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CESTAT LB : 'Optical fibre cables' imported for telecommunication not individually 'sheathed', dutiable under CTH

CESTAT Larger Bench upholds classification of 'Optical Fibre Cables’ (OFC) imported for use in Telecommunication under CTH 90.01, leviable to customs duty at 10% under Notification No. 21/2002-Cus; Rejects assessees’ plea that telecommunication wires and cables are classifiable under CTH 85.44 and OFC in present case, consist of dual layers of Acrylic Coating over core and cladding which result in 'individually sheathed fibre', thus satisfying description of said CTH as well as design, feature and use stated in HSN Explanatory Notes thereto; Remarks that Tariff does not make distinction between CTH 85.44 and 90.01 on the basis of product use and sole distinction is based on manner in which fibres are 'sheathed', and that CTH 85.44 is not limited to telecommunication wires but covers all insulated wires and cables; Holds that simultaneous use of words “impregnated”, “coated”, “covered” or “sheathed” at various places in Tariff makes it clear that terms ‘coating’ and ‘sheathing’ have different meanings, while observing that colouring is solely for identification of fibres at both ends and no conclusion regarding ‘dual acrylic coating’ constituting sheath can be arrived basis same; Consequently, concurs with Division Bench decision in Reliance Communications Infrastructure Ltd. and findings of AAR in case of Alcatel Ltd., holding that OFCs made of individually sheathed fibres are only classifiable under CTH 85.44, while others would fall under CTH 90.01 : Mumbai CESTAT

ITAT : Deletes addition u/s 41(1) for commission overdue to Kuwaiti agent for over 1400 days

Mumbai ITAT deletes addition u/s. 41(1) [on account of cessation of trading liability] in case assessee-company (engaged in engineering, designing services for oil & gas industry) with respect to outstanding commission payable to its agent in Kuwait (‘creditor’) for AY 2011-12;  ITAT notes that assessee had entered into MoU with the creditor for procuring business for assessee in Kuwait, noting that the creditor did not make any request for clearance of commission of  Rs. 34.90 lakhs outstanding for more than 1460 days, AO made addition u/s. 41(1) treating it as liability ceased; Rejecting Revenue’s action, ITAT notes that under the MoU, commission was payable only on realization of proceeds from customers procured by agent, thus observes that the commission payable was outstanding as the agent could not recover sales proceeds from customer;  Holds that by withholding commission payments of agent with respect to overdue payment from its debtors, assessee has acted in a manner consistent with principles of commercial expediency and in accordance with the terms of MOU, thus remarks that “ … Revenue cannot direct assessee to act in a manner in defiance to the principles of commercial expediency and in turn to damage its own business interest.”;  Observes that assessee had also produced details of court cases at Kuwait and correspondences with its overseas buyers/agents with respect to its efforts for making recovery etc. to justify that the payments were still due from the customers:ITAT 

After Katrina Kaif, Priyanka Chopra In Income-Tax Dragnet + Imp Verdict On Bogus Penny Stocks Capital Gains

Pr CIT vs. Prem Pal Gandhi (P&H High Court)

Bogus capital gains from Penny stocks: The fact that the appreciation in the value of the shares is high does not justify the transactions being treated as fictitious and the capital gains being assessed as undisclosed income if (a) the shares are traded on the Stock Exchange, (b) the payments and receipts are routed through the bank, (c) there is no evidence to indicate it is a closely held company and (d) the trading on the Stock Exchange was manipulated in any manner

HC : Suspends DGFT's demand notice seeking recovery of SFIS benefits vis-a-vis foreign brands

Delhi HC suspends demand notice issued by DGFT officers seeking recovery of sanctioned SFIS benefits under relevant FTP during the period 2003 to 2014; Demand had been raised pursuant to Bombay HC ruling in Shri. Naman Hotels wherein it was held that SFIS benefits cannot be availed by companies rendering services under foreign brand; Court notes petitioner’s reliance on judgment in Simplex Infrastructure Ltd which had followed Gujarat HC decision in Alstom India Ltd; Petitioner has challenged vires  of Rule 7(3) of Foreign Trade (Development & Regulation) Rules, Para 7(10) of FTP, constitution of Policy Interpretation Committee (PIC) for the period prior to 2012, while pleading that concerned DGFT officers have no jurisdiction to issue such demand notice in contravention of Section 16 of Foreign Trade (Development and Regulation) Act; HC issues notice to Revenue, and lists the matter for hearing on April 9, 2018 : Delhi HC

