TMI Tax Updates - e-Newsletter
November 5, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax CST, VAT & Sales Tax Wealth tax Indian Laws

Articles

1. CENTRAL GOODS AND SERVICES TAX (TWELFTH AMENDMENT) RULES, 2020

   By: DR.MARIAPPAN GOVINDARAJAN

Notifications

GST - States

1. (14/2020)-KGST.CR.01/17-18 - dated 29-10-2020 - Karnataka SGST

Seeks to amend notification (08/2020) No. KGST.CR.01/17-18 dated 06.05.2020

2. (40/2020) - FD 03 CSL 2020 - dated 27-10-2020 - Karnataka SGST

Amendment in Notification (20/2019) No. FD 47 CSL 2017, dated the 16th October, 2019

3. (39/2020) - FD 03 CSL 2020 - dated 27-10-2020 - Karnataka SGST

Prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year

4. (13/2020)-KGST.CR.01/17-18 - dated 16-10-2020 - Karnataka SGST

Amendment in Notification (12/2017) No.KST.GST.CR.01/17-18, dated the 29th June, 2017

5. (12/2020)-KGST.CR.01/17-18 - dated 16-10-2020 - Karnataka SGST

Seeks to prescribe return in FORM GSTR-3B of KGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

6. (11/2020) - KGST.CR.01/17-18 - dated 16-10-2020 - Karnataka SGST

Prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS/CIR/P/2020/223 - dated 4-11-2020

Guidelines for rights issue of units by an unlisted Infrastructure Investment Trust (InvIT)

2. SEBI/HO/MIRSD/CRADT/CIR/P/2020/218 - dated 3-11-2020

Creation of Security in issuance of listed debt securities and ‘due diligence’ by debenture trustee(s)

Highlights / Catch Notes

GST

• Court Rules Against Coercive Tax Interest Recovery; Petitioner to Receive Refund Due to Retrospective Interest Provision.

  Case-Laws - HC : Refund - Interest on delayed payment of tax u/s 50 - Refund of amount deposited earlier at the instance of Department - the petitioner states that the interest liability relating to belated payment of tax both by cash and reversal of ITC has been coercively recovered - With the insertion of the proviso to be taken to be retrospective, these writ petitions are allowed. - HC
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• Court Allows Correction of Form GSTR-3B to Claim Eligible Input Tax Credit Due to Notification Delays.

  Case-Laws - HC : Permission to correct Form GSTR-1 - Admittedly, the 31st of March 2019 was the last date by which rectification of Form – GSTR 1 may be sought. However, and also admittedly, the Forms, by filing of which the petitioner might have noticed the error and sought amendment, viz. GSTR-2A and GSTR-1A are yet to be notified. Had the requisite Forms been notified, the mismatch between the details of credit in the petitioner’s and the supplier’s returns might well have been noticed and appropriate and timely action taken. The error was noticed only later when the petitioners’ customers brought the same to the attention of the petitioner. - Also form GSTR Form 3B permitted to be rectified to claim eligible ITC - HC
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• Court Rules on Goods Detention: Section 129(1)(b) Compliance Needed for Release; Classification Issues Irrelevant.

  Case-Laws - HC : Detention of goods alongwith vehicle - if this Court ignores the classification issue as also the non-registration issue which are not relevant for the purposes of Section 129 of the Act, then it is the provisions of Section 129(1)(b) that would apply for the purposes of determining the deposit that the petitioner would have to make for obtaining a clearance of the goods and the vehicle - HC
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• Director General of Foreign Trade or authorized officer must follow legal procedure for IEC suspension/cancellation in GST evasion cases.

  Case-Laws - HC : GST evasion - Suspension and cancellation of importer exporter code (IEC) Number - It is trite that when a law requires a thing to be done in a particular manner, it has to be done in that particular manner and recourse to any other manner is necessarily forbidden. Suspension and cancellation of importer exporter code number can be done only by the DGFT or by his authorized officer - HC
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Income Tax

• One-time lease premiums not adjustable against periodic rent are not considered rent under Income Tax Act Section 194-I.

  Case-Laws - HC : TDS u/s 194I - Thus lump sum lease premium or one-time upfront lease charges, which are not adjustable against periodic rent, paid or payable for acquisition of long-term leasehold rights over land or any other property are not payments in the nature of rent within the meaning of section 194-I of the Act. Therefore, such payments are not liable for TDS under section 194-I - HC
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• High Court Revises Assessing Officer's Decision on Assessee's Deduction Claim u/s 10B; Deemed Erroneous and Prejudicial.

  Case-Laws - HC : Revision u/s 263 - Assessee's claim for deduction u/s 10B - The decision of the AO to allow such deduction to the Assessee without making any inquiries whatsoever or rather without addressing the issue in his order, rendered his order quite erroneous and prejudicial to the interests of the Revenue. - HC
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• TDS Liability Confirmed: Usance Charges to Non-Resident Suppliers are Taxable Income under Sec 9(1)(v)(b) & Sec 5(2).

  Case-Laws - HC : TDS u/s 195 - Usance charges were paid or were payable to a non resident supplier - Since in the present case, the assesses imported the raw material for its consumption based on a letter of credit and paid the Usance charges, the beneficiary of such charges is the foreign seller. The issuing bank of the assesses has merely acted as an agent of the assesses. - The Usance charges therefore constitute income of a non-resident as envisaged in the provisions of Section 9(1)(v)(b) read with Section 5(2) of the IT Act. - TDS liability confirmed - HC
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Customs

• Court Upholds Rejection of Declared Value Based on Actual Transaction Evidence; Similar Goods Not Considered.

  Case-Laws - AT : Valuation of imported goods - Revenue was not required to look into the value of the similar goods as per contemporaneous import, in view of the actual transaction value found in the documentary evidence retrieved from the appellants. Accordingly, rejection of the declared value and the re-valuation of the goods are upheld. - AT
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• Court Upholds Penalty for Misclassified Export Attempt u/s 114; Authority's Decision Deemed Justified.

  Case-Laws - HC : Levy of penalty u/s 114 - The discretion of levying penalty is always available with the Statutory Authority under Section 114, whenever such an Authority is of the view that an attempt to export the goods are in such a nature that the goods would be liable to be confiscated under Section 113 - Since the Original Authority was of the opinion that the petitioner attempted to export the goods through misclassification, this Court is of the view that the Authority was justified in levying the penalty. - HC
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• High Court supports Magistrate's decision to withhold confidential Section 108 Customs Act statements; not eligible u/r 222.

  Case-Laws - HC : Right to obtain copies of statements recorded u/s 108 of CA - The statements cannot be termed as documents produced in or in the custody of the court, copies of which are liable to be issued under Rule 222 - Hence, discretion is vested with the court to refuse copies, if the documents or proceedings are confidential or strictly judicial in nature. The learned Magistrate having refused to issue copies of the Section 108 statements finding them to be confidential, there are no reason to interfere with the impugned order. - HC
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• Court Orders Reclassification of SVLDRS Declaration from 'Voluntary Disclosure' to 'Litigation' Category; Rectification Due in Four Weeks.

  Case-Laws - HC : SVLDRS scheme - rectification of error/mistake apparent on the face of the record - The respondent No.2 is directed to rectify the declaration dated 30th December, 2019 and consider it as one filed under the ‘litigation’ category instead of ‘voluntary disclosure’ and process the same in accordance with law within four weeks - HC
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Indian Laws

• Court Can't Hold Mini Trial for Pleas in Cheque Dishonor Case u/s 561-A Cr.P.C; Facts Resolved at Trial.

  Case-Laws - HC : Dishonor of Cheque - This Court while exercising the powers under Scion 561-A Cr.P.C cannot conduct a mini trial with regard to the pleas raised by the petitioner. The complaint under Section 138 NI Act, no doubt can be quashed when it suffers from legal lacunae but not on the factual issues those are to be adjudicated upon only during the trial. - HC
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• Court's Role in Arbitral Awards: No Appeals, No Factual Corrections, Arbitrator's Evidence Authority Prevails.

  Case-Laws - HC : Grant of Arbitral Award - when a Court is applying the ‘public policy’ test to an arbitral award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the Arbitrator on facts must necessarily pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. - HC
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Service Tax

• Commissioner's Decision on CENVAT Credit Reversal Deemed Contrary; Appellant Entitled to Refund u/r 6 (3) (i).

  Case-Laws - AT : Refund of CENVAT Credit reversed - There are no hesitation to hold that the view taken by the Commissioner (Appeals) that the appellant has to reverse credit as per Rule 6 (3) (i) is against the provisions of law. The appellant would be eligible for refund after reversal / paying of proportionate credit on exempted services by applying Rule 6 (3) (i). - AT
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• Anti-virus software classified as 'Information Technology Software'; petitioner liable for service tax u/s 68, Finance Act 1994.

  Case-Laws - HC : Classification of services - Anti Virus Software - The petitioner has failed to substantiate that an ‘Anti Virus Software’ will not fall within the ambit of the definition of ‘Information Technology Software’ - Since the petitioner is liable to pay service tax but had not discharged the service tax liability, the provisions of Section 68 of the Finance Act, 1994 r/w. Rule 6 of the Service Tax Rules has been violated - HC
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• Show Cause Notice in Service Tax: Demands Beyond Notice Scope Are Invalid, Must Address All Recipient Objections.

  Case-Laws - HC : Validity of SCN - Demand of Service Tax - The very purpose of the show cause notice issued is to enable the recipient to raise objections, if any, to the proposals made and the concerned Authority are required to address such objections raised. This is the basis of the fundamental Principles of Natural Justice. In cases where the consequential demand traverses beyond the scope of the show cause notice, it would be deemed that no show cause notice has been given, for that particular demand for which a proposal has not been made - HC
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VAT

• Tax Assessment Deadline Starts After Tax Year Ends, Not Finalization Date; Rectifications Allowed Within Three Years.

