TMI Tax Updates - e-Newsletter
August 14, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Treatment of Input Tax Credit pertaining to Trading Turnover while calculating Net Input Tax Credit for computing refunds on account of inverted duty structure under Section 54(3)(ii) of the CGST Act, 2017

   By: Dhruv Chhabra

2. ADVANCE RULING ON CLASSIFICATION OF AND GST ON GOODS (POOJA OIL) (POOJA OIL)

   By: Dr. Sanjiv Agarwal

News

1. CCI approves proposed combination involving acquisition by Zomato of 9.3% (approx.) stake in each of Grofers India and Hands on Trades Private Limited

2. CCI approves acquisition of shares by Plum Wood Investment and voting rights by Mr. Bhavish Aggarwal in ANI Technologies Private Limited

3. CCI approves acquisition of shares by MacRitchie Investments and Fort Canning Investments; and voting rights by Mr. Bhavish Aggarwal in ANI Technologies Private Limited

4. INDIA’S FOREIGN TRADE: JULY 2021

5. Auction for Sale (Re-issue) of (i) ‘4.26% GS 2023’,(ii) ‘6.10% GS 2031’ and (iii) ‘6.76% GS 2061’

6. APEDA in collaboration with HPMC exports five unique varieties of apples to Bahrain

7. Insolvency and Bankruptcy Code (Amendment) Act, 2021

8. India@75 is a declaration for a new India with new dreams, new energy and new commitment: Shri Piyush Goyal

Notifications

Customs

1. 44/2021 - dated 12-8-2021 - ADD

Seeks to rescind notification No. 43/2016-Cus(ADD) dated 8th August, 2016 to remove levy of ADD on Viscose Staple Fibre (VSF) originating in or imported from China PR and Indonesia.

GST - States

2. . F.14 (73)/LA-2021/ALA1/76-85 - dated 11-8-2021 - Delhi SGST

Delhi Goods and Services Tax (Amendment) Act, 2021

3. S.O. 243 - dated 16-7-2021 - Jammu & Kashmir SGST

Modification Notification No. SRO 63 of 2018 dated 05.02.2018

4. 39/2019 – State Tax - dated 11-8-2021 - Maharashtra SGST

Seeks to bring Section 7of the Maharashtra Goods and Services Tax (Amendment) Act , 2021(Mah.Act No. XIII of 2021), in to force

5. 29/2021 – State Tax - dated 11-8-2021 - Maharashtra SGST

Seeks to notify sections 4 and 5 of the Maharashtra Goods and Services Tax (Amendment) Act , 2021(Mah.Act No. XIII of 2021), w.e.f. 01.08.2021

6. 16/2021 – State Tax - dated 11-8-2021 - Maharashtra SGST

Seeks to appoint 16.07.2021 as the day from which the provisions of section 6 of the Maharashtra Goods and Services Tax (Amendment) Act , 2021(Mah.Act No. XIII of 2021), relating to amendment of section 50 of the MGST Act, 2017 shall come into force.

7. 13/2021-VI(1)/219(a-3)/2021 - dated 30-7-2021 - Tamil Nadu SGST

Commissioner delegates the powers conferred on him to the officers

8. 12/2021 - VI(1)/219(a-2)/2021 - dated 30-7-2021 - Tamil Nadu SGST

Proper officer to exercise and the powers and perform the functions

9. 11/2021 - VI(1)/219(a-1)/2021 - dated 30-7-2021 - Tamil Nadu SGST

jurisdiction and Officers appointed

10. F.1-11 (91)-Tax/GST/2021(PART) - dated 19-7-2021 - Tripura SGST

Seeks to rationalize late fee for delay in filing of return in FORM GSTR-4.

11. F.1-11 (91)-Tax/GST/2021(PART) - dated 19-7-2021 - Tripura SGST

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

12. F.1-11 (91)-Tax/GST/2021(PART) - dated 19-7-2021 - Tripura SGST

Seeks to extend due date of compliances which fall during the period from "15.04.2021 to 29.06.2021" till 30.06.2021.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/DIL/CIR/P/2021/614 - dated 13-8-2021

Guidelines on issuance of non-convertible debt instruments along with warrants (‘NCDs with Warrants’) in terms of Chapter VI – Qualified Institutions Placement of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

2. SEBI/HO/CFD/CMD/CIR/P/2021/616 - dated 13-8-2021

Disclosure of shareholding pattern of promoter(s) and promoter group entities.

3. SEBI/HO/CFD/DCR-III/CIR/P/2021/615 - dated 13-8-2021

Tendering of shares in open offers, buybacks and delisting offers by marking lien in the demat account of the shareholders.

Highlights / Catch Notes

GST

• Provisional attachment of bank account set aside as Section 73 proceedings concluded; petitioner justified in seeking release.

  Case-Laws - HC : Release of freezed petitioner's bank account - The order of provisional attachment was made not during pendency of any proceedings under Sections 62 or 63 or 64 or 67 or 73 or 74 of the CGST Act but was made in view of contemplation of proceedings under Section 73 thereof - the proceedings under Section 73 of the CGST Act having been taken to its logical conclusion, the purpose for which the order of provisional attachment had been made has also ceased to survive and, therefore, the petitioner is justified in its claim that such order of provisional attachment ought to be set aside. - HC
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• GST Exemption Denied: Business Transfer Excludes Liabilities, Failing 'Going Concern' Criteria Under Tax Regulations.

  Case-Laws - AAR : Exemption form GST on the business transfer undertaken - transfer of a going concern - transfer of a going concern means transfer of a running business which is capable of being carried on by the purchaser as an independent business. Such transfer of business as a whole will comprise comprehensive transfer of immovable property, goods and transfer of unexecuted orders, employees, goodwill etc. - it is evidently clear that the transaction of 'transfer of business' in the instant case does not fit in the definition of a 'going concern' in the context of exclusion of liabilities. - AAR
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• GST Applies to Barter Transaction: Milling and Transport Services as Composite Supply u/s 2(30) of CGST Act 2017.

  Case-Laws - AAR : Levy of GST on Barter transaction - miller cum transporter - milling of Red gram - The applicant himself admitted that there is no separate contract for supply of packing material. Moreover, the clauses of the contract in which the applicant entered with AP State Civil Supplies Corporation also reflect the same. The packing charges offered are nothing but incidental and ancillary to the main supply of milling and transportation of red gram dall. Therefore, it is a clear cut case of composite supply under Section 2(30) of CGST Act 2017 - AAR
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• Truck Intermediary Services Classified as 'Agent' Under CGST/SGST; 18% Tax Applied, Serial No.11, Heading 9967(ii.

  Case-Laws - AAR : Classification of services - intermediary between the truck owners and goods transportation agencies - The applicant arranges trucks to the goods transport agency and charges the commission or brokerage for the said service and falls within the ambit of 'Agent' under the CGST/SGST Act - The service provided by the applicant in relation to transportation of goods fall under the serial No.11 under the Heading 9967(ii) supporting services in transport other than services of Goods Transport Agency and liable to be taxed @18% - AAR
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• Sub-contractors ineligible for input tax credit on construction materials for own use in works contract services.

  Case-Laws - AAR : Input tax credit - Sub-Contractor providing works contract services - purchases made by the applicant on their own account for furtherance of business - if a person purchases construction material to provide the constructions services by using the said material, ITC shall not be available. - AAR
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• Drinking water supplied via mobile units taxed at 18% GST under SI.No. 13, Heading 9969, per Notification 11/2017.

  Case-Laws - AAR : Exemption from GST or not - supply of drinking water - The service component of distribution of water through mobile units is covered under SI.No. 13 of Heading 9969 Electricity, gas, water and other distribution services vide Notification No. 11/2017-Central Tax (Rate), dated, 28th June, 2017 and taxable @ 18 %. It is invariably a composite supply and hence the rate of tax of purified water prevails, being the principal supply. - AAR
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• Transaction Not a Supply Under GST if Payment Received After Completion Certificate Submission Per Kerala Rule 20.

  Case-Laws - AAR : If the entire consideration in respect of the transaction is received after submission of the completion certificate in Form Appendix E3 to the Secretary as per Rule 20 of the Kerala Municipality Building Rules, 2019 the transaction shall not be treated as supply under GST in view of provisions contained in Paragraph 5 of Schedule III of the CGST Act, 2017. - AAR
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• Completion Certificate Date for Residential Construction Under CGST Act Tied to Rule 20, Kerala Municipality Building Rules.

  Case-Laws - AAR : Construction of residential accommodation - Scope of Completion certificate - relevant date of issuance of such certificate - The date of issue of completion certificate for the purpose of clause (b) of Paragraph 5 of Schedule II of the CGST Act shall be the date of issue of the completion certificate in form in Appendix E3 submitted to the Secretary as per Rule 20 of the Kerala Municipality Building Rules,2019. - AAR
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• Textbook Printing for State Government Exempt from GST; Lottery Tickets and Stationery Printing Not Exempt.

  Case-Laws - AAR : The service of printing of Text Books supplied by the applicant to the State Government is exempted from GST, However, the service of printing of lottery tickets and stationery items like Diary, Calendar etc supplied by the applicant to the State Government are not exempted - AAR
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• Printing Textbooks and Lottery Tickets for State Government Classified as Services u/s 7 of CGST Act.

  Case-Laws - AAR : Scope of supply - supply of goods or supply of services - printing text books, Lottery tickets, stationery items for State Government - All the activities as mentioned above, undertaken by the applicant constitute supply as defined in Section 7 of the CGST Act. The activities constitute supply of services falling under Heading - 9989 – Other manufacturing services; publishing, printing and reproduction services; material recovery services - 998912 - Printing and reproduction services of recorded media, on a fee or contract basis of the Scheme of Classification of Services under GST - AAR
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• Car Seat Covers Taxed at 28% Under HSN 8708, Schedule IV, Notification No. 01/2017-Central Tax (Rate.

  Case-Laws - AAR : Classification of goods - product namely 'Car Seat Covers' - Car seat covers fall under the entry at Serial No.170 under HSN 8708 Schedule IV of Notification No.01/2017-Central Tax (Rate) attracting tax rate of CGST+SGST (14%+14%) @ 28%. - AAR
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Income Tax

• Pr. CIT's Error: No Independent Enquiry in Declaring AO's Order u/s 143(3) as Erroneous and Prejudicial.

  Case-Laws - AT : Revision u/s 263 - this is not a case of no enquiry or inadequate enquiry and also find that Pr. CIT had not carried out any independent enquiry at his end and thus grossly erred in observing that the order of the Ld. AO u/s 143(3) of the Act is erroneous and prejudicial to the interest of Revenue. - AT
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• Depreciation on Non-Compete Fees Allowed: Payment Considered Intangible Asset u/s 32(1)(ii) For Three-Year Contract.

  Case-Laws - AT : Disallowance of depreciation on non-compete fees - Assessee stated that the non-compete payment being in the nature of payment and commercial right as referred to in section 32(1)(ii) has been capitalized and depreciation has been claimed at the rate applicable to the block of "Intangible assets" - The asset is depreciable as the contract is enforceable only for three years and it is not forever. The disallowance made by the AO is therefore, directed to be deleted - AT
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• Reopening Assessment u/s 147: Initial Opinion Needed, Change of Opinion Not Allowed Without It.

