TMI Tax Updates - e-Newsletter
April 8, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Highlights / Catch Notes
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Income Tax:
Unexplained investment in purchase land - on-money payment - The addition is also not based on valuation of land by any registered valuer. The addition is also not based on any report of Valuation Officer. The lower authorities have also failed to bring any material on record to show that the addition is justified on the basis of fair market value of the land. - Addition deleted - AT
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Income Tax:
TDS u/s 194J - advertisement expenses as the assessee failed to deduct TDS - payment was made for printing of leaflet and thus it is in the nature of purchase and VAT has been charged by the seller of the goods - No TDS liability - AT
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Income Tax:
Unexplained cash credits u/s 68 - huge amount of cash deposited and withdrawal from bank - once the Revenue has not disputed that the assessee is engaged in construction business and no independent source of such cash receipts has been determined, the nature of such cash receipts can reasonably be treated as undisclosed business receipts and only net profit arising thereon can be brought to tax. - AT
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Customs:
Print out of Final Bill of Entry & Uploading Of Documents in E-Sanchit— A Facilitation Measure During breakout of COVID-19 - Trade Notice
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Customs:
Measures to facilitate trade during the lockdown period - Section 143AA of the Customs Act, 1962 - Trade Notice
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Customs:
Imposition of penalty u/s 112 (a) of the Customs Act, 1962 - Who is the importer - No deponent has clearly mentioned that they were fully aware of the fact of the appellants being the owner of the goods and have merely mentioned that they were told so by the other concerned persons. There is virtually no evidence in the present case so as to show that the appellant were the actual importer of the goods - No penalty - AT
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DGFT:
Electronic filling and Issuance of Preferential Certificate of Origin for India’s Exports under various FTAs/PTAs w.e.f. 07th April 2020 - Trade Notice
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DGFT:
Amendment in Export Policy of APIs and formulations made from these APIs - Notification
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IBC:
Initiation of CIRP - failure to pay dues / salary to employee - the Operational Creditor has succeeded to establish this fact that he was duly appointed by the Corporate Debtor and joined new assignment and a transfer was made by Corporate Debtor in terms of offer letter and the amount claimed in the petition is not paid to the Operational Creditor, which he is entitled to get in lieu of services rendered by him. - Tri
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SEBI:
Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2020. - Notification
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Service Tax:
Valuation - inclusion of cost of fuel supplied, or reimbursement for fuel, the actual spending in the assessable value - section 67 of Finance Act, 1994 read with rule 5 of Service Tax (Determination of Valuation) Rules, 2006 - curative legislation effected from 14th May 2015 may, if at all, be applied only prospectively - Demand set aside - AT
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Service Tax:
Information technology software service - The designation of such deployed staff in a segregated portion of the premises of the respondent, not too unusual model in the software industry, is merely an extension of off-site activity pertaining to ‘information technology software service’ that is not exigibile to tax. - AT
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Central Excise:
Levy of NCCD - POY produced and captively consumed within the factory of production by the Petitioner - Once the excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character and, thus, would be entitled to the benefit of the exemption notification - HC
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Central Excise:
Refund of Interest on interest and penalty component deposited earlier - the reference u/s 35FF of Central Excise Act, 1944 to Section 11BB is only for the limited purpose of applicability of rate of interest in computing the refund amount. - adjudicating authority directed to compute the interest amount keeping in view the provisions of Section 35FF - AT
Articles
Notifications
DGFT-
02/2015-2020 - dated
6-4-2020
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FTP
Amendment in Export Policy of APIs and formulations made from these APIs
GST - States-
30/2018 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Amendment in Notification No. 11/2017 - State Tax (Rate), dated 29-06-2017
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29/2018 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Seeks to amend Notification No. 13/2017- State Tax (Rate), Dt. 29-06-2017
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28/2018 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Seeks to amend Notification No. 12/2017-State Tax (Rate), Dt. 30-06-2017
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27/2018 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Amendment in Notification No. 11/2017 - State Tax (Rate), dt. 29-06-2017
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26/2018 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Seeks to exempt central tax on supply of gold, silver or platinum by nominated agencies to registered persons.
