TMI Tax Updates - e-Newsletter
January 18, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax CST, VAT & Sales Tax Indian Laws

News

1. Roundtable meeting with Global Funds at the Startup India International Summit sees participation of around 70 funds from around the world

2. PM to interact with Startups and address ‘Prarambh: Startup India International Summit’ today

Notifications

GST - States

1. 87/2020 – State Tax - dated 22-12-2020 - Chhattisgarh SGST

Extend the due date for furnishing of FORM ITC-04 for the period July- September 2020 till 30th November, 2020

2. 86/2020 – State Tax - dated 22-12-2020 - Chhattisgarh SGST

Seeks to rescinds the Notification No. 76/2020-State Tax, dated 28-10-2020

3. 85/2020 – State Tax - dated 22-12-2020 - Chhattisgarh SGST

Special procedure for making payment of 35% as tax liability in first two month - in case of registered persons who have opted to furnish a return for every quarter or part thereof

4. 84/2020 – State Tax - dated 22-12-2020 - Chhattisgarh SGST

Class of persons under proviso to section 39(1) - Option to furnish a return for every quarter

5. 83/2020 – State Tax - dated 22-12-2020 - Chhattisgarh SGST

Seeks to extend the due date for FORM GSTR-1

6. 81/2020 – State Tax - dated 22-12-2020 - Chhattisgarh SGST

Seeks to bring Force section 7 of the Chhattisgarh Goods and Services Tax (Amendment) Act, 2020

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/CMD2/CIR/P/2021/11 - dated 15-1-2021

Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 due to the CoVID -19 pandemic

2. SEBI/HO/IMD/DF2/CIR/P/2021/10 - dated 15-1-2021

Norms for investment and disclosure by Mutual Funds in Exchange Traded Commodity Derivatives (“ETCDs”)

Customs

3. PUBLIC NOTICE NO. -04/2021 - dated 6-1-2021

Single Window – Online Query Module and other functionalities for PGA working in ICES

4. Public Notice No.: 01 /2021 - dated 1-1-2021

RoDTEP (Remission of Duties and Taxes on Exported Products) Incentive Scheme

5. PUBLIC NOTICE NO. 147/2020 - dated 11-12-2020

Clarifications regarding availment of exemption on temporary import of durable Containers

6. PUBLIC NOTICE NO. 148/2020 - dated 11-12-2020

Availment of exemption on temporary import of Durable Containers in terms of Board Circular No. 51/2020 dtd. 20.11.2020 – Provisions in ICES

Companies Law

7. 03/2021 - dated 15-1-2021

Scheme for condonation of delay for companies restored on the Register of Companies between 01 December 2020 and 31 December 2020. under section 252 of the Companies Act. 2013

Highlights / Catch Notes

GST

• Marine Cables for Navy Not Eligible for Warship Parts GST Concession; Standard Rate Applies.

  Case-Laws - AAR : Classification of goods - Rate of GST - concessional rate of GST@5% - the marine pressure tight cables and the marine non-pressure tight cables manufactured and supplied by the applicant to the Navy are not parts of the warship and hence the benefit of reduced rate of GST of 5% is not available to the applicant - AAR
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• Landlords Not Liable for GST on Electricity Fees in Lease Agreements if Acting as Pure Agents.

  Case-Laws - AAR : Liability of GST - landlord charges electricity or incidental charges in additional to rent as per Lease Agreement for immovable property rented to the tenant - Is landlord liable to pay and recover GST from tenant on electricity or incidental charges charged by it? - Held No - Since the amount is recovered on actual basis and conditions of pure agent satisfied, it would not be includible in the value of supply. - AAR
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• GST Exemption Denied: Applicant Lacks Curriculum, Exams, and Qualifications; 60% Fees from Gujarat University Taxed at 18.

  Case-Laws - AAR : Exemption from GST or not - Educational Services or not - the applicant does not have any specific curriculum and does not conduct any examination or award any qualification/degree. Hence, the applicant does not qualify as educational institution - In this process, the applicant received Fees (i.e. 60% of total fees collected from students by Gujarat university) from Gujarat University, which attract GST @18%. - AAR
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• Zn EDTA and Fe EDTA classified under HSN 3824 99 90, subject to 12% GST: 6% SGST and 6% CGST.

  Case-Laws - AAR : Classification of goods - product ‘Zn EDTA - Zinc Ethylenediamine Tetra Acetic Acid) - Fe EDTA - The products, viz. “Zn EDTA” and “Fe EDTA” manufactured and supplied by the applicant are classifiable under HSN 3824 99 90 of the First Schedule to the Customs Tariff Act, 1975. - attracting GST @ 12% (6% SGST +6% CGST). - AAR
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• Mosquito Repellent Aayudh-Mosx Classified Under Heading No. 3808 91 91, Not 3004 90 99, Per AAR Ruling.

  Case-Laws - AAR : Classification of goods - Product Mosquito Repellent, Aayudh-Mosx - Undoubtedly, the description under Heading No. 3808 91 91, i.e., “Repellents for insects such as flies, mosquito” is far more specific as compared to the description under the other heading under consideration, i.e., Heading No. 3004 90 99 which is “Other” (meaning medicaments other than all those explicitly specified in the other sub-headings of Heading No. 3004). Evidently, the latter heading is a residual classification while the former is specific and conforms to the description of the goods adopted by the applicant themselves for the purposes of packing as well as advertisement and publicity - AAR
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• Advance Ruling on Service Classification Delayed Due to Unfinalized Agreement with Rice Exporter Since October 2019 Application.

  Case-Laws - AAR : Scope of Advance Ruling application - Classification of services - In the present case, the applicant has asked hypothetical questions seeking Advance Ruling on an issue which has not materialised till date. We find that a period of nearly one year has lapsed after the filing of the application of Advance Ruling by the applicant (which was filed on 13.10.2019) but the agreement which they were supposed to make with the so-called Rice exporter has not materialised so far i.e. no agreement has been signed in this regard and therefore no copy has been submitted in the instant case. - it would not be possible to give a decision in the said matter. - AAR
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• Solid Waste Management Agreement Includes Goods, Disqualifying as "Pure Services"; Rates Must Include All Taxes Including GST.

  Case-Laws - AAR : Pure service - solid waste management service - Scope of the terms of service agreement - from a plain reading of the aforementioned clause, it appears that the services provided by the applicant includes supply of goods also, hence it cannot be considered as Pure Services. Further, one of the clauses specifically mentions that the rate should be filled inclusive of all taxes which means that as per the agreement, rate should be inclusive of all taxes which would also include GST. - AAR
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• Fusible Interlining Fabrics of Cotton not classified under Chapter 52; review points to Chapter 59 for customs tariff.

  Case-Laws - AAR : Classification of goods - product Fusible Interlining Fabrics of Cotton’ - classifiable under Chapter 52 or Chapter 59? - On going through the headings, chapter note of Chapter 52 as well as the explanatory notes to HSN with respect of the headings 5208 to 5212, we find that it does not cover laminated fabrics or fabrics coated with plastics. Hence, it can be safely concluded that ‘Fusible Interlining fabrics of cotton’ will not be covered under Chapter 52 of the First Schedule to the Customs Tariff Act, 1975 - AAR
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• Clarification on whether activities under the GIDC Act, 1962, are a "supply" per Section 7 of the CGST Act, 2017.

  Case-Laws - AAR : Supply or not - various activities carried out by the Applicant to the plot holders in terms of provisions of GIDC Act, 1962 - charges collected for the same - Section 7 of the Central Goods and Services Act, 2017 - Unless and until there is a specific entry pertaining to the establishment or development of industries in the aforementioned list, it cannot, by any stretch of imagination, be construed that the applicant is a Corporation that has been established to carry out activities in relation to functions entrusted to the municipalities under Article 243W of the Constitution of India merely on the grounds that establishment, organisation and development of industries would lead to economic development and would thus be covered under the aforementioned Entry No.3 of the list. - AAR
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• GST Applicability on Consultancy Services for SSNNL Deemed Hypothetical; No Decision for M/S. WAPCOS Involvement.

  Case-Laws - AAR : Scope of Advance Ruling - Levy of GST - The question raised here is not related to the agreement made by them with M/S. WAPCOS or the agreement made between M/s. WAPCOS and M/s. SSNNL but is related to the liability of GST on the consultancy services rendered by various consultancy agencies to SSNNL - the said question to be absolutely irrelevant, hypothetical and speculative which does not in anyway pertain to the services supplied/rendered by the applicant. - No decision can be given in view of the foregoing discussions. - AAR
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• GST Rate Set at 18% for Bulk Drugs and Intermediates Classified Under HSN 2919, Including Alpha-Ketoanalogue Calcium Salts.

  Case-Laws - AAR : Classification of goods - pharmaceutical products - Bulk Drugs and intermediates - the goods viz. bulk drugs and intermediate i.e. Alpha-Ketoanalogue Isoleucine Calcium Salt, Alpha-Ketoanalogue Valine Calcium Salt, Alpha-Ketoanalogue Leucine Calcium Salt, Alpha-Ketoanalogue Methionine Calcium Salt, Alpha-Ketoanalogue phenylalanine Calcium Salt classifiable under HSN 2919 attract GST @ 18%. - AAR
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Income Tax

• Lease Premiums to Mumbai Authority Not Subject to TDS as Rent u/s 194-I of Income Tax Act.

  Case-Laws - AT : TDS u/s 194I - lease premium paid to Mumbai Metropolitan Regional Development Authority (“MMRD") - lump sum lease premium or one-time upfront lease charges, which are not adjustable against periodic rent, paid or payable for acquisition of long-term leasehold rights over land or any other property are not payments in the nature of rent within the meaning of section 194-I of the Act. - such payments are not liable for TDS under section 194-1 of the Act - AT
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• Undisclosed cash receipts found during search cannot be justified; Assessing Officer's additions upheld by Tax Appeals Commissioner.

  Case-Laws - AT : Undisclosed income - Search proceedings - receipt in cash - As assessee is not able to justify and/or connect these receipts / payments as are found mentioned in loose documents seized by Revenue, with the transactions sought to be explained by assessee as are recorded in its books of accounts, and the explanation which is made by the assessee are merely an after thoughts to wriggle out of tax ambit. Thus, we reject the contention of the assessee on this issue and uphold /sustain the additions as was made by AO and which was later sustained / upheld by learned CIT(A). - AT
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• Land Sold Qualifies as Agricultural u/s 2(14)(iii), Affecting Capital Gain Tax Considerations.

  Case-Laws - AT : Capital gain - nature of land sold - the assessee has proved that the land in question is more than a distance of 8 km from the closest municipality and that it is agricultural land as defined u/s 2(14)(iii) - AT
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• PCIT's Oversight on Equity Share Valuation u/s 263 Raises Rule 11UA Compliance Concerns.

  Case-Laws - AT : Revision u/s 263 - valuation of equity share - the litigation before us may not have erupted if in the proceedings u/s 263 by Ld.. PCIT have mentioned that the audited financial statements are similar to the unaudited financial statement placed before Ld. A.O and the same has been examined by him and there is no change in valuation of the fair market value of the equity shares as per rule 11UA of I.T. Rules. - AT
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• India Taxation on ESOPs: No Treaty Protection for UAE Residents Without Direct Employment Nexus.

  Case-Laws - AT : Accrual of income in India - Taxation of ESOP benefit - In the absence of nexus of ‘other similar benefits’, as wages and salaries, received by the assessee vis-à-vis his employment in the U.A.E., the treaty protection of the said income in India cannot be available to a resident of the U.A.E. - AT
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• PCIT's Section 263 Action Flawed: Failed to Prove AO's Order Prejudiced Revenue Despite Finding Error. Legal Precedent Cited.

  Case-Laws - AT : Revision u/s 263 - PCIT has come to conclusion that the order passed by AO is erroneous, but has not verified nor investigated to determine the other condition i.e. how it is prejudicial to the interest of revenue. As held in numerous case law and it is settle position of law that to initiate proceedings under section 263, twin conditions has to be satisfied. - AT
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Customs

• Tax Exemption for Re-Imported Aircraft: Only Basic Customs Duty on Repairs, Freight & Insurance Applies; No Integrated Tax or Cess.

