TMI Tax Updates - e-Newsletter
March 5, 2020

Case Laws in this Newsletter:

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

News

1. DGGI HQ books case against 3 firms for issuance of fake invoices without actual supply of goods worth ₹ 4,198 crores

2. Webcast on problems faced in “GST Registration”

3. India’s rank has gone up from 142 to 63 in 2019 in Ease of doing Business

4. Cabinet approves Companies (Second Amendment) Bill, 2019

5. TDS Surveys by Income Tax Department unearths huge defaults in deduction and deposit

6. Cabinet approves Mega Consolidation in Public Sector Banks {PSBs} with effect from 1.4.2020

7. LLP settlement Scheme, 2020 launched ; Shall allow a One-time condonation of delay in filing statutorily required documents with the Registrar

8. Establishment of Farmer Producer Organisations (FPOs)

Notifications

Customs

1. 19/2020 - dated 4-3-2020 - Cus (NT)

Seeks to amend Notification No. 15/2020-CUSTOMS (N.T.), dated 20th February, 2020

GST - States

2. 1/2020- State Tax (Rate) - dated 25-2-2020 - Bihar SGST

Seeks to amend Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017

3. 01/2020-State Tax (Rate) - dated 20-2-2020 - West Bengal SGST

Seeks to amend notification No. 1125-F.T., dated 28.06.2017 so as to notify rate of GST on supply of lottery.

SEZ

4. S.O. 896 (E) - dated 21-2-2020 - SEZ

Central Government notifies the 52.08 hectares area comprising the Survey number at Banapur and Talbal Villages, Kukanur Taluka (erst. Yelburga Taluka) Koppal District in the State of Karnataka and constitutes an Approval Committee

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CDMRD/DRMP/CIR/P/2020/32 - dated 3-3-2020

Review of Norms regarding Regaining Matched Book for Commodity Derivatives Segment

LLP

2. 06/2020 - dated 4-3-2020

LLP settlement Scheme, 2020

Highlights / Catch Notes

GST

• GST Exemption on Mandi Fees: No Reverse Charge on Wood Purchases from Unregistered Sellers or Farmers.

  Case-Laws - AAR : Applicability of GST on mandi fees on local purchase of wood - Reverse Charge Mechanism (RCM) - the applicant is not liable to pay GST on the mandi fee paid on the purchase of wood from the unregistered person/farmer. - AAR
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• Advance Ruling Jurisdiction on Supplier Location and Export of Services Clarified u/s 97(2)(e) for Tax Clarity.

  Case-Laws - HC : Jurisdiction of Advance ruling - location of supplier - Export of Services or not - the scope of Section 97(2)(e) is very wide and Parliament has clearly mandated that the latter issue of determination of liability to pay tax on any goods or services or both, should also be matters on which the applicant concerned could seek advance ruling from the Advance Ruling Authority on which the said authority is obliged to render answers thereto. - HC
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• Profiteering Case: Respondent Must Pass on 11.97% Post-GST Benefit to Customers Under PMAY Housing Scheme.

  Case-Laws - NAPA : Profiteering - supply of construction service related to the purchase of a house under the Pradhan Mantri Aawas Yojna (PMAY) - post-GST, the Respondent has been benefited from additional ITC to the tune of 11.97% (11.97%-0%) of his turnover and the same was required to be passed on by him to the Applicant No. 1 and the other recipients. - NAPA
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• Samsung TV Supplier Accused of Price Hike to Offset Tax Cut, Faces National Anti-profiteering Authority Review.

  Case-Laws - NAPA : Profiteering - supply of “Samsung 80 CM (32 inches) HD ready LED TV 32FH4003” - If there was any increase in his costs the Respondent should have increased his prices before 31.12.2018, however, it cannot be accepted that his costs had increased on the intervening night of 31.12.2018/01 01.2019 when the rate reduction had happened which had forced him to increase his prices exactly equal to the reduction in the rate of such tax. Such an uncanny coincidence is unheard off - NAPA
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Income Tax

• High Court Rules Hospital Pharmacy Operations Qualify as Charitable Activity for Tax Exemption Under Income Tax Act Section 11.

  Case-Laws - HC : Exemption u/s 11 - Charitable activity - running pharmacy store in the hospital and was selling drugs and medicines to the patients through this pharmacy store - AO was not justified in treating the pharmacy store of the respondent as a separate business entity and to hold the surplus amount accrued there from as business income under Section 11(4A) - HC
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• Assessee entitled to LTCG exemption despite property being in spouse's name; investment conditions met u/ss 54/54F.

  Case-Laws - AT : Denying exemption u/s 54/54F - LTCG - since the entire sale amount of long term capital gain have been invested in purchase of other property in the name of wife of assessee, assessee would be entitled for exemption on account of long term capital gains. - AT
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• No Penalty for Misclassification of Securities u/s 271(1)(c) Due to Bona Fide Mistake in Tax Rate.

  Case-Laws - AT : Penalty u/s 271(1)(c) - mistake of wrong classification of the securities yielding Long Term Capital Gain and consequently the assessee had paid the tax @ 10% instead of 20% - Once the assessee has explained the reasons for wrong classification as bona fide being inadvertent mistake, no penalty could be levied - AT
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• Turnover Calculation in Speculative Transactions: Sections 44AA & 44AB of Income Tax Act Examined, No Penalty Imposed.

  Case-Laws - AT : Determination of turnover - scope of section 44AA and 44AB - failure to maintain books of accounts - failure to get accounts audited - speculative transactions on NCDEX/MCX commodity exchange - turnover of about 27 crores - net loss is about 3.60 lacs - the turnover has to be determined by taking the aggregate of both positive and negative differences arising from such speculative transactions and as an outcome of settlement of such contracts during the year which in the instant case comes to ₹ 3.60 lakhs. - No penalty - AT
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• Assessing the Legitimacy of Referral Commissions: Evaluating the Impact on Business Turnover for Divine Alloys and Power Co.

  Case-Laws - AT : Genuineness of expenditure - payment of “referral commission” - If the so-called client referral as made by the assessee in respect of M/s. Divine Alloys and Power Company Limited was effective, why was it that the assessee had only one year transaction with M/s. Elecon Engineering? Once the reference is made and the products of the assessee are of the top notch quality, the turnover should have been climbing instead of falling back to earlier levels. - AT
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• Hindu Undivided Family Taxation: Impact of Notional Partition and Section 171 on Property Acquisition and Succession.

  Case-Laws - AT : Properties acquired by the HUF - Creation of smaller HUF - Deemed partition / Notional partition - death of a Mitakshara Coparcener - absence of partition u/s 171 of the Income Tax Act - section 6 of Hindu Succession Act - the assessee HUF, at best, is taxable only in respect of ½ of the properties acquired by the HUF headed by Shodhan Sr. - AT
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Customs

• Court Allows Amendment in MEIS Scheme Case Over Timing Issue Under Circular No.36/2010-Customs Application Deadline.

  Case-Laws - HC : Benefits under MEIS scheme - amendment in shipping bills - It is not the case of the respondents that the petitioner is not otherwise covered by Circular No.36/2010­-Customs dated 23.09.2010. The sole ground on which the application has been rejected is for non compliance of condition (a) of paragraph 3 of the said circular, namely that the application has been filed beyond a period of three months from the date of filing the Let Export Order. - Amendment allowed - HC
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• Importer Wins Appeal for Customs Duty Refund Due to Unusable DEPB Scrips After Policy Withdrawal.

  Case-Laws - AT : Refund of Excess Customs Duty paid through RTGS instead of re-crediting it in the DEPB licence - appellant contended that, since DEPB scrips had been withdrawn by the Director General of Foreign Trade, the re-credited scrips cannot be utilized by Artex Textile - Commissioner (Appeals) allowed the appeal of the importer. - There is no infirmity in the order passed by the Commissioner (Appeals) - AT
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Indian Laws

• Respondent Must Prove No Loan Given to Overcome Section 139 Presumption in Cheque Dishonor Case.

  Case-Laws - HC : Dishonor of Cheque - onus to prove that loan was advanced - When the respondent himself has not deposed before the trial Court that he has not borrowed money from the appellant, presumption under Section 139 of the Act, 1881 will survive and remain exist and corroboration to the statement of the appellant is not required. - HC
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IBC

• Tribunal Upholds Lack of Jurisdiction to Recall Admission Order, Disagrees on Other Findings and Costs in CIRP Case.

  Case-Laws - AT : Recall the Order of admission - There are no fault with the Impugned Order of Adjudicating Authority where it observed that it does not have jurisdiction to recall its Order of admission but do not agree with its other findings referred earlier and imposing of costs. However, this Tribunal has jurisdiction in Appeal to consider whether initiation of CIRP process against the Corporate Debtor is legal or not. - AT
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Service Tax

• High Court Examines Rule 7B of Service Tax Rules: Technical Glitches Not Accepted for Revised Return Rejection Appeal.

  Case-Laws - HC : Filing of revised return - time limit for filing of revised return - Rule 7B of Service Tax Rules-1994 - the revenue authorities have failed to consider the aspect of technical glitches to reject the claim of the petitioner on the ground that the petitioner has no option to revise the return in Form ST-3 once the original return is revised by the petitioner - HC
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• Boards and Universities Classified as Educational Institutions for Service Tax; Exams and Credentials Integral to Education.

  Case-Laws - HC : Classification of services - Whether or not, the Boards and the University are educational institutions - Held Yes - education would mean the entire process of learning, including examination and grant certificate or degree or diploma, as the case may be and would not be limited to the actual imparting of education in schools, colleges or institutions only. Unless the School Boards hold examinations, the education of school students would not be complete, so is the case with college students, whose education would be complete only when the University conducts examinations and awards degrees or diplomas. - HC
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• High Court Rules Company Services Not Taxable Under "Club or Association" Category; Quashes Show Cause Notice.

  Case-Laws - HC : Club and Association service - It has been alleged that since the petitioner was an incorporated company and therefore, the services rendered by it cannot be said to be excluded from the definition of “club or association” in view of specific exclusion sub-clause (iii) to the above definition - allowing the petition, show cause notice (SCN) quashed - HC
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• Court Overturns Service Tax on Securitization Agreements Due to Lack of Legal Authority in Contract Analysis.

  Case-Laws - AT : Demand of service tax - receipts generated from securitization agreements - receipts from ‘special purpose vehicles’ - Barring a bald assertion that ‘cash management’ has been undertaken, the adjudicating authority has not made any effort to analyse the nature and circumstances in which the contract with ‘special purpose vehicles’ undertook to provide such facility. - The levy of tax and imposition of detriment in the impugned order is without authority of law - AT
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Central Excise

• Payment During Investigation Considered Pre-Deposit; Section 11B Refunds Not Applicable for Appeal Hearings in Central Excise.

  Case-Laws - AT : Refund - the payment made during investigation is in the nature of pre-deposit or not - It is obvious that once the appellant paid the substantial duty amount there cannot be further direction of separate deposit for hearing the appeal but that itself does not change the character of payment at the time when it was made. I am of the view that if the similar payment is considered as pre-deposit then in no case of refund section 11B will apply. - AT
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• Appellants Must Reverse Both CVD and SAD Credits; Inconsistent Treatment of Duties Not Accepted in CENVAT Reversal.

  Case-Laws - AT : Reversal of CENVAT credit - Appellants have reversed only the CVD and they have not reversed the credit of SAD availed by them. - there are no force in the argument of the Assessee that the goods which were treated by them as duty paid for the purpose of reversing CENVANT Credit of CVD must be treated as duty free for the purpose of reversing SAD. - AT
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• Reversal of CENVAT Credit: Exclude Material Costs, Include Ancillary Service Costs in Taxable Service Value Calculation.

  Case-Laws - AT : Reversal of CENVAT Credit - common input services - the value of taxable services cannot include the value of the material/goods used in rendering the taxable services. Simultaneously, it is an accepted principle that the cost of all ancillary and incidental services for providing the taxable service be part of the value of the taxable service - AT
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VAT

• High Court Rules Galvanized Poles for Lighting Aren't Transmission Line Material, Affecting VAT and Sales Tax Classification.

  Case-Laws - HC : Classification of goods - galvanized poles - transmission line material or not - Undoubtedly the Feeder Pillar is used for transmission of electricity while galvanized poles used for lighting are not used for transmission of electricity. - The findings recorded by the Tribunal are clearly flawed - HC
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• Section 27 Powers Unaffected by Section 64(2) Misinterpretation; Documentation Needed for Input Tax Credit Validation.

  Case-Laws - HC : ITC - As the assessment has been deemed to have been completed only on 13.6.2012, the powers of the assessing authority under Section 27 cannot be curtailed by giving a skewed interpretation of Section 64(2) Of the Tamil Nadu VAT Act, 2006 - If the petitioner wants to justify the input tax credit availed by it during the period in dispute, it has to produce documents called for to substantiate it. - HC
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• Court Rules on ITC Reduction for Hides and Skins in Inter-State Trade, Interprets Section 15(b) of CST Act.

  Case-Laws - HC : Reduction of Input Tax Credit - purchases of hides and skins resold in the course of inter-State trade and commerce - denial of reimbursement as per section 15(b) of the CST Act - t the impugned notification does not relate only to declared goods, the entire notification cannot be struck down. However, the notification has to be read down to mean that the non-entitlement to input tax credit provided thereunder shall not be applicable to goods which are both purchased and sold as declared goods. - HC
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• Advance Tax and Penalty in Vehicle Detention Case: Consignor or Consignee, Not Appellant, Affected by Penalty Proceedings.

  Case-Laws - HC : Imposition of Advance tax and penalty - detention of vehicle - in case the appellant had sold the goods to the consignor, there was no occasion for the representative of the appellant and of the consignee to appear in the penalty proceedings and to get the goods released. The affected parties would have been the consignor or the consignee and not the appellant. - HC
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• Tax Refund Mandated: Rajasthan to Issue 'C' Forms; Authorities to Process Refund Within 12 Weeks of Request Submission.

