Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 23, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Time of supply of goods - facility of supply of different types of Pre-Paid Instruments (PPI's) - Voucher by GST law is recognized as an instrument of consideration (non-monetary form) for future supply. Regarding classification of voucher, since voucher is only an instrument of consideration and not goods or services, the same is not classifiable separately but only the supply associated with the voucher is classifiable according to the nature of the goods or services supplied in exchange of the voucher earlier issued to the customer. - Thus, the time of supply of the gift vouchers / gift cards by the applicant to the customers shall be the date of issue of such vouchers and the applicable rate of tax is that applicable to that of the goods. - AAAR
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Input tax credit of GST paid - The applicant is not eligible for availment of input tax credit of GST paid on goods and services for laying of transfer pipeline and the foundation and structural support for such pipeline which is intended for unloading Propane/Butane from the Vessel/Jetty to the Terminal - The applicant is eligible for availment of input tax credit of GST paid on goods and services used for setting up refrigerated storage tank - The applicant is eligible for availment of input tax credit of GST paid on goods and services for setting up of Fire Water reservoir(tank) including the structural support thereon - AAR
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Exemption from GST - pure service or not - The operation of the Plant includes providing the security for the plant and also issuance of smart cards whenever necessary - the supplies made by the applicant is not 'pure service' but is a composite supply of purified water(goods), smart cards(goods), maintenance of RO Plant, vending machines(Service), providing security(service). The supply being not a 'Pure Service' - AAR
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Exemption from service tax - Agricultural Service - service of cold storage of tamarind inner pulp without shell and seeds - In the present case, the product stored is processed by drying the same in the sun and then by beating with wooden sticks to remove the pod and hammered to deseed and destring for extraction of the endocarp/pulp of the Tamarind. This process is not done at farm level. - The Tamarind inner pulp without shell and seeds is not an ‘Agricultural produce’ - therefore the service of cold storage of such tamarind are not exempted - AAR
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Seeking allowance to access to the portal to enable us to file Form GST TRAN – 1 - The exchange of communications between 12.02.2019 to 26.03.2019 reveal that the petitioner has been diligent in making efforts to open the portal and upload the forms. In the light of the above, the respondents are directed to do the needful forthwith to enable the petitioner to upload the requisite forms - HC
Income Tax
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Non setup of business - disallowance of deduction for expenditure incurred - Tribunal failed to appreciate the difference between the assessee being ready to commence business and the date from which it conducts business or, as in this, allowed to conduct. It has to be understood that business does not conform to, metaphorically speaking, the “cold start” doctrine. There is, in most cases, hiatus between the time a person or entity is ready to do business and when business is conducted. During this period, expenses are incurred towards keeping the business primed up. These expenses cannot be capitalized as suggested by the authorities below. - HC
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Disallowance of expenditure incurred in Cash under the head 'pond and farm maintenance' u/s. 40A(3) - as per the ledger account copy furnished by the assessee, all payments have been made to labours for cleaning of pond and JCB baffling charges. Therefore, we are of the considered view that expenditure debited under the head 'pond and farm maintenance expenses' cannot come under the exclusion provided under Rule 6DD(e) of IT Rules, 1962. - AT
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Disallowing unpaid interest u/s. 43B - In the instant case the assessee company failed to pay the interest amount on or before the due date of filing the return of income u/s. 139(1) of the Act. The proviso clearly states that the deduction is allowable if the amount is actually paid." Therefore, we are of the view that one more opportunity may be given to assessee to substantiate its claim by filling documentary evidence before the AO. - AT
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Disallowance u/s. 40A(3) - no disallowance can be made u/s. 40A(3) and benefit of rule 6DD(j) will be given to the assessee therein it is contemplated that if payment of Rs. More than ₹ 20,000/- paid in cash “where the payment was required to be made on a day on which banks were closed on account of holiday or strike.” It is pertinent to note here that assessee took this plea which was not accepted by the lower authorities so to our mind same is amounting to miscarriage of justice - AT
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Agricultural income OR Business income - AO observed that, the yielding from the assessee’s mango garden cannot be more than 90 tons as against 168.3 tons - The fact is examined by the Ld. CIT(A) at length and he gave a finding that the yielding of the mangoes depend upon the soil, maintenance, variety of mangoes and other aspects and the report of the District Collector is not a conclusive proof. We are fully agreeing with the Ld. CIT(A) on this count. - AT
Customs
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Interest on differential duty upon finalization of order-in-original - When the statute itself prescribes both the starting point and the ending point, to say that it shall be from the first day of the month in which the duty is provisionally assessed till the date of payment thereof, to read the same as “on the date of order” is beyond the legislative intent. - AT
Service Tax
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CENVAT credit of Service Tax - Input service - General Insurance Service - the appellant has not been able to bifurcate the Insurance Service availed on the assets of the company and on the lives of the persons working in the said company. In the absence of clear bifurcation and lack of documentary evidence, the CENVAT credit on General Insurance Services is denied - credit denied. - AT
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CENVAT Credit - input services - insurance premium paid in respect of “workmen compensation insurance policy” - The question is referred to as follows:- “The view expressed by the Tribunal Hydus Technologies India lays down the correct position in law. The view expressed by the Tribunal in Ganesan Builders has been over ruled by the Madras High Court in Ganesan Builders Ltd. vs. Commissioner of Service Tax, Chennai.” - AT
Case Laws:
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GST
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2021 (4) TMI 885
Time of supply of goods - facility of supply of different types of Pre-Paid Instruments (PPI's) - supply of goods or supply of service - applicable rate of tax for such supply of goods or services - issue of PPIs by the Third party PPI issuers subject to GST - amount received by the Applicant from Third Party PPI - GST collection at the time of sale of goods or services on redemption of PPIs i.e., own and from Third Party - reatment of discount (the difference between Face value and Discounted Value) in the hands of issuer of PPI in case of third party PPIs - GST on difference Value. HELD THAT:- Vouchers issued by the appellant are of the nature of actionable claims. Actionable claims, though included within the definition of goods under section 2 (52), have been included in schedule III as entry 6 and therefore cannot be treated either as supply of goods or supply of services. It follows that vouchers are not subject to levy of tax under the GST act - that there is an inherent contradiction in this argument, with the provision in sub sections (4) of section 12 and 13, that deal with determining the time of supply for goods and services respectively, both use the term 'voucher', and therefore indicate that voucher relate to both goods and services. If vouchers are to be treated as actionable claims, they are only goods and not services. When a voucher is issued, though it is just a means of advance payment of consideration for a future supply, subsection (4) of section 12 and 13 determine the time of supply of the of the underlying good(s) or service(s). Voucher per se is neither a goods not a service. It is a means for payment of consideration - there is no need to determine whether voucher is an actionable claim to arrive at a conclusion that it is neither a goods nor a service. Voucher by GST law is recognized as an instrument of consideration (non-monetary form) for future supply. Regarding classification of voucher, since voucher is only an instrument of consideration and not goods or services, the same is not classifiable separately but only the supply associated with the voucher is classifiable according to the nature of the goods or services supplied in exchange of the voucher earlier issued to the customer. Thus, the time of supply of the gift vouchers / gift cards by the applicant to the customers shall be the date of issue of such vouchers and the applicable rate of tax is that applicable to that of the goods.
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2021 (4) TMI 884
Applicability of GST - generation and distribution of electricity - TANGEDCO LTD. TANTRANSCO LTD. are two subsidiary companies of TNEB Ltd. (Holding company), and both are registered utilities for distribution and Transmission of Electricity respectively under the Electricity Act, 2003 - Applicability of GST on Deposit Contribution Works - Government Entity or not - Applicability of GST on Transmission Charges for Natural Gas - challenge to AAR decision. HELD THAT:- Electricity duty is a tax on consumption or sale of electricity and is levied under entry 53 of Part-II State list of Schedule 7 of the Constitution. Therefore, clearly the constitution leaves out only tax on consumption for sale of electricity from the purview of GST. The contention of the appellant is therefore rejected. TANGEDCO is indisputably a generation company and a distribution utility. TANTRANSCO on the other hand is a transmission utility. It is not the case of the appellant that the appellant company is providing transmission services to TANTRANSCO. The appellant contends that the various services extended to TANTRANSCO constitute distribution services. However, as already been stated above, distribution service can be supplied only to consumers in the area of supply of the licensee. Therefore, the services extended by TANGEDCO to TANTRANSCO cannot constitute distribution service. Deployment of employees to TANSTRANSCO from the appellant - HELD THAT:- As a matter of fact it has been averred by the appellant that there are two modes, one in which the employees deputed from the appellant to TANTRANSCO are paid by TANTRANSCO and the expenses are debited in that company's books of accounts only. The second mode involves where salary payments are made by the appellant and the same is accounted as receivable from TANTRANSCO. This distinction was not made during the time of hearing before the AAR. In our view, the second mode where the salary payments etc., are paid by the appellant company to the employees deputed to TANTRANSCO (as they are still under the rolls of the appellant) and is booked as receivables from TANTRANSCO, there is no reason to interfere with the AAR's order - However, where the employees are paid by TANTRANSCO themselves, there is no service involved in our considered opinion as they are fully under the control of TANTRANSCO only and deemed to be employees of TANTRANSCO for all purposes. The AAR's ruling is modified depending upon the factual matrix involved with respect to the particular employee, which will have to be determined by the assessing officer concerned - With respect to Deposit Contributory Works which include activities like shifting of service line, etc., we do not find any compelling reasons to differ with the ruling pronounced by the AAR. Appeal disposed off.
