2021-TIOL-NEWS-078, Dated: Saturday, April 03, 2021

2021-TIOL-NEWS-078| April 03 2021

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INCOME TAX


	2021-TIOL-787-HC-KAR-IT Pr.CIT Vs Moogambigai Charitable And Educational Trust Whether benefit u/s 11(4A) can be allowed to a Trust only upon compliance with twin conditions, namely any Institution or Trust being profits and gains of business - YES: HC Whether rejection of such benefit is sustainable if no reasons are recorded on as to whether or not the assessee complied with the twin provisions in Section 11(4A) - NO: HC - Revenue's appeal partly allowed: KARNATAKA HIGH COURT 2021-TIOL-625-ITAT-MUM Lalit Nathmal Shah Vs ITO Whether purchases alleged to be bogus can be disallowed to the extent of 5% of the total purchases, where the CIT(A) relied on a certain precedent to enhance such disallowance to 12.5%, despite such precedent not being available at time of passing the order - YES: ITAT - Assessee's appeal partly allowed: MUMBAI ITAT 2021-TIOL-624-ITAT-DEL USG Buildwell Pvt Ltd Vs Addl.CIT Whether search assessment u/s 153A is valid if no material incriminating the assessee is found in course of Search operations - NO: ITAT Whether expenses incurred by an assessee engaged in real estate, on account of additional payments made for acquisition of land, merit being allowed u/s 37 - YES: ITAT - Assessee's appeals allowed: DELHI ITAT 2021-TIOL-623-ITAT-PUNE ACIT Vs Gajalaxmi Steel Pvt Ltd Whether additions framed on the basis of excess electricity consumption, which is then made basis for estimating gross profit & net suppressed production, can be sustained - NO: ITAT - Assessee's appeal allowed: PUNE ITAT 2021-TIOL-622-ITAT-AHM Creative Fibre Products Ltd Vs DCIT Whether additions framed u/s 68 on account of assessee's failure to establish genuineness and creditworthiness of the loan creditors, can be sustained, when additional evidences filed by the assessee are not considered by the lower authorities - NO: ITAT - Assessee's appeal allowed: AHMEDABAD ITAT 2021-TIOL-621-ITAT-CHD Glaxo Smithkline Consumer Healthcare Ltd Vs ACIT Whether stay of recovery of outstanding duty demand, merits being allowed, where delay in disposal of appeal is not attributable to the assessee - YES: ITAT - Stay Applications allowed: CHANDIGARH ITAT

