This weekly round-up analytically summarises the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week from March 27 to April 1, 2023.
Calcutta HC quashes Order u/s 148A(d) of Income Tax Act with non-application of Mind Dobby Media Pvt. Ltd. Vs. Income Tax Officer, Ward No.1(1)/11`(4), Kolkata & Ors. CITATION: 2023 TAXSCAN (HC) 569
The Calcutta High Court (HC) quashed the order under section 148A(d) of the Income Tax Act,1961 passed with non-application of mind. A single-member bench comprising Justice Md. Nizamuddin viewed that quashing the aforesaid impugned order under Section 148A(d) of the Act and all subsequent proceedings, will not be a bar on the part of the Assessing Officer to pass a fresh order under Section 148A(d) of the Act after considering the objection/ response of the petitioner dated 15th June 2022 by the law. It was held that it would be by passing a reasoned and speaking order after giving an opportunity of hearing to the petitioner or his authorised representatives, within a period of eight weeks from the date of communication of the order.
Karnataka HC dismisses Writ Petition challenging Constitutional Validity of VAT Notification by Authorities to Track Movement of Goods to Fix Tax Liability M/S. MEENAXI BUILDING SOLUTIONS PVT. LTD vs THE COMMERCIAL TAX OFFICER CITATION: 2023 TAXSCAN (HC) 571
The Karnataka High Court dismissed a writ petition challenging constitutional validity of Value Added Tax (VAT ) Notification by Authorities to track movement of goods to fix tax liability. The Court of Justice MI Arun, observed that “I do not see any reason, as to why the impugned notification is to be struck down. The notices at Annexure – B and C to the writ petition are issued in pursuance of the impugned notification and they do not violate the said notification. Hence, the said notices are also upheld.”
GST Refund Claim in Transition Phase: Calcutta HC allows Filing of Fresh Calculations to Avail Refund Sondeep Paul vs Union of India & Ors CITATION: 2023 TAXSCAN (HC) 573
The Calcutta High Court allowed filing of fresh calculations to avail refund in the matter of GST Refund Claim in Transition Phase. The Coram comprising of Justice Shampa Sarkar, noted that “As the claims were made at a transitional phase when GST had just been introduced, it is expected that some teething problems will be faced by the claimants. As such, the executive heads of the respective divisions are expected to familiarize the claimants with the procedure and the calculations.” “Once the petitioner submits the calculations with the necessary corrections and documents, the same shall be processed by the WBSRDA as also by its counter-part in the centre, for refund of the GST claims” the Court observed.
Andhra Pradesh HC allows Appeal on GST registration cancellation in absence of GST Tribunal u/s 109 of GST Act ABISWATHIKA INFRA vsThe State of Andhra Pradesh CITATION: 2023 TAXSCAN (HC) 570
The Andhra Pradesh High Court (HC) allowed the appeal on Goods and Service Tax (GST) registration cancellation in absence of a GST tribunal under section 109 of the Central Goods and Services Tax Act(CGST), 2017. A two-member bench comprising Justice U Durga Prasad Rao and Justice V Gopala Krishna Rao observed that the GST Tribunal has not been constituted as per the provisions of the Act to enable the petitioner to pursue his further legal remedy. The Court allowed the writ petition and the matter is remitted back to the preliminary authority i.e., the 4th respondent to consider the case of the petitioner and after verifying the returns submitted by the petitioner and after allowinga personal hearing pass an appropriate order by governing law and rules expeditiously but not later than two weeks.
Writ Court has no authority to Adjust Municipal Taxes, Repair and Maintenance Charges in absence of Specific Agreement Sri Manoj Parmar and others vs Union of India and others CITATION: 2023 TAXSCAN (HC) 572
In a recent ruling the Calcutta High Court observed that the Writ Court has no authority to adjust Municipal Taxes, Repair and Maintenance Charges in the absence of a Specific Agreement. The Court ofJustice Sabyasachi Bhattacharyya observed that “There is no scope of this Court adjusting such amount of Municipal Taxes and alleged repair and maintenance charges within the ambit of the present writ petition.” The Court further went on to add that it is well-settled that unless there is a specific agreement between the lessor and lessee and/or landlord and tenant to the effect that repair and maintenance charges shall be adjusted from the rent, such adjustment cannot be claimed as a matter of right by the respondents/lessees.
SOP should be followed in Faceless Assessment: Calcutta HC quashes Assessment Order holding as Classic Example as to how Assessment should not be Made INDU GOENKA vs ASSESSMENT UNIT, INCOME TAX DEPARTMENT & Ors CITATION: 2023 TAXSCAN (HC) 574
The Calcutta High Court quashed an assessment order holding as classic example as to how assessment should not be made and observed that Standard Operating Procedure (SOP) should be followed in faceless assessment. The Court of Justices T. S. Sivagnanam and Hiranmay Bhattacharyya noted that “On a cursory perusal of the assessment order, one gets an impression that it is in compliance with the SOP as it contains requisite sub-headings but however, on a closure reading of the assessment order it is found that the assessing officer has acted in a most perverse manner in passing the assessment order.” The Court further went on to observe that the impugned assessment order is a classic example as to how an assessment should not be made. The assessing officer has reduced the procedure to an empty formality, which has to be deprecated.
Interim Order of SC not “sufficient cause” for Non-Payment: Orissa HC directs Shree Bharat Motors and Others to Pay Balance Entry Tax with Interest M/s.Shree Bharat Motors Ltd. vs The Sales Tax Office CITATION: 2023 TAXSCAN (HC) 576
The Orissa High Court observed that the Interim order of the Supreme Court not “sufficient cause” for Non-Payment and thereby directed Shree Bharat Motors and other applicants to pay Balance Entry Tax with Interest. The Court of Chief Justice Dr S Muralidhar and Justice Murahari Sri Raman noted that an analysis of Section 7(5) of the OET Act read with Rule 10 of the OET Rules transpires that interest is payable on tax due as discussed above, and the same is subject to fulfilment of the condition that on failure to pay the amount of tax due as per the return “without sufficient cause”
Writ petition filed before attaining Finality in Authorization for inspection and search issued by Additional Commissioner of State Taxes amounts to Premature and not maintainable SL Automobiles Private Limited vs The State of Tripura CITATION: 2023 TAXSCAN (HC) 577
The Tripura High Court (HC) has held that the writ petition filed before attaining finality in the authorization for inspection and search issued by the Additional Commissioner of State Taxes amounts to Premature and not maintainable .The petitioner submitted that seizing the vehicles of the petitioner and directing him to may payment of Rs. 1,28,37,517/- along with interest and penalty is wholly illegal and without jurisdiction. On the other hand, the respondent submitted that the memo dated 25.06.2021 and the notice dated 25.08.2021 passed within the ambit of law since the petitioner had not discharged his actual tax liability in filing Returns. Further argued that the petitioner failed to produce any valid document regarding the mode of business operation of the petitioner and stated that without the outcome of the proceeding initiated by respondent no. 4, the petitioner had filed the instant writ petition which is at its premature stage. A Coram comprising of Justice Arindam Lodh observed that the present writ petition which is filed by the petitioner is at the pre-mature stage, and is not maintainable. The appeal got dismissed
Petitioner is Victim of Lacuna in Software Governing the SVLDR Scheme: Bombay HC dismisses Rejection of Declaration under SVLDR Scheme Avenue Supermarkets Ltd. vs The Union of India and Another CITATION: 2023 TAXSCAN (HC) 580
The Bombay High Court dismissed the rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR) and commented that the petitioner, Avenue Supermarkets Ltd, is a victim of the lacuna in software governing the SVLDR scheme. The Bench concluded by observing that “This being the position, we are of the opinion that the Petitioner is entitled to get his application / declaration SVLDRS-1 to be examined on merits as to whether the Petitioner is otherwise entitled to the benefit of the scheme.”
Chhattisgarh HC Rejects Anticipatory Bail of Businessman Sunil Kumar Aggarwal in Chhattisgarh Coal Scam Case Sunil Kumar Agrawal vs Director of Enforcement CITATION: 2023 TAXSCAN (HC) 582
The Chhattisgarh High Court rejected an Anticipatory Bail application of Businessman Sunil Kumar Aggarwal in association with the Chhattisgarh Coal Scam case. Dismissing the application of anticipatory bail the Court of Justice P. Sam Koshy observed that “The manner of transaction made between the Applicant and the Firms belonging to Suryakant Tiwari, the timing of the transaction, the sale consideration made by the Applicant in the process of purchase of the Coal Washeries from the Firms belonging to Suryakant Tiwari, all establishes the nexus between the Applicant and Suryakant Tiwari and their involvement in the predicate offence.”
Madras HC quashes Assessment Order on Non-Issuance of Pre-Assessment Notice M/s.My Home Industries Pvt. Ltd vs State Tax Officer CITATION: 2023 TAXSCAN (HC) 581
The Madras High Court quashes assessment order on the ground of non-issuance of pre-assessment notice. The Court of Dr Justice Anita Sumanth noted that “In light of the documentary evidence that has been produced which is a print out of the virtual summary of notices issued to the petitioner and this being the admitted position, the impugned order is liable to be set aside.”