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2021 (4) TMI 883
Exemption form CGST - Pure services or not - services of water supply and sewerage schemes to urban and rural beneficiaries by TWAD Board - conducting Geological surveying and testing (Pure Services) to identify the water potentiality - Governmental Authority or not - exemption from CGST under SI.No.3 of the Notifications No. 12/2017 CT(Rate) dated 28.06.2017 as amended and exempted from SGST under SI.No.3 of the G.O(Ms) No.73 dated 29.06.2017 No.II/CTR/532(d-15)/2017 as amended. HELD THAT:- The service of testing is being provided by the applicant which is a Government authority to (i) Local bodies, (ii) Government departments and (iii) contractors undertaking the projects executed by TWAD. It is seen from the copies of documents submitted by the applicant vide their letter dt. 15.02.2021 namely Format:C-IlI- Collection of steel samples. Format: C-I -collection of PVC Pipe samples that the tests have been conducted by the applicant to the individual contractors, on payment of the fixed fee towards charges of testing. Thus, it is clear that the applicant is the service provider and the service is provided to both governmental and non-governmental agencies. The services rendered to the contractors, though done as per the contract conditions, at the insistence of TWAD, the same cannot be termed as services provided to Government/Local authority because these tests are done by TWAD for the individual contractors in fulfillment of his contractual obligations for a specific charge. This proves that testing is a service done by the provider viz., TWAD to the receiver, any individual contractor for a consideration which is the fee charged. Hence the service so rendered by TWAD to their contractors is not exempted by the entry at SI.No. 3 above as the services are not provided to the class of service receivers specified in the said entry. The functions entrusted are clearly mentioned in the schedules and only those activities fall under the functions entrusted to Panchayat/ Municipality. The exemption entry under consideration exempts pure services by way of any activity in relation to any of the functions listed above when provided to the said class of service receivers. The services rendered by the Applicant which is the subject matter of the current proceedings, namely quality testing of materials used in the turnkey contracts is undertaken to assure the quality of materials used in the turnkey projects to maintain the international standards required of a project. It is seen that this is an independent activity and is not in relation to activities listed in the Eleventh and Twelfth Schedule of the Constitution - the word used in the notification is 'Provided' and in the case at hand, without doubt the applicant provides the testing service only to the Contractor, for fulfilling his contractual obligations. In respect of geophysical survey tests and reports, the applicant conducts the survey and reports on the nature of the site. The applicant has stated that they have not undertaken this service to 'Private agencies so far'. Further from the documents submitted it is seen that such survey has been done by the applicant to the Local Panchayat body of Soolalgiri, on their request to assess the geophysical nature of the land and availability of water. The Local authorities are constitutionally entrusted with the function of 'Water Supply' and TWAD has stated that they undertake the geophysical Investigations and provide the Local Authorities 'survey sketch' of the site. The services provided by the applicant, namely, Quality material testing works is not exempted from Goods and Services Tax in terms of entry no.3 of the Notification 12/2017- Central Tax (rate) dated 28.06.2017 as amended - The service of Geophysical survey investigation is exempted from Goods and service Tax terms of entry no.3 of the Notification 12/2017- Central Tax (rate) dated 28.06.2017 subject to conditions stated.
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2021 (4) TMI 882
Input tax credit of GST paid - goods and services for laying of transfer pipeline for transporting Propane/Butane from Jetty to the Terminal - goods and services for construction of refrigerated storage tank at Terminal - goods and services for construction of Fire Water reservoir which is a part of firefighting system - goods and services used for foundation and structural support for such reservoir. HELD THAT:- The construction of Refrigerated Storage Tanks and Fire Water Tanks are undertaken by the vendors of the applicant as Works Contract . The vendors as per the Purchase Orders are to undertake the construction as an EPC and is to handover after successful demonstration of Performance Guarantee (PG) parameter. In respect of Pile foundation works for the project site, it is seen that the entire work is undertaken by the vendor as Works Contract as the scope of work includes the entire spectra of activity from Mobilisation to loadtest. The civil structural works for CCPL is again executed as Works Contract - The applicant sources Pipes on their own account for getting it laid and the said pipes are laid as a Works Contract including the foundation and structural supports; the Storage Tanks and water tanks along with the foundation are sourced as Works Contract ; the pile foundation for the entire project site is sourced as Works Contract . It is not in dispute that the Pipelines, storage tanks and water tanks are put in place for furtherance of their business and thereby the tax paid on these becomes eligible credit subject to limitations under Section 17(5) of the Act as these are constructed under Works Contract and the resultant is an immovable property. Goods and services for laying of transfer pipeline and the foundation and structural support for such pipeline - HELD THAT:- It is seen that the applicant sources Pipes on own account and the same is laid as a Works Contract including the foundation. Section 17(5) restricts the credit on such goods received for construction Works Contract service received except when such goods/Works Contract services are availed in respect of Plant and Machinery and Explanation, which defines Plant and Machinery restricts credit on the Pipelines laid outside the factory . The Explanation specifies that apparatus, equipment, and machinery fixed to earth by foundation, used for making outward supply of goods is Plant and Machinery and there are specific exclusions, which include Pipelines laid outside the factory premises The Act clearly states what constitutes Plant and Machinery and in that what is excluded i.e. apparatus, equipment, machinery-used for making outward supplies and fixed to earth by foundation or structural support constitutes Plant and Machinery and the Pipelines laid outside the factory premises are excluded from the ambit of Plant and Machinery for the purposes of eligible Credit - it is evident that the intention of the GST Law is to exclude Pipelines laid outside the factory premises from the definition of Plant and Machinery . In Ute ease at hand, the applicant has slated that the pipelines approximate length of around 4.1 Km are to be laid from jelly to the Terminal and accordingly, we hold without any hesitation that the credit of Pipes and Pipelines laid outside the factory is not available for the applicant. The decisions relied upon by the applicant is based on the earlier laws and do not have any application while considering the GST Provisions, in as much as the GST law has clearly defined what is to be considered as capital goods . Plant and Machinery and the specific exclusions. The applicant is not eligible for availment of input tax credit of GST paid on goods and services for laying of transfer pipeline and the foundation and structural support for such pipeline for transporting propane/Butane from jetty to the Terminal as pipelines laid outside the factory premises as being restricted under Section 17(5) of the act read with the Explanation thereof. Refrigerated storage tanks - HELD THAT:- The Explanation in Section 17 of the Act defines. Plant and Machinery as an apparatus, equipment, machinery fixed to earth by the foundation or structural support used for making outward supply and excludes land building and civil structure. So we find that the moot point to be decided is whether the refrigerated storage tank falls under the class of apparatus, equipment, machinery and the proposed foundation or structural support claimed falls under the foundation or civil structure - the Propane/Butane is stored, processed and maintained in refrigerated storage tanks before being dispatched to the end customers as per their requirements. Refrigerated storage tanks are constructed in a manner which can facilitate storage of Propane/ Butane and maintain its characteristics. It is built with certain equipment along with the concrete inputs to enable it to perform the said functions. Therefore, it is clear that these tanks are used for making outward supply . Eligibility of credit of tax paid on construction of water lank to follow the fire protection measure al Terminal - HELD THAT:- The applicant is eligible for availment of input tax credit of GST paid on goods and services for setting up of Fire Water reservoir (tank) including the structural support thereon as per the Purchase Order No 4500405071 dated 11.03.2020 subject to the condition that the tanks are capitalized in their books of accounts as Plant and Machinery and not as Immovable Property and the applicant are not eligible to avail input credit of goods and services used for Pile foundation and input credit on goods and services used for such pile foundation.
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2021 (4) TMI 881
Exemption from GST - Services provided by the applicant to the recipient i.e. The Greater Chennai Corporation is a pure service provided to the local authority by way of activity in relation to functions entrusted to a Panchayat under article 243G and Municipality under article 243W of the Constitution - Benefit under Serial No. 3 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The applicant under the said contract has supplied the RO Plant and undertakes O M of such plant. The Operation of the plant involves treatment of the raw water supplied to them to treated/purify water for dispensing the same to the designated beneficiaries of the GCC. The operation of the Plant includes providing the security for the plant and also issuance of smart cards whenever necessary - the supplies made by the applicant is not 'pure service' but is a composite supply of purified water(goods), smart cards(goods), maintenance of RO Plant, vending machines(Service), providing security(service). The supply being not a 'Pure Service', the same is not covered by the Description of Service at SI.No.3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. As the primary condition, that the supply must be 'Pure Service' is not satisfied, further conditions are not examined and it is held that the exemption at SI.No.3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended is not available for the applicant.
