The Maharashtra Authority of Advance Ruling (AAR) ruled that GST payable on Vehicles registered in the Tourist category for carrying Covid-19 patients for Medical Treatment.
The applicant, Geetee Tours Pvt. Ltd. is engaged in the business of tours and travels and carries on the business as package tour operators, daily passenger service operators, travel agents, etc, and is also engaged in running of buses, conveyances of all kinds and to transport passengers.
Since their vehicles are supplied for transportation of passengers and other allied activities, the applicant feels that the rate of tax applicable on supplies of vehicles for transportation of passengers and other allied activities is 12% as per Notification No. 11/2017-C.T(Rate) dated 28.06.2017, as amended vide Notification No. 20/2017-C.T(Rate) dated 22.08.2017. The applicant has entered into the contract with “MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM), Worli, Mumbai 400018 to provide AC SUV and Innova equivalent car services for carrying COVID 19 patients for medical treatment.
The applicant has sought the advance ruling on whether Toyota Innova Or Equivalent Vehicles (6 Seater) registered in Tourist category with All India Tourist Permit provided for carrying Covid 19 patients for Medical Treatment would be considered as Taxable Services Or Exempted Services.
The coram of Rajiv Magoo and T.R.Ramnani observed that even though the applicant has submitted that the subject supplies would fall under entry no. 6 of twelfth schedule article 243W of the constitution i.e. “Public health, no evidence or documents have been submitted to substantiate their claims for exemption. Further, the only SERVICE PURCHASE ORDER’, submitted by the applicant mentions the description of service as “Adv for ambulance-like Innova covid 19”. The applicant has not submitted that they have provided ambulance service for the covid patients. Neither have they submitted anything on record to show that the Innova vehicles supplied by them have been converted into ambulances or registered as such nor have they submitted proof of having transported only covid 19 patients for medical treatment. Further, the vehicles are not registered with RTO for use as the Ambulance and they are registered as tourist vehicles.
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The Maharashtra Authority of Advance Ruling (AAR) ruled that Input Tax Credit cannot be claimed on Indirect Expenses like rent, commission, professional fees, telephone incurred for purpose of business.
The applicant, Deccan Wheels purchases second-hand cars (goods) and after minor processing on it such as change of tires, change of battery, painting, denting, repairs, servicing, internal cleaning, polishing, etc, which does not change the nature of the goods, the said goods are sold. The applicant does not claim the Input tax credit on the purchase of second-hand goods and has opted for Margin Scheme and applies GST rate as per Notification No 8/2018- Central Tax (Rate) dt 25/01/2018.
The applicant has sought the advance ruling on whether Input Tax Credit can be claimed on other indirect expenses incurred for the purpose of business such as rent, commission, professional fees, telephone etc.
The coram of Rajiv Magoo and T.R.Ramnani observed that the concessional rate under the notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such goods.
In other words, since the applicant has been availing the benefit of the said notification and paying GST at a concessional rate, they shall not avail Input Tax Credit, as queried.
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The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 cannot be survived if the Assessing Officer does not clearly mention the reasons for the same in terms with the conditions specified in the provision.
Earlier, the Assessing Officer passed an assessment under section 153A of the Act and consequently initiated penalty proceedings on this addition under section 271(1)(c) of the Act. The assessee contended that the penalty notice was issued without giving specific reasons.
ITAT President G S Pannu and Judicial Member Kul Bharat noted the fact that the Revenue has not controverted the fact that the facts are identical as were in the Assessment Year 2010-11 and the penalty proceeding pertaining of this year was dropped.
While deleting the penalty proceedings, the Tribunal held that “the Assessing Officer has not given any reason as to why he dropped the penalty in Assessment Year 2010-11 and sustained the imposition of penalty for Assessment Year 2009- 10 under the same set of facts. Moreover, in the impugned penalty order, the Assessing Officer has stated that non-filing of the appeal goes to demonstrate the acceptance by the assessee of furnishing/concealing of income to the tune of Rs.15,96,494/-. This observation goes to demonstrate that the Assessing Officer had not specified the charge, whether it was far furnishing of inaccurate particulars of income or concealment of income. Therefore, looking into the facts where the Assessing Officer under the same set of facts has dropped the penalty in Assessment Year 2010-11, therefore, the penalty in this year also cannot be sustained, hence, deleted. Grounds raised in the appeal are allowed.”
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The Central Board of Direct Taxes (CBDT) has notified the Special Court of Goa, Manipur, and Karnataka for Handling Black Money Cases.
“The Central Government, in consultation with the Chief Justice of the High Court of Bombay at Goa, hereby designates the court of the Senior Civil Judge and Chief Judicial Magistrate Panaji, Goa as the Special Court for North Goa District and Senior Civil Judge and Chief Judicial Magistrate Margao, Goa as the Special Court for South Goa, for the purposes of subsection (1) of section 280A of the Income-tax Act, 1961 and section 84 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 within their respective jurisdiction in the State of Goa,” the notification said.
Further, the government in consultation with the Chief Justice of the High Court of Manipur, hereby designates the court of Chief Judicial Magistrate, Imphal East as the Special Court for the State of Manipur for the purposes of subsection (1) of section 280A of the Income-tax Act, 1961 and section 84 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
The Government, in consultation with the Chief Justice of the High Court of Karnataka, designated 12 Court in the State of Karnataka as Special Court for the area mentioned in the corresponding entry in column (3) of the said Table, for the purposes of section 84 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
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In a major relief to Indian Oil Corporation, the Madras High Court ruled that Lubricants can’t be considered to be excisable goods for purposes of the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).
