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Home e-Newsletters Index Year 2024 December Day 26 - Thursday

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TMI Tax Updates - e-Newsletter
December 26, 2024

Case Laws in this Newsletter:

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



TMI Short Notes


Highlights / Catch Notes

    GST

  • High Court quashes late fee order on delayed GST returns before 01.04.2023, extends amnesty benefit for filings till 30.06.2023.

    Case-Laws - HC : HC set aside order imposing late fee on petitioner for delayed GSTR-9/9C filing before 01.04.2023, holding petitioner entitled to benefit of amnesty notification N/N. 07/2023 dated 31.03.2023 exempting late fee for filings between 01.04.2023-30.06.2023. HC ruled differential treatment violative of Article 14, directed withdrawal of impugned order/show cause notice, remanded for fresh order extending amnesty benefit to petitioner.

  • Stock transfer hiccup: Goods hauled despite e-way bill discrepancy, HC vindicates owner's rights.

    Case-Laws - HC : Petitioner is owner of goods being transported as stock transfer from Orissa branch to Kanpur. HC held that when goods were intercepted, requisite documents under GST Act were accompanied and no discrepancy found regarding quantity, except in e-way bill transferee place was mentioned as Ghaziabad while in tax invoice it was Kanpur. As petitioner is consignor and consignee, being stock transfer, petitioner ought to have been treated as owner. Following SC judgment in Arviva Industries case and HC's own judgment in Riya Traders case, authorities were not justified in not recognizing petitioner as owner evident from record. Impugned orders quashed, petition allowed.

  • Interim bail in GST evasion case due to lack of tax liability determination & cooperation.

    Case-Laws - HC : Petitioner granted interim bail in GST evasion case. HC held arrest u/s 69 of CGST Act requires determination of tax liability by authorities, which was lacking. Despite power to arrest, continued detention at investigation stage not warranted as petitioner cooperated. Interim bail granted on personal bond of Rs. 1 lakh and bail bond with sureties, subject to conditions by CJM.

  • High Court upholds show cause notice against firms involved in generating fake input tax credit through circular trading (2017-2022).

    Case-Laws - HC : The HC dismissed the writ petition challenging the validity of the show cause notice (SCN) issued u/ss 74 and 122 of the CGST Act, 2017. The SCN was issued for generating fake input tax credit (ITC) through circular trading by multiple firms from 2017 to 2022. The HC held that joint assessment proceedings u/s 74 against all involved firms were justified, and the petitioner could not be singled out. The SCN was validly issued within the limitation period specified in Sections 74(2) and 74(10) of the CGST Act.

  • Validity of GST Act section 174(2) on hold pending Supreme Court decision in X v. Y case.

    Case-Laws - HC : The HC held that the challenge to section 174(2) of the GST Act, 2017 would be subject to the final outcome in the case of X v. Y [2024 (5) TMI 1498 - SC ORDER]. Till disposal of the SLP in X by the SC, interim orders passed by the HC in all respective cases shall continue to operate, subject to the final SC decision in X. The petition was disposed of.

  • Appellate authority must examine appeal merits even if documents not provided.

    Case-Laws - HC : The HC allowed the petition challenging the order of the appellate authority dismissing the appeal. Despite being granted an opportunity to produce documents, the appellant did not do so. However, the HC held that under the Bihar Goods and Services Tax Act, particularly Section 107(8)-(12), the appellate authority has a duty to examine the merits and grounds raised in the appeal memorandum. Even in ex parte proceedings, the authority must decide on merits, failing which it would abdicate its statutory powers to conduct further enquiry necessary to decide the appeal on the points raised.

  • Transfer of goods from FTWZ to DTA customers is a "Supply of warehoused goods"; IGST applicable, no ITC reversal required.

    Case-Laws - AAAR : Transfer of title of goods stored in Free Trade Warehousing Zone (FTWZ) by the appellant to customers in Domestic Tariff Area (DTA) or multiple transfers within FTWZ is covered under paragraph 8(a) of Schedule III of CGST Act, 2017 as "Supply of warehoused goods to any person before clearance for home consumption". It does not fall under paragraph 8(b) regarding endorsement of documents of title to goods. IGST is applicable on such supplies from FTWZ to DTA customers. No reversal of input tax credit is required under amended Section 17(3) of CGST Act for these supplies, except for supplies from duty-free shops at international airports.

