Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 21, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Input Tax Credit - Blocked Credits - Air Handling Units etc. (AHU) are sine qua non for a commercial mall and hence cannot he considered separate from the building or civil structure. The provision of these are either statutory for a building or defines the nature of the building as a commercial mall. Hence the input tax credit on the inward supplies of goods or services involved in the construction of immovable properly which is a civil structure or building is not available to the applicant and hence blocked.
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Input tax credit - Purchase of Lift - credit available to Hotel or not - the lift has become part of the building and thus falls under the exclusion from plant and machinery and accordingly, we do not find any reason to interfere with the clear provisions of statute - The ITC of tax paid on Lifts procured and installed in hotel building shall not be available to the applicant as the same is blocked u/s 17 of CGST.
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Classification of supply - work relating to “supply, installation and fixing of customized furniture in a building” - The supply made by the applicant to the Capital Project Administration consists of Two taxable supplies of Goods and Services, which are naturally bundled and supplied in conjunction with each others, where the supply of goods viz. Furniture is the principal supply.
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Classification of goods - Preparation of a kind used in Animal Feeding - Bio Processed Meal - The applicant is eligible to avail exemption on their finished products “Preparation of a kind used in Animal Feeding.
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Classification of supply - mounting of Bus/ Truck Body by the job worker on the chassis supplied by the principle for which the applicant charged fabrication charges including cost of certain material that was consumed during the process of job work - taxable under SAC 998881 - “Motor vehicle and trailer manufacturing services” and under entry no. 26(ii) as “Manufacturing services on physical inputs (goods) owned by other” it is taxable @18%.
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Classification of service - rate of tax - coal handling and distribution charges wherever supply of such services is intended to be made expressly to a customer - the coal handling and distribution charges will be taxable @ 18% and not 5%
Income Tax
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Disallowance of job work expenses - there is a direct relation between the amount of sales viz a viz the job work charges incurred by the assessee, therefore such turnover cannot be achieved without incurring the job work expenses. - there cannot be any disallowance of the job work expenses as alleged by the AO.
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Eligibility of exemption u/s 11 & 12 - whether assessee activities are not in charitable nature and activities falls under the last limb of section 2(15) - if in terms of the dominant and primary objectives of the Institution there was no desire to gain profits and the object was to promote trade and commerce not for itself but for the nation was to be construed as a charitable purpose
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Accrual of income - Additions based on TDS statements - The receipt of consideration of income, which has been already offered for taxation in earlier years, received in this year, naturally cannot suffer tax once again. This amounts to double taxation in the hands of the assessee. - Just because the payer has deducted tax at source, it cannot become the income of recipient automatically.
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Addition u/s 69A - addition of processing charges bill alleged to be paid outside the books of accounts - Assessee should have been allowed to reconcile and explain the differential amount of all the bills and processing charges paid to the assessee in cash - If the assessee fails to explain and reconcile the differential amount, the revenue authorities were well empowered to make addition in the hands of the assessee u/s.69A
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TP Adjustment - adjustment made on account of advertisement, marketing and promotion (AMP) expenses - internatinal transaction - the AMP expenditure incurred by the assessee in India cannot come within the purview of the international transaction
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Disallowance of repairs and maintenance - Disallowance made on account of repairs and maintenance by holding that assessee had already given flat deduction @30% of rental income towards repairs under head ‘income from house property’ and no further deduction is eligible to the assessee - Deduction has been given only for 5 months - assessee is entitled for proportionate deduction for the remaining period of seven months.
Customs
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Imposition of penalty u/s 112(a) of Customs Act, 1962 - import of LED battern fixture, LED panel light, LED flood light etc. - prohibited goods or not - the BIS number embossed on the driver did not tally with the registration number given in the BIS certificate - The misdescription of the BIS number is an error committed by the manufacturer - Penalty set aside.
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Refund of IGST - Non compliance with the Directions - action against the respondent authority (Pr. Commissioner of Customs) - In one week’s time, if the respondent does not move the Apex Court, the matter shall be proceeded on merits.
Service Tax
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Levy of Service Tax - banking and other financial services - foreclosure charges - The foreclosure of loan is a material breach of contract as it curtails the loan service period unilaterally, which can prompt the promisor to claim damages. Damages can be determined by Courts or they can also be incorporated in the loan agreements and other commercial contracts so as to ensure certainty in dealings and also serve as a deterrent measure. - Not liable to service tax.
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Levy of Service Tax - construction undertaken in TNCSC Thanjavur Division - The service rendered by the appellant and the activity of construction by the appellant is not an activity of charity and is rather a contract for profit. The appellant is doing construction work not for any loss by raising constructions for the Corporation.
Central Excise
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Principles of Natural Justice - Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - rectification of mistake - Revenue clearly complied with the provisions of Section 127, as there was no such occasion to afford opportunity of hearing being a farcical exercise.
Case Laws:
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GST
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2020 (7) TMI 482
Rectification of mistake - typographical error - tax leviable on the services on which applicant has sough ruling would be 18% - HELD THAT:- After perusal of the said order it was found that there was error in para number 5 and the para number 8.1 in typing the entry number. Hence in exercise of the powers under Section 102 of GST Act a rectification is being made in the said order dated 02.06.2020. In para number 5 and para number 8.1 for the words and number under entry no. 26(ii) read as under entry no. 26(iv) - Rest of the order/ruling will be same as in the original order.
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2020 (7) TMI 481
Classification of service - rate of tax - coal handling and distribution charges wherever supply of such services is intended to be made expressly to a customer - utilization of input tax credit - HELD THAT:- U/s 16 (1) of CGST Act, every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person - U/s 49(4) of the Act, the amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed. Thus, the coal handling and distribution charges will be taxable @ 18% and not 5% wherever supply of such services only is intended to be expressly made to a customer - the input credit availed as per the conditions specified in section 16 shall be allowed for discharging the liability towards supply of coal and supply of coal handling and distribution charges respectively.
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2020 (7) TMI 480
Classification of supply - mounting of Bus/ Truck Body by the job worker on the chassis supplied by the principle for which the applicant charged fabrication charges including cost of certain material that was consumed during the process of job work - whether classified as supply of service under HSN 9988? - Circular no. 52/26/2018-GST issued by Government of India, Ministry of Finance, Department of Revenue dated 9th August, 2018. HELD THAT:- The supply towards provision of services in respect of activity of mounting/ fabrication of bodies on chassis provided by Customer should be treated as supply of bus or provision of services in respect of activity of mounting/fabrication of bus body on the chassis wherein the said activity of mounting/fabrication is outsourced to the Applicant by owner/provider of chassis, in no case the ownership of the chassis belongs to the applicant, hence in both the scenarios mentioned in the question will be taxable under SAC 998881 - Motor vehicle and trailer manufacturing services and under entry no. 26(ii) as Manufacturing services on physical inputs (goods) owned by other it is taxable @18%.