  Case-Laws - HC : Time Limitation for completion of assessment - The limitation provided is not from the date of finalization of assessment, but from the closure of the year to which the tax relates. Even a rectification of mistake can only be within three years of the expiry of the year to which the tax relates. In that context, it would not have been the intention of the executive Government to enable an assessment at any time after the return is filed when the rules provide a limitation period of re-opening either for determination of turnover or for revising the rate of tax or even for rectification of a mistake. - HC
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Case Laws:

• GST

• 2020 (11) TMI 111
  Release of freezed Bank Accounts of petitioner and family members - Suspension and cancellation of importer exporter code (IEC) Number - Restraint from adopting any coercive measures without issuing show cause notice to compel the petitioner to pay further customs duty and / or goods and services tax (GST) dues - direction to the respondents allowing presence of a lawyer of petitioner s choice during investigation (questioning) of the petitioner. HELD THAT:- The property including the bank account liable to or which has been provisionally attached must belong to the taxable person. Taxable person has been defined in section 2(107) of the CGST Act to mean a person who is registered or is liable to be registered under sections 22 or 24 of the CGST Act - Respondent Nos.5 to 7 have explained in their affidavits that the investigation carried out against the petitioner falls within the ambit of sections 67 and 74 of the CGST Act and on satisfaction of the concerned authority provisional attachment orders were issued in the prescribed format. Contention of the petitioner that there was violation of the provisions of section 83 of the CGST Act and no due process was followed while provisionally attaching the bank accounts and the rebuttal contentions of the respondents that there has been due compliance to the statutory requirement of section 83 read with rule 159 may require a detailed examination. However, for the moment we may consider attachment of the bank accounts from the perspective of the taxable person i.e., the petitioner Mr. Siddarth Mandavia and his proprietorship firm M/s. XS Components - there is no allegation or any averment made by the respondents that any money belonging to the petitioner or to his firm have been credited into the joint accounts of the petitioner with his wife or with his minor son or into the account of his wife. As a matter of fact, in paragraph 38 of their first affidavit, respondent Nos.5 to 7 have stated that the reason for attachment of other bank accounts appears to be their link with the petitioner or his PAN. They being not the tax payers in this case, provisional attachment of their bank accounts therefore would not be justified. Liberty may be granted to the petitioner even at this stage to file objection to the provisional attachment and if such an objection is filed, the competent authority may take an appropriate decision thereon after providing an opportunity of hearing to the petitioner. It is trite that when a law requires a thing to be done in a particular manner, it has to be done in that particular manner and recourse to any other manner is necessarily forbidden. Suspension and cancellation of importer exporter code number can be done only under Foreign Trade (Development and Regulation) Act, 1992 by the Director General of Foreign Trade or by his authorized officer for the reasons specified and in the manner provided in section 8 of the said Act. Respondents arrayed in this petition are neither the Director General of Foreign Trade nor his authorized officer - It is interesting to note that on the allegation of blocking of importer exporter code of the petitioner by respondent No.3 made in paragraph 11 and ground No.S of the writ petition, respondents in paragraph 32 of their first affidavit have offered no comment, so also in paragraph 64. If that be the position, blocking of importer exporter code of the petitioner by any authority other than the Director General of Foreign Trade or by his authorized officer under section 8 of the Foreign Trade (Development and Regulation) Act, 1992 would be unauthorized, unwarranted and without jurisdiction. The attached properties are directed to be released - List for further consideration on 15.12.2020.

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• 2020 (11) TMI 110
  Detention of goods alongwith vehicle - non-registration of the person making the interstate supply - purchase bill issued by the petitioner - valid document for the purposes of supporting an interstate taxable supply or not - petitioner contends that, while the consignor agriculturist is not required to take any registration in view of the express provisions of Section 23(1)(b) of the Act, he is also not required to take a compulsory registration under Section 24, since the non-obstante clause in Section 24 does not apply to agriculturists mentioned under Section 23 - HELD THAT:- In the instant case, the declaration by the petitioner in the e-way bill, as also before the respondent authorities, has consistently been that the purchase was effected from an agriculturist in Karnataka who, going by the provisions of Section 23 of the GST Act, is not required to get himself registered for the sale of agricultural produce. Even assuming that the respondents dispute the said contention of the petitioner, the remedy available to them is to proceed against the agriculturist in question, for not taking the registration as required under the applicable provisions of the Act. The non-registration of the consignor, or the alleged mis-classification of the goods under transportation, cannot be a ground for detention under Section 129 of the GST Act. In the instant case, if this Court ignores the classification issue as also the non-registration issue which are not relevant for the purposes of Section 129 of the Act, then it is the provisions of Section 129(1)(b) that would apply for the purposes of determining the deposit that the petitioner would have to make for obtaining a clearance of the goods and the vehicle - the petitioner would have to pay the lesser of an amount equal to 5% of the value of the goods or Rs. 25,000/-. In the instant case, the value of the goods being approximately Rs. 10 lakhs, the lesser amount would be Rs. 25,000/- which amount the petitioner would necessarily have to pay to obtain a release of the goods and the vehicle. The writ petition is disposed off by directing the respondents to release the goods and the vehicle to the petitioner on the petitioner paying an amount of Rs. 25,000/-, as required in terms of Section 129(1)(b) read with Section 129(3) of the GST Act.

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• 2020 (11) TMI 109
  Grant of anticipatory bail - Jurisdiction of learned ASJ, Rohini to pass such order - it is contended that the jurisdiction lies with the learned ACMM and/or learned ASJ, Patiala House Court - HELD THAT:- Now since the bail extended till 30.10.2020 is also expiring, hence the learned counsel for the petitioner submits that this petition would in any case become infructuous and as such intends to withdraw the same but seeks a direction to the learned trial court that whenever a fresh application is moved, notice be issued to the department. Learned counsel for the petitioner submits he shall move an appropriate application before the learned Additional Session s Court to apprise him of his jurisdiction and to give notice to the petitioner/department. Petition disposed off.

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• 2020 (11) TMI 108
  Permission to correct Form GSTR-1 for the period August 2017 to December 2017 and redistribute the credit available from the IGST column to the CGST and SGST fields - HELD THAT:- A registered person who files a return under Section 39(1) involving intra-State outward supply is to indicate the collection of taxes customer-wise in monthly return in Form GSTR-1 and the details of tax payment therein are auto populated in Form GSTR -2-A of the buyers. Any mismatch between Form GSTR-1 and Form GSTR-2A is to be notified by the recipient by way of a tabulation in Form GSTR-1A. Admittedly, Forms in GSTR-2A and GSTR-1A are yet to be notified as on date. The statutory procedure contemplated for seamless availment is, as on date, unavailable. Undoubtedly, the petitioner in this case has committed an error in filing of the details relating to credit. What should have figured in the CGST/SGST column has inadvertently been reflected in the ISGT column. It is nobody s case that the error was deliberate and intended to gain any benefit, and in fact, by reason of the error, the customers of the petitioner will be denied credit which they claim to be legitimately entitled to, owing to the fact that the credits stands reflected in the wrong column. It is for this purpose, to ensure that the suppliers do not lose the benefit of the credit, that the present writ petition has been filed. Admittedly, the 31st of March 2019 was the last date by which rectification of Form GSTR 1 may be sought. However, and also admittedly, the Forms, by filing of which the petitioner might have noticed the error and sought amendment, viz. GSTR-2A and GSTR-1A are yet to be notified. Had the requisite Forms been notified, the mismatch between the details of credit in the petitioner s and the supplier s returns might well have been noticed and appropriate and timely action taken. The error was noticed only later when the petitioners customers brought the same to the attention of the petitioner - In the absence of an enabling mechanism, the assessees should not be prejudiced from availing credit that they are otherwise legitimately entitled to. The error committed by the petitioner is an inadvertent human error and the petitioner should be in a position to rectify the same, particularly in the absence of an effective, enabling mechanism under statute. The petitioner is permitted to re-submit the annexures to Form GSTR-3B with the correct distribution of credit between IGST, SGST and CGST within a period of four weeks from date of uploading of this order and the respondents shall take the same on file and enable the auto-population of the correct details in the GST portal - petition allowed - decided in favor of petitioner.

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• 2020 (11) TMI 107
  Interest on delayed payment of tax - Refund of amount deposited earlier at the instance of Department - Interpretation of Section 50 of the Central Goods and Services Tax Act, 2017, particularly the effective date of application of the proviso inserted vide Section 100 of Finance (No.2) Act of 2019 - HELD THAT:- Under the second proviso to Section 43B, assessees were entitled to deduction only if the contribution to provident fund (PF) stood credited on or before the due date as set out under the Provident Funds Act - This presented a difficulty since the financial year for companies ended on the 31st of March of the particular financial year whereas, the accounting period of the Provident Fund Commissioner ended after the due date for filing of income tax returns. Thus, an assessee, who had made the statutory deposit within the due date under the PF Act, would not be in a position to claim the deduction when the return of income for income tax was filed. The second proviso thus stood deleted by Finance Act, 2003, with effect from 01.04.2004. However, while considering the effective date of deletion, the Bench noted the reason for such deletion as being curative and intended to remove existing anomalies. The Bench held that an amendment, be it by way of insertion, substitution or deletion, made specifically to remove an anomaly, should normally be effective retrospectively, back to the date when the anomaly first arose. The Board has extended a waiver of recovery for the past period in line with the decisions of the Council (vi) Notification dated 18.09.2020, that cemented the long line of assurances of the GST Council and the Board in letter and spirit. While promising that the amendment in question will be clarified to be retrospective, the Board has indicated certain difficulties in carrying out the stated amendment at this juncture. I would be loath to speculate on the nature of the difficulties expressed and restrict myself to concluding that the sequence of events that I have set out above make it more than amply clear to me that the present writ petitions are liable to be allowed. Learned counsel for the petitioner states that the interest liability relating to belated payment of tax both by cash and reversal of ITC has been coercively recovered - With the insertion of the proviso to be taken to be retrospective, these writ petitions are allowed.

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• 2020 (11) TMI 106
  Migration from VAT to GST regime - direction to respondents to issue password to the petitioner against the provisional ID - H4ELD THAT:- Notice of motion. Mr. Sourabh Goel, Advocate accepts notice on behalf of the respondents No. 1 and 2 and Mr. Ankur Mittal, Addl. A.G., Haryana, accepts notice on behalf of respondents No. 3 and 4. The present petition is disposed of with a direction to respondent No. 2 - Goods and Services Tax Network to consider and decide the E-mail (Annexure P-13) in accordance with law within six weeks from the receipt of the certified copy of the judgment.

