TMI Tax Updates - e-Newsletter
January 28, 2022

Case Laws in this Newsletter:

Articles

1. PLACE OF SUPPLY OF SERVICE BY GTA

   By: Alkesh Jani

2. Officers must act reasonably and legally and not harass taxpayers Cost imposed on GST officer by High Court further increased by the Supreme Court. To put effective check on harassing attitude of officers , effective way can be suspension and debarring from government services.

   By: DEVKUMAR KOTHARI

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

4. Summons cannot be issued where the assessee is cooperating during the inquiry

   By: Bimal jain

News

1. Deployment of Interest Calculator in GSTR-3B

2. Union Budget 2022-23 to be presented on 1st February, 2022 in Paperless form

3. Electronic Goods Exports register a whopping growth of 49% in April-December 2021 by clocking USD 11.0 Billion (Provisional) over USD 7.4 Billion during same period in the year 2020

4. Air India strategic disinvestment completed

5. I-T refunds worth ₹ 1.62 lakh cr issued so far this fiscal

Notifications

GST - States

1. EXN-F(10)-22/2017 - dated 20-1-2022 - Himachal Pradesh SGST

Re-constitute the Himachal Pradesh Authority for Advance Ruling

2. EXN-F(10)-22/2017 - dated 20-1-2022 - Himachal Pradesh SGST

Re-constitute the Himachal Pradesh Appellate Authority for Advance Ruling

3. 16/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST

Seeks to bring in force provisions of section 6 of the Jharkhand Goods and Services Tax (Amendment) Act, 2021

4. S.O. 06/P.A.5/2017/S.9/Amd./2022 - dated 28-12-2021 - Punjab SGST

Amendment in Notification No. S.O 158/P.A.5/2017/S.9/2018, dated the 14 December, 2018

5. S.O. 05 /P.A.5/2017/S.9/Amd./2022. - dated 28-12-2021 - Punjab SGST

Amendment in Notification No. S.O 28/P.A.5/ 2017/S.9/2017, dated the 30th June, 2017

6. S.O. 04/P.A.5/2017/S.11/Amd./2022 - dated 28-12-2021 - Punjab SGST

Amendment in Notification No. S.O 18/P.A.5/ 2017/S.11/2017, dated the 30th June, 2017,

7. S.O. 02/P.A.5/2017/Ss.9, 11, 15 and 148/Amd./2022 - dated 28-12-2021 - Punjab SGST

Amendment in Notification No. S.O 37/P.A.5/2017/S.11/2017, dated the 30th June, 2017

Income Tax

8. 11/2022 - S.O. 345 (E) - dated 25-1-2022 - IT

Seeks to amend Notification No. 89/2020 dated 02 November 2020

SEBI

9. SEBI/LAD-NRO/GN/2022/71 - dated 25-1-2022 - SEBI

Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) (Amendment) Regulations, 2022

10. SEBI/LAD-NRO/GN/2022/70 - dated 25-1-2022 - SEBI

Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2022

Highlights / Catch Notes

GST

• Court Rules: No Bank Guarantee Needed if Tax and Penalty Paid with Bond Furnished for Detained Goods Release.

  Case-Laws - HC : Release of detained goods alongwith the vehicle - condition of furnishing the Bank Guarantee with bond - It is quite clear that second option of furnishing the security for tax, interest and penalty, there will be no requirement for giving the bond in a case where the person has already made payment of tax, penalty and interest. The petitioner has already made payment of tax and penalty as well as furnished the bond and since the petitioner is unable to insist on the Bank Guarantee, when the requirement is of execution of the bond, to insist on the furnishing the security is something undesirable. - HC
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• ITC Balance on Gold and Silver Inputs Can Be Used for Output Tax on Castor Oil Seeds Supply.

  Case-Laws - AAAR : Utilisation of Input Tax Credit - outward supply of Gold & Silver bullion - The applicant/appellant can use the Input Tax Credit Balance available in its Electronic Credit Ledger, which has been legitimately earned on the inputs / inward supplies (meant for outward supply of Bullions) for payment of ‘output tax’ (GST) on its outward supply of Castor Oil Seeds. - In other words, we hold that payment of output tax on Castor Oil Seeds through utilization of Input Tax Credit taken on Gold & Silver Dore Bars etc. cannot be denied merely on the ground that the inputs have no nexus with outward supply. - AAAR
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• Farmer's sale of developed plots outside municipal area is taxable at 18% GST under CGST Act, 2017.

