TMI Tax Updates - e-Newsletter
July 27, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Capital Gains - Slump sale or sale of individual assets - CIT(A) rendered a factual finding that the assessee has assigned separate values for the immovables consisting of land and building and movables consisting of furnitures and fixtures, plant and machinery, patents, net current assets and therefore, concluded that the consideration for transfer cannot be called as a lump sum consideration - ITAT wrongly reversed the order of CIT(A) - order of CIT(A) restored. - HC
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Income Tax:
Determining the business loss by allowing carried forward loss - return is filed beyond the due date prescribed u/s 139(1) - AO has correctly held that business loss is not allowable to be carried forward and has allowed being unabsorbed depreciation to be carried forward. - AT
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Income Tax:
Royalty/ Fees for Technical Services - Receipt of Business Support Charges - the receipt of business support charge is not taxable as fees for technical services/royalty under the Act or the relevant DTAA as the same is purely in the nature of reimbursement of cost. - AT
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Income Tax:
Difference in receipt shown in the Profit & Loss account and as per TDS certificate - the facts on record clearly show lack of proper enquiry by the Assessing Officer. It is a well settled legal principle that without making proper enquiry and bringing contrary material on record to falsify assessee‘s claim, the AO cannot make addition purely on conjecture and surmises. - AT
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Income Tax:
Existence of PE - addition on account of salary reimbursement cost treated as fee for technical services - the burden of proving that the foreign assessee has a PE in India and consequently it has to be taxed on the business generated by such PE is initially on the Revenue. - There will be no income attributable to the PE. - AT
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Income Tax:
Exemption u/s 11 - expenditure to the extent of 85% - assessee is running the trust in accordance with the objects. The activities carried by the assessee in running the trust are charitable in nature, the expenditure incurred by the assessee is also a genuine expenditure. - AT
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Customs:
Revocation of Customs Broker license - In the absence of acceptability of the enquiry report and the consequent reliance placed upon it by the Commissioner of Customs, we are unable to take a view on the correctness, or otherwise, of the charge in the notice issued to the appellant - Matter restored back - AT
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Service Tax:
Principles of Natural Justice - denial of reasonable opportunity of being heard - levy of Service Tax - show cause notice was issued about 9-10 months back before the order was passed - If the petitioner had any genuine intentions of filing reply and not delaying the matter, petitioner would have availed the opportunity - Petition dismissed - HC
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Service Tax:
Levy of octroi by municipalities - Invocation of Finance Act, 1994 against the amount retained by the appellant - the collection of octroi by the appellant is in pursuance of discharge of sovereign privilege - The adjudicating authority has erred in ignoring that the circumstances in which municipalities may have been perceived as industry had long since ceased to exist. - Not liable to service tax - AT
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Service Tax:
Services received from outside India - POPOS Rules - RCM - when such services are provided by agencies outside India these cannot be provided within India and it is for such reason that taxable services described in section 65 (105) (h) and section 65 (105) (i) of Finance Act, 1994 are within the ambit of section 66A of Finance Act, 1994 only to the extent of having been performed in India. Therefore, the commission or agency fee remitted to entities for handling of vessels outside India are exempt from taxation. - AT
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Service Tax:
Imposition of penalties - Once the payment of service tax and interest is made by the appellant assessee and the intimation is furnished to the authorities, then the authorities should not serve any notice under sub-section (3) of Section 73 in respect of amounts already paid - there was no case to initiate proceedings for imposition of penalties under various sections of the Act. - AT
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Service Tax:
Refund of CENVAT Credit - assessee was not registered with the Service Tax Department - even though they were not registered prior to 13/05/2013, they are eligible for refund of the unutilized credit which was accumulated prior to registration. - AT
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Central Excise:
Classification of goods - aloe vera juice and amla juice - both chapter heading 1302 and Chapter Heading 2009 equally merit consideration and therefore Chapter Heading 2009 being the last in the numerical order prevails in terms of General Rules of Interpretation Rule 3(c). Therefore, aloe vera juice and amla juice are classifiable under Central Excise Tariff Heading 2009 - AT
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Central Excise:
Classification of goods - Aloe vera powder and amla powder - They are not juices, they are not classifiable under Tariff Heading 2009. Being extracts of vegetables, they are classifiable under 1302. - AT
Articles
Notifications
Companies Law-
G.S.R. 463(E) - dated
24-7-2020
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Co. Law
Companies (Indian Accounting Standards) Amendment Rules, 2020
GST - States-
F.1-11(91)-TAX/GST/2020(Part-II) - dated
23-7-2020
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Tripura SGST
Seeks to give effect to the provisions of Rule 67A for furnishing a nil return in FORM GSTR-3B by SMS
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F.1-11(91)-TAX/GST/2020(Part -II) - dated
23-7-2020
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Tripura SGST
Seeks to bring into force Section 128 of Finance Act,2020 to bring amendment in Section 140 of TSGST Act w.e.f. 01.07.2017
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507/2020/6(120)/XXVII(8)/2020/CT-58 - dated
22-7-2020
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Uttarakhand SGST
Uttarakhand Goods and Services Tax (Eighth Amendment) Rules, 2020
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503/2020/6(120)/XXVII(8)/2020/ROD-01 - dated
22-7-2020
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Uttarakhand SGST
Uttarakhand Goods and Services Tax (Removal of Difficulties) Order, 2020
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502/2020/6(120)/XXVII(8)/2020/CT-53 - dated
22-7-2020
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Uttarakhand SGST
Seeks to provide relief by waiver of late fee for delay in furnishing outward statement in FORM GSTR-1 for tax periods for months from March, 2020 to June, 2020 for monthly filers and for quarters from January, 2020 to June, 2020 for quarterly filers
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501/2020/6(120)/XXVII(8)/2020/CT-52 - dated
22-7-2020
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Uttarakhand SGST
Seeks to provide one time amnesty by lowering/waiving of late fees for non furnishing of FORM GSTR-3B from July, 2017 to January, 2020 and also seeks to provide relief by conditional waiver of late fee for delay in furnishing returns in FORM GSTR-3B for tax periods of February, 2020 to July, 2020
Income Tax-
54/2020 - dated
24-7-2020
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IT
Income-tax ( 17th Amendment) Rules, 2020
Money Laundering-
G.S.R. 465(E) - dated
24-7-2020
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PMLA
Central Government extend the period for which small account shall remain operational till 30th September, 2020
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (7) TMI 614
Constitutionality and legality of National Anti-Profiteering Authority as well as Section 171 of the Central Goods and Services Tax Act and Rules 122, 126, 127 and 133 of the Central Goods and Services Tax Rules - HELD THAT:- Though learned counsel for respondent no1 and 3 objects to the grant of instalments to the petitioner, yet this Court keeping in view the COVID-19 pandemic situation, directs the petitioner to deposit the principal profiteered amount i.e. ₹ 75,08,64,019/- in six equated monthly instalments commencing 15th August, 2020.
