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2022-TIOL-NEWS-260 Part 2 | November 07, 2022

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TIOL AWARDS

 
INCOME TAX

2022-TIOL-1285-ITAT-MUM

Ashok Kumar V Sanghi Vs ITO

Whether addition u/s 69A can be upheld as assessee merely mentioned amount saved out of withdrawals, however has not substantiated with any documentary evidence - YES : ITAT

- Case Remanded: MUMBAI ITAT

2022-TIOL-1284-ITAT-MUM

Pawan M Shah Vs ITO

Whether case can be remanded back to examine how much of sale consideration received has been invested in new residential property for claiming exemption u/s 54 - YES : ITAT

- Case Remanded: MUMBAI ITAT

2022-TIOL-1283-ITAT-MUM

Karma Industries Ltd Vs ACIT

Whether revenue has rightly rejected books of account as assessee has failed to maintain proper records and owing to other irregularities - YES : ITAT

- Case Remanded: MUMBAI ITAT

2022-TIOL-1282-ITAT-MUM

DCIT Vs Cmi Fpe Ltd

Whether burden of investigating the genuineness of the seller or their business transaction lies with the assesee - NO: ITAT

- Appeal dismissed: MUMBAI ITAT

2022-TIOL-1281-ITAT-MUM

Amit Mangilal Jain Vs ACIT

Whether nexus of incriminating documents with undisclosed income calls for addition - YES: ITAT

- Assessee's appeal dismissed: MUMBAI ITAT

2022-TIOL-1280-ITAT-DEL

Preet Singh Vs ACIT

Whether exemption claimed u/s 54B and 54F can be rejected as conditions for claim of deduction are not fulfilled - YES : ITAT

- Assessee's appeal dismissed: DELHI ITAT

2022-TIOL-1279-ITAT-BANG

Indauto Filters Vs ADIT

Whether assessee is entitled to raise grounds towards deductions not claimed in the return of income - YES: ITAT

- Appeal allowed: BANGALORE ITAT

 
TODAY'S CASE (INDIRECT TAX)

GST - Value of seized goods diminishing due to passage of time - Ordered to be released on compliance with conditions: HC

CX - Only on the ground that some job workers could not be found or that some of them refused to have done job work, it cannot be concluded that no activity of job work manufacturing of fabrics was undertaken: HC

GST - AAR erred in its opinion that the non-cash consideration will be the actual sum received from open market on supply of gunny bags, refractor and bran - supply value cannot be dependent on actual receipts: AAAR

GST - State Urban Development Authority (SUDA) cannot be held as a local authority - supply by applicant to SUDA does not qualify for exemption; chargeable @18%: AAR

 
GST CASE

2022-TIOL-1391-HC-AHM-GST

Channel Traders Vs State of Gujarat

GST - Petitioner prays for release of the goods on the ground that since long the goods are under confiscation and since the value of the goods are diminishing in nature, it would be prejudicial to the petitioner if the goods are not released.

Held:  By way of interim relief, it is directed that the respondents shall release the goods and conveyance of the petitioner, confiscated and detained pursuant to the order dated 21.03.2022 passed in FORM GST MOV-11, subject to conditions as laid down viz. deposit of tax and penalty and bond towards the amount of fine and other charges: High Court [para 6]

- Interim relief granted: GUJARAT HIGH COURT

2022-TIOL-124-AAR-GST

Simoco Telecommunications South Asia Ltd

GST - A pplicant submits that the State Urban Development Authority (SUDA) has accepted his offer for design, build, finance, operate and transfer of Municipal Wet Waste processing facility - Applicant wishes to know as to whether they are entitled for exemption.

Held:  SUDA, being a registered society, is not a Panchayat or a Municipality or any Board or Cantonment as specified in the definition of local authority - Further, no documents have been produced before the Authority wherefrom it can be established that SUDA is an authority who is legally entitled to and entrusted by the Government with the control or management of a local fund -  SUDA cannot be held as a local authority as defined in clause (69) of section 2 of the GST Act and the supply involved in the instant case thus fails to qualify for exemption vide serial number 3 or 3A of the Exemption Notification;  is taxable @ 18% vide serial number 32 of Notification No. 11/2017-CTR: AAR

- Application disposed of: AAR

2022-TIOL-35-AAAR-GST

Shiv Flour Mill

GST - Applicant had sought a ruling as to ‘Whether the composite supply of services (by way of milling of food grains into flour) to Food & Supplies Department, Government of West Bengal for distribution under PDS is eligible for exemption under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) - AAR had while  observing that the instant supply is a composite supply viewed  that the valuation of non-cash consideration remained inconclusive as the appellant could not produce any documents regarding receipts of consideration from sale of gunny bags, bran and refractor and, therefore,  exemption under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) will be available when the value of supply of goods in the said composite supply shall not exceed 25% of the value of the said composite supply; that, in case the value of goods supplied exceeds 25% of value of entire supply, the supply shall attract tax @ 5%  - Aggrieved with the said ruling, the present appeal has been filed.