  Case-Laws - HC : Refund of Tax - tax was collected in the absence of ‘C’ forms - refund to the seller - once the Rajasthan authorities issue C forms against the sales made by Reliance Industries Limited to the petitioners and the petitioners produce the requisite documents/forms before the respondent authorities, the respondent authorities are required to process such claim within twelve weeks of the same being made in writing by the petitioners. - HC
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Case Laws:

• GST

• 2020 (3) TMI 190
  Activity of operation and maintenance part of Contract/s entered prior to implementation of GST - operation and maintenance part of contract/s entered post implementation of GST - applicability of N/N. 12/2017- CT(R) as amended by Notification No.02/2018- CT(R)dated 25.01.2018 S.No.3A. HELD THAT:- In the case at hand, from the documents furnished in respect of contracts (2) and (3), it is evident that the contract is for execution of works and Post-work maintenance for a specific period. The Operation and Maintenance in both the contracts are dealt in Section-II of the Agreement. The applicant has to bear the charges for chemicals, consumable, labour and other services in the course of execution of Operation and Maintenance . Thus, the Operation and Maintenance undertaken as per the contracts (2) and (3) are supplies which are Composite Supplies as per Section 2(30) and are taxable to GST. In respect of Contract 1, the applicant has not furnished the RA bills/ Invoices/any documents to establish the Time of supply and therefore the applicability of GST on the Operation and Maintenance of the said contract is not discussed. In respect of Contract (2), the Time of Supply for the composite supply of Operation and Maintenance under the said contract starts from March 2018 only as seen from the submissions before us. Hence on the entire activity of Operation and Maintenance under Contract (2) GST is leviable. In respect of Contract (3), the first RA bill is raised on 20.12.2017 for the main works as per Section-I of the contract and the applicant has furnished details upto L.S.9,h Part Bill dated 25.01.2019 and it is seen that the supply of Operation and Maintenance agreed to in the said contract as per Section -II of the Agreement for a receivable of Rs. 69,64,307.76 is not billed in any of these bills and the services are yet to be supplied. Therefore, it is amply evident that GST is leviable in respect of Operation and Maintenance agreed to be supplied under Contract (3). Applicability of SI. No. 3A of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended by Notification No. 02/2018-C.T.(Rate) dated 25.01.2018 - HELD THAT:- In the case at hand, M/s, TWAD Board is a Board, constituted by an Act of Tamil Nadu State Legislature called Tamil Nadu Water Supply and Drainage Board Act, 1970 with 100% contribution by way of Government and controlled by Government by way of appointing Directors of the TWAD Board entrusted with the development of Water Supply and Sewerage facilities in Municipalities and Panchayats in the State of Tamil Nadu, except Chennai Metropolitan Development. Thus M/s. TWAD is a Governmental Authority as defined under 2(zf) of the Notification No. 12/2017-CT (Rate) as amended effective from 13.10.2017 and the supply is made to the Government Authority by the applicant - The contracts under consideration are for providing Combined Water Supply Scheme (CWSS) to various regions. Thus, it is clear that the supplies as per the contracts are works received by TWAD and are in relation to functions entrusted to Panchayat or Municipality. In respect of Contract (2), the Operation and Maintenance of the executed project is undertaken after implementation of GST and is a composite supply. The contractor is obligated to borne the cost of water, gas, consumables, chemicals and other services during the period of Maintenance as seen from the VIII. Special Conditions of Contract . The details of the quantum of materials and Labour involved in the said contract are not furnished separately before this authority. In respect of contract (2), the exemption provided at SI.No. 3A of Notification No. 12/2017-C.T.(Rate) is applicable if the total value of the supply of goods involved in the RA bills raised for such supply do not constitute more than 25 percent of the value of such bills which are raised after 25.01.2018 and the break-up of the value of goods and other supplies are mentioned in such bills and all the other required conditions of the said entry stands fulfilled. In respect of Contract 3, the maintenance is to be undertaken after the execution of the project. In this contract also, the vivisection of the material and labour component is not furnished before this authority. Therefore, we hold that in respect of this contract, if the value of supply of goods involved in such supply as raised in each such bill does not constitute more than 25 percent of the value of such bill, then the exemption under SI.No. 3A of the Notification No. 12/2017-CT (Rate), inserted vide Notification No. 02/2018 -C.T.(Rate) dated 25.01.2018 is applicable to the Operation and Maintenance Part(Section-II) of the Contracts, in as much as all the other required conditions stands fulfilled.

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• 2020 (3) TMI 189
  Classification of goods - rate of GST - wood scrap - Security forfeited by Uttarakhand Forest Corporation - refund of GST on supply turned into bad debts and supply lost/destroyed in transit - GST on mandi fees on local purchase of wood - Reverse charge mechanism - GST on penalty. Applicability of GST rate and HSN/classification of wood scrap - HELD THAT:- Chapter 44 of the GST Tariff deals with wood and articles of wood; wood charcoal . Chapter Heading 4401 further deals with fuel woods, in logs, in billets, in twigs, in faggots or in similar form; wood in chips or particles; sawdust and wood waste and scrap, whether or not agglomerated in logs, briquettes, pellets or similar forms - the wood left after peeling process is not usable as timber rather the same is to be treated as manufacturing waste which used in paper manufacturing, particle board and fibre board manufacturing well as for fuel. Therefore the same may be classified under Chapter Heading 4401 31 00 or 4401 39 00 (supra) and will attract GST @5%. Applicability of GST rate on security forfeited by Uttarakhand Forest Corporation - HELD THAT:- Section 7(1)(a) of the Act is relevant to the issue in hand which provides that it covers all forms of supply of goods or services made for a consideration by a person in the course or furtherance of business. In this context we observe that supply of goods viz. wood, in consideration of payment is one set of mutual transactions and forfeiture of an amount for not depositing the balance amount for the wood purchased is another set of mutual transactions. Thus indeed there is supply of goods as well as supply of services also. Therefore it satisfies the conditions of Section 7(1)(a) of the Act. Now comes the test in terms of Schedule II appended to the Act in respect of forfeited amount - the agreement for tolerating an act or situation which is unable to deposit balance amount for the wood purchased is a provision of service in terms of Entry No. 5(e) of Schedule II appended to the Act which provides that agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - thus the forfeited amount is covered under Service Code (Tariff) 9997 94 as agreeing to tolerate an act and leviable to GST @ 18%. Refund of GST on supply turned into bad debts and supply lost/destroyed in transit - HELD THAT:- The said issue does not cover under sub-section (2) of Section 97 of the CGST/SGST Act, 2017 and thus no ruling can be given on this issue. Applicability of GST on mandi fees on local purchase of wood - Reverse Charge Mechanism - Whether exemption can be claimed if amount of mandi fee is below Rs. 5,000/- in individual consignment? - HELD THAT:- As per the provisions of Section 15(2)(a) of the CGST/SGST Act, 2017, value of supply also includes any fee levied under any law other than CGST/SGST/UTGST Act. Therefore, fee levied under Agricultural Produce Marketing (Development and Regulation) Act, 2011 (Uttarakhand Act No. 9 of 2011) will become the part of the value of supply and will attract GST rate specified for a particular goods under the relevant chapter/ Heading/ sub-heading irrespective of the fact that whether GST is paid on forward charge basis or reverse charge basis. It is relevant to mention that under Section 9(3) of CGST/SGST Act, 2017, wood has not been notified as such goods supplied by unregistered person/farmer/Agriculturist, in respect of which GST shall be paid on reverse charge basis by the recipient - prior to 1st February, 2019, in pursuance of the provision to tax the supply of taxable goods or services or both by an unregistered supplier to a registered person on reverse charge basis, an exemption to the extent of the aggregate value of such supplies of goods or services or both up to five thousand rupees in a day was made effective from the 1st of July, 2017. The said restriction of five thousand rupees was withdrawn on 13 th October, 2017 and a blanket exemption was provided till the 31st March, 2018 which was further extended to 30th September, 2019. However in between from 1st of February, 2019 an amended Section 9(4) of CGST/SGST Act, 2017, came into effect which have been discussed at length above and by virtue of coming into force of the amended Section 9(4) of CGST/SGST Act, 2017, the said exemption notification was rescinded with effect from 1st of February, 2019 - thus, the applicant is not liable to pay GST on the mandi fee paid on the purchase of wood from the unregistered person/farmer. Applicability of GST on penalty - HELD THAT:- The penalty recovered is covered under Service Code (Tariff) 9997 94 as agreeing to tolerate an act and leviable to GST @ 18%.

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• 2020 (3) TMI 188
  Permission to carry forward of unutilized CENVAT credit of duty paid - transitional credit - carry forward denied on account of nonfiling or incorrect filing of prescribed statutory Form i.e. TRAN-1 by the stipulated last date i.e. 27.12.2017. HELD THAT:- We are not inclined to exercise our jurisdiction under Article 136 of the Constitution. We accordingly dismiss the Special Leave Petition. SLP dismissed.

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• 2020 (3) TMI 187
  Maintainability of petition - availability of alternative and efficacious remedy of appeal - imposition of penalty - GST Act - HELD THAT:- It is not in dispute that a remedy of appeal is available to the petitioner against the impugned order. In view of the aforesaid, we are not inclined to entertain the present petition as the alternative and efficacious remedy of appeal is available to the petitioner - the present petition is disposed of with liberty to the petitioner to avail the remedy of appeal in accordance with law.

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• 2020 (3) TMI 186
  Jurisdiction of Advance ruling - location of supplier - Levy of GST - Export of Services or not - supply of services by India Branch of Sutherland Mortgage Services Inc. USA to the customers located outside India - intra company agreement entered into by the branch with the principal company incorporated in USA - In the instant case, the specific plea of the petitioner is that the services are rendered by the petitioner India branch directly to the overseas customers and not to the principal company incorporated in USA. Whether the determination of the issue of place of supply can be the subject matter of advance ruling? HELD THAT:- It is common ground that if an order is passed under Sec. 97(2) of the CGST Act, then the same is not appealable in terms of Sec. 100 of the Act as sub section (1) of Sec. 100 clearly provides that only if the applicant concerned is aggrieved by any advance ruling pronounced under Sec. 98(4) of the Act that the appeal would lie. Since the stand of the Advance Ruling Authority is that it has rendered its decision under Sec. 98(2) of the CGST Act, an order in the nature of Ext.P-2 cannot be the subject matter of an appeal under Sec. 100 of the said Act. Since that is the position there cannot be any dispute that since the petitioner does not have any alternative statutory remedy, he can challenge the same mainly by way of judicial review in writ proceedings under Art. 226 of the Constitution of India. No dispute has been raised by the respondent regarding the maintainability of the present writ proceedings. A reading of clauses (a) to (g) of sub section (2) of Sec. 97 of the CGST Act would make it clear that 7 items are enumerated as per clauses (a) to (g) of sub section (2) of Sec. 97 and all those clauses other than clause (e) thereof, are in specific terms. Whereas clause (e) of sub section (2) of Sec. 97 of the CGST Act clearly mandates that the larger issue of determination of liability to pay tax on any goods or services or both would also come within the ambit of the questions to be raised and decided by the Advance Ruling Authority on which advance ruling could be sought and rendered under the said provisions. Whereas Clauses (a), (b), (c), (d), (f) (g), ie. the clauses other than clause (e), are in specific pigeon holes and the provision as per clause (e) of sub section (2) of Sec. 97 is in wide terms and the Parliament has clearly mandated that the latter issue of determination of liability to pay tax on any goods or services or both, should also be matters on which the applicant concerned could seek advance ruling from the Advance Ruling Authority on which the said authority is obliged to render answers thereto. In the instant case, it is true that the issue relating to determination of place supply as aforestated is not expressly enumerated in any of the clauses as per clauses (a) to (g) of Sec. 97(2) of the CGST Act, but there cannot be any two arguments that the said issue relating to determination of place of supply, which is one of the crucial issues to be determined as to whether or not it fulfills the definition of place of service, would also come within the ambit of the larger of issue of determination of liability to pay tax on any goods or services or both as envisaged in clause (e) of Sec. 97(2) of the CGST Act. The Advance Ruling Authority has proceeded on a tangent and has missed the said crucial aspect of the matter and has taken a very hyper technical view that it does not have jurisdiction for the simple reason that the said issue is not expressly enumerated in Sec. 97(2) of the Act. This Court has no hesitation to hold that the said view taken by the Advance Ruling Authority is legally wrong and faulty and therefore the matter requires interdiction in judicial review in the instant writ proceedings. The application will stand remitted to the Advance Ruling Authority concerned for fresh consideration and decision in accordance with law.

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• 2020 (3) TMI 185
  Profiteering - supply of construction service related to the purchase of a house under the Pradhan Mantri Aawas Yojna (PMAY) in the Respondent s project Mayur Residency Extension - benefit of input Tax Credit (ITC) to him by way of commensurate reduction in the price of the house after implementation of the GST w.e.f. 01.07.2017, is not passed on - contravention of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1) that it pertains to the passing on the benefit of reduction in the rate of tax and that of benefit of ITC. On the issue of reduction in the rate of tax, it is apparent from the DGAP s Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be determined is as to whether there was any additional benefit of ITC with the introduction of GST which has accrued to the Respondent which he was required to pass on to his buyers. It has also been revealed from the DGAP s Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period from April-2016 to June-2017 was NIL and during the post-GST period from July-2017 to March-2019, it was 11.97%. This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 11.97% (11.97%-0%) of his turnover and the same was required to be passed on by him to the Applicant No. 1 and the other recipients. The amount of the benefit of ITC to be passed by the Respondent to his buyers or the profiteered amount, during the period from 01.07.2017 to 31.03.2019, is determined as Rs. 35,98,596/- which includes 18% GST on the base profiteered amount of Rs. 30,49,658/- as has been detailed in Annexure-12 of the DGAP s Report dated 30.08.2019, as per Rule 133 (1) of the CGST Rules, 2017. The profiteered amount in respect of the Applicant No. 1 is determined as Rs. 19,953/- which also includes GST @18%. This Authority, under Rule 133 (3) (a) of the CGST Rules, 2017, orders that the Respondent shall reduce the prices to be realized from the customers/buyers commensurate with the benefit of ITC received by him as has been detailed above. The above amount of Rs. 35,98,596/- which includes 18% GST on the base profiteered amount of Rs. 30,49,658/- has been profiteered by the Respondent from the Applicant No. 1 and the other recipients/buyers which is required to be refunded to the Applicant No. 1 and the other recipients/buyers as per the Annexure-12 of the DGAP s Report dated 30.08.2019 alongwith interest @18% from the date from when the above amount was collected by him from them till the date of payment as per the provisions of Rule 133 (3) (b) of the above Rules. The present investigation is only up to 31.03.2019 therefore, any additional benefit of ITC which shall accrue subsequently shall also be passed on to the recipients/buyers by the Respondent. Penalties - HELD THAT:-It is evident from the narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project Mayur Residency Extension in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus apparently committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section - Accordingly, a notice be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.