  Case-Laws - AAAR : Levy of GST - sale of plot of land - farmer having a vacant land outside the municipal area of town - The transaction/activity of the appellant is not covered under Entry No.5 of Schedule-III of the CGST Act, 2017 as it is a sale of developed plots and is a supply of taxable service falling under the head ‘Construction services’ appearing at Sr.No.3 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time) issued under the CGST Act, 2017 and is liable to GST at 18% - AAAR
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Income Tax

• Court Upholds Tribunal Decision Favoring Assessee on Slump Sale Capital Gains Under Amended Income Tax Act Sections 2(42C) & 2(47.

  Case-Laws - HC : Computation of capital gains - Slump sale u/s 2(42C) - transfer of capital assets u/s 2(47) - we took note of the submissions of the learned Senior Counsel for the respondent/assessee that the definition of slump sale as defined under Section 2(42C) was amended with effect from 1st April, 2021. The unamended provision defined slump sale to mean transfer of one or more undertaking as a result of sale. By Finance Act, 2021 the amendment made was by defining slump sale to mean the transfer of one or more undertaking by any means. This significant change by way of amendment would also aid the case of the assessee and would convince us to uphold the finding of the Tribunal. - HC
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• High Court Deletes Additions u/s 40A(3) for Cash Purchases of Raw Hides After Supporting Evidence Validates Transactions.

  Case-Laws - HC : Addition u/s 40A (3) - expenses incurred by the assessee for the purchase of raw hides and skins in cash - Notices to sellers sent u/s 133(6) of the Act have returned with postal endorsement ‘not known’. - the tribunal has noted the fact and also taken a note of the contemporaneous documents produced by the assessee, namely, the sales tax bills, transport permits and other Government records to prove the genuineness of the transaction. Apart from that, the day-to-day stock register were also maintained which is noted in the tax audit report. Furthermore, the payments were made to the suppliers of the hides and skins and considering the nature of the trade, the [CIT(A)] and the tribunal agreed with stand taken by the assessee. - Addtions were rightly deleted - HC
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• Rectification Order Quashed: Issued After Limitation Period Ended on March 31, 2016, Violating Section 154 of Income Tax Act.

  Case-Laws - AT : Rectification order passed u/s.154 - Period of limitation - In the present case before us there is no controversy about first order or second order but order under rectification is only the order passed by CPC, Bengaluru u/s.143(1) i.e., intimation or processing of return of income vide letter dated 05.03.2012. The rectification order by the AO u/s.154 of the Act was passed only on 20.06.2016. It means, that the rectification order u/s.154 of the Act in the present case can be passed upto 31.03.2016 and not beyond that. In the given facts and circumstances and above legal position discussed, we are of the view that the rectification order passed u/s.154 of the Act is clearly barred by limitation and hence, on this sole ground, the order is quashed. - AT
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• Taxpayer Wins Deduction: Interest Expenses Allowed u/s 57(iii) for Income from Other Sources.

  Case-Laws - AT : Disallowance of interest expense - interest expense not attributable to the business shown u/s 44AD - claiming separate deduction under section 57(iii) - As abundantly clear that expenditure incurred by the assessee for the purpose of earning the income, under the head “income from other sources” should be allowed as a deduction under section 57(iii) - Additions confirmed by the CIT(A) deleted - AT
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• Exemption Claim u/s 54-F Allowed After Timely Investment in NHAI Bonds Despite Late ITR Filing.

  Case-Laws - AT : Disallowing the claim of exemption u/s 54-F - Belated filing of ITR - capital gain was not deposited by assessee before due date of filing return of income under section 139(1) - When the assessee has deposited ₹ 15 lakhs of capital gain in purchasing the Bond of NHAI before due date of filing of return of income under section 139(4), his claim for exemption under section 54 –F was not to be disallowed. - AT
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• CIT(A) Decision Upheld: No Evidence Against Assessee in Stock Exchange Case; AO's Conclusions Unfounded.

  Case-Laws - AT : Bogus LTCG - While allowing relief to the assessee, CIT(A) has specifically held that there is no adverse comment in the form of general and specific statement by the Pr. Officer of stock exchange or by the company whose shares were involved in these transactions and he held that Assessing Officer only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions - the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing. - Order of CIT(A) sustained - AT
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• Section 92CA(3) Order Void Due to Limitation Period Expiry; Not Protected by Section 292BB of Income Tax Act.

