The City Court of Egmore, Chennai found the CA and former Madras Race Club Staff guilty of tax fraud and sentenced 4 years of imprisonment, after 35 years of long trial.
The case arose out of a complaint been filed by the complainant, the Chief Commissioner of Income Tax (Administration) and Commissioner of Income Tax at the instance of the Commissioners of Income Tax of wages Division in Tamilnadu, Bombay, and Trivandrum, in whose Jurisdiction the offence under the Income Tax Act have been committed.
The specific case of the prosecution is the Horse race and intervenue races could be held by Madras Race club at Madras and Ooty and the Jackpot winners would be paid at a deduction of TDS.
Initially, a temporary T.D.S certificate will be issued to the winner and subsequent remittance in the Central Government Account, original TDS certificate would be sent through Registered Post with acknowledgment due by entering the particulars in a register maintained in this regard. In case the TDS certificate is lost an application has to be made for issuance of the duplicate certificate to the Jackpot winners.
The accused Mohnot, the Chartered Accountant along with other accused entered into a conspiracy between January 1979 to June 1981 and obtained duplicate as well as original TDS certificates from the Madras Race Club with the aid of other accused and also with the aid of other accused have created false, fake and fabricated documents and had filed return of income to several Jackpot winners with false statements and declaration before various Income Tax officers in Tamilnadu, Trivandrum and Bombay and also cheated them by personation.
The officials were deceived and induced to pass assessment orders granting a refund. Search warrants were issued by the Commissioner of Income Tax to search residential and official premises of the CA and the Bank Locker of another accused for which he was the ostensible agent.
Several incriminating documents were seized during the search. It is the further case of the prosecution that the CA on the strength of duplicate TDS and in some cases with original TDS conspired with other accused and had filed return of income in the name of jackpot winners/assessee by forging the signatures and fabricating documents creating bogus firms, fake certificates, filing an affidavit and represented before the Income Tax officials with the fake Power of Authority and deceived the officials by cheating them induce them to past assessment orders and in several cases got refund orders which were encashed by creating spurious accounts in various Banks with fictitious address and thereby impersonating depositors. The Additional Chief Metropolitan Magistrate (E.O.I), Egmore, Chennai found the CA, Mohnot, and other accused Sundarraj guilty for the commission of offence under section 277 of Income Tax Act read with Section 120 (b) of IPC and Sentenced him to undergone rigorous imprisonment for 4 years each and shall pay a fine of Rs. 1,00,000 each and in default to undergo imprisonment for 3 months each.
Subscribe Taxscan Premium to view the JudgmentThe Goods and Services Tax Network ( GSTN ) has directed to ignore prompt on Liability for Inward Supplies attracting Reverse Charge in Table-3.1 (d).
In a Statement issued by GSTN said that, the system has started providing auto-populated GSTR-3B on the basis of GSTR-1 & GSTR-2B from the tax period of November 2020 onwards. In this auto-populated GSTR-3B, liability on account of inward supplies attracting reverse charge auto-populated in Table-3.1(d) is also drawn from GSTR-2B of the taxpayer for the said tax period. The values in GSTR 2B are auto populated from the GSTR-1 of the counter-parties making the supply.
It is noticed that the system is giving alert when the taxpayer revises the auto-populated values upward by 10% in table 3.1(d) which pertains to inward supplies attracting reverse charge. This alert is erroneous. The technical team is working to resolve the same at the earliest.
Meanwhile, the taxpayers may kindly continue to declare their correct liability in Table-3.1(d) pertaining to liability on inward supplies attracting reverse charge and proceed to file GSTR-3B.
The Kerala High Court while dismissing the review petition held that the penalty under State Goods and Service Tax (SGST) can not be imposed in case of Interstate Transaction.
The State filed the Review Petition seeking to review the judgment, which considered the legality of the detention of a consignment of goods at Muthanga, Wynad, during the course of interstate transportation.
The Court, taking note of the fact that the consignment was not covered by a valid delivery challan that was one of the prescribed documents for transportation of exempted goods, found that the detention was justified.
It was, however, held that the petitioner would only have to pay the lessor of an amount equal to 5% of the value of the goods or Rs.25,000/-, in terms of Section 129 (1)(b) of the CGST Act for obtaining a release of the goods and the vehicle.
The Counsel for the state, Dr. Thushara James contended that once it was found that the detention was justified, it was incumbent upon the petitioner to pay not only the amount of Rs.25,000/- in terms of Section 129(1)(b) of the CGST Act but also a similar amount under Section 129(1)(b) of the SGST Act since the tax payment under the IGST Act included components of the tax payable under both the CGST and SGST Acts.