The petitioner, M/s. Indian Oil Corporation Limited is engaged in the manufacture of lubricants that fall under Chapters 27, 34, and 38 of the First Schedule to the Central Excise Tariff Act, 1985. The supply was made without the payment of duty on the strength of exemption Notifications issued during the period September 2013 and June 2014, as per which, supplies made as against international competitive bidding to power projects did not carry the incidence of duty.
The petitioner, a Public Sector Undertaking has challenged an order passed by the sole respondent, Commissioner of Central Excise and GST rejecting the application of the petitioner for settlement of disputes under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019.
The single bench of Justice Anitha Sumanth held that there is no quarrel with the proposition that exempt goods continue to be excisable goods, though the rate of duty is stipulated as ‘nil’. However, that is not the question that arises for consideration. It is nobody’s case that lubricants are exempt from central excise duty. Undoubtedly, they figure as goods under Schedule 4. However, the rate of duty stipulated is ‘….’ and lubricants cannot be considered to be excisable goods, in such circumstances, for the purposes of the SVLDRS Scheme. The SVLDRS Scheme has been brought in to weed out pending litigations where possible and where the litigation falls within the limits set out under the Scheme. The interpretation of the clause under the Scheme must thus be in line with this avowed object and any conflict that arises in interpretation must be resolved in favor of the assessee.
“Section 125(h) specifically uses the term ‘excisable goods’. The Hon’ble Supreme Court in Moti Laminates (supra) provides guidance on how the term ‘excisable’ should be understood and interpreted. The rate of duty mentioned alongside lubricants under the 4th schedule is ‘…….’ and as rightly clarified by the Departmental Officer on Special Duty, it is only some of the products in the 4th schedule, such as Petroleum crude, high-speed diesel, motor spirit, natural gas, aviation turbine fuel and tobacco and tobacco products, that are to be construed as ‘excisable goods’ to determine the exclusions under the SVLDRS Scheme. The 101st amendment substitutes Entry 84 of the Union List to state that duties of excise shall be on the following goods manufactured or produced in India, namely, petroleum crude; high-speed diesel; motor spirit (commonly known as petrol); natural gas; aviation turbine fuel; and tobacco and tobacco products. The interpretation of Section 125 of the Scheme has to be seen in this context only as otherwise, the object of the Scheme will not be achieved,” the court said.
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The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the Service Tax demand as remittances made for meeting establishment costs at the location of Branches.
The appellant, M/s Kusum Healthcare Ltd has challenged order-in-original of Commissioner of Central Excise, Alwar demanding tax of Rs.4,28,30,862 for 2014-15 on the finding that remittances made to their branches and offices abroad were ‘consideration’ for ‘taxable service’ procured from outside the ‘taxable territory’ which, according to Learned Counsel for the appellant, is inconsistent with decisions of the Tribunal in which demands on identical grounds for the preceding periods had been set aside.
The interest liability under section 75 of Finance Act, 1994 as well as penalty under section 76 and section 77 of Finance Act, 1994 are also sought to be quashed. Another submission in the grounds of appeal, though not pressed in the light of these binding precedents, is that their explanation of these remittances as payments for supplies procured by overseas branches and offices, which would have excluded them from being deemed to have received in the ‘taxable territory’, was not considered in the impugned order that, according to Learned Counsel, was further susceptible for having been founded on statutory provisions and Rules that had ceased to be in vogue by then.
It is the admitted flow of funds for maintenance and upkeep of the branch offices that have been presumed to be the quid pro quo for the rendering of ‘taxable service’ by the branch to the principal office. That the remittances were made for meeting the establishment costs at the location of the branches is not disputed.
The coram headed by the President, Justice Dilip Kumar Gupta, and Technical Member, CJ Mathew held that Central to the revised schema is with ‘provided or agreed to be provided in the taxable territory’ as the frame of the event to be taxed. The mechanism for determination of any ‘service’ to have been rendered within the jurisdiction of such levy is established under the authority of Neither of these provisions makes passing reference to ‘consideration’ which finds a place in section 67 of Finance Act, 1994 and, for elaborating of the taxable event in section 66B of Finance Act, 1994 and of ‘taxable service’ wherever occurring, in of section 65B of Finance Act, 1944. On perusal of Place of Provision of Service Rules, 2012 that, by emphasis or by deeming so under the authority of section 66C of Finance Act, 1994, maps the boundary of ‘services provided or agreed to be provided in the taxable territory, it is seen that rule 4 to rule 6 and rule 9 to rule 12 address specific situations of deeming that do not find fitment within the default in rule 3; rule 7 is a determinative weightage for certain circumstances and rule 8 intends distribution of domestic jurisdiction.
The Tribunal relied upon Kusum Healthcare Ltd to set aside the demand after the introduction of a ‘negative list’ regime is similarly applicable to the present dispute.
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In a major relief to Raymond, the Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) while directing the refund of Service Tax to Raymond ruled that the Service tax cannot be levied under reverse charge mechanism prior to April 18, 2006.
The appellant, Raymond availed services of goods transport operator services. A show-cause notice dated 28.09.2021 was issued demanding service tax of Rs.43,89,613/- payable on Goods Transport Operator Services, along with interest and penalty. The appellants deposited an amount of Rs. 43,89,613/- vide challan dated November 07, 2003 “under protest”. A corrigendum dated 03.11.2004 was issued purporting to amend the SCN dated 28.09.2001 by inserting various amended provisions vide Finance Act, 2003 and 2004, and demanding service tax by invoking an extended period of limitation. The said corrigendum was received by the appellant on 10.11.2004.
The coram of Judicial Member, Anil Choudhary found that the issue of levy of service tax on GTO service, on the receiver of service under reverse charge mechanism was held ultra vires by the Supreme Court in the case of L. H. Sugar by judgment dated 27.07.2005. It was categorically held that the „person‟ required to file a return under Section 71A of the Act was not covered under Section 73, as it stood on the date of issuance of the show-cause notice.
