I-T - Advancing interest-free loans to employer company cannot be ground to claim deduction of interest expenditure from salary received therefrom: ITAT

I-T - Expenses incurred by company for protection of IPR rights & for normal maintenance of its intellectual property qualify as revenue expenditure : ITAT

I-T - Revisionary jurisdiction is rightly excercised by CIT as AO has not invoked sec 50C and has passed an erroneous order prejudicial to interest of revenue : ITAT

I-T- Employees' contribution paid by assessee before due date of filing of return of income u/s 139(1) is an allowable deduction : ITAT

I-T - Due to failure on part of assessee in substantiating ingredient of section 68, addition for unexplained cash credit can be made : ITAT

I-T - Registration to a trust cannot be denied where assessee was unable to furnish relevant documents due to COVID restrictions: ITAT

I-T - Expenditure for which bills are raised in subsequent year is allowable : ITAT

I-T - Reassessment order can be quashed for non-issuance of notice u/s 143(2): ITAT

GST - Once a person cannot be compelled to do something not possible, definitely he cannot be penalized for not doing so: HC

GST - Strict interpretation - Wrongful claim of ITC is not one of the conditions enumerated u/s 130(1) of the 2017 Act that could entail confiscation of the goods: HC

GST - Assessee cannot be held liable u/s 130 of Act, 2017 for contravention of the provision of law by other person in the supply chain: HC

ST - The demand prior to 2012 cannot sustain under the heads Commercial or Industrial Construction Service or Construction of Complex Service if the contracts are composite in nature: CESTAT

VAT - Revisional orders quashed where pre-revisional notices were not issued & personal hearing not given: HC

2022-TIOL-169-HC-P&H-GST

Shiv Enterprises Vs State of Punjab

GST - Despite the documents being in order, the vehicle and goods were detained on the ground that the 'genuineness of the tendered documents need verification from regular bills of A/c' - On 05.09.2021, the petitioner filed reply to GST MOV-02 through e-mail - The petitioner received a communication dated 11.09.2021 whereby he was informed that on verification, it has been found that inward supply to the sellers/suppliers of the petitioner is from one Balbir Enterprises and the said Balbir Enterprises is not having inward supply and is only engaged in outward supply without paying any tax and, therefore, the petitioner is liable to be proceeded under Section 130(1) of the PGST / CGST Act, 2017 - Petition filed on 14.09.2021.

Held:

+ Following two questions arises for consideration -

(1) Whether the present writ petition deserves to be dismissed being not maintainable?

(2) Whether the impugned order dated 30.08.2021 and further proceedings under Section 130 of the 2017 Act initiated vide show cause notice dated 14.09.2021 deserve to be quashed being bad in law? "

+ Since the authority committed error manifest on the record, Bench does not feel it appropriate to non-suit the petitioner on the ground of alternate remedy. Petition is maintainable - SC ruling in Whirlpool Corporation vs. Registrar of Trade Mark, Mumbai, 1998 Vol. 8 SCC 1 relied upon. [para 30]

+ It is not in every case where the goods in transit have been detained under Section 129, the authority should proceed under Section 130. [para 22]

+ A person can be attributed intent to evade payment of tax only if the contravention of the provisions of the Act or the rules made thereunder has some direct nexus with his action. He cannot be held liable under Section 130 for contravention of the provision of law by other person in the supply chain. Wrongful claim of input tax credit may be result of a bona fide claim as well and does not necessarily involve intent to evade payment of tax. Moreover, wrongful claim of input tax credit is not one of the conditions enumerated under Section 130(1) of the 2017 Act that could entail confiscation of the goods. Section 130 being penal in nature has to be construed strictly. [para 23]

+ Investigation report relied upon by the respondents to initiate proceedings under Section 130 against the petitioner lacks sting. Under the 2017 Act, a trader is either a 'supplier' qua 'outward supply' or is a 'recipient' of 'inward supply'. The alleged 'intent to evade tax' must have a direct nexus with the activity of trader. The opinion formed by the authorities must reflect such nexus before proceeding under Section 130 of 2017 Act. A trader cannot be accused of having intention to evade payment of tax for act or omission on part of a person not immediately linked to his activity.

+ Counsel for the State agreed that even if a trader wants to be prudent, there is no system in place from where he can check as to whether his predecessors in supply chain have paid input tax credit or not. Meaning thereby, it is virtually impossible for a trader to ascertain as to whether input tax has been paid by his predecessors or not and it is for this reason also that the claim to input tax credit has been made subject to scrutiny and assessment.

+ It is the fundamental legal principle embedded in legal maxim "LEX NON COGIT AD IMPOSSIBILIA" - That the law does not compel a man to do that which he cannot possibly perform". Once a person cannot be compelled to do something not possible, definitely he cannot be penalized for not doing so. [para 25]

+ In the present case, the goods and conveyance in transit were accompanied with the documents as prescribed under Rule 138A, i.e. the invoice and the e-way bill. No discrepancy has been pointed out in the said documents even in the reply filed by the respondents. [para 26]

+ There is no finding with respect to contravention of any provision of the Act by the petitioner. The only contravention of the provision alleged is against M/s. Balbir Enterprises, who is shown to have indulged in outward supply without having any inward supply. It has been alleged that he has not been paying any tax and thus, the successor dealers in the said supply chain are guilty of availing input tax credit wrongfully. [para 28]

+ It is clear that there is no allegation that the petitioner has contravened any provision of the Act or the rules framed thereunder much less with an intent to evade payment of tax. It is also not the case of the State that the petitioner did not account for any goods on which he is liable to pay tax under the Act or that he supplied any goods liable to tax under the Act without having applied for registration or that he supplied or received any goods in contravention of any of the provisions of the Act.