The issue raised was whether the 4th proviso would be attracted to the detention that was the subject matter of the Writ Petition more so when the transportation involved was of exempted goods.
The Single Judge Bench of Justice A.K. Jayasankaran Nambiar clarified that when exempted goods are transported interstate, in contravention of the provisions of the CGST Act, the goods and the conveyance used for transportation are liable to detention and can be released on payment of an amount equal to 5% of the value of the goods or 25,000 rupees whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty.
The court while dismissing the review petition reiterated that the only amount to which the writ petitioner was liable was the amount equal to 5% of the value of the goods or 25000 rupees whichever was less as mandated under Section 129(1)(b) of the CGST Act. “The liability of a person, who is not the owner of the goods, and who has transported exempted goods in contravention of the IGST Act, can only be in an amount equal to 5% of the value of the goods or 25000 rupees whichever is less, as specified under the CGST Act. He cannot be further mulcted with a similar amount under the SGST Act since the provisions of tax and penalty under the SGST Act are not attracted to the inter-state transaction of exempted goods covered by the IGST Act,” the court said.
Subscribe Taxscan Premium to view the JudgmentThe profiteering watchdog, National Anti-Profiteering Authority (NAA) dismissed the application alleging profiteering against Signature Global.
An application has been filed under Rule 128 of the CGST Rules, 2017 alleging profiteering by the Respondent, Signature Global (India) Pvt. Ltd. in respect of the supply of purchase of Flat in Respondent’s real estate project “The Millenia 37D” situated at Sector-37D, Gurugram, Haryana.
The DGAP has reported that it has been alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in the price of his residential unit and that GST had been charged on the amounts due to him against payments to be made by the applicant to the Respondent.
The NAA headed by the Chairman, Dr. B.N.Sharma noted that the Applicant could have availed the ITC benefit only if the project was under execution before coming in to force of the GST as the Respondent would have been eligible to avail ITC on the purchase of goods and services after July 1, 2017 on which he was not entitled to do so before the above date.
“Since there is no basis for comparison of ITC available before and after July 1, 2017, the Respondent was not required to recalibrate the price of the flat due to the additional benefit of ITC. Hence, the allegations of the Applicant made on this behalf are incorrect and therefore, the same cannot be accepted,” the Authority said.
Therefore, the NAA while dismissing the application held that since there had been no reduction in the rate of tax or benefit of additional ITC to the Respondent the provisions of Section 171 are not attracted in the present case and the allegation of profiteering is not established against the Respondent.
Subscribe Taxscan Premium to view the JudgmentThe Calcutta High Court has issued the notices to the Central and State Government over Input Tax Credit (ITC) Effect of GSTR-1 Return Subject to 10% ITC for Purchase.
The petitioner, LGW Industries Limited has challenged the constitutional validity and vires of Rule 36(4) of the CGST Rules/WBGST Rules and Section 43A(4) of the CGST Act/WBGST Act.
The Rule 36(4) of the CGST Rules/WBGST Rules drawing its power from Section 43A(4) of the CGST Act/WBGST Act, which is yet to be notified, restricts ITC available to a buyer of goods or services to a maximum of 10% on the basis of the details of outward supplies furnished by the supplier of goods or services on the common portal i.e. filing of GSTR 1 return by the supplier.
The Counsel for the petitioner, Advocate Vinay Shraff with Advocate Himangshu Ray on the ground that Section 43A(4) and Rule 36(4) puts an onerous and impossible burden on the buyer of goods and services to somehow ensure that the supplier of goods or services does in fact uploads the details of outward supplies on the common portal and if the supplier fails to do so, it undergoes the risk of being denied the benefit of ITC.
This is violative of Article 14 of the Constitution inasmuch as it treats both the innocent purchasers and the guilty purchasers alike. Restricting the benefit of ITC to a bona fide purchaser, only because of the default of the supplier or services to upload the details of outward supplies on the common portal, over which it has no control whatsoever, is arbitrary and irrational, Mr. Shraff added.
The petitioner further contended that this will discourage business entities to make purchases from a small and medium supplier of goods or services.
It therefore creates hostile discrimination against all such SME business enterprises that files their return on a quarterly basis and therefore violates Article 14 of the Constitution of India.