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2020 (7) TMI 479
Utilization of Input Tax credit - cancellation of debit entries in the Petitioner s Electronic Credit Ledger maintained under the CGST Act - HELD THAT:- The petitioner has not approached the respondents at any point of time making such a request. He also does not dispute that the investigation which is going on can continue for further period of 18 months approximately and he also does not dispute the provision of Section 76 and 76(2) which is on a statute book reflecting the liabilities of taxes of the parties. Relying on various decisions, it is urged that without following the procedure prescribed under the statute and without any taxing event having taken place, no recovery is permissible. Issue Notice returnable on 24.7.2020.
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2020 (7) TMI 478
Input Tax Credit - inward supply for the purpose of Banking Business - apportionment of credit - blocked credit - HELD THAT:- Benefit of Section 17(4) of Banking Regulations Act should be allowed.
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2020 (7) TMI 477
Input Tax Credit - Blocked Credits - Purchase of Water Slides - Water Slides are made up of Strong PVC - Water Slides are installed on Steel and Civil Structure - Input goods and services used in construction of the support structure - Goods and services used for area development and preparation of land on which water slides are erected - Goods and Services used for construction of Swimming Pool / Wave Pool as water slides directly run into pools. HELD THAT:- To set to rest the disputes regarding the definition of the Plant, in light of the fact that input tax credit of works contract services, goods and services received as input for construction of immovable property on own account has been specifically put under the Blocked Credit list with the rider that it shall not apply to plant and machinery, it was incumbent that there should be clarity regarding classification of buildings and civil structures that were hitherto been classified as Plant - in the explanation relating to Plant and Machinery, beneath sub-section (6) of Section 17. while providing the meaning of the term plant and machinery, it has been clearly stated that Buildings and Civil Structures shall not be covered under the term Plant. However, while so clarifying, it has been accepted and understood that plant and machinery many a times requires support structure and / or foundation for installation and cannot work otherwise. Thus, civil structures and foundation as supporting structure for fastening of plant and machinery to earth has been included as part of plant and machinery. Eligibility of ITC in case of Input Tax paid on Purchase of Water Slides - HELD THAT:- Water Slides shall fall within the meaning of the term apparatus, equipment and machinery and therefore, shall be eligible for claim of ITC. ITC on Steel and Civil Structure on which the Water Slides are installed - HELD THAT:- The foundation and support structures which are used to fasten plant and / or machinery to the Earth is classifiable as Plant and / or Machinery - In the instant case. slide are fastened to the Steel and Civil Structure are affixed to the Earth through these Steel an Civil Structures. Therefore, these Steel and Civil Structures shall form part of the Plant and Machinery. Accordingly. the credit of Tax paid on Input goods and services used in construction of this support structure shall be available. ITC - For Wave Pool, Machines have been installed - HELD THAT:- The foundation for these machines are eligible to be part of the Machines and the ITC shall be treated in a manner similar to that of the Machines. However, the Machine Room, which is a civil structure, erected for protecting machine is neither foundation nor civil structure for machine therefore, IT relatable to the construction of the room for Housing the machine shall not be eligible for ITC. ITC on Goods and services used for area development and preparation of land on which water slides are placed - HELD THAT:- The area development and expenditure on preparation of land like site formation services are part of the cost of the land and thus are interminably bound with land. These expenses are liable to be capitalized under the head Land. Therefore, on account of the specific exclusion of Land from the meaning of plant and machinery . ITC related to Land Development, subject to its capitalization as per accounting principles shall not be available. ITC on Construction of swimming pools / Wave Pool in which the water slides directly run into - HELD THAT:- Such Swimming Pools / Wave Pools are not support structure or foundation for a plant, but are independent items per se. Since they are not foundation or support structure on which slides are fasted for affixing them to earth and also on account they being Civil Structures. they are therefore excluded from the meaning of plant and machinery . Thus, the ITC related to the construction of the Swimming Pools and Wave Pools. subject to its capitalization shall not be available. ITC on Inward supplies of goods or services involved in the construction of immovable properly which is a civil structure or building - HELD THAT:- The provision of facilities like transformers. sewage treatment plant. Electrical Wiring and Fixtures. Surveillance systems. D.G. Sets. Lilts. Air Handling Units etc. are sine qua non for a commercial mall and hence cannot he considered separate from the building or civil structure. The provision of these are either statutory for a building or defines the nature of the building as a commercial mall. Hence the input tax credit on the inward supplies of goods or services involved in the construction of immovable properly which is a civil structure or building is not available to the applicant and hence blocked.
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2020 (7) TMI 476
Input tax credit - Purchase of Lift - credit available to Hotel or not - it has been used in the course or for the furtherance of business - HELD THAT:- The lift becomes part of the building and is not a separate thing per se. A lift does not have an identity when removed from the Building. Therefore, the lift cannot be said to be separate from a Building. Also, it has to be borne in mind that a lift is not an item that is purchased an sold. It is a customized mechanism for transportation, designed to suit a specific building. Upon piece by piece installation, it becomes an integral part of the building. In the explanation relating to Plant and Machinery, beneath sub-section (6) of Section 17, while providing the meaning of the term plant and machinery, it has been clearly stated that Buildings and Civil Structures shall not be covered under the term Plant. However, while so clarifying, it has been accepted and understood that plant and machinery many a times requires support structure and / or foundation for installation and cannot work otherwise. Thus, civil structures and foundation as supporting structure for fastening of plant and machinery to earth has been included as part of plant and machinery. In the instant case, the lift has become part of the building and thus falls under the exclusion from plant and machinery and accordingly, we do not find any reason to interfere with the clear provisions of statute. The input tax credit of tax paid on Lifts procured and installed in hotel building shall not be available to the applicant as the same is blocked in terms of Section 1 of the CGST Act 2017, become an integral part of the building.