  • Income Tax

  • Temporary interest income on funds borrowed for capital asset acquisition considered part of capital cost, not taxable income.

    Case-Laws - HC : The HC held that interest income earned on funds temporarily deposited in bank during pre-commencement of business for acquisition of capital asset like coal mine is inextricably linked to the cost of acquisition and cannot be charged to tax under 'income from other sources'. Such interest income is to be credited to capital work-in-progress (CWIP) and treated as part of capital cost. However, this accounting treatment applies only for assets requiring considerable time for construction or putting to use, not for off-the-shelf products. The Assessee, incorporated to acquire and operate coal mine overseas, had borrowed funds for this purpose which were temporarily kept in interest-bearing deposits pending acquisition. Since the attempt was aborted, the borrowed funds were repaid. The interest earned on such funds was rightly treated as part of capital cost creditable to CWIP. Decided in favour of the Assessee.

  • Reopening tax assessment quashed for lack of fresh evidence, AO merely changed opinion on existing material.

    Case-Laws - HC : The HC held that the AO lacked jurisdiction to reopen the assessment beyond four years u/s 147. The reasons did not establish the assessee's failure to fully disclose material facts. The AO merely changed its opinion on the same material, which is impermissible. Reopening was based on existing material without any fresh tangible evidence, violating the first proviso to Section 147. The HC entertained the writ petition and quashed the reopening notice for lack of jurisdictional compliance.

  • Landmark firm's plea for compounding tax offences rejected, HC allows fresh consideration.

    Case-Laws - HC : Respondent no. 5 - M/s Adel Landmark Limited's application for compounding offences u/s 276B and 278B was rejected as the competent authority [Chief CIT(TDS)] deemed petitioner's standalone application non-considerable. HC set aside the order, remanding to the competent authority to decide afresh per current guidelines, allowing co-accused to apply separately for compounding offences. Petition disposed accordingly.

  • Excess & short stock during survey: 50% benefit on excess stock; 12.72% GP rate on short stock.

    Case-Laws - AT : CIT(A) determined excess stock and short stock during survey. ITAT partly allowed assessee's appeal. For excess stock, benefit of doubt given to assessee for 50% of value. For short stock, ITAT directed AO to adopt 12.72% gross profit rate instead of 25% adopted by CIT(A). Appeal partly allowed.

  • Huge share trade profits alone don't make scrips penny stocks; Revenue failed to prove dubious transactions.

    Case-Laws - AT : The ITAT held that merely huge profits from share transactions do not make the scrips penny stocks. Despite the financials being incommensurate with purchase/sale prices and characteristics of penny stocks existing, the Revenue failed to link the assessee to dubious transactions, price rigging or establish involvement as entry/exit provider. Absent any material against the assessee's role beyond being an investor for quick profits, the ITAT decided in the assessee's favor, overturning the AO's addition treating share gains as bogus u/s 68, which was based on presumptions and human probabilities without substantiation.

  • Tax deduction disallowance u/s 14A accepted by AO; revisionary authority can't substitute satisfaction without inquiry.

    Case-Laws - AT : The ITAT held that the AO, after examining the assessee's explanation, was prima facie satisfied with the correctness of the suo motu disallowance made by the assessee u/s 14A read with Rule 8D. The revisionary authority cannot substitute the AO's satisfaction with its own without making an inquiry. The assessee consistently followed a particular methodology for suo motu disallowance u/s 14A, which was accepted in past assessment years. If the AO, being satisfied with the assessee's explanation, accepted the suo motu disallowance consistent with the past methodology, the assessment order cannot be considered erroneous. Thus, the assumption of jurisdiction u/s 263 was invalid. The decision was in favor of the assessee.

  • Interest expense on unsecured loans allowed; nexus proven between borrowings & interest income.

