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Showing 381 to 400 of 1320 Records
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2020 (9) TMI 941
Maintainability of application - Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial debt or not - Aggrieved Person or not - HELD THAT:- It is to be borne in mind that in a subsisting application, liability to pay a sum of money is condition precedent of a 'Financial Debt'. The 'Financial Debt' represents the money payable in respect of loan borrowing made by a Corporate Debtor. In short, the sum of money is certainly and in all events payable is a 'Debt', disregard to the fact whether it is payable now or at a later point of time, in the considered opinion of this Tribunal.
Indeed, in Part II of the IBC, Section 63 expressly oust the 'Jurisdiction' of a 'Civil Court' or an 'Authority' and specifies that such Civil Court or an 'Authority' cannot entertain any suit or proceedings which are in the nature of a 'lis' in respect of which the 'National Company Law Tribunal' or 'National Company Law Appellate Tribunal' has jurisdiction. As per Section 7 of the Code, a Financial Creditor' can initiate 'Insolvency Proceedings' against the 'Corporate Debtor' before the 'Adjudicating Authority'. Section 4 of the Code says that Part II applies to all matters relating to 'Insolvency' and 'Liquidation of 'Corporate Debtors' where the minimum amount of the default is Rs. One Lakh. In terms of Section 9 of the Code, an 'Operational Creditor' after fulfilling the requirements of Section 8, can initiate the 'CIRP' against the 'Corporate Debtor' before an Adjudicating Authority. In pith and substance if the 'Debt' due and payable is above One lakh rupees, then the Application for 'Corporate Insolvency Resolution' can be filed before the Adjudicating Authority i.e. NCLT and not before any other fora. Furthermore, the ingredients of Section 238 of the Code operates against other laws when they are in conflict with the Code - the Application (under Section 7 of the Code) filed by the 1st Respondent/Applicant (Financial creditor) is perfectly per se maintainable in Law.
As far as the present case is concerned, the 'Memorandum of Understanding' consists of two transactions i.e. one is related to the granting of loan and the other is in regard to formation of SPV. These transactions are quite independent of each other. The Loan was given by the Respondent to the 'Corporate Debtor' and its group Companies and for which promissory notes were executed. Section 5(7) of the Code defines 'Financial Creditor' meaning any person to whom a Financial Debt is owed and includes a person to whom such debt has been legally assigned or transferred - Considering the fact that in the instant case, there is a 'Debt' and 'Due' payable by the Corporate Debtor and a default was committed by the Corporate Debtor, this Tribunal without any haziness holds that the impugned order of the Adjudicating Authority ('National Company Law Tribunal, Kolkata Bench) dated 25.10.2019 in admitting the Section 7 Application filed by the Respondent/Financial Creditor is free from any patent illegalities.
Appeal dismissed.
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2020 (9) TMI 940
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - existence of debt and dispute or not - HELD THAT:- The debt arising out of non-payment of lease rent does not fall under the definition of 'operational debt' as defined under Section 5(21) of the Code (even though it may otherwise be a debt), and the Petitioner cannot be termed as an 'Operational Creditor' within the meaning of Section 5(20) and for the purpose of the Code.
It is also seen from the Petition that there existed a substantial dispute over the debt in question, prior to the filing of this Petition. It had filed a suit before the Court of City Civil Judge at Bengaluru under the Code of Civil Procedure on 1st October, 2018. The matter went to the Lok Adalat. Some payments were made but later the cheques paid towards rent were dishonoured on 31st January, 2019. The settlement was got annulled through the Civil Court. The Demand Notice as prescribed under the Code was issued on 11th October, 2019. This Petition was filed even later. There was therefore a pre-existing dispute, and was still pending in the Hon'ble Civil Court at Bengaluru - In the instant case, neither could the debt be considered to be an Operational debt for the reasons mentioned in the foregoing paragraphs, nor was there a clear undisputed debt as there was a pre-existing dispute taken to the Hon'ble Civil Court, much prior to the issue of the Demand Notice in Form 3 and Form 4 as prescribed under the Code on 11th October, 2019, which was received by the Corporate Debtor on 14th October, 2019. For this reason, also, the Petition has to be dismissed.
Petition dismissed.
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2020 (9) TMI 939
Recovery of tax dues - rendering of ‘erection, commissioning or installation service’ - wrongly availled CENVAT Credit - services provided from outside India to the appellant - reverse charge mechanism - period April 2009 and March 2012.
Demand of ₹ 17,55,58,713 has been confirmed to be due from the appellant company as tax on services procured from outside India for execution of the contract with M/s Oil and Natural Gas Corporation Ltd. - HELD THAT:- The appellant is not provider of service from outside India but an assessee within the meaning of Finance Act, 1994, the correctness of taxability, under challenge by the appellant company, must be decided in terms of section 66A of Finance Act, 1994 read with Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - It is contended on behalf of the appellant company that the substantial portion of the demand, relating to charter of a vessel, is not leviable as the vessel was not operational for the entire period in India. Undisputedly, as pointed out by Mr Mondal, evidence of such is not available; nevertheless, it would appear that the contention arising from the delivery, and the handing over, having occurred outside the country was not considered before crystalizing the demand. Furthermore, it is claimed that two other taxable activities would, in terms of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, not be leviable to tax as these were performance-based and to be taxed accordingly. These appear to be pleadings made for the first time ever. Naturally, these need to be attended to before the appellate jurisdiction can decide on the correctness, or otherwise, thereof.
