Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 14, 2020
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Clarification in respect of certain challenges faced by the registered persons in implementation of provisions of GST Laws- - CGST - Circular
Income Tax
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Exemption u/s 11 denied - grant of approval under Section 10 (23C) (vi) denied - Trust Deed seems to indicate that the source of funds of the petitioner’s trust is only from the school fees to be collected during these financial years. Therefore, it cannot be construed that the petitioner’s Trust’s Schools were not for the purpose of profit. - Benefit of exemption rightly denied - HC
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Attachment and recovery for realization of amounts due from the appellant Bank - recovery from the 4th respondent garnishee bank has been done in a manner depriving the interest of the assessee and without following the guidelines which ought to have been followed in the matter of garnishee attachment and recovery. - Refund allowed - HC
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Ad–hoc disallowance made out of conveyance expenses - assessee has produced some evidences to support the claim of expenditure - considering the turnover shown by the assessee, the expenditure claimed cannot be considered to be either unreasonable or excessive. - AT
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Exemption u/s 11 - application for registration u/s.12AA rejected - Admittedly, assessee before us is perusing activity of education. Therefore proviso to Section 2(15) of the Act cannot be applied to the assessee trust.This position is made clear even by the CBDT Circular - AT
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Revision u/s 263 - default in allowing LTCL by AO - writing off of advances for machinery and claiming the same as long-term capital loss to be carried forward has nothing to do with "note on allowability of provision written back". - there is enquiry and application of mind by the assessing officer is not all sustainable - Revision order confirmed - AT
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Levying penalty u/s 271(1)(c) - assessee has filed the revised return of income by showing the additional income and claiming exemption u/s 54 - Disallowance of claim u/s 54, nowhere attract the penalty - AT
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Deduction u/s 35 - Addition on bogus donation made by the assessee - expenditure on scientific research - reliance on the statement of brokers who are providing the accommodation entries - CIT(A) rightly deleted the additions - AT
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Condonation of delay - levy of late filing fee u/s 234E - Assessee has filed the appeal on the basis of default summary downloaded from Traces Income Tax Website. Further the assessee has been pursuing the matter with the Assessing Officer for issue of original order and emphasized that the assessee has received the original orders from the Department and ready to file the before the appellate authorities. - Delay condoned - AT
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Deduction u/s. 54 - LTCG - delay towards the impugned construction period - This means that any plots which are not approved by CMDA shall not be permitted for registration or for any other activity like construction after 09.09.2016. Hence the appellant could not start the construction and was waiting for the final outcome of the Judgment. Ultimately, when the legal and procedural environment became clear, the assessee constructed it after 13th Oct 2017. - Benefit of exemption allowed - AT
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Condonation of filling appeal - Levy of late fee u/s.234E - there was no legal remedy prior to 1.6.2015 against an intimation u/s.200A - Considering the reasons given by the Assessee for condonation of delay and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that the delay in filing the appeals deserves to be condoned. - AT
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Order u/s 119 of the Income tax Act, 1961 on issue of certificates for lower rate/nil deduction/collection of TDS or TCS o/s 195, 197 and 206C (9) of the Act for Financial Year 2019-20 - Order-Instruction
Customs
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Clearance of goods under India’s Trade Agreements without original Certificate of Origin - Circular
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Computation of Brand rate of Drawback - section 129A(1)(b) of the Customs Act, 1962 - Whether NCCD levied under section 134 of the Finance Act, 2003, is a customs duty and whether NCCD can be considered for computing brand rate eligibility? - since NCCD is a duty of customs, drawback thereof is admissible. - HC
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Imposition of penalty u/s 114AA of the Customs Act on the CHA - No case of connivance of the appellant CHA with the importer is made out. Further, no particular document is pointed out in the allegation which have been forged or falsified by the appellant or knowingly used by the appellant CHA having knowledge of its defect. - AT
DGFT
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Conditions on import of Refined Palm Oil - Trade Notice
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Procedure for availing Transport and Marketing Assistance (TMA) on Specified Agriculture Products - relaxation of time for submission of physical copy of application - Public Notice
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Retrospective Issuance of Certificates of Origin under India's Trade Agreements - Trade Notice
FEMA
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Risk Management and Inter-bank Dealings – Hedging of foreign exchange risk - Circular
Corporate Law
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Disqualification of Directors - Power of Registrar of Companies to de-activate “DIN” - in absence of any provision to deactivate DIN of petitioners if they have incurred disqualification u/s 164 of Act, 2013, the action of respondents and in particular of ROC, in deactivating DIN of petitioners, cannot be sustained. - HC
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Disqualification of Directors - While holding the Company responsible and to face consequences of such violation, Legislature has found it appropriate to hold the person responsible for its management i.e. Director to suffer certain consequences, which cannot be said to be unreasonable or per se arbitrary or irrational - there are no force in the submission that Section 164 (2) of Act, 2013 is ultra vires - HC
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Clarification on passing of ordinary and special resolutions by companies under the Companies Act,2013 and rules made thereunder on account of the threat posed by Covid-19. - Circular
State GST
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GST on license fee charged by the States for grant of Liquor licences to vendors - Sikkim SGST
Indian Laws
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MCA’s Frequently Asked Questions on eligibility of CSR expenditure related to COVID-19 activities - News
IBC
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Resolution Professional us/s 60(5) r/w 14 seeking release of goods - CIRP already initiated - the Corporate Debtor not being the consignee nor the importer of the goods it has ownership rights, it has to be construed that it has acted as an agent on behalf of the importer, therefore, this Applicant has no right to ask for release of the consignment. - Tri
SEBI
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Relaxation in adherence to prescribed timelines issued by SEBI due to Covid 19 - Circular
Service Tax
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Maintainability of petition - time limittaion for filing appeal before the Commissioner (Appeals) - Reasons stated by the petitioner for belatedly approaching the Court appears to be genuine. The petitioner may turn to file a statutory appeal before the Appellate Commissioner, within a period of 30 days from the date of receipt of copy of this order. - HC
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Import of Business Support Services - Import from Branch office situated outside India - Reverse Charge (RCM) - a comprehensive reading of Section 66A of the Act, would indicate that a permanent establishment situated abroad as a ‘separate person’, is only to determine whether the provision of service is in India or out of India. - The charging section is section 66 of the Act and not section 66A - Demand set aside - AT
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Payment of service tax by the Post Master / Postal Department by Book adjustment instead of electronic payment in cash - The demand of service tax for the second time is against the scheme of the Service Tax Act read with Article 265 of the Constitution of India. - AT
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Refund of the unadjusted cenvat credit - Admittedly Revenue has never objected to taking credit by the appellant under the scheme of the Service Tax Rules. Further, Section 142(5) of CGST Act, 2017 specifically provided for refund of tax paid during Service Tax regime in respect of services not provided, to be paid or disbursed in cash. - AT
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Commercial or industrial construction Service - Construction of road inside BALCO, SECL, NTPC - definition does not specify the type of road and so the road cannot be restricted to a public road only. Thus, whether a road is for public utility or for the utility of an organisation, the benefit of the exclusion clause has to be given. - AT
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Handling and transportation of coal for SECL and MCL - Whether coal transported from pitheads of the mines to the railway sidings would fall within the taxable service defined under section 65 (105) (zzzy) of the Act? - activity would appropriately be classified under the head “transport of goods by road service” and the activity does not involve any service in relation to “mining of mineral” - AT
Central Excise
