The Central Board of Excise and Customs (CBEC) has recently issued a circular notifying the establishment of Customs clearance Facilitation Committees in the Commissionerates of Customs (Preventive) of Amritsar, Kolkata, Patna and Shillong along with in the Commissionertes having jurisdiction over the Inland Container Depots.
In the year 2015, the CCFCs have already been set up by the Board at each seaports and airports with a view to ensure expeditious custom clearance of imported and exported goods. The present establishment of the CCFCs is with a view to have a similar administrative arrangement for facilitation of trade in the Land Customs stations.
As per the circular, the Committee would consists of members who are senior-most from the departments such as Food safety standards Authority of India, Plant Quarantine Authorities, Animal Quarantine Authorities, Drug Controller of India, Textile Committee, Custodians, Land ports Authority of India, Forest and wildlife Authorities etc.
The Committees are entrusted with the functions of ensuring and monitoring expeditious customs clearance of imported and exported goods in terms with the prescribed rules and regulations, identifying and resolving bottlenecks in case of clearance of goods, initiating time release studies for improving the clearance time of the goods imported etc.
Subscribe Taxscan Premium to view the JudgmentThe single bench of the Madras High Court, in a recent decision, held that the assessment under the Tamil Nadu Value Added Tax Act can be completed on the basis of the advance ruling, if the goods under dispute are similar to the goods covered by the advance ruling. The court was considering a petition challenging the clarification issued by the Commissioner of Commercial Taxes filed by the assessee.
The sole grievance of the Petitioners was that the Assessing authority has completed the assessments solely placing reliance on the Advance Ruling, given by the Authority for Clarification and Advance Ruling, by proceedings dated 2.12.2013,regarding the rate of tax of the goods which is similar to the goods dealt by the petitioners.The petitioners, challenged the clarification issued by the Commissioner, contending that the Commissioner of Commercial Taxes has no power to issue Clarification with regard tax rate of tax. Further, the Circular issued by the Commissioner of Commercial Taxes has no legal authority. The petitioners referred the decisions in the cases of Pizzeria Fast Foods Restaurant (Madras) Pvt.Ltd., vs. Commissioner of Commercial Taxes, Chennai and Others and Texx One Private Ltd., vs. Principal Commissioner and Commissioner of Commercial Taxes, Chepauk, Chennai and another, on support of the above contentions.
Justice T.S Sivagnanam found that the impugned proceeding dated 2.12.2013 is not a Clarification or circular issued by the Commissioner. In the view of the Court, it is a proceedings of the Authority for Clarification and Advance Ruling, exercising power under Section 48-A of the TNVAT Act, 2006. “Therefore, if the product is of the same nature, then obviously the assessing officer will apply the Advance Ruling. If according to the petitioner, the product manufactured by them is slightly different and the Advance Ruling is not applicable, then they have to file a revision petition before the concerned authority, in terms of Section 48-A(4) of the TNVAT Act, 2006. The Advance Ruling Authority has power to review, amend or revoke its Clarification or advance ruling at any time for good and sufficient cause, after giving an opportunity of being heard to the affected parties. Therefore, if the petitioner’s case is that the Clarification would not apply to their case, or if it is erroneous, then, they have to approach the authority by seeking for review of the orders,” the Court observed.
On the basis of the above findings the Court disposed the matter with a direction to the petitioners to approach the authority for Clarification and Advance Ruling.
Read the full text of the order below.
After the first meeting, the Goods and Services Tax Council has fixed the threshold limit of 20 lakhs in case of businesses all over India. However, the business in north-east region will get exemption if the annual turnover is below 10 lakh. The Council is headed by the Union Finance Minister, Arun Jaitley, who confirmed the news to the reporters on Friday. The meeting further clarified that all cesses will be subsumed in the GST.
Reportedly, the meeting further reached at a consensus on the issue of administrative control of the Central and State in the GST regime.
States would have sole jurisdiction over assessees (currently in the Value Added Tax (VAT) net at present) having a turnover of Rs.1.5 crore or less, while the administrative control of businesses with a turnover exceeding that limit would be jointly with the central and state governments, Mr. Jaitley said. As pointed out by him, there would be cross examination either by officers from the Centre or state to aviod dual control.
However, the present11 lakh service tax assessees will be continued to be under the control of the Cent. New assessees would be divided between the Centre and states.
The next meeting has been scheduled to 30th of September to finalize the draft rules on GST rate, rules on granting exemption and tax slabs.
While setting aside the orders of first appellate authority and the Income Tax Appellate Tribunal, Kochi, the division bench of Kerala High Court has observed that, under the Income Tax Act, the provision for depreciation is contained in Section 32 and if a hospital or part thereof qualifies to be a plant, it would be eligible for depreciation at the rate of 25%; whereas that part of the hospital which is to be treated as a building shall be eligible for depreciation only at the rate of 10%.
The assessee Moidu’s Medicare Pvt. Ltd is a hospital claimed depreciation at the rate of 25% contending that its hospital building is a plant. The Assessing Officer allowed depreciation at the rate of 25% as claimed by the assessee.
