TMI Tax Updates - e-Newsletter
September 18, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Levy of GST on contributions made to District Mineral Foundation (DMF) and the National Mineral Exploration Trust (NMDF) - the said contributions are nothing but additions to the royalty payable for the original supply itself - such amounts are paid in respect of mining rights and the said supply is already deemed to be taxable under reverse charge (RCM) basis - AAR
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GST:
Liability of IGST - Reverse Charge Mechanism (RCM) - Import of Consulting Services by the Directorate of Skill Development - the applicant is engaged in activities which is to be treated as Business or profession as defined in the Section 2(17) - Provisions of RCM applicable even to Govt. - AAR
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GST:
Interest charged on cost of securities - claim of exemption from GST not allowed - the additional amount charged on delayed payment shall be taxed as per original supply i. e. supply of Stock broking services. - AAR
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GST:
Classification of goods - rate of GST - solar LED Torch - even the packing of the impugned product does not intend to describe it as solar power based device. That being the case we find the argument of the applicant outlandish and arbitrary and a weak attempt to avail concessional rate. - AAR
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Income Tax:
Cash payments made to Royal Calcutta Turf Club u/s. 40A(3) - payment of operational expenses in relation to Horse Race - disallowance provision does not apply in case of overwhelming genuine payments coupled with business exigencies which may go beyond the prescribed rule 6DD - AT
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Income Tax:
Taxation in the hands of the member of the AOP - amount paid by the BCCI to the appellant which has already been taxed at the hands of BCCI, cannot be now taxed in the hands of the member of the AOP i.e. the appellant State Association as it will amount to double taxation of the same amount. - AT
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Income Tax:
Addition made u/s 40A(2)(b) - payment to the persons specified - Payment made towards subcontracting of work to JV - Payment of 99% of receipt instead of 95% as per AO - the provisions of this section 40A(2)(b) are not attracted - AT
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Customs:
SEZ unit - MEIS benefit - in the case of SEZ, the entire operations are under the control of Development Commissioner and the officers of the Customs posted therein and they can easily verify the entire records but the same was not done in this case. - Amendment in shipping bills allowed - AT
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FEMA:
Purchase of property in India - Individual arrived in India on Business Visa - He had continuously stayed for a period of 182 days - RBI said that no permission is required under FEMA - Thus, there is no violation of FEMA - AT
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Indian Laws:
Right to Privacy - Seeking information from the dealers of BPCL - Any information which discloses remittances made to the Income Tax Department towards discharge of tax liability would constitute personal information. A demand for furnishing income tax returns filed by a person would constitute invasion of the privacy of a person - HC
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Service Tax:
Management consultancy service or not - actual running or managing an organization cannot be the same as providing any service in connection with the management of the organization - Demand set aside - AT
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Central Excise:
Reversal of CENVAT credit - sale of capital goods as scrap - Unless Revenue establishes that they availed Cenvat credit on the capital goods which are being removed as waste and scrap, provisions of Rule 3(5A) of Cenvat Credit Rules, 2004 cannot be invoked. - AT
Articles
Notifications
FEMA-
G.S.R. 659(E) - dated
16-9-2019
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FEMA
Foreign Contribution (Regulation) (Second Amendment) Rules, 2019
GST - States-
G.O.Ms.No.401 - dated
13-9-2019
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Andhra Pradesh SGST
Andhra Pradesh Goods and Services Tax (Eleventh Removal of Difficulties) Order, 2019
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G.O.Ms.No.399 - dated
13-9-2019
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Andhra Pradesh SGST
Seeks to amend Notification G.O.Ms.No.588, Revenue (CT.II) Department, Dated : 12.12.2017
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G.O.Ms.No.398 - dated
13-9-2019
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Andhra Pradesh SGST
Seeks to amend Notification G.O.Ms. 258, Revenue (CT-II) Dept., Dt. 29.06.2017
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G.O.Ms.No.397 - dated
13-9-2019
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Andhra Pradesh SGST
Seeks to amend Notification 301, Revenue (Commercial Taxes-II) Department, Dated 16.05.2019
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G.O.Ms.No.393 - dated
11-9-2019
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Andhra Pradesh SGST
Re-constitute the Andhra Pradesh Authority for Advance Ruling
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ORDER No. 7/2019 - State Tax - dated
27-8-2019
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Chhattisgarh SGST
Chhattisgarh Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019
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F-10- 26/2019/CT/V(65) - dated
11-7-2019
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Chhattisgarh SGST
Corrigendum - Notification No. 10/2019-State Tax, F-10-12/2019/CT/V(28), dated the 07-03-2019
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F-10- 26/2019/CT/V(64).-25/2019-State Tax - dated
11-7-2019
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Chhattisgarh SGST
Seeks to amend Notification No. 22/2019-State Tax, No. F-10-19/2019/CT/V(47), dated the 23rd April, 2019
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38/1/2017-Fin(R&C)(3/2019-Rate)(Corri.) 3871 - dated
13-9-2019
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Goa SGST
Corrigendum - Notification No. 38//1/2017-Fin(R&C)(3/2019-Rate) dated 29-03-2019
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38/1/2017-Fin(R&C)(110) - dated
13-9-2019
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Goa SGST
Seeks to waive filing of FORM ITC-04 for F.Y. 2017-18 & 2018-19
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ORDER No. 7/2019-State Tax - dated
12-9-2019
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Himachal Pradesh SGST
Himachal Pradesh Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019
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EXN-F(10)-43/2017 - dated
12-9-2019
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Himachal Pradesh SGST
CORRIGENDUM - Notification No. 3/2019-State Tax(Rate) dated 8th May, 2019
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38/2019-State Tax - dated
12-9-2019
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Himachal Pradesh SGST
Seeks to waive filing of FORM ITC-04 for F.Y. 2017-18 & 2018-19
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36/2019-State Tax - dated
12-9-2019
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Himachal Pradesh SGST
Seeks to amend Notification No. 22/2019-State Tax, dated the 30th May, 2019
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ERTS(T) 4/2019/353 - 38/2019-State Tax - dated
31-8-2019
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Meghalaya SGST
Seeks to waive filing of FORM ITC-04 for F.Y. 2017-18 & 2018-19.
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LL(B).28/2017/707 - dated
30-8-2019
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Meghalaya SGST
THE MEGHALAYA GOODS AND SERVICES TAX (AMENDMENT) ORDINANCE, 2019.
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ERTS(T) 4/2019/352 - dated
30-8-2019
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Meghalaya SGST
Corrignedum to State Tax (Rate) No. 3/2019.
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ERTS(T) 4/2019/337 – Order No. 07/2019-State Tax - dated
26-8-2019
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Meghalaya SGST
The Meghalaya Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019.