List the matter on 24th August, 2020 along with other connected matters.
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2020 (7) TMI 613
Maintainability of petition - appealable order - Refund of ITC accumulated during export - CBIC’s Circular No. 135/05.2020 dated 31st March, 2020 - HELD THAT:- Since, the order dated 22nd July, 2020 is an appealable order, the present writ petition and all pending applications are disposed of with liberty to the petitioner to file appropriate proceedings in accordance with law. All the rights and contentions of the parties are left open. The next date of hearing i.e. 11th August, 2020 stands cancelled.
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2020 (7) TMI 612
Violation of principles of natural justice - cancellation of registration within stipulated time - petitioner did not appear in response to notice dated 06.09.2019 - CBIC order No.1 of 2020 Central Board of Indirect Taxes and Customs in S.O. 2064 (E). dated 25.06.2020 - HELD THAT:- The Commercial Taxes and Registration Department of the Government of Tamil Nadu has passed G.O.Ms.No.102 dated 26.06.2020 consequent upon the above CBIT Notification.
This Writ Petition is allowed and the petitioner is at liberty to approach the Assessing Authority by the cut-off date provided in the Notification seeking restoration of registration.
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2020 (7) TMI 611
Grant of refund along with interest - zero-rated supply of goods or services or both made by registered persons - HELD THAT:- Admittedly, till date the petitioner’s refund application dated 4th November, 2019 has not been processed. As neither any acknowledgment in FORM GST RFD-02 has been issued nor any deficiency memo has been issued in RFD-03 within time line of fifteen days, the refund application would be presumed to be complete in all respects in accordance with sub-rule (2), (3) and (4) of Rule 89 of CGST/DGST Rules - To allow the respondent to issue a deficiency memo today would amount to enabling the Respondent to process the refund application beyond the statutory timelines as provided under Rule 90 of the CGST Rules.
This Court is of the view that the respondent has lost the right to point out any deficiency, in the petitioner’s refund application, at this belated stage - this Court directs the respondent to pay to the petitioner the refund along with interest in accordance with law within two weeks.
Petition disposed off.
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2020 (7) TMI 610
Imposition of penalty - Profiteering - HELD THAT:- The petitioner to deposit ₹ 63,14,901/- in this Court, within two weeks, as sought. The amount once deposited, to be kept in maximum interest bearing account awaiting the adjudication of the petition - Subject to the said deposit, the operation of the impugned order dated 19th March, 2020 is stayed.
List on on 24th August, 2020.
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2020 (7) TMI 609
Release of detained goods along with vehicle - Section 129 and Section 130 of the GST Act - HELD THAT:- If the writ applicants are ready and willing to deposit the amount as stipulated above then we may consider releasing the goods as well as the conveyance with a further liberty to prefer appeal under Section 107 of the CGST Act, 2017, against the final order of confiscation having regard to the fact that the impugned order of confiscation was served upon the writ applicants in the month of March, 2020.
As the writ applicants are ready and willing to deposit the amount towards their liability, following order is passed:-
(i) The writ applicants shall deposit 50% of ₹ 36 Lac with the respondent No.3 and the balance amount of ₹ 18 Lac shall be paid by way of a Bank Guarantee of any nationalized bank. This shall be done within a period of two weeks from today.
(ii) If the amount of ₹ 36 Lac as referred to above is paid to the respondent No.3 then the conveyance as well as the goods shall be immediately released in favour of the writ applicants.
(iii) It shall be open for the writ applicants to prefer an appropriate appeal before the appellate authority under Section 107 of the Act, if they intend to question the legality and validity of the order of confiscation passed in Form MOV-11. If any such appeal is preferred, the appellate authority shall hear the same in accordance with law.
(iv) We clarify that we have not expressed any opinion on the merits of the case. We have passed this order keeping in mind that the goods are of perishable nature and are lying with the respondent No.3 since the month of September, 2019.
Application disposed off.
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2020 (7) TMI 608
Vires of Section 171 of the Central Goods and Services Tax Act, 2017 and Chapter XV of Central Goods and Services Tax Rules, 2017 - refund of profiteered amount - stay on recovery of balance amount - HELD THAT:- Granting an absolute stay with respect to the balance amount of ₹ 1.92 crores approx. may result in the flat buyers of the petitioner being left without a flat as well as without the benefit of the amounts which have already been ordered to be refunded to them. We are therefore not inclined to grant stay of recovery of the balance amount - eight weeks’ time granted to the petitioner to deposit the balance amount in this Court, if the proof of having already given benefit of an amount of ₹ 1.53 crores is furnished to the authority concerned.
However, there shall be a stay of proceedings for recovery of penalty.
List on on 24th August, 2020.
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2020 (7) TMI 607
Release of detained goods along with vehicle - Section 129 of the State Goods and Services Act, 2017 - evasion of tax or not - HELD THAT:- The counsel for the petitioner referring to Section 31 of CGST Act, 2017 and pointed out that as per the statute, an invoice could be issued either at the time of removal of goods or prior to the delivery of the goods and that the same is in consonance with the statute and hence, there is no cause for doubting any evasion of tax - Even though aforenoted contention is impressive, still, in view of the fact that an adjudication is already pending, it is only proper that a conclusion is not entered into at this juncture. For the present, a direction to complete the adjudication proceedings at the earliest would be sufficient in the instant case.
The respondent is directed to complete the adjudication proceedings in relation to Ext.P2 notice, within an outer time period of two months from the date of receipt of a copy of this judgment - petition disposed off.
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2020 (7) TMI 606
Principles of Natural Justice - whether specific opportunity of personal hearing by mentioning the date was given? - Section 75(4) of Tamil Nadu Goods and Service Tax Act, 2017 - HELD THAT:- It is not in dispute that individual and separate personal hearing notice was not issued to the petitioner. On the ground of violation of statutory mandate under Section 75(4) of Tamil Nadu Goods and Service Tax Act, 2017, the impugned orders have to be necessarily quashed.