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Refund of duty paid - filing of refund claim before the wrong jurisdiction - if the adjudicating authority was of the view that the appellant has not filed refund claim with the authorities which is not competent to entertain the refund claim, he would have transferred the application for refund claim before the competent authority but could not have rejected the refund claim simply on the ground that he had no jurisdiction. - HC confirmed the decision of Tribunal
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Refund in cash of excess excise duty paid - applicability of time limitation u/s 11B of CEA - the law in this case is settled that in case of revenue deposit the limitation prescribed under Section 11B is not applicable - AT
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Refund of Excess Excise Duty - principles of unjust enrichment - the provisional assessment was directed in the year 1995 and relevant documents for finalisation of claim have been submitted in the year 1996. The department finalised the assessment only in the year 2008 - the principles of unjust enrichment would not be applicable to the refund filed consequent to finalisation of provisional assessment initiated in the year 1995. - AT
VAT
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Recovery of tax dues from the buyer of property as land revenue - bonafide purchasers or not - A charge created by operation of law will not automatically infer a presumption of knowledge on the intending purchasers about the tax arrears, as well as the consequent charge on the property, which they intend to purchase. Consequently, the question of “Wilful Abstention” or “Gross Negligence”, would generally be a question of fact or law or a mixed question of fact and law - when the prospective purchasers are not expected to have constructive knowledge of the charge and when the property is purchased for a valid consideration and without notice of the charge, they would be entitled to the saving clause provided under Section 100 of the TP Act. - HC
Case Laws:
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Income Tax
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2020 (4) TMI 373
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Assessing Authority while invoking the provisions of Rule 14(A) (1) read with Rule 8(D) of the Income Tax Act has not disclosed any basis for expenditure in relation to exempt income while invoking the aforesaid provision. Therefore, the aforesaid substantial question of law is answered in negative and in favour of the assessee. Excess claim of bad debts written off under Section 36(1)(vii) - HELD THAT:- Issue decided in favour of assessee relying on M/S. SYNDICATE BANK [ 2020 (2) TMI 1020 - KARNATAKA HIGH COURT] Depreciation on valuation of investment portfolio - Whether allowable by treating the investments held by the assessee bank as stock-in-trade once the RBI Master Circular read with CBDT Circular No.665 came into force - HELD THAT:- Question of law is answered by a Bench of this Court in M/S. ING VYSYA BANK LIMITED [ 2020 (1) TMI 1116 - KARNATAKA HIGH COURT]
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2020 (4) TMI 372
Compounding of offence - order passed in terms of Section 279(2) of the Income Tax Act, 1961 - levy of penalty under Section 271(1)(c) were initiated for concealment of income and furnishing of inaccurate particulars of income - HELD THAT:- Facts noted were (i) the assessee claimed to have inspected the premises of Bellary Steels for inspection of the machineries but the fact was that there was no machinery supplied by the manufacture (ii) that this amounted to a substantial fraud upon the Department since the false claim for depreciation on non-existing assets was made consciously. These concurrent findings of fact by the lower authorities was confirmed further by a Division Bench in CRN INVESTMENTS P. LTD.[ 2007 (2) TMI 166 - MADRAS HIGH COURT ] dismissing the petitioners' appeal. This order has attained finality. The petitioner had in the meantime sought compounding of the offence that was rejected on the ground that the case of the petitioner fell within the parameters of an 'Offences involving major fraud or scam or misappropriation' or 'Offences committed by an assessee, who has enabled others in large scale concealment of income in a systematic and planned way over a number of years like hawala entries, bogus trusts, bogus remittance etc.'. The above portion in italics constitute the guidelines of the Central Board of Direct Taxes in F.No.285/90/2008IT(Inv.)/12 dated 16th May 2008 that have been relied upon by the Chief Commissioner of Income Tax in rejecting the request for compounding. Petitioner hardly has any defence to offer except to refer to its letter dated 26.03.2014 seeking a clarification from the respondent in respect of anticipated prosecution proceedings for the AY 1996-97. No relevance to this reference by the petitioner - there absolutely no merit in this writ petition and the same is dismissed.
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2020 (4) TMI 371
Exemption u/s 11 denied - grant of approval under Section 10 (23C) (vi) denied - trustees were empowered to fix fees and charges to be collected from student was to be after taking into account the cost of running schools including future development of the institutions and that such fees will be fixed without an element of profit - HELD THAT:- The fact that Clause 10 of the Trust Deed states that the fees and charges shall be fixed taking into account the cost of running including future development thereof though without an element of profit motive indicates that the actual intention of the trust is only to generate income by charging fees while admitting children s to their schools. The Deed of Trust has also not declared the source of fund for achieving the purpose. It merely stipulates the Trustees are authorised to borrow monies for the purposes of the trust with or without security from banks, financial institutions or otherwise and also have the power to offer a security of any immovable or movable property or other security. The fact that there is no clause for providing free education for children coming from different social and educational backgrounds and the scholarship to under privileged children shows that there is only profit motive and the institutions are to be run only out of fees collected by admitting children s to their schools. Trust Deed also seems to indicate that the source of funds of the petitioner s trust is only from the school fees to be collected during these financial years. Therefore, it cannot be construed that the petitioner s Trust s Schools were not for the purpose of profit. No merits in these writ petitions filed by the petitioner as well Since the schools run by the petitioner were directed to be closed, pursuant to the above directions I do not find any merits in W.P. Presence of educational institution is sine qua non for grant of approval under Section 10 (23C) (vi) of the Income Tax Act, 1961. The impugned order passed by the 1st respondent is therefore sustainable.
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2020 (4) TMI 370
Attachment and recovery for realization of amounts due from the appellant Bank - petitioner Bank sought direction for refund of the amount paid by the 4th respondent to the Income-tax Department pursuant to Ext.P7 - Contention of the petitioner was mainly that, the assessment made with respect to the amount sought to be recovered through Ext.P7 was under challenge in an appeal and that the recovery steps from the garnishee was initiated without taking into consideration of pendency of the appeal and the stay petition - whether 'garnishee proceedings' was initiated and the amount was recovered without issuing any notice to the appellant, as required under section 226(3) ? - HELD THAT:- No hesitation to hold that the attachment and recovery was effected at a great haste, without taking into consideration of the parameters enshrined in all the decisions cited as above. Further, we take note of the fact that the issue pertaining to liability of the appellant bank for payment of income tax, remains now settled through the decision of a Full Bench of this court in Mavilayi Service Co-operative Bank v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] . It is held therein that, by the reason of sub-section (4) of section 80P the Assessing Officer has to conduct an enquiry into the factual situations with respect to the activities of the society, in order to satisfy himself to the conclusions arrived at and also as to whether the benefits under section 80 can be extended or not. According to the learned counsel for the appellant, such a verification has not been done in the case. But the learned Standing Counsel appearing for the respondents 1 to 3 had pointed out that, even in the original assessment itself, those aspects were considered by the appellate authority. As observed above, recovery from the 4th respondent garnishee bank has been done in a manner depriving the interest of the assessee and without following the guidelines which ought to have been followed in the matter of garnishee attachment and recovery. However, since the amount has already been collected against the existing demand, we are not inclined to direct release of the amount, unless the appellant society furnishes Bank Guarantee for the entire amount. We take note of the fact that the above aspects were not considered by the learned Single Judge while disposing of the writ petition. Hence the impugned judgment requires modification. Writ appeal is hereby disposed of by directing the respondents 1 to 3 to make refund of the amount to the appellant society, in case the appellant society furnishes Bank Guarantee to the tune of the entire amount recovered, to the satisfaction of the first respondent. The Bank Guarantee is directed to be kept in tact, until disposal of the appeal filed by the appellant before the 2nd respondent. Realization of the Bank Guarantee shall be made only after communicating the appellate order to the appellant society. The refund shall be effected within a period of 2 weeks from the date of furnishing of the Bank Guarantee. The direction issued by the learned Single Judge in the impugned judgment with respect to disposal of the appeal shall survive.
