2020-TIOL-NEWS-247, Dated: Monday, October 19, 2020

2020-TIOL-NEWS-247| October 19, 2020

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INCOME TAX


	2020-TIOL-1746-HC-MAD-IT Karur Vysya Bank Ltd Vs ADDL CIT Whether the income received in advance in the nature of interest on discounting of bills against letter of credit is to be subjected to taxation on receipt basis and not on accrual basis - NO: HC - Assessee's appeal allowed: MADRAS HIGH COURT 2020-TIOL-1743-HC-KERALA-IT S Abdul Hameed Vs ITO Whether application filed u/s 119, seeking extension of time for filing revised returns u/s 139, cannot be rejected, where the delay is caused due to delay on part of the authorities in processing certain amount of TDS deducted in respect of a transaction involving the assessee - YES: HC - Assessee's Writ petition allowed: KERALA HIGH COURT 2020-TIOL-1742-HC-KAR-IT Srinivasan Chandira Kumar Vs Addl.CIT Whether payment made to a trust formed for the benefit of employees of the company, of which the assessee was a shareholder & whose shares the assessee had sold, qualifies as expenditure incurred wholly in connection with transfer of asset - NO: HC - Assessee's appeal dismissed: KARNATAKA HIGH COURT 2020-TIOL-1741-HC-MAD-IT CIT Vs Vetrivel Minerals Whether activity of purchasing illuminate, removal of dust therefrom and subsequent sale of the remainder, qualifies as manufacture - NO: HC - Revenue's appeal dismissed: MADRAS HIGH COURT 2020-TIOL-1740-HC-DEL-IT Nokia Solutions And Networks India Pvt Ltd Vs Addl.CIT In writ, the High Court finds the prayer of the assessee to be fair & reasonable and so it directs the Revenue to adjust the demand raised against the refund of interest u/s 244A payable to the assessee. It also directs that any balance amount be paid to the assessee. - Assessee's writ petitions disposed of: DELHI HIGH COURT 2020-TIOL-1239-ITAT-MUM DCIT Vs Utpal Kumar R Chaudhari Whether the entire purchases made by the assessee could not be disallowed but only the profit element embedded in such purchases can be considered for addition - YES : ITAT - Revenue's appeal dismissed: MUMBAI ITAT 2020-TIOL-1238-ITAT-MUM Abhijeet Dies & Tools Pvt Ltd Vs DCIT Whether for bogus purchases not entire amount of bogus purchases but only profit embedded in such transaction should be added to the total income of the assessee and considering nature of assessee's business GP @ 16.81% can be added - YES: ITAT - Assessee's appeal partly allowed: MUMBAI ITAT 2020-TIOL-1237-ITAT-MUM ITO Vs Abhay Kantilal Shah Whether AO is required to make verification of bank statements, evidencing the payments made to parties, ledger account of all the parties, purchase invoices from parties and sale invoices as issued by the assessee against the purchases made before making additions - YES : ITAT - Revenue's appeal dismissed: MUMBAI ITAT 2020-TIOL-1236-ITAT-KOL DCIT Vs Bhavya Merchandise Pvt Ltd Whether assessment made u/s 153A/143(3) is valid when the same was completed before the search operation and no incriminating documents were found during search u/s 132 - NO: ITAT - Revenue's appeal dismissed: KOLKATA ITAT 2020-TIOL-1235-ITAT-KOLKATA Auto Fuel Centre Vs JCIT Whether CIT(A) is justified in confirming the penalty imposed u/s 271E when there was no proliferation of black money - NO: ITAT - Assessee's appeal allowed: KOLKATA ITAT 2020-TIOL-1234-ITAT-BANG DU Mallikarjuna Vs ACIT Whether the assessee cannot avail exemption for a plot of land, even if it is having an area of less than 500 sq. mtrs or less, if he has already claimed exemption of one house u/s 5(vi) of the Act - YES : ITAT Whether if assessee has not claimed exemption of house, then he is entitled to claim exemption of either one house or part of a house or plot of land - YES : ITAT - Assessee's appeal dismissed: BANGALORE ITAT 2020-TIOL-1233-ITAT-CHD Dr SPS Thakur Vs ITO Whether, without any material on records, the CIT(A) can disbelieve assessee's claim that she was gifted by her daughter - YES: ITAT - Assessee's appeal allowed: CHANDIGARH ITAT

MISC CASES

2020-TIOL-160-SC-MISC

State of Madhya Pradesh Vs Bherulal

Limitation - SLP has been filed with a delay of 663 days and the explanation given for such delay by the State of Madhya Pradesh is "due to unavailability of the documents and the process of arranging the documents"; that "bureaucratic process works, it is inadvertent that delay occurs".

