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Home e-Newsletters Index Year 2024 November Day 12 - Tuesday

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TMI Tax Updates - e-Newsletter
November 12, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws



Highlights / Catch Notes

    GST

  • Tax evasion case: Bail for accused in fake invoice scam to claim illegal input tax credits.

    Bail granted to accused in case involving alleged issuance of fake invoices by nine firms for evasion of GST through fraudulent claims of input tax credit. Complaint alleges non-traceable addresses and proprietors of firms used to generate fake invoices. Maximum punishment of five years, accused already in custody for over seven months. Offences compoundable and triable by Magistrate, trial likely prolonged. Accused released on bail of Rs. 1,00,000 personal bond and two sureties of Rs. 50,000 each, subject to appearing before court on all dates.

  • Quasi-judicial body violated natural justice by issuing non-speaking order without reasoning.

    Violation of principles of natural justice by the authority in passing a non-speaking order without applying its mind to the material on record. It emphasizes that reasoning is the essence of any quasi-judicial order with adverse consequences. The impugned order merely stated that the reply and documents were unacceptable, without addressing the objections raised by the petitioner. Consequently, the High Court held that the order suffered from being non-speaking, violating natural justice principles, and set it aside, allowing the petition.

  • Tax credit blocked without hearing; Court quashes order citing lack of reasons.

    The Court held that the impugned order invoking Rule 86A of the CGST/SGST Rules by blocking the petitioner's Input Tax Credit (ITC) without providing a pre-decisional hearing violated principles of natural justice. The order lacked independent or cogent reasons, merely relying on reports of the Enforcement authority, which is impermissible as it amounts to borrowed satisfaction. The impugned order stating the petitioner was found non-existent or not conducting business without providing further reasons was also found deficient. Consequently, the High Court quashed the impugned order dated 09.07.2024 and directed the respondents to unblock the petitioner's ITC immediately to enable filing of returns, allowing the petition.

  • Tax refund claim for "Inverted Duty Structure" under GST regime allowed despite delay.

    The case pertains to the refund of tax paid by the petitioner under the 'Inverted Duty Structure' in the Goods and Services Tax (GST) regime. The petitioner filed an application for refund on 12.04.2023, beyond the limitation period, claiming a refund of Integrated Goods and Services Tax (IGST) paid. The High Court held that when the amounts in the credit ledger were set off against the demand, their character changed to that of tax recovered by the department. An appeal against the demand raised by the Assessing Officer was allowed on 20.02.2022, and the order was communicated on 15.08.2022. The second Explanation to Section 54 of the GST Act states that when tax becomes refundable due to an order of the Appellate Authority, the relevant date is the date of communication of such order, which in this case was 15.08.2022. The petitioner's online application could not be uploaded due to a technical glitch, and the Government contended that the 'Inverted Duty Structure' refund is possible only for two years. The High Court allowed the petition.

  • No statutory appeal possible due to non-constitution of Tribunal. 20% deposit ordered for stay on recovery.

    The petitioner is deprived of the statutory remedy of appeal against the impugned order due to the non-constitution of the Tribunal u/s 112(8) and (9) of the B.G.S.T. Act. Consequently, the petitioner cannot avail the benefit of stay on recovery of the balance tax amount upon deposit as contemplated u/s 112(8) and (9). The State authorities acknowledged the non-constitution of the Tribunal and issued a notification u/s 172, providing that the limitation period for filing an appeal before the Tribunal u/s 112 shall commence after the President's appointment. The petition is disposed of subject to depositing 20% of the remaining disputed tax amount, in addition to the earlier deposit u/s 107(6), entitling the petitioner to the statutory stay benefit u/s 112(9), as the non-constitution of the Tribunal cannot deprive the petitioner of this right.

  • Order on GST appeal remedy when Appellate Tribunal not constituted.

