TMI Tax Updates - e-Newsletter
March 17, 2022

Case Laws in this Newsletter:

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

2. The Supreme Court sent back matter to High Court, because of short order passed by High Court holding no substantial question of law arose.

   By: DEVKUMAR KOTHARI

News

1. GREENFIELD INDUSTRIAL NODES

2. FDI FROM NEIGHBOURING COUNTRIES

3. MAKE IN INDIA

4. INDUSTRIAL CORRIDORS

5. Unified Logistics Interface Platform (ULIP)

6. INVESTMENT IN INDUSTRIAL SECTOR

7. EXPORT OF FRESH FRUITS

8. DATA OF IMPORTS AND EXPORTS

9. SCHEMES FOR PROGRESS OF INDUSTRIES

10. CCI approves acquisition of Micro Life Sciences Private Limited by South Elm Investments B.V.

11. CCI approves acquisition of equity stake in Future Generali India Insurance Company Limited by Generali Participations Netherlands N.V

Notifications

Customs

1. 17/2022 - dated 15-3-2022 - Cus (NT)

Fixation of Traiff Values - Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver etc, (including Crude Palm Oil, RBD Palm Oil, Others)

GST - States

2. FTX.56/2017/Pt-V/74 - dated 24-1-2022 - Assam SGST

Seeks to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.07.2021.

3. FTX.56/2017/Pt-V/72 - dated 24-1-2022 - Assam SGST

Seeks to amend Notification no. FTX.2017/Pt-II/545 dtd. 22/05/2020 to exclude government departments and local authorities from the requirement of issuance of e-invoice.

4. 05/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST

Seeks to provide the concessional rate of SGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021

5. 04/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST

Seeks to amend notification No. 11/2017- (Rate) [FTX.56/2017/24 dtd. 26/06/2017] so as to notify GST rates of various services as recommended by GST Council in its 44th meeting held on 12.06.2021.

6. 03/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST

Seeks to amend notification No. 06/2019 (Rate) [FTX.56/2017/Pt-II/270 dtd. 03/06/2019] so as to give effect to the recommendations made by GST Council in its 43rd meeting held on 28.05.2021.

7. 02/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST

Seeks to amend notification No. 11/2017 (Rate) [FTX.56/2017/24 dtd. 29/06/2017] so as to notify Assam GST rates of various services as recommended by GST Council in its 43rd meeting held on 28.05.2021.

8. 01/2021-STATE TAX (RATE) - dated 24-1-2022 - Assam SGST

Seeks to amend notification No. 1/2017 (Rate) [FTX.56/2017/14 dtd. 29/06/2017] to prescribe change in Assam GST rate of goods.

9. AE-I/DT&T/2021-22/63 - dated 14-3-2022 - 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

10. AE-I/DT&T/2021-22/58 - dated 14-3-2022 - 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

11. AE-I/DT&T/2021-22/55 - dated 3-3-2022 - 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

12. 10/GST-2 - dated 16-3-2022 - Haryana SGST

Amendment in Notification no. 17/GST-2, dated 31.03.2020 (to implement e-invoicing for taxpayers having aggregate turnover exceeding ₹ 20 Cr. from 01st April, 2022)

Circulars / Instructions / Orders

Income Tax

1. 04/2022 - dated 15-3-2022

Income-Tax Deduction from salaries during the Financial Year 2021-22 Under Section 192 Of The Income-Tax Act, 1961.

Highlights / Catch Notes

GST

• Goods Detention Under GST: No Intent to Evade Taxes, Rs. 12.75 Lakhs Paid, Section 129 Proceedings Not Warranted.

  Case-Laws - HC : Detention of goods - It cannot be said that the petitioner had any intent to evade the tax or the mismatch in the quantities is of such nature which shall entail proceedings under Section 129 of the Act. A person, who has already paid a tax of ₹ 12.75 lacs - on a consignment cannot be said to have an intent to evade tax amounting to ₹ 11000/- - HC
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• Distillery Grains for Cattle Feed Classified as Brewing Waste, Attract 5% GST Under HSN 2303.

  Case-Laws - AAR : Exemption from GST - sale of produces Distillery Wet Grain Soluble (DWGS) and Distillery Dry Grain Soluble (DDGS) – Cattle feed - the Distillery Wet Grain Soluble (‘DWGS’) and Distillery Dry Grain Soluble (‘DDGS’) are clearly falling under ‘brewing or distillery dregs and waste’ and therefore under tariff item HSN No. ‘2303’. - Liable to GST @5% - AAR
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Income Tax

• Court Upholds Penalty for Non-Compliance with Income Tax Notice; Appellant's Swiss Bank Account Connection Confirmed.

  Case-Laws - HC : Imposition of penalty u/s 271(1)(b) - non-compliance of the notice issued under Section 142(1) - if the assessee really had no connection with the Swiss Bank accounts, no prejudice would have been caused to her if she had complied with the notice u/s 142(1) of the Act and filled the consent form. Moreover, it cannot be that penalty is upheld with regard to the attorney holder of the Swiss bank account and not with regard to the account holder no.2 (Appellant-assessee) qua the same bank account. - the penalty imposed upon the Appellant cannot be held to be erroneous and unwarranted - HC
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• Section 12AA Registration Valid Until Official Cancellation; Business Activities Alone Can't Invalidate Section 12A(1)(ab) Order.