Despite of assessing officer view, the Commissioner assumed jurisdiction under Section 263 of the Income Tax Act, taking the view that the assessment orders were prejudicial to the interest of the Revenue. According to the Commissioner, that part of the building used for general purposes and that used for specific hospital purposes should be distinguished and depreciation at the rate of 25% can be allowed only for such portion of the building used as operation theatre, X-ray rooms etc. and the other portion of the building or part of the building used as administrative blocks, patient rooms, visitors’ room etc. would be eligible for depreciation at the rate of 10% only. On that basis, he set aside the orders of assessment and the Assessing Officer was directed to redo the same.
The division bench comprising of Justice Antony Dominic and Justice Dama Seshadiri Naidu relied case Income Tax v. Dr. B. Venkata Rao, the Apex Court considered the case of a Medical Practitioner running a nursing home. In that case, the Tribunal has held the nursing home to be a plant and the same was affirmed by the High Court. In the appeals, the Supreme Court held that since the nursing home is equipped to enable the sterilisation of surgical instruments and bandages to be carried on and it was reasonable to assume that nursing home was equipped with operation theater, the finding of the High Court should be accepted.
While deciding in favour of the assessee the bench had cited bunch of decisions and observed that, the question to be examined is whether as held by the Apex Court in Karnataka Power Corporation (supra) the building has been so planned and constructed as to serve an assessee’s special technical requirements. On such consideration, if a factual finding has been arrived at in favour of the assesses, then the building would qualify to be a plant with consequential depreciation at the applicable rate. Insofar as these cases are concerned, from the assessment order itself, we find that it was the case of the assessee that the hospital building is a specifically designed and planned one to meet its requirements as a hospital. However, without any further verification, this contention has been brushed aside and the assessment has been completed merely following the principles laid down in Venkata Rao (supra).
Read the full text of the Judgment below.
Total Number of APAs Entered Into by the CBDT Reaches 103.
The Central Board of Direct Taxes (CBDT) entered into five (5) unilateral Advance Pricing Agreements (APAs) today with Indian taxpayers. One of these Agreements has a rollback provision in it. With these signings, the total number of APAs entered into by the CBDT has reached 103.
The five (5) APAs signed today pertain to diverse sectors i.e. Information Technology, Sourcing services and Investment advisory services. The 103 APAs signed so far include 4 bilateral APAs and 99 unilateral APAs. A total of 39 APAs have already been concluded in six months of the current Financial Year. The year-wise details of APA signings are as follows:
| Financial Year | 2013-14 | 2014-15 | 2015-16 | 2016-17 (up to 23-09-2016) | |
| Unilateral APAs | 5 | 3 | 53 | 38 | 99 |
| Bilateral APAs | 0 | 1 | 2 | 1 | 4 |
| Total | 5 | 4 | 55 | 39 | 103 |
The CBDT expects more APAs to be concluded and signed in the near future. The progress of the APA Scheme strengthens the Government’s commitment to foster a non-adversarial tax regime. The approach and functioning of the officers in the APA teams have been appreciated and acknowledged by the industry in India and abroad.
Earlier, the APA Scheme was introduced in the Income-tax Act in 2012 and the Rollback provisions were introduced in 2014. The Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arm’s length price of international transactions in advance for a maximum period of five future years. Further, the taxpayer has the option to rollback the APA for four preceding years. Since its inception, the APA scheme has attracted tremendous interest among Multi National Enterprises (MNEs) and more than 700 applications (both unilateral and bilateral) have been filed in just four years.
The High Court of Madras, in a recent decision confirmed the order of the Settlement Commission in which the levy of SAD (Special Additional Duty) was removed and instead, the Additional Excise Duty (ADE) was directed to be levied on goods imported under the Additional Duty of Excise Act. The Court was considering a petition in which the petitioners contended that the levy is beyond the authority of law.
The Department initiated proceedings against the petitioners, who imported lining and interlining materials alleging that they are not eligible to concessional rates rate of duty under Customs Notification No.21 of 2002 since the goods imported were not used in the manufacture of textile garments but diverted to domestic market in contravention of the said notification with an intention to evade payment of customs duty. Accordingly, the Department issued Show-cause notices containing proposals such as the petitioners are bound to pay equal amount of duty under section 114A of the Act along with interest and the goods are liable to be confiscated.The proceedings were challenged before the Settlement Commission, where they admitted the offence, but submitted that they were asked to pay basic customs duty as applicable plus CVD at 16% plus Special Additional Duty (SAD) at 4%.Based on the provisions of Section 3A(5) of the Customs Tariff Act, 1975, the petitioners contended that SAD will not apply to the goods chargeable to additional duties levied under Section 3(1) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957.
The Settlement Commission accepted the contentions raised by the petitioners and held that SAD is not applicable to the said goods. However, the Commission also directed the Department to collect 8% of Additional Duty of Excise from the petitioners. The petitioners challenged the above order before the High Court contending that there is no provision to demand payment of 8% equal to excise duty leviable under the ADE Act, since effective rate of additional duty of customs (equal to excise duties leviable) is only 16% and not 24%.Therefore, according to the petitioners, the Commission had gone beyond the notification.
The court found that before the settlement commission, the petitioners have already admitted the fact that the levy of additional duty of excise is valid.
