The Central Bureau of Investigation ( CBI ) has arrested 19 accused (6 Customs officials & 13 private persons) including an Assistant Commissioner, Superintendents, Inspectors, private persons(including Sri Lankan Nationals) in a case related to alleged bribery and smuggling of goods.
Searches were conducted at various places including residences of public servants and others at Trichy, Coimbatore, Madurai, Virudhnagar, Chennai & Rasipuram which has led to recovery of huge cash and several documents. Earlier, during this operation at Trichy Airport, CBI recovered cash of Rs.9 lakh(approx) collected as alleged illegal gratification.
CBI had registered a case against 6 Customs Officials including one Assistant Commissioner, two Superintendent of Customs, two Inspectors of Customs & an official posted at Trichy International Airport and 13 private persons including Sri Lankan Nationals. It was alleged that a large scale smuggling of contraband goods through the Trichy airport was going on with active connivance of the customs officials who were obtaining undue advantages from smugglers in the form of illegal gratification for allowing goods from Sri Lanka, Singapore, Malaysia etc., without payment of customs duty, thereby causing huge revenue loss to the Government of India.
It was further alleged that the private persons carrying goods ( viz gold, liquor, cigarettes etc.) had arrived in the evening of 5th August 2018 by Sri Lankan Airlines and they were allowed by said custom officials to pass through the customs without payment of duty. It was also alleged that these passengers were regular carriers and in nexus with the custom officials had been smuggling goods etc at regular intervals.
The arrested accused are being produced before the Competent Court.
Investigation is in progress.
The Madras High Court has held that a notice proposing to attach the property by the income tax department cannot be challenged before the High Court invoking the writ jurisdiction under Article 226 of the Constitution.
The tax department proposed to attach the property belongs to M/s NEPC India Ltd., which was later transferred to the petitioner. The petitioner approached the Court challenging the notice for attachment of the property by the Tax Recovery Officer. The notice stated that the said property has been attached, as the transfer in the name of the petitioner is null and void in view of Section 281(1) and Rule-16 of the 2nd Schedule to the Income Tax Act, 1961. The petitioner was prohibited from dealing with the property in any manner.
Before the High Court, the petitioner contended that she is a bona fide purchaser of the said property for a valuable consideration and as on the date of purchase, there are no encumbrances/charge on the property.
After analyzing the relevant rules, Justice T.S Sivagnanam pointed out that if any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection.
“The procedure for such investigation and the manner in which the proceedings to be conducted are enumerated under Rule 11 of the said Rules. Therefore, if the petitioner’s claim is that the property is not liable for such attachment, then the petitioner has to make a claim before the Tax Recovery Officer and for such reason, the petitioner could not have approached this Court invoking the jurisdiction under Article 226 of the Constitution of India. Therefore, the Court holds that the writ petition is not maintainable. However, considering the fact that the Income Tax Act and Rules framed thereunder, especially Rule 11 under the 2nd Schedule, provides for a remedy to the assessee, the petitioner is at liberty to avail such a remedy,” the Court said.
Subscribe Taxscan Premium to view the JudgmentThe Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the activity of loading or unloading of goods in trailer / truck in godown amount to cargo handling service for the purpose of imposing Service Tax.
Appellants, under an agreement with a Company, undertake loading and unloading of reels/reams/bundles/pallets in trailers/truck in the godown within the mill premises as per the requirement of company from time to time. The Revenue held that the above activity is subject to service tax under the head “Cargo Handling Service.”
The appellants contended that all the services rendered by them are within the premises of the factory and no part of the services rendered by the appellant is outside the premises of the factory area as is evident from the agreement itself. The term “cargo” refers to goods which are moved by train or truck, airplane or other carrier etc., as there is no transport of goods there is no cargo handling of the goods within the factory their services cannot be called cargo handling services.
The bench noted that for the activity to be classified as cargo handling services, the goods in question must be cargo, i.e., the goods must be put on a motor vehicle or ship or aircraft etc., and moved out of or into factory.
“The contract requires the handing to be done within the godown of the mill premises but is silent on whether this handling is meant for movement within the factory or it is handling of cargo to be shifted out of the factory. Usually, goods are moved within the factory, using material handling equipment such as cranes and forklifts although trucks etc., can also be used. In this case, as per para 3.3 of the agreement, loading & unloading of the reels/reams/bundles/pallets is in trailer/truck in the godown within the mill premises as per the requirement of the company from time to time,” the bench said.