Restoration of GST Registration: Andhra Pradesh HC remands matter to Primary Authority on non-constitution of GST Tribunal Y SCREENS ENTERTAINMENT (INDIA)N LTD vs GOVERNMENT OF AP
The Andhra Pradesh High Court remanded back matter to primary authority on non-constitution of GST Tribunal in a matter relating to the restoration of GST Registration. The Court of Justices U Durga Prasad Rao and V Gopala Krishnan Rao “In that view of the matter and as the GST Tribunal has not been constituted as per the provision of the Act so as to enable the petitioner to pursue his further legal remedies, in the interest of justice, we consider it apposite to allow the writ petition and remit the matter back to the primary authority.”
Institute of Cost Accountants of India cannot use “ICAI”, Trademark belongs to Institute of CAs THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA vs THE INSTITUTE OF COST ACCOUNTANTS OF INDIA CITATION: 2023 TAXSCAN (HC) 584
In a noteworthy ruling, the Delhi High Court has prohibited the Institute of Cost Accountants of India from using the acronym “ICAI,” which is a trademark registered in favor of the Institute of Chartered Accountants of India, for any of its services or institution. The court observed that it was impossible to determine whether the use of the ICAI acronym referred to the Institute of Chartered Accountants of India or the Institute of Cost Accountants of India without additional evidence. It concluded that the defendant had prima facie infringed on the Institute of Chartered Accountants of India’s trademark by using the ICAI acronym to designate its institution. The Delhi High Court Bench of Justice C Hari Shankar thereby restrained the Institute of Cost Accountants of India from using the ICAI acronym and has directed it to remove the acronym from all existing representations within three months.
No Criminal Liability of Guarantor for Failure to Pay Arrears of VAT and GST as in Undertaking Santhosh vs The Commercial Tax Officer Commercial Taxes Department Mini Civil Station CITATION: 2023 TAXSCAN (HC) 578
In a recent judgment the Madras High Court observed that there is no Criminal Liability of Guarantor for failure to pay Arrears of Value Added Tax(VAT) and Goods and Service Tax (GST) as in Undertaking.The Court of Justice R N Manjula, observed that “Unless the second petitioner is the assessee in the eyes of the Act he cannot be implicated as an accused for the default committed on the part of the first accused, who alone is the assessee.Since the complaint has been given against this petitioner by presuming culpability on his part for failing to pay the tax I feel there is no basis for this criminal case.”
Service Tax relief approved under SVLDR Scheme: Orissa HC directs to Lift Attachment under Section 79(1) (c) of CGST Act Bhagwati Agency vs Assistant Commissioner Counsel for Appellant: Mr. Siddhartha Ray and Mr. S.K. Sahu Counsel for Respondent: Mr. A. Kedia CITATION: 2023 TAXSCAN (HC) 579
The Orissa High Court directed the Revenue to lift the attachment under Section 79(1) (c) of the Central Goods and Services Tax (CGST) Act, 2017 as Service Tax relief approved under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019(SVLDR). The Court of Justices S. Talapatra and Savitri Ratho observed that “Having appreciated the facts and the submission as advanced we think that in the interest of the revenue, the revenue shall lift the attachment temporarily in favour of the petitioner as the petitioner has undertaken to deposit the sum of Rs.9 lakhs.”
Relief to Mount Everest Breweries: Madhya Pradesh HC directs to Refund pre-deposit with 6 % Interest since SLP was dismissed M/S MOUNT EVEREST BREWERIES LTD vs THE STATE OF MADHYA PRADESH CITATION: 2023 TAXSCAN (HC) 585
As a relief to Mount Everest Breweries, the Madhya Pradesh High Court (HC) has directed to refund pre-deposit with 6 % Interest since Special Leave Petition (SLP) was dismissed. The Court observed that the respondent was obliged to refund the amount so collected to the petitioner immediately after the dismissal of SLP. Further viewed that even though, there are no provisions of payment of interest on refund of amount so collected under the VAT Act, since the SLP was dismissed on 17.04.2017, the petitioner would be eligible for interest@6% per annum w.e.f. 17.04.2017 till the date of refund. The petition got allowed.
No Jurisdiction vested on Lok Ayukta to check Correctness of Order passed by AA on Settlement of Tax Arrears under Amnesty Scheme ADDITIONAL CHIEF SECRETARY vs KERALA LOK AYUKTA CITATION: 2023 TAXSCAN (HC) 587
In a major ruling the Kerala High Court observed that there is no Jurisdiction vested on Lok Ayukta to check Correctness of Order passed by Assessing Authority (AA) on Settlement of Tax Arrears under Amnesty Scheme. The Bench of Chief Justice observed that “The Lok Ayukta has no jurisdiction to decide the correctness of the order rejecting the option for settling the arrears under the Amnesty Scheme-2020.”
Gujarat HC quashes prosecution under Income tax Act on Undisclosed Income in absence of a willful attempt to Evade Tax, Penalty or Interest SUMAN PAPER & BOARDS LTD. & 6 other(s) vs JOINT COMMISSIONER OF INCOME TAX & 2 other(s) CITATION: 2023 TAXSCAN (HC) 586
The High Court (HC) of Gujarat quashed prosecution under the Income Tax Act, 1961 on undisclosed income in absence of a willful attempt to evade tax, penalty, or interest. A Single member comprising Justice Nikhil S Kariel observed that the fact of headson which income had not been disclosed was different and since there is not be of any material consequence.Consequently, the Court quashed and set aside the impugned Criminal Complaints. The applications are allowed accordingly.
TDS Refund Claim cannot be withheld Merely because of notice issued u/s 143(2): Delhi HC rules in favour of OYO OYO HOTELS AND HOMES PRIVATE LIMITED vs DEPUTY ASSISTANT COMMISSIONER OF INCOME TAX & ANR CITATION: 2023 TAXSCAN (HC) 588
In a significant ruling in favour of OYO, the High Court (HC) of Delhi has held that the refund claim of TDS can’t be withheld merely because of notice issued under section 143(2)of the Income Tax Act, 1961. While withholding a refund, the AO is required to look into various factors about an Assessee, such as the amount of tax liability which a scrutiny assessment may eventually lead to (as is underway in this case) vis-a-vis the amount of tax refund due; the financial standing or credit worthiness of the Assessee, and whether there would be any doubts in the Revenue recovering amounts from the Assessee. Merely because a notice has been issued under Section 143(2) of the Act, it is not sufficient ground to withhold the refund under the provisions of the Act. The Court comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganju set aside the order(s) dated 07.06.2022/30.05.2022. Further held that the Respondents shall conduct a de novo exercise bearing in mind the provisions of Section 241A of the Act and principles articulated within six weeks.
Expiry of GST e-Way Bill during Transit: Tripura HC quashes imposed Penalty M/s Balaji Steel Rolling Mills Ltd vs State of Tripura and ors CITATION: 2023 TAXSCAN (HC) 590
A Division bench of the High Court of Tripura recently set aside the imposed penalty for expiry of GST E-way bills and observed that the same had expired during transit, and the assessee was unable to renew them with the competent authority.The Bench of the Acting Chief Justice and Justice Arindam Lodh observed that, “the ‘e-Way bills’ had expired during the transit and the petitioner was not in a position to ask for its renewal to the competent authority when the vehicle entered into the territory of the State of Tripura. It was thus opined that the order dated passed by the Appellate Authority is not just and proper and the same is liable to be set aside. The Tripura High Court, allowing the refund remarked that the petitioner was entitled to all consequential reliefs including the refund.
Re-insurance services not excluded from the definition of ‘input services’ under Rule 2(l) of the CCR: Delhi HC rules in Favour of Oriental Insurance Company COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX vs ORIENTAL INSURANCE COMPANY LTD CITATION: 2023 TAXSCAN (HC) 589
In the case of Oriental Insurance Company, the Delhi High Court (HC) has held that re-insurance services are not excluded from the definition of ‘input services’ under rule 2(l) of the CENVAT Credit Rules, 2004 (‘CCR’). Justice Vibhu Bakhru and Justice Amit Mahajan observed that the show cause notice had proceeded on basis that the re-insurance services are not input services because they are received by OIC after the insurance services have been rendered; re-insurance services are not essential for providing insurance services; and re-insurance services are not directly or indirectly used for providing output services. It was alleged that re-insurance services were specifically excluded from the scope of input services under an amendment to Rule 2(l) of the CCR introduced with effect from 01.04.2011 – that is, by the exclusion contained in Clause (B) of Rule 2(l) of the CCR –is not a grounds which was stated in the show cause notice.
Penalty Cannot be levied for Late Filing of GST Returns during Cancellation of GSTIN ISHWAR CHAND PROPRIETOR Vs UNION OF INDIA & ORS. CITATION: 2023 TAXSCAN (HC) 591
In a recent ruling, the division bench of Delhi High Court (HC) presided by Justices Vibhu Bakhru and Amit Mahajan observed that from the date of the petitioner filing an application for revocation of its cancellation, he cannot be held responsible for not filing its returns during the period when the registration stood cancelled. The bench observed that the order of the respondent authority rejecting the application of GSTIN registration is unsustainable as it does not provide any proper reason for the rejection.