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ERTS(T) 4/2019/332 - 37/2019-State Tax - dated
21-8-2019
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Meghalaya SGST
Seeks to extend the due date for furnishing FORM GSTR-3B for the month of July, 2019.
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ERTS(T) 4/2019/331 - 36/2019-State Tax - dated
20-8-2019
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Meghalaya SGST
Seeks to extend the date from which the facility of blocking and unblocking of e-way bill facility as per the provision of Rule 138E of GST Rules, 2017 shall be brought into force to 21.11.2019.
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S.R.O. No. 308/2019 - dated
4-9-2019
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Orissa SGST
State Government do hereby appoint the following CT & GST officers.
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30167-FIN-CT1-TAX-0043/2017/FIN - S.R.O. No. 306/2019 - dated
4-9-2019
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Orissa SGST
Seeks to waive filing of FORM ITC-04 for F.Y. 2017-18 & 2018-19.
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11147/CT/POL-41/1/2017-Policy - dated
22-8-2019
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Orissa SGST
Extension of time upto 20th September 2019 in respect of 08 districts for filing of return in form GSTR-3B.
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F.1-11(91)-TAX/GST/2019(Part-II) - dated
6-9-2019
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Tripura SGST
Tripura State Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019
Income Tax-
66/2019 - dated
16-9-2019
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IT
Income-tax (7th Amendment) Rules, 2019 - Setting up an Infrastructure Debt Fund for the purpose of exemption u/s 10(47) - Additional condition of Lock-in-period of 3 years in case of Non-Residents removed.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (9) TMI 691
Extension of time period for amending GST Tran-1 - transitional credit - despite making several efforts, the electronic system of the respondent no.2 did not respond, as a result of which the petitioner is likely to suffer loss of the credit that it is entitled to by passage of time - HELD THAT:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner.
List this matter on 17.10.2019.
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2019 (9) TMI 690
Waiver of interest and late fee imposed - It is the case of the petitioner that the interest has been levied upon the petitioner without entering into the adjudicatory process as required under Section 73 of the CGST Act 2017 - alternate remedy of appeal u/s 107 of CGST Act - Notification No. 76/2018 dated 31st December, 2018 - HELD THAT:- As prayed for, learned counsel for the CGST is allowed four week’s time to file the detailed counter-affidavit in the matter - Till then, the operation of the order dated 22.05.2019, as contained in Annexure-10 to the supplementary affidavit, shall remain stayed.
Put up the matter on 28.08.2019, awaiting the counter-affidavit in the matter.
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2019 (9) TMI 695
Classification of royalty payments - taxability - reverse charge mechanism - royalty payments to Government in respect of Mining lease under “Licensing services for Right to use minerals falling under the heading 9973 - liability of tax - contributions made to District Mineral Foundation (DMF) and National Mineral Exploration trust (NMET) as per MMDR Act, 1957.
HELD THAT:- It is clear that the supply made by the government, i.e. the right to mine the resources is taxable under Section 9 of the Act and is within the meaning of the term ‘supply as covered by Section 7. That, in order to classify as a supply, two important conditions are to be met. First, it should be in the course or furtherance of business. It must also be noted that as per Section 2(17), inter alia, any activity undertaken by the Central Government in which they are engaged as public authorities shall be deemed to be a business. Hence, the royalty received by the Government in lieu of the mining rights shall also be deemed to be for business purposes - Furthermore, this is a service which is provided by the Central Government to the applicant being a business entity, and is therefore liable to be paid by the recipient under reverse charge, in terms of Sr. No. 5 of Notification No. 13/2017 - CT (Rate) dated 28.06.2017. Hence, the said service is taxable under reverse charge basis.
The services received by the applicant shall be classified under heading 997337.
Whether the license to extract mineral ore and also the right to use such minerals extracted is a leasing or rental service? - HELD THAT:- It is clear that what is supplied by the Government is the service by way of license to extract and use mineral ores and that is not covered by any specific entries in the serial no. 17 of the Notification and hence falls under the residual entry- Since the transaction is between the State Government and the applicant and the services are supplied by the state government to the applicant which is a business entity, and the transaction being a supply not covered under the exception, the applicant being the recipient of such service shall have to pay tax on the said supply under reverse charge mechanism as per Notification No. 13/2017 - Central Tax (Rate) dated 28.06.2017.
Taxability of the contributions made to District Mineral Foundation (DMF) and the National Mineral Exploration Trust (NMDF) - HELD THAT:- The money payable to the DMF and the NMET may be treated as nothing but royalty itself, since these contributions are described as being ‘in addition to’ the payment of royalty, which itself is “in respect of the mining rights. As such, therefore, such amounts are paid in respect of mining rights and the said supply is already deemed to be taxable under reverse charge basis.
Thus, the said contributions are nothing but additions to the royalty payable for the original supply itself, and is therefore liable to be added to the value of the original supply and treated accordingly for the purposes of GST.
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2019 (9) TMI 694
Liability of IGST - Reverse Charge Mechanism (RCM) - Import of Consulting Services by the Directorate of Skill Development - services received by it from a provider of service located in a non taxable territory - place of supply of services - section 5(3) read along with N/N. 10/2017 IT(R) - HELD THAT:- The applicant is engaged in Business or profession as defined in the Section 2(17) of CGST Act. Further the supply might be chargeable to tax if it is falling under Notification No 11/2017 - Central Tax (Rate) dated 28lh June 2019.
According to Section 5(3) of IGST Act, the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both - if the service is imported for the purpose of business or commerce even by the Govt then exemption would not be available and Govt need to pay GST under Reverse Charge.
In the present case, the applicant is engaged in activities which is to be treated as Business or profession as defined in the Section 2(17) of CGST Act. Further applicant is taking the service from non taxable territory for the purpose of business or profession therefore exemption provided in the N/N. 9/2017-lntegrated Tax (Rate) dated June 28, 2017 would not be available to the applicant. Therefore the applicant needs to pay the IGST under Reverse Charge.
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2019 (9) TMI 693
Classification of supply - charge of interest from customers for delayed payment - Interest charged on cost of securities is exempt under notification no. 12/2017 Central Tax(Rate) dated 28-06-2017 as amended.
HELD THAT:- The additional amount being charged in delay of payment by whatever named called should be classified as principal supply and the classification of the same cannot differ from the original supply. Hence the additional amount charged on delayed payment shall be taxed as per original supply i. e. supply of Stock broking services.
Applicability of Notification No. 12/2017 - HELD THAT:- Having regard to the nature of transaction it cannot be said that the share broker has extended any deposit, loans or advances to its clients hence the additional amount being charged cannot be treated as interest hence the exemption granted under entry no 27 of notification no 12/2017 is not applicable on the transaction on which advance ruling is sought.