Held: Bench is constrained to pen down a detailed order as it appears that all the counselling to the Government and the Government authorities have fallen on deaf ears i.e. the Supreme Court of India cannot be a place for the governments to walk in when they choose ignoring the period of limitation prescribed; that if the government is so inefficient and incapable of filing appeals/petitions in time, the solution may lie in requesting the Legislature to expand the time period for filing appeals/petitions by government authorities because of their gross incompetence and since that is not so, till the statute subsists, the appeals/petitions have to be filed as per the statutes prescribed - no doubt, some leeway is given for the government inefficiencies but the sad part is that the authorities keep on relying on judicial pronouncements for a period of time when technology had not advanced and a greater leeway was given to the government [Collector, Land Acquisition, Anantnag & And. vs. Mst. Katiji & Ors - 2002-TIOL-444-SC-LMT ; Chief Post Master General & Ors. vs. Living Media India Ltd. & Anr. - 2012-TIOL-123-SC-LMT - Aforesaid approach is being adopted in what we have categorised earlier as 'certificate cases' - The object appears to be to obtain a certificate of dismissal from the Supreme Court to put a quietus to the issue and thus, say that nothing could be done because the highest court has dismissed the appeal - It is to complete this formality and save the skin of officers who may be at default that such a process is followed - Bench has on earlier occasions also strongly deprecated such a practice and process but there seems to be no improvement - The purpose of coming to this Court is not to obtain such certificates and if the government suffers losses, it is time when the concerned officer responsible for the same bears the consequences - The irony is that in none of the cases any action is taken against the officers, who sit on the files and do nothing - It is presumed that this Court will condone the delay and even in making submissions, straight away counsels appear to address on merits without referring even to the aspect of limitation - Where there are such inordinate delays, the government or State authorities must pay for wastage of judicial time which has its own value and such costs can be recovered from the officers responsible - Looking to the period of delay and the casual manner in which the application has been worded, Bench considers it appropriate to impose cost on the petitioner-State of Rs.25,000/- to be deposited with the Mediation and Conciliation Project Committee - The amount is to be deposited in four weeks and is to be recovered from the officers responsible for the delay in filing the special leave petition and a certificate of recovery of the said amount is also to be filed in this Court within the said period of time - Special leave petition is dismissed as time barred - If the aforesaid order is not complied within time, Bench would be constrained to initiate contempt proceedings against the Chief Secretary, State of Madhya Pradesh: Supreme Court [para 6 to 10]

- Petition dismissed: SUPREME COURT OF INDIA

2020-TIOL-159-SC-MISC-LB

Asian Resurfacing Of Road Agency Pvt Ltd Vs CBI

Miscellaneous - The Additional Chief Judicial Magistrate, Pune had passed an order directing that the appellant move an application to the High Court to resume trial - The Magistrate's court held that the lower court could not pass any order which was stayed by the High Court - Magistrates all across the country must be reminded of the pyramidical structure of the judiciary in India - While the Supreme Court is at the apex, the High Courts, though not subordinate administratively, are certainly subordinate judicially - Such order passed by the Magistrate flies in the face of the order passed by this very court in the appellant's own matter - Magistrates all over the country are expected to follow the directions of the Apex Court in letter and spirit - Where the six-month stay granted by the High Court has lapsed and has not been extended, the Trial Court is at liberty to set a date for trial and proceed with the same: SC LB

- Appeals disposed of: SUPREME COURT OF INDIA

2020-TIOL-1747-HC-MAD-CT

Sri Siva Saravana Blue Metals Vs ACST

Whether assessee is entitled to the inclusion of 'High Speed Diesel Oil' as a commodity in the registration certificate and is also entitled for issuance of 'C' Forms - YES : HC

- Assessee's petition allowed: MADRAS HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-163-SC-ST-LB

CST Vs Verizon India Pvt Ltd

ST - Tribunal while allowing appeals has held that since the services have been provided by the appellant under contract with Verizon US, who are located outside India and have raised their invoices for such services and have received the remittance in convertible foreign exchange, the appellant satisfies all the conditions, as specified under Rule 6A of Service Tax Rules, 1994, inserted w.e.f 1.7.2012; that the appellants have rendered services to Verizon US as principal service provider and not as an 'intermediary' and accordingly, appellants are entitled to refund under Rule 5 of the Cenvat Credit Rules, 2004 read with the notification 27/2012-CE (NT) - aggrieved, Revenue has filed appeal before Supreme Court.

