Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 22, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Valuation - service of transportation to the employees of the tenants of the business park inclusion of value of bus passes distributed by the applicant to the Commuters in the value of facilitation charges - the value of the monthly passes issued plus the facilitation charges charged by the applicant and such other amounts which form the part of the Value of supply.
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Classification of goods - FANTA FRUITY ORANGE - the question raised by the applicant in the instant application, under the provisions of CGST Act 2017, has already been decided by the Gujarat Authority for ‘Advance Ruling. Therefore the instant application is liable for rejection.
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The consideration paid to the Director is in relation to the services provided by the Director to the Company and the recipient of such service is the Company as per clause (93) of section 2 of the CGST Act and the supplier of such service is the Director. - Liable to GST under reverse charge mechanism (RCM)
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Levy of GST - volume discount received on purchases - the amount received by the applicant is in the form of an incentive provided by the authorised supplier and does not affect the sale price of the goods already sold and hence there is no liability to charge GST on the same.
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Classification of supply - Rate of GST - it is a composite contract of cutting of live trees to obtain the logs and transfer of the timber logs, with transfer of timber logs being the principal supply in the composite supply.
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Classification of services - Renting of vehicle - In the instant case the applicant (renter) does not define how and when the vehicles will be operated and also does not determine the schedules, routes and other operational consideration. The client of the applicant decides the same and accordingly the applicant operates the buses. Therefore the services being provided by the applicant are not covered under the SAC 9966.
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Classification of services - Since the word “intermediary” is not defined in the CGST Act but defined in the IGST Act, the same meaning as assigned to it under the IGST Act would be applicable even under the CGST Act, 2017 - the applicant is providing management services in marketing as an intermediary with a HSN Code of 9983 11.
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Marketing service provided by the application - the applicant is providing services to the foreign affiliates as an intermediary - thus, the business services of the intermediaries are covered under the SAC 998599.
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The raw cotton is purchased by the applicant from agriculturist and tax @ 5% is paid under Reverse Charge Mechanism by him. They are eligible for claiming of ITC as per Section 16, however, the credit is to be restricted to the extent of input tax attributable to the taxable supplies including zero rated and has to reverse the amount of input tax attributable to the exempted supply i.e. Cotton seed oil cake in terms of Section 17 (2) of GST Act, 2017.
Income Tax
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Notices u/s 143(2) not issued on new address - the assessee is required to make an application for change of address in the departmental database of PAN, which in the present case the assessee has failed to do so - Order of CIT(A), ITAT and HC holding the the assessment order as bad in law quashed and set aside.
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Undisclosed income of the Assessee as recorded by the Securities and Exchange Commission in USA - the two communications relied upon by the High Court cannot be taken as admission of non-disclosure nor being a case of unconditional offer to pay tax in that behalf.
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Income Declaration Scheme, 2016 (IDS) - declaration was rejected on the ground that he had failed to pay the tax, surcharge and penalty before due date - Admittedly, there was no regular assessment for the said year, whereby the said advance tax could have been adjusted. Therefore, there is no logic or rationale in denying the petitioner credit of this amount while computing the amount payable by him under the IDS.
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Rejection of books of account and estimation of gross profit - basis of rejection of rejection of accounts by the AO was totally erroneous and uncalled for. - AO has not given any reason which would fall within the four corners of the ingredients as stipulated u/s. 145 (3)
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Levy of Minimum Alternative Tax (MAT) u/s 115JB - the assessee is not eligible for exemption from payment of MAT as per the provisions of section 115JB(6) since, admittedly, it does not qualify as a business or services rendered by an entrepreneur or developer in a unit or SEZ as per definition of the said terms in the SEZ Act.
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Nature of receipt of Damage for unauthorised occupation of property - income from house property or income from other sources - both the lower authorities have erred in treating the assessee’s damages amount as chargeable to tax.
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Disallowance of foreign travel expenses incurred in respect of the family members of the directors - the foreign travel expenses in respect of the wives, minor children and others fail the test of commercial expediency.
Customs
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Recovery of Duty Drawback - Petitioners has raised three issues namely (i) Effect of repeal of duty drawback rules 1995 w.e.f. 01.10.2017 (ii) Absence of mechanism to raise demand of duty drawback and (iii) Power of Respondent to reassess value of goods already exported. - SCN quashed.
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Recovery of Duty Drawback - goods were exported during 2010-2013 and Show Cause Notice was issued on 30.7.2018 - period of 5 years from the date of export/assessment is a reasonable period.
Indian Laws
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Seeking information under RTI in relation to an income tax assessee - is an indirect attempt to try to seek personal information from the respondent regarding tax records of an assessee - This detail the petitioner cannot get.
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Dishonor of Cheque - HC quashed the complaint - as the contract is for the purpose of procuring the land, as such the same is of civil nature, as held by the High Court, is also no ground for quashing. - The High Court has committed an error in allowing the petitions filed under Section 482, Cr.P.C. by the respondents-accused
Service Tax
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Refund claim - rejection on the ground of time limitation - export of goods - the notification categorically states that the claim for refund “shall” be filed within one year from the date of export of the said goods. The notification does not contain any provision for condoning the delay in filing the claim for refund. - No relief.
Central Excise
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Classification of goods - Minute Maid Nimbu Fresh - Nimbooz Masala Soda - Nimbooz - they cannot straightway be classified under the three dash “---” 22020 10 20 as lemonade - They would classify under Tariff Item No. 2202 90 20 as fruit juice based drinks.
Case Laws:
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GST
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2019 (10) TMI 800
Classification of services - rate of tax - Works contract services - services provided to Electricity Supply Companies (wholly owned Government of Karnataka undertakings) by way of construction, erection, commissioning, installation, completion, etc. - entry 3(vi)(a) to Notification No.8/2017 - Integrated Tax (Rate). HELD THAT:- The Electricity Distribution Companies are involved in selling of electricity to the consumers and are collecting consideration and electrical energy is considered as goods . Hence the Electricity Distribution Companies are involved in the sale of goods or in general, supply of goods to the consumers for consideration. From the definition of business, it is clear that any activity of trade, commerce, manufacture, etc or any other similar activity is included in the definition of business and it is immaterial whether it is done for a pecuniary benefit, and any activity done in connection with or incidental or ancillary to such activity is also included in the scope of business . The Electricity Distribution Companies are involved in the supply of goods as already explained and hence they are involved in the business of supplying goods. They also receive consideration for the supply of electricity. The predominant activity of the Electricity Distribution Companies is to supply Electricity and the works executed by the applicant are used for this only predominant activity and hence are original works meant predominantly for use for commerce, industry, or any other business or profession - hence, the contracts in question do not satisfy the fourth condition required for them to be covered under the Entry No.3(vij(a) of Notification No.11/2017 - Central Tax (Rate) as amended from time to time.
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2019 (10) TMI 799
Levy of GST - storage charges for the agreed space for storage - N/N. 12/2017 - Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The services provided by the Central Warehousing Corporation to the applicant is actually a renting of an immovable property and not storage service of goods. The said service is covered under SAC 997212 is liable to a CGST of 9% under entry no. 16 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017. The service is also liable to a tax of 9% under the KGST Act, 2017 under entry no. 16 of Notification (11/2017) No. FD 48 CSL 2017 dated 28-06.2017.
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2019 (10) TMI 798
Classification of goods - Air Handling Unit - Ventilation Unit - whether classifiable under 8414 80 90 or under 8445 90 00? - HELD THAT:- The Air Handling Unit is admittedly used in the Central Air conditioning System and has temperature control and definitely would fall under 8415 which relates to Air Conditioning machines, comprising of motor driven and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated. The parts are covered under 8415 90 00 and hence there is a specific entry defining the Parts of Air Conditioning machines, comprising of motor driven and elements for changing the temperature and hence the Air Handling Units supplied by the applicant would squarely fall under the HSN 8415 90 00 and not under a general entry 8414 80 90. It is observed that the Ventilation Unit found to have a Pre-filter Section Fan section and Controls and does not have any temperature control. The Ventilation Unit can be supplied independently of the Air conditioning unit, and would consist of exhaust. The applicant states that the Air Ventilation Unit only has exhausting facility and removes the old air and fresh air is brought in from outside after filtration, The same involves fans and these fans blow the air out and creates a vacuum in the area and this vacuum is filled by the fresh air from a different source which passes through filters. Hence this allows Circulation of air and hence is an Air Circulator which is covered under HSN 8414 59 10 which deals with Fans which are air circulators. The Air handling units which are supplied by the applicant is classified under HSN 8415 90 00 - Air Ventilators which supplied by the applicant is classified under HSN 8414 59 10.
