2020-TIOL-NEWS-248, Dated: Tuesday, October 20, 2020

2020-TIOL-NEWS-248| October 20, 2020

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INCOME TAX


	2020-TIOL-165-SC-IT-LB CIT Vs Somani Charitable Trust Whether in deserving case delay can be condoned and application seeking exemption from filing certified copy of the order can be allowed - YES : SC -Revenue's petition allowed :SUPREME COURT OF INDIA 2020-TIOL-164-SC-IT-LB Pr.CIT Vs City Centre Mall Nashik Pvt Ltd Whether in deserving case Special Leave Petition can be dismissed - YES : SC - Revenue's Petition dismissed :SUPREME COURT OF INDIA 2020-TIOL-1751-HC-MUM-IT CIT Vs Mukhtar Minerals Pvt Ltd Whether the AO is not required to proceed to assess the revised return or finalize the proceedings only on the basis of the revised return if the revised return was filed by the Assessee beyond the prescribed period of limitation - YES : ITAT - Revenue's appeal allowed: BOMBAY HIGH COURT 2020-TIOL-1750-HC-KAR-IT CIT Vs Jindal Aluminium Ltd Whether, deduction u/s Section 80IA can be granted windmill wise instead of eligible business wise - YES: HC - Revenue's appeal dismissed: KARNATAKA HIGH COURT 2020-TIOL-1749-HC-AHM-IT PR CIT Vs Gopal Space Org P Ltd Whether additions framed u/s 69 on account of unexplained investment, are sustainable, where it is based on assumptions of they being unexplained assets, when in fact no such asset came into existence in the assessee's name - NO: HC - Revenue's appeal dismissed: GUJARAT HIGH COURT 2020-TIOL-1748-HC-MAD-IT CIT Vs Enmas Engineering Pvt Ltd Revenue is in appeal against the Tribunal order holding that the additions made under deemed dividend as per Section 2 (22)(e) cannot be sustained. Relying on the decision in the case of The Commissioner of Income Tax, Chennai Vs. M/s. Checkpoint Apparel Labelling Solutions India Ltd., in T.C.A.No.307 of 2019, the HC rules against the Revenue. - Revenue's appeal dismissed: MADRAS HIGH COURT 2020-TIOL-1246-ITAT-DEL Sequel Alloys & Wires Pvt Ltd Vs DCIT Whether penalty is not sustainable if none of the twin charges in notice u/s 274 of the Act are stuck off - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2020-TIOL-1245-ITAT-DEL India Flysafe Aviation Ltd Vs DCIT Whether CIT(A) is justified in sustaining the disallowance made by the AO regarding Written off Deferred Revenue Expenditure, when in his opinion exact period of lease could not be verified - NO: ITAT Whether CIT(A) is justified in holding the repairing cost as capital expenses when he was of the opinion that the repairs done was of the essential nature - NO: ITAT - Assessee's appeal allowed: DELHI ITAT 2020-TIOL-1244-ITAT-DEL Ganpati Breweries Ltd Vs ITO Whether it is against interest of justice if the issue regarding non-issuance of notice u/s. 143(2) has not been decided by the First Appellate Authority - YES : ITAT - Assessee's appeal allowed: DELHI ITAT 2020-TIOL-1243-ITAT-MUM Tech Mahindra Ltd Vs ACIT Whether assessee's appeal against order passed in consequence to exercise of revisionary power u/s 263, is rendered infructuous, where the AO overshoots the limitation period prescribed for passing such order giving effect to directions issued by the CIT - YES: ITAT - Assessee's appeal dismissed: MUMBAI ITAT 2020-TIOL-1242-ITAT-PUNE ACIT Vs Kaiser Jamil Khan Whether CIT(A) is justified in allowing the benefit of deduction u/s 80IB(10), when the project was not completed within 4 years from the date of commencement of the project - YES: ITAT - Revenue's appeal dismissed: PUNE ITAT 2020-TIOL-1241-ITAT-CHD Fewa Electrical Corporation Vs ITO Whether CIT(A) is justified in sustaining the disallowance u/s 80IA(10) when the Assessing Officer has presumed providing of technical know how by related concern - NO: ITAT Whether in the facts and circumstances of the case, CIT(A) is justified in sustaining the addition on account amount stated to be charged in excess from sister / related concern - NO: ITAT - Assessee's appeal allowed: CHANDIGARH ITAT 2020-TIOL-1240-ITAT-INDORE Jain Shwetamber Vs CIT Whether CIT(E) is justified in issuing a registration u/s 12AA to the assessee with the new effect date, when assessee had applied only for the duplicate registration certificate - NO: ITAT - Assessee's appeal allowed: INDORE ITAT