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• 2020 (3) TMI 184
  Profiteering - supply of Samsung 80 CM (32 inches) HD ready LED TV 32FH4003 - allegation that benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price - contravention of Section 171 of the Central Goods and Services Tax Act, 2017 - penalties. HELD THAT:- If there was any increase in his costs the Respondent should have increased his prices before 31.12.2018, however, it cannot be accepted that his costs had increased on the intervening night of 31.12.2018/01 01.2019 when the rate reduction had happened which had forced him to increase his prices exactly equal to the reduction in the rate of such tax. Such an uncanny coincidence is unheard off and hence there is no doubt that the Respondent has increased his prices for appropriating the benefit of tax reduction with the intention of denying the above benefit to the consumers. The profiteered amount is determined as Rs. 37,85,342/-as per the provisions of Rule 133 (1) of the above Rules as has been computed vide Annexure-18 of the Report dated 12.09.2019. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 37,85,342/- in the CWF of the Central and the concerned State Government, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c) of the above Rules along with 18% interest payable from the dates from which the above amount was realised by the Respondent from his recipients till the date of its deposit. The above amount 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 Commissioners CGST/SGST. Penalties - HELD THAT:- It is evident that the Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus profiteered as per the explanation attached to Section 171 of the above Act. Therefore, he is apparently liable for imposition of penalty under Section 171 (3A) of the CGST Act, 2017. Therefore, a show cause notice be issued directing him to explain why the penalty prescribed under the above sub-Section should not be imposed on him.

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• Income Tax

• 2020 (3) TMI 183
  Disallowance of deduction u/s 80-IC - a new industrial unit at Selaqui, Uttrakhand had started during the assessment year - A.O. was not satisfied with the declarations and was of the view that having regard to the value of the machinery, that previously used machinery for any purpose is more than 20% of the value of the plant and machinery used in the new unit, the assessee has failed to satisfy the conditions laid down in Section 80-IC(4)(ii) - as per ITAT new plant and machinery, even if assumed to be transferred by the assessee from Kala Amb unit to Selaqui unit, it was never put to use to carry out the manufacturing activities to qualify for exemption u/s 80-IC - HC court is of the opinion that the ITAT performed the task to the extent it could, having regard to the materials which it elaborately and exhaustively analyzed - HELD THAT:- Though we see no reason to interfere in the matter, in view of the submission made on behalf of the petitioner that it would like to take benefit of Direct Tax Vivad Se Vishwas Scheme , the petitioner is allowed liberty to withdraw the present special leave petition, with further liberty to approach the authority under the Scheme. The special leave petition is, accordingly, dismissed as withdrawn.

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• 2020 (3) TMI 182
  Characterization of income - transport subsidy received - revenue or capital receipt - HELD THAT:- In respect of same assessee, the High Court for the subsequent assessment year 2001-2002 [ 2009 (9) TMI 572 - GAUHATI HIGH COURT] has answered the question on the basis of the exposition of this Court in particular in Jai Bhagwan Oil Flour Mills vs. Union of India Ors. [ 2009 (5) TMI 630 - SUPREME COURT] . Admittedly, this decision is accepted by the Department and no appeal is preferred against the same. - Decided in favour of the assessee

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• 2020 (3) TMI 181
  Benefit of deduction u/s 10B - determination of export turnover - Whether expenditure incurred by the Assessee in foreign currency in the foreign country where they exported computer software will be included in the export turnover , on which the Assessee is entitled to the benefit of deduction under Section 10B? - HELD THAT:- Controversy is no longer res integra in view of the decision of the Hon ble Supreme Court in the case of Commissioner of Income Tax -Vs- Mphasis Ltd [ 2019 (2) TMI 122 - SC Order] has affirmed the view taken by the Division Bench of the Karnataka High Court [ 2014 (8) TMI 690 - KARNATAKA HIGH COURT] and the Hon ble Supreme Court [ 2019 (2) TMI 122 - SC ORDER] has held that such expenditure incurred by the Assessee in foreign currency will be includible in the definition of export turnover for the purpose of computing deduction under Section 10B of the Act. - Decided against revenue

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• 2020 (3) TMI 180
  Revision u/s 263 - Treatment to benefit of deferred sales tax payment under the Scheme announced by the State of Maharashtra and under the Scheme made a premature payment at NPV (Net Present Value) of the deferred amount of sales tax collected - Assessing Authority allowed the said benefit to the Assessee and did not invoke Section 41(1) of the Income Tax Act, treating the remaining part of the deferred sales tax as neither remission nor cessation of sales tax liability of the Assessee - HELD THAT:- The controversy is no longer res integra as the Hon ble Supreme Court, in the case of Commissioner of Income Tax, Mumbai -Vs- Balkrishna Industries Ltd ., [ 2017 (11) TMI 1626 - SUPREME COURT] has decided that Section 41(1) of the Act does not apply in such circumstances . Following the said decision of the Hon ble Supreme Court, a Coordinate Bench of this Court also dismissed a similar appeal filed by the Revenue in the case of Commissioner of Income Tax -Vs- M/s.Wheels India Limited [ 2019 (7) TMI 986 - MADRAS HIGH COURT] - Decided against revenue

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• 2020 (3) TMI 179
  Revision u/s 263 - HELD THAT:- We are of the view that none of the two questions as proposed by the Revenue could be termed as the substantial questions of law involved in this appeal. The Tribunal has recorded a specific finding that during the search, nothing incriminating was recovered and the Assessing Office made adequate inquiry in the case. It is not in dispute that during the course of framing of assessment, the Assessing Officer had access to all the records of the assessee and after perusal of such records ultimately the Assessing Officer framed the assessment. The Tribunal is right in its final conclusion that such assessment order could not have been taken into revision in exercise of revisional power under Section 263 of the Act as assessment order cannot be said to be erroneous and prejudicial to the interests of the revenue.

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• 2020 (3) TMI 178
  Exemption u/s 11 - Charitable activity - running pharmacy store in the hospital and was selling drugs and medicines to the patients through this pharmacy store. - HELD THAT:- In the instant case, as already noticed above, assessing officer had carried out the exercise under Section 11(4A) of the Act and taking the view that considering the nature, volume, frequency and surplus of transactions of the pharmacy store, held the same to be a systematic business activity of the respondent and declined to consider it to be incidental to the charitable activity of the respondent trust. Besides, respondent had not maintained separate books of accounts in respect of the pharmacy store. It is in these circumstances that assessing officer held that the conditions prescribed under Section 11(4A) of the Act were not satisfied by the respondent Trust and accordingly he treated the surplus amount accruing out of the pharmacy store as business income under Section 11(4A) and brought the same within the taxable amount. In appeal, the first appellate authority noted that respondent was granted approval under Section 10(23C)(via) of the Act with effect from the assessment year 2009-10 on the satisfaction that respondent was existing solely for philanthropic purposes and not for purposes of profit. Therefore, the first appellate authority held that there was no basis to treat the running of pharmacy as a business venture. Running of pharmacy was part of philanthropic activity of running the hospital. No materials were brought on record by the assessing officer to justify the adverse view taken. Application of Section 11(4A) was not called for. Consequently, the first appellate authority held the addition and taxability of the surplus out of the pharmacy store to be erroneous and accordingly the same was directed to be deleted. We are of the view that the pharmacy store of the respondent was ancillary to the main object of running the hospital. Therefore, income accrued there from was incidental to the dominant object of the respondent i.e., running of the hospital. Thus, the assessing officer was not justified in treating the pharmacy store of the respondent as a separate business entity and to hold the surplus amount accrued there from as business income under Section 11(4A) of the Act. The lower appellate authorities have rightly interfered with such decision of the assessing officer. We do not find any error or infirmity in the view taken by the first appellate authority as affirmed by the Tribunal.

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• 2020 (3) TMI 177
  Penalty u/s 221 - Proceedings u/s 201(1)(A) - Non-remittance of TDS, which assessee had collected or retained - HELD THAT:- Assessee had made three payments for purchase of sites, three payment for purchase of cars and as such, it was noticed that cars which were purchased was in addition to the existing four cars purchased in the earlier year and the reason of business expediency raised or pleaded by assessee was not suspectable as it was not in the proximity of truth. This finding of fact which had been recorded by the Assessing Officer when being set aside by the 1st appellate authority the least that was expected from Commissioner of Income Tax (Appeals) was to record a finding which would disprove said fact or in other words reasons had to be assigned. This exercise having not been undertaken by CIT (Appeals) and by a cryptic order as noticed herein, finding of the Assessing Officer having been set aside, this has persuaded the tribunal to reverse the finding of Commissioner of Income Tax (Appeals) and restore the finding of the AO in part viz., affirming levy of penalty but reducing the quantum of penalty. We find from the order of tribunal that the finding recorded by the tribunal to arrive at a conclusion is based on sound appreciation of material available before it. In fact, a clear finding has been recorded by the tribunal that question of financial stringency pleaded by assessee was not proved. Even otherwise, it has been held that financial stringency would not justify the non-remittance of TDS to the Government, in as much as, it would amount to utilization of money payable to the appropriate government. As such, by extending its benevolence, tribunal has directed the Assessing Officer to restrict the levy of penalty to a sum of Rs. 20,55,573/-in substitution to Rs. 77,95,155/- levied by Assessing officer. This finding would not call for interference by us particularly when assessee having been declared as an assessee in default under section 201 (1) of the Act by order dated 30.07.2013 and said order having not been challenged by the assessee.

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• 2020 (3) TMI 176
  Denying exemption u/s 54/54F - Long Term Capital Gains (LTCG) - investment / purchase of new residential property in the name of wife - HELD THAT:- In the case of the assessee, the jurisdiction and PAN of the assessee have been admittedly transferred to Delhi. The appeal of the assessee was decided by the Ld. CIT(A)-28, New Delhi. Therefore, Ld. CIT(A) is bound to follow the Judgments of the Hon ble Delhi High Court. The jurisdiction in the case of assessee since transferred to Delhi even at the first appellate stage, therefore, the jurisdiction lies with the Hon ble Delhi High Court M/S AAR BEE INDUSTRIES [ 2013 (7) TMI 94 - DELHI HIGH COURT] - Also see SHRI KAMAL WAHAL [ 2013 (1) TMI 401 - DELHI HIGH COURT] The issue is squarely covered by the above decisions of the Hon ble Delhi High Court relied upon by the Learned Counsel for the Assessee. since the entire sale amount of long term capital gain have been invested in purchase of other property in the name of wife of assessee, assessee would be entitled for exemption on account of long term capital gains. In this view of the matter, we set aside the Orders of the authorities below and delete the entire addition. The A.O. is directed to allow exemption of assessee.

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• 2020 (3) TMI 175
  TP addition - treating Arms Length Price (ALP) of the international transaction of `Payment of Management Services Fees at Nil - HELD THAT:- When the assessee offered suo motu transfer pricing adjustment of Rs. 6.07 crore at 5.97%, considering arm s length margin at 7.00%, the same also encompassed the effect of international transaction of Payment of management services fees at ALP. The AO/TPO, in our considered opinion, were not justified in accepting on one hand the transfer pricing adjustment of Rs. 6.07 crore in the international transaction of import of goods with the assessee s margin at 1.03% (after the claim of management services fees at 1.59 core at ALP) and simultaneously on the other hand making separate transfer pricing adjustment of Rs. 1.59 crore in the international transaction of Payment of management support fees. Such an action has resulted into double disallowance of Rs. 1.59 crore, which cannot legally stand. The amount of transfer pricing adjustment made by the assessee by taking Nil ALP of the international transaction of `Payment of management services fees at Rs. 1.59 crore accounts for only 1.63% [2.66% (margin of the assessee by taking ALP of Management services fee at Rs. 1.59 crore) minus 1.03% (margin of the assessee by taking ALP of Management services fee at Nil)]. The amount of transfer pricing adjustment of Rs. 1.59 crore, representing 1.63% profit rate, is in any case less than even 1.80%, being, the cushion between the adjusted and unadjusted mean margin of the comparables. On this score alone, there was no reason to go ahead with the transfer pricing addition of Rs. 1.59 crore. TPO Justification in determining Nil ALP of the international transaction of Payment of management services fees - It is seen from a copy of Management services Agreement between Sandvik AB (the providing party) and the assessee (the receiving party), which is applicable to the year under consideration as well, that the term `Providing party has been defined as `all or some of the Sandvik companies which provide management services . Thus, it is clear that the charges by Sandvik AB were not only for the services provided by it but also some other group companies including Walter AB. The view point of the DRP on this issue is, therefore, not correct. Availing actual services - It is seen from the Agreement that it provides for rendering intra group services consisting of Management services, IT related services, Services primarily aimed at increasing and retaining the value of intangible assets, Sales services and Schedule related service activities. The Agreement provides that there will be no charge for shareholder related activities. We have perused the nature of services received by the assessee, which have been tabulated on pages 521 and 522 of the paper book. There is a detailed description of services in the categories of Pricing and quotation, Product and proposal, Product related pricing and quotation, Product drawing and pricing, Business promotion and Calculation. Against each of the above categories, there is an elaborate description of the nature of services and the persons/AE providing them. Then there are copies of e-mails from pages 523 to 537 of the paper book which demonstrate that the personnel of the AE rendered services to the assessee, that have been captured in the table given at pages 521 and 522 of the paper book. This shows that not only there was an Agreement between the assessee and its AE for rendering the services but the assessee actually availed the same. Having come to the conclusion that the services were availed by the assessee, the next question is determination of the ALP of the transaction. The ld. AR drew our attention towards the order passed by the Tribunal in the assessee s own case for the immediately preceding assessment year, 2011-12. It was shown that in the identical fact situation, the Tribunal has held the transaction of Payment of management services fee at ALP. This factual assertion could not be controverted by the ld. DR. In the absence of any distinguishing feature in the facts of the immediately preceding year vis-a-vis the current year, respectfully following the precedent, we hold the international transaction of Payment of management services fees was at ALP. Appeal is allowed.