While confirming the order impugned, the single bench of the Court held that “As rightly pointed out by the learned Standing counsel for the Revenue, the additional duty leviable and the power to levy the Additional Duty of Excise is traceable to sub-section (5) of Section 3 of the Customs Tariff Act, 1975, (referred supra), which gives power to the Government to levy such additional duty as would counter balance the sales tax on a like article on its sale in India.”
“Admittedly, the goods which were imported by the petitioner were meant to be used for manufacture and the petitioners availed the benefit of the exemption notification. This condition having been violated and the goods having been cleared to the domestic area and the petitioner having accepted their mistake, theadditional duty of excise is leviable in terms of sub-section (5) of Section 3 of the Customs Tariff Act. The exemption which is sought to be granted by the Budget Notification pertains to the duty leviable under sub-section (1) of Section 3 of the Customs Tariff Act and there is no reference to the additional duty of excise leviable in terms of sub-section (5), the object of which has not only been elucidated in the statutory provision, and explained by the Hon’ble Supreme Court in the case of Attesee, (supra).”
Read the full text of the Judgment below.
The Member of upper house of Parliament, Dr. Subramaniam Swamy urged complete stay of all operations of the newly constituted Goods and Services Tax Network (GSTN) in his letter wrote to Prime Minister Narendra Modi.
It remains in operational till it is restructured according to our national interest and after security certification by the Home Ministry, he said in the letter.
Dr. Swamy in his letter says, “it is dominated by not only by private institutions to hold majority shares in the GSTN Private Ltd Co. but also these private institutions are controlled by foreign shareholders”.
He also alleged that, “the data obtained by private parties and foreigners share holders of the indirect tax dues and payment of Indian tax payers as well as the details of travel from the point of manufacturing to the point of sale will help private parties to rig national stock exchange outcomes”.
Read the full text of the letter below.
The High Court of Madras, in a recent decision held that the Settlement Commission has no jurisdiction to extend the terminal date. The Court, while deciding so, relied upon its own decision in R.Vijayalakshmi V. Income Tax Settlement Commission.
Coming to the facts of the case, the Settlement Commission was directed by the Supreme Court to verify whether the two circulars referred therein issued by the Central Board dated 02.05.1994 and 23.05.1996 would be applicable in the case of the petitioner. In pursuance of the above order, the Commission has considered the matter and passed the impugned orders thereby withdrawing the waiver of interest. Further, the Commission shifted the terminal date for calculation of interest under Section 234B of the Income Tax Act by relying upon the decisions in cases of Hindustan Bulk Carrier and CIT V. Damani Bros.Aggrieved with the said order the petitioner approached the High Court contending that the above action of the Commission cannot be justified since the matter was remitted by the Supreme Court to the Commission with specific direction and the Commission cannot go beyond that direction.
The Single bench of Justice T S Sivagnanam noticed that in the case of R.Vijayalakshmi V. Income Tax Settlement Commission, the Court observed that “It is settled legal position that power of review is to be specifically conferred on the authority by the statute and power of review is not inherent with the authority.” Further, the Court held that the Commission had no jurisdiction to reopen the matter for the purpose of shifting the terminal date.In the light of the above decision, the Court set aside the order of the settlement Commission extending the terminal date.
Read the full text of the order below.
In a recent ruling, the Delhi bench, Income Tax Appellate Tribunal has held that addition cannot be made solely on the basis of surrender made during the time of survey. The Tribunal upheld the legal position that the addition should be supported by any material evidence procured at the time of survey since the statement under Section 133A of the Income Tax Act, 1961 lacks evidentiary value.
The assessee in the instant case, is a company engaged in the business of financing of automobiles and allied through loan cum hypothecation mode. During the time of survey, the assessee failed to prove the genuineness of certain transactions. Based on the statements made during this time, the Assessing Officer competed assessment. However, the assessee successfully challenged the assessment order before the Commissioner of Income Tax (Appeals) by proving the legality of the transactions. Therefore, the Revenue approached the Tribunal challenging the order of the CIT(A).
The Tribunal noted the fact that certain amount of the surrendered income was not in respect of cash credit and the certain other amount were not pertaining to the relevant assessment year, therefore, addition under s. 68 cannot be made.
The Tribunal noted that, in the case of Dhingra Metal Works, the Delhi High Court categorically held that the Assessing Officer could not have made the addition solely on the basis of the statement made on behalf of the assessee during the course of survey. A similar view had been taken by the Madras High Court in the case S. Khader Khan Son, which was subsequently upheld by the Apex Court.
The Tribunal further relied upon the CBDT circular dt 10.03.2003 which clarifies that the addition should be based upon the evidences/material gathered during the course of search/survey rather on the basis of statement recorded during the course of survey.
In view of the above circular and judicial pronouncements, the Tribunal confirmed the order of the CIT(A) by dismissing the appeal filed by the Tribunal.
Read the full text of the order below.
In a recent decision, the Madras High Court observed that the personal details of the concerned dealer cannot be compelled to be furnished to the assessee during the course of the proceedings under the Tamil Nadu General Sales Tax Act. The Court in the instant case found that the documents required by the assessee for the purpose of cross-examination is not, are personal details which are not relevant to prove their version.
