In a major relief to Bombay Chamber of Commerce & Mackinnon Mackenzie Building, the Income-tax appellate tribunal(ITAT) exempted the assessee trust from Income Tax for rendering services in relation to commercial activity for which fees were charged.
The assessee, Bombay Chamber of Commerce & Mackinnon Mackenzie Building is a non-profit company incorporated in 1924, inter alia for the purposes of promoting and protecting the trade, commerce, and manufacturers of India and in particular the trade, commerce, and manufacturers of the Bombay Presidency. It is registered as a section 25 company under the erstwhile Companies Act, 1956. The assessee was registered as a charitable trust under section 12A of the Act by order dated 22.09.1998. Upto and including the assessment year 2008-2009 the assessments were made granting exemption under section 11 of the Act. For the assessment year under consideration, the assessee filed its return of income on 30.09.2009 claiming exemption under section 11 of the Act.
The assessee received an assessment order wherein the ITO denied exemption under section 11 of the Act. However, exemption under the principle of mutuality was granted only to membership subscription but Surplus from non-members was taxed along with interest Income, unutilized accumulation of earlier years, and disallowance under section 14A of the Act. Aggrieved, the assessee preferred the appeal before the Commissioner of Income Tax (Appeals).
The CIT(A) confirmed the action of the AO and did not consider the assessee’s charitable institution for the purposes of section 2(15) of the Act. He stated that the activities of Trust would be hit by the first and second proviso under section 2(15) of the Act.
The coram headed by the Vice President, Mahavir Singh, and Accountant Member Manoj Kumar Aggarwal noted that the amounts received are not in nature of trade (since there is no exchange of goods either for goods in return or money) or commerce (since it is not engaged in purchase and sale of goods) or business (since we are a non-profit making body formed with the promotion of protecting the trade, commerce, and manufacture of India and in particular the Bombay Presidency).
The ITAT held that the activities carried out by the assessee chamber continue to be charitable in nature even under the amended definition under section 2(15) of the Act and the assessee is entitled to exemption under section 11 of the Act.
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In a relief to the State Bank of India (SBI), the Mumbai Bench of Income Tax Appellate Tribunal (ITAT) deleted the addition made on account of deferred payment guarantee commission.
The coram of Judicial Member, Saktijit Dey, and Accountant Member, M.Balaganesh noted that issue of addition made on account of deferred payment guarantee commission is already covered by the order of this Tribunal in assessee’s own case for AY 2001-02 and 2002-03 wherein it was held that Assessing Officer has given effect to the order of the Tribunal and has allowed the deduction for deferred payment guarantee commission for the assessment year 1984-85 to 1989-90 and 1996-97. Consequently, the ground raised by the assessee is decided in favor of the assessee and against the Revenue.
The ITAT while addressing the issue in respect of disallowance of expenses under section 14A of the Act read with rule 8D of the Rules, held, “computation mechanism provided in Rule 8D which was introduced from 24/03/2008 could be made applicable only from A.Y.2008-09 and hence, the same cannot be applied for earlier years prior to A.Y.2008-09. The ld. AR fairly submitted that in order to maintain consistent stand, this Tribunal in earlier years in assessee‟s own case had disallowed 1% of exempt income u/s.14A of the Act as expenses attributable for earning the exempt income. The DR fairly agreed that the said disallowance be made. Accordingly, we direct the AO to disallow only 1% of exempt income u/s.14A of the Act which would be in line with disallowance made in earlier years.”
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The Institute of Chartered Accountants of India (ICAI) President, CA Nihar N. Jambusaria while addressing Members regarding the Latest Developments at ICAI, said that the Institute has Good Coordination with National Financial Reporting Authority (NFRA) on Revised Accounting Standards and directed the members not to send diverse communication.
The post by NFRA on the website of Press Information Bureau right from 27th September 2021 when the then NFRA Chairman issued the press release wherein it was mentioned that the approach paper was sent back for the revision of the existing accounting standards to ICAI asking it to carry out Regulatory Impact Assessment and hold an extensive nationwide discussion.
“Accounting Standards revision process commenced in 2006 and the approach paper developed by ICAI was approved by National Advisory Committee on Accounting Standards (NACAS) when it was in existence, much efforts went into the revision of 18 accounting standards over 5 years for which new procedure for issuance of Exposure Drafts and seeking comments of stakeholders was followed. The then NFRA chairman did not think it fit to bring the revised accounting standard for discussion at the NFRA Board meeting as recently as 20 September 2021 wherein the part-time members were also present, an appropriate reply has been drafted and the revised accounting standards are being sent back to NFRA for its consideration again,” the ICAI President stated.
The statement that Micro, Small and Medium companies would be subject to audit only if they satisfy certain public interest entity criteria cannot be regarded as the view of NFRA. This view was never brought up at discussion on NFRA Board as it does not have jurisdiction over Micro, Small, and Medium Companies.
“We would like to have good coordination with NFRA for which discussions will be held with them, this was done in the past and will continue to have channels of discussions open with NFRA,” reiterated ICAI President.