Assessee failed to furnish Bank Statement before AO: Delhi HC remands Reassessment Proceedings triggered based on TEP to AO PRADEEP VERMA vs INCOME TAX OFFICER CITATION: 2023 TAXSCAN (HC) 593
In a significant ruling, the High Court (HC) of Delhi remanded the reassessment proceedings triggered based on Tax Evasion Petition (TEP) to Assessing Officer (AO). The Court comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that the petitioner has been remiss in not placing the bank statement before the AO. The AO proceeded based on the allegation made in the TEP. The record shows that the petitioner has taken the stand that he has purchased a half-share in an immovable property worth Rs. 45,00,000/-. The Court remanded the matter to the AO to consider the stand of the petitioner about the allegation made in the TEP.
Delay in filing Application u/s 270AA of Income Tax Act due to Technical Glitches in the Portal can be Condoned ROHIT KAPUR vs PRINCIPAL COMMISSIONER OF INCOME TAX CITATION: 2023 TAXSCAN (HC) 594
The Delhi High Court (HC) delayed filing applications under section 270AA of the Income Tax Act, 1961 due to technical glitches in the portal can be condoned. Justice Vibhu Bakhru and Justice Amit Mahajan observed that the petitioner has a valid explanation for the delay and the matter is remanded to the concerned officer (Respondent no.2) to consider the petitioner’s application under Section 270AA of the Act afresh. The Court directed the petitioner to appear either personally or through an authorized representative before Respondent no.2 at 11.00 AM on 05.04.2023 to avail the opportunity of being heard.
Delhi HC directs to lift block placed on Assessee’s Bank A/c since Refund was sanctioned by Auditor EUNIKE GENERAL TRADING vs COMMISSIONER OF GOODS AND SERVICE TAX CITATION: 2023 TAXSCAN (HC) 595
The Delhi High Court (HC) directed to lift the block placed on the assessee’s bank a/c since the refund was sanctioned by the auditor. The Court observed that the blocking of the bank account is taken under Section 83 of the Act. By sub-section (2) of Section 83 of the Act, the said order of attachment ceases to be operative on the expiry of a period of one year from the date of the order. Considering the averment that the auditor has already reviewed the petitioner’s case, the Court directed a refund for the sum of ₹38,786/-. It was further directed to reconsider the petitioner’s request for lifting of the block placed on the petitioner’s bank account and continue the same only if it is satisfied that the conditions as specified in Section 83 of the Act continue to exist.
Relief to EY India: Actual Supplier Professional Consultancy Services to Overseas Entities not Intermediary, Delhi HC allows GST ITC Refund Claim M/S ERNST AND YOUNG LIMITED vs ADDITIONAL COMMISSIONER CITATION: 2023 TAXSCAN (HC) 596
A Division Bench of the Delhi High Court allowed the refund claim of EY Ltd. India (assessee) on services rendered to EY Entities located outside India in terms of service agreement entered into between Head Office of EY Ltd. with the respective EY entities. It was further observed that, “even if it is accepted that the petitioner has rendered services on behalf of a third party, the same would not result in the petitioner falling within the definition of ‘intermediary’ under Section 2(13) of the IGST Act as it is the actual supplier of the professional services and has not arranged or facilitated the supply from any third party.” The Bench of Justice Vibhu Bakhru and Justice Amit Mahajan pointed out that “There is no dispute that the recipient of Services – that is EY Entities – are located outside India. Thus, indisputably, the Services provided by the petitioner would fall within the scope of the definition of the term ‘export of service’ under Section 2(6) of the IGST Act”, consequently allowing the GST Input Tax Credit refund claim.
Income Tax Notice issued u/s 148A(b) on dissolved Partnership is not valid LOTUS LAW PARTNERS LLP THROUGH LEGAL HEIR OF ITS MANAGING PARTNER vs INCOME TAX OFFICER CITATION: 2023 TAXSCAN (HC) 597
The Delhi High Court (HC) has held that the Income Tax notice issued under section 148A(b) of the Income Tax Act, 1961 on dissolved partnership is not valid. The Court comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganj allowed the liberty to the Assessing Officer (AO) to issue to Ms Ragini Mohan, who is the Legal Representative (LR) of the deceased managing partner [i.e., Mr Keshav Mohan], fresh notice under Section 148A(b) of the Act. Furthermore held that the AO will also accord a personal hearing to Ms Ragini Mohan and/or her authorized representative. The AO shall, thereafter, take the next steps, in law, as deemed fit.
Customs does not have the Authority to Seal Immovable Property Kalpesh Ghevarchand Jain vs Union of India CITATION: 2023 TAXSCAN (HC) 598
A Division bench of the Bombay High Court recently held that the Customs authorities do not possess any power to seal the premises of a person alleged to be involved in smuggling of goods. The bench observed that, “we find that there is no power available with the custom authorities to seal premises of any person, which are nothing but a form of immovable property. Under Section 110 or Section 121 of the Customs Act, 1962 what can be seized and confiscated is the “goods” or movable property”. It was further observed by the Bombay High Court bench that, “Section 110 and Section 121 respectively empower the customs authorities to seize the goods liable to confiscation and confiscate the sale proceeds of the smuggled goods, which are sold by the person, having knowledge or reasons to believe that the goods are smuggled goods.”
Evasion of Tax Payment by Smuggling Coal to Different States: Gauhati HC rejects Petition praying to quash FIR Abdul Kadir vs State of Assam and Anr CITATION: 2023 TAXSCAN (HC) 599
Gauhati High Court (HC) of bench Justice Susmita Phukan Khaund rejected the petition praying to quash FIR filed against the petitioner for evading tax payment from the government by smuggling coal to different states. The HC stated that they could not find any malice by the investigation agency. The bench rejected all the submissions made by the petitioner and observed that “the petitioner is alleged with an offence of evading payment of taxes to the Government by smuggling coal to different states. I have considered the magnitude of the offence. This is an offence against the society at large. The document submitted by the petitioner does not even substantiate his averments”.
Relief to Atlas: Kerala HC directs to Pass Fresh Assessment Orders after Complying Principles of Natural Justice ATLAS GOLD TOWNSHIP(INDIA)PVT LTD vs THE STATE OF KERALA CITATION: 2023 TAXSCAN (HC) 600
Atlas Gold Township received respite when the Kerala High Court (HC) division bench, headed over by Justices A K Jayashankaran Nambiar and Viju Abraham, ordered officials to issue new assessment orders. The bench noted that the appellant’s current limited request is for a directive akin to the sister company’s, which saw another learned Single Judge overturn the challenged assessment orders that were made without consulting the assessee and order the Assessing Officer to conduct a new assessment within a specific time frame. The division bench decided to set aside the judgment of the single judge in the writ petition,as also the order in the Review Petition, to the limited extent that it does not set aside the assessment orders impugned in the Writ Petition.
Order Preventing Assessee from Availing Benefit of Stay Recovery of Balance GST Amount passed in absence of Tribunal by GST Authorities: Patna HC directs to file Appeal u/s 112 of BGST Act Gammon Engineers and Contractors Pvt. Ltd. vs The State of Bihar CITATION: 2023 TAXSCAN (HC) 604
The Patna High Court (HC) directed to file an appeal under section 112 of the Bihar goods and services tax act 2017 (BGST Act) since the order preventing the assessee from availing the benefit of stay the recovery of balance GST amount passed in absence of Tribunal by GST authorities. A Coram comprising of Justice Madhuresh Prasad held that since the order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter the office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal.
Relief to IOC: Calcutta HC confirms Fulfilment of Obligation under Rule 6(2) of CCR, by taking only 85% of Credit on Common Input Service COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX vs M/S. INDIAN OIL CORPORATION LTD CITATION: 2023 TAXSCAN (HC) 606
The Calcutta High Court confirmed the fulfilment of obligation under Rule 6(2) of the Cenvat Credit Rules, 2004(CCR), by taking only 85% of credit on common input service, thereby granting relief to M/s Indian Oil Corporation Ltd, the petitioner. The Court of Justices TS Sivagnanam and Hiranmay Bhattacharyya observed that “This would indirectly mean that the contest which was made before the Tribunal with regard to the Chartered Accountant’s certificate does not any longer survive and it is only the contents thereof, sufficiency or insufficiency of the material contained in the certificate which is now being pursued by the Department. Therefore, technically we would not be wrong in observing that the revenue has accepted that portion of the order passed by the Tribunal.”
Non-participation in Proceedings due to Ill-Health: Andhra Pradesh HC directs Fresh Adjudication after Depositing 50% of Service Tax REDDY ENTERPRISES vs THE STATE OF AP CITATION: 2023 TAXSCAN (HC) 605
In a significant case, the Andhra Pradesh High Court (HC) directed fresh adjudication after depositing 50% of Service Tax since non-participation in proceedings due to ill health. A Coram comprising Justice U Durga Prasad Rao and Justice V Gopala Krishna Rao observed that the petitioner could not avail of the opportunity givenher old age as she has aged 75 years and also due to her ill health. The Court directed the 3rd respondent to afford a personal hearing to the petitioner and pass Assessment Order afresh by the law on suitable terms. Further, the Court set aside the impugned Assessment Order dated 10.11.2022 passed by the 3rd respondent on the condition of the petitioner depositing 50% of the tax component of Rs.23,79,26,090/- as mentioned in the impugned order dated 10.11.2022 within six (6) weeks.