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• 2020 (3) TMI 174
  Penalty u/s 271(1)(c) - mistake of wrong classification of the securities yielding Long Term Capital Gain and consequently the assessee had paid the tax @ 10% instead of 20% - AO was of the view that the assessee being a NRI and well educated and having availed of the services of a qualified professional, cannot take the plea of inadvertent mistake or error. HELD THAT:- When the return was filed through the Tax Consultant then it is only a matter of misclassification of the capital asset sold by the assessee which has resulted into short payment of tax. Therefore, in the facts and circumstances of the case, we find that it is a case of inadvertent and bona fide mistake of wrong classification of the securities yielding Long Term Capital Gain and consequently the assessee had paid the tax @ 10% instead of 20%. Except the classification of securities, all other necessary and relevant particulars/ details furnished by the assessee are not in dispute. Therefore, the said classifications of the asset is nothing but a mistake occurred while filing the return of income by the Tax Consultant of the assessee and accordingly the same falls in the ambit of reasonable and bona fide explanations/ reasons for the default/ failure on the part of the assessee. Once the assessee has explained the reasons for wrong classification of the securities and the said explanation of the assessee is bona fide being inadvertent mistake on the part of the Tax Advisor then this case would not fall in clause B of Explanation 1 to Section 271(1)(C) of the Act. Thus no penalty shall be levied u/s 271(1)( c) of the Act in view of the decision of Hon ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd vs CIT [ 2012 (9) TMI 775 - SUPREME COURT] - Decided in favour of assessee.

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• 2020 (3) TMI 173
  Penalty u/s 271(1)(c) - denying the claim of exemption u/s 10(23C)(iiiad) - Addition u/s 68 - HELD THAT:- In support of the unsecured loan of Rs. 13,000/-, the assessee has submitted the necessary confirmation from the lender, therefore, non-acceptance of the confirmation so filed of the assessee may be basis for making the addition u/s 68 of the Act. However, given the fact that the same has been filed by the assessee during the course of appellate proceedings, the AO who has relied on the findings in the assessment order has levied the penalty. Therefore, it is case where the explanation has been furnished by the assessee and necessary confirmation has also been filed, non-acceptance thereof may be basis for making the addition, however, the same cannot be the basis for levy of penalty U/s 271(1)(c) of the Act. In the result, the levy of penalty on such addition is hereby deleted. - Decided in favour of assessee.

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• 2020 (3) TMI 172
  Excess stock found as per valuation made by the Departmental Valuer at the time of survey - HELD THAT:- It is pertinent to note that survey was conducted on 25-11-2014 and Departmental Approved Valuer has valued the stock as per his valuation report dated 25-11-2014 27-11-2014 whereas the assessee filed the valuation report dated 29-11-2014 which is after two days of the valuation report of the Departmental Approved Valuer, though the same was submitted before the ADIT on 16-12-2014. It is not a document prepared by the assessee but it is a report of the registered valuer and therefore, if there is any delay in filing the same with the ADIT then it would not change the material fact as pointed out in such report. Accordingly, we do not concur with the view of the ld. CIT(A) to reject the valuation report of the Registered Valuer filed by the assessee. The assessee has clearly pointed out that the Departmental Approved Valuer has applied very high rate instead of cost of purchase of stock and further the purity of the gold in the articles/ jewellery was also not considered correctly but a standard 22 Carat purity was taken by the Departmental Approved Valuer. These facts as pointed out by the assessee have substance and merits when there was no discrepancy found in the quantity of the stock at the time of survey. Accordingly, in the facts and circumstances of the case the addition is based only on the higher valuation done by the Departmental Approved Valuer as against the valuation recorded by the assessee in the books of account and purchase bills. Further, some of the stock is also from the opening stock of the assessee and to that extent no addition can be made on account of higher valuation as the undervaluation, if any would not affect the income of the assessee being part of both sides of profit and loss account. Hence, the addition made by the AO and sustained by the ld. CIT(A) is deleted. Unverifiable purchases - HELD THAT:- Non-production of parties cannot be a reason for holding the transaction as unverifiable. Even otherwise the AO has not given the conclusive findings that these purchases are not genuine. It is only a suspicion and doubt about the genuineness of purchases that too for want of non-production of parties. Further, once the Department has examined the stock of the assessee and no discrepancy was found as far as quantity on account of opening stock, closing stock and sales then the purchases of the assessee cannot be doubted. Accordingly, in the facts and circumstances of the case, the addition made by the AO is highly arbitrary and unjustified which is deleted. - Appeal of the assessee is allowed.

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• 2020 (3) TMI 171
  Determination of turnover - Penalty u/s 271A and 271B - violation of provisions of section 44AA and 44AB - failure to maintain books of accounts - failure to get accounts audited - speculative transactions on NCDEX/MCX commodity exchange - turnover of about 27 crores - net loss is about 3.60 lacs - HELD THAT:- In case of speculative transactions, in absence of term turnover defined in the Act, as per the guidance note issued by ICAI, the turnover has to be determined by taking the aggregate of both positive and negative differences arising from such speculative transactions and as an outcome of settlement of such contracts during the year which in the instant case comes to Rs. 3.60 lakhs. Where turnover is less than the threshold provided under section 44AA of the Act, the assessee was not required to maintain his books of accounts in respect of such transactions. On same analogy, where the books of accounts are not required to be maintained, the question of getting the same audited doesn t arise for consideration and in any case, the turnover is less than the prescribed threshold under section 44AB of the Act. In such a scenario, there is no basis to hold that there was any violation of provisions of section 44AA and section 44AB of the Act and consequently, the penalty levied u/s 271A and 271B is hereby deleted and the orders of the lower authorities are set-aside. Levy of penalty U/s 271(1)(b) - non compliance to the notice issued U/s 142(1) dated 13.10.2017 - We find that there is nothing on record in terms of any explanation furnished by the assessee for non-compliance to the said notice. Therefore, levy of penalty u/s 271(1)(b) of the Act in absence of any reasonable cause shown by the assessee is hereby confirmed.

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• 2020 (3) TMI 170
  Genuineness of expenditure - payment of referral commission - Expenditure wholly and exclusively for the purpose of business of the assessee - HELD THAT:- This is not client referral by M/s. Divine Alloys and Power Company Limited but is the commission referral by M/s. Elecon Engineering. The assessee has been unable to produce any communication between M/s. Divine Alloys and Power Company Limited and the assessee, specifying the details of the transaction that the said M/s. Divine Alloys and Power Company Limited has done with M/s. Elecon Engineering which has led to the increased turnover. The submissions as made by the assessee before the CIT(A) clearly shows that the turnover has increased on account of the assessee s own activity of getting the business from M/s. Elecon Engineering. It is not understandable as to why on the basis of the advice of M/s. Elecon Engineering, M/s. Divine Alloys and Power Company Limited had to be brought into the picture for the payment of referral commission . Nor has any evidence been brought to show what is the reference done by M/s. Divine Alloys and Power Company Limited and the quantum of turnover on account of such reference. The statement of the assessee before the learned CIT(A) itself shows that M/s. Divine Alloys and Power Company Limited has not done anything, nor provided any services in respect of the transactions with M/s. Elecon Engineering. If the so-called client referral as made by the assessee in respect of M/s. Divine Alloys and Power Company Limited was effective, why was it that the assessee had only one year transaction with M/s. Elecon Engineering? Once the reference is made and the products of the assessee are of the top notch quality, the turnover should have been climbing instead of falling back to earlier levels. This clearly shows that the assessee has been unable to prove the purpose of the payment to M/s. Divine Alloys and Power Company Limited much less that it was wholly and exclusively for the purpose of the assessee s business. The assessee has not been able to place any agreement before any of the authorities below nor has it produced before us. The assessee states that the consolidated bill was produced by the assessee whereas M/s. Divine Alloys and Power Company Limited had produced five bills but even that has not been produced before the Tribunal nor it has been proved that the expenditure has been incurred wholly and exclusively for the purpose of business of the assessee. Facts clearly shows that the assessee has failed to substantiate much less proved the reason for the payment of the so-called referral commission to M/s. Divine Alloys and Power Company Limited. Appeal of the Revenue stands allowed.

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• 2020 (3) TMI 169
  Properties acquired by the HUF - Creation of smaller HUF - Deemed partition / Notional partition - death of a Mitakshara Coparcener - absence of partition u/s 171 of the Income Tax Act - section 6 of Hindu Succession Act - Taxability of Capital Gain - Surplus arising on sale of 3 immovable properties during the year wholly and exclusively in the hands of appellant HUF - HELD THAT:- Section 6(3) of the Hindu Succession Act, 1956, as it stands post 2005 amendment, provides that where a Hindu dies after the commencement of the Hindu Succession (Amendment) Act, 2005, his interest in the property of a Joint Hindu family governed by the Mitakshara law, shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship, and the coparcenary property shall be deemed to have been divided as if a partition had taken place .On the death of Shodhan Sr, who admittedly died intestate inasmuch as he did not make a will before his death, his HUF property is to devolve by intestate succession rather than survivorship of the HUF coparceners. It is also important to note that, for the purpose of devolution of property, a notional partition is to take place. When we assume that fiction, and considering that only Shodhan Sr and Shodhan Jr were coparceners in that HUF, the division of shares has to be one half to each- i.e. Shodhan Sr and Shodhan Jr. As for the share of the Shodhan Sr, that is what would go to Shodhan Jr, and as for the share of Shodhan Jr, that is what would constitute HUF nucleus for the smaller HUF of Shodhan Jr. In effect, thus, the son s share in the HUF will become property of the son s HUF, and the father s share will come to son in his individual capacity. The plea of the assessee thus indeed seems correct. As rightly contended by the learned senior counsel for the assessee, if one is to proceed on the basis that no partial partition of the HUF of Shodhan Sr has taken place as no order under section 171 is passed, the entire gains should have been assessed in the hands of that HUF of Shodhan Sr. AO however, proceeded to tax entire capital gain in the hands of the assesseen of the assessee before us i.e. HUF of Shodhan Jr. That course of action, in our humble understanding, is not permissible in law inasmuch as on one hand the AO proceeds on the basis that the larger HUF has come to an end on the death of Shodhan Sr, and, on the other hand, he also proceeds on the basis that entire assets of HUF of Shodhan Sr have also passed on to the HUF of Shodhan Jr. Once the assets of larger HUF are to go to small HUF, that can only be done only so far as of such assets are concerned. The other of the assets of HUF Sr have to essentially go to Shodhan Jr, in individual capacity, as he was the only class I heir to his father, i.e. Shodhan Sr. The stand of the Assessing Officer, which has met approval of the learned CIT (A) as well, cannot, therefore, meet our judicial approval. We uphold the plea of the assessee that the assessee HUF, at best, is taxable only in respect of of the properties acquired by the HUF headed by Shodhan Sr.

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• 2020 (3) TMI 136
  Penalty u/s 271B - Provisions of section 44AB - when the assessee has done the share trading in intraday segment and some of the transactions are delivery based transactions - HELD THAT:- There is no dispute regarding the delivery based transactions of shares to the tune of Rs. 53,498.90. We have verified the computation of the turnover in respect of intraday non-delivery based transactions and the positive and negative differences of these speculative transactions given in the above table. Therefore, by taking the aggregate of the positive and negative differences as well as the turnover of the delivery based transactions, the total turnover of the assessee comes to Rs. 3,15,280.69. Hence, when the turnover of the assessee is less than the threshold limit provided under section 44AB, then the assessee is not required to get its books of account audited in terms of section 44AB of the IT Act and consequently the penalty provision of section 271B is not attracted. Even otherwise, when this issue of turnover is a debatable issue and the assessee has claimed this turnover as Rs. 3,15,280.69 if computed in terms of the Guidance Note of ICAI, then the said explanation of the assessee would be regarded as reasonable and bonafide as per the provisions of section 273B and consequently no penalty under section 271B is leviable. Accordingly, the penalty levied under section 271B is deleted. - Decided in favour of assessee.

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• 2020 (3) TMI 135
  Bogus purchases - CIT-A restricting the addition to 12.5% on account of bogus purchases as the parties from whom purchases were made were hawala dealers and absolute burden of proof is cast on the assessee and this burden of proof never shifts to the Department - HELD THAT:- We respectfully following the view taken by the Tribunal while disposing off the assesses appeal for A.Y. 2009-10 [ 2019 (7) TMI 1581 - ITAT MUMBAI] therein uphold the sustaining of the disallowance to the extent of 12.5% of the aggregate value of the impugned purchases by the CIT(A). Accordingly, in terms of our aforesaid observations the appeal filed by the revenue is dismissed.

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• Customs

• 2020 (3) TMI 168
  Smuggling - Gold Chains - prohibited item or not - Baggage Rules - Confiscation - redemption fine - penalty - benefit of Notification No. 31/2003-Cus dated 01.03.2003 - HELD THAT:- As per Section 2(39) of the Customs Act, 1962, smuggling , in relation to any goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113 of the Customs Act, 1962 - If there was an attempt to smuggle the goods without payment of customs duty by not declaring the same with the customs officials at the Airport, the goods are confiscable under Section 111 of the Customs Act, 1962. Under Customs Notification No.31/2003-Cus dated 01.03.2003, an eligible passenger of Indian origin is allowed to import upto 10kg of gold provided customs duty is paid in convertible foreign exchange - In this case, the petitioner had failed to declare 177 grams of gold carried by him in his pant pocket and only when he was intercepted by the customs officers before he left the port, he admitted that he had carried 32 Nos. of gold chain weighing 177 grams for an unknown person to be given to an unknown person for a consideration of Rs. 3000/. Since the petitioner failed to declare gold chains numbering 32, they were confiscated and the petitioner was liable for penalty and redemption fine under Section 112(a) and 125 of the Customs Act, 1962. To avail the benefit of the Customs Notification No.31/2003-Cus dated 01.03.2003, the petitioner was not only required to declare the quantity of gold carried by him in person but also was required to pay the customs duty in foreign exchange. This was not done by the petitioner. The imported gold chains were not a prohibited item. The petitioner has attempted to smuggle of the gold chains and/or acted as an accessory for another person. However, the benefit of Customs Notification No.31/2003-Cus dated 01.03.2003 has been extended. Penalty under Section 112(ii) of the Customs Act, 1962 - HELD THAT:- Penalty imposable under Section 112(ii) is subject to penalty Section 114A of the Customs Act, 1962. Penalty under Section 114A of the Customs Act, 1962 is not attracted. Penalty under Section 112(ii) of the Customs Act, 1962, can vary only between 10% of the duty sought to be evaded or Rs. 5,000/- whichever is higher - Therefore, the penalty that could be imposed under Section 112 (ii) of the Customs Act, 1962 on the petitioner could not exceed 10% of the duty or Rs. 5000/-, whichever is higher. 10% of Rs. 39,598/- is only Rs. 3,959/-. Therefore, maximum penalty that can be imposed on the petitioner could not exceed of Rs. 5,000/. I am therefore inclined to modify the penalty to Rs. 5,000/- from Rs. 18,000/-. Redemption fine under Section 125 of the Customs Act, 1962 - HELD THAT:- Redemption fine under Section 125 of the Customs Act, 1962 cannot exceed the market value of the confiscated goods, less the duty chargeable thereon. Since customs duty sought to be evaded was only Rs. 39,598/- by the petitioner and he being a firsttime offender having indulged in an attempt to smuggle 177 grams gold chains number of 32 and considering the fact that the benefit of Customs Notification No.31/2003-cus dated 01.03.2003 has been extended to the petitioner and there being no challenge to extension of such benefit to the petitioner, the redemption fine of Rs. 1,55,000/- appears to be on the higher side - the redemption fine reduced to Rs. 50,000/- from Rs. 1,55,000/-. Appeal allowed in part.