The factual settings of the case are that, in terms with the High Court order directing the authorities to grant the petitioners-assessee a fair opportunity of cross-examination, the assessee submitted a list of documents before the concerned authority seeking the copies of the same. The authorities refused to grant copies of some documents which are confidential in nature. Being dissatisfied with the action of the authorities, the assessee approached the High Court contending that no opportunity of cross-examination was granted to them.
The court noticed that the assessee has sought for the copies of some documents, such as xerox copy of the application and other details when they applied for registration certificate, the name of the Officer, who issued the certificate, the xerox copy of the ration card, the name of the Officer, who collected the renewal fee., etc. the Court found that these details are absolutely not germane to complete assessment. Further, it was emphasized that “That part, these are documents filed by other dealers and are kept on the file of the respondent, and he holds the same in fiduciary capacity. Therefore, the details there under, which are personal to the concerned dealer, cannot be compelled to be furnished to the petitioner, even as per the provisions of the Right to Information Act.”
While concluding, the Court added that “Therefore, this Court is of the view that the direction issued by this Court, in W.P.No.38521 of 2004, dated 07.01.2005, insofar it relates to furnishing of documents is concerned, the same has been complied with by the respondent, and the petitioner is not entitled for any more documents. However, the other limb of the direction issued by this Court, is with regard to giving an opportunity to the petitioner to cross examine the witnesses who are examined by the respondents. This, of course, has not been complied with. Therefore, to that extent, the petitioner is entitled to the grant of relief.”
Read the full text of the Judgment below.
In a recent decision, the Bombay High Court emphasized that the Ministry of Finance and the Central Board of Excise and Customs must take necessary actions to ensure prompt payment of refund applications in order to avoid revenue loss in payment of statutory interest.
The division bench comprising of Justice S.C Dharmadhikari and Justice B.P Colabawalla observed that, taking expeditious actions in this issue would result in creating a business friendly atmosphere and saving the precious time of the Court.
The petitioners imported certain exempted goods in connection with petroleum operations Bombay High Court undertaken under petroleum exploration licenses.Petitioner could not avail the exemption entitled by them under the said Notification at the time of import, for want of the Essentiality Certificate from the DGH as ONGC did not issue any recommendation letters for issuance of the same.When the matter was brought before the Delhi High Court, the petitioners were served with the above certificate from the DGH as per the direction of the Court. When the matter was disposed in favour of the petitioners, they moved a refund application before the authority in the year 2003. However, the same was rejected for want of Essentiality Certificate.
In the year 2011, the petitioners further forwarded the application of refund filed by them in the year 2003 along with the High Court and the Essentiality Certificate, which was again rejected by the authority.On appeal, the appellate authority directed the refund authority to verify the claim of the petitioners, the petitioners could not get any relief. Being aggrieved, the petitioners approached the High Court directly, challenging the rejection. In pursuance of the said order, refund amount was granted to the petitioners, but without interest. Regarding this, the Department claimed that the refund claim was complete in all respects for sanctioning the refund only after the Petitioner submitted all essential documents at the personal hearing held on 12th May, 2014 and the refund was processed and granted to the Petitioner on 23rd June, 2014. This was well within three months as stipulated under Section 27A. Therefore, the petitioners are not entitled to get interest as per the said provision.
The Court also observed that as per s. 27A of the Act, interest would be payable immediately after expiry of three months from the date of receipt of such application till the date of refund of such duty. The Court further noticed the decision of the apex Court in Ranbaxy Laboratories Ltd Vs. Union of India, in which the Court dealt with s. 11B of the Central Excise Act, which is similar to s.27A of the Customs Act, held that the only interpretation of Section 11-BB that can be arrived at is that interest under the said section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11-B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11-BB of the Act becomes payable.
Following the above judicial pronouncement and the provisions of s. 27A, it was held that once a refund is granted to the applicant and the said refund is not given to the applicant within three months from the date of receipt of the refund application, then the applicant would automatically be entitled to interest on the said refund, from the date immediately after expiry of three months from the date of receipt of such refund application, till the date of the refund of such duty.
Rejecting the findings of the Refund authority, the Court set aside the order impugned and held that the petitioners are entitled to interest from the date immediately after expiry of three months from 20th June,2011 till 11th July, 2014.
The Court further added that “Before parting, we direct that a copy of this order be forwarded to the Secretary, Ministry of Finance (Department of Revenue), Government of India and the Chairman, Central Board of Excise and Customs, New Delhi for necessary action. It is only they who would possibly realise that the object and purpose is to take expeditious action on refund applications so that revenue loss is avoided in payment of statutory interest. The intent is to discourage the tendency of not taking prompt action on these applications, thereby defeating all policies aimed at creating a business friendly atmosphere. They must also realise that litigation in Court on this score results in precious time and money being wasted.”
Read the full text of the Judgment below.
In a recent ruling, the Cochin bench of the Income Tax appellate Tribunal has held that late fee cannot be levied for the default in filing TDS statements under section 243E of the Income Tax Act as per the amended provisions of section 200A, inserted vide Finance Act, 2015. The Tribunal opined that the amended provision have only prospective application.
