The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) ruled that Share Transfer without consideration or at a price lower than Fair Market Value (FMV) is chargeable to income tax.
The assessee, Rajeev Ratanlal Tulshyan was a director and a major shareholder in an entity namely M/s Kennington Fabrics Private Limited (KFPL). During the year, KFPL offered the right issue and the assessee was allotted 3.95 Crores shares of KFPL at face value of Re.1/- each in the right issue.
However, it was alleged by AO that the consideration of Re.1/- per share was less than fair market value (FMV) of shares as calculated in accordance with the provisions of Sec.56(2)(vii)(c)(ii) read with rule 11U & 11UA and therefore, the difference between FMV and the consideration paid by the assessee would be taxable in the hands of the assessee u/s 56(2)(vii).
The provisions of Section 56(2)(vii) were anti-abuse provisions inserted post abolition of the Gift Tax Act. The same is evident from CBDT Circular No. 05/2010 dated 03/06/2010which provided that Section 56 is being introduced as an anti-abuse measure. The same is fortified in CBDT Circular No. 01/2011 dated 06/04/2011 which also provided that these provisions are anti-abuse provisions that were applicable only if an individual or a HUF is the recipient. Therefore, transfer of shares of a company to a firm or a company, instead of an individual or a HUF, without consideration or at a price lower than the fair market value does not attract the anti-abuse provision.
The coram headed by the Vice President, Mahavir Singh, and Accountant Member, Manoj Kumar Aggarwal relied upon DCIT V/s Dr. Ranjan Pai and observed that the intent of introducing the provisions was anti-abusive measures still remain intact and there is no reason to depart from the understanding that the provisions were a counter evasion mechanism to prevent the laundering of unaccounted income. Therefore, the same does not apply to genuine issues of shares to existing shareholders.
The ITAT held that transfer of shares of a company to a firm or a company, instead of an individual or a HUF, without consideration or at a price lower than the fair market value does not attract Section 56(2)(vii) of the Income Tax Act.
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The Delhi Government has issued the notification empowering the Senior Assistant, Junior Assistant, to undertake physical verification of place of business before granting registration.
“In exercise of the powers conferred under Section 167 of Delhi Goods and Service Tax Act, 2017, Ankur Garg, Commissioner, GST confer upon Senior Assistant and Junior Assistant, working in the Department of Trade and Taxes, the power to undertake physical verification of the place of business of a person before the grant of registration or due to any other reason after the grant of registration, as assigned by the Proper Officer,” the notification read.
Section 167 of DGST Act, 2017 relates to Delegation of Powers wherein the Commissioner may, by notification, direct that subject to such conditions, if any, as may be specified in the notification, any power exercisable by any authority or officer under this Act may be exercisable also by another authority or officer as may be specified in such notification.
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The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that no Service Tax payable on services provided to Government Company for ‘transmission of electricity.
The appellants, M/s. Vivek Constructions, M/s. Shree Ram Construction Co. is registered with the Service Tax Department and is engaged in providing works contract services, inter alia, to Rajasthan Rajya Vidyut Prasaran Nigam Ltd., a State PSU (RRVPNL). It appeared to Revenue that the appellant has not paid or short paid service tax for the taxable services provided during the period 2010-2011 to 2014-2015 and thus, the short paid tax is Rs.7,75,082/-. On requisition, the Revenue received the details of payment made to various contractors, including the appellant, from RRVPNL.
It further appeared that in terms of Section 68(1) read with Section 68(2) read with Notification No.30/2012-ST, Sl.No.9 of the Notification provides that in respect of services provided or agreed to be provided, service portion in the execution of the works contract – 50% of the service tax is payable by the person providing services and balance 50% is payable by the person receiving the services. Further, it appeared that the appellant had not taken registration earlier for payment of tax and filing the returns, and have taken registration subsequently on 18.12.2013. Accordingly, by show cause notice dated 23.10.2015, service tax of Rs.7,75,082/- was demanded for the period 2010-2011 to 2014-2015, invoking the extended period of limitation along with interest, and a further penalty was proposed.
The appellant, inter alia, urged that exemption notification no.11/2010-ST dated 27.12.2010 provides that the services provided by any person to any other person for ‘transmission of electricity is exempt from service tax. They have provided services to RRVPNL, which is engaged in the transmission of electricity. Further, reliance was placed on notification no.45/2010-ST dated 20.07.2010, which provided ‘retrospective exemption’ for all taxable services in relation to the ‘transmission and distribution of electricity.
The coram of Judicial Member, Anil Choudhary held that no case of contumacious conduct or conscious breach of law is made out in the facts and circumstances. Revenue has raised the demand in the show cause notice, which has been found to be misconceived by the Commissioner (Appeals), as the appellant was entitled to exemption. Further, the services rendered to the Government Companies post 30.06.2012, being of non-commercial nature, was also exempt under Notification No.25/2012-ST. In this view of the matter, all the demands of tax and penalties are fit to be set aside.
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In a major relief to Reliance Industries, the Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) allows refund of the amount in respect of LPG cleared under Public Distribution System (PDS) exemption.