The ICAI President requested the members to have patients and not to send diverse communications to NFRA or to the Ministry individually.
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The Central Board of Indirect Taxes and Customs (CBIC) issued a circular in respect of clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 45th meeting held on 17th September 2021 at Lucknow.
The Board has received representations seeking clarification regarding the distinction between fresh and dried fruits and nuts and applicable GST rates.
At present, fresh nuts (almond, walnut, hazelnut, pistachio, etc) falling under heading 0801 and 0802 are exempt from GST, while dried nuts under these headings attract GST at the rate of 5% or 12%. The general Explanatory Notes to chapter 08 mentions that this chapter covers fruit, nuts intended for human consumption. They may be fresh (including chilled), frozen (whether or not previously cooked by steaming or boiling in water or containing added sweetening matter), or dried (including dehydrated, evaporated, or freeze-dried). Thus, the HS chapter differentiates between fresh, frozen, and dried fruits and nuts. Fresh fruit and nuts would thus cover fruit and nuts which are meant to be supplied in the state as plucked. They continue to be fresh even if chilled. However, fruit and nuts do not qualify as fresh, once frozen (cooked or otherwise), or intentionally dried to dehydrate, including through sun drying, evaporation or freezing, for supply as dried fruits or nuts. It may be noted that in terms of note 3 to Chapter 8, dried fruits, even if partially rehydrated, or subject to preservation say by moderate heat treatment, retain the character of dried fruits or dried nuts.
Therefore, exemption from GST to fresh fruits and nuts covers only such products which are not frozen or dried in any manner as stated above or otherwise processed. Supply of dried fruits and nuts, falling under heading 0801 and 0802 attract GST at the rate of 5% or 12% as specified in the respective rate Schedules.
It has been clarified that pure henna powder and henna leaves, having no additives, are classifiable under tariff item 1404 90 90 and shall attract a GST rate of 5%. Further, the GST rate on mehndi paste in cones falling under heading 1404 and 3305 shall be 5%.
The circular stated that flavored and coated illaichi generally consists of Cardamom Seeds, Aromatic Spices, Silver Leaf, Saffron, Artificial Sweeteners. It is distinct from illaichi or cardamom (which falls under heading 0908). It is clarified that flavored and coated illaichi is a value-added product and falls under sub-heading 2106. It accordingly attracts GST at the rate of 18%.
Corrugated boxes and cartons, falling under heading 4819 attracted GST at the rate of 12% (entry 122 of 12% rate schedule), while other cartons falling under this heading attracted GST at the rate of 18%. Disputes have arisen as regards applicable GST on fiber drums, which is partially corrugated (as to whether it can be treated as corrugated or otherwise). This dispute gets resolved on account of the recommendation of the GST Council, in its 45th meeting, to prescribe a uniform GST rate of 18% on all goods classifiable under heading 4819 (with effect from 1st October 2021 under S. No. 153A of Schedule III of notification No.1/2017-Central Tax (Rate) dated 28.6.2017).
“For the period prior to 1.10.2021, the Council upon taking note of the fact that there was ambiguity regarding the GST rates applicable on a Fibre Drums, because of its peculiar construction (partially corrugated), has decided that supplies of such Fibre Drums even if made at 12% GST (during the period from 1.7.2017 to 30.9.2021), would be treated as fully GST-paid. Therefore, no action for recovery of differential tax (over and above 12% already paid) would arise. However, as this decision has only been taken to regularize the past practice in view of certain ambiguity, as detailed in para 14.1, no refund of GST already paid shall be allowed if already paid at 18%,” the CBIC in the circular clarified.
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The Central Board of Indirect Taxes and Customs (CBIC) issued the clarifications regarding applicable GST rates & exemptions on certain services.
The Board has received the representations seeking clarification in respect of applicable GST rates on the various activities namely Services by cloud kitchens/central kitchens, Supply of ice cream by ice cream parlors, Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of “Scholarships for Students with Disabilities”, Satellite launch services provided by NSIL, Overloading charges at the toll plaza, Renting of vehicles by State Transport Undertakings and Local Authorities, Services by way of grant of mineral exploration and mining rights attracted GST, Admission to amusement parks having rides, etc., and Services supplied by contract manufacture to brand owners or others for the manufacture of alcoholic liquor for human consumption.
It has been clarified that service provided by way of cooking and supply of food, by cloud kitchens/central kitchens are covered under “restaurant service‟, as defined in notification No. 11/2017- Central Tax (Rate) and attract 5% GST (without ITC).
As recommended by the Council, the board has clarified that where ice cream parlors sell already manufactured ice- cream and do not cook/prepare ice cream for consumption like a restaurant, it is the supply of ice cream as goods and not as a service, even if the supply has certain ingredients of service. Accordingly, ice cream sold by a parlor or any similar outlet would attract GST at the rate of 18%.
“Services provided by any institutions/ NGOs under the central scheme of “Scholarships for students with Disabilities” where total expenditure is borne by the Government is covered under entry 72 of notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 and hence exempt from GST,” the government clarified.
