TMI Tax Updates - e-Newsletter
February 8, 2022

Case Laws in this Newsletter:

Articles

1. BUDGET 2022-2023 AND FINANCE BILL, 2022- MAJOR CHANGES IN GST LAW

   By: Dr. Sanjiv Agarwal

2. Service tax not payable on donations received from the members of the trust for advancement of yoga

   By: Bimal jain

3. BUDGET ON INFRASTRUCTURE DEVELOPMENT

   By: DR.MARIAPPAN GOVINDARAJAN

4. CENVAT credit cannot be denied due to invoice issued in the name of head office having with centralised registration

   By: Bimal jain

News

1. Around 6.17 crore Income Tax Returns (ITRs) and about 19 lakh major Tax Audit Reports (TARs) filed on new e-Filing portal of Income Tax Department

2. Union Budget 2022-23 is a direction setting budget aimed at making India future ready – Shri Piyush Goyal

3. Enhanced capital spending in the Budget will have 3-4 times multiplier effect on the economy: Union Minister Piyush Goyal

Notifications

GST - States

1. AE-I/DT&T/2021-22/35 - dated 1-2-2022 - Delhi SGST

Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer

2. AE-I/DT&T/2021-22/33 - dated 1-2-2022 - Delhi SGST

Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer

3. AE-I/DT&T/2021-22/26 - dated 27-1-2022 - Delhi SGST

Commissioner, State Tax confer powers under section 69, section 70, section 71, section 73 & section 74 of the DGST Act 2017, Jurisdictional Officer

4. ERTS (T) 65/2017/Pt. III/67 - dated 31-12-2021 - Meghalaya SGST

Seeks to supersede notification no. 15/2021 — State Tax (Rate). dated the 18th November. 2021 and amend Notification No. .ERTS (T) 65/2017/11. dated 29th June. 2017

5. ERTS (T) 65/2017/Pt. III/66 - dated 31-12-2021 - Meghalaya SGST

Amendment in Notification No. ERTS (T) 65/2017/1, dated 29th June, 2017

6. ERTS (T) 65/2017/Pt. III/62 - dated 29-12-2021 - Meghalaya SGST

Meghalaya Goods and Services Tax (Tenth Amendment) Rules, 2021.

Circulars / Instructions / Orders

SEZ

1. Minutes of the 108th meeting of the SEZ - dated 27-1-2022

Minutes of the 108th meeting of the Board of Approval for SEZ held on 27th January, 2022 to consider setting up of Special Economic Zones and other miscellaneous proposals

2. Minutes of the 107th meeting of the SEZ - dated 25-11-2021

Minutes of the 107th meeting of the Board of Approval for SEZ held on 25th November, 2021 to consider setting up of Special Economic Zones and other miscellaneous proposals

SEBI

3. SEBI/HO/CFD/SSEP/CIR/P/2022/14 - dated 4-2-2022

Disclosures in the abridged prospectus and front cover page of the offer document

Highlights / Catch Notes

GST

• Court Orders Release of Goods and Vehicle; Documents Complied with Rule 138A, No Tax Evasion Alleged.

  Case-Laws - HC : Seeking release of detained goods alongwith the vehicle - In the present case, the goods and conveyance in transit were accompanied with the documents as prescribed under Rule 138A, i.e. the invoice and the e-way bill. No discrepancy has been pointed out in the said documents even in the reply filed by the respondents - from the pleadings on record, it is clear that there is no allegation that the petitioner has contravened any provision of the Act or the rules framed thereunder much less with an intent to evade payment of tax. - The goods/conveyance cannot be detained without passing appropriate orders in accordance with law. - HC
  Visit to Get Source

  ---

• Supreme Court's Nine Judges Bench Reviews GST on Minerals with Paid Royalties; High Court Stays Notice Interim Order.

  Case-Laws - HC : Levy of GST - minerals on which already royalty has been paid - the very issue as to whether GST would be chargeable on minerals on which already royalty has been paid is actively under consideration before a Nine Judges Bench of the Hon’ble Supreme Court, in the present matter, the petitioner has made out a case for interim order. - there shall be stay of the notice - HC
  Visit to Get Source

  ---

• Court Requires Detailed Review of GST on Transferable Development Rights in Joint Development Agreements; No Immediate Intervention.

  Case-Laws - HC : Levy of tax/ GST - Transferable Development Rights pursuant to the Joint Development Agreement-cum-General Power of Attorney - It needs a detailed examination of the elements in the taxing proposal and all the points raised by the petitioner herein can be considered by the appellate authority. This Court finds no glaring illegality in the assessment order, which requires indulgence of this Court by exercising its jurisdiction under Article 226 of the Constitution of India, at this stage. - HC
  Visit to Get Source

  ---

Income Tax

• Tribunal Confirms No Taxable Income from Land Transfer as Capital in Partnership Firm u/s 45(3) IT Act.

