2020-TIOL-1188-HC-KAR-IT

CIT Vs ABB Ltd

Whether it is trite law that loss suffered on account of liquidation of a company is to be treated as capital loss, where nothing is gained therefrom - YES: HC

- Revenue's appeal allowed: KARNATAKA HIGH COURT

2020-TIOL-1184-HC-MUM-IT

Gateway Leasing Pvt Ltd Vs ACIT

Whether in absence of reasons to believe that income chargeable to tax had escaped assessment, AO could not assume jurisdiction and issue reopening notice u/s 148 - YES: HC

- Assessee's petition allowed: BOMBAY HIGH COURT

2020-TIOL-1178-HC-MAD-IT

Jothi Swaminathan Kalyanakumar Vs ACIT

In writ, the High Court modifies the order passed by the AO and directs that the assessee pay a sum of Rs 10 lakhs within four weeks' time from date of receipt of copy of this order. Meanwhile, the CIT(A) is to consider the assessee's appeal and pass appropriate orders.

- Writ petition disposed of: MADRAS HIGH COURT

2020-TIOL-1177-HC-MAD-IT

CIT Vs S Albert & Company Pvt Ltd

Whether discrepancies raised are not sufficient to reject books of accounts and adoption of 8% rate of turnover for best judgment assessment is without any basis - YES : HC

- Order passed in favour of assessee: MADRAS HIGH COURT

2020-TIOL-823-ITAT-DEL

Rajiv Madhok Vs ACIT

Whether the assessee was entitled for benefit of section 54F, if that the new asset i.e. residential house had been purchased within two years from the date of transfer of the original asset i.e shares – YES : ITAT

- Assessee's appeal allowed: DELHI ITAT

2020-TIOL-822-ITAT-KOL

Ram Bilaas Agarwal Vs JCIT

Whether a father using the money of his son cannot be deemed to have taken such amount as loan from his son - YES: ITAT

Whether cash transactions between family members during hour of need can be termed as loan or advances even though for purpose of accounting it was shown as loan – NO: ITAT

Whether it is a settled law that the nomenclature in the account books cannot determine the nature of transaction – YES : ITAT

- Assessee's appeal allowed: KOLKATA ITAT

2020-TIOL-821-ITAT-KOL

Pradip Debnath Vs ITO

Whether advances received by one person can be interlinked with other person and can be shown in other person's balance sheet in case of joint bank account – NO : ITAT

- Assessee's appeal allowed: KOLKATA ITAT

2020-TIOL-1187-HC-DEL-GST

GST - Petition has been filed seeking a direction to the respondents to immediately credit the already sanctioned Central Goods and Service Tax component of the provisional refund amount and to refund the balance amount to the petitioner - Petitioner further submits that CGST component of Rs.1,58,38,024/- provisionally sanctioned on 27th November, 2019 along with the interest and the remaining 10% of the refund of the balance amount of Rs.35,19,560/- (CGST-Rs.17,59,780/- + SGST-Rs.17,59,780/-) along with interest w.e.f. 01st October, 2019 has not been paid till date - on the hearing date, petitioner admits that CGST component of Rs.1,58,38,024/- being 45% of the total claim has been released to the petitioner - petitioner also seeks payment of interest.

Held : Writ petition is disposed of with a direction to the respondent No.2 to pay Rs.17,59,780/- as well as respondents No.3-4 to pay Rs.17,59,780/- within a period of one week - petitioner is also directed to file a comprehensive application manually with respondent No.2 seeking payment of outstanding interest within one week and which application has to be disposed of by way of a reasoned order within two weeks thereafter: High Court [para 9 to 11]

- Petition disposed of: DELHI HIGH COURT

2020-TIOL-1186-HC-DEL-GST

GST - Writ petition has been filed seeking a direction to the respondents to open the GST Portal and permit the petitioner to file TRAN-2 online, as the facility to file it online is open till 31st August, 2020 in terms of the Notification No.55/2020-CT dated 27th June, 2020 or in the alternative to direct the respondents to permit the petitioner to take credit of the eligible duties into the electronic credit ledger through the GSTR-3B route or accept manual TRAN-2 form.