    Non-constitution of Appellate Tribunal under CGST/OGST Act deprived petitioner of statutory remedy of appeal against order passed by Authority. Considering Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 and clarification by Central Board of Indirect Taxes and Customs vide Circular No.132/2/2020, High Court deemed it proper in the interest of justice to dispose of the writ petition.

  • Income Tax

  • Tax reassessment row: Lack of fresh evidence invalidates reopening.

    Validity of reassessment proceedings u/s 147, the requirement of fresh tangible material for reopening assessment, and the disallowance of expenditure incurred on DAP, production, and translation expenses. The court held that the reasons provided by the Assessing Officer (AO) failed to demonstrate the assessee's failure to disclose fully and truly, rendering the reassessment exercise nugatory. The court observed that the purported reasons only demonstrated a change of opinion, which cannot form the basis for reopening the assessment. The court also noted that even if the AO's argument of allowing expenses due to a mistake or without verification is accepted, the appropriate remedy would lie u/s 263. Consequently, the essential ingredient for reopening the assessment beyond four years was not satisfied, making the reassessment proceedings bad in law. Additionally, the court highlighted that the details regarding the expenses were placed before the AO in the previous assessment years, and the claim for deductibility was allowed, attaining finality. Since identical expenditure was claimed year after year without disallowance, the basis for "reasons to believe" did not survive anymore. The decision was in favor of the assessee.

  • Manufacturing Co's transfer pricing method upheld; AMP expenses deemed comparable.

    Tribunal's conclusion that Resale Price Method (RPM) is the most appropriate method upheld. Transfer Pricing Officer (TPO) and Dispute Resolution Panel (DRP) had rejected RPM, citing assessee's significant Advertisement, Marketing and Promotion (AMP) expenses. However, Tribunal accepted assessee's contention that AMP expenses were not excessive and comparable to other entities. DRP's finding that assessee was not a 'routine distributor' sustainable. Revenue's challenge to Tribunal's decision dismissed, no substantial question of law arises.

  • Tax Dept Overruled: Notice for Reopening Assessment Beyond Stipulated Time Limit.

    Notice issued for reopening assessment u/s 147 was beyond the limitation period stipulated in Section 149(1). The High Court, following Ojjus Medicare Pvt. Limited, clarified the manner of reckoning the six or ten-year period for reopening assessment prior to six years or before expiry of ten years from the relevant assessment year u/s 153C. The court held that the ten-year period is to be reckoned from the end of the assessment year relevant to the year in which the notice u/s 148 is issued. Consequently, the impugned notice for Assessment Year 2015-16 was set aside, restraining the respondent from proceeding with the reassessment proceedings.

  • Unreliable survey statement can't justify addition to assessee's income by hiking closing stock value.

    Addition to assessee's income by enhancing closing stock value made by Assessing Officer (AO) u/s 143(3) was based solely on statement recorded during survey without any incriminating material. As per S Kader Khan Sons [2007 (7) TMI 182 - MADRAS HIGH COURT], statement recorded u/s 133A has no evidentiary value, and addition cannot be made based on such admission during survey. AO relied on gross profit rate declared during survey, but CIT(A) noted AO did not provide basis for adopting 17.43% rate instead of overall 13.08%. AO cannot make additions based on surmises and conjectures without rejecting books of account. CIT(A) examined consistent gross profit rates over previous years and deleted the addition. AO did not disallow purchases but enhanced closing stock, potentially affecting opening stock in subsequent year. Revenue's appeal against CIT(A) order was dismissed.

  • Jurisdictional defects ignored, bogus expenses disallowed, profit estimation not justified.

    Assessment proceedings conducted by non-jurisdictional officer - Assessee participated without challenging jurisdiction - Assessment order valid as per Supreme Court ruling in DCIT vs. Kalinga Institute case. Bogus expenses - Assessee provided incomplete addresses, similar PAN numbers for different vendors - Disallowance of Rs. 20 lakhs justified considering totality of facts, assessee's inability to substantiate expenses despite reasonable profit rate declared. Estimation of 25% profit by authorities not warranted.

