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Home e-Newsletters Index Year 2024 April Day 6 - Saturday

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TMI Tax Updates - e-Newsletter
April 6, 2024

Case Laws in this Newsletter:

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



Highlights / Catch Notes

    GST

  • Validity of extension of time limit for issuance of SCN under GST Act - The petitioner challenged a notification issued under Article 226 of the Constitution of India, which extended the time limit under Section 73(10) of the CGST Act for certain financial years. The petitioner argued that the conditions precedent for the notification were not met, as their time limit for examining the annual return had already expired before the notification's issuance. The CGST standing counsel justified the extension of timelines citing the challenges posed by the Covid-19 pandemic. The court issued a notice for further examination of the issues raised and decided to halt the enforcement of the assessed amount against the petitioner until further orders, considering similar ongoing cases in other courts.

  • Cancellation of registration of Firm - The case involved a challenge to the cancellation of the petitioner's firm's GST registration due to non-filing of returns for a continuous period. The petitioner sought relief from the High Court to quash the cancellation order. Despite arguments from the opposing counsel regarding the lapse of statutory time limits, the Court recognized the importance of allowing businesses opportunities for restoration and revocation of registration. Consequently, the Court granted the petitioner permission to file an application for revocation of cancellation within 30 days, subject to payment of statutory penalties or fines.

  • Violation of principles of natural justice - mandatory SCN was not served - provisional attachment of property - The respondent defends the legality of the actions, asserting compliance with relevant provisions. However, the High Court finds in favor of the petitioner, ruling that the absence of a show cause notice renders subsequent proceedings void. Emphasizing the importance of procedural fairness and adherence to due process, the Court quashes the impugned orders and notices, including the provisional attachment of the petitioner's bank account. The matter is remitted back to the Adjudicating Authority for further proceedings in accordance with the Court's directives.

  • Violation of principles of natural justice - technical glitch - Despite the Department's submission that the petitioner had been informed in advance about the correct email address, the notices were still sent to the wrong address due to an error. Consequently, the High Court finds that the petitioner was not afforded a fair opportunity for a personal hearing, primarily due to technical errors in the communication process. - Therefore, the High Court sets aside the OIO on the grounds of violating principles of natural justice.

  • Income Tax

  • Ceasure of income tax settlement commission - restriction to the filing of the application before the Interim Board for Settlement - The Court found that the retrospective legislative changes could not negate the petitioner's vested rights to file a settlement application, particularly when such applications were made before the enactment of the Finance Act, 2021. It was held that the administrative actions and notifications that imposed additional eligibility criteria, not rooted in the Act, were invalid. - The Court quashed the contested notice and notification, directing that the petitioner's application be considered and disposed of in accordance with the law.

  • Penalty imposed by the Settlement Commission u/s 271(1)(c) - The petitioner argued against the penalty, citing lack of mens rea and the absence of evidence showing awareness or receipt of any excess consideration. The court examined the disclosures made by the petitioner, discrepancies in stamp duty valuation, and the petitioner's explanation regarding ignorance of the sale deed executed by the Power of Attorney holder. Ultimately, the High Court found that the element of concealment was not established, especially considering the lack of independent evidence showing receipt of excess consideration. Consequently, the court set aside the penalty imposed by the Settlement Commission.

  • Validity of Reopening of assessment based on order passed u/s 263 - The Court found that the reassessment proceedings lacked the satisfaction of jurisdictional pre-conditions and were based solely on an order that had been set aside by the Income Tax Appellate Tribunal. Therefore, the notices and order issued by the Assessing Officer to reopen the assessment could not be sustained. The Court emphasized that once a query is raised during the assessment proceedings and answered by the assessee, it is deemed to have been considered and accepted by the Assessing Officer.

  • The case involved a petitioner seeking relief under Article 227 of the Constitution regarding the rejection of their application for condonation of delay in claiming a significant loss in their income tax return. Despite arguments citing genuine hardship and procedural lapses, the High Court upheld the decision of the respondent authority. The Court interpreted Section 119(2)(b) of the Income Tax Act, finding that the delay could not be condoned as the petitioner had not made the claim belatedly. Moreover, the petitioner's failure to demonstrate genuine hardship and their habitual late filing of returns further weakened their case.