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2020 (4) TMI 369
Deduction u/s 80IC - assessee, an individual, is engaged in the business of manufacturing plastic packing material through his Proprietorship concern Creative Plastopack - HELD THAT:- In the present case, the business of the assessee is manufacturing of plastic packing material. Thus, prima facie, it appears that the assessee is not engaged in the business of warehousing. However, it is the contention of the assessee from the assessment stage itself that in the event the customer does not lift the goods within the permissible time limit, warehousing charges is levied for storage of goods in the warehouse. Thus, it has been contended that the warehousing charge is integrally connected to manufacture and sale of goods. In this context, it is essential to look into the terms of the contract between the assessee and the customers for levy of warehousing charges. No material has been brought before the Departmental Authorities to demonstrate under what circumstances warehousing charge can be levied from the customers. Even, on a specific query from the Bench to furnish any agreement or document providing for levy of warehousing charges, the learned Authorised Representative was unable to furnish them. In our considered opinion, the terms and conditions of levy of warehousing charges would have a crucial bearing on determining whether the warehousing charge is integrally connected to the profits and gains derived from the business. Since, the aforesaid aspect has not been factually verified either due to lack of material or otherwise, we are inclined to restore the issue to the AO for fresh adjudication after due opportunity of being heard to the assessee. Ground raised is allowed for statistical purposes. Ad hoc disallowance made out of conveyance expenses - Commissioner (Appeals) reduced the disallowance made by the Assessing Officer to 50% - HELD THAT:- On a perusal of the nature of expenditure, we are of the view that considering the turnover shown by the assessee, the expenditure claimed cannot be considered to be either unreasonable or excessive. Further, it is a fact on record that the assessee has produced some evidences to support the claim of expenditure. The Assessing Officer has not found such evidences to be totally unreliable. In such circumstances, a part disallowance of the expenditure claimed purely on ad hoc basis, in our view, is not sustainable. Accordingly, we delete the disallowance of the expenditure. The assessee would get consequential benefit under section 80IC of the Act. Grounds no.2 and 3 are allowed.
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2020 (4) TMI 368
Exemption u/s 11 - application for registration u/s.12AA rejected - Activities of the trust was not carried out with charitable object but with profit motive as activities of imparting education with primary object of earning profit cannot be said to be charitable activity and Building is being constructed in leasehold land which is owned by one of the Managing Trustee - whether or not the ld. CIT was justified in rejecting registration u/s.12AA of the Act by applying the proviso to Section 2(15) ? - HELD THAT:- Poviso to Section 2(15) of the Act is applicable only to organization which is for advancement of any other object of general public utility. The proviso cannot be applied to an organization which is engaged in the first three limbs of the definition of charitable activity i.e. Relief to the poor, education and medical relief. Admittedly, assessee before us is perusing activity of education. Therefore proviso to Section 2(15) of the Act cannot be applied to the assessee trust.This position is made clear even by the CBDT Circular No.11/2008,dated 19.12.2008 Reliance placed by the ld. CIT in the case of Queens Educational Society [ 2007 (9) TMI 347 - UTTARAKHAND HIGH COURT] was over ruled by Hon'ble Supreme Court[ 2015 (3) TMI 619 - SUPREME COURT] - In the light of this factual position, we are of the considered opinion that the proviso to Section 2(15) of the Act is not applicable to trust. In the circumstances, we direct the ld. CIT to grant registration u/s.12AA of the Act. - Decided in favour of assessee.
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2020 (4) TMI 367
Revision u/s 263 - default in allowing LTCL by AO - AO has during the course of assessment proceeding only called for routine details and has not delved in detail or made necessary inquiries on the issue of Long Term Capital Loss and investigation on such issues which should have been made - As per CIT AO accepted assessee s submission and did not make any further queries regarding the ownership, actual transfer, delivery/handing over possession etc of the said property - HELD THAT:- Without any specific enquiry on the subject by the assessing officer, the assessee has tried to pass off the information about how the said long term capital loss to be carried forward arose under a misleading heading of note on allowability of provision written back . Admittedly the claim of long-term capital loss to be carried forward on account of writing off of advance given for machinery, is itself erroneous, and hence the allowance thereof cannot be legally sustained on the ground that the same is conscious application of mind by AO. Moreover passing off this information under the heading note on allowability of provision of written back is more in nature of misleading than providing proper information. This is because writing off of advances for machinery and claiming the same as long-term capital loss to be carried forward has nothing to do with note on allowability of provision written back . Accordingly, in our considered opinion the submission that there is enquiry and application of mind by the assessing officer is not all sustainable. Hence Ld CIT is quite justified in invoking jurisdiction under section 263 of the income tax act, hence we uphold the order of Id CIT. We note that this is appeal against an order of Ld CIT passed under section 263 of the I-T Act Hence we are confining ourselves to the order passed under section 263 of the I-T Act. - Decided against assessee.
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2020 (4) TMI 366
Penalty u/s 271(1)(c) - Non specification of charge - defective notice - HELD THAT:- As per notice issued by the AO under section 274 r.w.s. 271 allegation of the AO is vague because the AO is saying that the assessee has concealed the particular of his income or furnished inadequate particulars of such income and this is not clearly alleged as to whether the assessee has concealed the income or furnished inadequate particulars of income. AO has not specifically stated as to whether the assessee is guilty of concealment of income or furnishing of inadequate particulars of income and therefore, this Tribunal order renders no help to the Revenue in the present case because of difference in facts. Hence, we respectfully follow the judgment of Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and hold that the penalty imposed by the AO under section 271 (1) (c) of the IT Act, 1961 is not sustainable and we delete the same. - Decided in favour of assessee.
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2020 (4) TMI 365
Bogus purchases - CIT(A) restricting the addition @ 3% on total purchases as the profit element embedded in these purchases - HELD THAT:- We find that the identical ground raised in the present appeal has already been decided for the same AY 2014-15 in assessee s own case [ 2019 (12) TMI 314 - ITAT MUMBAI ] wherein held that CIT(A) had rightly appreciated that the addition in the hands of the assessee was liable to be restricted only to the extent of the profit element which was embedded in making of purchases from the open/grey market. Following the said decision, it can be safely concluded that the restriction placed by CIT(A) that the addition by estimating profit percentage at the rate of 3% on bogus purchases, is correct. - Decided against revenue.
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2020 (4) TMI 364
Benefit under Sales Tax as eligible for deduction u/s. 80IA(i) - HELD THAT:- This Tribunal by placing reliance on the order in assessee‟s own case for A.Ys. 2006-07 to 2008-09 dismissed grounds raised by the assessee in challenging the action of CIT(A) in confirming the order of AO in denying deduction u/s. 80IA of the Act in respect of Sales Tax benefit is not eligible business income u/s. 80IA of the Act. Computation of deduction u/s 80IA - losses adjusted against the assessable income other than the profits of the industrial undertaking - HELD THAT:- As decided in own case for A.Y. 2008-09 where the assessee has exercised the option of 10 consecutive years as contained in section 80IA of the Act, then the losses beginning from such initial year were brought forward and set off while applying the provisions of section 80IA(5) of the Act and not the losses of earlier years, which had been adjusted against other income of the assessee in the relevant year itself.
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2020 (4) TMI 363
Levying penalty u/s 271(1)(c) - assessee has filed the revised return of income by showing the additional income and on account of disallowance of claim u/s 54 in connection with the Juhu flats - As argued appellant had suo moto revised its computation of income and offered the same to tax - HELD THAT:- In the revised return of income, there is no concealment of income and furnishing inaccurate particulars of income of any kind. Disallowance of claim u/s 54 of the I. T. Act, nowhere attract the penalty in view of the decision of Hon ble Apex Court in the case of Reliance Petroproduct Vs. CIT (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] . Taking into account all the facts and circumstances, we are of the view that the finding of the CIT(A) is not justifiable, therefore, we set aside the same and delete the penalty. - Decided in favour of assessee.
