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TMI Tax Updates - e-Newsletter January 20, 2021 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS No GST on the amount received from HO (from outside India) for payment of salary, reimbursement of expenses etc., since no Supply of services - AAR Articles A brief note on Rule 36(4) of CGST Rules, 2017 APPELLATE ADVANCE RULING: INPUT TAX CREDIT ALLOWED ON IGST News Nomination of members to the National Startup Advisory Council An Initiative of APEDA –for Connecting Agri-Export through Direct Flights from Lal Bahadur Shastri International Airport, Varanasi First India-EU IPR dialogue held to strengthen relation and facilitate enhanced cooperation in the field of Intellectual Property Rights Madhya Pradesh takes the lead in undertaking Power Sector reforms NITI Aayog to Launch Second Edition of India Innovation Index 2020 Invitation of comments on the report of the Company Law Committee on Decriminalization of the Limited Liability Partnership Act, 2008 Report of the Company Law Committee on Decriminalization of The Limited Liability Partnership Act, 2008 Finance Minister Smt. Nirmala Sitharaman holds Pre-Budget consultation with Finance Ministers of States/ Union Territories (with Legislature) for Budget 2021-22 Notifications GST - States 36/2020–State Tax - dated 15-1-2021 - Delhi SGST Amendment in Notification No. 29/2020 – State Tax, dated the 19th October, 2020 01/GST-2 - dated 18-1-2021 - Haryana SGST Amendment of notification no.43/GST-2, dated 07.05.2020 to extend the due dates for compliances and actions in respect of anti-profiteering measures under GST till 31.03.2021 under the HGST Act, 2017 Circulars / Instructions / Orders SEBI SEBI/HO/CFD/DIL1/CIR/P/2021/13 - dated 19-1-2021 Relaxations relating to procedural matters –Issues and Listing DGFT Trade Notice No. 39/2020-21 - dated 19-1-2021 Procedure and Criteria for submission and approval of applications for export of Diagnostic Kits and their components/laboratory reagents Customs 02/2021 - dated 19-1-2021 Posting of staff at Customs areas and collection of Cost Recovery Charges Highlights / Catch Notes GST Seeking Restoration of Cancelled GST registration of petitioner - there is no provision of restoration of a GST registration - Merely because such provision has not been made, the petitioner cannot be made to suffer and non compliance of an appellate order, passed by a competent appellate authority cannot be accepted or permitted on the plea raised in the counter affidavit or during the course of arguments. - HC Visit to Get Source Liability of Interest on delayed payment of GST on credit balance of ITC - Scope of Amendment - Petition disposed off in view of clarification issued by the CBIC, wherein it was clarified that amendment in section 50(1) has been made effective prospectively w.e.f. 01.09-2020 due to certain technical limitations, however for present no recoveries for interest charged on gross liability will be recovered for the past period as well by the central and state tax administration. - HC Visit to Get Source Validity of action of search - There are no merit in the contention of the Petitioner that absence of the signature of the authorised person on Form GST INS-01 would render the search action to be non-est. Mr. Babbar does not dispute that the persons who carried out the search were indeed those whose names has been mentioned in the said authorisation, and they had displayed their identity cards at the time of search. It is also not the case of the Petitioner that the officers who carried out the search did not properly discharge their official duty or otherwise acted in furtherance of some extraneous purpose. The absence of signatures does not manifest an absence of delegation of power in favour of the team which conducted the search action. - HC Visit to Get Source Refund of unutilized Input Tax Credit pertaining to compensation cess - the respondents are directed either to open GSTN portal enabling the petitioner to file its application for refund in GST RFD-01 or to manually accept the application for refund of the petitioner pertaining to the period 2017-18 and 2018-19 in respect of its claim for refund of unutilized Input Tax Credit pertaining to compensation cess within a period of one month from the date of communication of this judgement. - HC Visit to Get Source Classification of goods - Wheel Side Protection Control Unit (WSP) and Pantograph - The applicant claims that the DGGSTI did not contend the classification of ‘Pantograph’ and therefore the said goods were never a part of the investigation. The first proviso to Section 98(2) of the Act, states that where the question raised is pending or decided in any proceedings under this Act, the same is not eligible for admission before this authority. - AAR Visit to Get Source Water-well drilling services are specifically covered under 995434 and the said category includes all Water-well drilling services without any exceptions. Therefore, it is evident that the drilling of borewell without exceptions (even in the agricultural land) is a construction service involving drilling water well and not a support service for agriculture. As the activity do not merit classification under SAC 9986, the applicant is not eligible for exemption from GST - AAR Visit to Get Source Classification of supply of services - Compressor is not an agricultural machinery and is a General-Purpose Machinery. Also, only provision of agricultural machinery with crew and operators are stated as ‘Support service for agriculture’. Therefore, letting out of the Compressor is also not a ‘Support service for agriculture’ classifiable under SAC 9986 and the applicant is not eligible for exemption from GST - AAR Visit to Get Source Valuation of transfer - transfer to branches located outside the state - In the case at hand, the applicant supplies to their distinct persons, for which presently they adopt the approximate sale value of the distinct person. The distinct person undertakes supply to their ultimate-unrelated customer 'as such' and the value adopted is that on the Purchase Order issued to such distinct persons by the ultimate customer. Also, the distinct units are eligible to avail full Input Tax credit of the tax paid by the applicant. - the value to be adopted by the applicant can be arrived at following the methodology of either of the three methods. - AAR Visit to Get Source Classification of goods - the products namely HDPE Tarpaulin, PE laminated fabric PP ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla bed, agro shade net, HDPE woven laminated fabrics and PP/HDPE woven fabric would invariably be covered under heading 3926 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). - AAR Visit to Get Source Effective date of Change in rate of tax / GST - In case of a notification in the body of which the effective date is not written, the effect of the amending notification thus shall be the date on which the amending notification is published in the Official Gazette. Therefore, the effective date for the levy of the amended rate of tax as per amended Notification No. 11/2017 - Central Tax (Rate) shall be the date on which Notification No 20/2017 - Central Tax (Rate) and Notification No. 24/2017 - Central Tax (Rate) were published in the Official Gazette. - AAR Visit to Get Source Classification of goods - Composite supply or Mix supply - The supply of Gota Mix and Chutney powder will be considered as a ‘mixed supply’ of goods and will be considered as a supply of Gota Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%(2.5% CGST + 2.5% SGST). - AAR Visit to Get Source Input tax credit (ITC) - Demo vehicle purchased - There is clear provision in law for admissibility of Input tax credit on motor vehicles in any of' the three conditions prescribed in clause (A), (B) and (C) of Section 17(5)(a) of GST Act. As the applicant's Demo vehicles do not comply any of the said conditions. therefore. the applicant is not eligible for Input tax credit on Demo vehicles - AAR Visit to Get Source Classification of supply - supply of services or not - The amount received from HO are the funds for payment of salary, reimbursement of expenses like rent, security, electricity, travelling, etc. No consideration is being charged by the applicant from the HO for such services - Further the liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. Also the reimbursement claimed by them from their HO is also falling out of the purview of supply of service. As there are no taxable supplies made by the Liaison office, they are not required to get registered. - AAR Visit to Get Source Income Tax Advances written off in P & L - business purposes - The circumstances pointed out by the CIT cannot be a ground to come to a conclusion that the advances given is not for genuine business purposes - loss on account of forfeiture of advance paid is incidental to the business of the assessee and is allowable as a deduction u/s 37(1) or u/s 28 - AT Visit to Get Source Validity of order passed u/s 201(1)/201(1A) - Period of limitation - prior to section 201 was amended by Finance Act No.2 of 2009, no time limit was provided for passing an order u/s 201(1). But w.e.f. 01.04.2010, a time limit has been provided - for these three Quarters (Financial Year 2011-12), the limitation period had expired on 30.03.2014, and, therefore, the impugned order u/s 201(1), 201(1A), passed on 30.03.2015 was beyond the period of limitation and was, therefore, void ab initio - AT Visit to Get Source Exemption u/s 11 - Assessee cannot be equated by with the private entrepreneur or coloniser or club or Association, as it is a state under Article 12 of the Constitution of India and has duties, towards all the citizens and resident of the area irrespective of caste, creed, religion, sex etc . The charging of cess or fees by the assessee is only an incidental activities to the main and primary activities of the assessee ,continues to be development etc for the benefit of general public - Activities of the assessee were driven by the its obligation under the Act, which were not neither trade nor commerce nor business and the charging of fees et cetera is only an incidental element for fulfilment of its obligation under the Act. - AT Visit to Get Source Addition u/s 68 - It is a simple case of switch over of investments from one company to another and is not the case of fresh loan received during the year. We thus find no substance in the ground that since the assessee has agitated the addition qua the share capital and share premium shown to have been received by it during assessment year 2008-09 by filing an appeal the assessee cannot claim the availability of such fund for making the investments. - No additions - AT Visit to Get Source Addition u/s 68 - Since the assessing officer treated the unsecured loan as unaccounted received consequent interest was also disallowed. AO without any material evidence on record treated the unsecured loan as unaccounted amount received only on the basis of a statement of one of the partner. Though, confirmation of unsecured loan was furnished to the assessing officer. The assessee also furnished the TDS deducted on the interest paid on unsecured loan as well as copy of TDS return. - No additions - AT Visit to Get Source Validity of Reopening of assessment - A receipt of some information from another wing of the Department cannot be equated with a realization of escapement per se. Such information/evidence can possibly give birth to realization or belief of the AO as contemplated under section 147 of the Act. However, an independent formation of belief thereon is sine qua non for taking action under section 147 of the Act. - AT Visit to Get Source Addition u/s 40(a)(ia) - non-deduction of TDS - the assessee cannot comply the provisions of chapter XVII of the Act with respect to the expenses claimed on provisional basis in a situation where the recipients/parties/payees are not identifiable. In the case on hand, there was no allegation from the revenue that recipients/parties/payees are identifiable. Thus we can safely conclude that recipients/parties/payees are not identifiable in the present case in the given facts and circumstances and accordingly the assessee cannot be treated as assessee is default on account of non-deduction of TDS under the provisions of section 40(a)(ia) - AT Visit to Get Source Voluntary admission u/s.132(4) - under invoicing of sales and unaccounted purchase of acid slurry - additions made on the basis of statement u/s 132(4) without having corroborating evidence is unsustainable and accordingly we uphold the order of the Ld.CIT(A) and dismiss the appeals of the revenue on this issue. - AT Visit to Get Source Reopening of assessment u/s 147 - In the instant case, since the fact of furnishing of the reasons recorded by the AO has not been established and keeping in view, the fact that the revenue could not provide any evidence to prove that the reasons recorded indeed have been supplied to the assessee, we hereby hold that the reassessment proceedings are vitiated. - AT Visit to Get Source Non granting TDS credit - As per assessee when the return of income was processed by the Centralised Processing Centre (“CPC”) u/s 143(1) in the intimation the CPC did not allow credit of TDS because the same was not reflected in form 26AS per the assessment year 2017-18 but are entirely stood included in form 26AS for the assessment year 2018-19 - Matter remanded back to verify the facts - AT Visit to Get Source Addition of unsecured loan as a gift - gift from unrelated persons treated as assessee’s income u/s.56(vi) - simply because husband has treated his loan as a gift to his wife, cannot be the reason for drawing a similar conclusion for unrelated parties that the other persons will also convert their loan to gift, especially when in the books of account amount has been reflected as loan. - AT Visit to Get Source Customs Seeking grant of extension of two months to enable them to complete the import of “poppy seeds” - non-grant of extension is stated to be justified is that the lock-down in India was imposed - The submission of the Respondents relating to limited quotas being available for the import of poppy seeds is devoid of any merit inasmuch as no such argument has been raised in the counter affidavit. Moreover, the quantity sought to be imported is already part of the licensed quantities and not beyond that. This is a case where the authorities have been completely oblivious to the difficulties being faced by the importers in India - HC Visit to Get Source Exemption form IGST - aircrafts and parts thereof re-imported into India after repairs - 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 entitled to exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India - AT Visit to Get Source Case Laws: GST 2021 (1) TMI 705 Seeking Restoration of Cancelled GST registration of petitioner - contention is that there can be no manual restoration of the GST registration and, therefore, the writ petitioner is liable to be dismissed - HELD THAT:- The contention that there is no provision of restoration of a GST registration, once it has been cancelled borders on the absurd. In case, no provision for its restoration has been made in the software, the same is not the fault of the petitioner and it is for the department and the respondents to make provisions for the same in the software and on the GST Portal. Merely because such provision has not been made, the petitioner cannot be made to suffer and non compliance of an appellate order, passed by a competent appellate authority cannot be accepted or permitted on the plea raised in the counter affidavit or during the course of arguments. The respondents are directed to restore petitioner's GST registration on the GST Portal, forthwith not later than ten days from the date a copy of this order is filed before them - Petition allowed. 2021 (1) TMI 704 Levy of service tax - reverse charge mechanism - provision for recovering service tax from the service recipient - HELD THAT:- Central Government has issued several exemption notifications whereby services provided by an individual as an advocate or as a partnership frm of advocates by way of legal services are exempt from the charge of service tax. That apart, there is a provision for recovering service tax from the service recipient. Ignoring the above, the impugned show cause cum demand notice has been issued mechanically. We direct as an interim measure, there shall be stay of the impugned show cause cum demand notice dated 28.12.2020 until further orders. Stand over to 15.03.2021. 