SC upholds Order passed u/s 7 of COFEPOS Act in absence of valid Evidence to Explain Investment M/S. PLATINUM THEATRE AND OTHERS vs COMPETENT AUTHORITY SMUGGLERS & FOREIGN EXCHANGE MANIPULATORS (FORFEITURE OF PROPERTY) ACT CITATION: 2023 TAXSCAN (SC) 137
The Supreme Court (SC) upheldthe order passed under section 7 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOS) in absence of valid evidence to explain investment. It was observed that the proceedings were initiated about the appellants, in the first instance, under show cause notice dated 13th January 1977 and the competent authority passed an Order of forfeiture on 23rd November 1977. Later that came to be set aside in the year 1991 and fresh forfeiture proceedings were initiated under show cause notice under Section 6 of the Act dated 16th October 1994 which finally culminated inthe passing of the order of the competent authority on 31st December 1997. The Court alleged gross delay in initiating the proceedings for forfeiture of the property is misconceived and deserves an outright rejection.
Day of Remand should be Included to consider Default Bail Claim: SC answers Reference in Yes Bank Case ENFORCEMENT DIRECTORATE GOVERNMENT OF INDIA vs KAPIL WADHAWAN & ANR CITATION: 2023 TAXSCAN (SC) 138
In a major ruling the Supreme Court observed that the day of remand is to be included for considering for considering a claim for default bail and the observation was made while answering a reference in the Yes Bank Case. he Trial Court denied default bail to the accused by holding that the 60 days will have to be computed by excluding the date of first remand. However, the Bombay High Court, under the impugned judgment noted that, excluding the first date of remand while computing the period of 60 days was erroneous and held that the filing of the Charge Sheet by the ED on 13.7.2020, being on the 61st day, would entitle the respondents to default bail. An accused becomes entitled to default bail if the chargesheet isn’t filed by 61st or the 91st day of the remand, the Bench stated. The Bench reserved the judgement to be pronounced on a later date.
Separate Notice not required for Recovery of Excise Duty Refund granted Erroneously COMMISSIONER OF CENTRAL EXCISE vs M/S. MORARJEE GOKULDAS CITATION: 2023 TAXSCAN (SC) 139
A Two-Judge Bench of the Supreme Court ruled that a separate notice under Section 11A of the Central Excise Act of the Central Excise Act is not required for the recovery of an erroneous refund granted after the expiry of the prescribed time limit for filing a refund claim. It was thus clarified that, once the order originally sanctioning the refund came to be set aside, there was no need for any further notice under Section 11A of the Central Excise Act. The court thus held that from the scheme of the Central Excise Act, it is quite apparent that where proceedings under Section 35E of the Central Excise Act are initiated and an appeal is filed against the order sanctioning a refund, there is no need to issue any notice under Section 11A of the Central Excise Act.
The Bombay High Court on Thursday disposed of four tax petitions filed by actor Anushka Sharma and asked her to approach the appellate authority under the Maharashtra Value Added Tax Act for addressing the issue of demand of Sales Tax by the department. “She is providing her services and earning income through contract for services and not through contract of services (Not employed with anybody). Therefore, under Section 17 of the Copyright Act 1957 she is first owner of Copyrights created in her artistic performances,” the affidavit stated. Nevertheless, the Bombay High Court disposed of the petition granting the petitioner the liberty to file an appeal against the impugned order of sales tax demand.
The Gujarat High Court dismissed Time Barred Re-Assessment Notices and ruled that the Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act (TOLA) cannot override the provisions of Finance Act, 2021. The Bench of Justices NV Anjaria and Niral R Mehta, observed that “In view of the above, all the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, are beyond the permissible time limit, therefore, liable to be treated illegal.” “The Taxation and Other Laws Act, 2020 is a secondary legislation and a secondary legislation would not override the principal legislation-the Finance Act, 2021” the Bench concluded.
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The Income Tax Appellate Tribunal (ITAT) Mumbai Bench, has recently, in an appeal filed before it, held that Atos IT Solutions and Services Inc, is not liable to tax, for support services provided to Atom India.
The aforesaid observation was made by the Mumbai ITAT when an appeal was filed before it by the assessee, as against order of the Disputes Resolution Panel – 1, Mumbai [DRP], dated 22.08.2017, for the A.Y.2014-15, passed u/s. 144 C (5) of the Income-tax Act, 1961.
The brief facts of the case were that the assessee was a company incorporated in USA, providing support services to its group companies in India namely, Atos India Private Limited (Atos India). And, during the year under consideration, the assessee had received an amount of ₹.7,55,89,549 from the services rendered to Atos India as cost recharge of Microsoft license fees and co-ordination services relating to Tower Watson project. The above services were provided by the assessee in pursuance of the agreements entered with Atos India.
It so happened that even though the return of income was filed by the assessee and however, it had not reported the above receipts and offered the same to tax, based on which the Assessing Officer observed that the taxes were deducted at source at the time of payments.
The Assessing Officer observed that as per the 26AS statement, the taxes were deducted on a total receipt of ₹.5,55,75,255 /- at 10.55% on an average and the TDS of ₹.58,67,358 was claimed in the return of income as refund, and also that since no income was offered to tax, during the assessment proceedings, the assessee was asked to explain why the same should not be taxed as royalty and / or Fee for Technical Service (FTS).
In reply to the same, it was submitted by the assessee that it had received payments from Atos India towards recharge of costs pertaining to Microsoft licence fees, and that in this regard, it was informed that Atos group had entered into a central agreement with Microsoft to obtain licenses for the use of Microsoft products. It was further submitted by the assessee that, as per this agreement the assessee is being a USA based entity, with regard to various invoices of Atos entities, for their use of the Microsoft products.
The assessee submitted that accordingly, the assessee had recovered payments from Atos India for the Microsoft products used by them, and further that the assessee had remunerated for its services (of purchasing delivery and administrative support for the benefit of Atos India) with handling fees based on the cost of the Microsoft licenses. It was also added by the assessee that with regard to the co-ordination services relating to Tower Watson project, it was informed that Atos India had entered into a contract with Tower Watson India, to provide Information Technology services to Tower Watson India, and that for this purpose, Atos India has engaged the assessee to provide certain support services such as ‘service desk’, for authorized users of Atos India, which deals with all incidents, problems and service requests (including requests for data, system or application access) in the course of provision of services by Atos India to Tower Watson India.
It was further submitted by the assessee that it had received payment from Atos India for the above transactions, and that the same did not constitute either “Royalties” or “Fees for Technical Services (‘FTS’) or Fees for Included Services (FIS). The assessee added that the above services being in the nature of “Business Profits”, was thus, taxable in terms of the provisions of Article 7 of the Double Taxation Avoidance Agreement between India and USA (‘India-USA DTAA’), and that as per Article 7 of the India-USA DTAA, “Business Profits” are taxable in India only if the non-resident has a Permanent Establishment (PE) in India.
And thus, adding to its submissions, the assessee contented that since the assessee did not have a PE in India, the amount received from Atos India was not taxable in India, thereby relying upon various explanations and judicial precedents thus, defending its arguments.
However, the Assessing Officer rejected the submissions made by the assessee and observed that the assessee has merely attempted a vague explanation of the services it has provided to Atos India, without going into the context and the basis on which these services are rendered. He added that the same requires an analysis of the agreements on the basis of which these services are rendered, thereby analyzing the services offered by the assessee in terms of the Article 12 of the ‘India-USA DTAA‘ for royalty, FTS and FIS. And, subsequently, proposed the addition of ₹.7,55,89,549/- as fees received from Atos India being royalty as well as FTS.
Aggrieved by the same, the assessee filed its objections before the DRP, thereby filing its detailed submissions, but, the DRP rejected the reliance placed by the assessee on the IRS guidance notes, thus deciding the issue against the assessee with its observations being recorded. And it is being agitated by the same, that the assessee has preferred the instant appeal before the Mumbai ITAT.
The primary issue involved in the assessee’s appeal being as to whether on the facts and in the circumstances of the case and in law, the AO and the DRP erred in not considering that the sum of Rs. 7.55,89.550 to be in nature of “Business Profits” under Article 7 of the DTAA, and hence, not taxable in India as the Appellant did not have a Permanent Establishment in India under Article 5 of the DTAA, it was the submission of Shri Dhanesh Bafna, Ms. Chandani Shah Kinjal Patel & Yogesh Malpani ,the AR for the assessee, that the provisions regarding taxability of royalty and fees for technical/included services under section 9 the Income-tax Act, 1961 are wider in scope as compared to the respective provisions under Article 12 of the India USA Double Taxation Avoidance Agreement (India-USA DTAA), and therefore that since the provisions of the India-USA DTAA are more beneficial to the Appellant as compared to the provisions of the Act, the taxability or otherwise of the income of the Appellant from Atos India, shall be governed by the provisions of the India USA DTAA, in view of section 90(2) of the Income Tax Act.