Held: Delay condoned - Matter to be listed along with the connected matter SLP (C) Dy. No. 18328/2018 in the third week of November, 2020: Supreme Court Larger Bench

- Matter listed: SUPREME COURT OF INDIA

2020-TIOL-162-SC-ST-LB

Commissioner Of Central Excise Goods and Service Tax Vs N C Paul And Company

ST - CESTAT has held that activities of hiring pay loaders for loading of coal at pit head within the mines for internal transportation cannot be classified under Cargo Handling Service; that the activity of hiring pay loader for loading coal into railway wagon at railway siding for outward transportation is taxable under Cargo Handling Service; that the duty demand merits being confined to the normal period of limitation due to interpretation dilemma within the trade and within the department during the infance of the levy; that the penalties merit being set aside and the matter is remanded for separate quantification of tax demand - Revenue is in appeal against this order.

Held : Matter to be tagged along with Diary No.21263/2019 and other connected matters: Supreme Court Larger Bench

- Matter tagged: SUPREME COURT OF INDIA

2020-TIOL-1527-CESTAT-MUM

Life Insurance Corporation of India Vs CCE

ST - The issue relates to confirmation of tax liability held to have arisen from operation of rule 6 (3) of CCR, 2004 owing to non-reversal of credit availed on 'input services' that was attributable, mathematically, to rendering of services by assessee on which tax liability was not required to be discharged - In addition, the charging of appropriate interest under section 75 of FA, 1994 and imposition of penalty of like amount under section 78 of FA, 1994 while dropping demand that had been proposed in SCN issued to assessee are also under challenge - Recovery has been premised on the hypothesis that subsequent inclusion of a portion of consideration, hitherto excluded, in assessable value by expansion of definition of taxable service or by fresh enumeration unveils the existence of exempt service for which consideration has been received by provider of service - Ex facie, this proposition is liable to be rejected for it rides on retrospective application to deny credit; unveiling of the past from a subsequent enactment to foist detriment on tax assessees is not within the empowerment of tax administration - Neither is such a test for coverage within 'exempt service' enjoined by law - Considering that it has been held in Indian National Shipowners' Association and Anr 2009-TIOL-150-HC-MUM-ST by the High Court of Bombay and duly affirmed by Supreme Court in Indian National Shipowners' Association and Anr 2009-TIOL-129-SC-ST , that no taxable service can, by inference, be presumed to exist until specifically enumerated in section 65 (105) of FA, 1994, this proposition advanced by, and on behalf of, the adjudicating authority fails the test of judicial confirmation - Consequently, the inference that the service described in section 65 (105) (zx) of FA, 1994 is a bundle from which one has been isolated for tax till 1st May 2011 is also not tenable; this should have been amply evident from the absence of a new entry to describe such service identified for levy of tax - Neither does the tax on 'management of segregated fund' in section 65 (105) (zzzzf) of FA, 1994 with effect from 16th May 2008 obtain support for it as this freshly incorporated taxable service is a fiction designed by law through a deeming provision - Hence, it is abundantly clear that the expansion of taxable value through the two amendments did not bring new services into existence - Even if it did, the subsequent existence of such service could not enable assumption that these were exempted till then - The scope of 'exempted services', as defined in Rule 2 (e) of CCR, 2004, had been examined by Tribunal, while dealing with another dispute pursuant to the very same expansion of this taxable service - The amendments in section 65 (105) of FA, 1994 in relation to 'endowment policies' and 'unit linked insurance plan (ULIP) policies' cannot be held to have established 'exempted services' warranting any restriction on availment of CENVAT credit of 'input services' as provided for in the rule 6 of CCR, 2004 - The impugned order, thus, lacks authority of law and is set aside: CESTAT