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2021 (4) TMI 880
Classification of services - Rate of GST - works contract services to TANGEDCO for carrying out retrofitting work for strengthening the NPKRR Maaligai against seismic and wind effect and modification of elevation in TNEB headquarters building at Chennai - Sl.No.3 item (vi) of the N/N.11/2017-Central Tax (Rate) dated 28.06.2017 as amended - HELD THAT:- As per the scope of the contract it is seen that the work covered in the contract envisages detailed engineering, soil investigation and testing, preparation of design, drawing submission to TANGEDCO for the approval and carrying out execution of foundation, structure, superstructure works for retrofitting strengthening of structural members of NPKRR Maaligai against seismic, wind effect and modification of elevation of NPKRR Maaligai in TNEB Headquarters Complex including provision of glass cladding and aluminium composite panel works including all civil works viz. pile foundation, pile cap, columns, walls, beams, slab, shear wall etc. by supplying the goods involved and the related services, thereby is a composite supply of works contract. Further the works entrusted involves construction, fitting out, improvement etc of NPKRR Maaligai, the immovable property and there exists transfer of property in goods in the execution of the work. Therefore, it is observed that the works undertaken by the applicant are Works contract service as per Section 2 (119) of CGST Act 2017 and the supply is a composite supply, thereby condition at 8.1 (a) above is satisfied. Government entity or not - HELD THAT:- TANGEDCO is a Public Limited Company established by Government of Tamilnadu with more than 90 percent control for the purposes of generation and distribution of electricity. Hence, TANGEDCO Ltd is a Government Entity. It is further pertinent to note that the Authority for Advance Ruling in the case of Tamil Nadu Generation and Distribution Corporation Limited vide TN/ 14/AAR/2020 dt. 20.04.2020 has viewed that TANGEDCO is a Government Entity. As per the definition of Business, any trade, commerce or similar activity whether or not it is for pecuniary benefit itself is termed as business. TANGEDCO is involved in generation and distribution of electricity for which revenue is collected for the Energy consumed by the consumers. Revenue collection is based on tariff charged to different category of consumers. TANGEDCO as a state generation and distribution utility and deemed licensee is dependent on the collection of revenue for its operation, maintenance investigation for future growth. It is evident from the above facts that TANGEDCO is involved in the business of selling electricity to the consumers and collecting charges from them which is their predominant activity - the supply of works contract services as per the applicant s contract cannot be considered as that meant predominantly for use other than for commerce, industry, or any other business or professional purposes. Rate of GST - HELD THAT:- The SAC for the Construction Service is SAC 9954 and the applicable rates to the various types of construction service are given under S1.No.3 of Notification No. 11/2017-C.T.(Rate) as amended - The rate of GST to be charged on the services provided by the applicant to TANGEDCO for carrying out retrofitting work for strengthening the NPKRR Maaligai against seismic and wind effect and modification of elevation in TNEB headquarters building at Chennai is 18% as per SL.No.3(xii) of Notification 11/2017 CT(Rate) dated 28.06.2017 as amended .
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2021 (4) TMI 879
Exemption from service tax - Agricultural Service - service of cold storage of tamarind inner pulp without shell and seeds - N/N. 11/2017- C.T.(Rate) and 12/2017- C.T.(Rate) both dated 28/06/2017 - HELD THAT:- In the case at hand, it is seen from the affidavits of the Traders and the oath of allegiance of the Cultivators that the process of removing the shell and seeds are undertaken as a Cottage Industry with the Human Resource as a main resource and wooden stick, wooden/iron hammer as equipment. The video CD furnished by the applicant shows the tamarind fruit being sun dried, beaten to remove the shell and take the pulp, then hammered to remove seeds. The photographs furnished shows tamarind with Pod; Tamarind with seed and fibre; tamarind without seed. The product for which the cold storage service is provided by the applicant is the deshelled, destringed 8v deseeded tamarind. In the present case, the product stored is processed by drying the same in the sun and then by beating with wooden sticks to remove the pod and hammered to deseed and destring for extraction of the endocarp/pulp of the Tamarind. This process is not done at farm level. It is clone as a Cottage Industry as furnished in the affidavits of the Traders and the Oath of allegiance of the Farmers to whom the storage services are extended by the applicant. Therefore, as clarified in the Circular above, the Tamarind which is processed by sun drying, deshelling, deseeding, the process which are not farm level processes, is not an Agricultural Produce as defined under explanation 2(d) of the Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. Once the product for which the storage services are extended is held to be not an agricultural produce , then the exemption at Sl.No. 54 of the Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 is not available to the product, irrespective of the class of receivers of the service. The Tamarind inner pulp without shell and seeds is not an Agricultural produce as defined under explanation 2(d) of the Notification No. 12/2017- C.T.(Rate) dated 28.06.2017 and therefore the service of cold storage of such tamarind are not exempted under Sl.No. 54(e) of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017.
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2021 (4) TMI 876
Seeking allowance to access to the portal to enable us to file Form GST TRAN 1 - filing of Form GST TRAN 1 - HELD THAT:- It is to be noted that on 03.04.2018, the Central Board of Indirect Taxes and Customs issued a circular bearing No.39/13/2018-GST in F.No.267/7/2018-CX.8, dealing with the subject of setting up of an IT Grievance Redressal Mechanism to address the grievances of assessees. It is thus clear that the officials of the Department of Goods and Service Tax were well aware of the existence of such glitches. Notwithstanding this, the Board places the onus upon the assessee to establish a demonstrable glitch in the portal. Such requirement does not figure in the Act prior to 03.04.2018 and thus an assessee has not been put to notice that the would have to collect evidence of difficulty/technical glitch in uploading forms. The requirement for an assessee to establish technical difficulty as expressed in Circular dated 03.04.2018, is reiterated in the provision - Though Goods and Service Tax has been introduced to streamline multiple revenue enactments, the mass litigation that Rule 117 has generated, has defeated the very object and purpose of the enactment. Transition, by itself, does not vest any right in the assessee. It is only utilisation of credit that does, and such utilisation is subject to verification and assessment by an Assessing Officer. The exchange of communications between 12.02.2019 to 26.03.2019 reveal that the petitioner has been diligent in making efforts to open the portal and upload the forms. In the light of the above, the respondents are directed to do the needful forthwith to enable the petitioner to upload the requisite forms - Petition allowed.
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2021 (4) TMI 874
Principles of Natural Justice - opportunities given to the petitioner to produce his accounts for verification or not - HELD THAT:- Considering the fact that though the petitioner was given a personal hearing, as it was the peak period of Covid-19 Pandamic, the petitioner was not able to appear before the authorities, necessarily, an opportunity of personal hearing should be given to the petitioner to explain his case and therefore, the impugned orders are liable to be set aside. The matter is remanded back to the respondent for fresh consideration after giving an opportunity of cross examination and personal hearing and to pass appropriate orders on merits and in accordance with law - Petition allowed by way of remand.
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2021 (4) TMI 873
Maintainability of petition - availability of alternative remedy - Reversal of transitional credit claimed by the petitioner - no excess carry forward ITC as on 30.06.2017 - grievance of the petitioner is that opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- The stand taken by the respondents that the petitioner is having an appeal remedy before the concerned Appellate Authority and therefore this Writ Petition is not maintainable cannot be accepted. At this juncture, the learned counsel for the petitioner would submit that Writ Appeal filed against the order made in the aforesaid Writ Petition has also been dismissed by this Court. Petition allowed.
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Income Tax
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2021 (4) TMI 875
Non setup of business - disallowance of deduction for expenditure incurred - Tribunal held that the business of the Appellant was set up only in February 2012 on grant of license by the Insurance Regulatory Development Authority - HELD THAT:- As the assessee did all that, which was necessary, to set up the insurance broking business. Only to recapitulate, the assessee, after its incorporation opened a bank account, entered into an agreement for deputing employees (who were to further its insurance business), gave necessary training to the employees, executed operating lease agreements, and resultantly, set up offices at 29 different locations across the country. Besides this, as noticed above, the application for obtaining a license from IRDA was also filed on 01.12.2010. In the instant case, IRDA took more than a year in dealing with the assessee's application for issuance of a license. The license was issued only on 02.02.2012 although the assessee was all primed up, i.e., ready to commence its business, if not earlier, since 01.06.2011. The finding recorded by the Tribunal that the assessee set up its business only on 02.02.2012 was perverse and erroneous in law. Assessee, having acquired the necessary wherewithal and physical infrastructure for carrying on its business - it was only waiting for the approval of its application for commencement. Tribunal failed to appreciate the difference between the assessee being ready to commence business and the date from which it conducts business or, as in this, allowed to conduct. It has to be understood that business does not conform to, metaphorically speaking, the cold start doctrine. There is, in most cases, hiatus between the time a person or entity is ready to do business and when business is conducted. During this period, expenses are incurred towards keeping the business primed up. These expenses cannot be capitalized as suggested by the authorities below. We are of the view that if Mr. Bhatia s submission was to be accepted, then, it is quite likely that if, in a given situation, the statutory authority, which is required to grant the approval, delays the issuance of the license, the expenses incurred, in the interregnum, would not be allowed as business expenditure. As noticed above, in this case, the AO, based on the facts noted above, has concluded that the expenses incurred by the assessee are preoperative and have to be capitalised. This approach destroys business efficacy and is not countenanced by the law. Decided in favour of the assessee and against the revenue
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2021 (4) TMI 871
Provision made for post-retirement medical expenses by the assessee - HELD THAT:- It is not in dispute that the Tribunal, based on its own decision in assessment year 2009-2010, decided the same in favour of the assessee. Tribunal notes that via its decision for assessment year 2009-2010, it concluded that the post-retirement medical scheme provision created a definite liability. In this behalf, Accounting Standard [AS] 15 issued by the ICAI is taken note of. We are informed by Mr. Ajit Sharma, learned senior standing counsel, who appears for the revenue that the revenue did carry the aspects referred to in paragraph 2 above in appeal to this Court in an earlier round with respect to the aforementioned aspects. As the provision for postretirement medical expenses was concerned, this Court [ 2018 (9) TMI 2021 - DELHI HIGH COURT] has ruled that no substantial question of law arose vis-a-vis the said aspect. Interest income, which is sought to be taxed in the hands of the assessee, although, the same has already been offered to tax by various cooperative societies - HELD THAT:- Tribunal, in paragraph 8 of the impugned order, has noted that the assessing officer made inquiries with the concerned cooperative societies and found that they had offered to tax, interest, which accrued to them In view of this finding of fact, in our view, the same income [i.e., interest] cannot be taxed in the hands of the assessee.Accordingly, we are of the view that insofar as the third aspect is concerned, no substantial question of law arises. Appeal admitted on second aspect - Whether the Tribunal misdirected itself in law and on facts in deleting from the taxable income of the assessee interest which accrued to Cooperative Electrical Supply Society Ltd., Siricilla?