This issue has arisen in the wake of a ruling issued by an Authority for Advance Ruling that the entry at Sl. No. 22 of notification No. 12/2017-Central Tax (Rate) exempts services by way of giving on hire vehicles to a State Transport Undertaking or a local authority and not renting of vehicles to them. The ruling referred to certain case laws pertaining to the erstwhile positive list-based service tax regime. The issue was placed before the 45th GST Council Meeting held on 17.09.2021. As recommended by the GST Council, it is clarified that the expression “giving on hire” in Sl. No. 22 of the Notification No. 12/2017-CT (Rate) includes renting of vehicles. Accordingly, services, where the said vehicles are rented or given on hire to State Transport Undertakings or Local Authorities, are eligible for the said exemption irrespective of whether such vehicles are run on routes, timings as decided by the State Transport Undertakings or Local Authorities and under the effective control of State Transport Undertakings or Local Authorities which determines the rules of operation or plying of vehicles.
On the recommendations of the Council, it is clarified that 28% rate [entry 34 (iiia)] applies on admission to a place having a casino or race club [even if it provides certain other activities] or admission to a sporting event like IPL. On the other hand, Entry 34 (iii), having a rate of 18%, covers all other cases of admission to amusement parks, or theme park, etc or any place having joy rides, merry-go-rounds, go-carting, etc, whether indoor or outdoor, so long as no access is provided to a casino or race club. This clarification will also apply to Entries 34(iii) and 34(iiia) as they existed prior to their amendment w.e.f 01.10.2021.
Further, the expression “food and food products” in the said entry excludes alcoholic beverages for human consumption. As such, in common parlance also alcoholic liquor is not considered food. Accordingly, services by way of job work in relation to the manufacture of alcoholic liquor for human consumption are not eligible for the GST rate of 5% prescribed under the said entry. GST Council recommended that such job work would attract GST at the rate of 18%.
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In a partial relief to TV Today Network, the Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that the claim of leave encashment to be allowed on an actual payment basis and not on an accrual basis.
The appellant, TV Today Network gas contended that the Commissioner of Income Tax (Appeals) erred in law and on facts in sustaining a disallowance of a sum of Rs. 54,38, 500/- towards leave encashment in view of provisions of section 43B (f) of the Income Tax Act 1961, in doing so, the commissioner of Income Tax (Appeals) has failed to appreciate the fact that the provision for leave encashment was based upon the actuarial valuation which is again based on scientific calculations and is not based on any estimate basis and as such, the same should have been allowed.
The Assessing Officer made the addition of Rs. 1,03,15,922/- in respect of provision for interest payable to Prasar Bharti, the addition of Rs. 3,34,81,847/- relating to consumption debtors, addition of Rs. 54,38,500/- relating to unpaid leave encashment as well as made disallowance of Rs. 9,90,264/- u/s 14A read with Rule 8D. The Assessing Officer also made disallowance of Rs 43,14,198/- in respect of late deposit of employee contribution to the provident fund.
The assessee contended that claim on an “accrual basis” was made by the assessee in its return of income by following the judgment of the High Court of Calcutta in the case of Exide Industries vs. UOI. However, the said judgment has been reversed by Apex Court vide judgment dated 24.04.2020 in the case of UOI vs Exide Industries Ltd. wherein, it has been held that the claim with regards to “leave encashment” has to be allowed on a cash basis i.e. actual payment basis and not on an accrual basis.
The Coram of Judicial Member, Prashant Maharishi and Judicial Member, Suchitra Kamble relied on the Apex Court’s decision in the case of Exide Industries wherein it was held that the claim with regard to leave encashment has to be allowed on a cash basis i.e. actual payment basis and not on an accrual basis. It is pertinent to note that the payments with regards to the leave encashment have been made in subsequent assessment years i.e. 2013-14 and thus, the tribunal directed the Assessing Officer to verify and allow the deduction under section 43B on an actual payment basis as held in the decision of the Apex Court.
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The Finance Ministry on Tuesday notified the Foreign Exchange Management (Non-debt Instruments) (Third Amendment) Rules, 2021 wherein it allowed Foreign Investments up to 100% under automatic route in case an ‘in-principle approval for strategic disinvestment of a Public Sector Undertakings (PSUs).
In the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, in Schedule I, in the Table, after Sl no. 4.2, the following entries shall be inserted namely, “Notwithstanding anything contained at Sl. No. 4.2 above, foreign investment up to 100% under the automatic route is allowed in case an ‘in-principle approval for strategic disinvestment of a PSU has been granted by the Government.”
The Schedule I of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 pertains to the Purchase or sale of equity instruments of an Indian company by a person resident outside India.
This year in the month of July, the government has permitted 100 percent foreign investment under the automatic route in oil and gas PSUs which have received in-principle approval for strategic disinvestment.