GST CASE


	2021-TIOL-12-AAAR-GST Kalyan Jewellers India Ltd GST - Appellant is in the business of manufacturing and trading of Jewellery products and as part of sales promotion, the appellant introduced the facility of “Gift Vouchers/Gift Cards” - Appellant had sought to know as to whether issuance of these pre-paid instruments are classifiable as goods and taxable and if so, the time and value of supply of goods and determination of liability to pay tax for their pre-paid instruments - AAR had held that the gift voucher/gift card is an instrument squarely covered under the definition of 'payment instrument' under the Payment and Settlement Act, 2007; that the customer cannot use it to pay for any other goods, hence it is not an 'actionable claim' as defined in the Transfer of Property Act; that supply of such vouchers qualifies as “supply” u/s 7 of the CGST Act, time of supply being governed by s.12(4) of the Act; that the paper gift vouchers are classifiable under CTH 4911 9990, chargeable @12%, Sl. No. 132 of Schedule II of 1/2017-CTR; plastic gift cards/vouchers are classifiable under CTH 8523 2100 or CTH 8523 52, chargeable @18%, Sl. No. 382 of Schedule III of 1/2017-CTR - Aggrieved, Appeal filed before AAAR. Held : Voucher per se is neither a goods not a service - It is a means for payment of consideration - It, therefore, follows that where a voucher identifies the goods or service that can be received on redeeming, the supply of the underlying goods or service takes place at the time of issue of the voucher - This is the case with vouchers issued by a metro rail company for monthly trip tickets - In such cases, it may not even be possible to know when vouchers would be redeemed for availing of train service and, therefore, the law provides for taxing of the service at the point of time of issue of voucher itself when the supply is clearly known at the time of issue - The supply of underlying goods or service, therefore, gets taxed only at the time of issue of voucher and not at the time of actual availing of service or time of redeeming the voucher - The same is true in the case of the gold voucher presently under our consideration - Since the gold voucher clearly indicates that the voucher can be redeemed for gold jewellery at a known rate of tax, gold voucher also falls under this category - Therefore, it is our view that the gold voucher (representing the underlying future supply of gold jewellery) would be taxable at the time of issue of the voucher - It must be emphasised that this interpretation does not result in double taxation as transfer of gold subsequently will not be subject to tax at the time of redeeming the voucher for gold, as the supply is deemed to have been done at the time of issue of voucher itself (section 12(4)) - Voucher, by GST law, is recognized as an instrument of consideration (non-monetary form) for future supply - Regarding classification of voucher, since voucher is only an instrument of consideration and not goods or services, the same is not classifiable separately but only the supply associated with the voucher is classifiable according to the nature of the goods or services supplied in exchange of the voucher earlier issued to the customer - The time of supply of the gift vouchers / gift cards by the applicant to the customers shall be the date of issue of such vouchers and the applicable rate of tax is that applicable to that of the goods - Appeal disposed of: AAAR - Appeal disposed of: AAAR

MISC CASE


	2021-TIOL-789-HC-MAD-VAT Alpha Silica Company Vs Pr.CC of CT In writ, the High Court finds that the issue involved in the present petition stands settled vide the judgment in the case of M/s Ramco Cements Ltd. V. The Commissioner of Commercial Taxes . Accordingly, the Court directs the relevant authorities to issue the C Form being sought by the assessee. - Writ petition allowed: MADRAS HIGH COURT 2021-TIOL-788-HC-MAD-VAT Mahindra And Mahindra Ltd Vs DCCT Whether there is an absolute bar for entertaining writ petitions against orders which can also be appealed against - NO: HC - Writ petition allowed: MADRAS HIGH COURT 2021-TIOL-781-HC-MAD-VAT Sasi Anand Spinning Mills India Pvt Ltd Vs State Of Tamil Nadu In writ, the High Court finds that the issue involved in the present petition stands settled vide the judgment in the case of M/s Ramco Cements Ltd. V. The Commissioner of Commercial Taxes . Accordingly, the Court directs the relevant authorities to issue the C Form being sought by the assessee. - Writ petition allowed: MADRAS HIGH COURT

INDIRECT TAX

2021-TIOL-786-HC-AHM-CUS

Oriental Carbon And Chemicals Ltd Vs UoI

Cus - During the period between 1.4.2015 and 31.5.2015, the writ-applicant had exported certain quantities of Insoluble Sulphur from the Mundra Port (a non-EDI port) through various shipping bills - However, the aforesaid shipping bills did not contain the declaration as per the Clause 3.14 of the Handbook of Procedures - Initially, the authorities had raised certain issues including the issue of non-mentioning of the declaration of intent on the shipping bills, and had sought clarification from the DGFT as to whether the declaration was mandatory for the period between 1.4.2015 and 31.3.2015 - Three scrips/licenses aggregating Rs.20,01,236/- were thereafter issued by the authorities concerned in June 2016, which confirmed the writ-applicant's understanding of non-requirement/ relaxation of declaration of intent for the period in question - However, on that day, the said three scrips were put under suspension on the ground that a clarification was awaited from the DGFT, New Delhi, in regard to whether the non-EDI shipping bills prior to 1.6.2015 without the declaration of intent were eligible for the MEIS benefits - Accordingly, the writ-applicant was left with no other choice but to surrender the said three scrips on 28.7.2016 - Petition filed seeking a direction to the respondents to forthwith revoke the suspension of the Duty Credit Scrips issued to the petitioner under the provisions of the Merchandise Exports from India Scheme in the Foreign Trade Policy, 2015-20, and return the said Duty Credit Scrips to the petitioner after extending the validity thereof for a period of 18 months from the date of such return.