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2021 (4) TMI 868
Deemed dividend addition u/s 2(22)(e) - As argued section 2(22)(e) of the Act is not applicable to the opponent assessee as it was the recipient of the loans and advances but the same is applicable to the companies, who had made payment - ITAT deleted the addition - HELD THAT:- It is an undisputed fact that Akik Tiles Limited is having 23.38% shareholding in the opponent Gladder Ceramics Limited and also having 15.34% shareholding in Marbolite Granito India Limited. Shri Girish Patel, who is the management personnel in Marbolite Granito India Limited, is having 20% shareholding in the opponent assessee. Thus, it appears that the assessee is having substantial interest in the said company. The assessee company is engaged in the business of manufacturing and trading of tiles. It is also noticed that the assessee has also received the loans/advances of ₹ 26,70,709/ from Marbolite Granito India Ltd. The CIT (Appeals) deleted the addition under section 2(22)(e) of the Act of ₹ 97,56,376/ on account of loans and advances received from Akik Tiles Limited and Marbolite Granito India Limited. The provisions of section 2(22)(e) of the Act stipulate of treating such loans/advances as deemed dividend. The observations made in [ 2018 (1) TMI 1079 - GUJARAT HIGH COURT] to the effect that the assessee having not made any payment by way of advance or loan to a shareholder, but on the contrary, has received a loan from Akik Tiles Limited and Marbolite Granito India Limited and hence, the provision of section 2(22)(e) of the Act will not apply since the assessee is recipient of such amount appears to be erroneous. The order [ 2018 (2) TMI 2031 - GUJARAT HIGH COURT] suggests that the substantial question of law whether in case of a company who satisfies the provisions of section 2(22)(e) of the Act, the principles of deemed dividend can be invoked though the company may not be the shareholder of the principal company , is pending before the Larger Bench of the Supreme Court in the case of National Travel Services vs. Commissioner of Income Tax, Delhi VIII, [ 2018 (1) TMI 1159 - SUPREME COURT] . The Coordinate Bench has admitted the appeal with regard to the issue of deemed dividend in the hands of the assessee company under section 2(22)(e) of the Act. Under the circumstances and in view of the aforesaid undisputed facts, the application is allowed.The order [ 2018 (1) TMI 1079 - GUJARAT HIGH COURT] passed in Tax Appeal is hereby recalled to the extent of substantial question of law stated in Paragraph No.2(B) of the captioned Tax Appeal
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2021 (4) TMI 866
Stay of demand - deposit 20% of the disputed amount - HELD THAT:- Without any application of mind, the impugned order at Annexure-A, Page16 came to be passed. It appears that if an assessee wants stay against the recovery of demand, then, he is expected to deposit 20% of the total amount. In this case, the argument of Mr. Soparkar is that he has been asked to deposit ₹ 100 crore being 20% of the total demand. This according to Mr. Soparkar could not have been done. According to Mr. Soparkar, his client is expected to deposit 20% of the disputed amount and not the entire amount of demand. The second limb of his submission is that assuming for the moment that he is obliged to deposit ₹ 100 crore being 20% of the total demand, the department has adjusted an amount of ₹ 133 crore towards the refund for the purpose of recovery of 20%. Therefore, according to Mr. Soparkar, in all, an amount of ₹ 183 crore has been recovered by the department, which they could not have even otherwise recovered in law. As on date, he prays for two reliefs; first there should not be any further adjustment or recovery of any amount from the eligible refund claim and secondly, the respondents should be asked to refund the amount of ₹ 83 crore alleged to have been recovered in excess.
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2021 (4) TMI 865
Capital gain computation - CIT(A) directing to adopt the value determined by the DVO as against the value determined by the Stamp Duty Authority - HELD THAT:- We find on perusal of the CIT(A) order, at the time of assessment the assesse has agitated the applicability of provisions of Sec. 50C of the Act for adopting the value determined by the registering authority, therefore the matter was referred to the departmental valuation officer (DVO) as per Sec. 55A(a). Whereas,the DVO report was not received in the assessment proceedings and the assessment order was passed u/s 143(3) of the Act on 27.12.2016. Subsequent to the assessment order, the assesse has filed an appeal on 24.01.2017 with the CIT(A). As per the observations of the CIT(A) the DVO report dated 10.03.2017 was sent to the A.O only after completion of assessment.The value determined by the DVO is ₹ 1,61,13,000/-.We find that the powers u/s 251 of the Act of the CIT(A) are co terminus with the A.O. therefore, the CIT(A) considered the provisions of law, DVO report and relied on the Hon ble Tribunal decisions and granted relief to the assessee. We find that the CIT(A) has considered the judicial decisions and passed reasoned order, which cannot be interfered and accordingly we uphold the same and dismiss the grounds of appeal of the revenue.
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2021 (4) TMI 864
Ex-parte order passed by CIT-A - Treatment of loans received a bogus income on account of being held as unexplained income falling under scope of Section 68 - HELD THAT:- The perusal of CIT(A) order reveals that CIT(A) has passed an ex parte order without deciding the issue on merits. Sub Section (6) of Section 250 of I. T. Act mandate the CIT(A) to state the points in dispute and thereafter assign the reasons in support of his conclusion. We are of the view that by dismissing the appeal without considering the issue on merits, Learned CIT(A) has failed to follow the mandate required in Sub Section (6) of Section 250 of the Act. Further it is also a well settled principle of natural justice that sufficient opportunity of hearing should be offered to the parties and no parties should be condemned unheard. In view of these facts, we set aside the impugned order of CIT(A) dated 16.03.2018 and restore the issue to the file of CIT(A) for re-adjudication of the issues after granting sufficient opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2021 (4) TMI 862
Accrual of income - interest received on enhanced Compensation - assessee is agriculturist his land was acquired by the Government and he received total compensation from land acquisition officer Panchkula which includes interest on enhanced compensation - assessee claimed exemption under Section 10(37) - HELD THAT:- From the perusal of the order of the CIT(A), it can be seen that the CIT(A) has not given a separate finding as to why the Assessing Officer is justified in making an addition. The capital receipt unless specifically taxable u/s. 45 under the head capital gain, in principle, is outside the scope of income chargeable to tax and cannot be taxed as income unless it is in the nature of Revenue receipt or specifically brought within the ambit of income by way of specific provision of the Income Tax Act. Thus, the interest received on compensation/enhanced compensation to the assessee is nothing but a capital receipt and the addition is against the law. This issue has been decided by the Hon'ble Apex Court in case of Union of India Vs. Hari Singh[ 2017 (11) TMI 923 - SUPREME COURT] wherein it is held that on agricultural Land no tax is payable when the compensation/enhanced compensation is received by the assessee as the land was agricultural land. The compensation was received in respect of agricultural land belonging to the assessee which had been acquired by the government. - Decided in favour of assessee.
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2021 (4) TMI 861
Deduction under section 80P(2)(a)(i) - assessee submitted that assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959 - AO contended that as per the details furnished by the bye laws, it is observed that the assessee is dealing with non members termed as associate members termed as associate members and claimed to have admitted as per the provisions of the Karnataka Co-operative Societies Act, 1959 - HELD THAT:- After hearing both the parties we are of the view that the Supreme Court has reversed the decision of special Bench of Kerala High Court in the case of Mavilayi Service Co-operative Bank Ltd., Vs. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] We are inclined to remit this issue to the file of AO to examine the deduction under section 80P(2)(a)(i) of the Act in the light of the decision of the Hon ble Supreme Court- Appeal of the assessee is allowed for statistical purposes.
