The Bombay High Court directed the Central Board of Direct to clarify the government’s stand on the ‘Faceless Appeal Scheme’, after a public interest litigation (PIL) challenged its constitutional validity.
The Chamber of Tax Consultants has challenged the constitutional validity of provisions dealing with the ‘Faceless Appeal Scheme’.
The primary contentions raised by the consultants’ chamber in its Public Interest Litigation (PIL) is that the ‘Faceless Appeal Scheme’ will affect the independence of judicial power of the CIT (Commissioner of Income Tax) Appeal.
The other issue raised by the chamber is that if even at the first appellate stage, an opportunity for a personal hearing is not granted, then the assessee would stand to miss out on two chances or oral hearing in stages.
Anil Singh, Additional Solicitor General informed the court that the total pending cases are 4.74 lakh and out of the total appeals, about 56,104 appeals had been disposed of so far under the new scheme, without any request for a personal hearing.
“So far, in 581 cases, assessees have asked for personal hearing and those cases have been kept aside,” said Singh.
Arvind Datar, appearing for the petitioner, the Chamber of Tax Consultants informed the court that the Supreme Court has clarified that it is not taking up any matter because the government has said that they are going to bring the changes in the laws.
The division bench of Chief Justice Dipankar Datta and Justice MS Karnik has posted the hearing of the case to December 14 and has asked the Central Board of Direct Taxes (CBDT) to clarify if the government’s stand to make changes in the ‘Faceless Appeal Scheme’.
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This weekly round-up analytically summarizes the key stories related to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan.in during the previous week from November 29 to November 4, 2021.
PLG Impex Vs. Commissioner of Customs
The New Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the benefit of concessional rate of Customs Duty on Coated Paper’ certified by Authority designated under Comprehensive Economic Partnership Agreement (CEPA).
Commissioner of Central Tax Vs. M/s. Lenovo (India) Pvt Ltd
In a major relief to Lenovo, the Banglore Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed Service Tax demand as inclusion of turnover of Manufacturing unit for quantification of amount for reversal of CENVAT Credit was appropriate. The coarm of Judicial Member, S.K.Mohanty and Technical Member, P.Anjani Kumar ruled that there are only two limitations imposed under Rule 7 of the Rules, for distribution of credit by an Input Service Distributor. Firstly, it cannot exceed the amount of service tax paid and secondly, the credit of service tax attributable to service used shall not be distributed in a unit exclusively engaged in the manufacture of exempted goods or providing of exempted services. The manufacturer therefore, requires registering himself as Input Service Distributor and thereafter is entitled to distribution of credit of such input in the manner prescribed under the law.
M/s Jovex International Vs. Commissioner Central Tax
The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that enhanced payment of 12% Interest on pre-deposit to be payable from date of deposit till the date of Excise Refund.
Mining Engineer Vs. Commissioner of GST
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi Bench ruled that service of granting of mining rights provided by the Government will not fall under the category of “support services”.
M/s Mercantile & Marine Services Vs. Commissioner of Customs
The Banglore Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the cancellation of Customs Broker’s License as examination and inquiry are still pending.
Jaison James Vs. Commissioner of Customs
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai Bench set aside the Penalty for alleged gold smuggling as Customs Authority failed to conduct proper investigation.
M/s Pearl Drinks Limited Vs. C.G. & S.T. Jammu
The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the refund of Excise duty paid on service tax paid on transportation charges.
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The Kerala High Court has held that the goods can be released on payment of the fine in lieu of confiscation during the process of adjudication and post-adjudication.
A review petition against the interim order is preferred by the State Tax Officer in respect of the issue of whether section 130(2) of the Act contemplates the release of goods by payment of the fine in lieu of confiscation, even before orders of confiscation are issued.
The single bench of Justice Bechu Kurian Thomas held that the provisions of section 130 of the Act contemplate release of goods on payment of the fine in lieu of confiscation at two stages (i) during the process of adjudication, under section 130(2) and, (ii) post-adjudication under section 130(3) of the Act.
The court said that the words “be liable” in section 130(3) of the Act only conveys a possibility of attracting the obligation and not an imperative obligation, shorn of fair procedure. In view of the above deliberations, this Court is of the view that, when fine in lieu of confiscation is paid by a dealer under section 130(2) of the Act, the liability for payment of tax, penalty, and charges will fall upon the dealer, in addition to the fine and they need be paid only after adjudication. To obtain the release of the goods or conveyances, while the adjudication proceedings are continuing, the taxpayer needs to pay only the fine and not the tax, penalty, and charges thereon. The tax, penalty, and charges can be paid after adjudication.