- Appeal allowed: MUMBAI CESTAT

2020-TIOL-1526-CESTAT-MUM

Gammon India Ltd Vs CST

ST - The dispute concerns the stage - on receipt or on issue of the bill - at which 'mobilization advance' paid to the assessee is leviable to tax - The several contracts provide for payment to be made at different, pre-determined stages of performance and are, generally, subject to evaluation of work undertaken - It is also seen that such appraisal, as a prelude to making payments, is not undertaken until after the execution of work in relation to the taxable service has commenced and that all the contracts, while linking such measurable stages, provide for payment of only 90% of contracted amount for the entirety of the work - The 'mobilization advance' is adjusted against the final payment due and is not linked to the work but as a pledge of contract between the assessee and principal - It is also subject to furnishing of prescribed 'bank guarantee'; there is no connection with the performance of contract - It is not in dispute that 'mobilization advance', carrying interest, is granted to enable the contractor to prepare for undertaking the contracted work - The subsequent adjustment with the final payment due does not suffice to construe this as an advance payment for the work to be done merely because the recipient and payee happened to be the provider of service - The payment of 'mobilization advance' is but a separate financial transaction within the contract for providing of service and within the limits laid down by Supreme Court in re Intercontinental Consultants and Technocrats Ltd 2018-TIOL-76-SC-ST , is not permitted to be included in 'gross amount' envisaged in section 67 of FA, 1994 - In view of absence of allegation that any part of contracted value has not been levied to tax, the demand is not consistent with law and deserves to be set-aside: CESTAT

- Appeal allowed: MUMBAI CESTAT

CENTRAL EXCISE

2020-TIOL-161-SC-CX-LB

CCE & CGST Vs Focus Energy Ltd

CX - Issue involved is as regards the imposition of the Oil cess and National Calamity Contingent Duty (NCCD), Education cess (EC), Secondary and Higher Secondary Education cess (SHE) on condensate which emerges during the process of processing of the natural gas in the appellant's natural gas processing plant - The appellant have been classifying the product under CSH 2709 claiming it as a form of natural gas - The assessee have been filing the required ER-1 returns for the same wherein they have claimed that the condensate being form of gas is NIL rated so far as central excise duty is concerned and, therefore, other duties such as all cess, NCCD, education cess, secondary and higher secondary cess, on the quantities of condensate cleared by them is not leviable - CESTAT has also observed that this issue had been previously decided by Tribunal in the appellant's own case - 2019-TIOL-734-CESTAT-DEL whereunder it is held that oil cess is not leviable on the "condensate" under OIDA Act, either on merits or also on limitation - following the same, order-in-appeal was held to be without any merit and same was set aside and appeal was allowed - Revenue is aggrieved and in appeal before the Supreme Court.

Held: After condoning the delay, the Civil Appeal is dismissed on the ground of low tax effect - Question of law is left open: Supreme Court Larger Bench

- Appeal dismissed: SUPREME COURT OF INDIA

2020-TIOL-1525-CESTAT-CHD

Ranjeev Steel Pvt Ltd Vs CCE & ST

CX - The assessee is in appeal against impugned order wherein the interest of delayed refund has been rejected by department - The adjudicating authority has sanctioned the refund claim under Section 11B of CEA, 1944 and the said part of order has attained finality as the revenue had not challenged the said order before any appellate authority - In the impugned order, mere mentioning that the adjudicating authority has erroneously sanctioned refund claim under Section 11B of the Act shall not make the order of adjudicating authority on better footing - The fact is on record that the adjudicating authority sanctioned refund claim under Section 11B of the Act, therefore, provisions 11BB of CEA, 1944 are attracted to the facts of this case for entertaining the claim of interest - Assessee is entitled to claim interest on delayed refund - Now, the question arises, from which date the assessee is entitled to claim interest on delayed refund - It is a settled law by Apex Court in case of Ranbaxy Laboratories Ltd. 2011-TIOL-105-SC-CX that assessee is entitled to claim interest on delayed refund after three months from the date of filing of refund claim before the authorities till its realization - Therefore, assessee is entitled to claim interest after three months from the date of filing of refund on 19.09.2016 till its realization: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

CUSTOMS

2020-TIOL-1745-HC-MAD-CUS

Lahari Impex Pvt Ltd Vs CC

Cus - Controversy in brief is with regard to the Notification No.158/95-Cus on the question that whether the goods re-imported for repair/reconditioning of the goods, when again re-exported beyond the prescribed period of one year including the extension of six months permitted in the Notification, whether the Importer/ Assessee is liable to pay duty denying the concession/ exemption of the said Notification No.158/95-Cus or not.