The respondents, Reliance Industries Limited are engaged in the manufacture of dutiable goods viz. MS, HSD, ATF, LPG, and exempted goods viz SKO for PDS and LPG, etc therefore, it is admitted fact that LPG is a final product hence the stand taken now that the LPG is a byproduct is not tenable.
It has been submitted that Provision of Rule 6 (2) applies only where a manufacturer manufactures a final product that is chargeable to duty and another which is exempt from payment of duty. In the instant case, the LPG is dutiable, except when cleared to PSU oil marketing companies for distribution under PDS. This being the case, the requirement of Rule 6 (2) of there being a final product that is dutiable and another which is exempted is not satisfied.
The coram of Judicial Member, Ramesh Nair, and Technical Member Raju held that during the process of refining crude oil LPG namely propane and Butane also emerged at an intermediate stage. The LPG is liable to excise duty as per the Central Excise Tariff at the rate of 8% however, the same LPG if it is clear to PSU oil Companies for further supply to the domestic consumers under PDS, is exempted.
The respondents have used input and input services in the manufacture of dutiable goods i.e. motor spirit (MS), High-Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil, etc. the LPG is generated as one of the products which also dutiable but under the said scheme of the Government i.e. PDS when it is decided to clear dutiable LPG under the PDS there is an exemption on excise duty.
“We are of the view that respondents are not required to pay any amount under Rule 6(3) in respect of LPG cleared under an exemption under PDS. Therefore, the amount paid by the respondent was liable to be refunded to them,” the CESTAT said.
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Recently, the Central Board of Direct Taxes (CBDT) has notified the new Rules on Retrospective Tax Disputes Settlement so as to settle the long-drawn retrospective tax dispute with Vodafone Plc.
The new rules namely Relaxation of Validation (section 119 of the Finance Act, 2012) Rules, 2021 is consistent with the basic structure notified on October 1 for settling retrospective taxation cases that arose due to the controversial 2012 amendment to the Income Tax Act.
In May 2007, Vodafone acquired a stake in Hutchison Essar for $11.2 bn. Vodafone International Holdings BV bought the stake of Hutchison Telecommunications International Ltd in Hutchison Essar. The deal between the companies based overseas was executed in the Cayman Islands.
On October 30, 2009, the Income Tax department served notice to Vodafone International Holdings
Notice under Sections 201 and 201 (1A) of the Income Tax Act for non-deduction of tax at source on the $11.2 bn transactions. Further on October 30, 2010, the Income Tax Department ordered Vodafone to furnish Rs 11,218 cr under Sections 201 and 201(1A).
In the month of April 29, 2011, a Rs 7,900 crores penalty was imposed. The Bombay High Court upheld the tax authorities’ decision. Dept raised tax demand in the subsequent month
On January 20, 2012, the Supreme Court set aside the Bombay High Court decision; quashed tax & interest demand. It said the transaction was between two overseas entities & Indian tax authorities had no territorial tax jurisdiction. On February 17, 2012, the government filed a review petition, however, the Supreme Court dismissed the review petition.
In 2012 the Indian government amended the Income Tax Act retrospectively. Section 119 of the Finance Act validated the tax levied on Vodafone. The government said the amendment was only a clarification to remove ambiguity and provide certainty.
In January 2013, the Income Tax department raised a fresh demand for Rs 11,218 crores. Vodafone subsequently sought to settle the case. A committee set up to resolve the issue failed to make any headway.
Vodafone had challenged the tax demand at an international arbitration tribunal. Supporting the Vodafone argument, the tribunal passed an order against India and directed it to reimburse Vodafone. The government had challenged the arbitration award before a Singapore court.
How does CBDT’s new Rules on Retrospective Tax Disputes Settlement play a significant role in the Vodafone Retro tax case?
As per the new rule, the British telecom giant is required to give a declaration to the Income-Tax Department, withdrawing all legal proceedings against the Central government over the levy of retrospective taxes, besides the indemnity it has to give against any claims and commit not to seek any damages. The rule will facilitate the resolution of the Vodafone case.
The new rule gives Vodafone 45 days to approach the government for a settlement. The relaxation given by the government is a welcome provision. It will save foreign companies unnecessary litigation in the future.
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The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) recommended the constitution of a larger bench to consider the issue of Deduction on freebies to medical professionals.
The Deputy Commissioner of Income Tax has raised the issue of whether an item of expenditure on account of freebies to medical professionals, which is hit by rule 6.8.1 of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002- as amended from time to time, read with section 20A of the Indian Medical Council Act 1956, can be allowed as a deduction under section 37(1) of the Income Tax Act, 1961 read with Explanation thereto, in the hands of the pharmaceutical companies.
