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Tax Cases Weekly Round-Up: 22 May To 28 May 2022

Mariya Paliwala
29 May 2022 6:51 AM GMT
Tax Cases Weekly Round-Up: 22 May To 28 May 2022
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Supreme Court Case Name: Union of India And Anr. v. M/s. Mohit Minerals Through Director Citation: 2022 LiveLaw (SC) 500 Separate IGST On Indian Importers For Ocean Freight Against Concept Of "Composite Supply", Violates Section 8 CGST Act : Supreme Court The Supreme Court has held when the Indian importer is liable to pay Integrated Goods and Services Tax (GST) on...

Supreme Court

Case Name: Union of India And Anr. v. M/s. Mohit Minerals Through Director

Citation: 2022 LiveLaw (SC) 500

Separate IGST On Indian Importers For Ocean Freight Against Concept Of "Composite Supply", Violates Section 8 CGST Act : Supreme Court

The Supreme Court has held when the Indian importer is liable to pay Integrated Goods and Services Tax (GST) on the 'composite supply', which includes supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on them for the 'supply of services' by the shipping line would be in violation of Section 8 of the CGST Act.

Indian Company Liable To Service Tax On Secondment Of Employees From Overseas Group Entities As Recipient Of Manpower Supply: Supreme Court

Case Name: C.C., C.E. & S.T. - Bangalore (Adjudication) Etc. v. M/s. Northern Operating Systems Pvt. Ltd.

Citation: 2022 LiveLaw (SC) 526

The Supreme Court has held that when the Overseas group companies providing skilled employees, on secondment basis, to its Indian counterparts amounts to supply of manpower services, the Indian company would be considered as service recipient. Therefore, the Indian company is liable to pay service tax on the salaries of the seconded employees reimbursed to the overseas company.

Delhi High Court

Licensing Of Software Products By Microsoft Is Not Taxable In India As Royalty: Delhi High Court

Case Title: CIT Versus Microsoft Corporation

Citation: 2022 LiveLaw (Del) 483

The Delhi High Court bench of Justice Manmohan and Justice Sudhir Kumar Jain has ruled that licensing of software products by Microsoft in the Territory of India by Microsoft is not taxable in India as royalty.

Taxpayers Have Independent Statutory Right To File A Reply To Show Cause Notice And Draft Assessment Order: Delhi High Court

Case Title: Ketan Ribbons Pvt Ltd Vs National Faceless Assessment Centre Delhi

Citation: 2022 LiveLaw (Del) 498

The Delhi High Court bench of Justice Manmohan and Justice Manmeet Preetam Singh Arora, while directing the National Faceless Assessment Centre (NFAC) to pass the fresh assessment order, held that the taxpayers have an independent statutory right to file a reply to the show cause notice and draft assessment order.

Kerala High Court

Credit Notes Not Affecting Input Tax Can't Be Treated As Taxable Turnover: Kerala High Court

Case Title: Saji Thomas Vs Assistant Commissioner

The Kerala High Court bench of Justice S.V. Bhatti, Bechu Kurian Thomas, and Justice Basant Balaji has held that credit notes not affecting input tax already deposited cannot be treated as taxable turnover by the extended meaning of Section 2 subsection (iii) Explanation VII of the Kerala Value Added Tax Act.

Calcutta High Court

Personal Hearing By Way Of Exchange Of Chat Messages Not An Effective Opportunity Of Personal Hearing: Calcutta High Court

Case Title: SREI Equipment Finance Limited versus Additional/Joint/Deputy/Assistant Commissioner of Income Tax and Ors

Case Citation: 2022 LiveLaw (Cal) 206

The Calcutta High Court has ruled that personal hearing conducted by way of exchange of chat messages cannot be said to be an effective opportunity of personal hearing to the assessee and that it does not satisfy the test of fairness or the principles of fair play.

Madras High Court

Madras High Court Upholds Validity Of Section 6 Of The Tamil Nadu Value Added Tax Act 2006

Case Title: M/s. LG Electronics India Pvt Ltd v. The State of Tamil Nadu and Another with connected cases.

Citation: 2022 LiveLaw (mad) 227

The Madras High Court recently upheld the validity of amendments made to Section 6 of The Tamil Nadu Value Added Tax Act, 2006. The court observed that in matters relating to tax, the interest of the State must be considered as against the interest of certain individuals.