The matters are remitted to the file of the respondent to pass orders afresh in accordance with law - petition allowed by way of remand.
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2020 (7) TMI 605
Revision of own orders - several irregularities committed - tax on tax charged - HELD THAT:- The primary challenge raised by the writ petitioner has become infructuous in view of the passing of the revised orders. The petitioner has to train his guns only on the revised orders dated 03.07.2020. The said orders are appealable before the Appellate Deputy Commissioner of State Taxes (GST appeal), Madurai - The Appellate authority is directed to meticulously consider all the grounds of appeal to be raised by the petitioner and dispose of the appeal within a period of two months thereafter.
Petition disposed off.
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Income Tax
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2020 (7) TMI 603
Application of provision u/s 145 - whether books of account were produced before the ld AO or not? - HELD THAT:- Quantitative difference harped upon by AO is also with respect to the letter submitted by the assessee and the tax audit report. Quantitative difference also with respect to Raw materials and other materials it is necessary to examine the books of accounts of the assessee. In the present case, the whole addition is made by applying the provision of section 145(3).
The provisions of Section 145 (3) can only be applied if the assessing officer is not satisfied about the correctness or completeness of accounts of the assessee primarily. Therefore, even without examination of the books of accounts of the assessee which assessee has not produced despite called for by the assessing officer, application of the provisions of Section 145 (3) is premature.
As AR has agreed to produce the books of accounts before the assessing officer and the learned DR has also expressed his willingness on behalf of AO to examine it, therefore, in the interest of justice, we set aside the whole issue back to the file of the ld AO with a direction to the assessee to produce books of accounts and vouchers before him for examination.
AO is also directed to examine it and then decide the issue, following the order of the Hon'ble Delhi High Court as far as it relates to valuation, and decide the issue on merits with respect to the other grounds. Assessee is directed to produce the books of account before the AO within 120 days from the date of this order by taking prior appointment of the ld AO. - Appeal of assessee is partly allowed.
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2020 (7) TMI 602
Determining the business loss by allowing carried forward loss - return is filed beyond the due date prescribed u/s 139(1) - HELD THAT:- The facts are very clear that the assessee filed return on 02.01.2013, which is beyond the due date prescribed u/s 139(1). In the return of income the assessee has declared loss consisting of business loss for the year and unabsorbed depreciation. As per the provision of section 139(3) to carry forward business loss u/s 72(1), assessee should have filed its return of income in time allowed u/s 139(1).
The above condition does not apply in case of unabsorbed depreciation in view of the provision of section 32(2) - AO has correctly held that business loss is not allowable to be carried forward and has allowed being unabsorbed depreciation to be carried forward. CIT (A) clearly referred to the provision of section 80 also The ld CIT (A) has also upheld the same view. - Decided against revenue.
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2020 (7) TMI 601
Disallowance of royalty expenses - Disallowance u/s 40A(2)(b) - disallow the excessive or reasonable expenditure - AO has only questioned the fair market value of the expenses - HELD THAT:- In the instant case the AO has only compared royalty expenses of the preceding assessment year and no efforts have been made for identifying the fair market value of such expenses during relevant period, which is one of the requirement for invoking the provisions of section 40A(2)(b).
Under transfer pricing provisions the arm’s-length price is compared with similar transactions. Though the provisions of section 40A(2)(b) are general provision as compared to the specific provisions of the transfer pricing, the AO was required to compare the royalty expenses paid in case of the similar product by other companies during the relevant period. AO has not done any such exercise and only made basis of expenses paid in earlier years.
As assessee contended that in assessment year 2013-14 the transaction of the royalty expenses were subjected to transfer pricing provisions. As submitted that in assessment year 2013-14 average royalty payment was 2.99% of the sales, which stands accepted by the Department and therefore, no disallowance should be made in the year under consideration, where the royalty expenses are only 2.77% of the sales. This contention is rejected as the fair market value of the expenses have to be identified for the relevant year and percentile of the earlier year cannot be made basis for comparison. Disallowance made out of royalty expenses is deleted. The ground of the appeal is accordingly allowed.
Transaction of the royalty expenses between the assessee and its Associated Enterprises (AEs), is international transaction and therefore its arm’s-length price can be determined only under the transfer pricing provisions and not under the provision of the section 40A(2)(b) - when there is specific provisions for dealing with the issue of expenses paid to related party under transfer pricing provisions, the general provisions under section 40A(2)(b) of the Act should not be invoked. We have noticed that this issue was not raised before the lower authorities and it has been raised before us for the first time that too as oral argument and not either as regular ground or additional ground.
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2020 (7) TMI 600
Bogus purchases - CIT-A restricting the disallowance to the extent of 12.5% - HELD THAT:- The assessee has categorically stated that the purchases were made in the form of Diary for distribution to the customers. At the worst it may be a case of inflating expenses. The assessing officer has not verified and examined the fact that the diaries were distributed on not.
CIT(A) after considering the contention of assessee restricted the addition to the extent of 12.5% of the alleged bogus purchases by following the decision in CIT vs. Simith P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. - despite furnishing sufficient evidence in the form of ledger accounts and payment through banking channel, the AO ny adverse material against the assessee. CIT(A) has brought the element avoidance of VAT and other charges to tax, embedded in such bogus purchases. Considering the peculiar facts of the present case, we do not find any infirmity in the order passed by ld CIT(A),which we affirmed. - Decided against revenue.
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2020 (7) TMI 599
Royalty/ Fees for Technical Services - Receipt of Business Support Charges - whether what has been recovered from DIPL is the general maintenance and running cost of various global systems which does not amount to the definition of Royalty as prescribed under Explanation 2 to Section 9(1)(vi) ? - Whether appellant’s contention that business support charge receipt is reimbursement of cost incurred and hence not chargeable to tax ? - HELD THAT:- In the instant case, the appellant acts as the central coordinator for all Damco entities across the globe. As a central coordinator, the appellant procures from various service providers viz. insurance, procurement of various product and information technology related support services etc. needed by Damco entities across the globe. The appellant enters into ‘MSA’ with Damco operating entities and therefore, recovers the cost of procurement/provision from these entities. All these costs are only reimbursed to the appellant and there is no mark-up.
Receipt of business support charge is not taxable as fees for technical services/royalty under the Act or the relevant DTAA as the same is purely in the nature of reimbursement of cost.
