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I-T - No reasons furnished by assessee for not submitting reply to SCN; assessment order sustained: HC

I-T - TDS u/s 194H is not to be deducted in respect of any transaction with occurs between parties having a principal-to-principal relation : HC

I-T- Employee's contribution towards ESI and PF being paid before due date of filing of return of income u/s 139(1), no disallowance is required to be made: ITAT

I-T- Since appeal in paper form is already with CIT(A), therefore in that eventuality CIT(A) ought not to have dismissed appeal solely on ground that assessee has not filed appeal electronically before appellate Commissioner : ITAT

I-T - Penalty u/s 271(1)(c) can be sustained where it is imposed under both charges of concealment of income as well as furnishing inaccurate particulars of income & where inapplicable charge is not struck off : ITAT

I-T - Where assessee earns income from letting out properties, then same constitutes its main business and income so derived would be business income of assessee : ITAT

Miscellaneous - Pegasus row - SC Larger Bench finds substance in apprehensions of spyware abuse; constitutes 3-member panel to probe certain issues & make recommendations: SC LB

GST - If the applicant sells the land after developing by way of erecting a civil structure or a building or a complex, then such supply is liable to tax: AAR

ST - The claim is only for refund and not proceedings for assessment or adjudication, thus only sub-section (3) of section 142 will be attracted; rejection of refund claim by referring to sub-section (8) is mis-placed: CESTAT

CX - The Cenvat Credit Rules does not impose any bar or restriction in availing credit when the benefit of exemption is availed under Notfn 12/2012-Cus: CESTAT

2021-TIOL-254-SC-MISC-LB

Manohar Lal Sharma Vs UoI

Miscellaneous - The issue at hand in the present petitions pertains to the use, utility, need & alleged abuse of the Pegasus surveillance software - The Pegasus software was developed by the NSO Group, which is an Israeli company - The use of this software first came to light in 2018 and was revealed by a laboratory based out of the University of Toronto, Canada - The laboratory released a report detailing the capability of the Pegasus software to be used as spyware & that about 45 nations had been affected by the software - The Pegasus software is capable of compromising digital devices of a target individual, through zero-click vulnerabilities & hence does not require any action on part of the target - Upon entering the digital device operated by the target, the software is capable of accessing the entire data stored on the device, along with real time access to emails, text messages, call logs, camera recording & sound recording functionalities of the device - Moreover, this software is sold by the NSO Group to certain undisclosed buyers, which are limited to Governments, intelligence agencies & law enforcement agencies - Subsequently in 2019, instant messaging company WhatsApp identified a vulnerability in its software that enabled Pegasus spyware to infiltrate the devices of WhatsApp users - Thereafter the Canadian laboratory & Amnesty International found that 9 persons in India had been targetted by the Pegasus software - Further in 2021, a group of journalist groups from across the world released a list of 50000 numbers supposedly under surveillance by clients of the NSO Group - It was claimed that 300 of these numbers belonged to Indians, who were employed as senior journalists, doctors, political persons, and even some Court staff - Digital devices of 10 Indian people were forensically analyzed & presence of Pegasus software therein was confirmed.

+ While we understand that the allegations made in these petitions pertain to matters about which ordinary citizens would not have information except for the investigating reporting done by news agencies, looking to the quality of some of the petitions filed, we are constrained to observe that individuals should not file half­baked petitions merely on a few newspaper reports. Such an exercise, far from helping the cause espoused by the individual filing the petition, is often detrimental to the cause itself. This is because the Court will not have proper assistance in the matter, with the burden to even determine preliminary facts being left to the Court. It is for this reason that trigger happy filing of such petitions in Courts, and more particularly in this Court which is to be the final adjudicatory body in the country, needs to be discouraged. This should not be taken to mean that the news agencies are not trusted by the Court, but to emphasize the role that each pillar of democracy occupies in the polity. News agencies report facts and bring to light issues which might otherwise not be publicly known. These may then become the basis for further action taken by an active and concerned civil society, as well as for any subsequent filings made in Courts. But newspaper reports, in and of themselves, should not in the ordinary course be taken to be ready­made pleadings that may be filed in Court. (Para 43)