“I find that it is admitted fact that the appellant has taken service tax registration and are filing the periodical returns regularly. The appellant has maintained proper books of accounts in the normal course of business. The only allegation in the show cause notice is that the appellant has not discharged the service tax liability on a „reverse charge basis‟ on Goods Transport Service, received during the period 16.11.1997 to 01.06.1998. It is further alleged in the show cause notice that service tax was imposed as transport of goods of service w.e.f. 16.11.1997 vide Notification No. 41/1997-ST dated 5.11.1997. Further, the Central Government vide Notification No. 42/1997-ST dated 5.11.1997 amended the Service Tax Rules and in Rule 2(1)(d) clause (xvii) was inserted which read as “In relation to services provided by a GTO, every person who are liable to pay the freight either himself or through his agent for transportation by road in a goods carrier,” the Tribunal observed.
The CESTAT held that the extended period of limitation cannot be invoked, as admittedly the show cause notice has been issued after the normal period of limitation. The whole proceedings and the show cause notice are ab initio void in view of the ruling of the Supreme Court.
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The Central Board of Indirect Taxes and Customs (CBIC) has constituted the Committee for determining RoDTEP rates for AA or EOU or SEZ exports.
The Government vides Order dated October 18, 2021, has constituted a Committee for determination of RoDTEP rates for AA/EoU/SEZ exports and to give a supplementary report/ recommendations on issues or representations, if any, relating to errors or anomalies pointed out, arising from the report of the erstwhile RoDTEP Committee as well as the report of the incumbent RoDTEP Committee. The Committee will submit its report to the Government within a total period of eight months (six months for submission of report for determining RoDTEP rates for AA/EoU/SEZ exports and another two months for supplementary exercise).
“As intimated by the Committee, its first meeting is scheduled to be held on October 25, 2021, at 11.00 hrs at Committee Room, Drawback Division, 4th Floor, Jeevan Deep Building, Parliament Street, New Delhi,” the office memorandum read.
It has been further informed that from the experience gathered from the last exercise of determination of ceiling rates under the RoDTEP scheme, it has been felt that obtaining data from Trade Associations, Export Promotion Councils, etc. consumes a lot of time. Therefore, in order to complete the work assigned to RoDTEP Committee within the mandated time frame, it is imperative that necessary data are made available to the Committee quickly. DGFT is the nodal Government Agency dealing with the AA/EoU/SEZ schemes and is in touch with the exporters, availing the benefit of these schemes.
The DGFT may appoint a nodal officer who will assist the RoDTEP Committee in obtaining data from Trade Associations, Export Promotion Councils, etc. relating to AA/EoU/SEZ exports.
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This weekly round-up analytically summarizes the key stories related to the High Court reported at Taxscan.in during the previous week from October 18 to October 23, 2021.
The Gujarat High Court Gujarat HC refused the Anticipatory Bail to Directors of Company allegedly involved in wrongfully availing ITC on the basis of fake bills. The single-judge bench of Justice Vipul M. Pancholi while refusing the anticipatory bail said that if the applicants are enlarged on anticipatory bail then, there are all chances that the applicants will tamper with the evidence and witnesses and at the time of trial, the applicants would not be available.
The Kerala High Court while granting the refund to the taxpayer ruled that all the technical glitches that may occur in between, shall not stand in the way of ultimate relief of the grant of refund to the petitioner.
The single-judge bench of Justice Bechu Kurian Thomas directed the respondent authority to refund the amount of Rs.12,26,064/-, due to the petitioner as a refund, within a period of 30 days from the date of receipt of a copy of this judgment. All the technical glitches that may occur in between, shall not stand in the way of ultimate relief of the grant of refund to the petitioner as otherwise the sanctity of the whole scheme of section 129 of the State Goods and Services Tax Act will lose the confidence of the assessees to deposit the amount as contemplated under section 129 of the State Goods and Services Tax Act, will be affected.
The Gujarat High Court made scathing remarks against the department for not implementing the judgment to allow the filing of Form Trans 1 for claiming transitional credit.
The division bench of Justice J.B.Pardiwala and Justice Vaibhavi D.Nanavati said, “We are disturbed by the fact that it has been more than two years but our directions have not been complied with. All that is required to be done is to open the portal and allow the original writ applicants to file a declaration in Form GST TRAN 1 and GST TRAN 2 so as to enable them to claim the transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the Act.”
The Bombay High Court has refused the refund of Value Added Tax (VAT) worth Rs. 95.42 Lakhs due to an unreasonable delay in filing the Petition.
The division bench headed by Chief Justice Dipankar Dutta and Justice M.S.Karnik held that as a general rule that if there has been unreasonable delay the court ought not ordinarily to lend its aid to a party by the extraordinary remedy of mandamus. Their Lordships then considered the following submission made by learned counsel ‘that assuming that the remedy of recovery by action in a civil court stood barred on the date these applications were made that there would be no reason to refuse relief under Article 226 of the Constitution.
The Madras High court held that proceedings of bank attachment will not stand in the way of the revenue taking resort to Section 83 of CGST Act which pertains to the Attachment of Property, yet again.
The single bench of Justice Anita Sumanth ruled that the opinion of the Senior Intelligence Officer, in this case, is far more cryptic, revealing total non-application of mind and merely repeating what Principal Additional Director General has stated in his request for sanction. The impugned order of attachment is set aside. The respondents will complete the process of assessment within a period of six weeks.
The Madras High Court held that the writ petition in High Court is not maintainable if Statutory Alternative Remedy is available under CGST Act.