  Case-Laws - AT : Reopening of assessment u/s 147 - It is trite that there has to be an opinion first only then there can be issue of change of opinion. Moreover it is also settled law that at the time of notice escapement need not be proved to the hilt. We agree with Ld.CIT(A) that AO had valid reason for reopening. - AT
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• Charitable Entity Registration Approved: CIT(E) Focuses Only on Objective Genuineness, Not Activities, u/s 12AA.

  Case-Laws - AT : Assessment u/s 11 - registration u/s 12AA - Charitable activity u/s 2(15) - CIT(E) is not required to look into the activities at the stage of registration, which can be well taken care of by the AO during the assessment proceedings and at this stage, only genuineness of the objects has to be examined by the ld. CIT(E) which he has not disputed in this case. - Registration directed to be granted - AT
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• Court Confirms Disallowance of Bad Debts Due to Lack of Recovery Efforts on Notice Pay Debited to Ex-Employees.

  Case-Laws - AT : Bad Debts - Disallowance of amounts written being notice pay etc debited to employees at the time of their separation in the earlier years and credited to Income / expense Salaries & allowances but could not be recovered - in the case where the employees had left employment without paying mandatory notice pay, the assessee has not brought on record that what steps were taken to recover this amount to demonstrate that in fact these were recoverable from the employees. In the absence of such evidence, additions confirmed to that extent - AT
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• Court Rules TDS u/s 194C Not Applicable to Freight Charges for FY 2006-07; Assessee Entitled to Deduct Amount.

  Case-Laws - HC : Addition u/s 40(a)(ia) - TDS u/s 194C - Freight charges paid - Liability for deducting tax at source for payments made to individual contractors above the monetary limits arose only with effect from 01.06.2007. When the liability to make such deduction arose from 01.06.2007, it cannot be assumed that for failure to deduct such a tax at source for the previous year 2006-07, (i.e.01.04.2006 to 31.03.2007), the assessee should be put to a liability for non-deduction of such tax at source. - the assessee was entitled to deduct the aforesaid sum even though tax had not been deducted at source. - HC
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• High Court Upholds ITAT Order: CIT Failed to Record Prima Facie Findings on Tax-Free Income Deduction Claims.

  Case-Laws - HC : Revision u/s 263 - Addition u/s 14A - The Tribunal found fault with the CIT by observing that when such was the stand taken by the assessee, it is necessary for the CIT to at least record a prima facie finding that certain amount claimed by the assessee as deduction in its computation of income de facto related to earning of tax-free income. Thus, it was held that in the absence of any such prima facie finding, the reassessment was erroneous. - Order of ITAT sustained - HC
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• Issuing Debentures as Interest Payment Qualifies as Actual Payment u/s 43B; Deduction Allowed.

  Case-Laws - SC : Scope of Explanation C of Section 43B - Actual payment of interest or not - Issuance of debenture in lieu of Interest - since Explanation 3C was added in 2006 with the object of plugging a loophole – i.e. misusing Section 43B by not actually paying interest but converting interest into a fresh loan, bona fide transactions of actual payments are not meant to be affected - In the present case, it is clear that interest was “actually paid” by means of issuance of debentures, which extinguished the liability to pay interest. - Deduction allowed - SC
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• Unabsorbed depreciation losses from 1997-2001 can be carried forward beyond 2002 under amended Finance Act, Section 32(2).

  Case-Laws - HC : Period of limitation for carrying forward of Unabsorbed depreciation loss prior to assessment year - once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. - HC
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IBC

• Court Rejects Corporate Debtor's COVID-19 Excuse, Upholds Natural Justice Principle for Missing Adjudication Hearing.

  Case-Laws - AT : Ex-parte order - Principles of Natural Justice - When Corporate Debtor is a Company where there are more Directors rather than only one as can be seen from the Balance Confirmation issued by the Company, it does not lie in the mouth of the Corporate Debtor to claim that one Director was suffering from COVID so the Corporate Debtor could not cause appearance before the Adjudicating Authority - there is no reasons why before 16.02.2021 when hearing took place before Adjudicating Authority, Corporate Debtor did not approach Adjudicating Authority to seek to defend. - AT
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Case Laws:

• GST

• 2021 (8) TMI 538
  Classification of goods - product namely Car Seat Covers - merits classification under HSN 9401 or not? - applicability of SI.No.435A of Schedule IV of the Notification No 1/2017-Central Tax (Rate) dt: 28.06.2017 to Car Seat Covers - applicable entry under the said Notification? - HELD THAT:- The applicant being the manufacturer of seat covers and other allied accessories, sell the manufactured seat covers to car seat makers who in turn affix the seat covers to the seats and there after the seat is fixed to the motor vehicle. After a clear examination of both the terms i.e., parts and accessories , seat covers cannot be a part of seats by any means, in the instance case. They are meant for the protection of the seats and the functional value of seat covers is the comfort and convenience it extends to the driver and the passengers. Thus, the seat covers are not essential parts of the seats but accessories that enhance their functional value - Even in general trade parlance or in terms of their specific usage, the seat covers are considered as accessories and customized as per the preferences of the clients. Trade circles consider the automotive accessories as a category of articles relating to non-essential automotive parts which embellish the look and feel of an automobile or add functionality. Seat covers provide new look to the interior of the car, and also make it more comfortable for passengers. Car seat covers were classified under heading 87.08 as accessories of car seats vide Guru Overseas Private Limited Vs. Commissioner of Central Excise [ 2001 (5) TMI 87 - CEGAT, COURT NO. IV, NEW DELHI] - It was further strengthened by a clarificatory circular issued by CBEC vide circular no.541/37/2000-CX dt:16.08.2000, in which it was clearly mentioned that car seat covers were classified under heading 87.08 as accessories of car seats. Car seat covers fall under the entry at Serial No.170 under HSN 8708 Schedule IV of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 attracting tax rate of CGST+SGST @ 28% - SI.No.435A of Schedule IV of the Notification No 1/2017-Central Tax (Rate) is not applicable to Car Seat Covers .

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• 2021 (8) TMI 537
  Scope of supply - supply of goods or supply of services - printing text books for supply by the State Government to its allied educational institutions - printing of Lottery tickets for vending by the State Government to the general public - printing of stationery items like calendars, Diaries etc for supply by the State Government to its offices and other institutions - Governmental Authority or a Government Entity as defined under Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended or not - eligibility for exemption from levy of GST under Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended - liable to be registered under GST or not - person required to deduct TDS, applicant or their customer, Kerala Government. HELD THAT:- The taxable event in GST is the supply of goods or services or both. The term supply has been inclusively defined under Section 7 of the CGST Act and accordingly any transaction involving goods and / or services made for a consideration in the course or furtherance of business will come under the scope and meaning of supply unless it is listed under Schedule III or notified by Government on recommendations of the Council to be treated neither as a supply of goods nor services. From the facts as stated in the application, the activities / transactions undertaken by the applicant squarely fall within the scope and meaning of supply as defined in clause (a) of sub-section (1) of Section 7 of the CGST Act and the activities / transactions is neither specified in Schedule III nor notified in terms of clause (b) of sub-section (2) of Section 7 of the CGST Act. Therefore, the activities / transactions performed by the applicant constitute supply as defined in Section 7 of the CGST Act and accordingly are liable to GST unless specifically exempted by notification. Whether it constitutes a supply of goods or a supply of services? - HELD THAT:- Admittedly, the applicant is engaged in printing of textbooks, lottery tickets and stationery items like Diary and Calendars etc for the State Government and the entire content and its features that are to be printed are designed and given by the State Government. They only arrange the paper and print the said content on the paper. They do not own the usage rights to the said content given to them. The CBIC in Para 4 of Circular No. 11/11/2017 GST dated 20.10.2017 has clarified that in the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing [of the content supplied by the recipient of supply] is the principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services, which pertains to other manufacturing services; publishing, printing and reproduction services; material recovery services. The activities performed by the applicant is a supply of services falling under Heading -9989 - Other manufacturing services; publishing, printing and reproduction services; material recovery services - 998912 - Printing and reproduction services of recorded media, on a fee or contract basis and attracts GST at the rate of 12% as per the respective description of the entries at item nos. (i) and (ii) of Si No. 27 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. Whether the applicant is a Governmental Authority or a Government Entity as defined in the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended? - HELD THAT:- The applicant was established by the State Government for the purpose of printing school text books, which is an integral part of the function of Education including primary and secondary schools entrusted to a Panchayat under Article 243G as per entry at S1 No. 17 of 11th Schedule of the Constitution and also the function of Promotion of cultural, educational and aesthetic aspects entrusted to a Municipality under Article 243W as per entry at S1 No. 13 of 12th Schedule of the Constitution. Further, from the constitution of the governing body of the applicant it is evident that the applicant is fully owned and controlled by the State Government. Hence, the second condition prescribed in the above definition is also satisfied - the applicant is a Governmental Authority as defined in Para 2 (zf) of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. Since it is concluded that the applicant is a Governmental Authority we do not consider it necessary to examine whether the applicant is a Government Entity as it is not relevant for answering the questions raised in the application. Whether the services supplied by the applicant is exempted as per entries at Si Nos. 3, 4 or 5 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended? - HELD THAT:- The services of printing of text books is integral to the function of Education- including primary and secondary schools entrusted to a Panchayat under Article 243G as per entry at Sl. No. 17 of 11th Schedule of the Constitution. Therefore, the service of printing of textbooks supplied by the applicant to the State Government is exempted as per entry at Si No. 3 of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended, being pure service provided to the State Government by way of an activity in relation to a function entrusted to a Panchayat under Article 243G of the Constitution. Service of printing of lottery tickets to the State Government - HELD THAT:- The service of printing of Text Books supplied by the applicant to the State Government is exempted from GST as per entry at Sl No. 3 of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended. The service of printing of Lottery tickets supplied by the applicant to the State Government is liable to GST at the rate of 18% as per entry at item (ii) of Sl No. 27 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended - The service of printing of Diary and other stationery articles supplied by the applicant to the State Government is liable to GST at the rate of 18% as per entry at item (ii) of Sl No. 27 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended - The service of printing of Calendar supplied by the applicant to the State Government is liable to GST at the rate of 12% as per entry at item (i) of Sl No. 27 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. Liability of applicant or liability of the Government of Kerala to deduct TDS on the supplies made by them - applicability of Section 51 of the CGST Act - HELD THAT:- The provisions of the CGST Act governing advance ruling does not provide for an applicant to seek a ruling regarding the applicability of the provisions of the Act or the notification issued there under to a third person other than the applicant. Hence, no ruling can be issued by this authority on the applicability of the provisions of Section 51 of the CGST Act to the Government of Kerala.