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25/2019 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Seeks to notify the grant of alcoholic liquor licence neither a supply of goods nor a supply of service as per Section 7(2) of Telangana Goods and Services Tax Act, 2017
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25/2018 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Amendment in Notification No. 2/2017-State Tax (Rate), Dt. 29-06-2017
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24/2019 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Amendment in Notification No. 7/2019 - State Tax (Rate), dated 04-06-2019
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24/2018 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Amendment in Notification No. 1/2017- State Tax (Rate), Dt. 30-06-2017
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23/2019 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Amendment in Notification No. 4/2018 - State Tax (Rate), dated 28-02-2018
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22/2019 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Amendment in Notification No. 13/2017- State Tax (Rate), dated 30-06-2017
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21/2019 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Amendment in Notification No. 12/2017-State Tax (Rate), Dt. 29-06-2017
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20/2019 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Seeks to amend Notification No. 11/2017 - State Tax (Rate), dt. 29-06-2017
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19/2019 – State Tax (Rate) - dated
29-1-2020
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Telangana SGST
Seeks to exempt supply of goods for specified projects under FAO.
SEBI-
SEBI/LAD-NRO/GN/2020/09 - dated
7-4-2020
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SEBI
Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2020.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (4) TMI 189
Seizure of goods - Section 129 (3) of the Uttar Pradesh GST Act, 2017 - contention of the learned counsel for the petitioner is that the order dated 25.9.2019 could not have been passed under Section 129(3) Uttar Pradesh Goods and Services Tax Act, 2017. He contends that the penalty could have been imposed only under Section 122 of the Uttar Pradesh Goods and Services Tax Act, 2017. HELD THAT:- Put up this case as fresh on 27.2.2020.
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Income Tax
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2020 (4) TMI 188
Maintainability of appeal - low tax effect - Penalty u/s 271(1)(c) on non-disclosure of receipts from M/s. Hindustan Unilever Ltd., and unsecured loan added u/s 68 - HELD THAT:- The Hon'ble Supreme Court in the case of The Commissioner of Income Tax-5,New Delhi Vs. Keshav Power Ltd., in SLP No.21497/2019 dated 16.08.2019 [ 2019 (8) TMI 811 - SC ORDER] has applied the Circular No.17/2019 dated 08.08.2019 and has dismissed the appeal holding as since the tax effect involved in the matter is less than ₹ 2 crores, going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The Special Leave Petition is dismissed, leaving all the questions of law open - Thus appeal filed by the Revenue is found to be non-maintainable and hence, dismissed..
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2020 (4) TMI 187
Unexplained investment in purchase land - on-money payment - Addition relying on the statement of some of the sellers of land to the assessee - HELD THAT:- Both the lower authorities namely, the Ld. CIT(A) as well as the AO have failed to bring anything on record to prove conclusively, that the allegation of payment of on-money is in consonance with circle rate or with valuation of the land by Stamp Duty Authority. The addition is also not based on valuation of land by any registered valuer. The addition is also not based on any report of Valuation Officer. The lower authorities have also failed to bring any material on record to show that the addition is justified on the basis of fair market value of the land.- no material to even indicate that the true value of land commanded a figure higher than what is reported by the assessee. - Additions deleted. Addition being cash deposited in bank account of the lender - HELD THAT:- From perusal of records, we find that the assessee has conclusively proved that the assessee took loan from Mr. Rahul Kalsi, the loan creditor, for the purpose of purchasing the aforesaid piece of land and has explained the source of funds for purchase of the aforesaid piece of land, the loan creditor has also submitted Loan Confirmation Certificate, which is part of record. From the perusal of record we find that the assessee has proved the identity of the loan creditor, the capacity of the loan creditor and the genuineness of the loan transaction. - Moreover, there is no provision under law prohibiting the loan creditor to make direct payment to the seller of land. - Additions deleted. Addition on account of low drawings for household expenses - HELD THAT:- This addition is based on estimated monthly household expenses of ₹ 30,000/- per month. On perusal of records, and having regard to facts and circumstances of the case, we are of the view that this estimate made by AO cannot be said to be excessive, unreasonable or high pitched. Therefore, this addition made by the AO, and sustained by the Ld. CIT(A) is hereby confirmed.