2021 (1) TMI 703 Liability of Interest on delayed payment of GST on credit balance of ITC - Scope of Amendment - The present proceedings taking on record the averments made by the deponent, part of which are reproduced as under: That post issuance of Notification-no-63/2020 dated 25th August 2020 by the central government a press release was issued by Ministry of Finance, Govt of India on 26.08.2020 wherein it was clarified that amendment in section 50(1) has been made effective prospectively w.e.f. 01.09-2020 due to certain technical limitations, however for present no recoveries for interest charged on gross liability will be recovered for the past period as well by the central and state tax administration. That in the light of aforesaid submissions, it is stated that no recovery will be made for interest charged on delayed payment of tax which has been made by the taxpayer debiting the credit ledger. That however, in terms of amended section - 50 (1), it is prayed before the Hon'ble court that the taxpayer may be directed to pay the interest on delayed payment of tax which has been made by debiting the cash ledger that is on net liability. Petition disposed off 2021 (1) TMI 702 Validity of action of search carried out at the Petitioner s business premises - Section 67 of the Delhi Goods and Services Tax Act, 2017 (DGST Act) read with Rule 139 of the DGST Rules, 2017 - another search action in relation to the same period, despite the Petitioner being earlier subjected to search action at the hands of the Central Authorities - HELD THAT:- If an officer of the Central GST initiates intelligence- based enforcement action against a taxpayer administratively assigned to State GST, the officers of the former would not transfer the said case to their counterparts in the latter department and they would themselves take the case to its logical conclusion. At this stage, we are only concerned with the search action initiated and the ultimate logical conclusion would have to be gone into at the appropriate stage, when the Revenue proceeds for determination of tax. The Respondents would be bound by the aforenoted circulars and we reiterate that in case the action of the State and Central Authorities is overlapping, the Petitioner would be at liberty to take action to impugn the same in accordance with law. Absence of the two independent witnesses - HELD THAT:- There is no panchnama on record. In essence, the main thrust of Petitioner s argument is that the statement of Mr. Rajeev Gupta does not record the presence of the two independent witnesses or signatures, making the search action illegal. We have already dealt with the contention of the Petitioner regarding the alleged involuntary/forced statement and in view of our observations made hereinabove, this issue, is rendered insignificant. Further, no specific provision is shown to us that deals with recording of statement in search action. The only relevant section is Section 70, which does not entail signatures of witnesses. Be that as it may, determination of tax liability, has to be in accordance within the confines of statutory provisions of the GST laws. We reiterate that the evidentiary value of the aforenoted statement, and the effect of payment of tax and interest made pursuant thereto, are issues which would have to be gone into at the stage of adjudication. There are no merit in the contention of the Petitioner that absence of the signature of the authorised person on Form GST INS-01 would render the search action to be non-est. Mr. Babbar does not dispute that the persons who carried out the search were indeed those whose names has been mentioned in the said authorisation, and they had displayed their identity cards at the time of search. It is also not the case of the Petitioner that the officers who carried out the search did not properly discharge their official duty or otherwise acted in furtherance of some extraneous purpose. The absence of signatures does not manifest an absence of delegation of power in favour of the team which conducted the search action. Further, the provisions of DVAT Act quoted in the documents also cannot render the proceedings as illegal. The erstwhile Act is saved by the repeal and saving provisions of the DGST Act, 2017. Reasons to believe to inspect and search the premises of the Petitioner - HELD THAT:- The Courts can interfere and hold the exercise of power to be bad in law only if the grounds on which reason to believe is founded have no rational connection between the information or material recorded; or are non-existent; or are such on which no reasonable person can come to that belief. The reasons to believe shown to us demonstrate that the Appropriate authority had the reasons, as per mandate of Section 67(2) of the DGST Act alongwith relevant Rules, for formation of belief to carry out the search. Applying the test of reasonable man, we cannot say that there is no application of mind while issuing search warrant. Applying the test of reasonable man, we cannot say that there is no application of mind while issuing search warrant. Thus, we would not like to countermand the action taken against the Petitioner - Petition disposed off. 2021 (1) TMI 701 Refund of unutilized Input Tax Credit pertaining to compensation cess - Levy of compensation cess on imported Coal by virtue of Reverse Charge Mechanism - Allegation that procedure prescribed for availment of refund, not followed - petitioner stated that if the said resolution comments had been communicated to the petitioner, the petitioner would have followed the said procedure and would have re-submitted its application for refund - financial year 2017-18 and 2018-19 - HELD THAT:- Admittedly, neither the date of communication of resolution comments nor the mode of communication of the resolution comments is mentioned in the counter affidavit although a specific plea was raised by the petitioner in the writ petition that the petitioner did not receive any response to the complaint in help-desk of GSTN portal on 04.03.2019 for which the petitioner was allotted ticket no. 201903045258658 and also to the representation dated 14.03.2019 (Annexure-10) and subsequent communications. There is no dispute that the last date for submission of refund application was 31.03.2019 and as per para 8 of the counter-affidavit filed by the Respondent nos. 1 to 4, the ticket allotted to the petitioner was closed on 25.03.2019 with the aforesaid resolution comments quoted in the said counter affidavit. This court is of the considered view that mere resolution comment is not sufficient, it was also required to be communicated to the petitioner so that the petitioner could have complied with the directions issued in the resolution comments in order to claim its refund. It is not in dispute that if the petitioner could adhere to the directions mentioned in the resolution comment, the petitioner could have filed the application for refund of compensation cess for the periods involved in this case i.e 2017-18 and also for 2018-19. This court is of the considered view that the petitioner cannot be made to suffer on account of laches on the part of the respondents in not communicating the resolution comment to the petitioner and accordingly this is a fit case for exercise of power under Article 226 of the Constitution of India for the redressal of the grievance of the petitioner which the petitioner has suffered due to non-communication of the resolution comment. Whether the respondents, having made a resolution comment in connection with complaint in help-desk of GSTN portal on 04.03.2019 (for which the petitioner was allocated ticket no. 201903045258658) asking the petitioner to apply afresh, can the petitioner be deprived of such opportunity to apply afresh by not communicating the resolution comment to the petitioner? - HELD THAT:- The said resolution was not communicated to the petitioner and accordingly this court has already held above that the petitioner cannot suffer due to non-communication of the resolution comment. Further the relief which can be given to the petitioner is that the petitioner be granted some time to adhere to the directions mentioned in the resolution comment which has been communicated to the petitioner for the first time only through the counter affidavit filed by the Respondent nos. 1 to 4 and there is no question of giving any relaxation to the procedure required under law to file application for refund of compensation cess for the periods involved in the present case considering the legal position that Input Tax Credit (ITC) is a form of concession and whenever concession is given by statute or notification, the conditions thereof are to be strictly complied in order to avail such concession. This Court finds that the Hon'ble Bombay High Court in the judgement reported in NELCO LIMITED VERSUS THE UNION OF INDIA, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, THE STATE OF MAHARASHTRA, THE GOODS AND SERVICES TAX COUNCIL, THE COMMISSIONER OF STATE TAX [ 2020 (3) TMI 1087 - BOMBAY HIGH COURT] had entertained the plea of the petitioner regarding no response to communication regarding grievance of the petitioner, but the same was rejected considering the peculiar facts of the case. There is no doubt that the validity of Rule 117 of the Rules has been upheld and the resolution of technical difficulty by granting further concession as per Rule 117(1A) was also considered and clearly held that no direction could be issued to the respondents in the facts of the said case to treat the case of the petitioner as falling within the ambit of Rule 117 (1A) as the existence of technical difficulty was not found when logged on to the common portal and this was also communicated to the petitioner - The said judgement also does not apply to the present case particularly in view of the fact that the grievance raised by the petitioner was duly considered and responded to by the department favorably, but the same was never communicated to the petitioner. In the present case, the validity of Rule 117 of Central Goods and Services Tax Rules is not under challenge and the entire case rests on the prejudice caused to the petitioner due to non- communication of resolution comment to the petitioner - As a cumulative effect of the aforesaid findings of non- communication of resolution comment to the petitioner, which has been communicated to the petitioner for the first time through the counter affidavit filed by the respondent no. 4, the petitioner is held to be entitled to take steps in compliance of the directions contained in the resolution comment quoted above. Consequently, the respondents are directed either to open GSTN portal enabling the petitioner to file its application for refund in GST RFD-01 or to manually accept the application for refund of the petitioner pertaining to the period 2017-18 and 2018-19 in respect of its claim for refund of unutilized Input Tax Credit pertaining to compensation cess within a period of one month from the date of communication of this judgement. The respondents are directed to communicate the petitioner through e-mail as to whether they would open the GSTN portal or would accept the refund applications manually and upon such communication, the petitioner will be entitled to avail of the opportunity to file applications for refund of compensation cess for the financial years 2017-18 and 2018-19 within a period of 15 days from such communication. Petition allowed. 2021 (1) TMI 700 Classification of goods - Wheel Side Protection Control Unit (WSP) and Pantograph - to be classified as parts of railway or tramway locomotives or rolling stock, and parts thereof (Viz under Heading 8607) for the purposes of levy of GST or otherwise - Section 9(1) of Central Goods and Services Act 2017 read with notification no.01/2017-Central Tax (Rate) dated 28.06.2017. Admissibility of the application under Section 97/98 of the CGST Act - HELD THAT:- The question raised is on the classification of the product supplied by the applicant and therefore covered under Section 97 (2) of the Act. Section 98 of the CGST Act 2017/TNGST Act 2017 provides the procedure to be followed on receipt of the application and the first proviso to Section 98(2) states that the application is not to be admitted when the question raised in the application is already pending or decided in any proceedings in the applicant s case - In the case at hand, it is found that DGGSTI has submitted that the classification of the products supplied by the applicant to railways are under investigations and the investigations have been initiated through the summon dated 10.10.2018. It is the submission of DGGSTI, HRU Hosur that the question raised before this authority is part of the investigation and therefore the application do not merit admission. The first proviso to Section 98(2) makes an application ineligible for admission if the Authority finds that the question raised in the application is already pending or decided in any proceedings in the case of the applicant under any provisions of this Act. Issuance of summon under Section 70 of the CGST Act 2017 and calling for definite particulars happens in the course of investigation. We find that the only contention of the applicant is the summon is generic in nature and the subject goods whose classification is sought before us was never part of the proceedings. The applicant has classified `Pantograph under CTH 8607 and continues to do so while in respect of certain other products, they have re-classified and paid the differential taxes. The month-wise value in respect of Pantograph has been furnished by the applicant to DGGSTI Hosur. Show Cause Notice No.02/2020 dated 18.06.2020, Corrigendum issued to the SCN dated 27.10.2020 seek the differential excise duty payable and the proceedings for the period from 01.07.2017 remains pending. DGGSTI, Hosur letter dated 23.11.2020 has categorically stated that the investigation is specific for the classification of goods for railways and covers all goods supplied by the applicant to railways under Chapter Heading 8607 and in respect of subject goods, it is stated that WSP was not in the list of products prior to GST and the spares for WSP was re-classified by the applicant from CETH 8607 to CETH 9032; while in respect of Pantograph , the investigation included the same and re-classification of the same for pre-GST period is issued through corrigendum dated 27.10.2020 - it is clear that DGGSTI has taken up investigations on the classifications adopted by the applicant on their supplies to Indian Railways and classified under CTH 8607. The subject goods are supplied to `Indian Railways and the applicant classify the same under CTH 8607. The application is filed on 20.01.2020 while the proceedings on the Classification of the goods supplied to Indian Railways and the rate adopted for payment of GST were initiated through summon dated 10.10.2018. Also from the list of parts given to the DGGSTI by the applicant, it is seen that details relating to Pantograph and Parts is also furnished. The applicant claims that the DGGSTI did not contend the classification of Pantograph and therefore the said goods were never a part of the investigation. The first proviso to Section 98(2) of the Act, states that where the question raised is pending or decided in any proceedings under this Act, the same is not eligible for admission before this authority. The investigation initiated by DGGSTI in the case of applicant is on the classification and rate of GST adopted by the applicant on the supplies to Indian Railways, classifying under CTH 8607. It is without doubt that the applicant has been classifying the subject goods under CTH 8607 and the supplies are made to Indian Railways and therefore we are unable to agree the contention that the investigation is generic , while we find the investigation is on the class of products classified under CTH 8607 and supplied to Indian Railways . 2021 (1) TMI 699 Classification of supply of services - services provided by the applicant are in relation to agricultural operations directly in connection with raising of agricultural produce - Drilling of Borewells for supply of water for agricultural operations like cultivation including seeding, planting and ploughing - Letting out of compressors for pumping of water from the borewells to the agricultural fields - whether the said services are covered by the entry SI.No54 of Notification 12/2017 CT(Rate) dated 28.06.2017? HELD THAT:- The applicant carries on borewell drilling. From the documents furnished, it is seen that they raise invoice as Exempted sales when the drilling is made for Agriculture and in such cases, the invoice is raised classifying the services under SAC 9986 and no tax is charged. When the drilling is undertaken for Industries (other than agriculture), the invoice is raised as Tax Invoice , classifying the service under SAC 995434 and appropriate tax (CGST 8s SGST) is collected. The issue raised before us pertains to the drilling and hire service for agriculture , which the applicant classifies under SAC 9986 as Support services for agriculture . The contention of the applicant is that the borewells drilled provides the required quantity of water for cultivation of agricultural crops and the entry Sl.No.54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 covers agricultural operations directly related to raising of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; the borewells drilled provides the required quantity of water for cultivation of agricultural crops.; the supply of compressors which becomes a part of the motor that pumps water is inseparable from the activity of cultivation and therefore is a Support service for agriculture . Provision of agricultural machinery with crew and operators and operation of irrigation systems for agricultural purposes are listed as Support services to crop production . In the case at hand the applicant does not undertake the operation of irrigation system for agricultural purposes and also compressors are not agricultural machinery. They undertake the activity of drilling of borewells in the agricultural land and let out compressors. The said activity is not classifiable under SAC 9986 - In the case at hand, the applicant undertakes only drilling of bore wells in the agricultural land and are letting out compressors. The applicant are classifying the same under SAC 995434, when the said activity is undertaken in places other than agricultural land and under SAC 995434 when the drilling is done in other than agricultural land. Water-well drilling services are specifically covered under 995434 and the said category includes all Water-well drilling services without any exceptions. Therefore, it is evident that the drilling of borewell without exceptions (even in the agricultural land) is a construction service involving drilling water well and not a support service for agriculture. As the activity do not merit classification under SAC 9986, the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. Compressor is not an agricultural machinery and is a General-Purpose Machinery. Also, only provision of agricultural machinery with crew and operators are stated as Support service for agriculture . Therefore, letting out of the Compressor is also not a Support service for agriculture classifiable under SAC 9986 and the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. 