“The words ‘be liable’ in the context in which it occurs in section 130(3) of the Act only imports a possibility of attracting liability. Merely because the owner of goods or conveyance opts to pay a fine in lieu of confiscation does not mean that the facts essential for incurring the liability to order confiscation automatically stands proved. That proof has to come out through the process of adjudication, as otherwise, there would be conferment of unbridled powers upon the Proper Officer to coerce every dealer to pay fine, tax, penalty, and other charges without even any adjudication. Such a procedure is against fairness and contrary to the principle of rule of law,” the court noted.
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The Delhi High Court has granted anticipatory bail to a person accused of fraudulently availing and passing on fake Input Tax Credit (ITC) worth Rs. 72 Crores.
The petitioner is one of the directors in M/s Jetibai Grandsons Services India Pvt. Ltd, a company incorporated in August 2019. The company was initially involved in the supply of services; however, it subsequently started manufacturing and supplying solar inverters, solar power generating units, and other products.
The respondents have alleged that the Company of which the petitioner is a director, along with other firms namely M/s Microlyte Energy (P) Limited, M/s Sun Automation Limited, M/s Urja Global Limited, and M/s NYX Industry India (P) Ltd. are involved in fraudulently availing and passing on ineligible/fake Input Tax Credit amounting to Rs. 72,00,00,000/-.
The respondent has alleged that the Company made most of its purchases from three firms namely – M/s Microlyte Energy (P) Limited, M/s Sun Automation Limited, and M/s Urja Global Limited. It has been alleged that these three firms further received these goods from various firms, most of which have been found to be non-existent at their official addresses and had no inward supplies. The respondent has thus alleged that these firms have availed the ineligible Input Tax Credit amounting to Rs. 72,00,00,000 and fraudulently passed on the same to the Company within a short span of five months from November 2020 to March 2021.
The single bench of Justice Chandra Dhari Singh allows the instant application under section 438 of the Code of Criminal Procedure. In the event of arrest, the petitioner has been released on bail on his furnishing a personal bond in the sum of Rs. 5,00,000/- with two solvent sureties of like amount to the satisfaction of the Investigating Officer/Apprehending Authority with various terms and conditions.
Firstly, the court has directed that the petitioner shall surrender his passport before the Investigating Officer/Apprehending Authority and under no circumstances leave India without prior permission of the Investigating Officer/Apprehending Authority, and, if he does not possess.
Secondly any passport, he shall file an affidavit to that effect before the Investigating Officer /Apprehending Authority.
Thirdly, he shall cooperate in the investigation and appear before the Investigating Officer/Apprehending Authority as and when Summoned.
Fourthly, he shall not directly or indirectly make any inducement, threat, or promise to any person acquainted with the facts of the case.
Fifthly, he shall provide his mobile number and keep it operational at all times. He shall drop a PIN on Google map to ensure that his location is available to the Investigating Officer/Apprehending Authority, and he shall commit no offence whatsoever during the period he is on bail.
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The Delhi High Court has ruled that no income tax evasion is done by the assessee as it is for parties to settle the sale consideration for transfer of respective shares in the property.
The revenue has challenged the ITAT’s order wherein it was held that it is for the parties to settle the sale consideration for transfer of respective shares in the property while the ITAT failed to note that the parties were closely related and there was no proper basis for the settlement of sale consideration between them and it was done with a view to evade payment of tax.
The Assessing Officer, by the Assessment Order dated 31.03.2015, held that the respondent had the sole ownership right over the plot of land and therefore, should have received the minimum amount of sale consideration at the Circle Rate of Rs. 27,60,03,387/-. The Assessing Officer, therefore, added an amount of Rs. 9,60,03,387/- to the income of the respondent under Section 50C of the Income Tax Act, 1961.
The appellant submits that in terms of Section 48 of the Act the entire sale consideration should have been disclosed as income by the respondent and thereafter, the amount paid to M/s ESS ESS Metals and Electricals could have been claimed as a deduction. She further casts a doubt on the bifurcation of the amount between the respondent and M/s ESS ESS Metals and Electricals, submitting that the respondent is the daughter-in-law of the sole proprietor of M/s ESS ESS Metals and Electricals, that is, Mr. Banarsi Lal Pasricha.