The assessee, Macleods Pharmaceuticals Ltd. is a company engaged in the business of manufacturing pharmaceutical products, such as tablets, capsules, liquids, and injectables, etc. This is a case in which the assessee company was subjected to a search and seizure operation. The assessments were reopened, and the assessment proceedings were initiated. During the course of these assessment proceedings, the Assessing Officer noted that while the assessee has Rs 221.25 crores on sales promotion so far as the assessment year 2012-13 is concerned, and Rs 139.07 crores so far as the assessment year 2011-12 is concerned, the amounts spent to the extent of Rs 137.62 crores for the assessment year 2012- 13 and Rs 111.11 crores for the assessment year 2011-12 pertains to payments of freebies to doctors. These amounts, according to the Assessing Officer, included “payments made for gifts, promotion items, facilities etc given to various medical practitioners within the country as well as abroad”.
The coram of Vice President, Pramod Kumara, and Judicial Member, Saktijit Dey said that “this decision calls for reconsideration by a larger bench. In our humble understanding, conclusions arrived in the said decision do not reflect the correct legal position, and the same is the position with respect to a large number of other coordinate bench decisions following the said decision or following the line of reasoning in the said decision- as discussed above. However, in all fairness, while we may or may not agree with a coordinated bench decision, it cannot be open to us to disregard the same, lest such judicial inconsistency should shake public confidence in the administration of justice and lest one of the fundamental legitimate expectations of the stakeholders, i.e. those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases on identical matters, will stand declined.”
“It is, however, equally true”, to borrow the words of Hon’ble Supreme Courts as articulated in the case of Union of India Vs Paras Laminates Pvt Ltd [(1990) 186 ITR 722 (SC)], “that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness of an earlier decision if and when subsequent proceedings being to light what is perceived by them as an erroneous decision in the earlier case” and that “in such circumstances, it is but natural and reasonable and indeed efficacious that the case is referred to a larger bench”, the tribunal added.
The ITAT recommended the constitution of a bench of three or more Members to consider the question as to whether or not an item of expenditure on account of freebies to medical professionals, which is hit by rule 6.8.1 of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002- as amended from time to time, read with section 20A of the Indian Medical Council Act 1956, can be allowed as a deduction under section 37(1) of the Income Tax Act, 1961 read with Explanation thereto, in the hands of the pharmaceutical companies.
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The Central Board of Direct Taxes (CBDT) notified the Punjab State Electricity Regulatory Commission eligible for Section 10(46) Income Tax Exemption.
The Board empowered under clause (46) of section 10 of the Income Tax Act, 1961 notified ‘Punjab State Electricity Regulatory Commission, Chandigarh, a commission established by the state government of Punjab, in respect of the amount received in the form of processing fee for the determination of tariff; amount received in the form of license fee; amount received in the form of petition fee; and amount of interest income earned on bank deposits income arising to the Commission.
However, the exemption shall be effective subject to the conditions that Punjab State Electricity Regulatory Commission, Chandigarh shall not engage in any commercial activity; activities and the nature of the specified income shall remain unchanged throughout the financial years; and shall file a return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the Income Tax Act, 1961.
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The Central Board of Direct Taxes (CBDT) has notified the Relaxation of Validation (section 119 of the Finance Act, 2012) Rules, 2021 for settling the controversial retrospective tax disputes.
The Relaxation of validation (section 119 of the Finance Act 2012) rules 2021 seeks to extend the conditions, form, and manner of settling retrospective tax cases notified earlier this month to those cases where the tax demand was validated under a special provision.
“The form and manner of furnishing undertaking under Explanation to the fifth and sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Income Tax Act, 1961 (43 of 1961), as prescribed under sub-rule (1) and sub-rule (3) of rule 11UE and rule 11UF of the Income Tax Rules, 1962, shall mutatis mutandis apply to clauses (i), (ii) and (iii) of the first proviso to section 119 of the Finance Act, 2012,” the notification said.
“The conditions for the purposes of clause (iv) of the Explanation to the fifth and sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Income Tax Act, 1961 (43 of 1961), as prescribed under sub-rule (2) of rule 11UE of the Income Tax Rules, 1962, shall mutatis mutandis apply to clause (iv) of the first proviso to section 119 of the Finance Act,” the notification added.
The government has notified a fresh set of rules to facilitate settlement of the retrospective tax dispute with British telecom giant Vodafone Plc.
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The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) refused to issue a demurrage waiver certificate to Importer and held that Green Peas removed from ‘free’ to ‘restricted category’ prior authorization required.
The appellant, M/s. Oscar Pvt. Ltd. Kakinada imported 6479.30 MTs of ‘Green Peas’ falling under CTH 0713 against 21 bills of lading through Visakhapatnam Seaport. Out of this, 09 bills of entry were filed initially. As per DGFT Notification No. 37/2015-2020 dated 18.12.2019, the import of peas is restricted.
The appellant importer had obtained a stay order against the above Notification or Trade Notices issued by DGFT from the High Court of Andhra Pradesh. However, the Supreme Court in Transfer Petition (Civil) upheld the validity of Notification and the Trade Notice imposing restriction of import of peas.
It appeared to the department that the appellant has violated the provisions of Foreign Trade Policy 2015 – 2020 and thereby goods under import are liable for confiscation under the provisions of Customs Act, 1962. The goods lying in Visakha Container Terminal CFS and Sravan CFS, Visakhapatnam were restrained under section 110 of the Customs Act, 1962. The appellant waived the issuance of Show Cause Notice. After granting a personal hearing the matter was adjudicated.