+ We would like to re­emphasize what is already apparent from the record of proceedings. This Court gave ample opportunity to the Respondent­Union of India to clarify its stand regarding the allegations raised, and to provide information to assist the Court regarding the various actions taken by it over the past two years, since the first disclosed alleged Pegasus spyware attack. We had made it clear to the learned Solicitor General on many occasions that we would not push the Respondent­Union of India to provide any information that may affect the national security concerns of the country. However, despite the repeated assurances and opportunities given, ultimately the Respondent­Union of India has placed on record what they call a "limited affidavit", which does not shed any light on their stand or provide any clarity as to the facts of the matter at hand. If the Respondent­Union of India had made their stand clear it would have been a different situation, and the burden on us would have been different. (Para 45)

+ Such a course of action taken by the Respondent­Union of India, especially in proceedings of the present nature which touches upon the fundamental rights of the citizens of the country, cannot be accepted. As held by this Court in Ram Jethmalani v. Union of India, the Respondent­Union of India should not take an adversarial position when the fundamental rights of citizens are at threat. (Para 46)

+ Of course, the Respondent­Union of India may decline to provide information when constitutional considerations exist, such as those pertaining to the security of the State, or when there is a specific immunity under a specific statute. However, it is incumbent on the State to not only specifically plead such constitutional concern or statutory immunity but they must also prove and justify the same in Court on affidavit. The Respondent­ Union of India must necessarily plead and prove the facts which indicate that the information sought must be kept secret as their divulgence would affect national security concerns. They must justify the stand that they take before a Court. The mere invocation of national security by the State does not render the Court a mute spectator. (Para 50)

+ In the present matter, as we have indicated above, the Petitioners have placed on record certain material that prima facie merits consideration by this Court. There has been no specific denial of any of the facts averred by the Petitioners by the Respondent­Union of India. There has only been an omnibus and vague denial in the "limited affidavit" filed by the Respondent­Union of India, which cannot be sufficient. In such circumstances, we have no option but to accept the prima facie case made out by the Petitioners to examine the allegations made. (Para 51)

+ Different forms of surveillance and data gathering by intelligence agencies to fight terrorism, crime and corruption in national interest and/or for national security, are accepted norms all over the world. The Petitioners do not contend that the State should not resort to surveillance/collection of data in matters of national security. The complaint of the Petitioners is about the misuse or likely misuse of spyware in violation of the right to privacy of citizens. The Respondent­Union of India also does not contend that its agencies can resort to surveillance/collection of data relating to its citizens where national security and national interest are not involved. The apprehension of the Respondent­Union of India is that any inquiry in this behalf should not jeopardize national security and the steps taken by it to protect national security. There is thus a broad consensus that unauthorized surveillance/accessing of stored data from the phones and other devices of citizens for reasons other than nation's security would be illegal, objectionable and a matter of concern. (Para 52)

+ Hence a Technical Committee comprising of three members be formed to investigate & determine whether the Pegasus suite of spyware was used on phones or other devices of the citizens of India to access stored data, eavesdrop on conversations, intercept information and/or for any other purposes not explicitly stated; details of persons affected by such a spyware attack; actions taken by the Union in furtherance of reports of Pegasus hacking WhatsApp accounts of Indian citizens; whether Pegasus was acquired by the Central Govt, State Govts, Central agency or State agency for use against Indian citizens; the law, rule, guideline, protocol or lawful procedure followed by any Govt agency which deployed Pegasus against Indian citizens; whether use of Pegasus by domestic entities is authorised; and other anciliary issues deemed necessary to investigate - The Committee is also to make recommendations - regarding enactment or amendment to existing law and procedures surrounding surveillance and for securing improved right to privacy; enhancing and improving the cyber security of the nation and its assets; ensure prevention of invasion of citizens' right to privacy, otherwise than in accordance with law, by State and/or non­State entities through such spywares; establishment of a mechanism for citizens to raise grievances on suspicion of illegal surveillance of their devices; setting up of a well­equipped independent premier agency to investigate cyber security vulnerabilities, for threat assessment relating to cyberattacks and to investigate instances of cyberattacks in the country and other anciliary matters - Matter listed for hearing after 8 weeks.