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2021 (4) TMI 860
Penalty levied u/s 271(1)(c) - addition @ 5% of Gross Profit - HELD THAT:- Considering the fact that addition in the assessment order, on the basis of which the penalty was levied, is purely an estimated addition. It is settled position in law that no penalty under section 271(1)(c) can be levied on additions made on estimation. The similar view was taken by the Hon'ble Jurisdictional High Court in Manish Dhirajlal Mehta Vs. ACIT [ 2014 (11) TMI 939 - GUJARAT HIGH COURT ], Vijay Proteins Ltd., Vs. CIT [ 2015 (1) TMI 828 - GUJARAT HIGH COURT ], in Vijay Proteins Vs CIT [ 2015 (1) TMI 828 - GUJARAT HIGH COURT ] and other case laws relied by ld. AR for the assessee. No contrary facts or law is brought to our notice. In the result, Ground No.1 of appeal is allowed.
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2021 (4) TMI 859
Disallowance of expenditure debited under the head 'pond and farm maintenance' u/s. 40A(3) - addition u/s 40(a)(ia) for non-deduction of tax at source on JCB baffling charges - HELD THAT:- Although, the assessee claimed before the AO that said payments have been made to farmers, but the AO has negated arguments of the assessee in light of evidences filed during the course of assessment proceedings that impugned payments have been made to labours for cleaning of pond, for JCB baffling charges, for purchase of sand, bricks, jally, purchase of salt. No evidence has been placed on record to prove that payments have been made to cultivator, grower or producer as per Rule 6DD(e) in order to exclude said payments from the provision of section 40A(3). As per Rule 6DD(e), in order to exclude cash payment from the purview of section 40A(3) of the Act, said payment should be made for purchase of agriculture or forest produce or produce of animal husbandry or dairy or poultry farming or fish or fish products or the produce of horticulture or apiculture. But, as per the ledger account copy furnished by the assessee, all payments have been made to labours for cleaning of pond and JCB baffling charges. Therefore, we are of the considered view that expenditure debited under the head 'pond and farm maintenance expenses' cannot come under the exclusion provided under Rule 6DD(e) of IT Rules, 1962. Therefore, we are of the considered view that there is no error in the findings recorded by the AO and affirmed by the ld. CIT(A) to make disallowance of expenses u/s. 40A(3)/40(a)(ia) of the Act. Hence, we are inclined to uphold the findings of the CIT(A) and dismiss the appeal filed by the assessee.
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2021 (4) TMI 858
Penalty proceedings under section 271(1)(c) - Claim of exemption of capital gains as per the provisions of section 54G - HELD THAT:- In view of the confirmation of deletion of quantum addition by the Hon'ble High Court [ 2019 (7) TMI 1046 - MADRAS HIGH COURT] , we are of the considered opinion that the penalty levied under section 271(1)(c) of the Act cannot survive and accordingly, the appellate order passed by the ld. CIT(A) stands sustained. Thus, the ground raised by the Revenue stands dismissed.
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2021 (4) TMI 857
Disallowing unpaid interest u/s. 43B - AO observed that the assessee company failed to furnish any logic in apportioning at the ratios mentioned by itself - HELD THAT:- As per the provisions of Clause(d) of section 43B of IT Act any sum payable by the assessee as interest on any loan from any public financial institution in accordance with the terms and conditions of agreement governing such loan is allowable as deduction if such sum is actually paid. In the instant case the assessee company failed to pay the interest amount as detailed above of ₹ 13,36,34,769/- on or before the due date of filing the return of income u/s. 139(1) of the Act. The proviso clearly states that the deduction is allowable if the amount is actually paid. Therefore, we are of the view that one more opportunity may be given to assessee to substantiate its claim by filling documentary evidence before the AO. Accordingly, we remit the issue back to the file of the AO with a direction to decide the issue in dispute by examining the material which will be put-forth by the assessee before him and in accordance with law after providing an opportunity of being heard to the assessee in the matter. The assessee is directed to substantiate its claim by filing documentary evidence before the AO. Thus, the ground raised by the assessee on this issue is treated as allowed for statistical purposes.
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2021 (4) TMI 856
Deemed dividend addition u/s 2(22)(e) - HELD THAT:- The purpose of Section 2(22)(e) of the Income Tax Act, 1961 plainly seeks to bring within the tax net accumulated profits which are distributed by closely held companies to its shareholders in the form of loans. The purpose being that persons who manage such closely held companies should not arrange their affairs in a manner that they assist the shareholders in avoiding the payment of taxes by having companies payer distribute, what would legitimately be dividend in the hands of shareholders, money in the form of advance or loan. On going through the order of CIT(A) we observe that he has passed well-reasoned order and, in our considered, it does not require any interference. CIT(A) considered the submissions made by the assessee before him and analyzing the issue with case law, held that the provision of section 2(22)(e) has no application in case of the assessee. Therefore, we do not find any infirmity in the order of the CIT(A) in directing the AO to delete the addition - Decide in favour of assessee.
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2021 (4) TMI 854
Disallowance of interest expenses - Addition on account of interest on term loan - HELD THAT:- We find that the revenue authorities are not disputing that assessee has obtained the term loan from the bank. That the interest has also been paid to the bank. The view of the authorities below is that assessee did not need to take the term loan for paying its creditors. We find that it is also settled law that revenue authorities cannot step into the shoes of businessman and decide how the business should be conducted. Why the assessee is not charging from debtors and why it is using the money obtained from bank loan to pay the creditor is a businessman discretion and Assessing Officer cannot decide this aspect. Without any finding that assessee has actually not taken the loan and not paid interest on the loan or that assessee had diverted interest-bearing funds such addition lack cogency. In this view of the matter in our considered opinion the addition is not sustainable. Hence, the same is directed to be deleted. Disallowance on estimated basis out of travelling and telephone expenses - HELD THAT:- We find that the same has been done without bringing on record cogent material. Just writing that personal expenses cannot be ruled out the same cannot be ipso facto a ground for disallowance of expenditure. In this view of the matter in our considered opinion the addition made by the revenue authorities in this regard is not sustainable. Hence we direct that the same should be deleted. Appeal by the assessee stands allowed.
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2021 (4) TMI 849
Addition on account of notional rent u/s 23 - whether or not the ALV of the properties held by the assessee as stock-in-trade of its business as that a real estate developer is liable to be brought to tax in its hands under Sec.22? - HELD THAT:- It is a matter of fact borne from the records that the property in question was held by the assessee as stock-in-trade of its business of construction and development of real estate properties. As observed the solitary issue involved in the present appeal is as to whether or not the ALV of the properties held by the assessee as stock-in-trade of its business as that a real estate developer is liable to be brought to tax in its hands under Sec.22. As stated by the ld. A.R, and rightly so, the issue herein involved is squarely covered by the order of the ITAT C bench, Mumbai, in the case of M/s Osho Developers Vs. ACIT-32, Mumbai, [ 2020 (11) TMI 218 - ITAT MUMBAI] wherein direct the A.O to delete the addition made by him towards the ALV of the flats held by the assessee as stock-in-trade of its business as that of a builder and developer As such, finding no infirmity in the view taken by the CIT(A) we herein concur with him that the A.O was in error in assessing the notional lettable value of the flats held by the assessee as stock-in-trade of its business as that of a real estate developer. Appeal filed by the revenue is dismissed.
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2021 (4) TMI 847
Denial of the loss by treating as speculation loss - CIT(A) upheld the action of AO referring the decision of Hon'ble Kolkata High Court in CIT vs. Arvind Investments Ltd.[ 1990 (3) TMI 5 - CALCUTTA HIGH COURT] - HELD THAT:- Asgross total income of assessee was required to be computed inter-alia by computing the income under head profit and gain of business and profession as a whole, both the income from service charges in the amount of ₹ 2.25 crore and loss in share trading of ₹ 2.23 crore would have to be taken into account in computing the income under that head, both the being sources under the same head. Further, the assessee has a dividend income of ₹ 4.7 lakhs under the head income from other sources, thus, assessee falls within the purview of exception carved out in explanation to Section 73 of the Act and assessee would not be deemed to be carrying on speculation business for the purpose of Section 73(1) The facts in case law of Arvind Investments Ltd [ 1990 (3) TMI 5 - CALCUTTA HIGH COURT] relied by Ld. CIT(A) are at variance. In the said case Tribunal held that the sole business of the company was in share dealings. As accepting the assessee's contention it held that where a part of the business of a company consisted of the purchase and sale of shares, then only the Explanation to section 73 would come into play and not otherwise when the sole business of the company was in share dealings. However, the facts in the present case is entirely differ that is income shown by assessee is mainly consist of income from other sources. We found that the income shown by assessee is mainly consist of income from other sources of ₹ 94,28,211/-. Thus, in our view the assessee fall within the purview of Section 73 of the Act, accordingly, ground no.1 to 3 of assessee are allowed.
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2021 (4) TMI 845
Disallowance u/s. 40A(3) - payments through cash payment or bearer cheque to the payer - payment withdrawal made by the staff of the assessee - The assessee s contention is that when payments were made on next day, there was holidays of continuous four days and those payments were made for the business expediencies and assessee was compel to make cash payment under peculiar circumstances as principal company to which assessee was a distributor, and recipient of the cash payment insisted assessee to make payment in cash as realization takes a longer time. And payments were effected for outstanding amount as requested keeping in mind next four coming holidays being Thursday Rath Yatra, Friday, Saturday and Sunday the clearing was not available as per the ledger account submitted by the assessee. HELD THAT:- in our considered opinion, no disallowance can be made u/s. 40A(3) and benefit of rule 6DD(j) will be given to the assessee therein it is contemplated that if payment of Rs. More than ₹ 20,000/- paid in cash where the payment was required to be made on a day on which banks were closed on account of holiday or strike. It is pertinent to note here that assessee took this plea which was not accepted by the lower authorities so to our mind same is amounting to miscarriage of justice. Appeal filed by the Assessee is allowed.