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• 2021 (8) TMI 536
  Construction of residential accommodation - Scope of Completion certificate - relevant date of issuance of such certificate - classification of activity of sale of apartment undertaken by the applicant - period pre and post 08.11.2019 - What constitutes the completion certificate as mentioned in clause (b) of Paragraph 5 of Schedule II of the CGST Act and when such completion certificate would be said to have been issued? HELD THAT:- The determining factor as to whether GST liability will be attracted for the services of construction of building / apartment intended for sale is the receipt of consideration in respect of the contract of sale. If any consideration is received in respect of the contract, before the issuance of completion certificate then the activity / transaction shall fall within the scope of supply as defined in sub-section (1) of Section 7 and consequently would be deemed to be a supply of services as per provisions contained in sub-section (1A) of Section 7 read with Paragraph 5 (b) of Schedule II of the CGST Act. The completion certificate mentioned therein is the Completion Certificate issued in accordance with the laws, rules and regulations laid down in this regard by the Central Government, State Government or any other authority - The Rules governing the construction or reconstruction or alteration or extension of public and private buildings in the State of Kerala are contained in the Kerala Municipality Building Rules, 1999 issued under G.O.(Ms) No. 188/1999/LSGD dated 01.10.1999 of the Government of Kerala published as S.R.O No. 777/1999 dated 01.10.1999. The Kerala Municipality Building Rules, 1999 was superseded by the Kerala Municipality Building Rules, 2019 issued under G.O. (P) No. 77/2019/LSGD dated 02.11.2019 of the Government of Kerala published as S.R.O. No. 828/2019 dated 02.11.2019. The completion certificate in respect of the construction of a building or civil structure in the State of Kerala is the certificate prescribed in sub-rule (1) of Rule 22 and Rule 20 respectively of the KMBR, 1999 and KMBR, 2019. The completion certificate under any law for the time being in force mentioned in clause (b) of Paragraph 5 of Schedule II of the CGST Act, in so far as the State of Kerala is concerned is the certificate in form in Appendix F prescribed under proviso to sub-rule (1) of Rule 22 of the KMBR, 1999 or the certificate in form in Appendix E3 prescribed under proviso to sub-rule (1) of Rule 20 of the KMBR, 2019. Accordingly. the date of issue of completion certificate for the purpose of clause (b) of Paragraph 5 of Schedule II of the CGST Act shall be the date of issue of the completion certificate submitted to the Secretary in form in Appendix F of the KMBR, 1999 or in form in Appendix E3 of the KMBR, 2019.

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• 2021 (8) TMI 535
  Jurisdiction/scope of advance ruling application - Debit Note can be raised by a taxable person under Sec.34(3) of the CGST Act, 2017, for difference in rate of tax charged on tax invoice arising on account of objections raised by the proper officer that the rate of tax charged on tax invoice is lower than the applicable rate though not accepted by the taxable person - declaration of details of the Debit Note in the return for the month during which such Debit Note is issued and pay / discharge tax liability in such manner as may be prescribed - entitlement to take input tax credit in respect of Debit Note raised, declared in the tax return, tax liability paid / discharged - HELD THAT:- As the advance ruling is applicable only to the applicant and the jurisdictional officer of the applicant, the ruling is GSTIN specific and hence not applicable to distinct persons as specified in sub-section (4) of Section 25 of the CGST Act. In the instant case the applicant has sought ruling regarding the circumstances or situations under which a debit note can be raised, the time limit within which the debit note is to be raised and the manner of reporting of such debit note in the monthly returns. The provisions governing the issue of credit notes and debit notes and the manner of reporting them in the returns is contained in Section 34 of the CGST Act. The first question raised by the applicant is whether a debit note can be issued by the applicant for the difference of the rate of tax charged in the tax invoice as specified under section 34(3) of the CGST Act. The second question raised is whether the Bhavani branch of the applicant having GSTIN 33AABFT8331NlY in Tamilnadu can raise debit note for the difference of the rate of tax charged in the tax invoice issued to the applicant on the branch transfer and on supplies made by them to other customers. The Bhavani branch being a distinct person as per provisions of Section 25 (4) of the CGST Act is outside the jurisdiction of this authority and therefore the question raised pertains to an activity / transaction proposed to be performed by a registered person who is not within the jurisdiction of this authority. The third question is whether the applicant can avail input tax credit on such debit note raised by the Bhavani branch of the applicant which is dependent on the answer to the second question. The questions raised by the applicant are not in respect of any matter specified in sub-section (2) of Section 97 of the CGST Act and also in respect of activity / transaction proposed to be performed by a registered person who is not within the jurisdiction of this authority. This authority is a creature of statute and has to function within the limits of the jurisdiction granted to it. The questions raised by the applicant are not in respect of any matter that is specified in Section 97 (2) of the CGST Act and also in respect of activity / transaction proposed to be performed by a registered person who is not within the jurisdiction of this authority - Therefore, this authority is not having jurisdiction to issue rulings on the questions raised by the applicant.

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• 2021 (8) TMI 534
  Exemption from GST or not - supply of drinking water to general public in unpacked/unsealed manner through dispensers/mobile tankers by a charitable organisation at a concessional rate - availability of exemption of GST as per SI.No 99 of Notification 02/2017-Central tax (Rate) dated 28/06/2017 and CBIC Circular No.52/26/2018-GST dated 09.08.2018 - Taxability of services extended to the public through mobile tankers - HELD THAT:- The applicant, as a party to its contractual agreement with local Gram Panchayat, sets up plant for purification of drinking water through Reverse Osmosis (RO) and supplies the purified water to its registered beneficiaries in unpacked/unsealed manner through dispensers/mobile tankers at a price of Rs. 7 for 20 litres. The exemption entry at sl. no. 99 of N/N. 02/2017 - Central Tax (Rate) dated 28.06.2017 excludes the following categories of aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized, and water sold in sealed container - The supply in the instant case is purified water , which is purified through Reverse Osmosis (RO) process in the plants established by the applicant and thus it is covered under exclusion of the exemption entry and is liable to tax. As per CBIC Circular No.52/26/2018-GST dated 09.08.2018, whether supply of drinking water in unpacked / unsealed form through dispensers / tankers, to general public is exempt? - HELD THAT:- As admitted by the applicant in the description of the detailed procedure involved in the purification of water at the treatment plants, it leaves no further doubt that the supplies are nothing but of purified water. Consequently, we come to the conclusion that the purified water supplies made by the applicant are not eligible for exemption either as per SI.No 99 of Notification No. 02/2017- Central Tax (Rate) dated 28.06.2017 or by the clarificatory circular No.52/26/2018-GST dated 09.08.2018. Whether services extended to the public through mobile tankers would attract exemption under GST or not? - HELD THAT:- Prima facie, there are two supplies involved in the instant case; wherein one is the supply of purified drinking water and the other being the supply of the same through the mobile units to the public - In the present case, the principal supply is supply of purified water whereas the service component of distribution through mobile units is the ancillary service. The purified water is eligible to tax @ 18% as it is not fit for exemption under the serial no.99 of notification No. 2/2017- Central Tax (Rate) dated 28.06.2017. The service component of distribution of water through mobile units is covered under SI.No. 13 of Heading 9969 Electricity, gas, water and other distribution services vide Notification No. 11/2017-Central Tax (Rate), dated, 28th June, 2017 and taxable @ 18 %. It is invariably a composite supply and hence the rate of tax of purified water prevails, being the principal supply.

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• 2021 (8) TMI 533
  Application of Advance Ruling application - classification of goods - HSN Code - GST tax slabs - Distillery Dry Grains Soluble (DDGS) and Distillery Wet Grains Soluble (DWGS) (Cattle feed) - HELD THAT:- It is evident from the application that the applicant approached the Authority for Advance Ruling on an issue which has already been pending with the proper officer - It bars this authority to take up or admit an application which has been already pending or decided in any proceedings in case of the applicant under any of the provisions of the Act under proviso to section 98(2). Hence, the applicant s plea for admission of his application for advance ruling in terms of proviso of sub section (2) of section 98 of CGST Act, 2017 is rejected.

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• 2021 (8) TMI 532
  Input tax credit - Sub-Contractor providing works contract services - purchases made by the applicant on their own account for furtherance of business - HELD THAT:- Section 17 sub-section (5) Clause (d) restricts input tax credit of goods and services used by a person for construction of an immovable property (except plant and machinery) on his own account. Thus, if a person purchases construction material to provide the constructions services by using the said material, ITC shall not be available. Input Tax Credit shall not be available to the applicant on the above purchases made on applicant s own account for furtherance of business under Section 17 (5) (d) of the CGST/SGST Act, 2017.

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• 2021 (8) TMI 531
  Composite supply of works contract - taxable at the rate of 12% as prescribed under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017? - applicable GST Rate and SAC/HSN - HELD THAT:- Greater Visakhapatnam Smart City Corporation Limited (GVSCCL) is a Special Purpose Vehicle (SPV) created by the Government of Andhra Pradesh vide G.O.MS.No.43, Municipal Administration Urban Development (UBS) Department, Government of A.P. dated 17.02.2016. GVSCCL is a limited company incorporated under the Companies Act, 2013 in which the Andhra Pradesh State Government and the Greater Visakhapatnam Municipal Corporation are the promoters having 50:50 equity share holding, which substantiates more than 90% of participation of the Government. With reference to the control wielded by the shareholders, all the directors of the board are public authorities. Initially the board was constituted with the Principal Secretary for Municipal Administration and Urban Development, Govt, of A.P., (under promoter category) as chairman. The SPV is owned by the Government of A.P. And GVMC ON 50:50 ratio and is governed by a Board of Directors answerable to the Government of A.P., Government of India and GVMC. The Government of A.P. and GVMC are the shareholders in the GVSCCL - the GVSCCL rightly fits into the definition of the Government Entity as per the said notification. The functions carried out by the said GVSCCL are the functions which were entrusted by the Central Government, State Government and Local Authority i.e. of Municipal Administration. The service provided by the applicant is Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, provided to a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession. The same is classifiable under the Heading 9954 Entry at Serial No. 3(vi) (a) of the Notification No.il/2017 Central Tax (Rate) dated 28.06.2017 as amended from time to time and liable to tax @12%.

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• 2021 (8) TMI 530
  Scope of Advance Ruling application - Issue already is pending with the proper officer - Classification of transaction - Barter or not - advance supply of own red gram dall to the AP State Civil Supplies Corporation Limited, Vijayawada and receipt of whole red gram at a later date from the Corporation - taxability of packing charges received by the applicant for packing of red gram dall supplied to the said Corporation - HELD THAT:- It is evident that the applicant approached the Authority for Advance Ruling on an issue which has already been pending with the proper officer - It bars this authority to take up or admit an application which has been already pending or decided in any proceedings in case of the applicant under any of the provisions of the Act under proviso to section 98(2). The applicant s plea for admission of his application for advance ruling in terms of proviso of sub section (2) of section 98 of CGST Act, 2017 is rejected.

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• 2021 (8) TMI 529
  Classification of goods - HSN Code - rate of tax - Submarine Fired Decoy System (SFDS) supplied by the applicant - classifiable as parts of submarine under Chapter Heading 8906 - whether attract a GST rate of five (5%) by virtue of entry no. 252 of Schedule I in Notification No. 1/2017-Integrated Tax (Rate) dated 28.07.2017? HELD THAT:- The proposed supply of goods by the applicant, i.e., Submarine Fired Decoy System (SFDS) is an anti-torpedo defence system - A plain reading of chapter 89 connotes that the heading 8906 constitutes all kinds of structures that make any floating vessel but not of a particular kind. All the assembled, unassembled, or disassembled structures which are integral and essential to the making of a vessel fall in this category. The description of goods under 51.No. 252 is Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907. - In the instant case the product supplied by the applicant i.e., SFDS is basically not part of goods falling under headings 8901, 8902, 8904, 8905,8906, 8907 as claimed by him. It is neither integral nor essential to the basic structure and intended general functioning of the submarine , Besides, this anti-torpedo decoy system detects and locates the incoming torpedo with the help of SONAR deploys decoys to confuse incoming torpedo attack It is an anti-torpedo counter measure system for submarines and not an indispensable part of the submarine. Thus, it is not a part of ships boats and floating structures but an additional feature that falls under the category of arms and ammunition . As there is no description or explanation of arms and ammunition anywhere in the GST Act, we refer to the general usage of the word in trade parlance. In the present instance, SFDS is a part of military supplies and an anti-weaponry defence system used in naval warfare. This anti-torpedo system launches or drops expendable decoys from the launching pad - the SFDS system can very well be categorised under the heading of arms and ammunition . Moreover, in terms of classification rules, the goods need to be classified with goods of similar nature or they are akin to. Accordingly, goods are classified under chapter 93. The proposed supply in question falls under SI.No.434 under Chapter/Heading/Sub-heading/ Tariff Item 9306 under Schedule III of Notification No. 1/2017 - Central Tax (Rate) dt: 28.06.2017 attracting tax rate of 18% as amended from time to time.

