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Home e-Newsletters Index Year 2024 April Day 10 - Wednesday

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TMI Tax Updates - e-Newsletter
April 10, 2024

Case Laws in this Newsletter:

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



Highlights / Catch Notes

    GST

  • Waiver of the interest levied on late filling of GST return for the specified (four) registered person. - The table provided in the notification delineates the class of registered persons, the respective months of non-compliance, and the period for which interest is to be 'Nil'. Noteworthy is the meticulous detailing, specifying the GSTINs of the registered persons affected along with the months and periods concerned.

  • Interest on Delayed Refund of Input Tax Credit - Proviso to Section 56 specified increased interest rates for refunds arising from orders of adjudicating or appellate authorities. - The High court observed that the provision for interest in tax statutes is beneficial and non-discriminatory. - Non-granting of interest would constitute a failure to fulfill statutory obligation by the refund sanctioning authority. - The High Court highlighted the principle of strict construction of fiscal legislation and the necessity for interest payment. - Ultimately, the court directed the respondents to pay interest on the delayed refunds to the petitioners.

  • Validity of order in original and Demand of GST - These issues included discrepancies in GST returns, imposition of cess, treatment of scrips, and taxation of corporate social responsibility activities. The Court found that the tax demands related to discrepancies in GST returns and imposition of cess were unjustified. Additionally, the treatment of scrips and taxation of corporate social responsibility activities were deemed unsustainable due to procedural shortcomings and the nature of the activities involved. Consequently, the impugned order was set aside, and the matter was remanded to the respondent for reconsideration.

  • Validity Of Order - Tax demand based on Audit observations - variation between the GSTR 3B return and Form 26AS - The High Court observed that there could be duplication between the issue of turnover reconciliation and the differences between the GSTR 3B return and Form 26AS. - The High Court noted the lack of documentation regarding turnover from Tamil Nadu but acknowledged potential duplication in the issues raised. Consequently, the Court set aside the impugned order and provided specific terms for further proceedings, including allowing the petitioner to file a reply with supporting documents and directing a fresh order within a specified timeframe.

  • Generation of Duplicate / multiple E-way Bills - Delay in filing of Appeal before the Appellate Authority - The petitioner argued that these duplicates were the result of technical mistakes made by a new employee. Although multiple E-way bills were generated for the same invoices, only one consignment was actually dispatched, with the GST collected duly paid to the department and reflected in the returns. The High Court, acknowledging the technical nature of the error and the rectification attempts by the petitioner, concluded that no tax demand was justified. However, the Court noted a delay in filing the appeal beyond the prescribed time frame and directed the petitioner to pay 15% of the disputed tax. - Petitioner permitted to file an appeal within two weeks.

  • Classification of imported and traded goods - clear float glass - The Appellate Authority for Advance Ruling highlighted that the presence of a tin layer is a natural outcome of the float glass manufacturing process and does not equate to an applied absorbent layer intended for specific functionalities like infrared light absorption or enhancing reflective qualities. - AAAR concluded that for a product to be classified under 7005 10 (which pertains to glass having an absorbent, reflecting, or non-reflecting layer), there must be a deliberate application of such a layer, distinguishing it from products falling under 7005 29, classified as "other" non-wired glass without specific functional coatings. - Ultimately, the Authority sided with the AAR's classification of the clear float glass under 7005 2990, underscoring the legislative intent and industry standards which differentiate between naturally occurring tin layers and specifically applied absorbent or reflective coatings.

  • Valuation - Manpower supply agency - Whether GST is payable only on the service charges / commission or Income received by whichever name by the Agency Supplying Manpower and not on the salary / wages and related payments made to the Employees - The Authority referenced Section 2(31) and Section 15 of the CGST Act, 2017, which define consideration and the value of taxable supply, respectively. They concluded that the entire payment received by the applicant constitutes consideration, and therefore GST is payable on the total amount received for the provision of services, including salaries/wages and related payments to employees.

  • Income Tax

  • The Corrigendum to Notification No. 02 of 2024, issued by the Directorate of Systems under the Ministry of Finance, Government of India, addresses a clarification regarding the time limit for verification of Income Tax Returns (ITRs) after uploading. - Paragraph 5 of the original notification is amended to specify that returns must be verified within 30 days from the date of uploading or until the due date for furnishing the return of income as per the Income-tax Act, 1961—whichever is later. Failure to verify within this timeframe will result in the return being treated as invalid.