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2021 (4) TMI 844
Agricultural income OR Business income - AO has noted that the assessee is exporting mangoes from his own garden and purchasing and selling the same and showing it as his agricultural income - CIT(A) after considering the detailed explanation given by the assessee stated that the entire sale proceeds by the assessee cannot be treated as a business income and allowed the appeal filed by the assessee - HELD THAT:- The assessee is having 15 acres of mango garden and he is cultivating the same and the yield from the mango garden exported to Singapore and Malaysia. Accordingly to the AO, the assessee purchasing the mangoes apart from the production from his own mango garden exporting the same to Singapore and Malaysia, therefore he is of the opinion that the exporting activity carried by the assessee is a business activity and he estimated the agricultural income for acre is ₹ 35,000/- and remaining amount treated as a business income. In the assessment order, the AO has not established that the assessee is purchasing mangoes and exporting. We find that it is an assumption of the AO to come to the above conclusion without any material. AO further came to the conclusion that the yielding from the assessee s mango garden cannot be more than 90 tons as against 168.3 tons, based on the report of the District Collector, Thiruvallur. This fact is examined by the Ld. CIT(A) at length and he gave a finding that the yielding of the mangoes depend upon the soil, maintenance, variety of mangoes and other aspects and the report of the District Collector is not a conclusive proof. We are fully agreeing with the Ld. CIT(A) on this count. We are also of the opinion that the report of the District Collect, Thiruvallur is not a conclusive proof. The Ld. CIT(A) has considered all the facts and came to the conclusion that the activity carried by the assessee is an agricultural activity and directed the AO to delete the addition. We find no reason to interfere with the order passed by the Ld. CIT(A). - Decided against revenue.
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2021 (4) TMI 843
Depreciation on Computer Software - DR emphasized that the Ld.CIT (A) has erred in directing depreciation @60% rate on the computer software licenses, but actually rate applicable is @25% and the license has to be treated as intangible assets - HELD THAT:- DR could not controvert the observations of the Ld. CIT (A) with any new evidence or information but relied on the order of the Assessing officer. We find the Ld.CIT(A) considered the facts of granting of deprecition@60% rate in the earlier and subsequent assessment years by the revenue, provisions of law, and allowed the claim of the Assessee. Accordingly, we do not find any infirmity in the order of the Ld.CIT (A) and uphold the same and dismiss the grounds of appeal of the revenue.
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2021 (4) TMI 842
Estimation of profits from contractual receipts and sale of plots - CIT(A) estimating the assessee s profits from contractual receipts and sale of plots @8% and @5% respectively, than that @15% of wholesale basis adopted by AO - HELD THAT:- We are of the opinion that the CIT(A) s estimation for assessee s contractual receipts hardly calls for any interference since he has been guided by various judicial precedents as well as the nature of the taxpayer s contractual works performed. There can be hardly any dispute that a contractual assignment does not carry business risk at higher rate since involving asserted returns and all expenses relevant thereto. We thus find no merit in the former grievance. Estimation of assessee s profits from sale of plots @5% - It is not in dispute that it had not placed on record all of the corresponding details of plots sold in both rounds of the instant lis. AR pressed very hard in support of the CIT(A) s conclusion that 5% profit rate on sale of plots is indeed just and proper. We find no reason to accept learned counsel s arguments in entirety. The fact remains that contrary to the assessee s contractual receipts, is this segment of sale of vacant plots has of course not undergone the other inputs of labour and construction expenditure heads. These plots have been sold on as and where basis in other words. It can therefore be sufficiently presumed that in absence of any value addition or improvement or improvement, the sale of these vacant plots must have resulted in higher margin than mere profit rate 5%. We therefore exercise our inherent jurisdiction u/s.254 of the Act to re-estimate the profit rate on this latter segment as 8% only. It is made clear that the same would not be treated as precedent in any other assessment year or in any other case; whatsoever. Necessary computation as per law to follow.
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2021 (4) TMI 840
Stay on demand - extension of stay - HELD THAT:- We notice that the lead case is pending from 2014 and Coordinate Bench has granted the stay on condition and after going through the argument of both the counsels, we are of the view that assessee has no fault for the delay in disposing of the pending appeals. We are of the view that assessee deserves to be granted extension of stay for a period of 4 months and accordingly, we grant the same. As submitted by Ld. AR, the hearing of appeal for Assessment Year 2009-10 is coming up on 30.03.2021, therefore we direct the Registry to fix for hearing of the other 3 appeals for Assessment Year 2010-11 to 2012-13 on the same date i.e. 30.03.2021. Accordingly, the stay applications filed by the assessee are allowed. 8. In the result, all the Stay Applications filed by the assessee for the extension of stay stands allowed.
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Customs
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2021 (4) TMI 870
Refund of IGST - Zero rated supply - HELD THAT:- The writ petition disposed off relying on the decision in the case of AWADKRUPA PLASTOMECH PVT. LTD. VERSUS UNION OF INDIA [ 2020 (12) TMI 1116 - GUJARAT HIGH COURT] where it was held that respondents are directed to immediately sanction the refund towards the IGST paid in respect to the goods exported i.e.'Zero Rated Supplies' made vide the shipping bills. Let this exercise be completed within a period of six weeks from the date of receipt of the writ of this order.
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2021 (4) TMI 867
Effect of N/N. 1/2013 Custom dated 21.01.2013 - prospective effect or retrospective effect? - import of gold - HELD THAT:- Reliance can be placed in the case of M/S. MD OVERSEAS LTD. VERSUS UNION OF INDIA [ 2017 (5) TMI 742 - GUJARAT HIGH COURT] where it was held that the N/N. 1/2013Customs, though issued on 21.01.2013, was neither published in the official gazette nor was offered for sale on the said date, and therefore, would not come into force and be operative from 21.01.2013. Under the circumstances, the said notification cannot be made applicable to the goods imported by the petitioner which were cleared on 21.01.2013 Notice for final disposal returnable on 02.03.2021.
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2021 (4) TMI 851
Refund claim - undue availment of DEPB - grant of interest - Section 27 of the Customs Act, 1962 - HELD THAT:- The department has not filed any appeal against the order passed by the original authority sanctioning the refund of ₹ 25 lakhs. In the appeal filed by the appellant seeking relief of interest, Commissioner (Appeals) has gone to the extent of disallowing the refund that has been already granted. The department has no case that in the cross appeal filed by them they have challenged the sanction of refund. It is seen from the SCN that the amount was voluntarily deposited during the investigation. When the adjudicating authority has dropped proceedings then there is no confirmation of demand against the appellant which would give the amount the character or colour of duty. The amount remains to be a deposit only. Therefore, the refund claim filed under Section 129E of the Customs Act is legal and proper. Grant of interest - HELD THAT:- The appellant is eligible for interest on the amount deposited from the date of deposit till the date of payment. Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 850
Interest on differential duty upon finalization of order-in-original - interest shall have to be reckoned only from the date of provisional assessment till the date of payment thereof and not till the date of order or not - Section 18(3) read with Section 28 AA of the Customs Act - HELD THAT:- A reading of sub-section (3) supra makes it clear to me that any such interest could only be charged upto the date of payment and not upto the date of order ie., 07.05.2019. Hence, the impugned charging of interest is not in order. When the statute itself prescribes both the starting point and the ending point, to say that it shall be from the first day of the month in which the duty is provisionally assessed till the date of payment thereof, to read the same as on the date of order is beyond the legislative intent. The matter is remanded to the file of the adjudicating authority to verify from the records and charge the interest only upto the date of payment as mandated in Section 18 (3) and not as upto the date of Order-in-Original - Appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2021 (4) TMI 855
Attachment of movables by Respondent-EPFO for recovery of PF dues prior to the initiation of CIRP - Order of Attachment issued by the PF Authorities-Respondent not hit by moratorium - Respondent did not file any claim during the process of CIRP or thereafter when this Tribunal ordered for the Liquidation of the Corporate Debtor - HELD THAT:- Since the admission of the Petition on 05.10.18 and initiation of CIRP of the Corporate Debtor, the concerned Corporate Debtor has become, due to its insolvency, amenable to the jurisdiction of this Tribunal. Upon initiation of the CIRP of the Corporate Debtor it is to be noted that a sequence of steps is required to be initiated by this Tribunal and the IRP appointed by this Tribunal, including action under Section 13 of IBC, 2016, the declaration of moratorium for the purposes of Section 14 of IBC, 2016 and causing a public announcement calling for the submission of claims under Section 15 of IBC, 2016. Perusing the definition of 'claim' and upon a combined reading of sub-sections (a) (b) of Section 6 of IBC, 2016, it is seen that the definition covers a diverse spectrum with the only pre-condition being that there must exist a right to payment on the part of claimant and a duty on the part of the Corporate Debtor to make a payment. At this stage, there is no categorisation of the claimants, it must be noted, and the call made by the IRP is in relation to all the claimants having a claim over the Corporate Debtor undergoing the CIRP, so that the IRP is in a position to collate the claims received. Thus, filing of claim pursuant to the notice published by the IRP on the part of a Claimant puts the IRP on notice about the claim. A careful perusal of both i.e., Section 11 of the EPF MP Act, 1952 or for that matter Section 36(4)(a)(iii) of IBC, 2016 primarily deals with the assets concerned of the establishment, and the Corporate Debtor respectively and nowhere specifies that the EPF Authorities are not required to even lodge a claim before the IRP/RP/Liquidator in relation to a Corporate Debtor undergoing a Insolvency or Liquidation Proceedings even though liability accrued only prior to insolvency is deemed to be included amongst the debts - it is advised of PF authorities, instead of creating a legal logjam of the insolvency or liquidation process, they are required to approach the issue in a prudent and level headed fashion and in the interest of the employees/workmen concerned on whose behalf they are representing. Similarly, the Liquidator or for that matter IRP/RP is also required to be wary in dealing with the assets of the Corporate Debtor upon coming to know the estimate of dues in relation to PF, Pension and Gratuity whether put on notice by the concerned Authority, more so, taking into consideration the regulations of IBBI relating to liquidation process and the claims concerning the workmen where an onus is placed upon the Liquidator to ascertain the liability from the books of accounts of the Corporate Debtor, where the workers have not lodged a claim formally. The onus of this Tribunal as an Adjudicating Authority named in IBC, 2016 are of much wider amplitude as compared to the statutory authority named in EPF MP Act, 1952 as during the course of insolvency and liquidation and more so during liquidation as contemplated IBC, 2016 to balance the interests of all the stakeholders concerned including employees - this Tribunal is required to take a broader view without in any way compromising the interests of the employees, taking into consideration the provisions of EPF MP Act, 1952 and Section 36 of IBC, 2016 while considering and exercising in relation to the jurisdictional issue in relation to the question on hand, of course within the textual hook of IBC, 2016. Since the Corporate Debtor is undergoing liquidation process, and the application filed in effect seeks for determining priorities in relation to the claims and its satisfaction out of the assets of the Corporate Debtor, however, subject to whatever security interest created over it and the adjudication to be done by this Tribunal taking into consideration the provisions of IBC, 2016 and determine as who will have the first charge over the assets and right to invoke it towards the satisfaction of its claim, this Tribunal has the jurisdiction to entertain the application as filed before it and it is accordingly dealt with. Application disposed off.