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2020 (4) TMI 362
Deduction u/s 35 - Addition on bogus donation made by the assessee - expenditure on scientific research - reliance on the statement of brokers who are providing the accommodation entries - CIT(A) while deleting the additions has held, that the AO has solely relied upon the report of Investigation Wing and has not carried out any worthwhile independent inquiry in this matter - HELD THAT:- CIT(A) has relied upon the documentary evidence on record which has been produced by assessee. The AO declined the claim of the assessee on the basis of non submission of the record. However, the CIT(A) has placed reliance upon the number of decisions but on the similar facts and circumstances, the Hon ble ITAT has also given the finding in the case of Urnish Jewellers Vs. ACIT [ 2019 (5) TMI 1323 - ITAT MUMBAI] , Vora Financial Services Pvt. Ltd. Vs. ACIT [ 2018 (7) TMI 64 - ITAT MUMBAI] . The said law was relied by the Ld. Representative of the assessee. The facts are not distinguishable at this stage. We nowhere found any reason to interfere with the finding of the CIT(A), therefore, in view of the said facts and circumstances, we are of the view that the finding of the CIT(A) is quite correct and justifiable - Decided against revenue
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2020 (4) TMI 361
Condonation of delay - levy of late filing fee u/s 234E - AR submitted that order passed U/Sec 200A of the Act was never served on the assessee - HELD THAT:- As relying on MST. KATIJI AND OTHERS [ 1987 (2) TMI 61 - SUPREME COURT] w e condoned the delay and set aside the orders of the CIT (Appeals) and restore the disputed issues to the file of CIT(Appeals) to adjudicate on merits and provide adequate opportunity of Hearing to the assessee and further the assessee shall co-operate in submitting the Information for early disposal of appeal, and allow the assessee appeal for statistical purposes. Late filing fee u/s 234E - AR submitted that assessee has not received order under Section 200A and based on the letter of Assessing Officer on a default summary downloaded from Traces, web site of the Income Tax filed the appeal - HELD THAT:- Assessee has filed the appeal on the basis of default summary downloaded from Traces Income Tax Website. Further the assessee has been pursuing the matter with the Assessing Officer for issue of original order and emphasized that the assessee has received the original orders from the Department and ready to file the before the appellate authorities. We are of the view that the Revenue shall not be at loss if an opportunity of Hearing is granted. Considering the principles of natural justice, we set-aside the order of CIT(A), and provide one more opportunity of hearing to the assessee before the CIT (Appeals) to substantiate the case with evidences and CIT(Appeals) shall provide adequate opportunity hearing to the assessee to submit the information and the Assessee shall cooperate for early disposal of Appeal and allow the grounds of appeal for statistical purposes.
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2020 (4) TMI 360
Deduction u/s. 54 - delay towards the impugned construction period - As per AO vacant land is not assessed to the property tax and it does not have an Electricity connection and hence, he disallowed the assessee s claim of deduction u/s. 54 and assessed the assessee s income under the head long term capital gains - assessee submitted that he did not get approval for construction due to an order of the Madras High Court as it restricted the construction of plots at unauthorised lay outs - HELD THAT:- Though the assessee had invested the sale consideration in acquiring the vacant plots, obtained the planning permission on 29.03.2016 with the condition that the appellant should start the construction within 6 months ie before on or before 29.09.2016, by the time the appellant was about to start the construction, the Hon 'ble Madras High Court had given a Judgment restricting the registration of plots at unauthorized layouts or any flats/building constructed at such plots in Writ Petition number 19566 of 2015 dated 09.09.2016. This means that any plots which are not approved by CMDA shall not be permitted for registration or for any other activity like construction after 09.09.2016. Hence the appellant could not start the construction and was waiting for the final outcome of the Judgment. Ultimately, when the legal and procedural environment became clear, the assessee constructed it after 13th Oct 2017. Therefore, we are of the view that the assessee is entitled to the benefits of deduction u/s 54, as the delay towards the impugned construction period is beyond his control and not attributable to him. Therefore, we direct the AO to treat as if construction is made within time . Since the A O has not examined the other conditions in relation to the grant of deduction u/s 54 , we remit the issue back to A O for a fresh examination . After affording effective opportunity to the AO , the A O shall pass the order in accordance with law. Assessee s appeal partly allowed for statistical purposes
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2020 (4) TMI 359
Condonation of filling appeal - Levy of late fee u/s.234E - Order passed u/s.200A read with Sec.154 - delay in filing statement of TDS within the prescribed time - HELD THAT:- An intimation u/s.200A of the Act became an appealable order u/s.246A of the Act, only consequent to amendment by the Finance Act, 2015 w.e.f. 1.6.2015. Prior to the said date an intimation u/s.200A was not appealable. At the outset, we observe that the Hon ble Supreme Court, in the case of Mst. Katiji [ 1987 (2) TMI 61 - SUPREME COURT] has explained the principles that need to be kept in mind while considering an application for condonation of delay. The Hon ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day s delay must be explained does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational common sense and pragmatic manner ITAT Hyderabad Bench in the case of MSV IT Solutions Ltd. Vs. ITO, Ward 16(4) [ 2018 (10) TMI 1774 - ITAT HYDERABAD] wherein on identical facts noticing that there was no legal remedy prior to 1.6.2015 against an intimation u/s.200A of the Act, the Hyderabad Bench condoned delay in filing appeal before CIT(A). Considering the reasons given by the Assessee for condonation of delay and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that the delay in filing the appeals deserves to be condoned.
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2020 (4) TMI 335
Recovery proceedings - AO required the petitioner to deposit 20% of the disputed amount - projection of Tax on Returned Income - projection of the petitioner was that the prepaid taxes lying with the revenue were to the tune of ₹ 175,33,83,084/-, and the said amount was much more than the 20% of the disputed demand payable at ₹ 164,52,95,215/- - explanation furnished by petitioner for not disclosing the MAT tax liability, is that the Assessing Officer had not accepted the return on MAT basis and, therefore, the said amount was not reflected - HELD THAT:- Petitioner, while circulating the tabulation at the initial hearing of the petition, projected the Tax on Returned Income as ₹ 69,83,85,442/- on the assumption that its returned income was ₹ 210,24,62,383/-, and without accounting for the several additions and disallowances made by the Assessing Officer. Pertinently, in the Assessment order, the figure of ₹ 69,83,85,442/- is nowhere to be seen. If the petitioner were to be fair to the Court, the petitioner would have reflected the amount of ₹ 2,247,073,334/ which was the minimum tax liability of the petitioner, assuming that its return based on the consolidated financial statement, were to be accepted. Against the column indicating the Tax on admitted liability (Returned Income) , the said amount of ₹ 2,247,073,334/- would have been reflected, which would have completely changed the equation that was projected before us by the petitioner. The explanation furnished by Mr. Balbir Singh, learned senior counsel for the petitioner for not disclosing the MAT tax liability, is that the Assessing Officer had not accepted the return on MAT basis and, therefore, the said amount was not reflected. We do not find any weight in this submission. Since, the MAT liability, even according to the petitioner, was the higher of the two figures i.e. the tax on the net taxable income (as returned by the petitioner), and the MAT amount, the petitioner could not have run away from the fact that its liability was, at least, if not more than ₹ 2,247,073,334/-. Thus, we were clearly misled by the petitioner at the preliminary hearing of the petition which led to our passing the interim order. Petitioner has invoked the discretionary extraordinary writ jurisdiction of this Court, the petitioner was expected to approach this Court with clean hands, which, unfortunately, we find is completely lacking in the present case. We are, therefore, not inclined to exercise our discretionary writ jurisdiction in favour of such a petitioner. Accordingly, we dismiss this petition with costs quantified at ₹ 5 lakhs to be paid to the Delhi High Court Advocates Welfare Trust.
