TMI Tax Updates - e-Newsletter
June 6, 2020
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
-
Income Tax:
TDS u/s 195 - Since “Business connection” of Buhler AG, Switzerland in India and “M/s BIPL, Bangalore” is established beyond doubt, the income portion in the transaction between the Buhler AG, Switzerland and the assessee is subject to tax and the same has been rightly carried out by Ld. A.O.
-
Income Tax:
Denial of registration u/s 12A - Charitable activity u/s 2(15) - Since the funds were given to Other Educational Society for running of similar activities on behalf of the appellant trust, hence, in our view, the Ld. CIT(E) was not justified in rejecting the application of the appellant trust on this ground.
-
Income Tax:
Exemption u/s 11/12 - corpus donations - exemption to incomes of charitable trust - the investment in land had been made out of general donations, which fact has remained uncontroverted - claim of the assessee of utilization of amount incurred for purchase of land for the purposes of claiming exemption u/s 11/12 allowed.
-
Income Tax:
Disallowing interest paid on borrowed monies - loan from related persons - Section 40A(2)(b) does not envisage the complete disallowance of expenditure unless it is proved to be excessive or unreasonable having regard to the fair market value. No such finding with regard to the excess payment has also been established by the revenue while invoking the provisions of Section 40A(2)(b).
-
Income Tax:
Addition u/s 69C - expenditure stated as “MLA Balance” - illegal amount to be paid - It is submitted that, the amounts do not reflect payments already made. There are only payable at the time of seized of the papers. - Additions confirmed.
-
Customs:
Restriction on import of Palm oil through Kochi Port - Ld. Commissioner erred in holding that no redemption fine could be levied as the goods were not physically available. The goods were provisionally released in terms of a bond submitted by the importers - redemption fine upheld, but the quantum is reduced.
-
Indian Laws:
Execution of foreign arbitration award - two-tier arbitration process - when the legal submissions of 75 pages were sent even beyond the time that was granted, the learned Arbitrator took this into account and then passed his award. This being the case, on facts we can find no fault whatsoever with the conduct of the arbitral proceedings.
-
Service Tax:
Refund of Service Tax - services used in export of goods - merely because registration was not mentioned in the invoices it does not mean that appellant has not used the said services for export of goods - the rejection of refund on this count is not sustainable.
-
Service Tax:
Classification of services - BAS - to capture the data and photograph of applicants for the driving licences as well as learning licences and to prepare a smart card/paper licence and to submit to the RTO for further issuance to the applicant - it is apparent that the Road Transport Authority has outsourced part of their work - the appellants have in fact assisted the statutory functions of the authorities and have not in any case supported any business activity.
-
Central Excise:
Levy of penalty - re-credit of CENVAT Credit - Furnace Oil used as “fuel” in the manufacture of both dutiable and exempt goods (Wood Pulp) - re-taking of the credit by the appellant on furnace oil used as input was not with any malafide intention but was consistent with the prevalent judicial precedent in favour of the assessee.
-
VAT:
Levy of VAT - Medical services for in house patients - stents, valves, medicines, x-ray and other goods used while treating their in house patients - works contracts or not - deemed sale -The respondent shall exclude the value of medicine and other consultation charges while determining the taxable value. The demand shall be confirmed to the value of prosthetics and charges incurred towards X-ray, C.T.Scan, PET Scan etc.
Articles
Notifications
Customs-
51/2020 - dated
5-6-2020
-
Cus (NT)
Amendment in Notification No.92/2017-Customs (NT), dated 28.09.2017 to specify the jurisdiction of Commissioner (Appeals) to assessment orders passed by Faceless Assessment Groups
-
50/2020 - dated
5-6-2020
-
Cus (NT)
Notification to empower Customs officers as 'proper officers' to conduct faceless or remote assessment of Bills of Entry filed under Section 46 of the Customs Act, 1962 for import in another Customs station-
GST - States-
15/2019 – State Tax (Rate) - dated
1-6-2020
-
Delhi SGST
Seeks to amend Notification No. 2/2017-State Tax (Rate), dated the 30th June, 2017
-
03/2020-State Tax (Rate) - dated
2-6-2020
-
Jharkhand SGST
Amendment in Notification No. 1/2017- State Tax (Rate), dated the 29th June, 2017
-
02/2020- State Tax (Rate) - dated
2-6-2020
-
Jharkhand SGST
Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017
-
01/2020 - dated
28-5-2020
-
Telangana SGST
Extending the time limit for furnishing the of the annual return in FORM GSTR-9/FORM GSTR-9C.
-
F. 1-11(91)-TAX/GST/2020(Part-IV) - dated
21-5-2020
-
Tripura SGST
Seeks to provide relief by conditional lowering of interest rate for tax periods of February, 2020 to April, 2020.
-
F. 1-11(91)-TAX/GST/2020(Part-IV) - dated
21-5-2020
-
Tripura SGST
Seeks to provide relief by conditional waiver of late fee in FORM GSTR-3B
-
F. 1-11(91)-TAX/GST/2020(Part-II) - dated
20-5-2020
-
Tripura SGST
Regarding due date for furnishing FORM GSTR-1 for April to June, 20 and July to Sept, 20 for certain category registered persons
-
F. 1-11(91)-TAX/GST/2020(Part-II) - dated
20-5-2020
-
Tripura SGST
Regarding due date for furnishing FORM GSTR-1 by certain class of registered persons,for each of the months from April to Sep 20
-
F. 1-11(91)-TAX/GST/2020(Part-II) - dated
20-5-2020
-
Tripura SGST
Seeks to prescribe return in GSTR-3B of TSGST Rules, 2017 along with due dates of furnishing the said form for April to Sep, 20
News
Case Laws:
-
Income Tax
-
2020 (6) TMI 138
Refund the amount seized during the search proceedings along with interest - HELD THAT:- Today, learned counsel for petitioner states that interest amount has been refunded by the respondents-contemnors vide voucher No. ITC/Aq/053952 dated 02nd June, 2020 for ₹ 23,17,794/-. Petitioner states that the computation sheet should be supplied indicating as to how the interest amount has been calculated. Mr. Zoheb Hossain, learned senior Standing counsel for respondents-contemnors states that the computation sheet shall be provided to the petitioner within one week. Keeping in view the aforesaid, the present contempt petition is disposed of as satisfied. Registry is directed to list W.P.pending between the same parties on 15th June, 2020.
-
2020 (6) TMI 137
TDS u/s 195 - Default for making the above payments to NRI without deducting tax at Source - Whether the activity carried out by BIPL falls under the definition of business connection provided in explanation 2 to Section 9(1) of the Act which deals with the Income accrued and derived in India ? - HELD THAT:- BIPL leaves no confusion that BIPL being subsidiary/group company of Buhler AG, Switzerland is having regular business activity in India and apart from the trading business it also regularly providing marketing services to Buhler AG, Switzerland. The activities carried out by B/s BIPL for Buhler AG, Switzerland squarely falls in activity (a), (b) (c). Since Business connection of Buhler AG, Switzerland in India and M/s BIPL, Bangalore is established beyond doubt, the income portion in the transaction between the Buhler AG, Switzerland and the assessee is subject to tax and the same has been rightly carried out by Ld. A.O. Since the non resident supplier Buhler AG, Switzerland has carried out the transaction of sale of goods to the assessee company through its subsidiary/group company BIPL, Bangalore business connection is established and therefore Section 9 of the Act dealing with Income deemed to accrue or arise in India comes into operation and thus the transaction needs to pass through Section 195 - Decided against assessee.