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2019 (10) TMI 797
Valuation - service of transportation to the employees of the tenants of the business park - inclusion of value of bus passes distributed by the applicant to the Commuters in the value of facilitation charges - section 15(2) of the CGST Act, 2017 and KGST Act, 2017 - supply service in the hands of the applicant could be classified as merely a supply of facilitation services between and the commuters. HELD THAT:- The service is that of services of a chartered bus and the consideration is charged by the BMTC in the form of bus passes. The value of 50 passes is the consideration for the provision of service provided by the BMTC. Regarding the recipient of service, it is seen that the consideration for this Service is payable by the applicant and clause (93) of section 2 of the CGST Act, makes it amply clear that the person who is liable to pay the consideration is the recipient of service -and in this case, the applicant is liable to pay the consideration and hence would be the recipient of service under the GST Act. The services provided by BMTC to the applicant are covered under SAC 996413 - Non Scheduled Local Bus and Coach Charter Services. The Services are provided by the BMTC to the applicant and the applicant collects the consideration of the bus passes plus the service charges and provides the same services. Coming to the services provided by the applicant to the actual passengers, the applicant is providing transportation services and the applicant is required to arrange alternate services to the commuters in Case BMTC ceases to provide the transport services wholly or in part - Further, the bills issued by the applicant are verified and found that the bills are issued to the Companies in the ITPB and not to the individual commuters. The applicant is valuing the service only to the extent of the additional amount charged as facilitation charges and collecting the balance amount as monthly pass amount and paying the taxes only to the extent of facilitation charges. The Commuters. or the Companies are not party to the contract between the applicant and BMTC and the applicant is providing the services after obtaining the same from BMTC. The contention of the applicant that he is an intermediary is incorrect in that the applicant is receiving the services provided by BMTC for the aforesaid reasons and the applicant is providing the services to his clients. Value of services - HELD THAT:- The total amount charged to the service recipient by the applicant would be the value of services supplied as per Section 15 of the CGST Act, 2017. Hence the value of the monthly passes issued plus the facilitation charges charged by the applicant and such other amounts which form the part of the Value of supply as specified in Section 15 Would be the Value of supply of the services provided by the applicant to the commuters.
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2019 (10) TMI 796
Classification of goods - FANTA FRUITY ORANGE - whether classified under Chapter Heading 2202 99 20 at Sl.No. 48 under Schedule 11 as Fruit pulp or fruit juice based drinks , or under Chapter 2202 99 90 at SI.No. 24A under Schedule III as Other Non-alcoholic beverages or under 2202 10 at Sl.No.12 under Schedule IV as all goods (including aerated waters], containing added sugar or other sweetening matter or flavoured under Notification No. 1/2017- Central Tax (Rate) dated 28.06.2017 (as amended) ? HELD THAT:- In the instant case the applicant had already filed an application, on 27.11.2017, for advance ruling before the Gujarat Authority for Advance Ruling in respect of the same question i.e. classification of the product Fanta Fruity Orange that has also been raised in the instant application. Hence it is clearly evident that the question raised by the applicant in the instant application, under the provisions of CGST Act 2017, has already been decided by the Gujarat Authority for Advance Ruling. Therefore the instant application is liable for rejection. Application rejected.
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2019 (10) TMI 795
Levy of GST - Inward supplies from the vendors - landscape development and maintenance of garden work for State and Central Government Departments, all government local bodies (Municipalities and Corporations) etc. and other government undertakings through contract from sub-contracts - exemption under entry 3A of the Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No.2/2018- Central Tax (Rate) dated 25.01.2018. HELD THAT:- The precondition for this is that the activity of the applicant is exempt either as a pure services covered under entry no.3 or a composite supply or works contract involving goods covered under entry no.3A of the Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No.2/2018 - Central Tax (Rate) dated 25.01.2018 - The applicant offers this contract on sub-contract basis to subcontractors and any activity done by these contractors are not exempted either under entry 3 or entry 3A of the Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. The entry no.3 states that the Pure Services (excluding works contract service or other composite supplies involving supply of any goods) must be provided to the Central Government or State Government or Union territory or local authority or a Governmental authority are exempted from tax. Further entry no.3A states that Composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply must be provided to the Central Government, State Government or Union Territory or a local authority or a Government Authority or a Government Entity are exempted from tax - In the present case, in both the scenarios, the supply of the sub-contract service is to the applicant by the sub-contractor and the applicant is not covered under the class specified either under entry 3 or entry 3A of the said Notification.
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2019 (10) TMI 794
Rate of GST - Areca Palm Leaf Plates - HELD THAT:- The areca leaf plates are made out of a part of the areca plant and hence would be a leaf product and hence gets covered under entry no. 198A of Notification No.01/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 27/2017 - Central Tax (Rate) dated 22.09.2017 and hence liable to tax at 2.5% under the CGST Act and also at 2.5% under the Karnataka GST Act, 2017.
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2019 (10) TMI 793
Levy of GST - expenses incurred by the Staff members on behalf of the Company exceeding ₹ 5000-00 a day and then reimbursed periodically - Applicability of Reverse charge mechanism on remuneration paid to the Directors. HELD THAT:- The amount paid by the employee to the supplier of service is covered under the term consideration as if it is paid by the applicant himself for the services received by them on behalf of the company. This amount reimbursed by the applicant to the employee later on would not amount to consideration for the supplies received as the services of the employee to his employer in the course of his employment is not a supply of goods or supply of services and hence the same is not liable to tax. Remuneration to the Directors paid by the applicant - HELD THAT:- The question before us is not whether this service is taxable or not, but whether this supply of services is liable to tax under reverse charge mechanism. The services provided by the Directors to the Company are not covered under clause (1) of the Schedule III to the Central Goods and Services Tax Act, 2017 as the Director is not the employee of the Company. The consideration paid to the Director is in relation to the services provided by the Director to the Company and the recipient of such service is the Company as per clause (93) of section 2 of the CGST Act and the supplier of such service is the Director. Reverse Charge Mechanism - HELD THAT:- In the present case, the applicant is the company and is located in the taxable territory and the Directors remuneration is paid for the services supplied by the Director to the applicant company and hence the same is liable to tax under reverse charge basis under section 9(3) of the Central Goods and Services Tax Act, 2017.
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2019 (10) TMI 792
Levy of GST - rate of GST - volume discount received on purchases - volume discount received on retail (on sales) - Requirement for issuance of taxable invoice - HELD THAT:- The applicant when makes more purchases is eligible for the volume discount on purchases and a credit note is issued by the authorised supplier and no adjustment of price is made in respect of the goods already sold nor any adjustment of GST is made in the credit note. The applicant is also not claiming any reduction in input tax credit already claimed by him as it does not affect the price of the goods sold. Hence, the amount received by the applicant is in the form of an incentive provided by the authorised supplier and does not affect the sale price of the goods already sold and hence there is no liability to charge GST on the same. Further, the applicant when sells more than his target is eligible for the incentive which is provided by the authorised supplier in the form of a credit note without affecting the sale price of the goods purchased or sold. Even this is in the form of incentive and no adjustment of price nor tax is done either by the applicant or the authorised supplier - Hence, the amount received by the applicant is in the form of an incentive provided by the authorised supplier and does not affect the sale price of the goods already sold and hence there is no liability to charge GST on the same. Requirement for issuance of credit notes - HELD THAT:- The credit note issued by the supplier in the pertinent case does not have any effect on the value of supply and hence is only a financial document for account adjustment for the incentive provided. Hence there is no effect on the GST.
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2019 (10) TMI 791
Classification of supply - Rate of GST - rough wood - cutting of live trees to obtain the logs and transfer of the timber logs - HELD THAT:- On verification of the nature of activities carried out by the applicant, it is observed that applicant has obtained a work order from Social Forestry Department through the tender for cutting and removal of standing live trees. As per the work order issued by the Social Forestry Department some areas are allotted to the applicant to cut and remove standing live trees. Accordingly, the applicant is engaged in cutting standing live trees and removing the same from that place. Thus Forest Department has sold the standing live trees to the applicant to cut and remove the same without damaging any other trees. Here the job of cutting is undertaken by the applicant instead of Social Forestry Department that does not mean that the Department supplying standing live trees and further Department has directed the applicant to cut and remove the trees. The applicant is not allowed to leave the live trees intact in the area and hence is bound to cut and remove the wood from the area. What is appropriated by the applicant is the timber logs and not live trees as the contract is clearly mandating that the goods are to be cut and then appropriated to the contract. The Applicant is finally removing cut logs from that allotted area and not the live trees. Further, it is a composite contract of cutting of live trees to obtain the logs and transfer of the timber logs, with transfer of timber logs being the principal supply in the composite supply. By virtue of section 8 of the CGST Act, the entire supply would be deemed to be the supply of the principal supply i.e. supply of timber, which is covered under HSN 4403 and under the entry no. 134 of Schedule III of the Notification No: 1/2017- Central Tax (Rate) dated 28/06/2017 and hence chargeable to tax @ 9%. Similarly the same is taxable under KGST Act at 9%.