  • Assessee Wins! Tax Officer's Route Expense Disallowance Rejected, Surrender Deemed Excessive.

    This is a case concerning the disallowance of certain expenses termed as "route expenses" by the Assessing Officer (AO) due to lack of proper supporting vouchers. The key points are: The assessee made a surrender of Rs. 13 crores for all the years covered under search action. The Revenue cannot shift the burden on the assessee to prove the genuineness of expenses when nothing contrary was found during the search operations. The AO did not doubt the genuineness or allowability of expenses but harped upon the production of drivers, ignoring the search findings. Statements recorded u/s 132(4) and 131(1) have no evidentiary value and cannot be termed incriminating material, as per recent court rulings. Merely because drivers were unavailable during assessment, no addition is permissible without corroborating material proving the expenses were bogus, not business-related, or invoices were fake. The CIT(A)'s sustaining 60% of the hypothetical surrender is not tenable in law. All additions sustained by the CIT(A) are deleted. The assessee's appeals are allowed.

  • Tax tribunal deletes additions for commission expenses and non-genuine purchases for assessee's sister concern.

    The CIT(A) partly allowed and restricted the addition on account of commission expenses at 0.25% as compared to 2% adopted by the Assessing Officer. The coordinate bench of the Tribunal, in a similar case involving the assessee's sister concern, deleted the addition on account of non-genuine profit/loss in illiquid options and consequently also deleted the notional addition of commission u/s 69C. Following the same, the addition on account of commission expenses u/s 69C is deleted. Regarding the addition on account of non-genuine purchases, the coordinate bench of the Tribunal, in a similar case involving the assessee's sister concern, deleted the addition on account of non-genuine purchases. In the absence of contradictory material on facts and law, the addition on account of non-genuine purchases is also deleted, respectfully following the Tribunal's decision in the cited case.

  • Taxman can't revise order just for differing opinion, only lack of inquiry permits revision.

    Section 263 revision - derivative transactions losses - inadequate inquiry by Assessing Officer (AO). Commissioner of Income Tax (CIT) set aside AO's order for re-examination instead of giving conclusive finding on sustainability under law. Distinction between lack of inquiry and inadequate inquiry - if any inquiry conducted, even inadequate, CIT cannot revise merely due to different opinion. Only lack of inquiry permits revision u/s 263. AO conducted inquiry, was satisfied with evidence provided, not required to give elaborate finding. CIT cannot remand for fresh adjudication merely due to uncertainty about assessee's claim correctness. When AO's order not erroneous for want of inquiry, CIT must give conclusive finding on order's sustainability under law. Assessee's appeal allowed.

  • Transfer of tenancy rights not taxed but purchase of additional area beyond tenancy is taxable if consideration differs from stamp duty value. (2)(x.

    Applicability of Section 56(2)(x) of the Income Tax Act to the transfer or surrender of tenancy rights. It states that Section 56(2)(x) is a deeming provision akin to Section 50C, with the former applicable to buyers and the latter to sellers of immovable property. The decisions rendered in the context of Section 50C are applicable to Section 56(2)(x). The transfer of "tenancy rights" has been held to be outside the scope of Section 50C, and following the same reasoning, the provisions of Section 56(2)(x) will not apply to the transfer of tenancy rights. However, in the present case, the assessee purchased additional area beyond the tenancy rights, and the provisions of Section 56(2)(x) will apply to the additional purchase. The difference between the actual consideration and stamp duty valuation for the additional area was less than 10%, and as per the amended tolerance limit, no addition u/s 56(2)(x) is required.

  • Land sale capital gain: Indexation from allotment date. Cost based on land parcel accounts. Land improvement cost remanded. Loan interest disallowance set aside.