The bench, therefore, held that “If the goods are moved out of the factory or into the factory they meet the definition of “cargo” and the activities of handling it is “cargo handling service”. We, therefore, find that the activity under taken by the appellant/assessee must be classified as cargo handling service.”
Subscribe Taxscan Premium to view the JudgmentThe Appellate Authority has recently upheld the order of the Board of Discipline of the Institute of Chartered Accountants of India and held that the Chartered Accountant involved in arranging bogus bills through dummy concerns and charged commission for the same was rightly held guilty for committing the Professional and Other Misconduct.
A complaint was lodged against a Chartered Accountant for arranging accounting bills raised by 16 parties amounting to Rs. 14.09 Crores to M/s Sunil Hi-Tech Engg. Ltd (SHEL). It was alleged that the said entries were not genuine and the appellant had charged commission @0.25% to 1% of the transactions for arranging accounting entries.
The CIT (A) has reviewed all statements recorded, documents seized and the statement of the Appellant before the Income Tax and found the Appellant involved in arranging the bogus bills through bogus concerns promoted by him and charged commission.
The Director (Discipline) of the Institute of Chartered Accountants of India found that the appellant is guilty of misconduct falling within the meaning of the provisions of the Chartered Accountants Act, 1949.
The Appellate Authority has found that the Appellant has admitted that he had taken the commission but it was taken by him as a trustee on behalf of various contractors, which, considering the facts and circumstances involved in the matter, according to us is totally untenable.
“Further, the allegation of the Appellant that the Board of Discipline relied on statements of other persons or on documents not before it, is also not true as the Board of Discipline has relied only on the statement of Appellant himself and the aforesaid Order passed by the learned CIT(A). More so, the veracity of these documents has not been disputed by the Appellant anywhere and at any stage of the proceedings of this matter,” the AA said.
The order further said that when the Appellant has himself admitted charging commission at every stage of proceedings, there is no scope to challenge the findings and the Order passed by the Board of Discipline.
Subscribe Taxscan Premium to view the JudgmentA division bench of the Kerala High Court has held that the sub-contracts received by the assessee-trust from either State Govts or intermediaries to supply food to poor does not amount to any ‘charitable activity’ and therefore, the tax benefits under the provisions of the Income Tax Act, would not be available.
The assessee, a charitable Trust participated in Social Welfare Schemes of various State Governments and thus carries on work of distribution of food in various Schools. The assessee’s work is also involved in other States and not in the State of Kerala.
The assessee claimed that such State Governments identify charitable institutions for the purpose of implementing Welfare Schemes and spends the money for the Scheme of distribution of food to various schools. The assessee is said to have carried out the work on such entrustment made by another charitable institution, one M/s Naandi Foundation. The amounts paid by M/s Naandi Foundation to the assessee were also subjected to tax deduction at source.
The Revenue found the above activity as not charitable in nature and cancelled the registration under Section 12AA of the Income Tax Act.
The bench comprising Justices K Vinod Chandran and Ashok Menon noted that the specific case of the assessee is that it implements welfare schemes of other State Governments, with the funds supplied by the State Governments through another Trust, as per a contract awarded for the implementation.
“Definitely, there cannot be any requirement that charitable activities should be from self-generated funds because charitable institutions rely on donations, endowments and other contributions from philanthropic people and institutions to carry out such work. However, when a particular institution, as in the above case, is involved in the implementation of welfare schemes of the Government, we cannot find any charity in that. The mere assertion that there is no profit motive will not suffice especially when for implementing the schemes the assessee takes money from the State Government or the intermediary. The further contention that surplus is applied in the deficit of other program is a perfect ground for claiming business expenditure, but not to get a registration as a charitable institution,” the bench said.
“The sub-contract of the assessee cannot be considered to be a charitable activity, especially since the supply of food is with the funds of the State Government, received by the assessee as contract amounts. The activity of the assessee confined to such sub-contracts cannot be deemed to be a charitable activity and hence the Trust is not entitled to registration under Section 12AA,” the bench added.
Subscribe Taxscan Premium to view the JudgmentThe Ministry of Corporate Affairs ( MCA ) has released a draft of amendment to the Cost Record and Audit Rules as per which, the companies have to submit details related to the GST. This is with a view to enable the Government to cross-check GST-related information of a company. T
he draft cost audit form would also ask for GST reconciliation data, which is essentially a report on the data inserted at the taxpayer’s end and the matching data entered by vendors.