2021 (1) TMI 698 Classification of supply of services - services provided by the applicant are in relation to agricultural operations directly in connection with raising of agricultural produce - Drilling of Borewells for supply of water for agricultural operations like cultivation including seeding, planting and ploughing - Letting out of compressors for pumping of water from the borewells to the agricultural fields - whether the said services are covered by the entry SI.No54 of Notification 12/2017 CT(Rate) dated 28.06.2017? HELD THAT:- The applicant carries on borewell drilling. From the documents furnished, it is seen that they raise invoice as Exempted sales when the drilling is made for Agriculture and in such cases, the invoice is raised classifying the services under SAC 9986 and no tax is charged. When the drilling is undertaken for Industries (other than agriculture), the invoice is raised as Tax Invoice , classifying the service under SAC 995434 and appropriate tax (CGST 8s SGST) is collected. The issue raised before us pertains to the drilling and hire service for agriculture , which the applicant classifies under SAC 9986 as Support services for agriculture . The contention of the applicant is that the borewells drilled provides the required quantity of water for cultivation of agricultural crops and the entry Sl.No.54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 covers agricultural operations directly related to raising of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; the borewells drilled provides the required quantity of water for cultivation of agricultural crops.; the supply of compressors which becomes a part of the motor that pumps water is inseparable from the activity of cultivation and therefore is a Support service for agriculture . Provision of agricultural machinery with crew and operators and operation of irrigation systems for agricultural purposes are listed as Support services to crop production . In the case at hand the applicant does not undertake the operation of irrigation system for agricultural purposes and also compressors are not agricultural machinery. They undertake the activity of drilling of borewells in the agricultural land and let out compressors. The said activity is not classifiable under SAC 9986 - In the case at hand, the applicant undertakes only drilling of bore wells in the agricultural land and are letting out compressors. The applicant are classifying the same under SAC 995434, when the said activity is undertaken in places other than agricultural land and under SAC 995434 when the drilling is done in other than agricultural land. Water-well drilling services are specifically covered under 995434 and the said category includes all Water-well drilling services without any exceptions. Therefore, it is evident that the drilling of borewell without exceptions (even in the agricultural land) is a construction service involving drilling water well and not a support service for agriculture. As the activity do not merit classification under SAC 9986, the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. Compressor is not an agricultural machinery and is a General-Purpose Machinery. Also, only provision of agricultural machinery with crew and operators are stated as Support service for agriculture . Therefore, letting out of the Compressor is also not a Support service for agriculture classifiable under SAC 9986 and the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. 2021 (1) TMI 697 Valuation of transfer - transfer to branches located outside the state - whether the value of such supplies can be determined in terms of the second provision to rule 28 in respect of supplies made to distinct units in accordance with clause (4) (5) of section 25 of the CGST rules, 2017? - HELD THAT:- The applicant has stated that the distinct units have excess accumulated credits owing to various reasons and therefore they propose to change their valuation being adopted presently, which is the 'Open Market Value' as per Rule 28(a) of the CGST Rules 2017 to that provided under the second proviso to Rule 28 of the CGST Rules 2017. The question before us is to decide whether the method of valuation prescribed under the Second proviso is applicable to the supply to distinct persons of the applicant. We do not comment/give any opinion on the submissions of the applicant on the available excess ITC at their distinct units for want of jurisdiction and also considering that the issue raised before us is only on the value to be adopted for the supply which do not have any relation to the credit accumulation at the recipient end but for the fact that the recipient is eligible to avail the entire credit of tax paid by the applicant. In the case at hand, the applicant and the distinct persons outside the state of Tamil Nadu are different legal persons hence, both are said to be related as per the explanation to Section 15. Therefore the value to be adopted is governed by rules prescribed as per Section 15(4) of CGST Act. Rule 28 of CGST Rules, 2017 provides the value to be adopted when the supply is between distinct persons - In the case at hand, the applicant supplies to their distinct persons, for which presently they adopt the approximate sale value of the distinct person. The distinct person undertakes supply to their ultimate-unrelated customer 'as such' and the value adopted is that on the Purchase Order issued to such distinct persons by the ultimate customer. Also, the distinct units are eligible to avail full Input Tax credit of the tax paid by the applicant. Therefore, following the judicial discipline, we hold that the value to be adopted by the applicant can be arrived at following the methodology of either of the three methods. 2021 (1) TMI 696 Classification of supply - supply of goods and onsite services in SEZ area to SEZ units or SEZ developers - zero-rated supply or not - section 16 of the IGST Act,2017 - levy of GST for the supply of goods or services to SEZ units or SEZ developers - documentation required for the supply of goods or service to SEZ unit - HELD THAT:- The questions are admissible under section 97(2)(e) of the Goods And Services Tax Act, 2017(hereinafter called the GST Act). But, this authority answered both the questions by a IN RE : GARUDA POWER PRIVATE LIMITED [2018 (8) TMI 212 - AUTHORITY FOR ADVANCE RULINGS, WEST BENGAL] while disposing of an application dated 22/06/2018 by the same applicant. The questions raised have, therefore, been already decided in a proceeding under the GST Act. A fresh application on those two questions cannot be admitted in terms of the 1 st proviso to section 98(2) of the GST Act. Documentation is required for the supply of goods or service to SEZ units - HELD THAT:- An Advance ruling can be sought on the issues specified in section 97(2) of the GST Act. The issue raised in the third questions does not fall within the ambit of any of the clauses under section 97(2) of the GST Act. This authority, therefore, rejects the application under section 98(2) of the GST Act. 2021 (1) TMI 695 Classification of goods - pondliner - vermibed - weed mat - azolla bed - grow bags - agro shade net - classificable under sub-heading 54072090 or otherwise - liability of GST - N/N. 01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- Applicant are manufacturing and supplying HDPE woven fabrics falling under Chapter 39(Plastics and articles thereof) and Tariff items 3926 (other articles of plastics and articles of other materials of heading 3901 to 3914) and sub tariff item 39269099; that the manufacturing process involves manufacturing of HDPE tapes, which are weaved into a piece of fabric and the HDPE granules are mixed with additives and passed through an HDPE tape line plant to obtain HDPE tapes(mono-axially oriented HDPE tapes); that the HDPE tapes wound into spools, are passed through power looms for weaving HDPE woven fabric. None of the (except grow bags ) is covered under the Headings 3901 to 3925 of Chapter 39 as there is no specific mention of any of these products under any of the aforementioned headings. Since heading 3926 reads as Other articles of plastics and articles of other materials of headings 3901 to 3914 , it implies that articles of plastics or articles of other materials not covered in any of the headings from 3901 to 3925 would be covered under heading 3926 which is a residuary entry. As per the explanatory notes to HSN with regard to heading 3926, the heading 3926 covers articles, not elsewhere specified or included, of plastics or of other materials of headings 39.01 to 39.14 - thus, the products namely HDPE Tarpaulin, PE laminated fabric PP ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla bed, agro shade net, HDPE woven laminated fabrics and PP/HDPE woven fabric would invariably be covered under heading 3926 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Further, looking to the use of Grow bags , we find that they would be rightly classifiable under Heading 3923. Grow Bags - HELD THAT:- Grow bags is classifiable under Sub-heading No.39232990. The other products namely HDPE Tarpaulin, PE laminated fabric, PP ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla bed, agro shade net, HDPE woven laminated fabrics and PP/HDPE woven fabric would be classifiable under Sub-heading No.39269099 of Chapter 39 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) as we do not find the specific mention of any of these products in any of the other sub-headings of Heading 3926. Liability of GST - N/N. 01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The classification of the products manufactured and supplied by the applicant M/s. Gujarat Raffia Industries ltd., Ahmedabad (as per the First Schedule to the Customs Tariff Act, 1975(51 of 1975)) as well as the corresponding rate of GST(as per Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time)) is as detailed in the table below: HDPE Tarpaulin - Heading 39269099 - rate of GST 18%(9% SGST + 9% CGST). PE laminated fabric - PP Ropes - Pondliner - Vermibed - Weed mat - Wagon cover - Fumigation Cover - Azolla Bed - Heading 39269099 - rate of tax 28%(14% SGST + 14% CGST) upto 14.11.2017 and 18%(9% SGST + 9% CGST) from 15.11.2017 onwards. Grow Bags - Heading - 39232990 - rate of GST 18%(9% SGST + 9% CGST). Agro shade net - HDPE woven laminated fabrics - PP/HDPE woven fabric - Heading 39269099 - rate of GST 28%(14% SGST + 14% CGST) upto 14.11.2017 and 18%(9% SGST + 9% CGST) from 15.11.2017 onwards. 2021 (1) TMI 694 Effective date of Change in rate of tax / GST - composite supply of works contract - clause (119) of Section 2 of Central Goods and Services Act, 2017 - whether it would be in order for the applicant (supplier) to charge GST at the rate of 12% or is the GST rate 18% applicable to the nature of works contract undertaken by the applicant? - HELD THAT:- Regarding the rate of GST on the Composite Supply of Works Contract, it may be noted that the rate applicable is dependent' on the nature of the supply. The amendments made by Notification Nos 20/2017 - Central Tax (Rate) and 24/2017-Central Tax (Rate) have notified different rates for different nature of works .In Notification Nos 20/2017 - Central Tax (Rate) Entry No. (iii) of the Notification has specified the recipient of the supply for which the rate is applicable. Entry No. (iv) and (v) are for specific type of supply within the four corners of a Composite Supply of Works Contract - in Entry No. (vi) in Notification Nos 24/2017 - Central Tax (Rate). service as well as the recipient has been specified - the notifications clearly state the rate applicable on satisfaction of twin condition of the nature of the supply and the recipient. The applicant has neither given the particulars of the specific nature of the work done by the applicant nor the particulars of the recipient of the supply. Copies of Work Orders are also not on record. Therefore, in the absence of the relevant and necessary information, we are unable to answer the first query of the applicant relating to the rate of tax applicable to the Composite Supply of Works Contract provided by the applicant. In case of a notification in the body of which the effective date is not written, the effect of the amending notification thus shall be the date on which the amending notification is published in the Official Gazette. Therefore, the effective date for the levy of the amended rate of tax as per amended Notification No. 11/2017 - Central Tax (Rate) shall be the date on which Notification No 20/2017 - Central Tax (Rate) and Notification No. 24/2017 - Central Tax (Rate) were published in the Official Gazette. 2021 (1) TMI 693 Classification of goods - Mix flour - classified under Tariff item 1106 vide Entry No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and Notification No.01/2017-State Tax (Rate) dated 30.06.2017, Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017 or otherwise? - Chutney Powder - classified under Tariff item 2106 vide Entry No.100A of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and Notification No.01/2017-State Tax (Rate) dated 30.06.2017, Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017 or otherwise? - Chutney powder when supplied with Gota Mix flour and Bhajiya Mix flour - Composite supply or not having HSN of principal supply i.e. 1106 and 5% GST? Manufacturing and selling of varied types of mixed flour under the Talod brand name that are used to prepare instant Farsan and other similar dishes - HELD THAT:- On going through the break-up (percentage-wise) of the flours involved in the above products, it is seen that there are a few products, in which the content of rice flour, wheat flour, wheat granules is very high and thereby falling under either of headings 1101, 1102 or 1103 instead of heading 1106. Hence all these sub-headings alongwith their chapter notes as well as explanatory notes to HSN will have to be looked into. In order to determine the classification of the above 18 items, we will be first required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods, which are covered under 6 schedules. Recently, the Government has issued Circular No.80 dated 31.12.2018 containing clarification regarding GST rate and classification of some goods in which clarification has been issued with respect to classification of Chhatua or Sattu, which is a mixture of flour of ground pulses and cereals. The purpose of this circular being discussed here is that the said circular appears to be squarely applicable in the instant case. The issue regarding classification of Chhatua or Sattu as appearing in the said Circular - it can be seen from the above that HSN code1106 includes the flour, meal and powder made from peas, beans or lentils (dried leguminous vegetables falling under 0713) and such flour improved by the addition of very small amounts of additives continues to be classified under HSN code 1106. It is seen that products obtained from milling of dried leguminous vegetable including peas, lentils are covered under heading 11.06 and by milling of cereals (in the instant case) fall under headings 11.01, 11.02 or 1103. The applicant submitted that the product at hand is manufactured by grinding of pulses, mixing of flours and addition of a small quantity of spices and the finished product is ready and packed. The flours of grams, moong dal, rice, wheat and urad dal etc. are mixed in various proportions and packed. There is a small addition of spices etc. but no further processing of the flours is done. As seen in the explanatory notes to Chapter 11 above, flours of cereals and flours of dried leguminous vegetable and lentils are classified under Chapter 11 if they are obtained only by the milling of these raw materials and no further processing has taken place and no addition of other substances with a view for their use as food preparations has been done. If that was the case, they would be classified under heading 19.01 and such products are excluded from Chapter 11. Explanatory notes to Chapter 19.01 also states that it covers food preparations with a basis of flour or meal or starch or malt extract where other substances may be added to main ingredients such as milk, sugar, eggs, fat, oil etc. Unprocessed flour obtained only by the milling and sieving of cereals, leguminous vegetable including peas, lentils etc. are to be classified under Chapter 11 alone. In the instant case, the product has a mixture of various flours such that multiple tariffs are involved i.e. headings 11.01, 11.02, 11.03 and 11.06. Dhokla mix flour containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients - Idli mix flour Containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients - Dosa mix flour containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients - HELD THAT:- In this case, Rule 3(c) is applicable i.e. when goods cannot be classified by reference to Rule 3(a) or 3(b) of the Rules of interpretation of the Customs Tariff, they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Rice flour is classifiable under heading 1102 whereas leguminous flour is classifiable under heading 1106 and specific sub-heading 11061000. Hence the aforementioned products would be rightly classified under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975). The same will fall at Sr.No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (as amended vide Notification No.27/2017-Central Tax (Rate) dated 22.09.2017 on which GST payable is 5%. Percentage-wise break of the flours of the ingredients involved in the branded products manufactured by the applicant - HELD THAT:- The products Upma mix flour and Rava