The assessee, in the instant case is a charitable society, who had deducted tax from payments
made to contractors and filed TDS statement for the year 2012-13. However, the Dy Commissioner of Central Processing Cell (TDS) imposed late fee on the assessee under s. 234E of the Act based on amendment made to section 200A of the Act in the Finance act, 2015.
The Commissioner of Income Tax (Appeals) confirmed the levy of fees while dismissing the appeal. Being aggrieved, the assessee approached the Appellate Tribunal on second appeal.
In the opinion of the Tribunal there was no enabling provision therein for raising a demand in respect of levy of fees u/s 234E of the Act prior to the date of the said amendment and therefore, the amendment to s.200A is not applicable to the present case.
The Tribunal further noticed the decision of the Amritsar bench in the case of Sibia Healthcare (P) Limited Vs. Deputy Commissioner of Income Tax, in which it was held that levy of fee u/s. 234E is beyond the scope of permissible adjustments contemplated u/s.200A.a similar view was taken by the Ahmedabad and Chennai benches in their decisions.
In view of the above findings and judicial pronouncements, the Tribunal quashed the impugned order in which the officer imposed late fee on filing TDS statement.
Read the full text of the order below.
Delay caused without Malafide intention do not attract Penalty under the Income Tax Act, says ITAT Jaipur.
The Jaipur bench, Income Tax Appellate Tribunal, in a recent ruling held that dispute with the statutory auditor is a reasonable cause for delay within the meaning of section 273B of the Income Tax Act, 1961. The Tribunal, while quashing the penalty order, the Tribunal considered the fact that the default was not caused with a mala fide intention and therefore, levy of penalty is not justified.
The grievance of the assessee was that the Assessing Officer levied penalty u/s 271B for not getting accounts audited and submitting audit report within the prescribed time. While admitting the default, the assessee challenged the penalty order by maintaining that there was reasonable cause for delay and this is the first time the assessee made such a fault. The assessee submitted that the delay was caused due to the reason that there was a dispute with the auditor over the issue of audit fees.
However, the CIT(A) rejected the above contentions of the assessee by confirming the order impugned. Aggrieved by the above orders, the assessee approached the Income Tax Appellate Tribunal on second appeal.
The Tribunal noted the fact that there was a delay of 8 months, which is according to the assessee, is happened for the first time. The Tribunal observed that “the delay made by the assessee firm in filing the return of income is for the first time i.e. in A.Y. 2008-09 which was on account of dispute of audit fee between the assessee and the auditor. Hence, it appears that the dispute with the statutory auditor is a reasonable cause within the meaning of Section 273B”
The above finding was supported by the decision of the Pune Bench, in the case of Kripa Industries (I) Ltd. vs. JCIT by ITAT that there is no mala fide reason for not obtaining the accounts audited in time and penalty u/s 271B should not be imposed.
In view of the above findings, the Tribunal reversed the orders of the lower authorities.
Read the full text of the order below.
In a recent decision, the Allahabad High Court observed that the assessee is entitled to the interest on refund of excess duty paid after three months from the date of representation moved by him under section 11B of the Central Excise Act, 1944.
The factual settings of the case are that the petitioners are manufacturers of the product “gulabari”. The Department took a stand that the said product was taxable at the rate prescribed in the First schedule of the Central Excise Tariff Act. The order was reversed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi. When the matter was concluded by the Tribunal in favor of the assessee, they moved a refund application requesting the authorities for the amount deposited by them during the course of appellate proceedings. The Assistant Commissioner rejected the application by holding that the refund amount cannot be granted to the petitioner as the same would constitute unjust enrichment.
Though the Commissioner (Appeals) has confirmed the order impugned, the Appellate Tribunalhas reversed the said orders by rejecting the findings of the lower authorities. Though the Revenue preferred an appeal before the High court against the order of the Tribunal, the same was also dismissed.Consequently, the Assistant Commissioner granted the refund amount, but refused to pay interest on the refund. It is in this circumstance, the petitioners approached the High Court.
According to the assessee, as per section 11B of the Central Excise Act, 1944 any duty ordered to be refunded to any applicant, if not refunded within three months from the date of receipt of application, Assessee shall be entitled for interest on such rate not below ten percent and not exceeding thirty percent on the delayed amount.
The Court dive deeply into the facts of the case, and observed that “Facts detailed above evidently show that respondent authorities were adamant in retaining huge money legally refundable to petitioner for one or the other reason which could not withstand when tested in Court i.e. Tribunal and this Court. Now respondents are trying to deprive petitioner, benefit of interest though respondents themselves were guilty by not refunding amount in due time and also withheld the same without any authority of law. In other words, here is a case, where respondents deprive petitioner of his property in a manner which was not permissible in law. Once it was held by Tribunal, vide judgment and order dated 14.01.2000that product “Gulabari’ was not classifiable under the Heading 33.03 of the First Schedule of Act 1985. Pursuant thereto petitioner submitted application for refund in prescribed form but the Revenue authorities again relying on Heading 33.03 rejected claim for refund and again lost before Tribunal who held vide order dated 10.10.2003 that once an issue was already decided by it, it was not open to departmental authorities to sit in appeal and reiterate their view which has not been found correct by Tribunal in its order dated 14.01.2000. Respondents therefore, had no authority in law to retain the amount realised from petitioner on and after the judgment dated 14.01.2000 passed by Tribunal and non refund thereof despite of application filed by petitioner in prescribed form under Section 11BBrenders them liable to pay interest on refundable amount.”