-
2020 (6) TMI 136
Deduction u/s 80IC - unit number III situated in Ponta Sahib, which was set up on 30 March 2010 - whether rebate claimed u/s 80IC was being allowed to the appellant from year to year after thorough scrutiny u/s 143(3) for all the years since Assessment Year 2008-09? - Assessee is engaged in the business of trading in pipes and manufacture of waste disposal bins and containers for onward sales to various government agencies and Municipal Boards on tender basis - HELD THAT:- We are of the view that in the initial years if the deduction is allowed then, AO cannot disturb that as far as eligibility of the unit is concerned but the measurement of the profit can always be tested on a year-to-year basis. Therefore, the issue of machinery and the installation of power meters were already examined by the AO in the initial years. There is no objection by the revenue on granting the deduction under section 80 IC of the income tax act to the assessee on these two issues in earlier years. Thus, the AO could not have raised the issue of non availability of machinery, unless the original machinery installed at the time of the setup have been transferred by the assessee and are not available during the year. Similarly, the issue of the lesser capacity of electricity meter also could not be raised. In absence of the basic enquiry, merely rejecting the explanation of the assessee without obtaining further evidences, AO could not have rejected the production of the assessee. With respect of the transportation of goods, only reason mentioned by the learned assessing officer is that assessee could not produce Toll tax receipt. AO himself has admitted that the assessee has provided VAT form 26A which shows that trucks crossed Himachal Pradesh Haryana border at Bahral Check post. In form number 26A, under VAT laws, there is a complete detail of the goods transported, lorry numbers, quantity of the goods, the time of removal from the factory of those goods et cetera. This also can be examined from the excise records. Therefore, it was not denied that goods were removed from the factory. Merely because the assessee could not produce the toll tax receipt, it cannot be said that the goods did not transfer from Bharal Check post to Delhi. When the goods removed from the factory have not been disputed, it cannot be said that goods that transported to barhal Check post did not go to Delhi, as it is not supported by toll tax receipts. Coming to the issue of the machinery, objections of ld AO are that CST VAT has been charged in the invoices but no details of such CST VAT are available on the invoices, amount in words is not mentioned on the invoices, details of delivery date, delivery channel number, mode of transport, lorry receipt number, transporter name, vehicle number are not mentioned in the invoices, details of terms and conditions of purchases are not mentioned, jurisdiction is not mentioned price per unit rate of the machinery is not mentioned, all the invoices are of the same date i.e. 30-3-2010. AO has also attached the photocopies of the bills of the machinery. Alarmingly all these bills pertain to financial year 2009 10 when the original unit was set up. These bills are not pertaining to this year i.e. assessment year 2014 15. In the original assessment year, the 80 IC benefit is already granted in 143 (3) of the act by the assessing officer himself. In those years, these machineries were purchased. Naturally, the bills would have been of the date of 30 March 2010 because on that date the unit III was set up. After that almost 4 years have passed. If assessing officer wants to prove that bills of machineries purchased by the assessee in March 2010 are bogus, he should have first disturbed the assessment year 2010 11. Whole exercise by the assessing officer is useless. Even otherwise, not mentioning something in the bills does not make purchases of goods through those bills bogus. It leads to making a larger allegation on flimsy grounds. No merit order of the assessing officer disallowing the deduction under section 80 IC - also do not agree with the order of the learned CIT A which did not deal with any of the submissions of the assessee in proper perspective. - Decided in favour of assessee.
-
2020 (6) TMI 135
Rectification u/s 154 - draft assessment order, i.e., without complying with the directions issued by Ld DRP - AO has passed a rectification order suo-motu complying with the directions issued by the Ld DRP in respect of transfer pricing adjustment and also complying with the directions in respect of other matters except the matter of addition relating to belated payment of PF/ESI - HELD THAT:- Action of the AO would show that he has consciously omitted to comply with or completely disregarded the provisions of sec.144C of the Act by either ignoring the directions issued by Ld DRP or they have passed the final assessment order beyond the limitation period. In the instant case, we have noticed that the AO has actually passed the order u/s 143(3) r.w.s 144C(13) of the Act, meaning thereby, he has intended to comply with the directions issued by Ld DRP. By inadvertence, he has omitted to incorporate the directions in the final assessment order, which was duly rectified by passing a rectification order u/s 154 of the Act. There should not be any dispute that the Act visualizes committing of mistakes apparent from record either by the assessee or by the assessing officer and hence the provisions of sec. 154 have been incorporated in the Act. The mistakes apparent from record can be either pointed out by the assessee or it can be noticed by the assessing officer himself. Accordingly he may pass the rectification order suo-motu or on the application filed by the assessee in order to rectify the said mistake apparent from record. The Act also prescribes a time limit of four years for rectifying such mistakes. In the instant case, the assessing officer has passed the rectification order within one week from the date of passing of final assessment order. Accordingly, we are of the view that there was inadvertent omission on the part of the AO in not complying with the directions issued by Ld DRP, which has been duly rectified by him by passing the rectification order u/s 154 - A.R submitted that the AO has only partially complied with the directions, i.e., he has not followed the direction in respect of addition relating to belated payment of PF/ESI. In our view, this omission should also be treated as mistake apparent from record, which could have been brought to the notice of the AO by the assessee himself. Hence the said omission, in our view, would not be fatal to the final assessment order. Transfer Pricing adjustment made in respect of interest free advances given to M/s USL Holdings Limited - HELD THAT:- The fact remains that, during the year under consideration, the impugned transactions remained as loan transactions only. The loan has been given to a holding company and the proposed acquisition of a foreign company was proposed to be executed through Special Purpose Vehicles. Thus we notice that there appears to be multiple layers in the proposed scheme. There was no contractual obligation or option for converting the loan into equity as existed in the case of Cadila healthcare Ltd [ 2017 (4) TMI 462 - ITAT AHMEDABAD] . It is a fact that the TPO/DRP did not deal with the contentions of the assessee regarding quasi-equity. However, it is stated that the assessee has intended to convert the loan into equity. When the loan transactions remained as loan transactions in the books, in our view, the contention of any such intention cannot be recognized. Under these set of facts, we are unable to appreciate this alternative contention of the assessee. Disallowance made u/s 14A - HELD THAT:- We direct the AO to exclude investments, which did not yield exempt income, while computing average value of investments. Disallowance of interest expenditure relatable to the interest free advances given by the assessee to the related parties - own funds available with the assessee is in excess of the aggregate amount of interest free advances and hence the decision rendered by Hon'ble Supreme Court in the case of Reliance Industries Ltd [ 2019 (1) TMI 757 - SUPREME COURT] shall apply to the facts of the present case, in which event, no interest disallowance is called for. We notice that this contention of the assessee has not been examined by the AO in the light of decision of Hon'ble Supreme Court referred above. Accordingly, we restore this issue to the file of the AO to examine the factual aspects and for deciding this issue following the decision rendered by Hon'ble Supreme Court, referred above. If the disallowance gets deleted on this ground, then other contentions of the assessee would be rendered academic in nature. However, if any part of disallowance is liable to be made, then the AO should consider other arguments of the assessee also in the set aside proceedings. Disallowance of promotion and advertisement expenses - HELD THAT:- We notice the issue relating to allowability of expenditure incurred on sponsorship of sports event was considered by the Mumbai bench of ITAT in the case of Samudra Developers Pvt Ltd [ 2017 (4) TMI 1188 - ITAT MUMBAI] and it was held that the same is allowable as revenue expenditure. Expenditure incurred on sponsoring of sports events are intended to promote business only and hence the same is allowable as expenditure. The allowability of brand promotion expenses was examined by Hon'ble Delhi High Court in the case of Modi Revelon P Ltd [ 2012 (9) TMI 48 - DELHI HIGH COURT] consists merely in facilitating the assessee's business operations, enabling the management to conduct their Hotel business more efficiently and profitably. We are, therefore, satisfied that the view taken by the Tribunal in answering this question in favour of Assessee. Disallowance of PF/ESI payments for belated remittance - DRP directed the AO to delete the disallowance by following the decision rendered by jurisdictional Karnataka High Court in the case of Sabari Enterprises [ 2007 (7) TMI 169 - KARNATAKA HIGH COURT] - It is the say of the assessee that the AO did not follow the direction given by Ld DRP on this issue in the final assessment order as well as in the rectification order passed by the AO thereafter - HELD THAT:- Since it is a matter of rectification, we direct the AO to rectify the mistake pointed out by the assessee on this issue by deleting the disallowance as per the direction issued by Ld DRP. We heard the parties on this issue. Since it is a matter of rectification, we direct the AO to rectify the mistake pointed out by the assessee on this issue by deleting the disallowance as per the direction issued by Ld DRP.