However, on the other hand, Shri Richa Gulati, the DR opposed the submissions of the AR of the assessee, thus bringing to the Tribunal’s notice, page No. 160 and 162 of the paper Book which was a copy of the agreements for services rendered by the assessee, with special reference to clause 5.2 of the service agreement, thereby submitting that it is a service and that the assessee has not reported these services in 3CB.
Further, he brought to the notice of the Tribunal, the agreement relating to service desk services and specifically the Clause 8.4 of the above services, thus submitting that these are all support services rendered by the assessee to Atos India and that these services rendered by the assessee will thus, fall under royalty as well as FTS, relying upon the orders passed by the DRP/AO.
Hearing the opposing contentions of either sides and perusing the materials available on record, the ITAT Panel comprising of Amit Shukla, the Judicial Member, along with S Rifaur Rahman, the Accountant Member, noted:
“We observe that the assessee has given sub contract to Atos India of the services to be provided to Tower Watson India, the same is placed in record at Page No.160 of the Paper Book. The revenue has heavily relied on this sub-contract agreement to bring to tax the payment made by Atos India to the assessee relating to the Service Desk facility provided to the Tower Watson group. According to us, this activity is completely different to the sub-contracting agreement. As per the terms of agreement, the engagement clause clearly indicate that the assessee engages the services of Atos India to perform the services in accordance with the scope, delivery schedule, services levels and other essential factors as detailed in the services schedule (schedule no 2) of the sub contract agreement.”
“The services provided by the assessee to the group entity are separate and nothing to do with the separate sub contract awarded to the Atos India, which is independent contract. The service desk services are provided to all the group entities to enable the common services provided to the Watson Group employees and there is nothing on record to indicate any independent service provided to Atos India or IT enabled services which gives knowledge made available to Atos India. Therefore, in our considered view, the services provided by the assessee is separate and it only collected the related cost to maintain the service desk.”, the ITAT Bench added.
Thus, allowing the assessee’s appeal, the Mumbai ITAT held:
“It is a receipt which will fall under the Article 7 of the treaty. Hence, the addition proposed and sustained by the Ld.DRP are beyond the scope and accordingly Assessing Officer is directed to delete the same. Accordingly, the ground raised by the assessee is allowed. In the result, the appeal filed by the assessee is allowed”.
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The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed the refund of Countervailing Duty (CVD) as there was no evidence as to what order was received by Reviewing Authority.
The respondent, Ms. Mehra Eyetech Pvt. Ltd., filed claim for refund of 4% CVD in respect of various Bills of Entry as per Notification No.102/2007-Cus dated 14.09.2007 as amended. After due process of law, the original authority sanctioned the refund. Against this order of sanctioning the refund, Department filed appeal before the Commissioner (Appeals) and vide order impugned herein the Commissioner (Appeals) and dismissed the appeal of the Department as time barred. Hence the Department is before the Tribunal.
G. Anandalakshmi appeared and argued on behalf of the Department. The Counsel argued that the Order was received by the Review Cell only on 23.03.2010. The review order was passed on 22.06.2010. When computed from the date of receiving the Order-in-Original by the Review Cell, the review order has been passed well within three months. However, the Commissioner (Appeals) has erroneously calculated the period of three months from the date of passing the Order-in-Original.
As per Sub Section (2) of Section 129 D of Customs Act, 1962, the review authority has to examine the decision or order passed by adjudicating authority so as to satisfy the legality or propriety of such decision or order and has to pass a review order directing the department to prefer an appeal before the Commissioner (Appeals).
Sub Section (3) of Section 129 D provides that every such order under Subsection (2) shall be made within a period of three months from the date of communication of the decision or order passed by the adjudicating authority.
The Coram consisting of Suekha Beevi CS, Judicial Member and M Ajit Kumar, Technical Member observed that “We find the facts and issue for consideration in this appeal also to be the same. We cannot accept the contention of the Department that the order was received by the reviewing authority only on 23.03.2010. We find no grounds to interfere with the observations and findings of the Commissioner (Appeals).”
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The Haryana Authority for Advance Ruling (AAR) ruled that Good and Services Tax (GST) is applicable on export of pre-packaged and labelled rice up to 25kg.
Also ruled that GST is applicable on supply of pre-packaged and labelled rice up to 25 Kgs, to exporter on “bill to ship to” basis i.e., bill to exporter and ship to customs port. Exporter ultimately exports the rice to foreign buyers.
The applicant, M/s D D International Pvt Ltd, engaged in the business of manufacturing and supplying of rice and we are supplying rice to customers in pre-packaged and labelled packages, having quantity up to 25 kg.
As per the submissions, they have 3 types of Customers sales/supplies are executed details. They are i) Customers located abroad (“foreign buyer supplies”), ii) Customers located in India who purchase rice from us for the purpose of exports on “bill to ship to” basis (“Exporter”), iii) Customers located in India who purchase rice from us for the purpose of exports (“Exporter”).
The applicant has sought advance ruling on the GST rates of the supplies mentioned above.
The bench acknowledged the proper officer’s comments that, according to Notification No. 06/2022 — Central Tax (Rate) dated July 13, 2022, GST @5% is applicable on supplies of pre-packaged and labelled rice up to 25 kg, provided that both of the following conditions are met: i) It is pre-packaged and labelled; and ii) It is required to bear the declarations required by the Legal Metrology Act, 2009 (l of 2010) and the rules made thereunder.
As a result of the Proper Officer’s comment’s support, the Sunder Lal and Kumud Singh bench ruled that GST is applicable to all supplies of pre-packaged and labelled rice bags made to foreigners.
In addition, the bench noted that regardless of whether the rice is being sold for internal use or export, 5% GST will be applied if it is being delivered in pre-packaged and labelled bags with a capacity of up to 25 kg.
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The “Companies (Audit and Auditors) Amendment Rules, 2021″ have been released by the Ministry of Corporate Affairs (MCA) by notice No. GSR 206(E) dated March 24, 2021. (” Audit Rules”), read in conjunction with subsection 3 of Section 143 of the Companies Act of 2013, adding new Rules 11(e), 11(f), and 11(g), and repealing Rule 11(d).
It was reported before that there will be major changes in the audit trail requirements that the accounting software with edit logs will be used from April 1, 2023.
The Rule 11(g) requires auditors to report on the use of accounting software by the company for maintaining its books of account which has a feature of recording audit trail.
An audit trail is a list of all the data modifications that have been done throughout time. Any alteration to data, including newly added, updated, or deleted data, must be documented.
The Auditing and Assurance Standards Board (AASB) of the Institute of Chartered Accountants of India (ICAI) decided to prepare an Implementation Guide to give the members the necessary direction on this new reporting obligation so that the members can effectively carry out their duties.
The Implementation Guide provides comprehensive information on a number of reporting-related topics under Rule 11(g), including the numerous audit procedures that must be carried out. The Implementation Guide will make it possible for company auditors to successfully comply with this Rule’s reporting requirement.
Applicability: To the extent that a business uses accounting software to preserve its records electronically, the audit trail requirements are applicable. The assessment and reporting obligations under Rule 11(g) will therefore not apply in cases where the books of accounts are wholly maintained manually, and the auditor would need to record the situation as a statement of fact in relation to this provision.
The Guide is divided into different 15 heads:
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In a recent ruling, the division bench of Delhi High Court (HC) presided by Justices Vibhu Bakhru and Amit Mahajan observed that from the date of the petitioner filing an application for revocation of its cancellation, he cannot be held responsible for not filing its returns during the period when the registration stood cancelled. Thus,…
Karnataka Authority for Advance Ruling (AAR) consisted of members Dr. M. P. Ravi Prasad and Kiran Reddy T. ruled that the tansation of sale of one of the independent business divisions along with its assets and liabilities on a going concern basis in terms of business agreement comes under the purview of transaction of supply under section 7 of CGST/KGST Act, 201.
The Applicant, Pico2Femto Semiconductor Pvt Ltd.,a business holds a certificate of registration issued under these acts bearing the GSTIN and is in the business of “providing/supplying engineering services primarily relating to semiconductor services.
The applicant submitted that the instrument of business transfer agreement dated 27.6.2022, entered by them with M/s Tessolve Semiconductor Pvt. Ltd., Bengaluru, for transfer of one of the independent running business divisions of the Applicant, namely, “business of providing/supplying of engineering services primarily relating to semiconductor services”.
The bench observed that the applicant has two independent business verticals i.e. Research & Development of Semiconductor chips and Staffing business. The applicant entered into a business transfer agreement, for transfer of staffing business along with assets and liabilities.
The applicant submitted that the agreement envisages transfer/sale of the said business division as an ongoing running business as whole, along with all the assets and liabilities thereof to M/s Tessolve Semiconductor Pvt. Ltd., and therefore, it is “slump sale”, not involving any element of supply of goods or services or both for the purposes of CGST, KGST and IGST Acts and hence the transaction is not liable to GST in terms of Sl.No.2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, being the service by way of transfer of business of a going concern as an independent part thereof.