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PMLA
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2021 (4) TMI 878
Validity of Look-Out Circular (LOC) issued against the petitioner - company defaulted in repayment of a term loan availed from the State Bank of India (SBI) - the petitioner was a Director of the borrower-Company - HELD THAT:- The only reason disclosed in the request of the Bank as well as in the LOC itself was that the petitioner was a Director of the borrower-Company. Such allegation was made in the present tense in both the request and the LOC. However, such allegation is, by itself, insufficient to fall within any of the grounds for issuance of LOC, as contemplated in the relevant Office Memoranda - The petitioner has clearly shown that the petitioner had resigned long back, even before the discovery of alleged fraud in 2014 by the Bank. Economic offence or any other ground contemplated in the relevant Office Memoranda was not disclosed either in the request of the Bank or the LOC itself to justify the issuance thereof. Apart from the CBI Court and Sessions Court having given a clean chit to the petitioner on similar allegations, the loan-in-question is sufficiently secured in view of the DRT award obtained by the Bank against the borrower- Company and the attachment order passed by the Adjudicating Authority under the PMLA at the instance of the ED relating to the writ petitioner's movable and immovable properties - in the present case, the LOC would not only amount to curtailing the fundamental right to liberty of the petitioner, as guaranteed by the Constitution of India, it would also take away the livelihood of the petitioner which would directly affect his life, also guaranteed by the Constitution. Neither the LOC nor the request therefor discloses any ground as envisaged in the relevant Office Memoranda to justify the issuance of the LOC and/or the subsequent renewal thereof. The petitioner has successfully demonstrated that he was not a Director of the Company at the relevant juncture when the borrower- company is alleged to have committed fraud. Thus, there is no basis whatsoever for issuance of the impugned LOC and the consequential subsequent extension thereof against the petitioner - Petition is allowed.
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2021 (4) TMI 877
Maintainability of petition - petition challenged on the premise that the petitioner has filed the case in his individual capacity cannot hold good - prohibition under Section 195(1)(b)(i) of Cr.P.C - HELD THAT:- Undoubtedly, the writ petition is filed by the petitioner in his capacity as the Investigating Officer in ECIR/ACZO/31/2020. The fact that, the writ petition is filed with official sanction is evident from the appearance of the learned Solicitor General. At the same time, I find substance in the objection raised by the Sri. Raval against the manner in which the documents pertaining to the ED case is produced and persons, who are not made parties, named in the writ petition. The explanation offered for production of the documents is that they form part of Exhibit P5 complaint. If that be so, the petitioner ought to have produced the entire set of documents appended to Exhibit P5 complaint, rather than producing the documents of his choice. Even though the petitioner's action is liable to be deprecated, that does not warrant dismissal of the writ petition. The reason behind bringing certain specified offences under the purview of Section 195 of the Cr.P.C is because the commission of those offences have direct impact on an ongoing judicial proceeding and thereby, on the administration of justice. Section 193 of the IPC being one such offence, the prohibition under Section 195 of the Cr.P.C will apply. Whether the prohibition under Section 195(1)(b)(i) of Cr.P.C is from taking cognizance only or whether the Police is interdicted from conducting investigation of the offences enumerated in the section? - HELD THAT:- In Nirmaljit Singh Hoon v. State of W.B., [ 1972 (9) TMI 147 - SUPREME COURT] , the offences were under Sections 463, 471, 475, 476 of the IPC and hence the Apex Court held that police authorities have a statutory right under Sections 154 and 156 of the Code to investigate into a cognizable offence, without requiring any sanction from a judicial authority and even the High Court has no inherent power under Section 561-A of the Code (Section 482 of the new Code) to interfere with the exercise of that statutory power - The Special Court has taken cognizance of the offences under the PMLA on 12.10.2020. As such, recording of the accused's statements would undoubtedly fall within the import of the words in relation to any proceeding in any court mentioned in Section 195(1)(b) (i). Whether the prohibition under Section 195(1)(b)(i) could be made applicable to all the offences or should be confined to the offences enumerated therein? - HELD THAT:- The purpose behind the enactment of Section 195 being to ensure that the proceedings of the court are not sullied, nor the administration of justice not meddled with, if the other offences are interwoven and inseparable from the offences within ambit of Section 195(1)(b)(i), necessarily, the prohibition will have to be extended to the other offences also - the only possible conclusion of the bar under Section 195(1)(b)(i) Cr.P.C being applicable to the offences mentioned in the two FIRs, the allegations being to the effect that attempts were made to fabricate false evidence and to coerce and threaten the accused to give false statements. It may be pertinent to note that, if such attempts had fructified, it would have definitely sullied the proceedings of the court and impacted administration of justice. Therefore, even though the other offences alleged are under Section 167 and 195A of IPC, they are undoubtedly interwoven with and inseparable from the offence under Section 193 and therefore susceptible to the prohibition under Section 195(1)(b)(i) of Cr.PC. The Special Court has already received a complaint from Sri.Sandeep Nair and has allowed the application submitted by the Crime Branch to question him in jail. The 161 statement of Sri.Sandeep Nair recorded thereafter was made available to me in a sealed cover. In my considered opinion, while interdicting the Police from continuing the investigation, interest of justice requires that the Special Judge be permitted to look into the materials collected by the Crime Branch, treating it as the information mentioned in Section 340(1), so as to decide whether it is expedient to conduct an enquiry. Petition disposed off.
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2021 (4) TMI 869
Provisional attachment of property - allegation of diverting huge amounts of money given to the loanees and used the diverted funds for purchase of some of the properties - proceeds of crime - scheduled offences - HELD THAT:- At the inception, the legislative intent was to bring within the fold of the definition, such property, whose source of acquisition can be traced, directly or indirectly, to the benefits obtained from the commission of the scheduled offences. At that stage, the question of the proceeds of the crime not being available for being attached/confiscated, either on account of their dissipation in the hands of the person holding the property or on account of the property being moved out of India and the reach of the authority under the Act, does not appear to have been contemplated. This issue was addressed by Act 20/2015, whereby the words or where such property is taken or held outside the country, then the property equivalent in value held within the country were added - This amendment contemplates only one situation, namely the proceeds of the crime being moved out of India. In such a situation, the amended definition permitted the attachment of property, in India, equivalent to the value of the proceeds of thecrime, which were moved out of India. Later, by Act 13 of 2018 the words or abroad were added. By virtue of this amendment the property, which was moved abroad, could also be attached and confiscated. This amendment did not envisage a situation of dissipation of the property in the hands of the person holding the property. The amendments would be unnecessary if the term or the value of such property was understood to authorize the attachment of any property, when the actual proceeds of the crime are not available - The explanation to this provision which was brought in by Act No.2 of 2019 also speaks only of properties derived or obtained from the proceeds of a crime and expands the scope of the definition to include properties obtained not only from the scheduled offences but also criminal activity relatable to the scheduled offence. The explanation did not expand the definition to include any other property of equivalent value where the proceeds of the crime are lost even by the offender. Thus, the properties purchased before the commission of the offence, cannot fall within the definition of proceeds of crime and cannot be attached or confiscated under the Act. The impugned order of provisional attachment set aside - petition allowed.
