2020-TIOL-NEWS-171, Dated: Monday, July 20, 2020

2020-TIOL-NEWS-171| Monday July 20, 2020

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India-China Face-off: Future Pathway for India & Economy

INCOME TAX


	2020-TIOL-1210-HC-MAD-IT CIT Vs ABT Ltd Whether re-opening of assessment after passage of four-year limitation period, is sustainable, where it is based solely on change of opinion of the AO & where the assessee is found to have made full & true disclosure of material facts - NO: HC - Revenue's appeal dismissed: MADRAS HIGH COURT 2020-TIOL-1208-HC-MAD-IT PR CIT Vs N Muthusamy On appeal, the High Court dismisses the Revenue's appeals on account of the low tax value involved therein, as specified by the relevant CBDT Circular. - Revenue's appeal dismissed: MADRAS HIGH COURT 2020-TIOL-1207-HC-MAD-IT Jayanthi Seeman Vs Pr CIT In writ, the division bench of the High Court observed there to be no need to modify or alter the interim order, where te main appeal was to be heard. Hence the interim order passed by the Single Judge would remain in force till the main appeal is disposed of. - Writ appeal disposed of: MADRAS HIGH COURT 2020-TIOL-1201-HC-MUM-IT Mansukhlal Amritlal Modi Vs ITO Whether when the assessee is not in a favorable condition to pay the demand dues, it is just and reasonable for the AO being a quasi judicial authority to consider the relevant factors and thereafter take a decision regarding stay of demand - YES: HC - Writ appeal disposed of: BOMBAY HIGH COURT 2020-TIOL-1200-HC-MAD-IT PR CIT Vs SKI Retail Capital Ltd Whether u/s 147(b), reopening of case on factual errors pointed out by the audit party is permissible in law - YES : HC Whether review of the completed scrutiny can be done only if tangible material is made available to the Revenue and if reassessment notice is solely based on an audit opinion - YES : HC - Revenue's appeal dismissed: MADRAS HIGH COURT 2020-TIOL-841-ITAT-MUM Universal Medicare Pvt Ltd Vs DCIT Whether mere receipt of an amount is not enough to charge capital gain on it - YES : ITAT Whether a consideration loaded with riders of contingencies would not “accrue or arise” unless such contingences are fulfilled - YES: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2020-TIOL-840-ITAT-BANG Benedicta Mary Mendonce Vs ITO Whether when there were no bars u/s 50C(2)(b) at the time of reference being made by the AO for valuation of property, the AO is not right in overlooking the report of the DVO - YES: ITAT - Assessee's appeal partly allowed: BANGALORE ITAT 2020-TIOL-839-ITAT-JAIPUR Block Development Officer Vs ACIT Whether since the late fee u/s 234E is mandatory in nature, the presence of a reasonable cause does not help the assessee - YES: ITAT - Assessee's appeal dismissed: JAIPUR ITAT 2020-TIOL-838-ITAT-VIZAG DCIT Vs Care & Share Charitable Trust Whether when the activities carried out by the assessee in running the trust are found to be charitable in nature and the expenditure in this regard cannot be disallowed - YES: ITAT - Revenue's appeal dismissed: VISAKHAPATNAM ITAT

