Pr.CIT Vs Sapa Extrusion India Pvt Ltd

Whether it is a settled position in law that depreciation is allowed on payment of non-Compete fees - YES: HC

- Revenue's appeal dismissed: KARNATAKA HIGH COURT

Mani Marwaha Vs ITO

Whether it is fit case for remand where the CIT(A) upholds re-assessment proceedings while overlooking the fact that a fire accident at the assessee's premises prevented it from replying to notices issued - YES: ITAT

Whether considering that public money is utilised in sending notices to an assessee & the same was wasted due to non-compliance thereof, costs merit being imposed on the assessee - YES: ITAT

- Case remanded: DELHI ITAT

Pee Empro Exports Pvt Ltd Vs ACIT

Whether it is settled law that the same rate has to be adopted for computing value of closing stock and that of opening stock - YES: ITAT

Whether the value of closing stock as on the end of the relevant AY would be the value of the opening stock as on the opening day of the subsequent AY - YES: ITAT

- Assessee's appeal allowed: DELHI ITAT

Surana Enterprises Vs ITO

Whether when the sales are already accounted for in the books of accounts then once again making an addition of the gross profit will amount to double addition - YES: ITAT

- Assessee's appeal partly allowed: DELHI ITAT

MS Retail Pvt Ltd Vs UoI

GST - Petitioner seeks quashing of the order of 'cancellation of registration' dated 06.06.2020 passed by respondent No.3-the Assistant Commissioner of Commercial Taxes, Bengaluru - Counsel for Revenue submitted that u/s 30 of the CGST Act, petitioner can approach appropriate authority seeking revocation of cancellation of registration and that if such an application is filed in a prescribed format, the authority shall examine the same and pass appropriate orders.

Held: Petition is disposed of by granting liberty to the petitioner to file necessary applications seeking revocation of cancellation of registration - If such application is submitted, respondent No.3 - the Assistant Commissioner of Commercial Taxes, Bengaluru, shall consider the same and pass appropriate orders, as expeditiously as possible and in any event, in an outer limit of two weeks: High Court [para 5]

- Petition disposed of: KARNATAKA HIGH COURT

2020-TIOL-1092-HC-DEL-GST

Phillips India Ltd Vs UoI

GST - s.171 of the CGST Act, 2017 - Petitioner challenges the order dated 19th May, 2020 - 2020-TIOL-27-NAA-GST passed by the National Anti-Profiteering Authority wherein it is held that the petitioner had profiteered by an amount of Rs.4,53,949/- on the sale of "food processor" and that the said amount is required to be deposited in the Consumer Welfare Fund within three months along with interest @18%; that the DGAP should also investigate into all the other impacted products which have been supplied by respondent and a detailed report is to be submitted u/r 133(5) of the CGST Rules, 2017.

Held: Notice issued - Petitioner is directed to deposit the amount of Rs.4,53,949/- within three months - The interest amount as well as penalty and further investigation with regard to other impacted products as well as the letter dated 11th June, 2020 issued by the Director General of Anti Profiteering are stayed till further orders – Matter is listed on 7 th September 2020: High Court