    Indexation benefit allowed from date of allotment letter for capital gain on land sale. Cost of acquisition determined from books for separately maintained land parcel accounts. Cost of land improvement remanded to AO for fresh adjudication based on evidence. Disallowed expenses related to interest on loans for land purchase set aside for AO to examine allowability under law after considering all facts, including commencement of business. Partial relief granted to assessee.

  • Original asset co-owned by assessee and wife; sale proceeds invested in new property qualify for tax exemption u/s 54F.

    Legal interpretation of the term "original asset" for claiming exemption u/s 54F of the Income Tax Act. It discusses the ownership rights over the "original asset" by the assessee and his wife, and their entitlement to claim exemption based on the sale proceeds invested in a new property. The key points are: the "original asset" was jointly owned by the assessee and his wife, giving them equal ownership rights; the term "property" encompasses valuable rights and interests; both the assessee and his wife are beneficial owners and liable for taxation on the income from the property; the assessee invested the sale proceeds from the "original asset" in a new property co-owned with his son, fulfilling the criteria for exemption u/s 54F; the exemption is applicable based on judicial precedents, and the income should be computed considering the assessee's share of ownership and investment in the new property.

  • Customs

  • Imported goods exempted from countervailing duty due to domestic excise duty exemption.

    The appellant imported goods and claimed exemption from countervailing duty (CVD) under Notification No. 30/2004-CE, as the like articles manufactured in India were exempt from excise duty. The appellant paid CVD under protest and filed a protest letter. The Commissioner (Appeals) allowed the appellant's appeal, granting exemption from CVD. The Tribunal upheld the Commissioner's order, rejecting the revenue's objection based on unjust enrichment. The Tribunal relied on its earlier decision allowing the appellant's appeal on the same issue. Consequently, the impugned order denying refund was set aside, granting consequential relief to the appellant.

  • Revenue required to file separate appeals for each Bill of Entry due to monetary threshold limits.

    One appeal filed by the Revenue against 7 Bills of Entry is not maintainable. As per Rule 6(A) of the CESTAT Procedure Rules, 1982, when the Commissioner (Appeals) passes a common order-in-appeal disposing of appeals covering multiple Bills of Entry, the appellant is required to file separate appeals for each Bill of Entry, as each Bill of Entry is an assessment order in itself. This interpretation aligns with the Ahmedabad Bench's ruling in CMR Nikkie India Pvt Ltd case and the Jammu & Kashmir High Court's interpretation in CGST & CE, Jammu vs. M/s Narbada Industries case, which clarified that monetary thresholds apply to individual appeals, not the aggregate amount. Consequently, the Revenue is directed to file 7 separate appeals instead of one appeal if they wish to challenge the common order-in-appeal.

  • DRI officers' authority to issue customs notices upheld; misinterpretation rectified.

    DRI officers were appointed as officers of customs through notifications issued by the Department of Revenue, empowering them to issue show cause notices u/s 28 of the Customs Act, 1962. The Supreme Court's decision in Canon India erroneously held that DRI officers lacked jurisdiction, failing to consider Sections 2(34) and 5 of the Act which assign functions to proper officers. The reliance on Sayed Ali was misplaced as it dealt with different circumstances. Section 28(11) does not lead to chaos, as feared in Mangali Impex, due to the policy of excluding other officers once a notice is issued. Section 97 of the Finance Act, 2022, validating notices u/s 28, is constitutional. The Court provided directions for pending cases challenging jurisdiction, allowing appeals and remanding matters for adjudication on merits by proper officers u/s 28. The Canon India ruling on limitation remains undisturbed.

  • Customs Duty Dispute: Extended Limitation Period Scrutinized.