Services/procurement rendered by the appellant are in the nature of coordinating services whereby various costs incurred are pooled together and charged/recovered as reimbursement costs on the basis of various allocation keys like number of Headcount/Headcount usages/Number of users/Country operational cost/Country revenue etc., which is uniformly applied across the group.
Reimbursement of cost related to Global Service Centre is in effect provided to the group by Maersk Global Services Centre and is in the nature of low end BPO and hence cannot come in the field of managerial, technical and consultancy. Similarly, the business support services related to procurement and issuance are also reimbursement of cost incurred for the benefit of the group companies and not technical, managerial or consultancy in nature. Similarly, reimbursement of cost towards administrative services cannot be held to be in the nature of technical, managerial and consultancy in nature.
Thus we hold that the receipt of business support charge is not taxable as fees for technical services/royalty under the Act or the relevant DTAA as the same is purely in the nature of reimbursement of cost.- Decided in favour of assessee.
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2020 (7) TMI 598
Difference in receipt shown in the Profit & Loss account and as per TDS certificate - receipt of labour charges - HELD THAT:- On verification of the TDS certificate in Form no.16A, by Unity Infra Projects Ltd., learned Commissioner (Appeals) has also recorded a finding of fact that such certificate shows labour charges. As rightly observed by Commissioner (Appeals), AO has not made any in–depth enquiry to ascertain the correctness of assessee‘s claim regarding the receipt of labour charges. By simply issuing a notice under section 133(6) of the Act to Unity Infra Projects Ltd., the AO has finished his part of the job without pursuing the concerned party any further even after not receiving any reply. Thus, the facts on record clearly show lack of proper enquiry by the Assessing Officer. It is a well settled legal principle that without making proper enquiry and bringing contrary material on record to falsify assessee‘s claim, the AO cannot make addition purely on conjecture and surmises.
Addition u/s 69 - HELD THAT:- As found by learned Commissioner (Appeals) that the payments were made from the current account standing in the name of Rounaq Construction, a proprietary concern of the assessee. As established from the facts on record that the investments in house property were out of business income of the assessee. To substantiate such claim, copy of bank statements was also furnished by the assessee. The aforesaid factual finding of the Commissioner (Appeals) remains uncontroverted before us - as established on record that source of investment in house property has been properly explained by the assessee. That being the case, the addition made has been rightly deleted by learned Commissioner (Appeals). This ground is dismissed.
Addition of sundry creditors - HELD THAT:- AO does not dispute the fact that the assessee has received quite substantial amount from Unity Infra Projects Ltd. towards labour charges, whereas, on the other hand, he disbelieves the expenditure incurred by the assessee towards labour charges. This, is completely unreasonable and illogical. When the work entrusted to the assessee is labour intensive and the assessee has shown receipt towards labour charges, it has to be accepted that the assessee must have incurred quite substantial amount towards labour charges. AO has not made any in-depth enquiry except making certain general queries with regard to the labour charges. In these circumstances, the addition made purely on conjecture and surmises cannot be sustained.
We are inclined to agree with the conclusion reached by the learned Commissioner (Appeals). As regards the contention of the Departmental Representative that the assessee has furnished various evidences before learned Commissioner (Appeals) which were not submitted before the Assessing Officer, hence, the provision of rule–46A has been violated, we are unable to accept it. Firstly, the Revenue has not raised any specific ground challenging violation of rule 46A; secondly, the Revenue has failed to point out as to what is the fresh evidence filed before learned Commissioner (Appeals) which was not available before the Assessing Officer.
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2020 (7) TMI 597
Assessment u/s 153A - enhancement of income without following the mandatory/statutory requirement - non complying with the provisions of section 251(2) - HELD THAT:- We set aside the order of learned Commissioner (Appeals) on the issue and restore the matter back to his file for deciding afresh after complying with the provisions of section 251(2) of the Act. As regards second contention of the assessee that in the absence of any incriminating material, the disputed addition could not have been made, we must observe that since we have restored the issue back to the file of learned Commissioner (Appeals) for not complying with the provisions of section 251(2) of the Act, it is not desirable for us to express any conclusive opinion on the aforesaid contention of the assessee.
However, it is trite law, in absence of any incriminating material found as a result of search, no addition can be made in an unabated assessment completed under section 153A r/w section 143(3). Appeal is allowed for statistical purposes.
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].
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2020 (7) TMI 596
Interest income on FDR’s - FDR's pledged for security purposes in obtaining the contract business - whether business income or income from other sources? - HELD THAT:- Undisputedly, the documents now admitted are required to be examined by the Tribunal or by the lower authorities. Since the documents are running into more than 64 pages and we have heard the matter on virtual platform, therefore, the detailed examination of the documents at the stage of Tribunal is not possible. Hence, considering the limitations, we deem it appropriate to remand the matters to the file of CIT(A), pertaining to the issue involved with the direction to examine these documents (1 to 64) filed on 11.07.2019 before the Tribunal in both the appeals , in accordance with law and to find out whether the interest earned by the assessee on FDRs was intrinsically related to the business of the assessee or not. If it is found on examination that the interest income is related to the business of the assessee, the same may be considered as business income and accordingly the income of the assessee is computed by applying the NP rate.
CIT(A) is duty bound to grant personal hearing and opportunity to the assessee as well as Assessing Officer, from whom CIT(A) may also seek remand report from Assessing Officer, if required. The ld. CIT(A) shall also consider various decisions relied upon by the assessee including the decision of Tribunal in the assessee’s case for earlier years.
Computation of taxable income - HELD THAT:- We direct the Assessing Officer to compute the taxable income of the assessee after giving benefit of interest to partners ,remuneration to the partners and depreciation. The taxable income of the assessee would be subject to outcome on the issue of interest on FDRs.
NP rate @ 8% - HELD THAT:- In the present case, the assessee relied upon his own cases for the subsequent years .Though found that the assessee has not challenged the NP rate of 8% applied for assessment year 2012-13 and 2013-14 in which the turnover of the assessee was 17.17 crores and 22 crore respectively, whereas the turnover in the present year was 19.27 crores. However considering the peculiar facts and circumstance of the case we restrict the net profit rate to 7.75% instead of 8% as held by the lower authorities. In the result the relevant ground of appeal of assessee is, accordingly, partly allowed.