The bnch comprising of Justice Sudhir Agarwal and Justice Kaushal Jayendra Thaker observed that “there is another aspect of matter, application for refund was filed by petitioner on 08.03.2000. Under Section 11 BB it is provided that if the authority is satisfied that an amount is to be refunded to Assessee but the same has not been refunded within three months from the date of filing of application, Assessee would be entitled forinterest. Order passed by Revenue authority under Section 11B(2) for refund is not relevant for the purpose of attracting interest under Section 11BB but what is said that once refund is found admissible, Assessee if has not been refunded the amount within three months from the date of receipt of application under sub Section (1), he shall be paid interest. Meaning that there is no time limit prescribed for taking a decision about refund but that law makes it very clear that amount if not refunded within three months from the date of receipt of application, interest shall be payable.”
Based on the above findings, the Court held that the petitioners, in the instant case would be entitled for interest under Section 11BB of Central Excise Act 1944, after three months from the date of representation till the amount of refund actually paid.
Read the full text of the Judgment below.
The Madras High court, in a recent decision, observed that the revision order section 34 of the Tamil Nadu General Sales Tax (TNGST) Act cannot be passed solely on the basis of the Report of Inspecting officers.The Court opined that under section 34, wide powers have been vested on the officer and therefore, it must be exercised if the officer deems that the order is necessary to safeguard the interest of the Revenue. It was further observed that the revisional authority cannot disbelieve an appellate order merely on the basis of the Report of Inspecting officers, which is, according to the Court, can only be treated as a first information report.
In the instant case, the assessee challenged the order passed by the assessing authority before the appellate authority. The appeal was disposed in favour of the assessee. Consequent orders were passed by the assessing authority giving effect to the said order. After one year, the Joint Commissioner of Commercial Taxes, suomotu initiated revision proceedings and passed an order by invoking his powers vested under section 34 of the TNGST Act by holding that the appellate order was against the interest of the Revenue.Being aggrieved, the assessee approached the High Court seeking relief.
The Court while analyzing the legality of the order impugned, observed that “On a reading of the impugned proceedings, it is evidently clear that the Revisional Authority has not interfered with the factual findings recorded by the Appellate Assistant Commissioner, which is an elaborate order dealing with all issues, item-wise. But, the Revisional Authority relied upon the statement/observation of the Inspecting Officer, who inspected the place of business of the petitioner. Thus, what the Joint Commissioner seeks to do is to confront the petitioner with the findings of the Inspecting Officer, which was admittedly done on 28.12.1995, much prior to the order passed by the Appellate Assistant Commissioner. Thus, the authority namely the Revisional Authority has not conducted any enquiry on his own while exercising the power under section 34 of the Act.”
The single bench while quashing the order, noted that “The report submitted by the Inspecting Officer in the opinion of this Court can be treated as first information report, based on which, action could be initiated by issuing notice. As this was not done, it resulted in an order of dismissal, which has been set aside by the Appellate Authority by an order dated 24.09.1997. The Appellate Authority’s order is a well reasoned order, which dealt with each of the items. Therefore, the Revisional Authority cannot contend that what was stated by the Dealer before the Inspecting Officer was different and he cannot for that reason reject or interfere with the order passed by the Appellate Assistant Commissioner. The Revisional Authority should have come to a conclusion that the order of the Appellate Assistant Commissioner suffers from illegality, resulting in prejudice to the interest of the Revenue. Therefore, this Court is of the view that the order passed by the Revisional Authority solely based upon the report of the Inspecting Officers could not have been a basis for disbelieving the stand taken by the petitioner before the Appellate Authority, which decision was arrived at based on the facts placed before the Appellate Authority. Further, the Revisional Authority does not dispute the factual position and if such is the case, no case has been made out for reviewing the order passed by the Appellate Authority. Therefore, the impugned order calls for interference”.
Read the Judgment here.
In a recent ruling, the Delhi ITAT held that the income earned by the assessee on sale of mutual fund should be determined under the head “capital gain” under the provisions of the Income Tax Act, 1961. Earlier, the lower authorities, both the assessing officer and the Commissioner of Income Tax (appeals) have found that the income arising out of the sale of mutual funds and shares etc. would amount to business income since the assessee’s motive in investing in both was to make profit.
Briefly explaining the facts of the case, the assessee challenged the assessment order passed against it on ground that long term capital loss of Rs.1,37,78,697/- arising on sale of shares as shown by the appellant in its return, on ground that the transaction of sale of shares gave rise to business income since the dominant intention of the appellant was to earn income from sale of shares.Further, the AO assessed the income earned by the assessee on sale of mutual funds under the head “business income”by holding that the intention of the assessee was to earn income from sale of mutual funds.
The Commissioner of Income Tax (Appeals) confirmed the above order on first appeal. Being aggrieved, the assessee preferred a second appeal before the ITAT.
Before the ITAT, the assessee submitted that the transaction was in the nature of investment. There were no element of taking over of control and management of the business of the Company, from which the assessee purchased shares since the acquisition of the shares by was only 0.25% of the total shares.