The Assessing Officer had in fact invoked Section 50C of the Act claiming that the sale consideration of Rs. 18 Crores received by the respondent was below the Circle Rate. This was clearly ignoring the fact that the sale consideration was in fact Rs. 35 Crores. The CIT(A) and the ITAT have given concurrent findings on the above. It is also not denied that M/s ESS ESS Metals and Electricals held a lease for 99 years with respect to the land and the vendee has paid consideration of Rs. 17 Crores for cancellation of the said lease. In the present case, the vendor did not have an unencumbered right over the land and M/s ESS ESS Metals and Electricals admittedly had a perpetual leasehold right over the land, which right was also extinguished under the Sale Deed.
The division bench of Justice Navin Chawla and Justice Manmohan held that in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in the second appeal. Adopting any other approach is not permissible. It has also been held that there is a difference between a question of law and a ‘substantial question of law’.
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The Central Board of Indirect taxes and Customs (CBIC) has notified the extension Validity of NOC issued for alcoholic beverages bottled in origin & in bulk under section 16 (5) of the Food Safety and Standards Act (FSS), 2006.
The Board has invited the reference to F. No. TIC-BO5/1/2021-imports-FSSAI dated November 09, 2021, issued by Food Safety and Standards Authority of India, New Delhi wherein it has been stated, “To further facilitate trade and ease of doing business reforms, it has been decided that for the imported consignments of alcoholic beverages bottled in origin & in bulk, containing more than 10 percent alcohol which does not have an expiry date, the NOC issued as per the FSS (Import) Regulations, 2017 shall have a validity of 300 days. For consignments lying at ports/Customs area beyond 300 days, on payment of visual inspection fee, a visual inspection may be carried out for revalidation of NOC.”
It is stated that for the imported consignments of Alcoholic Beverages Bottled in Origin & in Bulk, containing more than 10 percent alcohol which does not have an expiry date, the NOC issued as per the FSS (Import) Regulations, 2017 shall have a validity of 300 days. For consignments lying at ports customs area beyond 300 days, on payment of visual inspection fee, visual inspection may be carried out for revalidation of NOC.
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The Maharashtra Authority of Advance Ruling (AAR) ruled that the activity of collecting contributions, spending towards meeting, and administrative expenditures only, is ‘business’ under GST.
‘Rotary’ is an International organization engaged in humanitarian and charitable services and one of its member clubs is the applicant i.e. M/s. Rotary Club of Bombay Queen City. The applicant arranges meetings for its members and in order to defray its expenditure for such meetings, communications, and administration, fees are collected from members. No facilities/benefits are provided such as recreation, etc by the applicant. The applicant also sends fees to the International Institution in the USA for service activities and International administration. The applicant further sends fees to its District Clubs.
The applicant has sought the advance ruling on the issues of whether the activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only, is ‘business’ as envisaged u/s 2(17) of the CGST Act, 2017 and Whether contributions from the members in the Administration Account, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, within the meaning of supply.
The coram of members Ranjiv Magoo and T.R.Ramnani ruled that the activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only, is ‘business’ as envisaged u/s 2(17) of the CGST Act, 2017.
The AAR further ruled that contributions from the members in the Administration Account, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, within the meaning of supply.
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The Calcutta High court while quashing the penalty held that No evidence was produced by the Customs dept. to fix exporters with the attempt to export Contraband Goods.
The Directorate of Revenue Intelligence (DRI) issued a show-cause notice under Section 124 of the Act dated 15th March 2013. In the said show cause notice there are five noticees of whom the respondent, Ashoke Enamel & Glass Work was the first noticee. The allegation was that there was an attempt to export Red Sanders Wooden Logs which was foiled by the department and after investigation, the DRI issued show-cause notice. The proposal of the show cause notice against the respondent was as to whether Red Sanders Wooden Logs which are prohibited items should not be confiscated and whether penalty under Section 114 of the Act should not be imposed on the respondent as well as the other four co-noticees.
The appellant department proceeded against the respondent by assuming that the respondent should be held responsible for the contraband being stuffed inside the container. This aspect of the matter was considered by the Tribunal and it referred to various documents more particularly the Panchanama dated 19.09.2012 in which it has been specifically stated that the seal number as mentioned on the export documents was found securely fixed on the said container, intact and untampered. Thereafter, the container was opened in the presence of all concerned as mentioned in the Panchanama. Thus, at the earliest point of time, there was nothing to connect the respondent company with the presence of the contraband inside the container which was admittedly sealed in the factory premises by the jurisdiction Central Excise Officer.
The division bench of Justice T.S.Sivagnanam and Justice Hiranmay Bhattacharya held that Tribunal has re-examined the factual position and returned a finding based on documents that there is no evidence produced by the appellant department to fix the respondent/exporter with an attempt to export Red Sanders Wooden Logs.