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2019 (10) TMI 790
Concessional Rate of tax - commodities such as marine propellers, rudder set, stem tube set, propeller shaft and couplings used only for the purpose of the fishing or floating vessels - taxable @ 5% or otherwise? HELD THAT:- In the instant case, it is an admitted fact that the applicant manufactures marine propellers and its accessories which are meant for use in fishing sector. The applicant contended that their products are exclusively meant for fishing vessels. However they have not provided any evidence towards exclusive usage of their products. Therefore the products of the applicant become parts of the goods falling under 8901, 8902, 8904, 8905, 8906 8907, only when they are meant for the said goods. Hence the concessional rate of GST in terms of entry number 252 of Schedule - I to the Notification No. 1/2007-Central Tax (Rate) dated 28.06.2017 would be applicable to the applicant subject to the condition that their product are used only as parts of goods falling under 8901, 8902, 8904, 8905, 8906 8907.
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2019 (10) TMI 789
Classification of services - revenue earned through the operation and maintenance of employee commutation vehicles and transportation services agreement - whether the said service falls under Passenger Transport service with SAC 9964(vi) or under Renting of Transport Vehicle to carry passengers with SAC 9966(i)? HELD THAT:- SAC 9966 covers Rental services of transport vehicles with or without operators and specifically the SAC 996611 covers Rental services of road vehicles including buses, coaches, cars, trucks and other motor vehicles, with or without operator. The said services include rental of buses or coaches, trucks and other motorized freight vehicles, with/without operators for a period of time, not generally dependent on distance. The renter defines how and when the vehicles will be operated, determining schedules, routes, and other operational considerations. In the instant case the applicant (renter) does not define how and when the vehicles will be operated and also does not determine the schedules, routes and other operational consideration. The client of the applicant decides the same and accordingly the applicant operates the buses. Therefore the services being provided by the applicant are not covered under the SAC 9966.
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2019 (10) TMI 788
Classification of services - in the nature of employment or independent service or intermediary service - applicant is required to make presentation of products of the company to the prospective clients of the company. The applicant reports to the Sales Manager of the company. HELD THAT:- In the instant case, the applicant is making presentation before the prospective clients and facilitates the supply of goods by the company for whom he is providing services and he does not supply such goods on his own account and hence squarely falls under the category of intermediary as per section 2(13) of the IGST Act, 2017. Since the word intermediary is not defined in the CGST Act but defined in the IGST Act, the same meaning as assigned to it under the IGST Act would be applicable even under the CGST Act, 2017 - the applicant is providing management services in marketing as an intermediary with a HSN Code of 9983 11. The nature of service rendered by the applicant, if it is an intra-State transaction, falls under clause (ii) of entry no. 21 of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 and hence is liable to tax at 9% under the CGST Act. Similarly it is also liable to tax under Karnataka Goods and Services Tax Act 2017 at 9% as per clause (ii) of entry no. 21 of the Notification (11/2017) No. FD 48 CSL 2017 dated 29.06.2017. But if it is an inter-State transaction, it would be liable to tax at 18% under clause (ii) of entry no. 21 of the Notification No. 8/2017 -Integrated Tax (Rate) dated 28.06.2017. Time of supply in relation to the transaction - HELD THAT:- The time of supply would have to be determined as per the provisions of sub-section (2) of section 13 of the CGST Act, 2017. Regarding the value of the supply of services, the amount received by the applicant in relation to the services provided both directly and indirectly would be the value of supply of services. This would also include the amount of consideration reimbursed by the company to the applicant in the form of expenses incurred by the applicant, which will also form the consideration.
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2019 (10) TMI 787
Taxability under GST - Rate of tax - marketing service provided by the application - export of services or not - intermediary services. Whether the applicant is acting as an intermediary of McAfee Singapore? - HELD THAT:- The applicant is performing services to support and facilitate the selling, marketing and distribution of Products by the Company and other affiliates. Hence this is clearly in line with the definition of the term Intermediary who is a person who facilitates the supply of goods or services or both, between two or more persons. Whether the services supplied by the applicant to McAfee Singapore is marketing services or intermediary services? - HELD THAT:- The exception clause in the definition states that the term intermediary does not include a person who supplies such goods or services or both or securities on his own account. The applicant is not supplying the goods or services on his own account and the ultimate supply of goods or services is made by the parent company directly and hence the applicant is not covered under the exception clause as well. It is pertinent to note the use of words such and this relates to the supply of such goods or services which is facilitated by the applicant and not the services provided by him - It is clear from the above agreement the applicant is providing services to the foreign affiliates as an intermediary - thus, the business services of the intermediaries are covered under the SAC 998599. Whether the services supplied qualifies as export of services and hence zero-rated? - HELD THAT:- The issues involved are verified and found there is no doubt that the applicant, i.e., the supplier of services is located in India, the recipient of service is located outside India and the consideration is received in convertible foreign exchange and also that the applicant and overseas entity are two separate legal entities as per the agreement. The only issue to be decided is whether the place of supply is outside India or not and this is outside the jurisdiction of this authority. Unless this is decided, there is no question of determining whether the transaction is that of export of services or inter-State supply of services. Hence this authority cannot give a ruling on this issue.
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2019 (10) TMI 786
Input tax credit - by-product Cotton Seed Oil Cake - taxable at 0% - Apportionment Input Tax Credit u/ s 17 of GST Act - treatment of claiming of Input Tax Credit on Raw Cotton purchased from agriculturist - reverse charge mechanism - treatment of claiming of Input Tax Credit on Plastic Bags (Bardana) which is only used for packing of the cotton seed oil cake - reversal of Input Tax Credit for the period of 2017-18, 2018-19 as per the Rule 42 of the CGST Rules, 2017. HELD THAT:- That the applicant is engaged in the business of manufacturing and production of Loose Cotton, Cotton Seeds, Cotton Seed Oil and by-product Cotton seed oil cake at Sangaria in the State of Rajasthan and has been granted a license for manufacture and production of same. The Loose Cotton, Cotton Seeds, Cotton Seed Oil are taxable at the rate of 5% under GST and Cotton seed oil cake is taxable at the nil rate of GST - the applicant is entitled to take credit of the ITC charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. Thus, where any goods or services or both are used by the registered person partially for taxable supply including zero rated supply and partially for the exempted supply then in that case the claim of ITC shall be restricted to the extent of taxable supply including zero rated supply. Reversal of input tax credit - HELD THAT:- In view of the provisions of Section 17 (2) of GST Act, 2017 read with rule 42 of GST Rules, 2017 as stated above, the amount of credit shall be restricted to so much of the input tax is attributable to the said taxable supplies including zero rated supplies. The applicant has to reverse the amount of credit used in the manufacture and sell of the product which attracts nil rate or exempted from GST. Raw cotton is purchased by the applicant from agriculturist - HELD THAT:- The raw cotton is purchased by the applicant from agriculturist and tax @ 5% is paid under Reverse Charge Mechanism by him. They are eligible for claiming of ITC as per Section 16, however, the credit is to be restricted to the extent of input tax attributable to the taxable supplies including zero rated and has to reverse the amount of input tax attributable to the exempted supply i.e. Cotton seed oil cake in terms of Section 17 (2) of GST Act, 2017. Plastic bags (Bardana) which is used only for packing of the Cotton Seed oil Cake - HELD THAT:- The Plastic bags (Bardana) which is used only for packing of the Cotton Seed oil Cake is an integral part of the Cotton Seed oil Cake and Cotton Seed oil Cake cannot be sold without plastic bags. Therefore, though they are entitled to take credit of input tax suffered on Bardana but will have to reverse the same as per provisions of Section 16 and 17 of GST Act, 2017. The issue i.e. whether the applicant has to reverse the Input Tax Credit for the period of 2017-18, 2018-19 as per the Rule 42 of the CGST Rules, 2017? is not covered under Section 95(a) of GST Act therefore no ruling is to be given on this issue.