A few days ago, the Central Board of Direct Taxes (CBDT) has released new return forms for businesses that have opted for presumptive taxation scheme. These forms require filers to provide GST identification number (GSTIN) as well as details of transactions under the GST. The requirement for cost audit is triggered at Rs 35 crore for certain companies in the regulated sector, while it is Rs 50 crore for others.
The amendment will not affect the companies who have already filed cost audits for the previous financial year. “Cost statements (monthly, quarterly and annually) in respect of reconciliation of indirect taxes showing details of total clearances of goods or services, assessable value, duties or taxes paid, CENVAT or VAT or service tax or goods and services tax, credit utilised, duties or taxes recovered and interest or penalty paid,” the draft amendment released by the MCA said.
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A division bench of the Kerala High Court has held that the rent charged on furniture and utensils in a Marriage Hall is subject to Luxury Tax under the provisions of the Kerala Tax on Luxuries Act, 1976.
The appellant, NSS Karayogam was aggrieved by the order of the Revenue that the assessee is liable to include the rent charged on furniture and utensils in the total turn over for determination of the luxury tax payable under the Kerala Tax on Luxuries Act.
Though the appellant approached the High Court through a writ petition, the Single bench rejected their contention and held that the levy is justified.
Before the High Court, the assessee contended that there can be no inclusion of the rent received for utensils and furniture in the turn over for determination of the amounts on which the tax can be levied. According to them, there are many instances when the person who rents out the hall does not rent out the furniture and utensils and resorts to outside suppliers. Hence, the inclusion can only be of the rent received for the hall, they argued.
Concurring with the observations of the Single Judge, the division bench comprising Justices K Vinod Chandran and Ashok Menon held that as per Section 4(2)(c), the charge is on the “accommodation, amenities and services provided excluding food and beverage”.
“The utensils and furniture supplied by the assessee to the person who takes on rent, for the purpose of accommodation, is an amenity or service which component also has to be included in the total turnover for the purpose of deciding the levy. When, as submitted by the learned counsel, utensils and furniture are supplied by outsiders even on rent, then necessarily, such component cannot be included in the turnover of the assessee. However, the assessee has not been able to show us, even in one instance, when such an amenity or service was provided from outside and included in the turnover. The contention taken is a mere speculation without any backing on facts. We are hence in perfect agreement with the findings of the learned Single Judge and we do not find any reason to interfere with the judgment to that extent.”
Subscribe Taxscan Premium to view the JudgmentRule 89(5) of the Central GST Rules, 2017 and Rajasthan GST Rules, 2017 relating to the refund of input tax credit on account of inverted duty structure has been challenged in the Rajasthan High Court, Jodhpur Bench (Principal Seat) wherein High Court has issued notices to Union of India, Government of Rajasthan and GST Council and sough their reply within four weeks’ time.
Petitioner Shree Ram Products Private Limited through its advocate Sanjay Jhanwar and Prateek Gattani stated that proviso (ii) to sub section (3) of Section 54 provides that refund of any unutilized input tax credit (ITC) may be claimed by the registered person in case where credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. However, Ministry of Finance, Government of India and Finance Department, Government of Rajasthan vide notification dated 18.04.2018 made an amendment in the definition of definition of Net ITC as envisaged under Rule 89(5) of the CGST / RGST Rules, with retrospective effect to restrict / not consider the input tax credit availed and accumulated on account of input services while computing the maximum amount of refund. Whereas, prior to said amendment definition of Net ITC includes the unutilized input tax credit availed on input as well as on input services.
Petitioner’s advocate argued that, provisions of Rule 89(5) of the CGST/ RGST Rules provides for refund of tax paid on input only without considering and appreciating the fact that the output supply is result of the input as well as input services. It is a reality that without use of input services in the manufacturing sector e.g. without availing services of Goods Transport Agency, Repair and maintenance of plant & machinery / factory building, legal and accountancy services, Job Work etc., it is not possible to supply output goods and services accordingly. Hence, allowing refund of only input tax as availed/charged on inputs per is unreasonable, irrational, discriminatory and defective in nature. Further, there is no apparent justification for excluding tax paid on input services from the purview of Net ITC for computing the refund amount under inverted duty structure.
Petitioners advocate further argued that Rule making power as envisaged by the Government under section 54(1) of the CGST / RHST Act is just to regulate the refund. No rules can be framed under the guise of such power which curtail the right of the Petitioner which is otherwise absolute in the Code. Petitioner advocate further relied on State of Mysore and Ors. vs Mallick Hashim & Co. (SC) (1974) 3 SCC 251.