The single-judge bench of Justice M.Sundar held that the argument that Section 19(4) reversal of ITC can be only for 5% and above of tax will not qualify as an excess of jurisdiction and it would at the highest quality only as an error. To be noted, this Court is not expressing any view as it is relegating the writ petitioner to the alternate remedy of revision/appeal. Even if this argument is to be accepted, it would only qualify as an error and it may not qualify as an excess of jurisdiction.
The Madras High Court quashed the order for cancellation of GST Registration as Show Cause Notice did not mention the date and time of the personal hearing.
The single bench of Justice M.Sundar ruled that the impugned order being order for cancellation of GST Registration d is set aside solely on the ground that SCN which preceded the same has not been issued in the prescribed template i.e., REG- 17 under Rule 22(1) of TN-GST Rules, as it does not mention the date and time of the personal hearing.
The Madras High Court directed the tobacco dealer to Appellate Authority as per the Rule of Alternate Remedy.
The single bench of Justice M.Sundar held that there is no disputation or disagreement that the impugned order is appealable. In other words, a statutory appeal qua impugned order is available to the writ petitioner, which will be under Section 51 of the TNVAT Act.
The Madras High Court directed the Sales Tax Authority to make a De novo Reassessment order after considering the objections of dealers.
The single-judge bench of Justice M.Sundar held that the impugned orders being orders are set aside solely on the ground that it proceeds on the basis that writ petitioner/dealer has not filed objections, whereas objections in fact have been filed and the same have been duly acknowledged by the respondent. “The respondent shall now de novo do revision/reassessment under Section 27 of TNVAT Act by considering the objections of writ petitioner/dealer and make an order as expeditiously as possible i.e., as expeditiously as the official business of respondent would permit and in any event, within three weeks from today i.e., on or before 27.10.2021; De novo order i.e., revision/reassessment order made in an aforesaid manner shall be duly communicated to writ petitioner under due acknowledgment within five working days from the date of the order,” the court-ordered.
The Karnataka High Court directed the Good and Service Tax (GST) Authority to permit the filing of TRAN-1 either electronically or manually within 30 days.
The Jharkhand High Court quashed the Show Cause Notice in respect of wrongful availment of Input Tax Credit (ITC) as it was vague and lacked details.
The division bench of Justice Aparesh Kumar Singh and Justice Anubha Rawat Choudhary noted that the impugned show-cause notice does not fulfill the ingredients of proper show-cause notice and thus amounts to a violation of principles of natural justice, the challenge is entertainable in the exercise of writ jurisdiction of this Court.
The Uttarakhand High Court quashed the Order of cancellation of GST Registration due to the non-providing opportunity of Hearing and remitted the matter back to GST Authority.
The single bench of Justice Sharad Kumar Sharma ruled that even if the impugned order of 12th July 2021, is taken into consideration, there is not even a single whisper that after the expiry of 30 days, as provided under Sub-rule (3) Rule 22, when the cancellation was being resorted to, though apart from the fact that the officer concerned has become functus officio after the expiry of 30 days, even if at all, the cancellation was required, in that eventuality, then the petitioner ought to have been heard.
The Bombay High Court directed the GST Authority to process the application for an IGST refund and pass a reasoned order as no order was passed.
The division bench headed by Chief Justice Dipankar Dutta and Justice M.S.Karnik held that there is no order or decision on record on the application claiming a refund. In this view of the matter, it would be appropriate to direct the respondent to process the application made by the petitioner for a refund and pass a reasoned order upon hearing the petitioner. The claim for refund be decided as expeditiously as possible on its own merits and preferably within a period of eight weeks from today. The petitioner is to appear before the Competent Authority on October 21, 2021, at 11.00 a.m.
The Gujarat High Court quashed the attachment of personal property of the Director for the realization of Sales Tax Dues as it is illegal and bad in law. The division bench of Justice Sonia Gokani and Justice Rajendra M.Sareen while allowing the petition, relied on the decision of Division Bench of this Court rendered in Special Civil Application No.243 of 1991 with Special Civil Application No.3103 of 1991and Special Civil Application No.7578 of 1991 in the case of Mr.Choksi Vs. The state of Gujarat has allowed the said petition and quashed and set aside the impugned notification by holding that the auction of the residential property in question as illegal and bad in law and restrained the respondents from attaching or selling any private property of the Managing Director of the Company for the realization of the aforesaid dues.
In a major relief to Ceebros Hotels, the Madras High Court deleted disallowance as substantial activities done to show property purchased is put to use.
The court held that the attempt to apply the proviso to the case of the assessee would lead to wrong interpretation of the law and therefore, the reasons given by the Assessing Officer to disallow the interest expenditure by applying the provisions of Section 36(1)(iii) is not in accordance with the law. Further, the Tribunal noted that the assessee is into the business of Real Estate Development and in the process of executing two projects at different places and the Assessing Officer was not justified in treating the two projects on a stand-alone basis and also that the property in MRC Nagar was not put to use. Further, the Tribunal observed that the purchase of inventory in the course of carrying on business should be reckoned as the continuation of the same business activity in the normal course and cannot be equated or termed as an extension of business activity. Furthermore, the Tribunal noted that the assessee has offered substantial income from the Atlantic project and the attempt to apply the Matching Concept principle is misconceived.
The Bombay High Court while coming down heavily on the Tax Official, imposed the substantial costs on AO and quashed the Faceless Assessment orders passed without application of mind.
The HC says it is compelled to set aside the impugned order passed on 8 June 2021 and also the consequential notices issued by the tax authorities. “Sub-section 9 of section 144B of the Income Tax Act provides that any assessment made shall be non-est (the return of a writ or process) if such assessment is not made in accordance with the procedure laid down under this section.