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2020 (7) TMI 604
Capital Gains - Slump sale or sale of individual assets - whether the Tribunal was right in affirming the order passed by AO and holding that the transfer of the division is to be treated as a 'slump sale' and not sale of individual items and consequently, Section 50B was attracted? - to be taxed u/s 41(2) or under the head “capital gains” - HELD THAT:- CIT(A) rendered a factual finding that the assessee has assigned separate values for the immovables consisting of land and building and movables consisting of furnitures and fixtures, plant and machinery, patents, net current assets and therefore, concluded that the consideration for transfer cannot be called as a lump sum consideration. - It was decided that, the sale effected by the assessee does not constitute “slump sale” as per Section 2(42C) of the Act and hence the provisions of Section 50B will not be applicable.
We find that all that the Revenue stated was that CIT(A) erred in holding that the sale effected by the assessee does not constitute “slump sale” as per Section 2(42C) of the Act and hence provisions of Section 50B will not be applicable. The same grounds have been repeated, but not in the same format, but by adopting a different style.
Substantial question of law framed for consideration in this appeal undoubtedly are mixed questions of fact and law. The question of remanding the matter to the Tribunal for fresh consideration would not arise for the simple reason that the fact that the individual assets were separately valued as recorded by the CIT(A) was never disputed by the Revenue before the Tribunal. Therefore, on such admitted facts, if we examine the finding of the Tribunal, more particularly, in paragraph 13 of the order, we find that the same calls for interference.
As decided in Artex Manufacturing Company [1997 (7) TMI 7 - SUPREME COURT] value of the plant, machinery and dead stock though not mentioned in the agreement, but information was furnished by the assessee before the Income Tax Officer from which it became evident that the plant, machinery and dead stock were separately valued and therefore, it was held that it is not a case in which it cannot be said that the price attributed to the items transferred is not indicated and hence Section 41(2) of the 1961 Act cannot be applied. This decision would clearly support the case of the assessee, who had succeeded before the CIT(A) by establishing that the individual assets were separately valued and documents to the said effect were produced. Added to that the Revenue did not dispute such a factual position before the Tribunal and consequently, the finding rendered by the Tribunal does not merit acceptance. - Decided in favour of the assessee
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2020 (7) TMI 595
Existence of PE - addition on account of salary reimbursement cost treated as fee for technical services - royalty income was offered to tax in India on the basis of tax rates prescribed in DTAA between India and Singapore i.e. @ 10% - AO was of the view that the person employed by the assessee, working under the Indian entity, were seconded to India; the salary of the said person was reimbursed by the Indian entity and hence taxable in the hands of the assessee.
HELD THAT:- The evidences need to be seen in their entirety as the burden of proving that the foreign assessee has a PE in India and consequently it has to be taxed on the business generated by such PE is initially on the Revenue. Such is the proposition laid down by Hon’ble Supreme Court in ADIT vs E-funds IT Solutions Inc. [2017 (10) TMI 1011 - SUPREME COURT] In such a scenario, the question of taxability of service PE in India of the assessee company is answered in the negative. The evidences have also been gone into by the CIT(A), who has given detailed finding.
DR for the Revenue has failed to controvert the said finding of the CIT(A). In the absence of the same, it cannot be said that the assessee had service PE in India.
Another aspect which is to be kept in mind for the taxability of service PE is that the expenses of salary cost needs to be deducted from the business income generated by the PE in India, which in the present case would be NIL.
There will be no income attributable to the PE. We find no merit in the stand of the Revenue in this regard.
Taxability in the hands of the assessee company i.e. income arising on account of deputation of Mr. Vinod Mahboobani and whether the same constitute service PE - We find no merit in the stand of the Assessing Officer in this regard, i.e. existence of service PE and provision of technical services; the same cannot co-exist. In any case under Article 12 of DTAA, the clause of “make available” needs to be fulfilled to hold existence of PE for technical services. In the absence of fulfillment of “make available” clause, it is not possible to hold that there is taxability of FTS under Article 12 of the DTAA.
We find no merit in the stand of the Assessing Officer in treating the reimbursement received by the assessee company from YRIPL on account of salary payment as FTS. We have already held in the paras above that Mr. Vinod Mahboobani was working as an employee of YRIPL and not as an employee of the assessee company. The reimbursement of salary had no element of income and was not taxable. In any case since Mr. Vinod Mahboobani had already paid taxes in India on the aforesaid salary, the same amount being taxed as FTS in the hands of the assessee company, would amount to double taxation. Upholding the order of the CIT(A), we dismiss the ground of appeal raised by the Revenue.
Attribution of business income to the alleged PE of the assessee company in India - AO has failed to establish his case and where none of the conditions specified in Article 5(8) of the DTAA have been satisfied, then it cannot be said that the assessee had any DAPE in India. In any case, the marketing activities undertaken by the YRMPL were on behalf of the YRIPL and its franchisees and in the absence of any link whatsoever with the business of the assessee company, there is no merit in attribution of contribution made by the Independent third-party franchisees, to constitute PE of the assessee company in India.
Assessee has no PE in India and no business undertaken in India, hence no fixed place PE also. - Decided in favour of assessee.
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2020 (7) TMI 594
Violation of rule 46A - CIT-A deleted addition without giving opportunity to the AO and seeking remand report - HELD THAT:- CIT(A) after examining each and every detail directed the AO to delete the addition. CIT(A) has not violated rule 46A of the I.T. Rules and adjudicated the issue after examining all the details. We are of the opinion that no remand report is required, for the reason that the expenditure incurred by the assessee is very clear from the records. Therefore, the ld. CIT(A) rightly directed the Assessing Officer to delete the addition.
Expenditure incurred on construction, based on the submissions made by the assessee - HELD THAT:- The addition made by the Assessing Officer is deleted by the ld.CIT(A) by considering the relevant material available on record, no interference is warranted, therefore same is dismissed.
Exemption u/s 11 - expenditure to the extent of 85% - HELD THAT:- It is very clear that assessee’s total income for the year under consideration is ₹ 16,66,37,767/-, the expenditure of the assessee is ₹ 14,82,12,178/- the assessee has spent more than 85% of the income for the year under consideration. As per section (11)(1)(a), the income accumulated by the assessee is less than 15%, therefore the entire income of the assessee is exempt u/sec. 11(1). We have examined the entire facts and circumstances of the case and find that assessee is running the trust in accordance with the objects. The activities carried by the assessee in running the trust are charitable in nature, the expenditure incurred by the assessee is also a genuine expenditure. CIT(A) after examining the details in respect of expenditure incurred by the assessee gave a finding that the assessee has applied his income more than 85%, therefore as per section 11(1), the entire income of the assessee is exempt. We find no reason to interfere with the order passed by the ld. CIT(A).