mix flour each contain 70% of Suji flour (wheat granules), 20% of leguminous flours and 10% of spices and other ingredients. Similarly, Muthiya mix flour which appears at Sr.No.16 contains 90% of wheat flour and 10% of spices and other ingredients, whereas the product mentioned at Sr.No.17 i.e. Khichu mix flour contains 95% of rice flour, 2% of Sabu dana flour and 3% of spices and other ingredients. As per Rule 3(b), mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as the criterion is applicable. Accordingly, (i) Upma mix flour and Rava idli mix flour each containing 70% of suji flour(wheat granules) and 20% of leguminous flour and 10% spices and other ingredients, have the essential characters of suji flour (wheat granules) and would be classifiable under heading 1103 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). (ii) Muthiya mix flour containing 90% wheat flour and 10% spices and other ingredients have the essential characters of wheat flour and would be classifiable under heading 1101 of the First Schedule to the Customs Tariff Act,1975. (iii) Khichu mix flour containing 95% rice flour, 2% Sabu dana flour and 3% spices and other ingredients shows the essential characteristics of rice flour and would be classifiable under heading 1102 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) - Since the details in respect of ash content/starch content/rate of passage through a sieve etc. in respect of the products mentioned in para 13.2 above have not been furnished by the applicant, it would not be possible for us to decide whether these products fulfil the criteria or otherwise. In view of the above, we are left with no option but to conclude that the above products do not fulfil the aforementioned criteria and would therefore be classifiable under Heading 2302 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975) - Upma mix flour and Rava idli mix flour each containing 70% of suji flour(wheat granules) and 20% of leguminous flour and 10% spices as well as Muthiya mix flour containing 90% wheat flour and 10% spices are classifiable under sub-heading 23023000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) whereas Khichu mix flour containing 95% rice flour, 2% Sabu dana flour and 3% spices and other ingredients would be classifiable under sub-heading 23024000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). Chutney powder - HELD THAT:- Chutney powder is classifiable under Sub-heading 21069099 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) on which GST rate was 18% upto 14.11.2017 and 5% with effect from 15.11.2017. Whether chutney powder when supplied with Gota mix flour and Bhajiya mix flour, should be considered as Composite supply as stated by the applicant? - HELD THAT:- Chutney powder and Gota mix flour or Chutney powder and Bhajiya mix flour are not naturally bundled and are not supplied in conjunction with each other in the ordinary course of business as they can be supplied separately or independently in the ordinary course of business. We therefore conclude that Chutney powder supplied with Gota mix flour or Bhajiya mix flour cannot be considered a composite supply - applicant has submitted that he provides Chutney powder in a pouch along with Gota Mix and Bhajiya Mix and no extra amount is collected for such Chutney powder and that he is charging a single price for the combined supply of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder. Further, as discussed earlier, since the aforementioned supply is not a composite supply of goods and a single price is being charged for the combined supply of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder, it will be considered as a Mixed supply of goods. Thus, it can be seen that a mixed supply comprising of two or more supplies, shall be treated as a supply of that particular supply which attracts the highest rate of tax. However, in the instant case, we find that the rate of tax of all the three products i.e. Gota mix, Bhajiya mix and Chutney powder is the same i.e. 5% GST, that a single price is being charged by the applicant for the mixed supply of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder and no extra charge is collected for the Chutney powder. Hence, we conclude that the mixed supply of Gota Mix and Chutney powder will be considered as a supply of Gota Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%. Similarly, the mixed supply of Bhajiya Mix and Chutney powder, will be considered as a supply of Bhajiya Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%. 2021 (1) TMI 692 Input tax credit (ITC) - Demo vehicle purchased - whether credit can be availed as the same will he capitalized in books - HELD THAT:- The Applicant has submitted that the firm will not claim depreciation on the tax component of Demo Vehicles which are capitalized in the books of accounts. We find that not charging depreciation on the tax component, is as per other relevant provisions of the GST Act. But. that can not affect the applicability of provisions of Section 17(5)(a) of GST Act according to which the applicant is not eligible for Input tax credit on Demo Vehicles. as the same arc not covered by any of the exceptions given clause (A). (B) or (C) of Sec. 17(5)(a) - It is found that the eligibility for inputs tax credit on Demo Vehicles can not he decided on the basis of their capitalisation. or payment of GST at the time of their sale in the subsequent year. There is clear provision in law for admissibility of Input tax credit on motor vehicles in any of' the three conditions prescribed in clause (A), (B) and (C) of Section 17(5)(a) of GST Act. As the applicant's Demo vehicles do not comply any of the said conditions. therefore. the applicant is not eligible for Input tax credit on Demo vehicles in view of provisions of Section 17(5)(a) of GST Act in spite of the filet that the Demo Vehicles are used by the applicant for furtherance of their business. 2021 (1) TMI 691 Classification of services - Outdoor catering services or not - catering of food, banquet facilities and combination of both (as per requirement of the customer) in self owned marriage and party halls by Hotel Jewels (having all rooms below ₹ 7,500/1, Kunjpura Road, Karnal (A unit of Jewel Classic Hotels Pvt Ltd) - N/N. 20/2019 Dated 30th September 2019 - Eligibility to charge 5 % tax (as per Notification No. 20/2019 Central Tax (Rate) for providing outdoor catering at Hazuri Bagh (A party lawn restaurant of M/s Jewel Classic Hotels Pvt. Ltd.) - treatment of pure agent services - additional arrangements (in addition to foods, beverages renting of premises) such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, to be excluded from value of supply as given in Rule 33 of CGST Rules and thus no tax is required to be charge on them - levy of tax on the supplies arranged from these unregistered people to be paid by the applicant under the Reverse Charge mechanism - whether extra bed forms part of the room tariff and liable to be charged as per various rates as per slabs given under Notification No. 11/2017-Central Tax (Rate), No. 13/2018-Central Tax (Rate) Dated 26th July 2018 and 20/2019 -Central Tax (Rate) Dated 30th September 2019? Whether catering of food, banquet facilities and combination of both (as per requirement of the customer) in self owned marriage and party halls by Hotel Jewels (having all rooms below ₹ 7,500/1, Kunjpura Road, Karnal (A unit of Jewel Classic Hotels Pvt Ltd) is covered in Outdoor Catering taxable @ 5 % as per Notification No. 20/2019 Dated 30th September 2019? - HELD THAT:- The hotel Jewels is the principal place of business and Noor Mahal is the additional place of business and both are owned by the same owner i.e. M/s Hotel Jewel Classic Pvt. Ltd. under the same registration number - There is a condition in column 3 of (i)(a)(iv) in the Notification No. 20/2019 Central Tax (Rate) dated 30.09.2019 amending the serial No. 7 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017, that the supply of outdoor catering should not be provided by such suppliers who are providing hotel accommodation at specified premises . In the present case, the applicant is providing hotel accommodation at Noor Mahal which is a specified premise. Thus, the applicant does not fulfill the condition - thus, outdoor catering activity carried by M/s Jewels Classic Hotels Pvt. Ltd, at its own Marriage Hall and Party Hall including outdoor lawns on the same registered premises of principal place or additional declared place does not fall in the ambit of GST (5%). Whether Hotel Jewels is eligible to charge 5 % tax (as per Notification No. 20/2019 Central Tax (Rate) for providing outdoor catering at Hazuri Bagh (A party lawn restaurant of M/s Jewel Classic Hotels Pvt. Ltd.)? - HELD THAT:- As Hazuri Bagh is situated in precincts of Hotel Noor Mahal, so it the clear that the taxpayer is not satisfying the condition (i) mentioned above. Therefore, the taxpayer is not entitled to supply @ 5% from the business premises of Hotel Noor Mahal/Hazuri Bagh. Whether the additional arrangements (in addition to foods, beverages renting of premises) such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, provided as pure agent will be excluded from value of supply as given in Rule 33 of CGST Rules and thus no tax is required to be charge on them? - HELD THAT:- As per valuation rule provision of GST Act, 2017, the taxpayer does not satisfy the condition of the pure agent which is to recover from recipient only such amount as has been paid by him to the third party. Facilitation charges collected shall disqualify taxpayer from being pure agent. Further, to arrange these supplies, some supplies are procured from Unregistered Persons having no GST Registration. Whether there is any tax on the supplies arranged from these unregistered people to be paid by the applicant under the Reverse Charge mechanism or any other provisions of the HGST Act/CGST Act? - HELD THAT:- The provisions of Section 9 (4) of the CGST Act are not applicable to all registered persons, goods and services. It is applicable only to selected categories of registered persons goods and services which have to be notified by the government - the N/N. 07/2019-Central Tax (Rate) dated 29.03.2019 and N/N. 24/2019-Central Tax (Rate) dated 30.09.2019, it is clear that presently reverse charge mechanism under section 9(4) is not applicable on the applicant. Whether the extra bed forms part of the room tariff and liable to be charged as per various rates prescribed as per slabs given under Notification No. 11/2017-Central Tax (Rate), No. 13/2018-Central Tax (Rate) Dated 26th July 2018 and 20/2019 -Central Tax (Rate) Dated 30th September 2019? - HELD THAT:- The charges of extra bedding if exceeds the room tariff as per the N/N. 20/2019-Central Tax (Rate) dated 30th September 2019 amending Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, the same shall be treated as gross value of supply and the tax shall be charged as per the amount including the extra bedding charges as it is a part of room tariff. 2021 (1) TMI 690 Classification of supply - supply of services or not - expenses and salary paid by Wilhelm Fricke SE, Germany to the liaison office established in India - no consideration is charged/ paid - requirement of registration of Liaison Office or not - levy of CGST/SGST/IGST on reimbursement received from HO - HELD THAT:- The HO in Germany reimburses the expenses incurred by the applicant for their operations in India which are in the nature of salary, rent, security, electricity, travelling etc. The applicant does not have any other source of income and it is solely dependent on the HO for all the expenses incurred by the applicant, which are subsequently reimbursed by the HO. Therefore the HO and Liaison Office cannot be treated as separate persons. Since, HO and Liaison Office cannot be treated as separate persons, there cannot be any flow of services between them as one cannot provide service to self and therefore, the reimbursement of expenses made by the HO cannot be treated as a consideration towards any service. The amount received from HO are the funds for payment of salary, reimbursement of expenses like rent, security, electricity, travelling, etc. No consideration is being charged by the applicant from the HO for such services - Further the liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. Also the reimbursement claimed by them from their HO is also falling out of the purview of supply of service. As there are no taxable supplies made by the Liaison office, they are not required to get registered. Income Tax 2021 (1) TMI 689 Extension of due date of filing the Tax Audit Report and Income Tax Return for the assessment year 2021-21 both for tax audit assessee and for non-tax audit assessee for a reasonable time, atleast till March 31, 2021 - COVID- 19 pandemic - HELD THAT:- Admittedly, the country continues to suffer and to reel under the COVID-19 pandemic. A large number of assesses still find it difficult to even meet their Chartered Accountants and to file their Income Tax Audit Reports and the Income Tax Returns. Therefore, this Court permits the petitioner to submit a fresh representation, voicing all their grievances, with regard to the consequences which would flow from different provisions of the Act. The CBDT is directed to leniently consider the said representation after giving an opportunity of hearing to the petitioner and to pass a reasoned order thereupon. 2021 (1) TMI 688 Stay of demand - Recovery proceedings - HELD THAT:- Tribunal has substantially scaled down the condition imposed by respondent No. 2 by reducing the figure of ₹ 100 crores to ₹ 20 crores i.e. ₹ 5 crores for each assessment year to be paid in two installments, subject to which recovery of the balance outstanding demand would remain stayed. On perusal of the said order, it cannot be said that Tribunal did not consider or did not follow the guidelines laid down by this Court while passing the impugned order. Mr. Raichandani may be right in saying that petitioner being a government undertaking, revenue's demand is secured but we are also conscious of the fact that merely because the assessee is a government undertaking, it cannot be treated on a different footing or as a separate category of assessee. Mere fact that it is in a position to safeguard the interest of revenue cannot be a ground to stay the demand. Tribunal has exercised its discretion while passing the order dated 10.06.2020 whereunder reasons have been given as to why petitioner should pay a further amount of ₹ 20 crores against the outstanding demand of ₹ 269,96,26,079.00. The discretion exercised by the Tribunal does not suffer from any infirmity to justify interference by this Court under Articles 226 and 227 of the Constitution of India. Therefore, in the facts and circumstances of the case, we are not inclined to invoke our writ jurisdiction. While declining to interfere in the matter, we are however of the view that Tribunal should expedite hearing of the appeals of the petitioner including the one pertaining to cancellation of registration under section 12AA of the Act. If the petitioner files application for early hearing, the same shall be duly considered by the Tribunal so that the appeals can be decided expeditiously. 2021 (1) TMI 687 Revision u/s 263 - As per 3CD report, TDS has not been deducted and the same has not been disallowed AND sum has been debited towards advances written off in P L (Schedule 13, Operating and Other Expenses) but the same has not been considered in the assessment order - according to the CIT, the action of the AO in not disallowing the aforesaid 2 items of expenses for the reason that the first item of the expenditure ought to have been disallowed under section 40(a)(ia) and the second item of expenditure ought to have been disallowed as one not incurred for the purpose of business of the Assessee. HELD THAT:- As far as the first item of disallowance is concerned, assessee could not point out as to why the aforesaid sum cannot be disallowed under section 40(a)(ia) - Form 3CD report clearly mentioned a sum of ₹ 2,24,000/- as the sum on which TDS was not made. The plea of the Assessee that the aforesaid sum is the sum total of all small payments made to different persons and that each of the payment was below the threshold limit of sum on which TDS has to be made as per law, has not been substantiated by the Assessee. In these circumstances, we confirm the order of CIT regarding this addition. - Decided against assessee. Advances written off in P L - business purposes - There is no material on record to come to such conclusion. The expenditure in question has been incurred for the purpose of business as the same was paid to Mr. Rakesh Rastogi for acquiring properties in Delhi for construction of a SEZ. The assessee is in the business of property development and it cannot be said that the advance given to Mr. Rakesh Rastogi is not for the purposes of business of the assessee. The assessee is the best judge as to whether he should accept forfeiture by Mr. Rakesh Rastogi or take a legal stand for recovery of advance paid to Mr. Rakesh Rastogi. The circumstances pointed out by the CIT cannot be a ground to come to a conclusion that the advances given is not for genuine business purposes - loss on account of forfeiture of advance paid to Mr. Rakesh Rastogi is incidental to the business of the assessee and is allowable as a deduction under section 37(1) or under section 28 of the Act as held in the case of Harshad J. Choksi [ 2012 (8) TMI 710 - BOMBAY HIGH COURT] - For the reasons stated above, we are of the view that the CIT was in error in adding this sum - Decided in favour of assessee. 