Highlights / Annotations / Quick updates

November 16, 2019
FEMA: Foreign Exchange Management (Deposit) (Third Amendment) Regulations, 2019
November 16, 2019
FEMA: Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2019
November 16, 2019
Cus.: Advance Authorization scheme - SION - allegation that the party had mis-declared that the exported product has been manufactured out of LSFO - This court finds no infirmity in the approach adopted by the Tribunal in accepting the explanation put forth by the respondent, which has a duly scientific basis
November 16, 2019
Cus.: Direction to issue a fresh certificate for unused value of the said Duty Free Credit Entitlement Certificate - Benefits under SFIS - Absolutely no discussion is made with regard to contentions raised by the petitioner that how they are not entitled for the benefits under “Served From India Scheme”. - Matter restored.
November 16, 2019
Cus.: Exemption under Rule 26 of the SEZ Rules, 2007 - import of New Garments in the name of "old and used clothing rags" - he project report clearly states that some of the reported garments that new and could be out of fashion in terms of time in these circumstances the conclusion of the Commissioner in the impugned order that the said T-shirts are not by letter of permission is mis-placed. - Benefit of exemption allowed.
November 16, 2019
GST: Classification of goods - fusible interlining cloth partially coated with plastic which is used for shirt collars, cuffs, pant belts etc. - The product, namely fusible interlining cloth, is classifiable under Heading 5903 in Chapter 59
November 16, 2019
GST: Recovery of amount on account of tax, cess, interest and penalty - no proceedings whatsoever, was issued against the petitioner - Perusal of Section 83 would show that the such provisional attachment can be resorted to only when proceedings are pending under any of the provisions viz., Section 62, 63, 64, 67, 73 and 74.
November 16, 2019
I.Tax: Reopening of assessment u/s 147 - assessee is not being supplied with information/ documents by the AO - If such petitions are routinely entertained, not only would it lead to opening of flood-gates, but also it would be extremely difficult for the AO to complete the assessment proceedings within the period of limitation prescribed under the Act.
November 16, 2019
I.Tax: Treatment to person as a Principal Officer of the company - Key Management Personnel - Whether the petitioner is the person connected with the management or administration of the company. Such finding has to be supported by substantial material - Merely on surmises and conjectures, no person shall be treated as a Principal Officer.
November 16, 2019
I.Tax: Revision u/s 263 - CIT was clothed with ample supervisory powers to direct for redoing the assessment provided twin conditions as envisaged by Section 263 were fulfilled.
November 16, 2019
I.Tax: Accrual of interest on deposits - Co-operative society had not come into existence till the end of relevant previous year - the assessee cannot hold the amount in fiduciary capacity of a non-existent entity. - If arguments forwarded by assessee are accepted, then the interest income on fixed deposits would escape tax net - Income could not be earned in vacuum and it should accrue to certain beneficiary.
November 16, 2019
Cus.: Scope of the SCN - It is completely impermissible for the Revenue to issue a Show Cause Notice and, thereafter, seek to support, or even supplement, the recitals in the Show Cause Notice by way of Office Memoranda, or executive instructions, such as the Office Memorandum dated 16th February, 2018, under challenge in these writ petitions. - Such an attempt would result in reducing the adjudicatory process to a mockery, and deserves to be deprecated.
November 16, 2019
Cus.: Status Holder Incentive Scheme - Import from the port which was not included in the list, later included - - listing of ports in Notification No.104/2009 is not an exhaustive list and on the other hand, it is only inclusive in view of the fact that the authorities included other ports by amending the said Notification periodically. - Benefit of the scheme allowed.
November 16, 2019
Cus.: Amendment in shipping bill - The conversion sought by the respondent was from free shipping bill to advance license shipping bill. The petitioner could not have entertained the application for such conversion without examination of the records.
November 16, 2019
Cus.: Levy of penalty on CHA - Prohibited goods - since they have failed in their duty and such act have rendered the subject consignment liable for confiscation as per provisions of Section 111 (d) of the Customs Act, 1962, a penalty under Section 112 (a) of Customs Act is required to be imposed.
November 16, 2019
Cus.: Levy of penalty - Improper importation - prohibited imports - The Adjudicating Authority has rightly taken the market value of such goods as prevailing in the local market for imposition of penalty, the amount of the penalty imposed on both the appellants is in accordance with the provisions of Section 112A (i) of Customs Act, 1962 and, therefore, no reason to interfere with the amount of penalty imposed on both the appellants.
November 16, 2019
Co.Law: Handover of possession of the properties belonging to the Company (In Liquidation) - Tenants - The orders/decrees passed by the Courts in favour of tenants declaring them to be tenants, are a nullity in the eyes of law and are declared illegal and void, as being coram non judice and hence not binding on the Official Liquidator of the Company (in liquidation) - The tenants are directed to handover physical possession of the properties set out in paragraphs 7 and 8 above within a period of one (1) week from the date of uploading this Order.