Imposition of various penalties - HELD THAT:- The adjudicating authority itself appears to have been uncertain of the provision under which tax levy arose; attribution of more certainty to the appellant company does not appear to be equitable. In such circumstances, it is difficult to conclude, with absolute sureness, that intent to evade taxes was manifest in the actions of the appellant company. No evidence to the contrary is adduced in the show cause notice. The site of the revamp, far beyond the territorial waters, may well have given rise to misconceptions about taxability at the place at which service was rendered. Errors in computation of demand has been admitted to in the crystalization of revised demand.
Towards the liability in the second notice, ₹ 17,55,26,556 has been deposited before issue of show cause notice on account of tax and ₹ 11,79,54,465 on account of interest - in terms of section 73(3) of Finance Act, 1994, with no dues apparently pending, there is no scope for imposition of penalty under section 78 of Finance Act, 1994. We, therefore, set aside the penalties imposed on the appellant company. Appeal of Revenue against the restricted penalty is, thus, infructuous and is dismissed.
The claim of the appellant to lower tax liability on output service, owing to eligibility for abating of material cost from the taxable value of services, must be responded to. Likewise, the appellant must be given an opportunity to validate claim for availment of CENVAT credit of ₹ 2,88,93,108. The claim of the appellant company to exclude the value of ‘supply of tangible goods service’, ‘survey and exploration of mineral, oil and gas service’ and ‘technical inspection and certification service’, for the reasons specified in the appeal, needs to be scrutinized. Remand is warranted for the purpose.
With the finding that service provided under contract to M/s Oil and Natural Gas Corporation Ltd is liable to tax from M/s Sarku Engineering Services as also on the services procured from outside India to the extent permissible, and in accordance with Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 we direct that the matter revert to the original authority for fresh quantification net of the exclusions, to the extent available to them, after affording opportunity to assessee for exercise of option to claim abatement of value of material used for rendering output service and to furnish data in support of the several claims recorded - Appeal allowed by way of remand.
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2020 (9) TMI 938
Refund of Service Tax - Information Technology Software Services - Department contends that the Information Technology Software Services was not taxable for the relevant period and it became taxable only w.e.f. 16.05.2008 hence refund under Rule 5 of CCR, 2004 is not available - unregistered premises - nexus between the output services provided and input services availed - HELD THAT:- Notification No. 5/2006 has been amended by the Finance Act, 2010 substituting the words “used for” in place of “used in”. It is also found that it has been clarified that the retrospective changes are made to ensure that the provisions of refund Notification and the CCR are aligned - also, most of the services utilized by the appellants are held to be input services for providing output services in the field Information Technology Services.
Moreover, going by the explanation submitted by the appellants before the lower authorities it is found that the services are integral and required for the rendering of output services. Further, as elucidated in CBEC vide Circular No. 120/1/2010 dated 19.01.2010, input services and their nexus with output service needs to be construed in a harmonious manner. Also, there is force in the appellant’s arguments that the Department did not dispute the availment of credit in the first instant and therefore, it is not open for them to deny the same when a refund is filed. Therefore, the appellants are entitled for refund and the impugned orders are not sustainable to that extent.
Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 937
CENVAT Credit - input services - Short term hotel accommodation service - rent-a-cab service - outdoor catering and housekeeping services - period from April 2016 to June 2017.
Short term accommodation in hotels - HELD THAT:- The Appellant’s personnel necessarily had to undergo the required training to obtain the necessary permissions and approvals for the service recipient to avail the services of the Appellant. Had such training not been completed before such personnel were deployed at the rig, the service recipient would have deducted a certain amount at the time of payment to the Appellant. In any case, the Appellant could not afford to deploy people without the required police clearance certificate and Safety training. Therefore, the Appellant had no choice but to accommodate its personnel for the time impending the said approvals and permissions. The said service extended to its personnel by the Appellant would not qualify as a service availed for personal consumption - the said service is in relation to and in pursuance of the service being provided by the Appellant - Credit allowed.
Rent-a-cab Service - HELD THAT:- As an operational requirement, they are required to send surveyors, naval officers for surveys and naval security clearance on their rigs. In this regard, they are required to hire vehicles for transporting such officers. Further, the Appellant is also required to provide conveyance for inspection agencies for various inspections such as Fire safety, underwater inspection, tubular inspection, thickness gauging inspection, etc. Therefore, the Appellant has availed Cenvat credit on the said input service - Tribunal in M/S. MARVEL VINYLS LTD. VERSUS C.C.E. INDORE [2016 (11) TMI 1126 - CESTAT NEW DELHI] while considering the amended definition of input service has already decided the matter in favour of the assessee and held that the definition does not provides for total exclusion but only restricts those cases where the vehicles do not qualify as capital goods. From recipient point of view, motor vehicle can never be capital goods and he would never be eligible for credit if a narrow interpretation is given - Credit allowed.
Outdoor Catering Service - HELD THAT:- As the personnel working at the rig have been deployed by the Appellant, it is the Appellant’s responsibility to ensure healthy working conditions for such personnel. Therefore, the Appellant had availed the said service to prevent food from getting spoilt. The access to proper food is the most basic requirement for any person to carry out a task - The Commissioner (Appeals) ought to have appreciated the facts of the present case, wherein the personnel have been deployed on a rig and away from the coastal area. The said personnel do not have access to food other than what is available on the rig and therefore, it is apposite in the given circumstances for the Appellant to ensure that its personnel remain healthy - The Hon’ble Rajasthan High Court in COMMISSIONER, CENTRAL EXCISE VERSUS M/S MANGLAM CEMENT LTD. [2017 (11) TMI 483 - RAJASTHAN HIGH COURT], for a period post the amendment of the definition of input service (w.e.f. 01.04.2011) and has held that ‘Outdoor Catering’ services are required to be carried out for the process of manufacture and delivery and hence eligible for credit - Credit allowed.
Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 936
Benefit of concessional rate of tax - difficulty in obtaining 'C' forms - purchase of High Speed Diesel from suppliers in other States - HELD THAT:- The petitioner is entitled to the inclusion of ‘High Speed Diesel Oil’ as a commodity in the registration certificate.
The issue involved in the Writ Petition is squarely covered by a decision of this Court in M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER & COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [2019 (2) TMI 1850 - MADRAS HIGH COURT], wherein it was held that The Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the ‘C’ forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [2018 (10) TMI 1529 - MADRAS HIGH COURT] Ltd can be extended only to those dealers in that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law.
The State has, after the date of the above order, filed a Writ Appeal in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED [2020 (3) TMI 450 - MADRAS HIGH COURT] challenging the decision in the case of Ramco Cements that has been considered and dismissed by a Division Bench of this Court.
Mrs.G.Dhanamadhri, submits that the State intends to challenge the order in Writ Appeal by way of a Special Leave Petition.
As on date, the order in Writ Appeal is final, and following the rationale thereof, the Writ Petition is allowed.
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2020 (9) TMI 935
Benefit of concessional rate of tax - difficulty in obtaining 'C' forms - purchase of High Speed Diesel from suppliers in other States - HELD THAT:- The petitioner is entitled to the inclusion of ‘High Speed Diesel Oil’ as a commodity in the registration certificate.
The issue involved in the Writ Petition is squarely covered by a decision of this Court in M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER & COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [2019 (2) TMI 1850 - MADRAS HIGH COURT], wherein it was held that The Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the ‘C’ forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [2018 (10) TMI 1529 - MADRAS HIGH COURT] Ltd can be extended only to those dealers in that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law.
The State has, after the date of the above order, filed a Writ Appeal in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED [2020 (3) TMI 450 - MADRAS HIGH COURT] challenging the decision in the case of Ramco Cements that has been considered and dismissed by a Division Bench of this Court.
Mrs.G.Dhanamadhri, submits that the State intends to challenge the order in Writ Appeal by way of a Special Leave Petition.
As on date, the order in Writ Appeal is final, and following the rationale thereof, the Writ Petition is allowed.
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2020 (9) TMI 934
Validity of assessment proceedings - time limitation - non- consideration of F-Forms - period April, 2015 to February, 2016 - HELD THAT:- The impugned Assessment Order dt.11.03.2020 passed by the 1st respondent is set aside; the matter is remitted back to the 1st respondent for fresh consideration; the 1st respondent shall consider the F-Forms which have also been filed by the petitioner before him; the petitioner is entitled to make submissions on the aspect of bar of limitation of the assessment proceedings for the period April, 2015 to February, 2016 invoking Sub- Rule (5A) of Rule 14A of the Central Sales Tax (Telangana) Rules, 1957; the 1st respondent shall also provide a personal hearing to the petitioner; and then pass a reasoned order in accordance with law and communicate it to the petitioner.
Petition allowed by way of remand.
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2020 (9) TMI 933
Principles of Natural Justice - Validity of Assessment Order - order of the Tribunal is assailed on the ground that opportunity of hearing is denied to revisionist - HELD THAT:- Admittedly the order of the Tribunal is ex-parte inasmuch as it is recorded that none has appeared on behalf of the revisionist. This observation is assailed by contending in para 14 to 16 that in fact the Tribunal observed in open Court that matter was complicated and, therefore, the appeal would be adjourned to the some other date. Letter of the counsel date 25.6.2020 has also been annexed as annexure no.5 which contains the communication of lawyer to the revisionist in that regard. The order of the Tribunal otherwise appears to have been passed essentially relying upon the remand report 6.3.2020 which has also been quoted in the order itself - The contention advanced on behalf of the revisionist that the order is vitiated for denial of reasonable opportunity of contest in the matter, therefore, is clearly substantiated.
The matter stands remitted to the Tribunal for affording an opportunity of hearing to the revisionist and for deciding the matter afresh in accordance with law - Appeal allowed by way of remand.
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2020 (9) TMI 932
Dishonor of Cheque - issuance of summons - primary ground of challenge as contended by the learned counsel for the petitioner is that the petitioner was not the Director when the underlying contract was executed between the respondent No.1 and respondent No.2, nor when the cheques were issued and when they were presented, inasmuch as the petitioner had resigned from the respondent No.2 much before, on October 27, 2010.
HELD THAT:- This Court is conscious of the settled position of law that the High Court while entertaining a petition of this nature shall not consider the defence of the accused or conduct a roving inquiry in respect to the merits of the accusation/s but if the documents filed by the accused / petitioner are beyond suspicion or doubt and upon consideration, demolish the very foundation of the the accusation/s levelled against the accused then in such a matter it is incumbent for the Court to look into the said document/s which are germane even at the initial stage and grant relief to the person concerned under Section 482 CrPC in order to prevent injustice or abuse of process of law. In my opinion the present petition would fall within the aforesaid parameters.
