Supreme Court

Valuation Of Shares For The Purpose Of Gift Tax Should Take Into Consideration Limitation And Restrictions: Supreme Court

Case Title: Deputy Commissioner of Gift Tax Versus M/s BPL Limited

Citation: 2022 LiveLaw (SC) 848

The Supreme Court has held that the valuation of shares for the purpose of gift tax must take into consideration the limitations and restrictions.

The division bench of Justice Sanjiv Khanna and Justice J.K. Maheshwari has observed that the equity shares under the lock-in period were not "quoted shares", for the simple reason that the shares in the lock-in period were not quoted on any recognised stock exchange regularity from time to time. There are no current transactions relating to these shares made in the ordinary course of business. The equity shares, being under the lock-in period, could not be traded and, therefore, remained unquoted on any recognised stock exchange.

Advancement Of General Public Utility Won't Be "Charitable Purpose" For Income Tax Exemption If It Is Done As Business : Supreme Court

Case Title : Assistant Commissioner of Income Tax vs Ahmedabad Urban Development Authority and connected cases

Citation : 2022 LiveLaw (SC) 865

In a significant judgment, the Supreme Court has held that entities created with the object of advancing general public utility cannot seek exemption under the Income Tax Act 1961 under the head "charitable purposes" if they are engaging in any trade, business, commerce or providing any service for any consideration.

Statutory Authorities, Professional Bodies Like ICAI Entitled To Income Tax Exemption If Amounts Charged By Them Are Nominal To Cover Costs : Supreme Court

Case Title : Assistant Commissioner of Income Tax vs Ahmedabad Urban Development Authority and connected cases

Citation : 2022 LiveLaw (SC) 865

The Supreme Court has pronounced a significant judgment on the scope of exemption for "charitable purposes" under Section 2(15) of the Income Tax Act 1961 in relation to statutory authorities and professional bodies.

With effect from 01.04.2009, after the Finance Act 2009, a proviso was added to the section to state : "Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity".

Delhi High Court

TDS On NRI Payment: Delhi High Court Rejects Appeal By Revenue-Payment Found As Salary, Not Fees

Case Title: PCIT Versus M/s Boeing India Pvt. Ltd.

Citation: 2022 LiveLaw (Del) 985

The Delhi High Court, while upholding the order passed by the Income Tax Appellate Tribunal (ITAT), has held that the provision of TDS on NRI payments under Section 195 of the Income Tax Act has no application once the nature of payment is determined as salary and a deduction has been made under Section 192.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that the real employer of the seconded employees continues to be the Indian entity and not the overseas entity.

SCN Without Any Reasons: Delhi High Court Quashes Order Cancelling GST Registration

Case Title: Balaji Enterprises Versus Principal Additional Director General

Citation: 2022 LiveLaw (Del) 986

The Delhi High Court has quashed the order cancelling the GST registration as the Range Inspector has physically verified the premises, neither by serving any notice of the physical verification nor in the report generated after the verification was uploaded on the portal.

The division bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju has observed that there was an infraction of the provisions of Rule 25 of the CGST and the order has gone beyond the frame of the Show Cause Notice.

Bombay High Court

Financial Benefits To Assessee Can't Be A Ground To Levy Interest Without A Statutory Provision: Bombay High Court

Case Title: Mahindra & Mahindra Ltd. versus Union of India & Ors.

The Bombay High Court has ruled that penalty or interest on additional customs duty (CVD) and special additional duty of customs (SAD), or surcharge, which is not connected to the basic customs duty, cannot be imposed in the absence of an explicit substantive provision.

The Division Bench of Justices K.R. Shriram and A.S. Doctor observed that there was no substantive provision which obligated the assessee to pay interest or penalty on CVD or SAD, leviable under the Customs Tariff Act, 1975, or on the surcharge leviable under the Finance Act, 2000.

Madras High Court

GST Dept. To Consider Reply to SCN Sent By Assessee Through post and Not Portal: Madras High Court

Case Title: Asia (Chennai) Engineering Company Private Limited Versus The Assistant Commissioner (ST) (FAC)

Citation: 2022 LiveLaw (Mad) 431

The Madras High Court has held that the GST Department should consider a reply to a show cause notice even if it is sent by the assessee through the post and not the portal.