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The Central Board of Indirect Taxes and Customs (CBIC) has issued the instructions on import of wireless equipment by Telecom Service Providers on the basis of self-declaration from November 15, 2021.
The CBIC has allowed the import of transmitting apparatus and of receiving apparatus incorporated in a single unit with transmitting apparatus, only by the persons who have been licensed to import such apparatus, by the Ministry of Telecommunications.
As a part of the Ease of Doing Business initiative, the Department of Telecommunications (DoT) vide OM dated October 21, 2021, has eased the manner of license processing for the import of wireless equipment by Telecom Service Providers. As per the modified procedure, importers shall apply to DoT thirty days prior to the arrival of shipment. On such applications, the license can be automatically generated on a self-declaration basis by the importer through a portal developed by DoT named Saralsanchar. The full procedure is prescribed by DoT.
Applicants shall submit all the relevant details on Saralsanchar Portal at least 30 days in advance from the date of destination port entry. Applicants can immediately download a system-generated certificate after online payment of fees of Rs. 500 and self-declaration.
For applications made within 30 days of the date of destination port entry, online fees of Rs. 5000 shall be payable. In such cases the completed application shall be authenticated by the Department. The applicant can download a system-generated certificate after 48 hours of application.
This certificate shall be accepted by the Customs authorities. In case of violation of any conditions mentioned in the self-declaration, the certificate generated will be cancelled and may entail appropriate action under applicable law.
“The said facility has been made available with effect from November 15, 2021. While integration with ICEGATE for transmission of WPC licences/approvals is underway, the Customs Officers can verify the authenticity of the certificate by scanning the QR code in the certificate to get an appropriate link to verify details of such certificate on Saralsanchar Portal,” the CBIC said.
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The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the Revocation of Customs Broker’s License on failure to produce KYC documents of exporter at any stage of inquiry.
The appellant, M/s Prabhu Shipping Systems is a licensed Customs Broker, is aggrieved by the Order-in-Original passed by the Commissioner of Customs, Chennai holding that the appellant had contravened Regulations 10(b), 10(d), 10(k), 10(n) and 13(12) of the Customs Brokers Licensing Regulations, 2018 and revoking the appellant’s licence under Regulation 14 read with Regulation 17. The security deposit furnished by the appellant was also forfeited and a penalty of Rs.50,000/- was also imposed upon the appellant under Regulation 18 of CBLR, 2018.
The appellant was licensed as Customs Broker by the Commissioner of Customs, Tuticorin but it also operated in Chennai and Mumbai Commissionerates under Form C procedure. Customs Brokers licensed by one Customs House can operate in other Customs Houses under this procedure. The appellant filed 33 shipping bills in the name of “M/s. Sunrise Enterprises, Ghaziabad” to export “Ratcheting spanner set and water saving aerator foam flow” declaring abnormally high price allegedly to claim excessive IGST refund. The CIU of Mumbai Customs detained the goods, recorded the statements of Shri Harichandra Pandurang Kadam, G-card holder of the appellant. They also recorded the statement of A. Prabhu, partner of appellant.
The appellant filed of shipping bills in the name of an exporter without even contacting the exporter and without verifying their KYC documents but by simply accepting the documents provided by Mr. Kohli who was neither the exporter nor an employee of Customs Broker nor the Customs Broker himself. The prices of the export goods were grossly overvalued with the intention to claim excessive IGST refund.
The coram headed by the President, Justice Dilip Gupta and Technical Member, P.V.Subba Rao while upholding the impugned order noted that the appellant had no idea who the exporter was. Its employee, Shri Kadam, also had no contact with the exporter. The appellant or its employee has not conducted any due diligence measures. They claimed to have obtained KYC documents through email but have failed to produce them either before the Inquiry officer or at any stage. The irresistible conclusion can only be that they have no such documents and also no idea of who the exporter was and simply filed a Shipping Bill heavily over-invoicing the goods.
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The Supreme Court has turned down the government’s plea to transfer cases relating to Income Tax reassessment notices sent from the High Court to the Supreme Court.
The three judge bench of Chief Justice NV Ramana, Justice Surya Kant and Justice Hima Kohli said “Is it a matter of convenience for the Union government to bring all matters to the Supreme Court? You want all the cases to come here and, in the process, you ensure no other court can proceed. Aren’t the high courts also constitutional courts?”