  Case-Laws - AT : Exemption u/s 11 - withdrawing the registration u/s 12AA - the Registration u/s 12AA of the Act, once granted, remains valid until it is cancelled by the Commissioner, by due process of law laid down u/s 12AA(3)/12AA(4) of the Act. It cannot cease to be operative unless order u/s 12AA(3)/12AA(4) of the Act is passed by the ld. CIT(E) in accordance with the law for cancellation of registration and that too on an application made by assessee for intimation of amendment in the object which was subsequently withdrawn. Thus, the order passed u/s 12A(1)(ab) is bad in law as well as on facts merely on a ground that the assessee is doing activities of the nature of business/commerce. - AT
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• Deductions for Security and Gardening Expenses Disallowed Due to Lack of Detailed Breakdown in Rental Income Case.

  Case-Laws - AT : Deduction from Rental income - Disallowance on account of Security Expenses and Gardening Expenses, respectively as part of annual value under Income from House Property - there was no break up provided by the assessee as pointed out by the CIT(A) and also Leave and License agreement no such break up is reflected to claim gardening and security service charges for computing the annual value. - No deduction can be allowed - AT
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• CIT(A) overlooked AO's concerns, granted relief u/s 80P without taxpayer's explanation on income sources. Case remanded.

  Case-Laws - AT : Deduction u/s 80P - CIT(A) also did not addressed the grievance of the AO while granting relief to the assessee as to non furnishing of the explanation by assessee before the AO about nature of sources of gross receipt or commission income as were claimed by assessee to be earned from the marketing of agricultural produce grown by its members , before allowing relief to the assessee u/s 80P of the 1961 Act . - the matter restored back to the file of ld. CIT(A) for fresh adjudication on merits and in accordance with law. - AT
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• Court Quashes Assessment Order; Officer Failed to Provide Evidence and Denied Cross-Examination in Section 68 Share Case.

  Case-Laws - AT : Addition u/s 68 - Bogus share transaction - Assessee has claimed exemption u/s. 10(38) on the huge long term capital gain from the sale of scrip - the assessment order passed u/s. 143(3) of the Act by the Assessing Officer is bad in law and has to be quashed as the Assessing Officer has failed to provide the copies of statements on which he relied on for making assessments and also for not providing cross examination of those persons inspite of specific request made by the assessee. - AT
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• Taxpayer's Claim Rejected: Evidence Lacking for Building Completion, Interest Deduction Not Rectifiable u/s 154.

  Case-Laws - AT : Rectification u/s 154 - Treatment to interest incurred by the assessee - Had there been any evidence furnished along with the return of income with regard to completion of construction of the building and its readiness to let out, then the claim of the assessee could have been entertained in the rectification proceedings u/s. 154 of the Act by the revenue authorities. In the absence of any such evidence furnished, the CIT(Appeals) was justified in rejecting the claim of assessee. The issue raised by the assessee is a debatable issue which cannot be rectified in the proceedings u/s. 154 - AT
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• India-Japan DTAA: No Fixed Place PE in India for Assessee; Goods Sold and Paid Outside Indicates No Local Operations.

  Case-Laws - AT : Existence of Fixed Place Permanent Establishment (“Fixed Place PE”) and Supervisory Permanent Establishment (“Supervisory PE”) - India-Japan DTAA - Merely providing access to the premises by FRL for the purpose of providing agreed services by the assessee would not amount to the place being at the disposal of the assessee. - Since the goods were manufactured outside India, sale of goods took place outside India and consideration was also received by the assessee outside India, title passed outside India and hence the assessee has not carried out any operation in India in relation to supply of the raw material and capital goods. We therefore hold that the assessee does not have a Fixed Place PE in India. - AT
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• Court Accepts Assessee's Reconciliation of TDS Statement and Audited Accounts; Revenue's Proposed Additions Deleted.

  Case-Laws - AT : Additions towards difference in the 26AS (TDS statement) and the books results - books of account of the assessee duly audited - We have noted that the audited books of accounts and reconciliation and the various entities contract amount offered for tax over a period & time. Only difference between the contract value of each party matches over a period of time irrespective of the year offered by the assessee and therefore, grievance of the Revenue that the assessee has not offered correct income is fully explained by the assessee by filing the chart. - Additions deleted - AT
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• Exemption u/s 54 Shouldn't Be Denied for 11-Day Registration Delay Due to Unavoidable Circumstances.

  Case-Laws - AT : Disallowance of exemption u/s 54 within the scope of section 154 - if assessee has received the entire sale consideration before one year and handed over the possession, then affectively assessee has transferred the property. If for extreme and unavoidable circumstances there is slight delay in registering the property exemption cannot be denied. Here the delay is only 11 days. Thus, no adverse inference can be drawn to withdraw the exemption. - AT
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• Depreciation on machinery at client's site is deductible if used for assessee's business purposes. Claim is valid.