Further, restraining the refund of input tax credit availed on input services would lead to result in blockage of funds / working capital in the form of tax paid on input services and affecting the cost competitiveness of small businesses and also paralyzing their working capital / liquidity which is an essential key for their survivor. The treatment of Input and Input Services on different yardsticks and making input tax credit on input eligible to be considered part of Net ITC and tax paid on Input Services ineligible for being considered as part of Net ITC, is against the principal of the fiscal neutrality and seamless flow of the credit which are the foundation principles of the GST.
Matter was heard by the bench consisting of Chief Justice and Justice Dinesh Ji Mehta. Notice have been issued by the Hon’ble High Court to the Respondents and sought their reply within a period of 4 weeks.
Subscribe Taxscan Premium to view the JudgmentThe Appellate Authority has recently quashed an order of the disciplinary committee and held that a mere technical error on the part of a Chartered Accountant is not sufficient to treat him guilty of professional misconduct.
Satish K. Arora, President & COO of M/s International Asset Reconstruction Company Private Limited, Mumbai lodged a complaint against the appellant, Chartered Accountant. In the complaint, it was alleged that in spite of clearly being in knowledge of facts of an assignment, the appellant has chosen to allow to misrepresent facts and has not disclosed the correct liability of the Borrower Company with respect to IARC. It was said that the said act would amount to professional misconduct.
The disciplinary committee of the ICAI found the above allegation admissible and awarded punishment of removal of name of the Appellant from the Register of Members for a period of one year and also imposed a fine of Rs.50,000/.
Before the appellate authority, the appellant contended that the loan towards Axis Bank and IARC were shown as ‘secured loans’ only and their character was not altered and therefore, the true and fair view was not impaired at all and at the worst, it can only be described as a technical error which does not constitute professional misconduct.
The appellate authority noted that even the counsel for the ICAI fairly admitted that there is no charge of impairment of true and fair view of financial statements.
“We have also observed that the issue of compliance of SA 505 raised by Director (Discipline) in his Prima Facie Opinion has also not been raised by the Disciplinary Committee and appears to have been dropped. Thus no violation of the law has been pointed out in the impugned Order passed by the Disciplinary Committee nor has any charge of impairment of true and fair view been levied. The fact of account of AVFL becoming NPA in Axis Bank is also of no relevance for the purpose of audit either for true and fair view or disclosure. Even there is no charge framed on this account.”
Diving deeply into the facts of the case, the appellate authority allowed the contentions of the appellant and held that “it may at worst be a technical error and therefore, it cannot be said that the due diligence was not exercised or there was any negligence, much less gross negligence. Accordingly, we find the appellant ‘Not Guilty’ under clause (7) of Part-I of the Second Schedule to the Chartered Accountants Act, 1949,” the AA said.
Subscribe Taxscan Premium to view the JudgmentThe International Monetary Fund ( IMF ) on Tuesday suggested for a dual rate structure as the present multi-rate structure and other features could give rise to high compliance and administrative costs.
According to the annual report of the IMF, though the Goods and Services Tax is a “milestone reform” in India’s tax policy, a dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality.
The GST is an indirect tax levied on the supply of goods and services in India. It came into effect on July 1, 2017.
GST was launched in India on 1st July 2017, which according to the report, the important step of unifying and harmonising numerous indirect taxes across all states of the federation and the central government.
“Yet, the GST has a complex structure with a relatively high number of rates (and exemptions), which could be simplified without sacrificing progressivity of the current GST and with potentially significant gains from lower compliance and administrative costs,” it said.
The IMF said that with the consumption basket of the rich taxed at higher rates than that of the poor, the GST as presently designed has an effective tax rate rising with household consumption. A revenue-neutral reduction in the number of rates would raise the effective rates for poorer households while reducing those for richer households. This is the key cost of moving to a simpler system, it argued.
In its report the IMF said the implementation of the GST led to the key step of harmonising indirect tax rates on goods and services that previously differed across different states and the centre, and brought services into the state tax net.
The Central Government, on Tuesday, introduced four Bills seeking to amend the present Goods and Services Tax (GST) laws before the Lok Sabha.
Once implemented, the amendment will make return forms simpler and raise the turnover threshold for availing composition scheme to ₹1.5 crore.