2021 (1) TMI 686 Rectification of mistake u/s 254 - Eligibility of exemption u/s.54F - HELD THAT:- We are concerned with the initial year when the assessee deposited the amount in capital gain account scheme. A categorical finding has been recorded that the assessee did deposit capital gain in specified capital gain account scheme. In that view of the matter, the assessee becomes entitled to exemption u/s.54F of the Act for the year under consideration - It is for the AO to examine as to whether the assessee has constructed the house within period of three years or not. In case the house is not so constructed or the other relevant conditions are not satisfied, then the AO becomes free to charge the amount of exemption earlier allowed as income u/s.45 of the third year. We, therefore, modify paras nos. 10 and 11 as under : 10. We have found it as an admitted position that the assessee deposited balance capital gain in the specified capital gain account scheme. This makes the assessee entitled to exemption u/s.54F in respect of the year under consideration. However, the AO is free to examine as to whether the assessee constructed the house within the stipulated period of three years. In case such construction is not done or the other relevant conditions are not satisfied, then the AO will be at liberty to invoke the proviso to section 54F and make suitable addition in the income of the assessee at the end of third year from the date of transfer of the original asset. Insofar as the year under consideration is concerned, the assessee is entitled to exemption because she has deposited the amount in the designated capital gain account scheme. 11. In the result, the appeal of the Revenue is dismissed. Miscellaneous Application is allowed. 2021 (1) TMI 685 Estimation of income - Bogus purchases - CIT(A) upholding only 30% addition - HELD THAT:- The assessee had filed all relevant details like copies of bills, bank statements and delivery challans. Having considered the above, we are of the considered view that the Ld. CIT(A) has rightly brought to tax the profit element embedded in such disputed purchases by estimating @ 30%. In the case of CIT vs. Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] has held that where purchases were not bogus but were made from parties other than those mentioned in the books of account, not entire purchase price but only profit element embedded in such purchases can be added to income of the assessee. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. - Decided against revenue. 2021 (1) TMI 684 Rectification u/s 254 - Whether invoking section 50C was right? - both the CIT(A) and ITAT principally agreed with the view of the AO that invoking section 50C was right - HELD THAT:- In the instant case, the Ld. CIT(A) has directed the AO to make a reference to the Valuation Officer in accordance with provisions of section 50C(2) of the Act. As mentioned earlier, the Ld. CIT(A), in an appeal against an order of assessment, may confirm, reduce, enhance or annul the assessment. He has no power to set aside/restore the order to the file of the AO. In such a scenario, we have held that the order passed by the Ld. CIT(A) being not in conformity with section 251 of the Act is bad in law. Consequently, we annulled the order passed by the Ld. CIT(A) and allowed the appeal filed by the assessee. Thus the relevant provisions of the Act as mentioned hereinabove have been followed. Consequently, there being no mistake in the order passed by the Tribunal, the MA being devoid of merit, is hereby dismissed. 2021 (1) TMI 683 Estimation of income - Bogus purchases - assessee failed to establish the genuineness of the purchases - AO estimated the profit @ 12.5% on the disputed purchases - HELD THAT:- The ratio laid down in Jakharia Fabric (P.) Ltd. [ 2020 (3) TMI 474 - BOMBAY HIGH COURT] observing that profit element embedded in such transaction has to be added to the total income of the assessee is applicable to the present case. The nature of business in the instant case is manufacturing and selling of agricultural equipments and implements. Considering the nature of business of the assessee, we set aside the order of the Ld. CIT(A) and direct the AO to estimate profit @ 4% on the disputed purchases and make an addition accordingly. 2021 (1) TMI 682 TP Adjustment - Selection of MAM - Resale Price Method Vs. Transactional Net Margin Method - TPO held that TNMM should be the most appropriate method AND selected 4 comparables whose margin was 4.70 % computed the margin of the assessee (-) 26.76% and proposed an adjustment u/section 92CA(3) - HELD THAT:- Admittedly in this case the assessee itself has adopted the transactional net margin method as the most appropriate method for benchmarking itself for international transaction by import of finished goods. As during the course of hearing before the ld TPO assessee submitted that RPM should be taken as the most appropriate method. In its TP Study report assessee itself submitted that assesses lacks information about the other companies, so that comparables are not available in public domain, so Resale Price method cannot be the most appropriate method. Owing to this limitation, the RPM was rejected. In case of resale price method only the gross profit margin is required to be computed whereas in the case of the assessee, it has incurred salaries and the employees benefit expenses of ₹ 1.49 crores and has incurred operating and other expenses of ₹ 1.93 crores out of total revenue of ₹ 7.92 crores - Assessee has incurred employee benefit and other expenses of approximately ₹ 3.5 Crores on a revenue of ₹ 7.92 Crores. In view of this, we did not find any infirmity in the order of the lower authorities in adopting TNMM as the most appropriate method. In view of this ground Nos. 1 and 2 of the appeal of the assessee are dismissed. We set aside the whole issue back to the file of the ld TPO with a direction to consider the fresh search of the comparables by the assessee. The assessee is directed to submit the complete search along with accept/ reject matrix and the computation of the margin of TNMM method before the ld TPO and the ld TPO may verify it and after giving proper opportunity of hearing to the assessee may compute the correct margin and consequent adjutsment. Accordingly ground No. 3 and 4 of the appeal is allowed with above direction 2021 (1) TMI 681 Validity of order passed u/s 201(1)/201(1A) - As argued order u/s 201(1), 201(1A), passed beyond the period of limitation - HELD THAT:- An identical issue has been considered by the Hon ble Gujarat High Court in Tata Teleservices Vs. Union of India[ 2016 (2) TMI 414 - GUJARAT HIGH COURT] wherein it has been held that prior to section 201 was amended by Finance Act No.2 of 2009, no time limit was provided for passing an order u/s 201(1). But w.e.f. 01.04.2010, a time limit has been provided specifying that such order was to be passed within two years from the end of the financial year in which statements of TDS are filed. If no statement is filed, the order could be passed up to four years from the end of the financial year in which the amount is credited or paid. This judgment of the Hon ble Gujarat High Court has been followed by the Co-ordinate Benches of this Tribunal in Delhi and Mumbai. Therefore, we hold that the order u/s 201 (1)/201 (1A) for the first three quarters for Financial Year 2011-12 was passed beyond the limitation period and, therefore, the same is not a valid order in the eyes of law. Accordingly, the same is quashed. TDS u/s 194C OR 194J - Short deduction of TDS - payments/credit to M/s Conax Access Systems (Pvt.) - it is the assessee s contention that payments to this company were made under normal contractual obligations and that the services being provided by these two companies were general in nature and did not require any transfer of skill nor did make available any skill to the assessee - HELD THAT:- AR has referred to invoices and agreements entered into with both the parties to buttress his arguments that the services rendered were not in the nature of technical services requiring any sharing/transferring of technical skill or knowledge. These evidences and explanations were submitted before the Assessing Officer as well as Ld. CIT (A). However, the Ld. CIT (A), notwithstanding the fact that in Financial year 2010-11 he had held that the payments were not in the nature of services falling under section 194J, not only ignored his appellate order in Financial Year 2010-11 but also chose to brush aside the explanations and evidences supplied by the assessee without examining the same in detail. We are informed that the Department s appeal against the order of the Ld. CIT (A) in Financial Year 2010-11 is pending before the Tribunal. In such circumstances, in the interest of substantial justice, we deem it fit to restore the issue of short deduction of tax at source and interest thereon in the fourth quarter of Financial Year 2011-12 to the file of the Ld. CIT (A) with a direction to pass a speaking order. 2021 (1) TMI 680 Exemption u/s 11 - entitlement of the assessee for registration under section 12 AA - applicability of second proviso to section 2 (15) - assessee under appeal is a body corporate constituted under Uttar Pradesh Urban Planning Development Act, 1973 was filing return of income in the status of Local Authority and claiming exemption u/s.10(20A) earlier - assessee (appellant) has been given registration u/s.12AA by the CIT-II, Agra w.e.f. 01.04.2003 vide order dated 21.10.2010 under the status of a charitable institution and thereafter, it has been filing its return of income claiming exemption u/s 11 and showing Rs. Nil income - HELD THAT:- Development of land and building , acquisition of land by the authority had consistently been considered to be falling within advancement of the general public purpose. The advancement of public purpose has been considered by the statute to be charitable purpose and is as provided in the last limb of the definition given in section 2 (15) Assessee is the extended arm of the UP state and is discharging it statutory functions within the four corners of the Act. The assessee is part of welfare state and is discharging its duties and function as has been empowered by the Act and also by the Constitution of India for the advancement and welfare of general public. Assessee cannot be equated by with the private entrepreneur or coloniser or club or Association, as it is a state under Article 12 of the Constitution of India and has duties, towards all the citizens and resident of the area irrespective of caste, creed, religion, sex etc . The charging of cess or fees by the assessee is only an incidental activities to the main and primary activities of the assessee ,continues to be development etc for the benefit of general public . Moreover charging of fees, cess, etc by the assessee for its activities were duly authorised by the act, regulation and rules framed under the law - Discharge of duties by the state or by the state functioning cannot be termed as an activity which is trade, commercial or business. The said activities were essentially done by the assessee for the discharge of the statutory duties and therefore the same cannot be termed as either trade, commerce or business. In our view any activity can be termed as trade, commerce or business if it is done with the purpose of earning the income or profit or in other words the driving forces for doing such activities, were to earn profit/ income . In the case of the assessee, the activities were undertaken by the assessee, not for the purpose of earning the profit but, were done in discharge of its statutory duties for general welfare of public of developing land and building in a regulated, structured and planned manner. The charging of fees is only a by-product or incidental to main activity. We are further of view that for the purpose of regulating the activities of development, creation and maintenance of infrastructure , providing affordable housing etcit is necessary to charge some fees or cess , as said activities could not be discharged for free.Though there mayalways be an element of subsidy or cross subsidy in the functioning of state authorities to provide maximum benefit to the most deserving class or community . Admittedly the revenue is the foundation and basis of every state action. No state or authority can function without the availability or generation of revenue. Hence merely on account of charging of fee or cess would not irresistibly lead to the conclusion that the activities ceases to be charitable ,as it will fall in proviso to section 2(15) Activities of the assessee were driven by the its obligation under the Act, which were not neither trade nor commerce nor business and the charging of fees et cetera is only an incidental element for fulfilment of its obligation under the Act. - advancement of any other object of general public utility, is an expression of wide amplitude and there are many activities, like the activities of the assessee authority created under the statute, which are neither in the nature of trade, nor commerce nor business , but were done for the advancement of public utility or benefit . Purposes of bringing the activities of the assessee under the rigors of proviso to section 2(15) it is essential that such activity should be in the nature of trade, commerce or business. However as mentioned hereinabove the activities for the advancement of any other object public utility is a bigger set and activities of trade, commerce or business, may be incidentally forming part of advancement of any other object public utility. The reliance on the objects of the assessee by AO, cannot form basis of coming to the conclusion that the assessee was doing commercial activities. Therefore the finding of the assessing officer that the assessee was carrying out the commercial activities was without any basis. Interest income on the fixed deposit - The income even if any earned by way of the interest income on the fixed deposit is also required to be exempted under section 11 of the Act,as there is no other source of income of the assessee other than doing the charitable activities .For the purpose of exemption of interest income we may rely upon the full bench decision in the matter of Hewlett Packard Global Soft Ltd. 2017 (11) TMI 205 - KARNATAKA HIGH COURT] which on examining the exempt income under section 10, had allowed the exemption even on interest income , if there is no other source of income except the exempt income , as in present case - Appeal of assessee allowed. 2021 (1) TMI 679 Revision u/s 263 - Bogus LTCG - addition of the entire sale proceeds of the shares as income and rejection of claim of exemption made u/s 10(38) - HELD THAT:- Assessee furnished all the documents called for and after considering the same the AO accepted the claim of the assessee exemption u/s 10(38) of the Act as the profits earned from purchase and sale of transfer. Nothing adverse was found by the AO during the course of assessment proceedings. Even the ld. PCIT, except the alleged report of DIT(INV), Kolkata no fresh evidence was referred to. This report of DIT(INV), Kolkata vide Note No. 75A/12015-161257 dated 27.04.2015 is not brought on record. The PCIT similarly states that there is a report of the DIT(INV) Kolkata and hence the assessment order is erronerous. The issue is whether the assessment order so passed is erroneous insofar as it is prejudicial to the interest of revenue. This is not the case of lack of enquiry as alleged ld. PCIT. In fact enquiry was conducted by the AO after obtaining all required details. The ld. PCIT himself said that report of DIT(INV), Kolkata was not before the AO. Thus, the order passed by the AO by taking into account a document or information which is not before him and based on the enquiry and documents before him in a possible view and the assessment order and cannot be held to be erroneous insofar as it is prejudicial to the interest of the revenue. As relying on M/S GITSH TIKMANI case [ 2019 (9) TMI 1177 - ITAT KOLKATA] the order passed u/s 263 of the Act is bad in law. The coordinate Bench of ITAT, Kolkata in the case of Shashi Bala Bajaj [ 2018 (11) TMI 1823 - ITAT KOLKATA] applied to the judgment of CIT vs. Bhagwati Prasad Agarwal [ 2009 (4) TMI 138 - CALCUTTA HIGH COURT] and held that the long term profits and gains received on, the purchase and sale of shares of M/s Surbhi Chemicals and Investment Ltd. though the Stock Exchange is exempted from tax u/s 10(38) of the Act. Thus, the view taken by the AO is plausible view which is supported by judicial decisions on this grounds also the order u/s 263 fails. - Decided in favour of assessee. 