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• 2020 (11) TMI 105
  Profiteering - DSLR Cameras - Power Banks - allegation that the reduction in the rate of tax not passed on - contravention of section 171 of CGST Act - Penalty - HELD THAT:- While the commensurate base price of the Power Bank was Rs. 385.94, the actual sale price was Rs. 418.84, the cost price has been claimed to be Rs. 774.03. By no stretch of imagination such an unreasonable claim can be accepted. Similar claims have been made by him in respect of other products also. The Respondent has not produced any evidence during the course of the present proceedings which can establish the exorbitant moving cost prices claimed by the Respondent. The screen shots of the SAP system can also not be accepted as the conclusive proof of the cost movement as the Respondent is free to make any entries in the above system as per his convenience. It will also be pertinent to mention here that the pre rate reduction base prices included all the costs which the Respondent had borne while selling these products and hence, the Respondent cannot invent additional costs to be taken in to account while computing the profiteered amount. There is also no evidence on record to show that the sales made by the Respondent were on discount as all the sales mentioned in Annexure-Il were normal sales as has been admitted by the Respondent himself vide Annexure-B. Therefore, the above claim of the Respondent is unreasonable, unsubstantiated and far-fetched which cannot be accepted, hence an amount of Rs. 13,13,441/- cannot be reduced from the profiteered amount on this ground. The Respondent has also claimed that he had sold some of the products mentioned in Annexure-III, on discounted comparable sale prices below the cost of purchase and had made a nominal profit as compared to the regular profit. The said nominal profit earned was not even sufficient to recover the variable costs incurred by the Respondent. Therefore, in view of the above reason, profiteering amounting to Rs. 14,86,332/- should be excluded from the total profiteered amount. To further establish his claim made vide Annexure-Ill the Respondent has also submitted Annexure-C alongwith his submissions dated 22.06.2020 vide which he has attached the details of the sale transactions alongwith transaction level cost as per Annexure-3, excel worksheet as well as screen shots from the SAP system confirming the invoice wise sale value and cost, SAP screen shot of cost movement for sample transactions mentioned in Annexure-3 and sample purchase invoices in support of cost amount mentioned in Annexure-3. Perusal of the above Annexures shows that the Respondent has claimed that he ad sold the digital cameras on the prices which were slightly more than the average base prices but were less than their regular sale prices - The screen shots of the SAP system also do not prove his claim of moving costs as the Respondent can make any entries in the system. All the purchase costs incurred by the Respondent on the products sold during the pre rate reduction period have already been taken in to account while computing the average base prices and hence there is no ground to claim that they have increased subsequently. The Respondent cannot claim increase in his costs to deny the benefit of tax reduction. There is also no evidence of giving discount on the sold goods as these sales have been admitted to be normal sales by the Respondent himself vide Annexure-C. Therefore, the above claim of the Respondent is not tenable and hence, an amount of Rs. 14,86,332/- cannot be reduced from the profiteered amount. The profiteered amount is determined as Rs. 1,91,21,441/-, details of the computation of which are given in Annexure-21 of the DGAP s Report dated 23.12.2019. Accordingly, the Respondent is directed to reduce his prices commensurately, as indicated in the above mentioned Annexure, in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 1,91,21,441/- in two equal parts each in the Central Consumer Welfare Fund and the Consumer Welfare Funds of the States/UTs mentioned supra as per the provisions of Rule 133 (3) (c) of the above Rules, since the recipients are not identifiable. The above amounts shall be deposited along with 18% interest payable from the dates from which the above amount was realized by the Respondent from his recipients till the date of deposit in the Consumer Welfare Funds. The above amount of Rs. 1,91,21,441/-, along with applicable interest thereon, shall be deposited within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioners as per the provisions of the CGST/SGST Acts. Penalty - HELD THAT:- The Respondent has denied benefit of rate reduction to the buyers of his products in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.01.2019 to 30.06.2019 and therefore, he is apparently liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.01.2019 to 30.06.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, notice for imposition of penalty is not required to be issued to the Respondent.

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• 2020 (11) TMI 104
  Profiteering - purchase of Short Capuccino - allegation that the Respondent had not passed on the benefit of reduction in the GST rate on restaurant service - contravention of section 171 of CGST Act - Penalty - HELD THAT:- The Respondent has profiteered to the tune of Rs. 1,04, 70,664/- during the period from 15.11.2017 to 30.06.2018 which he is required to pass on to the buyers by commensurately fixing prices of his products after taking in to account the impact of denial of ITC, which he has not done and hence he has violated the provisions of Section 171 (1) of the CGST Act, 2017. Accordingly, as per the provisions of Section 171(2) of the above Act read with Rule 133 (1) of the CGST Rules, 2017 the profiteered amount is determined as Rs. 1,04,70,664/-. The Respondent is directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit of tax reduction is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount mentioned above along with the interest to be calculated @18% from the date from which the above amount was collected by him from the recipients till the above amount is deposited, in terms of the Rule 133 (3) (b) of the CGST Rules, 2017. Since, the recipients in this case are not identifiable, the Respondent is directed to deposit the above amount of profiteering along with interest in the Consumer Welfare Funds (CWFs) of the Central and the above State Governments as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 in the ratio of 50:50 along with interest @ 18%, till the same is deposited as per the details mentioned - The above amount shall further be deposited within a period of 3 months by the Respondent, from the date of this order, failing which the same shall be recovered by the concerned Commissioners of the Central and the State GST, as per the provisions of the CGST/SGST Acts, 2017 under the supervision of the DGAP and shall be deposited as has been directed vide this order. A detailed Report shall also be filed by the concerned Commissioners of the Central and the State GST through the DGAP indicating the action taken by them within a period of 4 months from the date of this order. Penalty - HELD THAT:- It is also evident from the above narration of the facts that the Respondent has denied benefit of rate reduction to the buyers of his products in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence for violation of the provisions of Section 171(1) during the period from 15.11.2017 to 30.06.2018 and therefore, he is apparently liable for imposition of penalty under the provisions Of Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 15.11.2017 to 30.06.2018 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, notice for imposition of penalty is not required to be issued to the Respondent.

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• Income Tax

• 2020 (11) TMI 119
  Exemption u/s 11 - proof of activity carried on by the organisation are charitable in nature - levying and collecting of charges for the services and the earning of surplus income for the periods in question - petitioner is the Parivar Seva Sanstha runs 32 clinics pan India and is engaged in the activities of population control, medical relief, social marketing of contraceptives, mass level programmes, the education of youth in family planning, and other societal measures in the aforesaid areas - Denial of exemption as clinic had earned a surplus in some years - HELD THAT:- The grant of exemption to the clinic run by the Sanstha at Defence Colony, New Delhi would also support the position that the activity carried on by the organisation has been accepted to be charitable in nature, subject of course, to the examination of accounts and deployment of surplus earned, if any, for each financial period in question to satisfy the test of pre-dominant activity carried on by the organisation. Though profit earning should not be the dominant object of the institution, there is no bar to it being a mere incident of its operations. To hold that there should be a bar on the earning of profits would only serve to make the institution unviable. The provision for exemption in the Delhi Act specifically provides for this situation in the imposition of the condition that such society is supported wholly or in part by voluntary contributions, (and) applies its profits, if any, or other income in promoting its objectives and does not pay any dividend or bonus to its members . The Madras enactment does not employ the same phrase and extends the exemption to all charitable hospitals and dispensaries but not including residential quarters attached thereto . The deployment of the profits must however, be a pre-condition to the grant of the exemption. The argument to the effect that the mere existence of profit would debar an institution from claiming exemption, thus, stands rejected. What is necessary is for the respondents to have an appropriate mechanism to test and ensure that such profit if and when earned, is, in fact, utilized to subserve the charitable objectives of that institution. Concept of feeding the charity assumes importance and relevance as unless the institution is well-fed, it will wither and die, and along with it, the activity of charity. This cannot be the intention of the policy makers. It must therefore be the objective of every enactment to ensure that institutions engaged in charity are nurtured, of course, with all protocols in place to prevent abuse/misuse of the exemption granted and the surplus earned, if any. In my view, Section 101 of the Act should be interpreted with this end in mind. In light of conclusion to the effect that the mere fact that that clinic had earned a surplus in some years is not material per se for the grant of exemption, what remains is for the respondent to verify specifically the avenues into which the surplus generated for those has been ploughed. This exercise shall be taken up and completed, with all inputs to be provided by the petitioner, within a period of six weeks from date of receipt of this order. The petitioner shall also satisfy the respondent that all conditions imposed by the income-tax authorities for the grant of exemption from income-tax have also been complied with, scrupulously. The impugned order is set aside to be redone, in the light of the directions as above and this writ petition is allowed.

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• 2020 (11) TMI 118
  High court territorial jurisdiction to entertain the appeal - Income Tax Appellate Tribunal exercises its jurisdiction over more than one state, though it is located in one of those states - Which High Court should have the jurisdiction to rule on the Tribunal s order? - Is it the High Court in whose territorial jurisdiction that Tribunal is located? - HELD THAT:- Mere physical location of an inter-state Tribunal cannot be determinative of the High Court s jurisdiction for an aggrieved party to challenge that Tribunal s order. Here, the Assessee is located in Karnataka, so are the Income Tax authorities. The primary order, too, emanated from Karnataka; so was the first appellate order. All challenges, including the appeal before the Tribunal, were in continuation of that primary adjudication or consideration before the Assessment Officer at Belgaum, Karnataka. Therefore, Ambica Industries applies on all fours. This Court has no jurisdiction to entertain this Appeal. As a result, we return the Tax Appeal, to be presented to the jurisdictional High Court if the appellant desires

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• 2020 (11) TMI 117
  Non-availment of the alternate statutory appeal remedy - income tax implications - transaction is not a demerger? - HELD THAT:- Rule of exclusion of writ jurisdiction by availability of an alternative remedy, is a rule of discretion and not one of compulsion and there could be contingencies in which the jurisdiction under article 226 of the Constitution of India could be exercised in spite of availability of an alternative remedy. The question to be decided is relating to the jurisdiction, manner of exercise of power by the Assessing Officer and the correctness and propriety of the decision making process and whether principles of natural justice was adhered. Therefore, it is held that the Writ Petitions are maintainable and cannot be rejected solely on the ground that as against the impugned assessment orders, the statute provides for alternate remedy. Accordingly, issue No.1 is decided in favour of the petitioner. The grounds raised in the present writ petitions are some ofthe exceptions cited in the aforesaid decision for maintaining a writ petition without availing the alternate remedy and hence, the petitioner can maintain the writ petitions without availing the statutory appeal remedy. Demerger under Section 2(19AA) of the Income Tax Act - Whether transaction is not a demerger and that the income tax implications referred to in the statement under Section 393 of the Companies Act will not form a part of the Scheme of Arrangement ? - whether the statement under Section 393 of the Companies Act, 1956 would form a part of the Scheme of Arrangement and if so, whether the proceedings for sanctioning of the Scheme under Sections 391 to 394 would be a proceeding in rem? - AO disallowed the depreciation claim made by the petitioner and treated the Scheme as one of demerger under Section 2(19AA), thereby restricting the claim for depreciation, only on the Written Down Value (WDV) of the assets being transferred from PSCL to PEL - HELD THAT:- Scheme of Arrangement between PSCL and PEL, which expressly states that the Scheme is not a Demerger, within the meaning of Income Tax Act, has attained finality and statutory force not only inter se PSCL or PEL but also in rem . Accordingly, the Scheme, that includes the Income Tax implications given in the statement and which explanatory statements are in conformity with the scope of the terms of arrangement, would be binding on the Tax Department. On a conjecture that the Scheme is one of Demerger under Section 2(19AA), the Assessing Officer had disallowed the depreciation claim made by the petitioner and thereby restricted the claim for depreciation only on the WDV of the assets transferred from PSCL to PEL. The Company Court, while considering the petition for sanction under the Companies Act, had approved the Scheme of Demerger and the statement under Section 393 of the Companies Act. As held in the preceding paragraphs, the statements, being in conformity with the scope of the terms of the Scheme of Arrangement, becomes an integral part of the Scheme, which was sanctioned by the Company Court, and thus, the transfer of the undertakings will not be considered to be one of the Demerger within the meaning of Section 2(19AA) of the IT Act. As such, the basis of the impugned proceedings itself is fallacious and the further proceedings thereon, cannot be sustained. Accordingly, the impugned proceedings are quashed. The concerned Assessing Authority shall taken into consideration of the findings of this Court that the Scheme of Arrangement is not a Demerger, within the meaning of Section 2 (19AA) and take further course of proceedings, in accordance with law. WP allowed.

