2021-TIOL-NEWS-044, Dated: Monday, February 22, 2021

2021-TIOL-NEWS-044| February 22, 2021

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INCOME TAX


	2021-TIOL-435-HC-MAD-IT CIT Vs Young Womens Christian Association Whether rectification/amendments made to bye-laws of Society would only operate prospectively while granting registration u/s 12AA - YES: HC - Revenue's appeal allowed: MADRAS HIGH COURT 2021-TIOL-433-HC-AHM-IT Dolphin Metal India Ltd Vs ITO Whether Tribunal cannot dismiss the appeal without adverting to the merits of case - YES: HC Whether when taxpayer appears and satisfy the Tribunal about sufficient cause for its nonappearance on date of hearing, then Tribunal can set aside ex-parte order and restore the appeal - YES: HC - Assessee's writ application allowed: GUJARAT HIGH COURT 2021-TIOL-350-ITAT-DEL Bio Rad Laboratories India Pvt Ltd Vs DCIT Whether precedent decision of Tribunal becomes binding for AO to follow, while carrying out assessment in case of identical facts & circumstances - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2021-TIOL-349-ITAT-DEL Green Valley Tower Pvt Ltd Vs ACIT Whether reopening initiated by relying on seized documents unearthed during course of search, which belonged to other group companies, merits to be quashed - YES: ITAT Whether such seized documents can be equated with existence of incriminating seized material belonging to the taxpayer company in question - NO: ITAT - Assessee's appeal allowed: DELHI ITAT 2021-TIOL-348-ITAT-DEL ACIT Vs IFFCO Ltd Whether disallowance u/s 14A is to be computed after excluding dividend income - YES: ITAT - Revenue's appeal dismissed: DELHI ITAT 2021-TIOL-347-ITAT-MUM State Bank Of India Vs ACIT Whether when there is no specific bar in law on travel, eligible for exemption u/s 10(5), involving sector of overseas travel, then employer cannot be faulted for allowing LFC on travel outside India - YES: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2021-TIOL-346-ITAT-MUM Parin Ashok Tolia Vs ITO Whether assessee's failure to substantiate authenticity of a purchase justifies addition/disallowance to the said extent but by no means on standalone basis justifies levy of penalty u/s 271(1)(c) of Act - YES: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2021-TIOL-345-ITAT-AHM Baldevbhai Mangaldas Patel Vs DCIT Whether when all information furnished by taxpayer with regard to information called for by AO, tallied AIR information, and same stood accepted, then reopening on basis of change of opinion is not permitted - YES: ITAT - Assessee's appeal allowed: AHMEDABAD ITAT

MISC CASE


	2021-TIOL-434-HC-AHM-VAT Vihabhai Shivdas Patel Vs CTO Gujarat Value Added Tax Act, 2003 - Section 32(4) - The Assessee is in the business of reselling of grains, oilseeds etc. and was registered under the provisions of the Gujarat Value Added Tax Act, 2003. The Assessee has applied for cancellation of VAT Registration with effect from 12.04.2010. After submitting the application for cancellation of registration, Assessee did not have received any communication of cancellation at the end of the respondents herein. It is the case of the Assessee that during the assessment period from 1.4.2010 to 01.01.2011 his sale turn over was Rs. 2,26,32,946/- and had collected tax on the same to the tune of Rs. 9,05,318/- from the different parties. After some business transactions, later on assessee came to know about his cancellation of registration with effect from 12.04.2010 and accordingly, he was duty bound to return the amount of tax collected from the different parties during the said period of assessment - Revenue searched the premises of the Assessee on 05.06.2014 and his statement was recorded and it was found by the authority that being unregistered dealer, he was not legally authorized to collect the tax and failed to deposit the same with the concerned office. At the relevant time, he had explained to the authority that he had made the payment of tax to the concerned parties. However, the authority coerced the Assessee to pay the said tax amount of Rs. 9,05.318/- on the spot. Under this circumstances, the Assessee had issued two cheques amounting to Rs. 5,00,000/- and Rs. 4,05,318/- respectively to the Revenue under protest - Assessee was served with notice in Form 301 and notice for imposing penalty in Form 309 as provided under Section 32(4) of the GVAT Act. The time limit to complete the assessment has already expired. It is further alleged that the Revenue has neither initiated proceedings pursuant to the said notice served in Form 301 and 309, nor passed any assessment order under Sections 32 and 34 of the GVAT Act till date. In this circumstances the Assessee had sent to Revenue authorities either to make assessment finally or to refund the amount. However, the request of the Assessee has not been processed - at the time of search, it was informed by the Assessee that he had made the payment to different parties to the tune of Rs. 8,14,250/- by way of cheque. Desite of this, the authorities had collected the tax to the tune of Rs. 9,05,318/-. Since 2014, the Revneue authorities have not issued any assessment order after serving notice of provisional assessment in the prescribed form. Even no notice has been issued by the Revneue authorities invoking provisions of Section 8A(a) of Section 34 of the GVAT Act, 2003 - The Assessee is entitled to get the refund of amount. Authorities have no legal justification for withholding the amount, which is otherwise refundable to the Assessee and the action of the Revneue authorities could be said that such withholding of refund is contrary to the provisions of Section 36 of the GVAT Act, 2003. - Assessee's appeal allowed: GUJARAT HIGH COURT