As per the observation of the bench on section 7 of CGST Act, ‘Scope of Supply’, the 3 parts to be satisfied are (i) the activity must be a form of supply of goods or services or both, made or agreed to be made; (ii) for a consideration by a person (iii) in the course or furtherance of business.
The activity of the applicant in the instant case is transfer of staffing business, which is one of the forms of supply of goods or services or both, agreed to be made by the applicant and thus the first limb is fulfilled.
Further the impugned transaction (supply) is admittedly for a consideration, to be received in multiple stages with a performance guarantee and sharing of revenue and thus the second limb also is fulfilled.
The applicant intended to sell the staffing business in the course of his business and thus the third limb also is fulfilled.
Thus the panel observed that the applicant satisfied all the 3 parts and thus the transaction constitutes ‘Supply’. Also, it was also ruled that 18% of GST has to be paid in terms of Entry No.15(vii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended.
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Regarding the division of the Central Intelligence Unit’s (“CIU”) duty in a Custom House in relation to anti-smuggling activities, the CBIC has issued Instruction No. 12/2023 dated March 27, 2023.
Examining references from the industry and stakeholders, it was found that different customs field formations had different practices for dividing work involving anti-smuggling cases between the Special Intelligence and Investigation Unit (SIIB) [Import/Export] and the Central Intelligence Unit (CIU).
The Board has examined the situation. The Board has decided that insofar as any anti-smuggling work, including in detecting irregularities in commercial cases involving loss of revenue or violation of any prohibition/restriction on import or export of goods, where case investigated has a vigilance aspect or angle, it should be the CIU who interviews the suspects. This is in light of precedent and keeping in mind developments over time, as well as acknowledging the need for specialisation and exclusivity of work.
Thus, anti-smuggling cases which in the first instance (including at intelligence stage) are viewed to involve only revenue and/or restriction prohibition angle and no vigilance aspect, should not be taken up by the CIU, but be handled by the SIIB (or equivalent unit). When an anti-smuggling case is suspected to involve vigilance and is taken up by the CIU, however, it is found to be not involving such an angle, it should be transferred to the SIIB for further follow up and finalizing the investigation.
Similar to this, anti-smuggling cases that are initially believed to have vigilance aspects (particularly at the intelligence stage) should be handled by the CIU rather than the SIIB. When an anti-smuggling case that the SIIB has taken up turns out to involve a vigilance angle after being initially assessed to only involve revenue and/or restriction-prohibition angles and no vigilance aspect, it should be transferred to the CIU for additional follow-up and concluding investigation.
Custom Houses that lack a separate CIU are urged to establish one. A Customs Zone should only have one unit executing centralised CIU tasks, with the possible exception that this may not always be possible due to administrative or geographic constraints. A Principal Commissioner or Commissioner must serve as the CIU’s overall leader. A centralised standing order placing the CIU with a specific Commissioner in the Customs Zone and outlining its general duties should be made by the Pr. Chief Commissioner/Chief Commissioner.
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The Calcutta High Court (HC) quashed the order under section 148A(d) of the Income Tax Act,1961 passed with non-application of mind.
Dobby Media Pvt. Ltd., the petitioner has challenged the impugned order under Section 148A(d) of the Income Tax Act, 1961, dated 29th July 2022 on the ground that the aforesaid impugned order is perverse and in total non-application of mind by recording that no response was given to the letter in question issued by the Assessing Officer nor any supporting document was attached while the petitioner had filed the response along with supporting documents.
As per the above-said section, the Law makes it necessary to consider the reply and submissions filed by the assessee and discuss the same in the body of the order. Non-consideration of replies filed by the assessee under section 148A(c) of the Income Tax Act turned out to be the recent issue. Based on material available on record and based on the reply of the assessee AO has to decide whether or not it is a fit case to issue a notice under section 148, by passing a speaking order under section 148A(d), with the prior approval of the specified authority.
It was evident that the aforesaid impugned order under Section 148A(d) of the Income Tax Act, 1961 is in total non-application of mind and on this ground alone, the aforesaid impugned order is not sustainable and is liable to be quashed.
A single-member bench comprising Justice Md. Nizamuddin viewed that quashing the aforesaid impugned order under Section 148A(d) of the Act and all subsequent proceedings, will not be a bar on the part of the Assessing Officer to pass a fresh order under Section 148A(d) of the Act after considering the objection/ response of the petitioner dated 15th June 2022 by the law.
It was held that it would be by passing a reasoned and speaking order after giving an opportunity of hearing to the petitioner or his authorised representatives, within a period of eight weeks from the date of communication of the order.
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In the case of Vodafone Idea, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that TDS is not deductible on payment of roaming charges since the payment for interconnection is not fees on technical service under section 194j of the income tax act, 1961.
During the appellate proceedings, the appellant assessee claimed that the payments made by it for roaming facilities do not attract provisions of section 1941 of the Act since they are not like payment, for technical services. The CIT(A) held that “assessee could not have been deemed as one in default for non-deduction of tax at source on roaming charges paid by it to other service providers”
In the case of CIT, TDS. Bangalore vs Vodafone South Ltd, Hindustan Coca-Cola Beverages Pvt. Ltd and others it was held that payments made for interconnection are not fees for rendering any technical services as envisaged in section 1941 of the Act. Therefore, no tax is deductible at source under section 1941 of the Act on payment of roaming charges to the OTOs and the appellant therefore cannot be treated as an assessee in default.
The revenue submitted that for installation/setting up/repairing/servicing/maintenance/capacity augmentation etc. human intervention is required, however after this process is complete, the interconnection between the operators is automatic and at that stage, no human intervention is required. These conclusions have been arrived at after considering the Reports of the technical experts, their cross-examination etc.
A Coram comprising of Shri Vikas Awasthy, Judicial Member & Shri M Balaganesh, Accountant Member observed that in the case of i-Gate Computer Systems Ltd, it has been held that it does not require any human intervention and charges received or paid on account of this is not fees for technical services as envisaged in section 194J read with section 9(1) (vii) read with Explanation-2 of the Act.
The ITAT held that “the payments made for interconnection are not fees for rendering any technical services as envisaged in section 194J of the Act. Therefore, no tax is deductible at source u/s 1943 of the Act on payment of roaming charges to the OTOS and the assessee therefore cannot be treated as an assessee in default.” The appeals of the Revenue got dismissed.
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The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the Commissioner(Appeal) can’t go beyond the scope Show Cause Notice (SCN) demanding service tax under a different head other than in the SCN.
Uniform Enterprise, the appellant is engaged in providing service of painting job in the industrial sector which is covered under the category of ‘Industrial or Commercial Construction Service’ for levy of service tax as per the definition provided in Section 65(1) of the Finance Act, 1994.
On investigation conducted by the DGCEI, it was found that the appellant M/s. Uniform Enterprise was engaged in providing the service of industrial painting jobs which is covered under the category of ‘Industrial or Commercial Construction Service’ for levy of service tax.
Further found that the appellant has not paid the service tax on the taxable value received by them therefore, a show cause notice was issued to the appellant demanding the service tax of Rs. 11,25,541/- and proposing a demand of interest and penalties under Section 77 and 78 of the Finance Act, 1994 which was under the head of Industrial or Commercial Construction Service for the period 2006-07 to 2007-08. The Commissioner (Appeals) rejected the appeal filed by the appellant.
Shri S. Suriyanarayan, counsel appeared on behalf of the appellant stated that when in the show cause notice as well as the adjudication order, the demand was proposed and confirmed under Commercial or Industrial Construction, the Commissioner (appeals) has no right to change the classification proposed in the show cause notice.
Further contended that under the head of Management, maintenance and repair service, the service tax can be chargeable only when such service is under the contract or agreement whereas, in the present case there is no contract or agreement between the appellant and the service recipient for the reason that the service tax is otherwise not recoverable under the head of Management, maintenance or repair service. Shri Rajesh Agarwal, Superintendent (AR) appeared on behalf of the revenue and reiterates the finding of the impugned order.
It was evident that the show cause notice was issued demanding service tax under the head of Industrial or Commercial Construction Service and in the adjudication order also the service tax demand was confirmed under the same heading.
A two-member bench comprising of Mr Ramesh Nair and Mr C L Mahar observed that the Commissioner (Appeals) travelling beyond the show cause notice and adjudication order decided that the service tax is payable under the head of Management, maintenance and repair service is illegal and incorrect.
The Commissioner (Appeals) has no power to create a new case before him which is not flowing from the show cause notice. The CESTAT further held that the Commissioner (Appeals) shall decide the appeal considering the service under Industrial or Commercial Construction Service. While allowing the appeal, the Court set aside the impugned order and remanded the matter to the Commissioner (Appeals) for passing afresh Order-in-Appeal preferably within a period of two months.
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The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the enhancement of the value of copper scrap on LME price is not valid in absence of acceptance by the assessee.