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2020 (7) TMI 475
Classification of supply - Works Contract or Composite supply - principal supply - work relating to supply, installation and fixing of customized furniture in a building - applicable rate of GST - HELD THAT:- The supply, installation and fixing of furniture, customized or customized cannot be a works contract, as the items of furniture have been made or manufactured at the supplier's place which have been installed or fixed at the place of the recipient. Such installed or fixed items of furniture can be removed/ moved to any place without damage to the furniture. Thus, supply, installation and fixing of furniture cannot be covered under works contract, as it does not result in immovable property or it is not going to be part of immovable property - As per the view point and interpretation of law and facts of the case, the supply, installation and fixing of furniture, either customized or not customized, is not composite supply of works contract by way of construction etc of civil structure or other original works to the Government .and therefore, is not chargeable to concessional rate of 12% as per the Notification No.11/2017 dated, 28.06.2017. The contract in questions i.e. work order relating to supply, installation and fixing of customized furniture in a building conform to the COMPOSITE SUPPLY as provided in section 2(30) of CGST Act, 2017. The supply made by the applicant to the Capital Project Administration consists of Two taxable supplies of Goods and Services, which are naturally bundled and supplied in conjunction with each others, where the supply of goods viz. Furniture is the principal supply. Thus, the work order in question shall merit classification under Chapter Head 9403 of GST Tariff and shall be liable to GST at the rate applicable at the time of supply.
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2020 (7) TMI 474
Levy of GST - amount recovered by the applicant from other government departments for doing research work and study, which help them make policies or understand its impact - Pure services or not - Services provided by the applicant to other government department - entry no 8 of Exemption Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017. HELD THAT:- The applicant has attached the list of works undertaken by it, mentioning the item no of respective Schedule of Constitution of India against the each work being executed, in relation to which the pure services are being provided by the applicant to other government departments or local authority or a Governmental authority or a Government Entity - the works of pure services undertaken by applicant are covered in clauses of the Eleventh and Twelfth Schedule referred in article 243G and 243W of the Constitution. The of works being undertaken by the applicant is in relation to the functions entrusted to Municipalities under article 243W and to Panchayats under article 243G of the Constitution, and, therefore, it is exempt from tax being covered in Sr. No. 3 of Notification No. 12 of 2017-Central Tax (Rate), dated 28-6-2017 (as amended from time to time) issued under Central Goods and Services Tax Act, 2017 (CGST/Act), and corresponding notifications issued under Madhya Pradesh Goods and Services Tax Act, 2017. Whether Services provided by the applicant to other government department are covered under the entry no 8 of Exemption Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017? - HELD THAT:- Entry No. 8 prescribe for Services provided by the Central Government, State Government, Union territory or local authority to another Central Government, State Government, Union territory or local authority - this entry grants exemption to services provided by Central Government, State Government, Union territory or local authority only. Hence to qualify for the exemption granted under Entry No 8 service provider must be government or local authority. The Word government has been defined under the GST laws and the definition government covers Central Government and State Governments only. Here it is pertinent to note that the application is a society registered under MP Societies Registrikaran Act 1973 and has its own governing body being presided over by Chief Minister of State of Madhya Pradesh. Hence the applicant does not fall within the definition of Government or local Authority - the applicant falls within the ambit of definition of Government Entity as defined under clause (zfa) of notification no 12/2017. Entry no 8 of Notification no 12/2017 CT(R) covers services provided by government or local authority only however the applicant does not cover within the definition of Government or Local Authority hence Services provided by the applicant to other government department are not covered under the entry no 8 of Exemption Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017.
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2020 (7) TMI 473
Classification of goods - Preparation of a kind used in Animal Feeding - Bio Processed Meal - whether fall under HS Code 23099090 and applicable rate of GST on said product shall be NIL as per Notification 02/2017 - CT (Rate) dated 28.06.2017? - errors in the order of Advance Ruling Authority - rectification of the mistake - HELD THAT:- Chapter heading 23099090 is exclusively meant for animal feed. The applicant has started their new unit at 112, Industrial Area No.1 Dewas for manufacture of the finished product Preparation of a kind used in Animal Feeding - Bio Processed Meal which will be used for animal feeding only. The applicant also submitted a detailed process as how the raw material soyabean meal will undergoes various processes in various section like inoculation and missing section, bio-processing section / fermentation section, drying section, milling and packaging section to achieve the goal of manufacturing the finished product - The applicant finally declared that the product Preparation of a kind used in Animal Feeding - Bio Processed Meal will only be used for animal feeding and not for in other purpose. The said product i.e. Bio Processed Meal is only for specific use of Animal Feed, it is clear to us that the finished product being manufactured by the applicant will only be used for animal feeding and not for any other purpose and thus it should fall under chapter heading 23099090 - Serial No. 102 of Notification 2/2017-CT (Rate) dated 28.06.2017 and corresponding notification issued under MPGST Act speaks that the goods Aquatic feed including shrimp feed and prawn feed. poultry feed cattle feed, including grass, hay straw, supplement husk of pulses, concentrates additives, wheat bran de-oiled cake falling under chapter heading 2302, 2304, 2305, 2306, 2308, 2309 are exempted from payment of GST. The applicant is eligible to avail exemption on their finished products Preparation of a kind used in Animal Feeding - Bio Processed Meal from payment of GST under Notification 2/2017-CT (Rate) dated 28.06.2017 and corresponding notification issued under MPGST Act.
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Income Tax
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2020 (7) TMI 468
Disallowance of repairs and maintenance - Disallowance made on account of repairs and maintenance by holding that assessee had already given flat deduction @30% of rental income towards repairs under head income from house property and no further deduction is eligible to the assessee - HELD THAT:- We find that the rental income offered by the assessee in the sum of ₹ 57,500/- was only in respect of 100 sq.ft of premises let out for five months. Hence, the corresponding flat deduction @30% towards repairs under the head income from house property was also given only for a period of five months. No deduction for the remaining 7 months has been given, in terms of the provisions of Section 38(2) of the Act. We find that assessee is entitled for proportionate deduction for the remaining period of seven months of these repairs and maintenance in respect of 100 Sq.ft of property. TP Adjustment - Addition made on account of manning services fee being the arm s length price adjustment - HELD THAT:- The facts relating to the disputed issue being identical in A.Y.2003-04, in our considered opinion, the decision taken by this Tribunal in assessee s own case for the A.Yrs. 2002-03, 2004-05 and 2005-06 would squarely apply to this assessment year also and accordingly, we dealt the addition made towards manning services fee on account of transfer pricing adjustment. We find that the ld. CIT(A) had already granted relief to the extent of ₹ 2,14,48,677/- in this regard and had confirmed only the remaining sum of ₹ 5,00,47,881/-. At the time of hearing, both the parties informed that no appeal was preferred by the revenue against such relief granted by the ld. CIT(A). Accordingly, the ground No.4 raised by the assessee is allowed.