-
2020 (6) TMI 134
Assessment u/s 153A - addition on under invoicing and on account bogus purchases - HELD THAT:- The addition on account of under invoicing was also made on the basis of the e-mail conversation between the assessee company and Mr. Lucky Yuan, a trade associate of the assessee company. CIT(A) was not justified in deleting the addition in absence of any incriminating material found during the course of search. Addition made on account of bogus purchases - AO has prepared the chart for each assessment year containing the total purchases made by the assessee, purchases for which invoices are not available and payments made in cash, the details of which are already given in the preceding paragraph at para No.5 of this order. There is absolutely no mention of any incriminating material/evidence to show that the purchases booked in the books of account are bogus except the books of account found to be maintained in the name of OMASUM-DELHI during the course of search operation at the premises of Mohd. Shahnawaz for which separate addition has been made by the AO on account of sales outside the books of account under the nomenclature Domestic Sale and Cash payment in the name of OMASUM-DELHI. - No merit in the argument of the ld. CIT-DR that the addition on account bogus purchases are based on any incriminating material/evidence found during the course of search. Addition on account of under-invoicing of export sales - According to the ld.CIT(A), it is only a presumption drawn by the AO, but, there is no evidence on record to show that the difference in the rates of sales resulted in under-invoicing. CIT-DR could not controvert the findings of the ld.CIT(A) that the AO failed to co-relate the amount generated through under-invoicing of sales, if any and sending it abroad to be deposited in the bank accounts of the two entities or making payment to various parties as alleged. Further, the assessee has also explained satisfactorily that there can be various reasons for difference in the rates of goods exported such as size and quality of items, volume of transactions and relationship with buyers, etc. The relevant observation of the CIT(A) has already been reproduced in the preceding paragraph. In view of the above and in absence of any incriminating material found during the course of search on account of under-invoicing of export sales, the ld.CIT(A) in our opinion, was fully justified in deleting the additions. Addition on account of sundry creditors, ad-hoc disallowance of expenses on account of salary, rent, other expenses, expenditure through credit cards, additions on account of notional interest on interest free advances, disallowance of charity and donation, addition on account of deemed dividend u/s 2(22)(e) and disallowance of deduction claimed u/s 10B - We find the same are not based on any incriminating material/evidence found during the course of search but are based on entries already recorded in the books of account and on the basis of post search enquiries. Therefore, the decision in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] is squarely applicable on this issue and, therefore, there is no infirmity in the order of the CIT(A) in deleting the additions. Unexplained investment in shares - No infirmity in the order of the ld.CIT(A) in deleting the above addition made by the AO for A.Y. 2011-12 in absence of any incriminating material found during the course of search. Undisclosed domestic sales and protective addition on account of cash received - HELD THAT:- AO has grossly erred in adding the entire undisclosed sales as income of the assessee by holding that purchases are recorded in the regular books of account. However, contrary to the same, it is stated at number of places in the assessment order that the assessee was engaged in the activity of making undisclosed purchases, through Shri Mohd. Shahnawas. We find, the ld.CIT(A) has overlooked the contents of the assessment order and recorded an incorrect finding that the assessee failed to establish that there were any additional purchases outside the books of account against the undisclosed sales. Undisclosed income from the activity of domestic trading in meat products through Mohd. Shahnawaz by the AMQ Group including the assessee has to be computed in a consolidated manner by determining the profit from such undisclosed activity which would take care of the undisclosed sales as well as cash payments towards purchases. Under these circumstances, we deem it proper to restore the issue to the file of the AO for computing the undisclosed income from the activity of trading with the following specific directions:- i) In the present case, the undisclosed sales detected pursuant to the search action aggregates to ₹ 38.93 crores as compared to undisclosed purchase aggregating to ₹ 143.52 crores. Therefore, yearwise profit from undisclosed activity will be determined by the AO by applying the GP rate on the basis of the figure of the yearwise purchase rather than sales. ii) For working the net profit from undisclosed activity , the AO may take combined simple average of gross profit of all the years comprised in the block period (A.Y.s 2008-09 to 2014-15) as per audited balance sheet of the assessee for A.Y. 2008-09 to 2014-15. This would take care of any aberrations and distortions. The above method of determination of profit from undisclosed trading in meat product, in our opinion, is fair and reasonable and would meet the ends of justice under the peculiar facts and circumstances of this case. The average gross profit so determined shall be applied across all the assessment years to determine the profit from undisclosed activity. Needless to say, the gross profit rate percentage will have to be appropriately modified upwardly to correspond the same to gross profit percentage on purchases. iii) The figure of purchases (₹ 143.52 crores in total) in respect of each assessment year will be apportioned between the assessee M/s AMQ Agro India Pvt. Ltd. and Moin Akhtar Qureshi in the same proportion as has been done in the assessment order in respect of undisclosed sales. iv) The amount of profit from undisclosed activity in meat trading determined in the above manner will be the undisclosed income of the assessee for each assessment year. v) The AO shall also determine the initial capital required for the undisclosed purchase in the first year i.e., A.Y. 2008-09 based on a working capital cycle of 15 days since the product is a perishable one. The above initial capital so computed by the AO shall be apportioned between the assessee i.e., AMQ Agro India (P) Ltd. and Moin Akhtar Qureshi on the basis of their respective purchases and to be added to the income of the assessee as undisclosed investment. Non-set off of additional income on account of profit declared in 153A return - HELD THAT:- When addition has been made on the basis of sales outside the books of account and the assessee had declared additional income on that account in the return filed in response to notice u/s 153A, the same should be given set off from the undisclosed income computed by the AO. We, therefore, deem it proper to restore the issue to the file of the AO with a direction to grant appropriate relief to the assessee on the basis of such additional income declared in the return of income from undisclosed sales. Since the entire profit from undisclosed activity has been brought to tax in AMQ Agro India Pvt. Ltd. and Moin Akhtar Qureshi, therefore, additional income declared in section 153 tax return of other entities such as Mrs. Nasreen Qureshi and Mohd. Shahnawaz was argued to be excluded from their income on the ground that it will amount to double taxation of the same. Since we are remitting the matter to the file of the AO for adjudication of the undisclosed income from meat business outside books and the appeals of above persons are not before us, the assessee may take up this matter before the AO at the time of the set aside proceedings. The AO shall ensure that there is no double addition of the amount of additional income declared in the hands of AMQ Agro and income declared in the 153 tax return of other entities stated above. Needless to say the AO shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The grounds on this issue are accordingly allowed for statistical purposes.