- Matter listed: DELHI HIGH COURT

2020-TIOL-35-AAAR-GST

Ordnance Factory Bhandara

GST - AAR had held that - Indian Ordnance Factory is an industrial organization functioning under the Department of Defence Production of Ministry of Defence, GOI - Section 2(53) of the Act defines the word "Government" as the Central/State government - applicant is not created by the Constitution of India as a legislative, executive or judicial authority, hence applicant cannot be treated as "Government" - applicant is not entitled to get exemption under notification 12/2017-CTR in respect of 'liquidated damages' deducted from the payments to be made to suppliers in case of delayed delivery of goods or services; security deposit of suppliers forfeited by applicant due to non-fulfilment of certain contract conditions will also not be exempted as per Sr. no. 62, 12/2017-CTR; unclaimed security deposit cannot be treated as consideration received for supply of goods or services, therefore, applicant not liable to pay tax thereon; nominal charges recovered from employees for availing canteen facility inside factory premises is taxable in terms of 11/2017-CTR under SAC 9963, sr. no.6 of exemption list 12/2017 is not available; renting of Community hall to employees is also liable to GST; since applicant is not an educational institution, school bus facility extended to children of employees is also taxable, not exempted under sr. no. 66(b) of 12/2017-CTR, so also is services of conducting exams taxable; however, renting of residential dwelling is an exempt supply of service - ITC is available only in respect of expenditure related to purchase of LPG cylinders used within industrial canteen - ITC not available in respect of maintenance of garden inside factory premises, parks, playground etc.; also not available in respect of expenditure related to maintenance and upkeep of guest houses, medicines purchased by hospital maintained for treatment of factory employees and dependents - exemption from preparation and generation of E-way bill is available to the applicant being a 'defence formation' - exemption is available from payment of GST on transport of 'military or defence equipment' through GTA - ITCis not required to be reversed on finished goods that are destroyed during testing - Proportionate ITC is required to be reversed in cases where lesser payment is made to supplier due to deduction on account of liquidated damages from supplier's dues - Applicant is also not eligible for exemption in terms of notification 2/2018-CTR in relation to services provided to them by an arbitrator or an Advocate - Renting of immovable property for non-residential purpose is taxable at the hands of the applicant - Applicant is also required to discharge GST on sale of used vehicles, seized and confiscated goods, old and used goods, waste and scrap to a GST registered person - Appeal to AAAR.

Held: Appellant is fulfilling all the conditions stipulated for the Central Government, referred in s.2(53) of the CGST Act and provided under clause (8) of s.3 of the General Clauses Act, 1897 read with Article 53 and 77 of the Constitution of India - Since the appellant is functioning under the Department of Defence Production, Ministry of Defence, GOI and all its activities including administrative, executive, etc. are carried out for and on behalf of the President of India, facts which have been established by the various documents like the Appointment letter of the Group A Gazetted Officer of the Ordnance Factory, OFB Procurement Manual - OFB Procurement Manual clearly shows that all the defence contracts are in the name and on behalf of the President of India only - signatures on the supply order placed with the vendors, the acceptance of tender etc. clearly exhibit that all these executive works are being carried out in the name and on behalf of the President of India and thus it is adequately evident that the Ordnance Factory, Bhandara is nothing but 'the Central Government' in accordance with the provisions of s.2(53) of the CGST Act - appellant is, therefore, not liable to pay GST on the following services supplied by them viz. liquidated damages deducted from payments made to suppliers, amount of security deposit forfeited of suppliers; foods and beverages supplied at industrial canteen inside factory premises; Community hall provided on rental basis to employees of the organisation, school bus facility provided to children of employees and also conducting exams for various vacancies - Appellant is eligible to avail ITC in respect of the Input Services used to maintain gardens inside the factory premises in view of the provisions mandated by the Maharashtra Pollution Control Board - Moreover, since the supply of residential services to their employees is an exempted supply in terms of Sr. no. 12 of 12/2017-CTR, any inputs or input services pertaining to the residential quarters of the employees of the Ordnance Factory, Bhandara which are used inside the residential colony will not be available to the appellant in view of provisions of s.17(2) of the CGST Act, 2017 - Appellants are rightfully entitled to avail ITC in respect of all inputs like medicines, equipment, furniture etc. consumed in the hospitals and input services like maintenance and upkeep of hospitals etc. to provide health services to its employees and their dependents as per the terms of the Ordnance Factory Medical Regulation, in view of the amended section 17(5)(b) of the Act, 2017 effective from 01.02.2019 - No ITC is available against the exempt supply of providing guest house facilities since such supply is exempted in terms of sr. no. 6 of 12/2017-CTR - so also, ITC is not available in respect of the LPG cylinders used in factory canteen as supply of food and beverages at industrial canteen inside the factory premises is exempt in terms of Sr. no. 6 of 12/2017-CTR - Appellant is also not required to reverse ITC on account of deduction of liquidated damages from the payment made to suppliers and this is because deduction of Liquidated damages from the dues of suppliers has no bearing, whatsoever, on the actual taxable amount (GST being paid by suppliers) and GST leviable thereon mentioned in the tax invoices as transaction of Liquidated damages is separate from the transaction of receipt of goods and/or services - as it is held that the appellant is a 'Central Government', the exemption notification 2/2018-CTR in relation to services by an arbitrator or an Advocate is available; insofar as notification 3/2018-CTR in relation to services supplied by way of renting of immovable property to a registered person and notification 36/2017-CTR in relation to payment of tax on reverse charge mechanism on sale of used vehicles, seized and confiscated goods, old and used goods, waste and scrap to a GST registered person, the recipient is required to pay tax on reverse charge mechanism: AAAR