  • TDS u/s 194C - addition u/s 40(a)(ia) - Payments made to Calcutta Dock Labour Board - The High Court observed that the employment of dock workers and their conditions of service, including wage payments, were stringently regulated under the Act and the Scheme. It was noted that the appellant's obligation to deposit wages with the Board was a statutory requirement for the disbursement of wages to the dock workers, negating the existence of a contract for labor supply between the appellant and the Board. - The court underscored that there was no contract of supply of labor between the Board and the appellant; thus, the appellant was not obligated to deduct tax at source under Section 194C.

  • Addition u/s 41(1) - interest waived by the Bank - The appellant contended that the waiver of liability by the bank should not be chargeable to tax under Section 41(1) of the Act. The High Court examined the provisions of Section 41(1) and emphasized that for it to apply, there must have been an allowance or deduction made in the assessment for the loss or expenditure incurred by the assessee. In this case, no such allowance or deduction had been made. Additionally, the Court concluded that the waiver of the loan amounted to the cessation of a liability other than trading liability, making Section 41(1) inapplicable. Consequently, the High Court ruled in favor of the assessee.

  • Priority/out of turn hearing of the appeals pending with CsIT (AU) and/or CIT(A) - The judgment by the Madras High Court addressed the petitioner's grievance regarding the rejection of their appeal against an assessment order. Despite acknowledging the genuine hardship faced by the petitioner, the Court declined to prioritize their case due to the backlog of appeals before the Appellate Commissioner. Instead, it advised the petitioner to file an application for a stay of recovery proceedings, granting them four weeks to do so. The respondents were directed to suspend all recovery proceedings until the application is resolved.

  • Application u/s 154 - benefit of the second proviso to Section 40(a)(ia), introduced by the Finance Act, 2012, with effect from 01.04.2013 - This proviso allows relief if the payee has paid taxes on the receipts, even if the tax deduction at source was not made by the payer. - The Tribunal rules in favor of the assessee, holding that the rectification sought u/s 154 is maintainable. It directs the issue back to the Assessing Officer for consideration on merits regarding the quantum of benefit allowable to the assessee under the second proviso to Section 40(a)(ia) of the Act.

  • Accrual of income - Addition made to the income of the assessee received by the assessee from “JDS” and its associates, treated as own income of the assessee - Despite the Department's awareness of the true nature of the transactions, the addition was confirmed by the lower authorities based on certain factors, including the deletion of similar additions in the case of the ultimate beneficiary and the appellant's previous assessment. However, the Appellate Tribunal, relying on legal precedents and the evidence presented, concluded that the funds received by the appellant were not their own income but were meant for the ultimate beneficiary. - Additions deleted.

  • Addition u/s 69A - Addition of cash deposits made by the assessee during the demonetization period - The Tribunal examined the legality of the assessment order, the justification for the cash deposits, and the imposition of interest and penalty. It found the assessment order to be valid but disagreed with the A.O's reasoning for the cash deposit addition. The Tribunal partially allowed the appeal, reducing the addition amount based on the assessee's available cash and savings. It upheld the charging of interest but deemed the initiation of penalty proceedings premature.

  • Revision u/s 263 by CIT - Addition u/s 68 - unexplained credit - The Tribunal meticulously examined the submissions, the audit objections, and the law's provisions. It observed that the appellant had indeed furnished comprehensive details during the original assessment proceedings. Notably, the Tribunal found that the Pr.CIT's reliance on audit objections and the subsequent show cause notice under Section 263 lacked independent application of mind. - The Tribunal held that the original assessment order made after due inquiries by the AO, which included scrutiny of unsecured loans and trade payables, could not be deemed erroneous merely because the Pr.CIT had a different view.

  • Assessment u/s 153C - undisclosed receipts as allegedly received by the assessee - reliance on the statement of persons (from whose possession the material was seized) - The Tribunal agreed with the CIT(A) that the seized material did not directly link the assessee to the undocumented income without corroborative evidence. It emphasized the need for corroborative evidence to attribute the entries in the seized documents to the assessee and noted the lack thereof. - The Tribunal acknowledged the importance of sworn statements under section 132(4) but also recognized the significant impact of their retraction, especially when the retraction claims coercion or pressure. It concurred that statements retracted should not be solely relied upon without corroborative evidence.