-
2020 (6) TMI 133
Addition u/s. 68 - bogus share capital and share premium received - onus to prove the identity, creditworthiness and genuineness of the share applicants - HELD THAT:- Section 68 provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source, it shall be assessed as its undisclosed income. In the facts of the present case, both the nature source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record, including that of the directors and share holders of share subscribing entities as discussed supra. Accordingly all the three conditions as required u/s. 68 i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO and confirmed by Ld CIT(A) are based on conjectures and surmises, so their impugned action cannot be justified - no addition was warranted under Section 68 of the Act. Therefore, we do allow the appeal of assessee and direct deletion of addition under section 68 - Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
-
2020 (6) TMI 132
Set off business losses with the surrendered/ disclosed business income - HELD THAT:- This issue now stands clarified with the CBDT Circular No.11 of 2019 whereby the CBDT has clarified that an assessee will be entitled to set off of losses against income determined u/s 115BBE of the Act till assessment year 2016-17 - The assessment years involved in these appeals being 2012-13 2013-14, therefore, the assessee is accordingly entitled to set off of current year losses against deemed income. In view of our observations made above, Ground No.2 in both the appeals is accordingly allowed in favour of the assessee. Investment made in jewellery did not have any link / concern with the business of the assessee, therefore, the disallowance of interest made by the Assessing Officer was justified. Investment made in jewellery - Whether investment did not have any link / concern with the business of the assessee, therefore, the disallowance of interest made by the AO was justified - HELD THAT:- There is merit in the arguments of the AR that once the addition has been made on account of unrecorded sales, then no addition on account of shortage of stock or investment in stock is required to be made. Under the facts and circumstances of the case the arguments of the AR appears acceptable and the addition made by the AO is not found sustainable and hence deleted.
-
2020 (6) TMI 131
Denial of registration u/s 12A - Charitable activity u/s 2(15) - CIT(E) rejected the application on the ground that the appellant trust had been transferring funds to another trust namely Sanjeevani Educational Society out of the receipts received from NSDC - appellant trust had failed to provide various entries and details relating to the cash withdrawals from the bank account AND also failed to prove that the funds were utilized for advancement of the objects of the trust - CIT(E) also observed that the activities of the appellant trust of Skill Development did not qualify as Education - HELD THAT:- Activities of the appellant trust would fall under the definition of Education - Assessee has placed reliance on the decision of the Coordinate Bench of the Tribunal in the case of Unique Educational Society, Yamunanagar vs CIT [ 2019 (10) TMI 652 - ITAT CHANDIGARH ] wherein, in almost similar facts and circumstances, the similar activity of Vocational Education/Training programme through ITI has been held to fall within the purview and scope of term education . It has been further held that the receipt from the said activity was in the course of carrying out of educational activity of the assessee. Appellant trust had been transferring funds to another society namely Sanjeeni Educational Society - Assessee has invited our attention to the copy of the certificate of Registration in the case of Sanjeevni Educational Society and has submitted that the said society is separately registered and is not a part of the assessee trust. It has been further submitted that the Sanjeevni Educaitonal Society was only a franchise of the assessee trust for implementation of the skill Development program under the Prasadhan Mantri Kaushal Vikas Yogna (PMKVY). That the appellant trust has been providing training through its own institute as well as through Sanjeevni Educational Society for which payments were made to the Sanjeevani Educational Society solely for running the educational programme/skill development course. Since the funds were given to the Sanjeevni Educational Society for running of similar activities on behalf of the appellant trust, hence, in our view, the Ld. CIT(E) was not justified in rejecting the application of the appellant trust on this ground. Submission of the financial statement and application of funds - We do not agree with the above contention of the Ld. Counsel for the assessee that the Ld. CIT(E) can not raise the inquires about the application of the income/genuineness of the activities of the assessee trust at registration stage. Since the assessee trust has already commenced its activities and has applied funds for the advancement of its objects, hence, the Ld. CIT(E), in our view, would be justified to examine the activities and application of funds so as to form a view and to ascertain about the genuineness of the activities of the assessee trust. Impugned order of the CIT(E) is set aside and the matter is restored to the file of the Ld. CIT(E) for the limited purpose of examination of financial statement and application of funds to ascertain about the genuineness of the activities of the appellant trust subject to our observations made above. - Decided in favour of assessee for statistical purposes.
-
2020 (6) TMI 130
Additions based upon incremental difference between the balance sheet of earlier year and the current year - CIT(A) has not examined these issues in detail, and the required reconciliation is not available from the order of the Hon ble Settlement Commission - HELD THAT:- Since the nature and source of the impugned transactions were not properly placed and explained before the A.O, we deem it fit to remit the issues back to the file of A.O for a fresh examination. The assessee shall place relevant materials in support of his contentions before the A.O. and comply with the requirements of the A.O. in accordance with law. A.O. is also free to conduct appropriate enquiry as deemed fit. On due examination and after affording effective opportunity to the assessee, the A.O. shall decide the matter on merits - Appeal of Revenue is partly allowed for statistical purposes.
-
2020 (6) TMI 129
Exemption u/s 11/12 - corpus donations - exemption to incomes of charitable trust - findings of the AO that the activities of the assessee were not charitable - HELD THAT:- CIT(A) has noted the fact that the assessee had been incurring expenditure on running of school which being for the purpose of education qualified as charitable activities u/s 2(15) and has spent on the activities of running medical camps and old age homes which also qualified as charitable activities in the nature of medical relief to the poor u/s 2(15). Also noted that the lungar expenses are merely provision of food to the attendees of medical camps,in old age homes and Manav Seva Kender. The aforesaid facts have remained uncontroverted before us. Moreover, the Ld.DR has been unable to point out any infirmity in the same. In view of the same and on considering the factual findings of the Ld.CIT(A), we hold that there is no infirmity in the order of the Ld.CIT(A) holding the assessee as carrying out charitable activities within the definition of the same u/s 2(15) of the Act and eligible for exemption u/s 11/12 of the Act. Ground No.1 raised by the Revenue is, therefore dismissed. Corpus donation - There were separate receipt books for collecting the corpus donations which was marked with the stamp Bhumi Kharidane Hetu Dhan Seva and all donations collected under these receipts had been categorized as corpus donations by the assessee, which amount was kept in a separate bank account, separate from the general donation and also that FDRs had been made from the same which were subsequently used in subsequent years for purchase of land through issuance of cheques and drafts. The Ld.CIT(A) has also noted the fact that the assessee had maintained separate record of general donation and corpus donation and that its accounts were duly audited. CIT(A), we find, has further noted that the observation of the AO that there were no specific directions by the donor for treating the donation as corpus donation, was based on mis-appreciation of facts since the receipts referred to by the AO for basing his observation were relating to general donations and not corpus and donations. DR has been unable to controvert any of the above factual findings of the Ld.CIT(A).Since we find that the Ld.CIT(A) has given a categorical finding of fact, based on evidences produced before him, that the donations shown by the assessee as corpus donations were given with the directions that they qualified as such and which was the sole reason for the Revenue denying the claim, we do not see any reason to interfere in the order of the CIT(A) treating the corpus donations as such. The ground of appeal No.2 raised by the Revenue is, therefore, dismissed. Allowance of the claim of the assessee as expense incurred for purchase of land as utilization/application as per the provisions of section 11/12 - HELD THAT:- CIT(A) has noted from the documents and evidences and books of accounts of the assessee produced before him that the utilization by the assessee for purchase of land was out of general donation received and not out of corpus donation and that the AO had mis-appreciated the facts in this regard while not allowing the claim of the assessee. The said factual findings of the Ld.CIT(A) have not been controverted before us, nor has the Ld.DR made any arguments before us as to why the disallowance be upheld. AO, we have noted had made the disallowance noting that the same had been made out of corpus donation which did not qualify as such, but since the Ld.CIT(A) has given a finding of fact that the investment in land had been made out of general donations, which fact has remained uncontroverted before us, We see no reason to interfere in the order of the Ld.CIT(A) allowing the claim of the assessee of utilization of amount incurred for purchase of land for the purposes of claiming exemption u/s 11/12. - Decided against revenue.