2021 (1) TMI 678 Addition u/s 68 - whether the lender parties were making some paper formalities - loan from dummy/shell/bogus/paper/briefcase entities - CIT-A deleted the addition - HELD THAT:- Assessee had taken loans through banking channels from its own group entities in whose cases too, simultaneous survey proceedings were carried out u/s. 133A of the Act and during the course of such survey proceedings, the lender companies and their directors were duly found in existence. During the course of the search/survey operations, no incriminating material or evidence was found. In the entire body of the assessment order, as also, in the paper book filed by the Revenue before us, there is no reference of any incriminating document. Entire assessment order is based upon some statements recorded by the Investigation Wing or by some other authorities on some earlier occasions, and the AO has not conducted any independent inquiry at his own from the lender companies, despite the assessee s making a specific request to him to issue summons u/s. 131 or letters u/s. 133(6) to the lender companies. Recently, the Coordinate Bench of Mumbai in the case of Smt. Kalpana Mukesh Ruia vs. DCIT [ 2021 (1) TMI 93 - ITAT MUMBAI] has deleted the addition made u/s. 68. Source of alleged amount was from liquidation of investment made in the earlier years. The dispute about the source of fund utilized for making the investment in earlier years before the tax authorities in itself cannot be the sole basis to make the addition in the hands of the assessee as unexplained cash credit for the amount received from liquidating the investments made in the shares of unlisted companies which were invested in the earlier years and were duly appearing in the audited balance sheet. The alleged sum is received from sale of shares appearing as opening balance in the investment account. There is no dispute about the identity, genuineness and creditworthiness of these companies, the equity shares of which were sold by the assessee during the year and the funds were thereafter utilized to make the fresh investments. It is a simple case of switch over of investments from one company to another and is not the case of fresh loan received during the year. We thus find no substance in the ground that since the assessee has agitated the addition qua the share capital and share premium shown to have been received by it during assessment year 2008-09 by filing an appeal the assessee cannot claim the availability of such fund for making the investments. It is not in dispute that the matter for Assessment Year 2008-09 is open and the fate of the issue of the addition for that year will have its own process. We thus find no justification in the action of Ld. A.O making the addition for unexplained cash credit and thus find no inconsistency in the finding of Ld. CIT(A) deleting the addition. Addition u/s. 68 in respect of unsecured loan claimed to have been received by it from M/s. Etima Emedia Ltd. - Assessee had furnished before the AO, copy of PAN, bank account statement of the lender company, audited financial statement, profit and loss account statement, certificate of incorporation, copy of MOA and AOA, details collected from website of Ministry of Corporate Affairs and confirmation of lender. All these documents have also been furnished by the assessee - We find that the Ld. CIT(A) has dealt in depth with the various documentary evidences furnished by the appellant and reached to the conclusion that the appellant had been able to satisfy all the three condition required for genuineness of transactions u/s. 68 of the Act. We thus find that the assessee had discharged its onus of proving the genuineness of the sum credited in its books of accounts as contemplated u/s. 68 of the Act and since, no inquiry was conducted by the AO, the addition was not sustainable as held in similar case by the Hon ble Karnataka High Court in the case of M/s. Kumar Nirman and Nivesh Pvt. Ltd. [ 2020 (3) TMI 340 - KARNATAKA HIGH COURT] We are satisfied with the identity and creditworthiness of the cash creditor M/s Etima Emedia Ltd and also satisfied with the creditworthiness of the cash creditor - Decided in favour of assessee. 2021 (1) TMI 677 Assessment of Club as an association of person - principles of mutuality and taxation of revenue generated from non-voting associate members - assessee has claimed that the entrance fee collected from non-members is exempt from taxation - As per revenue entrance fees collected from members having no voting rights will be under the head income from business - claim of the assessee that the assessee company is an association of persons coming together for the benefit of all the participants because of which the activities falls under the principle of mutuality and therefore the surplus if any earned by the company is not chargeable to tax - HELD THAT:- As relying on CIT v. Willingdon Sports Club [ 2008 (3) TMI 134 - BOMBAY HIGH COURT] in which the judgement of the Hon ble Supreme Court in the case of Chelmsford Club v. CIT [ 2000 (3) TMI 4 - SUPREME COURT] has been applied and referred the decision in the case of CIT v. Bankipur Club Ltd. [ 1997 (5) TMI 392 - SUPREME COURT] . Thus, respectfully following the above judgements of the Hon ble Supreme Court, we set aside the orders of authorities below and direct the Assessing Officer to delete the addition made in both the assessment years. Addition under the head income from other sources being surplus income over expenditure as well as interest income - HELD THAT:- Respectfully following the above decision of the Hon ble Supreme Court in the case of Bangalore Club v. CIT [ 2013 (1) TMI 343 - SUPREME COURT] we dismiss the ground raised by the assessee towards the claim of exemption towards surplus income over expenditure as well as interest income for the assessment year 2013-14 as well as claim of loss being the expenditure over income under the head income from other sources for the assessment year 2015-16. 2021 (1) TMI 676 Addition u/s 68 - addition of unsecured loan - unsecured loan as bogus - HELD THAT:- The assessee explained that during the course of survey no adverse material was found regarding unsecured loan allegedly received by assessee. On the basis of a statement of partner without any further evidence, it cannot be said that assessee received unsecured loan from bogus parties. During the course of assessment proceeding, copy of confirmation of all unsecured loan from lenders along with a return of income were furnished for verification by assessing officer. The loan amounts were received through banking channel through cheques. Thus, the assessee proved identity of lender, genuineness and creditworthiness of the transaction. There was no material evidence before the assessing officer for treating the loan as unaccounted received. Since the assessing officer treated the unsecured loan as unaccounted received consequent interest was also disallowed. AO without any material evidence on record treated the unsecured loan as unaccounted amount received only on the basis of a statement of one of the partner. Though, confirmation of unsecured loan was furnished to the assessing officer. The assessee also furnished the TDS deducted on the interest paid on unsecured loan as well as copy of TDS return. Addition on account of undisclosed receipt - HELD THAT:- AO made addition on the basis of statement recorded during the survey without any supporting evidence or any adverse material on record. The learned Commissioner (Appeals) also concluded that it is settled legal position that statement recorded during the survey has no evidence of value moreover the survey party has no power to record the statement oath. On the issue of estimated addition we have seen that Commissioner (Appeals), while restricting the addition relied on the decisions in CIT President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] , Kishore Manohar Telwala [ 1998 (2) TMI 612 - ITAT AHMEDABAD] and Abhishek Indutries Vs DCIT [ 2014 (11) TMI 810 - GUJARAT HIGH COURT] . Appeal of the revenue is dismissed. 2021 (1) TMI 675 Addition on account of short term capital gains - CIT-A Applying provisions of Section 50C and considering stamp duty value to be actual consideration - assessee argued that the authorities below have failed to appreciate the fact that the assessee was merely an agent who earned commission and the revenue authorities have failed to appreciate the fact that the assessee had not transferred the land as the owner of the property. He has merely transferred the land as the Power of Attorney holder - HELD THAT:- From the registered sale deed furnished by the assessee, it is noticed that the sale deed was executed by one Shri Tejpal Patidar who had entered into agreement to sale with the original land owners namely Shri Shankar Sadhwani S/o Shri Dharmprakash Sadhwani and Shri Bharat Keswani s/o S.K. Keswani. Thus find no mention in this fact in the assessment order, it is also not clear whether the sale deed was placed before the assessing officer. Under these facts, therefore, set aside the impugned order and restore the assessment to the file of the assessing officer for making de novo assessment. 2021 (1) TMI 674 Validity of Reopening of assessment - legality of jurisdiction u/s 147 - addition as unaccounted income - AR contended that the reasons recorded by the AO do not meet the pre-requisites for assumption of jurisdiction - HELD THAT:- Revenue pointed out that the reasons were actually recorded on 19.03.2013 itself which is evident from the proposal sent by the AO to the Jt. CIT for his approval under s. 151 of the Act on 19.03.2013. The reasons recorded showing date of 26.03.2013 is merely a date on which the reasons recorded might have been reproduced and provided to the assessee and does not convey the date of recording of reasons per se. We find from the proposal memo under s. 151 of the Act dated 19.03.2013 that exact reasons were pre-existing on the date of issuance of the notice. Thus, we see no merit in this first line of argument. Certain information stated to be received from the Director of Income Tax (I CI), New Delhi - No definite formation of belief towards escapement of income was existing at the time of issuance of notice by the AO. What the AO really intended is to make an objective inquiry into the correctness or otherwise of the information received from other wing of the department to find out if there is any escapement of chargeable income indeed. The AO merely seeks to conclude that there is a case for investigation to unearth and ascertain truthfulness of alleged transactions. This is not the same thing as saying that there are 'reasons to believe' that some chargeable income has escaped assessment. Ostensibly, the AO, at best, has made out a case of probable escapement in contrast to a definite prima facie conclusion of escapement of income. Mere quoting of Section or iteration of expression 'reason to believe' would not satisfy the requirement of law. Thus, the requirement of section 147 of the Act is clearly not fulfilled in the instant case. A receipt of some information from another wing of the Department cannot be equated with a realization of escapement per se. Such information/evidence can possibly give birth to realization or belief of the AO as contemplated under section 147 of the Act. However, an independent formation of belief thereon is sine qua non for taking action under section 147 of the Act. The assessment under section 147 of the Act as a sequel to the illegal notice under section 148 of the Act is therefore a nullity and requires to be quashed. - Decided in favour of assessee. 2021 (1) TMI 673 Delay in the deposit of employees contribution towards PF and ESIC - employees contribution is required to be deposited within the due date prescribed u/s. 36(1)(va) - HELD THAT:- The issue is covered against the assessee by the Hon'ble Gujarat High Court in the case of CIT vs. GSTRC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] - Decided in favour of revenue. Addition on account of the amount written off for non-recovery of security deposits - assessee during the year has written of security deposit made with the landlord - HELD THAT:- Issue decided in favour of assessee as relying on ow case [ 2020 (3) TMI 620 - ITAT AHMEDABAD] . Addition u/s 40(a)(ia) - non-deduction of TDS with respect to the expenses claimed on provisional basis - Addition u/s. 40(a)(ia) on account of disallowance of commission expenses - HELD THAT:- Cumulative effect of the provisions of section 194C/194H/194J/200/203 of the Act is that after the deduction TDS from the sum/income payable to a person, the same has to be paid to the government exchequer and a certificate has to be issued to the concerned person who is recipient of such sum/income payable by the assessee. But the same is not possible where the recipient of such sum/income payable by the assessee is not identifiable. In other words, the assessee cannot comply the provisions of chapter XVII of the Act with respect to the expenses claimed on provisional basis in a situation where the recipients/parties/payees are not identifiable. In the case on hand, there was no allegation from the revenue that recipients/parties/payees are identifiable. Thus we can safely conclude that recipients/parties/payees are not identifiable in the present case in the given facts and circumstances and accordingly the assessee cannot be treated as assessee is default on account of non-deduction of TDS under the provisions of section 40(a)(ia) - Decided in favour of assessee. Depreciation on data processing equipment - HELD THAT:- As relying on assessee's own case we are of the view that the assessee is entitled for depreciation on data processing equipments at the rate of 60%. 2021 (1) TMI 672 Year of Taxability of LTCG / STCG - Sale of shares - Income Declaration Scheme, 2016 - penny stock company - As per revenue assessee has not sold any shares during the year under consideration, therefore, there is no question of any capital gain/capital loss arises for consideration - HELD THAT:- The source of investment was explained by the assessee before the Assessing Officer and the Assessing Officer accepted source and no addition was made. Therefore, as rightly submitted by the ld. Representative for the assessee it cannot be said that the source of investment to the extent of ₹ 50,31,000/- was not explained. Now the assessee claims that the total purchase of shares to the extent of ₹ 98,34,260/- was for two A.Ys.. This fact is admitted by the Assessing Officer. There was no capital gain arises for A.Y. 2014-15. For the A.Y. 2015-16, the assessee sold the shares and declared the same under Income Declaration Scheme, 2016 and paid the taxes. In such circumstances, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the entire addition made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of CIT(A). Accordingly, the same is confirmed. 2021 (1) TMI 671 Voluntary admission u/s.132(4) - under invoicing of sales and unaccounted purchase of acid slurry - whether entry in books of account can be incriminating when the assessee failed to explain it with proof as in the instant case, the assessee failed to explain the variation in charging different rates in sale invoices and admitted the income on account of it - HELD THAT:- Hon ble Supreme Court in Pullangode Rubber Produce Co. Ltd..v.State of Kerala, [ 1971 (9) TMI 64 - SUPREME COURT] held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. In the instant case there was no evidence found in the premises of the assessee to show that the assessee is under invoicing the sales. No other material was found and seized from the premises of the assessee with regard to receipt of cash from the distributors. No evidence was found in the premises of the distributors also to establish that the assessee was paid unaccounted cash by the distributors. The AO could not rebut the submissions of the assessee with regard to sale price and under invoicing with relevant facts and evidences - additions made on the basis of statement u/s 132(4) without having corroborating evidence is unsustainable and accordingly we uphold the order of the Ld.CIT(A) and dismiss the appeals of the revenue on this issue. Unaccounted purchases of Acid Slurry - In response to the show cause notice issued by the AO, the assessee filed explanation stating that the component of acid slurry in soap manufacture is 20% and the entire purchases made from the supplier was duly accounted and no unaccounted purchases was made by the assessee - HELD THAT:- In the instant case, search was conducted on 30.08.2016 and the assessee filed the return of income on 10.04.2017 admitting the income, which was declared in original return of income, thus, made it clear that the assessee has gone back from the admission given u/sec. 132(4). The assessee also retracted the statement subsequently, once the assessee retracted the statement recorded u/sec. 132(4), it is incumbent on the AO to prove the unaccounted purchases alleged to have been made by the assessee as discussed earlier in this order while discussing the issue of under invoicing as held by the Hon'ble Jurisdictional High Courts and other cases relied upon by the assessee. No sale bills issued by the supplier to the assessee which was found to be unaccounted in the books of the assessee were available in the premises of M/s Mahaveer Surfactants Pvt. Ltd., during the course of survey. No lorry receipts for transportation of goods, weighment slips etc. were available with the supplier. AO also did not place any evidence regarding the assessment made in the hands of supplier M/s Mahaveer Surfactants with regard to discrepancy found during the course of survey, specifically with regard to the assessee. It is obligation of the AO to make necessary enquiries to ascertain the correctness of the statement recorded from Mahaveer Surfactants and make out a case for addition in the hands of the assessee as well as Mahaveer Surfactants Pvt. Ltd., No such exercise was made by the AO. Thus, we hold that the addition made by the AO on account of acid slurry solely on the basis of statement recorded u/sec. 132(4) without any tangible evidence is unsustainable. - Decided against revenue. Validity of making additions u/sec. 153A without having the seized material - HELD THAT:- In search cases once the assessment is completed or unabated the assessing officer is not permitted to make the additions without having the seized material. There is no dispute that the entire addition was made on the statement recorded u/s 132(4) without having any incriminating material. Thus in completed assessments the AO is not permitted to make additions without having the seized material/ incriminating material. Accordingly we, uphold the orders of the Ld.CIT(A) to the extent of deleting the addition without having the seized material and dismiss the appeal of the Revenue on this issue. 