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2019 (9) TMI 692
Classification of goods - rate of GST - solar LED Torch, used generally in agriculture/ rural area - torch is having solar panel input socket, but provided without solar charging panel - Concessional rate of GST - Sr.No.234 of Schedule-I to Notification No.01/2017-CT(Rate) dtd.28.06.2017.
HELD THAT:- The product in question is essentially a Rechargeable LED Torch Light (as also mentioned on the packing of the product provided by the applicant). It comes equipped with an inbuilt rechargeable battery with AC adapter for recharging purpose. The product, thus, unquestionably merits classification under 85131010 of the GST Tariff.
Whether the product can be brought under the ambit of ‘Solar Powered Device’ in order to make it eligible for concessional rate of tax @5% in terms of Serial Number 234 of Schedule-I of Notification no.01/2017-CT(Rate) dtd.28.06.2017 and concurrent notification issued by the State Tax? - HELD THAT:- The product in question i.e. Rechargeable LED Torch, though essentially and primarily rechargeable through an AC adapter, also has mechanism which can be put to use for charging through solar power. The product is provided with a socket and a 5-meter long cable for the purpose, and in some cases a solar panel is also supplied with the product. While the product is also having capability and facility of being charged through solar power, it remains a fact on record that the product is essentially and predominantly made to be charged through AC adapter. Thus, we find the argument of the applicant a bit too overstretched to call it and classify it as Solar Based Devise.
In the instant case, we do not find any ambiguity in the GST legislation in as much as it clearly provides concessional rate of tax to ‘Solar power based devices’ being ‘Renewable energy devices’. The applicant have made a vague and vain attempt to get their product within the ambit of ‘Solar power based devices’, while as we have already discussed above, the product merely provides solar power as an alternate source to predominantly AC power sourced device. We also find it interesting to note that even the packing of the impugned product does not intend to describe it as solar power based device. That being the case we find the argument of the applicant outlandish and arbitrary and a weak attempt to avail concessional rate.
Thus, the product Nano Rechargeable LED Torch Light is classifiable under Chapter Head 8513 presently attracting GST @18% - the product in the question will not be entitled to concessional rate of GST @5% under Sr.No.234 of Schedule-I to Notification No.01/2017-CT(Rate) dtd.28.06.2017 as the same is not a ‘Solar Based Device’.
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Income Tax
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2019 (9) TMI 688
Penalty u/s 271(1)(c) - Notice in the name of merged company - curable defect - HELD THAT:- Impugned penalty order passed by the AO in the name of “M/s. Padampat Gopal Krishna Ramapanti Organization Ltd. (Merged with Gohoi Buildwell Ltd.Now known as V3S Infratech Ltd.)” is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B; and hence order passed on amalgamated entity which ceases to exist is a nullity. Such an illegality cannot be cured on the ground that assessee participation in the proceedings as there cannot operate as an estoppel against law. Accordingly, impugned penalty order is quashed. - Decided in favour of assessee
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2019 (9) TMI 687
Monetary limit - low tax effect - HELD THAT:- It is noted that in this appeal, the tax effect is below monetary limits of ₹ 50 lakhs as prescribed under the CBDT circular No.3/2018 dated 8th August, 2019. As relying on DINESH MADHAVLAL PATEL [2019 (8) TMI 752 - ITAT AHMEDABAD] it is noted that in this appeal, the tax effect is below monetary limits of ₹ 50 lakhs as prescribed under the CBDT circular No.3/2018 dated 8th August, 2019
Addition on account of disallowance of the legal expenses - Expenditure related to proceedings in the Debts Recovery Tribunal (DRT) - HELD THAT:- Considering the evidences so placed, the amount was spent on court fees is allowable expenditure, therefore, we direct the A.O. to delete this ground. The ground raised in the cross objection is allowed.
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2019 (9) TMI 686
Penalty proceedings u/s 271C - TDS u/s 194C on payment of external development work charges ('EDC') - reasonable cause for non-deduction of tax at source by the assessee company - HELD THAT:- We find that under the facts and circumstances it is clearly borne out that assessee did had bonafide reason for not deducting the TDS. Firstly, for the reason that the license was granted by DTCP which is a Governing authority and it has clarified that EDC charges are paid to HUDA; and secondly, DTCP has issued a clarification to the effect that no TDS is required to be deducted precisely. Precisely on similar set of facts, this Tribunal in the case of RPS Infrastructure Ltd. vs ACIT [2019 (9) TMI 39 - ITAT DELHI] has deleted the penalty - No penalty is leviable u/s 271C and same is directed to be deleted. - Decided in favour of assessee.
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2019 (9) TMI 685
Cash payments made to Royal Calcutta Turf Club u/s. 40A(3) - payment of operational expenses in relation to Horse Race - HELD THAT:- There is no dispute about assessee’s carrying on licensed bookmaker’s business with RCTC and therefore, he made the impugned cash payment to the said club only as ‘ operational charges’ has nowhere been doubted. The said operational charge relate to setting on horse racing conducted in the club on Saturdays/Sundays/Holidays only.
Assessee’s agreement with the club. The same suggest that the bookmakers have to pay operational charges in relation to previous day(s) horse racing next day & prior to commencement of the day(s) rates. Learned Departmental Representative fails to dispute that non compliance of this agreement clauses attracts appropriate action against book makers. It therefore emerges that all these clinching agreement’s conditions only made the assessee to pay operational charges to the club in cash at the earliest in order to avoid appropriate actions.
This tribunal ‘s co-ordinate bench’s decision in Sri Manoranjan Raha v/s. ITO [2016 (1) TMI 359 - ITAT KOLKATA] holds that impugned disallowance provision does not apply in case of overwhelming genuine payments coupled with business exigencies which may go beyond the prescribed rule 6DD of the Income Tax Rules, 1962.- Decided in favour of assessee.
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2019 (9) TMI 684
Unexplained cash credits in the matter share application money - as alleged assessee failed to satisfy the three relevant parameters of identity, genuineness and creditworthiness - HELD THAT:- Form 20B with R.O.C & details of share application sufficiently indicates that it had filed all the relevant details of the holding entity, which has nowhere been rebutted from the Assessing Officer’s end.
As emerges from all the foregoing details assessee had in fact received supplies of equipments to the tune of ₹ 6 crores from its heading entity M/s. Neon Healthcare & Research Institute Limited and the said entity also carried out pathological tests amounting to ₹ 3,35,000/- on its behalf. Learned counsel invited our attention to the fact that assessee’s foregoing detailed evidence(s) indicates that the amount of ₹ 68,50,000/- had been received by a/c payee cheque(s) as per the corresponding bank statements and that the said entity holds assessee’s 47.73% stake. The Revenue fails to dispute the further clinching fact that assessee’s depreciation claim(s) on medical equipments supplied forming subject matter of impugned addition averment also stood allowed during the course of assessment itself. This tribunal’s decision in M/s. ABA Earthline Communications Ltd v/s. ITO., Ward 1(4), Kolkata [2018 (12) TMI 972 - ITAT KOLKATA] holds that section 68 addition of unexplained cash credits in absence of actual cash credits/receipts is not sustainable - Decided in favour of assessee.