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Service Tax
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2021 (4) TMI 863
Refund of unutilized CENVAT credit of Service Tax - Input service - General Insurance Service - Club Membership Service - Photography Service - Credit Card and Debit Card Services - rejection on the ground of lack of nexus of the input service with the output service exported - exclusion of input service from the definition of Input Service under Rule 2(l) of CCR 2004 - HELD THAT:- The learned Counsel appearing for the appellant has given full justification that the said services have been used for providing the output service and I also find that the services viz. Architectural Service, Event Management Service, Works Contract Service, Supply of Tangible Goods Service, has been specifically held to be input service by various decisions rendered by the Tribunal and the High Court. General Insurance Service - HELD THAT:- The appellant has not been able to bifurcate the Insurance Service availed on the assets of the company and on the lives of the persons working in the said company. In the absence of clear bifurcation and lack of documentary evidence, the CENVAT credit on General Insurance Services is denied - credit denied. Club Membership Service - HELD THAT:- The learned Commissioner, though, has admitted that the said services is in relation to applying for the membership of the trade and association but still hold the same is for the benefit of the employees only. This finding of the learned Commissioner is wrong because the membership of the club was used in relation to promoting the trade and hence it falls within the definition of Input Service - credit allowed. Photography Service - HELD THAT:- The Photography Services were availed by the appellant for capturing the business events which are necessary to keep record of the events conducted as well as for future reference hence this service also falls within the definition of Input Service - credit allowed. Credit Card and Debit Card Services - HELD THAT:- These services were used for booking official travels, meal cards and accommodation for the appellant s employees who had to travel within or outside India on official projects which directly contributes to the business operation and has a direct nexus to the output service - the said service also falls within the definition of Input Service - credit allowed. Appeal allowed in part.
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2021 (4) TMI 853
CENVAT Credit - input services - insurance premium paid in respect of workmen compensation insurance policy - It is the case of the revenue that insurance being specifically excluded from the definition of input service under CCR, 2004, no Cenvat credit of service tax paid on Workmen Compensation Insurance Policy is admissible to the appellant - whether the view expressed by CESTAT Hyderabad in M/S HYDUS TECHNOLOGIES INDIA PVT LTD. VERSUS CCE, C ST, HYDERABAD-II [ 2017 (2) TMI 538 - CESTAT HYDERABAD] or the view expressed by CESTAT-Chennai in the case of M/S. GANESAN BUILDERS LTD VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI-II [ 2017 (7) TMI 720 - CESTAT CHENNAI] is correct - matter has been referred to a larger Bench for a decision. HELD THAT:- In Hydus Technologies India , a learned Member (Judicial) held that Cenvat credit is available in respect of service tax with respect to gratuity insurance, employees deposit linked insurance, employees health insurance, etc., on the ground that the benefit bestowed by one legislation cannot be taken away or made highly difficult and impractical to be adhered to by another field of law and accordingly, the benefit was allowed despite specific exclusion by Rule 2(l) whereas in Ganesan Builders , CESTAT-Chennai has denied the benefit of Cenvat credit on input services following the definition of input service including the exclusion clause therein under Rule 2(l) of CCR, 2004, as amended w.e.f. 01.04.2011. This decision of the CESTAT-Madras in Ganesan Builders has been overruled by the Hon ble High Court of Madras specifically dealing with workmen compensation insurance policy . The Hon ble High Court of Madras has held that the Workmen Compensation Act, 1923 is a beneficial legislation and the policy taken by the assessee in that case does not name the employees but categorised the employees based on their vocation/skill. The insured in that case is the assessee and the intention of the policy is to protect the employees who work at the site and not to drive them to various forums for availing compensation in the event of an injury or death. The service in that case was not primarily for personal use or consumption of employee and the insured is the assessee and not the employees. The present case is identical to the case of Ganesan Builders decided by the Hon ble High Court of Madras inasmuch the policy in question pertains to workmen compensation scheme. The insured, as can be seen from the insurance policies is the assessee/appellant and not the individual employees. In other words, the benefit of the policy, if any, goes to the assessee and not to the individual employees. It is not like health insurance taken for the benefit of employees. It is found from the Workmen Compensation Act, 1923 that Section 3 places the liability for compensation upon the employer. Section 4 determines the amount of compensation to be paid. If the assessee had not taken this insurance policy the employees would still be eligible for full compensation as per sections 3 and 4 of the Workmen Compensation Act, 1923. The question is referred to as follows:- The view expressed by the Tribunal Hydus Technologies India lays down the correct position in law. The view expressed by the Tribunal in Ganesan Builders has been over ruled by the Madras High Court in Ganesan Builders Ltd. vs. Commissioner of Service Tax, Chennai. The matter may be placed before the appropriate bench for deciding the case.
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Central Excise
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2021 (4) TMI 852
CENVAT Credit - input services - Appellant undertook renovation project of their sugar unit and for that work they have engaged M/s. Manana Construction and M/s. ISGEC Heavy Engineering Ltd. - works contract - period from January 2016 to March 2016 - HELD THAT:- As per the submission of the appellant, the appellant has entered into three different contracts with Manana Construction viz. supply of material for civil construction, supply of labour for civil construction and supply of labour for installation of plant and machinery and as per the appellant he is liable to pay service tax only on supply of labour for civil construction and supply of labour for installation of plant and machinery and is not liable to pay service tax on supply of material for civil construction and further as per the appellant, he has already reversed ₹ 8,40,768/- on proportionate basis, the service tax pertaining to supply of labour for civil construction and the remaining amount is entitled to avail as cenvat credit of the same and similarly for ISGEC Heavy Engineering the appellant submitted that they have entered into two different contracts but all the contracts entered into between the appellant and two different parties viz. Manana Construction and M/s. ISGEC Heavy Engineering Ltd. have not been produced before the original authority to verify the claim of the appellant. This case needs to be remanded back to the original authority to examine all the documents afresh and then decide the claim of the appellant and determine the demand, if any - Appeal allowed by way of remand.
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2021 (4) TMI 848
CENVAT Credit - capital goods - MS plates, MS angles, MS channels etc. falling under Chapter 72 and Nickel screen/pugmills falling under Chapter 73 and chains falling under Chapter 73 - HELD THAT:- It is found that for the period September 2015 to March, 2016, the cenvat credit on these disputed items were denied by the Department and this Tribunal in THE UGAR SUGAR WORKS LTD VERSUS COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, BELGAUM [ 2019 (5) TMI 654 - CESTAT BANGALORE] has allowed the appeal of the appellant. The issue is squarely covered by various decisions relied upon by the appellant including the appellant s own case - appeal allowed - decided in favor of appellant.
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2021 (4) TMI 846
Refund of Excise Duty paid - amount paid under protest - demand barred by limitation under section11B of Central Excise Act, 1944 - HELD THAT:- Considering the fact that the appellant has reversed immediately the amount to buy peace under protest, in that circumstance, the time limit prescribed under section 11B is not applicable to the facts of this case and as per proviso (2) to section 11B of the Act, the time limit is not applicable as the duty has been paid by the appellant under protest. The appellant is entitled to refund of the amount as no time limit is applicable to the facts of the case - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (4) TMI 872
Seeking reopening of assessment after providing an opportunity of personal hearing to the petitioner - violation of principles of natural justice - turnover within the threshold limit or not - Section 3(1) (b) of the TNVAT Act - HELD THAT:- Division Bench of this Court in an unreported decision in G.V. COTTON MILLS (P) LTD. VERSUS THE ASSISTANT COMMISSIONER (CT) AVARAYAMPALAYAM ASSESSMENT CIRCLE, COIMBATORE [ 2018 (3) TMI 1617 - MADRAS HIGH COURT] has held that failure to submit objection to the pre-assessment notice would not give a right to the Assessing Officer to deny opportunity of personal hearing. On the sole ground of not affording personal hearing, this Court is of the view that the matter should be remanded for fresh consideration - Petition allowed by way of remand.
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Indian Laws
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2021 (4) TMI 841
Prevention from Abuse of Court Processing - Role of Lower Judiciary - misuse of own processes in a judgement - Frivolous Litigation - physical altercation that took place between the Appellants, and the Respondent No. 2 and his wife - HELD THAT:- It is a settled canon of law that this Court has inherent powers to prevent the abuse of its own processes, that this Court shall not suffer a litigant utilising the institution of justice for unjust means. Thus, it would be only proper for this Court to deny any relief to a litigant who attempts to pollute the stream of justice by coming to it with his unclean hands. Similarly, a litigant pursuing frivolous and vexatious proceedings cannot claim unlimited right upon court time and public money to achieve his ends. This Court s inherent powers under Article 142 of the Constitution to do complete justice empowers us to give preference to equity and a justice oriented approach over the strict rigours of procedural law. This Court has used this inherent power to quash criminal proceedings where the proceedings are instituted with an oblique motive, or on manufactured evidence. Appeal allowed - decided in favor of appellant.
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