GST CASES


	2020-TIOL-1206-HC-DEL-GST Pitambra Books Pvt Ltd Vs UoI GST - The present application was filed by the applicant seeking early hearing of the matter as well as seeking that directions be issued to accept the petitioner's application seeking disbursal of refund for the relevant period. Held - Considering the strict timelines stipulated in Rules 90 and 91 of the CGST Rules, 2017, the authorities concerned are directed to process the petitioner's manual application within three days' time - Matter be listed for hearing on July 23, 2020: HC - Application disposed of: DELHI HIGH COURT 2020-TIOL-1205-HC-MAD-GST Guru Shoe Components And Company Vs GST COUNCIL GST - The petitioner-company manufactures Insoles - It was registered under the Puducherry VAT Act and later migrated to the Puducherry GST Act - Upon the enactment of the Puducherry GST Act, the petitioner-company had attempted to migrate existing credit under the VAT scheme to the GST portal - Section 139 of the PGST Act provides for migration of existing tax payers - As per procedure, existing dealers who held a valid PAN were provided with a provisional user ID and password, generated by the Goods and Service Tax Network (GSTN) - The petitioner claimed that no provisional ID was received from the GSTN and so proceeded to utilise an ID using random units that had no basis and were defective - Business was conducted using such ID and credit was earned - The petitioner was unable to utilise the credit on the basis of the incorrect ID and so applied for a new registration, which was granted - The petitioner filed returns and sought to claim credit of the ITC for the earlier period, but was unable to do so - The petitioner addressed several communications seeking ID and password, but received no response - Hence the petitioner filed the present petition seeking that directions be issued to the authorities concerned to issue a user name and password to complete the migration process, upload returns in GSTR-1 and GSTR-3 and claim TRAN 1 credit under the old provisional ID earned from the past period. Held - The ppropriate authority is directed to issue the necessary positive recommendations for migration/transition of credit available, within a period of four weeks from date of receipt of a copy of this order and R2 will, in turn and within four weeks from receipt thereof, issue necessary intimation to the petitioner permitting it to access the portal and upload the forms - The petitioner's prayer to be permitted to deposit tax, penalty and interest under Section 50 of the PGST Act is immature, as no assessment is made in the present case - The petitioner may canvass the same at time of assessment: HC - Writ petition allowed: MADRAS HIGH COURT 2020-TIOL-40-NAA-GST Director General Of Anti-Profiteering Vs Mahindra Lifespace Developers Ltd GST - Anti-Profiteering - S.171 of the CGST Act, 2017 - Applicant has alleged profiteering by the respondent in respect of purchase of flat in the respondent's “Avadi” project at Chennai - It is alleged that the respondent had not passed on the benefit of Input Tax Credit - DGAP in its report dated 18.12.2019, after reinvestigation, has submitted that the ITC as a percentage of the total turnover which was available to the respondent during the pre-GST period was 0.00% and during the post-GST period this ratio was 7.06% and, therefore, the respondent has benefited from the additional ITC to the tune of 7.06% of the total turnover which he was required to pass on to the flat buyers of this project - DGAP has also found that the respondent has not reduced the basic prices of his flats by 7.06% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the pre-GST basic prices, he has contravened the provisions of s.171 of the Act; that the amount of benefit of ITC which has not been passed on by the respondent or the profiteered amount came to Rs.2,87,64,178/- which included 12% GST; that the DGAP confirms that the respondent has already passed on an amount of Rs.7,71,830/- as ITC benefit to the 206 buyers including applicant no. 1 - that after adjusting this amount, the actual profiteered amount in respect of applicant no.1 is Rs.1,71,830/- including 12% GST and Rs.2,78,25,075/- including 12% GST in respect of 205 other flat buyers - Contentions of the respondent are not found to be acceptable by the Authority - Authority, therefore, agrees with the report of the DGAP and accordingly directs the respondent to pass on the profiteered amount to the applicant and the other 205 flat buyers along with interest @18% within a period of 3 months - present investigation is conducted up to 31.10.2019 only and the respondent has not yet received the Completion Certificate, therefore, he is liable to pass on the benefit of ITC which would become available to him till the date of issue of CC - the Commissioner CGST/SGST concerned is directed to ensure that the respondent passes on the benefit of ITC to the eligible flat buyers - for the contravention of the provisions of s.171(1) of the Act, the respondent is liable for imposition of penalty u/s 171(3A) of the Act read with rule 133(3)(d) of the Rules - Commissioners concerned are directed to monitor the instant order and report compliance within a period of four months - considering the pandemic and read with notification 55/2020-CT dated 27.06.2020, the present order is passed: NAA - Application allowed: NAA 2020-TIOL-201-AAR-GST Atriwal Amusement Park GST - Water Slides shall fall within the meaning of the term apparatus, equipment and machinery, therefore, shall be eligible for claim of ITC - Steel and civil structure on which Water slides are installed are part of the plant and machinery, hence credit is available - similar is the case with foundation for Wave pool, credit admissible - however, insofar as Machine room, which is a civil structure, erected for protecting machine is neither a foundation nor civil structure for machine, therefore, inputs relatable to construction of the Machine room is inadmissible - As regards Input tax on goods and services used for area development and preparation of land on which Water slides are placed, such area development expenditure are part of cost of the land and thus are interminably bound with land - such expenses are liable to be capitalised under the head land, therefore, on account of the specific exclusion of land from the meaning of 'plant and machinery', ITC related to land development shall not be available - ITC related to construction of swimming pools and wave pools, subject to its capitalisation shall not be available: AAR - Application disposed of: AAR 2020-TIOL-200-AAR-GST Agarwal Coal Corporation Pvt Ltd GST - Applicant is engaged in business of trading of coal - when coal is imported it is stockpiled at port itself at the designated place for subsequent sale to customers - applicant seeks to know as to whether they are liable to discharge tax liability @18% on Coal handling and distribution charges wherever supply of such services is intended to be made expressly to a customer or will the applicant be entitled to charge GST @5% as applicable on supply of coal; whether they are entitled to avail and utilise ITC for discharging liability towards supply of coal. Held: Coal handling and distribution charges will be taxable @18% and not @5% wherever supply of such services only is intended to be expressly made to a customer - Input tax credit availed as per the conditions specified in s.16 of the Act shall be allowed for discharging the liability towards supply of coal and supply of coal handling and distribution charges respectively: AAR - Application disposed of: AAR 2020-TIOL-199-AAR-GST VE Commercial Vehicles Ltd GST - Supply towards provision of services in respect of activity of mounting/fabrication of bodies on chassis provided by the customer should be treated as supply of ‘bus' or provision of services in respect of activity of mounting/fabrication is outsourced to the applicant by owner/provider of chassis, in no case the ownership of the chassis belongs to the applicant - in both scenarios, the services are taxable under SAC 998881 ‘Motor Vehicle and trailer manufacturing services' and under Entry no. 26(ii) as ‘Manufacturing services on physical inputs (goods) owned by other' - taxable @18% GST: AAR - Application disposed of: AAR 2020-TIOL-198-AAR-GST Vippy Industries Ltd GST - Preparation of a kind used in Animal feeding - bio processed meal is classifiable under HSN Code 2309 9090 and is exempted in terms of Sl. no.102 of 02/2017-CTR - Mistake/errors occurred on the face of the earlier order 01/2020 dated 02.01.2020 [ 2020-TIOL-48-AAR-GST ] passed by the Authority, hence rectified: AAR - Application allowed: AAR

