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2022-TIOL-NEWS-232| October 03, 2022

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TODAY'S CASE (DIRECT TAX)

I-T - 6 months' limitation for deciding refund claims is to be followed strictly: HC

I-T- Customs duty paid for yacht can be allowed as it is not used by assessee for its own personal use and has operated yacht for benefit and use of entities paying operating fee : ITAT

I-T - No addition on account of bogus sundry creditors can be made, if AO fails to substantiate non-availability of vendors: ITAT

 
INCOME TAX

2022-TIOL-1250-HC-MUM-IT

Pallavi Naresh Shah Vs UoI

In writ, the High Court finds that the order and notice of demand are not sustainable since they violate the rules of natural justice. The assessee has three weeks' time to file reply to SCN and to pass orders accordingly.

- Writ petition disposed of: BOMBAY HIGH COURT

2022-TIOL-1249-HC-DEL-IT

Pr.CIT Vs SPG Finvest Pvt Ltd

Whether the HC can interfere in cases which does not involve a 'substantial question of law' and warrants re-appreciation of evidence- NO:HC

- Writ Petition dismissed: DELHI HIGH COURT

2022-TIOL-1248-HC-DEL-IT

Nortel Networks India Pvt Ltd Vs DCIT

In writ, the High Court observes that this Court finds that CBDT instruction No. 2/2013 [F. No. 225/76/2013/ITA.II] dated 05th July, 2013 and Letter [F. No. 225/148/2015- ITA-II] , dated 05th July, 2015 stipulates that the Assessing Officers must strictly follow the time limit of six months provided under Section 154(8) of the Act in disposing of the rectification applications. Hence the Court directs that the AO consider and dispose off the assessee's applications within 6 months' time.

- Writ petition disposed of: DELHI HIGH COURT

2022-TIOL-1117-ITAT-MUM

Municipal Cooperative Bank Ltd Vs DCIT

Whether a primary objective of a cooperative society to create a mutual benefit fund among its members to tide over any losses & so amount received from members towards the fund as capital receipts are not taxable - YES: ITAT

- Appeal allowed: MUMBAI ITAT

2022-TIOL-1116-ITAT-MUM

ACIT Vs Reliance Transport And Travels Pvt Ltd

Whether custom duty paid for yacht can be allowed as it is not used by assessee for its own personal use and has operated yacht for benefit and use of entities paying operating fee as per agreement - YES : ITAT

- Revenue's appeal dismissed: MUMBAI ITAT

2022-TIOL-1115-ITAT-KOL

ACIT Vs Pradip Mullick

Whether no addition on account of bogus sundry creditors can be made, if AO fails to substantiate non-availability of vendors - YES: ITAT

- Revenue's appeal partly allowed: KOLKATA ITAT

2022-TIOL-1114-ITAT-AHM

Mehsana District Cooperative Milk Producers Union Ltd Vs DCIT

Whether where Assessing Officer has not intimated what is the interest determined u/s. 244A of the Act relevant to the Assessment Year, then addition framed u/s 245 are invalid - YES: ITAT

- Appeal allowed: AHMEDABAD ITAT

 
TODAY'S CASE (INDIRECT TAX)

ST - No service tax is payable on amount collected towards liquidated damages: CESTAT

CX - There is no reason to deny refund when assessee has availed drawback of only the customs duty portion and not of excise duty: CESTAT

CX - After 1.4.2011, appellant cannot avail credit on outdoor catering services, thus credit availed for period 1.4.2011 to 30.4.2011 which is part of SCN is not eligible for credit: CESTAT

Cus - First Appellate Authority was correct in allowing appeal thereby ordering provisional release of goods in question and since there is no change in facts, same is followed in case on hand as well: CESTAT

 
INDIRECT TAX

2022-TIOL-906-CESTAT-MAD

GKN Driveline India Ltd Vs CGST & CE

ST - The only issue to be decided is, whether Revenue was justified in demanding Service Tax on liquidated damages under Section 66E(e) of FA, 1994 - Issue is no more res integra as same is decided by Tribunal in case of M/s. Neyveli Lignite Corporation Ltd. 2021-TIOL-439-CESTAT-MAD which has followed the earlier decision of co-ordinate Delhi Bench in case of M/s. South Eastern Coalfields Ltd. 2020-TIOL-1711-CESTAT-DEL - Order of demand cannot be sustained and consequently, impugned order is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2022-TIOL-905-CESTAT-MUM