GST CASES

2020-TIOL-1757-HC-AHM-GST

Rajesh Kiran D Vs JCST

GST - Writ applicant is in the business of Areca Nuts - He received a letter from a party, situated at Delhi for supply of Areca Nuts - Three invoices were generated for the purpose of supply of the goods to the party stationed at Delhi - The goods were loaded in a vehicle bearing No. TN 50AA3666 from Kasaragod - E-way bills were generated on 01.08.2020 for all the invoices referred to above - The respondents intercepted the vehicle at 8:30 p.m. at Songadh-Surat Road and issued Form MOV-01 - The goods and the truck came to be seized under Section 129 of the GST Act, 2017 - In the Form GST MOV-06 discrepancies have been shown upon physical verification of the goods and the conveyance - Applicant inter alia seeks quashing of the said order of seizure.

Held: The matter, as on date, is at the stage of Form GST MOV-10 - Thus, the writ applicant has been called upon to show-cause as to why the goods and the vehicle should not be confiscated under Section 130 of the Act - The writ applicant is before this Court with a prayer that the goods and the vehicle may ordered to be released pending the confiscation proceedings - As the confiscation proceedings are pending, Bench is not inclined to grant any relief as prayed for at this point of time - If the writ applicant wants provisional release of the goods and the vehicle, it is always open for him to prefer an application before the authority concerned under Section 67(6) of the Act, 2017 - And if such application is filed, then the authority concerned shall look into the same at the earliest and pass an appropriate order in accordance with law - With the above observations, writ application stands disposed of: High Court [para 5 to 7]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-60-AAAR-GST

Karnataka State Electronics Development Corporation Ltd

GST - AAR had held that s treet lighting activity under the Energy Performance Contract [ESCO] amounts to composite supply where the principal supply is that of supply of goods; that the rate of tax applicable is @ 12% in terms of Sl. no. 226 of Schedule II to 1/2017-CTR; that since the impugned supply is not a pure service, applicant is not entitled to the benefit of exemption under Entry 3 or 3A of Notification 12/2017-CTR; that the time of supply is the date of invoice and the consideration is equal to the value of invoice, the GST rate being 12% - aggrieved, the applicant has filed an appeal before the AAAR.

Held: Supply under the ESCO contract is a composite supply involving both, a supply of service as well as supply of goods - The principal supply is, however, a supply of service as it is the operation, management and maintenance of the street lighting system which is the essence of the ESCO contract - the LED lights and other equipment like smart feeder panels are goods used for the rendering of the service, therefore, AAAR disagrees with the lower authority's ruling that the principal supply is a supply of goods - There is no doubt on the fact that the supply is made to a local authority (Thane Municipal Corporation) and the service supplied is in relation to a function entrusted to the municipality under Article 243W of the Constitution - However, the ESCO contract involves the supply of goods albeit at the time of the termination of the contract, therefore, the first condition of it being a pure service is not fulfilled - A pure service must necessarily not involve a supply of goods - AAR order in case of Kochi Metro Rail Ltd. is binding only on the applicant and the officer concerned and jurisdictional officer nonetheless in that case there is no mention of supply of goods by applicant - Appellant is, therefore, not eligible for exemption benefit as a pure service under entry no. 3 of 12/2017-CTR - Even the benefit of exemption under entry 3A of 12/2017-CTR is not available since the condition that the value of goods supplied should not exceed 25% of the total value of supply is not satisfied - Service of street lighting is classifiable under heading 9991 12 and this heading is chargeable to tax at the rate of 18% - time of supply in this case will, in terms of s.13 of the CGST Act be the earliest of the following dates viz. date of issue of invoice to TMC or date on which the payment is entered in the books of account of supplier or date on which the payment is credited to his bank account - AAR order is set aside and appeal is disposed of: AAAR