  Case-Laws - AT : Levy of IGST on re-import of aircrafts and parts thereof after repairs - Exemption form IGST - the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted. - AT
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Case Laws:

• GST

• 2021 (1) TMI 599
  Classification of goods - fusible interlining cloth used in cotton fabrics - classifiable under HSN code 5903 or under Chapter 52/55 (depending upon the weightage of Cotton)? - HELD THAT:- The dispute regarding classification of fusible interlining cloth, which is partially coated with plastic by the dot printing process i.e. whether it is covered under Chapter 52 to 55 or Chapter 59, has repeatedly come up before different authorities. In it s Circular No.24/Coated Fabric/88-CX.1 dated 02.09.1988, CBEC has referred to the production process. The finished woven fabric passed over preheated rolls having a high surface temperature and the heated substance was then pressed to a printing roll having fine dots engraved on it. High-density polyethylene powder was taken in a hopper that sat on the engraved printing roll, filling the dots. As a result, the pre-heated fabric got printed with plastic dots. The powder in between the engraved dots was scrapped by a doctor blade provided in the hopper. The dot printed cloth then passed through a heated chamber where the plastic melted and fused with the piece of cloth. CBEC concluded that the fusible interlining merited classification under Heading 5903 if the above printing process covered one side of the fabric with a continuous and adherent film or layer of plastic that made the fabric impervious. The applicant s product fusible interlining cloth of cotton fabric would undoubtedly be classifiable under Heading 5903 only. We, therefore, conclude that the product fusible interlining cloth of cotton fabric of the applicant is classifiable under Heading 5903 of the First Schedule to the Customs Tariff Act, 1975 - On going through the headings, chapter note of Chapter 52 as well as the explanatory notes to HSN with respect of the headings 5208 to 5212, we find that it does not cover laminated fabrics or fabrics coated with plastics. Hence, it can be safely concluded that Fusible Interlining cloth for cotton fabrics will not be covered under Chapter 52 of the First Schedule to the Customs Tariff Act, 1975.

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• 2021 (1) TMI 598
  Classification of goods - marine-pressure tight and non-pressure tight cables manufactured and designed by the applicant, for use by the Ministry of Defence in their warship as parts of warship - taxable at the concessional rate of GST@5% as per Entries No.250 and 252 of Schedule-I of the Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017 or otherwise? - HELD THAT:- Items like Anchor, Bow, Bowsprit, Bow Thrusters, Fore and Aft, Ship s Hull, Keel, Mast, Rigging, Rudder, Sails, Shrouds, Engines, gearbox, Propellor, Funnel, Navigation Bridge, Deck, Deck Crane, Forecastle etc. are very essential parts of a ship or vessel and are quite clearly parts of a vessel/ship and a ship cannot be imagined to be in existence without these parts i.e. the ship/vessel would not be complete without these parts. The essential items that are essential parts of a ship/vessel are such essential components/parts of a vessel/ship without which the ship/vessel would not be complete and without which the ship would not exist. While referring to the definition of the word part , we find that it is a separate piece of something or a piece that combines with other pieces to form the whole of something. Similarly, the second definition of part also defines part as one of the pieces that together forms a machine or some type of equipment. It is required to find out whether the marine pressure tight cables and marine non-pressure tight cables manufactured and supplied by the applicant can be considered as parts of a warship. The classification of these goods under Entry No.252 of Schedule-I of Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017 is solely dependent on the nature of use to which these goods are put to in order to be able to decide as to whether these goods are integral parts of the ships without which the ship would not be complete or would not exist. In order to avail of the benefit of reduced rate of GST as mentioned hereinabove, the applicant has to prove that the goods manufactured and supplied by them to the Navy are an integral part of the warship and are goods without which the warship would not come into being, or would not be complete or would not come into existence. The applicant has claimed that the marine pressure tight and marine non-pressure tight cables manufactured and supplied by them are very essential and integral part of the warship, without which warship cannot function and cannot be completed and at the same time the said goods supplied and used in the warship are capable of being separated as such for the purpose of repairs and replacement. However, they have not submitted any details with regard to these goods, which are essential to prove that the subject goods are integral parts of the warship such as: (i) the definition of marine pressure tight cables and non-pressure tight cables (ii) in which part of the warship they are used. (iii) do they constitute parts which can be used solely in warships? (iv) what are the uses of these cables i.e. what is the purpose they serve. (v) the reason why these cables can be considered to be so essential or so integral a part of a warship, without which the warship would not come into existence or would not be complete. -In the absence of these details, it would not be possible for us to decide whether the subject goods are parts of warship or otherwise. In fact, we will be left with no option but to make a decision based on the records available with us as well as on the merits of the case. The applicant has failed to prove their claim that the marine pressure tight cables and marine non-pressure tight cables manufactured and supplied by them are integral parts of warship without which the warship would not come into existence or would not be complete. It is therefore concluded that the marine pressure tight cables and the marine non-pressure tight cables manufactured and supplied by the applicant to the Navy are not parts of the warship and hence the benefit of reduced rate of GST of 5% is not available to the applicant as per Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017.

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• 2021 (1) TMI 597
  Government entity or not - Rajkot Urban Development Authority (Accredited Department of Gujarat State Government) - whether the said authority falls under the definition of Government Authority or a Government entity as defined under para 2(zf) 2(zfa) of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? - Pure Service or not - exemption by virtue of Notification No.12/2017 - HELD THAT:- Entry No.3 of aforementioned Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 exempts Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental Authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Hence, three conditions are required to be satisfied for a service to be covered under subject entry of the notification which is as below: (1) It must be pure service not involving any supply of goods. (2) It must be provided to the Central Government or State Government or Union Territory or Local Authority or a Governmental Authority or a Government Entity. (3) It must be an activity in relation to any function entrusted to a (i) Panchayat under Article 243G of the Constitution; or (ii) Municipality under Article 243W of the Constitution. The first condition to be verified is as to whether the services supplied by the applicant are pure services or otherwise. We, therefore, are of the opinion that if and only if, the first condition is satisfied, only then we will be required to look into the applicability of the other two conditions i.e. whether the other two conditions are also satisfied as per the current contract/agreement made by the applicant with Rajkot Urban Development Authority. So, the first condition to be discussed is as to what is meant by pure service? Since pure service has not been defined under GST, the same can be construed in general terms as any supply which is either deemed as services under Schedule II of CGST Act or which are not covered under the definition of goods shall be categorized as pure services. However, as per the notification, works contract services or other composite supplies involving supply of any goods are not covered in entry no.3 of aforementioned notification. In other words, if a person provides only service to any person without involvement of supply of goods along with supply of services, then the same would be termed as supply of pure service. Although the applicant has submitted that they are providing Professional and Technical service and have been allotted work of providing Project Management Consultancy Service(Heading 998339) in Relation to PM Awas Yojana by Rajkot Urban Development Authority and the service is Pure service and that Serial No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017, as amended from time to time exempts the Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or local authority or a Governmental Authority (or a Government Entity) by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution, they have only submitted the letter of acceptance dated 19.02.2019 issued to them by the Rajkot Urban Development Authority. The primary condition for an applicant to be eligible for the exemption by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) is that the services supplied by them are pure i.e. services supplied/provided without any supply of goods and excluding Works Contract service or other composite supplies involving supply of any goods, and only if it is proved or established that the services provided by them are pure, will the applicability of the other conditions i.e. whether the recipient of the services is a Governmental Authority or Government Entity, whether the services supplied are in relation to functions entrusted to a municipality or a panchayat under Articles 243G or 243W of the Constitution etc. will be looked into. However, under the above circumstances, it would not be possible for us to decide whether the services supplied by the applicant are pure or otherwise merely on the basis of the letter of acceptance submitted by them. Further, in absence of the aforementioned agreement, and without going through the terms and conditions of the agreement, it would not be possible for us to decide whether the Services provided by the applicant are Pure or are a supply of services along with supply of goods since the work is connected to the project of Affordable Housing and could also involve Works Contract service.

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• 2021 (1) TMI 596
  Liability of GST - landlord charges electricity or incidental charges in additional to rent as per Lease Agreement for immovable property rented to the tenant - Is landlord liable to pay and recover GST from tenant on electricity or incidental charges charged by it? - electricity charges paid by landlord to Torrent Power Ltd. (the supplier of electricity) for electricity connection in the name of landlord and recovered based on sub meters from different tenants (the legal liability to pay electricity bill to Torrent Power Ltd. is that of landlord) - Pure services of the tenant or not. Scope of Advance Ruling - HELD THAT:- The latter part of the first question raised by the applicant to the effect whether they are liable to recover GST from the tenant on the electricity or incidental charges charged by it is outside the purview of the scheme of advance ruling. The Advance Ruling authorities can only give a decision whether the applicant are liable to pay GST on such charges or otherwise. Whether such GST (if paid) can be recovered from the tenant or otherwise is a civil matter which has to be decided in terms of the agreement entered into by the two parties and the Advance Ruling authority is not empowered to comment on such issues - The Advance Ruling is restricted to following questions: a. When landlord charges electricity or incidental charges in addition to rent as per Lease Agreement for immovable property rented to the tenant, is landlord liable to pay GST on electricity or incidental charges charged by it? b. Can electricity charges paid by landlord to Torrent Power Ltd. (the supplier of electricity) for electricity connection in the name of landlord and recovered based on sub meters from different tenants be considered as amount recovered as pure agent of the tenant when the legal liability to pay electricity bill to Torrent Power Ltd. is that of landlord? In the instant case, there is no charge towards commission and packing and as such the same is ruled out. Thus, the only two possible inclusions are the incidental expenses and amount charged for anything done by the supplier. The includible charges are to be examined in terms of the language employed in the statute vis- -vis the terms and conditions of the agreement and would depend on case to case basis. Thus, the question to the effect whether incidental charges are includible in the value of supply is not answerable in general terms. The facts of each case would be different and such decision would be applicable based on the facts of each case. Therefore, we are discussing the matter only in respect of the specific case in terms of the agreement entered into by the applicant with the CGST department and the discussions and decision would not apply to other agreements. The charges towards electricity is covered under clause 9 of the agreement which is independent of clause 3 and the same stipulates that the Govt. of India shall pay all charges in respect of electric power, Air-conditioning charges, light and water used along with the applicable taxes thereon. Careful scrutiny of the clause indicates that the supplier of the service has made it mandatory that the Govt. of India is required to pay all the charges in respect of electric power used - In view of such an agreement, it cannot be said that the electricity charges would be covered by Sec. 15(2)(c) of the CGST Act, 2017 for the sole reason that the rate for renting of premises has been fixed at an amount and the electricity charges are to be borne by the lessee as per the actual usage of electric power by them in terms of the agreement. Accordingly, the said amount would not be includible in the value of supply. It is reiterated here that the decision would apply to this specific agreement in as much as the clauses of the agreement are specific to the effect that the lessee would. The second question to the effect whether such expenses incurred by the applicant would be considered as charges taken in the capacity of a pure agent or otherwise. This question gains importance owing to the fact that the applicant has not provided a separate electric meter to the lessee in the instant case and as such the lessee cannot make the payment of electric charges directly to the electric company. In such circumstances the applicant makes the payment to the electric company and in-turn collects such charges from the lessee. To make the system work, the applicant have installed sub-meters and they collect the charges of the electric power used by the lessee as per the usage of power ascertained from such sub-meter - the lessee was supposed to pay the electricity charges directly to the electric company as per the actual usage in terms of the agreement. However, for the failure of the lessor to obtain a separate electric meter for the premises rented to the lessee, they have mutually agreed to collect the electric charges on the basis of actual usage based on the sub-meters and onward payment to the electric company. At this juncture, it is noteworthy to mention that the lessee is Govt. of India and as such would by no means pay any amount in excess or lower than the actual electric power used by them. With a purpose to ensure such actual payment, the lessor i.e. the applicant has installed a sub-meter for the lessee. Thus, it is purely a reimbursable expense made by the lessee which is collected on actual usage of the electric power. Secondly, if at all the amount was not be charged on actual usage basis, it would have been all the more easier for both the parties to fix a certain amount towards electricity charges in the agreement itself. However, this has not been done which clarifies the intent of both the parties that the charges towards electric power usage would be on actual basis. It is clear that the agreement contains an inbuilt clause of actual payment of electric charges by the lessee directly to the electric company. However, due to lack of infrastructure on the part of the lessor, there is a silent agreement between both the parties that the applicant will collect the actual usage charges on the basis of the reading of the sub-meter and in-turn pay the same to the electric company. Since this arrangement has been on-going since such a long time, it can be clearly said that there is a mutual understanding between both the parties and such mutual understanding is also an called an agreement in terms of the provisions of the Indian Contract Act, 1852. Thus, the conditions of Rule 33 of the CGST Rules, 2017 also stand satisfied in the instant case and as such it is concluded that the electricity expenses incurred by the applicant on behalf of the lessee have been incurred in the capacity of a pure agent.