  Case-Laws - AT : Depreciation on plant and machinery - plant and machinery were installed at customer's premises - It cannot be said that the equipment in question had not been used for the purpose of the business of the assessee. The fact that the equipments were used in the business premises of the clients cannot be the basis to disallow the claim of the assessee for deduction on account of depreciation - AT
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• Depreciation on Diagnostic Machines at Customer Premises Allowed; Integral to Business Strategy per Section 32(1).

  Case-Laws - AT : Disallowance of depreciation on plant and machinery installed at customer's premises - the installation of the diagnostic machines owned by the assessee and forming part of its 'Block of assets' at the customers site, being a part of the business of the assessee, and rather as a matter of fact a modus operand! adopted by the assessee to boost its sales of reagents, therefore the latter being found to have duly satisfied the requisite conditions contemplated u/s. 32(1) is thus entitled to deprecation on the said diagnostic machines. - AT
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• Second Officer's Reassessment u/s 147 Challenged for Revisiting Scrutinized Issues by First Officer.

  Case-Laws - AT : Reopening of assessment u/s 147 - Assessing Officer to usurp the jurisdiction to reopen the assessment - The first Assessing Officer has made the reassessment after discharging his duties as an investigator as well as that of an adjudicator. So the action of the Second Assessing Officer to again rake up the same issue which has undergone scrutiny by his predecessor Assessing Officer is nothing but review of the action of first Assessing Officer, which power it is settled that the Assessing Officer (second) does not enjoy.- AT
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• Assessment Invalidated: Section 153A and 153D Breached as Draft Orders Lacked Necessary Records for Approval.

  Case-Laws - AT : Validity of Assessment u/s 153A - Proof of valid approvals u/s 153D - In the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment orders without any assessment records what to say about the search material. Therefore, the approval given in the instant case by the Ld. Addl. CIT is not valid in the eyes of law. - AT
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Customs

• Tariff Values Updated for Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold, and Silver: Compliance Alert.

  Notifications : Fixation of Traiff Values - Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver etc, (including Crude Palm Oil, RBD Palm Oil, Others) - Notification
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• Court Orders Cancellation of Bank Guarantee After DRI's Jurisdictional Error Nullifies Original Order and Show Cause Notice.

  Case-Laws - HC : Seeking direction to respondents to cancel and return back the Bank Guarantee, which was executed towards the clearance of goods - SCN and order in original was quashed on the ground of jurisdiction of DRI - as on date, since there has been no adjudication proceedings pending against the petitioner and that has been set aside in the eye of law, the respondents cannot hold the Bank Guarantee given by the petitioner without any authority. Therefore, this Court feels that the prayer sought for in this writ petition can be considered and granted. - HC
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• DRI's inconclusive investigation halts action; enhanced value based on one invoice lacks evidence. No show cause notice issued.

  Case-Laws - AT : Valuation - department has enhanced the value on the basis of one invoice - The investigation conducted by the DRI is inconclusive and hence cannot be held against the appellant inasmuch there is no tangible evidence that has been adduced by the DRI and neither a show cause notice has been issued on the basis of said inconclusive investigation of DRI - It is settled law that the price of contemporeous goods cannot be applied invariably in each and every case. Before applying the enhanced comparable price varies circumtances need to be verified such as the quality of goods, quantity of goods, country of origin etc. - AT
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IBC

• CIRP Application Dismissed: Invoices Issued to Third Party, Not Corporate Debtor; Section 9 Requirements Unmet.

  Case-Laws - AT : Maintainability of application - initiation of CIRP - From the invoices which are on the record, it is clear that invoices were issued to the FCIPL and invoices were not directly issued to the Corporate Debtor. The invoices were issued to the FCIPL only for the purpose of due certification by FCIPL and EIL, so that the Corporate Debtor may make the payment. In facts of the case, the Adjudicating Authority has not committed any error in rejecting the Section 9 Application filed by the Operational Creditor. - AT
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Service Tax

• Rejection of Application Under Voluntary Compliance Scheme 2013 Overturned Due to Improper Cheque Presentation Procedure.

  Case-Laws - AT : Rejection of application filed under Voluntary Compliance Encouragement Scheme, 2013 - It is seen that department has collected the bank details of the appellant and found that there was no sufficient fund to honour the cheque on 31.12.2013. On receiving the cheque, the department ought to have presented the cheque and if the same is dishonored could have rejected the declaration as the payment of 50% dues was not made. Without presenting the cheque, merely collecting the bank details on the date of closure of the scheme, it cannot be concluded that appellant has not paid the tax dues in accordance with the provisions of law. - The rejection of declaration filed by appellant under VCES cannot sustain - AT
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VAT

• Court Rules Rusk Production is "Manufacture," Not Bread; VAT Exemption for Bread Doesn't Apply to Rusk.

  Case-Laws - HC : Benefit of exemption from VAT - it is plain to see that the petitioner manufactures bread and subjects such bread to a further process, which activity falls within the meaning of “manufacture” as used in the said Act for an altogether different product to be produced - it cannot be said that the petitioner”s product rusk is bread or the VAT exemption available to bread in the State must be extended to rusk. - HC
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