Held: Re-import of the goods which had taken place to repair/recondition the goods in question were re-exported beyond the prescribed period of one year including the period of six months of extended period and, therefore, the Assessee had admitted the breach of the condition of exemption from customs duty under the said Notification No.158/95-Cus - Merely because the Assessee could claim the duty drawback later on, and it may give rise to a revenue neutral situation, it cannot be said that the period of one year prescribed in the said Notification is without any meaning - Whether the Assessee/ Importer would actually get such duty drawback or not, is a question which was yet to be determined by the Adjudicating Authority concerned when such a claim of duty drawback is made by the Assessee - Therefore, that issue cannot be prejudged either by the Tribunal or by this Court - On the admitted breach of the Notification No.158/95-Cus, the Assessee/Importer definitely became liable to pay the custom duty in question, denying the exemption under the said Notification in view of the admitted delay beyond the period of 12 months, for the re-export of the same goods – CESTAT, therefore, was justified in denying the said exemption to the Assessee and also rejecting the Rectification Application filed by the Assessee - What Tribunal has done is nothing but asking the Assessee to comply with the law – no question of law arises in the present appeals, hence dismissed: High Court [para 6, 8]

- Appeal dismissed: MADRAS HIGH COURT

2020-TIOL-1524-CESTAT-MUM

Crystaline Exports Pvt Ltd Vs CC

Cus - Appellant had filed Shipping Bill No. 9803273 dated 11/07/2012 for exports of goods described as Cotton/Polyester Woven Ladies Top/Tunic Top with FOB drawback benefit of Rs. 1,03,865/- under Drawback Code 620638; the Examiner/Operator, Assistant Commissioner, Jt. Commissioner disagreed with the drawback code and classified the goods under the head 6211; adjudged the case as mis-declaration and levied a fine of Rs.40,000; request of the appellant to draw the sample and send it to Textile Committee or any classification agency for classification was flatly turned down by the Joint Commissioner - The Appellant exported the consignment under protest after payment of the penalty and filed an appeal against the order passed by the Joint Commissioner of Customs (Export), JNCH, Nhava Sheva – Commissioner (A) ignored the report of the Textile Committee certifying the Code 6206 for the consignment stating that it cannot be considered as evidence as there was no representative sealed sample forwarded by the department; Commissioner also ignored samples produced of the consignment in question to ascertain that the tightening was around the waist level without any pocket - As Commissioner(A) rejected the exporter's appeal, they are before the CESTAT.

Held: Textile Committee report was not considered stating that the sample was not drawn by the department and were drawn by the appellant themselves - This approach is incorrect inasmuch as the department should have got the goods tested in the first place before coming to a conclusion - They could have at least sent samples at least on the request of the appellant - Both having not been done, Revenue cannot brush aside the report given by an expert Committee simply for the reason that sample was not drawn and referred by the Department - Department has also not adduced anything to counter the report of the Textiles Committee - Revenue has not proved that the sample sent to Textile Committee was not representative of the impugned goods - Moreover, the classification suggested by the Public Notice supports the appellants claim - Though the Public Notice is issued by another Custom House, it can be used as a reference - The Public Notice along with the Textile Committee report support appellants claim - Therefore, the allegation of misdeclaration is not substantiated - Consequently, the imposition of penalty and fine are not justified - In the result, the appeal is allowed with consequential relief: CESTAT [para 5 to 7]

- Appeal allowed: MUMBAI CESTAT

HIGH LIGHTS (SISTER PORTAL )


	TII TP - Intervention of HC is warranted in respect of an issue which involves appreciation of facts, more so where applicant is also free to raise such issue in appeal to Tribunal, which is ultimate fact-finding authority: HC TP - CIT(A) is justified in allowing deduction u/s 10A to assessee when undertaking of assessee has been formed by splitting up or reconstruction of business already in existence: ITAT TP - PCIT is justified in exercising power u/s 263 when Assessing Officer himself made an opinion that international transactions carried by assessee are within arm's length: ITAT TIOL CORPLAWS Arbitration and Conciliation Act - Even if respondent loses its right to appoint arbitrator, Court can still appoint arbitrator if it is convinced that person whose name has been suggested is suitable and qualified: HC Companies Act - Sec 18 of Limitation Act, 1963 is applicable to Insolvency Cases: NCLAT

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