MISC CASE

2020-TIOL-1209-HC-MAD-CT

Ram Blue Metals Vs PR CCCT

In writ, the High Court relies on the decision in the case of M/s. Dhandapani Cement Private Limited Vs. The State of Tamil Nadu wherein identical issues were settled in favor of the assessee. Following the findings recorded, the Revenue is directed to take the necessary action.

- Writ petition disposed of: MADRAS HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-1048-CESTAT-KOL

CST Vs Mackintosh Burn Ltd

ST - The allegation against assessee in SCN is that they had rendered services and received payments from its clients which were alleged to be liable to Service Tax; that no Service Tax was paid on such payments received from their clients viz. M/s. BCCL and M/s. ECL for the services rendered to them under category of "Site Formation and Clearance, Excavation and Earth Moving and Demolition Services" effective from 16.06.1005 and "Mining of Mineral Oil or Gas Services" effective from 01.06.2007 and also from M/s. UCIL under the category of "Commercial or Industrial Construction Service"effective from 10.09.2004 - With regard to demand under Commercial or Industrial Construction Service, the construction of Decanted Water Monitoring Pond and allied works was undertaken for exclusive use of M/s. UCIL in connection with the extraction of uranium ore for nuclear research and development activities - The Revenue has not placed on record any material evidence to prove that the extraction of uranium is a commercial/industrial activity - The initial burden is always on the Revenue and apparently, that has not at all been discharged - It is quite clear that the extraction of uranium ore is for the Union of India and the same is a restricted activity - No doubt, the uranium ores are sold exclusively to the Department of Atomic Energy, Union of India, but that alone would not paint the character of commerce or industry - In this regard, the findings of the Commissioner are fully approved - The assessee has challenged the demand of Service Tax under category of Mining Services - Though the Commissioner has accepted the contentions urged by assessee, mainly that the contracts/work orders were executed prior to 1st June, 2007, but the authority has held that in some cases bills were raised after 01.06.2007, which has prompted the lower authority to sustain the demand in respect of the bills raised after 01.06.2007 since the assessee was unable to produce any documentary evidence; but it is not the case of Revenue that the rendition of service itself was post 01.06.2007 - Matter remitted to the file of Adjudicating Authority for the limited purpose of verifying the relevant contracts/agreements entered into for Mining of Mineral Oil or Gas Services and to ascertain the date of completion/rendition of service, thereafter apply the decision of Delhi High Court in case of M/s. Vistar Construction (P) Ltd. 2013-TIOL-73-HC-DEL-ST and then adjudicate in the light of the directions laid down by High Court - This issue is therefore allowed for statistical purposes by way of remand - Further, on penalties and interest deleted by Commissioner, there is also no dispute that the assessee is a Government organization and hence, there cannot be any scope to allege suppression or misstatement - This fact coupled with the action of assessee in remitting the payment at least one year before the issuance of SCN establishes the bona fides of assessee, which per se makes out a case for invoking Section 80 of FA, 1994 for dropping the penalty and interest - The Commissioner himself having dropped the penalties and interest, the same is upheld : CESTAT