Held : To await the judgment of the Supreme Court in Union of India Vs. Brand Equity Treaties Limited & Ors., SLP (C) 7425-7428/2020 - 2020-TIOL-115-SC-GST-LB, list on 16th September, 2020: High Court

- Matter listed: DELHI HIGH COURT

2020-TIOL-178-AAR-GST

Master Minds

GST - Applicant is an educational institution providing coaching to students for Chartered Accountancy Certificate, Cost and Works Accountancy Certificate and Intermediate certificate - such coaching enables the students to appear for the examinations conducted by the respective statutory bodies - applicant was initially registered with the service tax department under the category of ‘Commercial Training or Coaching Centre' and was paying service tax; however, pursuant to exemption notification 33/2011-ST, they stopped payment of service tax - demands were issued for recovery of service tax not paid on the fees collected by applicant, some of these demands were dropped (coaching for obtaining certificates of CA-Final, CA-Inter (IPCC) and ICWA-Final and Intermediate Course), others confirmed (coaching for CPT, CA-Foundation, ICWA-Foundation) - orders were accepted by the Committee of Chief Commissioners and in respect of matters where demands were confirmed, appeals were filed by the assessee before the CESTAT and the same are pending, in some cases, refund was also granted to the applicant of the service tax paid by them - applicant now desires to know as to whether the same exemption provided under the FA, 1994 is applicable to him under the GST law since identical exemption is/was provided under both the laws.

Held: Coaching or training provided by applicant is for preparing the students for writing/appearing for CA (Inter & Final) and ICWA (Inter & Final) exams conducted by ICAI/ICWAI - said coaching or training per se does not lead to grant of a certificate or diploma or degree or a qualification which is recognised by any law - It only aims at giving a better preparation to the students and improves their chances in the examination - It is similar to any other coaching or training given in respect of competitive/entrance examinations such as IIT, EAMCET etc. - Furthermore, such coaching or training as imparted by the applicant is neither mandatory nor sine qua non to the students appearing for the CA/ICWA examination - Students who prepare on their own can also appear for these examinations and qualify based on their performance, hence the coaching imparted by the applicant is only a facilitation/improvisation of the preparation for the said exams and cannot be considered as a coaching/training leading to grant of certificate, qualification etc. recognised by law - benefit of Entry no.66(a) of 12/2017-CTR is not available to applicant - services of provision of food and accommodation to students pursuing the said courses are liable to GST under the same notification 12/2017-CTR as amended since applicant has not qualified as an educational institute for entitlement to the exemption under Entry no. 14, 66(a) of 12/2017-CTR: AAR

- Application disposed of: AAR

2020-TIOL-177-AAR-GST

Halliburton Offshore Services Inc (Drill Bits)

GST - Import of drill bits for supply to ONGC at its location in India involves two supplies namely, import into India and indigenous movement from port of import to ONGC's location - Essentiality certificates are required in respect of import of drill bits into India under sr. no. 404 of 50/2017-Cus and another for indigenous movement under 3/2017-CTR: AAR

- Application disposed of: AAR

2020-TIOL-176-AAR-GST

Andhra Pradesh State Road Transport Corporation

GST - Applicant is renting the non-air conditioned buses for the occasion of marriages, functions etc.for transporting of employees and students of other organisations/departments, for transporting of passengers to Sabarimala, for transporting of public to meetings conducted by political parties and to placed like Polavaram project etc. - it is clear that the applicant is providing rental services and thus fits under Serial no. 10 of 11/2017-CTR - tax liability is 5%/12% subject to the satisfaction of the conditions of the respective entry to the notification else the tax rate would be 18%: AAR

GST - Question as to whether the applicant is required to file reconciliation statement in Form GSTR-9C cannot be answered as it does not fall under the scope of the authority mandated u/s 97(2) of the CGST Act, 2017: AAR

- Application disposed of: AAR

2020-TIOL-175-AAR-GST

Halliburton Offshore Services Inc (Oil India)

GST - It is clear and evident that the different components namely, technical personnel, technical equipment and additives/chemicals/consumables are separately available for procurement and supply by the applicant - Therefore, supply of mud additives and chemicals cannot be said to be supplied in 'conjunction with supply of services and supply of other goods' namely, technical equipment - Accordingly, supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by applicant under the contract does not qualify as composite supply - Benefits referred under Customs Notification 50/2017-CTR is available to supply of such goods at the time of their importation subject to fulfilment of description, tariff item, lists and conditions specified therein and subject to the satisfaction of the proper officer: AAR