It adversely impacts their supply chain management, bargaining power etc. and consequently severely impacts their ability to continue business and therefore violates Article 19(1)(g) of the Constitution.
The ITC availed after satisfying the conditions of Section 16 of the Act is property of the taxpayer and therefore keeping ITC in suspended animation causes the deprivation of the petitioner’s enjoyment of the property and therefore, it violates Article 300A of the Constitution of India.
The single-judge bench of Justice Shekhar B. Saraf, has issued notice to the Central and State Government to file its affidavit-in-opposition within four weeks, reply thereto, if any, two weeks thereafter.
Subscribe Taxscan Premium to view the JudgmentThe Goods and Service Tax Network (GSTN) has enabled the new facility of “Communication between Taxpayers” on the GST portal.
After the introduction of this facility, the supplier and recipient can directly communicate with each other on GST Portal itself. They can also give a reply to communication received on the portal.
The GSTN has given this facility taking care of the requirement that the communication forms a significant part of GST as Input Tax Credit (ITC) in GST which is an important element is invoice based. In case there is some error in the invoice, that has to be immediately rectified so as to enable the buyer to take ITC.
The new facility will make communication easy; bring transparency in the system; help in the matching of invoices and avoid complications of Goods and Service Tax Framework.
This facility helps the taxpayer to raise questions related to Tax Invoices, Debit Note, Credit Note, Missing Document, Amendment of Filed Document, or any other issue. A taxpayer can raise questions both as a buyer or supplier of goods or services.
The Gujarat High Court issued the notices to the Central and State over blocking of Input Tax Credit (ITC) under Rule 86A.
The petitioner, Surat Mercantile Association has filed a petition challenging the constitutional validity and vires of Rule 86A of the Central GST Rules and the Gujarat GST Rules.
Rule 86A of the GST Rules has given unbridled power to a GST officer to block input tax credit in electronic credit ledger maintained on GSTN portal without giving any notice or intimation to the taxpayer, if the concerned GST officer has reason to believe that input tax available in the electronic credit has been fraudulently availed or is ineligible.
Electronic credit ledger of a buyer of goods or services of an honest business entity is getting blocked even if it is not at fault.
The Counsel for the petitioner Vinay Sharaff Parth S Shah contended that Rule 86A of the Rules which allows unilaterally blocking the electronic credit ledger without issue of Show Cause Notice and without giving an opportunity of fair hearing is in violation of principles of natural justice.
“Rule 86A of the Rules is a draconian, arbitrary, irrational and unduly harsh provision and therefore violative of article 14 of the Constitution of India. Rule 86A of the Rules ultra virus the Section 74 of the Act in as much as Section 74 of the Act mandates issue of show cause notice for demand of ineligible or fraudulently availed input tax credit,” the counsel for the petition said.
It was further submitted that Rule 86A of the Rules also ultra-virus Section 75(4) of the Act which mandates grant of an opportunity of hearing where any adverse decision is contemplated against a taxpayer. Rule 86A of the Rules also seeks to circumvent the right of appeal to the extent that such right can be exercised upon payment of 10% of the disputed amount under section 107 of the Act. The division bench headed by Chief Justice Vikram Nath and Justice J.B. Pardiwala issued notice to the Central and State Government to submit its response by 21st January 2021.
Subscribe Taxscan Premium to view the JudgmentThe Government has canceled the Goods and Service Tax (GST) registration of 163,000 business entities who have not filed monthly tax returns (GSTR-3B) for the last six months or more.
Furthermore, the department would persuade 25,000 taxpayers, who have not filed returns for October that was due by November 24, to comply with tax return deadlines.
“All these business entities, who had not filed their GSTR-3B returns for more than six months, were first issued the cancellation notices and then their registrations were cancelled as per standard operating procedure,” one of the officials said.
The Tax officers have been directed to follow up personally with these defaulting taxpayers so that their GSTR-3B returns due for the month are filed by November 30.
The push for better compliance comes on the heels of the tax department’s nationwide drive against fake invoice scams. It is suspected that fraudsters often register firms under GST but remain mostly dormant on compliance while using the status to claim invalid input tax credit (ITC).
As per the sources, in the Ahmedabad zone 11,048 GST registrations have been cancelled.
In the Chennai zone, 19,586 suo motu cancellations have been done so far in respect of GST taxpayers who have failed to file returns for more than six months. The officials said that the tax authority is also scanning newly registered entities that have not provided correct details at the time of registration. Out of 720 deemed registrations granted between August 21 and November 16 this year, where Aadhaar authentication was not done, 55 deemed registrations have been identified for the discrepancy and the process of cancellation was initiated in these cases.