- Revenue's appeal dismissed: KOLKATA CESTAT

2020-TIOL-1047-CESTAT-ALL

MKG Computers Pvt Ltd Vs CGST, C & CE

ST - Appellants are engaged in trading of Computers and its allied products - They received incentives in lieu of sale of the said products from various companies manufacturing the said products - The said incentives were shown in their Books of Account as "Incentives, Commissions & Discounts" - Revenue opined that the said amount received by the appellant was consideration for providing Business Auxiliary Service and, therefore, demanded service tax - Further, in terms of provisions of Section 73(1A) of the Finance Act, 1994, a statement dated 18.04.2016 for the period from 2014-15 was issued giving reference to earlier Show Cause Notice dated 20.10.2014 raising a demand of Service Tax amounting to Rs.12,13,087/- on the same grounds as stated in earlier Show Cause Notice dated 20.10.2014 – Incidentally, in the matter of the earlier SCN dated 20.10.2014, the proceedings culminated in the order dated 27.03.2018 passed by the Commissioner(A) and wherein he held that the appellant was a dealer in electronic goods manufactured by various companies like – APPLE, ACER and that the appellant purchased the goods from National Distributor of said Manufacturers and resold the same in the market and that all the Incentives, Commissions & Discounts received by the appellant were based on volume of sale effected by the appellant and therefore, the said consideration was in respect of sale and purchase transaction and therefore, there was no ground to charge Service Tax on the said Incentives – Since the said statement of demand dated 18.04.2016 was based on the grounds stated in the earlier Show Cause Notice dated 20.10.2014 and the said grounds were found to be unsustainable by Commissioner (Appeals) in said Order-in-Appeal dated 27.03.2018, the present impugned o-in-a does not have any merits, OiA is set aside and appeal is allowed: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2020-TIOL-1046-CESTAT-MAD

Sundaram Fasteners Ltd Vs CGST & CE

CX - The first issue is with regard to disallowance of credit of service tax paid with regard to service charges for ESI/EPF Contributions collected from the appellants - It is seen that the invoices issued by the Man-power Recruitment and Supply Agency includes the service charges as well as service tax on such charges and these charges are part of charges paid for Man-power Supply - When the appellants have already paid service tax to the service provider, the same is eligible as input services for the appellants: CESTAT [para 7]

CX - The second issue is with regard to denial of credit on the service tax paid on rent for the job workers premises - The invoices show that the rent has been paid by the job worker - In that case, the appellants cannot avail credit of the service tax paid on such rent – Credit rightly denied: CESTAT [para 8]

- Appeal parlty allowed: CHENNAI CESTAT

2020-TIOL-1045-CESTAT-KOL

Tide Water Oil Company India Ltd Vs CCE

CX - The appeal has been filed by assessee against imposition of interest and penalty for alleged wrong availment of Cenvat Credit on inputs - The assessee is engaged in manufacture of lubricating oil and grease - Due to shortage of storage space in factory, in pursuance to Rule 8 of CCR, 2004 assessee obtained permission from the Central Excise Department for storing inputs outside the factory premises which was duly considered and allowed by the Department - As regards to issue regarding imposition of penalty, the Commissioner has made a detailed examination of ER-1 returns filed by assessee, on perusal of which he has given a specific finding in adjudication order that availment and reversal of credits have duly been reflected in said returns which is based on RG-23A Pt-II registers maintained at both the places–within the factory as well as the Storage tank located outside the factory - He also observed that said availment of credit has been shown under head of "other payment" in ER-1 returns - Moreover, he has admitted that merely because of error in availment of credit when the entire input covered in an invoice are received in the factory, the substantial benefit of cenvat credit cannot be denied - He also agreed with the factual aspect that the inputs in question have been duly used in manufacture of final goods on which excise duty has been paid and therefore the assessee is legally entitled to avail credit on said inputs - Even though after taking a note of Tribunal's decision in case of Mangalam Enterprise , wherein the penalty has been specifically set aside on the ground that the deviations from normal practice necessitated by business exigencies should not be the reason for denial of legally available facility, the Commissioner rather chose to impose penalty under Rule 15(2) of Credit Rules read with Section 11AC of the Act, which provision is applicable only in case of wrong availment of credit for reasons of fraud or suppression, which is clearly absent in the case - No reason found to sustain the imposition of penalty and hence same is set aside - As regards to the issue regarding interest, interest cannot be levied when sufficient credit balance is available, despite that a portion of credit amount has been availed contrary to the guidelines issued in trade notices, inasmuch as in such cases there is no loss to the exchequer and therefore there cannot be any question to compensate the Revenue by levying interest - Mere fact that the assessee has paid interest in course of adjudication, the same will be deemed to be under protest following the decision of co-ordinate Bench of Tribunal in case of Maihar Cement 2004-TIOL-921-CESTAT-DEL - Identical views have been taken in case of Jayant Glass Inds. (P) Ltd. and U. P. State Sugar Corporation Ltd. - The demand of interest and the penalty imposed cannot be sustained and accordingly, the same are set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