November 16, 2019
IBC: Corporate Insolvency resolution process (CIRP) - A successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor.
November 16, 2019
IBC: Insolvency resolution process - Secured and unsecured creditors; the equality principle - the equality principle cannot be stretched to treating unequals equally, as that will destroy the very objective of the Code - to resolve stressed assets. Equitable treatment is to be accorded to each creditor depending upon the class to which it belongs: secured or unsecured, financial or operational.
November 16, 2019
VAT: The term "assessment" cannot be construed only as an order of assessment and on the other hand, the said term "assessment" consists several process commencing from the issuance of notice to passing of the order of assessment. Thus, the term "assessment" includes passing of an order of assessment as well and thus, it does not mean the order of assessment as such.
November 16, 2019
VAT: Levy of entry tax - validity of insertion of new entry as “unmanufactured tobacco in sealed container” - In view of the product sold in sachet under a brand name after subjecting raw tobacco to physical process of cutting, shredding and sizing so as to make it fit for consumption including the process of being packed in a sealed container, the unmanufactured tobacco ceases to be an agricultural produce as defined under the KTEG Act and the dictionary meanings.
November 16, 2019
Indian Laws: Appointment of members of Tribunal - Section 184 of the Finance Act, 2017 does not suffer from excessive delegation of legislative functions as there are adequate principles to guide framing of delegated legislation, which would include the binding dictums of this Court.
November 16, 2019
Indian Laws: Constitutional spirit of judicial independence - appointments to the Debt Recovery Tribunals - constitutionality of the Finance Act, 2017 - satisfaction of test of a ‘money bill’ under Article 110 of the Constitution. - Matter referred to a larger bench.
November 15, 2019
GST: Zero rated supply or not - The supply of stores imported or otherwise, to foreign going vessels cannot, therefore, be construed as export unless it is marked specifically for a location outside India. It is not a zero-rated supply.
November 15, 2019
GST: Exemption from GST - Supply of biscuits, soaps etc. earmarked ‘FOR PDS SUPPLY ONLY’ to fair price shops/PDS distributors - Supply of goods through PDS is not exempted
November 15, 2019
GST: Detention of goods - the conveyance in question has been detained on the ground of discrepancy in transport certificate which is not a requirement prescribed under the statute. Under the circumstances, the second respondent was not justified in passing the order of detention under section 129(1) of the CGST Act.
November 15, 2019
GST: Input tax credit - shifting to GST regime - transitional credit - The respondents (Govt) are directed to either open the online portal so as to enable the petitioner to again file the rectified FORM GST TRAN-1 electronically or accept the manually filed FORM GST TRAN-1 with corrections on or before 30th November, 2019
November 15, 2019
I.Tax: Reversal of profits declared in earlier years on account of estimated loss expected - valuation of work in progress (WIP) - The matching principle requires recording expenses in the same accounting period in which the revenues were earned as a result of the expenses. Expense recognition, similar to revenue recognition, has a balance sheet effect. - The action of the assessee upsets the applecart of mercantile system of accounting, the matching principles.
November 15, 2019
I.Tax: TDS u/s 195 - appealable order u/s 246A - there being a specific provision under section 248 of the Act for filing appeal against order passed u/s 195(2) of the Act, that too by payer / deductor of tax at source the said order cannot be challenged under section 246A of the Act by the assessee.
November 15, 2019
I.Tax: Not only that the appeal is ill conceived, but, even after pointing out the legal position, rather than explaining his stand or expressing remorse for having filed this appeal, the assessee did not even bother to attend the court proceedings any further, and submitted this note pointing out, on the basis of, what appears to be, fallacious logic, as to why special bench is required to be constituted in this case. Such an approach cannot meet any judicial approval, including by this forum. - Appeal dismissed with cost.
November 15, 2019
I.Tax: Rejection of books of account - Instead of making the assessment by considering the provisions of section 145(3) read with section 144, the AO has proceeded to make specific disallowance after rejection of books of account. This action of the AO is not permitted under law
November 15, 2019
I.Tax: TDS u/s 195 - Retrospective amendment - The amendment brought in by the Finance Act with retrospective effect, which was passed in the year subsequent to the year under consideration, should not be considered for penalizing the assessee by treating him as an Assessee in default.
November 15, 2019
I.Tax: TDS u/s 195 - Royalty - The fact that the charges for use of the simulator is separately quantified on hourly basis does not mean that the Assessee is hiring the same or making payment for a right to use the same. Without the imparting of training by the instructors, the hiring of simulator on its own does not have any purpose. It cannot therefore be said that the Assessee paid royalty for use of simulator.