Furthermore, the department would persuade 25,000 taxpayers, who have not filed returns for October that was due by November 24, to comply with tax return deadlines.
“All these business entities, who had not filed their GSTR-3B returns for more than six months, were first issued the cancellation notices and then their registrations were cancelled as per standard operating procedure,” one of the officials said.
The Tax officers have been directed to follow up personally with these defaulting taxpayers so that their GSTR-3B returns due for the month are filed by November 30.
The push for better compliance comes on the heels of the tax department’s nationwide drive against fake invoice scams. It is suspected that fraudsters often register firms under GST but remain mostly dormant on compliance while using the status to claim an invalid input tax credit (ITC).
As per the sources, in Ahmedabad zone 11,048 GST registrations have been cancelled.
In Chennai zone, 19,586 suo motu cancellations have been done so far in respect of GST taxpayers who have failed to file returns for more than six months. The officials said that the tax authority is also scanning newly registered entities that have not provided correct details at the time of registration. Out of 720 deemed registrations granted between August 21 and November 16 this year, where Aadhaar authentication was not done, 55 deemed registrations have been identified for the discrepancy and the process of cancellation was initiated in these cases.
The Special Judge for CBI Cases, Bangalore has sentenced Shri Srinivas Prasad then Superintendent of Customs to undergo four years simple imprisonment with a fine of Rs.30,000/- and Shri Lourdu Prabhu then Hawaldar to undergo four years simple imprisonment with a fine of Rs.15,000/- in a bribery case.
CBI had registered a case on 13.10.2015 against Shri Srinivas Prasad, Superintendent of Customs, and Shri Lourdu Prabhu Hawaldar both posted in the office of Commissioner of Customs, Devanahalli, Bangalore. It was alleged that both accused had demanded and accepted the bribe of Rs.50,000/- from a passenger for the release of his baggage containing laptops brought by him from Singapore. Both the accused were arrested. After investigation, a charge sheet was filed on 30.12.2015 against them.
The Trial Court found the accused guilty and convicted them.
The Madras High Court quashed the Income Tax Proceedings Against former Finance Minister, P Chidambaram’s son, Karti Chidambaram, and his Wife, Srinidhi Chidambaram over Non-disclosure of Cash Transactions.
The prosecution case was that Karti, the Congress Member of Parliament, representing Sivaganga, and his wife Srinidhi received Rs.6.38 crore and Rs.1.35 crore in cash, respectively, through the sale of land owned by them near Muttukadu.
However, they had neither disclosed the same in their assessment nor paid taxes for the income.
The Income Tax department initiated criminal prosecution for alleged non-disclosure of income by them to the tune of Rs.7.73 crore for 2015-16 fiscal.
Challenging the same, the petitioners contended that the prosecution is liable to be quashed for procedural lapse.
They argued that the prosecution has been initiated for filing of false return, which amounts to offence of giving false evidence before a court under the Indian Penal Code.
As per the Income Tax Act, the proceedings of the assessing officer are deemed to be that of a proceeding of a civil court and therefore, only the assessing officer should have initiated the prosecution.
But in this case, a deputy director of investigation of the department has initiated the prosecution, they claimed.
The Single Judge Bench of Justice N Sathish Kumar while Granting liberty to the department to initiate penal action as per law, if it chooses to, said that the prosecution launched by the Deputy Director is not maintainable and is premature one. “If the assessing officer comes to the conclusion in proceedings under Section 153 of the Income Tax Act, it is open to the Department to initiate penal action as per law,” the court said.
Subscribe Taxscan Premium to view the JudgmentThe Central Goods and Services Tax, Mumbai West, Investigation team has arrested Chartered Accountant Mr. Chandraprakash Pandey, Partner of M/s. C.P. Pandey & Associates. He was arrested on account of indulging in circular trading by way of issuing fake invoices, availing and passing on fraudulent Input Tax Credit ( ITC ) involving GST of Rs 10.63 Crores (approx.) on turnover of Rs. 59.10crores (approx.)
On the basis of specific intelligence gathered by the GST Officials of Investigation Wing, Mumbai West Commissionerate, investigation was conducted revealing that Mr. C.P. Pandey, CA & Partner have created numerous companies in the name of his family members which were indulging in issuance of invoices without any actual supply of goods/services. Also was enabling other companies to avail ITC on invoices for which no goods/services were supplied, in violation of provisions of the CGST Act, 2017.