- Appeal disposed of: AAAR

2020-TIOL-34-AAAR-GST

Safset Agencies Pvt Ltd

GST - Applicant is an auctioneer dealing in various goods such as paintings, vintage collectibles, sculptures, classic miniature paintings, fine writing instruments, vintage timepieces, celebrity memorabilia, aristocratic jewellery and vintage cars and seeks an advance ruling as regards the classification and HSN code of goods and GST rates applicable; and whether tax is to be paid on the difference between the selling price and purchase price as stipulated in rule 32(5) of CGST Rules while dealing in second hand goods - AAR held that Liability is required to be discharged on the difference between the selling price and purchase price as stipulated in rule 32(5) of the Rules ONLY in respect of old cars, old jewellery and old watches; HSN Code and rate of tax in respect of Paintings (Heading 9701 @12%); Old Cars (Heading 8703 @18% as per notification 08/2018-CTR); Old Jewellery (Heading 7113); Antique Jewellery of age exceeding hundred years (Heading 9706 @12%); Old Watches (Heading 9101/9102 @18%); Antique Watches of age exceeding hundred years (Heading 9706 @12%); Collectibles (cannot be determined in absence of specifics); Collectibles (Books)(Chapter 49 - no specifics shared, hence tax rate cannot be determined); Antique Books of less than hundred years (Chapter 49 at applicable tax rate) and Antique Books exceeding hundred years of age will be covered under Tariff Item 9706 and liable to tax @12% GST - Insofar as collectibles is concerned, with respect to the example given by applicant with respect to sale, in auction, of a bat signed by Sachin Tendulkar, it is to note that it is not only the bat that is sold; the intrinsic value of a legendary sportsperson like Sachin Tendulkar also comes into play in this case, as for example the specific cricket bat may be costing say, anywhere between Rs.1000/- to Rs.10,000/- but probably will be auctioned off at a price of may be even Rs.One lakh and in such a case the residual entry viz. Serial no. 453 of Schedule III of Notfn. 1/2017-CTR may come into play and tax will be charged accordingly and in these types of cases, it cannot be said that the goods are sold as second-hand or used goods and, therefore, the provisions of rule 32(5) of the CGST Rules will not be applicable - Appeal to AAAR