- Application disposed of: AAR

2020-TIOL-36-NAA-GST

Director General Of Anti-Profiteering Vs Neeva Foods Pvt Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Reference received by DGAP from Standing Committee on Anti-Profiteering recommending a detailed investigation in respect of an application, originally examined by the Maharashtra State Screening Committee on Anti-Profiteering alleging profiteering in respect of the restaurant service supplied by respondent (franchisee of M/s Subway India P Ltd.) inasmuch as despite reduction in the rate of GST from 18% to 5% w.e.f 15.11.2017, the respondent had not passed on the commensurate benefit of tax reduction as he had increased the base prices of his products - DGAP has in his reported dated 27.12.2019 computed the profiteered amount as Rs.41,93,431/- and which the Authority agrees with - accordingly respondent is direct to reduce his prices commensurately in terms of rule 133(3)(a) of the Rules - since the recipients are not identifiable, the profiteered amount is required to be deposited in two equal parts in the Central Consumer Welfare Fund and the Maharashtra Consumer Welfare fund along with interest@18% - amount to be deposited within three months failing which it shall be recovered by the Commissioners CGST/SGST concerned - for the contravention of the provisions of s.171 of the Act, the respondent is liable to penal action in terms of s.171(3A) of the Act and in which regard SCN is required to be issued - order passed taking note of notification 55/2020-CT dated 27.06.2020: NAA

- Reference Disposed of: NAA 

2020-TIOL-1039-CESTAT-MAD-LB

CST Vs Repco Home Finance Ltd

ST - Whether foreclosure charges levied by the banks and non banking financial companies on premature termination of loans are leviable to service tax under the head "banking and other financial services".

Held: Service tax would be leviable only when an activity is considered to be a service and such service classifies as a 'taxable service' defined in section 65(105) of the Finance Act - It is clear from the definition of "consideration" that only an amount that is payable for the taxable service will be considered as "consideration" - This apart, what is important to note is that the term "consideration" is couched in an "inclusive" definition - any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67 [Supreme Court in Bhayana Builders refers] - What follows from the aforesaid is that "consideration" must flow from the service recipient to the service provider and should accrue to the benefit of the service provider and that the amount charged has necessarily to be a consideration for the taxable service provided under the Act - It should also be remembered that there is marked distinction between "conditions to a contract" and "considerations for the contract" - A service recipient may be required to fulfil certain conditions contained in the contract but that would not necessarily mean that this value would form part of the value of taxable services that are provided - It is also necessary to remind ourselves that the word "include" is generally used in interpretation clauses to enlarge the meaning of the words or phrases occurring in the body of the statute and when it is so used, such words or phrases must be construed to comprehend, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include - What needs to be noted from the definition of consideration under section 2(d) of the Contract Act is that consideration should flow at the desire of the promisor - Thus, if the consideration is not at the desire of the promisor, it ceases to be a consideration - The banks and non-banking financial companies are promisors and the promisees are the borrowers - The contractual relationship between the banks and non-banking financial companies and the customers is repayment of the loan amount over an agreed period - The banks and non-banking financial companies would not desire pre-mature termination of the loan advanced by them as it is in “their interest” that the loan runs the entire agreed tenure, for the banks thrive on interest earned from lending activities - As premature termination of a loan results in loss of future interest income, the banks charge an amount for foreclosure of loan to compensate for the loss in interest income - It is the customer who has taken the loan, who moves for foreclosure of the loan by making the payment of the loan amount before the stipulated period and thereby breaching the promise to service the loan for the agreed period of time - This results in a unilateral act of the borrower in repudiating the contract and consequently breach of one of the essential terms of the loan agreement - A breach of contract may give rise to a claim for damages - The "expectation interest" is a popular measure for damages arising out of breach of contract - The foreclosure charges, therefore, are not a consideration for performance of lending services but are imposed as a condition of the contract to compensate for the loss of "expectations interest" when the loan agreement is terminated pre-maturely - In fact, foreclosure charges seek to deter the borrowers from switching over to cheaper available sources of loan, as has been so clearly stated in the Circular dated 26 June, 2012 issued by the Reserve Bank of India - The foreclosure of loan is, therefore, a material breach of contract as it curtails the loan service period unilaterally, which can prompt the promisor to claim damages - It, therefore, clearly follows that foreclosure charges are recovered as compensation for disruption of a service and not towards "lending" services - In fact, the amount for processing charges and documentation charges or like charges are subjected to service tax because they are essential for the activity of lending and are treated as activities "in relation to lending" - Foreclosure is antithesis to lending and, therefore, cannot be construed to be "in relation to lending" - The phrase "in relation to lending" cannot be so stretched so as to bring within its ambit even activities which terminate the activity - These foreclosure charges should not be viewed as 'alternative mode of performance' of the contract because they arise upon repudiation of specified terms of contract and are intended to compensate the injured party banks and non-banking financial companies - This is because 'alternative mode of performance' still contemplates performance, whereas foreclosure is an express repudiation of the contractual terms giving rise to the levy of foreclosure charges - Thus, merely because the clause relating to damage is featuring in a contract, it would be incorrect to conclude that the party has been given an option to violate the contract - Hence, to treat eventuality of foreclosure as an optional performance is incorrect - The contract cannot be understood to be providing an option to the parties to either perform or not perform/violate - Submission of AR that premature closure is a facility available to a borrower at a price in the same manner as a facility for availing a loan for a price and, therefore, the activity would fall within the ambit of "banking and financial services" cannot, therefore, be accepted - it is not possible to subscribe to the view taken by the Bench of the Tribunal in Hudco [2011-TIOL-1606-CESTAT-AHM] - Tribunal decision in M/s Magma Fincorp Limited. vs. Commissioner of Service Tax, Kolkata = 2016-TIOL-2014-CESTAT-KOL agreed with -Service tax cannot be levied on the foreclosure charges levied by the banks and non-banking financial companies on premature termination of loans under "banking and other financial services" as defined under section 65 (12) of the Finance Act - Reference answered: CESTAT Larger Bench [para 20, 21, 23, 27, 28, 32, 35, 37, 44 to 46, 51 to 54]