GST CASE


	2021-TIOL-437-HC-AHM-GST SKJ Finvest Advisory Pvt Ltd Vs UoI GST - Attachment of Bank account - Petitioner submits that they will maintain the minimum balance of Rs. 22 lac in the bank account which has been attached by the department - Inasmuch as at the time of attachment of the bank account, the balance available was Rs. 22 lac; that if they are permitted to operate the bank account, the would maintain the minimum balance of Rs. 22 lac in the same so as to protect the interest of the revenue pending the inquiry - Counsel for Revenue submitted that the writ-applicant should be asked to file an undertaking before this Court on oath that he shall maintain the minimum balance of Rs. 22 lac in his bank account. Held: Bench disposes of the writ-application by directing the writ-applicant to maintain the minimum balance of Rs. 22 lac in the bank account in question up to 21st September 2021 and on complying with this condition, the writ-applicant is permitted to operate his bank account - Writ-applicant shall file an undertaking in this regard on oath in writing before the department - writ-application stands disposed of: High Court [para 6] -Application disposed of : GUJARAT HIGH COURT 2021-TIOL-428-HC-RAJ-GST Anil Kumar Gupta Vs UoI GST - Allegation of wrongful claim of ITC of Rs.5,88 crores - bogus firms - Petitioner in his bail application submits that there was an actual movement of the goods, which is established by toll naka receipt, wherein the truck number is also mentioned which tallies with the truck number mentioned in the e-way bills; that if the tally exercise is conducted there would be reduction of ITC allegedly wrongly availed by about three crores; that where the offence is of wrongful claim of input tax credit below Rs.5 crore, the same is bailable and the maximum sentence provided under the Act is five years; that Petitioner is in custody since November 2020. Held: Bench deems it proper to allow the bail application - Bail application is, accordingly, allowed and it is directed that accused-petitioner shall be released on bail provided he furnishes a personal bond in the sum of Rs. 1,00,000/- together with two sureties in the sum of Rs. 50,000/- - Petitioner to appear for hearing as and when called for: High Court [para 7, 8] - Application allowed: RAJASTHAN HIGH COURT

INDIRECT TAX

2021-TIOL-436-HC-KERALA-CUS

MPM Gold House Vs CC

Cus - Petitioner has inter alia prayed for release of the gold seized - Show Cause Notice has been issued by the respondent Customs Department to the petitioner under Section 124 of the Customs Act, 1962, for confiscation of the gold as well as for imposing penalty - Petitioner submits that the allegations made in the Show Cause Notice are vague allegations without any corresponding data; that there is no iota of evidence on record of the respondent authority to show that the petitioner has dealt with smuggled gold; that the petitioner is a smuggler of the gold and, therefore, the proceedings should be quashed.

Held: It is the case of the respondent department that the petitioner is engaged in carrying the smuggled gold with the form changed under the shadow of jewellery manufacturing and he seems to be a part of well-established smuggling syndicate - There are other grounds enumerated in the Show Cause Notice issued to the petitioner asking him to show cause as to why the goods should not be confiscated and penalty should not be imposed - The Show Cause Notice further elaborates the legal provisions under which the action is sought to be taken against the petitioner, for which an opportunity of hearing is being accorded to him in pursuant to the provisions of Section 124 of the Customs Act, 1962 - In this view of the matter, the petition itself is premature - It is just at the stage of show cause - Petition is, therefore, dismissed: High Court [para 6, 7]

- Petition dismissed : KERALA HIGH COURT

2021-TIOL-432-HC-MAD-CUS

Varalakshmi Exports Vs CESTAT

Cus - Limitation - There is no period of limitation for violations of post import obligations, hence, the Questions of law 1 and 2 [viz. Whether the Tribunal is right in confirming the demand for the period 17.03.1994 to 04.10.1995 which is barred by limitation under Section 28 of Customs Act? & (ii) Whether extended period of limitation can be invoked against the appellants for the period 17.03.1994 to 04.10.1995 for demanding duty during the said period?] are answered against the Appellants: High Court [para 20]

Cus - Question is - Whether the imposition of penalty under Section 112 against the appellants is sustainable when Tribunal has not got any power to impose penalty under Section 112 of Customs Act for the first time, when there was no proposal in the show cause notice, nor the adjudicating authority has imposed such penalty under Section 112?