  • Investment allowance u/s 32AC - claim disallowed as assessee do not fulfill the requisite condition - The ITAT sided with the assessee, affirming that the activities of blending lubricant oil qualified as "manufacture" or "production", thus making them eligible for investment allowance under Section 32AC. The Tribunal found the Revenue's interpretation of the term "manufacture" too narrow and not in line with the legislative intent or judicial precedents that recognize a broader understanding of "production".

  • Validity of reopening of assessment u/s 147 - Reason to believe - The Appellate Tribunal observed that the reassessment proceedings were initiated solely based on the information available in Form 26AS, without any fresh material or tangible evidence. The Tribunal agreed with the CIT(A)'s conclusion that the AO did not have sufficient grounds to form a belief that income had escaped assessment. Therefore, the Tribunal dismissed the revenue's contention and upheld the CIT(A)'s decision to quash the reassessment proceedings.

  • Transfer Pricing Adjustment on Delayed Receipt of Export Proceeds - notional interest - The Appellate Tribunal found that the CIT(A) had dismissed the new contention of treating receivables from AEs and non-AEs equally without proper examination, relying on a judgment that didn't restrict the assessee from raising new arguments. Noting that the previous judgment cited by the CIT(A) was not applicable in the current case, the Tribunal deemed the dismissal unjustified. Consequently, the matter was remanded back to the CIT(A) for a fresh examination, allowing the assessee to present all relevant contentions and evidence.

  • Denial of Foreign Tax Credit (FTC) - being Form 67 was not filed along with the ITR before the time limit u/s 139 (1) - The use of the word "shall" in the rule indicates the mandatory nature of this requirement. - The Tribunal referred to a precedent set by the Mumbai Bench of the ITAT in the case of Rohini Hattangadi vs. CIT (A), where it was held that the delay in filing Form 67 should not disentitle the assessee from claiming FTC. The decision emphasized that procedural law should not be construed as mandatory if it aids the claim of substantive right. - Furthermore, the Tribunal considered various decisions stating that provisions of Double Taxation Avoidance Agreements (DTAA) override the provisions of the Act if they are beneficial to the assessee.

  • Income taxable in India - Royalty or FTS - PE in India or not? - Assessment of payments made by Google India Pvt. Ltd. (Payer) to Google Ireland Limited (payee) for online advertisement services. - The Tribunal observed that the services provided by the payee did not involve the transfer of any rights in or the right to use any copyright of literary, artistic, or scientific works, including software. It also noted that the services did not entail the transfer of any secret formula, process, or industrial, commercial, or scientific equipment. - The ITAT Bangalore decided in favor of the payer, stating that the payments made to the payee for online advertisement services could not be classified as 'royalty' or FTS under the Income Tax Act or the DTAA. Therefore, the payer was not liable for withholding tax on these payments.

  • Addition u/s 56(2)(viib) - Method of Valuation - share premium receipts - The Tribunal noted that the appellant had obtained a valuation report from a registered valuer, considering both movable and immovable properties owned by the assessee. This valuation was deemed appropriate and in compliance with recognized methods. - The Tribunal criticized the AO's method of valuing the equity shares based solely on the book value, disregarding the registered valuer's report. Additionally, the AO did not refer the issue to a valuation expert, which was considered unacceptable. - Given the discrepancies in the AO's approach and the validity of the valuation report provided by the appellant, the Tribunal ruled in favor of the appellant. The addition of share premium to the assessee's income was deemed unwarranted, and the Tribunal directed the AO to delete the addition.

  • Customs

  • Notification No. 23/2024-Customs amends the original Notification No. 64/2023-Customs by substituting the deadline mentioned in Column (4) of the Table against S. No. 1. Instead of the previous date of "30th day of April, 2024," the new deadline is extended to "30th day of June, 2024." This extension provides importers with additional time to comply with the conditions for availing exemptions on specified goods, particularly Yellow Peas.

  • Seeking release/return of gold bangle- Issuance of SCN after 3 months of seizure - The High Court of Meghalaya heard a case regarding the seizure of a gold bangle under the Customs Act. The petitioner sought the return of the seized item due to a delay in receiving the show cause notice, which violated the statutory provisions. Despite attempts to justify the delay, the court ruled in favor of the petitioner, emphasizing the mandatory nature of the notice period and the need for compliance with legal provisions. The court's decision highlighted the independence of Sections 110 and 124 of the Customs Act and their respective implications.