Appeal disposed of: AAAR

2020-TIOL-59-AAAR-GST

Macro Media Digital Imaging Pvt Ltd

GST - Applicant had sought a ruling as to whether the transaction of printing of content provided by the customer, on Poly Vinyl Chloride (PVC) banners and supply of such printed trade advertisement material is supply of "goods"; what is the classification of such trade advertisement if the transaction is supply of "goods"; what is the classification and applicable rate of GST on the supply of such trade advertisement material if the transaction is that of supply of "service" - AAR had adverted to Circular 11/11/2017-GST dated 20.11.2017 and concluded that the activity of printing the content supplied by the recipient on the PVC material becomes principal supply and such supply constitutes supply of "service" falling under SAC 9989; that the applicable rate of GST on the supply of the said service is @18% up to 30.10.2017 and @12% w.e.f 31.10.2017 as per Entry no. 27 of 11/2017-CTR - Aggrieved, the applicant is before the AAAR.

Held: What has been lost sight of is the fact that the activity of digital printing on the PVC material brings into existence a new product with a specific use for advertising and known in trade and common parlance as "Flex banner" or "Flex billboard" or "free standing display unit" - Appellant is not merely printing the images or reproducing the content given by customers on to the PVC material - The appellant is making a product which serves as an advertising material for the customer - Without the activity of printing the content given by the customer, the PVC material is of no use to the customer as it does not serve the purpose of any advertisement - The activity of printing brings into being an advertisement product and it is this product which has been ordered by the customer - Printing is a service rendered by the appellant to himself in order to execute the supply of trade advertising material - In other words, the supply in the case of the appellant is not the printing service but a supply of the trade advertisements either as a banner or billboard or free-standing display unit etc. which are products emerging out of the printing activity - What the appellant does is supply a product which it produces to the customer's requirements and satisfaction - The supply of the product is the predominant activity - Furthermore, cost of the product supplied by the appellant is charged on the basis of Sq. Ft. - Appellate Authority is of the opinion that digital printing on PVC material gives rise to a distinct trade advertisement product and supply of such products by the appellant is a supply of goods - Ruling given by AAR is set aside - Such Trade advertisements are classifiable under SH 4911 10 and attract GST @12% in terms of Sl. no. 132 of Schedule II of 1/2017-CTR: AAAR

- Appeal disposed of: AAAR

2020-TIOL-58-AAAR-GST

NMDC Ltd

GST - AAR had held by its order dated 21.09.2019 [2019-TIOL-397-AAR-GST] that r oyalty paid in respect of Mining lease is a part of consideration payable for licensing services for right to use minerals including exploration and evaluation falling under Heading 9973 and the same is taxable at the rate applicable on supply of like goods involving transfer of title in goods up to 31.12.2018 and taxable at 9% CGST and 9% SGST from 01.01.2019 under residual entries of Sr. no. 17 of 11/2017-CTR as amended - AAR further held that s tatutory contribution made to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) as per MMDR Act, 1957 is also a part of the consideration payable for the licensing services for right to use minerals including exploration and evaluation - Furthermore, s ince supply of services by the government to a business entity located in the taxable territory are covered under Sr. no. 5 of 13/2017-CT, the liability to pay tax is on the recipient of such services on reverse charge basis - applicant had filed an application dated 23.01.2020 for rectification of an alleged mistake in the said order dated 21.09.2019 but the said application was rejected by the AAR by its order dated 23.03.2020 - applicant has, therefore, filed appeal against the said order of rejection of rectification application.