The major contention put forward by the department was that the adjudicating authority ought not to have allowed redemption of the goods as it negates the intention of the Government in issuing the Notification. The department prayed for an order of absolute confiscation of the goods. The Commissioner (Appeals) vide order impugned herein allowed the appeal filed by the department thereby setting aside the order of the adjudicating authority allowing redemption of the impugned goods under Section 125 (1) of the Customs Act, 1962.
The coram of Judicial Member, Sulekha Beevi C.S. and Technical Member P. Venkata Subba Rao stated that the goods have been confiscated for violation of the Notification / Trade Notice. These are serious infractions on the part of the appellant importer. After the issuance of the notification, the appellant approached the jurisdictional High Court and on the basis of interim stay of the notification, he proceeded to import the subject goods. There were decisions rendered by various other High Courts (Madras, Gujarat) which upheld the validity of notification. The appellant was aware that there were decisions against him. The appellant has taken a chance of importing the goods after filing the writ petition and obtaining a stay from the jurisdictional High Court. The Supreme Court in the case of Agricas LLP held that when importers have taken such a chance there cannot be any bonafide belief on their part. The appellant was fully aware that they may have to face a dispute in regard to the notification.
“Ultimately, the appellant has not been able to justify the import, the Notification having been upheld by the Hon’ble Supreme Court. The goods were detained due to a violation on his part. The decisions relied on the learned counsel on this issue are not applicable to the facts of this case. In the present case, the Hon’ble Supreme Court has categorically held that there cannot be any bonafide belief when the importers have taken their chance to import the goods. In such circumstances, we do find that the appellant stands any favorable chance for the issue of a certificate of waiver of demurrage charges. This issue is found against the appellant,” the CESTAT ruled.
The tribunal modified the impugned order passed by the Commissioner (Appeals) to the limited extent of allowing the appellants to re-export the impugned goods on payment of redemption fine of Rs.2 crores. The imposition of a penalty of Rs. One crore is sustained.
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The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench has quashed the entire service tax demand on reimbursable expenses collected from clients post-May 1, 2006.
For the period 10.9.2004 to 1.5.2006, the appellant, M/s KFin Technologies Private Limited paid service tax under the head “Business Auxiliary Services” under protest. However, it did not pay any service tax on the reimbursable expenses, which it received from its clients.
The officers of the Director-General of Central Excise Intelligence initiated an investigation against the appellant and came to the conclusion that it was liable to pay service tax under the head of Business Auxiliary Services for the period 10.09.2004 to 30.04.2006, including on all reimbursable expenses. They also concluded that the appellant was liable to pay service tax under ‘share transfer agency’ service and ‘registrar to issue’ services for the period from 01 May 2006 including on all reimbursable expenses. The appellant had, during the investigation, clarified by letter dated 08.05.2008 that it had charged service tax on reimbursable expenses, except postage expenses from December 2006 and on all reimbursable expenses including the postage from February 2007.
The CFO of the appellant sent a letter submitting that it had issued debit notes whereby the service tax was charged from the clients on all reimbursable expenses on an actual basis and paid the same to the Department. It was also mentioned the service tax on reimbursable expenses for the period prior to 1 May 2006 was not paid as the demand itself under the head of Business Auxiliary Services was not sustainable.
The coram headed by President Justice Dilip Gupta and Technical Member, N.V. Subba Rao held that the entire demand of service tax on reimbursable expenses collected from clients for the period post 1.5.2006 cannot sustain and needs to be set aside.
“However, to the extent, the appellant has collected any amount representing service tax on such expenses and interest thereon from clients, the same needs to be deposited with the Government in terms of Section 73A of the Finance Act,” the Tribunal said.
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The Punjab and Haryana High Court initiated CBI enquiry to fix liability of erring Customs Dept. and Anti Evasion GST Units in respect of clearing of Consignment without making any entry
The petitioner, Sunil Dutt is a registered informer of General Goods and Service Tax, Commissionerate (GST) i.e. respondent, and has helped in unearthing many scams and GST Evasion for which he has been granted the award. The petitioner is enrolled as a G – Card Holder by the Department of Customs on behalf of M/s. Safe Cargo Clearing Services and being a G-Card Holder, the petitioner is assisting in moving the files of the parties in the Department of Customs for handling the custom clearances and has also obtained a KYC Form, Import-Export Code, PAN Card, Aadhar Card, etc. from Prabhjot Singh.
The petitioner has argued that the petitioner has initially given the information to GST Department regarding a consignment which was illegally cleared by the Customs Department without making any entry and the same was intercepted by Preventive Wing of CGST Commissionerate, Ludhiana and it was found that the shipping line seal of the container was intact and not broken which suggested that the Customs Authorities never checked the consignment. When the consignment was checked by the Preventive Wing of CGST Commissionerate, Ludhiana, it was found containing 39,60,000 Cigarettes (100 mm each) of four different brands, 10030 Kgs of iron scrap, and 04 alloy wheels. Counsel for the petitioner has further submitted that the petitioner was apprehensive that since he has unearthed a scam, he may fell to the ire of the Customs Department as the Custom Official, who was the Port Incharge when the consignment was allowed to move out of the Port without making any entry, is now made the Head of the Special Investigative Team and therefore, the petitioner has every apprehension that he will not get the justice.