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Customs
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2020 (4) TMI 358
Non-speaking order - Levy of penal demurrage charges - sufficient opportunity of being heard not provided to the petitioner - principles of natural justice - HELD THAT:- From the impugned order, it is evident that it is a non speaking order. The details of (a) declaration allegedly made by the petitioner's agent with regard to the petitioner's address, (b) when such a declaration was given by the petitioner's agent and (c) date of the alleged notice sent by the respondent to the petitioner, are all not reflected in the impugned order. As seen from the counter affidavit, the case of the respondent is that the notice sent to the petitioner was returned with the endorsement left . Even though it is the case of the respondent that the address was given only by the petitioner's agent, the said communication of the agent disclosing the petitioner's address has not been reflected in the impugned order dated 06.11.2014. By a single paragraph cryptic order, without any discussion with regard to the service of notice and with regard to the liability of the petitioner to pay penal demurrage charges, the impugned order has been passed by total non application of mind and has also been passed without adhering to the directions issued by a learned single judge of this Court. This Court is of the considered view that arbitrarily without affording a fair hearing to the petitioner, the respondent has passed the impugned order confirming the levy of penal demurrage charges on the petitioner - the matter is remitted back to the respondent for fresh consideration and the respondent is directed to pass final orders after affording sufficient opportunity to the petitioner to place all their submissions - Petition allowed by way of remand.
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2020 (4) TMI 357
Computation of Brand rate of Drawback - Nature of NCCD - section 129A(1)(b) of the Customs Act, 1962 - Whether NCCD levied under section 134 of the Finance Act, 2003, is a customs duty and whether NCCD can be considered for computing brand rate eligibility? HELD THAT:- Section 75 of the Act provides for allowing of a drawback of duties of customs chargeable under that Act on any imported materials of a class or description used in manufacture or processing of such goods or carrying out any operation on such goods. Sub-section (15) of section 2 of the Customs Act defines duty to mean a duty of customs leviable under that Act. Section 12 of the Customs Act provides that except as otherwise provided in that Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or exported from, India - we are not concerned with an exemption notification but as to whether NCCD can be considered for computing brand rate eligibility. Applicability of the Drawback Rules to NCCD - N/N. 4/2019-Cus. (Instruction) dated 11.10.2019 - HELD THAT:- There are similar provisions relating to NCCD as in the case of Secondary and Higher Education Cess. Vide Circular No.4/2019 Cus. (Instruction) dated 11th October, 2019, the CBEC has issued certain clarifications, whereby it has been clarified that section 136 of the Finance Act, 2007 which levies Secondary and Higher Education Cess (SHE), and section 110 of the Finance Act, 2018 which levies Social Welfare Surcharge (SWS), as a duty of Customs provide that the rules and regulations made thereunder including those relating to refunds, exemptions etc. shall apply to these levies. Further, these cesses are factored in the calculation of all industry rates of duty drawback by the Drawback Committee. Reference can be made to a Circular No. 106/95-Cus. dated 11.10.1995, wherein, the CBEC has clarified that anti-dumping duty which is leviable under section 9A of the Customs Tariff Act, read with section 12 of the Customs Act, is rebatable as drawback in terms of section 75 of the Customs Act. Since, anti-dumping duty is not taken into consideration while fixing all-industry rate of drawback, the drawback of such anti-dumping duty can only be claimed under an application for brand rate under rule 6 or rule 7 of the Customs and Central Excise Duties Drawback Rules, 1995 - in the case of anti-dumping duty, the Board has clarified that it is rebatable as drawback in terms of section 75 of the Customs Act. Section 75 provides for allowing a drawback of the duties of customs chargeable under that Act. Since the NCCD has not been taken into consideration while fixing all-industry rate of drawback, like in the case of anti-dumping duty as provided in Circular No.106/95-Cus dated 11th October, 1995, the drawback of such NCCD can only be claimed under an application for brand rate under rule 6 or rule 7 of the Drawback Rules. In this case the respondent has made an application for fixing the brand rate of duty drawback under rule 6 of the Drawback Rules. Therefore, in the light of the stand taken by the CBEC in the clarificatory circulars referred to hereinabove, the application made by the respondent under rule 6 of the Drawback Rules, ought to have been taken into consideration - this court is in agreement with the view adopted by the Commissioner (Appeals) in holding that since NCCD is a duty of customs, drawback thereof is admissible. Answered in affirmative, that is, in favour of the respondent and against the revenue - Appeal dismissed.
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2020 (4) TMI 356
Reduction in quantum of redemption fine and penalty - Confiscation - import of restricted item - mobile phones with batteries - HELD THAT:- Non procurement of certificates for the batteries was a bonafide and inadvertent mistake on the part of the appellant. In any case, he had subsequently produced the certificate and as such had made good the lapse, if any. In such a scenario, imposition of penalty upon the appellant is not justified. The same is accordingly set aside. Confiscation of batteries - HELD THAT:- Admittedly the same were without a certificate, though under a bonafide belief. As such, their confiscability has to be upheld. However, appreciating the facts and circumstances of the case, the redemption fine is reduced to ₹ 50,000/-. Appeal allowed in part.
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2020 (4) TMI 355
Imposition of penalty u/s 114AA of the Customs Act on the CHA - suppression of value of imported goods with an intent to evade tax - appellant is absent on call as this appeal have been heard several times, earlier also - HELD THAT:- No case of connivance of the appellant CHA with the importer is made out. Further, no particular document is pointed out in the allegation which have been forged or falsified by the appellant or knowingly used by the appellant CHA having knowledge of its defect. The condition for imposition of penalty under Section 114AA are not met - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2020 (4) TMI 354
Disqualification of Directors to continue as Directors of all the Companies in which they were Directors for a period of Five years - Section 164 (2) of Companies Act, 2013 - disqualification of Director of those Companies only on the ground that those Directors are also holding similar Office in other Companies which have committed default attracting disqualification under Section 164 (2) of Act, 2013 - HELD THAT:- Section 164 of Act, 2013 is not only similar to Section 274 of Act, 1956 but a bit wider. Disqualification added in Section 274 (1) by insertion of Clause (g) has been continued in Section 164 though framed in slightly different language and is on the Statute as sub-section (2) of Section 164 of Act, 2013 - Under Act, 2013 liability to file Annual Return is provided vide Section 92. It says that every Company shall prepare a return (described in Section 92 as Annual Return ) in the prescribed form containing particulars as detailed in Sub-section 1 of Section 92, as they stood on the close of Financial Year. Such Annual Return shall be signed by Director and the Company Secretary. Where there is no Company Secretary, it shall be signed by a Company Secretary in practice. Sub-section (4) of Section 92 makes it obligatory for every Company to file Annual Return with ROC within sixty days from the date on which Annual General Meeting (AGM) is held or where no AGM is held in any year within sixty days from the date on which AGM should have been held together with the statement specifying the reasons for not holding the AGM. The filing of Annual Returns and Financial Statements are obligatory, non-compliance thereof is punitive and penal is nature. Therefore, Legislature has found it expedient to include violation of said provisions as one of the disqualification of a person to be a Director of such Company. What shall be the financial years, which can be considered for the purpose of disqualification under Section 164 (2) of Act, 2013, which came into force on 01.04.2014? - HELD THAT:- A perusal of Section 2(41) of Act, 2013 shows that for a provision, which came into force on 01.04.2014, 'Financial Year' which ended on 31.03.2014 will not be relevant, inasmuch as, disqualification under Section 164(2)(a) of Act, 2013 is failure of submission of Financial Statements or Annual Returns for any continuous period of three Financial Years and this provision, which is adverse and penal in nature, cannot be made applicable to a Financial Year which had already lapsed and when there was no such condition attracting any disqualification on an event as provided under Section 164(2) (a) of Act, 2013. - for attracting mischief of Section 164(2) (a) of Act, 2013, the 'Financial Year' would commence from 2014-15 