SC : Ankitech ruling on ‘deemed dividend’ requires re-consideration, refers matter to larger bench

SC division bench refers to larger bench on the issue of whether shareholder must be a 'registered shareholder' and also a ‘beneficial shareholder’ to trigger deemed dividend taxability us. 2(22)(e), ‘prima facie’ opines that the co-ordinate bench ruling in Ankitech Pvt. Ltd.  requires reconsideration; SC notes that assessee (a partnership firm) had taken a loan from a company in which it beneficially held 48.19% shareholding in the name of 2 of its partners who were on company's register as members; Assessee had argued that in view of the recent co-ordinate bench ruling approving Delhi HC ruling in Ankitech Pvt. Ltd., provisions of Sec. 2(22)(e) would not apply to assessee firm which is not a registered shareholder of lender company; Firstly, SC examines the legislative history of 'deemed dividend' provisions including provisions under 1922 Act, perusing 1988 amendment to Sec. 2(22)(e) of the Income-tax Act, 1961, observes that under amended provisions, a ‘shareholder’ is a person who is the beneficial owner of shares and a new category was added to the definition by introducing concerns in which such shareholder is a member or partner; SC then takes note of Delhi HC rulings in Ankitech Pvt. Ltd. (approved by co-ordinate bench) and Madhur Housing and Development Company wherein it was held that the expression ‘shareholder’ would continue to mean a registered shareholder even after the amendment; Further, SC notes that HC in present assessee’s case had held that the expression ‘being a person who is a beneficial owner of shares’ would be in addition to the shareholder first being a registered shareholder of the Company, but it had ruled that a partnership firm can be treated as a shareholder even if its not a registered shareholder, observes that "it is very difficult to accept the reasoning of the Division Bench";  SC remarks that “the whole object of the amended provision would be stultified if the Division Bench judgment were to be followed. Ankitech’s case, in stating that no change was made by introducing the deeming fiction insofar as the expression ‘shareholder’ is concerned is, according to us, wrongly decided.”; Referring to Explanatory memorandum to 1988 amendment, SC notes that purpose was to get over the two SC judgments in C.P. Sarathy Mudaliar and Rameshwari Lal Sanwarmal and “'shareholder’ now, post amendment, has only to be a person who is the beneficial owner of shares”, explains that one cannot be a registered owner and beneficial owner in the sense of a beneficiary of a trust or otherwise at the same time; Further, referring to additional condition of beneficial owner holding not less than 10% of voting power, remarks that “This is another indicator that the amendment speaks only of a beneficial shareholder who can compel the registered owner to vote in a particular way”; Observing that "To state, therefore, that two conditions have to be satisfied, namely, that the shareholder must first be a registered shareholder and thereafter, also be a beneficial owner is not only mutually contradictory but is plainly incorrect", places the matter before the Chief Justice to constitute an appropriate Bench of three Judges in order to have a relook at the entire question.:SC 

In case of wilful non-payment of tax for a long period, assessee deserves NO sympathy if compounding fees turn out to be more than princpal amount: HC

 THE issue before the Bench is - Whether in a case of wilful non-payment of tax for a long period, assessee deserves any sympathy if compounding fees turn out to be more than the princpal. NO is the verdict.   

For invocation of provisions of Sec 2(22)(e), requirement of a registered shareholder who is also required to be beneficial owner, is mutually contradictory; Issue referred to Larger Bench of Supreme Court

THE issue is - Whether, for the invocation of provisions of Sec 2(22)(e), the requirement of a registered shareholder who is also needed to be a beneficial owner of shares, is mutually contradictory. YES is the answer and the question of law is referred to the Larger Bench.