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• 2020 (11) TMI 116
  Assessment framed in the name of non-existing entity - scheme of amalgamation conceived - DR submitted that notice u/s 143(2) was validly served on the amalgamating company - HELD THAT:- The amalgamating company i.e. Genpact India was not in existence at the time of conducting assessment proceedings as well as on the date of passing Assessment Order. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. Thus, in light of the decision of the Maruti Suzuki [2019 (7) TMI 1449 - SUPREME COURT ] is relevant in the present case as well and hence additional ground is allowed. Hence, the Assessment order itself is void ab initio. Therefore, assessment order is set aside. - Decided in favour of assessee.

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• 2020 (11) TMI 115
  Addition u/s 56(2)(viib) of the Act read with rule 11UA(2)(b) - excess fair market value - AO computed value of share premium at Rs. 51.32 per share and disallowed excess share premiumand treated as excess fair market value under section 56(2)(viib) - disregarding the valuation report prepared under the Discounted Cash Flow ( DCF ) method, and adopting the Net Asset Value ( NAV ) method for computation of the fair market value ( FMV ) of shares - HELD THAT:- As under Rule 11UA assessee has option to determine fair market value being NAV method or DCF method. As per observation of Hon ble Bombay High Court in case of Vodafone M-Pesa [ 2018 (3) TMI 530 - BOMBAY HIGH COURT ]. If assessee determines the fair market value in any one method as prescribed under Rule 11UA, the assessing officer can not dispute the method so adopted. In the present case, we note that assessing officer has not rejected the DCF method followed by assessee based on any discrepancy found in the valuation, but is based on the reasoning that, the valuation is based on estimates. Remand this issue back to Ld.AO for scrutinising valuation report filed by assessee by following DCF method either by himself or by calling a determination from an independent valuer and to confront the same with assessee. Ld.AO shall not reject the DCF method as it is the appropriate method prescribed under Rule 11UA. Assessee is also directed to establish the correctness of the valuation report based on documents/evidences. Assessee has to satisfy the correctness of the projection of discounting factor with the help of empirical data or industry norm. - Decided in favour of assessee for statistical purposes.

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• 2020 (11) TMI 114
  Disallowance of R D expenditure - assessee claimed deduction u/s 35 (1) (iv) on the ground that it related to research and development capital expenditure - AO rejected the claim of deduction by observing that assessee was involved in the manufacturing and testing of auxiliary groomed aluminum ammonia heat pipes used in spacecrafts by using the technology provided by Indian Space Research Organization (ISRO), and not out of it s own research and development - HELD THAT:- As submitted by assessee in written submission filed before CIT(A) dated 12/04/2013 that, though said intimation may not be relevant for the year under consideration, however the fact that this recognition has come after continued and sustained activities carried on in the field of research over several years as observed by Government of India cannot be ignored. Under such circumstances it is relevant that necessary steps may be taken to ascertain if assessee could be considered to be carrying out research and development activities during the relevant period. Ld.CIT(A) having observed the same has not taken necessary steps. The issue considered by Ld.CIT(A) needs to be ascertained based upon the facts in present case. We therefore find it proper to remand the issue back to Ld.CIT(A) to take necessary actions/steps to ascertain, whether assessee could be considered to be carrying out with research and development activity during the relevant period under consideration, based on the recognition issued by Ministry of Department of Science and Technology Government of India in January 2012. We remand the issue Ld.CIT(A) for necessary steps. Issues raised by revenue stands allowed for statistical purposes.

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• 2020 (11) TMI 113
  Disallowance u/s 43B - electricity duty was adjusted from the subsidy and the balance amount was not paid by the assessee before filing the return of income - As submitted assessee collects the duty from the customer and pays to the U. P. Government and the amount of electricity duty is deducted by the U. P. Government from the subsidy given by it - HELD THAT:- It is a settled legal position that the rule of consistency is required to be followed by the Income-tax authorities and that in the absence of any difference in the facts and circumstances of the case for the assessment year under consideration, the Assessing Officer is not justified in disallowing the claim. Further, Revenue has also not placed any material on record to demonstrate that the order of the Co-ordinate Bench of Tribunal passed in the case of assessee for A.Y. 2015-16 has been stayed/ set aside or overruled by higher judicial forum. In such a situation, following the rule of consistency and following the order of the Tribunal in the assessee s own case for A.Y. 2015-16 and for similar reasons hold that AO was not justified in disallowing the expenditure by invoking the provisions u/s 43B. We therefore, setaside the order of CIT(A) and thus the ground of appeal of the assessee is allowed. Disallowance u/s 40(a)(ia) - wheeling/transmission charges - Addition deleted by CIT(A) - HELD THAT:- We find that CIT(A) after relying on the various decisions, that were cited by it before CIT(A) and which has been referred to by CIT(A) in his order, has given a finding that provisions of TDS are not applicable to wheeling/transmission charges and therefore, no disallowance can be made u/s 40(a)(ia) of the Act. Before us no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue are dismissed.

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• 2020 (11) TMI 112
  Validity of notice u/s. 158BC - Whether a notice is invalid for not giving sufficient time as required u/s. 158BC? - HELD THAT:- We find that pursuant to search and seizure operation, the assessee was issued a notice u/s. 158BC of the Act in response to which the assessee had filed his return of income. The notice u/s. 158BC of the Act has been held to be invalid by the Tribunal. The AO got the jurisdiction over the assessee only by issuance of the notice u/s. 158BC, and since such notice has been held to be invalid, all consequential proceedings also will become invalid. The right course of action for the assessee would have been to challenge the above order of the Tribunal. By not challenging it, the finding of the Tribunal has become final and this Bench has no authority to set aside the finding of earlier Bench. Therefore, the assessee s appeal fails.

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• 2020 (11) TMI 103
  TDS u/s 195 - Usance charges were paid or were payable to a non resident supplier - as argued appellant paid LC Charges/commission charges which are in the nature of bank charges to their own Nationalized Banks based in India towards opening of the Letter of Credit it could not be construed under the 195(1) - HELD THAT:- In this case, though Usance charges may have been paid to the Indian bankers by way of LC Charges and commission, nevertheless, such payment, is a part of the transaction involving purchase/import of raw material from non-residents. According to us, issuing bank of the assesses, merely acts as an agent of the assesses. The Usance charges is the income of the non-resident as envisaged in the provisions of Section 9(1)(v)(b) read with Section 5(2) of the IT Act. Therefore, the provisions of Section 195(1) were attracted and the assesses were obliged to deduct tax at source before making such payment. In similar circumstances in the case of Vijay Shipbreaking Corporation Others [ 2003 (3) TMI 91 - GUJARAT HIGH COURT] as held that the assesses was duty bound to deduct tax at source even in respect of bank charges incurred for providing Letters of Credit to foreign sellers. Since in the present case, the assesses imported the raw material for its consumption based on a letter of credit and paid the Usance charges, the beneficiary of such charges is the foreign seller. The issuing bank of the assesses has merely acted as an agent of the assesses. The Usance charges therefore constitute income of a non-resident as envisaged in the provisions of Section 9(1)(v)(b) read with Section 5(2) of the IT Act. Therefore, the provisions of Section 195(1) of the IT Act were attracted and the assesses were obliged to deduct tax at source failing which, such expenditure, could not be exempted under Section 40(a)(i) - Decided in favour of the Revenue.

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• 2020 (11) TMI 102
  Revision u/s 263 - Assessee s claim for deduction u/s 10B - whether AO actually applies his mind to the information that may be supplied by the Assessee? - distinction between merely calling for information on a particular issue and considering such information with due application of mind - HELD THAT:- It is not possible to say that the CIT, in this case, acted under dictation from any extraneous authority. It is true that the CIT, in this case, in invoking revision jurisdiction, made reference to the SFIO report. However, that does not mean that the CIT acted under dictation. Any subsequent and allegedly changed SFIO report would not dent the exercise of jurisdiction by the CIT under Section 263 of the IT Act. AR urged that the as Assessee was indeed involved in manufacture and, therefore, was entitled to deduction under Section 10B but according to us, it was for the AO to examine the matter by due application of mind and, thereafter, decide afresh whether the Assessee was indeed entitled to deduction under Section 10B of the IT Act. The decision of the AO to allow such deduction to the Assessee without making any inquiries whatsoever or rather without addressing the issue in his order, rendered his order quite erroneous and prejudicial to the interests of the Revenue. At this stage, therefore, it will not be appropriate for us to examine the issue as to whether the Assessee indeed fulfilled the requirements of Section 10B of the IT Act during the relevant assessment year. It is for the Appellate Authority to go into the issue of eligibility of the Assessee for deduction under Section 10B of the IT Act during the relevant assessment year. Therefore, it will not be appropriate for us, at this stage and in these proceedings to go into such issues, now that we have held that there was no error in exercise of revision jurisdiction by the CIT for the relevant assessment year. - Decided against assessee.