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Income Tax
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2019 (10) TMI 785
Validity of scrutiny assessment - Notices u/s 143(2) not issued on new address - HELD THAT:- In absence of any specific intimation to the Assessing Officer with respect to change in address and/or change in the name of the assessee, the Assessing Officer would be justified in sending the notice at the available address mentioned in the PAN database of the assessee, more particularly when the return has been filed under EModule scheme. It is required to be noted that notices under Section 143(2) of the 1961 Act are issued on selection of case generated under automated system of the Department which picks up the address of the assessee from the database of the PAN. Therefore, the change of address in the database of PAN is must, in case of change in the name of the company and/or any change in the registered office or the corporate office and the same has to be intimated to the Registrar of Companies in the prescribed format (Form 18) and after completing with the said requirement, the assessee is required to approach the Department with the copy of the said document and the assessee is also required to make an application for change of address in the departmental database of PAN, which in the present case the assessee has failed to do so. Now so far as the submission on behalf of the assessee that with respect to the Assessment Years 2004-05 and 2005-06, communications and the assessment orders were sent at the new address and therefore the Assessing Officer was in the knowledge of the new address is concerned, the same has been sufficiently explained by the Revenue. In view of our findings the impugned judgment and order passed by the High Court as well as the orders passed by the learned C.I.T (Appeals) and the I.T.A.T holding the assessment order bad in law on the aforesaid ground cannot be sustained and the same deserve to be quashed and set aside.
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2019 (10) TMI 784
Penalty u//s 271AAA - accounting treatment of the transaction of the JV vs sale of land whereas the assessee treated the same as development agreement / JV - ITAT deleted the penalty levy - HELD THAT:- Special Leave Petition is dismissed on the ground of low tax effect.
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2019 (10) TMI 783
Addition u/s 68 - delay in filing the restoration application - HELD THAT:- Application is condoned and petition is restored to its original number subject to payment of costs of ₹ 5000/- with the Supreme Court Secretarial Staff Welfare Association within four weeks from today. If the costs are not deposited within four weeks then this order cease to operate and the matter shall be deemed to have been dismissed. Subject to deposit of costs, as aforesaid, the application for restoration is allowed.
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2019 (10) TMI 782
Deduction u/s 80O - technical services rendered out of India - even if it was to be held that a portion of the said services were managerial services, the same would be regarded as technical services - HELD THAT:- Learned counsel for the appellant, on instructions, in terms of the Circular dated 22.8.2019 bearing number F.No. 390/Misc./116/2017-JC issued by the Department of Revenue, Ministry of Finance, seeks permission to withdraw this appeal alongwith pending applications therein due to low tax effect. Permission is granted, subject to just exceptions.
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2019 (10) TMI 781
Deduction u/s 80HHC - appeal and pending applications are dismissed as withdrawn, leaving question of law open - HELD THAT:- The appeal and pending applications are dismissed as withdrawn, leaving question of law open.
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2019 (10) TMI 780
Undisclosed income of the Assessee as recorded by the Securities and Exchange Commission in USA - HC proceeded to reverse the finding of fact recorded by the Appellate Tribunal who deleted the addition - HELD THAT:- We have perused the two letters which had weighed with the High Court. Our analysis of the said letters is that, they had been in refutal of the allegations contained in the news items which were published around that time, when the communication was sent by the assessee to the Department with an explanation and a without-prejudice offer. Such communication(s) cannot be treated as admission of non-disclosure as such. What is significant to note is that in the present case, the disclosure is attributed to Goodyear Tyre Rubber Co., USA, filed by it in the proceedings in USA; and not by the assessee as such. It is not the case of the Department that the amount referred to in the said disclosure has been received in the accounts of the assessee or spent for and on behalf of the appellant assessee under instruction, so as to be treated as undisclosed income of the appellant. As aforesaid, the two communications relied upon by the High Court cannot be taken as admission of non-disclosure nor being a case of unconditional offer to pay tax in that behalf. On the other hand, we find that the ITAT had exhaustively analyzed the entire evidence, including the two letters and taken a view which, in our opinion, is a possible view. That being purely a finding of fact, no interference was warranted. Accordingly, these appeals must succeed and the same are allowed. The impugned judgment of the High Court is set aside and instead the judgment of ITAT is restored
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2019 (10) TMI 779
Depreciation on the fixed assets acquired on transfer scheme 2003 - as not yet finalized/ascertained on the fact that the actual assets are not identifiable and not being used as well as their full title have not been transferred to the assessee - reforming and restructuring the power sector in the State. - HELD THAT:- It is not in dispute that the UPPCL was divided into four new distribution Companies under the Transfer Scheme, 2003 by Government notification dated 12.8.2003. The assessee is one of the four distribution Companies. It is further not in dispute that the Transfer Scheme, 2003 provided for the assets, which included the fixed assets, but no break up of assets values and itemwise was provided in the Transfer Scheme, 2003, as such the assessee had appointed an auditor to make itemwise opening balance of the assets and liabilities, which according to the assessee themselves was submitted by the auditors to them on 4.12.2015. The contention of the counsel for the Department regarding the depreciation, which has been disallowed by the assessing officer on the balance assets acquired on the date of Transfer Scheme, 2003, as the assets was was not identifiable at the relevant point of time, needs consideration. The auditors themselves had submitted report to the respondent-assessee on 4.12.2015 and the assets so acquired under the Transfer Scheme, 2003 came to be identifiable only in the assessment year 2016-17. The said fact has also not been denied by the counsel for the respondent-assessee. Matter needs to be examined afresh for the claim of depreciation by the assessing officer, in the light of the auditor s report providing itemwise accounting of assets and liabilities on 4.12.2015. Thus, the matter is remitted back to the assessing authority to reconsider and verify the records and pass fresh order, as far as claim of depreciation on the assets claimed by the respondent-assessee, pursuant to the Scheme of 2003.
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2019 (10) TMI 778
Reopening of assessment - HELD THAT:- Same income which has been termed as escaped income for the assessment year 2012-13 was a subject matter of challenge before the appellate authority under the said Act in a different proceeding. The appellate authority had upheld the contention of the petitioner before it with regard to the computation of the said income as income from capital gains and an income not from business and profession. It is thus contended that there could be no reason for the authorities to come to a conclusion that the income had escaped assessment or that the petitioner had failed to fully and truly disclose all material facts for assessment and an arguable case has been made out by the petitioner. This matter requires to be heard on affidavits. Let affidavit in-opposition be filed within a week after re-opening; reply thereto, if any, within a week thereafter. The authorities shall not proceed with the re-assessment up to November 30, 2019. Learned Advocate for the petitioner is directed to communicate this order to the respondents as also the learned Advocate who had appeared for the respondents.
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2019 (10) TMI 777
Income Declaration Scheme, 2016 (IDS) - declaration was rejected on the ground that he had failed to pay the tax, surcharge and penalty on the undisclosed income declared by him before the due date, i.e., 30.09.2017 - HELD THAT:- Once the TDS relevant for the period covered by the declaration filed under the IDS is given credit as per the CBDT s clarification itself, there is no logic as to why advance tax paid for the very same period, which has not been given credit to earlier, should not be adjusted against the amount payable under the IDS. In the case on hand, the declaration of the petitioner pertains to the assessment years 2010-11 to 2015-16. The advance tax of ₹ 1,10,000/- was paid by him for the assessment year 2013-14. Admittedly, there was no regular assessment for the said year, whereby the said advance tax could have been adjusted. Therefore, there is no logic or rationale in denying the petitioner credit of this amount while computing the amount payable by him under the IDS. The writ petition is accordingly allowed setting aside the impugned proceedings dated 06.02.2018 passed by the Principal Commissioner of Income Tax-6, Hyderabad, rejecting the declaration filed by the petitioner under the Income Declaration Scheme, 2016. The said declaration shall be considered afresh by the Principal Commissioner of Income Tax-6, Hyderabad, duly giving credit not only to the TDS but also to the advance tax paid by the petitioner for the assessment year 2013-14. This exercise shall be completed expeditiously and in any event, not later than four weeks from the date of receipt of a copy of this order, be it from whatever source.