Facts of the case   

A restricted remand was not sought by appellant as erroneously understood by Tribunal : High Court

THE appellant is a manufacturer of transformers and also undertakes maintenance and repair as well as commissioning and installation of the said transformers on which they discharge service tax liability. In addition to such activities, appellant undertakes repair of transformers of various States Electricity Boards by quoting on tender for such activity. Needless to mention that the transformers so received from the Electricity Boards are not manufactured by the appellant but some other manufacturers.  

Admission of bogus purchases to inflate work in progress during search necessarily invites imposition of penalty: ITAT

THE issue is - Whether admission of bogus purchases to inflate work in progress during search necessarily invites imposition of penalty. YES is the answer.

Facts of the case:

If refund of advance tax is made but re-assessment leads to determination of escapement of income, such a situation does not warrant levy of interest u/s 234: HC

THE issue is - Whether if refund of advance tax is made but re-assessment leads to determination of escapement of income, such a situation warrants levy of interest u/s 234. NO is the verdict.

Facts of the case   

Panama, Malaysia and 4 others sign MLI taking total tally of signatories to 78

Six more countries (Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia) sign the BEPS Multilateral Convention, bringing the total number of signatories to 78; Further, four more jurisdictions (Algeria, Kazakhstan, Oman and Swaziland) express their intent to sign the Convention while a number of other jurisdictions are actively working towards signature by June 2018; OECD press release further updates that “ four jurisdictions – Austria, the Isle of Man, Jersey and Poland – have ratified the Convention, which will enter into force three months after a fifth jurisdiction deposits its instrument of ratification.”; Elated with this development,  OECD Secretary-General Angel Gurría remarks that “Today’s signing of the multilateral convention is another major step towards updating the international tax rules through the swift implementation of the BEPS package” 

President gives nod to hike in Compensation Cess on motor vehicles

President gives assent to amendment to Goods & Services Tax (Compensation to States) Act, 2017; The Goods and Services Tax (Compensation to States) Amendment Act, 2017 shall be deemed to have come into force from September 2, 2017; Vide said amendment, Compensation Cess on motor vehicles for transportation of 10 or more persons as well as SUVs, mid-size, large and luxury cars has been hiked to 25% ad valorem (from 15% ad valorem); Accordingly, repeals the Goods & Services Tax (Compensation to States) Amendment Ordinance 2017 

Stays provisional safeguard duty imposition on "solar cells" before initiation notification expiry

Madras HC directs continuance of status quo and bars precipitative action by Central Govt. pursuant to preliminary findings by Director General (DG) Safeguards recommending a provisional safeguard duty at 70% ad valorem on import of “Solar Cells"; Notes assessee’s challenge to the preliminary findings on premise that they are in violation of principles of natural justice, being made before expiry of 30 days as provided in initiation notification; As per assessee, it is entitled to be heard in the matter and therefore, notification issued without doing is illegal, arbitrary, without authority of law and in contravention of Customs Tariff Act, 1975 r/w Rule 6 of Custom Tariff (Identification and Assessment of Safeguard duty) Rules, 1997; Further notes assessee’s challenge to recommendation of DG Safeguard for exemption of safeguard duty on clearance made from SEZ to DTA, contending that DG Safeguards does not have the power to recommend exemption in terms of 8B(2) of Customs Tariff Act: HC issues notice to Revenue while posting the matter for hearing on February 2, 2018 : Madras HC

ITAT : Grants relief to builders consortium; No transfer absent agreement registration, applies Balbir Singh (SC)