  Case-Laws - HC : Addition towards capital gains u/s 45(3) - transfer of land as Capital contribution in the Partnership firm - Tribunal agreed with CIT(A) that after conversion of inventory into fixed asset the firm revalued the developed land including construction thereon in order to bring it in line with the current market value to justify the business assistance secured by the firm from the banks to extent of nearly ₹ 250 crores. Therefore, on facts the tribunal concluded that the revaluation was not a colourable device. - There was no withdrawal by the partners from capital accounts and therefore there cannot be any income liable to tax in their hands. - HC
  Visit to Get Source

  ---

• Write-off Disallowed: No Contingency for Obsolete Inventory Found Under AS-4 as of March 31, 2002.

  Case-Laws - AT : Disallowance on account of write off of obsolete inventory - the condition for invoking AS-4 is that there should exist a contingency as on the Balance Sheet date and the result of contingency, if known before the finalization of balance sheet, then the loss arising there from should be accounted for. In the instant case, it is not shown that the write off was related to the contingency that existed as on 31.3.2002. On the contrary, in the facts of the present case, there cannot be any contingency with regard to the raw material or finished goods. - Claim not allowed - AT
  Visit to Get Source

  ---

• Dispute Over Property Transfer Year: Section 53A Not Applied; No Possession Transfer, No Capital Gains for 2008-09.

  Case-Laws - AT : Transfer of property and accrual of capital gain - Year of transfer of capital asset - Agreement to sell - It is not the case of the AO that the provisions of sec. 53A of the Transfer of Property Act would apply to the impugned transaction. In fact, it is the submission of the assessee that the possession was never given to Buyer - the question of assessing any capital gain in AY 2008-09 does not arise. - AT
  Visit to Get Source

  ---

• Court Allows Deduction for Provisions on Cancelled Contracts Due to Vendor Commitments Under Supply Agreements.

  Case-Laws - AT : Claim of deduction of Provisions made - Basis of creating the provision - uncertain liability or not - The above facts would substantiate that the provision has been made for material cost and/or compensation for cancellation/suspension of contracts which is incurred under contracts with its vendors entered pursuant to pre-existing commitments against supply contracts with customers, the latter having been subsequently cancelled/suspended. Hence, we hold that the provision is an allowable deduction. - AT
  Visit to Get Source

  ---

• Tax Authority Confirms Only Commission Income on Jeera Bag Sales; No Additional Taxes Imposed Due to Lack of Evidence.

  Case-Laws - AT : Addition on account of sale of sale of jeera bag - CIT(A) deleted the additions by holding that the assessee only earned commission income in such sale - in the commission offered to tax by the assessee, as such no any enquiry carried out from the parties to assessee claimed to have sold goods on commission basis. Therefore, in the absence of contrary finding and since the assessee has filed the reconciliation of the entries with that the name of the parties, we inclined to agree with the categorical finding given by the CIT(A). - AT
  Visit to Get Source

  ---

• Court Rules No Basis for Addition u/s 153A Due to Lack of Evidence in Land Payment Case.

  Case-Laws - AT : Assessment u/s 153A - unexplained expenditure on account of cash payment made towards land - the addition made by the A.O. and upheld by the ld. CIT(A) on the basis of seized document is without any basis or foundation more particularly when no specific facts by virtue of documents have been placed on record and have not rebutted by the Revenue, thus, in this eventuality, no addition was warranted. - AT
  Visit to Get Source

  ---

• Unsecured Loan Validity Upheld: Verbal Contracts Between Known Parties Accepted, Additions Deleted Due to Proven Genuineness.

  Case-Laws - AT : Unexplained unsecured loans - the assessee in reply had submitted that the contract can be either verbal or written and simply non availability of a written contract would not make the loan non-genuine and in private arrangement of loan between known persons, no practice of entering into a loan agreement is followed. - the lenders are regular tax assessees and have given the loan through account payee cheques and have confirmed the transaction then the liability of the assessee of explaining the genuineness of the transaction stands discharged - Additions deleted - AT
  Visit to Get Source

  ---

Customs

• Court Orders Export Release: Petitioner Must Submit Bond and Bank Guarantee for Disputed Goods Under Jurisdictional Review.