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The Orissa High Court revoked the GST Registration Cancellation on the failure of the Department to prove the purchasing dealer deliberately availed of Input Tax Credit (ITC) knowing that the selling dealer was not in existence.
The Petitioner is carrying on the business of manufacturing and trade of Poly Vinyl Chloride (PVC) pipes, high-density polyethylene and low-density polyethylene pipes, scrap iron angles, iron scraps, etc. On 14th August 2020, the CT & GST Officer, Bhubaneswar (Opposite Party No.2) issued a show-cause notice in Form GST REG-17 under Rule 22(1) of the OGST Rules, 2017 for cancellation of Petitioner’s registration on the ground that “in case, Registration has been obtained by means of fraud, willful misstatement or suppression of facts”.
The Petitioner, who is a dealer registered under the Odisha GST Act, has filed this petition questioning the order passed by the Additional Commissioner of CT & GST (Appeal), Bhubaneswar rejecting the Petitioner’s appeal questioning the order passed by the learned Proper Officer (LPO) rejecting the Petitioner’s application for revocation of cancellation of his registration under Section 30(2) of the OGST Act.
Mr. Harichandan, the counsel for the petitioner contended that on a collective reading of Section 16 of the OGST Act with Rule 21 of the OGST Rules 2017, there is no provision that enables the cancellation of the registration of the purchasing dealer for any fraud committed by the selling dealer. Secondly, he points out that the cancellation registration of the selling dealer M/s. Pawansut Enterprises took place only on 1st October 2019 i.e., long after the dates of the purchases made by the present Petitioner from the said dealer. He, therefore, submits that on the date of purchases taking place, there was no way that the Petitioner would have known that at some future point in time, the registration of the selling dealer was going to be canceled.
Mr. Padhy, the counsel for the Department drew the attention of the Court to the reply filed to the present petition where it has been stated that when a field visit was undertaken to the address shown for the selling dealer, the premises were found to be occupied by some other person and not the selling dealer. From the said visits which were undertaken on 1st July 2019, a conclusion was drawn that the transactions entered into by the present Petitioner with the selling dealer in April and August 2018 were fake transactions.
The division bench of Chief Justice Dr. S. Muralidhar and Justice B.P. Routray held that to attribute fraud in such circumstances to the Petitioner, as a purchasing dealer, the Department would have to satisfy a high threshold of showing that the purchaser indulged in the transactions with the full knowledge that the selling dealer was non-existent. The Department would have to show that somehow the purchasing dealer and selling dealer acted in connivance to defraud the revenue. This threshold has not been made in the present case.
In other words, the court observed that the Department has failed to show that the Petitioner as a purchasing dealer deliberately availed of the ITC in respect of the transactions with an entity knowing that such an entity was not in existence.
“The impugned order of the LPO rejecting the Petitioner’s application for revocation of its cancellation of registration and the impugned appellate order dated 5th April 2021 rejecting the Petitioner’s appeal is hereby set aside. The Department is now directed to restore the Petitioner’s registration forthwith by issuing appropriate orders/directions not later than one week from today. The Petitioner will correspondingly now be permitted to file all the return which it could not file on account of the cancellation of the registration,” the court said.
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The Authority for Advance Ruling (AAR), Gujarat bench has held that the Advance Ruling cannot be used as a mechanism to nullify and frustrate the inquiry proceedings already initiated vide section 70(1) of Central Goods and Services Tax (CGST) Act.
The applicant, V.L.Traders challenged the DGGI investigation initiated against the applicant vide Search Authorization and that DGGI had initiated summon proceeding to Shri Vipul Laljibhai Dobariya and his statement was recorded for all the three firms M/s VL Traders, M/s JK Foods, and M/s JK Snacks. Shri Dobariya is the proprietor of M/s VL traders and he is a Partner in M/s JK Foods and M/s JK Snacks. Amidst the inquiry, the applicant approached the AAR bench seeking clarification on the rate of tax and classification of goods.
The two-member bench comprising Mr. Sanjay Saxena and Mr. Arun Richard found that the subject inquiry initiated under Section 70(1) of the CGST Act 2017 by the DGGI on the applicant is a judicial proceeding and it was initiated under Section 70(1) of the CGST Act 2017 by the DGGI on the applicant is a judicial proceeding.
“The applicant should bear in mind that the CGST Act has deemed this Authority to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973, and every proceeding before the Authority shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code. We note that an Admission order no GUJ/GAAR/ADM/2020/112 dated 30-12-2020 was issued earlier, admitting the subject application and it was stated in the Admission order itself that as the applicant has made a declaration that the question raised in the application is not already pending or decided in any proceedings in their case under any of the provisions of the Act and that nothing contrary to this declaration was found by the Authority, the application was, earlier, held as maintainable. We note that no Ruling has been pronounced by the Authority with regard to the subject application but for the said interim Admission order,” the bench said.
