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Home e-Newsletters Index Year 2024 March Day 28 - Thursday

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TMI Tax Updates - e-Newsletter
March 28, 2024

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws



Highlights / Catch Notes

  • GST:

    Mismatch in ITC Reporting - Non-payment of Tax on Director's Remuneration - The High Court found that the order failed to consider crucial submissions made by the petitioner in response to the show cause notice. Specifically, explanations regarding the mismatch in ITC reporting, non-payment of tax on director's remuneration, and blocked credit under Section 17(5) of GST enactments were disregarded. As a result, the court quashed the impugned order and remanded the matter for reconsideration by the respondent.

  • GST:

    Violation of principles of natural justice - validity of assessment order - The High Court acknowledged that the petitioner was not heard before the impugned order was issued, and there was a breach of natural justice. - Considering that the petitioner had already paid a sum exceeding the tax liability indicated in the impugned order, and the revenue interest was fully secured, the court deemed it appropriate to provide the petitioner with an opportunity to be heard.

  • GST:

    Challenged the order of cancellation of registration - appeal preferred was dismissed on the ground of limitation - The High Court allowed the writ petition, setting aside the cancellation order. It held that since the appeal dismissal was on grounds of limitation, the doctrine of merger did not apply, enabling judicial review of the original order. - The court directed the petitioner to appear before the respondent authority with the reply to the show cause notice and a certified copy of the court's order within three weeks.

  • GST:

    Time Limitation - issuing a notice after the detention - The High Court noted that the actions of the tax authority did not align with the prescribed timeline outlined in section 129(3) of the CGST Act. As per this section, the proper officer must issue a notice within seven days of detention or seizure and pass an order within seven days from the date of service of such notice. Since both the notice and the subsequent order were issued beyond these time limits, the court found no justification to uphold the demand raised. - While acknowledging the discrepancy in the vehicle number recorded in the e-way bills, the court observed that it was a minor error, possibly a bonafide mistake. The court indicated that such discrepancies should not lead to severe penalties under section 129 of the CGST Act.

  • GST:

    Cancellation of GST registration of the petitioner - The petitioner, a company providing technical consultancy services, had its GST registration cancelled due to non-filing of returns for over six months. The petitioner cited challenges such as the Covid-19 pandemic and changes in management as reasons for the delay. The High Court, considering the impact of the pandemic on businesses, directed the petitioner to rectify the default by filing pending returns and paying fines. Upon compliance, the Court ordered the restoration of the petitioner's GST registration.

  • GST:

    Release of goods in terms of the provision of Section 129(1)(a) of the GST / UPGST Act 2017 - SCN issued to the petitioner in its capacity as the consignee - The High Court acknowledged the petitioner's status as the consignee of the goods but emphasized their position as the registered owner. It concurred that, as per Section 129(1)(a) of the U.P.G.S.T. Act 2017, the goods are liable to be released in favor of the registered owner, which in this case, is the petitioner. The Court upheld the petitioner's right to obtain the release of goods.

  • Income Tax:

    The clarification addresses a crucial issue concerning the interpretation and application of section 44AE of the Income Tax Act. By providing clarity on the calculation of presumptive income for heavy goods vehicles, it ensures consistency and compliance within the transport industry. - The clarification offered by the CBDT resolves ambiguity arising from the differential definitions of 'heavy goods vehicle' in the Income Tax Act and the Motor Vehicles Act. This underscores the importance of aligning tax legislation with related statutes to avoid confusion and facilitate accurate tax assessment.

  • Income Tax:

    Notification No. 35/2024, issued by the Central Board of Direct Taxes (CBDT), specifies the 'Principal Secretary, Planning Department, Government of Uttar Pradesh' for accessing taxpayer information as per Section 138 of the Income-tax Act, 1961. This designation aims to facilitate effective governance, streamline administrative processes, and ensure transparency in tax administration.

  • Income Tax:

    Reopening of assessment u/s 147 - The High Court observed that the reasons provided by the Assessing Officer for reopening the assessment did not establish a live link between the information received and the belief that income had escaped assessment. There was no clear allegation of failure to disclose material facts by the petitioner. The court concluded that the reassessment was merely based on a change of opinion by the Assessing Officer, which did not justify reopening the assessment. It highlighted that a reason to suspect is not the same as a reason to believe, and there must be a rational connection between the material and the belief of income escapement.

  • Income Tax:

    Determination of long term capital gain u/s 50C - The Tribunal observed that the part payment of consideration was received by the assessee prior to the execution of the agreement to sale. Furthermore, the sale consideration declared by the assessee was significantly higher than the prevailing jantri rate at the time of the agreement. Therefore, the Tribunal held that the assessee was entitled to the benefit of the first and second provisos to Section 50C.