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Customs
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2020 (7) TMI 592
Revocation of Customs Broker license - forfeiture of security deposit - imposition of penalties - concealment of good bars inside slippers - HELD THAT:- The Commissioner of Customs has, merely, concurred with the findings of the inquiry authority and, without narration, let alone consideration, of the several submissions relating to the inquiry, to the extent of repeating the assessment of threats posed to the nation by the lack of diligence on the part of the ‘customs broker’, proceeded to revoke the license.
It is settled law that, in the absence of a specific procedure, the principles of natural justice shall govern any action that leads to detriment. It would appear that the inquiry had not distinguished itself by conformity to the fundamental requirement of notice of intention to conduct hearings. The request for cross-examination off investigating officer emanated from the charged ‘customs broker’ and it was incumbent upon the inquiry authority to intimate, and carry on with the deposition of the summoned witness, in, and unfailingly so, the presence of the noticee.
In the absence of acceptability of the enquiry report and the consequent reliance placed upon it by the Commissioner of Customs, we are unable to take a view on the correctness, or otherwise, of the charge in the notice issued to the appellant.
Accordingly, we set aside the impugned order and direct the Commissioner of Customs to institute a fresh inquiry and, after detailed consideration of the report arising therefrom as well as the response of the noticee, if any, to pass a detailed order of finding.
Appeal disposed off.
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2020 (7) TMI 593
Permission to withdraw petition - availability of statutory remedies - Imposition of penalty u/s 112(b)(ii) read with 114AA of the Customs Act, 1962 - improper importation of goods - SCN do not show any case against the petitioner u/s 112(b)(ii) to have been made out - HELD THAT:- The petition is dismissed as withdrawn with liberty to pursue the statutory remedies.
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PMLA
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2020 (7) TMI 581
Grant of Bail - Transfer of Government funds into fake accounts - Money Laundering - siphoning of funds - allegation against the petitioner is of opening 22 bank accounts in his name using forged identification documents - HELD THAT:- The Court notes that the case involves defrauding the public exchequer and the petitioner has admitted his role by the statement under Section 50 of the Act. This Court would refrain from offering any comment as to what would be the likely sentence awarded to the petitioner, if convicted, as at best, today, it would be merely speculative. Since the alleged offence is not a crime simpliciter, the period of custody already undergone by the petitioner and comparatively low value of amount involved, at the current stage, would not aid the petitioner's quest for bail.
The Court is not inclined to enlarge the petitioner on bail - taking note of the fact that the petitioner is in custody since 03.03.2017, for the ends of justice, let the Court below expedite the trial and conclude it at the earliest, preferably within 12 months - Application dismissed.
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Service Tax
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2020 (7) TMI 591
Rectification of impugned Form SVLDRS-03 dated 22nd May, 2020 - rectifiable error - HELD THAT:- The petition and application are disposed of with a direction to the respondent No.2 to decide the petitioner’s representation dated 12th June, 2020 in accordance with law within two weeks.
Issue Notice.
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2020 (7) TMI 589
Levy of octroi by municipalities - Invocation of Finance Act, 1994 against the amount retained by the appellant - exemption under notification no. 13/2004- ST dated 10 September 2004 - circular no. 897/7/2006-ST dated 18 December 2006 and no. 96/07/2007-ST dated 23 August 2007 of Central Board of Excise & Customs - HELD THAT:- The adjudicating authority has proceeded on the assumption that the collection of octroi was the service rendered by the appellant and the sole aspect that remained in dispute was the fitment within the proposed taxable service. In doing so, the plea of having discharged sovereign function that was beyond the ambit of tax laws was taken up to sustain the finding that taxable service had been rendered. There can be no cavil that sovereign functions are not intended to be taxed; sovereignty of a State has its genesis in either divine right or upon entrustment by the governed and the subjecting of the exercise of that sovereignty to levy is, generally speaking, anathema. Practically too, the absence of tangibility as well as specified recipients, renders the scope for such a levy to be well nigh impossible. It can be seen from the laws enacted for commodity taxation that there is a reiteration of the taxability of government transaction; such a mandate to tax is conspicuously absent in Finance Act, 1994. Normally, there would be no cause for such eventuality as the discharge of sovereign responsibility is not characterised with corresponding consideration.
The negation of the claim flows from certain responses of the adjudicating authority to the claims of the appellant. We are constrained to take note of the solecism evident in those findings. Tax officials are creations of taxing statutes and not only required to be diligent in enforcing levies contemplated in those statutes but also be soldiers in defence of rule of law. Incorrect sequencing of the hierarchy of findings underlines disregard for other taxing statutes and even of the Constitution itself which may be attributable either to ignorance or to egregious disrespect.
A perusal of Part XII of the Constitution of India would have been sufficient to appreciate that levy, collection and appropriation are all employed in the design of distribution of taxing powers and relegation of collection outside the aspect of sovereignty is not acceptable. Indeed, Article 265 is explicit in denying legality to tax is ‘levied or collected’ without authority of law. The finding of the appellant having exercised delegated powers is without basis.
Considering the flaws of inferences in the impugned order leading to the conclusion that collection of octroi by the appellant, we, on examination of the legal framework, finding it useful to restate the foundations. That levy and collection of tax is a sovereign privilege and must have authority of law enacted by the Union Parliament or the legislatures of constituent states is not in dispute. It is also not in doubt that List II of the Seventh Schedule in the Constitution of India empowers the legislatures of the constituent states to levy and collect tax on ‘entry of goods’ which is, essentially, what octroi is. The collection of octroi for the entry and consumption of specified goods in Greater Mumbai has been legislated under the Mumbai Municipal Corporation Act, 1888 and, in terms of the Mumbai Municipal Corporation (Levy of Octroi) Rules, 1965, Mumbai Port Trust, a statutory authority established under law and subsequently incorporated within the ambit of Major Port Trusts Act, 1963, was one of the three agencies of the Central Government empowered-and not by contract-to enforce collection - The conclusion, inevitably, is that the collection of octroi by the appellant is in pursuance of discharge of sovereign privilege.
Appeal allowed - decided in favor of appellant.
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2020 (7) TMI 588
Services received from outside India - POPOS Rules - reverse charge mechanism - chartering out of vessels - agency commission, disbursed in India and remitted outside India - various reimbursements - reimbursement to out chartering agents, being payment to agents for handling port charges outside India - reimbursement of deputation expenditure - reimbursement as sales promotion expenditure - reimbursement as expenditure on maintenance and repair - reimbursement towards expenditure on consulting engineers and training - section 66A of Finance Act, 1994.