  • Validity of criminal complaint and related summons issued by the ACMM, New Delhi - Liability to pay differential customs duty with penalty - The High Court acknowledged the merits of the petitioners' contentions, noting that the summons appeared to have been issued without proper consideration of the order dated 15.09.2023 passed by the Principal Commissioner of Customs. The Court directed that the factual position be brought to the attention of the ACMM for reconsideration. If the ACMM deemed the summons to be in accordance with the law, the petitioners were granted liberty to challenge the summoning order afresh, considering the previous order clearing them of charges. The Court also exempted the presence of the petitioners before the ACMM for the scheduled date.

  • Denial of relinquishment of title of part (balance) goods lying in the warehouse - Section 68 of the Customs Act, 1962 - The Appellate Tribunal notes the appellant's financial difficulties and their request for an extension of the warehousing period. Despite these challenges, the goods remained uncleared beyond the initial warehousing period. - The CESTAT determines that the appellant's relinquishment of title was made within the permissible timeframe, as no order for clearance of goods for home consumption had been issued. - Regarding penalties: the Tribunal observes that the appellant had already been penalized under section 117 of the Customs Act. Considering this penalty and the circumstances of the case, it refrains from imposing any further penalties on the appellant.

  • Seeking clearance of imported goods - e-waste/hazardous waste - imported medical devices - The Appellate Tribunal found in favor of the appellant on all grounds. They held that the absence of a valid SCN deprived the Adjudicating Authority of jurisdiction to pass the order. Additionally, considering the evidence presented, including certification by a Chartered Engineer, the Tribunal concluded that the imported goods did not qualify as waste under the relevant rules. The certification of the goods' residual life further supported this finding.

  • DGFT

  • The notification introduces a temporary shift from a 'Restricted' to a 'Free' import policy for melon seeds, effective from May 1, 2024, to June 30, 2024. This transition facilitates a smoother import process for a specified period, aiming to potentially stabilize market prices or meet domestic demand surges. - Notably, the 'Free' status is conditioned upon the imports being on an 'Actual User' basis, exclusively permitting processors of melon seeds to import. Importers must adhere to stringent regulatory requirements, including possession of a valid FSSAI Manufacturer Licence specifically for melon seeds, in alignment with the FSSAI Order dated March 15, 2024.

  • The period within which Yellow Peas can be imported freely, without the Minimum Import Price (MIP) condition and without port restrictions, has been extended from 30th April 2024 to 30th June 2024 for consignments with Bills of Lading issued on or before the latter date. - Import consignments where the Bill of Lading is issued after 30th June 2024 will be subjected to the 'Restricted' category. The associated import policy conditions that were in place before the issuance of DGFT Notification No. 50/2023 dated 08.12.2023 will be reinstated.

  • DGFT Notification No. 03/2023, issued on April 5, 2024, facilitates the export of essential commodities to the Republic of Maldives under a bilateral trade agreement for FY 2024-25. The commodities include Eggs, Potatoes, Onions, Rice, Wheat Flour, Sugar, Dal, Stone Aggregate, and River Sand. The notification exempts these exports from future restrictions, emphasizing India's commitment to supporting the Maldives. It also mandates environmental and regulatory compliance for the export of River Sand and Stone Aggregate, reflecting a commitment to sustainable and responsible trade practices.

  • Indian Laws

  • The Ministry of Home Affairs issued the Foreign Contribution (Regulation) Amendment Rules, 2022, on 1st July 2022, introducing several key amendments to the Foreign Contribution (Regulation) Rules, 2011. These amendments include a tenfold increase in the financial threshold for reporting foreign contributions, extended compliance deadlines for reporting, the omission of a specific clause under rule 13, and a formalization of reporting mechanisms to include electronic submissions. These changes are indicative of a move towards a more streamlined and possibly more digital framework for the regulation of foreign contributions in India, balancing between easing operational burdens on organizations and maintaining adequate regulatory oversight.

  • Freezing of Bank Accounts - investigation under the FCRA - Seeking to continue utilising their accounts for payment of salary and institutional expenses - Section 37 of the Foreign Contribution (Regulation) Act 2010 - The Supreme Court addressed a case involving the freezing of accounts of an organization under investigation for alleged financial irregularities under the FCRA. While allowing the organization to utilize its accounts for essential expenses, the Court imposed strict conditions on maintaining and auditing accounts, with regular reporting to investigating authorities or the trial court. The Court refrained from making any findings on the allegations of contempt, emphasizing that the order aimed to facilitate the continued operation of the numerous institutions run by the petitioners.