While dismissing the application, the bench also held that “we are of the view that the usage of the words “any proceeding” in the proviso to Section 98(2) of the CGST Act will encompass within its fold the following investigation proceedings launched by the DGGI under Section 70 of CGST Act. The applicant has contravened the provision of Section 98(2), CGST Act, in so much that it mis-declared that it had no proceedings pending under any provisions of the Act, with an intention to fraudulently obtain Ruling and frustrate the proceedings initiated by DGGI, for the Question raised in the subject Application dated 5-3-20 and issue for which Investigation was initiated vide Section 70(1) of CGST Act, 2017 by DGGI are the same.”
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The Telangana Government will be offering recognition to internship Opportunities for B.Com Students under Institute of Chartered Accountants of India (ICAI) registered members.
The Collegiate Education and Technical Education department of Telangana under the aegis of Apprenticeship/Internship Embedded Training Program will be offering recognition to Internship Opportunities for 6th Semester B. Com Students under ICAI Registered Members in the State of Telangana as per University Grants Commission (UGC) Guidelines.
Recently, UGC has urged the universities and other higher institutes to promote Apprentice/ Internship degree programs in their curriculum. The Commission has asked the Higher Education Institutions to offer Apprentice/ Internship embedded Degree program for embedding apprentice/ internship in general degree programs offered by the Universities.
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The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has recently allowed a refund claim by Hyundai Motor India where the Tribunal quashed an order of the service tax department rejecting the refund claim on port services.
The Company argued before the Tribunal that the only ground alleged in the Show Cause Notice for rejecting the claim for refund in regard to Port Services is that the invoices for payment of Service Tax have been issued by the CHA and that the CHA is not registered for providing Port Services. They further argued that as per the relevant Notification, there is no requirement that the services are to be provided by the port or any person authorized by the port in respect of the export of goods.
Tribunal bench comprising Judicial Member Sulekha Beevi C S and Technical Member P Anjani Kumar observed that prior to 30.06.2010, the definition of “Port Services” was such that only services rendered by a port or any person authorized by such port would come within the purview of taxable service.
“However, while giving the description of port services in Notification No. 41/2007-S.T. (supra), this description has not been adopted. The description of taxable services given in the Notification in regard to Port Services is “services provided for export of said goods”. The requirement that the services have to be provided by a port or any person authorized by the port has been included in the description of port service in the subsequent Notification No. 17/2009-S.T,” the bench said.
Holding that the rejection of refund on Port services cannot sustain, the bench relied on a catena of decisions and said, “From the judgment of the Hon’ble High Court it is seen that instead of adverting to Sl. No. 2 of the Notification, the Revenue has wrongly drawn the attention of the Hon’ble High Court to Sl. No. 13 of Notification No. 41/2007-S.T. Sl. No. 13 of Notification No. 41/2007-S.T. relates to Customs House Agent services under Section 65(105)(h) of the Finance Act, 1994 and not Port Services. The rejection of the refund claim is with respect to Service Tax paid on Port Services and not Customs House Agent services. Though the invoice is not issued by the port, as already discussed, as per Sl. No. 2 of the Notification No. 41/2007-S.T., it is not required to establish that the services were rendered by the port or any person authorized by the port during the relevant period and this condition was included only in the subsequent Notification i.e., Notification No. 17/2009-S.T. The issue on merits is held in favor of the assessee.”
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The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench, while setting aside the redemption fine and penalties imposed on Rajkamal Industrial Pvt Ltd, has held that base oil SN50 cannot be classifiable as High-Speed Diesel (HSD).
The appellant had imported base oil SN50 vide vessel Al Heera and had filed bills of entry by classifying the above product under CTH 27101960. While concluding the proceedings, the Commissioner of Customs, Kandla passed an order wherein he reclassified the imported goods under CTH 27101930 as HSD and confiscated the imported goods with an option to re-export on payment of fine of Rs. 3.50 Crores and imposed a penalty of Rs. 2 crores on the appellant and Rs.50 Lakhs each on the two directors of the appellant under 112(a) of the Customs Act.
After hearing arguments from both sides, Judicial Member Mr. Ramesh Nair and Technical Member Mr. Raju held that the customs department ought to have established that the imported base oil can be used as HSD/ Automotive fuel in internal combustion engines but the adjudicating authority could not establish that the imported product can be used as HSD or automotive fuel and he kept silence on this aspect.
Noting the Apex Court decision in a similar case, the Tribunal allowed the plea of the appellant and held that “as per our above discussion and finding we hold that the goods are not classifiable as HSD under CTH 271031930. Consequently, the claim of the appellant for the classification of goods as base oil under CTH 271019160 is maintained. The appellant has submitted that irrespective of the decision of classification they seek permission to re-export of goods. Though we have decided the classification as claimed by the appellant in their favor but as per the concession made by the appellant we allow the appellant to re-export the goods.”
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The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Allahabad bench has held that service tax under reverse charge mechanism (RCM) cannot be imposed for broadcasting cricket matches played in foreign countries.