    Extension of the limitation period under the first proviso to Section 28(9) of the Customs Act, 1962, and whether the proceedings initiated in the Show Cause Notice dated 28.09.2022 can be continued in light of the extension granted by the Chief Commissioner of Customs on 07.05.2024. It clarifies that the question of granting extensions under the first proviso arises only after the limitation period for passing an order determining duty or interest has expired. The senior officer can then extend the period by six months or one year, as specified in clauses (a) and (b) of Section 28(9). The second proviso deals with the abatement of proceedings if no orders are passed after the extension period. The clarification issued by the Commissioner of Customs regarding the amendment to Section 28(9) is deemed a non-application of mind. The appellant's argument about standing orders being guidelines is addressed, and the lack of a reply to the Show Cause Notice is mentioned. The rejection of the appellant's request for cross-examination by an officer without jurisdiction is highlighted, and the decision to file an appeal before the High Court is discussed. The summary also notes the expiry of the limitation for filing an appeal against the CESTAT Order and the failure to file a writ petition under Article 226 of the Constitution.

  • SEZ goods removed to DTA face Anti-Dumping Duty challenges.

    This is a case involving the imposition of Anti-Dumping Duty (ADD) on goods removed from a Special Economic Zone (SEZ) to the Domestic Tariff Area (DTA). The key points are: 1) The demand for ADD for the period from 08.12.2014 to 31.08.2015 cannot be sustained as the ADD Notification had lapsed on 07.12.2014, and the subsequent notification extending it was held invalid. 2) For the prior period (14.11.2014 to 07.12.2014), no breakup of ADD liability or penalty was provided, necessitating further examination after deciding other objections. 3) The Development Commissioner had jurisdiction to issue show cause notices and adjudicate the matter before 05.08.2016, as the administrative head empowered under the SEZ Act. 4) The failure to provide the petitioner with the respondents' written submissions before concluding proceedings is immaterial, as the orders are not mere modifications of those submissions. 5) Determining whether the goods fall within the scope of the ADD Notification and whether the business model involved circumvention involves disputed questions of fact, requiring detailed examination of evidence, which is inappropriate in a writ petition when a statutory remedy is available. 6) The High Court granted leave to the petitioner to file a statutory appeal on.

  • Tribunal upholds adopting SION norms to calculate yarn input for duty drawback on exported products in absence of actual data.

    Drawback scheme allows rebate of duty paid on excisable goods used in manufacture of exported products. The assessee calculated yarn consumption for exports based on SION norms, an established input-output ratio recognized by law, as actual quantity could not be ascertained due to quality checks and wastage. The Tribunal upheld the adoption of SION norms, stating that in absence of actual data, a methodology like SION has to be applied to determine duty incidence for drawback. The Tribunal found no infirmity in the method as it is consistent, certified by field officers, and not disputed by Revenue apart from alleging reverse calculation, which is permissible based on SION. The reasoned order was upheld as Revenue failed to negate the findings.

  • FEMA

  • FPIs can reclassify holdings as FDI with conditions.

    The circular provides an operational framework for reclassification of Foreign Portfolio Investment (FPI) to Foreign Direct Investment (FDI) as per the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. It allows FPIs investing beyond the prescribed 10% limit of paid-up equity capital to reclassify such holdings as FDI, subject to conditions. The key points are: reclassification not permitted in FDI-prohibited sectors; necessary approvals from government and investee company's concurrence required; reporting requirements specified; custodian to transfer shares from FPI to FDI demat account post reporting; entire FPI investment treated as FDI post reclassification; reclassification/divestment timeline prescribed; post reclassification, investment governed by FDI rules.

  • State GST

  • Exporter's IGST refund regularized if import taxes paid later.

    The circular clarifies the regularization of refund of IGST availed in contravention of Rule 96(10) of CGST Rules, 2017, where exporters had imported inputs without paying integrated taxes and compensation cess. Initially, if inputs were imported without IGST and cess by availing exemption notifications, but later the exporter paid IGST, cess with interest and got the Bill of Entry reassessed, then the IGST paid on exports shall not be considered in contravention of Rule 96(10). The Explanation inserted in Rule 96(10) retrospectively deems the exemption notification benefits as not availed if IGST and cess were paid on imported inputs. Thus, refund of IGST paid on exports can be regularized in such cases.