This modus operandi enabled buyers/other companies to avail inadmissible ITC thereby causing loss to the government exchequer and also to inflate the turnover in these companies enabling them to obtain bank loans. These transactions are nothing but paper transactions with no actual supply of goods, which in commercial parlance is circular trading.
The preliminary investigation has unveiled a network of around 50 firms registered in the same premises and involved in fraudulent activity of circular trading.
Mr. C.P. Pandey, was arrested on 10th December, 2020 and produced before the Magistrate Court, Mumbai on 11th December, 2020, wherein he was remanded to judicial custody for14 days. Further investigation is in progress.
The Central Board of Indirect Taxes ( CBIC ) has enabled the GST Annual Return ( GSTR-9 ) of Financial Year 2019-20 on the GST Portal.
A statement issued by CBIC said that, Facility to file an annual return in Form GSTR-9 for FY 2019-20 is now available. The Form is enabled for taxpayers whose table 8A computation has been completed. Computation of table 8A of the said return for auto-population from returns is in progress which is likely to be completed soon. Please ensure that all applicable returns of the said year have been filed before attempting to file the said return.
GSTR-9 is an annual return to be filed yearly by taxpayers registered under GST. It consists of details regarding the outward and inward supplies made/received during the relevant previous year under different tax heads i.e. CGST, SGST & IGST and HSN codes. Basically, it is a consolidation of all the monthly/quarterly returns (GSTR-1, GSTR-2A, GSTR-3B) filed in that year. Though complex, this return helps in extensive reconciliation of data for 100% transparent disclosures.
The late fees for not filing the GSTR 9 within the due date is Rs 100 per day, per act. That means late fees of Rs 100 under CGST & Rs 100 under SGST will be applicable in case of delay. Thus, the total liability is Rs 200 per day of default. This is subject to a maximum of 0.25% of the taxpayer’s turnover in the relevant state or union territory. However, there is no late fee on IGST yet.
It may be noted that filing of Annual Return (FORM GSTR-9/ GSTR-9A) for 2018-19 is optional for taxpayers who had aggregate turnover below Rs. 2 Crore. The filing of reconciliation Statement in FORM 9C for 2018-19 is also optional for the taxpayers having aggregate turnover upto Rs. 5 Crore.
The Income Tax Appellate Tribunal (ITAT), bangalore confirmed the disallowance of advertisement expenses relating to the construction of the swimming pool.
The AO noticed that the assessee firm, Himalaya Drug Company has contributed a sum of Rs.99.66 lakhs to a School named M/s Mallya Aditi International school, Yelahanka, Bangalore for the purpose of construction of a swimming pool in that school.
The assessee claimed the payment as advertisement expenditure. In support of the said claim, it was submitted that the “name of the assessee company” is displayed near the swimming pool and hence the same would promote the brand of the assessee company.
It was submitted that over 500 children study in that school. Apart from them, parents of the children also visit School and the alumni of the school hold events etc., who will happen to see the advertisement Board.
Accordingly, it was submitted that the assessee’s brand would get promoted in this process. It was claimed that the above said contribution is in the nature of advertisement expenditure only.
The AO however, noticed that the children of Mr.Meeraj Alim Manal had studied in the school and the children of Ms. Lubna Manal, daughter of Shri Meeraj Alim Manal (i.e., grand children of Mr. Meeraj Alim Manal) continues to study in this school.
Hence, the AO took the view that the contribution for the construction of the swimming pool was made by Mr. Meeraj Manal on account of his personal gestures only and hence it is clearly in the nature of personal expenditure. i.e., there is no commercial consideration involved in it. Accordingly, the AO disallowed the above said claim of Rs.99.66 lakhs. The DRP upheld the view so taken by the AO.
The coram headed by President N.V. Vasudevan noticed that the main objective of making a contribution to the school was on account of personal consideration & gesture of the ultimate owner of the assessee firm and no commercial consideration relating to the assessee herein was attached thereto. Therefore, the ITAT held that the AO was justified in treating the expenditure as not related to the business activity carried on by the assessee. Accordingly, confirmed the disallowance made by the AO.
Subscribe Taxscan Premium to view the JudgmentThe Directorate General of GST Intelligence ( DGGI ) of Nagpur has busted the Fictitious transactions racket of Rs. 290.70 Crore.