The additional solicitor general (ASG) Balbir Singh appearing for the central board of direct taxes (CBDT), had requested the Supreme Court to transfer to itself several hundreds of petitions pending before the high courts of Bombay and Calcutta on the validity of notices issued to several entities under the old provisions of Section 148 of the Income Tax Act, 1961. The ASG emphasised there are more than one lakh notices issued under Section 148 of the old Act.
Mr. Singh submitted that the high courts have stayed the revenue department’s notices in all these cases and that an authoritative ruling by the top court could help the situation since different high courts may end up laying down different judgments.
“You withdraw this and seek your remedies before the high court. We will not entertain it here. We will rather have the advantage of the high court judgment,” said the bench, compelling the ASG to withdraw the transfer petition.
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The Supreme Court will preside over the government’s plea in respect of the applicability of Income Tax on money earned from trading of carbon credits by Green Industries.
In the case in hand, Lanco Tanjore Thermal Power Company Ltd was saddled with a tax effect of Rs 567 lakhs for its earning from trading in carbon credits for the assessment year 2010-11. After the case meandered through the tax tribunals, the Madras High Court in February termed the earnings capital assets and ruled it was not liable for tax.
The Centre while challenging the decision of the High Court raised the issue whether the HC was justified in holding that the sale of carbon emission reduction, also known as carbon credits, is to be considered as capital receipts and not liable to taxation, without appreciating that carbon credit is revenue in nature as is obvious from Section 115BBG inserted in the Income Tax Act.
The division bench of Justice Sanjiv Khanna and Justice Bela M Trivedi said this would have a far reaching impact on the future industrial scenario given the rising clamour against global warming. Venkataraman said, “The issue could be-whether trading in carbon credits trading is part of the business activities of an industry? Today it may be capital assets but it may become a revenue asset as the carbon credits trading income could be classified as income from other sources.”
It was further added, “If you classify carbon credits trading as income from other sources, there could be a problem. If these are going to be treated as business assets, then the issue will arise in several cases.”
The bench didnot elaborate more as it issued notice to Lanco Tanjore Power Corporation Ltd, which was granted exemption from tax liability on income accrued to it by selling carbon credits to foreign firms.
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The Supreme Court held that the advocate losing the case on merits could not be termed as Deficiency in Service under the Consumer Protection Act.
The petitioner, Nandlal Lohariya filed three complaints before the District Forum through his three advocates against BSNL. All three complaints came to be dismissed by the District Forum on merits. That after the dismissal of the complaints, the petitioner herein filed a complaint against the three advocates who appeared on behalf of the petitioner in the aforesaid three complaints alleging deficiency in service on their part in contesting his cases before the District Forum.
It was alleged that all the three advocates have not performed their duties properly. The said complaints were also filed with a delay of 365 to 630 days. The petitioner herein claimed compensation of Rs.15 lakhs from the advocates alleging deficiency in service in contesting the three complaints which were dismissed. The said complaint filed against the three advocates came to be dismissed by the District Forum. The appeal preferred by the petitioner hereinbefore the State Commission also came to be dismissed, which was the subject matter of the revision petition before the National Commission. By the impugned judgment and order(s), the learned National Commission has dismissed the said revision petition, as also, the review application.
The division bench of Justice M.R. Shah and Justice B.V. Nagarathna said, “Only in a case where it is found that there was any deficiency in service by the advocate, there may be some case. In each and every case where a litigant has lost on merits and there is no negligence on the part of the advocates, it cannot be said that there was any deficiency in service by the advocates.”
The bench noted that if the submission advanced on behalf of the petitioner is accepted, in that case, in each and every case where a litigant has lost on merits and his case is dismissed, the person will approach the consumer fora and pray for compensation alleging deficiency in service.
“Losing the case on merits after the advocate argued the matter cannot be said to be a deficiency in service on the part of the advocate. In every litigation, either of the parties is bound to lose and in such a situation either of the parties who will lose in the litigation may approach the consumer fora for compensation alleging deficiency in service, which is not permissible at all,” it said.
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The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that deemed demutualization does not demonstrate legislative intention to tax specified transactions.
The Appellant, Kusum Healthcare Pvt Ltd is an ‘export-oriented unit (EOU) approved under the eponymous scheme in the Foreign Trade Policy for production and export of ‘pharmaceutical products and, in pursuit of its business strategy, has established representative offices at several places outside the country, as ‘cost centers’, dependent on the principal establishment in India for operational existence.
M/s Kusum Healthcare has preferred an appeal challenging OIO demanding tax on the finding that remittances made to their branches and offices abroad are ‘consideration’ for ‘taxable service’ procured from outside the taxable territory.