  • IBC

  • Apex Court Directs Liquidation for Non-Payment of Dues by Resolution Applicant, Allows PBG Invocation.

    The Supreme Court held that the Effective Date for implementing the Resolution Plan was achieved on 20.05.2022 as all Conditions Precedent were fulfilled. The Performance Bank Guarantee (PBG) could not be adjusted against the first tranche payment as per the Resolution Plan. The Resolution Applicant/Successful Resolution Applicant (SRA) failed to implement the Resolution Plan by non-payment of the first tranche, airport dues, workmen and employees' dues. The NCLAT rightly held the SRA contravened the approved Resolution Plan, warranting liquidation u/s 33(3) of the IBC. Timely implementation is crucial under the IBC, so the SC exercised Article 142 powers to direct liquidation of the Corporate Debtor, overriding the need for the Adjudicating Authority's determination, to prevent delays. The PBG may be invoked by creditors per the Resolution Plan terms.

  • IBC: Suspended Director's preferential transaction payment reversed in liquidation.

    This appeal arose u/s 61 of the Insolvency and Bankruptcy Code, 2016, filed by the Suspended Director against the Adjudicating Authority's order. The Liquidator had obtained a Transaction Audit Report, which identified a payment of Rs. 3,67,900/- to the Suspended Director as a preferential transaction. The Adjudicating Authority rightly noted that this payment placed the Suspended Director in a beneficial position against the provisions of Section 53, which prioritizes secured creditors and workmen over unsecured creditors. The Suspended Director could have staked his claim for the outstanding unsecured loan u/s 53's waterfall mechanism. Since the Liquidator formed an opinion based on the Transaction Audit Report and filed an application before the Adjudicating Authority, the contention that the Liquidator did not form an opinion cannot be accepted. Consequently, the appeal was dismissed.

  • Indian Laws

  • Partners split; firm wound up. Court-appointed receiver managed assets. Ex-partner claimed share in profits from firm's assets taken over.

    Partnership firm dissolution, accounts settlement, and distribution of shares. Receiver appointed to manage assets until winding up. Defendants restrained from disposing firm property. Appellant company took over firm assets. u/s 37 of 1932 Act, outgoing partner entitled to accounts, share in profits derived from their share in firm assets. Extent of appellant's business derived from firm assets to be determined through evidence. Appeal against remand order to trial court dismissed.

  • Petition under Arbitration Act dismissed based on forum non conveniens doctrine.

    The doctrine of forum non conveniens was applied to determine the maintainability of a petition u/s 11 of the Arbitration and Conciliation Act, 1996. The Court held that Part I of the Act is applicable only where the arbitration takes place in India or the law governing the arbitration agreement is Indian law. For agreements executed after 06.09.2012, if the seat of arbitration is outside India, Part I is inapplicable. For pre-06.09.2012 agreements, Part I is inapplicable if parties have excluded its application by designating a foreign seat or governing law. The seat cannot be determined by the 'Closest Connection Test' but by express designation or significant indicia. Where multiple possible seats exist, forum non conveniens determines the appropriate seat considering parties' intentions and convenience. The petition was dismissed as the seat was not in India, nor was the agreement governed by Indian law.

  • High Court overstepped limited jurisdiction by delving into factual matrix instead of ascertaining prima facie arbitration agreement.

    The High Court exceeded its limited jurisdiction u/s 11 of the Arbitration and Conciliation Act, 1996 by undertaking a detailed examination of the factual matrix and assessing the auditor's report, instead of merely ascertaining the prima facie existence of an arbitration agreement. The Supreme Court clarified that the referral courts' limited jurisdiction u/s 11 must not be misused to force parties into costly arbitration, but this does not determine the merits, which the Arbitral Tribunal is rightfully equipped to decide. The Supreme Court allowed the appeal and set aside the High Court's order, reiterating the narrow scope of judicial scrutiny at the Section 11 stage after the 2015 amendment.