Hindalco Industries Ltd, the petitioner filed an appeal against the order of the Commissioner (Appeals) whereby, the assessment of bills of entry enhancing the value of the goods namely copper scrap based on LME price has been upheld.
Shri Manish Jain, counsel appeared on behalf of the appellant submitted that the appeal was rejected not on merit but mainly on the ground that the appellant has accepted the enhancement of the price through assessment of bills of entry. It was argued that the appellant have not accepted the enhancement of the value on the contrary they have not accepted the enhancement of the value by giving the letter to the Assistant/Deputy Commissioner of Customs, Mundra and also requested for passing a speaking order in terms of Section 17(5) of the Customs Act, 1962
It was contended that the value for customs duty shall be the transaction value i.e. the price paid or payable for the goods exported to India hence, in terms of Section 14(1) of the act, the transaction value is to be accepted. He further submits that the LME price cannot be relied upon to reject the declared value because the LME bulletin gives the indicative price at which the goods are traded in international trade.
Further stated that in absence of evidence to show the remittance about the invoice value, foreign supplier, declared value cannot be rejected. On the other hand, Shri Tara Prakash, Deputy Commissioner (AR) appeared on behalf of the revenue and reiterates the finding of the impugned order.
It was evident that the appellant has not accepted the enhancement of the value as they have requested for passing a speaking order in terms of Section 17(5) of the Customs Act, 1962. Further viewed that the Commissioner (Appeals) has not adduced any evidence in support of his finding that the appellant has accepted the enhancement of the value of the goods.
Based on the above said findings, a two-member bench comprising Mr Ramesh Nair and Mr C L Mahar set aside the impugned orders and remanded the matter to the assessing authority for passing a speaking order.
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In a significant, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) approves excise duty against Himalaya Equipment since the clubbing of both units is based on ownership for SSI Exemption.
Himalaya Equipments, the petitioner challenged the Order-In-Original passed by the Commissioner Central Excise, Ahmedabad-III whereby, the differential demand of Central Excise Duty was confirmed against M/s. Himalaya Equipments on the ground that one other unit M/s. Himalaya Engineers and Manufactures have the same partners of equal sharing, the clearance of M/s. Himalaya Engineers and Manufacturers are required to be included in the value of M/s. Himalaya Equipments and consequently, exceeding the eligible limit of SSI exemption under notification no. 8/2003-CE, the appellant is liable to pay the excise duty.
Shri Amal Dave, who appeared on behalf of the appellant submits that it has been admitted in the adjudication order that the appellant and M/s. Himalaya Engineers & Manufacturers have separate registration, bank account and all other registrations and licenses with various government authorities and despite this position, the value of M/s. Himalaya Engineers and Manufacturers were clubbed with that of the present appellant.
It was contended that without the issuance of show cause notice, the value of the said unit cannot be clubbed with the value of the appellant. On the other hand, Shri Rajesh Agarwal, who appeared on behalf of the revenue reiterates the finding of the impugned order.
From the details submitted the CESTAT observed that both the firms of the partners are the same with the same sharing of 25% each, and viewed that even though there is a different name of the firm but both the firms are owned by the same partners therefore, there is a common ownership by same partners. As per notification no. 8/2003-CE dated 01.03.2003 the exemption shall apply for the clearance of one or more factories and the aggregate value of clearance of excisable goods for home consumption by the manufacturer from one or more factories should not be exceeded Rs. 300 lakhs in the preceding financial year.
It was viewed by the CESTAT that the ownership of both the units i.e. M/s. Himalaya Equipments and M/s. Himalaya Engineers and Manufactures is with the same partners which are to be considered that the one manufacturer has cleared the excisable goods from both the factories therefore, for exemption limit as well as for eligibility limit of Rs.300 lakhs, the value of clearance of both the factories have to be taken together.
A two-member bench comprising of Mr Ramesh Nair and Mr C L Mahar observed that the clubbing is not based on the common facility between both the units but because of the common ownership, being the same partners in both the firm. Since both the units are owned by one owner, there is no need to issue a show cause notice to another firm.
While dismissing the appeal, the Tribunal upheld the view of the adjudicating authority who clubbed the value of clearance of both the units and demanded excise duty from M/s. Himalaya Equipments.
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The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) in its ruling which was in favour of Vodafone Idea Ltd has held that there cannot be any disallowance under section 40 (a)(ia) of the Income Tax Act, 1961 on Sale of Prepaid Sim card/Recharge Vouchers to distributors.
The assessee is in the business of providing cellular services in the telecom circles of Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Kerala, Uttar Pradesh(W), Haryana, Delhi, Uttar Pradesh (E), Himachal Pradesh and Rajasthan. The assessee had filed its return of income on 26/09/2009 declaring a total income of Rs.‟Nil‟ after setting off brought forward unabsorbed depreciation of Rs.33,06,29,157/- and filed its revised return of income on 01/04/2010 declaring total income at Rs. Nil after set off of brought forward unabsorbed depreciation of Rs.229,74,10,373/- on 30/03/2011.
The AO observed that the assessee had deducted tax at source for the commission payments made but had not deducted tax for the discount allowed to the distributors. The AO merely followed the decision in the case of the assessee company reported in 325 ITR 148 (Del) wherein it was held that the relationship between the assessee and the Distributors was that of Principal to Agent and accordingly the discount given to the dealers/distributors would be like commission on which tax is deductible u/s 194H of the Act which has not been done by the assessee and consequently the same would be liable for disallowance u/s 40(a)(ia) of the Act. The CIT(A) rejected the additional evidence furnished by the assessee.
The assessee sold prepaid sim cards and recharge vouchers at a discounted price than the MRP to the distributors. This amounts to the sale of the right to service. Assuming the MRP of the sim cards and recharge vouchers is Rs.100/-, the assessee sells the same to its distributors at a discounted price of Rs.70/-. Later the distributor in turn sells the same product to retailers at Rs.90/- and thereafter, the retailer sells the same product to the ultimate customer /user at Rs.100/-.
A Coram comprising of Shri Vikas Awasthy, Judicial Member & Shri M Balaganesh, Accountant Member observed that the assessee has got no control over the appointment of retailers. Hence, the entire computation mechanism of deduction of tax at source in terms of Section 194H of the Act grossly fails as the income component thereon is not determinable when the assessee sells the sim cards to the distributors. The ITAT held that the sale of prepaid sim cards/recharge vouchers by the assessee to distributors cannot be treated as commission/discount to attract the provisions of section 194H of the Act and hence there cannot be any obligation on the part of the assessee to deduct tax at source thereon and consequentially there cannot be any disallowance u/s 40(a)(ia) of the Act. The Tribunal allowed the appeal of the assessee.
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As the New Financial Year (2023-24) will begin on April 1. For the last financial year( FY 2022-23), there are several duties that taxpayers should complete. Most taxpayers would have already finished all the tax-related tasks by now, those who have not done so must have to act now. Due to the upcoming end of several deadlines, it is important to complete all your financial tasks before March 31 to avoid paying Tax penalties and inconvenience.
Aadhaar Card and Pan Card are two important documents with which one can avail benefits of government schemes and also perform financial transactions. “As per Income-tax Act, 1961, it is mandatory for all PAN holders, who do not come under the exempt category, to link their PAN with Aadhaar before 31.03.2023.” Linking their Permanent Account Numbers (PAN) with the Aadhar UID needs to be linked to avoiding the late fee levy.
Filing updated Income-Tax Return (ITR)
The deadline for filing the revised income tax return for FY 2019-2020, or AY 2020-21 is March 31. An updated return can be filed by any person irrespective of the fact whether such person has already filed the original, belated or revised return for the relevant assessment year or not. An updated return can be filed at any time within 24 months from the end of the relevant assessment year.
Advance tax payment
Advance tax is paid by taxpayers who have sources of income other than their salary. As per section 208 of the Income Tax Act, 1961 every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. This Advance payment is applicable to rent, capital gains from shares, fixed deposits and lottery winnings. The last date to submit the final instalment of the advance tax payment for the fiscal year 2022–2023 is March 15, 2023.
Update KYC details
The RBI has extended the deadline for updating Know Your Customer (KYC) details in bank accounts. The last date to update is March 31. To update the KYC, you need to visit the nearest bank branch. E – KYC or online KYC is an effective way to submit your identity and address proofs online. It is a standardized way to check the authenticity of customers on a portal by the Indian government. To verify their identity and address, customers of the financial service are required to submit KYC documentation before investing in a variety of financial instruments like fixed deposits, mutual funds, and more.
It is a good opportunity for the taxpayers who opted for the old tax regime to choose their tax-saving investments before March 31, 2023, for the fiscal year 2022–23. In the old tax regime, taxpayers can claim multiple deductions under the Income Tax Act, of 1961. The rebate limit which is higher now is applicable only to the new income tax regime.
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The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the employee stock option (ESOP) expenses were capital in nature and were not allowable under Section 37(1) of the Income Tax Act 1961.
Assessee, Cvent India Pvt. Ltd. is a company stated to be engaged in the business of providing IT Software, Development and Sales option and marketing services. Assessee filed its original return of income.