As a follow-up of the detection of a non-existent Advertising Firm in Dhule which had availed and passed on fake ITC, searches were conducted at the premises of a Mumbai based Private Limited CompanyM/s M& M Advisors & Consultants Private Limited and at the residences of its Director and Chartered Accountants. This Company was registered for Licensing services for the right to broadcast and show Movies.
The searches uncovered a number of documents, the examination of which revealed that the Company was engaged in Licencing of Movie Rights of Film Production Houses for broadcasting on National and International Channels and had declared itself to be the Sole Rights Holder of Movies produced by big Production houses. The Company was purchasing the rights of Movies produced by the top Banners and was transferring these rights under Contract system to Rights Assignors, who was availing Input tax Credit.
Preliminary scrutiny of the documents revealed that this Company had undertaken fraudulent transactions of Rs. 290.70 Crore and had passed on fake Input tax Credit of Rs. 25.22 Crore to Rights Assignors, the ultimate beneficiaries.
During investigations, the Rights Assignors paid the entire Input Tax Credit of Rs. 25,22,62,786/- in Cash, which was the Input tax Credit passed on by this Company.
The Director of the Company Shri Pradeep Ashok Malankar who on inquiries with the Ministry of Corporate Affairs was found to be the Director of 3 more Companies, was arrested on 5th December, 2020 and has been remanded to Judicial Custody by the Hon’ble Court till 18th December, 2020.
The Delhi High Court will hear more than 50 petitions challenging the constitutional validity of anti-profiteering regulations in absence of any methodology to calculate profiteering under the Goods and Services Tax (GST) law.
The companies that dragged the indirect-tax department to court over anti-profiteering provisions under GST included Hindustan Unilever, Jubilant Foodworks, Abbott, Nestle, Whirlpool, IFB, Johnson & Johnson (J&J), etc.
The court would also look at the legality and interpretation of Section 171 CGST Act.
As per Section 171 of the CGST Act 2017, suppliers of goods and services should pass the benefit of any reduction in the rate of tax or the benefit of input tax credit to the recipients by way of commensurate reduction in prices.
The petitioners have raised multiple issues related to the anti-profiteering. In an earlier hearing, the High Court had asked the lawyers of the petitioners to arrive at a consensus on the issues to be heard by the court. However, the petitioners could not arrive at a consensus and their lawyers submitted that there are around 48 issues that need resolution by the court.
It is said that there are tremendous ramifications be it the methodology or procedure being used by the NAA, which does not have an economic basis. The court will also look into, apart from other rules, the legality of powers given to the National Anti-profiteering Authority to determine the methodology and procedure for a determination as to whether the reduction in the rate of tax on the supply of goods or services or the benefit of the input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices.
The Directorate General of GST Intelligence ( DGGI ), Visakhapatnam Zonal unit has recently busted a major input tax credit (ITC) racket where a 28-year-old Chartered Accountant based at Guntur was arrested for leading the racket.
Reportedly, the CA was involved in issuing fake GST invoices to the tune of ₹30 crore, fraudulently using 14 GST registered firms, to various infra companies located in Andhra Pradesh and Telangana from which he earned commission from the recipient entities of such fake invoices without the knowledge of the proprietors of those businesses.
Reports says that various firms, mostly created with fictitious addresses in and around Guntur, were identified and simultaneous searches carried out at several locations in Andhra Pradesh.
The department found that the Chartered Accountant passed on a fake credit of approx.. 7.5 crore rupees so far to various infra companies in the two States.
Further Investigation is under way. Recently, the DGGI has intensified its efforts to curb ITC frauds which lead to a lot of evasion of taxes. Since November, 11 cases were booked following detection of 51 such dummy/non-existent GST registrations responsible for transactions to the tune of ₹440 crore involving duty evasion of ₹38 crore. Three persons have also been arrested in these cases.
The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), in a recent order granting partial relief to Ford India, held that the order of the customs department denying concessional rate of duty to the Company on the import of “catalytic converter” was without logic and the same to be reconsidered.
The Company imported catalytic converter assembly and claimed the benefit of concessional rate of duty extended vide Sl. No. 265 of the impugned Notification.
According to the department, the benefit of concessional rate of duty is given vide the impugned Notification to an individual item, i.e., “catalytic converter” per se; that the imported goods in question are more than “catalytic converter” and hence, the denial of concessional rate of duty was correctly made.
The Tribunal observed that as per the impugned Notification, the concessional rate of duty is for a particular item/goods; a perusal of the Bills-of-Entry placed along with the Appeal Memorandum reflects “piece price” for the relevant item under ‘description’ column which would only mean that the price charged was for the described assembly.