  • Income Tax:

    Disallowance of interest - Loans advanced to sister concerns - The Tribunal noted that the Assessee had not appealed against the partial relief granted by the learned CIT (A). - Considering the availability of interest-free funds with the Assessee, the Tribunal upheld the decision of the learned CIT (A) to reduce the interest rate from 16% to 8%.

  • Income Tax:

    Addition u/s 68 - Bogus LTCG - Penny stock transactions - The Tribunal found that the assessee had provided sufficient documentary evidence supporting the genuineness of the transactions, including purchase and sale of shares through the Bombay Stock Exchange (BSE), payment through banking channels, and compliance with regulatory requirements (like STT). - ITAT noted that the AO primarily relied on a general report by the Kolkata Investigation wing and failed to connect the assessee or their transactions directly to any alleged manipulation of share prices. Additionally, SEBI did not find any wrongdoing on the part of the assessee or their broker. - Given the genuineness of the LTCG transactions was established, the Tribunal agreed with the CIT(A)'s decision to delete the addition.

  • Income Tax:

    Reopening of assessment u/s 147 - Reasons to believe - The ITAT thoroughly examined the reasons recorded by the AO for re-opening the assessment and found that there was no new or tangible material available to justify the re-opening. It was established that the AO had already examined and allowed the assessee's claim of deduction under Section 80IB(10) during the original assessment proceedings after due application of mind. The Tribunal concluded that the re-opening of the assessment was solely based on a re-appraisal of the same material available during the original assessment, amounting to a review of the decision taken earlier, which is legally impermissible.

  • Income Tax:

    Revision u/s 263 - another possible view of the matter - The appellant challenged the jurisdiction of the PCIT, arguing that the original assessment order by the AO was not erroneous and did not prejudice the revenue. - The ITAT found that the AO had duly examined the submissions and evidence before concluding the assessment. The PCIT's order was deemed unsustainable as it was based on grounds not part of the initial reasons for scrutiny and lacked sufficient basis. Consequently, the Tribunal set aside the PCIT's order and upheld the decision of the AO.

  • Income Tax:

    Addition u/s 69A - unexplained cash deposits in the bank account - onus to prove - The Tribunal noted that the appellant had provided evidence to support the source of cash deposits, demonstrating legitimate cash withdrawals preceding the deposits. It concluded that the Assessing Officer had not presented any adverse material to refute the appellant's claims. Therefore, the Tribunal directed the AO to delete the impugned addition under section 69A.

  • Income Tax:

    Addition u/s 40A(2)(b) - Allegation of excessive and unreasonable salary paid to the relative of partner - The assessing officer questioned the legitimacy of this payment due to the absence of a filed income tax return by the recipient and the perceived collusive nature of the transaction. - sham transaction designed to evade tax. - The Appellate Tribunal found that the salary payment was legitimate and incurred for business purposes. The Tribunal noted that the assessing officer failed to prove that the salary was excessive or unreasonable, a prerequisite for invoking Section 40A. Additionally, the Tribunal accepted the appellant's arguments regarding the separate nature of the salary and loan transactions.

  • Income Tax:

    Income from other sources - Deduction of interest expenditure - direction of the CIT – A in restricting the deduction to the extent of income earned of term deposit - The Appellate Tribunal noted that the appellant had earned bank interest of Rs. 41 lakhs. - Following previous decisions of the Coordinate Bench, the Tribunal directed the AO to allow the deduction of interest expenditure of Rs. 3.27 crores, as claimed by the appellant. - The Tribunal found that the interest expenditure was indeed incurred for the purpose of earning interest income, based on precedents and the nature of the transactions.

  • Income Tax:

    Addition u/s 68 - bogus share transactions - as alleged transactions in shares, “penny stock” are fraudulent and accommodation entries - The Appellate Tribunal noted that the appellant had purchased and subsequently sold shares of a company through open market channels using authorized brokers. The appellant provided comprehensive documentation, including credit notes, contract notes, Demat account statements, and bank statements, to substantiate the transactions. - Despite sharp fluctuations in share prices, the ITAT found no evidence of wrongdoing or irregularities in the appellant's transactions. - Consequently, the additions so made deleted.

  • Income Tax:

    Framing assessment u/s 143(3) without serving notices at the registered e-mail address - changing of the e-mail id - The ITAT found that the appellant had not communicated their change in email address to the revenue authorities, hence dismissing the appellant's claim of non-service of notices. - Concerning the disallowance of exceptional items, the tribunal determined that the shares issued by RFCL to the appellant constituted income, earned in exchange for the right to use the appellant's capital asset. Therefore, the disallowance made by the Assessing Officer was upheld. The tribunal directed the deletion of any income already offered for taxation in subsequent years to avoid double taxation.