The appellant has pointed out that the orders, pertaining to the pre-‘negative list’ era, has held that the nature of the relationship of overseas branches with the principal office does not render their internal transactions amenable to coverage as ‘consideration’ merely by concatenation of financial flows and the clarification afforded by Explanation 1 in section 66A of Finance Act, 1994 without setting forth positive evidence of ‘taxable service’ having been rendered within the meaning of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006.
On the other hand, the department contended that the contents of the impugned order and pointed out that the transactions were taxable within the authority of section 66B of Finance Act, 1994 in accordance with the provisions of the relevant Rules framed for placement of performance of service within, or without, the ‘taxable territory’ in the ‘negative list’ regime.
The coram headed by the President, Justice Dilip Gupta, and Technical Member, C.J.Mathew has ruled that the Tribunal in the case of Milind Kulkarni has held that deeming provision in a statute is a temporary suspension of conventional wisdom and existing legislative formulation of a concept or situation for a specified purpose and that the graft so incorporated is intended to be applied in its entirety and within the intended context. It, then, went on to enunciate the purpose of deeming demutualization as a contrivance to assure that structuring of such dependent establishments would not provide an avenue for escapement, either overtly or covertly, from the enforcement of the levy on the ‘taxable event’; concomitantly, the deemed demutualization does not demonstrate legislative intent to tax transactions that are normal to such dependent existence.
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The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the pre-delivery and after sale service charges cannot be included in the assessable value of motor vehicles.
The department, earlier initiated the proceedings against the appellant-Company stating that the cost of Pre-delivery Inspection (PDI) and After Sale Service (ASS) charges required to be included in the assessable value of the motor vehicles sold by them to the dealers, when these charges/expenditure are incurred by the dealers from their profit margin.
While considering the appeal filed by the Company, Technical Member Mr. C J Mathew and Judicial Member Mr. Ramesh Nair found that the issue is no longer res integra as in the appellant’s own case this Tribunal vide Order No. A/87563- 87565/2018 dated 24.09.2018 decided the issue that the said charges cannot be included in the assessable value of the motor vehicles.
In the above order, the Tribunal held that PDI charges and free ASS charges would not be included in the assessable value under Section 4 of the Act for the purposes of paying excise duty.
“In view of the above ratio, the Pre Delivery Inspection (PDI) and After Sales Service (ASS) charges cannot be included in the assessable value of the motor vehicles. In the result, the assessee’s appeals are allowed and Revenue’s appeal is dismissed. From the above order of this Tribunal the issue stand settled in favour of the appellant. Accordingly, the impugned order is set aside and the appeal is allowed,” the Tribunal said.
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The Madras High Court while quashing the CBIC Circular in respect of fish meal used for making cattle / poultry / aquatic feed held that the CBIC is not empowered to issue clarification on GST rate.
The petitioner, Jenefa India, is a manufacturer of fish meal. The fish meal produced by the petitioner comes in powder form. The petitioner is registered under the Goods and Services Tax Department, within the jurisdiction of the third respondent and it is an assessee on the file of the officers subordinate and under the administrative control of the respondent.
Pursuant to the GST regime with effect from 01.07.2017, the Central Government issued two notifications called Notification No.1 of 2017 Central Tax (Rate) dated 28th June, 2017, in short “Notification No.1/17”, and Notification No.2 of 2017, Central Tax (Rate) dated 28th June 2017, in short would be called as “Notification No.2/17”.
In Notification No.1/17, the Rate of Tax (Schedules) for specified goods under CGST under these schedules ie., Schedule I to VI have been provided. This notification and Notification No. 2/17 were issued by the Central Government in exercise of their powers conferred by Sub-Section 1 of Section 9 & 11, respectively, of the Central Goods and Services Tax Act, 2017
Under Notification No.1/17, for goods specified in the first Schedule, the rate of tax has been fixed as 2.5% for Central share that means totally, 5%. Like that, in second Schedule goods, it is 6% ie., 12% in total. In the third Schedule, it is 9% ie., 18% in total. In the fourth Schedule, it is 14% ie., 28% in total. Like that, in the fifth Schedule, it is 1.5% ie., 3% in total. In 6th Schedule goods, it is 0.125%, ie., 0.250% in total.