“Other than this, we do not see any breakup and nor is it relevant for us now,” the Tribunal said.
It was further observed that the appellant has claimed benefit of concessional rate of duty vide Notification ibid. and has paid Basic Customs Duty at 5% as against tariff rate of 7.5% Basic Customs Duty: the benefit is apparently claimed on the amount reflected which represents the cumulative value for “Catalytic Converter Asy”. “However, in the impugned Order-in-Original, even though there are allegations in the Show Cause Notice as to mismatch of the Bills-of-Entry vis-à-vis the invoices furnished by the appellant and also as to the alleged glaring discrepancies, there is no finding recorded and thereby the allegations or suspicions in the mind of the Revenue authorities have not been taken to its logical conclusion in the impugned Order-in-Original,” the Tribunal concluded.
Subscribe Taxscan Premium to view the JudgmentThe Madras High Court while directing the petitioner to clear the goods lying in the Warehouse held that it is a licensee’s duty to clear off goods after the cancellation of the license within 7 days.
The appellant, M/s. ACME Warehousing Private Ltd. has filed an appeal against the observation of the Single Judge wherein it was ordered for the removal of the goods from the licensed warehouse, which was taken under lease by the petitioner appellant, from the private respondent, Mr.S.Panneer Selvam.
The Warehousing License, for which renewal was sought by the petitioner company, was refused to be renewed since the lease by the respondent in favour of the writ petitioner/Licensee stood expired.
The Assistant Commissioner of Customs (Bonds), vide impugned communication held that the said License for Bonded Warehouse cannot be renewed in favour of the petitioner company and consequently, directed the petitioner to intimate the Importer/Customs House Agent for clearance of goods lying in the said Warehouse and that no further bonding of cargo was permitted thereafter.
The Coram consists of Justice Vineet Kothari and Justice M.S. Ramesh observed that there is no case of extension of period under Section 58B(4) of the Act in the present case. Therefore, in the eye of law, the possession of the vacant licensed warehouse, after seven days of the impugned order passed by the Customs Authority, should be deemed to be with its owner only.
“We do not see any reason for the appellant/ petitioner to have invoked the writ jurisdiction of this Court on the basis of a status quo order granted by the trial Court in a civil Suit in which Customs Department was not at all a party. Nothing prevented him to even implead Customs Department also as Defendant in that very suit, so that all related issues could be adjudicated by one Court,” the court said while dismissing the appeal.
Subscribe Taxscan Premium to view the JudgmentThe Central Board of Direct Taxes (CBDT) notified the clarification on provisions of Direct Tax Vivad se Vishwas Act, 2020.
The objective of the Scheme is to pending Income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise be spent on the long drawn and vexatious litigation process.
The Board clarified that the amount payable under Vivad se Vishwas shall be computed with reference to the position of appeal or arbitration as on 31 January, 2020.
The Vivad se Vishwas can be availed in a case where the enforceability of an assessment order passed by the AO has been stayed by the High Court or Supreme Court whether or not the appeal has been filed against the assessment order. Writ/ Appeal pending in High Court and Supreme Court shall be required to be withdrawn by the taxpayer. Upon settlement of quantum appeal, interest and penalty, if any, will be waived.
If order under section 263 of the Act contains general directions and income is not quantifiable, appeal against such order is not eligible under Vivad se Vishwas. However, if order under section 263 of the Act contains only specific directions and income is quantifiable and does not contain any general directions due to which income is not quantifiable), appeal against such order is eligible under Vivad se Vishwas.
In such case, assessee is required to settle all the issues in the order, which are subject matter of order under section 263 of the Act as well as issues pending in appeal (or issues in respect of which time to file appeal has not expired on 31″ Jan 2020), if any, with reference to the said order.
If the time limit for filing an appeal expired during the period from 14 April 2019 to 31″ Jan, 2020 (both dates included in the period), and the application for condonation is filed before the date of issue of this circular, and appeal is admitted by the appellate authority before the date of filing of the declaration, such appeal will be deemed to be pending as on 31 Jan 2020. In order to facilitate the taxpayers, the Board had vide circular no. 9/2020 dated 22 April, 2020 issued clarifications in form of answers to 55 frequently asked questions (FAQs) on issues related to eligibility, computation of amount payable, procedure and consequences under Vivad se Vishwas. Several representations have been received thereafter seeking further relaxation and clarifications with respect to such issues. Some of these representations have already been addressed through the aforesaid notification dated 27th October, 2020 and circular dated 28h October, 2020.