Whether rendering of such service outside India, even if it is for the benefit of the entity in India, amounts to provision of the service in India? - HELD THAT:- The peculiar characteristic of invisibility, and intangibility of the taxable event compounded by the near impossibility of segregating the taxable element in a bundled transaction, mandates rigorous rules of engagement to comply with constitutional requirement of limiting the levy within the authority of law. Hard enough as that is, the taxation of services rendered from outside India by the legal fiction of deeming the recipient as provider cannot be founded on money transaction. The scheme of taxation of services in Finance Act, 1994 does not envisage transfer of money to be a service as evidence of such rendering. The taxation of services procured from abroad, if such was the legislative intent, would have been a simple enactment without the need of either the deeming fiction or the elaborate Rules for determination of the destination of service.
It is trite to assert that the compelling reason for taxation of services rendered from abroad in the hands of the recipient was two-fold: that businesses in India should not be permitted to indulge in arbitrage owing to escapement from tax on services in which the provider is beyond jurisdiction and that the chain of value-added is not broken. Hence, the receipt of services in India for furtherance of business and commerce are co-terminus parameters for taxation. The convenience of classification as ‘business auxiliary service’, to bring the activities within the residual grouping of rule 3(iii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, merely from ‘commission’ having been paid, does not pass muster in view of competing and more specific descriptions in section 65(105) of Finance Act, 1994.
In the field of maritime commerce, the activity of vessel handling in ports is entrusted to ‘steamer agents’ and of goods to ‘customs brokers’; undoubtedly, these are agents but if legislative intent was to tax them as providers of ‘business auxiliary service’, there would be no need to have these separate descriptions in the enumeration of ‘taxable service’ and it cannot be the case of the tax authorities that these varieties of agencies are peculiar to India. Logically, when such services are provided by agencies outside India these cannot be provided within India and it is for such reason that taxable services described in section 65 (105) (h) and section 65 (105) (i) of Finance Act, 1994 are within the ambit of section 66A of Finance Act, 1994 only to the extent of having been performed in India. Therefore, the commission or agency fee remitted to entities for handling of vessels outside India are exempt from taxation.
Extende dperiod of limitation - penalty - CENVAT Credit - HELD THAT:- The Tribunal has, in JET AIRWAYS (I) LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI [2016 (8) TMI 989 - CESTAT MUMBAI], held that the revenue neutrality of CENVAT credit in procurement of services from outside the country blunted the scope for alleging the existence of ingredients that permit the invoking of the extended period of limitation as well as penalty under section 78 of Finance Act, 1994 - Indeed, but for the proceedings initiated in relation to the demands that we have, supra, set aside, the absence of these very ingredients, coupled the promptitude with which the liability had been discharged, the option of initiation of proceedings, would therefore close the option of initiating proceedings nearly for imposition of penalty - Penalties u/s 78 set aside.
Appeal disposed off.
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2020 (7) TMI 587
Imposition of penalties - Mining of Mineral services - tax along with interest paid on being pointed out before issuance of SCN - period 2007-08 and 2008-09 - HELD THAT:- The issue is no more res integra and has been settled in favour of the assessee that once the assessee pays the tax along with applicable interest before issuance of the show-cause notice, the show-cause notice should not have been issued in the facts of the present case.
The case of the appellant is squarely covered by Section 73(3) of the Finance Act, 1994 since the appellant assessee after making payment of service tax and the applicable interest before issuance of the show-cause notice, intimated the authorities for not issuing the show-cause notice. Once the payment of service tax and interest is made by the appellant assessee and the intimation is furnished to the authorities, then the authorities should not serve any notice under sub-section (3) of Section 73 in respect of amounts already paid - there was no case to initiate proceedings for imposition of penalties under various sections of the Act.
The appellant is not liable to pay penalty. Extending the benefit of Section of 80 of the Finance Act, 1994, the penalties and late fines are set aside in entirety - appellant’s liability to pay service tax and interest amount is upheld which already stands paid, is upheld - appeal allowed in part.
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2020 (7) TMI 590
Principles of Natural Justice - denial of reasonable opportunity of being heard - levy of Service Tax - contract of construction of road - period from April- 2014 to June-2017 - HELD THAT:- This court is of the considered view that due and sufficient opportunity of being heard of reasonable nature was extended to the petitioner to respond to the show cause notice which was issued about 9-10 months back. If the petitioner had any genuine intentions of filing reply and not delaying the matter, petitioner would have availed the opportunity - thus the opportunity of reasonable in nature was extended to the petitioner before passing of the impugned order vide P/1.
Petition dismissed.
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2020 (7) TMI 586
Refund of CENVAT Credit - rejection on the ground that the assessee was not registered with the Service Tax Department - shifting of premises - HELD THAT:- The issue is no more res-integra in view of the judgment of Hon’ble High Court of Karnataka in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [2011 (9) TMI 450 - KARNATAKA HIGH COURT] where it was held that In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund, on the ground which is not existence in law - the issue is answered in favour of the appellant holding that even though they were not registered prior to 13/05/2013, they are eligible for refund of the unutilized credit which was accumulated prior to registration.
Shifting of premises - error in mentioning new address - HELD THAT:- There was error in mentioning old address is an inadvertent error and the appellant assesse should not be deprived of their legitimate claim on this account.
Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (7) TMI 585
Classification of goods - Aloe Vera juice, Aloe Vera powder, amla juice and amla powder - whether classifiable under chapter 6 as originally classified by the appellant or under Chapter Heading 13021919 as confirmed in the impugned order or under Chapter Heading 20098990 as now claimed by the appellant? - demand of differential duty alongwith interest - extended period of limitation - imposition of penalties.
Classification of Aloe Vera juice, Aloe Vera powder, amla juice and amla powder - classified under Chapter 13 or under Chapter 20? - HELD THAT:- Chapter 13 deals with lac, gums, resins and other vegetable saps and extracts. Chapter note 1 specifically shows that Chapter Heading 1302 applies, interalia, to liquorice extract and extract of pyrethrum, extract of hops and extract of aloes. This note also excludes certain types of products to which this heading does not apply. The exclusions in this chapter note do not cover aloevera juice, aloevera powder, amla juice and amla powder. The exclusion also does not cover specifically any product which can also be covered under Chapter 20 - On the other hand, Chapter Notes to Chapter 20 also do not exclude any products which may fall under Chapter 13. Chapter Heading 2009 clearly covers fruit juices and vegetable juices, unfermented and not containing added spirit whether or not containing added sugar or sweetening matter.