The proceedings initiated by the respondent No.1 against the petitioner under Section 138 of the NI Act, pending before the learned Metropolitan Magistrate, Saket Courts, and the resultant proceedings including summons issued thereon are quashed - Petition allowed.
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2020 (9) TMI 931
Refund of unutilised Input Tax Credit - accumulation on account of being subjected to an inverted duty structure - constitutional validity of Section 54(3)(ii) of the Central Goods and Services Tax Act, 2017 - constitutional validity of amended Rule 89(5) of the Central Goods and Services Tax Rules, 2017 - ultra vires of Section 54 of the CGST Act and the Constitution of India - Whether it is necessary to read the word “inputs” in Section 54(3)(ii) as encompassing both goods and services so as to ensure that the said provision is not struck down? - Whether the words input services may be read into Section 54(3)(ii) as an exception to the general rule of casus omissus? - Whether the proviso to Section 54(3) qualifies and curtails the scope of the principal clause to the limited extent of specifying the two cases in which registered persons become eligible for a refund of the unutilised input tax credit? - Whether sub-clause (ii) of the proviso merely stipulates the eligibility conditions for claiming a refund of the unutilised input tax credit or whether it also curtails the entitlement to refund to unutilised input tax credit from a particular source, namely, input goods and excludes input services? - Whether the rule making power under Section 164 empowers the Central Government to make Rule 89(5) as amended? - Whether Rule 89(5) of the CGST Rules, as amended, is ultra vires Section 54(3) of the CGST Act? - Whether the definition of the term Net ITC, as contained in Rule 89(5), is liable to be read as encompassing both input goods and input services?
HELD THAT:- If the intention of Parliament was to curtail the quantity of unutilised input tax credit in respect of which a refund claim may be made, it would have been indicated in Section 54(3) by qualifying the words used therein. However, no such qualification is contained therein. As regards the proviso thereto, according to the learned counsel, they set out the two cases in which a registered person may claim a refund of the unutilised input tax credit. The first of these cases relates to zero-rated supplies made without payment of tax. This case pertains to exporters. Even among exporters, only those who make zero-rated supplies without payment of tax by executing a bond or undertaking would be entitled to a refund under Section 54(3). The exporters who undertake supplies upon payment of tax can claim a refund under Section 54(1) but not under Section 54(3). The second case pertains to registered persons who accumulate input tax credit on account of the rate of tax on input goods being higher than the rate of tax on output supplies.
Keeping in mind the scope, function and role of a proviso as adumbrated above, we closely examined the text of Section 54(3)(ii) in order to test the tenability of the rival contentions. We find that Section 54(3) undoubtedly enables a registered person to claim refund of any unutilised input tax credit. However, the principal or enacting clause is qualified by the proviso which states that “provided that no refund of unutilised input tax credit shall be allowed in cases other than” - Parliament has used a double negative in this proviso thereby making it abundantly clear that unless a registered person meets the requirements of clause (i) or (ii) of Sub-section 3, no refund would be allowed. On further examining sub-clause (ii), we find that it uses the phrase “where the credit accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies”.
Given the fact that we concluded that Section 54(3)(ii) enables a registered person to claim a refund of unutilised input tax credit only to the extent that such credit has accumulated on account of the rate of tax on input goods being higher than the rate of tax on output supplies, it remains to be considered whether Rule 89(5) is ultra vires the rule making power and Section 54(3). Keeping in mind that Section 164 confers power on the Central Government to frame rules for carrying out the provisions of the CGST Act and no fetters are discernible therein except that the rules should be in furtherance of the purposes of the CGST Act - Rule 89(5) would be intra vires the CGST Act and the rule making power if it is in line with Section 54(3)(ii) and ultra vires both Sections 54(3)(ii) and 164 if it is not.
Rule 89(5) of the CGST Rules, as amended, is intra vires both the general rule making power and Section 54(3) of the CGST Act. There is no dispute as regards the power to amend with retrospective effect either as such power is conferred under Section 164 of the CGST Act, albeit subject to the limitation that it cannot pre-date the date of entry into force of the CGST Act.
Constitutional Challenge - meaning of inputs - HELD THAT:- Explanation to Section 54 uses the terms "inputs" and "input services" separately and distinctively, thereby indicating the legislative intent to distinguish one from the other - we are unable to countenance Mr.Ghosh's submission that the word ''inputs'' should be read so as to include ''input services'' merely because the undefined word ''output supplies'' is used in Section 54(3)(ii) - it is concluded that both the statutory definition and the context point in the same direction, namely, that the word "inputs" encompasses all input goods, other than capital goods, and excludes input services.
Nature of Refund - HELD THAT:- Although there is a constitutional challenge in this case, the challenge is to a refund provision and this is not a refund claim arising out of a successful challenge to a provision under a tax statute that had imposed a liability. This issue can be approached from another perspective: would a registered person be entitled to such refund but for the statutory prescription in Section 54(3)(i) & (ii)? The answer is a resounding 'no'.
Validity of Classification - HELD THAT:- There is a classification of sources of unutilised input tax credit into sources that give rise to a right to refund, i.e. input goods, and those that do not, i.e. input services. As a corollary, registered persons may be entitled to full, partial or nil refund as regards unutilised input tax credit accumulating on account of being subject to an inverted duty structure - There is no doubt that the object and purpose of the present GST laws is to avoid the cascading of taxes and to impose a tax on consumption, be it goods or services. Thus, the long term objective appears to be to treat goods and services, as far as possible, similarly. Nonetheless, it must be borne in mind that this is an evolutionary process. By way of illustration, we may draw reference to the fact that the concept of input tax credit was not originally available under sales tax law and central excise law. It was first introduced in the form of MODVAT credit. MODVAT credit was initially available only in respect of goods.