  • IBC

  • Locus of appellant - The NCLT's decision dismissed the Appellant's objections to a scheme of amalgamation involving two companies - Appellant contended that they were a creditor based on previous agreements and royalty payments related to copyright material, thus entitled to object to the scheme and access scheme documents. - The Tribunal found no merit in the Appellant's arguments, affirming that the legal criteria for a creditor's locus standi in objecting to a scheme were not met by the Appellant. The NCLAT underscored that the Appellant's name was not listed in the audited financial statements nor among the unsecured creditors of either respondent company. This fact was pivotal in determining the Appellant's lack of standing to object to the scheme.

  • Non-compliance of conditions of the Approved Resolution Plan by the Successful Resolution Applicant (SRA) - The Appellate Tribunal found that as per the order dated January 13, 2023, by the Adjudicating Authority, all conditions precedent as required under the approved Resolution Plan were fulfilled by the SRA by May 20, 2022. This included the validation of the Air Operator Certificate, submission and approval of the business plan, slots allotment approval, international traffic rights clearance, and the demerger of ground handling business into AGSL. - The Tribunal acknowledged the extensions and exclusions granted by the Adjudicating Authority for fulfilling the conditions precedent and for the infusion of the first tranche of funds. - The Tribunal did not grant the appellants' request for the liquidation of the corporate debtor under Section 33(3) of the IBC.

  • VAT

  • Review of the order - Recovery of dues - priority of charges - secured creditor have a prior right over the relevant Department of the Government to appropriate the amount realized by the sale of a secured asset - The High court agreed with the submissions made by Ms. Jeejeebhoy (for Revenue) that the discovery of new particulars would not assist the petitioner in the review proceedings. The court emphasized that the findings in paragraph 237, which referred to paragraph 154 of the judgment, were crucial in determining the outcome of the case. Paragraph 154 underscored the significance of following legal procedures, particularly regarding the attachment and proclamation of the defaulter's property. - The court affirmed that the respondent, the Sales Tax Department, had adhered to the legal procedures, as observed and accepted by the court.


Articles


Notifications


Circulars / Instructions / Orders


News


Case Laws:

  • GST

  • 2024 (4) TMI 367
  • 2024 (4) TMI 365
  • 2024 (4) TMI 364
  • 2024 (4) TMI 363
  • 2024 (4) TMI 362
  • 2024 (4) TMI 361
  • 2024 (4) TMI 360
  • 2024 (4) TMI 359
  • 2024 (4) TMI 358
  • Income Tax

  • 2024 (4) TMI 357
  • 2024 (4) TMI 356
  • 2024 (4) TMI 355
  • 2024 (4) TMI 354
  • 2024 (4) TMI 353
  • 2024 (4) TMI 352
  • 2024 (4) TMI 351
  • 2024 (4) TMI 350
  • 2024 (4) TMI 349
  • 2024 (4) TMI 348
  • 2024 (4) TMI 347
  • 2024 (4) TMI 346
  • 2024 (4) TMI 345
  • 2024 (4) TMI 344
  • 2024 (4) TMI 343
  • 2024 (4) TMI 342
  • 2024 (4) TMI 341
  • Customs

  • 2024 (4) TMI 340
  • 2024 (4) TMI 339
  • 2024 (4) TMI 338
  • 2024 (4) TMI 337
  • Insolvency & Bankruptcy

  • 2024 (4) TMI 336
  • 2024 (4) TMI 335
  • Service Tax

  • 2024 (4) TMI 334
  • 2024 (4) TMI 331
  • 2024 (4) TMI 330
  • 2024 (4) TMI 329
  • 2024 (4) TMI 328
  • 2024 (4) TMI 327
  • 2024 (4) TMI 326
  • Central Excise

  • 2024 (4) TMI 325
  • 2024 (4) TMI 324
  • 2024 (4) TMI 323
  • CST, VAT & Sales Tax

  • 2024 (4) TMI 333
  • 2024 (4) TMI 322
  • Indian Laws

  • 2024 (4) TMI 366
  • 2024 (4) TMI 332
 

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