The single bench of Justice Arvind Singh Sangwan noted that it is very strange and surprising that 02 Departments i.e. Department of Customs, Customs Commissionerate, Ludhiana and Anti-Evasion Unit, Central Goods & Service Tax, Commissionerate, Ludhiana, are fighting tooth and nail regarding fixing the liability as to how the consignment was cleared manually without making any entry by the Customs Department and as per stand of the Customs Department, there is a collusion of the official of the CGST Department with the petitioner and the other accused and in that process, the CGST Department is posing the petitioner as a Secret Informer/Source and has even filed a Secret Note under the signatures of Joint Commissioner, Central GST Commissionerate, Ludhiana, giving a clean chit to the petitioner, Sunil Dutt.
“The officers of Customs Department, as well as the CGST Department, derive their powers from the respective Customs Act, 1962 and the Central Goods and Services Act, 2017 and both Departments are part of premium investigating agencies, however, instead of fighting and levelling allegations against each other, the office of the Director-General of both the Departments should have intervened and settled the dispute. Therefore, taking note of the tardy, casual and irresponsible attitude of both the departments, I find it to be a fit case where the matter needs to be referred to the Central Bureau of Investigation (CBI) for conducting further investigation of the case and fix liability of the erring official(s),” the court said.
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The Institute of Chartered Accountants of India(ICAI) has published the 72nd Annual Report and Accounts of the Institute for the year 2020-21 wherein the Disciplinary Committee enquired in 235 cases in respect of professional misconduct by its Members.
From 1st April 2020 to 15th June 2021, 30 meetings of the Board of Discipline were held. Moreover, 146 Complaint/Information cases were considered by the Board of Discipline (under Section 21A) wherein prima facie opinion of the Director (Discipline) was formed. A number of cases (Complaint/Information cases) in which inquiry was completed by the Board of Discipline (including those cases, which were referred to the Board of Discipline during the earlier years) were 67 and in 22 cases (Complaint/Information) punishment has been awarded by the Board of Discipline (including those cases, which were referred to the Board of Discipline during the earlier years.
During the year under review, the Disciplinary Committee (all benches) held 86 meetings including meetings through video conference. During the course of the aforesaid meetings, the Committee concluded its inquiry in 235 cases, which included cases referred to it in previous years.
As per the report, during the period from 1st April 2020 to 15th June 2021, 86 meetings of the Disciplinary Committee were held. A number of Complaints or Information cases considered by the Disciplinary Committee (under Section 21B) wherein prima facie opinion of the Director (Discipline) was formed was 225. Further, in 235 cases (Complaint/Information cases) in which inquiry was completed by the Disciplinary Committee (including those cases, which were referred to the Disciplinary Committee during the earlier years). Lastly, 126 cases (Complaint/Information) in which punishment has been awarded by the Disciplinary Committee including those cases, which were referred to the Disciplinary Committee during the earlier years.
Interestingly, 203 writ petitions were filed arising out of disciplinary action under Section 21 of the Chartered Accountants Act, 1949.
The Disciplinary Committee of IIIPI has to date issued 21 orders against its members, in order to maintain high ethical and professional standards in the regulation of its members.
Looking to the pandemic further amendments have been made in E hearing modalities facilitating the parties/their representatives and members of the Board of Discipline/Disciplinary Committee to appear from their respective places. E-hearings are resulting in saving the time and energies of the members of the Board of Discipline/ Disciplinary Committee besides being economical. Now, members of the Committees will not have to travel to different places for hearings. Parties to the cases are also having an option to attend the Board of Discipline (BOD)/Disciplinary Committee (DC) hearing through Video Conferencing from their respective places.
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The National Company Law Appellate Tribunal (NCLAT), Chennai Bench ruled that the Resolution Professional (RP) is not empowered to undertake Revision of GST assessment.
The appelllant, Bijoy Prabhakaran Pulipra is a Resolution Professional who has assailed the NCLT’s order under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) holding that there is no error in the Order. The Appellant has sought the clarification about assessment of the GST amount payable by the Corporate Debtor.
The coram of Judicial Member Justice Venugopal M and Technical Member [V. P. Singh held that the Resolution Professional committed an error in exercising their power and exercised the powers of GST Authorities, by way of Regulation 14 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), which was not held to be sustainable.
The Tribunal observed that the Appellant revised the admitted claim of GST dues filed by The State Tax Officer, SGSTafter verification of the GST claims with Corporate Debtor’s books. On account of this, the NCLAT remarked that the revision of the GST assessment order was beyond the jurisdiction of the RP and the RP was not having the adjudicatory power given by the GST Law
The NCLAT further stated that any revision of assessment orders also cannot be made under the pretext of Section 238 of IBC. Section 238 of IBC cannot be read as conferring any appellate or adjudicatory jurisdiction in respect of issues arising under other statutes.