After the introduction of service tax through the Finance Act, CENVAT credit was introduced and made available both in respect of goods and services. However, refund of unutilised input tax credit was not provided - Thereafter, the GST laws have been introduced which enable registered persons to avail input tax credit both on goods and services but there are restrictions as regards refund. When viewed objectively and holistically, we find that, under the GST laws, goods and services are treated similarly in certain respects but differently in other respects. Even with regard to rate of tax, almost all services attract a uniform rate of 18%, whereas goods are taxed at rates that vary considerably.
Entitlement to refund of unutilised input tax credit and not the availing of input tax credit - HELD THAT:- Under Section 54(3)(ii), Parliament has provided the right of refund only in respect of unutilised credit that accumulates on account of the rate of tax on input goods being higher than the rate of tax on output supplies. Goods and services have been treated differently from time immemorial, as reflected in the use of the expressions, quantum valebant, as regards the measure of payment for goods, and quantum meruit, as regards the measure of payment for services, supplied non-gratuitously and without a formal contract. While there has been a legislative trend towards a more uniform treatment as between goods and services, the distinction has certainly not been obliterated as is evident on perusal of the CGST Act, including provisions such as Sections 12 & 13, etc., which are specifically targeted at goods and services - Given the fact that we have concluded that Section 54(3)(ii), on a plain reading, does not violate Article 14, it is not necessary to draw definitive conclusions on the scope of reading down or to examine if the casus omissus rule should be deviated from in this case. Nonetheless, extensive submissions were advanced as regards reading down.
Following conclusions are reached at:
(1) Section 54(3)(ii) does not infringe Article 14.
(2) Refund is a statutory right and the extension of the benefit of refund only to the unutilised credit that accumulates on account of the rate of tax on input goods being higher than the rate of tax on output supplies by excluding unutilised input tax credit that accumulated on account of input services is a valid classification and a valid exercise of legislative power.
(3) Therefore, there is no necessity to adopt the interpretive device of reading down so as to save the constitutionality of Section 54(3)(ii).
(4) Section 54(3)(ii) curtails a refund claim to the unutilised credit that accumulates only on account of the rate of tax on input goods being higher than the rate of tax on output supplies. In other words, it qualifies and curtails not only the class of registered persons who are entitled to refund but also the imposes a source-based restriction on refund entitlement and, consequently, the quantum thereof.
(5) As a corollary, Rule 89(5) of the CGST Rules, as amended, is in conformity with Section 54(3)(ii).
Consequently, it is not necessary to interpret Rule 89(5) and, in particular, the definition of Net ITC therein so as to include the words input services.
All the writ petitions challenging the constitutional validity of Section 54(3)(ii) are dismissed.
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2020 (9) TMI 930
Demand of GST alongwith interest and penalty as well as encashment of 8 Bank Guarantee - detention of goods on the ground that e-way bills were faulty and undervalued and detention order passed - HELD THAT:- Admittedly, there is IGST demand of ₹ 2,36,63,256.00 with equal amount of penalty imposed, together the total dues comes to ₹ 4,73,26,512.00 - As against this, petitioner had paid IGST of ₹ 2,36,63,256.00. At the stage of preferring the first appeals petitioner had deposited 10% of the IGST dues amounting to ₹ 23,66,326.00. Thereafter while filing the second appeals under section 112 of the CGST Act petitioner deposited ₹ 47,32,651.00 being 20% of the IGST dues. Thus, petitioner had deposited an amount of ₹ 70,98,977.00 in addition to IGST dues already deposited. In all petitioner has deposited ₹ 3,07,62,233.00.
The amount covered by the eight bank guarantees is ₹ 4,73,26,512.00. If both the figures are added i.e., the amount covered by the bank guarantees and the dues paid by the petitioner, the amount would be ₹ 7,80,88,745.00 (₹ 4,73,26,512.00 + ₹ 3,07,62,233.00) which amount is now with the respondents as against demand and penalty of ₹ 4,73,26,512.00. From the above, it is evident that an amount of ₹ 3,07,62,233.00 (₹ 7,80,88,745.00 ₹ 4,73,26,512.00) is lying in excess with the respondents. Even if the appeals filed by the petitioner under section 112 of the CGST Act are dismissed, petitioner would be required to pay a further amount of ₹ 1,65,64,279.00 only whereas respondents are holding onto an amount of ₹ 3,07,62,233.00 of the petitioner much in excess of the dues.
There is provision for filing further appeal to the appellate tribunal under Section 112. As per sub-section (1), any person who is aggrieved by an order passed against him under Section 107 or by the revisional authority under Section 108 may prefer appeal to the appellate tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the aggrieved person. As per sub-section 8(b), no appeal shall be filed under subsection (1) unless the appellant has paid a sum equal to 20% of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of Section 107. Subsection (9) clarifies that when the appellant pays the pre-deposit as per sub-section (8), recovery proceedings for the balance amount shall be deemed to be stayed till disposal of the appeal - That being the position and without entering into the controversy as to whether respondent No.4 received request of the petitioner for extension of the bank guarantees before encashment, we are of the view that having regard to the facts and circumstances of the case, the following directions will meet the ends of justice:-
a. Respondent Nos.3 and 4 shall refund the amount of ₹ 4,73,26,512.00 covered by the eight encashed bank guarantees with applicable statutory interest thereon to the petitioner within a period of four weeks from the date of receipt of a copy of this order;
b. Petitioner to furnish fresh bank guarantee(s)from nationalized bank to respondent No.4 for an amount of ₹ 1,65,64,279.00 covering the balance amount of penalty imposed on the petitioner within a period of four weeks from the date of receipt of a copy of this order.