2021 (1) TMI 670 Reopening of assessment u/s 147 - non furnishing of the reasons recorded by the AO to assessee - HELD THAT:- As gone through the letter dated 29.11.2016 wherein the objections of the assessee have been removed by the AO but the supply of reasons has not been mentioned there to. We have gone through the order sheets in assessment folder and could not find any noting pertaining to furnishing of reasons recorded to the assessee. As verified the records of the revenue and find that the letters filed by the assessee requesting for supply of reasons have been a part of the record. The revenue till the date of hearing could not furnish the evidence of supplying the reasons recorded to the assessee. The issue of vitiation of reassessment proceedings on account of the failure of the AO to furnish reasons for reopening the assessment u/s. 148 of the Act to the assessee has been dealt in Sh. M.R. Seetharama (Ind.)[ 2015 (12) TMI 110 - ITAT BANGALORE] and ITO Vs. Rishi Godani [ 2018 (4) TMI 929 - ITAT AGRA] Hon'ble jurisdictional High Court in the case of Pr. CIT Vs. Jagat Talkies Distributors [ 2017 (9) TMI 192 - DELHI HIGH COURT] held that the assessment proceedings cannot be held to be valid in the absence of furnishing of reasons recorded by the AO to the assessee. Hon'ble Supreme Court in the case of M/s. GKN Driveshafts Pvt. Ltd.[ 2002 (11) TMI 7 - SUPREME COURT] held that after filing of the return in response to the notice issued u/s. 148, the assessee has every right to seek the reasons recorded for the assessment and Assessing Officer is bound to furnish the reasons within the reasonable time. In the instant case, since the fact of furnishing of the reasons recorded by the AO has not been established and keeping in view, the fact that the revenue could not provide any evidence to prove that the reasons recorded indeed have been supplied to the assessee, we hereby hold that the reassessment proceedings are vitiated. - Decided in favour of assessee. 2021 (1) TMI 669 Non granting TDS credit - As per assessee when the return of income was processed by the Centralised Processing Centre ( CPC ) u/s 143(1) in the intimation the CPC did not allow credit of TDS because the same was not reflected in form 26AS per the assessment year 2017-18 but are entirely stood included in form 26AS for the assessment year 2018-19 - HELD THAT:- Provisions u/s 199 (3) and also rule 37 BA (3) of the Rules, we are of the considered opinion that in this case where the tax has been deducted at source and paid to the Central government by the Hindustan Aeronautics Limited in the assessment year 2018-19 and such TDS relates to the income assessable over the assessment years 2017-18 and 2018-19, the credit has to be given in the proportion in which the income is assessable to tax for the assessment years 2017-18 and 2018-19 respectively. Ends of Justice would be met by directing AO to look into the fact whether the TDS deducted by the Hindustan Aeronautics Limited and reflected in form 26AS for the assessment year 2018-19, relates to the income/receipt in the hands of the assessee which is assessable for the assessment years 2017-18 and 2018-19, and if so then the assessing officer is directed to grant proportionate credit for such years. We, set aside the impugned order and remand the issue to the file of the assessing officer to verify whether the TDS deducted by the Hindustan Aeronautics Limited and reflected in the 26AS for the assessment year 2018-19 relates to the receipt in the hands of the assessee assessable for the assessment years 2017-18 and 2018-19, and if it is so, AO will allow proportionate credit for these 2 years. With this observation we allow the appeal of the assessee. 2021 (1) TMI 668 Validity of initiation of proceedings u/s.153A - Addition of brand expenses - Proof of seized material found during the course of search - HELD THAT:- The grounds raised by the Revenue are dismissed as infructuous, because the additions challenged by the Revenue are not based on any seized material found during the course of search. Accordingly, the Revenue s appeals are dismissed. 2021 (1) TMI 667 Deemed dividend u/s 2(22)(e) - shareholding of the assessee was more than 10% in company imparting advances to assessee - HELD THAT:- Assessee though herself did not dispute about her shareholding more than 10% in M/s Saraswati Agro Chemicals (India) Pvt. Ltd., she has also not disputed that she took a loan of ₹ 3,07,230/- during this year and the CIT(A) has also confirmed the addition to this extent only. Her case is that the company has distributed the dividend @ ₹ 4/- per share and has deposited dividend distribution tax. This amount of ₹ 3,07,230/- has been adjusted with the dividend amount distributed by the company, therefore, within the meaning of sub-clause (3) of Section 2(22) this adjusted amount is to be excluded from the deemed dividend under sub-clause (e) of Section 2(22). A perusal of the impugned order of ld. First Appellate Authority would indicate that this aspect has not been considered by the ld. CIT(A). We find force in the contention of ld. counsel for the assessee and allow the appeal of the assessee. 2021 (1) TMI 666 Addition u/s. 41(1) - certain creditors which remained outstanding from the preceding year - HELD THAT:- It is a matter of record that the assessee paid the amounts to some of the parties in the F.Y. 2014-15, whose copies have also been reproduced in the impugned order. CIT(A) has doubted the genuineness of the transactions on the ground that cash payments could not have been made because all such parties were coming from Kerala. Once the assessee furnished ledger accounts of the parties evidencing the making of payments in a succeeding year that established the existence of liability at the end of the year under consideration non-justifying the applicability of section 41(1) - Here is a case in which some of the parties sent confirmations with their ledger accounts to the AO through the assessee. AO simply doubted the genuineness of e-mails without brining anything concrete on record as to their non-genuineness.Thus the case is not covered u/s.41(1) calling for any addition - Decided in favour of assessee. 2021 (1) TMI 665 Addition of unsecured loan as a gift - gift from unrelated persons treated as assessee s income u/s.56(vi) - CIT (A) has deleted the said addition - HELD THAT:- AO has made addition in respect of unsecured loan as a gift purely on the basis of surmises and presumption, because her husband, Shri P.K. Jain, has also given unsecured loan which has been subsequently treated as gift by the assessee. Inferring the same yardstick, Assessing Officer has treated the loan taken from unrelated person as gift and has taxed u/s.56(vi). We concur with the finding and the observation of the ld. CIT(A) that, simply because husband has treated his loan as a gift to his wife, cannot be the reason for drawing a similar conclusion for unrelated parties that the other persons will also convert their loan to gift, especially when in the books of account amount has been reflected as loan. Assessee has brought on record that, these loans has been repaid back in the subsequent year, and therefore, amount which has been treated as loan in the books of account and has also been repaid back as a loan, same cannot be treated as a gift. We do not find any reason to interfere in the order of the ld. CIT (A), and therefore, the appeal of the Revenue is dismissed. Customs 2021 (1) TMI 664 Seeking grant of extension of two months to enable them to complete the import of poppy seeds , for which registration certificates have been issued by the Central Bureau of Narcotics - HELD THAT:- A perusal of the impugned order dated 21st May, 2020, shows that the Union of India has considered merely factual circumstances to decide that in February, 2020, there was no outbreak of COVID-19 pandemic, and, therefore, the plea of extension in light of the Chinese exporter being unable to supply the consignment, is not justified. Further, the impugned order records that there was no obligation under the guidelines to pay any advance for the said consignments and that making advance payment is completely as per the convenience of the importers. Hence, the payment of advances would not constitute a reason for any extension to be granted. Finally, the reasoning that has been adopted in the impugned order is that since 1802 metric tons out of 2499 metric tons had already been imported by the end of February, 2020, there is no justification to not have had imported the remaining portion of the said consignment. The Petitioners, in all these petitions, are registered importers. The outbreak of the pandemic around early 2020 is a matter of fact which cannot be disputed. The period when the outbreak may have taken place in China, as per the Chinese exporter s letter, ought not be doubted in the manner in which the impugned order doubts the same. It is a matter of which judicial notice can be taken. The COVID-19 pandemic originated in China, and hence the adverse effects and problems due to the outbreak could have been much earlier in China, than in India. The Chinese exporter has repeatedly contacted the Petitioners and has expressed its willingness to complete the contract and to supply the product. However, despite repeated letters and reminders requesting an extension by the Petitioners, the Government has not responded to the same, leading to the filing of these writ petitions. A perusal of the counter affidavit shows that the main reason for which the non-grant of extension is stated to be justified is that the lock-down in India was imposed from 24th March, 2020. The Government seeks to ignore the fact that the lock-down and the impediments caused due to the outbreak, could have been earlier in China and hence in the opinion of this Court, the non-grant of extension is not tenable. The submission of the Respondents relating to limited quotas being available for the import of poppy seeds is devoid of any merit inasmuch as no such argument has been raised in the counter affidavit. Moreover, the quantity sought to be imported is already part of the licensed quantities and not beyond that. This is a case where the authorities have been completely oblivious to the difficulties being faced by the importers in India - this Court directs that the Petitioners, in all these petitions, are permitted to import the permitted and licensed quantity of poppy seeds in accordance with the guidelines on or before 31st March, 2021. It is made clear that no further extension shall be granted. Application disposed off. 2021 (1) TMI 663 Exemption form IGST - aircrafts and parts thereof re-imported into India after repairs - serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 2017, as amended by Corrigendum Notification dated July 22, 2017 - HELD THAT:- 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 It would also be relevant to refer to the entries at serial no. 1 of the Exemption Notification. Serial no. 1 specifically refers to what types of duties or taxes are leviable under different situations. There is a specific reference to integrated tax in column (3) in connection with serial no. 1 (d) and to integrated tax and compensation cess in connection with serial no. 1(e). There is, therefore, enough intrinsic evidence in the Exemption Notification itself to show that integrated tax cannot be understood as duty of customs in the Exemption Notification - It would be seen that the aforesaid Notification refers to the duties of customs leviable thereon which is specified in the said first schedule, the additional duty leviable thereon under section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act, whereas the instant Exemption Notification refers to duty of customs leviable thereon which is specified in the said First Schedule and the integrated tax, compensation cess leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act. Thus, the additional duty leviable thereon under Section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act have been replaced by the integrated tax under section 3(7) and compensation cess under section 3(9) of the Tariff Act. It cannot, therefore, be contended that duty of customs referred to in the condition against serial no. 2 of the Exemption Notification would include integrated tax. The inevitable conclusion that follows from the aforesaid discussion is 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. It is not possible to sustain the orders impugned in 51 appeals upholding the assessments made on the Bills of Entry. These orders passed by the Commissioner (Appeals) are, accordingly, set aside and it is held that the Appellant is entitled to exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India - Appeal allowed. Corporate Laws 2021 (1) TMI 656 Restoration of name of the Company in the Register of Companies maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- After going through the provisions of Section 252 (3) of the Companies Act, 2013, this Tribunal is of the view that the Company was in existence and it is a going concern and name of the Company to be restored in the Register of Companies as maintained by RoC. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company's status from 'Strike off' to Active (for e-filing), to restore and activate the DINs if applicable, to intimate the bankers about restoration of the name of the company so as to defreeze its accounts. 2021 (1) TMI 654 Sanction of scheme of Amalgamation - sections 230-232 and other applicable provisions of the Companies Act, 2013, read with Companies (Compromises, Arrangements, Amalgamations) Rules 2016 - HELD THAT:- It could be seen that the Transferor Companies are directly or indirectly, wholly owned subsidiaries of the Transferee Company, accordingly, upon the Scheme becoming effective, all the equity shares held by the Transferee Company in the Transferor Companies either by itself or through its subsidiaries/nominess shall stand cancelled and extinguihed. Therefore, there will be no issue and allotment of shares as consideration by the Transferee Company to the shareholders of the Transferor Companies upon coming effect of the Scheme. The Applicant Companies have filed compliance affidavit vide Special Diary No. 135 dated 18.06.2020. The Provisional Balance Sheets of all the Applicant Companies as on 31.03.2020 along with the Board Resolutions in Osram Lighting Ltd (unsecured creditor in Applicant Company 2), DSM India Pvt Ltd (unsecured creditor in Applicant Company 2), Minda Industries Ltd (unsecured creditor in Applicant Company 6), Siemens Financial services Pvt Ltd(secured creditor in Applicant Company 9) and Mahadhyuta Automotive Pvt Ltd( unsecured creditor in Applicant Company 9) are all part and parcel of Special Diary No. 135 dated 18.06.2020. The Affidavit of Mr Rajat Kumar Singh (who has deposed the consent affidavit on behalf of M/s Bajaj Finance Ltd., a secured creditor in Applicant Company 4) clarifying that his name has wrongly being stated in the previous consent affidavit as Mr Rajat Singh is annexed as Annexure E with the above compliance. The statutory auditors of the Applicant Companies have furnished certificate at Annexures B-8, C-9, D-9, E-9, F-9, G-9, H-9, I-9, J-9 and K-8 respectively, stating that the accounting treatment proposed in the Scheme is in compliance with Accounting Standards prescribed under Section 133 of the Companies Act, 2013 - It is also stated in Para 94 of the application that neither the Transferor Companies nor the Transferee Company is governed by any sectoral regulator. The meetings of the equity shareholders of all the Applicant Companies are dispensed with as their consent by way of affidavits have been received. Since there are no Secured Creditors in Applicant Companies 1, 7, 8 10, therefore, there is nothing to convene their meetings. Also, there are no Unsecured Creditors in Applicant Company 1 10 and therefore, there is nothing to convene their meetings as well. The meetings of Secured Creditors in Applicant Companies No.2, 3, 4, 5, 6 and 9 and Unsecured Creditors in Applicant Companies No.2, 3, 4, 5, 6, 7, 8 and 9 is dispensed with as their consent affidavits have been received. However, Rule 8 of the Rules requires the notice of the meetings to be sent to the statutory authorities in Form CAA 3. Since the calling and convening of the meetings are being dispensed with, the applicants shall have to make a specific prayer while moving the second motion petition to issue the notice to the statutory authorities - Application allowed. 2021 (1) TMI 653 Seeking restoration of name of the Company in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- After going through the provisions of Section 252 (3) of the Companies Act, 2013, this Tribunal is of the view that the Company was in existence and it is a going concern and name of Company to be restored in the Register of Companies as maintained by RoC. The Registrar of Companies, the 2nd Respondent herein, is ordered to restore the original status of the Applicant/1st Respondent Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company's status from 'strike off' to Active (for e-filing), to restore and activate the DINs if applicable, to intimate the bankers about restoration of the name of the company so as to defreeze its accounts - AApplication allowed. 2021 (1) TMI 651 Seeking revival of the Company with minimum or nil penalty for the delay and to waive off the additional fee payable an account of filing of Annual Returns/Reports with the ROC, Karnataka till FY 2018-19 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. Though the impugned order striking off the Company was in accordance with law, the Tribunal has to take into consideration of bona fide contentions of Petitioner seeking to restore the name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. In the instant case the Promoters and Directors being involved in the continuous development in the field of fire-fighting equipment were not able to concentrate on the Company's compliances part. Unless the revival order is made the Company and the Promoters will suffer irreparable loss and no purpose would be served in preventing it from continuing its business, since in the FY 2018-19 it had a Turnover of ₹ 54.32 lakh. This would not be in the interest of any of the stakeholders. It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company. The Respondent has not opposed the Petition; and left the issue to the Tribunal to consider the case subject to terms and conditions. Therefore, the interest of justice and fairness would be met if the name of Company is restored as prayed for subject to conditions imposed. 