Middle Earth Enterprises Vs CST

ST - Appellant, having provided certain services that are clearly recognizable as 'security agency services', has discharged tax liability on consideration received from sub-contractor next, and above, in hierarchy of such delegation - As far as invoices raised by appellant on same recipient of services and which are in dispute here, are concerned, nature of service has not been identified - In absence of such identification, inclusion thereof in a composite service and applicability of the judicial decisions led by either side or the resort to section 65A of Finance Act, 1994 is not only academic but also a non-starter - Taking that definition into section 65(105)(w) of Finance Act, 1994 would lead to outcome of every compound wall/fence put up by any person to be that of 'security agency'; consequently and by extension, every civil project would be activity of 'security agency', thereby rendering 'construction service' or 'work contract service' in section 65 of Finance Act, 1994 to be superfluous - Fencing/compound wall are, after all, intended as safeguard against encroachment by neighbour, taken over by squatters or ingress by thieves - That, surely, cannot be the intent of section 65 of Finance Act, 1994 - The hierarchical assumptions on which demand has been established has collapsed on itself - Demand cannot sustain and consequently, impugned order is set aside: CESTAT

- Appeal allowed: MUMBAI CESTAT

2022-TIOL-904-CESTAT-MUM

Dynasty Oil And Gas Pvt Ltd Vs CCGST

ST - Applicant is engaged in business of chartering of rigs on hire basis to Oil & Natural Gas Corporation - Applicant was duly discharging service tax on whatever amount it charged for such services rendered to ONGC under head 'mining services' - However, issue involved is, whether free of cost fuel/diesel supplied by service recipient i.e. ONGC in terms of agreement is includible in taxable value of mining services rendered by applicants - The Principal Commissioner has sought to distinguish the decision of Larger Bench of Tribunal and Supreme Court which is not correct - Decision in case of Bhayana Builders (P) Ltd. 2018-TIOL-66-SC-ST is squarely on issue under consideration - Said decision of Bhayana Builders has been followed in case of Vantage International Management Company 2021-TIOL-139-CESTAT-MUM - Since issue involved is identical to that of judgments and following the same, appeals allowed: CESTAT

- Appeal allowed: MUMBAI CESTAT

2022-TIOL-903-CESTAT-KOL

Van Shah Fragrance Pvt Ltd Vs CCE

CX - Appellant was manufacturing Soya Products with brand name "Gulab" - On investigation, it was found that brand name "Gulab" was registered in name of M/s. Vinita Soya Products, a partnership firm in which Shri S. B. Sharma as well as Shri P. K. Sharma were partners - Revenue was of the view that appellant will not be eligible for benefit of SSI Exemption under Notfns 8/2002 as well as 8/2003 in as much as appellant had manufactured and cleared Soya Products bearing the brand name of another person - Benefit of SSI exemption has been denied to appellant not only for the reason that they were clearing the goods under brand name "Gulab Brand" but also for the reason that they had crossed the maximum prescribed limit of Rs 3 crore for availing said exemption in year 2003-04 - Revenue has further adduced evidences by making market enquiries and recording the evidences in form of statement of Directors of appellant and purchaser of goods - It is not just the statement but all circumstantial evidences which have been taken into account by adjudicating authority for concluding that Appellant had cleared the goods contrary to provisions of SSI Exemption Notification - Since benefit of SSI Exemption cannot be extended to appellant for said reasons, the question as to when they have crossed exempted turnover limit of Rs 1 crore is of no significance - As regards to limitation, Commissioner in impugned order have concluded that extended period of limitation can be invoked for making this demand - Appellant's contention is that they were under bonafide belief that their goods were classifiable under 23.04, and attracted Nil rate of duty till the issuance of Notfn 3/2006 classifying the said goods under 21061000 and attracting duty @ 8% - Appellants have not been able to show any ground by which they could claim that they entertained a bonafide belief that goods manufactured and cleared by them were not subject to excise duty or attracted nil rate of duty or were exempt from payment of duty - It is settled law that bonafide belief is not blind belief and need to be established before that plea can be taken - Thus, order of Tribunal in first round determining classification of goods and dutiability of goods manufactured and cleared by appellant has acquired finality - Appeals filed by appellant 2 and appellant 3 are allowed to extent of reducing penalties from Rs 2 lakh imposed on each by impugned order to Rs 50,000/- in view of the reduction granted by Tribunal in its earlier order: CESTAT

- Appeals partly allowed: KOLKATA CESTAT

2022-TIOL-902-CESTAT-KOL

Corporate Ispat Alloys Ltd Vs CCE & ST

CX - Refund claim filed by assessee have been denied under Rule 5 of CCR, 2004 - Commissioner (A) in impugned order has not examined the aspect of time bar - He has rejected the appeal only on the ground that since the assessee has already claimed benefit of drawback, refund of CENVAT Credit under Rule 5 is not admissible - No observation has been made with regard to other issues which were subject matter of dispute - Issue with regard to admissibility of refund, in case where drawback of only customs portion have been availed by assessee, has already been decided in favour of assessee by Tribunal in case of Cholayil Pvt. Ltd. 2020-TIOL-939-CESTAT-HYD and Sabharwals Medicals 2018-TIOL-414-CESTAT-ALL - There is no reason to deny refund when assessee has availed drawback of only the customs duty portion and not of excise duty which facts are not in dispute - Insofar as aspect of time bar is concerned, since no observation has been made by Commissioner (A), it would be fit to remand the matter to Commissioner (A) to decide the issue as to whether the refund claimed by assessee is within time: CESTAT