November 15, 2019
Cus.: Prohibited goods or not - powers conferred by Clause 8(1) of the Imports (Control) Order, 1986 - For, a quasi judicial order passed in exercise of powers under the Statutory Order which stands repealed along with the repealed Act, is not saved especially when it will be per se repugnant to 1992 Act and defeat the spirit of opening of the import regime for the stated goods
November 15, 2019
Cus.: Provisional release of gold stock in trade - Advance Authorisation Scheme - Exhibition Export Scheme - Due to seizure of almost the whole working capital (Goods, raw material, W.I.P.), for over 6 months, the appellant is facing difficulty of livelihood, it’s workmen, and others too. - The provisional release of goods allowed on certain terms.
November 15, 2019
S.Tax: Extended period of limitation - the appellant itself has chosen to follow the procedure laid down under Rule 6 (3A) on and from 01.04.2014 by reversing the proportionate input service credit attributable to the exempted service of trading, which clearly shows the knowledge of the appellant as to the requirement of law, which was also done prior to the issuance of the Show Cause Notice - extended period rightly invoked.
November 15, 2019
S.Tax: Erection, Commissioning or Installation Service (ECIS) - Had there been a break up of the material and the service components in the contract itself, the demand would have been raised on the service component ignoring the material. - it is found that the contract in question is a composite works contract - The demand in this case has been made under Erection, Commissioning and Installation Service. ECIS does not include the contract where transfer of materials is involved. - Demand set aside.
November 15, 2019
C.Ex.: Scope of SCN - Manufacturing activity taking place or not - the scheme of Section 11A does not contemplate that before issuance of any show cause notice, there must, prima facie, be: (a) a preliminary determination that the process or activity undertaken in the matter amounts to manufacture; and (b) before arriving at such preliminary determination, any hearing to the concerned person is contemplated.
November 15, 2019
C.Ex.: In the present case, eligibility to benefit of the notification is not in dispute and therefore the strict interpretation of the notification is not to be followed because once the appellant is found to be eligible for the benefit of the notification thereafter liberal procedure to be followed, is permissible - the substantive benefit should not be denied for procedural infractions
November 15, 2019
C.Ex.: Rate of Interest on Refund of duty paid - once there is a notification of Central Government fixing 6% as the rate of interest same has to be followed as having power of statute. - The error of adjudication which is very much apparent irrespective once committed cannot be repeated.
November 15, 2019
VAT: Recovery of outstanding tax arrears from the purchaser of the property - The petitioner being a bona fide purchaser who has purchased the subject property in sale proceedings under the Securitisation Act prior to any charge having been created in favour of the first respondent has no liability to discharge the debts of the third respondent.
November 15, 2019
Indian Laws: Rejection of Arbitration application - If the court were to take a contrary approach and minutely examine the plea and judge its credibility or reasonableness, there would be a danger of its denying a forum to the applicant altogether, because rejection of the application would render the finding (about the finality of the discharge and its effect as satisfaction) final, thus, precluding the applicant of its right event to approach a civil court.
November 14, 2019
GST: Presence of Lawyer during examination/interrogation by the GST officers - The petitioner in the present case has been summoned by the Officers under GST Act who are not Police Officers - The presence of the lawyer is not required during the examination of the petitioner.
November 14, 2019
I.Tax: Disallowance of damages u/s 37 - only those payments which have been made for infringement of law shall not be allowed as revenue expenditure. Since, the said payment/deduction was not towards any offence or infringement of law therefore the disallowing the same is not tenable on part of the AO.
November 14, 2019
I.Tax: Penalty u/s 271AAB - whether it is mandatory or discretionary - income surrender on account of advance for land - When there is no acquisition of land then in the absence of the corresponding asset acquired by the assessee the mere noting of the advance which is out flow of the funds cannot be held as undisclosed income.
November 14, 2019
Cus.: Confiscation of the goods already cleared - Import of certain capital goods under EPCG Scheme - The bond executed by the AMW is not for production of goods but for fulfillment of export obligation and to pay duty in case of failure to fulfill export obligation - The goods cannot be confiscated, even if, the same are liable for confiscation.
November 14, 2019
Cus.: Revocation of CHA License - not obtaining authorization from the importer - not advising his client properly. - Once the Customs Broker has been approached by the employee of the importer and he has verified the necessary documents, then there cannot be any allegation of violations against the CHA
November 14, 2019
IBC: Maintainability of application - initiation of CIRP - scope of the term goods or services under the code - The debt arising out of non-payment of lease rent does not fall under the definition of “operational debt” as defined u/s 5(21) of the Code of 2016 (even though it may otherwise be a debt).
November 14, 2019
S.Tax: Voluntary Compliance Encouragement Scheme - the substantial benefit should not be disallowed for venial mistake of clerical nature.
November 14, 2019
S.Tax: Condonation of 67 days delay in filing the appeal before the CESTAT by the Revenue - The occasion to adopt a liberal approach in matters of condonation of delay would only arise if some cause is made out for the delay - Therefore, the view taken by the Tribunal in the present facts cannot be said to be perverse