Delhi ITAT rules that amount received by the assessees (who have formed a consortium for the purpose integrated township development) on account of transfer of development rights in the underlying land during AY 2008-09, not chargeable to tax u/s. 2(47)(v), being not accrued to assessees in subject AY; ITAT notes that assessees have entered into agreement for the development of integrated township in February, 2007 with the Ghaziabad Development Authority (GDA)  which had also agreed to provide assistance in acquisition of land other than the land owned by the consortium parties so as to complete 72.9 acres; ITAT further notes that the consortium parties entered into a shareholders’ agreement with a financial partner on 18th May 2007to form SPV and under the shareholders agreement, the assessees’ land and development rights together were valued at Rs. 103.45 crores, which were paid 60% in cash and 40% in terms of equity shares / debentures and land was vested in SPV; Rejects Revenue’s stand that since the possession of land was handed over by assessees to the SPV, it amounted to transfer in terms of section 2(47)(v), observes that the  shareholders agreement was not registered which is the condition precedent to give effect to Sec. 53A of the Transfer of Property Act, applies the ratio laid down by SC in case of Balbir Singh Maini; Further notes that the consortium parties were under obligation to provide the developed land along with necessary approvals and permissions from the concerned competent authorities and in case they failed to provide the agreed FSI, then the consortium parties would not be allowed to withdraw their amounts fixed under the agreement, thus ITAT holds that “unless and until the approvals and permissions are granted by GDA, it cannot be said that any income accrued to the appellants.”: ITAT accepts assessees’ stand that as and when the approvals would be granted in subsequent years, the proportionate amount out of the advance so received under the shareholders agreement shall be offered to tax:ITAT 

HC : Disallows Excise Duty credit utilisation towards NCCD & Education Cess to exempted manufacturer

HC disallows utilization of basic excise duty credit towards payment of NCCD and Education Cesses to motor cycle manufacturer (assessee) availing area based exemption under Notification No. 50/2003-CE; Rejects assessee’s plea that since final product is not exempt from NCCD and other Cesses, this would necessarily render provision of Rule 6 of CENVAT Credit Rules, 2004 (CCR) inapplicable; Observes, while it can be said that basic excise duty paid would be available for payment of NCCD and Cesses as they fall under category of “any duties of excise” imposed on the final product (excluding period subsequent to 2016 amendment in 5th proviso to Rule 3(4) whereby credit utilization has been restricted to NCCD alone), Rule 6 is intended to cover cases where the main duty i.e. basic excise duty is exempt; States that in present case, substantial duty invariably would be basic excise duty whereas NCCD and other Cesses are essentially surcharges calculated as percentage thereof; Elucidates, “…the intention was that when the final product is exempted from the payment of the substantial part of the aggregate of the levies in a case where apart from the excise duty, there are surcharges, as NCCD and cesses in this case, then when the assessee opts for the benefit of the exemption from the duty under Section 3, then it would not also, at the same time, claim further benefit by way of CENVAT credit…”; As regards imposition of 100% penalty u/s 11AC, HC upholds Revenue contention that mere deposit of duties, either before or after issuance of notice, would not absolve assessee from liability to pay penalty, be it under protest or otherwise, where assessee is otherwise found liable; Rejects assessee’s reliance on host of judicial precedents to plead that there was no mala fide intention and that matter involved legal interpretation, but accepts that it was of bona fide view that CENVAT credit utilization of basic excise duty paid on inputs was permissible against NCCD and Education Cesses; Finds no scope of any interpretation for including NCCD or Cesses under the expression “duty of excise” while noting that assessee’s ER-1 Returns also revealed its awareness about leviability of all duties of excise including NCCD and Cesses; Consequently, relying on SC ruling in Dharmendra Textile Processors, HC holds that “penalty is mandatory and there is no discretion to the authorities on quantum of such penalty”  : Uttarakhand HC

Launch of Self Help Portal

To enable you to express your issues and problems related to GST System and its services, GSTN is launching a Self Help Portal (https://selfservice.gstsystem.in/) as a single platform where tax payer call log tickets for any issues or concerns and for quick resolution.   This will be launched soon.   

ITAT : No PE for Booz UAE; Revenue’s reliance on AAR in group concern’s case, misplaced

Mumbai ITAT holds that consideration of Rs.112.83 lakhs received by assessee (a UAE based Booz group company) for providing technical/professional personnel to its Indian associated enterprise (i.e. Booz India)  during AY 2011-12, not taxable as business income under Article 7 of India-UAE DTAA absent assessee’s PE  in India; Rejects Revenue’s reliance on AAR ruling which had held in case of other Booz group companies that they had PE in India & income received by them from Indian companies was taxable as business profit under Article 7; ITAT accepts assessee’s stand that without examining the facts available in the present case, “the ruling given by AAR in the group concern’s case should not have been taken by the tax authorities as the basis for determining the existence or otherwise of PE of the assessee herein”;  Notes that the fees received by assessee for provision of technical/professional personnel were in the nature of business receipts;  However, observes that there was no service PE constituted since assessee’s employees worked for 156 solar days (i.e. lesser than 9 months threshold), also notes that there was no fixed place PE as Booz India did not earmark any specific place under the control or disposal of the assessee, further rejects constitution of dependent agency PE :ITAT 