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2020 (4) TMI 186
TDS u/s 194J - advertisement expenses as the assessee failed to deduct TDS - HELD THAT:- As additions concerned for want of TDS, we find that the said payment was made for printing of leaflet and thus it is in the nature of purchase and VAT has been charged by the seller of the goods under Delhi VAT Act and therefore, the provisions of TDS are not applicable on such facts, no inference is called for. This ground is also dismissed. Addition u/s 68 - unexplained cash credit - HELD THAT:- All payments to creditor are through Account payee cheque only. As the appellant is a small customer to the creditor, it was not possible for the appellant to force the creditor to appear and get the statements recorded. However necessary documents for the genuine existence of the appellant and confirmation of accounts have been sent by the creditor which are on record Documents on record the Ld A.O. has neither disputed the genuine existence of the creditor nor has doubted the genuineness of the transactions of the creditor with the appellant - Decided against revenue.
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2020 (4) TMI 185
Unexplained cash credits u/s 68 - cash withdrawal and deposit in the bank account - HELD THAT:- Identity, creditworthiness and genuineness of the transactions, all three requirements go hand-in-hand, however, among all the three, the genuineness of the transaction shall take precedence and the same should be demonstrated clearly when the same is called in question by the Revenue. In the instant case, the theory of borrowing the money in cash from time to time by the assessee from her husband for meeting business expenditure is not supported by any verifiable demonstrable evidence and therefore, the same cannot be accepted. We find that once the Revenue has not disputed that the assessee is engaged in construction business and no independent source of such cash receipts has been determined, the nature of such cash receipts can reasonably be treated as undisclosed business receipts and only net profit arising thereon can be brought to tax. Before the ld CIT(A), the assessee has stated that she has reported net profit @ 8% of her turnover and has filed her return of income. There is no independent finding of the ld CIT(A) in this regard. In the result, we set-aside the matter to the file of the Assessing officer to verify the net profit which has been reported by the assessee for the year under consideration as the same has been accepted during the course of assessment proceedings and apply the same to undisclosed business receipts amounting to ₹ 73.50 lacs and which can be brought to tax. Appeal of the Revenue is partly allowed.
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Customs
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2020 (4) TMI 184
Imposition of penalty u/s 112 (a) of the Customs Act, 1962 - import of the cigarettes without the mention of MRP - Confiscation - demand based on statements of co-noticee - HELD THAT:- The bill of lading revealed the consignee as M/s. Ankit Enterprises and there was no name of the appellants either in the bill of lading or in the invoices issued by the foreign exporters. It is only during the recoding of the statements, the co-noticee impleaded the present appellants. When the appellants were contacted, they denied any role in the import of goods in question. It is well settled law that the statements of the co-noticee cannot be adopted as a legal evidence to penalize the accused unless the same are corroborated in material particulars by independent evidence. Even the statements of various persons are not conclusive to establish the appellants as the importer of the goods as the same are in the nature of hear-say evidence. No deponent has clearly mentioned that they were fully aware of the fact of the appellants being the owner of the goods and have merely mentioned that they were told so by the other concerned persons. There is virtually no evidence in the present case so as to show that the appellant were the actual importer of the goods - Revenue has not made any enquiries with the supplier of the goods so as to establish as to who ordered the import of the goods. The entire case of the revenue is based upon the statements of the other persons, who have not been even offered for cross examination. The appellants statements are ex-culpatory and there is no evidence produced by the revenue to show that the same are false statements. In the absence of any evidence to the contrary, to impose penalty under Section 112 (a) of the Customs Act, which provides for imposition of penalty in case of the asseessee importer being related to the smuggled goods, is not justified and warranted. Penalties set aside - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2020 (4) TMI 183