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The Telangana Authority of Advance Ruling (AAR) ruled that the GST is payable on land after developing by erecting civil structures or Buildings or Complexes.
The applicant, M/s. TIF Integrated Industrial Parks Pvt. Ltd. is a company formed by industrialists as required by the Telangana State Industrial Infrastructure Corporation Limited (TSIIC) as a special purpose vehicle (SPV) representing the member industrialists with an objective of providing industrial infrastructure by the development of land acquired by TSIIC. It is informed by the applicant that TSIIC issued a final allotment letter confirming the allotment of 377 acres of land for a cost of Rs.55.11 Cr. on Vijayawada Highway to set up an Industrial Corridor on 16-05-2018. A sale agreement was executed between the applicant and TSIIC on 23-06-2018. It is informed by the applicant that a sale deed will be executed with TSIIC upon completion of the development of internal infrastructure. Similarly, the applicant is authorized in turn to sell to individual industrialists after each of his allottees commences commercial operation by executing individual sale deeds.
The applicant has sought the advance ruling on the issue of Whether the activity of disposal of developed plots of land to allottee members of the applicant from and out of the land received from the TSIIC for the specified purpose of industrial development is outside the purview of GST by virtue of the said activity failing under Entry 5 of Schedule III of Central Goods & Service Tax Act, 2017 and corresponding provisions under Telangana Goods & Service Tax Act, 2017 as amended.
Yet another issue raised was Whether the activity of infrastructure development (ID) of land received from the TSIIC for the specified purpose of industrial development and undertaken on behalf of allottee members (allottee(s) or the member(s)) does not qualify as a “supply” under Section 7 of the Central Goods & Service Tax Act, 2017 & corresponding provision under Telangana Goods & Service Tax Act, 2017 as amended and hence will remain outside the purview of the GST Act.
The coram of B. Raghu Kiran, IRS, Additional Commissioner (Central Tax) and S.V. Kasi Visweswar Rao, Additional Commissioner (State Tax) ruled that if the applicant sells the land after developing by way of erecting a civil structure or a building or a complex then such supply is liable to tax under CGST/SGST Acts. However, if the land is sold without any development involving any civil structure or building or complex such supply falls under paragraph 5 of Schedule III to Section 7(2) of CGST Act, 2017 and hence is exempt from tax.
“If the applicant executes works contracts involving the transfer of property in goods for consideration under an agreement of contract such consideration will be liable to tax. However, if these elements are missing in the execution of construction it shall not be liable to tax,” the AAR ruled.
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The Supreme Court held that the nomenclature ascribed to tax does not determine the nature of the levy or its true and essential character.
The issues raised by the petitioner, Jalkal Vibhag Nagar Nigam was whether the demand of water tax and sewerage tax is sustainable with reference to the provisions of the UP Water Supply and Sewerage Act; and Whether the State Legislature has the legislative competence to levy the tax under the provisions of Section 52(1)(a).
The three-judge bench comprising Justices DY Chandrachud, Vikram Nath, and BV Nagarathna observed, “the nomenclature that the legislature has ascribed to the tax does not determine either the nature of the levy or its true and essential character. The legislature may choose a label for a tax. The label however will not determine or for that matter clarify the nature of the levy. The nature of the levy has to be deduced from the nature of the tax, the provision which specifies the taxing event, and, as in the case of Section 52, the unit upon which the levy is to be imposed. The legislature may choose a label for the tax based on the nature of the levy. On the other hand, the legislature may choose a label having a relationship with the function of the authority which imposes the tax as in the present case. The tax has been labeled as the water tax or a sewerage tax simply because it is imposed by the Jal Sansthan constituted under the UP Water Supply and Sewerage Act. That does not alter the nature of the levy which in substance is a tax on lands and buildings within the meaning of Entry 49 of List II of the Seventh Schedule.”
The court observed that While imposing the levy under clause (a) of Section 52(1) the legislature has provided that the levy will be on-premises situated within the area of the Jal Sansthan, where the area is covered by the water supply services of the Jal Sansthan. This stipulation in clause (a) does not render the levy a fee instead of a tax. The purpose of the legislation in imposing a tax, which is prescribed as a water tax, is to enable the Jal Sansthan to finance the activities which it undertakes to plan, promote and execute schemes for and operate an efficient system of water supply. Besides the above function in Section 24(1), the Jal Sansthan has to manage its affairs to provide the people of the area within its jurisdiction with wholesale water.
The court said that there can be no manner of doubt that the levy which is imposed under Section 52 is a tax on lands and buildings situated within the area of the Jal Sansthan for the purpose of imposing the tax. The tax is imposed on premises that fall within the territorial area of the Jal Sansthan. The expression ‘premises’ is defined to mean land and building. The tax is on lands and buildings. The nomenclature of the tax does not indicate its true character and substance. Nor does the fact that the law enables Jal Sansthan to levy the tax render it a tax on water. The charging section indicates in unambiguous terms that it is a tax on lands and buildings. The legislature has introduced certain restrictions in Section 55 inter alia stipulating in clause (a) that for land which is exclusively used for agricultural purposes, the tax shall not be levied unless the water is supplied by the Jal Sansthan for such purposes to the land.
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The Institute of Chartered Accountants of India (ICAI) notified the Exposure Drafts of Amendments to various Engagement and Quality Control Standards.
The Institute of Chartered Accountants of India (ICAI) has issued various Engagement and Quality Control Standards over the period of years. These standards contain provisions/references of relevant Acts, Rules, Regulations, Accounting Standards, and other Pronouncements issued by ICAI which were prevailing at the time of issuance of these standards. Further, the Auditing and Assurance Standards Board (AASB) of ICAI has decided that in the present scenario, these standards require some amendments in the light of current prevailing provisions/references of relevant Acts, Rules, Regulations, Accounting Standards, and other Pronouncements issued by ICAI. Accordingly, AASB has made some amendments to these standards and has finalized the Exposure Drafts of these standards.