  • SEBI

  • Unified Payment Interface (UPI) facilitated trading, integrated demat/bank accounts, fund blocking at order placement.

    Circular mandates qualified stock brokers to provide facility of trading supported by blocked amount in secondary market using UPI block mechanism or 3-in-1 trading account integrating trading, demat and bank accounts. 3-in-1 account blocks funds/securities at order placement, transfers post market hours, client earns interest on available funds. Clients have option to continue existing mode or opt for new facilities. Provisions effective February 1, 2025. Stock exchanges and clearing corporations to amend bye-laws, disseminate circular. Issued under SEBI Act to protect investors, regulate securities market.

  • To reclassification rules: Equity investment over 10% requires compliance, custodian reporting to , and transfer to FDI account.

    This circular outlines the procedure for reclassification of Foreign Portfolio Investment (FPI) to Foreign Direct Investment (FDI). If an FPI's investment reaches 10% or more of a company's paid-up equity capital, and the FPI intends to reclassify its holdings as FDI, it must follow extant FEMA rules and RBI circulars. The custodian shall report this intent to SEBI, freeze the FPI's purchase transactions, and upon completion of RBI reporting, transfer the equity instruments from the FPI's demat account to its FDI demat account. The circular modifies the previous procedure outlined in the Master Circular and comes into immediate effect under SEBI's powers to regulate securities market.

  • Service Tax

  • Limitation Period For Tax Evasion Not Extended For Mere Non-Production Of Documents.

    Failure to produce supporting documents before audit team does not constitute suppression of facts to invoke extended period of limitation u/s 73(1) of Finance Act, 1994. No allegation of statutory contravention with intent to evade tax against assessee. Not producing documents necessary for substantiating claim does not fall under exception of "suppression of facts". No express allegations made in show cause notice regarding suppression of facts. High Court concurred with CESTAT that extended period not correctly invoked as intent to evade tax neither established nor evident. No infirmity in CESTAT's decision rejecting Revenue's contention of invoking extended period under proviso to Section 73(1).

  • Subcontractor not liable for service tax in SEZ despite lacking A-1, A-2 forms.

    Service tax demand was made on a subcontractor for services provided in a Special Economic Zone (SEZ), on the grounds that the subcontractor failed to provide declarations in forms A-1 and A-2, and Rule 10 of the SEZ Rules does not extend benefits to subcontractors. However, it was held that the subcontractor cannot be expected to obtain A-1 and A-2 forms, as these are obtained by the main contractor who directly deals with the SEZ unit. The main criteria for granting exemption is that the service should be provided in the SEZ, which was not disputed. Once this fact is established, the service is exempt under Notification No. 09/2009-ST and not taxable u/ss 51 and 26 of the SEZ Act. It is settled that when a subcontractor provides services on behalf of the main contractor in an SEZ, the same is exempt from service tax. Therefore, the subcontractor is not liable to pay service tax.

  • Manufacturer's interest on late payments for excisable goods not a taxable service.

    Classification of interest charged by a manufacturer on delayed payments from customers for the sale of excisable goods. The key points are: The interest was classified as a declared service u/s 66E(e) of the Finance Act, making it liable for service tax. However, relying on the Supreme Court's judgment in South Eastern Coalfields Ltd., it was held that penal interest on delayed payments cannot be subject to service tax u/s 66E(e). Consequently, the order classifying the interest as a taxable service was set aside, and the appeal was allowed with consequential relief, following the ratio decidendi of the Supreme Court case.

  • Services tax relief: GTA, reimbursements, double demands, pure supply, public roads, commissions, railway works, compensations set aside.