Rajasthan High Court

Constitutionality Of First Proviso To Section 148 Of Income Tax Act, Rajasthan High Court Issues Notice To Govt.

Case Title: Maya Rathi Versus ITO

The Rajasthan High Court bench headed by Acting Chief Justice Manindra Mohan Shrivastava and Justice Sameer Jain has issued the notice to the government on a plea challenging the validity of the first proviso to section 148 of the Income Tax Act by granting arbitrary powers to the AO.

Orissa High Court

ITC Transfer From One State To Another Is Not An Inward Supply: Orissa High Court

Case Title: M/s. JSW Steel Ltd. Versus Union of India

The Orissa High Court bench of Justice Jaswant Singh and Justice M.S. Raman has ruled that an input service distributor (ISD) can claim ITC only in the case of an inward supply, and an ITC transfer from one state to another is not an inward supply.

Meghalaya High Court

​​Income Tax Act | No Order Can Be Passed U/S 148A(d) Without Taking Into Consideration Reply Filed By Assessee To Notice U/S 148A(b):Meghalaya HC

Case Title: Jasmine Bonny Agitok Sangma v. Union of India & Ors.

Citation: 2022 LiveLaw (Meg) 16

A Division Bench comprising of Chief Justice Sanjib Banerjee and Justice W. Diengdoh of Meghalaya High Courthas held that no order can be passed under Section 148A(d) of the Income Tax Act, 1961, without taking into consideration reply filed by an assessee to the initial notice issued under Section 148A(b).

ITAT

Husband Entitled Capital Gain Exemption For Asset Bought In The Name Of The Wife: ITAT

Case Title: Kaushlendra Singh Versus ITO

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) consisting of Dr. S. Seethalashmi (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) held that the husband was entitled to a capital gain exemption for assets bought in the name of the wife.

Delay In Filing Appeal Based On COVID-19 Reasons: ITAT Imposes Penalty Of Rs.25,000

Case Title: M/s. Kal Airways Private Limited Versus DCIT

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) headed by Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant Member) has imposed a penalty of Rs. 25,000 on the assessee for the delay of 1217 days in filing the appeal due to COVID-19.

Failure Of Assessee To Reply To Income Tax Notice Due To COVID: ITAT Directs Fresh Adjudication

Case Title: M/s. Madanthyar Primary Agricultural Credit Co-operative Society Versus DCIT

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the assessee could not respond to the notices in view of the pandemic situation, which has to be accepted as a reasonable cause.

The two-member bench headed by N.V. Vasudevan (Vice President) and Chandra Poojari (Accountant Member) set aside the orders of the CIT (A) and remanded the issue to the CIT (A) for a decision afresh after affording the assessee an opportunity to be heard.

Income Tax Penalty Can't Be Imposed For Committing Unintentional Error In Form-16: ITAT

Case Title: Anmole Singh Ghuman Versus ITO

The Pune bench of the Income Tax Appellate Tribunal (ITAT) consisting of S.S. Viswanethra Ravi (Judicial Member) and Inturi Rama Rao (Accountant Member) has ruled that the income tax penalty cannot be imposed for committing an unintentional error on Form-16.

Loss Arising Out Of Sale Of Government Securities Is A Trading Loss: ITAT

Case Title: Asst. Commissioner of Income Tax Versus The Eluru Cooperative Urban Bank Limited

The Visakhapatnam Bench of the Income Tax Appellate Tribunal (ITAT) held that the loss arising out of the sale of government securities is a trading loss.

The two-member bench of Duvvuru Rl Reddy (Judicial Member) and S. Balakrishnan (Accountant Member) observed that the treatment of securities of the AFS (available for sale) categories has to be seen in contradiction and contrast with securities of the HTM (held to maturity) categories, which are purchased and held for the purpose of investment only.

CESTAT

Composition Scheme On Works Contract Cannot Be Denied On The Ground That Service Tax Was Discharged Earlier: CESTAT Bangalore

Case Title: M/s MFAR Construction Private Limited versus C.C.E & C.S.T.- Bangalore Service Tax- I

The Bangalore Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has reiterated that Composition Scheme for payment of Service Tax on Works Contract cannot be denied merely on the ground of discharge of Service Tax under a different head prior to 01.06.2007.