While rejecting the objection of the department that the postal/physical reply to them shall not be considered, the single bench of Justice M. Nirmal Kumar has directed the department to give an opportunity for personal hearing to the petitioner, hear the objections, peruse the documents submitted and the explanations.

Failure To Issue ASMT 10 In Respect Of Aspects Forming Subject Matter Of Proceedings Vitiates Entire Proceedings: Madras High Court

Case Title: M/s.Vadivel Pyrotech Private Limited Versus The Assistant Commissioner (ST)

Citation: 2022 LiveLaw (Mad) 438

The Madras High Court has held that ASMT 10 is mandatory before proceeding to issue GST DRC-01. Failure to issue ASMT 10 in respect of the discrepancies forming the subject matter in GST DRC-01 culminating in GST DRC-07 would vitiate the entire proceedings.

The single bench of Justice Mohammed Shaffiq has observed that any proceeding in GST DRC-01A/1 culminating in an Order in GST DRC-07, if pursuant to scrutiny under Section 61 of the TNGST Act, ought to be preceded by the issuance of Form ASMT 10.

Orissa High Court

Appellate Authority To Bear In Mind The Predicaments Faced By Taxpayers On Introduction Of GST Procedures: Orissa High Court

Case Title: Durga Raman Patnaik Vs Additional Commissioner of GST

The Orissa High Court has held that the Appellate Authority should have borne in mind the predicament faced by taxpayers on the introduction of a new set of procedures by way of the promulgation of the CGST Act and rules and that time is required to be taken to get acquainted.

The division bench of Justice Jaswant Singh and Justice Murahari Sri Raman has observed that it preferred to exercise its writ jurisdiction to undo prejudice and injustice caused to the petitioner as the Appellate Tribunal has not yet been constituted as per Section 109 of the CGST Act. There was no alternative remedy available for the petitioner to question the veracity of the order passed in the first appeal.

ITAT

Cess Received By Trust From Milk Societies, Against Sales Made ,Not Voluntary; Can't Be " Corpus Donation": ITAT

Case Title: Dudhsagar Research & Development Association versus ACIT(Exemption)

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the Cess received by a trust from the milk supplying societies, against the sales made by them to the Cooperative Milk Producers Union, cannot qualify as a "Corpus Donation" under the Income Tax Act, 1961, since they are not voluntary in nature.

The Bench of Siddhartha Nautiyal (Judicial Member) and Annapurna Gupta (Accountant Member) observed that the assessee trust- Dudhsagar Research & Development Association, passed a suo moto resolution to collect donations in the form of Cess from the milk societies, which depended on the quantity of milk fat supplied by them. Holding that the donors had no discretion in computing the quantum of Cess, the Tribunal ruled that merely producing a receipt which states that a certain amount was paid towards the corpus fund of the trust, cannot qualify the contribution as a "Corpus Donation".

IT Exemption To Defence Personnel Invalidated From Service Due To Disability: ITAT Rejects Revenue's Contention

Case Title: Aradhya Ghosh Versus DCIT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that income tax exemption shall be available to Defence Forces personnel who have been invalidated from service on account of bodily disability while in service.

The two-member bench of Chandra Mohan Garg (Judicial Member) has deleted the addition made by the A.O. on account of disability pension not exempt from tax as the assessee had taken premature retirement at his own request.

Payment Made By Assessee To Non-Resident Supplier Amount To"Royalty" And Liable To Deduct TDS: ITAT

Case Title: Prolific Research Pvt. Ltd. Versus DCIT

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that the payment made by the assessee to the non-resident supplier would amount to royalty and there is an obligation on the part of the assessee to deduct tax at source.

The two-member bench of T.R. Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) has observed that the introduction of Explanation 5 in Section 9(1)(iv) of the Income Tax Act has enlarged the scope of the definition of "Royalty".

Vodafone Idea Not Liable To Deduct TDS On Discount Allowed To Distributors On Purchase Of Prepaid SIM Cards And Recharge Vouchers: ITAT

Case Title: M/s. Vodafone Idea Ltd. versus Dy. Commissioner of Income Tax

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that Vodafone Idea is not liable to Deduct Tax at Source (TDS) on the discount allowed to the distributors on purchase of prepaid SIM Cards and recharge vouchers.