Held: Appellate authority finds it difficult to agree with the conclusion drawn by the AAR insofar as interpretation of rule 32(5) of the CGST Rules, 2017 is concerned inasmuch as the rule as it stands does not have any qualification to the words "used" or "second hand"' - as the words themselves are not explained in the rule and, therefore, they have to be understood as they are used in common parlance; that the terms "second-hand" and "used" are synonymous words; that goods can be called "second-hand" or "used" when they are not new; it is used by someone else or by the original owner before they are sold - in the instant case, the appellant is an auction dealer whose main business is to sell jewellery, car, watches, antiques etc. - the appellant being an auctioneer dealer sells personal effects or such other goods in an auction which have not come in the market for the first time and, therefore, it is called a secondary market - a primary market refers to any goods when they come to the market for the first time; the website of the appellant - astaguru.com mentions that the appellant sells vintage collectible and rare antiques such as sculptures, paintings, writing instruments, vintage cars etc. and they are players in the secondary market - a reading of rule 32(5) says that the value for tax purpose will be the difference between the selling price and the purchase price - in the instant case, the appellant fulfils all the conditions of the rule viz. the appellant is a seller dealing in buying and selling second-hand goods; the goods sold are second-hand or used goods which have not come for sale for the first time in the market; the appellant has sold the goods as such and has done no processing on them and no ITC is availed by them on the purchase of those goods, therefore, if all the conditions are fulfilled by the appellant, there seems to be no reason in denying them the benefit of the margin scheme as contained in rule 32(5) of the CGST Rules, 2017 - AAR has denied the benefit of the margin scheme to paintings, antique jewellery and antique watches but extended the benefit to old cars, old jewellery and old watches - no reason is advanced in the order for denying the benefit to antique jewellery and antique watches and the reason for denying benefit in respect of paintings is that the "paintings" cannot be treated as used - AAAR is of the opinion that the AAR seems to have been swayed by the fact that antique watches, painting and jewellery are valuable products which cannot be classified in the category of "second-hand" or "used" and that there is a separate tariff heading for "Antiques" in the form of Tariff heading 9706 0000 covering "Antiques exceeding 100 years" - However, it is the view of the AAAR that classification of goods does not have anything to do with the application of Rule 32(5) of the CGST Rules, 2017 - There is nothing in the rule which says that it is not applicable to valuable or precious objects or objects having antique value - it is settled principle of jurisprudence that when the words of a statute are unambiguous and only one reasonable meaning can be given to it, then the Courts are bound to give effect to that meaning - Antique pieces are also second-hand and used by people before they come in the market, so also paintings are bought by appellant from art-collectors and it presupposes that the art collectors have bought it second-hand or used and then sold it to the appellant - it would be an entirely different thing if the appellant had bought the paintings from the artists themselves, however, this is not the fact before the Authority if the submissions of the appellants are considered true - All the categories viz. valuable paintings, antique watches, antique jewellery, though falling under category of valuable goods are at the same time also "second-hand" or "used goods" and, therefore, they cannot be denied the benefit of rule 32(5) of the CGST Rules - the term "antique books" is evocative enough to describe what it contains and the appellant can apply rule 32(5) to it - insofar as collectibles/memorabilia and collectible books are concerned, as no specific details of such goods are given, AAR has not given any ruling and since apart from the description of general nature, no further details are presented by the appellant as to whether they are bought from individual art collectors or not, AAAR agrees with the ruling of AAR to the said extent - Appeal disposed of: AAAR

- Appeal disposed of: AAAR

Vestas Wind Technology India Pvt Ltd Vs CTO

Whether failure to obtain separate registration for the site office attracts penal provision Section 71(1)(b) of the TNVAT Act - YES: HC

Whether detention of goods is sustainable where based on the presumption that such goods had been sold and no tax had been paid on such transaction - NO: HC

- Assessee's appeal partly allowed: MADRAS HIGH COURT

2020-TIOL-1080-HC-KERALA-VAT

Maratt Plantations Pvt Ltd Vs State Of Kerala

Whether denial of input tax credit for purchases made for manufacturing centrifuged latex, which is later sold inter-State and upon availment of exemption, is sustainable - YES: HC