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• 2020 (3) TMI 167
  Benefits under MEIS scheme - amendment in shipping bills - It is the case of the petitioner that despite continuous follow up by the petitioner by way of written as well as personal visits, there was no response or any positive outcome, and hence, the petitioner once again sent a reminder letter to respondent No.6 Assistant Commissioner of Customs (Exports) requesting to grant amendment of the shipping bills - section 149 of the Customs Act, 1962. HELD THAT:- On a plain reading of the provisions of para 3.14 of the Handbook of Procedure to Foreign Trade Policy 2015 -20, it is apparent that the declaration of intent , in the manner provided for EDI shipping bills, has been made mandatory, whereas in the case of Non- EDI shipping bills, such declaration of intent is not stated to be mandatory. The respondents, in their affidavit in reply, have stated that the instant case is of a SEZ unit which exported the goods under free shipping bills. All the SEZ exports come under free shipping bills. Therefore, the mandatory declaration of intent with effect from 01.06.2015 will not be applicable in this case. Therefore, the unit has to declare its intent for claiming benefits under the MEIS for exports made prior to 01.06.2015, that is, for the period between 01.04.2015 to 31.05.2015. As per the Foreign Trade Policy/Handbook of Procedure 201520, MEIS benefits were available to SEZ units with effect from 01.04.2015. It emerges that the petitioner is not permitted conversion of the shipping bills from free shipping bills to MEIS shipping bills for the reason that Circular No.36/2010 -Customs dated 23.09.2010 provides that conversion may be allowed provided that request has been made within three months from the date of the Let Export Order. The facts as recorded hereinabove reveal that the Deputy Commissioner of Customs, Kandla SEZ, Gandhidham (Office of the Development Commissioner, Kandla Special Economic Zone) has, in the context of the petitioner s request for amending the shipping bills to incorporate declaration of intent , has furnished comments on the issue to the respondent No.6 Assistant Commissioner (Exports), Office of the Commissioner of Customs, Kandla, stating that the petitioner has been regularly filing its claim for similar goods under the MEIS for later periods and it appears that the petitioner is otherwise eligible for benefits under the said scheme. Therefore, in the light of the provisions of section 149 of the Act read with the provisions of Circular No.36/2010 -Customs dated 23.09.2010 and Notification No.40/2012 (NT) dated 02.05.2012, the decision regarding conversion may be taken on the basis of documentary evidence which was in existence at the time when the goods were exported subject to the satisfaction of the competent authority. The eligibility of the petitioner to claim benefits under the MEIS has not been doubted. The sole hurdle in the case of the petitioner is that since the shipping bills are free shipping bills, wherein no declaration of intent has been made, the petitioner is required to get the shipping bills amended by incorporating the following declaration of intent : We intend to claim rewards under Merchandise Exports From India Scheme (MEIS) . It is not the case of the respondents that the petitioner is not otherwise covered by Circular No.36/2010 -Customs dated 23.09.2010. The sole ground on which the application has been rejected is for non compliance of condition (a) of paragraph 3 of the said circular, namely that the application has been filed beyond a period of three months from the date of filing the Let Export Order. The impugned letter dated 11.02.2019 of the respondent No.2, Under Secretary, Government of India, is hereby quashed and set aside. The respondents are directed to permit the petitioner to convert the shipping bills in question from free shipping bills to MEIS shipping bills subject to the satisfaction of the competent authority - Petition allowed - decided in favor of petitioner.

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• 2020 (3) TMI 166
  Refund of Excess Customs Duty paid through RTGS instead of re-crediting it in the DEPB licence - payment of excess customs duty due to valuation dispute - finally the transaction value as declared was accepted. - appellant contended that, since DEPB scrips had been withdrawn by the Director General of Foreign Trade, the re-credited scrips cannot be utilized by Artex Textile - Commissioner (appeals) allowed the appeal of the importer. HELD THAT:- In this connection, it would also be appropriate to refer to a decision of the Tribunal in MK Agrotech Pvt. Ltd. v/s Commissioner of Customs- Mangalore [2019 (6) TMI 80 - CESTAT BANGALORE] . The issue involved was whether refund could be allowed in cash, if duty was paid through DEPB scrips. - It was held in the case that both the authorities have wrongly held that refund cannot be paid in cash since the duty was paid through DEPB scrip. The scrips issued by the DGFT are freely tradeable in the open market and this enables exports the facility to encash the export incentives. The holder of the scrip could utilize these scrips for payment or discharge of duty liability at the time of importation of goods. Further the Bill of Entry for home consumption filed at the time of clearance of goods depicts the list of scrips utilized for payment of customs duty arising on the import of goods. Further I find that there is no provision anywhere under the Customs Act to re-credit these duty scrips at the time of refund. There is no infirmity in the order passed by the Commissioner (Appeals) that directs refund of duty by RTGS - Appeal dismissed - decided against Revenue.

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• 2020 (3) TMI 165
  Condonation of delay in filing delay - service of order - case of Revenue is that the order was sent by speed post to the Applicant and the same has not been returned back by the postal authorities as undelivered - HELD THAT:- The tribunal has itself recorded that the date of communication of impugned order is 09.04.2019 in the above referred order, and proceeded to discharge the defect memo and entertain the appeal. That being so the appeal has been filed by the appellant on 17.05.2009 within the period prescribed for filing the appeal. Any other view to be taken by this Bench will amount to review of the earlier order passed which is beyond the power vested by the statue in tribunal. Since the appeal has been filed within time, this application for condonation of delay is infructuous and hence not maintainable. COD application dismissed.

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• Insolvency & Bankruptcy

• 2020 (3) TMI 164
  Maintainability of appeal - Liquidation of the Corporate Debtor to sell the Corporate Debtor as a going concern - E-auction - The contention that the Appellant Bank has no locus to file the Appeal is without any merit because as per section 61(1) of the IBC which starts with a non-obstante clause, any person aggrieved by the order passed by the Adjudicating Authority is entitled to file an appeal. The Appellant Bank being the lead Financial Creditor of the consortium of banks of the Corporate Debtor, who had opposed the intervention by NCLT in the auction, is well within its rights to approach this Hon ble Appellate Tribunal. HELD THAT:- It is found that R-2 to R-4 did not participate in the e-auction and filed an application as objectors and offering a higher price in order to create a lust for worth maximisation and thereby vitiated the whole process. In any case R-1 has also withdrawn the offer without there being any corresponding provision in the IBC and NCLT was entitled to forfeit their entire amount. Regulation 32, 32(A) and 33 of Insolvency and Bankruptcy Board of India liquidation process regulation 2016, provides for the mode of liquidation. Regulation 32 of Insolvency and Bankruptcy Board of India Liquidation Process Regulation 2016 the liquidator should originally sell the Corporate Debtor through an auction and private auction is permitted only in certain classes of assets which are of perishable nature, assets likely to deteriorate in value if not sold immediately, if it is sold at a higher price than the Reserve Price of a failed auction etc. Hon ble Supreme Court has already observed in Valji and Khimji Company v. Official liquidator of Hindustan nitro product (Gujarat) limited and others. [ 2008 (8) TMI 562 - SUPREME COURT ] where bids were received and were opened in the Court. The highest bid was that of the appellant M/s. Valji Khimji Company amounting to Rs. 3.51 crores. With the consent of the learned advocates representing the secured creditors, the said bid was accepted and the sale was confirmed on 30-7-2003. The Court directed the appellant to deposit 25% of the purchase price i.e. Rs. 63,98,000/- within 30 days from the said day and to deposit the balance amount within the next three months. The Court also directed that the amount may be deposited in instalments, but no instalment should be less than Rs. 5 lakhs. Accordingly Hon ble Supreme Court confirmed the auction sale in favour of the Appellant. The appeal is, therefore, maintainable in view of the provision of Section 61 (1) of IBC as SBI has a large stake of Rs. 469.29 cr. - appeal allowed.

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• 2020 (3) TMI 163
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute - HELD THAT:- The services were availed by the Corporate Debtor and there is no dispute about this. The only contention raised is that the purchased price of material was much higher than market price and that there was collusion by an employee of the Corporate Debtor. There is not even a whisper in the petition as to when the fraud was discovered. Also, there was no reply from the side of the Corporate Debtor to the Demand Notice - Thus, there is only an attempt to clutch at straws by saying that there was some collusion on the part of some of the Corporate Debtor s employee(s). However, even if this is accepted at face value, there may be various other legal options for the Corporate Debtor to proceed against the employee(s) in question. The contention/stand of the Corporate Debtor is outside the purview of IBC and it is a matter of Doctrine of Indoor Management , with which Operational Creditor is not at all Concerned. The Petition made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. This Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor - petition admitted - moratorium declared.

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• 2020 (3) TMI 162
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - existence of debt and dispute - HELD THAT:- Under the arrangement, the Corporate Debtor is not liable to pay monies/debt which was due and payable by M/s Mahalasa Acoustic Pvt. Ltd. Therefore, it can be said that there is no debt due from the Corporate Debtor to the Petitioner since no invoice was raised on the Corporate Debtor and the proforma invoices were raised on M/s. Mahalasa Acoustic Pvt. Ltd. The Petitioner has failed to establish the debt and there is no debt as defined under Section 3(11) of the Code which provides that debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt . Petition dismissed.

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• 2020 (3) TMI 161
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- There is no pre-existing dispute regarding the unpaid operational debt, being the principal amount of Rs. 6,97,915/-. The invoices for the period of 11.06.2016 to 22.08.2016 were raised upon the Corporate Debtor on a running account basis, but the outstanding dues were not paid. Thus, the existence of debt and default is established. The date of default is 10.10.2016. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor - From the material available on record, apparently there is nothing that would point to the petition being collusive in nature. Petition admitted - moratorium declared.

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• 2020 (3) TMI 160
  Permission for withdrawal of Company Petition - Section 12A of I B Code, 2016, Read with Regulation 30A and Rule 11 of NCLT Rules - HELD THAT:- IRP has stated that he has enclosed the copy of receipt issued by the operational creditor and copies of DD s acknowledged by operational creditor and copy of MoU including Form FA. Thus the procedure prescribed under Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons), 2016, has been followed. This Adjudicating Authority has power under Section 12A, Read with Regulation 30A, of IBBI (Insolvency Resolution Process for Corporate Persons) 2016, to permit for withdrawal of the application even after admission of the Petition. By exercising the power u/s 12A of I B Code, the application filed by IRP is allowed and the CIRP filed against corporate debtor and moratorium order issued thereunder stands withdrawn and the corporate debtor is allowed to function independently through its Board of Directors with immediate effect. Application allowed.

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• 2020 (3) TMI 159
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute - Whether the Petitioner is a Financial Creditor of the Respondent? - HELD THAT:- Financial debt defined under section 5(8) of the Code means a debt along with interest disbursed against the consideration for the time value of money and inter alia includes any amount raised under any other transactions including any forward sale or purchase agreement, having the commercial effect of borrowing. Any amount raised for an allottee under a Real Estate Project shall be deemed to be an amount having the commercial effect of borrowing. The expression allottee and Real Estate Project shall be construed as under the Real Estate (Regulations and Development) Act 2016 - The term Real Estate Project defined under section 2 (zn) of the said Act provides that it would mean the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case maybe, for the purpose of selling all or some of the said apartments or plots or buildings, as the case maybe, and includes the common areas, the development works, all improvements and structures thereon and all easement, rights and appurtenances belonging thereto. In 2005, the Respondent had entered into an agreement with M/s Salarpuria Properties (Private) Limited for construction of residential apartments over its properties. It subsequently entered into an agreement on 15.03.2007, with the Petitioner for allotment of 10 flats/apartments in the developed project. Accordingly the development so carried out would come within the definition of Real Estate Project indicted above. The Petitioner would thus be an allottee in respect of 10 (ten) apartments the Respondent had agreed to sell. The amount raised for the forward sale would accordingly come within the definition of a financial debt provided under section 5 (8) (f) of the Code. It satisfies the requirement of being a financial creditor and that is what this Authority needs to consider - issue is answered in the affirmative. Whether the Petition is maintainable? - Whether the Respondent defaulted in payment of financial debt? - HELD THAT:- The Petitioner having not paid the full amount as agreed under the agreement, dated 15.03.2007, could not expect the Respondent to execute and deliver possession of all the flats agreed thereunder. In view of the non-payment of the agreed balance amount the Respondent under letter, dated 18.07.2018, recalled the allotment letter, dated 26.12.2017, and terminated the agreement, dated 15.03.2007. The Petitioner having not adhered to the terms of the agreement cannot claim that the Respondent owed a financial debt to it and squarely was in default in payment of the debt. In the instant case as already indicated no default of financial debt can be said to have occurred as far as the Respondent is concerned - issue is accordingly answered in the negative. In view of the foregoing findings the Company Petition at the instance of the Petitioner cannot be allowed and the same is liable to be rejected. The Petitioner is not entitled to any relief in this forum. Petition dismissed.