Two Imp Verdicts

Indrani Sunil Pillai vs. ACIT (ITAT Mumbai)

S. 271(1)(c) penalty: If the AO has not recorded any satisfaction in absolute terms whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income, the levy of penalty is invalid. The judgement of the Bombay High Court in Maharaj Garage cannot be read out of context or in a manner to mean that there is no need for mentioning the specific limb of section 271(1)(c) of the Act for which the penalty was intended to be imposed, as such issue never came up for consideration before the High Court  

CBEC notifies reduction in delayed returns late fees, e-waybill website & amended CGST Rules

CBEC notifies reduction of late fee to Rs. 25 per day in case of delayed filing of Forms GSTR-1, GSTR-5, GSTR-5A, GSTR-6 while extending the last date for filing of Form GSTR-6 for the months of July 2017 to February 2018 till March 31; Also notifies CGST (Amendment) Rules 2018 inter alia extending the time limit for furnishing statement in    

Benefit of exemption u/s 54F is not limited to investments made on claimants' name only: HC

THE issue is - Whether Section 54F places a restriction that the investment should be in the name of assessee only, for purpose of seeking benefit of exemption under the said provision. NO IS THE VERDICT. Facts of the case: The Assessee, an individual, had filed its return declaring total income of Rs.2,18,610/- which includes income from long term capital gain on sale of agricultural land at Rs.31,500/-. The assessment was completed u/s 143(3) at total income of Rs.3,87,830/- by assessing the income from long term capital gain at Rs.2,00,219/-. For enhancing the income under the head long term capital gain, the AO observed that (i) sales consideration of the land as per the provision of section 50C was Rs.55,13,599/- as against Rs.55.00 lacs claimed by the assessee (ii) the assessee had claimed brokerage expenses of Rs.1 lacs but had failed to prove the source of it (iii) the assessee has claimed deduction u/s 54B at Rs.43,50,000/- which included Rs.11 lacs incurred on construction of boring & pipe, rooms, boundary walls and stamp duty but had proved the source of Rs.10,44,880/- only. The AO finally assessed total income at Rs. 3,87,330/- which included salary income of Rs. 2,12,340, capital gain of Rs. 2,00,219/- and income from other sources at Rs.47,817/-. In the meanwhile, the CIT had examined the assessment and found that the order of AO was erroneous and prejudicial to the interest of Revenue. High Court held that, ++ it is to be noted that in view of the decision of Malabar Industrial company Ltd., Sec.263 provisions are taken only on the ground of prejudicial and interest loss of the revenue to the Government. Merely change of opinion will not give any right u/s 263 hence, the issue regarding Sec. 263 is required to be answered in favour of the assessee and against the department; ++ on the ground of investment made by the assessee in the name of his wife, in view of the decision of Delhi High Court in Sunbeam Auto Ltd. and other judgments of different High Courts, the word used is assessee has to invest, but it is not specified that it is to be in the name of assessee. It is true that the contentions which have been raised by the department is that the investment is made by the assessee in his own name but the legislature while using language has not used specific language with precision and the second reason is that view has also been taken by the Delhi High Court that it can be in the name of wife. In that view of the matter, the contention raised by the assessee is required to be accepted with regard to Section 54B regarding investment in tubewell and others. In the considered opinion of this court, for the purpose of carrying on the agricultural activity, tubewell and other expenses are for betterment of land and therefore, it will be considered a part of investment in the land and same is required to be accepted.

A Fiction- Trouble on transporters due to E-Way bill

Arjuna (Fictional Character): Krishna, There was Festival of Makar Sankrant yesterday. The Government also has given the Til-Gul of E-Way bill to the taxpayers. But now due to E-Way bills on whom the ‘Sankrant’ will come i.e. Trouble?