  • Customs:

    Notification No. 24/2024 - Customs (N.T.), supersedes the previous Notification No. 18/2024-Customs(N.T.) and determines the rates of exchange of foreign currencies concerning the conversion into Indian currency or vice versa for imported and exported goods. The notification, effective from 27th March 2024, includes detailed schedules outlining the specific rates for various foreign currencies.

  • Customs:

    The Instruction No. 06/2024-Customs issued by CBIC addresses the need to enhance preventive vigilance during elections. It emphasizes coordination among law enforcement agencies to curb the flow of suspicious cash, illicit goods, and other malpractices. The document outlines a detailed SOP for CBIC formations, emphasizing roles and responsibilities, focus areas for vigilance, data analysis, and reporting. Specific measures are highlighted to enhance vigilance, including increased monitoring along borders and airports, random audits, and currency declaration checks. The instructions aim to uphold the integrity of elections and ensure compliance with procedures to prevent misuse and malpractices.

  • Customs:

    Disposal of Export goods brought into Customs area but neither exported nor taken back to town. - The Trade Notice issued by the Commissioner of Customs (General) outlines procedures for the disposal of uncleared export cargo brought into the Customs area but not exported or taken back to town. It aims to free up storage space and containers by facilitating the auction of such goods. The notice provides a detailed procedure for custodians to follow, including preparing lists of eligible cargo, sending auction notices, examining goods, obtaining necessary approvals, valuing goods, conducting E-auctions, and sharing sale proceeds. The process must be completed by June 30, 2024.

  • Customs:

    Seeking benefit of Merchandise Exports from India Scheme (MEIS) - submission of online declaration indicating that it would not avail the benefits of MEIS - The judgment addresses a typographical error in a previous court order and grants relief to the petitioner based on previous judicial precedents and customs practices. It upholds the petitioner's claims for MEIS benefits and directs the concerned authorities to process the claims accordingly.

  • Customs:

    Classification of imported goods - Electronic Control Unit (ECU) - The CESTAT concluded that ECUs do not qualify as "Electronic automatic regulators" under Chapter 90 for several reasons: ECUs, while electronic, do not regulate anything by themselves but are components of a larger system (ABS) that performs regulation based on inputs analyzed by the ECU. The primary function of the ECU is data analysis, not direct regulation or control of braking, thus it does not fit the criteria for classification under CTI 9032 89 10. - The Tribunal found that the ECU is an automotive part, used solely with automobiles, fitting the classification under CTI 8708 99 00.

  • DGFT:

    The Directorate General of Foreign Trade (DGFT) in India has issued Notification No. 81/2023, amending the export policy of onions. The amendment extends the prohibition on the export of onions under HS Code 0703 10 19 until further orders, effectively prolonging the restriction beyond its initial expiration date of 31st March 2024. - The objective of the amendment is to ensure domestic availability and price stability of onions, considering their significance in Indian agriculture and culinary practices.

  • DGFT:

    The DGFT issued Notification No. 80/2023, amending the policy condition for the export of crude oil under HS Code 2709 00 10. The amendment exempts AMI (ADNOC Marketing International (India) RSC Limited India) from the Special Trading Entitlement (STE) conditions, allowing them to re-export crude oil from their Commercial Stockpile at Mangalore SPR, at their own cost.

  • Corporate Law:

    Oppression and Mismanagement - Allegations of financial mismanagement and irregularities by the promoters/directors - The High court acknowledged that despite the appointment of Central Government directors, the desired development and management outcomes were not achieved, highlighting a failure to meet the developmental promises made to the plot holders. - The court ordered the cessation of Central Government control, allowing the company to be managed by its shareholders with specific directives to ensure development work commences, including the installation of basic infrastructure and facilities.

  • Benami Property:

    Benami transaction - Validity of summons issued u/s 19 and the provisional order of attachment - The court found no ex facie erroneous assumption of jurisdiction by the Investigating Authority under the Benami Act. The transactions were within the ambit of the Benami Act, as amended in 2016, particularly under Section 2(9)(D), which deals with transactions where the person providing the consideration is fictitious or not traceable. - The court ruled that the petitioner-company's transactions fell within the scope of the Benami Act, particularly after the 2016 Amendment. The court found that the procedure under the Act, including the issuance of a show-cause notice without a prior hearing, does not violate principles of natural justice, as the Act provides a detailed adjudication process with opportunities for hearing at later stages.