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- Mere plain reading of the provision shows that an application under section 9 can only be rejected on the following grounds mentioned in section 9 sub-section 5 (11) and if it is not covered under any of the clause of section 9 sub-section 5 (11) then the Adjudicating Authority in view of the decision of M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT] has no option but to admit the application under section 9 (5) (11) of the Code. In the light of such provision, when we shall consider the case in hand then we find that admittedly no dispute was raised under section 8, sub-section 2 of the Code and the amount claimed by the Operational Creditor has not been paid by the Corporate Debtor and we have also noticed that the application is complete and there is no disciplinary proceeding pending against the proposed IRP who has also given his consent. The amount claimed by the Operational Creditor is more than ₹ 1 lakh which is the minimum threshold limit fixed under IBC, 2016 therefore,under such circumstances we have no option but to reject the contention of the Corporate Debtor that the application is not maintainable and it is liable to be rejected rather we are of the considered view that the Operational Creditor has succeeded to establish this fact that he was duly appointed by the Corporate Debtor and joined new assignment and a transfer was made by Corporate Debtor in terms of offer letter and the amount claimed in the petition is not paid to the Operational Creditor, which he is entitled to get in lieu of services rendered by him. Petition admitted - moratorium declared.
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Service Tax
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2020 (4) TMI 182
Valuation - inclusion of cost of fuel supplied, or reimbursement for fuel, the actual spending in the assessable value - section 67 of Finance Act, 1994 read with rule 5 of Service Tax (Determination of Valuation) Rules, 2006 - HELD THAT:- The decision of the Hon ble Supreme Court in re Bhayana Builders (P) Ltd [2018 (2) TMI 1325 - SUPREME COURT] resolved the controversy over the inclusion of goods/ materials supplied by recipient of service, with consequent reduction of cost of contracted undertaking, in the consideration to be taxed for provision of the service. Doubtlessly, the issue arose from the claim for the benefit of abatement of 67% of gross amount charged in notification no. 15/2004-ST dated 10th September 2004 which was amended to explain the expression gross amount charged by notification no. 4/2005-ST dated 1st March 2005 - Nevertheless, the decision of the Hon ble Supreme Court, having gone into the scope of includability of nonmonetary receipts in consideration, does establish the principle that applies across-the-board. There can be no room for doubt that the goods supplied by the recipient of the service without any charge and which, in consequence, does not find inclusion in the recompense for the taxable service is not includable for the purposes of assessment of tax on services. Hon ble Supreme Court in Union of India v. Intercontinental Consultants Technocrats (P) Ltd [2018 (3) TMI 357 - SUPREME COURT] held that the amendment in section 67 of Finance Act, 1994 effected on 14th May 2015 validates rule 5 of Service Tax (Determination of Valuation) Rules, 2006 only prospectively - Adverting to the contours of the plea of Union of India in their writ appeal challenging the nullifying of rule 5(1) of Service Tax Rules, 1994, incorporated for the specific purpose of including reimbursable expenses in gross amount charged except in circumstances enumerated in rule 5(2), and the statutory provisions, the Hon ble Supreme Court, finding that legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation - It was also held that the curative legislation effected from 14th May 2015 may, if at all, be applied only prospectively without going into the legality thereof. The submission of Learned Authorized Representative that later decisions of the Tribunal have acknowledged the scope for inclusion after examining the applicability of the above decision does not merit consideration by us. There is no allegation that the appellants were at any stage entitled to use the fuel for operation of other contracts on which higher amounts were charged. Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 181
information technology software service - Demand of service tax - portion of the consideration received from the four customers in India computed in terms of employees utilised at the premises of the respondent for fulfilling the transaction contracted with them - receipts for operation of offshore development centre - HELD THAT:- The normal activities of a commercial transaction with the four customers, notwithstanding the deployment of staff at the premises of the latter being taxable as a service, which may have been recompensed by monetising the time spent by the employees of the respondent on discharging a contractual obligation cannot be construed as a service merely because another transaction, being taxable service, has been established. To extend the logic of the grounds of appeal would be tantamount to subjecting every commercial activity, other than manufacture, to the tentacles of Finance Act, 1994 which clearly is not the legislative intent. The designation of such deployed staff in a segregated portion of the premises of the respondent, not too unusual model in the software industry, is merely an extension of off-site activity pertaining to information technology software service that is not exigibile to tax. Appeal dismissed - decided against Revenue.