The appellants, Sporty Solutionz Pvt. Limited had acquired ‘Media / Broadcasting rights’ of various sporting events from M/s Taj TV Ltd., Mauritius, for broadcasting cricket matches between Bangladesh and Zimbabwe (to be played outside India), in Bangladesh territory on payment of rights fee/license fee, and further sold/sub-licensed to other parties for broadcasting in Bangladesh only, against consideration in the name of rights/license fee. The service tax department raised a demand that the appellant was liable to pay service tax under ‘Reverse Charge Mechanism’ (RCM) for acquiring such rights from persons located outside India as recipients of services under the category of ‘Commercial Exploitation of Rights of Sports Events’ up to June 2012 falls under the definition of Services, not included in the negative list w.e.f 01.07.2012.
Allowing the plea of the appellants, the Tribunal bench comprising Judicial Member Mr. Anil Chaudhari and Technical Member Mr. P Anjani Kumar observed that “Further Rule 6 of the Place of Provision of Service Rules, 2012, provides and clarifies that in case of any cultural or sporting event and/or services related to such event, shall be the ‘place’ where the event is actually held. We find that admittedly the event was held outside India (Zimbabwe), and this service has not been received in India, rather it was meant for Bangladesh, for which territory, the telecasting rights were purchased and resold by the appellants. Only for the reason that the appellant provider or trader of telecasting right is located in India, it cannot be assumed or presumed by any stretch of the imagination, that the service under dispute has been received in India.”
CA Abhinav Kalra appeared for the appellants.
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The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax cannot be imposed on the amount of Tax Deduction at Source (TDS) paid towards royalty.
The appellants, Indian Additive Ltd are engaged in the manufacture of additives. They entered into technical assistance agreements with M/s. Chevron Oronite Company LLC, USA. As per the agreement, the appellant is paying royalty to the foreign company on the basis of net sales of the products manufactured by them. The service tax department during scrutiny noted that for the period April 2007 to March 2008, appellants did not pay service tax on the TDS portion of the royalty paid by them to the foreign company.
Before the authorities, the appellants pleaded that they have discharged service tax on the entire consideration paid to the foreign service provider. TDS was paid separately by the appellant in terms of the agreement entered by the appellant with a foreign company. As per the agreement, the running royalty shall be the net of Indian income tax which shall be borne by the appellant. The demand of service tax on the TDS amount is incorrect as the TDS is borne by the appellant, they argued.
The Tribunal bench comprising Judicial Member Sulekha Beevi C S and Technical Member P Anjani Kumar observed that the issue, whether the levy of service tax on the TDS portion borne by the appellant is legal and proper, stands decided by the order of the Tribunal in the appellant’s own case for a different period. In the said case, the Tribunal had relied upon the decision in the case of Magarpatta Township Development and Construction Co. Ltd and held that Service Tax liability needs to be discharged on amounts that have been billed by the service provider.
From the above, we hold that the levy of service tax on the TDS portion borne by the appellant cannot sustain and requires to be set aside. The impugned order is set aside. The appeal is allowed with consequential relief if any.
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In a setback to Sky Automobiles, the Orissa High Court upheld the reopening of the computation of surcharge.
The petitioner, M/s. Sky Automobiles challenged a notice issued by the Deputy Commissioner of Sales Taxes (DCST) calling upon the Petitioner to appear before him for the purposes of re-computation of tax under the Orissa Sales Tax Act, 1947 (OST Act).
The Tribunal passed an order dated 29th November 2007 and directed the Department to re-compute the tax liability by allowing a set-off of entry tax from the tax due and thereafter levy surcharge on it. Accordingly, a re-computation order was passed by the STO on 25th July 2008 and the excess amount to the tune of Rs.29,57,232/- was refunded to the Petitioner.
The grievance of the Petitioner is that the Department cannot on the basis of the judgment in Bajaj Auto (SC) seek to reopen the computation of surcharge for the periods 2000-01, 2001-02, and 2002-03.
Mr. Sahoo, learned Senior Advocate for the Petitioner, submits that the earlier orders granting refund to the Petitioner for the aforementioned tax periods had attained finality and in fact, the refund was made to the Petitioner. This cannot be sought to be reopened after a long lapse of time. He further submitted that those orders which resulted in a refund being granted to the Petitioner were appealable. However, the Department did not choose to either file an appeal or a revision in this Court. The Department in fact accepted those orders. Thus, long before the judgment of the Supreme Court in Bajaj Auto (SC) on 28th October 2016, the issue pertaining to the Petitioner for the periods earlier to 2003-04 was laid to rest.
Mr. Sahoo submits that Section 28-B of the OST Act provides for the limitation period for the reopening of assessment and even this period had been crossed. He accordingly submits that in the absence of any statutory provision, the Department cannot revive the demand for those earlier periods by mere orders of re-computation. He points out that there is no provision in the OST Act corresponding to Section 49-A of the Orissa Value Added Tax Act, 2004 (OVAT Act) to enable the Department to issue a re-computation order to revive an enforceable demand. Having failed to invoke the statutory remedy available to it in law, the Department cannot take advantage of the subsequent judgment of the Supreme Court.