Held:

++ Section 149 of the Customs Act, 1962, specifically permits amendment of the shipping bills even after the export on the basis of the documentary evidence which was in existence at the time the goods were exported.

++ There is no restriction in the said provision for not allowing the amendment after the goods are exported unless the goods are checked at the time of export. Hence, the authorities cannot to introduce such restrictions de hors the said provision.

++ The respondents had themselves asked the writ-applicant to remove the deficiency (i.e. lack of declaration) vide their letters issued in August 2018. Therefore, the respondents were ready to allow the writ-applicant's claim despite the said declaration not having been there on the shipping bills at the relevant point of time. [para 21]

++ This Court, as well as other High Courts have allowed several petitions where the free shipping bills were allowed to be amended and/or the MEIS benefits were directed to be given despite lack of declaration. [para 22]

++ Section 149 of the Customs Act, 1962 does not prescribe any time limit. In fact, at the relevant point of time, it did not even provide for the fixation of the time limit by way of rules or regulations. Therefore, no time limit can be read into the said provision nor can it be introduced by way of a circular. It is well-settled that a subordinate legislation cannot travel beyond the parent statute or impose a limitation or restriction not found in the parent statute. [para 24]

++ In the present case, the authorities had themselves sought clarification from the DGFT as to whether such declaration was mandatory prior to 1.6.2015 and were awaiting such clarification. The authorities had even issued three scrips to the writ-applicant against six of its applications, which were later suspended while awaiting such clarification. Hence, it is not correct to blame the writ-applicant for not having sought amendment immediately. [para 27]

++ In the case of the EDI shipping bills, the declaration is by ticking "Y" (for Yes) in the reward column, which was not done by several exporters who had exported through the EDI ports. This was the exporter's mistake as well as the inadvertent omission of declaration on the shipping bill in the case of the non-EDI shipping bills. Therefore, to discriminate between the two would be unreasonable and unfair. [para 30]

++ There is no dispute that the writ-applicant is eligible to claim the benefits under the MEIS since it has admittedly exported the notified goods to the notified countries as per the scheme of the MEIS. [para 31]

++ The only lapse is with regard to the inadvertent non-mention of the declaration of intent as per Clause 3.14 of the Handbook of Procedures during the period between 1.4.2015 and 31.3.2015, i.e. during the initial period of the FTP, 2015-20. [para 33]

++ The writ-applicant's shipping bills were non-EDI only because the Mundra Port was not an EDI port.

++ This lapse being a technical or a procedural lapse, the writ applicant should not be denied substantive benefits, as held by this Court in the case of Bombardier Transportation India Pvt. Ltd. ( 2021-TIOL-478-HC-AHM-CUS ).

++ The authorities themselves were not sure whether the declaration was mandatory prior to 1.6.2015.

++ In light of the aforesaid, it would be extremely unfair and unjust not to extend the benefits of the MEIS to the writ applicant on the ground that it had exported goods from a non-EDI port.

++ Application succeeds and is hereby allowed. Reliefs granted. Entire exercise to be undertaken at the earliest and completed within a period of eight weeks. [para 34, 35, 36, 39, 40]

- Petition allowed: GUJARAT HIGH COURT

2021-TIOL-785-HC-MAD-CUS

Souparnika Shipping Services Vs JCC

Cus - Cross examination - The appellate authority has passed an order allowing the appeal of petitioner to the effect that the principles of natural justice will have to be complied with and the Assessing Authority should grant an opportunity of cross examination to the petitioner prior to finalization of assessment - A copy of this order is placed on file - In such circumstances, the impugned order has no legs to stand, since it has, admittedly, been passed without affording an opportunity of cross examination to the petitioner and the same is set aside - Let the petitioner be afforded an opportunity of cross examination, heard in full and an order of assessment be passed denovo within a period of six weeks: HC