“It has also been observed by AASB that some amendments are required in other documents (i.e. Preface to the Standards on Quality Control, Auditing, Review, Other Assurance, and Related Services, Glossary of Terms and Framework for Assurance Engagements) as well. Accordingly, AASB has made some amendments in the abovementioned documents,” the ICAI said.
The Exposure Drafts of Amendments to various Engagement and Quality Control Standards and Other Documents have been issued for public comments by 07th December 2021 at Secretary, Auditing and Assurance Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, A-29, Sector-62, NOIDA, Uttar Pradesh – 201 309.
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The Bombay High Court while coming down heavily on the Tax Official, imposed the substantial costs on AO and quashed the Faceless Assessment orders passed without application of mind.
The petitioner, Mantra Industries Ltd had assailed the Income Tax department’s initialization of penalty proceedings against it under Section 274 read with Section 270A of the Income Tax Act, 1961.
The petitioner contended that the assessment order was passed without following the principles of natural justice in as much as its request for an adjournment had not been considered and a request for a personal hearing had not been considered. Most importantly, the reply and objection filed in response to the show-cause notice with the draft assessment order had not been considered, the company contended.
The division bench of justice KR Shriram and justice Amit B Borkar said, “Respondents are put to notice, and Akhileshwar Sharma (counsel for National Faceless Assessment Centre-NFAC-set up by the Central Board of Direct Taxes-CBDT) to circulate this order right from the revenue secretary to everybody in the finance ministry, that if such orders are continued to be passed, this court will be constrained to impose substantial costs on the concerned assessing officer (AO) to be recovered from his or her salary and also direct the department to place such judicial orders in the career records of such assessing officer.”
“The assessment order is an exact reproduction of the draft assessment order except for one sentence which has been added ‘Regarding this show cause notice issued to the assessee on 22 April 2021, but assessee has not given any justification for non-furnishing of quantitative details in form 3CD’,” the bench said.
The bench says, “We have compared the details provided by Mantra Industries and form 35(b) annexed to the affidavit in rejoinder. We do not find any difference except that in the response dated 27 April 2021, the product manufactured, wet grinders, is mentioned. We have also to note that this is not the case in the assessment order, which has proceeded on the basis that no response at all has been filed to the notice dated 22 April 2021. There cannot be anything far from the truth.”
The HC says it is compelled to set aside the impugned order passed on 8 June 2021 and also the consequential notices issued by the tax authorities. “Sub-section 9 of section 144B of the Income Tax Act provides that any assessment made shall be non-est (the return of a writ or process) if such assessment is not made in accordance with the procedure laid down under this section.
“Therefore, the impugned order being non-est, the AO may take such steps as advised in accordance with the law. We are not making any observations on the merits of the case,” the bench says while disposing of the petition.
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The Delhi High Court ruled that the writ petition in High Court is not maintainable as Statutory Alternative Remedy is available at National Company Law Appellate Tribunal (NCLAT).
The only basis for the petitioner, Sunil Tandon to approach the High Court was that under the proviso to Section 241(2), it is only the Principal Bench of NCLT at Delhi which could entertain the petition preferred by the Central Government and therefore, the very filing of the petition before the NCLT, Mumbai Bench and the passing of any order by the said Bench being coram non Judice, was a nullity. The petitioner has, however, not denied the fact that two company appeals assailing the very same impugned order passed by the NCLT, Mumbai Bench, filed by aggrieved parties forming part of the same group are already pending adjudication before the NCLAT.
There is also no denial that the Companies Act is a complete code in itself, as also that the NCLT and NCLAT are specialized Tribunals created by the statute for dealing with issues arising under the Companies Act. The petitioner’s primary plea before this Court is that in view of the proviso to Section 241(2) of the Companies Act, the NCLT, Mumbai did not have the jurisdiction to entertain the petition and therefore, the proceedings before it and all orders passed by the said Bench are a nullity. The respondents have vehemently denied this position and have contended that only the Mumbai Bench had the necessary jurisdiction. The conflicting stands taken by the parties will depend only on the interpretation of the proviso to Section 241(2) and thus, it is evident that the petitioner is ultimately seeking to urge that a provision of the Companies Act is required to be read in a particular manner.
The single-judge bench of Justice Rekha Palli held that the present petition is not maintainable on account of the alternative statutory remedies available to the petitioner and not for want of territorial jurisdiction, did not deem it necessary to delve into the aspect.
“The writ petition, along with the pending application, is dismissed. Needless to observe that this Court has not gone into the merits of the petitioner’s challenge to the impugned orders and letter and therefore, the petitioner will be at liberty to raise all grounds raised in the present petition either before the NCLT or NCLAT, which he may choose to approach,” the court said.
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In a major drive initiated against fraudsters who are availing and utilizing fake Input Tax Credit (ITC) Thane Central GST Commissionerate, Mumbai CGST Zone has arrested a mastermind who had opened a firm M/s. Doshi Marketing and was operating from Bhayander West. He has indulged in fraudulent availment and utilization of Input Tax Credit to the tune of Rs 90.68 crores without receiving the goods or services in violation of the provisions of CGST Act 2017.
His firm was dealing in trading of Asbestos, cotton yarn, sewing thread, etc, and had fraudulently taken credit of Input Tax showing the value of goods amounting to Rs.503.80 crores. This was a paper transaction only without actual supply of goods and without the filing of E-way bills.
The mastermind accused was arrested under provisions of CGST Act 2017 and was remanded to judicial custody till the 5th of November by JMFC Court Thane.