- Revision petition dismissed: KERALA HIGH OURT

SERVICE TAX

CENTRAL EXCISE

Agardeep Enterprises Pvt Ltd Vs UoI

CX - The petitioner purchased a plot of land from one M/s Rajasthan Foams Pvt Ltd - The petitioner got such land transferred from RIICO and lease agreement was executed - The petitioner then received a notice seeking payment of interest and penalty payable by the erstwhile owner of the property, M/s Rajasthan Foams Pvt Ltd Jaipur - The petitioner responded to such notice through a letter stating that any dues payable to the Govt bodies are to be paid by M/s Rajasthan Foams Pvt Ltd - Such letter did not elicit any response but a notice of attachment was served to the petitioner - A notice was affixed at the premises of the petitioner's factory, proclaiming the area as being on sale and panchnama was executed - The petitioner also sent a reminder to the Revenue seeking withdrawal of the recovery notice, but such letter also did not beget any response - Later, the High Court concurred with the petitioner's reliance on the judgment of the Apex Court in Rana Girders Ltd. Vs. Union of India wherein it was held that the subsequent purchaser cannot be fastened with the liability relating to the dues of the Government, unless there is a specific provision in the statute claiming first charge for the purchaser - No provision to such effect was found to be existing in the Central Excise Act 1944 - Considering such findings, the High Court quashed the notice issued to the petitioner.

Held - Leave granted - It is also appropriate that the Department pay simple interest @ 8% per annum on the amount refunded to the petitioner, for a period of three years - Such amount be remitted within two months' time: SC

- SLP disposed of: SUPREME COURT OF INDIA

2020-TIOL-915-CESTAT-CHD

Honda Motorcycle And Scooter Pvt Ltd Vs CCE & ST

CX - CENVAT - There was an agreement between the Union and the appellant that food will be provided at the subsidized rate i.e. 25% of the total food charges - To that extent the appellant has already reversed the Cenvat credit to the tune of Rs.24,67,690/- - For the remaining credit, it is the submission that the appellant, apart from food also provides tea and snacks in morning and evening to the employees for which the appellant does not recover anything from the employees and has borne the total cost of the said items in their own account, therefore, they are entitled to avail the Cenvat credit of the said amount – however, total demand on account of reversal of Cenvat credit to the tune of Rs.35,06,550/- was confirmed – in appeal, Tribunal observed that the Commissioner failed to given credit of certain amount which they have already paid and, therefore, remanded the matter for verification – impugned order is passed in remand proceedings wherein the amount paid has been appropriated and penalty of Rs.35,06,550/- has been imposed – aggrieved, assessee is in appeal before CESTAT.

Held: In the first round of proceedings, while ordering remand, the Tribunal had directed the adjudicating authority to verify the figures of reversal made by the appellant of Rs.24,67,690/- and on verification of the figures, as contended by the appellant that they have borne the cost of tea and snacks provided to the employees free of cost and, for the same, the adjudicating authority was also required to consider to allow Cenvat credit for inputs/input services used to provide tea and snacks – however, the same has not been done by the adjudicating authority in the remand order – Vis-à-vis the reversal chart given by the assessee, no contrary evidence has been produced by the Revenue in their support of their claim that they are required to reverse total amount of Cenvat credit of Rs.35,06,550/- - therefore, there is no merit in the impugned order qua demand on account of reversal Cenvat credit of Rs.10,38,860/- - No penalty is, therefore, imposable – Appeal partly allowed: CESTAT [para 6, 7]

- Appeal partly allowed: CHANDIGARH CESTAT

Freudenberg Nok Pvt Ltd Vs CCE & ST

CX - CENVAT credit on Guest House has been denied to the appellant for the period October 2009 to March 2015 on the ground that the guest house maintained by the appellant which has been taken on rent is not an input service in terms of Rule 2(l) of CCR, 2004 – appeal to CESTAT.