Krishna (Fictional Character): Arjuna, E-way bill is an electronic document generated on the GST portal evidencing movement of goods. The nationwide e-way Bill system will be ready to be rolled out on a trial basis latest by 16th January, 2018 i.e, from tomorrow and from the 1st February the implementation of nationwide e-way Bill system for interstate supply will be done on a compulsory basis. Therefore, the Sankrant will come on Consignor, Consignee and transporter.

Arjuna: Krishna, what is the importance of E-way bill for Consignor?

Krishna: Arjuna, Consignor means supplier. Every registered person who causes movement of goods of consignment value more than Rs. 50000/- is required to furnish E-way bill. In that the details of GSTIN of recipient, place of delivery (PIN Code), invoice or challan number and date, value of goods, HSN code, transport document number etc are to be given. On the basis of this information, the GSTR 1 of the supplier will be generated on the portal. That’s why it is important for the Consignor.

Arjuna: Krishna, what is the importance of E-way bill for Consignee?

Krishna: Arjuna, Consignee means receiver. The e-way bill is very much important for the consignee. All the details of consignment received can be cross checked by E-way bill. Whether the supply is as per our requirement?, its value, HSN Codes, etc can be verified through E-way bill. ITC allowance may be affected due to this on the proof of receipt of goods. As, ITC is available on receipt of goods only.

Arjuna: Krishna, Is there any relation between transporter and E-way bill?

Krishna: Arjuna, Transporter is an important link between consignor and consignee. If either the consignor or consignee do not generate the e-way bill and the value of goods is more than Rs.50,000/- then responsibility of the generating e-way bill will be of the transporter. Transporter should check whether the consignment is sent to right person, or received from correct supplier, Vehicle no., etc. Where a vehicle has been intercepted and detained, the transporter may upload the said information in FORM GST EWB-04 on the common portal. A taxable person who transports any taxable goods without the cover of e-way bill shall be liable to a penalty of Rs. 10,000/- or tax sought to be evaded whichever is greater.

Arjuna: Krishna, what is the importance of E-way bill for Tax officer?

Krishna: Arjuna, E-way bill and tax officer will come face to face at two times. First, they will check the consignment on the roads at the time of transportation and second, at the time of assessment, the tax officer will check the documents i.e, e-way bill. Where any contravention found, the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure. Unlawful acts of Consignor, consignee, transporter or tax officer may lead to corruption on the road.

Arjuna: Krishna, what lesson the taxpayer should take from this?

Krishna: Arjuna, The E-way bill is starting from 1^st February. The Sankrant will come on transporter. Transporter is an important link between consignor, consignee and transportation. If the transporter make any wrong things, then the consignor and consignee will be found in difficulty. Therefore, the transporter should  transport the  goods compliancing with the GST provisions

A financial transaction within the family members is not covered by provisions of Sec 269SS: ITAT

The issue is - Whether a financial transaction within the family members is covered by the provisions of Sec 269SS. NO is the answer.   

ITAT : Imposes stay conditions similar to Google, directs Vodafone to pay further Rs. 5 cr

Bengaluru ITAT directs Vodafone Mobile Services Ltd. (‘assessee’) to pay Rs. 5 Cr on or before January 31, 2018 and retain balance of another 20% (rounded off to Rs. 10 cr.) as balance in its bank account while granting stay for 3 months for balance amount; Firstly, ITAT holds that there is no ‘prima facie’ case in favour of the assessee as the issue involved in appeal (i.e. TDS applicability on interconnect charges payment to foreign carriers) is covered against the assessee by earlier year order in assessee’s own case; Next, ITAT relies on jurisdictional HC ruling in Google India Private Ltd. wherein it was held that for granting stay, payment of 55% of disputed demand and retaining balance of another 20% of disputed demand in assessee’s bank account is just & proper condition; Further, ITAT rejects giving much importance to the rectification application filed by assessee (which according to assessee would reduce the total demand for subject AY  to Rs.34.66 cr.) as such application was filed by assessee just a day prior to filing stay application and therefore, could not be considered by AO, moreover, ITAT observes that assessee did not demonstrate any ‘financial hardship’,  cites SC ruling in Dunlop India Ltd.; Noting that on payment of Rs.5 cr., the total payment against the outstanding demand comes to 42.5% of the total disputed demand of Rs.47.05 Cr (and about 57.7% if rectification application is allowed), ITAT directs Revenue not to enforce recovery of the demand subject to assessee meeting the aforesaid twin conditions:ITAT 