-
2020 (6) TMI 128
Disallowing interest paid on borrowed monies - Disallowance u/s 40A - AO held that the transfer of funds from the proprietary concern of the assessee to the assessee's personal account and then to the firm wherein the assessee is a partner and from the partnership firms the amounts have been transferred to the HUF and to the mother's account and finally the amounts have been received from the account of the mother and the HUF to the proprietary concern of the assessee - HELD THAT:- There is no dispute about the payment of the interest and the utilization of the loans received by the business entity. The invocation of the Section 40A(2)(b) by the AO in this case is on a wrong interpretation/application of the provisions. The provisions of Section 40A(2)(b) entitles disallowance on account of any expenditure being excessive are unreasonable having regard to the fair market value. In the instant case, we find that the amounts have been received from the partnership firm by the loan parties and if at all any disallowance is to be made, the same needs to be considered in the hands of the partnership firms but not in the proprietary concern. Section 40A(2)(b) does not envisage the complete disallowance of expenditure unless it is proved to be excessive or unreasonable having regard to the fair market value. No such finding with regard to the excess payment has also been established by the revenue while invoking the provisions of Section 40A(2)(b). Hence, the disallowance made is hereby directed to be deleted. Disallowance u/s 14A r.w. Rule 8D - HELD THAT:- The undisputed fact is that the assessee has not earned any exempt income nor claimed any expenses with regard to the investments made. The AO has disallowed an amount based on the CBDT Circular No. 5/2014 dated 11.12.2014. Since, no exempt income has been earned and no expenses has been claimed, we hereby hold that no disallowance is warranted under this Section. Interest on Capital Work in Progress (CWIP) - HELD THAT:- Assessee has paid and claimed in P L A/c, an interest of ₹ 10,05,318/- which was on account of interest on cash credit, interest on unsecured loans and interest on car loan but not anything related to CWIP. The assessee has not debited any interest in the P L A/c under the head capital work in progress . The capital of the assessee was ₹ 20.24 crores and the operating profit for the year is ₹ 11.70 crores. Since, no amount has been debited in the P L A/c, no disallowance ought to have been made by the AO. The disallowance is hereby directed to be deleted. Diwali Food Expense Disallowance - HELD THAT:- We find that the Diwali expenses have been fully vouched alongwith the relevant bills. Since, all the supporting documents for the services obtained and payments made are on record, the disallowance made by the AO at the rate of 25% on estimate basis is hereby directed to be deleted. Similarly, 50% of the amount disallowed out of expenses pertaining to food supply to approximately 100 persons working for the assessed, inspite of the evidences available for supply of food, payments to food suppliers thereof and employment of is hereby directed to be deleted. Appeal of assessee allowed.
-
2020 (6) TMI 127
Estimation of profits - Finding of the Tribunal on the itemised additions related to the business profits of the assessee/ appropriate GP rate - HELD THAT:- We have two rates for quantifying the additional profits i.e. 0.61% of CIT(A) and 0.51% of the Tribunal for the assessment year 2006-07. The turnover is found increased for the assessment year 2007-08. Considering the same, we are of the opinion that the additional profits at 0.51% needs to be revised marginally. If the same is done, we find the decision of the CIT(A) with 0.61% of additional profits should be considered proper and appropriate. In summary, we proceed to hold that the order of CIT(A) with 10% should be fair and reasonable on this issue of quantification of the business profits. Therefore, we proceed to confirm the manner of quantification of business profits at the rate of 10%. Accordingly, since we confirmed the order of the CIT(A), the relevant grounds/additional grounds raised by the assessee are dismissed. Accordingly, we order the Assessing Officer to quantify the profits of the business and delete all the business linked itemised additions. Additions u/s 40(a)(ia) - transport charges incurred related to the purchase of earth (murum) - HELD THAT:- We find there is need for undertaking the comparative analysis of facts of the cases cited above. For the said reason, we find it relevant to remand this issue to the file of the Assessing Officer. The Assessing Officer shall decided the issue after granting reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Accordingly, this issue is allowed for statistical purposes. Quantification of the business profits of the assessee for A.Y. 2007-08 as well as the GP estimation as done by the CIT(A) - HELD THAT:- Additions and relied heavily on the order of the Tribunal [ 2019 (9) TMI 861 - ITAT MUMBAI] . Further, we also approved the estimation of profits at a percentage of profits. We have also approved the requirement of taxing the additional profits applying the rate of 0.61% on the total turnover of ₹ 137.13 crores of the assessee for the assessment year 2007-08. In the process, we slightly deviated from the 0.51% for assessment year 2006-07. In effect, the said grounds no.1 to 5 of the Revenue should be considered as adjudicated while dealing with the grounds no.2 to 7 of the assessee s appeal. Miscellaneous receipts - HELD THAT:- On perusal of the Chart furnished before us on the gross receipts mentioned at sl. No. (a) to (f) of the Chart, we find some of the receipts should be taxed at the rate of 10% as done by the CIT(A) and others need to be taxed at the rate of 100%. Keeping the prima-facie opinion to the scrutiny of the authorities, we find it relevant to remand to the file of the Assessing Officer as requested by the counsels. We dismiss the AR s contention not admitting the said ground since the issue cannot be said to be used for the first time considering the finding of the Assessing Officer in his odder and the manner of making of additions by way of itemised additions. Rejecting the legal jurisdictional issue raised by the ld. AR, we are of the considered opinion that this aspect of the taxation on such receipts requires to be remanded to the file of the Assessing Officer for fresh adjudication of the issue after granting reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Accordingly, ground no.6 is allowed for statistical purposes. Addition u/s 69C - expenditure stated as MLA Balance - HELD THAT:- We find it is escapable discretion that the word used as MLA Balance . In our considered view that the expression balance cannot be described as payment made in this regard. We perused the relevant discussion given by the CIT(A) on this issue and find the decision of the CIT(A) is fair and reasonable and it does not call for any interference. Accordingly, ground nos.1 and 2 of the Revenue are dismissed.