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2019 (10) TMI 776
Disallowance u/s.14A - HELD THAT:- Where the assessee has itself offered some disallowance with which the AO is not satisfied, it becomes incumbent upon him to record satisfaction, before embarking upon the disallowance as per rule 8D of the I.T. Rules, as to how the apportionment made by the assessee was not correct. We are confronted with a situation in which the assessee suo moto offered a disallowance of ₹ 10.00 lakh. AO without recording any such satisfaction about the incorrectness of the apportionment made by the AO, simply proceeded to compute the disallowance under Rule 8D(2). When we consider the factual panorama prevailing in the instant case in juxtaposition to the mandate of section 14A(2), it becomes manifest that the AO failed to record the mandatory satisfaction before proceeding to make disallowance u/s.14A of the Act, which has resulted in vitiating the addition. Respectfully following the precedent, we order to delete the disallowance sustained in the first appeal. MAT computation u/s 115JB - HELD THAT:- Disallowance sustained in the first appeal, we find that, even otherwise also, no addition can be made u/s 14A in computation of book profit u/s 115JB of the Act. The Hon ble Delhi High Court in Pr. CIT Vs. M/s. Bhushan Steel Limited and others [ 2015 (9) TMI 1424 - DELHI HIGH COURT] has held that no disallowance can be made u/s.14A in computation of income u/s.115JB. Similar view has been reiterated by the Special Bench of the Tribunal in ACIT Vs. Vireet Investments (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . We, therefore, hold that neither the disallowance can be made u/s.14A nor any addition on this score can be made in the computation of income u/s.115JB of the Act. Disallowance of weighted deduction u/s.35(2AB ) - AO disallowed the deduction of such R D expenses - HELD THAT:- Having heard both the sides and gone through the relevant material on record, it is noted that section 35(2AB), at the material time, provided for weighted deduction on the basis of report to be submitted in Form 3CL read with Rule 6 of the Income-tax Rules. Clause (b) of Rule 6(7A), at the relevant time provided that: The prescribed authority shall submit its report in relation to the approval of in-house Research and Development facility in Form 3CL to the Director General (Income Tax Exemptions) within sixty days of its granting approval . An amendment was carried out to clause (b) of Rule 6(7A) w.e.f. 01-07-2016 providing that The prescribed authority shall furnish electronically its report,- (i) in relation to the approval of in-house Research and Development facility in Part A of Form No. 3CL; (ii) quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Act in Part B of Form No. 3CL . Simultaneous with the amendment in Rule 6(7B), an amendment was also made to Form 3CL. Whereas the earlier Form, being, the Report to be submitted by the prescribed authority to the Director General (IT Exemptions) u/s.35(2AB), talked of recognition granted by DSIR to the in-house Research and Development Centre of the company, the amended Form 3CL, pursuant to amendment in Rule 6(7A)(b), bifurcated the report into two parts, namely, Part-A containing one-time recognition by the DSIR and Part-B containing year-wise details of the expenditure incurred and approval. When we consider the position prevailing as per Rule 6(7A) and Form 3CL before and after the amendment w.e.f. 01-07-2016, it becomes manifest that in the pre-amendment period, the requirement was only for registration with DSIR and not to the grant of the year-to-year approval of the amount spent on Research and Development by a company qualifying for weighted deduction. Such an amendment came into force only from 01-07- 2016, by virtue of which the claim of the assessee for weighted deduction became subject matter of examination by the DSIR and resultantly the AO, on year to year basis. Since it is the position prevailing in the pre-amendment era which governs the years under consideration, once the assessee has been registered and other necessary requirements have been satisfied, the entire amount spent on Research and Development qualifies for weighted deduction u/s.35(2AB) irrespective of the fact that some amount was not approved by the DSIR. Actual amount spent on research and development vis- -vis the approval by the DSIR on year-to-year basis, entitling the assessee to the weighted deduction, has become relevant only after the amendment carried out from 01-07-2016. Since it is not the case of the AO that the assessee did not fulfill all other relevant conditions, we hold that it is entitled to weighted deduction for the full amount of the expenditure incurred on Research and Development irrespective of the fact that a part of the amount so incurred was not approved by the DSIR.
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2019 (10) TMI 775
Penalty u/s 271(1)(c) - addition u/s 14A r.w.r. 8D - HELD THAT:- We are of the view that penalty U/s 271(1)(c) I.T. Act levied by AO, and already deleted by the Ld. CIT(A); has no legs to stand when the corresponding additions made by the AO have already been deleted by ITAT. When the quantum addition does not survive, the penalty levied U/s 271(1)(c) of I.T. Act on the corresponding quantum addition also cannot survive. We take support from judicial precedent in the case of K.C. Builders vs. ACIT [ 2004 (1) TMI 7 - SUPREME COURT] in which the Hon ble Apex Court held that where the additions made in the Assessment Order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment, and therefore, in such a case, no such penalty can survive and the same is liable to be cancelled. In view of the foregoing, appeal filed by Revenue is hereby dismissed.
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2019 (10) TMI 774
Application for registration u/s 12AA rejected - CIT held that the charitable nature of the objectives and genuineness of the activities of the institution could not be established and accordingly, he rejected the registration of the assessee company under section 12AA - HELD THAT:- As the sole issue of granting registration under section 12AA of the Act precipitate on whether the assessee was engaged in imparting education, which has not been examined properly by the CIT, we feel it appropriate to set aside the order of the learnedCIT(E) and remit the matter back to him for deciding the issue of granting registration afresh in accordance with law. Alternatively, CIT(E) may also examine eligibility of the assessee for registration under the fourth limb of charitable purpose, i.e., advancement of general public utility in accordance with law, if raised so by the assessee. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. The grounds raised by the assessee are accordingly allowed for the statistical purposes. Appeal of the assessee is allowed for statistical purposes.
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2019 (10) TMI 773
Rejection of books of account and estimation of gross profit - HELD THAT:- In the present case, basis of rejection of rejection of accounts by the Assessing Officer was totally erroneous and uncalled for. The Assessing Officer has not given any reason which would fall within the four corners of the ingredients as stipulated u/s. 145 (3) of the Act. Basis of making the addition on the basis of G.P. is also unsustainable, as making the GP addition on the basis of earlier year or future year is not called for when the rejection of books of account was found to be unsustainable. As in the present case, we do not agree with the finding of the lower authorities with respect to the rejection of books of account and in consequence thereof, we have no hesitation to hold that the GP rate of 16% is also erroneous and liable to be set aside. We may further mention that in the similar circumstances, the remand report was submitted by the Assessing Officer for the assessment year 2012-13 and the ld. CIT(A) had deleted the addition of ₹ 82.68 crores based on the remand report of the Assessing Officer. Books of Accounts maintained in regular course of business cannot be rejected unless there are strong and sufficient reasons to indicate that they are unreliable. In the present case, basis of rejection of rejection of accounts by the Assessing Officer was totally erroneous and uncalled for. The Assessing Officer has not given any reason which would fall within the four corners of the ingredients as stipulated u/s. 145 (3) of the Act. Basis of making the addition on the basis of G.P. is also unsustainable, as making the GP addition on the basis of earlier year or future year is not called for when the rejection of books of account was found to be unsustainable. As in the present case, we do not agree with the finding of the lower authorities with respect to the rejection of books of account and in consequence thereof, we have no hesitation to hold that the GP rate of 16% is also erroneous and liable to be set aside. We may further mention that in the similar circumstances, the remand report was submitted by the Assessing Officer for the assessment year 2012-13 and the ld. CIT(A) had deleted the addition of ₹ 82.68 crores based on the remand report of the Assessing Officer. Books of Accounts maintained in regular course of business cannot be rejected unless there are strong and sufficient reasons to indicate that they are unreliable. - Decided in favour of assessee. Disallowance of prior period expenses - HELD THAT:- Income and expenditure are required to be taxed in the year in which it was accrued and if the income is considered to be accrued in the year under consideration, may be relating to the prior period, then any expenditure laid out or expanded wholly and exclusively for the purpose of business is also required to be allowed in this year. In the present case, if we look into the computation of income, then it is clear that the assessee has not taken into account the prior period expenses in computation of income. As the assessee has not taken into account the prior period expenses for the purpose of computation of income, then there was no reason for the Assessing Officer to make disallowance of ₹ 13,52,866/-. In view of the above, the ground raised by the assessee is allowed, as there is no occasion for the Assessing Officer to disallow the same being not arising and forming part of the profit loss account of the assessee. Notional rental income - rent was payable by GIL on account of machines let out by the assessee and the said machines were given to GIL after taking consent from the Financial Institution to whom the machines were hypothecated - HELD THAT:- When we look into the record, it is clear that the assessee has let out the machines on lease to GIL and the GIL was under legal obligation to pay yearly rent of ₹ 29.11 lacs. In our considered opinion, there is an obligation of GIL to pay rent to the assessee in terms of lease agreement and further it was under obligation to return back the assets leased to it by the assessee. Further the GIL while entering into amicable settlement had paid an amount of ₹ 2.60 crores towards the value of machines as well as for pending rent which clearly shows that the rental income of the assessee was not a hypothetical or imaginary income, but had accrued on account of use of industrial plant by GIL . Therefore, there was no error in the orders of the authorities below. Disallowance of claim of deferred revenue expenses in respect of payment made to financial institution on restructuring of loans - AO considered the disallowance on the ground that deferred revenue expenses are only allowable in terms of provisions of section 35D and the payment made to financial institution is covered u/s 43B - HELD THAT:- It is an undisputed fact that the identical claim of assessee, in the similar facts and circumstances of the case, has been accepted by the Revenue authorities since 2002- 03 onwards. There is no rebuttal of the fact stated by the assessee that the impugned deferred revenue expenses are relatable to expenses actually incurred and apportioned over the period of loan. In view of the above and following the rule of consistency, we are of the opinion that the ld. authorities below were not justified in disallowing the claim of the assessee. Accordingly, the disallowance made on this count is liable to be deleted.