  Case-Laws - AT : Validity of proceedings u/s. 92CA(3) passed after expiry of limitation period - period of limitation - In the present facts, the Ld. CIT.DR has in the written submission mentioned that the order of the Ld. TPO is passed on 29.01.2014 or 30.01.2014 but dated 31.01.2014. Then, the order of the Ld. TPO is not only irregular, wrong or illegal but is also null and void. Such action cannot be considered to be of any irregularity in the procedure, so as to get any kind of protection u/s. 292BB of the Act. - AT
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• Non-resident's income from services to foreign company not taxable under India-Singapore DTAA; no permanent establishment in India.

  Case-Laws - AT : Income accrues or arises in India - services to MTR foods Private Limited who is located outside India - Secondment charges paid in respect of the professional services rendered - classification as FTS - Nothing is made available by non resident Assessee to MTR Foods in India. Accordingly the services rendered by the non resident assessee to MTR Foods are not taxable as per India Singapore DTAA. Since the non resident assessee do not have a permanent establishment in India, the income so arising cannot be taxed under Article 7 as 'business profits' either. - AT
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• CIT Revises Assessment u/s 263: AO Failed to Verify VAT Input Claim on Deemed Imports as Expense.

  Case-Laws - AT : Revisions u/s 263 by CIT - Whether the assessee has claimed VAT input on the deemed import as an expense in the profit and loss account? - This fact, to our understanding, has not been verified by the AO. At the time of hearing the learned AR has also not brought anything on record suggesting that the assessee has not claimed VAT input on the deemed import as an expense in the profit and loss account - Revision proceedings upheld - AT
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• CIT Revises Assessment u/s 263 Due to Discrepancies and Lack of Records in Plot Purchase Case.

  Case-Laws - AT : Revision u/s 263 by CIT - difference in guidelines value for plots purchase - Find no merit in this contention of assessee because books of account are not maintained, no such details were ever filed during the course of assessment proceedings. Assessee has himself declared the income on estimated basis. Even AO has also estimated the income on estimated basis so all expenditures if any incurred for the business are deemed to have been allowed. - AT
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Customs

• Release Request for Export Consignments After Seizure Period; Entitlement to Notice Under Customs Act Section 110(2) Discussed.

  Case-Laws - HC : Seeking release of export consignments covered under the three shipping bills - Period of six months from the date of seizure expired - The person from whose possession the goods have been seized is entitled to notice of the proposal before the authority for the extension of the original period of 6 months mentioned in Section 110 (2) of the Act and he is also entitled to heard upon such proposal, subject to the restrictions that he is not entitled to information as to the investigation which is in process, because there can be no right in any person to be informed midway, during an investigation of the materials collected in the case against him and moreover there is a need for maintaining confidentiality of the investigation proceedings. - HC
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• Court Rules Exporter Retains Ownership of Uncleared Goods; Can Seek Re-export Permission from Commissioner.

  Case-Laws - HC : Claim of foreign exporter to India as owner of goods seeking to re-export - seizure of cargo currently lying in a warehouse at Gandhidham - Mere filing of the ex-bond bill of entry, by itself, would not vest the title of the goods into the importer if ultimately such goods are not cleared by the importer, or in other words, if such goods are abandoned. In such circumstances also, the title over the imported goods would remain with the exporter and the exporter may, in peculiar facts and circumstances of the case like the one on hand, request the Commissioner to permit him to reexport the goods as an unpaid seller - Undoubtedly, the writ-applicant herein is the unpaid seller and he has been suffering for no fault on his part. - This writ-application permitted to file an application addressed to the Commissioner seeking re-export of the goods. - HC
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• Customs Broker Penalized for Neglecting Duty to Inform Clients on Compliance, Regulation 10(d) Ignorance Defense Rejected.

  Case-Laws - AT : Levy of penalty on Customs Broker - As per Regulation 10 (d) the appellant has another statutory duty of informing with diligence his client to comply with the provisions of the CBLR and in case of non-compliance to bring the matter to the notice of Dy. Commr. Of Customs all Asstt. Commr of Customs. The duty burdened upon the appellant vide these regulations cannot be set aside on the mere plea of ignorance by the CB/CHA - AT
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Indian Laws

• Accused Acquitted in Cheque Dishonor Case Due to Probable Defense Creating Doubts on Enforceable Debt Existence.

  Case-Laws - HC : Dishonor of Cheque - acquittal of the accused - if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. In this case, the factual situation pointed out by the appellant contains several discrepancies mentioned above which is sufficient to raise a probable defence so as to create doubts as to the existence of legally enforceable debt or liability. - HC
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• Loan Admitted with 15% Interest; Security Addressed per MOU; Legal Steps Allowed; Commercial Dispute per Section 2(c)(i).