-
Customs
-
2020 (6) TMI 126
Restriction on import of Palm oil through Kochi Port - Notification 39(RE-2007)/2004-09 dated 16th October 2007 - Confiscation - penalty - HELD THAT:- The importer has not made out any case to show the compelling circumstances under which they could not either cancel the Contract or alter the Port of discharge - the importer was required to comply with the Notification dated 16.10.2007, inasmuch as they could not produce an irrevocable commercial letter of credit as required by the Notification. Therefore, the impugned goods are liable for confiscation in terms of Section 111 (d) of Customs Act, 1962. The Learned Commissioner erred in holding that no redemption fine could be levied as the goods were not physically available. The goods were provisionally released in terms of a bond submitted by the importers - redemption fine upheld, but the quantum is reduced. The impugned order is modified to the extent of reducing penalty from ₹ 80,00,000/- to ₹ 38,00,000/- - Appeal allowed in part.
-
Insolvency & Bankruptcy
-
2020 (6) TMI 125
Termination of Works Contract - Liquidation proceedings pending against the petitioner company - writ petition is filed during the pendency of the liquidation proceeding - Chapter-III read with Section 33 of I B Code - HELD THAT:- Section 33 (5) of the Insolvency Bankruptcy Code, 2016 stipulates that when a liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the corporate debtor. Further a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the executing authority. From the reliefs sought for by the petitioner it cannot be inferred that the petitioner is seeking for protection of its fundamental rights. The reliefs as indicate are issues arising out of the contractual obligations entered into by the parties vide agreement dated 16.12.2011. The said agreement as includes an arbitration Clause. Under such circumstance, the power under Article 226 of the Constitution of India is exercised, keeping in view the disputes as raised through this writ petition arose out of the said agreement and as the parties decided their own forum for their redressal in the event of dispute between them. The interim relief is granted for a period of 2 (two) months from today, thereby directing the respondent Nos. 2 to 4 to maintain the status quo as on 05.02.2020 i.e. date on which the interim order was passed in this writ petition in respect of securities and the performance guarantee - petition disposed off.
-
PMLA
-
2020 (6) TMI 116
Prayer for deposit of amounts deposited in the accounts opened in HDFC and DCB - HELD THAT:- I take on record the submission made by Mr. Jain, on instructions from Mr. Mahajan that the order passed by this Court on May 13, 2020 with regard to the payment of salary to the employees, has been complied with - The statement made by Mr. Luthra for not withdrawing the amounts deposited in the accounts opened in HDFC and DCB shall continue till the next date of hearing. List on 26th May, 2020.
-
2020 (6) TMI 115
Freezing of petitioner's Bank Accounts - permission to petitioner to pay the salaries to the employees for the month of April, 2020 by encashing FDRs of equivalent amounts - HELD THAT:- The petitioner is permitted to furnish to the respondents within 24 Hrs., list of the employees to whom the salaries have to be paid for the month of April, 2020. Respondents shall verify the list and convey their approval and objection, if any, with regard to any name, within 24 Hrs. of the receipt of the list from the petitioner. They shall send a communication to the Banks forthwith to enable the petitioner pay salary to its employees for the month of April, 2020, by operating / encashing the FDRs of the equivalent amount, (equivalent to the salaries to be paid to the employees). The petitioner is permitted to deposit the TDS and connected statutory dues (if any) with the authorities. That apart, petitioner is also permitted to open one account each in HDFC Bank and DCB respectively. The monies received by the petitioner from the lenders / customers shall be deposited in these accounts. The petitioner shall not withdraw any amount from the said accounts till the next date of hearing. List on May 20, 2020.
-
Service Tax
-
2020 (6) TMI 124
Benefit of Exemption N/N. 12/2003-S.T. dated 20.06.2003 - value of the material i.e. tread rubber etc. used in providing the service of retreading of old and used tyre under the service head of Management, maintenance or repair - the contention of the learned Commissioner (Appeals) is that since the material used in retreading has been consumed therefore the appellant will not get exemption - HELD THAT:- This contention of learned Commissioner (Appeals) is solely based on the Tribunal Chennai s judgment in the case of Safety Retreading Company [ 2012 (6) TMI 719 - CESTAT, CHENNAI (THIRD MEMBER) ]. However this Tribunal judgment was reversed by the Hon ble Supreme Court as reported at Safety Retreading Company (P) Limited vs. Commissioner of C.Ex. Salem [ 2017 (1) TMI 1110 - SUPREME COURT ] wherein the Apex court considering the identical facts in as much as the tread rubber was used for retreading, has held that the value of such tread rubber is not liable to service tax. Therefore in view of this Apex Court judgment the dispute in hand came to rest and it is not res integra. As regard the clubbing of value of material sold by M/s Perfect Rubber, the material cost is not includible in the gross value of service of retreading. Moreover, the Perfect rubber is an independent proprietory concern and sale of goods by them is not in dispute. There are no reason for clubbing of value of goods sold by M/s Perfect Rubber in the value of the appellant M/s Perfect Re-treads. Therefore this reason also the value of material sold by M/s. Perfect Rubber cannot be included in the value of M/s Perfect Re-treads. Simultaneous penalty u/s 76 and 78 of FA - HELD THAT:- The Jurisdictional Hon ble High Court of Gujarat in the case of Raval Trading Company vs. CST [ 2016 (2) TMI 172 - GUJARAT HIGH COURT ] held that once the penalty under Section 78 has been imposed, penalty under Section 76 cannot be imposed. The penalty under Section 76 is set aside - Since the issue relates to interpretation of Notification No.12/03-ST, the penalty under section 78 is not imposable invoking Section 80 0f the Finance Act, 1994. Accordingly, the penalty imposed under Section 78 is also set aside. Appeal allowed - decided in favor of appellant.