Held: It is clear that even in cases where a rectification of mistake application is admitted and a mistake apparent on record is corrected, the original order is not set aside; the original order remains on record and only the mistakes are corrected therein; that the principle of doctrine of merger will not apply in such cases - Any appeal can be made only against the original order which will be read together with the correction made in the rectification order - In the present case, the rectification application was not admitted as there was no error apparent on record and hence the original order stands without any changes - Therefore, the appeal should have been filed by the appellant against the Advance ruling order dated 21.09.2019 within the period of 30 days from the date of communication of the said order - Assuming for the sake of argument that the present appeal is an appeal against the advance ruling dated 21.09.2019, even then it is observed that the statutory time limit for filing an appeal against the advance ruling has long expired - The appellate authority being a creature of statute is empowered to condone a delay of only a period of 30 days after the expiry of the initial time period for filing appeal and not beyond - In view of the aforesaid, AAAR holds that the appeal filed against ROM order dated 23.03.2020 is not maintainable inasmuch as the impugned order is not an appealable order u/s 100 of the CGST Act, 2017 - ROM rejection order dated 23.03.2020 does not merge with the original advance ruling dated 21.09.2019 - since the appeal is not maintainable, the question of addressing the issues raised in the appeal does not arise: AAAR

- Appeal dismissed: AAAR

MISC CASES

2020-TIOL-166-SC-VAT-LB

Excise and Taxation Commissioner Haryana Vs Indian Oil Corporation Ltd

In writ, the Larger Bench of the Supreme Court dismisses the present appeal on grounds of delay in filing appeal.

-Revenue's SLP dismissed :SUPREME COURT OF INDIA

2020-TIOL-1752-HC-MAD-VAT

Wabco India Ltd Vs ACCT

Assessee is in appeal against the AO, who is a Quasi Judicial Authority, has not independently applied his mind while dealing with the proceedings, but has adopted the averments and proposals of the Enforcement Wing/ISIC Authorities, who are their higher authorities. Relying on Circular No.3 dated 18.01.2019 issued by the Commissioner of State Tax, Chennai, the HC rules against the Revenue.

- Assessee's writ petition allowed: MADRAS HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-1529-CESTAT-KOL

Lumino Industries Ltd Vs CST

ST - The appeal has been filed by assessee against disallowance of Cenvat credit of service tax paid on outward transportation services from factory to customer's premises for the period in dispute i.e from January 2005 to December 2007 - In identical matter in case of Vesuvious India Ltd 2013-TIOL-1038-HC-KOL-ST , the issue was decided against the assessee - The said decision was further carried in appeal before the Supreme Court which has settled the issue in favour of assessee - In the said decision, while deciding the batch of appeals filed by Department as well as assessee reported as 2018-TIOL-90-SC-CX , the Apex Court has inter-alia held that the assessee is legally eligible to avail credit on outward transportation availed from place of removal upto a certain point, whether it is a depot or customer's premises - The availment of credit on outward transportation from factory gate to customer's place pertains to period prior to April 2008 i.e. prior to period when the definition of input service was amended - Since the credit eligibility finally stands decided by Apex Court in favour of assessee, the impugned adjudication order is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