By virtue of this Circular having been issued by the Board, the revenue has taken a stand that, the product of the petitioners ie., fish meal, since is also to be used as a raw material for the purpose of making cattle / poultry / aquatic feed, which is not exempted, therefore, tax are to be levied on these items at the rate of 5% and accordingly, they inspected the premises of the petitioners’ factories and demanded the tax and pursuant to which, the concerned officials of the Revenue ie., from Directorate General of GST Intelligence [DGGI] had issued summons that, there would be an enquiry proceedings conducted in the name of judicial proceedings within the meaning of Section 193 and Section 228 of the Indian Penal Code. Therefore, they should appear before the officer concerned of the DGGI ie., Directorate General of GST Intelligence.
Mr.Joseph Prabakar, Counsel appearing for the petitioners, has taken this Court extensively to the relevant entries made in Customs Tariff Act, 1975, to explain that, even from the year 1997-98, entries 2301 & 2309 were available in the Customs Tariff Act and it has never underwent any change for all these years despite the said Act especially the Schedule underwent various amendments over a period of time.
The single judge bench of Justice R. Suresh Kumar held that the impugned Circular insofar as Clause (ii) of the same, namely, fish meal and other raw materials used for making cattle / poultry / aquatic feed is concerned, is unsustainable and therefore, insofar as the said product is concerned, whatever the clarification issued in the impugned Circular dated 31.12.2018 is set aside. As a sequel, the petitioners, so long as they make a finished product from their manufacturing units, can enjoy the benefit of exemption as provided under Sl.No.102 of Exemption Notification No.2/17 dated 28.06.2017. Therefore, all consequential actions, if any taken on the part of the Revenue against the petitioners pursuant to the impugned Circular, would not stand in the legal scrutiny. Therefore, they are also declared to be invalid.
“No such attempt since has been made either by the Parliament or by the Central Government, by issuing a mere Circular exercising the powers under Section 168 of the CGST Act, 2017, such kind of right already vested, to get exemption, on the assessee, cannot be taken away by way of a clarificatory Circular, that too issued only to the benefit of the officials and staff of the department, as culled out from the language used in Section 168 of the Act. Therefore, for that reason also this Court feels that the impugned Circular would not stand in the legal scrutiny,” the court noted.
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The Manipur High Court granted anticipatory bail to Former Manipur Chief Minister Ibobi Singh in a money laundering case.
The bail plea was filed on the basis of a report on November 12 that the ED is likely to register a case against Okram Ibobi under the Prevent of Money Laundering Act. It was also reported that a similar case is likely to be taken up against former Project Director of Manipur Development Society (MDS) Y Ningthem, former Chief Secretaries DS Poonia, PC Lawmkunga and O Nabakishore. The ED reportedly sought documents from the Central Bureau of Investigation (CBI).
The CBI registered a case on November 20, 2019 against Okram Ibobi Singh, who was the Chairman of MDS, three former Project Directors and an Administrative officer of the MDS under IPC and PC Act under the request of the Manipur Government.
It was alleged that, Singh, while working as Chairman of MDS from June 30, 2009 to July 6, 2017, in conspiracy with others, misappropriated Government funds to the tune of Rs. 332 crore out of the total amount of Rs. 518 crore which was entrusted to them for the purpose of executing development work in Manipur.
The same month, in connection with the case, the CBI also conducted simultaneous raids at 9 locations including Aizawl, Imphal, Gurgaon. During the search, the agency recovered Rs. 15.47 lakh in cash, Rs. 36.49 lakhs demonitised currency, incriminating documents among others.
The single judge bench of Justice M.V. Muralidaran allowed the application and granted the petitioner anticipatory bail in connection with the respondent investigation.
However, the court imposed conditions to execute a personal bond for Rs.1,00,000 with two sureties for the like sum to the satisfaction of the respondent Directorate of Enforcement.
Subscribe Taxscan Premium to view the JudgmentThe Goods and Service Tax Network (GSTN) enabled two new features on the GST Portal where the taxpayers can now get auto populated GSTR-3B statements on a monthly basis and a useful facility of “Communication between Taxpayers”. These two new features are introduced with an aim to make the portal user-friendly.
The steps to access the facility on the GST portal is to click on the ‘services’, then click on user ‘user services’ and then a dialogue box will appear and then select on ‘communication between taxpayers’.
This facility will enable security as GST data will travel end-to-end without the involvement of a third-party; better experience; convenient and scalability.
To further ease the process, the GSTN has also updated a complete auto-populated GSTR-3B for Nov 2020.
“A complete auto-populated GSTR-3B for Nov 2020 tax-period is available now for monthly filers,” GSTN tweeted last day.
A two-judge bench of the Madras High Court has denied the benefit of exemption of urban land tax to Chennai Port Trust under the provisions of the Tamil Nadu Urban Land Tax Act of 1996.