-
2020 (6) TMI 123
Refund of Service Tax - services used in export of goods - Refund rejected on the ground that the registration number of the service providers was not mentioned in the invoices issued by the service provider - time limitation - GTA Service for transportation of goods from ICD to Port was not supported with proper document - lack of co-relation of export with documents of service provided of storage and warehouse - improper documents, name of appellant not mentioned in the documents. Registration number of the service providers was not mentioned in the invoices issued by the service provider - HELD THAT:- The learned Commissioner (Appeals) denied the refund solely relying upon the Circular No. 106/9/2008-ST dated 11.12.2008 whereas the same Circular was amended by Circular No. 112/6/2009-ST dated 12.03.2009 - the refund claim cannot be rejected merely because the service provider has not mentioned registration number in their invoices. Moreover, there is no dispute raised by the Revenue on the facts that goods have been exported, service was used for export of goods and the value of service including service tax was paid to the service provider. In these undisputed facts, merely because registration was not mentioned in the invoices it does not mean that appellant has not used the said services for export of goods - the rejection of refund on this count is not sustainable. Time Limitation - Refund claim pertaining to the period October 2007 to December 2007 for which refund claim was filed after a period of 60 days, therefore hit by limitation - HELD THAT:- The refund for the quarter January 2008 to March 2008 which included the present claim pertaining to October 2007 to December 2007 was filed on 29.05.2008. Therefore, it was held that refund was filed beyond 60 days, hence inadmissible - the adjudicating authority adjudicated the show cause notice in 31.03.2009 and by which time the period of 60 days was extended to six months. Therefore, the extended period upto six months should have been considered. Accordingly, refund was well within time period of six months and hence does not hit by limitation. Refund claim filed for service tax paid on GTA Service for transportation of goods from ICD to Port was not supported with proper documents, co-related with export of goods - HELD THAT:- The services covered under Serial No. 6 of Notification No. 41/2007-ST which does not stipulate any condition. Moreover, transportation of goods from ICD to Port was undoubtedly for export of goods only. Therefore, importing any condition which is not exist in the notification is beyond the jurisdiction of learned Commissioner (Appeals) and on that ground, refund should not have been rejected. Refund claim filed for storage and warehouse service rejected on the premise that there was no co-relation of export with documents of service provided of storage and warehouse - HELD THAT:- There is no dispute that the entire storage areas were exclusively used for export of goods. It is not the case of the revenue that such storages and warehouses are also used for other than export goods. Therefore, there is no doubt that the said service was used for export of goods only - also, storage and warehousing premises were exclusively used for export of goods, refund claim cannot be rejected on the issue of correlation particularly in the facts of the present case. Refund claim was filed for GTA for transportation of goods from place of removal upto Port, lorry receipt did not mention name of the appellant therefore, it was held that refund claim was not filed with proper documents - HELD THAT:- The transportation of goods gets clearly correlated with other documents which bear the name of the appellant. The appellant also obtained certificates from the transporters namely Ess Enn International, Sanjay Container Services and Sanjay Transport Company whereby it was certified that the invoice numbers and Lorry Receipts referred to transportation of Polyester Cotton Grey from Mafatlal Industries Limited to Port is under instruction of the appellant and due to their inadvertent mistake, the name of appellant along with Mafatlal Industries Limited was not mentioned in the Lorry Receipts. It was also certified by the transporters that against the said Lorry Receipts, the invoices were raised on the appellant and the same was paid by them. With these ample evidences, merely that the name of the appellant is not appearing on the Lorry Receipts, cannot be the reason to reject the refund. Therefore, on this ground also refund claim was wrongly rejected. The learned Commissioner (Appeals) has wrongly upheld the rejection of claim - appeal allowed - decided in favor of appellant.
-
2020 (6) TMI 122
Classification of services - Business Auxiliary Services or not - activity undertaken by the appellants was to capture the data and photograph of applicants for the driving licences as well as learning licences and to prepare a smart card/paper licence and to submit to the RTO for further issuance to the applicant - CBEC vide Circular No. 89/7/2006-ST dated 18/12/2006 - HELD THAT:- The appellants are only assisting a statutory authority in the discharge of statutory functions and by no stretch of imagination they are rendering any Business Auxiliary Service to the Road Transport Authorities. From the facts of the case, it is apparent that the Road Transport Authority has outsourced part of their work to the appellant and thereby the appellants have in fact assisted the statutory functions of the authorities and have not in any case supported any business activity. Appeal allowed - decided in favor of appellant.
-
Central Excise
-
2020 (6) TMI 121
Levy of penalty - re-credit of CENVAT Credit - Furnace Oil used as fuel in the manufacture of both dutiable and exempt goods (Wood Pulp) - the furnace oil is partly captively consumed in the same factory for manufacture of dutiable VSF and partly cleared at Nil rate of duty to Sister Unit at Nagda (MP) for manufacture and clearance of dutiable VSF - Department entertained the view that the re-credit of cenvat taken by the appellant on its own which was earlier reversed was in violation of Rule 6(1) of Cenvat Credit Rules, 2002 - HELD THAT:- In the present case the appellants were reversing the cenvat credit on furnace oil used as fuel in the manufacture of dutiable VSF and exempted Wood Pulp, a part of which was being stock transferred to Sister Unit at Nagda for the manufacture of dutiable VSF. Subsequently, the appellant came to know that the High Courts and the Tribunal in large number of judgments had taken the view that the provisions of Rule 6 of Cenvat Credit Rules, 2002 are not attracted to inputs intended to be used as fuel - after that the Apex Court decision in the matter of COMMNR. OF CENTRAL EXCISE VERSUS M/S. GUJARAT NARMADA FERTILIZERS CO. LTD. [ 2009 (8) TMI 15 - SUPREME COURT ] which finally settled the issue and reversed the judgment of the High Court and the Tribunal. It is settled legal position that when there are conflicting judgments and the issue is finally resolved by the Supreme Court then in such circumstances, penalty should not be imposed. Thereafter, the appellant informed the jurisdictional authorities vide letter dated 28/04/2003 that they intend to take cenvat credit on furnace oil. Further the appellant vide their letter dated 29/08/2003 which is on record informed the Department that they had taken credit only partially till 28/02/2003 on furnace oil used as fuel and they intend to avail the balance credit for the period from 01/04/2000 to 28/02/2003 in the month of September, 2003 - The appellant deposited the entire cenvat credit which was also appropriated in the impugned order. Further we find that the appellants have also deposited ₹ 1,52,39,714/- towards interest vide Challan No. 1 dated 19/06/2012 under intimation to the Department which fact has also been accepted by the Department. Further we find that re-taking of the credit by the appellant on furnace oil used as input was not with any malafide intention but was consistent with the prevalent judicial precedent in favour of the assessee. The imposition of penalty of ₹ 11,00,000/- on the appellant under Rule 13/15 Clause (1) of Cenvat Credit Rules, 2004 is not sustainable in law - appeal allowed - decided in favor of appellant.
-
2020 (6) TMI 120
Refund of CENVAT Credit - denial on the ground of unjust enrichment - allegation is that the appellant has not established that the incidence of the ST has not been passed on to the buyer - HELD THAT:- The appellant have filed the refund claim in respect of Cenvat Credit reversed by them which is related to a compensation charges towards the short lifting of steam. In this undisputed fact, the compensation paid by the appellant to M/s. PR Ecoenergy Pvt. Ltd. is related to supply of steam which is used in the manufacture of final product by the appellant therefore, this expenses is directly in relation to the manufacture of final product. Hence, the same is admissible input service. Therefore, there is no doubt that the appellant is entitled for the Cenvat Credit of Service Tax paid on compensation for non-lifting of steam by the appellant. Unjust Enrichment - HELD THAT:- The appellant have accounted for the amount of refund in their ledger as recoverable dues therefore, the amount was not included in any of the amount which was recovered or recoverable from the buyer. Hence, it is clear that the incidence of the refund amount was not (sic) paid passed on by the appellant to any other person - the appellant have passed the test of unjust enrichment. Appeal allowed - decided in favor of appellant.
