2021-TIOL-NEWS-063, Dated: Tuesday, March 16, 2021

2021-TIOL-NEWS-063| March 16 2021

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INCOME TAX


	2021-TIOL-626-HC-MAD-IT CIT Vs Leela Devi Whether Tribunal can remand back a matter without interfering with the factual findings recorded by the Assessing Officer and the CIT(A) - NO: HC - Revenue's appeal allowed: MADRAS HIGH COURT 2021-TIOL-622-HC-MAD-IT CIT Vs South India Bottling Company Pvt Ltd Whether the substantive right of appeal should not be denied to the assessees on hand on a technical ground - YES: HC - Revenue's appeal dismissed: MADRAS HIGH COURT 2021-TIOL-621-HC-KAR-IT Nitesh Bera HUF Vs DCIT Whether when a subsequent order is passed in respect of the same assessment, the previous order of assessment passed by the AO gets effaced - YES: HC - Assessee's appeal disposed of: KARNATAKA HIGH COURT 2021-TIOL-620-HC-KAR-IT Pr.CIT Vs Ambuthirtha Power Pvt Ltd On appeal, the High Court observes that the issue raised by the Revenue has been settled against the Revenue and in favor of the assessee vide the judgment in the case of Commissioner of Income-tax-III Vs. Subhash Kabini Power Corporation Ltd. Hence the present appeal is disposed off accordingly. - Revenue's appeal dismissed: KARNATAKA HIGH COURT 2021-TIOL-516-ITAT-MUM ITO Vs Ramesh B Musale Whether when taxpayer has made genuine purchase from bogus parties, then only amount of profit margin is taxable and not entire purchase amount - YES: ITAT - Revenue's appeal dismissed: MUMBAI ITAT 2021-TIOL-515-ITAT-PUNE ITO Vs Ganesh Refinery And Balaji Oil Mill Whether The Tribunal can review its order under an application filed u/s 254(2) - NO: ITAT - Revenue's appeal dimissed: PUNE ITAT 2021-TIOL-514-ITAT-HYD DCIT Vs Raasi Associates Whether addition of undisclosed profit can be deleted from assessee's income when assessee has admitted the enhanced estimated profit during the course of survey proceedings - YES: ITAT - Revenue's appeal dismissed: HYDERABAD ITAT 2021-TIOL-513-ITAT-BANG Power Company Of Karnataka Ltd Vs ACIT Whether expenditure u/s 37 can be disallowed on the ground that there is no business income of the assessee - NO: ITAT - Assessee's appeal partly allowed: BANGALORE ITAT