Brought forward losses set off - HELD THAT:- Assessee’s shareholders to the extent of 51% of its stake i.e M/s. XL Enterprises and M/s. Neon Health Care had admittedly held 27.34% and 47.73% of its stake in preceding assessment year and 26.02% and 53.87% in the impugned assessment year; respectively. Coupled with this, the CIT(A) has also held that SHRI SUBHULAXMI MILLS LTD. [1995 (9) TMI 2 - SUPREME COURT] settled the law long back that section 79 of the Act does not apply on brought forward losses on account of depreciation. We therefore affirm the CIT(A)’s findings for this latter issue as well. - Decided in favour of assessee.
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2019 (9) TMI 683
Exemption u/s 11 - charitable activity u/s 2(15) - exemption u/s 10(23C)(iv) - HELD THAT:- Section 2(15) of I.T. Act read with 3rd proviso to Section 143(3) of I.T. Act was invoked and exemption U/s 10(23C)(iv) was denied to the assessee.
Further, out of assessee’s claim for depreciation was allowed by the AO and the remaining amount was disallowed on the ground that capital expenditure incurred on acquisition of fixed assets in the earlier years had been already allowed to the assessee as application of income. AO took the view that depreciation was to be allowed only on the value of assets acquired during the year under consideration. The assessee filed appeal before CIT(A) against the aforesaid Assessment Order. CIT(A) followed the order of his predecessor for Assessment Year 2011-12 and held in his appellate order dated 08.07.2016 that mischief of proviso of Section 2(15) of I.T. Act was not attracted on the facts on the assessee’s case.
CIT(A) also based his decision on the order of Income Tax Appellate Tribunal (“ITAT”) for Assessment Year 2009-10 in assessee’s own case in appeal [2017 (10) TMI 1410 - ITAT DELHI] in which it was held by ITAT that the assessee was not engaged in any sort of commercial activity and all the activities were in furtherance of main objects of the assessee’s society, which remained charitable and further held that authorities below were not justified in deny the exemption of the assessee society. CIT(A) further noticed that the order of the AO was identical to the order of the AO for Assessment Year 2009-10. - Decided in favour of assessee.
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2019 (9) TMI 682
Penalty u/s 271(1)(c) - defective notice - disallowance of claim of u/s 43B - whether the assessee has concealed particulars of income or has furnished inaccurate particulars of such income during assessment proceedings? - HELD THAT:- Notice issued u/s 274 read with section 271(1)(c) of the Act, extracted above, in order to initiate the penalty proceedings against the assessee goes to prove that the AO himself was not aware / sure as to whether he is issuing notice to initiate the penalty proceedings either for “concealment of particulars of income” or “furnishing of inaccurate particulars of such income” by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him/her, he/she is required to be specifically made aware of the charges to be leveled against him/her.
Hon’ble High Court of Karnataka in case of CIT vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] while deciding the identical issue held that when the AO has failed to issue a specific show-cause notice to the assessee as required u/s 274 read with section 271(l)(c), penalty levied is not sustainable. Thus when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. Also see M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SC ORDER] - Decided in favour of assessee
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2019 (9) TMI 681
Eligibility of exemption u/s 11 & 12 - rendering of services in respect of Indian Premier League cricket (IPL) by the appellant - charitable activity u/s 2(15) - arrangement of conducting Indian Premier League cricket (IPL) matches agreed between BCCI and Kings XI Punjab - assessee cricket association is a society registered under the Societies Registration Act 1860. It was earlier granted registration u/s 12A which was cancelled by CIT and the cancellation was made from assessment year 2009-10 onwards in view of the amended provisions of section 2(15) - HELD THAT:- If we go strictly by the provisions of the Act, since the BCCI in its books of accounts has booked the payments to the State Associations as expenditure, it is thus payment out of its gross receipts and not out of income and thus it should not qualify as application of income. However, as most of the charitable institutes do, the expenditure is generally booked as application of income e.g. educational institutions claiming charitable status, generally claim the salary to teachers as application of income whereas in the books of accounts, the same is treated as expenditure and hence under the circumstances, in our view, the claim of the BCCI in this respect is not an exception. In view of this, the alternate plea of the BCCI is not opposite or destructive to its primary plea. However, the question that whether the expenditure can be considered as application of income for the purpose of claiming exemption as per the provisions of section 11 of the Act is left open to be decided in appropriate case.
Question arises that when the donor that is BCCI in its books of account has not treated the payments to State Associations as voluntary grants or largesse, can the donnee/recipient claim the same to be so. The answer to this question, in our view, is ‘no’.
, there seems force in the contentions raised by the Ld. DR that the Tamil Nadu Societies Registration Act, primarily, has been enacted for registration and regulating the societies in the State of Tamil Nadu. The BCCI though, having itself registered with the Tamil Nadu Societies Registration Act, yet, does not operate in Tamil Nadu rather all its operations and functions are conducted from Mumbai and its highly doubtful that the Registrar of the Tamil Nadu Societies could exercise any jurisdictional power over the BCCI. Under the circumstances, it appears that BCCI has shielded itself behind veil of registration under the Tamil Nadu Societies Registration Act , whereas the entire activity of the BCCI is being run out of the State of Tamil Nadu.
The assessee in the earlier years (before the introduction of the above revised object) might have claimed the application of income on capital assets/infrastructure as application for charitable purposes. However now with the amended objects, it may exploit the so created infrastructure for commercial purposes. This leads to a very peculiar situation. In our view, the introduction of the above object has brought clarity about the manner of operation and activities of the assessee.
As established beyond doubt that that the BCCI which is constituted of the Assessee and other State associations has acted in monopolizing its control over the cricket and has also adopted restrictive trade practice by not allowing the other associations who may pose competition to the BCCI to hold and conduct cricket matches for the sole purpose of controlling and exclusively earning the huge revenue by way of exploiting the popularity of the cricket. The assessee cricket association being the constituent member of the BCCI has also adopted the same method and rules of the BCCI for maintaining its monopoly and complete domain over the cricket in the ‘area under its control’. As observed above, such an act of exclusion of others cannot be said to be purely towards the promotion of game rather the same can be said to be an act towards the depression and regression of the game. Hence the claim of the assessee that its activity is entirely and purely for the promotion of game cannot be accepted. In view of the above discussion, the contention of the Ld. Counsel that the payment by the BCCI to the appellant is a grant to Charitable Institution cannot be accepted. Even as discussed above, the nature of payment by the BCCI, is not voluntary grant or largesse rather the same is a payment in an arrangement of sharing of Revenue from commercial exploitation of the Cricket and infrastructure thereof, hence, the plea of the assessee that the income from BCCI be treated as a capital receipt in its hand is not tenable.