  • State GST:

    Rectification of assessment orders u/s 161 of DGST / GST Act, 2017 - The latest instruction issued by the Department of Trade and Taxes, Government of NCT of Delhi, supplements the earlier directive on the rectification of assessment orders under Section 161 of the DGST Act, 2017, focusing on challenges faced and additional cases eligible for rectification pertaining to the fiscal year 2017-18. - The instruction acknowledges the complexities in implementing the previous guidelines and provides further clarity and expansion on the rectification process.

  • State GST:

    Rectification of assessment orders to correct the errors apparent on the face of record u/s 161 of DGST GST Act, 2017. - The instruction issued by the Department of Trade and Taxes, Government of NCT of Delhi, emphasizes the need for rectification of assessment orders to correct errors apparent on the face of the record under Section 161 of the DGST Act, 2017. It acknowledges the challenges faced by taxpayers/dealers due to errors in demand orders and aims to streamline the rectification process to minimize unnecessary litigation.

  • Indian Laws:

    Rejection of bid - requirement of uploading annual turnover certificate issued by the Chartered Accountant for the last five financial years bearing UDIN of Institute of Chartered Accountants of India (ICAI) - The Court found that the stipulation for submitting a five-year annual turnover certificate with UDIN by Chartered Accountants was mandatory. The absence of UDIN was grounds for rejection, and this requirement was repeatedly emphasized in the tender documents. - The Court criticized the Technical Evaluation Committee's reconsideration favoring Respondent No. 5 as unfair, arbitrary, and biased. It noted that the Committee's reliance on documents not meeting the UDIN requirement was illegal and overlooked the mandatory nature of the tender conditions.

  • IBC:

    Condonation of delay in filing appeals - The NCLAT made it clear that ignorance of the proceedings or the order does not extend the limitation period for filing an appeal. This decision reflects the IBC's emphasis on expediency and certainty in resolving insolvency matters, which is crucial for maintaining confidence in the insolvency resolution process and the stability of the financial and commercial systems. The Tribunal's reliance on authoritative legal precedents and its interpretation of the IBC provisions reinforce the principle that statutory rights of appeal must be exercised within the prescribed timelines to uphold the Code's objectives.

  • IBC:

    Condonation of delay in filing appeal - The appellant argued that the delay was due to the unavailability of the impugned order and the holiday period of the tribunal. However, the respondent contested these claims, asserting that the appellant's counsel was present when the order was pronounced in open court. - The NCLAT found that the appellant failed to provide evidence of attempting to obtain a certified copy of the order and held that they were entitled to do so as the initiating party. However, since no application was made, the appellant could not benefit from the exclusion of time under the Limitation Act.

  • IBC:

    Review petition - The tribunal dismissed the review application, stating it was not maintainable in the petitioner's personal capacity and lacked merit. It emphasized that the petitioner, as the erstwhile Liquidator, no longer had a vested interest in the matter following his removal and replacement by the new Liquidator. The decision to withdraw the appeal was deemed within the legal rights of the new Liquidator, reflecting the tribunal's reliance on established legal principles and statutory mandates to ensure justice and maintain the integrity of the liquidation process. No costs were awarded.

  • IBC:

    Objection to Resolution Plan submitted - categorization of the Appellant as ‘affected’ homebuyer - The Tribunal upheld the classification of homebuyers into 'affected' and 'unaffected' categories, agreeing with the rationale and justification provided for the different treatment of these groups. It also referenced its previous judgment affirming this classification. - The Tribunal found that the requirement for an NOC from LICHFL was valid and necessary. - The NCLAT noted the overwhelming approval of the Resolution Plan by the Committee of Creditors (CoC), including the majority of homebuyers, and found no grounds to challenge the Plan's approval.

  • PMLA:

    Invocation of jurisdiction of this Court under Section 482 of the Cr.P.C - cognizance of offences on basis of supplementary complaint filed by the respondent against the petitioner second time - Regarding the filing of the supplementary complaint, the High Court determined that it was permissible under the law, especially when further investigation uncovers new evidence or implicates additional offenders. - However, concerning the Special Judge's actions in taking cognizance and issuing process based on the supplementary complaint, the High Court found them legally unsustainable. It clarified that cognizance can only be taken once for the same offense and that the court cannot take cognizance again based on a supplementary complaint when proceedings are already underway based on the initial complaint.

  • PMLA:

    Grant of Bail - The High Court of Jammu and Kashmir and Ladakh granted interim relief to the petitioner, challenging his arrest and remand under PMLA charges, on the grounds that the investigation of the predicate offence was stayed by another High Court. The court underscored the importance of adhering to procedural safeguards and guidelines for arrest under PMLA. While addressing the maintainability and jurisdictional aspects, it differentiated the cause of action for invoking its jurisdiction from that before the High Court of Punjab and Haryana, thereby dismissing the respondent's preliminary objection.