and not prior thereto. Whether Section 164 (2) of Act, 2013 is arbitrary and discriminatory, hence violative of Articles 14 and 19 (1)(g) of the Constitution of India or not? - HELD THAT:- While holding the Company responsible and to face consequences of such violation, Legislature has found it appropriate to hold the person responsible for its management i.e. Director to suffer certain consequences, which cannot be said to be unreasonable or per se arbitrary or irrational - there are no force in the submission that Section 164 (2) of Act, 2013 is ultra vires - This question, therefore, is answered against petitioners. Whether principles of natural justice are applicable before holding a Director disqualified under Section 164(2) or holding that Office of Director has become vacant under Section 167(1) (a)? - HELD THAT:- Section 248 of Act, 2013, therefore, does not talk of disqualification, which a Director would suffer so as to incur disqualification under Section 164 (2) read with Section 167 of Act, 2013. Thus the mere fact of striking off of a Company by itself can not prejudice a Director for the purpose of Sections 164 (2) and 167 (1) of Act, 2013 - if conditions precedent to attract Section 164 (2) of Act, 2013 is established to exist, consequences are by operation of law but the condition precedent is that the condition of disqualification actually exists and for this purpose, a bare minimum requirement of notice to such Directors would be necessary to verify, whether such condition exists or not. Whether there is such failure as contemplated and provided by Section 164(2)(a) of Act, 2013 to attract disqualification thereunder and also to incur consequences provided under Section 167(1) (a) of Act, 2013, it has to be established, as a matter of fact, that there is such failure. For this purse, in our view, a notice would be necessary to find out whether the alleged disqualification which according to ROC has been incurred by any Director, is an undisputed fact or if disputed, opportunity to concerned person has to be given to establish otherwise - it cannot be said that continuance of a person as Director though under law he has suffered disqualification and he knows it, and office of Director has become vacant, will remain unpunished but he has to suffer further penalty also. It is, however, true that even this consequence will arise only when basic facts of incurring disqualification are established. This has to be established by an Authority who is responsible for monitoring and ensuring compliance of various provisions of Statute. A complete embargo on principles of natural justice would not be justified, particularly when to attract disqualification and consequences under aforesaid provisions, certain basic facts, whether exist or not, had to be established and for this purpose at least a notice to concerned person was necessary to be given by ROC. Whether there is any provision empowering Registrar of Companies to de-activate DIN of petitioners who were allotted DIN under Section 154 of Act, 2013? - HELD THAT:- We need not go into this aspect in detail for the reason that various High Courts have examined relevant statutory provisions on this aspect and have taken a common view that there is no provision which empowers ROC to de-activate DIN, only on the ground that a Director has incurred disqualification under Section 164(2) (a) or his Office has become vacant under Section 167(1) (a) - the question is answered in favour of petitioners - in absence of any provision to deactivate DIN of petitioners if they have incurred disqualification under Section 164 of Act, 2013, the action of respondents and in particular of ROC, in deactivating DIN of petitioners, cannot be sustained. All writ petitions have to be allowed partly and action of respondents in deactivating DIN of petitioners is to be quashed - Petition allowed in part.
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Insolvency & Bankruptcy
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2020 (4) TMI 352
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- We do not find that the Corporate Debtor is able to show dispute with regard to quality of services rendered and thus we do not find any reason to interfere in the Impugned Order. Appeal dismissed.
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2020 (4) TMI 351
Failure to implementation of plan as given in Resolution Plan - failure to make payment of upfront amount - HELD THAT:- In view of the fact that both the Resolution Plans submitted by Liberty House Group Pte. Ltd. in respect of M/s. Adhunik Metaliks Limited and M/s. Zion Steel Limited have now been given effect by making full payment of upfront amount, learned counsel appearing on behalf of the Committee of Creditors submits that he has been instructed not to press the appeal preferred by the State Bank of India - the Resolution Professional submitted that for M/s. Adhunik Metaliks Limited , cost of the Corporate Insolvency Resolution Process has been partly paid. In the present case, both the Resolution Plans are now being implemented and Liberty House Group Pte. Ltd. , has paid additional amount of ₹ 10 Crores, we are inclined to interfere with the impugned order of liquidation. We, in exercise of powers conferred under Rule 11 of the NCLAT Rules, 2016 and to ensure that the CIRP of both the Corporate Debtors - M/s. Adhunik Metaliks Limited and M/s. Zion Steel Limited now reaches finality, the Committee of Creditors , other Creditors etc., now have no objection and the liquidation will not be in the interest of both the Corporate Debtors - M/s. Adhunik Metaliks Limited and M/s. Zion Steel Limited , its employees etc., set aside the impugned order dated 9th July, 2019. Appeal allowed.
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2020 (4) TMI 350
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - pre-existing dispute or not - HELD THAT:- The Notice does disclose pre-existing dispute between the parties with regard to the services rendered by the Appellant. Notice shows loss of confidence thus holding on to outstanding payments. It is not possible in a summary proceeding like the present one for the Adjudicating Authority or this Tribunal to analyze the e-mails exchanged earlier in depth to ignore Notice like the present one, which was not simply rushed through. In proceedings of Section 9 of IBC, such Notice which is prior in time to the Notice sent under Section 8 of IBC, does show that there was pre-existing dispute regarding services rendered. It cannot be stated to be a dispute raised merely for the purpose of dispute - Application rightly rejected - appeal dismissed.
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2020 (4) TMI 349
Resolution Professional us/s 60(5) r/w 14 seeking release of goods - CIRP already initiated - During the CIRP period, the Corporate Debtor had transactions with the Respondent and the payments have been made in accordance with the terms agreed upon. - It is claimed that, the Respondent has illegally held back it on account of the payments outstanding prior to the CIRP period dated 09-12-2018, in respect of which, the claim has already been filed and admitted by the Applicant herein. HELD THAT:- This Corporate Debtor is not the owner of the goods, it is evident on record that the Corporate Debtor is not the consignee, the Corporate Debtor was only engaged to provide clearance services, for which, we need not labour over the facts to say that the asset lying with the Respondent is not the asset of the Corporate Debtor - Even looking at the invoices allegedly raised by the Respondent on the Corporate Debtor dated 23-4-2019, 30-5-2019 and also other documents filed by the Applicant clearly indicate that buyer of those goods is M/s. Sundaram Fasteners whereby it cannot be inferred that the Corporate Debtor has right over the goods lying with the Respondent. For the goods not belonging to the Corporate Debtor, the Corporate Debtor, by virtue of invocation of moratorium, cannot ask for the custody of the asset showing as if the asset belongs to the Corporate Debtor. Assuming that the asset is belonging to the Corporate Debtor, even then also, by virtue of contractual arrangement which is in the nature of bailment protected not only by Contract Act but also by Customs Act cannot be said as an asset of the Corporate Debtor as stated in the explanation to section 18 of the Code. However, the Respondent counsel, adding it as a supplementary to the above point, has reiterated that the Corporate Debtor not being the consignee nor the importer of the goods it has ownership rights, it has to be construed that it has acted as an agent on behalf of the importer, therefore, this Applicant has no right to ask for release of the consignment. Application dismissed.
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2020 (4) TMI 348
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Corporate Debtor has denied the claim of the Petitioner - HELD THAT:- It is apparent that the Petitioner has failed to submit any documentary evidence with the application to show that the claimed amount is due and payable by the Corporate Debtor. No invoice whatsoever has been submitted before us either. Further, as admittedly stated in the Written Submission filed by the Petitioners, there have been several e-mail correspondence, which indicate that pre-existing disputes have been there between parties - the submission of the Petitioner clearly indicates that there were disputes pre-existing the filing of the instant application u/s.9 of the Code by the Petitioner Company. This Adjudicating Authority is not inclined to admit the instant Application - Application dismissed.