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• 2020 (11) TMI 101
  TDS u/s 194I - payments made by Assessee to M/s.SIPCOT Ltd for payment of land as in the nature of rent - lump sum payment - applicability of provisions of Section 201(1A) - HELD THAT:- As in the case of Foxconn India Developer (P.) Ltd. [ 2016 (4) TMI 314 - MADRAS HIGH COURT ] in which has held that such lump sum payment made by the Assessee for getting a long term lease does not amount to payment of rent and the same is not adjustable against the annual rent payable by the Assessee and therefore, the provisions of Section 194I of the Act will not apply to such circumstances. The said judgment of the Division Bench of this Court has since been accepted by the Central Board of Direct Taxes which has issued CIRCULAR NO.35/2016 [F.NO.275/29/2015-IT (B)], DATED 13-10-2016, holding that the Assessee is not entitled to deduct any tax at sources in such circumstances. Thus lump sum lease premium or one-time upfront lease charges, which are not adjustable against periodic rent, paid or payable for acquisition of long-term leasehold rights over land or any other property are not payments in the nature of rent within the meaning of section 194-I of the Act. Therefore, such payments are not liable for TDS under section 194-I - Decided in favour of assessee.

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• 2020 (11) TMI 100
  Nature of land - AO s estimation on the basis of guideline value - whether land in question cannot fall within the definition of Urban Land u/s. 2(ea) of the Wealth Tax Act - HELD THAT:- As decided in own cas e [ 2020 (10) TMI 313 - MADRAS HIGH COURT] CIT-A has recorded the factual finding that the land, which is unbuiltable under any law for the time being in force, is not an urban land and as such, is not an asset within the meaning of Section 2(e) (a) of the Wealth Tax Act. The CIT-A also referred to a decision in the case of Prabhakar Keshav Kunde [ 2010 (8) TMI 926 - BOMBAY HIGH COURT] .Thus, considering that factually, the CITA on verification found that the land falls within the prohibited zone CRZ III category. - Decided against the revenue.

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• 2020 (11) TMI 99
  Allowable expenditure in terms of Explanation to Section 37(1) - Provision made by the Assessee towards demand raised by Kerala State Electricity Board towards alleged theft of power, (Which was subsequently set aside by the Kerala High Court) - Whether Tribunal was right in law in not following the decision in Exide Industries Ltd and another Vs. Union of India Others [ 2020 (4) TMI 792 - SUPREME COURT] - Whether the claim for provision for demand raised by KSEB is disallowable under Explanation to Section 37 when the Kerala High Court has dismissed the case of KSEB and has held that there was no theft of power? - HELD THAT:- Substantial Question of Law No.4 is concerned, the same has to be answered against the assessee in the light of the decision of the Hon ble Supreme Court of India in the case of Union of India and others Vs. Exide Industries Ltd and another [supra] - Accordingly, the same is answered against the assessee. Substantial Question of Law Nos.1 to 3, we find that no material was placed by the assessee before the Tribunal to show that the assessee had succeeded in the Writ Petition filed by them before the High Court of Kerala, wherein according to the assessee, there is an observation that it is not theft of energy, but a case of excess consumption. Assessee submitted that though the assessee succeeded before the learned Single Judge, the Electricity Board filed Writ Appeal before the Hon ble Division Bench, which was dismissed only in the year 2011. Though such submission is made before us, there is no scrap of paper placed before this Court either as an averment in the Memorandum of Grounds of appeal or a document in the typed set of papers. There is no mention about any order passed by the High Court of Kerala in favour of the assessee in the Memorandum of Grounds of appeal. We do not wish to place the assessee in a disadvantageous position, because no person should be put to prejudice on account of a Court order. This Court is inclined to grant liberty to the assessee to move the Tribunal by way of Miscellaneous Petition, raising all contentions and if such Miscellaneous Petition is filed, the Tribunal shall entertain the same without reference to limitation.

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• 2020 (11) TMI 98
  Reopening of assessment - contention raised by the assessee that the Assessing Officer has done a roving enquiry by re-examining the facts already in record - HELD THAT:- Though such a ground was raised, the Tribunal in Paragraph No.3 of the impugned order, records that only two grounds have been raised by the assessee. When a specific plea has been raised by the assessee, contesting the validity of the reopening proceedings, the CIT(A) and the Tribunal could have considered the same As noticed above, the assessee has specifically raised a plea regarding the validity of the reopening. Infact, the assessee being a Nationalized Bank, does not stand to gain by not raising such a plea, especially when they have got a large team of Legal Experts and Chartered Accountants advising them in these matters. Therefore, the validity of the reopening needs to be considered by the Tribunal on merits and in accordance with law - matter is remanded to the Tribunal to decide the validity of the reopening proceedings.

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• 2020 (11) TMI 97
  Allowable deduction u/s 37 - expenditure incurred towards revamping of visbreaker unit which was abandoned - Tribunal disallowed deduction - HELD THAT:- As perused the findings recorded by the Tribunal and find that the Tribunal rightly reverse the order passed by the Commissioner of Income Tax [ CIT(A) for brevity] on this aspect. The Tribunal took note of the decision of the Hon ble Supreme Court of India and arrived a finding against the assessee, We find no grounds to interfere with the said finding. Accordingly, the Substantial Question of law No.1 is answered against the assessee. Grant of depreciation on the repair charges incurred on Vis Breaker - HELD THAT:- Having held that the deduction is not allowable under Section 37 of the Act with regard to the expenditure incurred for revamping of vis-breaker Unit. The Tribunal ought to have considered the claim for consideration at vis-breaker Unit. Though there is a reference made to the said submission of the assessee, We find that there is no specific finding rendered by the Tribunal on that record. That apart, We find that such a claim for depreciation was not made by the assessee before the Assessing Officer or before the CIT(A) as an alternate submission and it was raised only before the Tribunal. Therefore, We are inclined to grant liberty to the assessee to raise that issue before the Assessing Officer which can be considered in accordance with law. Depreciation on gas sweetening plant - HELD THAT:- Issue decided in favour of assessee in own case [2013 (8) TMI 525 - MADRAS HIGH COURT] wherein held on the admitted case that business was a going concern and the machinery could not be put to use due to raw material paucity, we reject the Revenue s contention, thereby, confirm the majority view of the Income Tax Appellate Tribunal.

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• 2020 (11) TMI 96
  Reopening of assessment u/s 147 - as alleged assessment was wholly without jurisdiction - HELD THAT:- Since the Writ Court had come to the conclusion that reopening of assessment was without jurisdiction. Therefore, to make any further observation or issuing any further direction after holding so cannot be sustained in the eye of law. Having held that the reassessment proceedings were without jurisdiction, no further direction could have been issued by the learned Single Judge and more particularly the directions in paragraphs 17 to 20 of the impugned common order. For the above reasons, we are of the considered view that the appellant should succeed in these appeals.

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• 2020 (11) TMI 95
  Deduction u/s.80IB - proof of manufacturing activity of the assessee - whether no re-structuring of any business in existence? - whether no business was ever carried out by the said entity so much so that neither any plant machinery was acquired by the said entity nor any business activity was commenced by them? - HELD THAT:- An examination of the given documents clearly indicates that prior to the electric connection from Reliance Energy, the assessee was availing electricity connection from the Government of Goa ; the application for license to work was made by the assessee on 22.03.2002; the provisions of section 6 7 of the Factories Act, 1948 clearly indicate that there is no bar in occupying the factory premises, using it for manufacture and commencing the production there from before obtaining the final license from the prescribed authority; in the said application dated 22.03.2002 it was also declared that the manufacturing process is already commenced by the assessee on 19.03.2002, the computation of income for AY 2002-03 filed along with the return also stated that it was the first year of claim and that deduction was not claimed solely due to loss. A perusal of the excise returns filed before the Excise Authorities for the period from March 2002 to March 2003 as well as sales tax returns before the Sales Tax Authorities for the quarters pertaining to the financial year 2002-03, clearly indicates that manufacturing activity and corresponding sales was carried out by the assessee. Thus it cannot be said that the manufacturing activity of the assessee had not started till the receipt of the factory license. The ledger account of the plant machinery in the books of the assessee for the year ending 31.03.2002 along with copies of the bills/invoices also indicates purchase of new machinery during the said period. It is further evident that the block of asset had started during AY 2002-03 and fixed asset statement of the assessee for the AY 2003-04 would show opening WDV. find merit in the contentions of the Ld. counsel that although the original certificate was granted to M/s Konkan Plastics, no business was ever carried out by the said entity ; except the SSI license and the lease hold rights in the plot, no activity was ever carried out by the said entity. The excise returns and sales tax returns filed by the assessee clarify the issues in the instant case. The plant machineries, as evidenced by the invoices, have been purchased by the assessee ; the manufacturing activity was carried out by the assessee at its own premises. In the case of CIT v. Western Outdoor Interactive P. Ltd. [ 2012 (8) TMI 709 - BOMBAY HIGH COURT] has held that where a benefit of deduction is available for a particular number of years on satisfaction of certain conditions under the provisions of the Income Tax Act, 1961, then unless relief granted for the first year in which the claim was made and accepted is withdrawn or set aside, the Income Tax Officer cannot withdraw the relief for subsequent years. - Decided against revenue.

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• 2020 (11) TMI 94
  Penalty levied u/s 271(1)(c) - addition of alleged non-genuine purchases - receipt of information from the Sales Tax Department, Government of Maharashtra that the assessee had obtained accommodation entries through bogus purchase bills from hawala parties - HELD THAT:- Though the assessee had filed the details containing his full explanation, the AO made an addition of Rs. 21,17,152/-, without making any inquiry/verification. In such a situation like the present one wherein the Ld. CIT(A) has estimated the profit @ 17.67% of the total alleged bogus purchases which comes to Rs. 3,74,100/-, We are of the considered view that penalty u/s 271(1)(c) is not leviable. The law that penalty would not be exigible merely because an addition is made on estimate basis was reiterated in CIT v. Raj Bans Singh [2004 (8) TMI 73 - ALLAHABAD HIGH COURT] and CIT v. Ajaib Singh Co. [2001 (8) TMI 79 - PUNJAB AND HARYANA HIGH COURT] In view of the above factual matrix and position of law we delete the penalty - Decided in favour of assessee.