While accepting the above contentions, the ITAT held that “After considering the facts of the case, we do not find any justification for the finding of the lower authorities that the shares were acquired with the intention of business in such shares. We find that there was a single transaction of purchase and sale of shares. The purchase was made with own funds. The shares were held for a period of 16 months and then sold. After sale of shares, there is no acquisition of shares of this company or any other company. Neither in the preceding assessment year nor in this year, there is purchase and sale of shares of any other company. In the balance sheet of 31st March, 2008, shares have been shown as investment. Totality of these facts clearly lead to the conclusion that itis a case of investment in shares which was realized later on. The presumption of the Assessing Officer that the shares of M/s Acme Telepower Ltd. were purchased to acquire the management and control of the said company is without any basis. The assessee has pointed out that the shares acquired by the assessee were less than 1% of the total shares of M/s Acme Telepower Ltd. The intention of the assessee at the time of acquisition of shares is to be gathered from the totality of all the facts and, after considering the totality of all the facts,we have no hesitation to hold that the assessee made the investment in the shares. The conclusion of the Assessing Officer that the assessee purchased the shares with the intention of business is without any justification and is only on the basis of presumption and suspicion. In view of the above, we direct the Assessing Officer to accept the long term capital loss on the sale of shares of M/s Acme Telepower Ltd.”
Regarding the disallowance of Short term capital loss, the ITAT observed that “The facts relating to this ground are that the assessee made investment in mutual funds which was realized subsequently. From the details of the acquisition of mutual funds, we find that there were total three transactions of acquisition of units of mutual funds and only three transactions of their redemption. There is no frequency of the acquisition and redemption of the investment in mutual funds. Investment is made from own funds. Therefore, in our opinion, the surplus from the redemption ofthe units of mutual funds should be assessed as short term capital gain(since the redemption is within one year from the investment in mutual funds) rather than business income. Accordingly, ground No.2 of theassessee’s appeal is allowed.”
Read the full text of the order below.
The Union Finance Minister Shri Arun Jaitley released here today a Booklet containing Frequently Asked Questions (FAQs) relating to Goods and Services Tax (GST). Speaking on the occasion, the Finance Minister Shri Jaitley lauded the efforts of the officials associated in the preparation of the booklet. He complimented Central Board of Excise and Customs (CBEC) for taking the initiative in getting the compilation done on a short notice. He hoped that the compilation would serve as a useful guide for the officers as well as trade and industry
The FAQ compilation covers broadly 24 topics with Chapters on Registration, Valuation, Input Tax Credit, Assessment, Audit, Refund, Demand and Recovery, Appeals, Advance Ruling, Offence and Penalties etc.
The FAQ will serve as a training tool for helping the officers as well as public, to get acquainted with the Model GST law and its nuances.
The journey to roll-out the Goods and Services Tax (GST) has commenced with the enactment of the 101st Constitution Amendment Act, 2016 on 8th September, 2016 and the subsequent notifications. The GST is a new fiscal law and it is necessary that tax officers and the trade are suitably aware of the law. In this backdrop, CBEC as a part of capacity building exercise has prepared a compilation of FAQ on GST.
Read the full text of the FAQs below.
The kolkata bench of the Income Tax Appellate Tribunal recently ruled that Section 40A(3) of the Income Tax Act, 1961 has no application in case of amount deposited with the whole sale licensee in accordance with the rules prescribed by the State government in case of sale and purchase of excisable goods. The Tribunal observed that the Revenue shall not disallow the amount paid on the same.
The assessee in the present case, is a retail dealer of country spirit which an excisable good. The purchase and sale of the said commodity is strictly controlled by the Central government. Earlier, the assessee was asked to follow the procedure of depositing the cost price, excise duty, bottling charges, etc. in the Treasury for getting supplies from the wholesale licensee. In the year 2005, the same procedure was changed by the government. Since then the assessee was required to make payment consisting of cost of the stock-in-trade, excise duty and bottling charges, etc. only to the wholesale licensee appointed by the State Government. During the assessment year in question, the assessee deposited the amount for the above purpose with the whole sale licencee. However, the assessing Officer, disallowed the cash deposits which were in excess of Rs.20,000/- and passed an order accordingly.
The Commissioner of Income Tax (Appeals) confirmed the said additions with slight modifications. Therefore, the assessee preferred a second appeal before the Income Tax Appellate Tribunal.