Finance Minister Piyush Goyal said the amendment Bills, i.e., the Central GST (Amendment) Bill, the Integrated GST (Amendment) Bill, the GST (Compensation to States) Amendment Bill and the Union Territory GST (Amendment) Bill, were primarily aimed at helping the MSME sector and small traders.
Congress Member Sunil Jakhar, warned to avoid ‘hurried’ action of bringing the Bills and said it would hurt the interests of the MSME sector.
He alleged that Punjab was suffering on account of GST implementation and the Centre should have consulted stakeholders before amending the GST laws.
Responding to Mr. Jakhar, Mr. Goyal said the government had held wide consultations with all stakeholders including Punjab and the changes were intended to help small traders.
Mr. Goyal said the threshold for composition scheme was being raised from ₹1 crore to ₹ 1.5 crore.
The first arrest under the Goods and Services Tax ( GST ) has law recorded in Kerala as the Intelligence Wing of Central Excise on Monday arrested a plywood trader for evading GST using fake invoices. According to Excise officers, Nishad used to supply plywood to other states using fake invoices. Even though accused had done business worth more than Rs 100 crore, officers suspect he has evaded tax worth Rs 5 crore. “Our preliminary inquiry found the accused was doing business using fake bills.
Reports said that the trader had taken several several bogus GST registrations in Kerala and other states. The invoices were generated using fake GST registrations and supplies were sent evading the taxes,” an officer said. “From the documents recovered, we could trace out tax evasion to the tune of Rs 5 crore. But we have to recover more documents. We also have to extend the investigation to other states where the supplies were sent,” he added.
A division bench of the Kerala High Court has held that the capital gain received on the sale of land water-logged and comprised within the backwaters, adjacent to the agricultural land as the same can be treated as ‘agricultural land’ for the purpose of the provisions of the Income Tax Act, 1961.
The assessee sold 130.73 Ares of land, out of which 97.60 Ares of land was agricultural land and the remaining was a water-logged area. The Assessing Officer denied capital gain exemption on the water-logged area, being comprised in the backwaters finding that there could be no classification as an agricultural land.
On appeal, the tribunal granted relief to the assessee by finding that the Kayal portion was used for irrigating the other portion was acceptable. It was found that the Kayal land has acquired the character of a water tank, used for the irrigation of the other land.
Aggrieved by the order, the Revenue approached the High Court alleging that said finding was merely on the submission of the assessee and there was nothing to establish the same.
The bench comprising Justices K.Vinod Chandran and Ashok Menon noted that the Assessing Officer had accepted the fact that 97.60 Ares of land sold by the assessee is agricultural land.
“In fact, the said finding was also on proof of specific agricultural operations having been undertaken in the said land. The adjacent land which is lying as Kayal land and water-logged would only have made the adjacent land more fertile and admittedly it was not used for any other purpose. The adjacent land remaining as water-logged and comprised within the backwaters, sold along with the agricultural land, could be deemed to be only agricultural land. We are, hence, not inclined to interfere with the orders of the Tribunal. We answer the questions of law, which are more on facts, against the Revenue and in favour of the assessee,” the bench said.
Subscribe Taxscan Premium to view the JudgmentThe Appellate Authority for Advance Ruling, Maharashtra has upheld the order of the AAR and clarified that accumulated credit by way of Krishi Kalyan Cess as appeared in the Service tax return of Input Service Distributor (ISD) on June 30 2017 cannot be considered as admissible input tax credit.
The question raised before the AAR was that whether accumulated credit by way of Krishi Kalyan Cess as appeared in the Service tax return of Input Service Distributor (ISD) on June 30 2017 which is carried in the electronic credit ledger maintained by the Company under CGST Act 2017 will be considered as admissible input tax credit?
The applicants, M/s Kansai Nerolac Paints Limited are engaged in business of manufacture of paints and engaged in provision of works contract service as well. The works contract services are carried out from the company’s Head Office.
Before the authorities, the applicant contended that as the CGST liability subsumed KKC lability through a constitutional amendment, the migrated KKC credit will be admissible to set off with KKC liability.
While clarifying the ruling, the AAR Members comprising B V Borhade and Pankaj Kumar answered the question in negative. On appeal, the Members, Sungita Sharma and Rajiv Jalota upheld the finding.
The authority noted that that no reference is made to the KKC until Notification No.28/2016/Central Excise (N.T.) 26 May, 2016 came into effect. The Central Government made the rules which came into effect from 01.06.2016.