2021 (1) TMI 650 Seeking condonation of delay of 569 days caused in submission of the Order of this Tribunal dated 26.04.2018 along with the Corrigendum dated 05.07.2018 to the Registrar of Companies - seeking direction to ROC to accept the same and take them on record - HELD THAT:- It is not in dispute that the main Company Petition was disposed of by an Order dated 26.04.2018. It is also seen that the Scheme of Arrangement was envisaged and approved so that the Resulting Company, which deals with software applications and solutions, would benefit by having a separate identity, its own capital and human resource management, focussed leadership, etc., which would be hampered if the delay prayed for is not condoned. As per the learned Counsel the delay has occurred due to inadvertence. In order that the Demerged and Resulting Companies can avail the benefits of the Scheme, it would be just and fair to condone the delay in filing the Order, along with the Corrigendum thereto, to the Registrar of Companies. Application is allowed by condoning the delay of 569 days in submission of the Order passed by this Tribunal dated 26.04.2018 along with the Corrigendum dated 05.07.2018 to the Registrar of Companies, Karnataka, with a further direction to the ROC to take appropriate action by accepting the eForm INC-28 filed by Demerged Company vide SRN R33866682 along with the Order dated 26.04.2018 and the Corrigendum dated 05.07.2018, on submission of this Order Insolvency & Bankruptcy 2021 (1) TMI 658 Forfeiture of part of the earnest money deposited by the Appellant - Sale of assets by the Liquidator of the company in liquidation - It is the case of the Appellant that in compliance of Clause 13 of this Corrigendum, the Appellant was ready to deposit the amount with 12% interest but the Respondent was not willing to consider their request - HELD THAT:- In the present case, the material on record evidences that reminder e-mails dated 01.04.2020, 02.04.2020, 23.04.2020, 15.05.2020 and 18.05.2020 were issued by the Liquidator to the Appellant herein requesting for payment of the balance amount of the 25% of the consideration but the Appellant neither replied to the e-mails nor made any payment adhering to the terms and conditions. It can be safely construed that the Appellant, by his own conduct, precluded the coming into existence of the concluded Sale and cannot now be given an advantage or benefit of his own wrong doing by not allowing forfeiture. The contention of the Learned Counsel for the Appellant that Clause 13 of the Corrigendum is applicable to this case and that the same has not been considered by the Ld. Adjudicating Authority, is unsustainable on the ground that Clause 13 of the Corrigendum is with respect to payments regarding the balance 75% of the sale consideration. The timelines with respect to the initial payment of the 25% is clearly given as 25.03.2020 and the payment of balance consideration by the successful bidder was given as 24.04.2020. Thus, it cannot be construed that Clause 13 is applicable to the initial 25% payment of the EMD amount. Be that as it may, the documentary evidence, the e-mails dated 02.04.2020, 03.04.2020, 15.05.2020 and 18.05.2020 clearly establish that sufficient opportunity was given to the Appellant to make the balance payments, which the Appellant had failed to respond or comply with the requests made and therefore Clause 3 of the Forfeiture of Earnest Money Deposit from the E-Auction terms and conditions, squarely applies to the facts of this case. Appeal dismissed. 2021 (1) TMI 655 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues to Operational Creditor - existence of dent and dispute or not between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute - HELD THAT:- The petitioner/ Operational Creditor though claimed to have entered into Purchase Order dated 25.02.2016 (ANNEXURE 'A') with the respondent/ Corporate Debtor, the petitioner/ Operational Creditor could not produce any documentary evidence to the effect that it had provided AMC services as agreed upon, or any evidence to show that the Corporate Debtor has acknowledged debt or any acknowledgement that the Corporate Debtor has received invoices issued by the Operational Creditor or that the Corporate Debtor has confirmed any debt, in part or full - It is further observed that the petitioner/ Operational Creditor had claimed to have issued Demand Notice dated 11.09.2017 (ANNEXURE 'E'). However, there is no proof of service/ acknowledgement of the said Demand Notice. so is the case with Demand Notice dated 17.08.2019 (ANNEXURE 'F'). Besides, affidavit under section 9(3)(b) of the I B Code, 2016, is not filed by the petitioner/ Operational Creditor. We are not able to trace any shred of acknowledgement/ confirmation from the Corporate Debtor that the Operational Creditor had provided AMC services either in part or full or that the Corporate Debtor had acknowledged/ confirmed that the Corporate Debtor owed any dues to the Operational Creditor towards such services or that the Corporate Debtor had paid any part of amount towards any services provided by the Operational Creditor. Nowhere we find any acknowledgement of the Corporate Debtor, except Purchase Order dated 25.02.2016 (ANNEXURE 'A', page 17). Mere signing of Purchase Order, ipso facto, does not lead to its execution - In absence of such acknowledgement/ confirmation by the Corporate Debtor, operational debt is not proved. Further there is no documentary evidence to show that debt has become due and payable by the Corporate Debtor. It can be concluded that (i) no ingredients of any debt having become 'due and payable' are available in the present case, (ii) there is no acknowledgement/ confirmation by the Corporate Debtor that the Corporate Debtor had received any services, in part or full, pursuant to Purchase Order dated 25.02.2016 (ANNEXURE 'A'), and (iii) no evidence that the Corporate Debtor had ever paid any amount towards any services provided by the Operational Creditor. The proceedings initiated by the Operational Creditor is solely based on Purchase Agreement dated 25.02.2016 (ANNEXURE 'A') sans any evidence to show that such an agreement has ever been executed and sans evidence that any debt has become due and payable by the respondent/ Corporate Debtor - petition dismissed. 2021 (1) TMI 652 Extension of CIRP period - exclusion of period of lockdown from CIRP - HELD THAT:- The Hon'ble Apex Court in IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION [ 2020 (5) TMI 418 - SC ORDER ] extended the limitation due to the Covid-19 Pandemic with effect from 15th March, 2020. In the instant case however, the CIRP period got over on 16th January, 2020. No reason whatsoever is assigned by the Applicant as to why either the EOI or the Resolution Plan was not submitted by that date. The reason that due to the intervening Pandemic it could not submit any EOI or Resolution Plan is not tenable in view of the fact that the lockdown commenced more than 2 (two) months after the period of CIRP had expired. It is settled law that the timeline provided under Section 12 for completion of the CIRP needs to be adhered to unless extended by the Adjudicating Authority - In this case there has been no such extension beyond 16th January, 2020. In the absence of any reason whatsoever, much less satisfactory, this Authority is not inclined to accord any indulgence to the Applicant for condoning the unexplained delay in submitting the Resolution Plan. It is settled law that a person/party who sleeps over his/its rights does not deserve any equitable relief. Delay, as is settled, defeats equity. The Application does not merit any consideration and is liable to be rejected - Application dismissed. PMLA 2021 (1) TMI 662 Seeking extension of the period of interim bail granted - Sections 3/4 of Prevention of Money Laundering Act, 2002 - HELD THAT:- As it is evident that the order dated 09.12.2020 passed in Bail Application No.5974 of 2020 of applicant is not appended with the present application and it is well settled as per the doctrine of merger that the interim order is automatically merged in the final order, and in the present case, the order of interim bail dated 14.10.2020 passed in Bail Application No.5974 of 2020 is merged in the final order dated 09.12.2020 passed in Bail Application No.5974 of 2020, therefore, it is open to the applicant either to move his second bail application under Section 439 Cr.P.C. or challenge the rejection order dated 09.12.2020, but in place of doing so, the present application under Section 482 Cr.P.C. has been moved with a prayer that the interim bail granted by this Court vide order dated 14.10.2020 passed in bail application No.5974 of 2020 be extended for a period of ten weeks, which is not permissible, therefore, the Court is of the view that the present application (U/S 482 Cr.P.C.) of applicant for extension of his interim bail is not maintainable. The application is misconceived and is, thus, hereby dismissed. Central Excise 2021 (1) TMI 657 CENVAT Credit - levy of penalty - allegation is that the vehicle in question is not capable of transportation of the goods - HELD THAT:- It is a fact on record that during the course of investigation, shortage of inputs was found. Further, duty free goods were also been unloaded which creates doubt that the appellant is procuring duty free goods and procuring invoices to avail the cenvat credit without receiving the goods; therefore, investigation took place. In the annexure to the show cause notice at Sr.No.1 2, the vehicles were found to be auto cycles and transportation of goods has been arranged by the appellant themselves. In these circumstances, the cenvat credit is not admissible to the appellant on the invoices issued by Kanhya Lal Jai Narain at S No. 1 2 of the SCN. Further, with regard to the invoice issued by Ram Parkash Sons, their vehicle found to be Tractor Trailer and it has been alleged in the show cause notice that some of the vehicles were light goods vehicles which were later found to be heavy goods vehicles further the Tractor Trailer is capable of transportation of the heavy goods; therefore, on the invoices issued by Ram Parkash Sons, the appellant is entitled to avail the cenvat credit and to that extent, no penalty can be imposed on the appellant at S.No. 3,4,9-13 of the SCN. Levy of Penalty - HELD THAT:- In the case of invoices issued by M/s Madan Industrial Corporation, the ld. Counsel has stated that they asked for D.T.O. report which was not supplied to them. Moreover, it is their statement on record that they have supplied the goods and received the payments and the buyer has arranged for transportation of the goods. In that circumstance, penalty on M/s Madan Industrial Corporation cannot be imposed, but it is also a fact that the transportation has been done by the appellant themselves and as per the D.T.O. report, the vehicles involved are scooters, which are not capable of transportation of heavy goods, therefore the cenvat credit to the manufacturer/buyer is denied. Appeal disposed off. CST, VAT & Sales Tax 2021 (1) TMI 660 Principles of Natural Justice - allegation that the impugned orders have been issued even without affording an opportunity of being heard to his client, but recording that the applicable returns have not been filed - HELD THAT:- The petitioner has not been heard and it is so recorded in the said orders. Thus, they require to be given the opportunity of being heard before an assessment of the nature as Exs.P12 and P13 can be allowed to operate. In the afore circumstances, I order this writ petition and set aside Exts.P12 and P13, not because it is found against it affirmatively, but so as to pave way for a fresh consideration at the hands of the 2nd respondent. The petitioner is directed to mark appearance in the office of the 2nd respondent at 11.00 a.m. on 19/01/2021; on which day, they will either be heard or a suitable date fixed for such purpose - application disposed off. 2021 (1) TMI 659 Validity of assessment order - Form C filed belatedly - case of Revenue is that having slept over the matter for three years for submission of C forms, it is absolutely not open for the petitioner herein to insist on consideration of the representation, said to have been made on 23.07.2016 - HELD THAT:- The declaration in form C is required to be furnished to the prescribed authority within three months after the end of the period to which the declaration or the certificate relates. In the instant case, the assessment pertains to the period 2012-2013. Three months period, according to the said provision of law, came to an end by the end of June, 2013. As per the proviso to Rule 12 (7) of the Rules, the prescribed authority is empowered to receive form C if the authority is satisfied that the assessee concerned was prevented by sufficient cause from furnishing the same within time. Therefore, it is very much lucid that it is mandatory on the part of the assessee to show sufficient cause for submission of C forms with delay and the said consideration, in the considered opinion of this Court, is not automatic, however, subject to the satisfaction of the authority concerned. In fact, the said provision of law, obviously, imposes an obligation on the authority to record the satisfaction with regard to the cause shown by the assessee which prevented the assessee from filing the required form within time. Therefore, it is for the authority to consider the entire material available on record and to arrive at a conclusion as to whether the assessee assigned proper and sufficient cause for not filing C forms within the prescribed period. The obligation is cast upon the assessee to demonstrate the existence of sufficient cause which prevented the assessee from filing the C forms within time. In the instant case, on the application, dated 23.07.2016, there is no response given by the first respondent. Therefore, having regard to the same, this Court deems it appropriate to dispose of the Writ Petition with a direction to the first respondent herein to consider the representations, dated 23.07.2016 and 20.08.2020, said to have been submitted by the petitioner herein, under Rule 12 (7) of the Rules, and to take appropriate action/pass appropriate orders, strictly in accordance with law - petition disposed off. Indian Laws 2021 (1) TMI 661 Dishonor of Cheque - service of notice - Refusal of notice - endorsement of refusal by the postal peon was dated 10.04.07 while notice refused on 2.4.07 - case of petitioner is is that the Complaint itself was premature and not maintainable, inasmuch as, the statutory period for filing the Complaint under Section 138 of the Negotiable Instruments Act, 1881 had not expired - HELD THAT:- This court finds that there is nothing on record, neither documentary or oral evidence, as to what happened on 02.04.2007 when the postal peon went to deliver the notice and as to whether he met the accused and whether on the same day the accused refused to accept the notice. Admittedly, the postal peon has not been examined as a witness and the postal envelope has a specific endorsement of refusal with a date as 10.04.2007. Thus, finding of the learned lower appellate court that the date of refusal is to be taken as 02.04.2007 is based on no evidence and perverse and is accordingly set-aside. The finding of the learned trial court that the date of service of notice is the date of endorsement of refusal 10.04.2007 is well reasoned order on the point of date of refusal of notice. Accordingly, the finding of the learned lower appellate court that the date of refusal of the notice was 2.4.07 is perverse and is set-aside and it is held that the date of refusal of the notice by the accused is 10.04.2007 and not 02.04.2007. If the date of refusal of notice is held to be 10.04.2007 and not 02.04.2007 then, Whether the Complaint filed on 17.04.2007 was premature due non-fulfillment of condition prescribed under Clause (c) of the proviso to Section 138 of the Negotiable Instruments Act, 1881 and therefore, the Complaint was not legally maintainable? - HELD THAT:- This Court is of the considered view that in the case of refusal to receive the demand notice also, the cause of action to file the Complaint would not arise unless the statutory period of 15 days from the date of refusal to receive the demand notice has expired - This Court finds that the learned trial court has held the Complaint maintainable on the basis that after refusal to receive the legal notice on 10.04.2007, the Complaint was filed on 17.04.2007, but summon was issued against the petitioner on 12.09.2007 which is much after the lapse of 15 days. This Court is of the considered view that learned courts below have erred in holding that the Complaint was maintainable. Accordingly, this Court holds that the Complaint filed before expiry of the statutory period 15 days from the date of refusal to receive the legal/demand notice regarding the dishonour of the cheques was premature in view of the fact that the cause of action for filing the Complaint had not arisen on 17.04.2007 and therefore, the Complaint itself was not legally maintainable. The petitioner is acquitted from the accusation thereunder and he is discharged from the liability of his bail bond - Revision petition allowed.
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