The division bench is headed by Chief Justice Dr. S. Muralidhar and Justice B.P. Routray held that the impugned re-computation orders of the Department as well as the notice dated 11th January 2017 except to the extent of interest on surcharge. A direction is therefore issued to the DCST to issue fresh orders re-computing the amount payable on the basis of the limited modification as regards interest, not later than 1st November 2021. It is made clear that it would not be open to the Petitioner to again challenge the said order as long as it is in conformity with the directions issued in the present judgment of this Court.
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The Gujarat Authority of Advance Ruling (AAR) held that 5% GST on Ammonium Sulphate supplied for direct use as fertilizers or used in the manufacturing of complex fertilizers for agricultural use.
The applicant, Willmart Enterprise supplied fertilisers for different types of customers having both the purposes i.e. agriculture purpose and/or non-agriculture; that the proprietor has set an unwritten business policy to demand from their prospective customers the NOC as issued to them by the Directorate of Agriculture to determine whether the product has agriculture use or non-agriculture use and upon receipt of the NOC, the applicant goes through the same to confirm whether the NOC is specifically issued for the product and validity of the same; that the applicant also obtains the declaration from the prospective customers declaring the use of the product as ‘agriculture’ and once both i.e. NOC and declaration are received, this sales transaction is treated by the applicant as the sale of the product for the agriculture purpose. The NOC from the Directorate of Agriculture as referred herein above is required to be obtained by those enterprises/units who are intending to sell or offer for sales or carrying on the business of selling agricultural fertilizer.
The applicant has sought the advance ruling on the issue of whether the classification of the product under HSN 3102 is correct? Whether the applicant is eligible to avail the benefit of charging concessional rate of GST of 5% on outward supply of its product for the purpose of agriculture and Rate of GST on outward supply of product for the purpose of non-agriculture should be charged at the rate of 18%.
The Coram of Arun Saxena and Arun Richard ruled that ‘Ammonium Sulphate’ is classifiable at HSN 310221. GST of 5% is leviable on Ammonium Sulphate supplied for direct use as fertilizers or used in the manufacturing of complex fertilizers for agricultural use (soil or crop fertilizers). GST of 18% is leviable on Ammonium Sulphate supply for other than fertilizer use.
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The Institute of Chartered Accountants of India (ICAI) notified the List of Participating organizations for Campus Placement Programme September-October, 2021 which include top companies namely EY, PwC, TATA, Wipro, ITC, and many more.
The list consists of 213 companies in 18 cities namely Ahmedabad, Bangalore, Bhubaneswar, Chandigarh, Chennai, Coimbatore, Ernakulam, Hyderabad, Indore, Jaipur, Kanpur, Kolkata, Mumbai, New Delhi, Noida, Pune, Rajkot, Thane, and Visakhapatnam.
In times of dynamic business environments, Chartered Accountants are looked upon as Complete Business Solution Providers. They are thoroughly trained practically in all avenues of Finance and Accounting. The Institute of Chartered Accountants of India (ICAI) provides an opportunity both to employing organizations as well as young professional aspirants or experienced professionals to meet and explore the possibility of taking up positions in the Industry.
Read the Complete List here.
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The Gujarat Authority of Advance Ruling (AAR) held that 12% GST payable on Fusible Interlining Cloth.
The applicant, M/s. Supercoat India submitted that it supplies partially coated Polyester fabric (knitted or woven) or any other kind of partially coated (with scattered micro-dot print) Fabric covered under chapter heading 50 to 55, 58, or 60. The goods supplied are further used as interlining fabric in products like shirts, suits, coats, Gowns, etc.
The applicant has sought the advance ruling on the issue of whether the Partially Coated Polyester Fabric (Knitted or Woven) or any other partially coated Fabric will be covered under relevant chapter headings (50 to 55, 58, or 60) or under Tariff Heading 5903.
The Coram of Arun Saxena and Arun Richard noted that the fabric is coated with plastics and the fabric is not tire cord fabric, the goods can be bent manually. The fabric is partially coated on one side and the dots are elevated in a manner that the fabric can be attached to another fabric and used for interlining. The use of the subject goods is that it is used as interlining fabric in various products.
The AAR ruled that the goods are used as interlining fabric wherein the dots on the fabric are elevated in a manner that the fabric can be attached to another fabric which is used for interlining, by applying heat and pressure for a certain time. Thus the spattered dots are thermoplastic material capable of providing a bond to other fabrics/materials on the application of heat and pressure.
“We note that the applicant has relied on cited AAR and AAAR Rulings. We have perused the cited Rulings and find that in few AAR Rulings, such as in M/s Sadguru Seva Paridhan Pvt ltd, the fusible interlining cloth was classified at Heading 5903; in both the cases of M/s Ruby Mills and M/s Ashima Dyecot it was Ruled that fusible interlining fabric of cotton is classified at Heading 5903. However, even though few Rulings cited by the applicant classify fusible interlining cloth at Heading 5903, we do not delve into these Rulings as we hold that as per Section 103 of the CGST Act, any Advance Ruling is binding only on the Applicant who has sought it and on the concerned officer or the jurisdictional officer in respect of the Applicant,” the AAR added.