GST CASE


	2021-TIOL-628-HC-MUM-GST Sunil Kumar Jha Vs UoI GST - The petitioners herein are the MD and the CFO respectively, of a company engaged in roviding business process outsourcing (BPO) services to various clients covering a range of services from customer support to consultancy services, to healthcare and retailing - In the relevant period, the assessee-company was subject to search & seizure operations - The petitioners were summoned to produce purchase invoices of seven companies - The petitioners subsequently filed the present petition seeking to declare Sec 132(1)(b) & 132(1)(c) of the CGST Act as being unconstitutional - It also sought for a declaration that power under section 69 can be exercised only upon determination of liability and consequent upon failure of the taxable person to meet such liability - The petitioners also sought that the Revenue be restrained from lodging any criminal complaint against the petitioners - The petitioners, who had been arrested, also sought that the petitioners be released on bail. Held - Notice be issued to the Revenue authorities concerned - Petitioners to execute personal bond of Rs 50000/- each - Upon release, petitioners to furnish surety of Rs 5,00,000/- each - Within six weeks of their release, petitioners to furnish one solvent surety each of the like amount before the said authority: HC + In the instant case, we find that both the petitioners taken together had appeared before the respondents on multiple occasions particularly on 20.11.2020, 01.02.2021, 03.02.2021, 09.02.2021, 12.02.2021, 15.02.2021 and 16.02.2021 when their statements were recorded. Not only that a number of employees and officials of the petitioner company as well as independent directors had appeared before the investigating authorities and their statements were also recorded. As a matter of fact in the statement of Mr. Akashnand Karnik, director of the petitioner company recorded on 01.02.2021, he meticulously answered all the queries pertaining to various transactions of the petitioner company with M/s. Wiggins Coretech Equipments Pvt Ltd, M/s. Siddharth Education Services, M/s. HNO Furnishsings Ltd, M/s. Creative Business Associates, M/s. Mystique Media Pvt Ltd, M/s. Gradient Infotainment Ltd and M/s. Cannon Ball Trading Pvt Ltd including supply of computers and whatever services were provided by them. On the same day, the statement of Mr. Sunil Kumar Jha was also recorded separately and if we look at the two statements, we do not find any significant discrepancy in the two. If that is the position and following the law laid down in Arnesh Kumar as reiterated by this Court in Daulat S. Mehta , there could not have been any justification to arrest the two petitioners on 16.02.2021 (Para 13); + That apart we do not find any instance of the petitioners tampering with documents or trying to influence any witness being brought on record. Merely saying or apprehending that in future they may tamper with evidence or induce any witness as observed by the learned Magistrate cannot be a justification to deny bail (Para 14); + We have already noticed that the maximum sentence that can be imposed upon conviction for the said offence is imprisonment for five years. This brings us to section 167 of the Cr.P.C.. Section 167(2)(a)(ii) makes it clear that a person cannot be kept in detention beyond a total period of sixty days where investigation relates to an offence punishable for imprisonment for a term of not less than ten years and is not completed. It also says that a Magistrate may authorize detention of the accused person beyond a period of fifteen days if he is satisfied that adequate grounds exists for doing so but no Magistrate shall authorize detention of the accused person in custody for a total period exceeding 60 days as in the present case. In this backdrop, if we look at the remand application, we find that the prayer made by the arresting authority (page 119 of the paper book in WP (st) No. 5486/2021) is for remand of the petitioners to judicial custody for 60 days though in the penultimate paragraph, this was overwritten to 14 days but without initials. This only indicates the manner in which the respondents have proceeded in the matter whereby the process of detention itself is sought to be converted into a penalty. We say this and no more on this aspect (Para 15); + We have also noticed that as per the remand application, the allegation against the two petitioners is that they had played a crucial role in illegally availing input tax credit of Rs. 9,04,89,054.00. Petitioners have stated that on 18.02.2021, petitioner company made a payment of Rs. 1,36,56,638.00 under protest. Thereafter further payments were made on 23.02.2021 for a total amount of Rs. 3,44,02,350.00. In all, petitioners have paid Rs. 4,80,58,988.00 till date and they have made a statement that they would be bound to pay whatever amount is found due and payable upon investigation and adjudication subject to their right of appeal (Para 16); + In Daulat S. Mehta , this Court has held that bail jurisprudence which has evolved over the years stands on a different footing altogether. This is more so when admittedly respondents have not lodged any first information report before the police under section 154 of Cr.P.C. Respondents have also not filed any complaint before the competent magistrate under section 200 Cr.P.C. There was no formal accusation against the petitioners prior to their arrest. The first time such accusation was placed on record was after arrest in the form of remand application. A remand application by its very nature cannot be construed to be a first information or a complaint as is understood in law. If the remand application is excluded, then even after 26 days of custody (in the case of Daulat S. Mehta ), there was still no formal accusation against the said petitioner (Para 17); + The same is the situation in the present case as well. Both Mr. Akshay Chhabra and Mr. Sunil Kumar Jha are in detention since 16.02.2021 without any formal accusation. In such circumstances, without expressing any opinion at this stage as to the legality and validity of the initial arrest, we are of the view that continued detention of the petitioners would not at all be justified. Accordingly and in the light of the above, we issue the following directions (Para 18). - Writ petition disposed of: BOMABY HIGH COURT 2021-TIOL-627-HC-MAD-GST Sugan Lifestyle Vs Asstt. CGST & CE GST - The petitioner-company filed the present petition, seeking direction of Mandamus to allow the petitioner to file Form GST TRAN 2 and allow it to claim ITC on goods held in its stock, in relation to which the invoices & duty-paying documents were not available. Held - The Revenue's counsel filed a memo stating that the relevant representation dated 28.01.2020 was filed before the Nodal Officer, who has not been arrayed as a party - The petitioner seeks permission to file representation before the correct officer - Hence the Mandamus directions being sought for, cannot be granted: HC - Writ petition dismissed: MADRAS HIGH COURT