The Tribunal found that the transaction made by the assessee was genuine while considering the facts and circumstances of the case.The assessee followed the mandatory requirement which was prescribed by the State government. Regarding the application of section 40A(3) of the Income Tax Act, in the present case, the tribunal observed that “we find from the CBDT Circular No. 6P dated 06.07.1968 that this provision under section 40A(3) was designed to counter evasion of tax through claims for expenditure shown to have been incurred in cash with a view to frustrating proper investigation by the department as to the identity of the payee and reasonableness of the payment. When this is the primary object of enacting section 40A(3), we will have to see whether the payments made by the assessee into the account of M/s. IFB Agro Industries Limited, Durgapur would frustrate the purpose of enactment of section 40A(3). By virtue of payment through cash dated 04.09.2006, the wholesale licensee with exclusive privilege for bottling and/or sale by wholesale country spirit in sealed or capsule bottles and for manufacture and wholesale supply of country spirit in bulk litter enjoyed now by the holders of license in terms of section 22 of the Bengal Excise Act, 1909 and IFB Agro Industries Limited, Durgapur has become an arm of State Government. On this aspect, for all practical purposes, the relationship between the Government and wholesale licensee in so far as dealing with the country made liquor is concerned, i.e. the principal and agent, subject to the territorial limitation prescribed in such Notification. We, therefore, can safely conclude that the payments made to M/s. IFB Agro industries Limited, Durgapur for all practical purposes are the payments to be reached to the State Government and once this is so, the said wholesale licensee shall be construed as an agent of the State Government. We, therefore, can safely conclude that once such payments are made to the credit of IFB Agro Industries Limited, Durgapur, the source and destination of such funds cannot be doubted. Therefore, the provision of section 40A(3) is not frustrated by the assessee making payments into the account of M/s. IFB Agro Industries Limited, Durgapur maintained in the State Bank.”
Read the full text of the order below.
The Ministry of Finance has notified CENVAT Credit (Tenth Amendment) Rules, 2016.
In rule 9 of the CENVAT Credit rules, 2004, dealing with documents and accounts, Government has substituted a clause ‘fa’ which is “(fa) a Service Tax Certificate for Transportation of goods by rail issued by the Indian Railways; or”..
In the said notification, the Central Board of Excise and Customs has amended to the effect that photocopies of the railway receipts shall be enclosed with the STTG certificate in case of availing CENVAT credit of service tax paid on transportation of goods by rail. Following the notification, the Board further issued a circular toits officials prescribing the procedure to be followed in respect of availing CENVAT credit of service tax paid on transportation of goods by rail.
In the recent circular issued by the CBEC directed that the STTG certificate, which includes the particulars of the customer, shall be to the consignor/consignee for the purpose of availing CENVAT credit. The format of the said certificate is available with the present circular.
It is further directed that in cases where the Service Tax paid by the consignor and he intends to avail the CENVAT credit, he may avail the same on the strength of the STTG certificate issued in his namein the format prescribed in the circular.
As per the circular, the CENVAT credit can also be availed by an eligible consignee by making a written request to raileays for issue of consignee-wise STTG certificate in the prescribed form. The consignee-wise certicate cannot be issued if a certificate is already issued in terms of clause (iii) of the circular.
The amended rules shall came into force on 20th September 2016.
Read the full text of the notification below.
Advancement of budget presentation and merger of plan and non-plan classification in budget and accounts.
The Union Cabinet has approved the proposals of Ministry of Finance on certain landmark budgetary reforms relating to (i) the merger of Railway budget with the General budget, (ii) the advancement of the date of Budget presentation from the last day of February to the 1st of February and (iii) the merger of the Plan and the Non-Plan classification in the Budget and Accounts. All these changes will be put into effect simultaneously from the Budget 2017-18.
Merger of Railway Budget with the General Budget:
The arrangements for merger of Railway budget with the General budget have been approved by the Cabinet with the following administrative and financial arrangements-
(i) The Railways will continue to maintain its distinct entity -as a departmentally run commercial undertaking as at present;
(ii) Railways will retain their functional autonomy and delegation of financial powers etc. as per the existing guidelines;
(iii)The existing financial arrangements will continue wherein Railways will meet all their revenue expenditure, including ordinary working expenses, pay and allowances and pensions etc. from their revenue receipts;
(iv)The Capital at charge of the Railways estimated at Rs.2.27 lakh crore on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 and Ministry of Railways will get Gross Budgetary support. This will also save Railways from the liability of payment of approximately Rs.9,700 crore annual dividend to the Government of India;
The presentation of separate Railway budget started in the year 1924, and has continued after independence as a convention rather than under Constitutional provisions.
The merger would help in the following ways:
Advancement of the Budget presentation:
The Cabinet has also approved, in principle, another reform relating to budgetary process, for advancement of the date of Budget presentation from the last day of February to a suitable date. The exact date of presentation of Budget for 2017-18 would be decided keeping in view the date of assembly elections to be held in States.
This would help in following ways:
Merger of Plan and Non Plan classification in Budget and Accounts:
The third proposal approved by the Cabinet relates to the merger of Plan and Non Plan classification in Budget and Accounts from 2017-18, with continuance of earmarking of funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan. Similarly, the allocations for North Eastern States will also continue.
This would help in resolving the following issues:
The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has given its approval for signing and ratification of Agreement between India and Samoa for the exchange of information with respect to Taxes.
The Agreement will stimulate the flow of exchange of information between India and Samoa for tax purposes which will help curb tax evasion and tax avoidance.
There is no financial implications at present. Only in the event of extraordinary costs exceeding USD 500, the same will be borne by India. India has similar provisions in other such tax information exchange agreement.
Salient features of the Agreement:
Background:
The Central Government is authorized under section 90 of the Income Tax Act, 1961 to enter into an Agreement with a foreign country or specified territory for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under the Income-tax Act, 1961. Negotiations for entering into an Agreement for the exchange of information with respect to Taxes were finalized between India and Samoa in June, 2016 and both countries have agreed on the text of the Agreement.