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2020 (7) TMI 467
MAT Computation - Addition on account of subsidy received on the Technology Upgradation Fund (TUF) - computation of book profit under Section 115JB - HELD THAT:- Proposition that book profit is not to be tinkered with is duly supported by Hon'ble Jurisdictional High Court decision in M/S. BHAGWAN INDUSTRIES LTD. [ 2017 (8) TMI 32 - BOMBAY HIGH COURT], AKSHAY TEXTILES TRADING AND AGENCIES P. LTD. [ 2007 (10) TMI 251 - BOMBAY HIGH COURT] AND ADBHUT TRADING CO. P. LTD. [ 2011 (7) TMI 716 - BOMBAY HIGH COURT] Hon ble Supreme Court in the case of ACIT vs Saurashtra Kutch Stock Exchange Ltd [ 2008 (9) TMI 11 - SUPREME COURT] has expounded that non-consideration of jurisdictional High Court decision can render a decision of the Tribunal suffering from mistake apparent from record. We note that honourable Supreme Court in the case of Kapurchand Shrimal v CIT [ 1981 (8) TMI 2 - SUPREME COURT] had expounded that it is the duty of the appellate authority to correct the errors in the orders of the authorities below and remit the matter, with or without directions for their consideration, unless prohibited by law. In our considered opinion, this issue needs to be remitted to the file of learned CIT(A). The learned CIT(A) is directed to consider this issue de novo after taking into account the aforesaid Hon ble Jurisdictional High Court decisions. Needless to add, the assessee should be granted adequate opportunity of being heard. Disallowance u/s 14A of the Act read with rule 8D(2)(ii) - HELD THAT:- We find that it has not been denied by the Assessing Officer that assessee has sufficient interest free funds. However, the Assessing Officer has held that assessee has not submitted the cash flow statement. CIT(A) is correct in holding that if assessee has sufficient interest free funds, no disallowance under Section 14A of the Act on account of interest for funds utilised for earning the exempt income needs to be done. See HDFC BANK LTD. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT]. Disallowance with respect to employees contribution to the Provident Fund under Section 36(1)(va) - HELD THAT:- The issue is squarely covered in favour of the assessee by the decision of Hon ble Bombay High Court in CIT vs Ghatge Patil Transports Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] that the said contributions made before the due dates of return or grace period is allowable. Hence, we uphold the order of ld. CIT(A) in this regard.
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2020 (7) TMI 466
TP Adjustment - adjustment made on account of advertisement, marketing and promotion (AMP) expenses - internatinal transaction - HELD THAT:- Referring to decision of the Hon'ble Delhi High Court in Martuti Suzuki India Ltd. [ 2015 (12) TMI 634 - DELHI HIGH COURT] it has to be concluded that the AMP expenditure incurred by the assessee in India cannot come within the purview of the international transaction. Hence, the Transfer Pricing Officer has no jurisdiction to determine the arm's length price of AMP expenditure. - Decided against revenue.
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2020 (7) TMI 465
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- From the details furnished by the assessee we find that it has computed suo-moto disallowance. Further a perusal of the details of the expenses other than interest expenses shows that assessee has incurred expenditure towards administrative expenses. After deducting expenses incurred by the assessee on account of increase in share capital, stamp duty expenses and gratuity expenses the total administrative expenses comes against which the assessee has made suo-moto disallowance which is approximately 18.61% of the administrative expenses. However, without recording any satisfaction the AO has made the disallowance u/s. 14A read with Rule 8 D of the IT Rules 1962 which in our opinion is not justified. Hon ble Supreme Court in the case of Maxopp Investment Limited [ 2018 (3) TMI 805 - SUPREME COURT] has held that when suomoto disallowance are shown by the assessee, without recording the satisfaction as to why the working shown by the assessee is not acceptable, disallowance cannot be made. A perusal of the assessment order nowhere shows that the AO has recorded any satisfaction as to why the suo-moto disallowance made by the assessee is not correct. Therefore, we find merit in the argument of assessee that in absence of recording of any satisfaction by the AO having regard to the accounts of the assesses as to why the claim of disallowance made by the assessee u/s. 14 A is not correct, no disallowance can be made. The various decisions relied by the Ld. DR are not applicable to the facts of the present case. We find both the decisions relied on by him are prior to the decision of Hon ble Supreme Court in the case of Maxopp Investment Limited (supra). In view of the above discussion we hold that no further disallowance u/s. 14 A r.w.r 8 D could have been made. Addition under the head income from capital gain - HELD THAT:- We find although the assessee has raised specific ground before the CIT(A), however, the Ld. CIT(A) has not adjudicated the same. Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore the issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate its case. The AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct according.
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2020 (7) TMI 464
Addition u/s 69A - addition of processing charges bill alleged to be paid outside the books of accounts - HELD THAT:- On receipt of reply alongwith 34 documents from M/s. Utkal Export, neither the AO or the CIT(A) show caused the assessee by way of written notice or note sheet entry and proceeded to make addition u/s.69A by treating the impugned amount of three bills and processing charges paid to the assessee in cash. This act of the revenue authorities is clearly contrary to the principles of natural justice as on receipt of reply from M/s. Utkal Export before making addition, the assessee should have been show caused informing him regarding reply received from M/s. Utkal Export and asking the assessee to reconcile the same. If the assessee fails to explain and reconcile the differential amount, the revenue authorities were well empowered to make addition in the hands of the assessee u/s.69A - no hesitation to hold that the addition has been made in clear violation of principles of natural justice and the ld CIT(A) was not justified and correct in upholding the same. Assessee should have been allowed to reconcile and explain the differential amount of all the bills and processing charges paid to the assessee in cash as per reply of M/s. Utkal Exports furnished before the AO. Issue related to additions made by the AO on both the issues required reverification by the AO after allowing opportunity of being heard to the assessee, thus both the issues are restored to the file of the Assessing Officer for limited purposes with the direction that the AO shall re-examine the bills and reply of M/s. Utkal Exports keeping in view stand and explanation of the assessee and redecide the issue after allowing reasonable opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2020 (7) TMI 463
TDS u/s 194J - interconnection usages charges (IUC) - HELD THAT:- CIT(A) while allowing the claim of the applicant in deleting the demand raised u/s 194J for A.Y. 2008-09 2009-10 respectively with the conclusion that the roaming charges paid by the appellant to other telecom companies are not covered under fee for technical service and such payments are out of the purview of TDS provision of 194J. We find no infirmity in the order passed by the Learned CIT(A). We, therefore, do not hesitate to confirm the same. Therefore, revenue's appeal is devoid of any merit and hence dismissed.