-
CST, VAT & Sales Tax
-
2020 (6) TMI 119
Levy of VAT - Medical services for in house patients - stents, valves, medicines, x-ray and other goods used while treating their in house patients - works contracts or not - deemed sale - whether in the course of provision the medical service, petitioners who are private hospitals were liable to pay Value Added Tax (VAT) under the provisions of the Tamil Nadu Value Added Tax Act, 2006 on the stents, valves, medicines, x-ray and other goods used while treating their in house patients? HELD THAT:- Works contract essentially involves two fundamental elements namely (i)transfer of material and (ii) rendering of service. The supplier transfers the ownership and possession of the material used to the recipient in the course of execution of the work contract. Sometime such work may result in new identity altogether different from the material supplied while sometimes such materials become part of the existing structure or goods - It can be both divisible and indivisible contract. The Honourable Supreme Court in Commissioner of Central Excise versus Larsen and Toubro Ltd and another [2015 (8) TMI 749 - SUPREME COURT] while dealing with the above provision in the Finance Act, 1994 held that works contract is a separate species of contract distinct from contract for services simpliciter recognised by the world of commerce and law as such, and has to be taxed separately as such. This decision though was rendered in the context of levy of service tax on works contract , make it clear on supply portion sales tax was payable. Thus, the Hon ble Supreme Court has time and again recognized that works contract is a separate specie of contract distinct from contract for service. A possible conflict which would have arisen as to whether a health service having trappings of works contract as we understandnow in the said notification could also have been classified as a works contract also. Scope for such any confusion was averted by clever drafting by the draftsman in the Act. The definitions were defined separately. Section 65(F)(2) which dealt with Principles of interpretation of specified descriptions of services or bundled services left no scope for ambiguity - As per Section 65F(2), where a service was capable of differential treatment for any purpose based on its description, the most specific description was to be preferred over a more general description. The health services involving the implanting of prosthetics and other artificial parts inside the body of a patient were either outside the purview of tax levy under Tamil Nadu Value Added Tax Act, 2006or earlier under the Tamil Nadu General Sales Tax, 1958 or were exempted by notifications under the respective enactments in absence of a specific notification. The dominant test after the 46th amendment does not survive for the reasons stated in this order. Even if such a test was to be applied, the Court has to first answer as to whether in the course of the provision of medical /health service , any of the clauses in the definition of sale in Section 2(t) of the Bihar Finance Act 1981 were attracted or not. It is only after ruling out the applicability of Section 2(t) and the definition of works contract in the said Act, the Court could have thereafter proceeded to determine the taxability or non-taxability of the transaction. Thus, the definition of works contract in Section 2(43) of the Tamil Nadu Value Added Tax Act, 2006 is of very wide import. It is a generic definition. It is not limited. It is not confined to any specific genre of contract involving service and supply of goods. It is also not confined to immoveable property. Any agreement for fitting or installation of any moveable property such as prosthetics can quality as works contract - It encompasses within its fold it every possible and conceivable commercial transactions which involve sale and service. Therefore, Medical / Health service cannot be carved out as separate specie of service and/or sale different from the definition of works contract for the purpose of the Tamil Nadu Value Added Tax Act, 2006 - fitting out or implanting of prosthetics into the physiology or the body of the patient for alleviation of pain or for improvement of the life of the patient in the course of medical/surgical procedure can be construed as works contract . It is for the petitioners to demonstrate how the definition of works contract is not attracted to this case. There is merits in the contention of the respondent that the medical/Health services rendered by the petitioners could fall within the ambit of the Article 366 (29-A) of the Constitution of India read with the provisions of the Tamil Nadu Value Added Tax Act, 2006. At the same time, dispensing of medicine to such patients while they undergo treatment as an inpatient in the hospital cannot come within the purview of the definition of works contract . Consequently, no tax can be demanded on the value of such medicine - there is not only transfer of possession of prosthetics into the physiology of the patient but also the ownership of such prosthetics to the patient for consideration in the course of the provision of medical/health service. Similarly, in the course of taking x-ray, scan, MRI/CT Scan for such in-patient, cost of which get included into the package are taxable as such activity can be termed as the processing of moveable property. The respondent shall exclude the value of medicine and other consultation charges while determining the taxable value. The demand shall be confirmed to the value of prosthetics and charges incurred towards X-ray, C.T.Scan, PET Scan etc. - The respondent assessing officer shall hear out the petitioners separately and pass appropriate order on mertis all the other issues raised in the respective notices impugned in these writ petitions - Petition disposed off.
-
2020 (6) TMI 118
Imposition of penalty u/s 67 of the KVAT Act - Production of Books of Accounts - principles of natural justice - HELD THAT:- It is pertinent to note that, neither in the impugned orders nor in the counter affidavit, there is no allegation of the petitioner having failed to produce the books of account on 8.10.2014. On the other hand, what is stated is that, the dealer had not produced any books of accounts for any of the years 2008-09, 2009-10, 2010-11, 2011-12 for verification now, in spite of the directions by the appellate authority and of the issuance of this office notice . The above statement lends credence to the submission of the petitioner that, though the books of accounts were produced on 8.10.2014, he was directed to produce them at a later stage, but was not served with any notice thereafter. The impugned orders, passed without reference to the books of accounts and by discarding the statements of the witnesses, examined behind the petitioner's back, cannot be sustained - the first respondent is directed to reconsider the penalty orders in terms of the directions contained in Ext.P4 appellate order, providing effective opportunity to the petitioner to participate in the enquiry proceedings, including examination of witnesses - petition allowed by way of remand.
-
Indian Laws
-
2020 (6) TMI 117
Execution of foreign arbitration award - two-tier arbitration process - Quantity of dry weight of copper concentrate delivered - Difference of opinion between the Judges of Division Bench - HELD THAT:- Despite the fact that the legal submissions running into 75 pages were submitted beyond time, that is only on 13.9.2001, in view of the 11.09.2001 attack in New York, the learned arbitrator received the same and took the same into account despite being beyond time. It was only on 29.09.2001 that the learned arbitrator then passed his award. Given the aforesaid timeline, it is clear that the learned arbitrator was extremely fair to the respondent. Having noticed that the respondent wanted to stall the arbitral proceedings by approaching the Courts in Rajasthan and having succeeded partially, at least till February 2001, the conduct of the respondent leaves much to be called for. Despite being informed time and again to appear before the Tribunal and submit their response and evidence in support thereof, it is only after the arbitrator indicated that he was going to pass an award that the respondent s attorneys woke up and started asking for time to present their response. This too was granted by the learned arbitrator, by not only granting extension of time, but by extending this time even further. Finally, when the legal submissions of 75 pages were sent even beyond the time that was granted, the learned Arbitrator took this into account and then passed his award. This being the case, on facts we can find no fault whatsoever with the conduct of the arbitral proceedings. Factually, there is no supporting material to show that any such further material was received by the learned arbitrator, except documents that have been presented by Shri Raval for the first time before us. They were clearly not before Chatterjee,J. when this surmise was made by the learned Judge, Further, the arbitrator cannot be faulted on this ground as, given the authorities referred to by us hereinabove, the arbitrator is in control of the arbitral proceedings and procedural orders which give time limits must be strictly adhered to. Even otherwise, Chatterjee, J., refers to the judgment in Hari Om Maheshwari (supra) as well as Minmetals (supra), but then does not proceed to apply the ratio of the said judgments. Had he applied the ratio of even these two judgments, it would have been clear that an arbitrator s refusal to adjourn the proceedings at the behest of one party cannot be said to be perverse, keeping in mind the object of speedy resolution of disputes of the Arbitration Act. Further, the Minmetals (supra) test was not even adverted to by Chatterjee,J., which is that HCL was never unable to present its case as it was at no time outside its control to furnish documents and legal submissions within the time given by the learned arbitrator. HCL chose not to appear before the arbitrator, and thereafter chose to submit documents and legal submissions outside the timelines granted by the arbitrator. Foreign Award enforced.
|