  • Stay of demand - direction to depositing 40% of the outstanding demand - The court found the stance of requiring a 20% pre-deposition as a precondition for stay consideration, as adopted by the respondents, to be legally unsound. Further, it was highlighted that the PCIT exacerbated the petitioner's burden by demanding a 40% deposit without assessing the merits or hardship entailed. The High Court quashed the orders dated 22 November 2021 and 27 February 2024, remanding the matter to the AO for fresh consideration of the stay applications in accordance with the legal position elucidated in the NASSCOM judgment and without prejudice to the merits of the petitioner's challenge.

  • Reopening of assessment v/s assessment u/s 153C - The High Court concludes that both Sections 153A and 153C have an overriding effect on regular provisions for assessment or reassessment under Sections 139, 147, 148, 149, 151, and 153. - The High Court clarifies that Section 153C applies when seized material relates to or belongs to a person other than the one on whom the search was conducted or requisition made. The Court emphasizes that Section 153C does not render Section 148 redundant but rather provides a specific procedure in certain cases. It asserts that the Department can resort to Section 148 when there is no incriminating material found during the search or requisition.

  • Rejection of the books of accounts - best judgment assessment u/s 144 - addition of the sales made in cash on account of unexplained cash credit u/s 68 - While the rejection of books of accounts was upheld, the tribunal disagreed with the addition of unexplained cash credit under section 68, emphasizing the necessity for a fair and scientific estimation of income. They directed the Assessing Officer to delete the addition made under section 68, highlighting inconsistencies in the assessment process.

  • Deduction u/s. 80IA(4)(i) on storage tank MDI and storage tank EDA - By affirming the eligibility for deductions u/s 80IA(4) for the specialized storage tanks, the tribunal underscored the broader interpretation of infrastructure facilities in the context of port operations. The decision to allow share issue expenses under section 35D reiterates the acceptance of capital nature expenses pre-business commencement. Meanwhile, the nuanced approach in dealing with section 14A disallowances reflects the tribunal's acknowledgment of the complexity surrounding the allocation of expenses towards earning exempt income.

  • Condonation of delay filling appeals - The Tribunal, after thorough analysis, decided to condone the delay, considering the principle of substantial justice. It also found shortcomings in the AO's actions, including inadequate investigations and discrepancies in assessments. Additionally, it criticized the CIT(A) for not properly considering additional evidence and not adjudicating on the merits of the case. Ultimately, the Tribunal set aside the order of the CIT(A) and remanded the case for a fresh adjudication, allowing the appeal for statistical purposes.

  • Customs

  • Levy of penalty - Bill of Entry for clearance of ‘Sweet Pearl P200’ classified under 29054900 - Revenue reclassified the goods under 21069060 - The burden of proof was on Revenue to justify the reclassification, which they failed to do adequately. The Tribunal upheld the appellant's classification, emphasizing the importance of Revenue's burden of proof and the correctness of the proposed classification. The appeal by Revenue for imposing a penalty was dismissed.

  • Smuggling - Absolute Confiscation - The Appellate Tribunal found that the Customs department failed to prove that the mosquito repellents and ladies garments were smuggled items. The department did not provide sufficient evidence to establish the smuggled nature of these goods. Additionally, these items were not listed as prohibited items under Section 123 of the Customs Act, 1962. Therefore, the Tribunal ruled that these goods cannot be confiscated. - Regarding the green-colored refrigerant gas cylinders containing HCFC gas, the Tribunal acknowledged that these were restricted items but not prohibited items. Merely stating that the goods could only be manufactured in China was deemed insufficient to justify their confiscation. Hence, the Tribunal held that the HCFC gas cannot be confiscated.