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• 2021 (1) TMI 595
  Exemption from GST or not - Educational Services or not - services provided by the applicant in affiliation to/ partnered with Gujarat University and providing education for degree courses to students under specific curriculum as approved by the Gujrat University, for which degrees are awarded by the Gujarat University - applicability of N/N. 12/ 2017-Central Tax (Rate) dated 28th June, 2017 - HELD THAT:- The applicant is a company enacted under the Company Act, 1956. They are having necessary expertise in the fields of Computer Animation, IT-Infrastructure Management System and Mobile Computing Application Education - an Agreement and a Memorandum of Understanding (MOU) are entered into on 05.07.2017 between the Applicant and the Gujarat University, Ahmedabad for knowledge sharing in the fields of Computer Animation, Mobile Computing Application, IT-Infrastructure Management Systems (ITIMS) for Skill development, Entrepreneurship development, Youth empowerment and promotion of skill based training. The applicant is an educational consultant and a professional in the fields of Computer Animation, IT-Infrastructure Management System and Mobile Computing Application Education, which uses their experience and knowledge in teaching, to help with curriculum development and other issues to Gujarat University and parents face. The applicant designs and handles the courses, namely M.Sc.-IT in Animation, M.Sc.-IT in Mobile application, M.Sc.-IT in IMS (Infrastructure Management Systems) and M.Sc.-IT in Network Securities, which undertaken by Gujarat University. The applicant then on the basis of the approved courses, provide training to the students. Further, the applicant also helps to administer the admission and fees collection process. Training given by the applicant as a Private Institutes would not be covered, as such training does not lead to grant of a recognized qualification. Thus, the applicant does not have any specific curriculum and does not conduct any examination or award any qualification/degree. Hence, the applicant does not qualify as educational institution - In this process, the applicant received Fees (i.e. 60% of total fees collected from students by Gujarat university) from Gujarat University, which attract GST @18%. Thus, the applicant is not at all entitled for exemption in respect of said services provided by the applicant to Gujarat University, under Entry at Sr. No. 66 of the exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

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• 2021 (1) TMI 594
  Levy of GST - PAPAD of different shapes and sizes in un-cooked condition - Classification of goods - rate of tax - HELD THAT:- The main ingredient of their product i.e. so called Papad of different shapes and sizes i.e. Fryums is wheat flour, superfine wheat flour, whereas main ingredient of Papad is batter of Pulses i.e. Moong dal, Udad Dal, black pepper and not of wheat Flour and Maida. In the market most popular papad are of Moong dal Papad and Udad dal papad . Therefore, main ingredients of both the Product i.e. Fryums and Papad are not same but are different. Further, the manufacturing processes of both the product have also some differences. In Fryums some sort of moisture are maintained at specific temperature and then fried the Fryums and applied Masala then put in a unit container for sale whereas Papad are required to be completely dried in sun light otherwise Papad will become rotten if some moisture remains in Papad and cannot be useful for consumption. Further Papad are commonly sold in ready to cook condition and not fried or baked whereas applicant product sold as ready to eat. Hence the applicant s claim that their product fried Fryums are known as papad is totally baseless and misleading. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger [ 1996 (5) TMI 419 - SUPREME COURT ] wherein the Hon ble Supreme Court examined the matter under Rajasthan Sales Tax Act, whether Gol Papad manufactured out of Maida, Salt and Starch are Papad or not. It was held that size or shape is irrelevant and that Papad of all shapes and sizes are covered under the entry Papad. Thus, the fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of fried Fryums - HELD THAT:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids. Obviously, the term such as is purely illustrative but not exhaustive and therefore processing includes frying also, hence fried goods are also covered under chapter head 2106 which is ready for human consumption - In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known in the heading 1905 is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals - the product different shapes and sizes fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. It can be concluded that applicant s product of different shape and sizes is fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.

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• 2021 (1) TMI 593
  Levy of GST - PAPAD of different shapes and sizes in un-cooked condition - Classification of goods - rate of tax - HELD THAT:- The main ingredient of their product i.e. so called Papad of different shapes and sizes i.e. Fryums is wheat flour, superfine wheat flour, whereas main ingredient of Papad is batter of Pulses i.e. Moong dal, Udad Dal, black pepper and not of wheat Flour and Maida. In the market most popular papad are of Moong dal Papad and Udad dal papad . Therefore, main ingredients of both the Product i.e. Fryums and Papad are not same but are different. Further, the manufacturing processes of both the product have also some differences. In Fryums some sort of moisture are maintained at specific temperature and then fried the Fryums and applied Masala then put in a unit container for sale whereas Papad are required to be completely dried in sun light otherwise Papad will become rotten if some moisture remains in Papad and cannot be useful for consumption. Further Papad are commonly sold in ready to cook condition and not fried or baked whereas applicant product sold as ready to eat. Hence the applicant s claim that their product fried Fryums are known as papad is totally baseless and misleading. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger [ 1996 (5) TMI 419 - SUPREME COURT ] wherein the Hon ble Supreme Court examined the matter under Rajasthan Sales Tax Act, whether Gol Papad manufactured out of Maida, Salt and Starch are Papad or not. It was held that size or shape is irrelevant and that Papad of all shapes and sizes are covered under the entry Papad. Thus, the fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of fried Fryums - HELD THAT:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids. Obviously, the term such as is purely illustrative but not exhaustive and therefore processing includes frying also, hence fried goods are also covered under chapter head 2106 which is ready for human consumption - In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known in the heading 1905 is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals - the product different shapes and sizes fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. It can be concluded that applicant s product of different shape and sizes is fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.

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• 2021 (1) TMI 592
  Levy of GST - PAPAD of different shapes and sizes in un-cooked condition - Classification of goods - rate of tax - HELD THAT:- The main ingredient of their product i.e. so called Papad of different shapes and sizes i.e. Fryums is wheat flour, superfine wheat flour, whereas main ingredient of Papad is batter of Pulses i.e. Moong dal, Udad Dal, black pepper and not of wheat Flour and Maida. In the market most popular papad are of Moong dal Papad and Udad dal papad . Therefore, main ingredients of both the Product i.e. Fryums and Papad are not same but are different. Further, the manufacturing processes of both the product have also some differences. In Fryums some sort of moisture are maintained at specific temperature and then fried the Fryums and applied Masala then put in a unit container for sale whereas Papad are required to be completely dried in sun light otherwise Papad will become rotten if some moisture remains in Papad and cannot be useful for consumption. Further Papad are commonly sold in ready to cook condition and not fried or baked whereas applicant product sold as ready to eat. Hence the applicant s claim that their product fried Fryums are known as papad is totally baseless and misleading. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger [ 1996 (5) TMI 419 - SUPREME COURT ] wherein the Hon ble Supreme Court examined the matter under Rajasthan Sales Tax Act, whether Gol Papad manufactured out of Maida, Salt and Starch are Papad or not. It was held that size or shape is irrelevant and that Papad of all shapes and sizes are covered under the entry Papad. Thus, the fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of fried Fryums - HELD THAT:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids. Obviously, the term such as is purely illustrative but not exhaustive and therefore processing includes frying also, hence fried goods are also covered under chapter head 2106 which is ready for human consumption - In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known in the heading 1905 is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals - the product different shapes and sizes fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. It can be concluded that applicant s product of different shape and sizes is fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.

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• 2021 (1) TMI 591
  Classification of goods - product Zn EDTA - Zinc Ethylenediamine Tetra Acetic Acid) - Fe EDTA - (Iron Ethylenediamine Tetra Acetic Acid) Acetic Acid) - applicability of correct S. No. of Schedules under Notification No.1/2017-Central Tax(Rate) dated 28.06.2017(as amended) and corresponding Notifications issued under GGST Act, 2017 and IGST Act, 2017 - HELD THAT:- Applicant are engaged in the manufacture and supply of a Zinc Ethylenediamine Tetra Acetic Acid (Zn EDTA-Chelate Zinc as Zinc EDTA), Iron Ethylenediamine Tetra Acetic Acid (Fe EDTA-Chelate Iron as EDTA) and other products. The product Zn EDTA contains Zinc 12%+, Nitrogen 6.9% EDTA Acid Salt and it has Ph level of 6 - 6.5. The product Fe EDTA contains Iron-12%+, Nitrogen-6.5% EDTA Acid Salt and it has Ph level of 6-6.5. They sell the products, Zn EDTA and Fe EDTA in 25 Kgs. packing in HDPE Bags. Micronutrients are essential nutrients that are required in small quantities for the normal growth and development of plants. As on today, iron (Fe), manganese (Mn), zinc (Zn), copper (Cu), boron (B), molybdenum (Mo), nickel (Ni) and chlorine (Cl) are included in this category. These elements are also called minor or trace elements, but this does not mean that they are less important than macronutrients. These micronutrients are sold in the market as `micronutrient fertilizer supplying one or more of the eight essential nutrients listed above, namely iron to chlorine. However, in the trade parlance sale of micronutrients as micronutrient fertilizers would not lead to classification thereof under chapter 31 as fertilizers for the purposes of GST. For classification under chapter 31, at least one of the elements, namely- nitrogen (N), phosphorus (P) or potassium (K) should be an essential constituent of the fertilizer as per chapter note 6 of chapter 31 - Further, there is no specific heading in the tariff for classification of micronutrients. However, where the micronutrient is a separate chemically defined compound, it will be classifiable under the heading for that chemically defined compound under chapter 28 or chapter 29. For example, some of the sulphates of micronutrients are specifically covered under CETH 2833. PGRs are different from nutrients, be it macronutrient or micronutrient. PGR as a substance is specifically covered under HSN 3808. More specifically, Plant Growth Regulators are covered under tariff item 3808 9340 - Fertilizers are classified under chapter 31 of the Customs Tariff and for this purpose they may, inter alia, be minerals or chemical fertilizers nitrogenous (CTH 3102), phosphatic (CTH 3103), potassic (CTH 3104) or fertilizers consisting of two or three of the fertilizing elements namely nitrogen, phosphorous and potassium; other fertilizers (CTH 3105). For the purpose of classification of any product as other fertilizers , chapter note 6 of Chapter 31 is relevant which provides that the term other fertilizers applies only to products of a kind used as fertilizers and contain, as an essential constituent, at least one of the elements nitrogen, phosphorus or potassium. It is quite clear that for any product to merit classification under CTH3105 as other fertilizers, the product must have nitrogen or phosphorus or potassium or their combination as an essential constituent providing the essential character to the product. The chemical elements nitrogen, phosphorus and potassium are also referred as macronutrients or primary fertilizer elements and are required in higher quantity by the plants - any product where the essential elements are not nitrogen or phosphorus or potassium or their mixture, would not merit classification under CTH 3105. Further, the specific exclusion of separate chemically defined compounds as laid down in chapter note 1 (b) and in the HSN Explanatory Notes to the heading 3105.90, reinforce the above conclusion. The products, viz. ZN EDTA and Fe EDTA are used as fertilizer to overcome zinc deficiency and iron deficiency respectively, in plants as well as a source of zinc and iron respectively for those plants which require zinc and/or iron for their normal growth and higher yields. Further, Zn EDTA contains Zinc 12%+, Nitrogen 6.9% EDTA Acid Salt and Fe EDTA contains Iron 12%+, Nitrogen 6.5% EDTA Acid Salt - the products, viz. Zinc Ethylenediamine Tetra Acetic Acid (Zn EDTA-Chelate Zinc as Zinc EDTA) and Iron Ethylenediamine Tetra Acetic Acid (Fe EDTA-Chelate Iron as Fe. EDTA) are micronutrients and merits classification under Chapter sub-heading 3824 99 90 of the First Schedule to the Customs Tariff Act, 1975. Applicable rate of GST - HELD THAT:- The micronutrients products, viz. Zn EDTA and Fe EDTA manufactured and supplied by the applicant are covered under Sl. No.7 8 of 1(g) of Schedule I (Micronutrients), Part-A of the Fertilizer Control Order, 1985, as amended and the Applicant is also registered under the Fertilizer Control Order, 1985. Under GST, the micronutrients classifiable under Chapter 28 or 38, which are covered under serial number1(g) of Schedule 1, Part (A) of the Fertilizer Control Order, 1985 and are manufactured by the manufacturers which are registered under the Fertilizer Control Order, 1985 are covered under Sl. No. 56 of Schedule-II of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended), and corresponding Notifications issued under the GGST Act, 2017 and IGST Act, 2017 - the products, viz. Zn EDTA and Fe EDTA manufactured and supplied by the applicant are classifiable under HSN 3824 and are covered under Entry at Sl.No.56 of Schedule-II of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 as amended, on which total rate of GST chargeable is 12%. The applicant has further contended that there is no condition under S. No. 56 of Schedule-II of the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) that the buyer/recipient of micronutrient fertilizer should also be registered under the Fertiliser Control Order, 1985, in the understanding of the applicant, the supply of products, Zn EDTA and Fe EDTA by the applicant to the recipient, who is not registered under the Fertiliser Control Order, 1985, will not have any impact on the applicability of S. No.56 of Schedule-II of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended), and corresponding Notifications issued under the GGST Act, 2017 and IGST Act, 2017 - the supply of the products `Zn EDTA and Fe EDTA by the applicant to the recipient, who is not registered under the Fertilizer Control Order, 1985, will have no impact on the applicability of particular S. No. of the Schedules of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) and corresponding Notification No.1/2017-State Tax (Rate) dated 30.06.2017 (as amended) and Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 (as amended), as there is no such condition prescribed in said entry under said notifications.