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• 2020 (11) TMI 93
  Characterization of distribution fee - Royalty or not? - HELD THAT:- As decided in own case [ 2020 (3) TMI 781 - ITAT MUMBAI] as the assessee had merely acted as an intermediary between the broadcaster and the ultimate customers to use the channels, therefore, the distribution fee paid by the assessee to its AEs could not be termed as royalty. Accordingly, we herein vacate the view taken by the lower authorities that channel distribution fees paid by the assessee to its AEs was in the nature of payment of royalty. The Ground of appeal No. 4 is allowed. TPA - Comparable selection - HELD THAT:- Avance Technology Ltd - From actual position, we find that the aforesaid company which had generated its entire revenue from sale of software product could safely be adopted as a valid comparable for benchmarking the international transactions of the assessee for the year under consideration. As the functions of the aforementioned company had not witnessed any change as in comparison to the immediately preceding and succeeding years i.e A.Y.2012-13 and A.Y. 2013-14, therefore, finding no reason to take a different view we respectfully follow the aforesaid order of the Tribunal, and direct the A.O/TPO to include the aforementioned company in the final list of comparables for benchmarking the international transactions of the assessee for the year under consideration. Empower Industrial India Ltd - Include the said company as a valid comparable for the purpose of benchmarking the international transactions of the assessee for the year under consideration. Sonata Information Technologies Ltd. - In the assesses own case for the immediately preceding year i.e. A.Y. 2011-12 had accepted the aforementioned company whose generation of revenue from software distribution during the said year was 97%, as a valid comparable, for benchmarking the international transactions of the assessee for the said preceding year. Also, the aforementioned company was selected as a valid comparable by the Tribunal while disposing off the assessee s appeal for A.Y. 2013-14. Integra Telecommunications Software Ltd. - We are not inspired by the reasoning given by the TPO for rejecting the aforementioned company which was into software distribution business, as a valid comparable for benchmarking the international transactions of the assessee for the year under consideration. Direct the A.O/TPO to include the aforementioned company as a valid comparable for the purpose of benchmarking the international transactions of the assessee for the year under consideration. Short grant of TDS - HELD THAT:- As the adjudication of the aforesaid issue would require verification of records, therefore, we restore the issue to the file of the A.O. The A.O is directed to verify the aforesaid claim of the assessee, and in case there is any short credit of TDS, the same may therein be allowed. Deduction of Education cess and Secondary and higher education cess paid on the income-tax liability while computing of its income under the head Profits and gains of business or profession - Additional ground raise - HELD THAT:- We respectfully follow the aforesaid judgment of the Hon ble High Court of Bombay in the case of Sesa Gold Limited [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] and therein conclude that the assessee shall be entitled for deduction under the head Profits and Gains from Business or Profession of the amount of Education Cess and the Secondary higher Education Cess levied on its income under the Act. The additional ground of appeal raised by the assessee is allowed.

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• 2020 (11) TMI 92
  Capital gain computation - Reference to DVO - prescribed percentage of value of asset referred to in Section 55A(b)(i) - Conditions of reference to Valuation Officer as per Rule 111AA - HELD THAT:- From a straight reading of the provisions of the Act u/s 55A(b)(i), Rule 111AA, orders of the ITAT, judgments of the Hon ble High Courts and keeping in view the fact that the estimation made by the DVO differs only 8.92% with that of the fair market value, which is less than 15% prescribed by the provisions of the Act and the less than 10% as held by the various judicial forums, we hereby direct that the addition made by the AO be obliterated. Appeal of the assessee is allowed.

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• 2020 (11) TMI 91
  Nature of expenditure - pre-commencement expenditure - Whether it has to be capitalised? - HELD THAT:- In the case of the assessee before us, it is evident that the assessee company s business is not set-up and ready for commercial transactions because the assessee company has not equipped itself to start generation of power during the relevant assessment year. Entire expense is proportionately attributable towards the earning of interest income arising out of borrowed interest-bearing funds and the funds received from other sources such as capital contribution etc., which may or may not be interest-bearing funds because there are no other activities conducted by the assessee company during the relevant assessment year for earning income or toward advancing any other objects of the assessee company. Further, when it comes to utilisation of mixed funds of the assessee it is up to the assessee to determine as to which funds are to be deployed for what purpose and what funds are to be treated as retained. That is because the Revenue cannot sit on the shoes of the assessee and decide as to how the assessee has to conduct its business. Hence, we hereby direct the Ld. AO to compute the aggregate expenditure proportionately attributable to borrowed funds as discussed herein above and allow the same as deduction while computing the income of the assessee under the head income from other source since the provisions of Section 57(iii) mandates for the grant of deduction with respect to any revenue expenditure incurred wholly and exclusively for the purpose of earning such income. As regards the interest income earned from the deposits made from non-interest bearing funds are concerned, the same shall be taxable in the hands of the assessee under the head income from other source after granting deduction for the proportionate expenditure incurred by the assessee towards Miscellaneous Expenditure Auditor s remuneration as discussed herein above.

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• 2020 (11) TMI 90
  Order passed ex-parte by CIT-A - assessee had arranged bogus long term capital gain - appeal was preferred by the assessee before the Ld. CIT(A) and since there was no satisfactory compliance on the part of the assessee to the notices issued by him fixing the said appeal for hearing from time to time, the Ld. CIT(A) dismissed the said appeal - HELD THAT:- It is observed that even though the notices of the hearings fixed before the Ld. CIT(A) were stated to be issued to the assessee, there is nothing in the impugned order of the Ld. CIT(A) to show that any of the said notices was ever served on the assessee. In our opinion, the assessee, therefore, cannot be said to have been given proper and sufficient opportunity of being heard by the Ld. CIT(A) before disposing the appeal of the assessee vide his impugned order passed ex-parte. Even the ld. DR has not disputed this position which is clearly evident from the record. We, therefore, set aside the impugned order passed by the Ld. CIT(A) ex-parte and remit the matter back to him for disposing of the appeal of the assessee afresh after giving the assessee proper and sufficient opportunity of being heard. Appeal filed by the assessee is treated as allowed for statistical purpose.

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• Customs

• 2020 (11) TMI 89
  SVLDRS scheme - petitioner s rectification application rejected on the ground that Section 128 confers limited powers upon the designated committee and it is not empowered to rectify errors committed by the petitioner/applicant/ declarant/assessee - HELD THAT:- Section 128 of SVLDRS does not state that an error/mistake apparent on the face of the record that can be rectified is of the designated committee alone. This Court is also of the view that an error/mistake apparent on the face of the record by the declarant/assessee/applicant would also fall within the scope and ambit of Section 128 of SVLDRS - Further, if the error/mistake committed by the declarant/assessee/ applicant while filing the form is not rectified, it is bound to result in a mistake/error in the decision/order passed by the designated committee. Consequently, an error committed by the assessee, which inevitably leads to an error in the order of the designated committee, can be rectified by the designated committee under Section 128 of SVLDRS. The stand of the respondent no. 2 that there is no bar on filing of multiple declarations by any assessee is misconceived on facts and untenable in law. Firstly, SVLDRS does not provide for resubmitting an application under the said Scheme. Secondly, for a declaration under litigation category, voluntary disclosure category, being mutually exclusive, is ruled out. Thirdly, any fresh declaration after issuance of SVLDRS-3 on 03rd January, 2020 would end up in a chaotic situation as then there would be two SVLDRS-3. The respondent No.2 is directed to rectify the declaration dated 30th December, 2019 and consider it as one filed under the litigation category instead of voluntary disclosure and process the same in accordance with law within four weeks - Petition disposed off.

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• 2020 (11) TMI 88
  Right to obtain copies of statements recorded under section 108 of CA - whether the court was liable to issue copies of the Section 108 statements on receipt of the application under Rule 222 of the Criminal Rules of Practice? - HELD THAT:- As per Section 104 of the Act, an authorised officer can arrest a person, if he has reason to believe such person of having committed offences punishable under Section 132 or Section 133 or Section 135 or Section 135-A or Section 136 of the Act. The person arrested should be informed of the grounds for his arrest and taken to a Magistrate without unnecessary delay. Sub-section (3) of Section 108 stipulates that, where an officer of Customs has arrested any person under sub-section (1), he shall, for the purpose of releasing the arrestee on bail or otherwise, have the same powers as an officer-in-charge of a police station under the Code of Criminal Procedure, 1898 (5 of 1898). There are substance in the contention of the learned Counsel for the petitioner that the interdiction in Section 172(3) Cr.P.C cannot be relied on to deny copies their Section 108 statements to the accused - Even though there are merits in the contention put forth by the learned Senior Counsel that an application under Rule 222 of the Criminal Rules of Practice ought to be filed on the administrative side, the fact that the learned Magistrate entertained the application and directed to issue copies of most of the documents applied for, deter me from dismissing the Crl.M.C on that ground. Rule 222 provides for submission of applications for copy of the proceeding or document filed in or in the custody of a court. As far as the instant case is concerned, it is not in dispute that the Section 108 statements were made available for perusal of the court in a sealed cover. The Prosecutor had also requested to keep the statements confidential. Therefore, the statements cannot be termed as documents produced in or in the custody of the court, copies of which are liable to be issued under Rule 222 - Hence, discretion is vested with the court to refuse copies, if the documents or proceedings are confidential or strictly judicial in nature. The learned Magistrate having refused to issue copies of the Section 108 statements finding them to be confidential, there are no reason to interfere with the impugned order. As per the statement filed on behalf of the respondent, copies of relevant papers mandatorily required, including the Section 108 statements was furnished to the petitioner, along with the order made against her under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - application allowed.

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• 2020 (11) TMI 87
  Levy of penalty u/s 114 of Customs Act - Duty Drawback claim - export of tissue paper in sheet form - allegation that petitioner wrongly declared the goods under Serial No.40030010 in tissue paper in roll form and claimed 7.2% of drawback wrongly - HELD THAT:- When the petitioner had admitted of having wrongly quoted the DBK code for the goods and thereafter rectified it itself would amount to misclassification and thereby attempted to export the goods improperly. A mere plea of inadvertence may not absolve the petitioner and grant them immunity from penalty. The discretion of levying penalty is always available with the Statutory Authority under Section 114, whenever such an Authority is of the view that an attempt to export the goods are in such a nature that the goods would be liable to be confiscated under Section 113 - Since the Original Authority was of the opinion that the petitioner attempted to export the goods through misclassification, this Court is of the view that the Authority was justified in levying the penalty. The confiscation order, with an option to redeem on payment of redemption fine, was set aside by the Appellate Authority only on the ground that the goods, since already exported, were not available for confiscation and therefore, the confiscation order is bad in law. It was not the finding of the Appellate Authority that the petitioner had not attempted to export the goods improperly. Hence, a mere setting aside of the confiscation order and the option of redemption, will not entitle the petitioner to escape his liability from penalty. Petition dismissed.