  • Confiscation of goods - Redemption fine - Imposition of penalty - Valuation dispute - The case involved the importation of machinery where the foreign supplier mistakenly shipped an incorrect quantity of machines. The appellant declared the assessable value based on the purchase order without knowledge of the error. The Tribunal noted that the importer had no knowledge of the mistake and had actually over-declared the assessable value, indicating no intention to deceive. Therefore, it overturned the confiscation of goods, redemption fine, and penalty imposed.

  • Seeking Permission to abandon the goods and remission of duty - The case involved the misdeclaration of goods where the appellant received Stone Chips instead of Aluminium Alloy Ingots. They sought permission to abandon the goods and remission of duty, which was initially granted by the Adjudicating Authority. However, the Commissioner (Appeals) imposed a redemption fine, which the Tribunal deemed unjustified as the goods were abandoned, not redeemed. The Tribunal also granted the appellant's request for re-credit of duty, affirming their entitlement due to the incorrect shipment received.

  • Levy of penalty on Customs Broker - Accepting documents without proper authorization - The Department argued that this constituted abetment of the export of prohibited goods. - While the appellants were found to have violated certain Customs Regulations by failing to verify exporter details and accepting documents without proper authorization, the tribunal concluded that they had no knowledge of the contraband concealed in the cartons. As a result, the penalties imposed on the appellants were deemed unjustified and were set aside.

  • Classification - Rate of duty - Toy or not - Goods claimed to be ‘automatic data processing machine’ in heading 8471 - Bureau of Indian Standards (BIS) - Despite the appellant's assertions of technological advancements and regulatory approval, the Tribunal ultimately determines that the goods should be classified as electronic toys based on their primary function of providing amusement and entertainment.

  • Valuation - Imported 20 MT of Aluminium powder 99.7% - The Department contended that the declared value was low, considering it a related party transaction due to the overseas supplier's connection to the appellant. The appellant argued that they paid duty under protest and provided evidence such as details of contemporaneous imports, which were not considered by the authorities. The Tribunal found merit in the appellant's arguments, particularly noting the lack of detailed explanation for the enhancement of value. Consequently, they set aside the impugned order and remanded the matter to the adjudicating authority for reconsideration.

  • Corporate Law

  • Maintainability of Criminal proceedings - illegal allotment of shares - illegal appointment of petitioner as a director and transfer of shares - The court highlighted the distinct domains of the NCLT and criminal courts, stressing that findings in civil adjudications (NCLT) do not automatically negate criminal prosecutions. - The court scrutinized the allegations of digital signature misuse, unauthorized share transfers, and surreptitious changes in directorship. It found that these allegations, supported by evidence collected during the investigation, merited closer examination under criminal law, contrary to the trial court's decision which leaned heavily on NCLT findings. - n a pivotal move, the High Court set aside the trial court's order, remanding the matter for a fresh evaluation.

  • Anti-competitive agreements - Cartelisation - While other parties admitted to the contravention, the appellant denied involvement and challenged the Commission's decision. They argued that they only submitted bids for three tenders without colluding with other cartel members. However, evidence presented, including confessions from cartel members and appellant's employees, suggested their active participation in bid rigging activities. Despite the appellant's claim of merely receiving information from the cartel, the Tribunal found their continuous receipt of emails without protest indicative of their tacit agreement with cartel activities. The Tribunal dismissed the appeal, affirming the Commission's decision based on the evidence presented.

  • IBC

  • Dismissal of Section 9 application - pre-existing dispute - The Tribunal examined the evidence, including email correspondences, and concluded that a debtor-creditor relationship existed between the parties. Moreover, the Tribunal found that there was a genuine pre-existing dispute regarding the alleged debt, which precluded the application of the Insolvency and Bankruptcy Code. As a result, the Tribunal upheld the decision of the Adjudicating Authority to dismiss the petition.

  • PMLA

  • Seeking grant of anticipatory bail - Money Laundering - The allegations against the applicant, as CEO of a company, included signing agreements facilitating fund transfers, implicating him in money laundering activities. Despite the applicant's arguments regarding his role as a director and the timing of amendments to PMLA provisions, the court found a prima facie case against him. It emphasized the broad scope of PMLA provisions and the continuing nature of money laundering offenses. Additionally, the court highlighted the liability of directors for offenses occurring during their tenure. Due to the seriousness of the allegations, failure to prove innocence, and non-compliance with court summons, the court dismissed the application for anticipatory bail.