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• 2021 (1) TMI 590
  Classification of goods - Product Mosquito Repellent, Aayudh-Mosx - classifiable under Heading 30049011 or 38089191? - HELD THAT:- The product in question i.e. AAYUDH-MOSX is a Ayurvedic mosquito repellent made from all-natural plant extracts and does not contain DEET (N, N-Diethyl-meta-toluamide). Said product is used for prevention of the body from being infected by the bite of the mosquitos. The applicant refers Section 3(a) of the Drugs and Cosmetics Act, 1940 defines Ayurvedic, Siddha or Unani drug . The definition of the Drugs and Cosmetics Act, 1940 having different object, purpose and scheme cannot be applied mechanically to GST law. The object of the GST Act is to raise revenue for which various products are differently classified in the Customs Tariff Act, as also applicable to GST - the applicant pitched the product in their sale material and advertisements as a mosquito repellent. Various mosquito repelling qualities are identified as defining characteristics of the subject goods in the market. Also, it is noted that the said product is not normally prescribed as a medicine by medical practitioner as a drug. There is no restriction on sales. The product is sold on demand at the counters in shops and establishments. Sales are not restricted to chemists/druggists alone. A perusal of the classification heading no. 38089191 shows that the product in question is a neat fit into the description of products laid down therein. No laboured process of reasoning is required since the heading No. 38089191, is clear as day light - invocation of the general entry called others by the applicant is clearly misconceived, since the product in question is covered by a specific description in the heading under which the product has been classified. Undoubtedly, the description under Heading No. 3808 91 91, i.e., Repellents for insects such as flies, mosquito is far more specific as compared to the description under the other heading under consideration, i.e., Heading No. 3004 90 99 which is Other (meaning medicaments other than all those explicitly specified in the other sub-headings of Heading No. 3004). Evidently, the latter heading is a residual classification while the former is specific and conforms to the description of the goods adopted by the applicant themselves for the purposes of packing as well as advertisement and publicity - the product, AAYUDH-MOSX is not known in the market as an Ayurvedic medicine and the same is also not ordinarily prescribed by a Physician as a medicine for prevention of the body from being infected by the bite of the mosquitos. It is pertinent that mosquito repellents are classified at Heading No. 3808 91 91 of the Customs Tariff as a subcategory of insecticides. Thus, this again indicates that Heading No. 3808 91 91 is most specific for the classification of the subject product. Thus, the product in question i.e. AAYUDH-MOSX , is a mosquito repellent used on the skin toward off mosquitoes and, hence, same is classifiable under Chapter Heading No. 3808 91 91 of the Customs Tariff Act, 1985 and not as a medicament under Heading No. 3004. AAYUDH-MOSX , being a mosquito repellent, attracts GST @18%, as per Sl. No. 87 of Schedule-III to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017.

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• 2021 (1) TMI 589
  Levy of GST - sale of Fryums manufactured by the applicant - Classification of goods - rate of tax - HELD THAT:- The main ingredient of their product i.e. so called Papad of different shapes and sizes i.e. Fryums is wheat flour, superfine wheat flour, whereas main ingredient of Papad is batter of Pulses i.e. Moong dal, Udad Dal, black pepper and not of wheat Flour and Maida. In the market most popular papad are of Moong dal Papad and Udad dal papad . Therefore, main ingredients of both the Product i.e. Fryums and Papad are not same but are different. Further, the manufacturing processes of both the product have also some differences. In Fryums some sort of moisture are maintained at specific temperature and then fried the Fryums and applied Masala then put in a unit container for sale whereas Papad are required to be completely dried in sun light otherwise Papad will become rotten if some moisture remains in Papad and cannot be useful for consumption. Further Papad are commonly sold in ready to cook condition and not fried or baked whereas applicant product sold as ready to eat. Hence the applicant s claim that their product fried Fryums are known as papad is totally baseless and misleading. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger [ 1996 (5) TMI 419 - SUPREME COURT ] wherein the Hon ble Supreme Court examined the matter under Rajasthan Sales Tax Act, whether Gol Papad manufactured out of Maida, Salt and Starch are Papad or not. It was held that size or shape is irrelevant and that Papad of all shapes and sizes are covered under the entry Papad. Thus, the fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of fried Fryums - HELD THAT:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids. Obviously, the term such as is purely illustrative but not exhaustive and therefore processing includes frying also, hence fried goods are also covered under chapter head 2106 which is ready for human consumption - In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known in the heading 1905 is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals - the product different shapes and sizes fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. It can be concluded that applicant s product of different shape and sizes is fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.

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• 2021 (1) TMI 588
  Scope of Advance Ruling application - Classification of services - composite supply or mixed supply? - services for a Single consolidated Rate as a package - services are not naturally bundled and are capable of being provided independently - Section 2(74) of the CGST Act, 2017 - rate of GST - Applicable HSN Code - Input tax credit - refund of GST paid on outward supply invoices - HELD THAT:- The provisions for seeking Advance Ruling made under the Act is limited to the activities conducted by the applicant only and is for the purpose of clarifying issues such as classification of the supply of goods/services provided by them, their GST liability if any, applicability of a notification issued under the provisions of the Act, determination of time and value of supply of goods or services or both, admissibility of input tax credit, determination of the liability to pay tax on any goods or services or both, whether applicant is required to be registered or whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. The very purpose of the Board for making the provision of Advance Ruling in the CGST Act, 2017 is to help the applicant in planning his activities which are liable for payment of GST. It also brings certainty in determining the tax liability, as the ruling given by the Authority for Advance Ruling is binding on the applicant as well as Government authorities. Further, it helps in avoiding long drawn and expensive litigation at a later date. Seeking an advance ruling is inexpensive and the procedure is simple and expeditious. It thus provides certainty and transparency to a taxpayer with respect to an issue which may potentially cause a dispute with the tax administration. In the present case, the applicant has asked hypothetical questions seeking Advance Ruling on an issue which has not materialised till date. We find that a period of nearly one year has lapsed after the filing of the application of Advance Ruling by the applicant (which was filed on 13.10.2019) but the agreement which they were supposed to make with the so-called Rice exporter has not materialised so far i.e. no agreement has been signed in this regard and therefore no copy has been submitted in the instant case. Without any agreement or any other relevant documents having been provided by the applicant in the instant case, it would not be possible to give a decision in the said matter.

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• 2021 (1) TMI 587
  Classification of goods - product Non Woven Bags manufactured through the intermediate product Non Woven fabric - classifiable under Heading No. 5603 or under 6305 or under Heading No. 3923? - exemption under N/N. 01/2017-CT (Rate) and 01/2017-I.T. (Rate) dated 28.06.2017 as amended - HELD THAT:- Applicant has relied upon decision of Hon ble Supreme Court of India in PORRITTS SPENCER (ASIA) LTD. VERSUS STATE OF HARYANA [ 1978 (9) TMI 72 - SUPREME COURT] has stated that textile is woven fabric, which is emerged by weaving of yarn of cotton, silk, rayon or nylon and similar type of material. The said textile may be used for making apparel, bed sheet or tapestry or upholstery or as towel. Therefore, fabric made of other than the yarn of cotton, silk, rayon or nylon and similar type of material is not a textile. The word used in the sentence is similar type of material and the meaning of said word can only be drawn in reference of the words used before the above word. The fabric made of Fiber grade Poly Propylene granules is not a similar type of material of cotton, silk, rayon or nylon. Hence fabric made of Fiber grade Poly Propylene granules cannot be considered as textile. Hence, ratio of above case law is not squarely applicable to the present case. Non-Woven Bags manufactured through the intermediate product, i.e. Non-Woven fabric manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology, merits classification under HS code 3923, as also clarified by the CBIC in the Board Circular No.80/54/2018-GST issued from F. No. 354/432/2018-TRU dated 31st December, 2018 Applicable rate of GST on product - Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The rates of GST leviable on above product were changed from time to time, as below: (a) Period 01.07.2017 to 30.09.2019 - rate of CGST and SGST @ 9% each, totalling to 18%. (b) Period 01.10.2017 to 31.12.2019 - rate of CGST and SGST @ 6% each, totalling to 12%. (c) Period 01.01.2020 to till date - rate of CGST and SGST @ 9% each, totalling to 18%.

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• 2021 (1) TMI 586
  Pure service - solid waste management service - Scope of the terms of service agreement - Exemption provided under Sr.No.3 of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 - solid waste management service provided by the applicant to Notified Area Authority, Vapi - Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. HELD THAT:- Entry No.3 of aforementioned Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 exempts Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental Authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Hence, three conditions are required to be satisfied for a service to be covered under subject entry of the notification which is as below: (1) It must be pure service not involving any supply of goods. (2) It must be provided to the Central Government or State Government or Union Territory or Local Authority or a Governmental Authority or a Government Entity. (3) It must be an activity in relation to any function entrusted to a (i) Panchayat under Article 243G of the Constitution; or (ii) Municipality under Article 243W of the Constitution. On going through the work order/agreement of the applicant with Notified Area Authority, Vapi, we find that it is for the purpose of collection, sorting and recovery of waste and setting up of Material Recovery Facility under DBFOOM model as per Rules, Norms and Regulations of SWM Rules-2016, PWM Rules-2016, MoEFCC, CPCB, GPCB etc. at Notified Area, GIDC, Vapi. However, while going through the Scope of Work of the agreement, we find that there are certain clauses under the portion Detailed Specification and terms and conditions of the agreement which raise a question mark over the contention of the applicant that they are supplying/providing pure services. As per the agreement, the rate of supply of services includes the cost of the Collection vehicle with licensed holder driver, fuel, oil, pick axes, tools, plants, suction machine, machinery, gumboots, hand gloves, raincoat in the monsoon period etc. Thus, from a plain reading of the aforementioned clause, it appears that the services provided by the applicant includes supply of goods also, hence it cannot be considered as Pure Services. Further, one of the clauses specifically mentions that the rate should be filled inclusive of all taxes which means that as per the agreement, rate should be inclusive of all taxes which would also include GST. This clause itself nullifies the contention of the applicant that they are providing pure services to Notified Area Authority, Vapi which they claim, are exempt from GST by virtue of Sr.No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. In view of the above, we conclude that the services provided by the applicant to Notified Area Authority, Vapi are not Pure Services. Since the applicant have failed to satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all - the exemption under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 is not available to the applicant.

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• 2021 (1) TMI 585
  Classification of goods - product Fusible Interlining Fabrics of Cotton - classifiable under Chapter 52 or Chapter 59? - HELD THAT:- The dispute regarding classification of fusible interlining cloth, which is partially coated with plastic by the dot printing process i.e. whether it is covered under Chapter 52 to 55 or Chapter 59, has repeatedly come up before different authorities. In it s Circular No.24/Coated Fabric/88-CX.1 dated 02.09.1988, CBEC has referred to the production process. The finished woven fabric passed over preheated rolls having a high surface temperature and the heated substance was then pressed to a printing roll having fine dots engraved on it. High-density polyethylene powder was taken in a hopper that sat on the engraved printing roll, filling the dots. As a result, the pre-heated fabric got printed with plastic dots. The powder in between the engraved dots was scrapped by a doctor blade provided in the hopper. The dot printed cloth then passed through a heated chamber where the plastic melted and fused with the piece of cloth. CBEC concluded that the fusible interlining merited classification under Heading 5903 if the above printing process covered one side of the fabric with a continuous and adherent film or layer of plastic that made the fabric impervious. In Circular No.5/89 dated 15.06.1989, CBEC discussed the significance of the insertion of Chapter 2(c) in Chapter 59 by the Finance Act, 1959. After the insertion of the said note, the fusible interlining cloth made by discrete coating with plastic by dot printing process became classifiable under Heading 5903. CBEC clarified that before that, such cloth had been covered under Chapter 52 to 55, depending upon the textile materials used. Chapter Note 2 (c) was omitted w.e.f. 16.03.1995. CBEC vide Circular No.433/66/98-CX.6 dated 27.11.1998 tried to clear the air about the classification of fusible interlining cloth in the context of removal of Chapter Note 2(c) from Chapter and drew attention to the Finance Act, 1995 that broadly aligned the Central Excise Tariff to the Tariff Act. The significance of the alignment was that the Explanatory Notes to the HSN code or the Chapter Notes to Chapter 59 of the Tariff Act had not contained any provision like Chapter Note 2(c) to Chapter 59 of the Central Excise Tariff Act, 1985. The said Chapter Note 2(c) was, therefore, deleted by the Finance Act, 1995 - The difference arises from the application of the provisions of the explanatory notes to the HSN Code. In the said explanatory notes to Chapter 59, textile fabrics which were spattered by spraying with visible particles of thermoplastic material and were capable of providing a bond to other fabrics or materials on the application of heat and pressure were classifiable under Heading 5903. According to Circular No.433/66/98-CX.6 dated 27.11.1998, such classification should be treated as an exception to Chapter Note 2(a)(4) to Chapter 59. CBEC Circular No. 433/66/98-CX-6 dated 27/11/1998 is relevant even today and has persuasive value. Further, Chapter Note 2(a)(4) to Chapter 59 says that fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are excluded from Heading 5903 and are usually covered in Chapter 50 to 55, 58 or 60, depending on the materials used. At the same time, according to the Explanatory notes to the HSN code, textile fabrics which are spattered by spraying with visible particles of thermoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure are classifiable under heading 5903. Also, the process of manufacture of the fusible interlining of fabrics of cotton. On going through the headings, chapter note of Chapter 52 as well as the explanatory notes to HSN with respect of the headings 5208 to 5212, we find that it does not cover laminated fabrics or fabrics coated with plastics. Hence, it can be safely concluded that Fusible Interlining fabrics of cotton will not be covered under Chapter 52 of the First Schedule to the Customs Tariff Act, 1975 - The product Fusible Interlining Fabrics of Cotton of the applicant M/s Girish Rathod(Jay Ambey), Ahmedabad is correctly classifiable under Heading 5903 of Chapter 59 of the First Schedule to the Customs Tariff Act, 1975.

