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Home e-Newsletters Index Year 2024 April Day 3 - Wednesday

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TMI Tax Updates - e-Newsletter
April 3, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise Indian Laws



Highlights / Catch Notes

    GST

  • Violation of the principles of natural justice - The petitioners asserted that since an adverse decision was made against them without a personal hearing, it was in contravention of Section 75(4) of the CGST/MGST Act. - The petitioners, a private company, challenged the order on the grounds that they were not afforded a personal hearing despite requesting one and that the discrepancies alleged against them were unsubstantiated. - Since the petitioners had requested a personal hearing in their reply, the failure of Respondent No. 3 to provide one was deemed a violation of the law. - Matter restored back.

  • Recovery notices and bank attachment orders - No opportunity of being heard - discrepancies between the GSTR 3B return and the GSTR 2B return - The High Court observed that the petitioner was not given a proper opportunity to be heard before the issuance of the assessment order. Despite the petitioner's submission of a reply, no opportunity for a personal hearing was provided. - Considering that approximately 50% of the tax liability was recovered by debiting the petitioner's bank account, the court deemed it necessary to provide the petitioner with an opportunity to be heard. - Matter restored back.

  • Validity of Assessment order - demand of GST - The petitioner asserts that an error was committed by entering the same invoice number in multiple e-way bills - The High Court noted that the petitioner had indeed submitted a reply on 28.08.2023, explaining the error and attaching relevant bill copies. However, the impugned order did not provide reasons for rejecting the petitioner's reply and documents, which led to the conclusion that there was a lack of proper consideration. - The High Court quashed the impugned order dated and remanded the matter to the assessing officer for reconsideration.

  • Income Tax

  • LTCG - Deduction claimed u/s 54 - ITAT allowed claim - The High Court notes that the issue revolves around long-term capital gains arising from an Apartment Buyers Agreement entered into before the property sale. - The ITAT's conclusion, aligning with previous case law, states that possession of the property was completed within three years from the sale, entitling the assessees to relief. Referring to precedent, the High Court reaffirms that the construction commenced within the mandated time frame, and the assessees fulfill the conditions under section 54 of the Act. The High Court dismisses the appeal of the Revenue, finding no substantial question of law raised and upholds the ITAT's decision.

  • Maintainability of the writ petition in HC - Validity of reassessment order passed - The petitioner raised concerns about procedural irregularities, including the lack of sufficient time for response and the initiation of multiple proceedings for the same period and issue. The High court considered the maintainability of the writ petition, emphasizing the importance of adhering to statutory remedies and precedents regarding writ jurisdiction. Ultimately, the court dismissed the petition, highlighting the availability of alternative remedies under the Income Tax Act, 1961, and refrained from making observations on the merits of the case.

  • Disallowance of prior period expenditure - Mercantile system - Matching principles of accounting - The assessee had claimed deduction for such expenses, citing a consistent practice and a previous favorable decision by the ITAT Nagpur. Despite the Revenue's contestation based on accounting principles, the Tribunal upheld the CIT(A)'s decision in favor of the assessee, emphasizing consistency with past rulings. As a result, the Tribunal dismissed the Revenue's appeal, affirming the allowance of prior period expenses for the relevant assessment year.

  • Rectification u/s 154 application rejected as being time barred - The Appellate Tribunal agreed with the assessee's contention that the rectification application was not time-barred. It held that the clock for the four-year limitation period starts only when the assessee is in receipt of the order to be rectified. Since there was no evidence that the intimation under Section 143(1) was served on the assessee, the limitation period did not begin, and the application was well within the stipulated time.

  • Revision u/s 263 by CIT - inadequate v/s no enquiry - unsecured loan, difference in stock and late payment of PF & ESI - The Tribunal reviewed each of the contested issues and found that the AO had adequately considered them during the assessment. It observed that the appellant had provided relevant details and explanations, which were duly examined by the AO. As a result, the Tribunal determined that there was no basis for considering the assessment order as erroneous under Section 263.

  • Customs

  • Recovery under demand notices based on alert issued 5 years ago - Bonds for Warehoused goods has already expired - The High Court determined that the demand notice issued under Section 72(1) of the Customs Act in 2013 became unenforceable when no concrete measures were undertaken within a reasonable period to execute the notice. The Court highlighted the lapse in action for nearly ten years, rendering the subsequent enforcement attempts invalid. - The Court found the Alert Notice issued in 2018 to be unjustified and illegal, as it sought to enforce an expired and redundant demand. This action was deemed contrary to the provisions of the Customs Act and the principles of limitation.

  • Seeking defreezing of petitioner’s bank account - export under Duty Drawback Scheme under Section 75 of Customs Act, 1962 - The petitioner claimed duty drawback under the Duty Drawback Scheme for goods exported through Tuticorin Sea Customs. However, due to the petitioner's inability to submit a bank realization statement at the time of consideration, their claim was rejected. The High Court, after considering the submissions, directed the remittance of the matter for reconsideration. The impugned orders were set aside, and the respondents were instructed to reevaluate the claim, considering the bank realization statement submitted by the petitioner.