Held:

+ Section 114(A) of the Customs Act which empowers the Department to impose the penalty equal to the duty was not in force during the impugned period and hence the Tribunal modified the imposition of penalty by restricting it to Section 112 (prior to its amendment). The words 'prior to amendment 'assumes significance for the reason that subsection 112(b)(ii) was amended in the year 2015 by virtue of Act 20 of 2015. Prior to the said amendment, the said subsection 112(b)(ii), encompassed a discretion to impose penalty at an amount not exceeding the duty evaded or at Rs.5,000/-, whichever is greater.

+ In para 17.1 of the show cause notice also, the act of the First Appellant in selling away of the goods liable to be confiscated has been mentioned and the penalty is also contemplated under sec.112(a)(ii). However, in the concluding part of the show cause notice, the penalty for the above violation is mentioned as under sec.114-A. This is obviously for the reason that after the above amendment in the year 2015, the effect of sec.112(a)(ii) is subject to sec. 114-A.

+ Since both sec.114-A and the amendment to sec.112(b)(ii) were not in force during the relevant period, the order of the Tribunal modifying the penalty by using the discretion vested under sec.112 (prior to amendment) is correct only.

+ In fact, the modification has put the Appellants in a more advantageous situation and it was not prejudicial to their interest. The Appellants did not suffer any new penalty other than the one mentioned in the show cause despite a right provision which was in force at the relevant point of time was employed by the Tribunal.

+ The process for imposing penalty under sec. 112 has been initiated (though a more stringent provision is mentioned in the concluding portion of the show cause) from the time when show cause was issued and the Appellants have also been given with the opportunity to defend themselves. Hence the Appellant cannot claim that the order of the Tribunal which modified and reduced the penalty under sec. 112 is altogether a new one or that they were not given with any opportunity of hearing.

+ Appeal is dismissed: High Court [para 24 to 27]

- Appeal dismissed: MADRAS HIGH COURT

2021-TIOL-431-HC-MAD-CUS

Sri Venkateshwara Paper Boards Vs CC

Cus - Petitioner contends that the consignment imported has been mutilated and, therefore, their import is free whereas stand of the respondent is that the consignment contains usable paper and that, therefore, they had agreed to release the goods only on provisional basis - Although not asked for, the third respondent has passed the impugned order dated 29.12.2020 ordering their provisional release on execution of a bond for a sum of Rs.34,65,334/- and production of cash security/bank guarantee for a further sum of Rs.12,12,867/- towards redemption fine and penalty and on payment of applicable duty of Rs.9,43,411/- - Petitioner is aggrieved by this order and hence the petition - Even while asserting that the imported goods have already been mutilated, the petitioner would state that, if according to the respondents, the goods are serviceable items, the petitioner is ready to get them totally mutilated to the satisfaction of the customs authority and under their supervision, and clear the goods thereafter. Held: When the petitioner is entitled to call upon the customs authority to mutilate the goods and clear them thereafter and when the petitioner has not invoked his right under Section 110 of the Customs Act, 1962, the third respondent could not have passed the impugned order - In this view of the matter, the impugned order is quashed - The respondents are directed to permit the petitioner to have the goods mutilated at the cost of the petitioner, but under the supervision of the third respondent; as agreed by the petitioner, the cost of mutilation of goods will be included in FOB - The entire exercise will be concluded within a period of three weeks - Writ Petition is allowed: High Court [para 8]