The NCLAT stated that the Committee of Creditors (COC) cannot exercise judicial power under commercial wisdom and has no role in acceptance/rejection of the claim, the NCLAT concluded that the NCLT had rightly considered the statutory provision and suggested filing an Appeal before NCLAT. Furthermore, the said act of the RP is without jurisdiction and not sustainable in law.\
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The Maharashtra Authority of Advance Ruling (AAR) held that 12% GST applicable on Turbilatex C-reactive protein (CRP) infinite & HbA1c infinite.
The applicant, M/s. Accurex Biomedical Private Limited sought the advance ruling in respect of the HSN Classification and GST rate to be charged on Tar bilatex C-reactive protein (CRP) infinite and HbAlc infinite.
The intended use or purpose of the CRP diagnostics kit is for the quantitative determination of C-reactive protein (CRP) in human serum for medical diagnosis of inflammation and infections.
The intended use or purpose of the HbA1c diagnostics kit is for the quantitative determination of hemoglobin A1c (HbA1c) in human blood for medical diagnosis and monitoring of glycaemic control in diabetic patients. Components of the HbA1c diagnostics kit include HbA1c R1 latex reagent, HbA1c R2 buffered antibody reagent, and HbA1c Calibrator sets made from human blood. HbA1c is based on the agglutination principle by antigen-antibody interaction.
The coram of Members Rajiv Mago and T.R.Ramnani noted that the government has issued the notification during the COVID 19 Pandemic situation in India vide which the Government of India announced a reduction in the GST rates (IGST, UTGST, and CGST) on the specified items being used in Covid-19 relief and management till 30th September 2021. The reduction was announced on certain Medicines, Oxygen, Oxygen generation equipment & related medical devices, Testing Kits and Machines, and Other COVID relief material. It is seen from Sr. No. 18 of the said notification that the GST rate on Ambulances was reduced from 28% to 12%. Similarly as per Sr. No. 7, the GST rate on certain products, including CRP (C-Reactive Protein), falling under Heading 38.22 has been reduced to 5%. It is clear from the said notification that the rate of GST on CRP (C-Reactive Protein) was reduced to 5% for that particular period only, else the rate is higher at 12% (6% each of CGST and SGST/UTGST.
The AAR ruled that the Tar bilatex C-reactive protein (CRP) infinite and HbAlc infinite are classifiable under Heading 38.22 and under Sr.No 80 of Schedule II of the Notification No. 1/2017 – Central Tax (Rate) dated 28th June 2017 attract GST at the rate of 12% (6% each of CGST and SGST/UTGST or 12% IGST)
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The Allahabad High Court directed the refund of Uttar Pradesh Value Added Tax (UPVAT) on Extra Neutral Alcohol (ENA) as the State lost its legislative competence to impose the tax.
As many as 9 petitions were filed seeking relief in the nature of a declaration that the State legislature (of Uttar Pradesh) lost its legislative competence to impose or levy tax on the sale of Extra Neutral Alcohol, after enactment of the 101st Constitution Amendment, with effect from 01.07.2017 – as a direct consequence of the enactment of Article 246A read with Article 366 (12-A) of the Constitution of India, read with the substituted Entry 54 of List II of the Seventh Schedule, to the Constitution of India.
According to the petitioners ENA, both denatured and un-denatured as also SDS fall under the heading 2207 of the First Schedule to the Customs Tariff Act, 1975. ENA is concentrated Ethyl Alcohol (Ethanol) having an alcohol content of about 95 percent. Similarly, SDS is a spirit or neutral alcohol used for industrial purposes only. According to the petitioners, they manufacture and sell ENA, both to distilleries that manufacture “alcoholic liquor for human consumption” and to chemical and other industries. Owing to the high alcohol content (above 95 percent), both ENA and SDS are unfit for human consumption. Prior to the 101st Constitution amendment and, in light of Article 246 of the Constitution read with Entry 54 of List II (as those provisions then existed), the State legislature had the legislative competence to enact laws to impose a tax on sale or purchase of any goods other than newspapers, subject, however, to the provisions of Entry 92A of List I. Also, in view of Article 246 of the Constitution read with Entry 51 of List II of the Seventh Schedule, the State Government had the legislative competence to enact laws to impose duties of excise on goods manufactured or produced in the State, being alcoholic liquors for human consumption and opium, Indian hemp, etc.
On the other hand, in view of Article 246 read with Entry 92, the Parliament had the legislative competence to enact laws, to impose a tax on sale or purchase of newspapers and on advertisements published therein. Similarly, by virtue of Article 246 read with Entry 84 of List I of the Seventh Schedule, the Parliament had the legislative competence to enact laws to impose duties of excise on tobacco and other goods manufactured or produced in India, except alcoholic liquors for human consumption and opium, Indian hemp, etc.