  • Valuation of the export goods on which duty has to be paid - The Appellate Tribunal upholds the appellant's contention regarding the determination of the transaction value. It asserts that customs authorities cannot alter the transaction value agreed upon by the buyer and seller. The transaction value, as per the contract terms, remains binding, and customs authorities cannot disregard it based on conflicting test reports. The Tribunal concludes that the re-determination of the transaction value based on the CRCL test report is incorrect and cannot be sustained. - The Tribunal rules in favor of the appellant regarding the inclusion of the additional amount paid by the overseas buyer as commission. It emphasizes that commissions paid cannot be added to the transaction value for export goods.

  • Classification of imported goods - AJI-NO-MOTO - The main contention was whether Ajitide I+G should be classified as a miscellaneous chemical product or as a food flavouring material. The Tribunal examined the product's usage, characteristics, and industry perception, concluding that it functions both as a flavour enhancer and imparts the umami taste, fitting more accurately under the category of food flavouring materials under CTH 2106 9060. - Since the Tribunal found the product to be correctly classified under food flavouring materials, it ruled that the appellant was not eligible for the claimed exemption.

  • Imposition of penalties u/s 112(a) of the Customs Act 1962 on Customs broker - import of used Multifunction Digital Photocopiers and Printers - it is alleged that the appellant had connived with the importers - The Tribunal in its earlier order upheld confiscation of the goods but allowed redemption on payment of redemption fine and penalty on the enhanced value. - The Tribunal reviewed the evidence and found no proof of the appellant's involvement in the importation violations. As there was no penalty under Customs House Agents Licensing Regulations, the penalty under Section 112(a) was not sustainable.

  • Proceedings against importer when the sole proprietor of M/s Ganpati Enterprises had expired - mis -declaration and short payment of duty - imposition of penalty on appellant - The Tribunal ruled that proceedings cannot continue under the Customs Act following the death of the sole proprietor. Citing legal precedent, the Tribunal emphasized that there are no provisions to continue proceedings against the legal heir of a deceased proprietor. - Regarding the imposition of penalties, the Tribunal found no evidence linking one of the appellants to the import of the consignment. Therefore, no penalty was imposed on this appellant.

  • Smuggling - foreign origin Gold - burden to prove - The tribunal clarified that the burden of proof under Section 123 of the Customs Act, 1962, solely rested on the person claiming ownership of the seized goods, in this case, the appellant who claimed to have purchased the gold legally. It was deemed that the appellants had discharged their burden by providing substantial documentary evidence supporting their claim of lawful acquisition from Snehal Gems Pvt Ltd. - The tribunal found that the Department failed to disprove the appellants' claim of legal purchase or to conclusively prove that the goods were procured through illegal means.

  • Classification of imported goods - different categories of "IP Phones" such as (i) IP Audio Phones (ii) IP Audio Conference Phones (iii) Wireless IP Phones (iv) IP Video Phones - Applying the General Rules for the Interpretation of the Customs Tariff, the Tribunal preferred the specific classification claimed by the appellants over the more general classification used by the customs department, in line with legal precedents that favor more specific descriptions when classifying goods. - The tribunal observed that the principal function of the IP Phones is telephony, as they are used for the transmission of speech or audio signals, which aligns them more closely with the classification attracting 'NIL' BCD.

  • Payment of IGST on the imported raw materials/inputs taken into the private bonded warehouse of the appellants importer - Schedule-III entry at 8(a) to Section 7 of CGST Act, 2017 - The Tribunal held that GST is not leviable on imported raw materials consumed in the manufacture of final products under a customs bonded warehouse arrangement until such goods are cleared for home consumption.

  • Warehousing of imported Goods without payment of duty - The Tribunal concluded that the appellant complied with all legal provisions for the importation and warehousing of goods under the Customs Act, 1962. The Tribunal found no basis for the demand for customs duty on raw materials used in manufacturing, which were imported and stored in a licensed private bonded warehouse. - The Tribunal affirmed that the jurisdiction for raising demand for short levy lies with the proper officer having jurisdiction over the warehouse and not with the Custom House of the port of import, aligning with previous Tribunal decisions and legal provisions.

  • Indian Laws

  • Dishonour of cheque - Respondent (accused) denied issuing the cheques and claimed they were taken from his office by the complainant. - The Trial Court found the ledger produced by the complainant to be inadmissible as it lacked a certificate u/s 65B of the Evidence Act. - The Trial Court held that since the signatures on the cheques were admitted by the respondent, the presumption u/s 138 would arise. - The Trial Court found that the accused had raised a probable defense by asserting that he used to sell goods to the complainant and the cheques were not issued for any legally recoverable debt or liability. - The High Court emphasized the limited scope of interference in appeals against acquittals, stating that unless the view taken by the Trial Court is impossible or perverse, interference is not warranted.