These rules were intended to amend the CENVAT Credit Rules, 2004 as per which KKC could be utilized towards payment of KKC only. “The KKC cannot be adjusted or cross utilized against the payment of excise duty or service tax. It was made expressly clear that CENVAT credit of input duty specified in the sub rule above i.e. excise duty, additional excise duty cannot be utilized for payment of KKC. Similarly, the CENVAT credit in respect of KKC cannot be utilized for payment of excise duty or service tax. It could be utilized only for payment of KKC. Thus the CENVAT rules made an exception in respect of credit of KKC,” the appellate authority said.
Subscribe Taxscan Premium to view the JudgmentThe Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the computer printouts which do not fulfil the mandatory provisions of Section 36B-(2) and (4) of the Central Excise Act, cannot be admissible as evidence.
In the instant case, the Central Excise Officer of Indore Commissionerate searched the factory premises of M/s Radiant Containers (P) Ltd. on 08.10.2012, who is engaged in the manufacture of plastic containers (buckets) for various paint manufactures. During the search, the officers seized six computers and one laptop and two hard disc drives were seized from the office premises. Another computer was handed over to the central excise officers by the appellants themselves on 20.10.2012, after completion of the search/panchnama proceedings. The seized computers were cloned and print outs were taken therefrom.
After an investigation, the revenue found that the appellants had indulged in clandestine clearances of huge quantities of the products during the years 2010-11 to 2012-13 and since the unaccounted sale which exceeded Rs.4 Crore each year, the Revenue the benefit of SSI exemption to the appellants and levied penalty and excise duty on them.
The appellants contended that the printouts cannot be relied as evidence since the data retrieval and taking printouts from the seized computers was done behind the back of the appellants and without the presence of any panchas.
The Tribunal found that there are serious irregularities in preparing panchnamas both at the factory premises of the appellants as well as their office on different dates. Apart from the irregularities in the panchnama proceedings there are also inherent contradictions in the manner in which the seized computers were sealed and de-sealed.
“The computer which was handed over by the appellants to the investigating officer on 20.10.2012 was never sealed. We, therefore find that the entire computer data which has been relied upon substantiate the duty demand to be highly unreliable for want of procedural irregularities,” the bench said.
Quashing the order, the bench held that “computer printouts cannot be held to be an admissible evidence unless the conditions as laid in the provisions of Section 36B of the Central Excise Act are fully complied with. A perusal of section 36B would indicate that the Act has prescribed very stringent conditions for computer printouts to be a piece of admissible evidence. The Ld. Counsel for the appellants has invited our attention particular to provisions of Section 36B(2) and (4) of the Central Excise Act.”
Subscribe Taxscan Premium to view the JudgmentIncome Tax Notices have been issued by the Income Tax Department and the Enforcement Directorate in respect of Income Tax Department, assesses including, non-resident assesses are served notices/summons consequent to the initiation of various proceedings under the Income-Tax Act, 1961, including, for assessment of income, collection, recovery and taxes, whenever required. Where information is received indicating holding of assets by NRIs, necessary enquiry is made to examine whether the assets have been disclosed in any returns of income and whether the assets would have been acquired from income chargeable to tax in India.
No such incidence has come to the notice of Enforcement Directorate (ED) and Ministry of External Affairs whereby to escape this harassment, NRIs are changing their addresses in their passports to their current addresses in countries where they reside thereby establishing their tax residency status abroad. In respect of Income Tax department, the persons are liable for taxation on income/transaction originated/attributed to India irrespective of their addresses. Giving-up of Indian addresses may not result in escaping scrutiny by the Department. Specific cases of NRIs giving-up Indian addresses solely for this purpose have not been noticed.
Under the Exchange of Information (EOI) Article present in Indian tax treaties, Indian Tax authorities can make requests for banking information. In cases where a request is made, the concerned authorities in the requested jurisdiction are able to gather banking information from the relevant banks which is then exchanged with India. In cases where the treaty does not contain a provision to exchange banking information, such exchange may not be possible.
The information for assistance in Criminal matters under Prevention of Money Laundering Act (PMLA), 2002 is sought under Mutual Legal Assistance Treaty (MLAT) or Assurance of Reciprocity. The Central authorities of the requested jurisdictions arrange banking information according to their domestic laws and share with Indian authorities.
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the penalty under the provisions of the Customs Act, 1962 cannot be imposed on the employees if they are not benefitted/ incentivized by any act of evasion of duty by their master Company.