Held: Guest house has been used by the foreign technicians who used to visit their factory for technical assistance which ultimately resulted in production of their final goods - In that circumstances, the stay of technicians is used for manufacturing activity and the same is eligible as input service in terms of Rule 2(l) of CCR, 2004 – impugned order is set aside and appeal is allowed: CESTAT [para 5, 6]

- Appeal allowed: CHANDIGARH CESTAT

HSB Agro Industries Ltd Vs CCE & ST

CX - The assessee is engaged in manufacture of jute bags and claiming the benefit of Central Excise Notfn 30/2004-CE - The Notification granted exemption to jute bags - The period of dispute is from 01.03.2011 to 28.02.2013, during which the Notification was amended vide Notfn 12/2011-CE - The amendment restricted the exemption to goods other than those bearing brand name or sold under the brand name - The jute bags manufactured by assessee, were required to print on jute bags certain information in terms of orders passed by Jute Commissioner - After noticing the fact that the jute bags were printed with the name of the buyers, such as, Food Corporation of India, the Department was of the view that these jute bags were manufactured and cleared bearing the brand name of the buyers - Accordingly, Departmental Authorities came to the conclusion that the assessee will not be entitled to the benefit of Notfn 30/2004-CE as it stood amended during the period of dispute - Both sides agree that the dispute involved in all the present appeals stands decided by Supreme Court in case of RDB Textiles Ltd. 2018-TIOL-59-SC-CX - The Apex Court had examined the wordings of Notification as it stood during the disputed period and decided that the printing of the name, logo and other particulars of buyer, like, FCI and State Governments, were made by the manufacturers to comply with the requirements of Jute Control Order - The Supreme Court further held that the markings on jute bags were under compulsion of law and meant for identification, monitoring and control by Government Agencies and such markings cannot be considered as brand name - Accordingly, the Apex Court held that the benefit of Notfn 30/2004-CE will be available during the disputed period - Since the issue has been decided by Apex Court, by respectfully following the same, the appeal is allowed: CESTAT

- Appeal allowed: KOLKATA CESTAT

CUSTOMS

2020-TIOL-1091-HC-DEL-CUS

Rainbow Fashions Vs DCC

Cus - The assessee filed the present writ seeking that directions be issued to the Revenue authorities concerned to finalise BoE filed by the assessee for clearance of consignment of Polyester knitted Fabrics - The assessee claimed that the BoEs which are provisionally assessed cannot be kept provisional for an indefinite period and a final decision needs to be taken at the earliest.

Held - Considering the limited prayer made in the writ petition, the Revenue authorities concerned are directed to finalise the BoE filed by the assessee for clearance of Polyester knitted Fabrics, within 6 weeks' time - If such directions are not complied with, the assessee is at liberty to initiate appropriate proceedings: HC

- Writ petition disposed of: DELHI HIGH COURT

2020-TIOL-912-CESTAT-KOL

Ajit Bhosle Vs CC

Cus - The instant case of seizure is based on a seizure of gold which is covered under Section 123 of Customs Act, 1962 which caused an obligation on the owner to prove that it is not smuggled - It is on record that the seizure is made from a melting house - The gold is in cut pieces having no marking and has different purity - The claimants have submitted documentary evidence in support of the lawful possession which has not been controverted by investigation - Thus, the claimants have duly discharged the burden of proof in terms of Section 123 of Customs Act, 1962 - On the other hand, Department has not adduced any evidence documentary or otherwise that the gold is illegally imported - Considering the fact that gold is freely imported in the country and it is abundantly available in the market, it cannot be held that some gold found inside the Indian Territory is smuggled in nature - There may be doubt and suspicion inviting investigation but cannot be sufficient for the purpose of penal action - The impugned order cannot be sustained and is accordingly, set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

TP - Mere incurring of AMP expenses can't be considered as international transaction: ITAT

TP - Functionally different companies can't be considered as good comparables for benchmarking of international transactions: ITAT

TP - While determining ALP of international transaction of loan or guarantee by assessee to its AEs, LIBOR rate at relevant year is to be considered by Revenue: ITAT

TIOL CORPLAWS

Limitation Act - Plaint can be dismissed without giving an opportunity to plaintiff to lead evidence to show that reason for pursuing matter before Bombay High Court has been bona fide and with due diligence when plaint is not barred by limitation: HC

Regulation and Development Act - Royalgolf Link City Projects has to pay interest as per earlier order of court, otherwise it would tantamount to unjust enrichment: SC