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2020 (7) TMI 462
Bogus purchases - GP estimation - HELD THAT:- It would make it a fit case to make estimated additions to account for profit element embedded in these suspicious / unverified purchases to factorize for profit earned by assessee against possible purchase of material in the grey / unorganized market and undue benefit of VAT against such bogus purchases, which CIT(A) has rightly done so - assessee was dealing in low-margin commodity like iron steel which attracts lower VAT rate, the estimation of 12.5% with set-off of already declared GP was on higher side. The coordinate bench in the cited decision of assessee s son, found merits in the contentions of the assessee and observed that the assessee took all possible steps and produced relevant documents to prove the genuineness of the purchases made from M/s RTIPL. The evidences furnished by AO were not disproved by AO and therefore, the view taken by Ld. AO was not based on any material. In the said background, the bench directed Ld.AO to restrict the estimation to 0.11% on purchases made from M/s RTIPL. This rate was nothing but the GP rate earned by the assessee on other purchases. Drawing analogy from the same keeping in view the GP rates reflected by assessee in preceding as well as in succeeding years, we direct Ld. AO to estimate the additions against suspicious / unverified purchases @1% on net basis, without any other benefit. The additions would come to ₹ 3,81,027/-. The balance additions would stand deleted. Accordingly, the revenue s appeal stands dismissed whereas the assessee s appeal stands partly allowed.
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2020 (7) TMI 461
Accrual of income - Additions based on TDS statements - Addition on account of sum received which was allegedly not shown as income by Assessee - HELD THAT:- It is apparent that outstanding receivable from the above party debited by admass Builders to the account of the assessee towards various charges. The gross sale price of the above project has already been offered for taxation in the earlier year. The receipt of consideration of income, which has been already offered for taxation in earlier years, received in this year, naturally cannot suffer tax once again. This amounts to double taxation in the hands of the assessee. The lower authorities rejected the submissions of the Assessee asking for the confirmation when all the agreement were already available before them and copies of the ledger account depicting the conditions of the agreement before them.There were details of each and every expenditure incurred by Admass Builder pursuant to above agreement. The agreement itself shows various stages of payment and various obligations of the parties. The buyer was to obtain certain approvals at the cost of the appellant on payment as per the agreements. Buyer incurred such cost and debited the account of the appellant as payment of sale consideration. The appellant also accepted the same and credited the account of the buyer. Just because the payer has deducted tax at source, it cannot become the income of recipient automatically. It is undisputed that total c sales consideration received/ receivable is offered for taxation in immediately preceding year. In view of this, merely because the assessee did not furnish confirmation and more so even when each and every expenditure is part of the agreement, this addition cannot be made so it cannot be sustained. In view of this, we direct the ld AO to delete the addition. Disallowance of depreciation - HELD THAT:- Assessee has earned gross revenue of ₹ 81,50,271/- such as miscellaneous income and lease rent income etc. These incomes is offered by the assessee as business income and accepted by the ld AO in the assessment. The assessee has been allowed several business expenditure during the year. Further, the assets on which depreciation is claimed by the assessee are also general asset as per Schedule No. 5 of the balance sheet. They are in the nature of air conditioner, fax machine, Xerox machine, computers, motor cars. These assets were not purchased during the year but was part of the assets i.e. block of assets in earlier. These assets were used for the purposes of the business. Merely because there was no project undertaken by the assesse during the year, and was trying to complete the formalities of sale of the huge project sold last year , which has certain obligations cast on assesse to be fulfilled, it cannot be said that those assets are not used during the year. The business of the assessee is continuing. In view of this, it cannot be said that the assessee did not carry onany business during the year. Accordingly, ground No. 4 of the appeal of the assessee is allowed and the ld AO is directed to grant depreciation accordingly. Disallowance of legal and professional charges - HELD THAT:- As per the agreement, some of the expenses were on account of assessee. Those expenses were incurred during the year as bills of the same were received during the year, they were acknowledged in this year, and consequently obligation to pay by assessee and right to receive by the service providers arose in this year. Therefore, assessee incurred this expenditure during this year. Under section 209(3)(b) of the Companies Act, 1956 [now section 128(1) of the Companies Act, 2013], all companies are required to follow the accrual basis of accounting However the profit on sale of the project Global Technology park was offered for taxation in the immediately previous year. As the allowability of these expenditure , the above bills agreed during the year and itwas paid during the year. we do not find any reason for the disallowance of the same. Assessee was to record and recognize expenses when they are incurred in case those expenses relate to past performances. The sale took place last year, full sales consideration was offered for taxation by assessee. Some of the expenses of such a large project are bound to spill over to next year. It was a continuous process to incur expenditure when such a large project was soldand to account for in the books of account. Therefore, even though they were treated technically as prior period expenses, it related to a continuous flow of expenditure. Therefore, there was no justification in disallowing the expenditure, otherwise normally eligible for deduction. It is not the case of the revenue that the assessee towards the business of the assessee did not incur these expenses. In view of this, we direct the ld AO to delete the above disallowance.
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2020 (7) TMI 460
Eligibility of exemption u/s 11 12 - whether assessee activities are not in charitable nature and activities falls under the last limb of section 2(15) and hit by the proviso to section 2(15) ? - HELD THAT:- As relying on assessee's own case NEW DELHI YOUNG MEN S CHRISTIAN ASSOCIATION LTD. AND VICE-VERSA [ 2017 (11) TMI 1370 - ITAT DELHI] we hold that assessee is eligible for exemption under Section 11 and 12 of the Act and the activities of the assessee are not hit by proviso to Section 2(15) of the Act. The expression would take its colour and had to be considered in the context of Section 10(23C)(iv) of the Act. The court held that if in terms of the dominant and primary objectives of the Institution there was no desire to gain profits and the object was to promote trade and commerce not for itself but for the nation was to be construed as a charitable purpose. Thus, on a careful consideration of the entirety of the facts and the material on record and based on the history of the case and the existing precedents on this point, we have no hesitation in holding that the CIT(A) has rightly decided the issue in favour of the assessee Association by directing relief u/s 11 read with Section 12AA. The assessee trust s income is also required to be computed on the commercial basis. In view of this all the grounds of appeal filed by the ld. Assessing Officer are dismissed. - Decided in favour of assessee.