The appellant Company M/s Global Cambay Marine Service Private Limited, Surat (GCMSL) are engaged in the activity of supply of Ship Store, Water Bunker and other items to the vessels calling at various port of Gujarat. After the investigation, the DRI found that the company was indulging in illegal import of diesel oil. Consequently, the redemption fee and penalty was imposed on the Company. Also, penalty of Rs. 10 lakhs was imposed on Director Sh. Zohar Mallampattiwala and 2 employees Sh. Pattvitti Parukutty Radhakrishnan and Sh. Hanzel Malik.
It was argued before the Tribunal that the person is mere employees and performing their duties as per the instruction of their employer. There is no evidence that they have got an incentive out of the benefit derived by the appellant company.
The bench, after hearing both the sides, noted that the person is mere employees and performing their duties as per the instruction of their employer. There is no evidence that they have got an incentive out of the benefit derived by the appellant company.
Relying on the relevant decision, the Tribunal observed that “the employees cannot be penalized as they do not have believed that the goods are liable for confiscation, moreover, they are mere employee of the company working on fixed salary basis and there is no evidence on record that they were benefited by any act of evasion of duty by the company, therefore, the employees are not liable for penalty. As regards the appeal of Sh. Zoharbhai A Mallampattiwala, since the appellant is expired, his appeal shall stand abated.”
Subscribe Taxscan Premium to view the JudgmentA division bench of the Delhi High Court has held that the payment of tax amount before the issuance of the show cause notice would not absolve the assessee from imposing penalty under the provisions of the Finance Act, 1994.
The assessee, engaged in providing commercial coaching and training services, have not paid up his liability for the period 09.09.2004 to 31.03.2008. in its income tax returns, assessee declared that there was no service tax liability.
The Income Tax Search and Seizure proceedings further resulted in investigations by service tax authorities and a show cause notice demanding tax and imposing penalties was issued against the assessee. Consequently, the assessee paid the due amount.
After payment of tax amount due, the assessee submitted that since they deposited an additional amount of Rs.5,06,270/- after the show cause notice was issued and had paid Rs.34 lakhs prior to that, imposition of any penalty under Section 76 was unjustified.
The division bench comprising of Justice Ravindra Bhatt and Justice AK Chawla noted that the assessee was aware about its service tax liability; despite this knowledge, it filed its returns claiming that no liabilities were attracted. When it smelt investigation and adverse orders, it apparently approached the service tax authorities and deposited the amounts which they were admittedly liable to pay.
“Such being the case of foreknowledge, in the opinion of the court, itself is an important factor that ought to have been and was taken into account by the lower revenue authorities. Hence, foreknowledge lead to the imposition of recovery of dues assessed as well as imposition of the penalty under Section 78. The court is of the opinion that the invocation of Section 78 cannot be faulted with having regard to the facts of this case. Depositing the amount due, by the appellant, before issuance of show cause notice per se does not absolve the appellant of its responsibility to file the returns, since the option of imposing other penalty under Section 76 was exercised. Being a matter of discretion, its judicious exercise, is all that is in question. Having regard to the fact of concurrent findings, we are of the opinion that the exercise of such discretion reserving imposition of Section 76 in the circumstances, does not call for interference,” the bench said.
Subscribe Taxscan Premium to view the JudgmentThe Karnataka High Court in the case of M/s. Fidelity Business Services India Pvt. Ltd. v. ACIT vide its judgment dated July 23, 2018 has delivered a significant judgment by interpreting the powers of the Income Tax Appellate Tribunal (ITAT) and held that ITAT has the power to give directions for fresh enquiry into the aspects of the subject matter of appeal filed before it either suo motu or on any grounds raised by either party to the appeal.
The Appellant Assessee Company bought back its own shares from its Holding Company at a very high price during the relevant previous year out of the ‘Reserves and Surplus’ of the Appellant. This amount was taxed as Dividend u/s 115-O of the I.T. Act upon directions given by the Dispute Resolution Panel (DRP) u/s 144-C(5) for which an appeal was preferred with the Income Tax Appellate Tribunal (ITAT). The ITAT held that the buy-back shall be taxed as ‘Capital Gains’ in the hands of the recipient in accordance with the provisions of Section 46-A of the Income Tax Act and non-taxability as was also stated in the Indo-Mauritius Double Taxation Avoidance Agreement (DTAA). The ITAT reasoned the transfer to be a colorable device and hence eligible to be reopened on the basis that the AO did not consider that the transaction is between two closely related parties and not at the Arm’s Length treating the excess of payment for buyback from the fair market price of shares as Dividends. Hence, the present appeal.