- Case deferred: SUPREME COURT OF INDIA

2021-TIOL-2136-HC-KAR-VAT

CCT Vs KMS Coach Builders Pvt Ltd

Whether meaning assigned to the phrase "value of the contract" that it includes all the amount received whether as taxes or labour, is correct - YES: HC

- Revision petition dismissed: KARNATAKA HIGH COURT

2021-TIOL-2137-HC-DEL-GST

Indo International Tobacco Ltd Vs Addl. Director General DGGI

GST - The petitioners have been charged with availment and utilisation of fake ITC to the tune of Rs 100 crores & that the petitioners supplied low-grade tobacco products in the garb of 'smoking mixture for pipes and cigarettes' - The petitioners were also charged with over-valuation of products to pass on huge fake ITC to certain entities across Delhi NCR - The Department claimed that 13 separate investigations were being carried out against the petitioners by different authorities.

Held - The counsel for the petitioners raised the issue as to whether the Ahmedabad Uni of the GST Intelligence can claim to be 'proper officer' notwithstanding the Circular dated 5th October, 2018 and claim the right to carry out investigation in respect of the petitioners even when the enforcement action had already been initiated by the St ate GST authorities at Gautam Budh Nagar - Right from the day the final hearing commenced all the matters were taken up for hearing together - This Court did not advice any counsel to argue in a particular manner or not to argue at all - It is only when the petitioners concluded their arguments that this Court called upon counsel for the Revenue to argue - Today to state that counsel for Revenue should confine their arguments to the issue of law or the petitioners should be allowed to argue first would amount to 'derailing' the hearing - Matter listed for hearing on 22.11.2021 for arguments on behalf of petitioners: HC

- Case deferred: DELHI HIGH COURT

2021-TIOL-247-AAR-GST

TIF Integrated Industrial Parks Pvt Ltd

GST -  Applicant is a company formed by industrialists as required by the Telangana State Industrial Infrastructure Corporation Limited (TSIIC) as a special purpose vehicle (SPV) representing the member industrialists with an objective of providing industrial infrastructure by development of land acquired by TSIIC - It is informed by the applicant that a sale deed will be executed with TSIIC upon completion of development of internal infrastructure - Similarly, the applicant is authorised, in turn, to sell to individual industrialists after each of his allottee commences commercial operation by executing individual sale deeds - Applicants seeks to ascertain whether the transaction of sale of developed plot between himself and his member falls within the ambit of GST and whether the infrastructure development undertaken by the applicant qualifies as supply under GST.  

Held:  Activity undertaken by the applicant for construction of the immovable property would qualify to be a "works contract" if (i) It is executed in pursuance of a contract or agreement; and (ii) There is a transfer of property in goods in execution of works contract from the contractor to the contractee; and (iii) There is a consideration paid by the contractee to the contractor - P erusal of the contract entered by the applicant with the TSIIC Ltd clearly indicates that the property in land will be transferred to the applicant only when the applicant completes the development of infrastructure of schedule land - However, this clause in the agreement appears to have been made to meet the larger objective enumerated in industrial policy of the State - Though there is a contract for development of the land the other two conditions enumerated are not fulfilled i.e., transfer of property in goods from the applicant to the TSIIC Ltd and payment of consideration by TSIIC Ltd to the applicant, hence the activity is not a Works Contract -  If the applicant sells the land after developing by way of erecting a civil structure or a building or a complex, then such supply is liable to tax under CGST/SGST Acts - However, if land is sold without any development involving any civil structure or building or complex, such supply falls under paragraph 5 of schedule III to Section 7(2) of CGST Act, 2017 and hence would be exempt from tax - If the applicant executes works contracts involving transfer of property in goods for a consideration under an agreement of contract, such consideration will be liable to tax - However, if these elements are missing in execution of a construction, it shall not be liable to tax: AAR