    Case-Laws - AT : The ITAT held: Interest expenditure on unsecured loans is allowable deduction u/s 57(iii) as borrowed funds were utilized for advancing loans earning interest income, establishing one-to-one nexus. Addition of Rs 20 lakh unsecured loan from Mr Piyush Kumar deleted as fresh loan of Rs 5 lakh from same party accepted as genuine. Addition u/s 69A on unsecured loans incorrect as AO failed to record satisfaction that assessee owned unexplained money/assets; AO examined loans from angle of s.68 requiring assessee to prove sources instead of invoking s.69A shifting onus on AO. Decided in assessee's favour.

  • Customs

  • Single window for voluntary self-payments replaces manual challans for customs duties & taxes.

    Circulars : The CBIC circular enabled electronic voluntary self-initiated payments on ICEGATE e-Payment platform to replace manual TR-6 challan payments. Users registered on ICEGATE can generate challans for specified purposes listed in Annexure-A and make payments through authorized banks/modes. Field officers are instructed not to accept manual TR-6 challans after 31.12.2024 unless specifically approved by jurisdictional Pr. Commissioner/Commissioner citing reasons. Payment verification facility provided on ICEGATE.

  • Customs notice quashed due to 8-year delay in adjudication despite importer's reply.

    Case-Laws - HC : The HC quashed the show cause notice (SCN) issued u/s 28(9) of the Customs Act, 1962 due to an inordinate delay of almost eight years in adjudication. Despite the petitioner's reply to the SCN dated 17.04.2015, no adjudication was conducted. The HC held that there was no justifiable reason for the non-adjudication, and the facts did not reveal any impossibility for the Customs Department to deal with the SCN. Consequently, the impugned SCN deserved to be quashed, and the petition was allowed.

  • Imported metal items classified as ingots/flats, not scrap - higher duty upheld despite appeal.

    Case-Laws - AT : The CESTAT dismissed the appeal against the order of the Commissioner (Appeals) confirming the classification of the imported goods as ingots and flats instead of heavy melting scrap, thereby rejecting the appellant's claim for concessional rate of duty. The Tribunal upheld the Additional Commissioner's authority to determine the accurate classification after 100% physical examination and examiner's reports, refuting the appellant's contention that the reclassification was improper.

  • Digging Spades Classified for DEPB Scheme; Exporter's Valuation Upheld Despite Quantity Mismatch.

    Case-Laws - AT : The appellants challenged the classification of goods described as "Hand Tools Digging Spade With Handle" under CTH 82011000 or as "Pick Mattock" under CTH 82013000 for DEPB Scheme. CESTAT held the goods are spades used for digging based on Chartered Engineers' opinions, falling under Sr. No. 196 of DEPB schedule. Regarding mismatch in declared and actual quantity, CESTAT ruled the exporter cannot be blamed due to loose packing. On valuation, CESTAT held no evidence of market price for identical goods, and FOB value can be higher than market value. The impugned order was set aside and appeal allowed.

  • Corporate Law

  • Judges Protection Act upheld; non-payment is default for insolvency; no forum shopping; cost imposed on petitioner.

    Case-Laws - HC : Section 3 of Judges (Protection) Act, 1985 held constitutional. Non-payment of debt, even partially, amounts to default by Corporate Debtor u/s 7 IBC. Order of NCLT-1 Mumbai admitting insolvency application not perverse or illegal. Petition alleging forum shopping, suppression, multiplicity of proceedings dismissed. Cost of Rs. 2.5 lakh imposed on Petitioner.

  • Land dispute lost for defunct firm: Court bars claim, upholds trespassers' possession. Costs imposed on struck-off company's rep.

    Case-Laws - HC : Suit dismissed. Plaintiff company's suit seeking possession and permanent injunction rejected. HC granted permanent injunction against plaintiff barring reliance on sale deeds and interference with defendants' possession. Suit filed after final judgment is abuse of process. Plaintiff struck off under Companies Act, unable to maintain suit. Actual costs awarded against plaintiff's representative personally due to struck-off status.

  • State GST

  • GST rates revised for snacks, AC units, & vehicle seats. Snacks 12%, Rail AC 28%, Two-wheeler seats 28%, Four-wheeler seats 28% from Oct 2024.