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• 2021 (1) TMI 584
  Supply or not - various activities carried out by the Applicant to the plot holders in terms of provisions of GIDC Act, 1962 - charges collected for the same - Section 7 of the Central Goods and Services Act, 2017 - Gujarat Industrial Development Corporation - Central Government, State Government, Union Territory, Local authority or Governmental Authority or not - N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 - N/N. 14/2018-Central Tax(Rate) dated 26.07.2018 (effective from 27.07.2018) vide which certain amendments were made in Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 - HELD THAT:- Gujarat Industrial Development Corporation has come into existence by virtue of Gujarat Industrial Development Act, 1962 of the Government of Gujarat (Gujarat Act No.XXIII of 1962). The entire top Management of the Corporation including the Chairman, vice-Chairman, Managing Director, Chief Accounts Officer as well as the Directors of the Corporation are directly appointed by the State Government i.e. the Government of Gujarat. It can also be seen from the website of the applicant that the Managing Director as well as the Joint Managing Director are officers from the cadre of Indian Administrative Service(IAS) whereas the Executive Director is an officer belonging to the cadre of Gujarat Administrative Service (GAS). Also, on going through the various sections of the GID Act mentioned hereinabove, it appears that the said Corporation is totally governed by the State Government and functions just like any other Department of the State Government i.e. State of Gujarat. Further, on perusal of the Audit Report and Annual Accounts of Gujarat Industrial Development Corporation for the financial year 2013-14(available online), it is specifically mentioned therein at Point No.4(Related Party Disclosure) that Gujarat Industrial Development Corporation is a wholly owned corporation of Government of Gujarat. Hence it is a state controlled enterprise as defined in Para-9 of Accounting Standard AS 18 Related Party Disclosure issued by the Institute of Chartered Accountants of India. Thus no disclosure is required, keeping the spirit of the accounting standard in mind. Thus, Gujarat Industrial Development Corporation is nothing but a wing of the State Government i.e. the Government of Gujarat which has come into existence by virtue of the Gujarat Industrial Development Act and Rules, 1962 of the Government of Gujarat. The supply of goods/services provided by the applicant are covered in sub-sections 1 and 1(A) above, since as per their submission itself, they are involved in sale, transfer, rental, lease, etc. and are earning income from provision/supply of various services/goods as listed in para-14 above. However, the second part of the said provision specifically states that the aforementioned supply of goods and services should be made or agreed to be made for a consideration by a person in the course or furtherance of business. It can therefore be seen from the above that supply would include supply of goods or services or both in all the forms, made by a person in course or furtherance of business for consideration. Thus, the primary requirement under Section 7(1)(a) is that all forms of supply of goods or services or both mentioned in the section should be in the course or furtherance of business and to qualify to be supply under Section 7(1)(a) of CGST Act, 2017, the said phrase in the course or furtherance of business will have to be satisfied. Unless and until there is a specific entry pertaining to the establishment or development of industries in the aforementioned list, it cannot, by any stretch of imagination, be construed that the applicant is a Corporation that has been established to carry out activities in relation to functions entrusted to the municipalities under Article 243W of the Constitution of India merely on the grounds that establishment, organisation and development of industries would lead to economic development and would thus be covered under the aforementioned Entry No.3 of the list. In view of the above facts, we conclude that the applicant namely Gujarat Industrial Development Corporation is not eligible for the exemption mentioned at Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time). It can be seen from the Entry No.6 that the services supplied by the applicant who is providing or supplying the services as a public authority and falling under the category of State Government as discussed earlier, would be covered under item(d) above which provides that any service, other than services covered under entries (a) to (c) above, provided to business entities would be exempted from GST. It is seen that the services supplied/provided by the applicant is to the various industries located in the Industrial area. All the industries as we know, are undoubtedly business entities i.e. entities built or created for the purpose of carrying on business only with the motive of earning profit and are covered under the definition of business as defined in Section 2(17) of the CGST Act, 2017 - in view of the item(d) of Entry No.6 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) no exemption will be available to the applicant - it can be concluded that the various activities carried out by the Applicant to the plot holders in terms of provisions of GIDC Act, 1962 and charges collected for the same as may be notified from time to time amounts to supply under Section 7 of the Central Goods and Services Act, 2017 and are liable to tax under GST.

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• 2021 (1) TMI 583
  Classification of goods - product Non Woven Bags manufactured through the intermediate product Non Woven fabric - classifiable under Heading No. 5603 or under 6305 or under Heading No. 3923? - exemption under N/N. 01/2017-CT (Rate) and 01/2017-I.T. (Rate) dated 28.06.2017 as amended - HELD THAT:- Applicant has relied upon decision of Hon ble Supreme Court of India in PORRITTS SPENCER (ASIA) LTD. VERSUS STATE OF HARYANA [ 1978 (9) TMI 72 - SUPREME COURT] has stated that textile is woven fabric, which is emerged by weaving of yarn of cotton, silk, rayon or nylon and similar type of material. The said textile may be used for making apparel, bed sheet or tapestry or upholstery or as towel. Therefore, fabric made of other than the yarn of cotton, silk, rayon or nylon and similar type of material is not a textile. The word used in the sentence is similar type of material and the meaning of said word can only be drawn in reference of the words used before the above word. The fabric made of Fiber grade Poly Propylene granules is not a similar type of material of cotton, silk, rayon or nylon. Hence fabric made of Fiber grade Poly Propylene granules cannot be considered as textile. Hence, ratio of above case law is not squarely applicable to the present case. Non-Woven Bags manufactured through the intermediate product, i.e. Non-Woven fabric manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology, merits classification under HS code 3923, as also clarified by the CBIC in the Board Circular No.80/54/2018-GST issued from F. No. 354/432/2018-TRU dated 31st December, 2018 Applicable rate of GST on product - Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The rates of GST leviable on above product were changed from time to time, as below: (a) Period 01.07.2017 to 30.09.2019 - rate of CGST and SGST @ 9% each, totalling to 18%. (b) Period 01.10.2017 to 31.12.2019 - rate of CGST and SGST @ 6% each, totalling to 12%. (c) Period 01.01.2020 to till date - rate of CGST and SGST @ 9% each, totalling to 18%.

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• 2021 (1) TMI 582
  Refund of GST - supplies to SEZ Unit/SEZ Developer were made during the period July-2017 August-2017 - Refund rejected on the ground that the appellant submitted the copies of invoices issued in the month of July-2017 and August-2017 but the ARN generated shows that the refund is claimed for the month of February-2018 - HELD THAT:- The appellant has not shown the value / figure in column 3.1 (a) Outward taxable supply (Zero rated) of GSTR-3B for the relevant month. The NIL amount was shown in column 3.1 (a) Outward taxable supply (Zero rated). The appellant s contention is that due to typographic mistake it was inadvertently shown in column 3.1 (b) of GSTR-3B in the month of July-2017 instead of column 3.1 (a) Outward taxable supply (Zero rated) of GSTR-3B. Moreover, as per detail of Tax invoices number RIL/PPS-06 and PPS-07 shows Commissioner pertains to the month of June-2017 (pre GST regime) on which Service Tax was to be paid by the appellant. The submission of the appellant that the figures related to SEZ supplies made during the period July-2017 and August-2017 declared correctly in their GSTR-1 filed for July and August-2017 is not found correct and acceptable at this stage. The appellant should have rectified the mistake committed while filing GSTR-3B. Since the appellant has not taken the advantage of aforesaid circular by rectifying their mistake in filing the relevant return, their appeal can not be allowed. Appeal dismissed.

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• 2021 (1) TMI 565
  Scope of Advance Ruling - Levy of GST - consultancy services rendered by various consultancy agencies to Sardar Sarovar Narmada Nigam Limited(SSNNL) - If such consultancy services is exempted from GST, whether the sub-consultant is also exempted from the payment of GST? - rate of GST - HELD THAT:- The provisions for seeking Advance Ruling made under the Act is limited to the activities conducted of the applicant only and is for the purpose of clarifying issues such as classification of the supply of goods/services provided by them, their GST liability if any, applicability of a notification issued under the provisions of the Act, determination of time and value of supply of goods or services or both, admissibility of input tax credit, determination of the liability to pay tax on any goods or services or both, whether applicant is required to be registered or whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. There is no provision for seeking Advance Ruling in respect of third parties or parties who are not directly connected to the applicant by way of supply of services or goods. The question raised here is not related to the agreement made by them with M/S. WAPCOS or the agreement made between M/s. WAPCOS and M/s. SSNNL but is related to the liability of GST on the consultancy services rendered by various consultancy agencies to SSNNL - the said question to be absolutely irrelevant, hypothetical and speculative which does not in anyway pertain to the services supplied/rendered by the applicant. The second question also irrelevant to the instant issue since it is connected to the first question. No decision can be given in view of the foregoing discussions.

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• 2021 (1) TMI 564
  Classification of goods - pharmaceutical products - Bulk Drugs and intermediates - Alpha-Ketoanalogue Isoleucine Calcium Salt - Alpha-Ketoanalogue Valine Calcium Salt - Alpha-Ketoanalogue Leucine Calcium Salt - Alpha-Ketoanalogue Methionine Calcium Salt - Alpha-Ketoanalogue phenylalanine Calcium Salt - classified under HSN code 2919 or not? - applicant submitted that as per Notification No. 01/2017-Ct (Rate) dated 28.06.2017 their products is liable to GST @ 5% in respect of goods specified in Schedule-I under Sr. No. 180 under Ch. 30 and under Schedule-1 List -1 Sr. No. 54 as such their product name is Ketoanalogue preparation of essential amino acids - HELD THAT:- As per Sr. No. 180 of Schedule-I of Notification No. 01/2017-CT (Rate) dated 28.06.2017, Drugs or medicines including their salts and esters specified in List I appended to this Schedule are eligible for GST @5%. In CGST Act 2017, the terms Medicine or Drugs have not been defined. We consider the definition Drugs given in Drugs and Cosmetics Act, 1940 (Central Act 23 of 1940). Clause (i) of Section 3(b) defines a drug as all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human being, or animals , including specified preparations. Thus, Sr. No. 180 of Schedule-I of Not. No. 01/2017-Ct (Rate) dated 28.06.2017, as amended, only such medicine and drugs are covered, which can be used for or in diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings - further, the term drugs as per DRUGS (PRICES CONTROL) ORDER, 1979 makes it clear that bulk drugs are raw material /ingredient of pharmaceutical and they are the Active Pharmaceutical Ingredients (i.e. API) of the medicine. In other words, it is the substance responsible for the product being a medicine. The bulk drug would inevitably remain the same as it is the identity of the medicine. When the bulk drug is absent, the product is no longer a medicine and when it is changed, it is a new medicine. Bulk dugs is not defined in GST, therefore, in common parlance we can say that Bulk drugs is basically an Active Pharmaceutical Ingredients (API) meaning any pharmaceutical, chemical, biological or plant product, which is used as such or as an ingredient in any formulation. It is an admitted fact that the product being supplied by the applicant cannot be directly administered in a human being. The concessional rate of GST is applicable only to the medicine or drugs, which are ready for administering in the human being or person - In the instant case, the applicant supplies bulk drug to their customers and hence the said bulk drug becomes raw material to the said customers. The applicant contention is that their bulk drug i.e. Alpha-Ketoanalogue Isoleucine Calcium Salt, Alpha-Ketoanalogue Valine Calcium Salt, Alpha-Ketoanalogue Leucine Calcium Salt, Alpha-Ketoanalogue Methionine Calcium Salt, Alpha-Ketoanalogue phenylalanine Calcium Salt is covered under the entry No. 180 of Not. No. 01/2017-CT (Rate) dated 28.06.2017 and eligible for concessional rate of GST. In the said entry No. 180 of said Notification word Bulk Drugs would have been included, had the intention of the Government been to extend the benefit of concessional rate to the bulk drugs/raw material. Therefore 5% GST is not applicable to the bulk drug Alpha-Ketoanalogue Isoleucine Calcium Salt, Alpha-Ketoanalogue Valine Calcium Salt, Alpha-Ketoanalogue Leucine Calcium Salt, Alpha-Ketoanalogue Methionine Calcium Salt, Alpha-Ketoanalogue phenylalanine Calcium Salt, in terms of List I to Entry No. 180 of Schedule I to the Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017. In view of the entry No. 40 of Notification No. 01/2017-Ct (Rate) dated 28.06.2017 the goods viz. bulk drugs and intermediate i.e. Alpha-Ketoanalogue Isoleucine Calcium Salt, Alpha-Ketoanalogue Valine Calcium Salt, Alpha-Ketoanalogue Leucine Calcium Salt, Alpha-Ketoanalogue Methionine Calcium Salt, Alpha-Ketoanalogue phenylalanine Calcium Salt classifiable under HSN 2919 attract GST @ 18%.