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2020 (7) TMI 459
Disallowance of job work expenses - Allowable business expenses or not? - HELD THAT:- Job workers in their statement recorded under section 131(1) have confirmed that they provided services of job work, received charges based on competitive market rate and offered the same for the taxation. CIT (A) further given the finding that the there was no evidence brought by the Revenue suggesting that the amount paid to the job worker returned to the assessee in any manner. On perusal of the details of the job work expenses incurred by the assessee in the earlier years, we find that the expenses for the year under consideration towards the job charges in relation to the sales has reduced significantly. Thus, in our considered view there is a direct relation between the amount of sales viz a viz the job work charges incurred by the assessee, therefore such turnover cannot be achieved without incurring the job work expenses. It is also pertinent to note that, at the time of hearing the learned DR has not brought anything on record contrary to the finding of the learned CIT (A). Thus there cannot be any disallowance of the job work expenses as alleged by the AO. In holding so we find support and guidance from the judgment of Hon ble Gujarat High Court in the case of CIT vs. Avinash M Jhawar [ 2011 (4) TMI 1514 - GUJARAT HIGH COURT ] - Decided against revenue. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (7) TMI 458
Re-opening of assessment u/s 147 - re-opening beyond a period of 4 years from the end of the AY - Addition u/s 68 - HELD THAT:- In this case, the assessee has disclosed during the course of original assessment proceedings details of all the loan creditors. The assessee has filed before us a copy of the notice issued u/s 142(1) of the Act dated 12.11.2013 along with the annexure and replies. He has also filed a copy of the unsecured loan account which contains the account of M/s. Rexnox Trexim Pvt. Ltd. The assessee has paid interest on this loan and deducted tax at source. The loan has been repaid within the same year. On these facts, it is wrong on the part of the AO to record at para 7 of his reasons that the assessee has failed to disclose fully and truly all material facts necessary for assessment. Merely alleging that there is failure to disclose, would not serve the purpose. In this case, a factually wrong allegation has been made that the amount of ₹10 lakhs has not been fully and truly disclosed. Re-opening of assessment on such wrong reasons cannot be upheld. No fresh tangible material has come into the possession of the AO, which could trigger re-opening in this case. The transaction with M/s. Rexnox Trexim Pvt. Ltd. was fully disclosed and it is not fresh material. All the other sentences in the reasons recorded are general and vague and it is not known how these observations are relevant to the assessee company. Re-opening of assessment is bad in law on this ground also. Coming to the merits of the case, the assessee had received ₹10 lakhs in cash through banking channels and he has repaid the same along with interest after deducting tax at source. The details of the company from which the amount was received were filed. Under these circumstances, the question is whether the addition can be made u/s 68 - Assessee has explained the credit in question and as the amount has also been repaid along with interest, the addition in question made u/s 68 of the Act is bad in law. Hence we delete the same. - Decided in favour of assessee.
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2020 (7) TMI 457
TDS u/s 194C - Payment under the head Distributor Hire Charges - assessee has failed to deduct the tax at source, the AO held that the expenditure is not allowable as provided u/s 40(a)(ia) - HELD THAT:- In the earlier assessments, on identical facts, CIT(A) deleted the addition and it appeared that the department has not filed the appeal. In the subsequent year, though the assessment was made on identical facts, no such addition was made by the AO. AO did not dispute that the payment is the sharing of revenue between the theatre owner and the assessee. AO also has not made out a case, to establish that the payment was either in the nature of contract payment or in the nature of rental payment. In the instant case, the payment was made by the theatre owner who is exhibiting the films, therefore, it cannot be held as rental payment. In the case of rent, the assessee ought to have received the payment, but in the instant case, the assessee is making the payment to film distributor. Assessee is screening the films being the theatre owner, it cannot be held that the same is contract payment. Therefore, we are of the view that the AO has not made out the case of either contractual payment or rental payment for holding that it attracts the TDS. Department also did not make out a case of assessee in default for non deduction of tax at source u/s 201(1). Hence, the order of the Ld.CIT(A) is unsustainable and accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. - Decided in favour of assessee.
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2020 (7) TMI 456
Admissibility of interest paid to KSEB towards delayed payment of pole rental charges - Interest amount for the delayed payment of the pole rent payable by the assessee since 2002-03 - allowable expense - HELD THAT:- KSEB revised the demand which was accepted by the assessee in the year 2016-17. Thus, the entire dispute was finally settled based on mutual verifications conducted by the parties. This was due the serious anomalies in the apportionment of poles in the urban and in the rural areas. The assessee has placed a copy of the demand raised by KSEB on 28.09.2006 and copy of the order of High Court settling the dispute. In view of the fact that the demand had arisen and liability crystallized during the year, the statutory auditors had disclosed the expenditure under extraordinary item in the financial statements of the company in accordance with the provisions of AS-5 on net profit or loss for the year prior period items and changes in the accounting policies issued by the ICAI considering the largeness of the amount involved. There is no case for the department that the expenditure is in the nature of prior period expenses. The Chennai Bench of the Tribunal in the case of ITO(OSD) vs. Sicgil India Pvt. Ltd. [ 2009 (3) TMI 239 - ITAT MADRAS-C] dealt with a case wherein the contractual liability which was disputed arose in the year of settlement of dispute. In the instant case, the dispute involved was finally settled during the F.Y. 2006-07 relevant to the A.Y. 2007-08. - Decided against revenue. Difference between liability of interest due and penal interest which arose out of the demand by a competent authority - HELD THAT:- Supreme Court in the case of Mahalakshmi Sugar Mills Co. vs. CIT [ 1980 (4) TMI 1 - SUPREME COURT] where it was held that the interest for delayed payment of statutory dues is an allowable deduction u/s. 37(1). The same view was taken by Supreme Court in the case of Lachmandas Mathurdas vs. CIT [ 1997 (12) TMI 16 - SUPREME COURT] . Similarly, in the recent decision of the Cochin Bench of the Tribunal in the case of Lakshdweep Development Corporation Limited [ 2018 (10) TMI 283 - ITAT COCHIN] the Tribunal has held that interest on delayed payment of VAT and TDS is only compensatory and is not penal in nature. Therefore, the CIT(A) has correctly deleted the disallowance made for the interest expenditure claimed on delay payment of VAT and TDS. Thus, this ground of appeal of the Revenue is dismissed. Depreciation on Modem - @ 15% OR 60% - HELD THAT:- Special Bench of the ITAT, Mumbai has held in the case of Dy.CIT vs. Data Craft ndia Ltd. [ 2010 (7) TMI 642 - ITAT, MUMBAI] that definition of computer should not be restricted to Central Processing Unit of the computer but should also extend to all input and output devices which support computer in the receipt of input on outflow and output to and from the computer. Further, in the following decision of High Courts and Tribunals, it has been held that modem is an integral part of a computer eligible for high rate of depreciation of 60% - Decided against revenue.
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Customs
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2020 (7) TMI 455
Refund of IGST - Non compliance with the Directions - action against the respondent authority (Pr. Commissioner of Customs) - HELD THAT:- Noticing the contents of reply, time of one week is permitted to the respondent to approach the Apex Court. We are conscious of the fact that the judgment which is sought to be implemented by the applicant original petitioner is dated 27.06.2019. One year has already gone. In one week s time, if the respondent does not move the Apex Court, the matter shall be proceeded on merits. Matter to appear on 20.07.2020.