The division bench of Justice Naheed Ara Moonis and Justice Saumitra Dayal Singh declared that the State lost its legislative competence to enact laws, to impose a tax on sales of ENA, upon the enactment of the 101st Constitution Amendment. Consequently, and upon considering Section 174(1)(i) of UPGST Act, 2017, the impugned Notification dated 17.12.2019, insofar as it seeks to impose UPVAT on ENA, Rectified Spirit and SDS, is ultra vires, both on account of lack of legislative competence and valid delegation. It is therefore quashed. Consequently, all assessment Orders/Notices and the (administrative) Circulars/letters holding otherwise are also quashed.
“It is further directed, subject to the applicability of the rule against unjust enrichment, any amount that may have been deposited by the petitioners (except petitioners claiming under this order, in Writ Tax 355 of 2020), by way of UPVAT on ENA on or after 01.07.2017, maybe refunded to them, within a period of one month from today,” the court said.
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The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that there is no mandatory requirement to produce original invoices in order to prove the service tax refund claims. While granting refund to the appellants, the Tribunal held that the photocopies of the invoices shall be treated as sufficient proof to accept such claims.
The appellant Cognizant is engaged in providing Information Technology Software Services and holds Service Tax registration for such services as well as services in the nature of Management Maintenance and Repair Services, Business Support Services, etc, providing services from various premises situated at different locations across the country. They have set up units in Special Economic Zones (SEZ) from where they export services and claimed service tax in relation to 25 SEZ units.
The department rejected the refund claims on various grounds including non-production of original invoices.
The appellant contended that all the services were used for authorized operations by the appellant and these services have been approved as ‘specified services’ by the Unit Approval Committee (UAC) / Development Commissioner of SEZ. It was further argued that the authorities below then cannot apply their own view to hold that such services are not specified services for authorized operations.
With regard to the non-submission of original invoices, the Tribunal bench comprising Judicial Member Mr. Sulekha Beevi and Accountant Member Mr. Venkata Subba Rao held that “the relevant condition in the Notification has already been noticed above. The appellant asserts that they have produced the photocopies of all the invoices. The requirement as per the Notification is to produce proof of payment of Service Tax. If the photocopies of the invoices establish the transaction as well as the payment of Service Tax, the Department ought not to have rejected the refund claim stating that original invoices are not produced. We therefore cannot agree with this view taken by the authorities below. If the appellant produces proof of payment of Service Tax, the same should be considered. However, this issue is remanded to the Adjudicating Authority, who shall re-consider this issue after verifying the copies of the invoices/documents produced by the appellant.”
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In an interim relief to apnacar, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Bangalore bench has directed the service tax department to reconsider the claim of Rs. 13,28,220/- under Section 13B of the Central Excise Act, 1944.
There was the excess payment of taxes by the appellant which was claimed as a refund later on. The lower authorities have also cited the time limit prescribed under Section 11B ibid to reject the refund claim as time-barred.
Judicial Member P Dinesh cited that decision of the High Court of Madras in one of its decisions in the case of M/s. 3E Infotech Vs. CESTAT and another, wherein the Court has considered an almost identical issue and, has, after considering decisions of the Hon’ble Apex Court as well as other High Courts, held that application under Section 11B for refund cannot be rejected on the ground that it is barred by limitation.
The Tribunal, while remitting the matter back to the department, held that “on merits, the adjudicating authority has observed that the appellant’s claim was not supported by any documentary evidence. Further, I also find that the Chartered Accountant certificate furnished by the appellant is given in 2019 while the payments were made in the year 2008. The Chartered Accountant has specified that the said certificate was issued at the ‘request of the appellant’. Hence the certificate is only a self-serving document that cannot be considered as conclusive proof to decide the issue. Law provides permissible documentary evidence that is accepted by the sanctioning authority and apparently, no effort seems to have been made by the appellant in this regard. But considering the fact that the refund is subject to Section 11B wherein the authority has to credit the amount claimed to the welfare fund if the claimant is not entitled to the same, which having not been done, I am of the view that the appellant deserves a second chance.”
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The officers of Central Goods and Services Tax (CGST) Commissionerate, Delhi East, carried out the detailed analysis and unearthed a network of fictitious exporters who were availing and utilizing fake Input Tax Credit (ITC) of Rs 134 crore under the Goods and Services Tax (GST) with an intent to claim IGST refund fraudulently.
On the basis of Risk Analysis, a risky exporter M/s Vibe Tradex was identified for scrutiny. M/s Vibe Tradex is engaged in export of Pan Masala, chewing tobacco, FMCG goods, etc.
The network of fictitious exporters was being operated by a person named Mr. Chirag Goel, who is an MBA from the University of Sunderland, UK. On an extensive analysis of the e-Way Bills generated by two supplier firms/ companies owned by his associate, who is at large, it was found that the vehicles for which the e-way Bill were generated for the purported supply of goods were being used in distant cities namely Gujrat, Maharashtra, Madhya Pradesh and had never entered Delhi during the said period. The fake Input Tax Credit availed and utilized is Rs. 134 crore.