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• 2021 (1) TMI 563
  Classification of goods - rate of GST - sale /supply of Fryums manufactured by the applicant - HELD THAT:- The main ingredient of their product i.e. so called Papad of different shapes and sizes i.e. Fryums is wheat flour, superfine wheat flour, whereas main ingredient of Papad is batter of Pulses i.e. Moong dal, Udad Dal, black pepper and not of wheat Flour and Maida. In the market most popular papad are of Moong dal Papad and Udad dal papad . Therefore, main ingredients of both the Product i.e. Fryums and Papad are not same but are different. Further, the manufacturing processes of both the product have also some differences. In Fryums some sort of moisture are maintained at specific temperature and then fried the Fryums and applied Masala then put in a unit container for sale whereas Papad are required to be completely dried in sun light otherwise Papad will become rotten if some moisture remains in Papad and cannot be useful for consumption. Further Papad are commonly sold in ready to cook condition and not fried or baked whereas applicant product sold as ready to eat. Hence the applicant s claim that their product fried Fryums are known as papad is totally baseless and misleading. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger [ 1996 (5) TMI 419 - SUPREME COURT ] wherein the Hon ble Supreme Court examined the matter under Rajasthan Sales Tax Act, whether Gol Papad manufactured out of Maida, Salt and Starch are Papad or not. It was held that size or shape is irrelevant and that Papad of all shapes and sizes are covered under the entry Papad. Thus, the fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of fried Fryums - HELD THAT:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids. Obviously, the term such as is purely illustrative but not exhaustive and therefore processing includes frying also, hence fried goods are also covered under chapter head 2106 which is ready for human consumption - In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known in the heading 1905 is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals - the product different shapes and sizes fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. It can be concluded that applicant s product of different shape and sizes is fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.

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• Income Tax

• 2021 (1) TMI 581
  Disallowance u/s 14A - whether disallowance u/s 14A could exceed the income not includable in the total income ? - HELD THAT:- It is not disputed that the issue involved in this case is squarely covered by the decision of the Hon ble Division Bench of this Court in the case of Marg Ltd. [ 2020 (10) TMI 102 - MADRAS HIGH COURT ] as relying on M/S. TIDEL PARK LIMITED [ 2020 (7) TMI 339 - MADRAS HIGH COURT] held that the mandate of s.14A is clear. It desires to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of an exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. The provision this is clearly relatable to the earning of actual income and not notional or anticipated income. The submission of the Department to the effect that s.14A would be attracted even to exempt income includable in total income would entail the assessment of notional income, assumed to be exempt in the future, in the present assessment year. The computation of total income in terms of s.5 of the Act is on real income and there is no sanction in law for the assessment of admittedly notional income, particularly in the context of effecting a disallowance in connection therewith. The computation of disallowance in terms of Rule 8D is by way of a determination involving direct as well as indirect attribution. Thus, accepting the submission of the Revenue would result in the imposition of an artificial method of computation on notional and assumed income.- Decided in favour of assessee.

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• 2021 (1) TMI 580
  Assessment u/s 153A - Addition on account of interest on post-dated cheques (PDC) - HELD THAT:- This addition has already been made in the original assessment proceedings u/s 143(3) and subject to appeal before CIT (A) and Now pending before ITAT, same could not have been repeated once again in assessment proceedings under Section 153A - we direct the AO to delete the above addition on account of interest on PDC. Even otherwise this is a concluded assessment and same could have been tinkered only if any incriminating material found during the course of search. No such material was found during the course of search but the addition is made only for the reason that the ld. CIT (Appeals) has sustained the above addition in assessee s appeal against order under Section 143(3) - In view of this we direct the Assessing Officer to delete the addition. Addition on violation of the provisions of Section 40A(3) - assessee has found to have paid to various farmers and agriculturists for purchase of land in cash - HELD THAT:- On perusal of the assessment order as well as the order of the ld. CIT (Appeals) we do not find that there is any reference to incriminating material found during the course of search. These are already part of the accounted entries in the books of accounts of the assessee. Therefore, in the absence of any incriminating material, respectfully following the decision of Hon ble Delhi High Court in CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] this addition deserves to be deleted. Also as relying on assessee s own case [ 2015 (5) TMI 384 - ITAT DELHI] addition to be deleted. - Decided in favour of assessee.

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• 2021 (1) TMI 579
  Revision u/s 263 - low net profit or loss shown from large gross receipts - VAT liability tantamount to violation of provisions of section 43B and the same should have disallowed by the Auditor himself from the calculation of net profit of business of the assessee - HELD THAT:- It was the duty of the id. Pr. CIT to at least verify, prima facie as to whether the input and output entries have been routed through the profit and loss account or not, as certified by the tax auditor. Without doing so, he could not have come to the conclusion that there was an error in the assessment order passed by the AO and that this error is prejudicial to the interest of the revenue. When VAT is not routed through the profit and loss account, the assessee could not have claimed this amount it as a deduction. VAT is not debited to the profit and loss account. When VAT is not claimed as a deduction, while computing the income, the question of disallowing the same u/s 44AB of the Act, does not arise. Thus, in our considered view, the id. Pr. CIT has committed an error in not examining the issue by himself before coming to the conclusion that there is an error which is prejudicial to the interest of the revenue, which requires revision, by invocation of powers u/s 263 - Decided in favour of assessee.

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• 2021 (1) TMI 578
  Loss on account of FC revaluation which was a marked to market (MTM) loss - Addition as such loss as a notional loss and contingent in nature - CIT (A), relying on the CBDT instruction dated 23.03.2010, held that the MTM losses on account of foreign derivatives were a difference between the purchase price and the value as on the valuation date, which is a notional loss and therefore, not an allowable expenditure and thus upheld the disallowance - HELD THAT:- In this case, the pending forward contracts were restated on the basis of foreign exchange rate as on 31.03.2013. There is no dispute on the details furnished by the assessee. The losses are booked by the assessee in compliance of mandatory accounting standard AS-11 from AY 2011-12 onwards and it admitted the corresponding profits as income in the respective year. Since, the facts of this case are similar to the case decided in EMMSONS INTERNATIONAL LTD.[ 2019 (10) TMI 761 - ITAT DELHI] following it, we hold that the addition is unsustainable. We, accordingly direct the AO to delete the same. - Decided in favour of assessee.

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• 2021 (1) TMI 562
  TDS u/s 194I - lease premium paid to Mumbai Metropolitan Regional Development Authority ( MMRD ) - AO treated the assessee to be in default u/s 201(1)/201(1A) in respect of tax not deducted at source - HELD THAT:- As decided in Central Board of Direct Taxes ( CBDT , for short) vide Circular No. 35/2016 [F. No. 275/29/2015-IT(B)], Dated 13-10-2016, in which CBDT has taken note of order of Hon ble Delhi High Court in assessee s own case [ 2015 (12) TMI 984 - DELHI HIGH COURT] lump sum lease premium or one-time upfront lease charges, which are not adjustable against periodic rent, paid or payable for acquisition of long-term leasehold rights over land or any other property are not payments in the nature of rent within the meaning of section 194-I of the Act. Therefore; such payments are not liable for TDS under section 194-1 of the Act. - Decided in favour of assessee.

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• 2021 (1) TMI 561
  Undisclosed income - Search proceedings - receipt in cash - Unaccounted sale - HELD THAT:- No enquiry whatsoever was made by Revenue even at first appellate stage. Further Hulash Sharma is seeking for receipt of Rs. 1 Lac paid by them in cash and name of Mukesh is struck off in the said seized letterwhich also strengthen our view that this Rs. 1 Lac received by assessee is against the bill no. 126. There are other dealings of the assessee with the said party M/s Mukesh Kumar and Company during the year under consideration and even payments vide cheque was received hence we accept the contention of the assessee on the touchstone of preponderance of probabilities. The assessee has discharged its primary onus and it was for the Revenue to have brought evidence to demolish the story set up by assessee in order to unravel the truth, which Revenue failed to do so. We allow the appeal of the assessee because on touchstone of preponderances of probability, we are of the considered view that the assessee has accounted for sale of Rs. 1 Lacs and also cash of Rs. 1 lacs as is mentioned in the seized documents was received by assessee and was duly recorded in the books of accounts of the assessee and offered for taxation, thus, we accept the contention of the assessee to this effect. The assessee s appeal is allowed on this ground. Addition of sales outside books - assessee posting stock covered by sales in the stock register - HELD THAT:- The assessee corrected this mistake in the stock register on 31st August 2009, after conclusion of search operations. In our considered view this is a plausible and genuine human error in posting of entry in the stock register and based upon material on record, we do not find any mala fide or malice on the part of the assessee to defraud Revenue by posting this entry wrongly in stock register, rather it is a genuine human error . Under these circumstances on touchstone of preponderance of probabilities, we hold that this is a genuine and bonafide human error in posting of stock in the stock register while posting sale invoice, and the assessee cannot be saddled with tax liability merely on the ground that there was some human error while making postings in the stock register. We hold that this is a genuine and bonafide error made by the assessee while posting stock covered by sales in the stock register and we order deletion of addition . Addition of receipts / payments as found mentioned in loose documents seized by Revenue - HELD THAT:- As assessee is not able to justify and/or connect these receipts / payments as are found mentioned in loose documents seized by Revenue, with the transactions sought to be explained by assessee as are recorded in its books of accounts, and the explanation which is made by the assessee are merely an after thoughts to wriggle out of tax ambit. Thus, we reject the contention of the assessee on this issue and uphold /sustain the additions as was made by AO and which was later sustained / upheld by learned CIT(A). We order accordingly. Deduction from income towards purchases of raw material and consumables - HELD THAT:- The assessee has to justify that these purchases/consumables are used for its business. The manufacturing process is to be brought on record by assessee with respect to manufacturing activities carried on by the assessee and details of raw material and consumables required in connection with the manufacturing process carried on by assessee or for other business needs of the assessee is required to be brought on record. Thus based on material on record, in the interest of justice and fairness to both the rival parties, we restore the matter back to the file of the AO for fresh consideration and denovo determination of the issues on merits in accordance with law. Disallowing expenses towards freight charges - HELD THAT:- CIT(A) has given finding that there was an inadvertent mistake mentioned of date of 25.02.2009, instead of correct date 25.03.2009. The learned CIT(A) has also mentioned that form no 16A was produced before him. The assessee has not filed proof of payment of TDS as well no Form No. 16A is filed before us. Thus, under these circumstances, we are restoring the matter back to file of AO for limited verifications of facts contended by assessee before learned CIT(A), such as correct date, payment of TDS, form no. 16A . We order accordingly.

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• 2021 (1) TMI 560
  Capital gain - nature of land sold - whether the land sold by the assessee, by way of a registered sale deed is a capital asset as defined u/s 2 (14)? - HELD THAT:- The land in question is classified as Don in the revenue records and is thus wet land in which paddy is grown. Based on the documentary evidences it is clear that the land in question which is sold, is agricultural land. The AO or the ld. CIT(A) have no evidences to controvert the documentary evidences furnished by the assessee. The assessee has submitted a copy of Indian Village Directory where the village Lapra is located 12 km away from sub-district headquarter Khelari and 60km away from the district headquarter of Ranchi and that it is a gram panchayat that has a population of 3,559 people. No evidence controverting the above facts is brought on record by the AO or the ld. CIT(A). Thus the assessee has proved that the land in question is more than a distance of 8 km from the closest municipality and that it is agricultural land as defined u/s 2(14)(iii) - Appeal of the assessee is allowed.

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• 2021 (1) TMI 559
  Revision u/s 263 - valuation of equity share - HELD THAT:- PCIT has mentioned that though the issue of valuation of equity share had come up before Ld. A.O during the assessment proceedings but he need to examine the issue in detail. PCIT should have made an enquiry and examination of the facts which would have certainly landed up in computing the same fair market value of equity share as was adopted by Ld. A.O. Here we would also like to mention that the proceedings initiated u/s 263 of the Act may not always result into outcome of setting aside the assessment order or giving direction to examine certain issues. It is fairly possible that once the show cause notice u/s 263 is issued to which the detailed reply is filed by the assessee and after indepth examination and if necessary after conducting any investigation or for calling relevant information, if Ld.CIT/PCIT may end up the proceedings that find that A.O has rightly concluded the assessment proceedings which are neither erroneous nor prejudicial to the interest of revenue. In the instant case also the litigation before us may not have erupted if in the proceedings u/s 263 by Ld.. PCIT have mentioned that the audited financial statements are similar to the unaudited financial statement placed before Ld. A.O and the same has been examined by him and there is no change in valuation of the fair market value of the equity shares as per rule 11UA of I.T. Rules. Since proper enquiry was conducted by the Ld. A.O with regard to the issue mentioned in the impugned order u/s 263 of the Act in the case of assessee(s) M/s Dhirendra International Pvt. Ltd and M/s Charitra Gold Pvt. Ltd, the assessment order u/s 143(3) of the Act of the Ld. A.O are neither erroneous or prejudicial to the interest of revenue. Thus Ld. PCIT erred in assuming jurisdiction u/s 263 - Decided in favour of assessee.