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• 2021 (8) TMI 528
  Classification of goods - HSN code - iron tubular trevis - HELD THAT:- The taxability of the goods and services supplied or to be supplied, as governed under the provisions of respective GST Acts are examined to decide the question involved in the present Ruling. After a detailed examination of the specific features of the Product i.e., Iron Tubular Trevis , or Insemination Crate-Cum-Trevis , we are of the opinion that it falls under Entry No.220 of Notification 1/2017 - (Integrated Tax) with HSN code 7306 of Other tubes, pipes and hollow profiles (for example, open seam or welded, riveted or similarly closed), of iron or steel attracting 18 % rate of tax.

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• 2021 (8) TMI 527
  Scope of Advance Ruling application - same issue pending with Revenue but under different provisions - Applicability of GST - proposed receipt of money in case of arbitration claims awarded for works contract completed in the Pre-GST regime - HSN Code - rate of GST - HELD THAT:- Proviso to Sec 98(2) of CGST /APGST Act 2017 makes the following observation that it is a fit case for rejection as the applicant approached the Authority for Advance Ruling for clarification while it is still pending with the Revenue on the same issue but under different provisions i.e., under refund provisions of the Act. The application is not admitted.

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• 2021 (8) TMI 526
  Works Contract services - Classification of services - services pertaining to construction, erection, commissioning and completion of Bridges and Roads provided by the applicant as a subcontractor to the Contractors - award of construction contract pertaining to construction/widening of roads by the Government Entities such as National Highway Authority of India - rate of GST on outward supplies - RA bills raised on main contractor - input tax credit on inward supply of JCB, Road Roller, Grader, Hydra Crane, Transit Mixer, Generator, Excavator and Sensor Paver. HELD THAT:- The applicant has stated that they are proposed to be a sub-contractor for construction, erection, commissioning widening of Roads and completion of Bridges for the works awarded by the National Highway Authority of India to the main contractor on the National High Way (erstwhile NH 5). - National Highways Authority of India was set up by an act of the Parliament, NHAI Act, 1988, under the administrative control of the Ministry of Road Transport and Highways. It was set up as a central authority to develop, maintain and manage the National Highways entrusted to it by the Government of India. The principal rate Notification No. 11/2017 was amended vide Notification No. 1/2018-Central Tax (Rate), dated 25.01.2018 to amend the entries at Serial No 3 by inserting new entries at Serial No. 3(ix), 3(x), 3(xi) and 3(xii). The Composite Supply, of Works Contract services provided by a sub-contractor to the main contractor were dealt with in entries at Serial No. 3(ix) 3(x) of the amended Notification No. 11/2017 dated 25.01.18. But the entry at serial No. 3(iv) was not clubbed in the newly created serial Nos. 3(ix) and 3 (x). Further, the said supply of service is excluded from the 18% tax rate entry newly enumerated at 3(xii) which reads as (xii) Construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x) and (xi) - the supply of service rendered by the applicant falls under the item 3(iv) of the amended provisions of the notification 11/2017 - Central Tax (Rate) and the Rate of Tax applicable is 12%. Input tax credit - JCB, Road Roller, Grader, Hydra Crane, Transit mixer, Generator, Excavator, Sensor Paver - HELD THAT:- The applicant is eligible to claim ITC with subject to the satisfaction of certain pre requisite conditions mentioned in Section 16 (2) such as, being in possession of tax invoice, having actually received goods or services, tax being paid by the supplier, return being filed under Section 39 etc. - Under Section 17(5) (c), the restriction on claiming Input Tax Credit by a taxable person is applicable on the inward supply of works contract service unless it is an input service for further supply of works contract service. The restriction applies only if the works contract service is used for the construction of immovable property other than plant and machinery. In the instant case, the applicant seeks clarification on the claim of input tax credit on inward supply of the following goods, JCB, Road Roller, Grader, Hydra Crane, Transit Mixer, Generator, Excavator and Sensor Paver, The inward supply of the stated goods neither fall under works contract services as per Section 17(5) (c) and these goods received by the applicant are made use of for the construction of an immovable property, which is certainly not on his own account as per section 17(5) (d) - it is clear that the clauses of blocked credits under section 17(5) (c) (d) are not applicable to the instant case and thus eligible for claiming Input Tax Credit subject to the requisite conditions as mentioned in the Section 16 (2) of the CGST Act, 2017.

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• 2021 (8) TMI 525
  Classification of services - transportation of goods by road - intermediary between the truck owners and goods transportation agencies for transportation of goods by road - HELD THAT:- The applicant is engaged in the business of transportation of goods by road wherein he acts as an intermediary between truck owners and goods transportation agencies. The issue at hand is the classification of the service provided by the applicant by way of arranging trucks to the GTA and the rate of tax applicable for the said service. In terms of provisions of Section 2(13) of the IGST Act, 2017, an Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account. The applicant arranges trucks to the goods transport agency and charges the commission or brokerage for the said service and falls within the ambit of Agent under the CGST/SGST Act - The service provided by the applicant in relation to transportation of goods fall under the serial No.11 under the Heading 9967(ii) supporting services in transport other than services of Goods Transport Agency and liable to be taxed @18% as per the N/N. 11/2017 Central Tax (Rate) dated 28.06.2017.

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• 2021 (8) TMI 524
  Levy of GST on Barter transaction - Supply of red gram dall 2600 MTs by receiving 3823.529 MTs of indigenous red gram under barter system - packing charges of received by the applicant for packing red gram dall supplied to the said Corporation - Whether the activity of milling of whole red gram to red gram dall by the millers is liable to GST or not? - HELD THAT:- The applicant is appointed as miller cum transporter , for the purpose of conversion of red gram whole to red gram dall @68% of outturn ratio. Hence, the argument of the applicant treating the activity under taken in the instant case, as barter system is misconstrued. It is nothing but job work carried out on the whole red gram supplied to the applicant. Thus, the milling of Red gram fall under the Serial No.26 Heading 9988 (i) (f) of the Notification no.11/2017 Central Tax Rate dated 28.06.2017 and as amended from time to time and liable to tax @ 5%. Whether the packing charges of Rs. 4.50 received by the applicant for packing of 1 Kg. of red gram dall supplied to the said Corporation are taxable or not? - HELD THAT:- The applicant himself admitted that there is no separate contract for supply of packing material. Moreover, the clauses of the contract in which the applicant entered with AP State Civil Supplies Corporation also reflect the same. The packing charges offered are nothing but incidental and ancillary to the main supply of milling and transportation of red gram dall. Therefore, it is a clear cut case of composite supply under Section 2(30) of CGST Act 2017. In the instant case, the custom milling is the principal supply, while the packing charges of Rs. 4.50 received by the applicant for packing of I Kg. of red gram dall supplied to the said Corporation constitutes ancillary supply. As seen from the agreement, it is a single contract of composite supply comprising of two or more taxable supplies like milling, transportation and packaging services. Out of which, milling is the principal supply and the rest of the supplies are liable to be taxed at the same rate of principal supply.

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• 2021 (8) TMI 523
  Exemption form GST on the business transfer undertaken - Services by way of transfer of a going concern as a whole or an independent part thereof - SI.No.2 of the N/N.12/2017 - Central Tax (Rate) dated June 28th, 2017 - HELD THAT:- It is noticed that the applicant s Business as MSO sought to be sold is in functioning state and the transaction by virtue of the Business Transfer Agreement contemplates the sale of business to the purchaser, except any of the employees or liabilities and the purchaser intends to continue the same business - The term going concern is defined nowhere in the CGST Act. Hence, the term is taken in its common parlance as used in trade. The running business, when sold in its entirety or a branch of the business, it is considered a going concern in lock, stock and barrel. Going concern is not included in the GAAP (Generally Accepted Accounting Principles) but included in the GAAS (Generally Accepted Auditing Standards). Accounting standards determine what a company disclose on its financial statements if there are doubts about it s ability to continue as a going concern. Conditions that lead to substantial doubt about going concern include the following like negative trends in operating results, continuous losses from one period to next, loan defaults, lawsuit against a company, and denial of credit by suppliers. Moreover, transfer of a going concern means transfer of a running business which is capable of being carried on by the purchaser as an independent business. Such transfer of business as a whole will comprise comprehensive transfer of immovable property, goods and transfer of unexecuted orders, employees, goodwill etc., The transaction of transfer of business in the instant case does not fit in the definition of a going concern in the context of exclusion of liabilities - the entry at serial No.2 of the chapter 99 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 prescribing the rate of tax for the services by way of transfer of a going concern as a whole or an independent part there of , as NIL rated, is not applicable to the present case.

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• 2021 (8) TMI 522
  Levy of IGST - export of service or not - marketing and consultancy services supplied by the applicant - Intermediary Services or not - HELD THAT:- The applicant is covered and fits into the definition of intermediary as defined under the IGST Act and, therefore, provisions pertaining to place of supply in case of intermediary services as provided in sub-section 8 of section 13 are relevant - Commission received by the applicant in convertible Foreign Exchange for rendering services as an Intermediary between an exporter abroad receiving such services and an Indian importer of an equipment is not an export of service. Said supply will be treated as inter-state supply and IGST will be levied @18%. In the instant case the intermediary services are provided to the recipient located outside India and the Interstate provisions as contained under Section 7 (5) (c) shall be applicable and hence IGST is payable under such transaction.

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• 2021 (8) TMI 521
  Condonation of delay in filing appeal - HELD THAT:- There is a delay of 520 days in filing the Special Leave Petition for which there is no satisfactory explanation. The application for condonation of delay is accordingly dismissed. Application disposed off.

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• 2021 (8) TMI 519
  Release of freezed petitioner s bank account - rejection on the ground that condition precedent for provisional attachment of a bank account, as referred to in Section 83 of the CGST Act, was non-existent - Whether, having regard to the decision in M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] , the order of provisional attachment dated December 1, 2020 can be kept alive? HELD THAT:- It matters little that proceedings initiated against the appellant in M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] were different from the provision under which proceedings have been initiated against the petitioner. Suffice it to note, proceedings having been initiated against the petitioner under Section 73 of the CGST Act and such proceedings having been terminated by a final order under sub-section (9) thereof, for all intents and purposes the proceedings do not survive and, a fortiori, such termination would have the effect of terminating the life of the order of provisional attachment. The order of provisional attachment, which is the subject matter of challenge in the writ petition, suffers from an error of jurisdictional fact. Proceedings under Section 73 had been initiated against the petitioner for reclaiming the erroneous refund, which was earlier effected on its prayer. The order of provisional attachment was made not during pendency of any proceedings under Sections 62 or 63 or 64 or 67 or 73 or 74 of the CGST Act but was made in view of contemplation of proceedings under Section 73 thereof - the proceedings under Section 73 of the CGST Act having been taken to its logical conclusion, the purpose for which the order of provisional attachment had been made has also ceased to survive and, therefore, the petitioner is justified in its claim that such order of provisional attachment ought to be set aside. The writ petition as well as the interim application stands disposed of.