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2019 (10) TMI 772
Levy of Minimum Alternative Tax (MAT) u/s 115JB - profits eligible for deduction u/s 80IB(10) - assessee is neither the units in SEZ not a Developers of SEZ - HELD THAT:- Benefit of exemption from MAT is provided only for business, as specified, carried on by the persons who have got approvals under the SEZ Act and which are carried on in SEZ or units therein. In view of the above we do not find any merit in the contention of the Ld. Counsel for the assessee that sub-section (6) is to be interpreted independently, thus making the assessee eligible for exemption from payment of MAT also, since it is a developer of housing projects, and dismiss all arguments made by the Ld. Counsel for the assessee in this regard. We, therefore, hold that the assessee is not eligible for exemption from payment of MAT as per the provisions of section 115JB(6) since, admittedly, it does not qualify as a business or services rendered by an entrepreneur or developer in a unit or SEZ as per definition of the said terms in the SEZ Act . The alternate contention of the assessee that profits eligible for deduction under section 80IB(10) of the Act were to be reduced for arriving at the book profits of the assessee were also dismissed relying on the decision of the Hon'ble Uttarakhand High Court in the case of SIDCUL Industrial Association Vs State of Uttarakhand [ 2010 (11) TMI 671 - UTTARKHAND HIGH COURT] Interest leviable u/s 234B and 234C - HELD THAT:- Apex Court in CIT Vs Kwality Biscuits Ltd. [ 1999 (11) TMI 48 - KARNATAKA HIGH COURT] has unambiguously held that interest under sections 234B and 234C of the Income-tax Act, 1961 cannot be levied on a company whose income is computed u/s 115J. Accordingly, in the face of the clear legal position as settled in the aforesaid decision, there cannot be any ambiguity.
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2019 (10) TMI 771
Nature of receipt of Damage for unauthorised occupation of property - Taxability of amount in question received form Punjab State Industrial Development Corporation PSIDC - income from house property or income from other sources - HELD THAT:- Assessee had entered into the lease agreement with the PSIDC on 28.10.1993 for a period of three years upto 31.10.1996. The said lease agreement sufficiently indicates that no landlord / tenant existed between two parties after 31.10.1996. We further find from the arbitration award to this effect dated 28.04.1997 that the assessee had been awarded damages with interst than rental amount of the property in issue. This arbitration award forms part of case record in pages 17 to 25 of the paper book. All this leads to irresistible conclusion that assessee has not received any rent from this lessee / tenant but damages amounting neither assessable under the head house property income nor income from other sources going by the various case law discussed in the CIT(A) s order (supra). We reiterate that hon ble jurisdictional high court s in Smt. Lila Ghosh [ 1993 (1) TMI 11 - CALCUTTA HIGH COURT] has already settled the law that mense profits are in the nature of damages which are not chargeable to tax being in the nature of a capital receipt. We apply the very analogy in the case of damages as well to conclude that both the lower authorities have erred in treating the assessee s damages amount as chargeable to tax. The assessee therefore succeeds in its former substantive ground.
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2019 (10) TMI 770
Reopening of assessment u/s 147 - As recoded by the Ld. CIT(A) neither the assessee nor his authorized representative appeared before him during the course of appellate proceedings - HELD THAT:- It is settled law that unless an appeal is rejected in limine for any vital defect, section 250(1) provides that the first appellate authority shall fix a date of hearing and give notice thereof, with the information about the time and place of hearing, to the appellant as well as to the AO against whose order the appeal has been filed. If a party could establish that he was not properly served with the notice of hearing and was therefore unable to present his case at the hearing, it could not be said that the party was given an opportunity of being heard as required u/s 250(1) of the Act. This is not so in this case. The notice dated 02.05.2016 was sent to the assessee fixing the case of hearing on 02.06.2016. The assessee vide letter dated 02.06.2016 sought adjournment and the case was adjourned by the CIT(A) to 28.06.2016. However, no one attended on 28.06.2018 nor was any adjournment sought. Again notice dated 19.09.2016 was sent fixing the case for hearing on 18.10.2016. However, nobody attended nor was any adjournment sought. Finally, notice dated 18.10.2016 was sent fixing the case for hearing on 21.11.2016. The office of the CIT(A) received the acknowledgement of service of the notice, however, nobody attended nor any adjournment was sought. The Ld. counsel has not controverted the above facts. Because of non-compliance by the assessee, the Ld. CIT(A) could not examine the issue in its entirety. Thus considering the facts and circumstances of the case, we set aside the order of the Ld. CIT(A) and restore the matter to him to pass an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to appear before the Ld. CIT(A) and file the relevant documents/evidence.
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2019 (10) TMI 769
Demand u/s 201(1) 201(1A) - Non deduction of tds - reversal of entries for payment to Avastagen Ltd., parent company of the Assessee - termination of agreement between the parties - Agreement to pay Royalty was cancelled before the closure of account, HELD THAT:- Reasons assigned by the revenue authorities cannot be the basis to hold that there was in fact an entry for payment which obligates the Assessee to deduct tax at source. Admittedly, even at the time of survey, the entries for payments as well as the entry for reversal of those entries were found. The theory of reversal cannot therefore be an afterthought. Had there been no reversal of entries in the books of accounts the liability of the Assessee to deduct tax at source would exist. It is only owing the mistake in making the entries for payment despite the agreement having been terminated that the reversal of entries became necessary. Therefore the reversal of entries cannot be said to be an after- thought. Secondly, the termination of agreement between the parties was unilateral and there is no material on record to show that the plea of termination of the agreement was not true. The parties to an agreement are at liberty to vary the terms of the agreement or terminate the agreement. The conclusions of the revenue authorities in this regard are purely based on surmises and cannot be sustained. Since the Agreement was cancelled there was no obligation to deduct tax at source. On further appeal, the Hon ble High Court in Wipro Health Care IT Ltd. [ 2013 (5) TMI 45 - KARNATAKA HIGH COURT ] held that from the material on record, it was clear that if agreement with regard to payment of royalty was cancelled, no royalty was payable and therefore, the question of deducting TDS on such royalty does not arise. - decided in favour of assessee.
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2019 (10) TMI 761
Addition on account of MTM losses on account of foreign exchange fluctuation - HELD THAT:- We are of the considered opinion that the decision in the case of Woodward Governor P Ltd [ 2009 (4) TMI 4 - SUPREME COURT] and ONGC vs CIT [ 2010 (3) TMI 81 - SUPREME COURT] are applicable, and the line of judicial view is that the Revenue cannot be permitted to contend that there is a CBDT instruction No. 03/2010 dated 23/3/2010 to the contrary. No CBDT circular or instruction can be contrary to the decision of the Hon ble Apex Court, even subsequent to the decision of the Hon ble Apex Court. We, therefore, accept the contention of the assessee and hold that the addition is unsustainable. We, accordingly, direct the Assessing Officer to delete the same. Disallowance of foreign travel expenses incurred in respect of the family members of the directors - HELD THAT:- Unless and until, it is shown that it is customary for the directors or the employees to attend such business meetings or so with wives and minor children, merely because the assessee says so, it cannot be assumed that the accompaniment of wife and minor children of the directors, management trainees and overseas employees was due to commercial expediency. It is not the case of the assessee that the directors or other employees of the company have declared in their returns of income the foreign travel is a perquisite. We are of the considered opinion that the foreign travel expenses in respect of the wives, minor children and others fail the test of commercial expediency and there are no valid reasons to interfere with the findings of the authorities below on the disallowance of the foreign travel expense relatable to the wives and minor children of the directors, management trainees and overseas employees of the assessee company. We therefore dismiss ground No. 2 of assessee s appeal.