    Circulars : The CBIC clarified: Extruded/expanded savoury snacks under HS 1905 90 30 attract 12% GST prospectively from 10.10.2024, earlier 18% payable. Roof Mounted Package Unit Air Conditioners for Railways classified under HS 8415 attract 28% GST. Two-wheeler seats under HS 8714 attract 28% GST. Four-wheeler seats classified under HS 9401 attract 28% GST prospectively from 10.10.2024, earlier 18% payable.

  • Universities charging 18% GST for college affiliation; school boards taxed except govt schools. Flying training exempt.

    Circulars : The SC clarified that affiliation services provided by universities to colleges are taxable at 18% GST rate. Affiliation services by educational boards/councils to schools, except government schools, are taxable; GST liability is regularized from 1.7.2017 to 17.6.2021. DGCA-approved flying training courses by approved FTOs are exempt under education services. Transport of passengers by helicopter on seat share basis attracts 5% GST; GST liability regularized from 1.7.2017 to 9.10.2024, while charter operations attract 18% GST. Ancillary services by GTAs are part of composite transport supply. Import of services by foreign airlines from related parties without consideration is exempt; GST liability regularized from 1.7.2017 to 9.10.2024. Preferential location charges are part of construction services supply. Certain support services by electricity utilities are exempt; GST liability regularized from 1.7.2017 to 9.10.2024. GST liability on film distribution rights regularized from 1.7.2017 to 30.9.2021.

  • IBC

  • Insolvency Professional suspended for related party dealings & unauthorized valuation report submission.

    Case-Laws - HC : Petitioner's registration as an Insolvency Professional suspended for one year by DC. Engaged brother's firm without proper CoC disclosure - related party transaction violation of Section 28(1)(f), IBC Code. Submitted valuation report without CoC approval/ratification - violation of Regulation 34, CIRP Regulations. Appropriate action taken against non-payment of water charges. Suspension upheld on two valid grounds despite one ground lacking. HC disposes application.

  • Appellate authority dismisses appeal for 156-day refiling delay, citing insufficient justification and IBC's strict timelines.

    Case-Laws - AT : The NCLAT dismissed the appeal, declining to condone the delay of 156 days in re-filing. The appellant's explanation was found insufficient to condone such a prolonged delay. The NCLAT emphasized adherence to procedural timelines under the IBC, referring to Supreme Court judgments which disallowed extending timelines beyond statutory limits except in limited circumstances not attributable to the litigants. As the appellant failed to provide adequate justification for the inordinate delay of 156 days in re-filing, which appeared aimed at hindering the resolution process, the NCLAT dismissed the appeal.

  • Unsuccessful bidder's challenge to approved resolution plan dismissed due to lack of locus standi.

    Case-Laws - AT : The NCLAT rejected the intervention application filed by the Appellant for approval of the Resolution Plan u/s 30 of the I&B Code. The Appellant was an unsuccessful Resolution Applicant and lacked locus standi to become a party to the proceedings. The NCLAT held that the Adjudicating Authority has the prerogative to determine whether the approved Resolution Plan by the COC falls within the parameters prescribed in Section 30(2), and the Appellant has no right to ensure its compliance. The NCLAT allowed the impleadment of M/s Lulu International Shopping Malls Private Limited, whose Resolution Plan was approved. Since the Appellant's Intervention Application was rejected and its Resolution Plan was rejected without challenge, the NCLAT dismissed the appeal, holding that the Appellant has no locus standi to intervene or challenge the approval of the Resolution Plan granted to M/s Lulu International Shopping Malls Private Limited.

  • Indian Laws

  • Apex court reverses High Court's premature discharge; says charge framing needs only prima facie case, not clinching evidence.

    Case-Laws - SC : The SC held that the HC erred in setting aside the charge framed against the respondent while exercising revisional power. At the charge framing stage, the court is only required to consider if a prima facie case exists, not whether there is clinching evidence. The HC's meticulous consideration of evidence to find absence of clinching material was beyond its scope under S.239 CrPC. The SC set aside the HC's judgment quashing the charge and discharging the respondent.

  • Service Tax

  • Mining contract: Site formation service demand incorrect, incidental to mining.