- Reference answered: CHENNAI CESTAT

2020-TIOL-1190-HC-AHM-CX

Hitech Projects Pvt Ltd Vs UoI

CX - SVLDRS, 2019 - Application preferred by the writ applicants seeking to avail the benefit of the Scheme was held to be not maintainable on the premise that the case involves the confiscation of goods and imposition of redemption fine and Section 129 of the Finance (No.2) Act, 2019 does not grant any relief from the confiscation or redemption fine.

Held: Having gone through the materials on record, Bench is of the view that the writ applicants could not be said to have got a fair opportunity of hearing before the respondent concerned - respondent could not have fixed the personal hearing during the period of lockdown - Bench is, therefore, of the view that one opportunity should be given to the writ applicants to put forward their case before the concerned respondent in person - Bench does not propose to go into the merits of the various issues raised as regards the claim to avail the benefit under the Scheme; all the relevant aspects of the matter should be explained by the writ applicants before the respondent in person - In the result, the impugned communication in Form SVLDRS-3 is hereby quashed and set aside - The matter is remitted to the respondent No.3 herein i.e. the Designated Committee, Ahmedabad-South for fresh hearing on the issues in question - The respondent No.3 shall fix a particular date of personal hearing and intimate the same in writing to the writ applicants - The writ applicants upon receipt of such intimation shall appear before the respondent No.3 and make their submissions - Thereafter, the respondent No.3 shall pass a fresh order in accordance with law - entire exercise be undertaken at the earliest and shall be completed in any case within a period of six weeks - Bench is conscious of the fact that the time period to make the deposit of the requisite amount for the purpose of availing the benefit under The Scheme came to an end on 30.06.2020 - In the event ultimately if some amount has to be deposited, then despite the time limit having expired the Department shall accept the payment in view of the fact that this litigation was pending before this Court: High Court [para 19 to 22]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-1017-CESTAT-KOL

SSD & Company Vs CCE & ST

CX - The assessee is the trader of Chaman Bahar, Rose Powder and cigarettes - A Search was conducted at the shop and godown premises of assessee and 24,25,000 Nos. filtered and unfiltered cigarettes of various brands was seized along with some loose papers - The seized cigarettes were kept at assessee's premises under supurdnama - A SCN was issued to assessee - The preliminary objection is that the SCN was served after 6 months from the date of seizure and therefore, the goods are to be returned to assessee in terms of Section 110 (2) of Customs Act, 1962 - It is found from the Adjudication order that only one notice was issued and the legible copy of the same was served on assessee - It is observed by Adjudicating Authority that the acknowledgement receipt sent by DGCEI proves that the notice was served on 12.06.2014, hence the notice is not barred by time - But the assessee disputed the said fact before the Commissioner (A) as well as Tribunal - The assessee should be given an opportunity to examine the records in respect of receipt of SCN as on 12.06.2014 as revealed from the adjudication order - The other ground which has been vehemently argued regarding non-disposal of perishable goods by Department, 24,25,000 Nos. of filtered and unfiltered cigarettes of various brands were seized on 13.12.2013 on the reasonable principle that the above mentioned stock of cigarettes has not suffered Central Excise duty - The other aspect of this matter is that the assessee is contesting the jurisdiction of adjudicating authority - It appears that the Revenue proceeded on the basis that the seized goods are manufactured by manufacturer M/s Ankit Tobbacco Pvt. Ltd, Patna - The issue of jurisdiction is to be decided on the basis of clear facts of the case, which is not available on record - Hence, this issue is required to be examined by lower authorities - The matter is remanded to the adjudicating authority to decide afresh: CESTAT