Held:   WBAAR did not consider the valuation of Rs.124/- per 100 kg wheat being supply consideration of gunny bags, refractor and bran - It erred in its opinion that the non-cash consideration will be the actual sum received from open market on supply of gunny bags, refractor and bran -  The WBAAR failed to appreciate that the valuation of the composite supply is the agreed upon price between the flour millers and the Food & Supplies Department - This agreed upon price includes the notional value of Rs.124/- of two gunny bags and 5 kg by-products (1 kg refractor and 4 kg bran) which are retained by the miller, irrespective of actual disposal price of those gunny bags and by-products in future - The supply value of milling of wheat in the instant case cannot be dependent on actual receipts by the miller in future from third parties in disposal of the retained goods - It is clear from the Memo dated 08.12.2020 read with Memo dated 18.02.2022 that the total supply price is Rs.260.48 for milling services to produce 95 kg fortified atta from 100 kg wheat - The value of goods in the composite supply is not more than Rs.60/- being cost of elements for fortification and packing materials and so the percentage of value of goods in the composite supply is established to be lesser than 25% of the total supply value - Held, therefore,  that in the instant case the supply of fortified wholemeal flour to the Food & Supplies Department, Government of West Bengal will fall under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) and exempt from taxation: AAAR

- Appeal allowed: AAAR

2022-TIOL-34-AAAR-GST

Maa Laxmi Enterprise

GST - Applicant had sought a ruling as to ‘Whether the composite supply of services (by way of milling of food grains into flour) to Food & Supplies Department, Government of West Bengal for distribution under PDS is eligible for exemption under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) - AAR had while  observing that the instant supply is a composite supply viewed  that the valuation of non-cash consideration remained inconclusive as the appellant could not produce any documents regarding receipts of consideration from sale of gunny bags, bran and refractor and, therefore,  exemption under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) will be available when the value of supply of goods in the said composite supply shall not exceed 25% of the value of the said composite supply; that, in case the value of goods supplied exceeds 25% of value of entire supply, the supply shall attract tax @ 5%  - Aggrieved with the said ruling, the present appeal has been filed.

Held:   WBAAR did not consider the valuation of Rs.124/- per 100 kg wheat being supply consideration of gunny bags, refractor and bran - It erred in its opinion that the non-cash consideration will be the actual sum received from open market on supply of gunny bags, refractor and bran -  The WBAAR failed to appreciate that the valuation of the composite supply is the agreed upon price between the flour millers and the Food & Supplies Department - This agreed upon price includes the notional value of Rs.124/- of two gunny bags and 5 kg by-products (1 kg refractor and 4 kg bran) which are retained by the miller, irrespective of actual disposal price of those gunny bags and by-products in future - The supply value of milling of wheat in the instant case cannot be dependent on actual receipts by the miller in future from third parties in disposal of the retained goods - It is clear from the Memo dated 08.12.2020 read with Memo dated 18.02.2022 that the total supply price is Rs.260.48 for milling services to produce 95 kg fortified atta from 100 kg wheat - The value of goods in the composite supply is not more than Rs.60/- being cost of elements for fortification and packing materials and so the percentage of value of goods in the composite supply is established to be lesser than 25% of the total supply value - Held, therefore,  that in the instant case the supply of fortified wholemeal flour to the Food & Supplies Department, Government of West Bengal will fall under entry no. 3A of Notification No. 12/2017-Central Tax (Rate) and exempt from taxation: AAAR

- Appeal allowed: AAAR

 
INDIRECT TAX

2022-TIOL-1392-HC-MUM-CX

Pr.CCGST & CE Vs Filatex India Ltd

CX - Clandestine removal - Assessee, a company is engaged in manufacture of polyester yarn of different descriptions falling under Chapter 54 of Central Excise Tariff Act, 1985 - Tribunal found that assessee before sending the goods for job work filed intimation with Department as required under CER, 2002 - Department was in knowledge of job work activities, that while sending goods, challans were prepared and yarn was acknowledged by job workers of having been received - Assessee has paid job work charges to said job workers and also deducted TDS on such payments as found by Tribunal from Form-16A issued to all six job workers - It is recorded that none of the statements from job workers recorded during investigation deny the fact that they had undertaken job work activity on behalf of assessee - Only on the ground that some job workers could not be found or that some of them refused to have done job work, it cannot be concluded that no activity of job work manufacturing of fabrics was undertaken - The statement of few transporters that they did not transport the fabric cannot be a ground to hold that no fabric was manufactured as main job workers have accepted the manufacture of fabric on job work - Even if some of buyers of fabrics could not be found, it cannot lead to conclusion that assessee did not sell the fabrics to such parties - Majority of job workers, i.e. 5 job workers out of 6 investigated, have accepted the job work manufacturing of fabrics from Yarn supplied by assessee and that no evidence has been adduced to the effect that they had clandestinely removed the yarn from their factory for sale by evading central excise duty - These are all findings of fact by final fact finding Authority viz. the CESTAT which cannot be faulted with - There is also no perversity demonstrated - No merit found in this appeal: HC