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Service Tax
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2020 (4) TMI 347
Maintainability of petition - time limittaion for filing appeal before the Commissioner (Appeals) - Business Auxiliary Services - HELD THAT:- The impugned order was passed on 15.11.2012 and therefore, the appeal ought to have been filed within a period of 2 months before the Commissioner (Appeals) in terms of Section 85(3)(a) of Finance Act, 1994 or with an application to condone the delay within a period of 30 days thereafter. The petitioner did not choose it. Instead, the petitioner has filed the present Writ Petition on 17, September, 2013 - Since the Writ Petition has been filed beyond the limitation of period, it is liable to be dismissed. Reasons stated by the petitioner for belatedly approaching the Court appears to be genuine. The petitioner may turn to file a statutory appeal before the Appellate Commissioner, within a period of 30 days from the date of receipt of copy of this order. In case, the petitioner files a statutory appeal within the stipulated time herein, the 2nd respondent shall consider the appeal and pass orders on merits in accordance with law.
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2020 (4) TMI 346
Business Support Services - It was alleged that the Branch Office of the Appellant in China was a separate entity under the provisions of section 66A (2) of the Act and the services imported by the Appellant under the category of BSS were liable to service tax - SCN alleges that the Appellant received services from the overseas office in China which is for furtherance of business - HELD THAT:- Section 66A (1) refers to service provider and service recipient as persons which would mean different business persons. Section 66A(2) and its Explanation I only fix service tax liability on a recipient of service under a reverse charge mechanism by treating the permanent establishments in India and abroad as separate persons. This only clarifies whether a service is provided and consumed in India or abroad. If the permanent establishment is treated as a service provider to its own head office in India then it will amount to charging service tax for an activity provided to own self. Therefore, a comprehensive reading of Section 66A of the Act, would indicate that a permanent establishment situated abroad as a separate person , is only to determine whether the provision of service is in India or out of India. The Commissioner (Appeals) also observed that section 66A is an independent charging section for levy of service tax on services provided or to be provided to a person located in India. This observation of the Commissioner (Appeals) is not correct. The charging section is section 66 of the Act and not section 66A - confirmation of demand under the impugned order, therefore, cannot be sustained. Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 345
Condonation of delay in filing appeal - appeal filed after the delay of ten months and 29 days - Payment of service tax by the Post Master / Postal Department by Book adjustment instead of electronic payment in cash - power of Commissioner (appeal) to condone delay - HELD THAT:- The demand of service tax for the second time is against the scheme of the Service Tax Act read with Article 265 of the Constitution of India. Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 344
Refund of the unadjusted cenvat credit - time limitation for such adjustment - Rule 6(3) of CCR - HELD THAT:- The Court below have erred in denying the refund to the appellant. The appellant have bonafidely taken credit under Rule 6(3) of Service Tax Rules on account of service not provided, as they have refunded amount to their customers including the service tax on cancellation of purchase agreement. Admittedly Revenue has never objected to taking credit by the appellant under the scheme of the Service Tax Rules. Further, Section 142(5) of CGST Act, 2017 specifically provided for refund of tax paid during Service Tax regime in respect of services not provided, to be paid or disbursed in cash. The appellant is held entitled to refund of the unadjusted credit lying in their cenvat credit register, as also reflected in their ST-3 return as on 30.06.2017. The adjudicating authority is directed to disburse the refund amount within a period of two months from the date of receipt of copy of this order alongwith interest as per Rules - appeal allowed.
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2020 (4) TMI 343
Handling and transportation of coal for SECL and MCL - Whether coal transported from pitheads of the mines to the railway sidings would fall within the taxable service defined under section 65 (105) (zzzy) of the Act? - HELD THAT:- The Supreme Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR VERSUS SINGH TRANSPORTERS [2017 (7) TMI 494 - SUPREME COURT] held that the activity would appropriately be classified under the head transport of goods by road service and the activity does not involve any service in relation to mining of mineral as contemplated under section 65(105) (zzzy) of the Act. The Supreme Court also held that the definition of mines has no apparent nexus with the activity undertaken under the service rendered - demand do not sustain. Construction of shop cum godown for mandi samiti - HELD THAT:- In the instant case, the definition of commercial or industrial construction remained the same even after 1 June, 2007. The demand could not, therefore, have been confirmed under commercial or industrial construction service. Commercial or industrial construction Service - Construction of road inside BALCO, SECL, NTPC - HELD THAT:- It clearly shows that services provided in respect of roads, airports, railways, terminals, bridges, tunnels and dams have been excluded. The Commissioner has observed that the road should be a public road and not a private road. It is not possible to accept this distinction drawn by the Commissioner because the section does not draw a definition between a private road or a public road - This Tribunal in Rajendra Singh Bhamboo vs. Commissioner of Excise and Service Tax, Jaipur [2018 (4) TMI 772 - CESTAT NEW DELHI] . The Tribunal held that the definition does not specify the type of road and so the road cannot be restricted to a public road only. Thus, whether a road is for public utility or for the utility of an organisation, the benefit of the exclusion clause has to be given. Commercial or industrial construction service - Internal road construction work - Construction of CSEB Internal road - HELD THAT:- This issue has been discussed while dealing with the construction of road inside the premises of BALCO, SECL, NTPC. It would not be possible to sustain Construction of residential houses for employees of NTPC - HELD THAT:- This issue was examined by the Tribunal in Khurana Engineering Limited vs. Commissioner of Central Excise, Ahmedabad [2010( 11) TMI 81-CESTAT, AHMEDABAD] . The Bench held that the residential complex was constructed for use by the Income Tax Department to provide the same on rent to its employees and, therefore, the service cannot be included in the definition of residential complex services - as the Appellant had constructed residential houses for employees of NTPC., the activity would not be subjected to levy of service tax - Demand do not sustain. Handling/transportation of coal in the JPL plant area - HELD THAT:- A perusal of the work order shows that the activity undertaken by the Appellant was of transportation of coal through dumpers. The Appellant loads the coal on to the dumpers using pay loaders and then transports the coal to the power plant. The activity, therefore, is clearly of transportation of goods by road and the liability to pay service tax is on the recipient of service and not on the service provider - it would be appropriate to refer to a decision of this Tribunal in Jain Carrying Corporation vs. Commissioner of Central Excise, Jaipur [2019 (3) TMI 864 - CESTAT NEW DELHI] . The Bench observed that the transportation was the main activity and loading and unloading was incidental to transportation. The service rendered would, therefore, be transportation of goods by road and not cargo handling service - demand do not sustain. Learned Counsel for the Appellant has also submitted that the computation of demand under the aforesaid six heads is incorrect. According to the Appellant the demand under the aforesaid six heads comes to ₹ 5,90,69,053/- as indicated - The submission is that once the impugned order holds the transactions to be taxable, values corresponding to such transactions only should have been made taxable for which the liability would come to ₹ 5,90,69,053/-. The submission deserves to be accepted. In any case, the demand has been confirmed only under six heads, and it has been found that the demand could not have been confirmed under these heads. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (4) TMI 353
CENVAT Credit - input services - GTA Service for transportation of petroleum products from the refinery to the depot and from the depot to the customers premises - place of removal - period December 2006 to March 2008 - denial of credit on the ground that such transportation service should not be considered as input service in terms of the definition provided under Rule 2(l) of the Cenvat Credit Rules, 2004 - HELD THAT:- The period of dispute involved in this case is from December 2006 to March 2008. The case of the appellant falls under the pre-amended definition of input service contained in Rule 2(l) ibid. Under the said definition both in the main part as well as in the inclusion part, it has been provided that clearance of final product from the place of removal and outward transportation up to the place of removal should be considered as input service for availment of the Cenvat credit of Service Tax paid on the GTA service for transportation of the final product. Analysing the provisions of amended Rule 2(l) ibid, the Hon ble Apex Court in the case of COMMISSIONER OF CUSTOMS CENTRAL EXCISE AND SERVICE TAX, GUNTUR VERSUS M/S. THE ANDHRA SUGARS LTD. [ 2018 (2) TMI 285 - SUPREME COURT] have extended the Cenvat benefit to the assessee, holding that such transportation service availed by the assessee is confirming to the definition of input service. There are no merits in the impugned order, in so far as it has confirmed the Cenvat demand of ₹ 55,95,563/- and the resultant interest and penal liabilities - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 342
Refund of Central Excise duty - benefit of N/N. 108/95, dated 28.08.1995 - exemption from excise duty to the goods supplied to UN or an International Organization subject to certain conditions - principles of unjust enrichment - HELD THAT:- The Tribunal rightly found that merely because the notification is termed as exemption notification, it does not bar any person who may have wrongly paid duty to seek refund. As regards plea of bar of jurisdiction and incompetent authority, the Tribunal found that firstly assessee moved an application to the Director General of Foreign Trade which was a wrong Forum to seek this refund but it did show that assessee was not acquiescent about its claim. Principles of unjust enrichment - HELD THAT:- The Tribunal found that alongwith the refund application, the respondent- assessee had appended a certificate from the Chartered Accountant attesting to the fact that the duty which has been paid, has been borne by the assesee and not passed on to anybody else. In the face of evidence of the assesee and lack of any evidence led in this behalf by the Revenue, this was a purely presumptive finding - Appeal dismissed.