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2019 (10) TMI 760
TP Adjustment - ALP of the guarantee commission charges provided by the Respondent Co. - tribunal direction that the money advanced to the AE as share application money is not to be considered as loan - HELD THAT:- Issue as concluded against Revenue and in favour of Respondent-assessee in the Respondent s own case [ 2018 (9) TMI 293 - BOMBAY HIGH COURT] Disallowance u/s 36(1)(ii i) - whether the acquisition of business by way of investing into shares of that company through either Special Purpose Vehicle or directly cannot be considered to be ordinary event of the business and therefore, cannot be termed as expenditure incurred for the purpose of assessee s business, which is providing ITES services? - HELD THAT:- As held in SRISHTI SECURITIES PVT. LTD. [ 2009 (1) TMI 408 - BOMBAY HIGH COURT] where an assessee claims deduction of interest paid on capital borrowed, all that an assessee has to show is that the borrowed funds were used for business purpose and if so then interest will have to be allowed as a deduction. The submission on behalf of the Revenue that the Petitioner is in the business of BPO and Call Centre activities and not in the business of investment means the prime business of the assessee is of running BPO and Call Centres and as recorded by the Tribunal the entire funds were borrowed so as to expand the business activities of BPO and Call Centres in Canada by acquiring a Canadian Company. Thus the loan was taken for the purpose of business. This is a finding of fact which has not been shown to be perverse. The expansion of ones activities in Canada would require acquisition of a Company by purchasing shares therein so as to expand the assessee's business. The object of the expenditure clearly is for the purpose of the business and therefore the interest incurred on the funds borrowed for investment in M/s.Minacs Canada has to be allowed as a deduction under section 36 (1)(iii) of the Act. So far as the finance expenditure is concerned, it would follow the allowing of interest expenditure. This expenditure is incurred in respect of the above loan taken for purpose of business and allowable u/s 36(1)(iii)
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2019 (10) TMI 759
Deduction u/s 80P - interest on FDRs placed by the assessee society with such cooperative society - Whether by virtue of provisions of Section 80P(4) the claim of the assessee under section 80(P)(2)(d) can be denied to the assessee society? - HELD THAT:- For the purposes of section 80P(2)(d) of the Act, Jaipur Central Cooperative Bank Ltd shall be treated as a co-operative society. Therefore, interest on FDRs placed by the assessee society with such cooperative society shall be eligible for deduction u/s 80P(2)(d) The Coordinate Bench in case of Kaliandas Udyog Bhavan Premises Co-op Society Ltd. vs Income-tax Officer-21(2)(1), Mumbai [ 2018 (4) TMI 1678 - ITAT MUMBAI] had an occasion to examine similar contention and it was held that though the co-operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, however, as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being enforced in any state for the registration of co-operative societies, therefore, the interest income derived by a cooperative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. We see no reason to deviate from the same and agree with the aforesaid view taken by the Co-ordinate Bench By virtue of provisions of Section 80P(4) of the Act, the claim of the assessee under section 80(P)(2)(d) cannot be denied to the assessee society. Another issue that arise for consideration is whether deduction u/s 80P(2)(d) shall be allowed on the gross interest income on FDRs or it should be allowed on the net interest income calculated after deducting the interest expenditure allocable to funds placed in form of FDR. Though the assessee has challenged the findings of the ld CIT(A) to the effect that it has not incurred any interest expenditure, we find that there is no necessity to examine the same as conceptually, the deduction under section 80P(2)(d) has to be allowed on gross and not on net interest income as held by the Hon ble Gujarat High Court in case of Surat Vankar Sahakari Sangh Ltd vs ACIT [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] The assessee society is held eligible for deduction under section 80P(2)(d) in case of interest income on FDRs placed with Jaipur Central Cooperative Bank Ltd.- Decided in favour of the assessee
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Customs
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2019 (10) TMI 804
Recovery of Duty Drawback - Petitioners has raised three issues namely (i) Effect of repeal of duty drawback rules 1995 w.e.f. 01.10.2017 (ii) Absence of mechanism to raise demand of duty drawback and (iii) Power of Respondent to reassess value of goods already exported. - rejection of declared Free on Board (FOB) value of the goods already exported - demand of drawback disbursed post export of goods - recovery of Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - HELD THAT:- In the present writ petitions, concededly identical questions as raised in M/S FAMINA KNIT FABS THROUGH ITS PARTNER VERSUS UNION OF INDIA AND ORS. [ 2019 (9) TMI 970 - PUNJAB AND HARYANA HIGH COURT] and M/S JAIRATH INTERNATIONAL AND ANR. AND RAJESH DHANDA VERSUS UNION OF INDIA AND ORS. [ 2019 (10) TMI 642 - PUNJAB AND HARYANA HIGH COURT ] are raised - In both judgments, we have held that inspite of availability of alternative remedy available under 1962 Act, writ petition is maintainable in view of involvement of pure questions of law as well jurisdiction and law enunciated by Hon ble Supreme Court and followed by this court time and again. While taking cue from Sections 28, 28AAA 75 of 1962 Act and relying upon judgment of Hon ble Supreme Court in the case of Commissioner of Central Excise versus Larsen and Toubro [2015 (8) TMI 749 - SUPREME COURT] as well this court in the case of Laqshya Media Pvt. Ltd. Vs State of Punjab and Others [2016 (8) TMI 1460 - PUNJAB AND HARYANA HIGH COURT], we have held that mechanism is absent in Duty Drawback Rules, 1995 thus demand under Rule 16 of Drawback Rules, 1995 is not sustainable. Petition allowed.
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2019 (10) TMI 803
Recovery of Duty Drawback - goods were exported during 2010-2013 and Show Cause Notice was issued on 30.7.2018 - rejection of declared Free on Board (FOB) value of the goods already exported - demand of drawback disbursed post export of goods - recovery of Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - HELD THAT:- In the present writ petitions, concededly identical questions as raised in M/S FAMINA KNIT FABS THROUGH ITS PARTNER VERSUS UNION OF INDIA AND ORS. [ 2019 (9) TMI 970 - PUNJAB AND HARYANA HIGH COURT] and M/S JAIRATH INTERNATIONAL AND ANR. AND RAJESH DHANDA VERSUS UNION OF INDIA AND ORS. [ 2019 (10) TMI 642 - PUNJAB AND HARYANA HIGH COURT ] are raised - In both judgments, we have held that inspite of availability of alternative remedy available under 1962 Act, writ petition is maintainable in view of involvement of pure questions of law as well jurisdiction and law enunciated by Hon ble Supreme Court and followed by this court time and again. Reasonable period of limitation to issue show cause notice raising demand of duty drawback - HELD THAT:- Hon ble Supreme Court in STATE OF PUNJAB VERSUS BHATINDA DISTRICT CO-OP. MILK P. UNION LTD. [ 2007 (10) TMI 300 - SUPREME COURT] and this court in M/S GUPTA SMELTER PRIVATE LIMITED VERSUS UNION OF INDIA AND ANOTHER [ 2018 (11) TMI 502 - PUNJAB AND HARYANA HIGH COURT] , M/S GPI TEXTILES LIMITED VERSUS UNION OF INDIA AND OTHERS [ 2018 (9) TMI 25 - PUNJAB HARYANA HIGH COURT] , and COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS HARI CONCAST (P) LTD. [ 2009 (4) TMI 170 - PUNJAB AND HARYANA HIGH COURT] , we have held that period of 5 years from the date of export/assessment is a reasonable period. Petition allowed.
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Insolvency & Bankruptcy
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2019 (10) TMI 802
Admissibility of application - initiation of CIRP - Corporate Debtor - default in making payment of the outstanding debt - HELD THAT:- The Operational Creditor has complied with Section 9 (3) (b) (c) of the I B Code, 2016, by filing Affidavit, wherein under Para 4, it has been deposed that the Corporate Debtor has not given any notice of dispute or a pendency of a suit or arbitration proceedings in relation to the unpaid of operational debt. The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Authority is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt claimed by the Operational Creditor. Therefore, Application is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted - moratorium declared.
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2019 (10) TMI 801
Maintainability of application - initiation of CIRP - Section 9 of Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - debt due and payable by the Corporate Debtor - HELD THAT:- The present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Application admitted - moratorium declared.
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Service Tax
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2019 (10) TMI 768
Maintainability of appeal - monetary amount involved in the appeal - HELD THAT:- Considering the low tax effect, in view of instructions dated 22.08.2019 issued by the Director (Review), Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes Customs (Judicial Cell), New Delhi, the appeal is dismissed.