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• 2020 (3) TMI 158
  Recall the Order of admission - Adjudicating Authority was of the view that Corporate Debtor was required to establish that it was rendering financial services as defined under section 3(16) of IBC and that it is financial service provider as defined under section 3(17) of IBC which would require appreciation of evidence - HELD THAT:- The present case is squarely covered by a Judgement of this Tribunal in the matter of Housing Development Finance Corpn. Ltd. v. RHC Holding (P.) Ltd. [ 2019 (7) TMI 638 - NATIONAL COMPANY LAW APPELLANT TRIBUNAL NEW DELHI ] - In that matter, Section 7 Application against M/s. RHC Holding Private Ltd. (Corporate Debtor) had been rejected giving rise to the Appeal. The Appellant - HDFC claimed that the Corporate Debtor in that matter was not Financial Service Provider. In that matter also, the Corporate Debtor had been issued Certificate by RBI as NBFC and had not been allowed to accept public deposits. The definition of Corporate Person in section 3(7) of IBC specifically provides that it shall not include any financial service provider . Considering the Certificate issued by the Reserve Bank of India and also documents as placed on record by the Appellant - Corporate Debtor, we have no hesitation to hold that the Corporate Debtor in the present matter on date of Application being financial service provider, the provisions of IBC could not have been invoked against the Corporate Debtor. There are no fault with the Impugned Order of Adjudicating Authority where it observed that it does not have jurisdiction to recall its Order of admission but do not agree with its other findings referred earlier and imposing of costs. However, this Tribunal has jurisdiction in Appeal to consider whether initiation of CIRP process against the Corporate Debtor is legal or not. The impugned order admitting the section 7 Application under IBC as well as further steps taken on admission of the Application and release the Corporate Debtor from rigour of Corporate Insolvency Resolution Process , is set aside.

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• 2020 (3) TMI 157
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - application was rejected on the ground of limitation - HELD THAT:- Appellant submitted that the Corporate Debtor returned the goods worth Rs. 27,794/- leaving behind the net balance of Rs. 42,04,186.08/- only as on 10th March, 2016. However, such submission cannot be accepted as admittedly the bill raised from the period 03.04.2014 to 29.08.2014 and more than three years having passed, the amount has not been paid. The application u/s 9 was barred by limitation. Appeal dismissed.

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• 2020 (3) TMI 156
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- It is pertinent to note that the applicant has placed on record all the invoices, stating that the respondent itself had acknowledged the said invoices. There is no documentary evidence on record to show that any complaint was ever made or any proceedings were initiated by the respondent regarding the alleged mala fide acts of the applicant nor any correspondence is placed on record with respect to issuing fake/ bogus bills. Once the debt shown as due, it is for respondent to prove that there are no outstanding dues to be paid to the applicant. There has been much cloud in the submission of the respondent - Therefore, without any specific details of material particulars or evidence the fact of existence of a dispute cannot be sustained. In the present case, there is no such dispute as pre-existing, the dispute which was being claimed to be pre-existing by the corporate debtor did not survive and section 8 notice was issued much later on 01.11.2018 - the dispute was settled and the respondent has not challenged or taken any other steps against the decision of CERA, albeit a hypothetical or illusory dispute has been raised by the Corporate Debtor and the same appears to be a moonshine defense. The present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfilment of requirements under section 9(5) of the Code. Hence, the present application is admitted - Moratorium declared.

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• Service Tax

• 2020 (3) TMI 155
  Filing of revised return - time limit for filing of revised return - Rule 7B of Service Tax Rules-1994 - HELD THAT:- On perusal of the Rule 7B of the Rules-1994, it permits the assessee to file revised return in form ST-3, in triplicate, to correct a mistake or omission, within a period of ninety days from the date of submission of return under Rule 7. Rule 7 prescribes for return to be filed under Form ST-3. As per rule 7B, it appears that the assessee can revise the return filed under Rule 7 within a period of 90 days from the date of submission of the original return under Rule 7 of the Rules 1994. Rule 7B only permits the assessee to revise the mistake or omission in the return filed under Rule 7 within a period of 90 days. If the assessee finds any mistake in the form ST-3 file under Rule 7 of the Rules1994, he can revise the same in multiple documents within prescribed period. The intention of the framing of the Rule is to revise return Form ST-3 filed under Rule 7 of the Rules-1994. The stand taken by the respondents that once option is exercised to revise the original return then the assessee cannot file revised return again within prescribed time period under Rule 7B of the Rules-1994 is not tenable. ACES portal not allowing the petitioner to revise the Form ST-3 for the second time within prescribed period resulting into technical glitches is contrary with the provisions of Rule 7B of Rules-1994. In the opinion of the the Court, the respondents have failed to consider the aspect of technical glitches to reject the claim of the petitioner on the ground that the petitioner has no option to revise the return in Form ST-3 once the original return is revised by the petitioner - the respondents are hereby directed to consider the claim of the petitioner for the amount of ITC of Rs. 99,46,810/- manually under Rule 7B of the Rules-1994, so as to enable the petitioner to take advantage of the order dated 07.02.2020 to revise the Form Tran-1 to be filed online on or before 31.03.2020. Petition disposed off.

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• 2020 (3) TMI 154
  Maintainability of appeal - Classification of services - Whether or not, the Boards and the University are educational institutions. If the Boards and University are found to be educational institutions, the services provided to them are exempt? Maintainability of appeal - HELD THAT:- Against an order passed by the Appellate Tribunal, appeal lies to the High Court; however, the order which is subject matter of challenge should not relate to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment. Since classification of goods or services has a direct relation with the rate of duty, an appeal against an order of the Appellate Tribunal relating to a classification dispute would also lie before the Supreme Court and not the High Court - Since an appeal against a matter which relates to the determination of a question having a relation to the rate of duty or value of goods for the purposes of assessment lies to the Supreme Court and not to the High Court, this court ordinarily, would not entertain such a dispute in exercise of powers under article 226 of the Constitution of India. Whether the dispute involved in the present cases is a classification dispute? - HELD THAT:- A dispute can be said to be a classification dispute provided it involves a question regarding the entry under which particular goods or services fall. In the present cases, insofar as the nature of the services is concerned, there is no dispute. The question involved in these cases is whether the institutions to which the services are supplied by the petitioners are educational institutes. In the opinion of this court, the question as to whether an institution is an educational institution or not, is strictly speaking, not a classification dispute - Moreover, in both these cases there is no dispute on facts. On a perusal of the impugned show-cause notices, it is apparent that based on admitted facts, the only dispute raised is a purely legal issue, namely, whether the institutions to which the services are supplied by the petitioners are educational institutions. Moreover, the relevant material on the basis of which such question can be decided is already on record. This court is of the view that the decision of the Supreme Court in UNION OF INDIA OTHERS VERSUS COASTAL CONTAINER TRANSPORTERS ASSOCIATION OTHERS [ 2019 (2) TMI 1497 - SUPREME COURT] would not be applicable to the facts of the present cases, inasmuch as, in that case the court had firstly found that the dispute involved in the case was a classification dispute; and secondly, that even from the contents of the show-cause notices, it could not be said that there are no factual disputes; whereas the present cases do not involve any classification dispute, nor do they involve any disputed questions of fact. Educational services or not - HELD THAT:- The main ground on which the petitioners are sought to be denied exemption from service tax in respect of the services provided by them to the Boards/University is that according to the respondents, the Boards/University are not educational institutions - The facts are not in dispute, inasmuch as the nature of services provided by the petitioners in Special Civil Application No.20748 of 2018 are examination related activities like Barcode Scanning, Printing, OMR Scanning, Data Entry, etc. provided to the service recipients mentioned in the impugned show-cause notice and in case of the petitioners in Special Civil Application No. 7414 of 2019, the services provided are in the nature of rent-a-cab in connection with the examinations held by the concerned Boards/University. It is an admitted position that such services are exempted under section 66D(l) of the Finance Act, 1994 as well as under Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 if such services have been provided to the educational institutions . The petitioners have not paid service tax on the services provided to the above institutions claiming exemption under serial No. 9 of Mega Exemption Notification No. 25/2012-ST dated 20.06.2012, as amended, applicable to the services provided to educational institutions. Whether the Boards and University to whom services are provided by the petitioners are educational institutions ? - HELD THAT:- Notification No.06/2014 - Service Tax dated 11.07.2014 defines educational institution to mean an institution providing services specified in clause (l) of section 66D of the Finance Act, 1994. Therefore only those entities which provide such services would qualify under the term educational institution - It appears that according to the respondents the term educational institution envisages only those institutions which actually enroll students and impart education. In paragraph 7.6 of the show-cause notice, it has been stated that on examining the functions and duties of the above said Boards/University, it appears that these Boards/University are functioning as organisations which are entrusted with the work of creating more schools/colleges/institutes under their affiliation, to prepare the syllabus of education for such institutes, to conduct the academic tests and exams, to appoint examiners/supervisors for smooth conduct of examination, to declare the results of such examinations etc. On a broader aspect, these University/Boards work more like managerial organisations to plan the syllabus of education and conduct of examination for institutes affiliated under them. For this purpose, the Boards/University procure services of other service providers for such examination related and result processing services. Whether the narrow meaning sought to be assigned to the word education by the respondents is required to be adopted, namely only those institutions which directly impart education to the students; or a broader meaning which includes even those institutions which are connected with the education of those students? - HELD THAT:- This court is of the opinion that the word education cannot be given a narrow meaning by restricting it to the actual imparting of education to the students but has to be given a wider meaning which would take within its sweep, all matters relating to imparting and controlling education. Examination is an essential component of education as it is one of the major means to assess and evaluate the candidate s skills and knowledge, be it a school test, university examination, professional entrance examination or any other examination. - Thus, education would mean the entire process of learning, including examination and grant certificate or degree or diploma, as the case may be and would not be limited to the actual imparting of education in schools, colleges or institutions only. Unless the School Boards hold examinations, the education of school students would not be complete, so is the case with college students, whose education would be complete only when the University conducts examinations and awards degrees or diplomas. Once the Boards/University to whom services have been provided by the petitioners, are held to be educational institutions, the very substratum of the impugned show-cause notices is lost inasmuch as the show-cause notices are premised on the allegation that the service recipients namely the Boards/University referred to hereinabove are not educational institutions and, therefore, the services rendered by them do not fall within the negative list of services as provided under section 66D(l) of the Finance Act, 1994 and that the Board/University are not educational institutions as defined under clause (oa) of Entry No.2 of the Mega Exemption Notification No.25/2012-ST dated 20.06.2012 - Once it is held that the service recipients are educational institutions, the impugned show-cause notices are rendered unsustainable. Extended period of limitation - HELD THAT:- When the Department itself was of the view that the services provided by the petitioner in Special Civil Application No.7414 of 2019 to the Boards/Universities were covered by the Mega Exemption Notification and were therefore, exempt, the petitioners in both these petitions were equally entitled to hold such a view. Therefore, it cannot be said that the petitioners had, with an intention to evade payment of service tax, misstated that the organisations to which they had provided services are educational institutions to claim incorrect and ineligible exemption. The larger period of limitation, therefore, could not have been invoked in the facts and circumstances of the present cases. Petition allowed - decided in favor of petitioner.

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• 2020 (3) TMI 153
  Club and Association service - It has been alleged that since the petitioner was an incorporated company and therefore, the services rendered by it cannot be said to be excluded from the definition of club or association in view of specific exclusion sub-clause (iii) to the above definition - demand of service tax - extended period of limitation- HELD THAT:- Normally, writ against show cause notices ought not to have been entertained in the 1st place. The petitioner ought to have been directed to reply to the said show-cause notice. However, in the present writ petition an interim injunction was ordered on 16.11.2011 in M.P.No.2 of 2011 and therefore the impugned Show Cause Notice has not been adjudicated till date. Meanwhile, the Honourable Supreme Court has now given its verdict in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] . The question of law has been settled. The proposed demand in the impugned show cause notice can no longer be sustained in the light of the above decision of the Hon ble Supreme Court - petition allowed - decided in favor of petitioner.

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• 2020 (3) TMI 152
  Club Association Service - appellant was collecting membership subscription from its members but started paying service tax only w.e.f. 01.01.2009, but prior to that the membership subscription they have not paid service tax - demand of service tax - HELD THAT:- The issue has been dealt by the Hon ble Gujarat High Court in the case of Federation of Surat Textile Traders Association vs. UOI [2015 (10) TMI 1582 - GUJARAT HIGH COURT] and in the case of Calcutta Club Limited [2019 (10) TMI 160 - SUPREME COURT] wherein it has been held that the services provided by the assessee to its members is not liable to pay service tax. As the issue has already settled that no service tax is payable on membership subscription paid by the members of the appellant for providing services by the appellant to its members - the appellant is not liable to pay service tax - appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 151
  Demand of service tax - receipts generated from securitization agreements entered into by the appellant prior to February 2006 that continued to subsist during the period of dispute - Proceedings were initiated against the appellant on the ground that the receipts from special purpose vehicles were not included in the assessable value even though this constituted consideration that could not be construed as interest on loans which were exempt. HELD THAT:- Barring a bald assertion that cash management has been undertaken, the adjudicating authority has not made any effort to analyse the nature and circumstances in which the contract with special purpose vehicles undertook to provide such facility. On the most superficial evaluation, we take note that there is a facility that may be drawn upon by the utilising entity with the ceiling linked to the collectables for the specified period and interest liability arising therefrom. It would appear to be nothing other than an overdraft and the attempt to levy a tax on the consideration earned by the bank is in breach of the exemption afforded to interest. It would also appear that the primary purpose of providing such liquidity is to make the derivative issued by special purpose vehicles more attractive to investors and, in the process, enhance the value to be realized by the bank on sale of the securitized asset. Consequently, it would appear that the beneficiary of the facility is not the special purpose vehicle but the appellant themselves. This clearly does not conform to the concept of service which must, necessarily, be rendered to another person. Rendering of cash management services - HELD THAT:- It is worth noting that the transfer to special purpose vehicle is not of the loan customers of the appellant but of the assets including such loan accounts. The relationship between the bank and its loan customers does not alter; all that the bank has undertaken, by affording liquidity facility , is to ensure that the collections that would otherwise have accrued to the bank is transferred at the specified intervals to the special purpose vehicle and the facility extended is the contractual undertaking to do so - the bank is merely fulfilling such obligation and not rendering service to any other person. There is nothing on record in the impugned order to substantiate the finding that the claim of the appellant herein of having extended an overdraft facility on which interest is chargeable to the extent of availment is not tenable on facts and law. In the absence of such legally valid conclusion, the claim of the appellant does not merit disregard. Even if, while enhancing the marketability, the securitization terms are made attractive for better returns to the appellant, the special purpose vehicle too finds itself blessed with brighter prospects of attracting investors for the pass through certificates a service with the potential of taxability under some other enumeration in section 65(105) of Finance Act, 1994 - there is neither notice nor finding on the taxability or consideration for a valid confirmation of demand. The levy of tax and imposition of detriment in the impugned order is without authority of law - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (3) TMI 150
  Refund of CENVAT amount and interest - the payment made during investigation or before issuance of show cause notice is in the nature of pre-deposit or not - applicability of time limitation - HELD THAT:- As per the fact of the present case the appellant have paid consciously and knowingly that the said payment is towards alleged wrong availment of cenvat credit and also paid interest thereon which is payable in terms of rule 14 of Cenvat Credit Rules, 2004. Therefore at the time of payment the nature of payment was clearly as of duty and not the deposit. The payment of cenvat credit was considered by the tribunal as sufficient for hearing the appeal. It is obvious that once the appellant paid the substantial duty amount there cannot be further direction of separate deposit for hearing the appeal but that itself does not change the character of payment at the time when it was made. I am of the view that if the similar payment is considered as pre-deposit then in no case of refund section 11B will apply. Both the lower authorities have rightly held, the refund is time bar - Appeal dismissed - decided against appellant.