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• 2021 (8) TMI 518
  Validity of summons in regard to the on-going GST investigation - grievance of the petitioner appears to be that the Institution is called upon repeatedly before the respondent authorities, despite the petitioner having furnished all materials in support of its claim for exemption under the provisions of the Central Goods and Services Tax Act, 2017 - HELD THAT:- At paragraph No.5 of the memo dated 09.08.2021, the petitioner states that having produced all relevant documents, Notifications and supporting documents to substantiate its claim for exemption, it has no further documents to be furnished to the Department. This is recorded. To a specific query put to Mr.Prabakaran, learned counsel for the petitioner as to whether the petitioner desires a personal hearing in the matter, he would state that no personal hearing is required and the authorities may proceed to pass an order on the basis of available materials - the respondents are thus at liberty to conclude the pending proceedings in regard to the petitioner in accordance with law and based on the materials available with them. Petition dismissed.

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• 2021 (8) TMI 517
  Seeking a direction to unblock the Input Tax Credit (ITC) available in the electronic credit ledger - materials necessary to substantiate its request for unblocking of the credit supplied or not - rejection on the ground that the tax payer has claimed ITC using fake invoices - HELD THAT:- The claim of ITC is one that would have to be decided based on documents that are supplied by an assessee as well as material collated/available with the Assessing Officer and not by way of a cursory order, as has been done in the present case. The representation of the petitioner dated 18.02.2021 encloses several documents that must be taken into account in coming to a decision as to whether the petitioner is entitled to succeed or not, and this has to be done by way of a reasoned, speaking order. The impugned order hardly meets the standards to be followed in the framing of a assessment and is hence set aside. Petition allowed.

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• 2021 (8) TMI 512
  Seeking permission to petitioner to debit a sum of Rs. 47,30,457/- form its electronic credit ledger - process of adjudication before the competent authority - seeking to withdraw the blocking of ITC - HELD THAT:- Intermittent intervention by the High Courts in a writ proceedings are not desirable, as the same would cause prejudice to the interest of the either of the parties. The petitioner claims that blocking of ITC is erroneous. The show cause notice issued by the Department would reveal that certain allegations are raised against the petitioner. All these aspects require an adjudication based on the documents and evidences to be produced by the respective parties. Thus, the petitioner is at liberty to redress their grievances before the competent authorities and this Court cannot issue any such direction as such prayed for, as the proceedings are in progress. Petition disposed off.

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• 2021 (8) TMI 497
  Cancellation of GST registration - time limitation - rejection of application for revocation of cancellation of registration through Form GST REG-05 dated 05.11.2020 due to not replied to the show cause notice within the time specified therein - HELD THAT:- The appellant has filed all his pending returns upto date of cancellation of registration and he has also deposited tax liabilities, late fee and interest, therefore the appellant has now been complied with the relevant provisions in the instant case. In view of the above, the registration of appellant may be considered for revocation by the proper officer - the proper officer is directed to consider the revocation application of the appellant after due verification of payment particulars of tax, late fee, interest and status of returns - appeal allowed.

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• 2021 (8) TMI 496
  Validity of notice sent to petitioner-school - exemption from GST - HELD THAT:- A perusal of the compilation of documents accompanying the affidavit would itself reveal that the petitioner has furnished some particulars and has sought an adjournment thereafter on account of the COVID-19 pandemic. It would be appropriate for the petitioner to co-operate with the authorities, furnish the documents sought for and pursue its case before them. Let the authorities take note of the documents, afford the petitioner an opportunity and complete the proceedings in accordance with law. Petition dismissed.

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• Income Tax

• 2021 (8) TMI 520
  Scope of Explanation 3C of Section 43B - Actual payment of interest or not - Issuance of debenture in lieu of Interest - Funding of the interest amount by way of a term loan amounts to actual payment as contemplated by Section 43B - whether interest can be said to have been actually paid by the mode of issuing debentures? - HELD THAT:- Both the CIT and the ITAT found, as a matter of fact, that as per a rehabilitation plan agreed to between the lender and the borrower, debentures were accepted by the financial institution in discharge of the debt on account of outstanding interest. This is also clear from the expression in lieu of used in the judgment of the learned CIT. That this is so is clear not only from the accounts produced by the assessee, but equally clear from the fact that in the assessment of ICICI Bank, for the assessment year in question, the accounts of the bank reflect the amount received by way of debentures as its business income. In the present case, it is clear that interest was actually paid by means of issuance of debentures, which extinguished the liability to pay interest. Explanation 3C, which was introduced for the removal of doubts , only made it clear that interest that remained unpaid and has been converted into a loan or borrowing shall not be deemed to have been actually paid. As has been seen by us hereinabove, particularly with regard to the Circular explaining Explanation 3C, at the heart of the introduction of Explanation 3C is misuse of the provisions of Section 43B by not actually paying interest, but converting such interest into a fresh loan. On the facts found in the present case, the issue of debentures by the assessee was, under a rehabilitation plan, to extinguish the liability of interest altogether. No misuse of the provision of Section 43B was found as a matter of fact by either the CIT or the ITAT. Explanation 3C, which was meant to plug a loophole, cannot therefore be brought to the aid of Revenue on the facts of this case. Indeed, if there be any ambiguity in the retrospectively added Explanation 3C, at least three well established canons of interpretation come to the rescue of the assessee in this case. First, since Explanation 3C was added in 2006 with the object of plugging a loophole i.e. misusing Section 43B by not actually paying interest but converting interest into a fresh loan, bona fide transactions of actual payments are not meant to be affected This Court found that Explanation 3C was squarely attracted in that outstanding interest had not actually been paid, but instead a new credit entry of loan now appeared, bringing the case within the express language of Explanation 3C. Consequently, the impugned judgments of the High Court are set aside and the judgment and order of the ITAT is restored. These appeals are allowed in the aforesaid terms.

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• 2021 (8) TMI 516
  Revision u/s 263 - Addition u/s 14A - HELD THAT:- We find that what was intended to be said by the Tribunal is that Section 14A of the Act has been functionally made operative on introduction of Rule 8D and the said Rule was inserted by Income-tax (Fifth Amendment) Rules, 2008 with effect from 24.03.2008 and therefore, Section 14A read with Rule 8D is not applicable to the impugned assessment year 2002-03. In this background, it was held that Section 14A(1) itself has been brought into the statute book by Finance Act, 2006 with effect from 01.04.2007. In fact, there appears to have been typographical error, since it should be Section 14A(2) and not Section 14A(1) - on a reading of paragraph 7, it is seen that the Tribunal has reiterated that the functional operation of Section 14A is not applicable to the assessment year, which was impugned before it. Thus, we find that the finding rendered by the Tribunal in paragraph 7 sets out the correct legal position. The Tribunal, not stopping with that, examined the scope of enquiry made by the CIT to examine as to whether the revision order is sustainable or not. On taking into consideration the factual position, the Tribunal held that general observations are not sufficient to hold an assessment order erroneous and prejudicial to the interests of the Revenue. It noted the submission of the assessee that dividend income has been received from its hundred per cent subsidiary and the assessee has not incurred any expenditure whatsoever in earning that dividend income and therefore, there was no occasion for the assessee to claim any such expenditure in computing its taxable income. The Tribunal found fault with the CIT by observing that when such was the stand taken by the assessee, it is necessary for the CIT to at least record a prima facie finding that certain amount claimed by the assessee as deduction in its computation of income de facto related to earning of tax-free income. Thus, it was held that in the absence of any such prima facie finding, the reassessment was erroneous. Thus, we find that the Tribunal rightly held in favour of the assessee.

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• 2021 (8) TMI 515
  Period of limitation for carrying forward of Unabsorbed depreciation loss prior to assessment year - beyond the eight year period mandated under the provisions of Section 32 - HELD THAT:- We find that the substantial questions of law, raised in the present appeal, were considered by this Court in the case of CIT vs. Sanmar Speciality Chemicals Ltd.[ 2020 (9) TMI 770 - MADRAS HIGH COURT] once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. - Decided against the Revenue.

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• 2021 (8) TMI 514
  Interest u/s 244A - HELD THAT:- There is no particular dispute so far as due refunds to the petitioner from respondents and that for Assessment Years 2005-06 and 2007-08 refund has already been released and further that the matter with regard to the balance of refund is being resolved. It would be expedient that the balance amount of refund be released and paid to the petitioner along with resolution of petitioner s concern over payment of interest within a period of four weeks from today. In the meanwhile, the petitioner would communicate its banker to accept refund communication being sent by the Income Tax Department, since it appears that the petitioner s status and PAN have undergone change including its name.

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• 2021 (8) TMI 513
  Validity of reopening of assessment u/s 147 - grievance of the writ petitioner is that the objections submitted by the petitioner was not disposed of on merits and the impugned assessment order had been passed directly in violation of the directives - HELD THAT:- This being the lapses committed by the authorities competent, the matter is to be remanded back for fresh consideration and for the purpose of disposing of the objections filed by the writ petitioner on 26.12.2011. Accordingly, the impugned assessment order dated 28.12.2011, passed by the respondent is quashed and the matter is remanded back for fresh consideration. The respondent is directed to consider the objections filed by the writ petitioner, on merits and dispose of the same within a period of six weeks from the date of receipt of a copy of this order and thereafter, proceed with the process of re-assessment, by following the procedures, as contemplated.

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• 2021 (8) TMI 511
  Addition u/s 40(a)(ia) - TDS u/s 194C - Freight charges paid - HELD THAT:- Liability for deducting tax at source for payments made to individual contractors above the monetary limits arose only with effect from 01.06.2007. When the liability to make such deduction arose from 01.06.2007, it cannot be assumed that for failure to deduct such a tax at source for the previous year 2006-07, (i.e.01.04.2006 to 31.03.2007), the assessee should be put to a liability for non-deduction of such tax at source. We, therefore, hold that the asseessee was not bound to deduct tax at source for payment made to individual contractors for the assessment year in question. In the circumstances, the Tribunal went wrong in interfering with the order of the First Appellate Authority directing deletion of the disallowance made under Section 40(a)(ia) to the extent of Rs. 32,18,677/- for non-payment of TDS under Section 194C of the Act. We hold that the assessee was entitled to deduct the aforesaid sum even though tax had not been deducted at source. TDS u/s 94H - In the absence of any record or material to show that the commission or brokerage paid by the assessee to the extent of Rs. 8,86,790/were to different individuals and each one of such payments were less than the monetary limit of Rs. 20,000/-, we are of the view that the Tribunal was justified in interfering with the order of the First Appellate Authority. Accordingly, we affirm the order of the Tribunal as far as the claim under Section 194H of the Act is concerned. Addition u/s 69C - HELD THAT:- As mentioned earlier, when satisfactory explanation is not offered by the assessee, the assessing officer is entitled to draw inferences. The expenditure to the extent mentioned above was not found by the assessing officer to be on the basis of any known sources of income. The Tribunal as a final fact finding authority came to the conclusion that in the absence of any details furnished by the assessee, the conclusion of the assessing officer that the above referred amount was incurred out of undisclosed sources cannot be faulted. In the above circumstances, we affirm the finding of the Tribunal as related to the claim under Section 69C.