- Application disposed of: AAR

2021-TIOL-697-CESTAT-MUM

Mantri Mettalics Pvt Ltd Vs CCT & CE

CX - The assessee is in appeal against impugned order passed for payment of interest on reversed CENVAT credit for the extended period, when penalty under Section 11AC was set aside - Both parties have tried to delve into the issue once again concerning the legality of duty demand and reversal of CENVAT credit but this issue is to be kept confined to the legality of imposition and confirmation of interest on credit reversed before issue of SCN - The Commissioner (A) had treated the other units as sister concerns of assessee in which the capital goods were installed - However, he has confirmed the interest component as to him it is a civil liability under Section 11AA of Central Excise Act and the same is unrelated to intention of appellant to evade payment of tax, though he found imposition of penalty as harsh punishment unless there is clear evidence of fraud, mis-statement or suppression of fact with an intention to evade payment of duty and he was satisfied that assessee had accepted the mistake and reversed the credit (duty) - Such a finding on Commissioner (A) attained finality as no appeal is preferred by respondent-revenue department against such order, which revenue submits to be not appealable as covered under litigation policy - It is a settled principle of law that if assessee feels it a duty to pay or discharge tax liability of any past period, there is no prohibition to do so but such a liability can never be realised through the process of law unless the statute authorised the department to travel beyond the stipulated period as liability of person to pay duty for the extended period would arise only when his/her intention to evade payment of duty is established - The issue is reversal of credits which assessee had made immediately upon bringing the fact to its knowledge and much before issue of SCN - Moreover, such reversal was done from the credits available in its account, in which case no interest is payable in view of the decision in case of Bombay Dyeing & Mfg. Ltd. 2007-TIOL-141-SC-CX - The impugned order imposing interest on reversed CENVAT credit is set aside: CESTAT

- Appeal allowed: MUMBAI CESTAT

2021-TIOL-696-CESTAT-MAD

Terex India Pvt Ltd Vs CGST & CE

ST - The appellant is engaged in manufacture and export of mining machineries - They also provide business support services for which they were paying service tax and they filed ST-3 returns - A spot memo was issued to appellant directing to pay the service tax on Business support services on foreign remittances under RCM - The appellant paid the amount along with interest - Though they were eligible for credit since the time to carry forward the Cenvat Credit to GST regime had expired on 27.12.2017, appellant could not follow the procedure to carry Cenvat Credit to GST regime - They then applied for refund of said credit which has been rejected resorting to Section 142 (8) (a) of GST Act, 2017 - The department views that the payment made by appellant is consequent to an assessment/adjudication proceeding and therefore, when recovered as an arrears of tax, appellant is not eligible for input tax credit under GST Act, 2017 - There is no assessment/adjudication tax as contemplated under provisions of erstwhile law - The appellant has paid the tax when pointed out by Audit Officers - Such payment does not fall under recovery of arrears of tax by an assessment or adjudication proceedings - The sub-section (8) to Section 142 only means that after assessment or adjudication proceedings if an assessee pays the tax so determined, he cannot claim the benefit of availment of credit under the CGST Act, 2017 - The claim is only for refund and not proceedings for assessment or adjudication - In such a scenario, only sub-section (3) of section 142 will be attracted - Rejection of the refund claim by referring to sub-section (8) of Section 142 of CGST Act, 2017 is mis-placed - For these reasons, rejection of refund is unjustified and impugned order is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2021-TIOL-695-CESTAT-MAD

Tamil Nadu Newsprint And Papers Ltd Vs CGST & CE

CX - The appellants are engaged in manufacture of Printing and Writing paper - They import steam coal which is used by them for generation of steam / electricity which is in turn used in relation to the manufacture of final products - W.e.f. 1.3.2011, steam coal was levied with Central Excise duty @ 5% ad valorem vide Notfn 2/2011-CE - However, concessional rate @ 1% ad valorem was available for steam coal as per Notfn 1/2011-CE, subject to conditions - The appellants paid 2% CVD on the imported coal and availed credit of said CVD - The department alleges that in terms of Rule 3 (1) (i) to (vii) of CCR 2004, appellants will not be eligible to take cenvat credit of CVD paid on imported steam coal for the reason that they have availed the benefit of Notfn 12/2012-Cus. - The issue is no longer res integra and it has been held in favour of appellant by coordinate Bench of Tribunal in case of Hindustan Zinc Ltd. 2021-TIOL-403-CESTAT-DEL - The CCR, 2004 does not impose any bar or restriction in availing credit when the benefit of exemption is availed under Notfn 12/2012-Cus. - Following the said decision, the demand cannot sustain - The impugned orders are set aside: CESTAT

- Appeals allowed: CHENNAI CESTAT