In another two separate cases M/s. Trimurti Gems and M/s.Nikita Trading & Cooperating in the Bhayander area who were also involved in the activity of fraudulently availing and passing on the Input Tax Credit amounting to Rs.292 crores have also been booked. These firms were not active and their registrations had been canceled. Efforts are on to nab the masterminds in these cases also.
Further investigation is in progress.
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The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that no Service Tax is payable on payment made to foreign companies under Manpower Recruitment or Supply Agency Service.
The appellants, M/s Komatsu India (P) Ltd. has been engaged in the manufacture of Dump Trucks and is a wholly-owned subsidiary of Komatsu Asia Pacific Limited (KAP) belonging to the Komatsu Group of companies in Japan. They are registered with the department for payment of service tax under various categories of taxable services. On verification of records of the appellant, it was observed that though the appellant received various services from abroad they had not paid the service tax on such services in terms of Section 66A of the Finance Act, 1994. Show cause notice was issued proposing to demand service tax under the category of ‘Manpower Recruitment or Supply Agency Service’, Online Information and Database Access and Retrieval Service, Consulting Engineering Service, and Maintenance and Repair Services. After due process of law, the original authority confirmed the demand, interest, and imposed penalties.
The issue raised in respect of tax liability under consideration is the demand of service tax on “Manpower Recruitment or Supply Agency Service”. Manpower Recruitment or Supply Agency Service is defined under Section 65 (105) (k) of the Finance Act, 1994.
The coram of Sulekha Beevi C.S. and P. Anjani Kumar ruled that the payment made to the foreign company which has been subjected to service tax under Manpower Recruitment or Supply Agency Service cannot sustain and is required to be set aside.
“We do not find any payment of consideration towards the rendering of Manpower Recruitment or Supply Agency Service. The appellant company and the parent company being of the same group, the secondment employees cannot be said to have been recruited by the parent company to the appellant company. Once the employees are deputed to the appellant, the appellant would enter into an individual contract for employment with such employees. A part of the salary that is to be paid to these employees is paid to the parent company in foreign currency for payment to their families. The said amount is not a consideration for services of manpower recruitment,” the CESTAT said.
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The Jaipur bench of the Income Tax Appellate Tribunal (ITAT), while quashing the re-assessment proceedings, has held that the ‘proper service’ of notice is a mandatory requirement for reopening of assessment under section 148 of the Income Tax Act, 1961.
The two-member bench comprising Judicial Member Mr. Sandeep Gosain and Accountant Member Mr. Ramesh S Sharma was hearing an appeal filed by a company against whom the income tax department initiated re-assessment proceedings by making an addition of Rs. 2,76,51,300/- on account of short-term capital gains.
The assessee contended that the service of notice under section 148 and the Assessing Officer has not mentioned the date of service of notice under section 148. According to them, this clearly establishes that notice under section 148 was not served upon the assessee. It is also submitted that it is settled position of law that when service is effected by notice server of the department or by post in such case it is for the department to prove that notice has been served in accordance with provisions of Order V of the Code of Civil Procedure, particularly rules 16 to 20 thereof.
Allowing the plea of the assessee, the Tribunal held that “from the entire crux of the matter, we found that the revenue has failed to bring on record any positive evidence to prove that the notice U/s 148 of the Act was served upon the assessee whereas the assessee has successfully placed on record letter dated 07/11/2017 issued by the department wherein it has no where been mentioned that the notice U/s 148 was ever served upon the assessee. In view of the above facts and circumstances, we can safely conclude that there was no ‘proper service’ of notice U/s 148 of the Act was effected in the present case before completion of reassessment u/s 147 r.w.s 143(3). Therefore, we set aside the orders of the lower authorities and quash the proceeding U/s 148 of the Act.”
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The Punjab and Haryana High Court while directing the Customs Authority to provisionally release Insecticides for re-export held that the option to re-export goods was given even if Goods were liable to absolute confiscation.
The petitioner, M/s Modern Insecticides Limited had exported what is termed to be ‘Sulphur Formulation’ to a Sister Concern in Dubai; however by the time they reached there they could not be sold because there was no demand at that time and consequently, those goods were sent back to the petitioner. On checking those goods it was found that some of the goods which were returned were actually different from the ones that had been exported and consequently, the goods were detained.
The petition has been filed against the alleged act of omission by the Customs Department in not giving effect to the order passed by the Appellate Authority whereby it has been directed that the goods are released provisionally for re-export, subject to furnishing a bond equal to the value of the goods imported and after representative samples of such items, as deemed fit by the investigating agency are drawn for further investigation/examination. The petitioner prays for the provisional release for re-export of the goods in question, in accordance with the order passed by the Appellate Authority.
The division bench of Justice Ajay Tewari and Justice Vikas Bahl in the light of the Supreme Court’s decision in the case of Union of India and others Vs. Raj Grow Impex LLP and others held that even after holding that the goods were liable to absolute confiscation, an option was given to re-export the goods.
The court noted that the petitioner is a 100% export-oriented unit and thus, any difference in the declaration of the value of the goods to be exported by the petitioner would not make much difference, as the petitioner would be entitled to seek a 100% refund of the duty paid.
The court directed the petitioner to furnish a bond amounting to Rs. 15 crores and within seven days of the petitioner submitting the said bond and complying with the other formalities as per law, the respondents are directed to provisionally release the goods in question for re-export.
“The petitioner be permitted to re-export the goods by using the nomenclature “Sulphur Formulation” and it is observed that using of the said nomenclature would not bind the Department and would not entitle the petitioner to raise a plea of estoppel in the pending proceedings or in any proceedings to be initiated by the respondents,” the court said.