The Bench, consisting of members P Dinesha (Judicial Member) and P. Anjani Kumar (Technical Member), held that Works Contract Services are liable to Service Tax only from 01.06.2007. The CESTAT ruled that the appellant could not be put to jeopardy for the reason that it had been paying Service Tax before 01.06.2007 even though it was not legally required to pay.

Proceedings Can't Be Initiated When Excise Duty Was Paid Prior To Issuance Of Show Cause Notice: CESTAT

Case Title: M/s. Surya Alloy Industries Limited Versus Commissioner of CGST & CX

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of P.K. Choudhary (Judicial Member) has held that the authorities had no jurisdiction to initiate proceedings as the assessee had paid the excise duty along with the interest prior to the issuance of the show cause notice.

Failure Of Customs Broker To Observe Due Diligence Leading To Facilitate Fake Importers: CESTAT Revokes Licence

Case Title: M/s. Sky Sea Services Versus Commissioner of Customs (General), Mumbai

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) affirmed the revocation of the customs broker's licence because the customs broker failed to conduct due diligence, allowing fake importers to operate.

The two-member bench of S.K. Mohanty (Judicial Member) and P. Anjani Kumar (Technical Member) observed that the institution of customs brokers was created to facilitate the import and export of trade and, at the same time, to take care of the interests of revenue. Thus, a great responsibility has been cast upon the customs brokers to exercise due diligence while conducting their business.

CESTAT Allows Cenvat Credit To The Member Of Industries Association Who Received Services And Borne Expenditure

Case Title: Gujarat Guardian Limited Versus C.C.E. & S.T.-Vadodara-ii

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Ramesh Nair (Judicial Member) has held that the member of an industry association who has received the services and borne the expenditure is entitled to the cenvat credit.

CESTAT Allows Cenvat Credit On Insurance Services

Case Title: Milestone Preservatives Pvt. Limited

The Ahmedabad Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Ramesh Nair (Judicial Member) has allowed the Cenvat credit on insurance services.

No Service Tax Leviable On Toll Collection, Toll Collector Not A Commission Agent: CESTAT Mumbai

Case Title: Souvenir Developers India Pvt Ltd versus Commissioner of Central Excise, Customs & Service Tax– I

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that any amount retained by a toll collector while undertaking toll-collection activity does not attract service tax since the said activity does not constitute a service rendered by a commission agent and thus it does not fall within the purview of a 'business auxiliary service' under the erstwhile Section 65(19) of the Finance Act, 1994.

AAAR

LNG Jetties Is Not In The Nature Of 'Plant And Machinery', ITC Not Eligible: Gujarat AAAR

Appellant's Name: M/s. Swan LNG Pvt. Ltd.

The Gujarat Appellate Authority of Advance Ruling (AAAR), comprised of Seema Arora and Milind Torawane, ruled that LNG jetties are not in the nature of "plant and machinery," but rather serve as the foundation for the installation of re-gasification equipment, apparatus, and machinery.The input tax credit on inputs, input services, and capital goods for the purpose of building these LNG jetties is not admissible.

AAR

GST Not Leviable On Services By Security Manager Located Outside India For Subscription To Secured Notes : Gujarat AAR

Applicant's Name: M/s. Adani Green Energy Ltd

The Gujarat Authority of Advance Ruling (AAR), consisting of members Atul Mehta and Arun Richard, has ruled that GST is not leviable on services by security managers located outside India for subscription to secured notes placed in the USA.

Air Circulation Fans Supplied To Poultry House For Providing Ventilation To Livestock Attracts 18% GST: Gujarat AAR

Applicant's Name: M/s. Naimunnisha Nadeali Saiyed (legal name M/s. Star Enterprise)

The Gujarat Authority of Advance Ruling (AAR)consisting of Arun Richard and Atul Mehta has ruled that the 18% GST is payable on air circulation fans supplied to poultry houses for the purpose of providing ventilation to livestock.

Sale Of Second Hand 'Paintings' Attracts 12% GST: Maharashtra AAR

Applicant's Name: M/s. Saffron Art Private Limited

The Maharashtra Authority of Advance Ruling (AAR) consisting of Rajiv Magoo and T.R. Ramnani has ruled that the 12% GST is payable on the sale of second-hand paintings.

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