- Appeal dismissed: BOMBAY HIGH COURT

 

 

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NEWS FLASH
 

Direct Tax Code - Need to eliminate deeming fiction in new code - avoids differing interpretations of provisions - MS Vasan

Income Tax - investors & corporates value quick resolution of disputes - Vishweshwar Mudigonda, Deloitte Touche Tohmatsu India LLP

Direct Tax Code - virtues of present Act are kept intact + new insights have been incorporated - provisions have been made easier to understand & interpret - Mukesh Patel, Advocate

Income Tax - Resistant to change lies in the mind - if the GST regime with all its complexities can be rolled out successfully, the Income Tax Code can be similarly implemented - Neeru Ahuja, Deloitte Touche Tohmatsu India LLP

Income Tax - Direct Tax Code - voluminous Tax Code a direct challenge to Ease of Doing Business - Indira Anand, Tax Head, Tata Sons

Income Tax - scrap non obstante provisions - law must be easy to interpret for a layman - provisions in new code must be independent and self contained - MS Vasan, Senior VP, Hinduja Global Solutions

Income Tax - assessees need tax certainty - Direct Taxes must also serve social & economic purposes - need to incorporate international best practices - Rajat Bansal, Principal CCIT, New Delhi

Customs must also be geared to tax intangible goods similarly to tangible goods - amendments to Acts need to be made - Taxation of services - Govt must amend Customs Act to this end - RK Singh (Member Technical, CESTAT (Retd.))

E-commerce platforms monetise huge amount of data - Govt has legitimate right to levy GST thereon under reverse charge mechanism - can be done unilaterally or in synergy with other Governments - RK Singh

Digital Economy - need to tax C2C transactions - RK Singh

Royalty - levy depends on use of the copyrighted content, not on purchase of it per se - Kamlesh Varshney, JS, CBDT

E-commerce - India was instrumental in promoting automatic exchange of information in international taxation - Need to check AIS constantly to check and prevent wrong claiming of benefits - Kamlesh Varshney, JS CBDT

Digital Economy - E-commerce - Digital sales - more tax revenue flows for Govt - small sellers growing, can focus on artisanal goods - however e-commerce is only 5% of retail sales - huge enabler for MSMEs - Pramod Jain (Senior VP, Flipkart)

Digital Economy - data is the new oil, provided it carries value - Govt Departments very progressive in harnessing new technology - Saurabh Sancheti (CFO, Jio Digital Platforms)

E-commerce - Tax authorities see it as cash cow - large quantity of data - heavy compliance burden imposed - Pramod Jain (Senior VP, Flipkart)

Digital Economy - physical presence no longer important - demand, supply and other operations happens remotely - revenue also comes from different networks - profoundly affects levy of tax thereon - RK Singh (Member (Technical), CESTAT (Retd))

Digital Economy - difficult to distinguish from National economy - RK Singh (Member (Technical), CESTAT (Retd.))

Income Tax - equity, fairness and justice have vital role to play in implementing tax systems - taxation is a means to an end and not an end itself - tax authorities must implement citizens charter in letter and spirit - citizens must be honest while paying taxes - Manmohan, J (High Court of Delhi)

Income Tax - Govt deploying AI for hearing and assessment of appeals - Executive must ensure sufficient manpower and infrastructure for handling vast amount of information -  Manmohan, J

Income Tax - base erosion and profit shifting - small countries with lower tax rates have huge investments - India loses billions of dollars USD due to corporate tax planning - Manmohan. J

Income Tax - difficulty to decide where income accrues or arises in India - due to creation of deeming fiction - often leads to double taxation Manmohan. J (High Court of Delhi)

GST - Must resolve to move to an exemption-free system - aim for unified and streamlined direct and indirect tax system by 2047 - Dr Bibek Debroy

GST - Tax filers increased considerably, but all do not pay tax - need to revaluate tax exemptions - exemptions complicate tax system and structure - lead to tax avoidance - Dr Bibek Debroy

GST - Be willing to pay high taxes or be willing to settle for reduced delivery of services - exemptions eat away 5-5.5% of tax revenue - Dr Bibek Debroy

GST - Need a single rate + scrap most exemptions - Dr Bibek Debroy

GST - Revenue prediction was based on premise of all goods and services being part of GST + single GST rate - Dr Bibek Debroy

TIOL Tax Congress 2022 - Citizens expect public goods and services to be delivered and subsidised - Fiscal devolution at both Central & State level very important - Taxes primary source of revenue & are building blocks for infrastructure, education, defence - Dr Bibek Debroy

 
TOP NEWS
 

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