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2020 (4) TMI 341
Maintainability of appeal - appeal; to High Court - issue relates to taxability or excisability of goods - primary objection taken by the Assessee is that this case would not be covered under Section 35G of the Central Excise Act, 1944 but under Section 35L of the Act as the basic question for determination relates to taxability or excisability of goods - HELD THAT:- From Section 35L(1) (b) of the Act it is evident that the appeal shall lie to the Supreme Court on the question in relation to rate of duty of excise or value of goods. Sub-Section(2) of Section 35L of the Act clarifies that the rate of duty shall include the determination of taxability or excisability of goods. In the present case, the claim of the Assessee was that the activity carried out by it was manufacture and hence was covered under exemption notifications. The issue is for determination of the taxability. The case would be covered by Section 35L of the Act because taxability depends on whether the activity carried out by the Assessee is manufacture or not - the appeal is dismissed as not maintainable.
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2020 (4) TMI 340
CENVAT Credit - input services - insurance services - air travels services - professional fee/consultancy services. Insurance services - rejected on the ground that such insurance also covers the families of the job workers, which is not permissible - HELD THAT:- Appellant submits that they were admittedly entitled to the credit of service tax paid on insurance cover of their own factories and they are in a position to segregate such amounts. In view of the statement made by the Advocate, it is deemed fit to remand the said issue to the Original Adjudicating Authority - matter on remand. Air travels Services - denial on the ground that the appellant has not established any nexus between the travels undertaken by the said individuals with the business of the appellant - HELD THAT:- It was held in the case of M/s. The Ramco Cements Ltd. [2018 (10) TMI 896 - CESTAT CHENNAI] that the air travels undertaken by the employees for the business of the assessee are cenvatable input services. As such, the only fact requires to be investigated that such air travels were not in the individual capacity but were in connection with the business of the assessee. For verification of the said fact, the appellant s case needs to be remanded - Matter on remand. Professional fee/consultancy Services - HELD THAT:- There is an observation by the Appellate Authority that such travels were undertaken by the person on a recreational trip and Forex charges, etc. Further, the appellant has not explained as to how these services can be allowed as input services and has failed to substantiate before the lower authorities for the credits, so availed by them - this issue is required to be remanded for verification of the documents, etc. - Matter on remand. Appeal allowed by way of remand.
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2020 (4) TMI 339
Refund in cash of excess excise duty paid - applicability of time limitation u/s 11B of CEA - appellant is before this Tribunal on the ground that the excess amount paid by them is not classifiable as tax or excise duty, rather it is revenue deposit - HELD THAT:- The excess amount deposited by the appellant is not in the nature of excise duty, but revenue deposit. Further, the law in this case is settled that in case of revenue deposit the limitation prescribed under Section 11B is not applicable - adjudicating authority is directed to grant refund in cash in terms of Section 142(5) of CGST Act, 2017 - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 338
Refund of Excess Excise Duty - principles of unjust enrichment - refund granted but the same is directed to be credited to the consumer welfare fund as per amended Section 11B(2) read with Section 12C of Central Excise Act 1944 - finalisation of provisional assessment - whether the principles of unjust enrichment to the provisional assessment in the year 1995 would be applicable on finalisation of assessment in 2008? - HELD THAT:- This issue has been resolved by the Hon ble Bombay High Court in CEAT Ltd case [ 2018 (5) TMI 605 - BOMBAY HIGH COURT ] where it was held that The proviso to Rule 9B(5) would be made applicable only with effect from 25.06.1999 and therefore the principle of unjust enrichment cannot be made applicable to the refunds arising out of finalization of the provisional assessments pertaining to the period prior to 25.06.1999 even if the assessments are finalized after 25.06.1999. It is not in dispute that the provisional assessment was directed in the year 1995 and relevant documents for finalisation of claim have been submitted in the year 1996. The department finalised the assessment only in the year 2008 - the principles of unjust enrichment would not be applicable to the refund filed consequent to finalisation of provisional assessment initiated in the year 1995. Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2020 (4) TMI 337
Recovery of tax dues from the buyer of property as land revenue - bonafide purchasers or not - Presumption of knowledge of statutory charge created, either under Section 24 of the Tamil Nadu General Sales Tax Act, 1959 or under Section 42 of the Tamil Nadu Value Added Tax Act, 2006 - enforceability of charge - Section 100 of the Transfer of Property Act, 1882 - HELD THAT:- A charge created by operation of law will not automatically infer a presumption of knowledge on the intending purchasers about the tax arrears, as well as the consequent charge on the property, which they intend to purchase. Consequently, the question of Wilful Abstention or Gross Negligence , would generally be a question of fact or law or a mixed question of fact and law and the exception to such a finding would be the three explanations given under Section 3 of the Transfer of Property Act, 1882 as well as to cases wherein the purchaser has failed to make enquiries on the arrears of municipal taxes with the authorities. If and when this proposition is applied to the issue involved in the present case, the objections raised by the respondents that the intending purchasers had constructive notice of the charge on the property would be contrary to this decided ratio. While that being so, when the prospective purchasers are not expected to have constructive knowledge of the charge and when the property is purchased for a valid consideration and without notice of the charge, they would be entitled to the saving clause provided under Section 100 of the TP Act. While holding that the purchasers cannot be imputed with constructive knowledge of the existence of municipal taxes or tax arrears and on the facts of the case, the Hon ble Apex Court held in AHMEDABAD MUNICIPAL CORPORATION OF THE CITY OF AHMEDABAD VERSUS HAJI ABDULGAFUR HAJI HUSSENBHAI [ 1971 (3) TMI 89 - SUPREME COURT] that an enquiry with the vendors was sufficient to hold that the purchasers had not indulged in willful abstention or gross negligence. Petition allowed.
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2020 (4) TMI 336
Maintainability of appeal - appeal was dismissed on the ground of time limitation - contention raised before this Court is that the Assessee was not served with the impugned assessment order in time and he applied for a certified copy and upon receipt of the same, he filed the appeal - HELD THAT:- The learned Appellate Authorities ought to have decided the appeal on merits. Appeal is a valuable statutory right of the Assessee and the power of the Appellate Authority are co-extensive with that of the Assessing Authority and being fact finding authorities, the Appellate Authorities should not have shirked their responsibilities and decided the case on merits. The present writ petition is allowed by setting aside the impugned orders passed by the Authorities below and restore the matter to the First Appellate Authority to decide the appeal afresh in accordance with law, after affording reasonable opportunity to both the parties, within a period of six months from today - petition allowed by way of remand.
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