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• 2021 (8) TMI 510
  Bad Debts - Disallowance of amounts written being notice pay etc debited to employees at the time of their separation in the earlier years and credited to Income / expense Salaries allowances but could not be recovered - whether CIT [A] has erred in not deleting the Write off of amounts treated as income / credited to expense in earlier years and written off in the current as they are allowable under sections 28 and 37 of the Act? - whether all these three items would fall within the category of debt and even if they do not fall within the category of that whether such expenses are allowable as business expenditure? - contention of the assessee has been through out that the transactions have occurred during the course of business and routed through P L A/c - HELD THAT:- Amounts which are recoverable from the employees under different items would certainly fall within the ambit of the debt. Undisputedly, in this case, so far item related to shortage of garments is concerned and returning of uniform, both these items are directly related to the course of business of the assessee. Therefore, the authorities below ought to have allowed the claim of the assessee. I, therefore, direct the Assessing Officer to delete the addition. However, in the case where the employees had left employment without paying mandatory notice pay, the assessee has not brought on record that what steps were taken to recover this amount to demonstrate that in fact these were recoverable from the employees. In the absence of such evidence, no interference is called for. Thus, Ground of appeal No.1 raised by the assessee is partly allowed. Disallowances made under normal provisions are not includable to book profits/ income computed u/s 115JB - HELD THAT:- In agreement with the Ld. Counsel for the assessee that as per the explanation 2 of section 115JB of the Act, the amount disallowed could not have been added for the purpose of section 115JB of the Act. We therefore, direct the Assessing Officer to compute book profits as per explanation 2 of section 115JB of the Act. Thus, Ground of appeal No.2 raised by the assessee is allowed.

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• 2021 (8) TMI 509
  Disallowance relating to prior period expenses made - assessee is engaged in the business of design, development and testing of software - HELD THAT:- It is a fact that the assessee has offered no prior period income which has been arrived at after deducting prior period expenditure from the prior period income - Though the A.O. initially added both prior period income and prior period expenditure in the original assessment order, yet in the rectification order passed by the A.O. u/s 154 of the Act, he has deleted the disallowance relating to prior period income. The net effect of the action of AO resulted in disallowance of prior period expenses. As held in the case of Dishman Pharmaceuticals Chemicals Ltd. [ 2019 (10) TMI 1195 - GUJARAT HIGH COURT] that once the prior period income is assessed to tax, then the corresponding prior period expenditure also should be allowed to be set off. Hence the action of the AO was contradictory to the decision rendered by Hon ble Gujarat High Court in the above said case. We notice that the assessee has offered Rs. 16,86,334/- as per the principle laid down by the Hon ble Gujarat High Court in the above said case. Thus we direct the AO to allow the prior period expenditure as deduction against prior period income. Accordingly, we direct the A.O. to delete the disallowance relating to prior period expenditure. - Decided in favour of assessee.

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• 2021 (8) TMI 508
  Assessment u/s 11 - registration u/s 12AA - Charitable activity u/s 2(15) - HELD THAT:- We are of the considered view inter alia that when charitable objects to be undertaken by the assessee trust are not in dispute, assessee company cannot be expected to start its charitable activities within a period of about 2 months; that to get the benefit of sections 11 12 of the Act, registration u/s 12AA is necessary; that so far issue as to paying remuneration of Rs. 40,000/- to one of its Directors is concerned it can be decided during the assessment proceedings while examining the benefit u/ss 11 12 of the Act, the impugned order passed by the ld. CIT (E) is not sustainable in the eyes of law. CIT(E) is not required to look into the activities at the stage of registration, which can be well taken care of by the AO during the assessment proceedings and at this stage, only genuineness of the objects has to be examined by the ld. CIT(E) which he has not disputed in this case. So, impugned order passed by the ld. CIT (E) is set aside. Consequently, the appeal filed by the assessee is allowed directing the ld. CIT (E) to accord registration u/s 12AA of the Act to the assessee.

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• 2021 (8) TMI 507
  Bogus purchases - disallowance @3.55% of the alleged bogus purchases and working out average gross profit in erroneous manner - HELD THAT:- We note that even after noting that the payments are in multiple of large amounts with no relationship whatsoever with the invoice value, Ld.CIT(A) has not made any further investigation - examination of the bank statement and the concerned party ledger account shows that payments have a pattern of huge payments periodically and AO also has noted that time lag between payment is not in accordance with what is there in other account. The examination of the financials of the assessee shows that against an issued capital of Rs. 5 crores, there is share premium account of 57.6 crores. The assessee company also has received Rs. 35.48 crores share premium during the year also. There are loan and advances without detail of Rs. 25.36 crores and sundry debtor of Rs. 24.45 crores. CIT(A) has all these documents before him. The circular movement needed to be examined, when the addition made by the AO was in term of peak credit. It was incumbent upon Ld.CIT(A) to examine this aspect and in our considered opinion, the Ld.CIT(A) has erred in over looking these aspects. In our considered opinion, the interest of the justice demands that the issue be remitted to the file of Ld.CIT(A) to examine the issue, we note that in light our observations hereinabove. Accordingly, the issue is remitted to Ld.CIT(A). Needless to add, assessee should be granted adequate opportunities. Reopening of assessment u/s 147 - HELD THAT:- We have heard both the parties and perused the record. No separate argument was placed orally by Ld. Counsel of the assessee on this issue. We note Ld.CIT(A) has taken a correct view of the matter. On the facts and circumstances, it cannot be said that reassessment is a change of opinion here. It is trite that there has to be an opinion first only then there can be issue of change of opinion. Moreover it is also settled law that at the time of notice escapement need not be proved to the hilt. We agree with Ld.CIT(A) that AO had valid reason for reopening. The case laws referred by Ld.CIT(A) also germane. Appeals are allowed for statistical purpose.

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• 2021 (8) TMI 506
  Revision u/s 263 - disallowance under section 43B - HELD THAT:- It is an admitted position under the law that at the time of search, assessment for the assessment year under consideration was not pending, therefore the assessment for the A.Y. 2008-09 remained unabated. Further, in the assessment order passed u/s 153A r.w.s. 143(3), there was no issue that any incriminating material with regard to disallowance under section 43B was passed. The time limit for revising the assessment order, if any, for A.Y. 2008-09 could be passed within two years from the end of financial year in which the order sought to be revised was passed. Admittedly, the impugned order is passed by the ld. PCIT on 08/02/2016 which is much beyond the prescribed period of limitation of two years from the end of relevant assessment year. Our view is also supported in CIT Vs Alagendran Finance Ltd. [ 2007 (7) TMI 304 - SUPREME COURT] and in CIT Vs. ICICI Bank Ld.[ 2012 (2) TMI 308 - BOMBAY HIGH COURT] . Accordingly, the action initiated under section 263 is barred by time period prescribed under section 263(2) of the Act. Thus, the revision order passed qua A.Y. 2008-09 is bad in law and subsequent action initiated therein is void ab-initio.- Decided in favour of assessee.

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• 2021 (8) TMI 505
  Deduction u/s.80P(2)(a)(i) - interest income earned on fixed deposits - HELD THAT:- As relying on THE PUTTUR PRIMARY CO-OP AGRICULTURE AND RURAL DEVELOPMENT BANK LTD. [ 2021 (6) TMI 460 - ITAT BANGALORE] we restore the issue to the AO to examine the claim of the assessee afresh as directed by the Tribunal in the aforesaid order. We also notice that the assessee has raised a specific plea that the investments which yielded interest income were all investments that are statutorily required to be maintained under the Karnataka Co-operative Societies Act and therefore interest income has to be regarded as business income. The AO can examine this aspect also in the set aside proceedings. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2021 (8) TMI 504
  Rejection of audited books of accounts u/s 145(3) - estimation of net profit - Addition of net profit @ 11.5% (before interest depreciation) - HELD THAT:- We find that the AO has not specified or identified a single voucher which is not in order. No independent investigation was carried out by the AO, on the bills and vouchers furnished by assessee, which were examined on random basis. Further, the books of account of the assessee are duly audited. The Auditor has not made any adverse comment or pointed out any deficiency. In our view, the books of account were rejected without any basis. If there was violation of section 36(1)(va) of Income tax Act, the AO could disallow the same as per law. Therefore, we set aside the order of the AO in rejecting the books of accounts. Estimation of net profi t - When similar gross profit and net profit from the same business is accepted by the revenue in earlier years, the revenue cannot increase the net profit of the assessee without specifying any cogent reason or bringing evidence of comparable instances of assessee s engaged in similar trade or business. The AO estimated the net profit @ 12.5% which was though reduced to 11.5% by the ld. CIT(A), in our view, the estimation is without making any investigation or bringing comparable case on record, estimation made by the AO is not justified. Our view further strengthened by the fact that assessee has shown better gross profit and net profit comparative to A.Ys. 2012-13 2013-14 which we have referred above. The addition made by the AO which was upheld to the extent of 11.5% by the ld. CIT(A) is set aside and the AO is directed to delete the entire addition. In the result, the grounds of appeal raised by the assessee are allowed.

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• 2021 (8) TMI 503
  Penalty levied under the provision of section 271(1)(c) - whether the assessee has concealed the particulars of income by not disclosing the capital gain in the income tax return? - HELD THAT:- AO was not conscious about the charge under which the penalty was to be levied under the provisions of section 271(1)(c) of the Act. Accordingly we hold that the penalty order is not sustainable and therefore the penalty cannot be levied on this technical ground. As we have decided the issue in favour of assessee on technical ground, we do not find any reason to give our finding on merit. Hence the ground of appeal of the Revenue is dismissed.

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• 2021 (8) TMI 502
  Rejection of books of accounts - Estimation of gross profit - CIT(A) has upheld the rejection of books of accounts by invoking provisions of section 145(3) and has estimated gross profit rate of 25% as against gross profit rate of 23.60% declared by the assessee - HELD THAT:- As rightly held by the ld. CIT(A), the past history of the assessee provides a reasonable and rationale basis for such estimation or comparable third party data which is absent in the instant case. In the past, on perusal of assessee s submission before the ld. CIT(A), we note that the assessee has disclosed a gross profit of 27.05% in A.Y 10-11, 26.16% in A.Y 2011-12 and 17.04% in A.Y 2012-13 and these past years results have apparently not attained finality as the matters are pending before the AO in the set-aside proceedings before the AO for A.Y 2010-11 and before the ld. CIT(A) in other years. Nothing has been brought on record in terms of finality of past year results. Therefore where the past years results have not attained finality and even third party comparable data is not on record, we are constrained to remand to the file of the AO for the limited purposes of determining the past years gross profit rate as have attained finality and apply the average of such gross profit rate which have attained finality to the year under consideration. In the result, the ground is allowed for statistical purposes.