MISC CASE


	2021-TIOL-625-HC-MP-MISC BVG India Ltd Vs State of MP Miscellaneous - Petition has been filed seeking quashing of the NIT (bid) open tender process and to direct the respondents-State to initiate the fresh tender process - It is asseverated that the petitioner's Company was making preparation for submission of the price bid on 24.12.2020 but the office of the Commercial Tax M.P. conducted a raid with respect to Goods and Service Tax (GST) on the very date and time for last date for submission of the document; that the said raid continued in the office of the petitioner up to 20.00 hrs and thereafter the office was sealed and due to the same, the petitioner's Company was precluded from submitting its bid for the tender in question; that from the above facts it is clear that the bidders waited till it was ensured that the petitioner was not in a position to submit its bid and thereafter submitted its bid which later turned out to be lowest. Held : The on-line bid submission commenced from 9.12.2020 up to 18 hours and the last date of submission online was 24.12.2020 and the date of opening of the bid was 26.12.2020 at 12.30 hrs - The petitioner had sufficient time for making preparation for submission of the bid from 9.12.2020 till the last date i.e. 24.12.2020 but he opted to wait till 22nd December, 2020 to prepare the bank guarantee of Rs.2.50 Crore to participate in the bid - If the petitioner would have been interested to participate, he could have prepared the bank guarantee well in advance and could have submitted the bid much before the last date i.e. 26.12.2020 - Respondents cannot be held responsible for the raid conducted by the Commercial Tax, M.P. under GST - Even otherwise, for the same the respondents cannot be blamed that because of their action the petitioner was precluded from participating in the 3rd revised call - The respondents have duly considered the two eligible tenderers who had submitted their bid well in time before last date of submission of the bid - There is no element of pick and choose as due process of tender was followed by the respondents - Petitioner has failed to point out any arbitrariness on the part of the respondents in selection of respondent No.4 - The petitioner has to blame himself for not participating in the tender process - Bench does not find any illegality or arbitrariness in decision making process of the respondents in finalizing the bid of the respondent No.4, especially when the petitioner himself has not participated in the tender process - Writ petition is dismissed: High Court [para 10, 11, 12, 16, 17] - Petition dismissed: MADHYA PRADESH HIGH COURT

INDIRECT TAX

2021-TIOL-137-SC-ST

CCE Vs Johnson Lifts Pvt Ltd

ST - Assessee engaged in supply and erection of lifts / elevators and are registered with Service Tax department for various services - During audit, it was noticed that assessee paid service tax on erection, commissioning or installation services adopting a notional value of 15% of gross amount realized for supply and erection of lifts/escalators - On balance portion of 85%, assessee discharged VAT - It appeared to department that such notional adoption of 15% of gross amount realized is not proper and resulted in short payment of service tax - Hence SCN was issued proposing to recover service tax along with interest and also proposing to impose penalties - It is seen that vide OIO dt. 29.05.98 it has been concluded that the service portion of the work order in regard to supply and erection of lift is to be taken as 15% - Assessee has been following the said order to discharge service tax liability - Further, as per Tamil Nadu Value Added Tax Rules, 2007, the service portion of such works contract is to be considered as 15% and assessee has to pay VAT on the balance portion - The very same issue was considered by Tribunal in assessee 's own case for earlier period - Hence the Tribunal held that the duty demand was unsustainable.

Held - There is 994-day delay on part of the Revenue in filing the present appeal - As such delay is not explained satisfactorily, the appeal is dismissed on limitation: SC

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-624-HC-KAR-CX

3M India Ltd Vs ACCT

CX - The first petitioner is a company engaged in manufacture of diesel engine conditioner, fuel system cleaner & intake system cleaner - The remaining petitioners are employees of the first petitioner company in various capacities - The allegations against the petitioners is that the first petitioner company evaded payment of Central Excise duty and removed Excisable goods in contravention of Rules 6,8,11 & 12 of the CER 2002 - The first petitioner acquired possession of Excisable goods & engaged in depositing, keeping, concealing, selling, purchasing or clandestine removal of the excisable goods without payment of duty knowing fully well and suppressed the facts from the Department - The other petitioners were also charged with offences punishable u/s 9(1)(b), 9(1)(bbb), 9(1)(c) of the Central Excise Act, 1944 read with Section 174 of the CGST Act, 2017.

Held - Proceedings initiated against the petitioners are kept in abeyance till disposal of adjudication proceedings - Petitioners directed to get appeal disposed off, which is pending before the adjudicatory authority, within a period of one year from the date of this order by taking steps immediately - If the same is not disposed of within the stipulated time of one year, the Revenue is given liberty to proceed with the matter for criminal prosecution: HC (Para 67)