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• 2020 (11) TMI 86
  Valuation of imported goods - consumer electrical goods like light fittings, chandeliers, garden lights etc. - rejection of declared value - enhancement of the value - imposition of penalties - HELD THAT:- The allegation of undervaluation has been established by the documentary evidence brought on record and corroborated by the oral evidence of the appellants. Interestingly, such oral evidences were given not once but on 3 to 4 occasions. Thus, the oral evidence is reliable as it corroborates whatever documentary evidence is available on record. Moreover, there is no allegation that the statements were given under threat or coercion or undue influence. The appellants have admitted that they were undervaluing, based on the invoice and packing list, etc. received through courier, whereas the actual import /transaction value (higher value) was contained in the order list sent by the supplier via email. Such email and order lists were downloaded and saved by the appellants on their computer(s) for future reference. Such data was retrieved at the time of search and is undisputed. Thus, revaluation made on the basis of the actual transaction value contained in the order list or by loading 33.3% for some of the items, based on the undervaluation as per the statements of the Manager, is just and reasonable. Revenue was not required to look into the value of the similar goods as per contemporaneous import, in view of the actual transaction value found in the documentary evidence retrieved from the appellants. Accordingly, rejection of the declared value and the re-valuation of the goods are upheld. So far as the penalties are concerned with respect to the 13 past bills of entries, the same were subject to assessment by the Customs Department. In some cases, the values were loaded, which were accepted by the appellant and duty paid accordingly. Accordingly, we set aside the penalty with respect to the past imports of Rs. 74, 05,019/- under Section 112(a) and reduce penalty under Section 114AA from Rs Ten lakhs to Rs One lakh. Penalty on Shri A.V. Joseph can be reduced to Rs. 1 lakh under Section 112(a) and Rs. 50, 000/- under Section 114 AA - as far as Penalty on Smt. Reshmi Sanjith under Section 112 (a) is concerned, the same is liable to be set aside as she has been working as an employee on a meagre salary and there is no allegation on her having made any personal pecuniary gain from the illegality being committed by the firm. Appeal allowed in part.

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• 2020 (11) TMI 85
  Valuation of imported goods - CRGO of different grades, viz., M3/M4/M5 etc - rejection of declared value - enhancement of value based on the contemporaneous higher import price of the similar goods made by the other importer - HELD THAT:- On perussal of the description/grade/quantity of the impugned goods mentioned in the said order dated 16.10.2012, we find that the original authority had referred to the description as CRGO-M3, M4, M5 etc. Whereas, on comparison of the said description with other particulars mentioned in the original order vis- -vis the import documents, viz., Bills of Entry, Purchase Order etc., we find that the reference of such goods are not figuring in all the cases in the import documents presented by the appellant for assessment before the department. Thus, we are of the considered view that the original authority had not referred to the contemporaneous import in the proper manner as prescribed under Rule 5 ibid. The matter should go back to the original authority for appreciation of the facts to the effect that the subject goods imported by the appellant were liable for rejection and the value can be redetermined by referring to the relevant provisions of the Valuation Rules, 2007 - Appeal allowed by way of remand.

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• Service Tax

• 2020 (11) TMI 84
  Validity of SCN - Demand of Service Tax - Site formation and clearance, excavation, earth moving and demolition services - Works contract service - Maintenance and Repair service - main grounds raised by the petitioner is that the demand of service tax on the grounds relied upon in the impugned order is not in conformity with the proposals made in the show cause notice and that the notice is vague and without any details - HELD THAT:- It is a settled proposition of law that a show cause notice, is the foundation on which the demand is passed and therefore, it should not only be specific and must give full details regarding the proposal to demand, but the demand itself must be in conformity with the proposals made in the show cause notice and should not traverse beyond such proposals. The show cause notice issued to the petitioner, is a proposal to demand service tax on manpower recruitment or supply agency; management, maintenance or repair services; works contract; and commercial or industrial construction - Apparently, the demand of service under the aforesaid heads were not specifically proposed in the show cause notice dated 13.10.2014. Furthermore, the petitioner had expressed his inability to raise his objections to the show cause notice since the notice did not indicate the respective services under which the proposal for demand of service tax was made. However, without adhering to his objections, the impugned adjudication order has been passed. The very purpose of the show cause notice issued is to enable the recipient to raise objections, if any, to the proposals made and the concerned Authority are required to address such objections raised. This is the basis of the fundamental Principles of Natural Justice. In cases where the consequential demand traverses beyond the scope of the show cause notice, it would be deemed that no show cause notice has been given, for that particular demand for which a proposal has not been made - the impugned adjudication order cannot be sustained, since it traverses beyond the scope of the show cause notice and is also vague and without any details. Petition allowed.

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• 2020 (11) TMI 83
  Classification of services - Information Technology Software Service - Anti Virus Software - petitioner submitted that Anti Virus Software do not fall within the ambit of taxable service, as defined under Section 65 (105) (zzzze) of the Act - HELD THAT:- The Anti Virus Software runs on computers, mobile phones, data processing machine, sensors, cameras and other such equipments. They provide interactions with the user under the EULA, by providing interactions, configurations and other screens or pages. They are invariably provided to the market in machine readable, executable or binary compilations and exists with the creator or producer in source code or object code forms. They are representation of instructions that include data, sounds and images. The petitioner s Anti Virus Software in CD forms squarely falls within the essential features of the definition of the Information Technology Software . In other words, all essential conditions stipulated under the definition of Information Technology Software are the essential and salient features of an Anti Virus Software also. If that be so, the submissions of the petitioner that an Anti Virus Software is outside the ambit of the definition of an Information Technology Software is not based on any Intelligible Differentia . The petitioner has failed to substantiate that an Anti Virus Software will not fall within the ambit of the definition of Information Technology Software - Since the petitioner is liable to pay service tax but had not discharged the service tax liability, the provisions of Section 68 of the Finance Act, 1994 r/w. Rule 6 of the Service Tax Rules has been violated and therefore, there are no infirmity on the part of the Department, in imposing interest under Section 75(i) along with penalty under Section 76(1) of the Finance Act, 1994. Petition dismissed - decided against petitioner.

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• 2020 (11) TMI 82
  Refund of CENVAT Credit reversed - common input services used for taxable as well as exempt goods - appellants had not maintained separate accounts of the input services used for exempted services (trading) and taxable output services - HELD THAT:- The appellant has been compelled to reverse credit @ 7% of the value of exempted services under Rule 6 (3) (i) read with Rule 6 (3D) (c) only for the reason they have not followed the procedure of intimating the department with regard to the option exercised. The Tribunal in the case of Philips Carbon Black Ltd. (supra)has observed that non-comlinace with the procedure prescribed under Rule 6 (3A) of the CCR does not result in loosing substantive right to avail the option of reversing proportionate credit as envisaged in Rule 6(3) (i); That procedural lapse is condonable and denial of substantive right is unjustified. There are no hesitation to hold that the view taken by the Commissioner (Appeals) that the appellant has to reverse credit as per Rule 6 (3) (i) is against the provisions of law. The appellant would be eligible for refund after reversal / paying of proportionate credit on exempted services by applying Rule 6 (3) (i). This amount however has to be verified. Appellant has furnished details of the credit availed and the amount reversed by them along with the letters issued to department. The indirect tax regime has been shifted from Service Tax to GST, appellant would be eligible for cash refund of such amount. For the limited purpose of quantification of the amount eligible for refund, the matter remanded to the adjudicating authority - appeal allowed by way of remand.

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• 2020 (11) TMI 81
  Rebate claim - rejection on the ground of time bar and also on the ground that the appellant have not submitted relevant GAR challans - N/N. 27/2012-CE dt. 18/06/2012 - HELD THAT:- There is no dispute regarding the appellant s services qualified as export of service under Export of Service Rules, 2005. Also, in the present case, the appellant had paid the service tax on exported output services and subsequently filed rebate claim under Notification No.11/2005-CE(NT) dt. 19/04/2005 which is a self-contained code to deal with the claim filed by the appellant. Further it is found in the said Notification, no time limit is prescribed for filing rebate claim but this issue has been settled by various decisions of the Tribunal and the High Court that for claiming refund/rebate, the time limit prescribed under Section 11B of the Central Excise Act, 1944 is applicable. In the present case, the rebate claim has been filed under Notification No.11/2005-ST dt. 19/04/2005. In the said notification, no time limit is prescribed but it has been settled by the Hon ble Karnataka High Court that the limitation as provided under Section 11B of Central Excise Act would be applicable for claiming refund - Further as per the Export of Service Rules, 2005, the receipt of consideration in foreign exchange is a condition precedent for qualifying a service to be an export service - Since in the present case, the refund is filed for whole of one year i.e. for April 2006 to Marcy 2007 and hence the limitation should be computed from the end of the year i.e. from 31/03/2007 and the appellant filed the rebate application on 04/03/2008 and hence it is within time. The yearly claim filed by the appellant on 04/03/2008 is within time - Further for the purpose of verification of documents regarding the payment of service tax on export of services and the corresponding FIRCs received by the appellant, the case remanded back to the original authority for the limited purpose of verifying the documents - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2020 (11) TMI 80
  Time Limitation for completion of assessment - though the assessees sought the limitation period to be limited to four years as has been prescribed under sub-rules (7) and (8) of Rule 6 of the CST Rules, the decisions thought it fit to refer to the General Sales Tax laws applicable in the State, thus enlarging the period of limitation from that available in the Rules - HELD THAT:- Section 9 enables the levy and collection of tax and penalties exercising all or any of the powers conferred on the Department under the General Sales Tax law of the State, which is subject to the other provisions of the CST Act and the Rules framed there under - Under the KGST regime as was applicable till the year 2004-2005, there was a finalization of assessment contemplated after the return is filed. Under the KVAT regime, which came into force from 01.04.2005, on filing of return, there is a self assessment under Section 21, which deems the assessment to have been completed on the receipt of the return. The limitation provided is not from the date of finalization of assessment, but from the closure of the year to which the tax relates. Even a rectification of mistake can only be within three years of the expiry of the year to which the tax relates. In that context, it would not have been the intention of the executive Government to enable an assessment at any time after the return is filed when the rules provide a limitation period of re-opening either for determination of turnover or for revising the rate of tax or even for rectification of a mistake. We would have in that context found the reasonable time to be four years. Rule 6(5) does not provide for a period of limitation and when the General Sales Tax law provided a period of five years for re-opening an assessment which is deemed to be completed under Section 21, the same applies under the CST Act and the Rules. We cannot but observe that though Section 25 of the KVAT Act provides for re-opening of the completed assessment under Section 21, under the CST Rules the limitation provided for reopening of assessment on the ground of escaped assessment is four years. For the year 2005-06 and 2006-07, the notices issued under Section 6(5) were just prior to the close of the 8th year, i.e., respectively on 13.02.2014 and 19.03.2015. For the year 2007-08, notice was issued on 20.03.2015, just prior to the close of the 7th year - Decided in favour of the assessee and against the Department.

