no credit was availed in respect of such goods, they are not liable to reverse an amount of 6% - accordingly, they filed a refund claim on 10.07.2014 for an amount of Rs.39,23,615/- - after due process of law, the original authority denied the entire refund but in appeal, the Commissioner(A) allowed the refund of Rs.18,59,400/- and disallowed the amount of Rs.20,64,215/- on the ground of being time barred and also remanded the matter to consider the factum of unjust enrichment - appellant is before the CESTAT.

Held: Refund pertaining to two invoices dated 03.07.2011 and 29.02.2012 have been held to be time barred as claim is filed on 10.07.2014 - question is whether the wrong reversal of amount in the cenvat credit account by the appellant would amount to payment of duty to the Government - Tribunal in the case of S.N.J. Sugars and Products Ltd. - 2018-TIOL-952-CESTAT-HYD has held that such reversal does not amount to duty and the provisions of Section 11B of Central Excise Act, 1944 is not attracted - relying on the decision of Madras High Court in the case of 3E Infotech - 2018-TIOL-1268-HC-MAD-ST has held that rejection of refund on the ground of time bar cannot sustain - The Commissioner (Appals) has remanded to look into the issue of unjust enrichment and which portion of the order is upheld - Appellant has to establish that the duty burden has not been passed on to another in the remand proceedings ordered by the Commissioner (Appeals) - The appeal is allowed with consequential relief: CESTAT [para 5, 6]

- Appeal disposed of: CHENNAI CESTAT

TII

TP - Company which is functionally different from and having different FAR analysis, is to be adopted as comparable in respect of assessee-company: ITAT

TP - It is fit case for remand where fresh Transfer Pricing analysis done by TPO makes use of TNM method as most appropriate method, when in fact same was changed to RP method & where latter method is upheld by DRP: ITAT

TIOL CORPLAWS

SARFAESI Act - Notice issued u/s 13(2) by bank seeking delivery of possession of aircrafts is not valid as there is specific bar u/s 31(c) for taking possession of aircrafts: HC

Companies Act - Section 167(1)(a) envisage vacation of office of director u/s 164(2): HC