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• 2021 (1) TMI 558
  Accrual of income in India - Taxation of ESOP benefit - CIT-A upholding the action of AO to tax Employee Stock Option as perquisite u/s 17 - HELD THAT:- The income, even if it was inchoate at the point of time when the options were granted, has accrued and has arisen in India. The assessee is a non-resident in the current assessment year, but quite clearly, the benefit, in respect of which the income is bring sought to be taxed now, had arisen at an earlier point of time in India. Viewed thus, the income in respect of ESOP grant benefit accrued and had arisen at the point of time when the ESOP rights were granted, even though the taxability in respect of the same, on account of the specific legal provisions under section 17(2)(vi), has arisen in the present in this year. If grant of stock option is the part of remuneration, as observed in this OECD publication and rightly so, it accrues a benefit when these options are granted, and the said benefit accrues in the jurisdiction in which the qualifying services are rendered. In our humble understading, therefore, the action of the Assessing Officer in bringing the said income to tax in the hands of the assessee in the present assessment year, even though the status of the assessee in the present assessment year, was non-resident, cannot be faulted. ESOP benefit in question were only taxable in U.A.E. as the said income is protected by Article 15 of the Indo U.A.E. tax treaty and as the assessee was a resident of the U.A.E. in the relevant assessment year - Scheme of Article 15 permits taxation of ESOP benefit, which is included in the scope of the expression other similar remuneration appearing immediately after the words salaries and wages , in the jurisdiction in which the related employment is exercised. Thus, in case the assessee is to get ESOP benefits in respect of his service in U.A.E. and he exercises these options at a later point of time, say after returning to India and ceasing to be a non-resident, he will still have the treaty protection of that income under article 15(1). This principle, however, is not a one-way route. Conversely, when the assessee gets the ESOP benefit on account of rendering services in India, he cannot have the benefit of article 15 in respect of the said income. The reason is simple. Article 15(1) itself provides that salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State and so far as the other similar benefits are concerned, which include the ESOP benefits, the employment is exercised in the other contracting State, i.e., in India. As much as the nexus is required to be between salaries and wages vis- -vis the employment, the nexus is also required between other similar benefits vis- -vis the employments; what hold goods for the former holds good for the latter as well. In the absence of nexus of other similar benefits , as wages and salaries, received by the assessee vis- -vis his employment in the U.A.E., the treaty protection of the said income in India cannot be available to a resident of the U.A.E. Thus as the assessee has not rendered service in India for the whole grant period, only such proportion of the ESOP perquisite as is relatable to the service rendered by the assessee in India is taxable in India - The assessee s claim for the treaty protection is thus equally devoid of legally sustainable merits, and we reject the same. - Decided against assessee.

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• 2021 (1) TMI 557
  Revision u/s 263 - payments made by the Assessee to doctors disallowed u/s 37 - Disallowance u/s 14A read with rule 8D - allowability of expenses u/s 43B - HELD THAT:- We do not agree with the conclusion of the Ld. PCIT that he had concluded that the order was erroneous, but has not made further investigation to determine, whether the order passed by AO is prejudicial to the interest of revenue. Instead, he remitted this issue back to AO to verify and investigate the issue once again and finalize the assessment order. PCIT should have verified or investigated the issue afresh by asking the assessee to submit all relevant information. Assessee claims the payments were made to doctors on regular consultancy fees and not relating to freebees. It is the duty of Ld. PCIT to establish that these payments were in fact freebees and not regular consultation fees, without actually finding that these are freebees and payments are in violation of conditions specified in Circular No. 5 of 2012, he proceeded to annul the assessment order. The issue involved in this appeal is, whether payments are consultancy fees or freebees. AO has proceeded with the view that there are regular consultancy fees and accepted the submissions of assessee. AO did not discuss anything in his order. The department taking clue from audit query, they are presuming that the payments are relating to freebees. There is no evidence brought on record by the revenue authorities to substantiate that there were actually freebees. Mere presumption without any cogent material to indicate that these payments are actually freebees is far fetched. In our view, Ld. PCIT has not determined the other condition how it is prejudicial to the interest of revenue. As discussed above, the payments were made to doctors, is it freebees or not is the issue. If it is freebees, it is the duty of Ld. PCIT to bring on record that these payments are in fact disallowable under section 37 of the Act. There are various decisions submitted before us by Ld. AR that the payment made to doctors by the pharmaceutical companies and allied healthcare industries are not in violation of Circular No. 5 of 2012. It is applicable only to the practicing doctors. As discussed above, Ld. PCIT has not clearly brought on record that the payments were actually in contravention of circular and provision of section 37(1) of the act. Even on disallowance under section 14A, from the records submitted before us, clearly indicate that the relevant information was submitted before AO and AO has accepted the submissions made by assessee and AO came to conclusion and taken one of the views, which may not be acceptable to Ld. PCIT. PCIT has come to conclusion that the order passed by AO is erroneous, but has not verified nor investigated to determine the other condition i.e. how it is prejudicial to the interest of revenue. As held in numerous case law and it is settle position of law that to initiate proceedings under section 263, twin conditions has to be satisfied. In the given case, Ld. PCIT has not fulfilled second condition before initiating proceedings under section 263 - Decided in favour of assessee.

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• Customs

• 2021 (1) TMI 577
  Levy of IGST on re-import of aircrafts and parts thereof after repairs - Exemption from IGST - Availability of Integrated Goods and Service Tax exemption provided at serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 2017, as amended by Corrigendum Notification dated July 22, 2017 - Validity of order that upholds the orders of assessment of Bills of Entry, as a result of which all the appeals have been dismissed by the Commissioner (Appeals) - HELD THAT:- There is no dispute that it is serial no. 2 of the Exemption Notification that is applicable to aircrafts/ parts re-imported into India after repairs. What would, therefore, be payable in terms of serial no. 2 would be the duty of customs on the fair cost of repairs carried out including cost of materials used in repairs, insurance and freight charges, both ways. The Exemption Notification does not define the phrase duty of customs. However, section 2(15) of the Customs Act defines duty to mean duty of customs leviable under the Customs Act - A bare perusal of section 12(1) of the Customs Act shows that duties of customs shall be levied at such rates as are specified under the Tariff Act or any other law for the time being in force, on goods imported into, or exported from India. The contention of learned Authorized Representatives of the Department is that section 12(1) of the Customs Act leaves no manner of doubt that duties of customs are levied not only under the provisions of the Customs Act and the Tariff Act but also under any other law for the time being in force . Thus, the integrated tax levaible on imported goods by the Integrated Tax Act would also be a duty of customs and, therefore, the Appellant was correctly denied exemption from integrated tax leviable under section 3(7) of the Tariff Act. The levy of additional duty under section 3 of the Tariff Act, which is in addition to the duty of customs under section 2 of the Tariff Act, would not be duty of customs for the purpose of Notifications issued under the Customs Act. Though integrated tax is levied under section 5 of the Integrated Tax Act, but it is collected in accordance with the provisions of section 3 of the Tariff Act on the value as determined under the Tariff Act and at the point when duties of customs are levied under section 12 of the Customs Act. Thus, integrated tax is levied under section 5(1) of the Integrated Tax Act and only the procedure for collection has been provided under section 3 of the Tariff Act. It also needs to be noted that the term integrated tax has not been defined either under the Customs Act or the Customs Tariff Act or under the Exemption Notification. As integrated tax is not levied under section 12 of the Customs Act, it cannot be called duty of customs . The charging section for integrated tax, in terms of which it is levied, is section 5 of the Integrated Tax Act and not section 3(7) of the Tariff Act. Section 3 (7) of the Tariff Act only provides for the manner of collection of the said integrated tax to be done by the Customs Authorities in case of import of goods - This is what was observed by the Madras High Court in M/S. VEDANTA LIMITED VERSUS UNION OF INDIA, THE DIRECTORATE GENERAL OF FOREIGN TRADE, THE DEPARTMENT OF REVENUE INTELLIGENCE AND THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [ 2019 (1) TMI 85 - MADRAS HIGH COURT] . It would also be appropriate to refer to the judgment of Bombay High Court in DEVIDAYAL ELECTRONICS WIRES LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 1981 (1) TMI 78 - HIGH COURT OF JUDICATURE AT BOMBAY] - The Bombay High Court held that since the Notification used the word factory and also the word industrial unit in the same Notification, it has to be assumed that the said two words were intended to bear different meanings. The Court, therefore, held that the words industrial unit must mean something other than factory . It can be concluded that the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted. The Appellant is thus entitled to exemption from payment of integrated tax under the Exemption Notification on reimport of repaired parts/ aircrafts into India - appeals are, accordingly, allowed.

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• Corporate Laws

• 2021 (1) TMI 576
  Approval of scheme of amalgamation - seeking directions for convening, holding and conducting of the meeting of the Equity Shareholders and dispensing with conducting of the meeting of Unsecured Creditors - Section 230-232 of The Companies Act, 2013 read with The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- This Bench directs, in accordance to Section 230(5) of the Companies Act, 2013, the Applicant Companies shall individually serve the notices of this Petition to the following Authorities, namely : (a) Central Government through Regional Director (Northern region), Ministry of Corporate Affairs, (b) Registrar of Companies, NCT of Delhi Haryana, Ministry of Corporate Affairs, (c) Official Liquidator, Delhi (d) The Income Tax Department, and (e) Such other Sectoral Regulatory Authorities, which govern working of the Companies involved in the Scheme; at least 40 days before the date fixed for hearing of this Petition. The Applicant Companies are directed to place the notice on their website, if any, and also place the same on the Notice board of the registered office of Companies. The Applicant Companies are also directed to send private notices to the authorities by way of speed post and file the proof of service along with the paper publication by way of an affidavit before the next date of hearing - The authorities are directed to make objection/ representations, if any, within 30 days from the date of receipt of the Notice. In the event that no objections or representations are made within the stipulated timeframe, it shall be presumed that they do not have any objections and the SCHEME will be considered by this Tribunal subject to other conditions as may be applicable under the Companies Act, 2013 and relevant rules framed thereunder being satisfied. Application disposed off.

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• 2021 (1) TMI 575
  Seeking restoration of name in the Registrar of Companies - section 248 of the Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 - HELD THAT:- The provisions pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act 2013 which includes that, if it is just and equitable to restore the name of the company in the Registrar of Companies, it may direct the RoC to restore the name in its Register - The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable. As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. It is therefore the Registrar of Companies, the Respondent herein, is ordered to restore the Original status of the Appellant Company as if the name of the Company has not been struck off from the Registrar of Companies and take all consequential actions such as change of Company s status from Strike Off to Active (for e-filing) etc. - Appellant Company is directed to file all the statutory document(s) along with prescribed fees/ additional fee/ fine as decided by RoC within thirty days from the date on which its name is restored on the Register of Companies by the RoC - Application allowed.

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• 2021 (1) TMI 574
  Reduction in share capital - cancellation/extinguishment of shares as approved by the share-holders at their annual general meeting - section 66 read with section 52 of the Companies Act, 2013 read with the National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016 and the Rules framed thereunder - HELD THAT:- From the balance-sheets submitted by the company, it is noted that as on August 24, 2020 as per books, the company is having negative net worth/shareholders funds of Rs. 1,609.66 lakhs (share capital of Rs. 698.50 lakhs + other equity of Rs. (-) 2,308.16 lakhs) and borrowings and inter corporate loans are to the tune of Rs. 11,354.43 lakhs. Other equity consists of share premium account and accumulated losses. The book value per share as on August 24, 2020 is Rs. (-) 23.04. Further, for the previous financial year 2019-20, the company s total income is Rs. 1,962.45 lakhs and interest payments (finance cost) is Rs. 1,019.37 lakhs - Based on the accounting treatment, on capital reduction, the negative net worth/shareholders funds of the company as per books may go to Rs. 7,014.59 lakhs (share capital of Rs. 1 lakh + other equity of Rs. (-) 7,015.59 lakhs), the book value per share to Rs. (-) 70,110.81 and the companies borrowings and inter corporate loans to the tune of Rs. 11,354.43 lakhs. In view of negative net worth as per books, and negative book value per share, this Adjudicating Authority is of the considered view that the proposed capital reduction by way of return of capital to its shareholders is not in the overall interest of the company and its stakeholders - Petition allowed.