During the course of assessment proceedings, AO noticed that the assessee had claimed Employee Stock Option (ESOPs) expense. AO noted that assessee did not furnish the break-up of expenses on shares exercise i.e., allotted during the year. He, therefore, held that the claim of the assessee cannot be allowed and accordingly disallowed and made its addition. On appeal it was held that AO was not justified in deleting the ESOP expenses.
Himanshu Sinha,on behalf of the assessee submitted that the expense on account of ESOP was an incentive/compensation to the employees and had direct nexus with their employment and therefore such expenses could not be said to have been incurred wholly for the purpose of business and were revenue in nature and, therefore, allowable under Section 37(1) of the Act.
Avikal Manu, appeared on behalf of the revenue.
The Division Bench of Anil Chaturvedi, (Accountant Member) and Yogesh Kumar Us, (Judicial Member) dismissed the appeal filed by the revenue observing that,
“We find that CIT(A) after considering the various High Courts and Tribunals decisions cited in the order held the ESOP expenses to be allowable u/s 37(1) of the Act. Before us, Revenue has not placed any material on record to point out any fallacy in the findings of CIT(A) nor has placed any contrary binding decision in ACIT vs. Cvent India Pvt. Ltd. 10 its support.”
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The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that assessee is not liable to explain receipts shown in Form No.26AS.
The Assessee Travelport LP is a limited partnership based in the state of Delaware, USA having its principal business at Georgia and is engaged in the business of providing information reservations, transaction processing and related services of airlines, travel agencies and other travel related entities. The assessee owns and operates a global distribution system located outside India and provides subscribers with access to and use of this GDS.
As per the information received through non-filers monitoring system, the Assessing Officer came to know that the assessee has received a sum of Rs. 6,63,17,256/- from different Airlines operating in India. The Assessing Officer found that the assessee has not filed its return of income. Pursuant to the notice issued by the assessing officer assessee filed return of income declaring income at NIL.
While scrutinizing the return of income, the Assessing Officer noticed that the assessee did not have any receipts in India during the year under consideration though the Revenue appears in Form No. 26AS.
The assessee was asked to explain why it did not file its return of income in spite of having receipts during the year as appearing in Form 26AS.
After getting the reply from the assessee ,the assessing officer concluded by holding that the assessee has Permanent Establishment in India and profit of 100% was attributed to the assessee company and addition of Rs. 6,63,17,256/- was made. Against the order made by the assessing officer assesee filed an appeal before the ITAT.
Ravi Sharma counsel for the assessee submits that is not an eligible assessee within the provisions of section 144C of the Income Tax Act, 1961. Therefore, being an eligible assessee, there was no need for framing the draft assessment order and by doing so, the final assessment order dated 21.06.2019 is void ab initio.
Jitender Kumar, counsel for the revenue, supported the decision of the lower authorities.
After considering the contentions of the both parties the division bench of the ITAT comprising N.K. Billaiya, (Accountant Member), and Anubhav Sharma, (Judicial Member) allowed the appeal filed by the assessee and observed that Assessing Officer has put the entire burden on the assessee to show in whose hands the receipts shown in Form 26AS has been declared. Further assessee was not responsible to explain the recipients of the receipts shown in Form No. 26AS.
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While considering a bunch of appeals, the Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that exemption for Countervailing duty (CVD) on imported goods under excise notification after an amendment is allowable only on satisfaction of both conditions.
The appellants imported goods and self-assessed duty under section 17(1) and filed Bills of Entry which were re-assessed by the proper officers under section 17 (4) enhancing the duty. The appellants appealed to the Commissioner (Appeals) who, by the impugned orders, in each of the cases, partially allowed the appeals but denied the benefit of Central Excise Notification No. 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 on the additional duty of Customs.
The goods imported into India are chargeable to Customs duty under section 12 of the Customs Act, 1962 which is commonly referred to as Basic Customs Duty and additional duty of customs commonly referred to as countervailing duty levied under Section 3 of the Customs Tariff Act, 1975. BCD is chargeable as per the schedule to the Customs Tariff Act, 1975 while CVD is chargeable as per the schedule to the Central Excise Tariff Act, 1982 at the rates at which articles manufactured or produced in India will be charged to Central Excise duties.
The disputed exemption notification is 30/2004-CE dated 9.7.2004 was available subject to the condition that the goods were manufactured without availing the benefit of CENVAT credit on inputs. The Court held that the appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/2002. The appeals are allowed and the demand of CVD raised by the respondents-authorities is set aside.
After the 17.7.2015 amendment, to avail the benefit of exemption notification, one more condition has to be fulfilled ie; the Central Excise duty should have been paid on the inputs used and no CENVAT credit should have been taken.
It was evident that it is impossible for a manufacturer located outside India to avail of CENVAT credit, it is equally impossible to pay central excise duty on the inputs which have gone into such manufacture. The appellant claimed that since the goods were imported, the benefit of this exemption notification must be available without fulfilling this condition.
A Coram comprising of Mr P V Subba Rao, Member (Technical) and Ms Binu Tamta, Member (Judicial) viewed that if the exemption notification is read as per the appellant’s submissions, it will put the domestic industry at a disadvantage and unduly favour the imported goods.
Further held that any exemption notification must be strictly interpreted as it is drafted and there cannot be any intendment while interpreting it. The person claiming the benefit of the notification will have to fulfil all the conditions in the notification. If the conditions are not fulfilled, the benefit is not available.
The CESTAT viewed that there are two conditions (1) no CENVAT credit should have been availed which is fulfilled and (2) that excise duty should have been paid on the inputs which have not been fulfilled. The CESTAT held that “the appellants were not entitled to the benefit of 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 for the CVD on the imported goods.”
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The Bengaluru Bench of the Income Tax Appellate Tribunal (ITAT), comprising George George K., Judicial Member and Padmavathy S., Accountant Member observed that the payment for online advertisement space to Google India is not “Royalty”, thereby granting relief to Google Ireland. The assessee, Google Ireland Limited (herein after referred as the assessee or GIL) is…
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has while directing re -adjudication observed that kidney failure has a reasonable cause for non-compliance during assessment proceeding.
Assessee Sunil Kumar Garg, carrying the business of trading of menthol oil and when the assessment proceedings carried out the assessing officer found that the list of sundry creditors included an amount of Rs.2,17,85,150/- due in the name of M/s Suraj Trading Company, Gangyal, Jammu and Kashmir.
The Assessing Officer required the assessee to file a conformed copy of the account of this creditor along with Bank Statement which was not submitted. A notice under section 133(6) Income Tax Act 1961 was issued to the above creditor to verify the creditworthiness and genuineness of the transactions with the appellant.
A notice was issued to the above creditor to verify the creditworthiness and genuineness of the transactions with the assessee.
Creditor submitted to the AO among other details a list of Sundry Debtors. In the list of Debtors, AO found mismatches and sought assessee to clarify the mismatches by issuing notice .While issuing repeated show cause notice assess did not reply to it. Hence the AO considered the difference amount of Rs.1 ,47,10,075/- as the amount representing remission or cessation of trading liability under section 41 (1) of the Income Tax Act 1961.Against the order assesee filed apoeal before ITAT.
V.K. Sabharwal Counsel for the assessee submitted that there were some genuine reasons because of which documents and replies could not be submitted to the AO also the assessee was suffering from failure of kidney.
Indu Bala Saini, Counsel for the revenue, supported the decision of the lower authorities. After considering the contentions of the both parties the division bench of the ITAT comprising Shamim Yahya, (Accountant Member) and Astha Chandra,(Judicial Member) allowed the appeal filed by the assessee and further observed that, “there was reasonable cause of ailment that prevented the assessee to supply the documents and replies to the AO. Thus the bench directed for re-adjudication of the above matter” .
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The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that electricity load extension charges are allowable as expenditure.
Assessee Tewari Warehousing Co. Pvt. Ltd is a private limited company engaged in the business of loading, unloading, blending and packing of raw tea. After filing the return assessee’s Case selected for scrutiny Assessment under section 143(3) of the Income Tax Act 1961 completed on 31.12.2016 making various additions and assessing income at Rs. 2,34,65,970/-. The additions made by AO were challenged before Commissioner of Income Tax Appeal CIT (A) but the assessee failed to get any relief. Against the order assesee filed second appeal before the ITAT.
Vikash Surana counsel for the assessee relied upon the decision of the Punjab and Haryana High Court in CIT vs. Lakhani Rubber Works submits that that the electricity load extension charges are allowable as revenue expenditure.
Vijay Kumar counsel for the revenue submits that said sum could not be allowed as revenue expenditure since it is capital in nature.
After considering the contentions of the both parties the division bench of the ITAT comprising Sanjay Garg, (Judicial Member) and Dr. Manish Borad, (Accountant Member) allowed the appeal filed by the assessee and observed that,
“The sum paid towards electricity load extension charges is revenue expenditure”
Further relied upon the decision of the Delhi High Court in Dart Manufacturing India Pvt. Ltd. The Bench determined that the expenditure towards installation of low tension lines for supply of electricity to its factory was revenue expenditure.
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