Subscribe Taxscan Premium to view the JudgmentThe West Bengal Authority of Advance Ruling (AAR) ruled that no GST applicable on the supply of services waste disposal activities to Bagrakot Military Station and Sukna Military Station.
The Applicant, M/s Lokenath Builders is stated to be providing conservancy service to the Station Commander, Bagrakot Military Station, Office of Chief Medical Superintendent N.F. Railway, Alipurduar Junction and Sukna Military Station.
The applicant seeks a ruling on whether the supply is exempted in terms of Sl No. 3 or 3A of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017 (corresponding State Notification No. 1136 – FT dated June 28, 2017), as amended from time to time.
The coram consisting of Sushmita Bhattacharya and Parthsarthi Dey clarified that such functions are in the nature of public welfare service that the governments on their own, and sometimes through governmental authorities or entities, do provide to the citizens.
The AAR observed that when the activity is in relation to any such function, the supply to the governments or governmental authorities/entities or local authorities is exempt from paying GST under Sl No. 3 or 3A of the Exemption Notification, provided it is either a pure service or a composite supply, where the supply of goods does not constitute more than 25% of the value.
The Authority noted that the applicant performs waste disposal activities by engaging garbage lifting vehicles and other cleaning equipment. There is, however, no reference to any supply of goods in the course of executing the work. The vehicles used and the fuel consumed and the machinery used do not result in any transfer of property in goods to the recipient.
The Authority observed that the applicant’s supply to the recipient is a pure service. “The Applicant‟s supply to Bagrakote and Sukna Military Stations, therefore, is exempt under Sl No. 3 of the Exemption Notification. As no agreement is available regarding supplies to the Railways, this authority offers no comment thereon,” the AAR said.
Subscribe Taxscan Premium to view the JudgmentThe Supreme Court upheld the validity of imposing Goods and Service Tax (GST) on Lotteries and Gambling. The Court granted the petitioner the liberty to challenge notification by which rate of GST for lottery run by the State and lottery organized by the State have been made the same.
The petitioner, Skill Lotto Solution Pvt. Ltd. an authorized agent, for sale and distribution of lotteries organized by State of Punjab has filed this writ petition impugning the definition of goods under Section 2(52) of Central Goods and Services Tax Act, 2017 and consequential notifications to the extent it levies tax on lotteries.
The petitioner sought for a declaration that the levy of tax on lottery is discriminatory and violative of Articles 14, 19(1)(g), 301 and 304 of the Constitution of India.
The Parliament enacted the Central Goods and Services Tax Act, 2017 to make provisions for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto.
After the enactment of Central Goods and Services Tax Act, 2017 , Notification was issued by Government of India dated June 28, 2017 in exercise of power conferred by Section 9(1) notifying the rate of the integrated tax.
By the notification with regard to lottery run by the State Government, value of supply of lottery was deemed to be 100/112 of the face value of the ticket or the prize as notified in the official gazette of the organising State, whichever is higher. With regard to lotteries authorised by the State Government value of supply of lottery was deemed to be 100/128.
The petitioner contended that the lottery is not a goods and under the Central Goods and Services Tax Act, 2017, GST is levied only on goods, hence levy of GST on lottery is ultra vires to the Constitution.
The petitioner has also relied on various taxing statutes of other countries, wherein the petitioner submits that prize money of the lottery ticket is not computing for levy of tax.
The three-judge bench of Justice Ashok Bhushan, Justice R.Subhash Reddy, and Justice M.R. Shah concluded that while determining the taxable value of supply the prize money is not to be excluded for the purpose of levy of GST.
The Court while rejecting the contention of the petitioner stated that the taxing policy and the taxing statute of various countries are different which are in accordance with taxing regimes suitable and applicable in different countries.
The Supreme Court was of the view that the petitioner is not entitled to reliefs as claimed in the writ petition.
However, the Court granted the liberty to the petitioner to challenge the notifications dated 21.02.2020 or 02.03.2020 by which rate of GST for lottery run by the State and lottery organized by the State have been made the same, which notification has not been challenged in the writ petition since the notifications were issued during the pendency of writ petition.
“We accept the above prayer of the petitioner. The petitioner shall be at liberty to challenge the notifications dated 21.02.2020/02.03.2020 (challenging the rate of levy tax uniformly at 28%) separately in appropriate proceedings,” the court said.
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