HC : Upholds Joint Commissioner's revisional powers under UP Trade Tax, no separate authorization required

HC holds that Joint Commissioner (Executive) (JC) is empowered to exercise revisional powers comprised under Section 10­B of U.P. Trade Tax Act 1948; Rejects assessee’s plea that no notification has been issued by State Government conferring such authority, acts and decisions of JC cannot be validated or saved by application of “de facto” doctrine, hence exercise of power by JC was invalid, liable to be viewed as a mere usurper of office; Observes, a careful reading of Section 10B clearly establish that initially the provision empowered the Commissioner or such other officer not below the rank of Deputy Commissioner to exercise powers of revision and later words “Deputy Commissioner” was substituted by words “Joint Commissioner”; States, fact that Commissioner did not require separate authorisation by State Government or a notification/authorization is evident from a plain construct of Section 10­B and once Section 2(b) mandates recognition and inclusion of Joint Commissioner in expression “Commissioner”, there is, no requirement of separate authorisation/notification of conferment of such authority; Remarks,  “The classification or the description of different categories in the Rules framed under the 1948 Act clearly can neither control nor be determinative of the authority which may exercise powers under Section 10­B”, accordingly, dismisses assessee’s revision petitions : Allahabad HC

CBEC answers questions for Transport & Logistic sector; Clarifies road transport, air journeys taxability

CBEC releases FAQs for transport & logistics sector, says that while transportation of goods by road is exempt vide Notification No. 12/2017-Central Tax (Rate), person receiving commission from truck owners towards fixing of hire with GTA shall be liable to registration if the aggregate amount thereof exceeds Rs. 20 lakhs in an FY; A transporter is required to maintain records of consigner, consignee, goods transported, delivered and those stored in transit in terms of Section 35(2) of CGST Act r/w Rule 56 of CGST Rules; Further clarifies that any intermediary and ancillary service provided in relation to transportation of goods by road where charges thereof are included in invoice issued by GTA, would form part of composite GTA service and hence be taxable, however, incidental services provided as separate services and charged separately, whether in same invoice or not, would be treated as separate supplies; GTA providing service in relation to transportation of goods by road under reverse charge mechanism can avail the benefit of exemption from registration under Notification No. 5/2017-Central Tax, but sale or disposal of old vehicles, old tyres and scrap material by truck owner for a consideration would attract GST regardless of whether ITC has been availed or not; In relation to passenger transportation services by air, CBEC clarifies that a multi-leg international journey shall be treated as ‘continuous supply’ even if there is a stopover, however, in case of return journey, its place of supply being outside India, would be liable to tax if the location of supplier is in India  

ITAT : Rejects Revenue’s reference for Special Bench constitution on software taxation

Mumbai ITAT rejects Revenue’s request for constitution of Special Bench on software taxation matter involving various Reliance ADAG group of companies (‘assessees’)   rejects the constitution of Special Bench; ITAT (in its original order) had held that the receipts from sale of software was not taxable as ‘royalty’, however, upon writ filed against the MA order (recalling original ITAT order), HC had directed ITAT to dispose the appeals afresh and accordingly dismissed Revenue’s writ; After the writ dismissal,   

Finmin explains GST levy on accommodation, betting & gambling, horse racing, printing services