  • IBC

  • Approval of Resolution Plan - The Tribunal found the resolution plan’s treatment of operational creditors contrary to Section 30(2)(b) of the IBC, as operational creditors were offered payments through equity rather than cash, which is not aligned with the precedence established by the Supreme Court. - The Tribunal modified the order of the NCLT to ensure that the resolution plan complies with the provisions of Section 30(2)(b)(ii) of the IBC. It directed that the resolution applicant distribute the plan amount to the operational creditors on a pro-rata basis as per the said section, prioritizing cash payments over other forms.

  • PMLA

  • Seeking grant of bail - money laundering - proceeds of crime - misappropriation of credit facilities extended by the banks for personal gain - creation of shell companies - The court notes the serious nature of the allegations and the necessity for thorough investigation, considering the substantial amount involved. Despite the defense's contentions, the court finds sufficient grounds to reject the bail plea, emphasizing the need for deeper inquiry. - The court considers the allegations regarding the transfer of funds overseas and the petitioner's involvement in such transactions. Despite the defense's denials, the court finds merit in the prosecution's concerns, warranting a thorough examination before considering bail.

  • The High Court addressed the petitioner's plea to quash the ECIR proceedings against him, which were based on an FIR that had been quashed earlier. After examining the arguments presented by both parties, the court found that since the proceedings in the predicate offense had been quashed, the ECIR proceedings against the petitioner could not be sustained.

  • Service Tax

  • Levy of service tax - bowling alley income - scope of ‘amusement facility’ - The case involved a dispute regarding the taxability of income from a bowling alley operated by the appellant. The Department contended that since the appellant provided additional services within the premises, the bowling alley income was not exempt from service tax. However, the Tribunal determined that the bowling alley qualified as an 'amusement facility' under the relevant provisions of the Finance Act. Charges for accessing the facility were deemed exempt from service tax, regardless of the additional services provided within the premises.

  • Providing Services to SEZ unit - Benefit of exemption - The appellant couldn't submit Form A1 due to unavailability to SEZ units but submitted Form A2. The revenue argued against granting exemption due to non-submission of mandatory forms. However, the Tribunal ruled in favor of the appellant, stating that since Form A2 was available, denial of exemption was unwarranted. The appellant's eligibility for exemption was confirmed based on Form A2 issued by the jurisdictional officer. Consequently, the impugned order was set aside, and the appeal was allowed.

  • Central Excise

  • CENVAT Credit - place of removal for the GTA Services provided under a F.O.R sale contract - The High Court determined that in an F.O.R sale, where ownership remains with the seller until delivery at the buyer's premises, the place of removal should be considered the buyer's premises. This interpretation was supported by relevant Supreme Court decisions and a circular issued by the CBIC. The Tribunal's decision to consider the factory gate as the place of removal was deemed unjustified. - The High Court concluded that the appellant is indeed eligible for CENVAT credit on outward transportation beyond the place of removal.

  • Cenvat credit for service tax paid on 'management fee' and 'common sharing of Head office services' - invoices from the service provider were not in the prescribed format - The Appellate Tribunal concluded that there was a reasonable nexus between the services provided and the appellant's activities, justifying the admissibility of the cenvat credit. Despite minor procedural defects in the invoices, the Tribunal upheld the admissibility of the credit, emphasizing that the invoices contained the necessary particulars. Furthermore, the Tribunal found no suppression of facts by the appellant, rendering the invocation of the extended period of limitation by the Department untenable.

  • Process amounting to manufacture - The appellant's contention was that the activities—testing, labeling, and packing—performed on imported modems did not amount to manufacture, as the modems were already in a marketable state upon import. They argued that these processes were essential quality checks and did not alter the modem's identity, thus not constituting manufacture. - The Tribunal held that testing, labeling, and packing of modems, coupled with the inclusion of additional accessories, amounted to making the product marketable to the consumer, thereby falling within the definition of manufacture.


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Case Laws:

  • GST

  • 2024 (4) TMI 59
  • 2024 (4) TMI 58
  • 2024 (4) TMI 57
  • 2024 (4) TMI 56
  • Income Tax

  • 2024 (4) TMI 55
  • 2024 (4) TMI 54
  • 2024 (4) TMI 53
  • 2024 (4) TMI 52
  • 2024 (4) TMI 51
  • 2024 (4) TMI 50
  • Customs

  • 2024 (4) TMI 49
  • 2024 (4) TMI 48
  • 2024 (4) TMI 47
  • 2024 (4) TMI 46
  • 2024 (4) TMI 45
  • 2024 (4) TMI 44
  • 2024 (4) TMI 43
  • 2024 (4) TMI 42
  • 2024 (4) TMI 41
  • Insolvency & Bankruptcy

  • 2024 (4) TMI 40
  • 2024 (4) TMI 39
  • PMLA

  • 2024 (4) TMI 38
  • 2024 (4) TMI 37
  • Service Tax

  • 2024 (4) TMI 60
  • 2024 (4) TMI 36
  • 2024 (4) TMI 35
  • 2024 (4) TMI 34
  • 2024 (4) TMI 33
  • Central Excise

  • 2024 (4) TMI 32
  • 2024 (4) TMI 31
  • 2024 (4) TMI 30
  • Indian Laws

  • 2024 (4) TMI 29
 

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