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The Institute of Chartered Accountants of India (ICAI) has removed the name of 21 Chartered Accountants (CAs) namely CA. Vishal Dhingra, CA. Avinash Lalwani, CA. Kishor CA Purushottam Joshi, CA Sanjit Kumar Singh, CA. Priya Wadhwa Chawla, CA. Suresh Kumar Goklani, CA. Ankit Daga, CA. Madhukar Raghunath Tile, CA. Jeetendra Kumar Amar, CA. Prem Kumar PK, CA. Padmakesh Dubey, CA Anugrah Srivastava, CA Dinesh Gopalrao Malpathak, CA. Gaurav Agarwal, CA. Avdhesh Mittal, C.A. Mulraj Devchand Gala, CA. Raj Kumar Sawhney, C.A. Mohammed Shahin Ashraf Padath, and CA. (Ms.) Neelam Dhawan on the grounds of professional misconduct.
The notifications said that in terms of the provisions of Section 21B(3) of the Chartered Accountants Act, 1949 read with Rules 18(17) and 19(1) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Disciplinary Committee has held 21 CAs guilty of Misconduct.
CA Vishal Dhingra (Membership No. 408383), shall stand removed from the Register of Members for a period of 5 years with effect from 22nd October 2021.
CA Avinash Lalwani (Membership No. 048715), shall stand removed from the Register of Members for a period of 3 months with effect from 22nd October 2021.
CA Kishor Purushottam Joshi (Membership No. 034760), shall stand removed from the Register of Members for a period of 5 years with effect from 22nd October 2021.
CA. Sanjit Kumar Singh (Membership No. 504600) shall stand removed from the Register of Members for a period of 15 days with effect from 22nd October 2021.
CA. Priya Wadhwa Chawla (Membership No. 516631), shall stand removed from the Register of Members for a period of 2 months with effect from 22nd October 2021.
CA. Suresh Kumar Goklani (Membership No. 075009), shall stand removed from the Register of Members for a consolidated period of 4 months [3 months plus an additional 1 month] with effect from 22nd October 2021.
CA. Ankit Daga (Membership No. 419176), shall stand removed from the Register of Members for a period of 1 year with effect from 22nd October 2021.
CA. Madhukar Raghunath Tile (Membership No. 042963), shall stand removed from the Register of Members for a period of 1 year with effect from 22nd October 2021.
CA. Jeetendra Kumar Amar (Membership No. 065389), shall stand removed from the Register of Members for a period of 1 month with effect from 22nd October 2021.
CA. Prem Kumar P K (Membership No. 028270), shall stand removed from the Register of Members for a period of 1 month with effect from 22nd October 2021.
CA. Padmakesh Dubey (Membership No. 403892) shall stand removed from the Register of Members for a period of 1 month with effect from 22nd October 2021.
CA. Anugrah Srivastava (Membership No. 073264), shall stand removed from the Register of Members for a consolidated period of 15(fifteen) months [01(one) year plus an additional 03(three) months] with effect from 22nd October 2021.
CA. Dinesh Gopalrao Malpathak (Membership No. 006427), shall stand removed from the Register of Members for a period of 03(Three) months with effect from 22nd October 2021.
CA. Gaurav Agarwal (Membership No. 505241) shall stand removed from the Register of Members for a period of 01 (one) month with effect from 22nd October 2021.
CA. Avdhesh Mittal (Membership No. 083360) shall stand removed from the Register of Members for a period of 45 (Forty-Five) days with effect from 22nd October 2021.
C.A. Mulraj Devchand Gala (Membership No. 041206), shall stand removed from the Register of Members for a period of 01(one) year with effect from 22nd October 2021.
CA. Raj Kumar Sawhney (Membership No. 010516), shall stand removed from the Register of Members for a period of 01(one) year with effect from 22nd October 2021.
C.A. Mohammed Shahin Ashraf Padath (Membership No. 210295), shall stand removed from the Register of Members for a period of 01(one) year with effect from 22nd October 2021.
CA. (Ms.) Neelam Dhawan (Membership No. 081035), shall stand removed from the Register of Members for a period of 03(Three) months with effect from 22nd October 2021.
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The Central Board of Indirect Taxes and Customs (CBIC) reminded the GST Taxpayers that just 2 days are left to file Form ITC-04 in respect of inputs/capital goods sent to or received from a job worker.
The due date for filing Form ITC-04 in respect of inputs/capital goods sent to a job worker or received from a job worker, during the quarter from July to September 2021 is October 25, 2021.
A registered manufacturer or a principal is required to file a declaration in Form GST ITC-04 in case of job work. It is filed once in every quarter in the various cases if the manufacturer sends inputs or capital goods on job work and/or receives it back or sends inputs or capital goods to another job worker or Supplies from the premises of the job worker to the customer directly.
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The Central Board of Indirect Taxes and Customs (CBIC) reminded the GST Taxpayers who are under Quarterly Return Filing and Monthly Payment of Taxes (QRMP) scheme that only 1 day is left to file quarterly GSTR-3B Return and having principal place of business in State Group 2.
The due date to file your quarterly GSTR-3B Return for July to September 2021 is October 24, 2021.
With effect from January 1, 2021, as notified vide Notification No. 81/2020-Central Tax dated 10-11-2020 and Notification No. 84/2020-Central Tax dated 10-11-2020, the small taxpayers with an aggregated turnover of less than Rs. 5 Crores can opt for Quarterly Return Monthly Payment (‘QRMP’) scheme and file Form GSTR 3B on a quarterly basis. However, if such taxpayers do not opt for the QRMP scheme, they are required to file the return on a monthly basis.
Late filing of GSTR-3B will attract late fees and penalties. Late fees and interest form important components of the Goods and Services Tax (GST) payment and are incurred by businesses in case of delay in submitting or filing GST returns.
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