- Writ petition allowed: MADRAS HIGH COURT

2021-TIOL-182-CESTAT-MAD

CC Vs Kamdar Global Solutions Pvt Ltd

Cus - The appellant imported 5 nos. of Thermo Drones and 5 nos. of Thermal batteries - The said drones were meant for supply to Commissioner of Police for use during the pandemic (COVID-19) for monitoring the people / public during lockdown period - The said goods, according to department, require a licence as per DGFT Notfn 30/2015-2020 and WPC licence for the drones - The goods were specifically imported for meeting the requirements during pandemic - Drones were intended to be used for monitoring the public as to whether there is violation of restrictions for travel and gathering of people - It is also seen from the documents that drones were intended for supply only for the police department and only for the purpose of use during the pandemic - The department has issued an end-user certificate in which it is stated that such drones are intended to monitor the COVID-19 situation in Chennai city - From 22.03.2020 onwards, the country was in lock down for a period upto May 2020 - A letter dt.18.05.2020 is seen to have been produced by importer - It is a letter from Commissioner of Police to the Commissioner of Customs explaining that it was the decision of Police Department to procure the thermal drones for surveillance of physical movement of people in Greater Chennai Police jurisdiction so as to contain the spread of COVID-19 - When the goods are imported/intended for use by government for public purpose and especially when there is worldwide pandemic of COVID-19, the departmental authorities ought to have viewed the same in the right perspective - So also, no purpose would serve by release of goods after prolonged delay - In fact, Commissioner (A) has taken a correct view after applying his mind so as to release the goods for immediate use so that the pandemic can be contained and lives of many can be saved - The act of adjudication is not an automatic or mechanical application of provisions of law - The Commissioner (A) has rightly ordered for release of goods - No grounds found to interfere in the said order: CESTAT

- Appeal dismissed: CHENNAI CESTAT

2021-TIOL-181-CESTAT-MAD

Indo Tech Transformers Ltd Vs CCGST & CE

ST - Assessee is in appeal against impugned order, whereby the Commissioner (A) has rejected the appellant's claim for refund in cash under Section 142 (6) (a) of CGST Act 2017 - It is not in dispute that the order of Commissioner (A) in first round has been accepted by Revenue as well as the assessee without any further appeal - For this very reason, Tribunal do not agree with the so-called clarification made in impugned order, of the earlier order dated 30.09.2017, by the Commissioner (A) - Moreover, it is manifestly clear that the observations were made in the context of payment under reverse charge mechanism vis-a-vis the assessee's entitlement to take cenvat credit for which Commissioner (A) had also drew support from the decisions of Supreme Court in Uniworth Textiles Ltd. 2013-TIOL-13-SC-CUS and Continental Foundation JT. Venture 2007-TIOL-152-SC-CX - Tribunal do not propose to delve into the merits or demerits of appellate order dated 30.09.2017 as the said order has attained finality - Further, the adjudicating authority has also recorded the pleadings of assessee as to their claim to take credit on service tax paid, that was sought to be appropriated in SCN - It is sufficient to hold that the assessee has all along maintained its claim for taking cenvat credit and therefore, to deny refund only on the ground that there was no such claim, is farce/far from truth - The impugned order is not sustainable for which reason the same is set aside - Admittedly, the issue is of refund claimed under Section 142 (6) (a) of CGST Act, but Tribunal cannot go into that since CESTAT is not authorised to decide issues under CGST Act, 2017, as per assessee's request - The only possible order is to set aside the impugned order and remand the matter back to the file of the adjudicating authority: CESTAT

- Matter remanded: CHENNAI CESTAT

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