  Case-Laws - HC : Provisional release of goods - Jurisdiction - Power to deal with the EIC of the petitioner - The respondents are directed to permit the petitioner to export the goods which are subject matter of the impugned order upon the petitioner submitting PR Bond equivalent to declared value of goods within three days from today and upon furnishing of bank guarantee to the extent of 20% of the duty drawback payable within one week from today. - HC
  Visit to Get Source

  ---

• Tribunal Special Bench to Expedite Appeals on Anti-Dumping Duty Extension; Urgent Hearings Required by High Court Stay.

  Case-Laws - HC : Extension of period of levy of anti-dumping duty - the Special Bench of the Tribunal are expected to take up the appeals for hearing and dispose them of in accordance with law before the period of six weeks comes to an end. A litigant should not suffer because the Special Bench of the Tribunal is not available. The Tribunal has to make the necessary arrangement for urgent hearing of the appeals one filed by the Association. - Notification dated 24-1-2022 stayed from its operation for a period six weeks - HC
  Visit to Get Source

  ---

• Court Allows Re-export of "Naphtha" with Rs. 15 Crore Guarantee; DRI Free to Pursue Further Action.

  Case-Laws - HC : Seeking provisional release of goods - Classification of imported goods - Naphtha - the respondent No.1 is permitted to proceed with the re-export of the goods on the respondent No.1 furnishing a bank guarantee of ₹ 15 Crore - The respondent No.1 be permitted to re-export the goods by using the nomenclature “Naphtha” and it is observed that using of the said nomenclature would not bind the Department (DRI) and would not entitle the respondent No.1 to raise a plea of estoppel in the proceeding that may be initiated by the DRI against the respondent No.1. - HC
  Visit to Get Source

  ---

• Court Rules Imported Goods Misclassified: High Speed Diesel Imported as Base Oil for Fuel Use.

  Case-Laws - HC : Classification of imported goods - High Speed Diesel or goods just in the form of base oil - The Bio-Diesel shown to have been manufactured was cleared under the invoices for use as Bio-Diesel B100. The Bio-Diesel is a product of vegetable origin and no known literature ascribe the Base Oil as an input for the manufacture of the same. The Bio-Diesel is used as fuel. The modus operandi adopted thus appears to be that High Speed Diesel imported under the guise of Base Oil SN 50 is being diverted as fuel by routing such goods through the purported manufacturers who claim to manufacture Bio-Diesel B100. - decided in favor of Revenue.- HC
  Visit to Get Source

  ---

• Customs Duty Exemption Denied Under SAFTA Lacks Legal Basis; Duty Demands Dismissed, Penalties Reduced Proportionately.

  Case-Laws - AT : Exemption from Customs Duty as per South Asia Free Trade Agreement (SAFTA) - The denial of the exemption certificate for the entire quantity of goods when the bulk of the goods are already covered by the SAFTA Certificate is not supported by any legal provision. Therefore the demands need to be set aside. The amount of redemption fine imposed by the impugned order as well as the penalties imposed upon the Appellants need to be proportionately reduced. - AT
  Visit to Get Source

  ---

• Mayil Mark Raw Honey Import Classification Corrected; Anti-Dumping Duty Under Category 7013 Invalidated.

  Case-Laws - AT : Classification of imported goods - Mayil Mark Raw Honey - glass bottles having specific measurement of 45 ml, 80 ml, 180 ml, 380 ml and 730 ml - The classification adopted by the appellant is correct. Consequently, the anti-dumping duty collected alleging classification of the goods to be 7013 cannot sustain. - AT
  Visit to Get Source

  ---

• Penalty Imposed on Importer for Customs Act Violation u/s 112(a) Aligns with Similar Cases.

  Case-Laws - AT : Penalty u/s 112(a) of the Customs Act, 1962 - The admitted act of the importer amounts to a clear omission, for which penalty under Section 112(a) ibid. appears to be correct. This is also for the reason that similar penalty was imposed on the other co-noticees, who appear to have accepted the same without agitating further. - AT
  Visit to Get Source

  ---

• Import Documents Confirm Goods Classified as 'Hooks and Eye' for Brassieres Under CTH 83081010.

  Case-Laws - AT : Classification of goods - The appellants have successfully demonstrated that the import documents describe the product to be ‘Hooks and eye’ for the Brassieres; other importers are also claiming the classification under the same heading. Such overwhelming evidence cannot be overlooked - the impugned goods are rightly classifiable CTH 83081010. - AT
  Visit to Get Source

  ---

• Appellant's Import of Petroleum Hydrocarbon Solvent Correctly Classified; Not Superior Kerosene Oil, as Department Claimed.