2020-TIOL-1528-CESTAT-MUM

Overseas Infrastructure Alliance India Pvt Ltd Vs CCGST

ST - The assessee is engaged in business of Erection, Commissioning and Installation Service and exporting the project to African Countries - They availed Cenvat credit of various input services and had filed two refund claims under Rule 5 of CCR, 2004 r/w Notfn 27/2012-CE(NT) , one for the period January to March 2016 and another for the period April to June, 2016 on the ground that they have exported erection, commissioning and installation services to Overseas clients but were not in a position to utilise the Cenvat credit taken on input services used in providing output services exported without payment of service tax - The Adjudicating Authority granted relief to the assessee qua sponsorship service proportionately and the same was neither challenged by assessee nor by the Revenue before Commissioner, but the commissioner still chooses to give findings on the said service also that too in the appeal filed by assessee - In view of the decision of a co-ordinate Bench of Tribunal in Mavenir Systems Pvt. Ltd. 2012-TIOL-966-CESTAT-BANG , the findings recorded by Commissioner on the said service is beyond his jurisdiction and hence liable to be ignored - An amount of Rs.77,875/- is in issue against Club or Association Membership Service for both the periods i.e. January to March, 2016 and April to June, 2016 and an amount of Rs.58,489/- is in issue qua Design Service for the period January to March, 2016 only - A reading of Rule 2(l) (C) of CCR, 2004 makes it clear that after 01.04.2011, certain services have been specifically excluded from definition of 'input service' which includes membership of club also but this exclusion is only when such services are used primarily for personal use or consumption by any employee Meaning thereby that this exclusion will not apply in other cases e.g. Corporate club membership without naming any specific employee will be eligible - It is the case of assessee that they have not been availed for personal or recreational activity - Nothing has been produced, except mere allegation, by the department to establish that the club or association membership has been used or consumed by any employee personally - Documentary evidence has been submitted by assessee before the authorities below to establish the plea that service tax has been paid with regard to membership of ASSOCHAM, National Highway Builders Federation, the Taj Mahal Hotel and Federation of Indian Exports Organisation - It is not the case of Revenue that the membership has been taken in the name of any particular employee - The absence of these services will have an impact on the quality and efficiency of output service and therefore will be eligible as input service - So far as membership of Taj Mahal Hotel is concerned, since the members gets priority in the respective hotels where they are members therefore membership of hotels also becoming essential day by day as the members can get conference halls, cabins in a short notice for conducting business meetings with foreign delegates and the same is the case of assessee also - Therefore, it has also nexus with the output service - Similarly Diaries/calendars are also essential part of business promotion therefore designing them can very well be said to have nexus with the output service: CESTAT

- Appeals allowed: MUMBAI CESTAT

CENTRAL EXCISE

2020-TIOL-1530-CESTAT-AHM

Standard Pesticides Pvt Ltd Vs CCE & ST

CX - Assessee is in appeal against impugned order, whereby the Commissioner (A) has upheld the rejection of rebate claim of Excise Duty paid on goods exported through merchant exporters - There is no dispute that assessee have claimed rebate of duty paid on the goods exported through merchant exporters - Therefore, even though the Commissioner has given findings as regards unjust-enrichment, the nature of rebate is not altered - As against the export of goods, duty is refunded as rebate claim and not as a normal refund - Therefore, this case relates to rebate of duty paid on export of goods - As per Section 35B (1) proviso (b), the Tribunal has no jurisdiction in the cases relates to rebate of duty - The assessee has liberty to approach the right form, Additional/ Joint Secretary to Government of India, Revisionary Authority by filing revision application - Accordingly, appeal disposed of as non maintainable on the ground of jurisdiction without going into merits of the case: CESTAT

- Appeal disposed of: AHMEDABAD CESTAT

CUSTOMS

2020-TIOL-1531-CESTAT-MUM

Crysta Led Pvt Ltd Vs CC

Cus - The issue involved is not having any relation to the rate of duty of Customs or to the value of goods for the purpose of assessment that would prohibit the Single Member Bench to hear the appeal as contemplated in Section 129C(4)(b) of Customs Act, 1962 - On the other hand, it is concerned with the requirement of production of a certificate from BIS Authority for release of goods - Therefore, having regard to the fact that the goods are live consignment on which earliest possible hearing is to be afforded to the assessee, the early hearing application is allowed: CESTAT

- Application allowed: MUMBAI CESTAT

HIGH LIGHTS (SISTER PORTAL )


	TII I-T - Payment made to Non residential company having no PE or business connection in India, for procurement of orders are not subject to deduction of tax at source u/s 195: ITAT I-T - Assessment order is not erroneous or prejudicial to interest of Revenue for non disallowance of demurrage charges paid without deduction of tax at source as no obligation has been cast upon assessee to deduct tax u/s 195: ITAT TIOL CORPLAWS Arbitration and Conciliation Act - Definitions have an independent existence or applicability apart from statute or law wherein they have been mentioned: HC IBC - It is permitted to submit copies of GST Returns manually in physical form when company is undergoing liquidation and its GST registration is cancelled: NCLT

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