+ Having perused the material available on record and also the principles laid down in the judgments, no doubt, the Apex Court has held that simultaneously both the civil as well as the criminal proceedings can be launched even if the matter is pending for adjudication. But in the recent decision of the Apex Court, it has been held that the criminal proceedings can be kept in abeyance. The Apex Court in Additional Commissioner's case has held that at the most according to him, the criminal proceedings could have been kept in abeyance till the disposal of the matter before the Appellate Authority/Tribunal. This Court also in Kavveri Telecom's case quashed the proceedings for the present reserving liberty to the respondent to initiate appropriate action depending upon the result of the proceedings pending before the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru. No doubt, the Apex Court in Videocon's case subsequent to the decision relied upon by the counsel for the Revenue, it is held that if there is no contravention of any of the provisions of Act, it would be unjust and an abuse of process of the Court to permit the Enforcement Directorate to continue with the criminal prosecution. (Para 65);

+ In the present case on hand also, it is clear that service tax is paid but the excise duty has not been paid and the same has been disputed, for which, the matter has also been before the Tribunal for adjudication. The main contention of the learned counsel for the petitioners is that if the excise duty payable is less than the minimum limit, there cannot be any criminal proceedings but actually the claim by the respondent is for Rs.3,02,87,970/- and whether the same is reduced to less than the minimum limit or more than the minimum limit has to be adjudicated by the Tribunal. If the criminal prosecution is continued and the accused persons are convicted and if, subsequently, the adjudicatory proceeding has been concluded exonerating the petitioner or comes to the conclusion of minimum limit, then it amounts to an abuse of process and the same would be unjust permitting the Enforcement Directorate to continue with the criminal prosecution. Hence, it is appropriate for the present the proceedings can be kept in abeyance till the disposal of the matter which is pending before the adjudicatory authority. If the same favours the petitioners herein, the question of revival does not arise and if it is against the respondent, the same can be revived or continued. However, this Court direct the petitioners herein to move an application before the adjudicatory authority to get the matter disposed of as early as possible within one year since the matter involved is with regard to payment of excise duty due for a period of more than 3 years and odd, which affects the economy of the country as held by the Apex Court as well as other High Courts. (Para 66)

- Writ petitions disposed of: KARNATAKA HIGH COURT

2021-TIOL-619-HC-MAD-CX

Paramount Vijetha Holdings Vs Customs, Excise & Service Tax Settlement Commission

CX - The present petition was filed challenging the order passed by the Customs & Excise Settlement Commission & for consequential direction to dispose of the application filed by the petioner before the Commission on merits - The Single Bench of the High Court of Madras dismissed the writ petition, on the ground that it is not maintainable before this Court and that the petitioner, being an assessee in the State of Karnataka, have to avail the remedy before the High Court of Karnataka. Held - Several factual aspects have been touched upon by the petitioner with regard to the quantum of settlement amount, which has to be considered only after hearing the jurisdictional Commissioner - The Single Bench also has referred to the decision of the Division Bench of this Court with regard to the exercise of jurisdiction of this Court under Article 226 of the Constitution of India and as to how the territorial jurisdiction has to be ascertained - The decision in C. Ramesh Vs. The Director General of Police also clearly decides the questions against the petitioner - Hence, no intervention is warranted: HC

- Writ petition dismissed: MADRAS HIGH COURT

2021-TIOL-154-CESTAT-DEL

Yutaka Auto Parts India Pvt Ltd Vs CCE & ST

ST - The appellant is a 100% subsidiary of M/s Yutaka, Japan - During the period April 2010 to March 2015, the appellant had employed several experts from their parent organization in Japan on secondment basis - The persons so employed were regular employees of M/s Yutaka, Japan and worked for appellant during the period of secondment - The appellant paid their salaries directly to them after making some deductions towards tax deduction at source (TDS) and provident fund - During audit, the audit team felt that the said activity amounted to parent organisation from Japan supplying manpower to the appellant is a taxable service - Accordingly, a SCN was issued to the appellant invoking extended period of limitation - This issue has been decided by various benches of Tribunal in the case of Volkswagen India 2013-TIOL-1640-CESTAT-MUM , Nissin Brake India 2018-TIOL-1976-CESTAT-DEL , Spirax Marshall 2016-TIOL-238-CESTAT-MUM and Computer Sciences Corporation India 2014-TIOL-434-CESTAT-DEL - Thus, it is now a settled legal position that in an arrangement like this, the deputed employees will be working as employees of Indian company - The parent company is not supplying manpower to Indian company - Therefore, no service tax is payable under Reverse Charge Mechanism by the Indian company on the salaries paid to the deputed employees - In appellant's own case, for a period subsequent to the period of dispute, the Commissioner (A) himself has also decided so which order has not been appealed against by the Revenue - Thus, the issue has also reached finality in appellant's own case - No reason found to hold that this arrangement is supply of manpower by parent company to the appellant - Consequently, the impugned order is set aside: CESTAT

- Appeal allowed: DELHI CESTAT

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