  Case-Laws - AT : Classification of imported goods - From the documents it is established that raw material i.e. Petroleum Hydrocarbon Solvent imported by the appellant is their raw material which is used in the manufacture of their final product such as industrial solvent, thinner etc. This fact also strengthen the case of the appellant that the goods imported by them is not Superior Kerosene Oil. - The declaration of the goods and classification made by the appellant in the bill of entry is correct and the department’s claim of classification as Superior kerosene Oil could not be established - AT
  Visit to Get Source

  ---

Indian Laws

• High Court Quashes Order for 20% Interim Compensation on Cheque Dishonor, Citing Section 143A of Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of Cheque - demand of interim compensation not exceeding 20% of cheque amount - The trial court was required to consider only the facts and circumstances of the case which concerns the applicant wherein non-bailable warrant was issued - Taking into consideration the said provisions of Section 143A of the Negotiable Instruments Act, the order of Revision Court directing the applicant to pay 20% of the cheque amount is against the provisions of law; hence the same deserves to be quashed and set aside - HC
  Visit to Get Source

  ---

IBC

• Appellant initiates CIRP application u/s 9 after payment refusal by Proprietary Concern within limitation period.

  Case-Laws - SC : Initiation of CIRP - Period of limitation - A final letter was addressed by the appellant to the Proprietary Concern on 27 February 2017, demanding the payment on or before 4 March 2017. The Proprietary Concern replied to this letter on 2 March 2017, finally refusing to make re-payment to the appellant. Consequently, the application under Section 9 will not be barred by limitation. - SC
  Visit to Get Source

  ---

• Corporate Insolvency Process Stalled Due to Unregistered Special Resolution; MOA Amendment Deemed Invalid Under Companies Act Section 13.

  Case-Laws - SC : Initiation of CIRP - Evidentiary value of respondent’s MOA as amended - Section 13 of CA 2013 provides for the procedure which has to be followed when the MOA is to be amended. In cases where the object clause is amended, it requires the Registrar to register the Special Resolution filed by the company. However, the respondent has provided no proof that: (i) the purported resolution dated 1 September 2014 was a Special Resolution; (ii) it was filed before the Registrar; and (iii) that the Registrar ultimately did register it. Thus, in terms of Section 13(10) of CA 2013, the purported amendment to the MOA would not have any legal effect. - SC
  Visit to Get Source

  ---

• Bank Guarantee Invocation Allowed Despite CIRP; Case Sent Back for Further Orders on Appellant's Claim.

  Case-Laws - AT : Refusal of the Bank to invoke the Bank Guarantee - Adjudicating Authority has taken the view that since CIRP proceedings were continuing the Bank Guarantee cannot be invoked - The Appellant was clearly entitled for invocation of Bank Guarantee, hence, we remit the matter back to the Adjudicating Authority to pass appropriate orders with regard to claim of the Appellant to the amount as included in the Bank Guarantee. - AT
  Visit to Get Source

  ---

• NCLT Can't Impose Fines for Moratorium Breaches; Offenses Require Section 236 Procedure Under IBC.

  Case-Laws - AT : Jurisdiction of NCLT to levy fine u/s 235A of IBC - When the allegation of Resolution Professional was that Appellant has contravened the Moratorium there was allegation of commission of an offences on which punishment could have been awarded after following the procedure under Section 236. An act which is termed as offence within specific provision of Chapter VII of Part-II could not have been indirectly dealt with by the Adjudicating Authority by imposing a fine - AT
  Visit to Get Source

  ---

Service Tax

• Court Rules on Correct Classification Under SVLDRS: Case Should Be Under "Arrears" Once Declared u/r 3(2)(b.

  Case-Laws - HC : SVLDRS - unfair classification of the case of the petitioner under “litigation” category, instead of “arrears” category - Once a case travels from the category of show cause notice (“litigation category”) under clauses (a) and (c) to the category under clause (b) which is of a “an amount in arrears” (arrears category) and the declaration is made under the category listed in clause (b) of rule 3(2), it would have to be treated as one single case for the purpose of Rules, 2019, no matter the show cause notice contained two demands of taxes, one under Finance Act, 1994 and the other under Cenvat Credit Rules, 2019. - HC
  Visit to Get Source

  ---

• Late Refund Claim for Residential Complex Services Denied u/s 102 of Finance Act 1994 Due to Late Filing.

  Case-Laws - AT : Rejection of refund claim - residential complex services - Section 102 of Finance Act, 1994 - In the instant case, the refund claim was not filed within a period of six months as provided in sub Section (3) of Section 102 of Finance Act, 1994. The Finance Bill was granted assent on 14.05.2016. Refund claim has been filed on 05.09.2017. - The exemption was revived by notification dated 01/03/2016. But since it was prospective in effect, the appellant was not entitled for any exemption, which the appellant was aware of and with open mind and eyes deposited the service tax due with interest. - AT
  Visit to Get Source

  ---