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• 2020 (3) TMI 149
  Reversal of CENVAT credit on CVD and SAD - wheel sets for use in the manufacture of railway wagons. However, after availing the CENVAT Credit they have not used some of the wheel sets for manufacture of railway wagons, but instead transferred them to their Sister Unit at Sodepur after reversing the CENVAT Credit - extended period of limitation. Case of Department is that while they availed CENVAT Credit on both the CVD and SAD they have reversed only the CVD and they have not reversed the credit of SAD availed by them. HELD THAT:- It is not in dispute that the appellant assessee availed CENVAT Credit on the imported wheel sets in respect of both the CVD and SAD paid by them. It is not in dispute that against the same Bills of Entry some wheel sets were cleared on payment of duties and same were cleared under DEEC without payment of duty and it is not possible to separate duty paid goods from the goods cleared under DEEC. Therefore, the only way to decide whether the goods which were transferred to the sister unit were duty paid or duty free is based on the records of the assessee and how they treated the transferred goods. It is not in dispute that the appellant assessee has treated the transferred goods as duty paid and also reversed some portion of the CENVAT Credit so availed. The amount of CENVAT Credit so reversed has been taken as credit by the sister unit. Under the circumstances, there are no force in the argument of the Assessee that the goods which were treated by them as duty paid for the purpose of reversing CENVANT Credit of CVD must be treated as duty free for the purpose of reversing SAD. Extended period of limitation - HELD THAT:- There is force in the argument of the assessee that their sister unit gets credit of the amount of CENVAT Credit reversed by the appellant and therefore no malafide can be attributed to them. For extended period of limitation to be invoked, there must be fraud or collusion or willful misstatement or suppression of facts or violation of the provisions of the Act or Rates with an intent to evade payment of duties - none of these elements exists in the present case - the extended period of limitation under Section 11 (A) cannot be invoked. Penalty under Rule 15 (1) of CCR 2004 - HELD THAT:- The penalty under Rule 15 (1) of CCR 2004 is imposable only when any person takes or utilizes CENVAT Credit wrongly. There is no such allegation at all in the Show Cause Notice. Therefore revenues appeal is liable to be rejected. The appeal is remanded to original authority for the limited purpose of calculation of the amount of CENVAT Credit to be reversed for the normal period of limitation - appeal allowed by way of remand.

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• 2020 (3) TMI 148
  CENVAT credit - fake invoices - supply of invoices only without supply of goods - it stands alleged by the Revenue that he was handling day-to-day affairs of M/s Unnati Alloys from whom the inputs were being received by M/s Arya Alloys - case of appellant is that there is no manufacture taking place, and no inputs received hence credit cannot be disallowed - HELD THAT:- On being questioned, learned Authroised Representative has not been able to bring out any other evidence on record except the statement of Shri Amit Gupta and the transporters and the allegations of receiving back of cash as against the payments made through banking channels - It is also a fact that the appellant was reflecting the receipt of the inputs in their statutory records. Further, the Revenue has not alleged that the inputs required for making the final product were procured by the appellant from any other source. In the absence of the inputs, it is not possible to manufacture final product, which the appellant have shown to have manufactured and cleared on payment of duty. There are no justifiable reasons to deny the Cenvat credit or to impose penalties upon the appellants - appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 147
  CENVAT credit - capital goods written off - contravention of provisions of Rule 3 (5B) of Cenvat Credit Rules 2004 - Department was of the view that when the appellants have made provision in their books of account for writing off the obsolete / non-moving capital goods they are required to reverse / pay up the cenvat credit pertaining to such capital goods - Extended period of limitation - HELD THAT:- There are no reason as to how the department has called upon to pay up the cenvat credit availed and written off by the appellants, whether partially or fully for the period from 1994-2010 by issuing a show cause notice on 30.4.2015. The annexure to the SCN shows the demand is raised in respect of the credit availed from 1994 to 2010. This annexure shows the year of purchase of capital goods from 1994 to 2009 and the written off the value is done during this period. In the year 2010 and thereafter, there is no writing off the value of the capital goods but the amounts were carried forward to subsequent years. The act of writing off has happened prior to 2010. Thus the allegation that the appellants have written off the value after the period 2010 is factually incorrect as evidenced from annexure to the show cause notice. For this reason itself, the demand raised invoking the extended period cannot sustain. It is for the department to prove the allegations raised in the SCN. Even from the SCN or the documents placed before me, there is no evidence to show that the appellants have written off the full value of capital goods. There is only partial writing off to the extent of 50%, 70%, 90%. On such score, the amendment brought forth w.e.f. 1.3.2011 to reverse the credit on partial written off value would only apply. However, the provision for recovery of the credit availed wrongly has been introduced only w.e.f. 1.3.2013. This being the case, the demand raised for the credit availed from 1994-2010 and written off during this period cannot sustain. Demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 146
  Reversal of CENVAT Credit - common input services used in the manufacture of goods, providing taxable output services and sale of CBUs - non-maintenance of separate records - Rule 6 of CENVAT Credit Rules, 2004. Whether the appellants are eligible to CENVAT Credit on common input services described under Rule 6(5) of the CENVAT Credit Rules, 2004 and in calculating the proportionate CENVAT Credit attributable to sale of cars? - HELD THAT:- It is clear that credit on whole of Service Tax paid on taxable input services mentioned in the said sub-rule(5) shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services. In the present case, the appellant had categorically submitted that as and when the aforementioned listed services were used exclusively in providing exempted services or manufacture of the exempted goods, they have reversed the credit availed on such input services. No contrary finding has been recorded by the authorities below to the said claim of the assessee. Therefore, the input services on which CENVAT Credit availed in the present case mentioned under sub-rule (5) of Rule 6 of the CENVAT Credit Rules, 2004 would be admissible, even if the same are used both for exempted services as well as taxable output services giving due effect to the non-obstante clause mentioned under the said Sub-rule. There is fundamental fallacy in the approach and would be at the cost ofmis-interpretation of the said rules. No doubt, CENVAT Credit on input services would be allowed only when it is used in the taxable output services and/or dutiable manufactured goods; but when common input services are used in both taxable and exempted services or non-taxable services, the appropriate rule prescribed under CENVAT Credit Rules is Rule 6 of the CENVAT Credit Rules, 2004 - It prescribes a procedure/mechanism to separate the inadmissible quantum of cenvat credit used in the exempted services and/or exempted goods. To simplify the procedure further in case of input service credit, sub-rule(5) lays down a fiction whereby services mentioned under the said Rule deemed to have been used in providing only taxable service, and consequently the rigour of Sub-Rule (1),(2),(3) of CENVAT Credit Rules, 2004 has been made inapplicable. This reasoning is further supported when under the said sub-rule it is specifically laid down that when input services are exclusively used in providing exempted service, credit is inadmissible. Whether in the formula-prescribed under Rule 6(3A) of CCR,2004, it is only the margin of value addition of the traded cars be considered or otherwise? - HELD THAT:- It is clear that the nerve chord of the dispute lies in the determination and scope of determination of the value of the traded goods for the purpose of Sub-rule (3A) of Rule 6 of CCR,2004. Under the sub-rule (3A) of Rule 6 of CENVAT Credit Rules, 2004 as was in force between 01.04.2008 and 31.03.2011, there is no mention about determination of value of traded goods. In the said explanation, it is prescribed that the value for the traded goods be determined in accordance with Section 67 of the Finance Act, 1994. A plain reading of Section 67 of Finance Act,1994 along with Service Tax (Determination of Value) Rules, 2006, and principles of law settled in this regard, it can easily be construed that the value of taxable services cannot include the value of the material/goods used in rendering the taxable services. Simultaneously, it is an accepted principle that the cost of all ancillary and incidental services for providing the taxable service be part of the value of the taxable service - Applying the said principles to the present case also, that is, in determining the value of non taxable service i.e. trading of imported cars, it cannot include the value of the imported cars while apportioning the quantum of credit availed on common input services and attributable to the sale of imported cars, but the total value of the services/expenses incurred in trading of the imported cars ought to be considered as part of value for the purpose of the formula prescribed at sub-rule 3A(c) (iii) for the period 01.4.2008 to 31.3.2011. To apportion the quantum of CENVAT Credit availed on various common input services and attributable to sale of the imported Cars as per the formula prescribed at Rule 6(3A)(c )(iii) of CCR, 2004, for the period 01.4.2008 to 31.3.2011 the matter needs to be remanded to the adjudicating authority, who would determine the said amount by applying the principles discussed above and other factors for the normal period of limitation. The Appeals filed by the assessee are disposed of by way of remand to the adjudicating authority.

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• CST, VAT & Sales Tax

• 2020 (3) TMI 145
  Classification of goods - galvanized poles - whether the galvanized poles would fall into the category of transmission line material and would be liable to be taxed at the rate of 4%, rather than unclassified items? - HELD THAT:- The Galvanized Poles used for light is a specific product which is used only for the purposes of street lightening, while the entry under which tax liability is sought which is at Serial No. 236 pertains to overhead transmission lines material. The over head transmission lines material has further been described in Section 2 (aaa), where transmission line has been defined which includes transmitting electricity from a generating station to another generating station or a sub-station etc. clearly the said definition would not include galvanized poles which is used for lighting. Undoubtedly the Feeder Pillar is used for transmission of electricity while galvanized poles used for lighting are not used for transmission of electricity. The findings recorded by the Tribunal are clearly flawed and therefore the order of the Commercial Tax Tribunal dated 01.June.1999 deserves to be set-aside and the galvanized poles used for lighting are liable to be taxed, as unclassified items - revision allowed.

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• 2020 (3) TMI 144
  Input Tax Credit (ITC) - Seeking information within 6 years from the date of completion of assessment - Deemed assessment where no assessment has been done - Pnciples of Natural Justice - Failure to produce the documents called for - TNVAT Act - petitioner submits that the impugned orders therein are liable to be quashed on the ground that the demands confirmed were in variance with the proposals in the respective Show Cause Notices and therefore there is a manifest violation of Principles of Natural Justice. HELD THAT:- Section 22 of the Tamil Nadu VAT Act, 2006 which was amended with effect from 19.6.2012 vide Tamil Nadu Act 23 of 2012 introduced the concept of deemed assessment. For returns filed in time where no assessment orders were passed, assessment was deemed to have been completed for that year on the 31st October of the succeeding year - Therefore, from 2012 upto the repeal of TNVAT Act, 2006, the assessment was deemed to have been made on 31st day of October of the succeeding year. Under Section 27(1) of the said TNVAT Act, 2006, an assessing authority may subject to provisions of the sub-Section (3) may at any time within a period of 6 years [5 years prior to 19.6.2012] from the date of assessment determine to the best of his judgment the turnover which escaped assessment and assess the tax payable on such turnover after making such enquiry as may be considered necessary - Under Section 27(2) of the TNVAT Act, 2006, an assessing officer is empowered to re-open the assessment if he finds that input tax credit has been wrongly availed or where any dealer produced false bills, vouchers, declaration certificate or any other document with a view to support his claim of input tax credit or refund. As per the provision, the assessing authority shall at any time within a period of 5 years from the date of assessment order reverse input tax credit availed and determine the tax due after making such an enquiry, as may be considered necessary. As there was scope for reopening the assessment under Section 27 of the TNVAT Act, 2006, it was incumbent on the part of a registered dealer to retain records until the expiry of period prescribed therein. As the assessment has been deemed to have been completed only on 13.6.2012, the powers of the assessing authority under Section 27 cannot be curtailed by giving a skewed interpretation of Section 64(2) Of the Tamil Nadu VAT Act, 2006 - If the petitioner wants to justify the input tax credit availed by it during the period in dispute, it has to produce documents called for to substantiate it. Further, under Section 19(5) of the Tamil Nadu VAT Act, 2006, there were certain restrictions for goods cleared as such or which were used in the manufacture of other goods and sold in the course of interstate trade or commerce falling under sub-Section (2) of Section 8 of the Central Sales Tax Act, 1956. Further, there were few intervening amendments to these provisions and this court has clarified the position - This aspect has not been discussed in the impugned order. There are no grounds to sustain the impugned orders for it has not considered implication of the amendment to Section 19 of the Tamil Nadu VAT Act, 2006 - petitioner is therefore relegated back to the respondent to answer the issues. The petitioner is therefore directed to file its objection and produce documents that are required for scrutiny before the respondent within a period of 60 days from the date of receipt of copy of this order. Petition allowed by way of remand.