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• 2021 (8) TMI 501
  TDS u/s 195 - commission paid to non-resident India u/s. 40(a)(ia) of the Act for export of sales of machine and commission paid to non-resident - HELD THAT:- As decided in own case [ 2018 (4) TMI 1879 - ITAT AHMEDABAD] AO was not justified to hold that the commission payable to the overseas agents was deemed to accrue or arise in India and is taxable under the Act in view of the specific provisions of sections 5(2)(b) read with section 9(1)(i) - there was no liability on the part of the appellant to deduct tax under section 195 or approach the I.T. Authorities for a no deduction tax certificate. - Decided in favour of assessee. Disallowance of depreciation on non-compete fees - Assessee stated that the non-compete payment being in the nature of payment and commercial right as referred to in section 32(1)(ii) has been capitalized and depreciation has been claimed at the rate applicable to the block of Intangible assets - HELD THAT:- As decided in own case[ 2018 (4) TMI 1879 - ITAT AHMEDABAD] non-compete fee paid by the appellant to Mr. Patel is a capital expenditure and the appellant has acquired an intangible right which is depreciable and depreciation claimed is allowable under section 32(1)(ii) of the Act. The asset is depreciable as the contract is enforceable only for three years and it is not forever. The disallowance made by the AO is therefore, directed to be deleted. - Decided in favour of assessee.

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• 2021 (8) TMI 500
  Disallowance 50% of salary and bonus expenses - reliance on books of account lying seized with the department. HELD THAT:- From perusal of contents of assessment order dated 29.03.2016 passed under section 143(3) r.w.s. 145C/254, we find that the matter was restored back to the file of the A.O. with the direction to consider the books of account lying seized with the department, though the assessee was directed to provide documents and details when called by the A.O - as directed to provide the information within the fifteen days of receipt of order or fixing the date of hearing. A.O. nowhere recorded that he has considered the books of account lying seized with the department. A.O. observed that salary and bonus expenses are increased comparative to earlier assessment and disallowed 50% of salary and bonus expenses. A.O. has not rejected the books of accounts. There is not finding that salary and bonus expenses are bogus and not verifiable. CIT(A) conferred the order of A.O. by taking that no details were furnished. At the cost of repetition, we may note that ld. CIT(A) passed the order of ex parte without verification of facts and following the mandate of order of Tribunal. CIT(A) in A.Y. 2007-08 while deleting the addition find that no discrepancy in the books of account was pointed out while making disallowance of salary and bonus. Further, reasonableness of salary was not questioned. The ld. CIT(A) in subsequent year also observed that the A.O. has not appreciated Star TV has increased their rates many times because of broadcasting system from analogue system to digital system by Telecom Regulatory Authority of India (TRAI). Considering the details discussion and the relief granted by ld. CIT(A) in subsequent year, on identical facts, we find that the ground of appeal raised by Revenue is squarely covered in favour of assessee.

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• 2021 (8) TMI 499
  Revision u/s 263 - whether AO conducted sufficient enquiry with regard to unsecured loans taken by the assessee company during the year? - HELD THAT:- As specific reply submitted to each of such query by the assessee, independent enquiry conducted by the AO by issuance of notice u/s 133(6) of the Act and are satisfied that the ld. AO has conducted adequate and detailed enquiry to investigate and examine all the unsecured loan taken during the year including the loan taken from cash creditors named in the show cause notice issued u/s 263 of the Act and find that the AO has taken one of the permissible view in law by verifying the identity of the cash creditors, got satisfied with the genuineness of the transactions between the assessee and cash creditors and also satisfied with the creditworthiness of the cash creditors. We further find that this is not a case of no enquiry or inadequate enquiry and also find that Pr. CIT had not carried out any independent enquiry at his end and thus grossly erred in observing that the order of the Ld. AO u/s 143(3) of the Act is erroneous and prejudicial to the interest of Revenue. In the instant case Ld. Pr. CIT failed to show that both conditions exists i.e. neither it has been proved that order is erroneous nor it has been proved to be prejudicial to the interest of revenue. We thus find merit in the contentions of the assessee that the revisionary order passed by the Ld. Pr. CIT in the years under appeal i.e. A.Y. 2013-14 is beyond the scope of section 263 and hence not valid. Thus the action of the Ld. Pr. CIT is contrary to the ratio laid down by binding precedence. We, therefore, quash the impugned order and decide in favour of the assessee.

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• 2021 (8) TMI 498
  CIT- A passed order ex-parte - dismissal of the appeal of the assessee for non-prosecution - HELD THAT:- We find merit in the contention of the ld. Counsel for the assessee that proper and sufficient opportunity of being heard was not given to the assessee either by the Assessing Officer or by the ld. CIT(Appeals) and the orders passed by them are in violation of the principle of natural justice. Even the ld. D.R. has not been able to rebut or controvert this position, which is clearly evident from the orders of the AO and ld. CIT(Appeals). We, therefore, set aside the impugned order passed by the ld. CIT(Appeals) ex-parte and restore the matter back to the file of the Assessing Officer with a direction to frame the assessment afresh on merit in accordance with law after giving proper and sufficient opportunity of being heard to the assessee. Assessee is treated as allowed for statistical purposes.

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• Customs

• 2021 (8) TMI 552
  Maintainability of petition - instead of appeal an appeal, the petition is filed - HELD THAT:- Instead of preferring an appeal for the redressal of the grievances, the petitioners have chosen to file a writ petition raising several grounds, which are all to be adjudicated based on certain facts and on verification of documents and evidences in original. Even in cases where mixed question of fact and law is raised, the appellate authority, is competent to adjudicate both factual and legal grounds and made a finding and pass orders. The appellate authority is the final fact finding authority. Thus, importance attached to the appellate remedy at no circumstances be undermined. In this writ petition also, the petitioners are granted liberty to approach the appellate authority and file an appeal by following the procedures as contemplated and by complying with the conditions to prefer the appeal, within a period of 60 days from the date of receipt of a copy of this order - Petition disposed off. In the present case, the petitioners have stated that there are certain violations and factual aspects either not considered or mistakenly considered. However, all these aspects could be adjudicated before the appellate authority - The importance of appellate remedy and its relevance are elaborately adjudicated by this Court in a batch of writ petitions in M/s.Sri Sathya Jewellery, Vs. The Principal Commissioner of Customs [ 2021 (4) TMI 1210 - MADRAS HIGH COURT ] where it was held that This Court has no hesitation in arriving at a conclusion that the petitioners are bound to exhaust the appellate remedy, either under Section 128 or Section 129 of the Customs Act, respectively. The petitioners are granted liberty to approach the appellate authority and file an appeal by following the procedures as contemplated and by complying with the conditions to prefer the appeal, within a period of 60 days from the date of receipt of a copy of this order - Petition disposed off.

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• 2021 (8) TMI 549
  Maintainability of petition - remedy of appeal not exhausted - sufficient opportunity has not been granted to the petitioner before passing the impugned order - violation of principles of natural justice - HELD THAT:- Undoubtedly, the appellate remedy contemplated under the Act is efficacious and able to deal with various possible circumstances and the powers are conferred to issue directions to remand the matter, set aside the order, including the ground of violation of principles of natural justice. When a specific provision is contemplated to deal with the violations of the principles of natural justice, question arises why a writ petition under Article 226 is to be entertained by the High Court. The practice of filing writ petitions on the ground of violation of principles of natural justice is in ascending mode. The aggrieved persons are attempting to thwart the provisions of law by approaching the High Court and with an idea to protract and prolong the issues. High Court cannot encourage such practices of prolonging the issue at the instance of the litigations. Once the remedy provided under the statute is efficacious and capable of dealing with various circumstances including the violation of principles of natural justice, then there is no ground for entertaining a writ petition under Article 226 of the Constitution of India. The tenor of the appeal provisions under Chapter XV of the Act makes it very clear that the Commissioner (Appeals) is empowered to deal with the grounds, which all are not taken in the grounds of appeal by the appellant and deal with the grounds regarding violation of principles of natural justice and many other circumstances. Therefore, this Court is of a strong opinion that the Orders-in-Original passed are to be taken by way of appeal under Section 128 of the Act by an aggrieved person. The petitioner is bound to exhaust the appellate remedy as contemplated under the provisions of the Act, by following the procedures contemplated - Petition dismissed.

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• 2021 (8) TMI 548
  Seeking permission to shutout the cargo / taking back the cargo to their premises - seeking release of goods comprising of Readymade Garments presented for the export without insisting for execution of Bank Guarantee for 25% of the value - HELD THAT:- Admittedly, now the petitioner is not in a position to export the goods due to cancellation of the export order. The goods are berthed in Tuticorin Port and kept idle and because of that, the demurrage and container charges has been mounting heavily. Since the export order has been cancelled, the petitioner wants to take back the cargo to their premises, but the 3rd respondent insisting the petitioner for bank guarantee for 25% of the value as security for provisional release of the goods. In the considered opinion of this Court, the question of providing bank guarantee does not arise, when the petitioner take back the goods, due to cancellation of the export order. The respondents are directed to permit the petitioner to take back the cargo to their premises, comprising of Readymade Garments presented for the export, without insisting Bank Guarantee, forthwith - Petition disposed off.

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• 2021 (8) TMI 542
  Levy of redemption fine and penalty - import of Raw Agarbathies - restricted import or not - HELD THAT:- Raw Agarbathies classified under CTH 33074100 became a restricted item for import into India vide Sl. No. III of Notification No. 15/2015-2020 dated 31.08.2019 issued by the Directorate General of Foreign Trade - The invoices raised by the supplier in the case on hand are dated 27.08.2019 and 28.08.2019, which are well within the date of the above Notification, by which time the contract between the importer and the supplier had concluded. There are no mala fides in so far as the import of the goods in question are concerned. Admittedly, the prohibition in question was not in force as on the date of invoice and it is nobody s case that the appellant was aware as to the change in law at the time of signing of the contract or when the invoice was raised in terms of the contract. There are no justification in redemption fine and penalty being imposed on the appellant - appeal allowed - decided in favor of appellant.

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• 2021 (8) TMI 539
  Refund of SAD - refund denied for not having discharged appropriate tax on sale and for failure to correlate the invoices of sale with the bills of entry pertaining to the imports - HELD THAT:- The imported goods, upon sale in the domestic market, are entitled to post facto exemption from special additional duty upon furnishing of sales invoices and that, despite the impugned goods being exempted from tax on sale, the eligibility for refund of special additional duties of customs is not, thereby, discountenanced. Though, in a manner of speaking, there is no specific finding that the goods claimed to have been sold were other than the goods on which special additional duty had been discharged at the time of import, the exemption available under Maharashtra VAT Act, 2002 combined with the description in the sale invoices were stated to have caused disquiet. The appellant was unable to reconcile the difference in description and entitlement to refund was the casualty. It would appear that the absence of any clarification from the Joint Commissioner of Animal Husbandry, sought for vide letter dated 15 th June 2018 and 27th June 2018, also contributed to doubt. It would be appropriate for the appellant herein to furnish all necessary information to the original authority for a proper determination that the goods, covered by the furnished invoices, were the same as those imported which is the only satisfaction prescribed in notification no. 102/2007 dated 14 th September 2007 - the original authority is directed to consider the application afresh and to dispose off the claim for refund accordingly within a period of three months from the receipt of this order - appeal allowed by way of remand.

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• Corporate Laws

• 2021 (8) TMI 550
  Suit for declaration and injunction - application filed under Order VII Rule 11 of the Code of Civil Procedure for rejection of the plaint - doctrine of estoppel - HELD THAT:- Sections 397 and 398 of the 1956 Act in cases of oppression and mismanagement and were similar in scope to Sections 241 and 242 of the 2013 Act. Since, admittedly, the CLB order was, inter alia, passed under the former provisions, the same operates as an issue estoppel against the plaintiffs from urging similar issues in the subsequent suit. The plaintiffs submitted to the jurisdiction of the CLB by participating in the proceeding before the CLB. The principle of res judicata squarely applies, since the CLB elaborately considered the family settlement/arrangement-in-question in the context of the transfer of the shares of both the companies HCM and HF - in view of the CLB having already adjudicated the issue on merits at length in similar context as in the present suit, the principle of res judicata comes into operation squarely, debarring the plaintiffs from filing the present suit. The suit is barred by law as contemplated in Order VII Rule 11(d) of the Code of Civil Procedure - impugned order set aside - application allowed.