Mr Chirag Goel masterminded a deep-rooted conspiracy to defraud the Government and committed offenses specified under Section 132(1)(c) of the CGST Act, 2017 which are cognizable and non-bailable. He has been remanded to judicial custody by the Metropolitan Magistrate Patiala House Courts, New Delhi, for a period of 14 days till 26.10.2021. Further investigation in the case is under progress.
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The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under section 54F of the Income Tax Act, 1961 is available to multiple flats obtained by the assessee under a joint development agreement (JDA).
The assessee entered into a Joint Development Agreement with M/s. OCEANUS DWELLINGS (PVT) LTD., BANGALORE, in terms of which the assessee was entitled to 13 flats with a total plinth area of 16,819 Sq Ft in lieu of transfer of 71% undivided share in the land situated at site No 26/B Industrial Suburb 3rd Stage Mysore, belonging to the assessee. The assessee pointed out that the law is clear to the effect that exemption under section 54F is available in respect of investment in the acquisition of more than one house by the assessee.
Before the authorities, the assessee relied on decisions of Karnataka High Court in Anand Basappa case and Smt K.G. Rukminiamma case and submitted that the entire Long Term Capital Gain of Rs. 1,15,74,390.00 is entitled to exemption under section 54F of the Act of 1961.
While allowing the plea of the assessee, the Tribunal bench comprising Vice President N V Vasudevan and Accountant Member B R Bhaskaran held that “we notice from the perusal of the order of the AO that he has come to the conclusion that the assessee held the property that was the subject matter of JDA as stock in trade and therefore the assessee was not eligible to claim deduction under section 54F of the Act. This finding of the AO is without any basis and is liable to be vacated. The issues to be considered afresh are whether the property at Vishnuvardhan Road, Mysuru, belongs to the HUF or the assessee. The second issue that the AO has to consider is whether the assessee would be entitled to deduction under section 54F of the Act. In this regard, learned Counsel for the assessee placed reliance on the decision of the ITAT, Bengaluru Bench in the case of Smt. Nethravathi, Bengaluru vs ITO in ITA No.2630/Bang/2017 order dated 25.04.2018 wherein this Tribunal took the view that multiple flats obtained under JDA would be entitled to deduction under section 54F of the Act,” the Tribunal said.
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The Central Board of Direct Taxes (CBDT) exempts Non-resident and foreign companies from furnishing Income Tax Return subject to some conditions.
In exercise of the powers conferred by sub-section (1C) of section 139 of the Income-tax Act, 1961, the Central Government exempted the class of persons namely a non-resident, not being a company; or a foreign company and non-resident, being an eligible foreign investor subject to the conditions.
The non-resident, not being a company; or a foreign company is exempted on the condition that the said class of persons does not earn any income in India, during the previous year, other than the income from investment in the specified fund referred to in sub-clause (i) of clause (c) of Explanation to clause (4D) of section 10 of the said Act; and the provisions of section 139A of the said Act are not applicable to the said class of persons subject to fulfillment of the conditions mentioned in sub-rule (1) of rule 114AAB of the Income-tax Rules, 1962.
The non-resident, being an eligible foreign investor is exempted on the condition that the said class of persons, during the previous year, has made transaction only in capital asset referred to in clause (viiab) of section 47 of the said Act, which is listed on a recognized stock exchange located in any International Financial Services Centre and the consideration on transfer of such capital asset is paid or payable in foreign currency. The said class of persons does not earn any income in India, during the previous year, other than the income from transfer of capital asset referred to in clause (viiab) of section 47 of the said Act. The provisions of section 139A of the said Act are not applicable to the said class of persons subject to fulfillment of the conditions mentioned in sub-rule (2A) of rule 114AAB of the said rules.
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The Allahabad High Court while refusing the bail to a person accused of Wrongful Availment of Input Tax Credit (ITC) held that interim Bail cannot be treated as constructive custody.
Advocate Nipun Singh, the counsel for the petitioner, Vishal Gupta contended that although the petitioner has been released on interim bail in compliance with directions issued by the High Power Committee, he shall be deemed to be in constructive custody of the Court. The complete charge sheet has not been filed by the investigating officer in the matter, so the petitioner is entitled to default bail. The petitioner should be granted default bail on account of filing an incomplete charge sheet.
On the other hand, the respondent authority vehemently opposed the submission and contended that the petitioner cannot be treated in constructive custody because he is already on interim bail. Further submitted that the department can file additional evidence any time after submission of the charge sheet.
The single-judge bench of Justice Anil Kumar Ojha observed that custody means when a police officer arrests a person, produces him before the Magistrate and gets a remand to judicial or other custody, he can be stated in judicial custody when he surrenders before the court and submits to its directions.
“As the petitioner has been released on interim bail, he cannot be treated in constructive custody, as his movements are not restricted as per directions of the Court,” the court while dismissing the petition said.
The court added that in case, after submission of a charge sheet, or during the trial any evidence comes to light, it can be filed in Court to do justice between the parties. It cannot be said that an incomplete charge sheet has been submitted by the prosecuting agency.
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