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2020 (7) TMI 454
Holding of Video Conferencing - Commencement of physical hearing in the first week of July, 2020 - HELD THAT:- From the report it is evident that though the CESTAT was willing to hold the video conferencing but the members of the Bar were not in favour. On a representation of Bar Association President, CESTAT, New Delhi was requested to commence physical hearing on first week of July, 2020. petitioner has already filed the appeal. But, the only apprehension is that there is no hearing either physical or through video. In view of the report of the Registrar General, no further course of action in the review petition seeking the clarification of the order whereby petitioner was given liberty to avail the remedy of appeal is required. Petition disposed off.
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2020 (7) TMI 453
Imposition of penalty u/s 112(a) of Customs Act, 1962 - import of LED battern fixture, LED panel light, LED flood light etc. - prohibited goods or not - the BIS number embossed on the driver did not tally with the registration number given in the BIS certificate - Absolute Confiscation - HELD THAT:- The registration number has two parts. One, the 8-digit number and also I.S. no.R-41036226 is 8-digit number, with regard to the driver imported by the appellant which is under dispute. The second part, which is the I.S. no. gives the description of the product type number. In case of driver, the product type number i.e., IS No.15885 is PART 2/SEC 13 2012. On the drivers instead of embossing the said Indian Standard number, the Indian Standard number of LED lights happened to be embossed. The Indian Standard number of LED lights is IS 10322 PART 5/SEC 2 2012. The Commissioner (Appeals) in para 5 has noted that the second part of the BIS number embossed on the driver does not tally. On perusal of the facts as brought out from the records, it is seen that the Indian Standard number only has been embossed erroneously on the driver. The I.S. no. of the LED panel has been embossed on the driver. It is not the case that the I.S. no. of entirely different product is endorsed. Driver is part of the LED panel lights and the lights cannot be used without the corresponding driver - there are no merit in the clarification given by the manufacturers stating that it was an error while embossing I.S. no. on the drivers. For this reason, the confiscation of the driver alone cannot sustain. The order passed by the authority below is therefore set aside. There is no requirement to state specifically that the appellant has to pay duty when these goods are cleared for home consumption. The misdescription of the BIS number is an error committed by the manufacturer - Penalty set aside - appeal allowed.
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2020 (7) TMI 449
Non-Compliance of the directions issued by this Court - HELD THAT:- Notice to the respondents, returnable on 8.7.2020. Direct service through E-mode is permitted in addition to the normal mode of service.
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Insolvency & Bankruptcy
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2020 (7) TMI 452
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - time limitation - HELD THAT:- Admittedly, even as per learned counsel for the petitioner, the date of default for the alleged claim was July 8, 2013. The petitioner also failed to show any subsequent acknowledgment of debt by the respondent-corporate debtor, therefore, the starting point for the period of limitation is the date of default, i. e., July 8, 2013. Since, admittedly, the date of default of the debt due to the petitioner was July 8, 2013 and that no acknowledgment of debt or any other circumstances are shown to extend the period of limitation beyond the period of 3 years expiring on July 8, 2016 and the CP having been filed on July 16, 2018 is clearly barred by the period of limitation - the instant CP is barred by the period of limitation and accordingly, the same is dismissed.
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Service Tax
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2020 (7) TMI 472
Levy of Service Tax - banking and other financial services - foreclosure charges levied by the banks and non banking financial companies on premature termination of loans - matter referred to Larger Bench - HELD THAT:- Where service tax is chargeable on any taxable service with reference to its value, then such value shall be determined in the manner provided for in (i), (ii) or (iii) of sub-section (1) of section 67. What needs to be noted is that each of these refer to where the provision of service is for a consideration , whether it be in the form of money, or not wholly or partly consisting of money, or where it is not ascertainable. In either of the cases, there has to be a consideration for the provision of such service. Explanation to sub-section (1) of section 67 defines consideration to include any amount that is payable for the taxable services provided or to be provided, or any reimbursable expenditure, or any amount retained by the lottery distributor or selling agent - It is clear from the definition of consideration that only an amount that is payable for the taxable service will be considered as consideration . This apart, what is important to note is that the term consideration is couched in an inclusive definition. A Larger Bench of the Tribunal in M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] observed that implicit in the legal architecture is the concept that any consideration whether monetary or otherwise, should have flown or should flow from the service recipient to the service provider and should accrue to the benefit of the latter. In the said decision, the Larger Bench made reference to the concept of consideration‟, as was expounded in the decision pertaining to Australian GST Rules, wherein a categorical distinction was made between conditions‟ to a contract and consideration‟. The foreclosure of loan is, therefore, a material breach of contract as it curtails the loan service period unilaterally, which can prompt the promisor to claim damages. Damages can be determined by Courts or they can also be incorporated in the loan agreements and other commercial contracts so as to ensure certainty in dealings and also serve as a deterrent measure. This aspect of damage is known as liquidated damages - It would thus be seen that clauses relating to damages for foreclosure of loan are usually incorporated in contracts as an agreed measure of damages which can be enforced in the event there is a breach of contract with a view to bring about certainty in contracts. These clauses do not and cannot give rise to any consideration . These clauses also come into effect only after the contract comes to end. A penalty is a sum of money so stipulated in terrorem, and liquidated damages are a genuine pre-estimate of damages. So far as the law in India is concerned there is no qualitative difference in the nature of liquidated and unliquidated damages, as section 74 eliminates the somewhat elaborate refinement made under the Common Law between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty, which under the Common Law is stipulation in terrorem; a genuine pre-estimate of damages is regarded as liquidated damages, and is binding - It, therefore, clearly follows that foreclosure charges are recovered as compensation for disruption of a service and not towards lending services. In fact, the amount for processing charges and documentation charges or like charges are subjected to service tax because they are essential for the activity of lending and are treated as activities in relation to lending . Foreclosure is anti thesis to lending and, therefore, cannot be construed to be in relation to lending . The phrase in relation to lending cannot be so stretched so as to bring within its ambit even activities which terminate the activity. The foreclosure charges should not be viewed as alternative mode of performance of the contract because they arise upon repudiation of specified terms of contract and are intended to compensate the injured party banks and non banking financial companies. This is because alternative mode of performance still contemplates performance, whereas foreclosure is an express repudiation of the contractual terms giving rise to the levy of foreclosure charges - merely because the clause relating to damage is featuring in a contract, it would be incorrect to conclude that the party has been given an option to violate the contract. Hence, to treat eventuality of foreclosure as an optional performance is incorrect. The contract cannot be understood to be providing an option to the parties to either perform or not perform/violate. Foreclosure charges collected by the banks and non banking financial companies on premature termination of loans are not leviable to service tax under banking and other financial services as defined under section 65 (12) of the Finance Act. The appeal may now be listed before the regular Bench for hearing.