- Matter remanded: KOLKATA CESTAT

2022-TIOL-901-CESTAT-MAD

Intimate Fashions India Pvt Ltd Vs CGST & CE

CX - Appellants are engaged in manufacture of womens' inner garments - They avail the facility of CENVAT credit on taxes paid for various input services - Appellants have availed ineligible credit on outdoor catering services for period January 2010 to August 2010 for an amount of Rs.4,45,329/- - SCN was issued proposing to disallow the credit and also for recovery of same along with interest and for imposing penalty - Later a SCN dated 12.9.2011 was issued proposing to disallow credit for period from September 2010 to April 2011 for an amount of Rs.4,68,131/- on very same services - From the periods involved in both SCNs, it is seen that only one month from 1.4.2011 to 30.4.2011 pertains to period after amendment in definition of input services - Supreme Court in case of Toyota Kirloskar Motor Pvt. Ltd. has held that after 1.4.2011, appellant cannot avail credit on outdoor catering services - Following the same, credit availed for period 1.4.2011 to 30.4.2011 which is part of SCN dated 12.9.2011 is not eligible for credit - For the remaining period i.e. from January 2010 to August 2010 as well as from September 2010 to March 2011, credit will be eligible as definition of input service prior to 1.4.2011 included such services - Following the decisions in cases of Sharda Motor Industries Ltd. 2019-TIOL-2592-CESTAT-MAD and Chennai Container Terminal Pvt. Ltd. 2021-TIOL-478-CESTAT-MAD , it is held that the credit on outdoor catering services for these periods is eligible - The impugned order is modified to the extent of allowing credit for period from January 2010 to March 2011 and disallowing credit from 1.4.2011 to 30.4.2011: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

2022-TIOL-900-CESTAT-MAD

CC Vs Genuine Copier Systems

Cus - Provisional release of goods - First Appellate Authority has only followed the order of Tribunal in case of M/s. S.P. Associates 2021-TIOL-632-CESTAT-MAD and also the decision of Apex Court in case of M/s. Delhi Photocopiers to order for provisional release of goods - The ratio of said case has been followed by Tribunal in case of M/s. Kutty Impex, wherein it was held that First Appellate Authority was correct in allowing the appeal thereby ordering provisional release of goods in question and since there is no change in facts, same is required to be followed in case on hand as well - Following the said ratio decidendi, therefore, appeal of Revenue is dismissed: CESTAT

- Appeal dismissed: CHENNAI CESTAT

2022-TIOL-899-CESTAT-MAD

Salasar Tools (An HUF) Vs CC

Cus - The issue arises is, whether Redemption Fine imposed under Section 125 of Customs Act, 1962 in regard to goods to reexport and penalty imposed under Section 112 (a) of the Act ibid is legal and proper - On an earlier occasion, very same goods were imported by appellant-importer from very same supplier through Nhava Sheva Port - The documents relating to earlier imports have been furnished by appellant and it is stated that they have been produced before original authority also - Relying upon the decision of jurisdictional High Court in Sankar Pandi 2003-TIOL-1525-HC-MAD-CUS , redemption fine imposed requires to be set aside - Appellant has argued to set aside penalty of Rs.7 lakhs imposed by adjudicating authority - Apart from goods at Sl.No.6 & 7 all other goods have been redeemed by appellant by paying redemption fine and appropriate duty - These goods which fall in Sl.No.2, 8, 10 & 11 have also been misdeclared/misclassified - Penalty imposed under Section 112 (a) of Customs Act, 1962 is improper - However, penalty of Rs.7 lakhs appears to be on a higher side, same is reduced to Rs.2,00,000/-: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

 

 

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TIOL EDIT
 

Economy Needs Synergetic Inputs to fix twin Deficits of Inflation & Rupee fall

By TIOL Edit Team

THE Indian economy might slip deep into the woods, if current account deficit, fiscal deficit, inflation and rupee depreciation are not reined in time...

 
GUEST COLUMN
 

By Lukose Joseph & Jobby George 

Agriculture Income & ITR 7

ACCORDING to the Goods and Services Tax (GST) Act 2017, only an agriculturist, to the extent of supply of produce out of cultivation of land is not liable for GST registration requirement. Further, the Act goes on to describe an agriculturist as an individual or a Hindu Undivided Family who undertakes cultivation of land:...

 
NOTIFICATION
 

etariff22_32

Special Addl Excise duty reduced on Petrol and ATF

etariff22_33

Special Addl Excise Duty reduced on diesel

 
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