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• 2020 (3) TMI 143
  Failure to pay the disputed tax - TNGST Act, 1959 - CST Act, 1956 - respondent Commercial Tax Officer has held that the petitioner was acting as a Del credere agent for Tvl. Reliance Industries Ltd. and had failed to discharge the tax liability under the respective Acts - HELD THAT:- A Del Credere Agent is someone who usually for extra remuneration undertakes the liability to guarantee the due performance of the contract by the buyer. A Del credere commission charged by him. He assumes responsibility for the solvency and performance of their contract by the vendees and thus indemnifies the Principal against any loss on account of possible default. He gives a security to the seller. The Del credere commission is the premium or price given by the principal to the Del credere agent for the guarantee given by the latter. A Del Credere agent is like any other agent bound to handover the money to the principal, as soon as he receives it or pays in advance and is distinguished from other agents. The fact that the petitioner acted as a Del Credere Agent stands established and therefore, the petitioner was a dealer within the meaning of the respective enactments - Whereas in Explanation (1-B) to Section 2(n) of TNGST Act, 1959, transfer of property involved in the purchase, sale, supply or distribution of goods through a factor, broker, commission agent or arhati, del credere agent or an auctioneer or any other mercantile agent, by whatever name called, whether for cash or for deferred payment or other valuable consideration, shall be deemed to be a purchase or sale, as the case may be, by such factor , broker, commission agent or arhati, del credere agent, auctioneer or any other mercantile agent, by whatever name called, for the purposes of this Act. From a cumulative reading of the definition of sale in Section 2(n) of the TNGST Act, 1959 only in the case of ascertained goods within the state of Tamil Nadu at the time of sale will be liable to tax in the hands of a Del credere agent. In this case, it is the contention of the petitioner that the goods were transferred by their principal namely Reliance Industries Ltd directly from the State of Gujarat. This would require verification on facts - The question of treating a transaction as sale by the petitioner would arise only if the goods were available in the State of Tamil Nadu when the petitioner placed purchase orders for and on behalf of the prospective buyers on the supplier in Tamil Nadu. This is a question of fact which would be required to be ascertained under only by the adjudicating authority. The cases are remitted back to the respondent for proper determination of taxability - petition allowed by way of remand.

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• 2020 (3) TMI 142
  Reduction of Input Tax Credit - purchases of hides and skins resold in the course of inter-State trade and commerce - denial of reimbursement as per section 15(b) of the CST Act - Gujarat VAT Act - HELD THAT:- While section 15(b) of the CST Act provides for reimbursement of the tax levied under the State law in case such goods are sold during the course of inter-State trade or commerce, in the manner and subject to the conditions provided in the State law; since under the GVAT Act, no rules have been prescribed for the manner and conditions subject to which such reimbursement shall be made, the dealers are given input tax credit in lieu of reimbursement. The question that arises for consideration is whether the State Government can reduce the input tax credit which amounts to reduction of the reimbursement to be made to the dealers. Reliance can be placed in the case of KADWANI FORGE LTD. VERSUS STATE OF GUJARAT [ 2014 (12) TMI 909 - GUJARAT HIGH COURT] - on reading of the said judgement, it appears that while the submissions made by the learned counsel for the petitioners therein, even regarding declared goods have been considered, they appear to have been considered in the context of the declared goods having been used in the manufacture of other goods which resulted in new and different goods being sold and not in the context of both purchase and sale of declared goods. Moreover, reading the findings recorded by the Division Bench in their entirety, it is evident that there is no discussion in the context of section 15(b) of the CST Act. While the court in the above decision has recorded the submissions advanced on behalf of the petitioners therein in respect of declared goods also, from the submissions advanced by the learned Advocate General it appears that in the facts of those cases, the petitioners had manufactured and sold, new and different goods and the vital condition for reimbursement under section 15 of the CST Act, viz. the purchased as well as sold goods both should be declared goods , was not satisfied; whereas in the facts of the present case, the petitioners are traders who have purchased declared goods and sold such declared goods in the course of inter-State trade and commerce. Moreover, as noted hereinabove, the aspect of section 15(b) of the CST Act has not been gone into in the above decision. Clause (3) of article 286 of the Constitution of India provides that any State law, insofar as it imposes or authorises the imposition of a tax on sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce shall be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of tax as Parliament may by law Specify. Thus, the imposition of tax on sale or purchase of declared goods is subject to the restrictions and conditions specified by the Parliament by law. The Parliament has enacted the law namely, section 15(b) of the CST Act, which in clear and unambiguous terms provides for reimbursement of the tax levied under the State law when such goods are sold in the course of inter-State trade or commerce. In the light of the provisions of article 286(3) of the Constitution read with section 15(b) of the CST Act, the State is bound to reimburse the State tax levied on declared goods. The impugned notification, to the extent it curtails the entitlement to input tax credit on sales or purchases of declared goods made during the course of inter-State trade or commerce, therefore falls foul of the above provisions of the Constitution and the CST Act which is the Central Act - Keeping in mind the fact that the impugned notification does not relate only to declared goods, the entire notification cannot be struck down. However, the notification has to be read down to mean that the non-entitlement to input tax credit provided thereunder shall not be applicable to goods which are both purchased and sold as declared goods. Thus, the impugned notification shall not be applicable to purchases of hides and skins resold in the course of inter-State trade or commerce. The respondents are, therefore, not justified in denying reimbursement of the whole of the State tax paid by the petitioners on the declared goods purchased in the State and sold in the course of inter-State trade and commerce - petition allowed - decided in favor of petitioner.

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• 2020 (3) TMI 141
  Imposition of Advance tax and penalty - detention of vehicle - goods detained were admittedly accompanied by all the required documents as per the provisions of Section 31(2) of the HVAT Act - imposition of penalty just on the basis of statement of the driver, even though the goods are accompanied by genuine documents - the stand taken by the appellant before the Penalising Officer fell flat, firstly for the reason that the appellant never produced the documents with regard to the earlier transaction which were bound to be in possession of the appellant. Secondly the goods were cleared from ICD, Dadri on 9.11.2015 and then sold by the consignor to the consignee on 10.11.2015, there was delay of six days in between the said sale and the date of checking. No explanation was put forth for the said delay. Lastly the stand taken was contradicted by the statement of the driver. HELD THAT:- The appellant in order to fortify the stand produced before the Appellate Authority and the Tribunal GR No. 2111 dated 9.11.2015 issued by M/s Nice Cargo Movers, New Delhi. From the GR, it rather established that the stand taken was after-thought. GR No. 2111 dated 9.11.2015 was for the earlier transaction whereas the goods were being accompanied by GR No. 19594 dated 10.11.2015 for the subsequent sale. It shows that the GR produced in appeal was got issued afterwards as for the earlier transaction GR of subsequent serial number was issued - There is another aspect of the matter that in case the appellant had sold the goods to the consignor, there was no occasion for the representative of the appellant and of the consignee to appear in the penalty proceedings and to get the goods released. The affected parties would have been the consignor or the consignee and not the appellant. The case set up by the appellant before the Tribunal is not acceptable. In case it was sale made in transit, there would have been endorsement on the GR. Moreover, the driver in that case would be carrying the documents with regard to movement of goods from ICD, Dadri to Bawal - no interference is called for in the order of the Tribunal. No question of law much less a substantial question of law arises. Appeal dismissed.

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• 2020 (3) TMI 140
  Grant of refund of tax collected from the petitioner by the seller and deposited with the respondent authorities - CST Act, 1956 - Refusal to issue C-Form - case of petitioners is that just like no statutory provisions are required for applying the principle of unjust enrichment, correspondingly no provision is required for refund to the person who has borne the tax - HELD THAT:- It is an undisputed position that the petitioners have borne the burden of tax as the CST authorities at Rajasthan had refused to issue C forms after the coming into force of the GST regime. On account of non-issuance of C forms, the petitioners were not in a position to submit C form declarations in respect of the diesel purchased by them for their mining activity, as a result whereof, the petitioners could not purchase diesel at concessional rate of tax from the seller - Reliance Industries Limited, which collected tax at the rate of 20 % from the petitioners and deposited the same with the respondent authorities. The respondent authorities do not dispute that against the C form declarations, the tax collected from the petitioners and deposited by Reliance Industries Limited is required to be refunded. The sole refrain of the respondent authorities is that such refund can be made to the seller Reliance Industries Limited after its assessment for the period in question is concluded and not to the petitioners who are not registered as dealers in Gujarat. In the present case, in the absence of C forms having been issued by the Rajasthan authorities, the respondent authorities have collected excess tax from the seller-Reliance Industries Limited, who in turn has collected the same from the petitioners - once the Rajasthan authorities issue C forms against the sales made by Reliance Industries Limited to the petitioners and the petitioners produce the requisite documents/forms before the respondent authorities, the respondent authorities are required to process such claim within twelve weeks of the same being made in writing by the petitioners. Unjust enrichment - HELD THAT:- In case of the petitioners, it is an admitted position that the HSD has been purchased by them from Reliance Industries Limited in the course of inter-State trade for use in mining activities and they are, therefore, the ultimate consumers thereof and hence, the question of passing on the tax burden to anyone would not arise. Consequently, the question of unjust enrichment would also not arise. The respondents are directed to forthwith process the refund claims of the respective petitioners and grant refund of the tax amount collected from the petitioners and deposited by the seller in accordance with law within a period of twelve weeks of the receipt of a copy of this judgment - Petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2020 (3) TMI 139
  Smuggling - Contraband item - Opium - Non-production of independent witnesses - compliance with the requirements of Section 50 of NDPS Act or not. Discrepancy brought out in the testimony of the Gazetted Officer, viz., the DSP who was allegedly called in by the ASI when upon being informed about the right under Section 50, the accused demanded compliance of Section 50 and on a telephone message, the DSP arrived at the spot - HELD THAT:- On the one hand, in this case, the very same officer has deposed that he reached the spot at about 01:30 P.M. and the ASI has deposed that he remained at the spot till 03:00 P.M. The DSP has deposed in connection with another case that he reached the spot of that investigation in connection with that case at about 12:20 P.M. and remained there till 02:30 P.M. The argument, therefore, is that from the evidence, the DSP must be present at the same time at two different places. This clearly rendered prosecution case suspect and benefit of doubt should at any rate must go to the accused. Violation of Section 50 - HELD THAT:- This is not a case where anything was recovered on the alleged personal search. The recovery was effected from the bag for which it is settled law that compliance with Section 50 of the Act is not required. Non-production of contraband articles - HELD THAT:- In the facts of this case, no doubt the contraband article weighed 6 kg 300 gms. A perusal of the judgment of the Trial Court does not appear to suggest the appellant had taken the contention regarding non-production of the contraband before the trial Court. This contention as such is not seen as taken before the High Court. This is a case where the sample was produced. There is no argument relating to the tampering with the seal - there is no hesitation to reject the contention of the appellant. Whether the conviction of the appellant made by two courts requires interference on the ground that independent witnesses were not associated with the investigation, seizure and recovery? - HELD THAT:- We have noticed the evidence which is referred to by the appellant to criticize the impugned judgment on this score. Two courts have reposed confidence in the deposition of the prosecution witnesses - we do not think that a case has been made for overturning the verdict of guilt returned against the appellant. Though there appears to be doubt created about whether the DSP was present, upon being called by PW7 having regard to the testimony of the DSP in the other case, in view of the fact that the contraband articles were in fact recovered upon search of the bag, there are no merit in the argument of the appellant. Lastly, the learned Counsel for the appellant made a fervent plea in this case that should his contentions not be found acceptable, the Court may direct that appellant may not suffer further incarceration in the State of Haryana but may consider her being housed in a jail in the State of Madhya Pradesh where she would have access to her family members. This is a matter which we leave upon to the appellant to seek appropriate relief. Appeal stands dismissed - Since the appellant is on bail, her bail bond shall stand cancelled.

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• 2020 (3) TMI 138
  Dishonor of Cheque - insufficiency of funds - acquittal of respondent for the offence under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumption - HELD THAT:- As per Section 139 of the Negotiable Instruments Act,1881, it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. It is not a case of the respondent that he has not signed the cheque. A meaningful reading of the provisions of the Act, 1881 makes it ample clear that the person signed the cheque over to a payee remains liable and he may adduce any evidence to rebut presumption. Presumption will live, exist and survive and shall end only when contrary is proved by the accused/respondent. The trial Court recorded finding that there is no specific evidence that on which date loan was advanced, therefore, advancement of loan is not established. In view of this Court, finding arrived at by the trial Court is against the legal aspects of the matter. When the respondent himself has not deposed before the trial Court that he has not borrowed money from the appellant, presumption under Section 139 of the Act, 1881 will survive and remain exist and corroboration to the statement of the appellant is not required. On an overall assessment, it can be said that the finding of the trial Court is against the weight of the evidence and the same is not legal and contrary to the provisions of the Act, 1881, therefore, argument advanced on behalf of the respondent is not sustainable. The act of the respondent falls within mischief of Section 138 of the Act, 1881 - espondent is convicted under Section 138 of the Act, 1881 - appeal allowed.

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• 2020 (3) TMI 137
  Dishonor of Cheque - insufficiency of funds - application moved under section 91 of the Cr.P.C. for summoning the documents - HELD THAT:- The powers conferred under Section 91 of the Cr. P.C. are, enabling in nature, aimed at arming the Court or any officer-in-charge of a Police Station concerned to enforce and to ensure the production of any document or other things, necessary or desirable , for the purposes of any investigation, enquiry, trial or the proceedings under the Code, by issuing a summons or a written order to those in possession of such material - The language of Section 91 of Cr.P.C. would, no doubt, indicate the width of the powers to be unlimited, but the inbuilt inherent limitation takes its colour and shape from the stage or point of time of its exercise, commensurately with the nature of proceedings as also the compulsions of necessity and desirability, to fulfill the task or achieve the object. The Sine qua non of an order under this Section is a consideration by the court that the production of the documents concerned is desirable and necessary for the purposes of the trial. Whether a document should be summoned or not, is essentially discretion of the trial Court - The Apex Court in the case of Assistant Collector of Customs Anr. Vs. L.R. Malwani Anr. [1968 (10) TMI 49 - SUPREME COURT] has held that except for very good reasons, the High Court should not interfere with the discretion exercised by the court below. Thus, the trial Court has considered the necessity of the documents to be produced in its proper prospective and has exercised its discretion in rejecting the application for the reasons mentioned therein - no apparent jurisdictional error appears to have been committed by the trial Court in rejecting the application under Section 91 of Cr.P.C. warranting interference or exercising the inherent powers under Section 482 of Cr.P.C. Rejection of application under section 243(2) of Cr.P.C. - HELD THAT:- The said application was moved on the ground that it is important to get the ink and signature of the so called agreement examined from Forensic Science Laboratory, Bhopal for the purpose of just and fair trial. It is further mentioned that due to accident of the earlier counsel Shri Rajeev Chauhan all these aspects could not be examined at the time of recording the evidence. As such the application deserves to be allowed. The learned Trial Court has not committed any error in rejecting the applications - petition dismissed.

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