The appellant cannot be granted exemption under section 11 of the Act as its activities no more fall under the definition of charitable purposes as per the provisions of section 2(15) of the Act.
Taxation in the hands of the member of the AOP - amount paid by the BCCI to the appellant which has already been taxed at the hands of BCCI, cannot be now taxed in the hands of the member of the AOP i.e. the appellant State Association as it will amount to double taxation of the same amount. However, if the claim of the BCCI for treating the payments made to the State Association as deductible expenditure is accepted by any higher appellate authority in its case for the year under consideration, it will be open to the assessing officer of the appellant to reopen the case of the appellant and to decide whether the said payments received from BCCI can be taxed as income of the appellant which will be subject to our observations given on other issues raised in this appeal. The income received by the appellant/assessee otherwise, except the club income, which has not been taxed at the hands of the BCCI, will be assessed as per the normal provisions of the Act.
Income from club facilities and from caterer is concerned, the plea of the assessee is that all the above facilities e.g. Gym, Lawn Tennis, Swimming pool etc. are interconnected and interwoven with the objects of the appellant i.e. promotion of sport and cannot be viewed separately. Without prejudice to above, it has been submitted that the appellant is maintaining separate books of accounts in respect of all above club activities. That these facilities are being provided on the principle of mutuality, accordingly, these cannot be termed as trade, commerce or business activity. That the receipts from the caterer for providing catering service during the matches is intrinsically linked with the activity of organizing matches and tournaments for the promotion of cricket. It has been submitted that the club facilities are being run for the benefits of members and cricketers as per the objects of the society on the principle of mutuality.
AO observed that the assessee earned huge income of ₹ 123.03 lacs during the year from these facilities and this includes a sum of ₹ 14.97 lacs from caterer. That the assessee hosted these facilities for the purpose of recreation or one time booking for parties, functions etc. and these were commercial activities in nature as the assessee was charging fees for providing these facilities.
This issue is required to be reexamined by the Assessing officer after verification of the accounts of the assessee as to ascertain which part of the club income and catering services has been generated from the members of the assessee association and which part of the income is earned from non-members. It is also to be looked into whether the income from the club house and other facilities is generated generally from the members only and the receipt from the non-members is an exception or the income is generated from members and non-members in normal course of business. Whether the catering services are limited to the members and their guests only or the same are also provided to non-members also on commercial basis. AO after thoroughly examining the above facts will decide if the principle of mutuality applies to the club income including catering contract in accordance with law. This issue is accordingly restored to the file of the Assessing officer.
It is also made clear that our observations made above will not have any bearing as such on any adjudication in the cases of the BCCI and that the BCCI will have right and liberty to contest its cases irrespective of the observations given above as our findings rests on the pleadings of the parties before us though, the viewpoint of the BCCI has also been considered after giving due opportunity to the BCCI. Appeal of the assessee is treated as partly allowed for statistical purposes.
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2019 (9) TMI 680
Penalty u/s 271(1)(c) - bonafide belief - addition was made on enhancement u/s. 251(1) of the Act for the benefit of telescoping of income/outgoings - undisclosed transactions have been admitted to be undisclosed and he was ready to pay tax on it - scope of amendment - HELD THAT:- The position now is that unless and until the assessee substantiates the explanation and proves that such an explanation was bonafide, the addition made to his income shall deemed to represent the concealed income. As per the proviso to this Explanation, the onus to establish that the explanation offered was bonafide facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged for concealment. Now the entire onus is on the assessee to not only offer an explanation but also to substantiate it and to prove that the presumption was bonafide.
CIT(A) has rightly observed that assessee had deliberately and intentionally not disclosed the true and correct income with the intention to evade tax to the extent of ₹ 2,28,90,500/- on account of undisclosed sale of property and bank transaction and the Assessee himself has not filed any return of income and has admitted the transaction to be undisclosed. Even otherwise, we note that the Tribunal in quantum appeal vide its order dated 06.6.2019 in assessee’s own case in the same assessment year i.e. 2009-10 has upheld the action of the Ld. CIT(A) for enhancement of income. No infirmity in the impugned penalty order of the Ld. CIT(A), hence, we uphold the penalty order of the Ld. CIT(A) and reject the ground raised by the Assessee.
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2019 (9) TMI 689
Addition on account of share capital money received u/s. 68 - as alleged assessee has failed to offer any explanation with regard to credit found in the nature of share capital - HELD THAT:- In the case of PCIT vs. Hi-Tech Residency Pvt. Ltd. [ 2018 (7) TMI 1347 - SC ORDER ] has considered identical issue and held that where an assessee company had discharged the onus of establishing identity, genuineness of transaction and creditworthiness of investors, no additions could be made u/s. 68.
We, further, noted that although the Apex Court has not expressed any opinion, because of dismissal of SLP filed by the assessee, the fact of the matter is that this issue has been considered in the case of CIT vs. Lovely Exports (P) Ltd [ 2008 (1) TMI 575 - SC ORDER ] where the issue has been thoroughly examined in the light of provisions of section 68 of the Act, and held that if the share application money is received by the assessee company from alleged bogus share holders, whose names are given to the AO, then the department is free to proceed to reopen their assessment in accordance with law, but sum received from share holders cannot be regarded as undisclosed income of the assessee.
Assessee has discharged its initial onus to prove identity, genuineness of transactions and creditworthiness of the parties by filing various documents. AO, without carrying out further inquiries in order to ascertain the claim of the assessee, jumped into conclusion on the basis of financial statements of the subscribers that none of them had enough source of income to establish creditworthiness. AO and the CIT(A) erred in making additions towards share capital received from seven subscribers u/s. 68 of the I.T. Act, 1961. Hence, we direct the AO to delete the additions made towards share capital u/s. 68
Addition towards non-existing liability u/s. 41(1) - HELD THAT:- AO erred in making addition towards creditors u/s. 41(1) of the Act, unless he brought out any material to the effect that such liability has been in fact ceased to exist during the relevant financial year. However, it is not clear whether the details with regard to payment of such liabilities /written back in subsequent years were before the AO or not. Therefore, for the limited purpose of verification of the facts with regard to payment of such liabilities and also written off such liabilities in subsequent financial year and offered to tax, we set aside the issue to the file of the AO and direct him to make necessary inquiries and allow relief in terms of our discussion hereinabove.
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2019 (9) TMI 679
Addition made towards “undisclosed investment” - taxability of the cash deposits in the assessee’s bank account - HELD THAT:- Merely because the assessee’s father did not file the return of income within the due date specified u/s 139(1) it cannot be held that the cash component of the consideration should be assessed in the hands of the assessee as has been held by the CIT(A).