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Central Excise
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2020 (4) TMI 180
Maintainability of appeal - appropriate forum - rebate claim - section 35-G, being section 35-G(1) of the Central Excise Act, 1944 - HELD THAT:- A plain reading of the aforesaid provision of law reveals that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal other than the exceptions as specified in section 35-G (1) only if the High Court is satisfied that the case involves a substantial question of law. A bare perusal of the judgment and order dated 27th June, 2019, passed by the Customs, Excise and Service Tax Appellate Tribunal, Allahabad, Regional Bench - Court No.1, does not reveal that the case involves any substantial question of law - there are no merit in the instant appeal - appeal dismissed.
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2020 (4) TMI 179
Levy of NCCD - POY produced and captively consumed within the factory of production by the Petitioner - HELD THAT:- Issue decided in the case of BAJAJ AUTO LIMITED VERSUS UNION OF INDIA OTHERS [ 2019 (3) TMI 1427 - SUPREME COURT] where it was held that Once the excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character and, thus, would be entitled to the benefit of the exemption notification. The ratio of the Supreme Court, when stated to govern the case and the petition was filed prior to the judgment rendered by the Supreme Court and considering the contentions raised in the petition, we do not propose to relegate the petitioner to avail alternative remedy, as suggested by learned counsel for the respondent - Petition allowed.
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2020 (4) TMI 178
Refund of Interest on interest and penalty component deposited earlier - denial on the ground that Section 11BB of the Central Excise Act, 1944 allows interest only on refund of duty - HELD THAT:- It is not in dispute that the appellant had deposited the duty for ₹ 33,32,327/- i.e. the entire amount of duty, interest and penalty confirmed against the appellant by the original adjudicating authority. The appellant chose to deposit ₹ 5.00 lakhs initially before the Commissioner (Appeals) and later before the CESTAT, the remaining amount in compliance with Section 35F of the Central Excise Act, 1944 - On a plain reading of the provision of Section 35FF, it is clear that the appellant was required to deposit entire amount of duty, interest and penalty while pursuing their appeal before the first appellate authority or CESTAT. Section 35FF prescribes that the amount deposited before the appellate authority, if not refunded within three months from the date of communication of the order to the adjudicating authority, the appellant shall be paid interest at the rate specified under Section 11BB after expiry of three months from the date of communication of the order till the date of refund of such amount. Thus, the reference under Section 35FF of Central Excise Act, 1944 to Section 11BB is only for the limited purpose of applicability of rate of interest in computing the refund amount. The amount deposited with the appellate authorities pursuant to Section 35F of Central Excise Act, 1944 cannot be considered as duty, interest or penalty but as an amount necessary to pursue the appeal before the appellate forum. Consequently, if the decision of the appellate forum is in favour of the appellant, the appellants are entitled to refund of the amount deposited for pursuing the appeal before the appellate authorities within the period prescribed under Section 35FF of Central Excise Act, 1944. The matter is remanded to the adjudicating authority to compute the interest amount keeping in view the provisions of Section 35FF of the Central Excise Act, 1944 as was in force during the material time - Appeal allowed by way of remand.
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