+ Thus, the action of the respondents in initiating proceedings under Section 130 on the basis of show cause notice dated 14.09.2021 cannot be sustained. [para 29]

+ Having found that the authority committed error manifest on the record, we do not feel it appropriate to non-suit the petitioner on the ground of alternate remedy. [para 30]

+ In case, the goods in transit are accompanied with the documents as prescribed under the Act, authorities need not proceed under Section 129 of the 2017 Act. [para 31]

+ A bona fide issue which is subject matter of assessment under the Act cannot be a ground to proceed under Section 130 of the Act unless the same falls within four corners of Section 130(1) of the 2017 Act. [para 31]

+ Order dated 30.08.2021 issued by office of Assistant Commissioner, State Tax, Mobile Wing, Chandigarh-2 and notice dated 14.09.2021 issued under Section 130 of the CGST Act are hereby quashed and set aside. Respondent No.4 is directed to release conveyance and goods in question forthwith. [para 32]

- Petition allowed: PUNJAB AND HARYANA HIGH COURT

2022-TIOL-170-HC-MAD-VAT

Jasmine Towels Pvt Ltd Vs Asstt. Commissioner (CT)

In writ, the High Court quashes the revisional orders on grounds, considering that it is not conclusively established that pre-revisional notices had been issued. The Court further draws attention to relevant judgments of the High Court which make it mandatory to permit an assessee to present its case through a personal hearing and that such exercise was not conducted in the present case. Hence the Court directs that pre-revisional notices be issued, the assessee be given hearing & fresh orders be passed thereafter.

- Writ petitions allowed: MADRAS HIGH COURT

2022-TIOL-125-CESTAT-MAD

Royal Shelter Vs CGST & CE

ST - Appellant is engaged in providing taxable service of construction of residential complex service and goods transport service - The department views that the appellants are liable to pay service tax on taxable services of construction of residential complex rendered by them - The original authority has dropped the demand accepting the contention of appellant that the Circular No. 108/2/2009-S.T. is applicable to taxable service of construction of individual flats rendered by the appellant - It is not in dispute that the construction services are composite in nature involving both supply of goods and rendering service - The definition of works contract was introduced under Section 65(105)(zzzza) of Finance Act, 1994 w.e.f. 1.6.2007 - The service portion in composite work contract was specifically made taxable under works contract service w.e.f. 1.6.2007 - The manner of determination of value of such service portion is prescribed vide Rule 2(A) of Service Tax (Determination of Value) Rules, 2006 framed under Section 94(2) ibid - The issue as to whether a composite contract which has both transfer of property in goods as well as rendering of service would fall under CICS/CCS/CRCS was examined and finally settled by Supreme Court in case of Larsen & Toubro Ltd. 2015-TIOL-187-SC-ST wherein it is observed that the service classified under CICS and CCS as defined under clauses (zzzq) and (zzzh) of section 65(105) ibid would cover only pure service contracts which does not involve any transfer of property in goods - The Tribunal in case of Real Value Promoters Pvt. Ltd. 2018-TIOL-2867-CESTAT-MAD following the decision of Supreme Court held that the demand prior to 2012 cannot sustain under the heads Commercial or Industrial Construction Service, or Construction of Complex Service if the contracts are composite in nature - Following the said decisions, the demand under construction of residential complex service cannot sustain and same is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2022-TIOL-124-CESTAT-MAD

Madurai Power Corporation Pvt Ltd Vs CC

Cus - Appellant is in appeal against impugned order whereby adjudicating authority confirmed the demand of short-paid customs duty along with interest and also penalties - The main argument advanced by appellant is that the SCN having been issued by DRI is not sustainable in law in terms of decision of Supreme Court in case of Canon India Pvt. Ltd. 2021-TIOL-123-SC-CUS-LB - The jurisdictional High Court in case of Quantum Coal Energy P. Ltd. 2021-TIOL-711-HC-MAD-CUS has applied the decision of Supreme Court to hold that the SCN issued by DRI is invalid and the proceedings initiated cannot sustain - The Tribunal in case of Nitin Jatania 2022-TIOL-61-CESTAT-MUM had occasion to analyse the very same issue as to whether DRI has jurisdiction to issue SCN - Applying the decision of Supreme Court in Canon India Pvt. Ltd. , Tribunal held that the SCN issued by DRI is invalid - In recent decision of Arun Kumar Agarwal 2022-TIOL-65-CESTAT-DEL similar view was taken - The said decisions hold that the SCN having been issued by DRI are ab initio void - Following the same, impugned orders cannot sustain: CESTAT

- Appeals allowed: CHENNAI CESTAT

2022-TIOL-123-CESTAT-DEL

Angel Pipes And Tubes Pvt Ltd Vs CCE & CGST

CX - The issue involved is whether the lower authorities were correct in denying cenvat credit along with imposition of interest and penalties on the ground that the appellant had availed cenvat credit on inputs without their receipt and use in or in relation to manufacture of final products - Undisputedly, appellant have manufactured dutiable finished goods by using inputs in question and have cleared the same on payment of duty - No alternative source of raw material have been identified by Revenue - Accordingly, issue is squarely covered by decision of Allahabad High Court in case of Juhi Alloys 2014-TIOL-2693-HC-ALL-CX - The appellant have clearly established the genuineness of transaction as regards purchase and receipt of inputs from first stage dealer - Thus, appellant has discharged their onus for credit of goods as required under scheme of the Act read with Cenvat Credit Rules - Accordingly, allegation of Revenue as regards non receipt of duty paid raw material is not substantiated by cogent evidence - The impugned order is set aside: CESTAT

- Appeal allowed: DELHI CESTAT