Taking into account the factual matrix and the circumstances of the case, as discussed above, the inference of the AO that the cash deposits amounting in the assessee’s bank account in Corporation Bank, Vijaynagar Branch, Mysore, constitutes unexplained investment by the assessee in the case on hand is not tenable.
The explanation furnished by the assessee in this regard was proper and plausible and ought to have been accepted, but was rejected without substantial reasons. The finding rendered by the ITAT-Jaipur Bench in the case of Smt. Ramawati [2015 (4) TMI 1277 - ITAT JAIPUR] is equally applicable to the facts of the present case and therefore the addition made by the AO being untenable and unsustainable is ordered to be deleted. - Decided in favour of assessee.
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2019 (9) TMI 678
Addition made u/s 40A(2)(b) - payment to the persons specified - Payment made towards subcontracting of work to JV - Payment of 99% of receipt instead of 95% as per AO - HELD THAT:- As decided in KEC-Delco-Vraha (JV) [2018 (9) TMI 1885 - ITAT DELHI] disallowance under this section is made in respect of the expenses incurred or payments made which are not deductible. This section has no application to income aspect of the assessee. As the AO has made disallowance u/s 40A(2)(b) in respect of income which the assessee in his opinion ought to have earned rather than certain expenses incurred, the provisions of this section are not attracted. Uphold the impugned order on this score deleting the disallowance - Decided in favour of assessee.
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Customs
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2019 (9) TMI 677
SEZ unit - Amendment in shipping bills - MEIS benefit - Section 149 of the Customs Act, 1962 - HELD THAT:- As far as examination of the consignment is concerned during the relevant time, there was no provision for physical examination of the cargo exported from SEZ unit under MEIS Scheme and that requirement was incorporated only on 19.09.2018 vide Notification G.S.R. No. 909 (E) dated 19.09.2018. Further, the entire export took place prior to incorporation of the physical examination requirement. Further, in the case of SEZ, the entire operations are under the control of Development Commissioner and the officers of the Customs posted therein and they can easily verify the entire records but the same was not done in this case.
The impugned order denying the amendment of the Shipping Bills is not sustainable in law - Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2019 (9) TMI 676
Maintainability of application - initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016, read with Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Operational Debt - default in repayment of debt due and not payable - existence of dispute.
HELD THAT:- This adjudicating authority is of the considered view that operational debt is due to the Applicant. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default - the Application filed by the Applicant is complete in all respects.
It is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - Petition admitted - moratorium declared.
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2019 (9) TMI 675
Approval of Resolution Plan - default in repayment of Debt - funding of Resolution Plan - HELD THAT:- Resolution plan is approved subject to that the dissenting FC even though a related party shall be paid the principal amount due and as agreed before this Tribunal by the Resolution applicant before payment is made to the equity shareholders as contemplated under the resolution plan - Further in relation to the transactions as brought to the notice of this Tribunal by Ld. RP in CA No. 58 of 2018 cannot be easily brushed aside and if true cannot be also condoned and hence OBC being the sole financial creditor in the CoC and being part of the Monitoring Agency shall cause a detailed investigation to be made, transaction wise of the Corporate Debtor and bring to the notice of this Tribunal factoring the reply of the Corporate Debtor and all the respondents of any acts of the nature of transactions brought forth by the RP in the above said application.
The implementing and supervision authority shall have also the authority to bring to the notice of this Tribunal any deviation from the resolution plan including in relation to the losses, which may have occasioned due to the conduct of the promotors of the Corporate Debtor prior to the initiation of the CIRP as against it - The moratorium imposed under Section 14 shall cease to have any effect henceforth.
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FEMA
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2019 (9) TMI 666
Purchase of property in India - Individual arrived in India on Business Visa - “Person resident in India” as contemplated under Section 2(v) of the Foreign Exchange Management Act, 1999 - THAT:- Appellants residing in India for more than 182 days in the previous financial year at the time of setting up of business and purchase of property in India.
Thus, they satisfied the definition of the term “Person resident in India” as contemplated under Section 2(v) of the Foreign Exchange Management Act, 1999 and therefore there was no impediment to purchase and hold property in India nor did they require any permission from the Reserve Bank of India to purchase immovable property or to set up any business in India. The property was purchased on 01.09.2009 more than a year after they entered India under a valid Visa. It is specifically alleged that the documents/allegations as made out in the complaint/ Impugned order are vague as nothing was placed on record to show that ₹ 2,15,21,972/- was brought in India in violation of FEMA.
The appellants issued a valid Business Visa by the Embassy of India, Seoul which Business Visa was valid from 28.07.2008 to 27.07.2009 and thereafter from 17.08.2009 to 16.08.2010 and on subsequent dates. Both entered India on 08th August 2008 and continuously stated in India till 17.07.2009 when they left India and came back after obtaining a fresh Business Visa for the period 17.08.2009 to 16.08.2010. It is further confirmed in the impugned order.
Copy of passport of the Appellants with the relevant Business Visa and stamp of the Immigration Department for arrival and departure on the respective dates have been filed alongwith written submissions as Document no. 1. They purchased the immovable property on 01.09.2009, they had fulfilled the requirement of “Person Resident in India” as defined under section 2(v) of the Foreign Exchange Management Act, 1999 by continuously residing in India from 08th August, 2008 till 31.03.2009 for more than 182 days during the preceding Financial Year i.e. 2008-2009.
Before they purchased the immovable property, had written a letter to the Reserve Bank of India on 06.08.2009 requesting for permission to purchase the property and for constructing a building thereon. The Reserve Bank of India vide their letter dated 26.08.2009 bearing no. FE.CO.FID/5396/10.51.000/2009-10 had confirmed under Section 2(v) of the FEMA, 1999 that the Appellants do not require the approval from the RBI from the FEMA angle and that they would have only to prove his/her residential status if required, by any Authority.
Therefore, before purchase of the immovable property, the appellants had approached the RBI seeking permission. In view fo the reply of the RBI vide the afre said letter, the Appelalnt had only to satisfy Section 2(v) of FEMA, 1999, and no prior approval was required on the date when they ahd purchased the immovable property. Copy of the RBI letter is enclosed Documents no.2.
This fact has been noted by the Adjudicating Authority (internal page 6, paragraph No. 18 (6)) while passing the impugned order.
The test as contemplated under Section 3(c) of FEMA has not been met. The Respondents failed to establish all the three (3) necessary ingredients to show any violation, the ingredients being that there was a receipt of payment; the receipt was otherwise than through an authorized person and the receipt was by Order or on behalf of any person resident outside India. In the impugned order contentions and documents referred by the appellants have not been dealt with. It has come on record that the Trust was setup by the Appellants for a charitable purpose of providing shelter and education to children belong to backward and poor class irrespective of caste, creed or religion and Appellants have agreed to hand over the property to a Trust which has been set up comprising of Indian trustees who have given their consent to act as trustees and carry on with the objectives of the trust.