The issue before the present Court was whether the Tribunal was right in directing examination by the Assessing Officer (AO) of the fair market value of the shares bought back and application of Section 2(22)(e) of the Act if the consideration for buy back of shares was in excess of the fair market value of the shares.
It was submitted on behalf of the assessee that the Tribunal has exceeded its jurisdiction to unnecessarily open the enquiry upon questions of market price of the shares’ buy-back.
On the other hand, the respondent submitted that the Tribunal was completely justified in re-opening the assessment and the same was well within the parameters of the subject of appeal.
The Hon’ble Court after considering the submissions of both the parties held that ITAT has the power to give directions for fresh enquiry into the aspects of the subject matter of appeal filed before it either suo motu or on any grounds raised by either party to the appeal which have not been investigated or enquired into by the lower Authorities earlier and which may result in enhancement of tax liability of the assessee. It was elaborated that the remittance by the assessee to its holding company could not be taxed as dividend. The powers of the Tribunal are not limited or circumscribed by the grounds raised before it and any order on the subject matter of appeal can be passed if is found to be necessary, expedient and relevant by the learned Tribunal.
Further, the Hon’ble Court denied adjudication upon the second question of taxability of the remittance pointing to the 2012 Vodafone case mentioning that the “Mauritius route of tax avoidance and evasion is a hugely suffered phenomenon in our Country. It also resulted in a huge tax controversy in the case of Vodafone in which even after the decision of the Hon’ble Apex Court in favour of the Assessee in 2012”.
Subscribe Taxscan Premium to view the JudgmentThe Central Government has decided to further extend the implementation of the reverse charge mechanism ( RCM ) for further one year under the Goods and Services Tax (GST) regime.
Notification in this regard has been issued by the Central Board of Indirect Taxes and Customs (CBIC) for exempting payment under reverse charge under sections 9 (4), 5 (4) and 7 (4) of the CGST Act, IGST Act and UTGST Act respectively.
As per the new notification, there will not be the reverse charge on the supply of goods or services by unregistered person till September 30, 2019.
The GST Council meeting held at New Delhi in October, had decided to suspend the reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under subsection (4) of section 5 of the IGST Act, 2017 till 31th March 2018 and will be reviewed by a committee of experts. This was further extended till 3oth September 2018.
This was a benefit to small businesses and substantially reduce compliance costs.
Parallelly, a group of ministers under Bihar deputy chief minister Sushil Kumar Modi has recommended doing away with reverse charge mechanism, a key anti-evasion measure under the new tax regime.
Subscribe Taxscan Premium to view the JudgmentThe Central Board of Indirect Taxes and Customs (CBIC) has laid down a special procedure for GST migration. This is for completing migration of taxpayers who received provisional IDs but could not complete the migration process.
As per the notification issued on Monday, the persons who did not file the complete FORM GST REG26 of the Central Goods and Services Tax Rules, 2017 but received only a Provisional Identification Number (PID) till the 31st December, 2017 may now apply for Goods and Services Tax Identification Number (GSTIN). Upon completion of the process, the taxpayers shall be deemed to have been registered with effect from the 1st July, 2017.
Such taxpayers should furnish the details specified in the notification to the jurisdictional nodal officer of the Central Government or State Government on or before the 31st August, 2018.
On receipt of an e-mail from the Goods and Services Tax Network (GSTN), such taxpayers should apply for registration by logging onto https://www.gst.gov.in/) in the “Services” tab and filling up the application in FORM GST REG-01 of the Central Goods and Services Tax Rules, 2017.
After due approval of the application by the proper officer, such taxpayers will receive an email from GSTN mentioning the Application Reference Number (ARN), a new GSTIN and a new access token.
Upon receipt,
The Taxpayers shall, further required to furnish the details such as Old GSTIN, Access Token for new GSTIN, Old GSTIN (PID), etc., to GSTN by email, on or before the 30th September, 2018.
Upon receipt of the above information from such taxpayers, GSTN shall complete the process of mapping the new GSTIN to the old GSTIN and inform such taxpayers. Such taxpayers are required to log onto the common portal www.gstn.gov.in using the old GSTIN as “First Time Login” for generation of the Registration Certificate.
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