It is equally logical to classify the aloe vera juice and amla juice under Chapter Heading 2009 as claimed by the appellant. However, we find no ground to call the powders manufactured by the appellant as juices as powder is a solid and the juice is a liquid. There is nothing in the description of Chapter Heading 2009 to suggest that it also includes powders. Therefore, the aloe vera powder and amla powder manufactured by the appellant cannot be classified under Chapter Heading 2009 - as far as the aloe vera juice and amla juice are concerned, both chapter heading 1302 and Chapter Heading 2009 equally merit consideration and therefore Chapter Heading 2009 being the last in the numerical order prevails in terms of General Rules of Interpretation Rule 3(c). Therefore, aloe vera juice and amla juice are classifiable under Central Excise Tariff Heading 2009 as claimed by the appellant.
Aloe vera powder and amla powder - HELD THAT:- They are not juices, they are not classifiable under Tariff Heading 2009. Being extracts of vegetables, they are classifiable under 1302.
Extended period of limitation - HELD THAT:- In terms of Section 11A of the Central Excise Act, extended period of limitation can be invoked only in cases of fraud, collision, wilful misstatement, suppression of facts or violation of Act or Rules with an intention to evade payment of duty. Claiming wrong classification cannot be the ground for invoking extended period of limitation, therefore, the entire demand beyond normal period of limitation needs to be set aside.
Demand of Interest - HELD THAT:- Once the duty is payable to some extent, interest on that amount has to be paid as per law and this is not a matter of discretion.
Penalties - HELD THAT:- No penalty can be imposed under Section 11AC as there is no element of fraud, collusion wilful misstatement or suppression of facts or violation of the provisions of the Act or Rules with an intent to evade payment of duty. No penalty is imposable upon the appellant under Rule 25 also as the assessee has not violated any Rules and it is only a matter of difference of opinion regarding classification by the assessee and by the department. Therefore all penalties are also set aside.
All appeals are remanded to the original authority for the limited purpose of calculation of demand - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2020 (7) TMI 584
Amendment in returns of second quarter - recovery of alleged tax - civil appeals pending before Supreme Court - HELD THAT:- This Court is of the view that no useful purpose would be served by keeping the petition pending. Consequently, it directs respondent no. 1 to allow the amendment sought by the petitioner in its return of 2nd Quarter for the Financial Year 2015-16 vide application dated 16th June, 2019. However, this direction shall remain suspended till the Civil Appeals pending before the Supreme Court, are decided and this direction shall abide by the decision that the Supreme Court renders.
Petition disposed off.
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2020 (7) TMI 583
Principles of Natural Justice - petitioner did not avail opportunity of personal hearing - HELD THAT:- Whether or not the petitioner availed the opportunity of personal hearing, it is the duty of the 1st respondent, as appellate authority, to deal with the contentions raised in the grounds of appeal filed by petitioner and the 1st respondent could not have rejected the appeal only on the ground that personal hearing opportunity was not availed by the petitioner.
The appeal filed by the petitioner before the 1st respondent is restored to the file of the 1st respondent.
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2020 (7) TMI 582
Principles of Natural Justice - contention urged by the learned counsel for the petitioner is that Exhibit P8 order is bad, since it was issued after the period prescribed under Section 25(1) of the KVAT Act - HELD THAT:- As per Section 25(1) of the KVAT Act, the assessing authority can, within five years from the last date of the year to which the return relates, proceed to determine, to the best of its judgment the turnover which has escaped assessment to tax or has been underassessed - In the instant case, the petitioner has not disputed the fact that the assessee was issued with Exhibit P4 notice dated 21.11.2011, which was well within the period prescribed under Section 25(1). The assessing officer having thus proceeded to determine the tax which had escaped assessment, the challenge against Exhibit P8 assessment order on the premise that it was passed after the five year period stipulated in Section 25(1) cannot be countenanced.
There is no reason for this Court to interfere with Exhibit P8 order, particularly since the petitioner has approached this Court without exhausting the statutory remedies - petition dismissed.
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Indian Laws
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2020 (7) TMI 580
Grant of Bail - unsecured loans granted by RFL to various entities - Non-performing Assets - ever-greening of loans - conspiracy with the Promoters and for their benefit - It is alleged that despite the report of RBI, the petitioner had not taken any remedial measures, but on the contrary actively sought to misrepresent the financial position of RFL by concealing various NPAs - HELD THAT:- The reading of the chargesheet indicates that the prosecution had identified nineteen questionable loan transactions where the borrowers had defaulted in repayment of the dues advanced to them. The chargesheet indicates that in all of those nineteen instances, the loan had been approved by the Risk Management Committee and in certain cases was also approved by the RPT (Related Party Transaction) sub-committee. The date on which the approvals were been granted are indicated in the chargesheet. All of these questionable transactions pertain to the period after the year, 2016 - However, it cannot be disputed that most of the questionable loan transactions had been entered into after 2016. Undisputedly, the petitioner was employed with the Religare Group of Companies in various capacities since 2008. However, it is not disputed that the petitioner was not holding any executive position in RFL after 13.11. 2011. The chargesheet indicates that he had ceased to be a whole time director with effect from 13.11.2011. The petitioner acted as the Group CFO from 06.04.2010 till his resignation on 14.11.2017; thus, it prima facie appears that the petitioner may have supervised certain executive functions relating to RFL but he was not control of its day to day management.
The petitioner is a qualified Chartered Accountant and there is no allegation that he had any other stake in REL or RFL except as an employee or an official of the said companies. It prima facie does appear that the petitioner was employed by virtue of his professional qualifications. There is also little material to establish that the remuneration paid to the petitioner was not commensurate with his position in REL. The above is also a vital aspect to be borne in mind while examining whether the petitioner should be granted bail - This Court is not persuaded to accept that the petitioner has any propensity to tamper with the relevant evidence. As noticed above, the petitioner had left the employment of the REL almost three years ago. He had also resigned as a director of RFL.
The petitioner shall be released on bail on his furnishing a personal bond in the sum of ₹25,000/- to the satisfaction of the Trial Court/Duty Magistrate with one surety of the like amount. This is also subject to further conditions imposed - petition allowed.
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