Thus, there is no violation of FEMA - Appeal allowed.
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Service Tax
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2019 (9) TMI 670
Recovery proceedings - demand of service tax - management consultancy service - fees paid to Hyatt International for the operation of Hotel - Business Auxiliary Service - miscellaneous payment to Hyatt International - Maintenance or repair service - subscription and maintenance of Software - Business Auxiliary Service - Reservation expenses, Hyatt Gold Passport, Hyatt chain services - Interior Decorator Service - penalty on Design and Consultancy charges - penalty on Advertising Agency Service - Business Auxiliary service - Currency Conversion Fee - Convention Centre Services - miscellaneous Revenue like photocopies etc -
Management consultancy service - fees paid to Hyatt International for the operation of Hotel - period 18 April, 2006 to 31 March, 2007 - HELD THAT:- In the present case, as the period in dispute is from 18 April, 2006 to 31 March, 2007, the definition of ‘management consultant’, as it stood prior to 01 June, 2007 would be relevant - Hyatt International carries out the operation and management of the hotel for the Appellant under the agreement. It is not engaged in providing any service in connection with the management of the hotel. It is itself running the hotel. Hyatt International also does not render any advice, consultancy or technical assistance to the Appellant. It needs to be noted that actual running or managing an organization cannot be the same as providing any service in connection with the management of the organization.
It is difficult to comprehend, on a plain reading of the agreement, that Hyatt International is providing any service to the Appellant as a ‘management consultant’. - Hyatt International is not providing any service of a ‘management consultant’ to the Appellant - Demand do not sustain.
Business Auxiliary Service - miscellaneous payment to Hyatt International - period is from 18 April, 2006 to 31 March, 2007 - HELD THAT:- Only such amount is subject to service tax which represents consideration for provision of service and any other amount which is not a consideration for provision of service cannot be subjected to service tax - the service tax is on the “value of taxable services” and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the service tax - the value of material which is supplied free by the service recipient cannot be treated as “gross amount charged” as that is not a “consideration” for rendering the service - the expenses which are reimbursed, cannot be subjected to levy of Service Tax under ‘business auxiliary service’ - demand do not sustain.
Maintenance or repair service - subscription and maintenance of Software - period 18 August, 2006 to 31 March, 2007 - HELD THAT:- The impugned order has taken into consideration the ‘Explanation’ that provides that ‘goods’ would include ‘Computer Software’, even though this Explanation was added w.e.f 01 June, 2007 and the period in dispute is from 18 August, 2006 to 31 March, 2007 - It is, therefore, not possible to sustain the demand made by the Commissioner under this head.
Business Auxiliary Service - Reservation expenses, Hyatt Gold Passport, Hyatt chain services - period involved is from 18 April, 2006 to 31 March, 2007 - HELD THAT:- It is seen that M/s Hyatt Chain Services Ltd. undertakes certain promotion activities for the Hyatt Chain of hotels and thereafter passes on the cost to the hotels on actual basis. Thus, the arrangement is of sharing of joint promotional expenses at a global level. Even under the ‘Hyatt Gold Passport Program’, the members of the program are provided exclusive services, benefits, and promotions at the Hyatt hotels. The participating hotels are jointly promoting their business by organizing the said program and offering bonus points to guests availing facilities in their hotels. The settlement between the hotels where the bonus points are earned and the hotel where the bonus points are redeemed is facilitated by Hyatt Corporation - It was found that the arrangement was such that all the group companies would benefit for such expenses which, though initially borne by the Appellant, were subsequently shared. Thus, there was no scope for imposition of tax liability on the Appellant under the category of ‘business auxiliary service’ - In the present case the Commissioner after noticing the contention of the Appellant merely observed, without giving any reasons, that all the services were covered under the definition of ‘business auxiliary service’. This apart, no particular clause of the definition of ‘business auxiliary service’ was referred to - it is not possible to sustain the confirmation of demand under this head.
Imposition of penalty - Interior Decorator Service - Design and Consultancy charges - HELD THAT:- The taxable service under the aforesaid Section 66A has to be treated as if the recipient had himself provided the service in India. The impugned order seeks to levy Service Tax upon the Appellant as a service recipient. There was a confusion regarding imposition of tax on reverse charge basis and the legal position was finally settled by the Bombay High Court in INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT] - the imposition of penalty under the impugned order under this head is not justified.
Imposition of penalty - Advertising Agency Service - Reverse charge mechanism - HELD THAT:- The submissions advanced by the learned Counsel for the Appellant for contesting the penalty under this head are the same as advanced for contesting the penalty under the earlier head ‘Design and Consultancy Charges’. For the reasons stated, while dealing with imposition of penalty under the said head, the imposition of penalty under this head cannot also be sustained.
Business Auxiliary service - Currency Conversion Fee - period is from 01 April, 2003 to 31 March, 2003 - HELD THAT:- In M/S MARUDHARA MOTORS VERSUS CCE JAIPUR [2018 (1) TMI 1216 - CESTAT NEW DELHI] a Division Bench of the Tribunal examined whether document processing charges received from the buyer of the vehicle could be subjected to levy of Service Tax under ‘business auxiliary services’. The Tribunal found that service was being provided to a client for and on behalf of the financial institutions or banks. It was for providing documentation that charges were claimed from the customers and since there was no involvement of any third party on whose behalf service could be said to have been provided to the customers, Service Tax could not have been demanded under ‘business auxiliary services’ - demand set aside.
Convention Centre Services - miscellaneous Revenue like photocopies etc - period is from 01 October, 2002 to 31 March, 2004 - HELD THAT:- The aforesaid charges collected by the Appellant from the hotel guests do not in any manner whatsoever relate to holding of a convention. Convention, means a formal meeting or assembly which is not open to the general public. The levy of charges under this head, therefore, cannot be sustained.
Appeal allowed in part.
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2019 (9) TMI 667
Renting of immovable property service - period August, 8/2008 to June, 6/2012 - eligibility for abatement of 40% in terms of notification no.26/2012 - service tax on letting out plant/machinery and fixtures to M/s. Mahindra Holidays & Resorts India Ltd. - Supply of tangible goods service - extended period of limitation - penalty u/s 77 and 78 of FA.