    Case-Laws - AT : The CESTAT held: The demand of service tax under 'site formation service' for June 2005 to May 2007 by culling out site formation charges from a composite mining contract is unsustainable. The alleged site formation activity was only incidental to the mining service, and demanding tax on a service not agreed upon lacks merit. The demand for short payment of service tax under mining service for June 2007 to September 2008 is unsustainable. The appellant had already paid service tax on the gross income by end of 2008-09. The demand for service tax under mining service for June 2007 to September 2008 on account of undervaluation is unsustainable. Enhancement of value based on cost of provision u/r 3(b) is inapplicable as there was no realization of consideration in kind. All three demands of service tax confirmed in the impugned order, along with interest and penalty, are set aside. The appeal is allowed.

  • Overseas Universities' Service Fees Exempted from Service Tax.

    Case-Laws - AT : The CESTAT held that the services rendered by the appellant to overseas universities/colleges amounted to 'Export of Service' and not 'intermediary service'. It observed that the appellant was not an agent of the foreign universities as per the agreements. All conditions u/r 6A of Service Tax Rules, 1994 were satisfied. The amount was received from foreign universities in convertible foreign exchange, not from Indian students. Indian students were not the service recipients. The place of provision was wrongly held to be in the taxable territory (India). The services fell u/r 3 of Place of Provision Rules, 2012, with the service recipient (foreign universities) located outside the taxable territory. Invoking Rule 9 of Place of Provision Rules was incorrect. The appellant was not liable to pay service tax on foreign consultancy fees. The show cause notice was barred by limitation as there was no evasion of tax. The order was set aside, and the appeal allowed.

  • Central Excise

  • Excise Duty Overpayments and Short Payments Resolved: No Fraud, Leniency on Limitation Period.

    Case-Laws - AT : The CESTAT allowed the appeal. The appellant had been adjusting duty payments considering sale price at factory gate and ex-C&F depot price, resulting in excess and short payments. The appellant informed the department about the price details since 2009. The CESTAT held that invoking extended period of limitation u/s 11A(4) of the Central Excise Act, 1944 was wrong as there was no fraud, wilful mis-statement or suppression of facts with intent to evade duty by the appellant. The impugned order confirming the show cause notice demanding short payment of duty was set aside as legally unsustainable on the point of time limitation.


Articles


News


Notifications


Circulars / Instructions / Orders


Case Laws:

  • GST

  • 2024 (12) TMI 1228
  • 2024 (12) TMI 1227
  • 2024 (12) TMI 1226
  • 2024 (12) TMI 1225
  • 2024 (12) TMI 1224
  • 2024 (12) TMI 1223
  • 2024 (12) TMI 1222
  • 2024 (12) TMI 1221
  • 2024 (12) TMI 1220
  • Income Tax

  • 2024 (12) TMI 1219
  • 2024 (12) TMI 1218
  • 2024 (12) TMI 1217
  • 2024 (12) TMI 1216
  • 2024 (12) TMI 1215
  • 2024 (12) TMI 1214
  • 2024 (12) TMI 1213
  • 2024 (12) TMI 1212
  • 2024 (12) TMI 1211
  • 2024 (12) TMI 1210
  • Customs

  • 2024 (12) TMI 1209
  • 2024 (12) TMI 1208
  • 2024 (12) TMI 1207
  • 2024 (12) TMI 1206
  • Corporate Laws

  • 2024 (12) TMI 1205
  • 2024 (12) TMI 1204
  • Insolvency & Bankruptcy

  • 2024 (12) TMI 1203
  • 2024 (12) TMI 1202
  • 2024 (12) TMI 1201
  • 2024 (12) TMI 1200
  • 2024 (12) TMI 1199
  • PMLA

  • 2024 (12) TMI 1198
  • Service Tax

  • 2024 (12) TMI 1197
  • 2024 (12) TMI 1196
  • 2024 (12) TMI 1195
  • 2024 (12) TMI 1194
  • 2024 (12) TMI 1193
  • Central Excise

  • 2024 (12) TMI 1192
  • 2024 (12) TMI 1191
  • 2024 (12) TMI 1190
  • 2024 (12) TMI 1189
  • CST, VAT & Sales Tax

  • 2024 (12) TMI 1188
  • 2024 (12) TMI 1187
  • Indian Laws

  • 2024 (12) TMI 1186
 

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