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• 2021 (1) TMI 573
  Seeking sanction of the proposed scheme of amalgamation - section 232 read with section 230 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- On perusal of the scheme, the documents produced on record and the undertakings given by the petitioner-companies by way of affidavits, the scheme of amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under sections 230 to 232 of the Companies Act, 2013. The scheme of amalgamation with appointed date as April 1, 2019 is hereby sanctioned. The same shall be binding on the petitioners and their respective shareholders, secured creditors, unsecured creditors/trade creditors, employees and all concerned - Petition allowed.

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• Insolvency & Bankruptcy

• 2021 (1) TMI 572
  Criminal breach of trust and cheating - dishonest misappropriation and conversion of the assets and properties of M/S Meghalaya Infratech Pvt. Ltd. for its own purpose in violation of the provision of law - Illegal finalization of the resolution plan/bid forwarded by other bidders at a lower price - allegation against the petitioner was that the revised offer of resolution applicant, viz., the PPIPL was not considered or placed before the committee of the creditors and the committee of creditors approved the plan/bid of another resolution applicant, who was found to be the highest bidder - HELD THAT:- Admittedly the request of the respondent No. 2 for extension of time and the revised offer was rejected by the committee of creditors and the petition filed by the PPIPL to direct the petitioner to consider the revised offer of the respondent was also turned down by the learned NCLT, Guwahati Bench. In the instant case from the admitted facts as revealed from the order of NCLT, it is apparent that the NCLT directed the petitioner to resume the CIRP for taking a fresh decision by the committee of creditors regarding the resolution plan, and as such, there was no delivery of property. It is also evident from the record that on 14-02-2020 the e-mail was addressed by the PPIPL to all the members of the committee of the creditors regarding his revised offers and as such, there was also no question of deception by the petitioner. From the materials, it is apparent that though the revised offer of the PPIPL was not placed before the committee of the creditors, members of the committee of creditors were aware about the said offer, and as such, there was no question of deception or fraud practiced by the petitioner. The Hon ble NCLT observed that the revised offer ought to have been placed before the committee. Such observation, per-se, can by no stretch of imagination be construed as motive or practicing fraud or deception on the part of the petitioner. Therefore, the ingredients to constitute an offence u/s 420 IPC is also absent in the FIR. Evidently the petitioner was discharging his official duty as per the direction of the NCLT under the provision of the Insolvency Code and the respondent No. 2 after exhausting all other forums to ventilate his grievance lodged the FIR only when a favorable order was passed by the NCLT. Therefore, the lodging of the FIR after exploring all the avenues and the facts and circumstances of the present case, as discussed hereinbefore, the FIR or the criminal proceeding appears to be attended mainly with the ulterior motive of wrecking vengeance on the accused petitioner - Petition disposed off.

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• 2021 (1) TMI 571
  Direction to Respondent to admit the claim of the applicant as Financial Creditor - direction to not to conduct any meeting in absence of the applicant - seeking declaration that any meeting of Committee of Creditors convened by the Respondent, in absence of the applicant herein as illegal and void apart from other prayer - Section13(1)(b) read with Section 15 of the Code and Regulations - HELD THAT:- It is a matter of record that the loan was not reflected in the Income Tax record of the Corporate Debtor that apart the RP has also raised objection with regard to the invalid agreement. In view of the fact that the stamp paper was issued in 2014 and the agreement was entered on 25.01.2017. Maharashtra and Gujarat are the two states which have provisions stating that if stamp is not used or surrendered back within 6 months of the date of issue, then they will be treated as expired. Section 52B(b) of the Maharashtra Stamp Act and Section 52 C of Bombay Stamp (Gujarat Amendment) Act, 2016 states that if any Stamp have been purchased and it is neither used nor any allowances are claimed on it within the period of six months, it will be treated as invalid - Admittedly, the agreement was entered in the State of Maharashtra. On perusal of the Non-Judicial paper (page 106 of the application), it is found that the same was issued on 2014 and the agreement was executed on 25.01.2017. So, in view of the Maharashtra Stamp Act, the said agreement is invalid. Application dismissed.

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• 2021 (1) TMI 570
  Non-cooperation by the directors of the suspended board, and the statutory auditor of the Corporate Debtor - Section 19(2) of I B Code, 2016 - HELD THAT:- The documents produced on the side of the applicant satisfy that the respondents are not caring about her demands by providing the books of account, the information about the CD current status and the keys of various offices and factories. Physical possession of the Immovable Assets and vehicles, documents as well as other records pertaining to the Corporate Debtor are all retained with the Respondents without any legitimate excuse. The respondents are responsible for delaying the progress of CIRP even if works of all are disrupted due to Covid-19 pandemic. Only because the RP can exclude the unutilised period from the timeline to be completed by her, due to lockdown issued by the respective Government, it doesn t mean that the respondents can cause deliberate delay in handing over the information, documents, assets of the CD and books of account which are essential for continuing the CIRP. The respondents are to be directed to assist or cooperate the RP for completion of the process keeping the timeline as mandated under the Regulations - respondents/directors of the suspended board of the Corporate Debtor and R5 auditor, are directed to provide immediate cooperation and assistance to the RP by providing the information, documents and handing over possession of the assets as detailed in a list of inventory to be prepared by the RP and issued to the respondents - Respondents are directed to provide/handover all the details to be requested by the RP within ten days of the date of receipt of the Inventory/list of documents/assets etc. Petition disposed off.

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• PMLA

• 2021 (1) TMI 569
  Money Laundering - proceeds of crime - assets disproportionate to known source of income - existence of predicate offence or not - scheduled offence or not - direct allegations are leveled against the accused attracting the ingredients of the offence under section 3 of the PML Act - HELD THAT:- From the plain reading of section 3 read with section 2(1)(u) of the PML Act, it is clear that what is made punishable under section 3 is the activity connected with the proceeds of crime either by getting oneself involved in the process or activity connected thereto or directly or indirectly attempting to indulge or knowingly assist or knowingly be a party to the alleged activities and projecting it as untainted property. The prosecution under section 3 of the PML Act cannot be equated with the prosecution under section 13 of the PC Act. Both are distinct and separate offences. A reading of section 3 of PML Act would clearly indicate that even without there being any conviction of the accused in a predicate offence and even if the offender under section 3 of the PML Act is not a party to the predicate offence, still the prosecution could be launched against the offender, if he is found involved in any process or activity connected with the proceeds of crime . Since the allegations made in the complaint and the material produced in support thereof prima facie disclose ingredients of the above offences, the Trial Court was not justified in discharging the accused solely relying on the overruled decisions rendered by the High Court of Jharkhand and Delhi. The material on record clearly makes out sufficient grounds for proceeding against the accused. In that view of the matter, impugned order cannot be sustained. Criminal Revision Petition is allowed.

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• 2021 (1) TMI 568
  Money Laundering - provisional attachment order - proceeds of crime - existence of predicate offence or not - petitioner as well as the original accused filed their objections to the provisional attachment interalia contending that the properties acquired by the petitioner and her husband were not the proceeds of crime - It is the submission of learned counsel for the petitioner that prior to amendment of section 5 of PML Act, the provision postulated a charge for the schedule offence. But this requirement was done away with after the amendment Act 2 of 2013 w.e.f. 15.02.2013 - HELD THAT:- The prosecution under section 3 of the PML Act cannot be equated with the prosecution under section 13 of the PC Act or other offences specified in the Schedule namely IPC or other laws. They are distinct and separate offences. Prosecution under section 3 of PML Act is not based on the outcome of the trial of the offenders under section 13 of the PC Act. A reading of section 3 of PML Act in unamended form would clearly indicate that even without there being any conviction of the accused in a predicate offence and even if the offender under section 3 of the PML Act is not a party to the predicate offence, still the prosecution could be launched against him if the offender is found involved in any process or activity connected with the proceeds of crime . What is necessary to constitute the offence of money laundering is the existence of proceeds of crime and not the pendency of predicate offence as vehemently contended by the learned counsel appearing for the petitioner. This Court as well as various other Courts have analysed this provision and have consistently held that the offence under section 3 of the PML Act is an independent and stand alone offence. Therefore, the argument of learned counsel for petitioner that without the existence of predicate offence and without there being any conviction of the petitioner for the predicate offence, her prosecution for the offence of money-laundering cannot be sustained being contrary to the language of section 3 of the PML Act and the intendment of the Legislature in enacting section 3 of the PML Act and the allied provisions is liable to be rejected and is accordingly rejected. Petition dismissed.

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• 2021 (1) TMI 556
  Levy of penalty - allegation is that the Petitioner has been held to be a reporting entity and a payment system operator , under Section 2(1)(wa) and Section 2(1)(rc) of the Prevention of Money Laundering Act, 2002 - case of the Petitioner is that it merely facilitates transactions and does not actually enter into any transactions with either of the parties conducting the same - HELD THAT:- This court is of the opinion that the question as to whether a business like the Petitioner s, which is of recent origin in India. ought to fall within the ambit of a `payment system and whether the Petitioner would be a `payment system operator and a `reporting entity , requires consideration. A perusal of the RBI s affidavit filed in another writ petition, shows that the stand of the RBI is that the Petitioner would not be attracted by the Payments and Settlements Scheme, under the PSS Act. The stand of the RBI in the affidavit filed in another writ petition appears to be in contrast with the view taken in the impugned order. The RBI and Union of India ought to take a clear stand after due consultation as to whether they consider platforms such as that of the Petitioners as being within the purview of the PML Act. Accordingly, the Secretary, Ministry of Finance, is directed to constitute a Committee with a nominee of the RBI and the Ministry of Finance, to clarify their position as to whether companies like the Petitioners who claim to be facilitators of monetary transactions, both in foreign exchange and in Indian Rupees, ought to be categorised as payment system operators and hence reporting entities under the PML Act. Let the Committee meet within ten days and the conclusion of the Committee be filed, by way of an affidavit, within two weeks thereafter. In the meantime, the Petitioner shall, henceforth, maintain records of all transactions under Section 12(1)(a) of the PML Act, in electronic form on a secure server, located in India, for the same to be retrieved, if required, subject to further orders in this writ petition. List before the Registrar General for acceptance of the Bank Guarantee on 16th February, 2021. List this matter for further hearing on 26th February, 2021.

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• Service Tax

• 2021 (1) TMI 567
  Rectification of mistake - error apparent on the face of record - case of Revenue is that in the impugned order different judgments which were submitted by other Authorised Representative at the time of Early Hearing Application were cited. Therefore, it is his submission that all the judgments cited in the submission have not been considered. Therefore, the order needs to be corrected and effect of the written submission dated 14/09/2020 and the judgments cited therein may be given and, accordingly, the order may be corrected. HELD THAT:- All the judgments are not relevant on the line of discussion and finding given in the final order dated 22.092020. Therefore, it cannot be said that submission of the learned Authorised Representative made at the time of hearing was not considered. The judgments cited in the order at para 5 may be replaced with the aforesaid judgments. With this the mistake apparent on record in the order dated 22/09/2020 stands corrected - Application allowed.

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• CST, VAT & Sales Tax

• 2021 (1) TMI 555
  Maintainability of petition- availability of alternate remedy - non-speaking order - HELD THAT:- Learned Assistant Government Pleader Shri Chintan Dave could not justify in any manner that the impugned order is a reasoned order or that it was not a non speaking order. Law is well settled that a non speaking order suffers from arbitrariness which goes to the root of the matter and as such, alternative remedy may not come in the way of this Court in entertaining this petition. Petition allowed.

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• Indian Laws

• 2021 (1) TMI 566
  Dishonor of Cheque - acquittal of accused - appellant submitted that the Trial Court after appreciating the evidence on record had convicted respondent no.2 accused for the alleged offence under the said Act, which has been reversed by the Appellate Court by misinterpreting the evidence and solely on the ground that the respondent no.2 accused had deposited Rs. 2,00,000/ towards compensation, interest and cost - HELD THAT:- It would be beneficial to refer to the decision of the Supreme Court in the case of M/S. METERS AND INSTRUMENTS PRIVATE LIMITED ANR. VERSUS KANCHAN MEHTA [ 2017 (10) TMI 218 - SUPREME COURT ], whereby it has been observed by the Supreme Court that though the compounding of offence requires consent of both the parties, even in absence of such consent, the Court, in the interest of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused. In the present case, though the respondent no.2 was convicted by the Trial Court, the Appellate Court acquitted him considering the fact that the respondent no.2 had deposited Rs. 2,00,000/ towards compensation alongwith interest and cost, which was four times amount of cheque in question, and therefore, it could be said that the complainant was fully compensated, applying the principle laid down in case of Meters and Instruments Pvt. Ltd. Thus, the impugned order passed by the Appellate Court being discretionary in nature following the judgment of Supreme Court, this Court is not inclined to interfere with the said impugned order passed by the Appellate Court. Appeal dismissed.

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