    Service tax demand on Goods Transport Agency (GTA) services rendered on reverse charge basis set aside as appellant did not collect service tax from service recipient. Demand on reimbursable expenditure for diesel procurement set aside being reimbursements not taxable. Double demand on advances received and later included in final bill value set aside. Demand on supply of materials where CST paid set aside being pure supply. Demand on road works set aside as construction of public roads exempted. Demand on commission retained on back-to-back contracts set aside as not covered under Business Auxiliary Service. Demand on railway works set aside as service tax already paid. Double demand on erection, commissioning and testing set aside. Demand on lump sum compensation paid and reimbursed set aside as not related to taxable service. Double demand on advances adjusted in bills set aside. Demand on hiring of additional dumpers set aside as service tax not collected. Demand treating services as Works Contract Service partly allowed 60% abatement. Demand for extended period set aside being time-barred. CENVAT credit demand for 2013-14 and 2014-15 set aside being time-barred. Balance credit demand remanded for verification. Extended period not invokable as Revenue aware of facts. Demand of service tax collected but not paid for 2015-16 to be verified and paid. Penalties.


Articles


Notifications


Circulars / Instructions / Orders


News


Case Laws:

  • GST

  • 2024 (11) TMI 463
  • 2024 (11) TMI 462
  • 2024 (11) TMI 461
  • 2024 (11) TMI 460
  • 2024 (11) TMI 459
  • 2024 (11) TMI 458
  • 2024 (11) TMI 457
  • 2024 (11) TMI 456
  • 2024 (11) TMI 455
  • 2024 (11) TMI 454
  • 2024 (11) TMI 453
  • 2024 (11) TMI 452
  • 2024 (11) TMI 451
  • 2024 (11) TMI 450
  • 2024 (11) TMI 449
  • 2024 (11) TMI 448
  • 2024 (11) TMI 447
  • 2024 (11) TMI 446
  • 2024 (11) TMI 445
  • 2024 (11) TMI 444
  • 2024 (11) TMI 443
  • 2024 (11) TMI 442
  • 2024 (11) TMI 441
  • 2024 (11) TMI 440
  • 2024 (11) TMI 439
  • 2024 (11) TMI 438
  • 2024 (11) TMI 437
  • 2024 (11) TMI 436
  • Income Tax

  • 2024 (11) TMI 435
  • 2024 (11) TMI 434
  • 2024 (11) TMI 433
  • 2024 (11) TMI 432
  • 2024 (11) TMI 431
  • 2024 (11) TMI 430
  • 2024 (11) TMI 429
  • 2024 (11) TMI 428
  • 2024 (11) TMI 427
  • 2024 (11) TMI 426
  • 2024 (11) TMI 425
  • 2024 (11) TMI 424
  • 2024 (11) TMI 423
  • 2024 (11) TMI 422
  • 2024 (11) TMI 421
  • 2024 (11) TMI 420
  • 2024 (11) TMI 419
  • Customs

  • 2024 (11) TMI 418
  • 2024 (11) TMI 417
  • 2024 (11) TMI 416
  • 2024 (11) TMI 415
  • 2024 (11) TMI 414
  • 2024 (11) TMI 413
  • 2024 (11) TMI 412
  • 2024 (11) TMI 411
  • 2024 (11) TMI 391
  • Insolvency & Bankruptcy

  • 2024 (11) TMI 410
  • 2024 (11) TMI 409
  • Service Tax

  • 2024 (11) TMI 408
  • 2024 (11) TMI 407
  • 2024 (11) TMI 406
  • 2024 (11) TMI 405
  • 2024 (11) TMI 404
  • 2024 (11) TMI 403
  • 2024 (11) TMI 402
  • 2024 (11) TMI 401
  • Central Excise

  • 2024 (11) TMI 400
  • 2024 (11) TMI 399
  • 2024 (11) TMI 398
  • 2024 (11) TMI 397
  • CST, VAT & Sales Tax

  • 2024 (11) TMI 396
  • 2024 (11) TMI 395
  • Indian Laws

  • 2024 (11) TMI 394
  • 2024 (11) TMI 393
  • 2024 (11) TMI 392
 

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