2020-TIOL-1044-CESTAT-ALL

Hajela Brushes Pvt Ltd Vs CCT & CE

CX - For demanding duty, Revenue has picked up value of clearance from the records of appellant including their balance sheet - balance sheet stands held to be a public document by various decisions of Tribunal and it stands concluded that reflection of entire fact in the balance sheet would amount to disclosure of factual position and would not involve any suppression of fact or mis-statement with an intention to evade payment of duty - element of malafide is missing and would not call for imposition of any penalty - penalty imposed upon the appellant is set aside by confirming the demand and interest as not contested – appeal partly allowed: CESTAT [para 6]

- Appeal partly allowed: ALLAHABAD CESTAT

CUSTOMS

2020-TIOL-1043-CESTAT-AHM

Batra Jay Vs CC

Cus - The assessee concealed gold bars in his sock arriving from Dubai At the Airport - Though the assessee has made the submission that they were about to declare the gold carried by him but as per the facts the assessee without informing to the Custom Officer crossed the Green channel - This clearly shows the intention of assessee to avoid declaration as well as evasion of duty - There is no evidence to show that the assessee had bona-fide belief and intend to declare the gold bars and pay the Customs duty - The gold bars brought by him from Dubai is clearly liable for confiscation - Even if the statement recorded under section 108 is not considered, the fact of smuggling of gold by intercepting by Customs Officer is not in dispute, therefore, the act of smuggling of gold is not in doubt - As per the Indian Customs Declaration Form enclosed as per Annexure C in the appeal, the assessee has made wrong declaration that he has not bringing prohibited Articles, Gold jewellery, Gold Bullion despite concealing the gold bars - Therefore, it is clear that the assessee had a malafide intention to escape with the smuggled gold without payment of duty - The adjudicating authority has rightly exercised his discretion to absolute confiscate of gold bars - Absolute confiscation of gold bars ordered by adjudicating authority is proper and legal - For the same reason, the penalty imposed by adjudicating authority needs no interference: CESTAT

- Appeal dismissed: AHMEDABAD CESTAT

2020-TIOL-1042-CESTAT-KOL

CC Vs Jatin Impex

Cus - The assessee has imported old and used worn clothing and two bills of entry were filed covering the four consignments of importer - At the time of original assessment, the declared value of imported goods was enhanced - The original adjudicating authority ordered confiscation of imported goods for violation of Import Trade Control restrictions and the goods were confiscated under Section 111 (d) of Customs Act, 1962 - He also imposed redemption fine under Section 125 of the Act @ 30% and personal penalty under Section 112 (a) of the Act, varying from 10% to 11% - The Commissioner (A) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down by Three Member Bench of CESTAT in case of Omex International 2015-TIOL-582-CESTAT-DEL - The Three Member Bench has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions - No reason found to interfere with the findings of Commissioner (A) on the basis of such decision - The impugned order is upheld: CESTAT

- Appeal rejected: KOLKATA CESTAT

HIGH LIGHTS (SISTER PORTAL)

TII

TP - Companies having very high turnover cannot be considered as good comparable evern if these are functionally comparable: ITAT

TP - Possession of high brand value makes comparable distinct: ITAT

TP - Variation in related party transactions of two companies makes them incomparable: ITAT

TIOL CORPLAWS

Arbitration & Conciliation Act - Court is right in restraining respondent from invoking bank guarantee, post an arbitral award on the ground that sum is not due to respondent and objections against arbitral award u/s 34 are pending: HC

Companies Act - Liquidator should forward order of dissolution of Company within thirty days from date of order to Registrar in order to update status of dissolution in records: HC

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