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• 2020 (11) TMI 79
  Best Judgement assessment - suppression of turnover - TNGST Act - HELD THAT:- Both the reassessment orders for the Assessment Years 2002-03 and 2003-04 emanates from the inspection conducted in the petitioner s place of business between 08.10.2003 and 14.10.2004. Apparently, the inspection relates to the Assessment Year 2003-04. However, the reports that emanated from the inspection has been applied to the Assessment Year 2002-2003 also, which cannot be countenanced. In the present case, though the Assessing Officer were originally of the view that D3 proposals can be deviated and inspite of the fact that this Court had directed the Assessing Authority to independently take a view in the issues, the first respondent had, without any doubt, strictly adhered to the D3 proposals and the orders of rejection passed by the second respondent to the deviation proposals and came to a conclusion in the impugned orders. There are force in the submissions of the learned Senior counsel that during the original assessment, the first respondent, Assessing Authority had admitted that the day book, ledger, purchase bills, etc., were produced by the petitioner. Likewise, in the first deviation report forwarded by the first respondent for the Assessment Year 2002-03 dated 17.06.2008, the remarks of the processing officer evidences inspection of the stock statement register, which was maintained to monitor the day-to-day productions, purchases, sales and stock production. In the second deviation report of the first respondent for the Assessment Year 2002-03 dated 14.01.2011, it is recorded that the accounts of the dealers for the year 2002-03 were checked. Accordingly, the first respondent had verified every aspect of the issue relating to the turnover of the dealers and hence the submissions of the learned Government Advocate that the dealers have failed to produce the relevant records during the impugned assessment proceedings, cannot be the sole ground in rejecting the petitioner s claim. Penalty - HELD THAT:- There was sales suppressions and the consequential levy of tax, the respondent had also levied penalty under Section 16(2)(c), as well as, Section 23 of the TNVAT Act. Now, that this Court has held that the impugned orders itself cannot be sustained, the consequential penalty also requires to be set aside. Petition allowed.

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• 2020 (11) TMI 78
  GST Compensation - primordial submission made by the learned counsel for the petitioner is that in the light of Sub-section [1] of Section 7, the compensation payable under the Act to any State during the transition period, is mandatory and as such, the 1st respondent is under obligation to pay the compensation to the State of Tamil Nadu without any loss of time, especially, in the light of the onset and thick spread of COVID- 19 pandemic virus - HELD THAT:- The Goods and Services Tax [Compensation to States] Act, 2017, does not deal and speak about the consequences of non-compliance of the time line stipulated under Subsection [2] of Section 7 of the said Act and therefore, it can be construed only as directory and not mandatory. It is not as if the 1st respondent is not going to compensate the States, in the light of the above cited provisions and whatever difficulties faced by the Government of Tamil Nadu in lieu of the economic melt down due to COVID-19 pandemic virus, may have equal application to the Union of India also. This Court is of the considered view that positive direction sought for by the petitioner cannot be granted - Petition dismissed.

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• Wealth tax

• 2020 (11) TMI 73
  Wealth tax assessment - Nature of land - urban land - whether the land owned by the respondent assessee would not fall within the definition of the expression urban land under Section 2(ea) of the Wealth Tax Act - HELD THAT:- As decided in [ 2020 (10) TMI 313 - MADRAS HIGH COURT] CIT-A has recorded the factual finding that the land, which is unbuiltable under any law for the time being in force, is not an urban land and as such, is not an asset within the meaning of Section 2(e) (a) of the Wealth Tax Act. The CIT-A also referred to a decision in the case of Prabhakar Keshav Kunde [ 2010 (8) TMI 926 - BOMBAY HIGH COURT] .Thus, considering that factually, the CITA on verification found that the land falls within the prohibited zone CRZ III category. - Decided against the revenue.

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• Indian Laws

• 2020 (11) TMI 77
  Grant of Arbitral Award - Section 37 of the Arbitration and Conciliation Act, 1996 read with Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 - CENVAT Credit - Appellant refused to make any payment to the Respondent until necessary documents were submitted by the latter to confirm that the entire guaranteed amount towards CENVAT credit would be passed on to the Appellant - HELD THAT:- The Supreme Court in the case of Associate Builders v. Delhi Development Authority [2014 (11) TMI 1114 - SUPREME COURT] has elaborately laid down the scope of jurisdiction of the Court to interfere with the arbitral award while exercising power under Section 34 of the A C Act. The Supreme Court had observed that only the grounds specifically provided in Section 34 of the A C Act can be relied upon to interfere with an arbitral award and held that the Court would be justified in interfering with the merits of the award only when it is purported to be in conflict with the public policy of India. The Court also considered different types of heads falling under the scope of public policy in India, which inter alia includes patent illegality. It was further observed that the Arbitral Tribunal must decide the dispute between the parties in terms of the contract and the construction of the terms of the contract is primarily for an Arbitrator to decide and must not be interfered with, unless the Arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person could do. In the said judgment, the Court has further observed that when a Court is applying the public policy test to an arbitral award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the Arbitrator on facts must necessarily pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Appeal dismissed.

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• 2020 (11) TMI 76
  Dishonor of Cheque - allegation that the cheques with unfilled dates given to respondent No. 1 as security have been misused by him - HELD THAT:- In order to falsify the complaint the petitioner has raised the various contentions such as that he did not owe any liability to the respondent No. 1, that the cheques with unfilled dates given to respondent No. 1 as security have been misused by him and also non-existence of any liability towards the respondents as per the Memo of Understanding. These all pleas are the disputed question of facts particularly when they have been denied by the respondent No. 1 and these disputed facts are to be determined during the trial and cannot be adjudicated upon by this Court while exercising powers under section 561-A Cr.P.C. This Court while exercising the powers under Scion 561-A Cr.P.C cannot conduct a mini trial with regard to the pleas raised by the petitioner. The complaint under Section 138 NI Act, no doubt can be quashed when it suffers from legal lacunae but not on the factual issues those are to be adjudicated upon only during the trial. Learned counsel for the petitioner also made half hearted attempt to persuade this Court that no notice was sent on 05.10.2017 by the complainant as he has not placed on record postal receipt with regard to the dispatch of the notice and also that the statement of the complainant has not been recorded on oath - Both these contentions of the petitioner were found false and incorrect as the learned counsel for the respondent No. 1 produced before this Court the postal receipt dated 05.10.2017 and also information has also been received from the trial court through virtual mode and it was found that the statement of the complainant was recorded on oath. Thus, there is no force in the contentions of the petitioner and the petition is found to be meritless. Petition dismissed.

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• 2020 (11) TMI 75
  Dishonor of Cheque - Jurisdiction to file complaint - petitioner has stated that the learned JMIC Baramulla has no jurisdiction to try the complaint as admittedly the cheque had drawn at J K Bank Branch, Nowgam Srinagar which is not situated within the jurisdiction of JMIC Baramulla - HELD THAT:- As per Sub-section 1 of Section 142-A of the Act as amended by Negotiable Instruments (Amendment) Ordinance, 2015, all the complaints those were pending in courts other than the courts having territorial jurisdiction as per the amended section 142 of Negotiable Instruments Act, stood automatically transferred to the court having territorial jurisdiction as provided under amended section 142 of Negotiable Instruments Act - Thereafter, the Parliament amended the Negotiable Instruments Act, 1881 and section 142-A was incorporated and it validated the transfer of the cases, transferred pursuant to the Negotiable Instruments (Amendment) Ordinance, 2015. The challenge thrown to the issue of process by JMIC Baramulla on the ground of territorial jurisdiction has lost its relevance, as by operation of law, the complaint that is the subject matter of the present controversy stood automatically transferred to the court of Chief Judicial Magistrate, Sopore w.e.f. 15.06.2015, as the J K Bank Agro High-tech, Sopore, where the respondent has maintained his account is situated within the territorial limits of Chief Judicial Magistrate, Sopore. The other contention raised by the petitioner that the complaint has been filed by the respondent by concealing the compromise agreement, is the disputed question of fact that cannot be adjudicated under section 561-A Cr.P.C.The contention of the petitioner for transferring the case to the court at Srinagar also deserves to be rejected as there is nothing on record to demonstrate that the petitioner is unable to appear in any court other than the Srinagar - this petition is disposed of with the direction to JMIC Baramulla to transmit the record of the complaint, titled, Noor Mohammad Gujree vs. Nayeem Ahmad Khuroo to the court of Chief Judicial Magistrate, Sopore.

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• 2020 (11) TMI 74
  Smuggling - Heroin - fulcrum of the argument of the learned counsel for the appellant is that the prosecution was unable to establish beyond reasonable doubt that the appellant was in conscious possession of the contraband - whether the suspension of sentence sought by the appellant is permissible within the stringent parameters laid down under Section 37(1)(b) of the NDPS Act? HELD THAT:- It is beyond a doubt that by a reading of the provision the parameters laid down are with respect to grant of bail, but by judicial pronouncements they have been made applicable to cases of suspension of sentence under the NDPS Act also - It is evident that the broad principles that the Court needs to apply and satisfy itself while considering an application for grant of suspension of sentence is that the appellant is not guilty of the offence and there are reasonable grounds to arrive at such a belief as also that he is not likely to commit the offence once the sentence is suspended. There are force in the contention of the learned counsel for the appellant that the charge for the offence punishable under Section 29 of the NDPS Act pertaining to criminal conspiracy to possess the contraband substance or to deal with it, was held to be proved only against the co-accused Mandeep Kaur and not against the appellant. The Trial Court has observed that there was no independent corroborative evidence led by the prosecution to substantiate the said charge. It has also come in evidence that the appellant was only a driver of the main accused Balwinder and had been hired by the latter a few days prior to the alleged incident. During the course of the argument learned counsel for the appellant had repeatedly pointed out that Balwinder is absconding for the last several years and his status as reflected is of a proclaimed offender. There was no rebuttal to this by the Respondent s counsel. The additional factor in the present case is that the appellant had subsequently retracted the statement and therefore as per law a retracted statement, even though retraction is not proved, is a weak piece of evidence to connect the accused to the alleged offence. There are force in the contention that being a driver the appellant was prima facie not in conscious possession of the contraband and therefore there exists a reasonable ground to conclude that he may not be guilty of the alleged offence. In view of the fact that the appellant has undergone major part of the sentence and the fact that his wife is suffering from multiple medical ailments, with nobody to look after her and the four minor children, the present application deserves to be allowed - sentence awarded to the appellant shall remain suspended during the pendency of the appeal. Appellant was directed to be released granting interim suspension of the sentence by this Court vide order dated 22.06.2020 for a period of 45 days and the interim suspension was extended up to 31.10.2020. Application disposed off.

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