- Matter remanded: KOLKATA CESTAT

2020-TIOL-1016-CESTAT-KOL

Mahashakti Cements Vs CCE & ST

CX - The assessee is a manufacturer of cement and their factory is located in Kamrup, Assam which entitles them to special exemption available to units in north-eastern India - Notfn 33/1999-CE, as amended, allows exemption to the extent of duty payable on value addition undertaken in manufacture of specified goods by units located in north-eastern states subject to fulfilment of some conditions - The notfn also specifies the rates of value addition for different commodities - The issue arises is, where there is a statutory time limit with statutory condonable period, can the Commissioner or this Tribunal go beyond provisions of statute and condone the delay beyond the condonable limits - On the question of condonable limit for delay in case of Singh Enterprises 2007-TIOL-231-SC-CX the Supreme Court has held that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days - The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning delay only upto 30 days after the expiry of 60 days which is the normal period for preferring appeal - Thus, it has been held that where a statutory time limit is fixed for condonation, the delay cannot be condoned beyond the time limit so fixed - The second question is about interpretation of the exemption notification - There were several views on how exemption notifications must be interpreted i.e., either strictly or liberally - There were judgments taking both views at various levels including by Apex Court, some case laws viewing exemption notifications strictly and others viewing them liberally - It has also been held in some decisions that beneficial notifications must be viewed liberally and the substantive benefits should not be denied on procedural grounds - In view of the conflicting decisions, the matter was referred to a five member Constitutional Bench of the Supreme Court which in the case of Dilip Kumar 2018-TIOL-302-SC-CUS-CB has held that when there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by assessee and it must be interpreted in favour of the revenue - Thus, it is now well settled that the exemption notification must be strictly construed against the person who is claiming it - In this case, if assessee wants to claim a higher rate of refund under exemption notification, the condition therein that they should have made an application by 30th of September must be fulfilled - If they were prevented by sufficient cause from making such application, the Commissioner could have condoned the delay only up to 30th of October and not beyond - The application was clearly made beyond the condonable time limit and therefore, was correctly rejected: CESTAT

- Appeal rejected: KOLKATA CESTAT

2020-TIOL-1015-CESTAT-CHD

CCE Vs Sita Enterprises

CX - The assessee is engaged in manufacture of LD, HM and PP Packing Materials - They applied for the benefit of Notfn 01/2010-CE on the ground that they have undertaken substantial expansion by way of increase by not less than 25% of value of fixed capital investment in plant and machinery and have commercial production for such expansive capacity w.e.f. 22.08.2014 - The Notification simply provides that if unit is in existence before 06.02.2010 and have invested more than 25% in fixed capital and production as started after 06.02.2010, the assessee is entitled to avail the benefit of the said Notification - Admittedly, the assessee has complied with the condition of the said Notification, in that circumstance, no infirmity found with the impugned order wherein the authorities below have hold that the expansion has taken after 06.02.2010 and commercial production has also started after 06.02.2010 - No merit found in the appeal filed by Revenue, accordingly, the same is dismissed by affirming the impugned order: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

2020-TIOL-1179-HC-KERALA-CUS

Muhammed Asif KA Vs DRI

Cus - The petitioners filed the present petition, seeking that directions be issued to the Customs officials concerned to record the petitioner's statements u/s 108 of the Customs Act via video conferencing and waive the requirement of the petitioner having to physically be present as long as the COVID pandemic is on-going.

Held - In course of hearing, it emerged that the petitioners, who were wanted by the DRI, had surrendered before the Deputy General of Police, Government of Kerala, Thiruvananthapuram - The counsel for the Revenue stated that the petitioners were put in quarantine at Thiruvananthapuram jail and after the period of quarantine the statements would be recorded by DRI officials - In such facts and circumstances, the prayer sought for in the writ petition does not survive - Nonetheless, the Revenue officers concerned are directed to expedite the recording of statements and issuing of SCNs: HC

- Writ petition disposed of: KERALA HIGH COURT

2020-TIOL-1014-CESTAT-MAD

Simplex Engineers and Traders Vs CC

Cus - Redemption fine cannot be imposed when the goods have to be redeemed only for the purpose of export - Appellant ought to have made all efforts to import only those goods which conforms to FSSAI Regulations - There being violation of said Regulations, penalty under Section 112(a) of the Customs Act, 1962 is attracted, however, the penalty of Rs.2 lakhs imposed is on the higher side, hence the same is reduced to Rs.50,000/-: CESTAT [para 5, 6]

- Appeal partly allowed: CHENNAI CESTAT