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• 2021 (8) TMI 543
  Sanction of Scheme of Amalgamation - section 230-232 of Companies Act - HELD THAT:- There is no impediment in the approval of the Scheme . The Scheme (Annexure A) is hereby approved. While approving the Scheme, it is clarified that this Order should not be construed as an Order in any way granting exemption from payment of any stamp duty, taxes or any other charges, if any, and payment in accordance with law or in respect of any permission /compliance with any other requirement which may be specifically required under any law. Application allowed.

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• 2021 (8) TMI 540
  Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Directions are issued with respect to calling, convening and holding of meetings of the shareholders, secured creditors and unsecured creditors or dispensing with the same as well as issue of notices to regulatory authorities - the scheme is approved. Application allowed.

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• Insolvency & Bankruptcy

• 2021 (8) TMI 553
  Approval of Resolution plan - jurisdiction to approve resolution plan - compliance with the requirements of Section 30(2) of IBC - HELD THAT:- The resolution plan was approved by the CoC, in compliance with the provisions of the IBC. The jurisdiction of the Adjudicating Authority under Section 31(1) is to determine whether the resolution plan, as approved by the CoC, complies with the requirements of Section 30(2). The NCLT is within its jurisdiction in approving a resolution plan which accords with the IBC. There is no equity-based jurisdiction with the NCLT, under the provisions of the IBC. The RP has to present to the CoC, for its approval, such resolution plans which conform to the conditions specified in sub-Section (2) of Section 30. The approval of the resolution plan is a statutory function which is entrusted to the CoC, under sub-Section (4) of Section 30. The CoC may approve a resolution plan with a voting percentage of not less 66 per cent of the voting shares of financial creditors after considering: (i) its feasibility and viability; (ii) the manner of distribution proposed having regard to the order of priority amongst creditors laid down in Section 53(1) of the IBC, including priority and value of the security interest of the secured creditors; and (iii) such other requirements as may be specified by the Insolvency and Bankruptcy Board of India. In other words, the decision to approve a resolution plan is entrusted to the CoC. The jurisdiction which has been conferred upon the Adjudicating Authority in regard to the approval of a resolution plan is statutorily structured by sub-Section (1) of Section 31. The jurisdiction is limited to determining whether the requirements which are specified in sub-Section (2) of Section 30 have been fulfilled. This is a jurisdiction which is statutorily-defined, recognised and conferred, and hence cannot be equated with a jurisdiction in equity, that operates independently of the provisions of the statute. The Adjudicating Authority as a body owing its existence to the statute, must abide by the nature and extent of its jurisdiction as defined in the statute itself. Once the requirements of the IBC have been fulfilled, the Adjudicating Authority and the Appellate Authority are duty bound to abide by the discipline of the statutory provisions. It needs no emphasis that neither the Adjudicating Authority nor the Appellate Authority have an unchartered jurisdiction in equity. The jurisdiction arises within and as a product of a statutory framework. Conclusion:- In the present case, the resolution plan has been duly approved by a requisite majority of the CoC in conformity with Section 30(4). Whether or not some of the financial creditors were required to be excluded from the CoC is of no consequence, once the plan is approved by a 100 per cent voting share of the CoC. The jurisdiction of the Adjudicating Authority was confined by the provisions of Section 31(1) to determining whether the requirements of Section 30(2) have been fulfilled in the plan as approved by the CoC. As such, once the requirements of the statute have been duly fulfilled, the decisions of the Adjudicating Authority and the Appellate Authority are in conformity with law. Appeal dismissed.

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• 2021 (8) TMI 545
  Maintainability of petition - Service of Notice - compliance of Rule 38 of NCLT Rules, 2016 - Allottee is a speculative investor or not - Whether the transaction between the Allottee and the Corporate Debtor is clarified to be treated as Financial Debt under Section 5(8) of the Code? - HELD THAT:- In the instant case, it is needed to be seen if the allottee has entered into any lucrative Agreement based on the facts of this case. The clauses of the Agreement clearly stipulate that there is a buy-back Agreement, there is an assured return of 25% per annum at the end of 24 months or at the issuance of the final LTC by the Competent Authority (whichever is earlier). Right from the date of receipt of the booking amount from the Applicant, the word investment is consistently used. It is also stated that in consideration for the investment, the Company has agreed to earmark a unit in the project, give an assured return of 25% per annum and at the end of 24 months which is the minimum period of investment, it is also stated that the return assured would be given through the re-sale of apartment only. In Clauses 2(f) (g) of the Agreement, the Home Buyer herein is given a choice to retain the apartment or to sell the earmarked unit. In a regular Builder Buyer Agreement, the Home Buyer does not have this option of exercising his choice of taking or not taking the possession of the subject unit. In a normal Builder Buyer Agreement if the Buyer does not accept the possession, the EMD is forfeited. In this case, the Buyer gets his money plus 25% assured return even if he chooses not to retain the apartment. This Agreement is only a camouflage of actually financing the construction of the flat. Though the Respondent has denied that the Respondent s son had entered into a Settlement Agreement with the Corporate Debtor for return of the principal amount, it is noted that the Learned Counsel on instructions has submitted that they are ready to settle the matter and return the principal amount - the Order of Admission under Section 7 is set aside. Appeal allowed.

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• 2021 (8) TMI 544
  Ex-parte order - Principles of Natural Justice - Appellant (Corporate Debtor) could not avail the opportunity to defend as was suffering from COVID - HELD THAT:- What appears is that the Application under Section 7 (Annexure A-2 page 33 at page 38) shows that Respondent No. 1 Bank had correctly mentioned in Part IV of the Format that the date of NPA was 28.10.2016. It appears an error in recording occurred in impugned order Para 1 where date of default has been recorded to be 04.03.2020. Part IV of the Format shows that the Respondent Bank had mentioned that Total amount of default as on 04.03.2020 was Rs. 8,44,15,488 . It was specifically mentioned that date of NPA was 28.10.2016. When date of NPA is 28.10.2016 and there is Balance Confirmation as mentioned above of 15.07.2019, the same is within three years. Calculating limitation period from 15.07.2019, Application under Section 7 filed on 28.07.2020 cannot be said to be time barred. When Corporate Debtor is a Company where there are more Directors rather than only one as can be seen from the Balance Confirmation issued by the Company, it does not lie in the mouth of the Corporate Debtor to claim that one Director was suffering from COVID so the Corporate Debtor could not cause appearance before the Adjudicating Authority - there is no reasons why before 16.02.2021 when hearing took place before Adjudicating Authority, Corporate Debtor did not approach Adjudicating Authority to seek to defend. There is no reasons why before 16.02.2021 when hearing took place before Adjudicating Authority, Corporate Debtor did not approach Adjudicating Authority to seek to defend - Appeal dismissed.

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• Service Tax

• 2021 (8) TMI 541
  Non-payment of service tax - inclusion of out-of-pocket expenses in the demand not ascertainable - no details submitted in this regard - HELD THAT:- The appellant had not entered appearance before the original authority on the plea that they intend to subject themselves before the Settlement Commission. There is no evidence of such having occurred, and indeed, the filing of appeal before us is clear indication of incorrect averment having been made before the original authority. In the grounds of appeal too, no concrete counters to the findings of the original authority have been enumerated. The grounds of appeal are vague and insufficient to determine a finding on merit. The appellant has also foregone several opportunities to appear and to elaborate upon the grounds preferred in the appeal. Appeal dismissed.

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• Central Excise

• 2021 (8) TMI 551
  Maintainability of appeal - non-compliance with the condition of pre-deposit - also there is a delay in filing the appeal - HELD THAT:- This Court is of the considered opinion that the appeal filed by the aggrieved persons have to be decided in merits on all circumstances. If the reasons stated for the delay is acceptable, then the Courts may consider the same and condone the delay by providing opportunity to the aggrieved persons and adjudicate the issues on merits and in accordance with law. In the present case, pre-deposit was not made by the petitioner, which is mandatory for entertaining the appeal under the provisions of Central Excise Act due to the fact that the Bank Accounts of the petitioner were frozen and further the appeal was filed belatedly in view of the pendency of the Writ Appeal before the Division Bench of this Hon ble Court. The petitioner is directed to comply with the condition of pre-deposit as contemplated under the Central Excise Act, within a period of four weeks from the date of receipt of a copy of this order and represent the appeal to the 1st respondent - Petition allowed.

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• CST, VAT & Sales Tax

• 2021 (8) TMI 547
  Time limit for filing appeal - Constitutional validity of Section 2(11) of Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- While upholding the validity of Section 2(11) of the TNVAT Act, the Hon ble Division Bench in M/S. SCHWING STETTER (INDIA) PVT. LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER [ 2016 (5) TMI 912 - MADRAS HIGH COURT ] rejected the prayers sought for by the writ petitioner for declaration. However, liberty was granted to prefer an appeal against the individual orders of assessment and the time limit of 30 days granted by the original authority was extended and to be reckoned from the date of issue of copy of that order. Thus, the petitioner in the present writ petitions are also entitled to prefer an appeal against the order of assessment by extending the benefit granted by the Hon ble Division Bench in respect of the time limit prescribed for appeal. The petitioner is permitted to prefer an appeal against the impugned orders of assessment within a period of 30 days from the date of receipt of a copy of this order and if any such appeal is filed by the petitioner before the Appellate Authority, the appellate authority is directed to condone the delay and entertain the appeal - petition disposed off.

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• 2021 (8) TMI 546
  Levy of penalty u/s 47(6) of KVAT Act - failure to carry a declaration in Form 8FA - HELD THAT:- Admittedly, the goods in transit were not accompanied by Form 8FA declaration. Rule 66(6)(ba) of the KVAT Rules, 2005 read with section 46(3)(e) of the Act provides for carrying declaration under Form 8FA while the imported goods are transported within the state. When the imported goods are not declared in the manner prescribed by the Act and the Rules, it opens a window of an opportunity to the dealer to suppress the transaction. Whether an actual suppression has taken place or not is not required to be considered when penalty is sought to be levied under section 47(6) of the Act. As held by the Division Bench of this Court in POLYMER DESIGNS AND MOULDINGS VERSUS STATE OF KERALA [2020 (4) TMI 74 - KERALA HIGH COURT], Form 8FA is mandatory and when the goods transported are not accompanied by the said declaration, it is only reasonable to conclude that there is an attempt to evade tax. Since the statute makes even an attempt to evade tax as penal, we are of the considered view that the imposition of penalty for failure to carry a declaration in Form 8FA is wholly justified in the circumstances of the case. Quantum of penalty - HELD THAT:- Though the technical omission of carrying Form 8FA declaration is penal, the circumstances of the case do not justify imposition of the quantum of penalty as was done by the Intelligence Officer. A minimal penalty alone ought to have been imposed in the instant case. Having regard to the circumstances of the case and the nature of the transaction involved in the case, an amount of Rs. 15,000/- alone ought to have been imposed as a penalty. The quantum of penalty is reduced - question of law framed is answered and the revision petition is allowed in part.

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