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The Gujarat Authority of Advance Ruling (AAR) held that 12% GST on Activity of re-gasification of LNG owned by GST registered customers amounts to the rendering of service by way of Job Work.
The applicant, M/s. Petronet LNG Ltd. (PLL), submitted that it provides re-gasification services to its customers on the LNG owned by the customers, referred to as ‘Tolling’. In the ‘Tolling Model’, the Applicant receives the LNG belonging to the customers at its plant, stores it, re-gasifies it, and supplies RLNG to the customers. The Appellant enters into Re-gasification Agreements (RAs) with the customers. As per the RAs, the term ‘Re-gasification’ means the various activities namely reception by PLL of LNG Ships at the Unloading Port; receipt by PLL of LNG delivered by LNG Ship at the Custody Transfer Point; storage and re-gasification of such LNG at PLL’s Facilities; and transportation and delivery of RLNG by PLL to the Customer at the Custody Transport Point through pipelines which are connected through PLL’s plant.
The applicant has sought advance ruling on the issue of whether the applicant’s activity of providing service of regasification of LNG owned by its customers to convert to RLNG, from its Plant at Dahej, Gujarat would amount to the rendering of service by way of Job Work within the meaning of Section 2(68) of the CGST, 2017 and the GGST Act, 2017.
The Coram of Arun Saxena and Arun Richard ruled that Petronet’s activity of re-gasification of LNG owned by its GST registered customers amounts to the rendering of service by way of Job Work and merits to be covered at entry ‘id’ of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017, as amended, liable to CGST at 6%.
Subscribe Taxscan Premium to view the JudgmentThe Gujarat Authority of Advance Ruling (AAR) held that the e-Commerce Operator is liable for GST Registration for providing an electronic platform for booking cabs.
The applicant, M/s. Gensol Ventures Pvt. ltd intends to own, develop an electronic/digital platform for booking of cabs. The applicant submitted that the drivers will list their electric motor vehicles on the proposed electronic platform/App for booking by the customers for the passenger transportation services; that E-Commerce Operator means any person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce and considering this, the applicant can be termed as an E-Commerce Operator; that the Electric Motor Vehicle operated by the Drivers will be in connection with Central Office and can be tracked through Global Positioning System (GPS) or General Packet Radio Service (GPRS) and qualify as radio taxi.
The applicant has sought the advance ruling on the issue of Whether the applicant is liable to be registered and classified under the Category of E-Commerce Operator, whether the applicant is liable to pay or discharge Goods & Service Tax(GST) in accordance with Section 9(5) of the CGST Act, 2017″.
The ruling was also sought in respect of the Rate of Tax and Service Accounting Code for the services supplied in terms of passenger transportation service under Goods & Service Tax Law.
The Coram of Arun Saxena and Arun Richard held that M/s Gensol is an e-commerce operator and shall be liable to be registered. M/s Gensol is liable to pay GST as per Section 9(5)CGST Act. The value of supply for passenger transportation service shall be the net amount arrived after the deduction of discount (to be provided by M/s Gensol to the customer) from the gross value.
“The SAC for subject supply is 996412. The GST shall be leviable @ 5% (2.5% CGST + 2.5% SGST) subject to the fulfilment of the condition at Entry No.8 (ii) of cited Notification 11/2017-CT(R) dated 28-6-2017,” the AAR ruled.
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The Gujarat Authority of Advance Ruling (AAR) held that Corporate Social Responsibility (CSR) activities were excluded from the normal course of business and not eligible for Input Tax Credit (ITC).
The applicant, M/s. Adama India private limited, supplies insecticides, fungicides, and herbicides. The applicant submits that as per Section 135 of the Companies Act, 2013, it has been spending the mandatory amount on CSR activities in the form of donations to the Government relief funds/educational societies, civil works, or installation of plant and machinery items in schools or hospitals, distribution of food kits, etc; that the vendors that supply goods/services to the applicant for the purpose of undertaking the CSR activities charge GST on their output supplies; that the applicant intends to avail the Input Tax Credit (ITC) of the inputs and input services being procured for the purpose of undertaking the CSR activities.
The applicant has sought the advance ruling on the issue of whether CSR activities are in the course or furtherance of business and will therefore be counted as eligible ITC in terms of Sections 16 and 17(5) of the CGST Act, 2017.
The Coram of Arun Saxena and Arun Richard ruled that Section 16(1) of the CGST Act, stipulates that a registered person is entitled to take credit of input tax charged on any supply of goods or services or both, which are used or intended to be used in the course or furtherance of his business. Thereby, the AAR held that Section 16(1) of the CGST Act bars CSR activities from input or input service.
“CSR activities, as per Companies (CSR Policy) Rules, 2014 are those activities excluded from the normal course of business of the applicant and therefore not eligible for ITC, as per Section 16(1) of the CGST Act,” the AAR said.
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