Petition disposed off.
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2020 (9) TMI 929
Validity of Notifications - N/N. 1/2017-Central Tax (Rate) dated 28.06.2017 issued by Respondent No. 1 under Section 9(1) of the CGST Act, 2017 - N/N.1/2017Integrated Tax (Rate) dated 28.06.2017 also issued by Respondent No. 1 under Section 5(1) of the IGST Act, 2017 - N/N. 1/2017-State Tax (Rate) dated 30.06.2017 issued by Respondent No.2 under Section 9(1) of the DGST Act, 2017 -conflict with the recommendations made by Respondent No. 3 in its 15th Meeting held on 03.06.2017 - HELD THAT:- This Court referred the matter to Respondent No. 3 in view of the seeming ambiguity in the minutes of the 15th GST Council Meeting, as portrayed by the learned counsel for the Petitioner. The Court prima facie comprehended that the affidavit filed on behalf of Respondent No. 3 was only a proposal of the Joint Secretary (TRU-1), CBEC that was not agreed to or approved by the Council. In these circumstances, in order to have certainty in the matter, the Court deemed that the best course of action would be to have the opinion of the GST Council. Now, the Council in its 38th meeting on 18.12.2019 has deliberated on the matter and has unequivocally confirmed that it had indeed recommended the GST rate of 12% for the fabrics falling under Chapters 56 to 59 of the Customs Tariff.
The learned counsel for the Petitioners is not satisfied and persists that the Respondent No. 3 has recommended tax at the rate of 5% for all fabrics. To buttress his contention, he relies upon the reply given by the Union Minister for Finance in response to a starred question raised on 18.07.2017 in the Rajya Sabha. We find the aforesaid contention to be unconvincing and meritless. A perusal of the response reveals that the Union Minister for Finance while responding to a question raised in connection with organized traders and unorganized sellers in textile sectors, stated that the GST rate structure for textile sector was discussed in detail in the GST Council Meeting held on 03.06.2017, and that the Council recommended the detailed rate structure for textile sector. The tabulation which form part of the response reflects the notified GST rates as 5%. This response of the Union Minister for Finance to a query, cannot prevail over the decision of the GST Council.
The rate of taxes is jointly decided by the centre and states on the recommendations of the Council. The Council has the power and prerogative to issue recommendations on issues in terms of Article 279A (4) of the Constitution. The composition of Respondent No. 3 and the constitutional scheme of taxation is a clear indication that the functioning of the GST Council is based on collaborative efforts that embody the spirit of cooperative federalism. The coming together of the stakeholders has given rise to a unified system of taxation for the entire country.
The impression of contradiction that appeared on comparison between the counter affidavit of Respondent No. 3 and the minutes of meeting has been resolved and conclusively settled. The matter has been deliberated by the body whose decision were called in question. - We cannot sit in appeal and postulate that the decision of the Council is not what they have unwaveringly held it to be - petition dismissed.
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2020 (9) TMI 928
Depreciation on Floor Space Index (FSI) - @ 10% or 25% - depreciation on intangible assets - as per AO grant of FSI was not in the nature of any asset and only a payment made to the government for increasing the size of the building - Whether grant of additional FSI is not in the nature of any kind of assets until and unless the additional flooring/building is constructed, therefore, not eligible for depreciation in this case? - Tribunal held that the assessee would be eligible for depreciation for the entire amount of premium debited to the account of the asset - Tribunal held that the assessee would be entitled to depreciation @ 10% on the whole of the consideration towards FSI and not @ 25%
HELD THAT:- View taken by the Tribunal is a reasonable one, having regard to the provisions contained in sections 32 (1)(ii) and 43(6)(c) - revenue had not questioned the finding of CIT(A) that the amount spent by the assessee would add to the value of the existing building as additional FSI would be available to the assessee; the amount spent was for the purpose of business and was of enduring nature; since it related to the building block of the asset, the overall cost of the building block would increase by this amount; therefore CIT(A) directed the Assessing Officer to add the amount spent during the year to the building block of asset and allow depreciation as per law i.e. on the rate applicable to the building which is 10% and not 25%.
Documents placed on record that the order of the CIT(A) was accepted by the revenue and a conscious decision was taken not to file further appeal. When the revenue sought to file cross-objection belatedly the same was dismissed on the ground of limitation. That apart, having not filed appeal against such decision of CIT (A), revenue cannot now raise a dispute as to percentage of depreciation. No good ground to disturb the finding of the Tribunal on this point. Therefore, we are of the view that no substantial question of law arises from the order of the Tribunal on this issue. - Decided against revenue.
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2020 (9) TMI 927
Reopening of assessment - non-availing of the procedure by the petitioner - Exemption u/s 10(15)(iv)(h) denied on interest received on tax free bonds - Revenue submits that the writ petition filed is not maintainable in as much as the procedure laid down in GKN Driveshafts (India) Limited Vs. Income Tax Officer [2002 (11) TMI 7 - SUPREME COURT] has not been followed by the petitioner - HELD THAT:- The present case is one were the impugned notice issued under section 148 of the Act is clearly beyond four years from the end of the assessment year in question. What is relevant to note is that AO must have or form reason to believe that any income of the petitioner chargeable to tax has escaped assessment by reason of the failure on the part of the petitioner to disclose fully and truly all material facts. Change of opinion cannot be a ground for re-opening concluded assessment.