HELD THAT:- The facts are akin to the ruling in the case of M/S JAI MAHAL HOTELS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2014 (7) TMI 540 - CESTAT NEW DELHI], wherein it has been held that on true and fair construction of the provisions of Exclusionary Clause under Explanation I to Section 65(105) (zzzz) and in particular, sub-clause (d) thereof, it was held that renting of building used for the purpose of accommodation including hotels, meaning thereby renting of a building for a hotel is covered by the Exclusionary Clause and does not amount to an immovable property, falling within the ambit of taxable service. Accordingly, it is held that for the part of the disputed period August, 2008 to 30.06.2012, the appellant is not liable to service tax. For the period from 1.7.2012, the appellants have admittedly deposited the service tax and has not disputed their liability, subject to abatement.
The appellant, as provided in Notification No.26/2012-ST, is entitled to abatement of 40% and is liable for service tax only on the balance receipt of 60% with respect to the lease rent of the hotel.
Supply of Tangible goods service - demand of service tax - HELD THAT:- The amount received per annum is not wholly for supply of tangible goods, as the plant and machinery, which are embedded to the earth and the fixtures and fittings, which cannot be removed without cannibalising them, and their removal may destruct, is not classifiable as goods, as the same are immovable - the appellant shall not be liable to service tax under the category of SOTG on the goods which are present in the hotel premises, which are immovable in nature - this issue is remanded to the Adjudicating Authority for a re-determination.
Penalties - HELD THAT:- The issue is wholly interpretational in nature. Further, the transaction is duly recorded in the books of accounts maintained in the ordinary course of business and thus, there is no contumacious conduct on the part of the appellant - Penalty u/s 77 and 78 set aside.
Appeal allowed in part.
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Central Excise
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2019 (9) TMI 669
CENVAT credit - items which were cleared by the appellant as scrap or as un-used items or partially used items - case of appellant is that these goods are generated out of the items procured prior to March 1994 and therefore there is no question of reversal of Cenvat credit - applicability of Rule 3(5A) of Cenvat Credit Rules, 2004 - HELD THAT:- Rule 3(5A) applies on capital goods on which credit has been taken and which are cleared as waste and scrap. The product has to be first been received as capital goods and on which the credit has been availed.
Before invoking Rule 3(5A) of the Cenvat Credit Rules, 2004, it is necessary for the Revenue to establish that items of capital goods are cleared as waste and scrap and on which the appellant has availed Cenvat credit. The defense of the appellant throughout is that they have not availed Cenvat credit in respect of capital goods - There are no merit in the submissions made by the appellant. Unless Revenue establishes that they availed Cenvat credit on the capital goods which are being removed as waste and scrap, provisions of Rule 3(5A) of Cenvat Credit Rules, 2004 cannot be invoked. In these circumstances, demand under Rule 3(5A) of Cenvat Credit Rules, 2004 is set-aside.
CENVAT Credit - demand on waste and scrap items lime MS Oil paint drums, spent zinc based catalyst, used therminol, comox catalyst etc., these items - HELD THAT:- The Section 2(d) defines the excisable goods and to be excisable goods, is to be first manufactured. The goods coming into existence as by-product during the process of manufacture cannot be treated as manufactured goods - Thus, even if the items cleared answered to the description under Section 2(d) of the Central Excise Act, duty can be charged only if they pass through the process under Section 2(f) of the Act - demand do not sustain.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 668
CENVAT Credit - Partial writing off of inputs - reversal u/r 3(5B) of CCR - HELD THAT:- It is an admitted fact that the appellant has partially written off the value of certain inputs and has not fully written off. Further, as per the provisions of Rule 3(5B), the appellant is required to reverse the CENVAT credit if he has written off fully the value of inputs whereas in this case, the appellant has not fully written off - Further, in the case of partial writting off, the provision has been incorporated with effect from 1.4.2011 whereas in the present case, the period involved is prior to this date, therefore, this amendment is not applicable in the appellant’s case - demand set aside - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (9) TMI 674
Maintainability of petition - alternate efficacious remedy of appeal - section 26 of the Maharashtra Value Added Tax Act, 2002 - HELD THAT:- Section 26 of the said Act provides for an alternative remedy of appeal. The petitioner can avail of the alternative remedy of appeal. Even the issue of breach of natural justice is an issue which could be considered by the Appellate Authority, if that be factually so.
There is no reason to exercise our extra-ordinary jurisdiction when there is an efficacious alternative remedy available to the petitioner under the Act - petition dismissed.
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2019 (9) TMI 672
Condonation of delay of 101 days in filing review petition - HELD THAT:- The learned State Counsel concedes that the grounds raised in the present Review, have already been considered and rejected by the Full Bench of this Court, therefore, nothing would survive in the present review application and the same is liable to be dismissed.
Review application dismissed.
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2019 (9) TMI 671
Validity of assessment order - TNVAT Act - alleged unaccounted purchases of Cardamom - seeking opportunity to cross-examine the consignors mentioned in the notice - also seeking copies of transport bills, copy of payment and despatch details in regard to the twelve transactions - principles of Natural Justice - HELD THAT:- It is appalling that the impugned order of assessment proceeds to fasten tax liability of ₹ 14,53,811/- along with penalty of ₹ 21,80,717/- in such a careless and cursory fashion. None of the principles at play for framing of an assessment, such as consideration of the objections filed, grant of opportunity for personal hearing or application of mind by the assessing officer find place in the impugned order. The impugned assessment does not take into account any of the detailed submissions made by the petitioner in regard to the sixteen (16) transactions.
There has been gross violation of the principles of natural justice insofar as the specific request for the personal hearing has also been ignored. In all, the order indicates gross misapplication and non-application of mind.
Impugned assessment is quashed - petition allowed.
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Indian Laws
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2019 (9) TMI 673
Right to Privacy - Seeking information from the dealers of BPCL to ensure that the outlets are not operated on benami basis - Seeking copy of sales tax returns, bank account statements and income tax returns pertaining to their dealership - failure to furnish the information - HELD THAT:- In K.S. Puttaswamy [2017 (8) TMI 938 - SUPREME COURT], the Supreme Court has held that, the right to privacy is protected as an intrinsic part of the right to life and personal liberty under Article 21 of the Constitution of India and as a part of the freedoms guaranteed by Part III of the Constitution. However, the Apex Court has further held that the right to privacy is not absolute.
K.S.Puttaswamy holds that any action by the State or its agencies which curbs or restricts the right to privacy of a citizen shall pass each of the following three tests: (1) test of legality, that is, such action must have a legislative or statutory basis (2) test of need and necessity, that is, such action shall serve a definite purpose in public interest and (3) test of proportionality, that is, such action shall be at the minimum level required to achieve the object.
Any information which discloses remittances made to the Income Tax Department towards discharge of tax liability would constitute personal information. A demand for furnishing income tax returns filed by a person would constitute invasion of the privacy of a person.
The second, fourth and the sixth respondents have got no right to require the appellants to furnish their income tax returns and the bank account statements, as a condition for continuing the petroleum retail dealership granted to them. Ext.P2 circular issued by the second respondent is hereby quashed - Petition disposed off.
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