- Petition allowed: MADRAS HIGH COURT

2021-TIOL-430-HC-MAD-CUS

Sabeer Ahamed Sayeed Vs CC

Cus - Petitioner challenges the impugned order dated 30.06.2020 whereby the petitioner along with others have been penalised - The petitioner has been imposed with penalty of Rs.3½ Crores under Section 114(iii) and 114AA of the Customs Act, 1962 - Petitioner's contention is that the relied on documents were not furnished to him and since this is a grave violation of the principles of natural justice, he is entitled to maintain this writ petition. Held: Issue boils down to ‘Whether the relied on documents were served on the petitioner or not?' - In reply to the show cause notice, the specific prayer for supply of the documents was made - In the impugned order, though it is admitted that the reply was received in response to the show cause notice from the petitioner, this contention as regards the non-supply of the relied on documents was not dealt with or controverted - Nothing stopped the adjudicating authority from averring in the impugned order that the contention taken by the noticee/petitioner herein was false - He could have also furnished proof of having served the documents in question on the petitioner - Such an averment or finding is totally absent in the impugned order - Held that the writ petitioner was not served with copies of the documents relied upon by the department both in the show cause notice as well as in the impugned order - On this sole ground, Bench is constrained to interfere with the impugned order - Order impugned in this writ petition stands quashed insofar as the petitioner is concerned - It is made clear that since it is only the petitioner who has come before this Court to challenge the impugned order, the benefit of this order will enure only in favour of the petitioner and not in favour of others - Respondent is directed to supply all the copies of the documents relied on by the department - Petitioner is directed to submit his reply within a period of two weeks - Thereafter, the respondent will pass orders afresh - Writ petition stands allowed: High Court [para 7, 9, 10] Cus - Speed Post cover in which the show cause notice was sent has been enclosed - It is seen therefrom that the said show cause notice was despatched on 26.02.2020 - It is seen in the postal endorsement that the weight of the contents was 110 gms . and 50 Rupees stamp was affixed on the cover - The show cause notice runs to 36 pages - It is stated by the petitioner that the weight of the show cause notice alone would come to 110 gms - If all the 24 documents had been enclosed, the weight would have been much higher and that would have been reflected in the stamp value also - Bench finds this circumstance to be quite interesting and indicative of the truth of the version projected by the petitioner herein: High Court [para 8]

- Petition allowed: MADRAS HIGH COURT

2021-TIOL-429-HC-MAD-CX

Alagappa And Company Vs CESTAT

CX - Allegation is that the assessee has supplied non-duty paid goods to M/s. Amtex Alloy Private Ltd., but passed on the CENVAT credit, during the period from October, 2004 to July, 2006 - In adjudication and appellate proceedings, penalty was imposed under Rule 25 of the Rules read with Section 11AC of the Act - Issue before the High Court is whether during the disputed period penalty under rule 25 of the CER can be imposed on the dealers. Held: Rule 25 of the Rules would clearly stand attracted to the case on hand - Rule 25 deals with 'confiscation and penalty' - Sub-Rule (1) states that subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer (a) removes any excisable goods in contravention of any of the provisions of the rules or the notifications issued under the rules or (d) contravenes any of the provisions of the rules or the notifications issued under the rules with an intent to evade payment of duty, then all such case shall be liable for confiscation and the producer or manufacturer or the registered person of the warehouse or a registered dealer, as the case may be, shall be liable to penalty - Admittedly, the assessee is a registered dealer - Tribunal rightly referred to Rule 11(7), which covers the removal from the premises of a second stage dealer and for such removal, the second stage dealer has to issue proper invoices disclosing full and true particulars - Tribunal rightly observed that in respect of non-duty paid goods, cleared to the manufacturers, under invoice showing duty payment, there is a clear violation of the Rules with intent to evade payment of excise duty on final products manufactured by paying such duty through fraudulent credit - Thus, the entire dispute revolves on facts, which have been brought out in detail by the Adjudicating Authority in Order-in-Original dated 21.01.2010 - Appeal fails and is, therefore, dismissed: High Court [para 10, 11, 13]

- Appeal dismissed: MADRAS HIGH COURT

2021-TIOL-101-CESTAT-AHM

Pujan Builders Engineers And Contractors Vs CCE & ST

ST - Assessee is in appeal against impugned order whereby the Commissioner (A) upheld the rejection of refund claim of excess paid service Tax on the ground of time barred - The assessee have paid excess service tax during the quarter April to June, 2017, however, under bona fide belief they transferred the said excess paid service tax into their TRANS-1 as balance in personal ledger account - Subsequently, on objection raised by GST department, assessee have reversed the said amount and also paid an interest - Since the assessee has transferred the amount of excess paid service tax in the TRANS-1 and same was reversed on 27.02.2019, therefore till the date up to 27.02.2019 there is no cause for claiming refund of this amount - The refund was admittedly filed on 05.04.2019 i.e well within the prescribed time limit of 1 year in terms of section 11B - Therefore, the refund was filed well within the time - Though the refund is not hit by limitation but the fact that whether the incidence of refund amount has been passed on or otherwise needs to be examined by the sanctioning authority - Accordingly, the matter is remanded to the adjudicating authority to only verify the unjust enrichment and accordingly, to dispose of the refund claim of assessee: CESTAT

- Matter remanded: AHMEDABAD CESTAT

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TIOL EDIT

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By TIOL Edit Team

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We urge the Union Finance Ministry to urgently convene a meeting of GSTC Council to decide on 15thFC recommendations. The meeting should, in fact, consider all inputs ...

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