  Case-Laws - HC : Dishonor of Cheque - The receipt loan amount is unequivocally, unambiguously and indisputably admitted by the respondent. The obligation of the respondent to pay interest @15% per annum is also admitted, indisputable and uncontroverted. - the respondent has already dealt with the security furnished to the petitioner in terms of the Memorandum of Understanding, liberty is granted to the petitioner to take appropriate steps for securing its claim, in accordance with law, if so advised. - this is a classic commercial dispute which falls within the ambit of Section 2(c)(i) of the Commercial Courts Act, 2015 - HC
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Wealth-tax

• High Court Rules Assessee Can Directly Approach Court Under Article 226 if Section 17 Conditions Are Absent.

  Case-Laws - HC : Validity of Reassessment proceedings initiated u/s 17 of the Wealth Tax Act, 1957 - As regards the plea of alternative remedy, this court is of the opinion that when the condition precedent for the invocation of reassessment proceedings does not exist, the assessee is entitled to approach this court under Article 226 of the Constitution of India and hence, the question of invoking the alternative remedy available to the assessee, does not arise. - HC
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Service Tax

• Charter Helicopter Services Taxed as "Supply of Tangible Goods"; Recompute Tax When Not Separately Collected from Customers.

  Case-Laws - AT : Classification of services - The services rendered by the appellant in charter hire of helicopters to various corporates for offshore operations is classifiable under “supply of tangible goods for use” service - the demand of service tax under the said category along with interest thereon is upheld. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed - AT
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• Service Tax Not Applicable on Free Flats for Society Members in Tri-Partite Construction Agreements.

  Case-Laws - AT : Effect of negative regime on Construction of Complex Services - tri-partite agreement - providing free of cost flats to all the existing members of the Society in lieu of the development rights - In the present case the respondent has discharged the complete service tax liability on the gross amount received by him for providing the taxable services. Once he have discharged the tax liability on the gross consideration received by him by the sale of flats to new buyers, the demand of service tax for the flats handed over to the existing members of the societies without any consideration cannot be sustained. - AT
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Central Excise

• Adjudicating Authority Overlooked CAS-4 Certificate; Appeal Allowed for Excess Duty Payment Error Under Valuation Rules 9 & 8.

  Case-Laws - AT : Valuation - clearance of HTS wire to their sister concern for pressed concrete slippers by the said sister concern - The adjudicating authority below has failed to consider the CAS-4 certificate issued by the authorised auditors proving the excess payments of duty made by the appellant in terms of Rule 9 read with Rule 8 of the valuation rules. The certain short payments in terms of all these rules have wrongly been denied to be set off against the said excess - Appeal allowed - AT
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VAT

• Petitioner Challenges VAT on Warranty Replacements; Must Present Evidence to Appellate Joint Commissioner in Tirupathi for Exemption.

  Case-Laws - HC : Levy of VAT - goods replaced being covered under warranty of the product sold by the petitioner - time limitation - exemption form VAT/Tax sought on the ground that no sale of such goods has taken place and the same has been given to the customer by way of replacement being covered under warranty - the Appellate Joint Commissioner (CT), Tirupathi, is the forum before which the petitioner is required to agitate the matter by producing all documentary evidence available with him in support of his contention. - HC
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• Petitioner Entitled to 100% Penalty Waiver Under Karasamadhana Scheme 2021 for Pre-July 31 Reassessment Penalty Arrears.

  Case-Laws - HC : Seeking direction to the respondents to allow the petitioner's application for waiver of penalty - Karasamadhana Scheme, 2021 - in view of the undisputed fact that the petitioner did not have any arrears of tax but only arrears of penalty relating to reassessment, which was already completed on 28.04.2021, much before the cut off date dated 31.07.2021, the petitioner would clearly be entitled to the benefit of waiver of 100% penalty - HC
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• Court Rules Interest Automatically Payable from Filing Date, Dealer's Contest Over Payment Adjustment Rejected.

  Case-Laws - HC : Treatment given to the amount deposited by the dealer - stand of Department is that the amount deposited by the dealer on 30.03.2007 is firstly credited to the interest due from dealer but not to tax due - the dealer resisted the adjustment, firstly, in interest account as illegal for the reason that the respective assessment orders do not stipulate interest for non-payment or delayed payment of tax - Interest the Act is automatic, becomes payable on the date on which return is filed, and hence no separate order demanding interest is necessary. - HC
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