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2019 (10) TMI 764
Refund claim - rejection on the ground of time limitation - claims filed for a period beyond one year from the date of export of the goods - N/N. 17/2009 dated 7 July 2009 - HELD THAT:- It is not possible to accept the contention of learned Counsel for the appellant that the delay in filing of the refund claim is merely a procedural lapse and can be condoned. There is nothing in the notification which may lead to such an inference. In fact, the notification categorically states that the claim for refund shall be filed within one year from the date of export of the said goods. The notification does not contain any provision for condoning the delay in filing the claim for refund. This issue was examined by the Gujarat High Court in PATEL CONSTRUCTION COMPANY A SOLE PROPRIETORSHIP FIRM VERSUS ASSISTANT COMMISSIONER, SERVICE TAX DIV [ 2017 (3) TMI 424 - GUJARAT HIGH COURT] , though in connection with the provisions of Section 11B of the Central Excise Act, 1944. The Court observed that no relief can be granted contrary to the statute and, therefore, no direction can be issued to an Authority to condone the delay in filing the refund application. The Commissioner (Appeals) committed no illegality in rejecting the claim for refund made beyond the period of one year from the date of export of the goods - appeal dismissed.
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Central Excise
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2019 (10) TMI 763
CENVAT Credit - the credit was availed by the assessee on the basis of three invoices issued by the head office which is registered as ISD - HELD THAT:- Admittedly, the appellant would not be in a position to explain the correctness or otherwise of the credit availed by the head office, for which records are being maintained at the head office only. Further the head office, as a registered ISD, is required to file returns etc. to their jurisdictional Service Tax Authorities. No objection seems to have been raised by the jurisdictional Service Tax Authorities of the head office. It is well settled law that assessment made at the end of the service provider cannot be re-opened at the end of the service recipient by resorting to objection relatable to the service provider. As such, we find no justification for denial of credit to the appellant. Denial of credit - HELD THAT:- The appellant contended that all the documents were seized by the Department and still lying in their custody. As such they are not in a position to explain the availment of the said credit unless such documents are returned to them. Time limitation - HELD THAT:- The appellant s factory was visited by the officers on 05/08/2014 whereas show cause notices have been issued on 30/03/2016. Apart from the fact that the entire facts were being reflected by the appellant in their statutory records from August, 2013 onwards, which fact would not justify the invocation of longer period, we also note that the show cause notice has been issued even after normal period from the date of visit of the officers - The Hon ble Allahabad High Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS TRIVENI ENGINEERING AND INDUSTRIES LTD. [ 2015 (1) TMI 760 - ALLAHABAD HIGH COURT] has observed that issuance of the show cause notice after a gap of twenty two months from the date of audit is barred by limitation. Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 762
Classification of goods - Minute Maid Nimbu Fresh - Nimbooz Masala Soda - Nimbooz - whether would fall under Tariff Item No. 2202 10 20 of the Central Excise Tariff Schedule or under Tariff Item No. 2202 90 20? - HELD THAT:- For a product to be classified under 2202 10 20 it must be in the nature of waters, including mineral waters and aerated waters, containing flavouring elements as lime/lemon. It, therefore, follows that products which are not essentially waters with flavouring elements as lime/lemon, would not fall for classification under 2202 10 20. Thus, unless the products MMNF, Nimbu and Nimbooz satisfy the description of single dash 2202 10 as waters including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured , they cannot straightway be classified under the three dash --- 22020 10 20 as lemonade. It is not even the charge in the show cause notice or in the impugned order that any of the products in question satisfy the above description of 2202 10 as waters including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured. These products, therefore, cannot fall under 2202 10 20 as lemonade. Tariff Item No. 2202 10 20 would cover only those products which are essentially waters with added sugar and flavoured. The Supreme Court in its decision in Parle Agro (P) Ltd. [ 2017 (5) TMI 592 - SUPREME COURT ] examined at length the provisions of the Regulations framed under The Food Safety and Standards Act and more particularly to the provisions of Regulation 2.3.10 that requires fruit juice content in lime / lemon ready to serve beverage as not less than 5% and in all other beverages / drinks as not less than 10%. It was noticed that in Appy Fizz, the contents of apple is more than 10%. In the case of lime / lemon the fruit juice content the requirement is that it has to be not less than 5 %. The products bought and sold as fruit drink with lemon juice having a juice content of 5 per cent or more are described as Ready to Serve Fruit Drink and not as Lemonades or Lemon/Lime Flavoured Drinks. On the other hand, the products which are sold as Sweetened Carbonated Beverage have no fruit juice content in them and they are bought and sold either as Lemonades or Lemon Flavoured Drinks with a clear stipulation that they contain no fruit juice or fruit pulp - It can, therefore, safely be assumed that the first group of products which are Lemon Juice Based Drinks having a juice content of 5 per cent or more are not Lemonades in the commercial parlance and, therefore, will not be covered under Tariff Item No. 2202 10 20 and will be covered under Tariff Item No. 2202 90 20. Regulation 2.3.10 deals with Non-Carbonated Fruit Beverages and Regulation 2.3.30 deals with Carbonated Fruit Beverages . The fruit juice content (m/m) for both the Non-Carbonated and Carbonated Fruit Beverages has been indicated. In the case of Non-Carbonated Fruit Beverages , the Total Soluble Solid (m/m) should not be less than 10% and the fruit juice content for Lime/Lemon ready to serve beverage has been mentioned to be not less than 5.0 per cent. In the case of Carbonated Fruit Beverage, the Total Soluble Solid (m/m) should also not be less than 10% and the Fruit content of Lime or Lemon juice should not be less than 5%. It has also been stated that the product shall have the colour, taste and flavour characteristic of the product and shall be free from extraneous matter. Thus, the fruit juice content of lime or lemon juice in MMNF, Nimbu Masala Soda or Nimbooz has been indicated to be not less than 5% and the Total Soluble solids is also not less than 10%. All the three products namely MMNF, Nimbu Masala Soda and Nimbooz, satisfy the requirements of Regulation 2.3.10 or Regulation 2.3.30. These products, therefore, would classify under Tariff Item no. 2202 90 20 as fruit juice based drinks - The irresistible conclusion, therefore, that follows from both the common parlance test and the supporting legislation test is, therefore, that the three products MMNF, Nimbu Masala Soda and Nimbooz would classify under Tariff Item No. 2202 90 20 as fruit juice based drinks.
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CST, VAT & Sales Tax
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2019 (10) TMI 766
Principles of Natural Justice - Service of order - impugned assessment order has been passed without the notice having been served upon the petitioner - section 35(1) of the Gujarat Value Added Tax Act, 2003 - HELD THAT:- Issue notice, returnable on 24.10.2019. By way of adinterim relief, the operation of the impugned order dated 31.7.2017 (Annexure-A to the petition) is hereby stayed.
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Indian Laws
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2019 (10) TMI 767
Dishonor of Cheque - HC quashed the complaint - offences under Sections 417, 418, 420, 422 and 120(B) read with Section 34 of IPC - HELD THAT:- It is fairly well settled that power under Section 482 Cr.P.C. is to be exercised sparingly when the case is not made out for the offences alleged on the reading of the complaint itself or in cases where such complaint is filed by way of abuse of the process. Whether any Schedules were appended to the agreement or not, a finding is required to be recorded after full fledged trial. Further, as the contract is for the purpose of procuring the land, as such the same is of civil nature, as held by the High Court, is also no ground for quashing. Though the contract is of civil nature, if there is an element of cheating and fraud it is always open for a party in a contract, to prosecute the other side for the offences alleged. Mere filing of a suit or complaint filed under Section 138 of the N.I. Act, 1881 by itself is no ground to quash the proceedings. While considering the petition under Section 482 of Cr.P.C., we are of the view that the High Court also committed an error that there is a novation of the contract in view of the subsequent agreement entered into on 08.11.2012. Whether there is novation of contract or not and the effect of such entering into the contract is a matter which is required to be considered only after trial but not at the stage of considering the application under Section 482 of Cr.P.C. The High Court has committed an error in allowing the petitions filed under Section 482, Cr.P.C. by the respondents-accused - criminal appeals are allowed.
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2019 (10) TMI 765
Seeking information under RTI in relation to an income tax assessee - pending complaint or not - details and status of the action taken by your department in respect of the complaint - HELD THAT:- The Additional Director, Income Tax (Investigation) to whom the original application under the RTI Act was addressed to is exempted from the provisions of the income tax. It is manifest that what the petitioner is seeking essentially pertains to the details of personal tax record of income tax assessee - Though, learned counsel for the petitioner in a very innocuous manner stated that he only seeks to know the steps taken by the respondent pursuant to the complaint but this plea, in my opinion, is an indirect attempt to try to seek personal information from the respondent regarding tax records of Sh.Nautiyal. - This detail the petitioner cannot get. There is no infirmity in the impugned order. Petition dismissed.
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