While considering an appeal filed by the State, Chief Justice Amreshwar Pratap Sahi and Justice Senthilkumar Ramamoorthy ruled that the CPT had failed to establish that it was entitled to exemption granted, under Section 29 (a) of the Act, to lands owned by the State government or the Centre.
Earlier, the first Division Bench overturned a ruling passed by a single judge of the High Court last year in favour of the CPT.
The land in question was originally owned by the Madras Dock Labour Board (MDLB), a body corporate constituted under Section 5-A of the Dock Workers (Regulation of Employment) Act of 1948. In 1998, MDLB was later merged with the Chennai Port Trust.
After the merger, all assets and funds of the MDLB were vested with the Board of Trustees of the CPT, which refused to pay urban land tax on the ground that both the entities were fully controlled by the Centre, and hence the land technically belonged to the latter.
Rejecting the contention, the first Division Bench pointed out that the MDLB was a body corporate empowered to own lands and it had been paying urban land tax before its merger without claiming that the lands were owned by the Centre.
“Upon examining Section 29(a) of the Urban Land Tax Act, we find that it undoubtedly applies to lands owned by the Central or State Government. The learned counsel for the Respondent did not produce any evidence to prove that the Lands were owned by the Central Government and that the Madras Dock Labour Board was only the ostensible owner. Indeed, the evidence on record indicates that the Madras Dock Labour Board was both the ostensible and real owner. The other factor to be borne in mind is that the Lands were assessed to urban land tax and that the Madras Dock Labour Board paid urban land tax as and when demanded. Moreover, the learned Government Pleader cited the Board Circular dated 30.06.1976 whereby it was expressly provided that lands owned by the Madras Port Trust would not be eligible for the exemption under Section 29(a). In light of the above conclusion that there is no evidence of ownership by the Central Government, Article 285 of the Constitution does not come to the aid of the Respondent,” the bench said.
Subscribe Taxscan Premium to view the JudgmentThe Delhi Government notified the reconstitution of the State level Screening Committee on Anti-Profiteering.
The Lieutenant Governor of the National Capital Territory of Delhi reconstituted the Delhi State level Screening Committee on Anti-Profiteering.
The Government notifies Additional/Joint Commissioner, CGST & CX, Delhi Audit-I Officer of the Central Government nominated by the Principal Chief Commissioner, Delhi Zone and Special Commissioner (Law & Judicial), GST Officer of the State Government nominated by the Commissioner State Tax as the members of the committee.
Subscribe Taxscan Premium to view the JudgmentThe Patiala House Court accepted the bail plea of a person accused of wrongfully availing Input Tax Credit (ITC).
The applicant, Kabir Kumar alleged to have created around 31 firms using different person identities for the sole purpose of issuing fake bills without supplying goods and thereby passing on fraudulent input tax credit.
The modus operandi was that bills were issued to various firms without supply of goods on commission basis. He admitted that no movement of actual goods has been done and the invoices generated by them.
The accused also managed the payment of these 31 fake firms which was received from various recipients in the individual accounts of these fake firms which he transferred through RTGS to multiple firms who intum purchase gift cards from banks.
The gift cards were sold to local markets in cash through dealers after deducting commission of around 3-4% cash was sent to firms. Thereafter, he used to generate Inward and Outward E-way bills in respect of the said firms but there was no movement of vehicles and all Eway bills were forged.
The accused filed GSTR-1 & GSTR-3B in respect of the said firms and operated all bank accounts of 31 firms and earned 2 to 3% commission on issuing fake bills without supply of goods. It is submitted that the accused accepted a total fraudulent ITC of Rs. 392.37 Crores have been passed on by him to various firms allocated in India.
The Chief Metropolitan Magistrate, Panjkaj Sharma noted that the investigating agency is having the possession of all the documentary evidence collected so for and all other relevant material which is in the form of stamps, cheque books, debit cards, digital signatures and other material like invoices which they can scrutinize and for such scrutiny which is time consuming the further detention without any justification seems to be unreasonable.
Accordingly in the considered view of this Court, the accused is entitled for bail subject to furnishing PB/SB in the sum of Rs. 5 lakhs with one surety in the like amount subject to various conditions.
Firstly, the accused shall join the investigation as and when directed by the investigating agency
Secondly, the accused shall not tamper with the evidence or influence the witnesses which will be examined by the department during investigation.
Thirdly, accused shall not leave the country without the permission of the permission of the Court
Fourthly, the accused shall not indulge in similar offence in future.
Lastly, accused shall appear before the Court on each and every date of hearing.
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