Finance Ministry (TRU) explains levy of GST on supply of services such as accommodation, homestays, betting and gambling in casinos, horse racing, admission to cinema, printing and legal; Reiterates that in case of accommodation services, declared / published tariff is relevant only for determination of tax rate slab and that GST will be payable on the actual amount charged (transaction value); As per Notification No. 11/2017-Central Tax (Rate), GST at 28% would apply on entry to casinos as well as on betting / gambling services provided by the casinos on transaction value of betting i.e. total bet value, in addition to GST on any other services such supply of food / drinks; In case of horse racing, GST would be leviable on entire bet value i.e. total of face value of any or all bets paid to totalizator or placed with licensed book makers, as the case may be; While room rent from in-patients in hospital is exempt, E-commerce Operators are liable to GST in case of accommodation services provided by person having turnover below threshold and such persons, even though they provide services through E-commerce Operators, are not required to take registration; As regards printing / publication / selling of books, Ministry clarifies that supply of books shall be treated as supply of goods as long as supplier owns the books and has legal rights to sell those books on his own account : Finance Ministry Circular 

Parliamentary Committee's Report on 'exports' inter alia recommends dispensing with "rigmarole" of refund mechanism

Dept. Related Parliamentary Standing Committee on Commerce presents 139th report on ‘Impact of GST on Exports’, notes several operational issues making refund procedure tardy & cumbersome while stating that significant time lag in providing refunds has supposedly eroded the competitiveness of exporters by around 1.2% to 2%; Finding that refunds are being disallowed on slightest pretext, Committee states that due diligence cannot be overplayed and accordingly, recommends a formal grievance redressal mechanism for exporters and establishment of a dedicated office/unit for continuous interaction which shall act as a single window; Also finds that new Drawback and ROSL rates (post transition, w.e.f. October 1, 2017) are low and not realistic, they do not capture various blocked taxes that reduce the cost competitiveness of various labour-intensive industries and therefore, recommends that Finance Ministry extend the pre-GST Duty Drawback rates till June 30, 2018 or till such time the Dept. works out revised rates; Further recommends that Govt. should provide such rates which would encompass all taxes including GST / IGST as well as embedded / blocked taxes and give exporters option to claim either drawback or ITC; Committee strongly recommends permitting Duty Credit Scrips for payment of GST in domestic procurements and for payment of IGST on exports and imports, while keeping ‘high seas trade’ outside the purview of GST where goods are directly delivered to customers outside India; According to Committee, reverse charge mechanism may be removed on permanent basis for procurements made in relation to exports, and suggests no GST on job-work for exports with a criminal penalty to ensure such products don’t enter domestic market; GST on export freights through air, sea and railway may be exempted or rationalised and Govt. should revisit definition of “export of service” u/s 2(6) of IGST Act to ensure that HO-branch transactions are kept outside GST ambit; Further, location of ‘recipient of service’ be treated as ‘place of supply’ in case of ‘intermediary’ services so that benefit of export of service would be available, suggests the Committee;  Also feels that GSTN did not get enough time for testing and even training to officers on ground on issues like LUT and related matters has not been adequate; Questioning the need to put exporters to rigmarole of paying taxes and taking refund, Committee feels that “a system may be devised to ensure that the procurement / manufacture for export purpose may be exempted from taxation system” : Dept-Related Parliamentary Standing Committee on Commerce Report 

HC : Reverses ITAT; Accrued FD interest not hypothetical income, TDS non-deduction u/s 194A irrelevant

Kerala HC reverses ITAT order for AY 2009-10, rules that interest income from bank deposits accrued but not due and hence not credited to assessee’s (a Public sector undertaking) account is taxable; Assessee had disclosed Rs. 3.23 cr accrued in the balance sheet as interest receivable on fixed deposits but excluded the same in its tax return claiming that it was only a hypothetical income and the right to receive had not accrued; Rejects assessee’s stand that since the b ank neither credited/paid the interest nor deducted TDS u/s. 194A, the question of accrual did not arise; HC observes that assessee follows mercantile system of accounting, further observes that assessee had exercised the option to let the interest accumulate to the deposit and thereby earned compound interest by the end of the deposit term; Clarifies that the Bank's liability to deduct tax at source arises only when it pays the interest and not on periodical accrual of interest, remarks that “the interest income that accrued cannot, by any stretch of imagination, be termed as hypothetical income”, relies on SC rulings in Tuticorin Alkali Chemicals and Fertilizers, Keshav Mills Ltd., distinguishes assessee’s reliance on SC ruling in Excel Industries Ltd.:HC