  • Service Tax

  • Taxability - advance payments - The Tribunal observed that the appellant failed to issue invoices/bills upon receiving payments for the services provided, as mandated by the Service Tax Rules. However, it was found that the appellant paid the service tax upon the finalization of the services contracted with government departments, implying no evasion of service tax occurred. - The Tribunal noted that the appellant’s failure to issue invoices in a timely manner did not amount to suppression of facts, as the service tax was ultimately paid. Therefore, the demand based on suppression was found to be unsustainable.

  • Central Excise

  • Refund claim lying in cenvat credit on CVD and BCD paid by the appellant - The Tribunal observed that the appellant wasn't registered under the Central Excise Act, 1944, during the relevant period. Therefore, they were not eligible for cenvat credit under the existing law. Despite transitional provisions permitting credit transfer on the appointed day (01.07.2012), the appellant had paid duties after this date. Hence, they were ineligible for the credit prayed for under transitional provisions. The Tribunal upheld the rejection of the refund claim, citing the conditional nature of the import and its exclusive use for export as per Foreign Trade Policy.

  • Valuation of goods - admissibility of discounts - adjustment of list price by giving different rebates / discounts referred to as Movement Plan Rebate (MPR) - The Tribunal upheld the appellant's contention that discounts passed on to buyers and known at the time of clearance should be considered for determining the assessable value. Additionally, they ruled in favor of the appellant regarding the limitation on demand, citing the absence of intent to evade duty and the non-disclosure of rebate adjustments in filed returns.


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Case Laws:

  • GST

  • 2024 (4) TMI 216
  • 2024 (4) TMI 215
  • 2024 (4) TMI 214
  • 2024 (4) TMI 213
  • 2024 (4) TMI 212
  • 2024 (4) TMI 211
  • 2024 (4) TMI 210
  • Income Tax

  • 2024 (4) TMI 209
  • 2024 (4) TMI 208
  • 2024 (4) TMI 207
  • 2024 (4) TMI 206
  • 2024 (4) TMI 205
  • 2024 (4) TMI 204
  • 2024 (4) TMI 203
  • 2024 (4) TMI 202
  • 2024 (4) TMI 201
  • 2024 (4) TMI 200
  • 2024 (4) TMI 199
  • 2024 (4) TMI 198
  • 2024 (4) TMI 197
  • 2024 (4) TMI 196
  • 2024 (4) TMI 195
  • 2024 (4) TMI 194
  • 2024 (4) TMI 193
  • 2024 (4) TMI 192
  • 2024 (4) TMI 191
  • 2024 (4) TMI 190
  • 2024 (4) TMI 189
  • 2024 (4) TMI 188
  • 2024 (4) TMI 162
  • Customs

  • 2024 (4) TMI 187
  • 2024 (4) TMI 186
  • 2024 (4) TMI 185
  • 2024 (4) TMI 184
  • 2024 (4) TMI 183
  • 2024 (4) TMI 182
  • 2024 (4) TMI 181
  • 2024 (4) TMI 180
  • 2024 (4) TMI 179
  • 2024 (4) TMI 178
  • Corporate Laws

  • 2024 (4) TMI 177
  • 2024 (4) TMI 176
  • Insolvency & Bankruptcy

  • 2024 (4) TMI 175
  • PMLA

  • 2024 (4) TMI 174
  • 2024 (4) TMI 163
  • Service Tax

  • 2024 (4) TMI 173
  • 2024 (4) TMI 172
  • 2024 (4) TMI 171
  • 2024 (4) TMI 170
  • Central Excise

  • 2024 (4) TMI 169
  • 2024 (4) TMI 168
  • 2024 (4) TMI 167
  • CST, VAT & Sales Tax

  • 2024 (4) TMI 166
  • 2024 (4) TMI 165
  • Indian Laws

  • 2024 (4) TMI 164
 

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