  • SEBI:

    SEBI introduced a beta version of the T+0 rolling settlement cycle on an optional basis alongside the existing T+1 settlement cycle in the equity cash market. The decision follows advancements in technology and market infrastructure, aiming to enhance efficiency, transparency, and risk management. Operational guidelines were provided, including eligibility criteria, surveillance measures, trade timings, price band, and index calculation. MIIs will publish further guidelines and monitor the implementation of the beta version.

  • SEBI:

    Jurisdiction/Validity of show-cause notice issued u/s 11(1), 11(2)(b), 11(4) and 11(B) of SEBI Act - The petitioner alleges that the notice is identical to a previously adjudicated one, which resulted in exoneration. Additionally, the petitioner contests the jurisdiction and maintainability of the notice. The High Court, while acknowledging the similarity between the notices, directs SEBI to first decide on the jurisdictional issue before proceeding with the adjudication.

  • Service Tax:

    The appellate tribunal addressed two main issues regarding the non-payment of service tax by the appellant. Firstly, it examined the non-payment of service tax on ground rent of empty containers and found in favor of the appellant due to the benefit of cum tax being granted after remand. Secondly, it scrutinized the non-payment of service tax for handling empty containers. Despite circulars suggesting that handling could fall under taxable services, the tribunal ruled that since the containers were not stored or warehoused before handling, they did not qualify for taxation under Storage and Warehousing Services. Furthermore, the activity did not meet the criteria for Cargo Handling Service.

  • Central Excise:

    Valuation - inclusion of advertisement and publicity expenses incurred by the dealers as per the terms and conditions of the dealership agreement mutually agreed between the appellant and their dealers, in the assessable value of the vehicles sold by the appellant - The Tribunal found that the dealership agreement did not impose an enforceable right on the appellant to require dealers to incur specific advertisement expenses. It concluded that since the expenses were incurred at the dealers' discretion and the sale price of vehicles to dealers was unaffected by whether dealers chose to advertise, such expenses should not be included in the assessable value.

  • VAT:

    Recovery of tax dues - Attachment of assets - dues of MVAT Authorities’ have charge in priority to the secured creditors or not - This judgment reaffirms the supremacy of the SARFAESI Act over state tax claims in matters of secured creditors' rights. It clarifies that secured creditors with interests registered prior in time with CERSAI have priority over the proceeds from the sale of secured assets, irrespective of the claims of the MVAT authorities. The judgment highlights the importance of balancing competing interests to ensure that secured assets can be auctioned without undue interference, thereby safeguarding the rights of secured creditors and ensuring the continued economic utility of assets.


Articles


Notifications


Circulars / Instructions / Orders


News


Case Laws:

  • GST

  • 2024 (3) TMI 1165
  • 2024 (3) TMI 1164
  • 2024 (3) TMI 1163
  • 2024 (3) TMI 1162
  • 2024 (3) TMI 1161
  • 2024 (3) TMI 1160
  • 2024 (3) TMI 1167
  • Income Tax

  • 2024 (3) TMI 1157
  • 2024 (3) TMI 1156
  • 2024 (3) TMI 1155
  • 2024 (3) TMI 1154
  • 2024 (3) TMI 1153
  • 2024 (3) TMI 1152
  • 2024 (3) TMI 1151
  • 2024 (3) TMI 1150
  • 2024 (3) TMI 1149
  • 2024 (3) TMI 1158
  • 2024 (3) TMI 1159
  • 2024 (3) TMI 1148
  • Benami Property

  • 2024 (3) TMI 1147
  • Customs

  • 2024 (3) TMI 1146
  • 2024 (3) TMI 1145
  • Corporate Laws

  • 2024 (3) TMI 1144
  • Securities / SEBI

  • 2024 (3) TMI 1143
  • Insolvency & Bankruptcy

  • 2024 (3) TMI 1142
  • 2024 (3) TMI 1141
  • 2024 (3) TMI 1140
  • 2024 (3) TMI 1139
  • PMLA

  • 2024 (3) TMI 1138
  • 2024 (3) TMI 1137
  • Service Tax

  • 2024 (3) TMI 1136
  • 2024 (3) TMI 1166
  • Central Excise

  • 2024 (3) TMI 1135
  • CST, VAT & Sales Tax

  • 2024 (3) TMI 1134
  • Indian Laws

  • 2024 (3) TMI 1133
 

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