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2020 (7) TMI 451
Maintainability of petition - alternative remedy of appeal - Levy of Service Tax - construction undertaken in TNCSC Thanjavur Division - time limitation - HELD THAT:- There is nothing on record to indicate that the appellant himself was very much vigilant in getting his writ petition disposed of. Merely delay in taking up of the writ petition does not impell to entertain the aforesaid arguments for the reason that even if the contention is that the appellant was not liable to service tax, it was a question of fact, which had to be determined on the strength of the contract agreement and the documents which have been relied on by the parties - there are no error in the approach of the learned Single Judge in allowing the appellant to seek the remedy of appeal, which has been extended to the appellant even after a lapse of such a long time by giving the benefit of limitation. The Tamil Nadu Civil Supplies Corporation, admittedly, is a Corporation registered under the Companies Act and is basically a Corporation for transacting food and civil supplies through various projects, where certain subsidies are also extended. Merely because the Corporation is working on the principle of No profit No loss basis, the same cannot enure to the benefit of the appellant, who is a Contractor, extending his service as Contractor for the purpose of raising construction for the Corporation. The activity of the Corporation will have no impact on the claim of any such benefit under the provision aforesaid that has been pressed into service by the learned counsel for the appellant. The service rendered by the appellant and the activity of construction by the appellant is not an activity of charity and is rather a contract for profit. The appellant is doing construction work not for any loss by raising constructions for the Corporation. There are no merit in the appeal - appeal dismissed.
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Central Excise
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2020 (7) TMI 450
Principles of Natural Justice - Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - request for an opportunity of personal hearing rejected - rectification of mistake - whether aggrieved person of an order like Ext.P1 having availed the remedy of rectification, be permitted to take the benefit of Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 or not? - HELD THAT:- It is deciphered that the amount estimated by the designated committee must exceed the amount declared by the declarant. However on comparison of Exts.P1 and P3 the amount confirmed in the order in original Ext.P1, is ₹ 5,88,76,999/- whereas in the scheme the petitioner had claimed the liability of ₹ 4,60,68,715/-. Thus it was less than the amount as estimated by the designated committee. It is also a matter of record that though the petitioner could have availed the scheme, the rectification petition, against Ext.P1, pending consideration could not have arrived at a figure other than reflected in Ext.P1 - Revenue clearly complied with the provisions of Section 127, as there was no such occasion to afford opportunity of hearing being a farcical exercise. The 1st respondent is directed to dispose of the rectification application Ext.P2, as expeditiously as possible, in accordance with law, by affording an opportunity of hearing - application disposed off.
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CST, VAT & Sales Tax
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2020 (7) TMI 471
Principles of Natural Justice - legality and the validity of the assessment order - challenge is made essentially and predominantly on the grounds that, without assigning any reason or availing any opportunity and in complete breach of the principles of natural justice, the impugned order came to be passed by the respondent No.2 - HELD THAT:- In the instant case, since there is violation of principles of natural justice, more particularly, when the petitioner chose to approach the respondent-authority on 13.03.2020 and requested for relevant and vital documents, in response to the notice issued by it, without supplying the same, respondent-authority has imposed the petitioner with not only the heavy penalty but also interest by the order dated 24.03.2020, which is impugned in this petition, we, therefore, deem it appropriate to entertain this petition and at the joint request made by both the sides, matter deserves to be remitted, quashing and setting aside the impugned order of assessment. The period prescribed for reassessment of five years has already been concluded on 31.03.2020. However, since, the petitioner has moved this Court questioning the action of the respondent authority and as it has submitted through the learned Sr. Advocate representing its case that no contention, with regard to period of limitation shall be raised, the same shall not be treated as a ground to hamper the proceedings before the tax authority for its fresh consideration of the show-cause notice issued to the present petitioner. It would be of utmost necessary for the adjudicating authority to independently examine the material, which has been/ shall be placed on record before it by the petitioner and assess the same, on the strength of the substantiating documents, rather than basing its decision, solely on the cancellation of the registration of M/s. Maa Oil Mills, ab initio from the year 2007. This petition succeeds and is PARTLY ALLOWED - The impugned order dated 24.03.2020 is QUASHED and set aside and the matter is REMANDED to the competent authority for its consideration afresh, on merits, the case of the petitioner of ITC, after availing due opportunity to the petitioner, herein.
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2020 (7) TMI 470
Principles of Natural Justice - Jurisdiction - Power of Respondent of Re-opening of self assessment after expiry of statutory time limit - section 25A to KVAT Act - HELD THAT:- The matter in issue is covered in favour of the petitioner as per Ext.P3 judgment in the case in Philips India Ltd. Vs. Assistant Commissioner Others [ 2016 (10) TMI 814 - KERALA HIGH COURT ] as well as by Ext.P4 judgment passed by this Court on 02/02/2017 in WP(c) 35493/2016. Ext.P3 judgment has been upheld by the Division Bench of this Court. Further petitioner has got a specific case that Ext.P2 order is an ex-parte order and the notice dated 26/09/2019 has not been served on the petitioner. The impugned Ext. P2 ex-parte order will stand quashed - Petition allowed by way of remand.
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2020 (7) TMI 469
Re-opening of assessment - suo motu review proceedings - Levy of purchase tax - return of empty bottles from unregistered dealers - section 12(1) of the WB VAT Act, 2003 - HELD THAT:- The assessment order has been passed after hearing the petitioner under section 46(1) of the VAT Act. The petitioner had produced the books of account and necessary records which were duly examined by the respondents. The petitioner was assessed for tax liability on the best judgment basis for various expenses as reflected in final accounts and also for tax on sale of plastic crates. Purchase tax under section 12 was also levied upon the petitioner and the petitioner was made liable to pay a sum of ₹ 59, after giving credit for tax paid/tax deducted at source during the concerned financial year. It also appears that the petitioner did not dispute the said liability and the assessment order had attained finality. The orders passed in the suo motu revisional proceedings on December 21, 2018, cannot be set aside on the point of law that the petitioner is not liable to pay tax on return of bottles from the dealers. Since report of Bureau of Investigation has been independently considered by the respondent authorities while undertaking suo motu revision, we are of the considered view that the said report of bureau of investigation cannot also be set aside. Application disposed off.
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