In the instant case, the impugned notice was issued on 30.03.2001 and the reasons were furnished by respondent No.1 to the petitioner on 04.12.2001; all before the judgment was rendered in GKN Driveshafts (India) Limited [2002 (11) TMI 7 - SUPREME COURT]. Therefore, a view can be taken that since the impugned notice and furnishing of reasons had preceded the judgment in GKN Driveshafts (India) Limited, the later may not have applicability in the present case.
As in the first Ajanta Pharma case i.e. [2003 (11) TMI 32 - BOMBAY HIGH COURT] this Court after referring to the Constitution Bench judgment in Calcutta Discount Company Limited Vs. Income Tax Officer, [1960 (11) TMI 8 - SUPREME COURT] held that Supreme Court in GKN Driveshafts (India) Limited (supra) nowhere lays down the law to the effect that the noticee is totally debarred from approaching the High Court under Article 226 of the Constitution of India when the exercise of power by the authority under section 148 of the Act ex-facie appears to be without jurisdiction.
This writ petition was admitted for hearing by issuing rule way back on 27.06.2002. Having admitted the petition for hearing and such a long period having elapsed, it would neither be fair nor reasonable to relegate the petitioner to file objection to the reasons recorded before respondent No.1. This is more so because respondent No.1 has filed affidavits justifying the reasons recorded and issuance of the impugned notice. In other words, to direct the petitioner to file objection before respondent No.1 would be a mere formality, respondent No.1 having already disclosed his mind. We are unable to accept the preliminary objection raised on behalf of the revenue.
Reason to believe that income of the petitioner chargeable to tax for the assessment year 1990-91 had escaped assessment by reason of failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment? - Assessee company was entitled to a rebate on the gross dividends and not on the net dividends i.e., not after deducting proportionate management expenses.
Though section 14A was inserted in the Act by Finance Act, 2001 with retrospective effect from 01.04.1962, the same may not be of any assistance to the revenue in as much as the retrospective amendment of law would only negate the inference sought to be drawn of the failure to disclose material facts, which aspect was highlighted by this Court in DIL Limited [2012 (2) TMI 85 - BOMBAY HIGH COURT] As a matter of fact, respondent No.1 has stated in the affidavit that its action of seeking to reopen the assessment is not based on section 14A of the Act.
No reasonable view can be taken that there was failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year 1990-91. If that be so then respondent No.1 could not have formed any reason to believe that any income of the petitioner chargeable to tax for the said assessment year had escaped assessment. Condition precedent for re-opening the concluded assessment of the petitioner is absent in the present case. In such circumstances, issuance of the impugned notice under section 148 of the Act is clearly without jurisdiction and is therefore illegal and invalid. - Decided in favour of assessee.
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2020 (9) TMI 926
Exemption under Section 10(23C) (vi) and (via) - appropriate authority for the purposes of grant of exemption u/s 10(23C)(vi) & (via) - HELD THAT:- Similar application(s) filed by the petitioner for the subsequent periods were dealt with by the competent authority. With respect to the year in question, it is the case of the Revenue that the application filed, if any, was not before the competent authority, and as such, none other than the authorized authority was under any obligation to deal with the same. We are in agreement.
Even though the petitioner diligently pursued similar application for the period subsequent to the one in question, but did not take any steps for pursuing the application purportedly filed on 31 st of October, 2002/ refiled on 4th of February, 2003. For more than eight years petitioner allowed the matter to be slept over.
Revenue does not admit filing of the application (Annexures P-1 and P-2), but only avers that neither any application was filed nor was it pending with the competent authority. In view of disputed question of fact, applying the ratio laid down in Commissioner of Income Tax & Anr. v. Karnataka Planters Coffee Curing Work Private Limited [2016 (11) TMI 893 - SUPREME COURT] we refrain from passing any order which the petitioner so desires - Petition dismissed.
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2020 (9) TMI 925
Payment of tax collectable at source u/s 206C - Maintainability of Writ petition - applicability of section 206C to a contract of settlement of Balu Ghats? - whether TCS cannot be recovered from the petitioner? - as contented mechanism provided under Section 206(c) of the Income Tax Act would be unavailable to recover of the amount - HELD THAT:- All these contentions can be raised by the petitioner, in fact already stands raised vide representation dated 14.3.2008 (Annexure-8), which is still pending consideration before the authority.
No reason to interfere with the impugned notice dated 18.04.2009 (Annexure-11), more so from the return filed by the petitioner, it does not appear as to whether, and if any, amount of component of TCS was deposited by the petitioner.
Also as contended that only for the year in question the issue is pending, as for the subsequent period petitioner has already deposited the amount - issues raised before us are left open to be considered by the appropriate authority which in the instant case is the Assistant Director who issued notice dated 8.04.2009.
We are not in agreement with the submission made that the Assistant Director has already prejudged the issue inasmuch as he has asked the petitioner to pay the amount by way of a Demand Draft - impugned notice cannot be read in such a manner. The Officer has to adjudicate the amount only after hearing the parties and affording adequate opportunity of filing reply and substantial compliance of principles of natural justice. The officer has only asked the petitioner to deposit the amount, through a Bank Draft, which is due and payable in accordance with law. In any event we clarify that the amount mentioned in the notice be not construed to be determination of the sum due and payable by the petitioner.
We direct the petitioner to appear before the Assistant Director on 5th October, 2020.
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2020 (9) TMI 924
Validity of the reopening of assessment - validity of the notice u/s 148 - wrong understanding of the legal position - Whether assessee was estopped from challenging the validity of the notice under Section 148? - HELD THAT:- CIT(A) issued a direction in the order to the Assessing Officer to assess the turnover as commission received. There were two options open to the assessee. One was to prefer an appeal against the order passed by the CIT(A) dated 20.10.2005, which, in fact, was an order in an appeal filed for the assessment year 2002-03. The other option open to her was to contest the matter before the Assessing Officer upon issuance of the notice under Section 148 of the Act.
The assessee, in the case on hand, chose the second option, which, in law, was permissible to be done by the assessee. Therefore, both the CIT(A) as well as the Tribunal fell in error in holding that the assessee was estopped from challenging the validity of the notice under Section 148 of the Act dated 22.12.2005.
Period of limitation exceeded on the date of issuance of the notice u/s 148 - As per Section 149 of the Act as it stood prior to amendment by the Finance Act 2001 with effect from 01.6.2001, the limitation provided under Section 149(b)(iii) of the Act was seven years, but not more than 10 years from the end of the relevant assessment year unless income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to ₹ 50,000/- or more for that year. After amendment, in terms of Section 149(1)(b) of the Act, no notice under Section 148 shall be issued for the relevant assessment year if four years, but not more than six years have lapsed from the end of the relevant assessment year unless the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to one lakh rupees or more for that year.
Admittedly, the notice under Section 148 of the Act was issued by the AO on 22.12.2005 and the law applicable as on date prescribed the limitation of four years, but not more than six years. Thus, the notice issued on or after 31.3.2004 would suffer from lack of jurisdiction as it is clearly hit by the limitation prescribed under the Statute. Unfortunately, the Tribunal failed to take note of this very important legal issue, which has been settled by the Hon'ble Supreme Court. In fact, the assessee, at the earliest point of time, referred to the decision of the Hon'ble Supreme Court in the case of K.M.Sharma [2002 (4) TMI 7 - SUPREME COURT] which was erroneously distinguished by the Assessing Officer, the CIT(A) and the Tribunal and they committed an error in gross violation of the Statute. - Decided in favour of assessee.
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2020 (9) TMI 923
Unexplained investment u/s 69A - acquisition of jewellery - HELD THAT:- Assessee had furnished an affidavit of his wife, wherein the receipt of gifts on specific events have been clearly mentioned. Averments made in the affidavit have not been dislodged or proved false by the A.O. by bringing any contrary evidence on record.
Status/reputation of the assessee and the amount of income he has declared annually in the return of income filed, it cannot be denied that the assessee is a man of means and had the capacity to make the investment in gold/diamond jewellery as well as silver articles. A.O. has allowed an allowance of 500 grams in respect of gold jewellery only in respect of assessee and his wife. Whereas, as per CBDT Instruction No. 1916 dated 11.05.1994, the allowance of 500 grams has to be granted in respect of each married lady and 250 grams for each unmarried girl and 100 grams for each male member of the family.
As well settled that the aforesaid CBDT Circular would also be applicable in respect of addition made u/s. 69A of the Act. If one goes by the aforesaid CBDT Instruction, then, there will be no unexplained jewellery to be treated as unexplained investment u/s. 69 A of the Act. Thus, looked at from any angle, the addition made by the A.O. on account of unexplained investment u/s.69A of the Act cannot survive. Accordingly, we delete the addition.
Levy of interest u/s. 234B - claim of the assessee that in the year under consideration, the assessee did not have any income chargeable under the head profits and gains of business and profession and further he is a Senior Citizen of more than 60 years old - HELD THAT:- Sub section (2) of section 207 which has been inserted by Finance Act, 2012 w.e.f. 01.04.2012 carves out an exception by stating that sub section (1) would not be applicable to a resident individual assessee who does not have any income chargeable under the head profits and gains of business and profession and if he has attained the age of 60 years or more at any time during the relevant previous year. As per the copy of PAN card submitted before us, the date of birth of the assessee is 03.05.1949. Thus, during the previous year relevant to the assessment year under dispute, the assessee has crossed the age of 60 years. Further, it is the claim of the assessee that during the year under consideration, the assessee had no income which is chargeable under the head profits and gains of business and profession.
In case, the aforesaid claim of the assessee is correct, no interest u/s. 234B of the Act can be levied in view of the provision contained under sub section (2) of section 207. The A.O. is directed to factually verify the aforesaid claim of the assessee and delete the interest charged u/s. 234B of the Act. This ground is allowed for statistical purposes.
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2020 (9) TMI 922
Dependent Agency Permanent Establishment of the assessee company in India - Income accrued in India - HELD THAT:- We find the issue stands squarely covered in favour of the assessee by the decision of the Tribunal in assessee’s own case for asstt. Year 2005-06 wherein it was held that MIPL is not a Dependent Agency PE of the assessee.
Attribution of profits to DAPE - HELD THAT:- Respectfully following the consistent decisions of the Tribunal in assessee’s own case for the preceding assessment years [2020 (2) TMI 1053 - ITAT DELHI] and in absence of any contrary material brought to our notice we hold that no further profit could be attributed since assessee is not a Dependent Agency Permanent Establishment.
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