The Bench of Vikas Awasthy (Judicial Member) and M. Balaganesh (Accountant Member) held that since the relationship between the assessee Company and the distributors was only that of a principal to principal and not that of a principal to agent, therefore, the assessee was not obligated to deduct tax at source in terms of Section 194H of the Income Tax Act, 1961.

ITAT Deletes Disallowance u/s 14A Against Toyota As No Exempted Income Was Earned

Case Title: Toyota Tsusho India P. Ltd. Versus The Joint / Deputy Commissioner of Income Tax

The Banglore Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the disallowance under section 14A of the Income Tax Act against Toyota as no exempted income was earned.

The two-member bench headed by N.V. Vasudevan (Vice President) and Padmavathi S (Accountant Member) has noted that the AO has made the disallowance on the basis that the investment could potentially earn income, which substantiates the contention of the assessee that in the year under consideration the assessee has not earned any exempt income.

CESTAT

Charges Of Clandestine Removal Cannot Be Confirmed On The Basis Of Private Records Without Corroborative Evidence: CESTAT

Case Title: Metal Gems Versus C.C.E. & S.T.-Daman

The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that charges of clandestine removal cannot be confirmed on the basis of private records, the authenticity of which was doubted by the manufacturer without any corroborative evidence.

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that the onus to establish clandestine activities, resulting in confirmation of demand is placed heavily on the Revenue and is required to be discharged by the production of sufficient evidence.

Service Tax Demand Can't Be Sustained On Ocean Freight Under RCM: CESTAT

Case Title: M/s Universal Industries Versus Commissioner, CGST- Dehradun

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the service tax demand is not sustainable as the appellant has purchased fertilisers, which are their inputs, at cost, insurance, and freight (CIF) value, which includes the ocean freight element.

The appellant has paid custom duty on CIF value, which includes ocean freight, according to the single bench of Anil Choudhary (Judicial Member). Thus, there can be no demand for service tax on the purchase price of goods, even under the reverse charge mechanism.

CESTAT Allows CENVAT Credit On Welding Electrodes And Dissolved Acetylene Gas As Inputs In Cement Manufacturing Process

Case Title: M/s Manikgarh Cement Versus Commissioner of Central Excise, Nagpur

Citation: Excise Appeal No. 87998 of 2019

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Suvendu Kumar Pati (Judicial Member) has allowed the CENVAT Credit on Welding Electrodes and Dissolved Acetylene Gas (D.A. Gas) as inputs in the Cement Manufacturing Process.

MSO Liable To Pay Service Tax For Providing Cable Operator Services To LCO: CESTAT

Case Title: Commissioner of Central Excise And Central Goods And Service Tax Versus M/s Hathway Sukhamrit Cable & Datacom Pvt. Ltd.

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Multi System Operators (MSOs) are liable to pay service tax for providing cable operator services to Local Cable Operators (LCOs).

The two-member bench of Ajay Sharma (Judicial Member) and P.V. Subba Rao (Accountant Member) has observed that owing to the business model of the cable operator industry, the MSO is providing cable operator services to LCOs and not to ultimate consumers, and hence the MSO would be liable to pay service tax only on the amount received from LCOs. The LCOs will be separately liable for discharging service tax on the gross amount received from the ultimate customers for the service provided by the LCO to them.

AAR

Operation And Maintenance Of Municipal Wet Waste Processing Facility Attracts 18% GST: West Bengal AAR

Applicant's Name: Simoco Telecommunications(South Asia) Limited

The West Bengal Authority of Advance Ruling (AAR) has ruled that the 18% GST is payable on the operation and maintenance of municipal wet waste processing facilities.

The two-member bench of Varindra Kaur and Viraj Shyamkarn Tidke observed that the supply of services to be provided to the State Urban Development Agency for the design, build, finance, operation, and transfer of municipal wet waste processing facility based on composting and bio-methanation technology; setting up a semi-automatic material recovery facility for dry waste; and construction of a sanitary landfill along with operation and maintenance under Swachh Bharat Mission/Mission Nirmal Bangla is classifiable under SAC 9994 as "sewage and waste collection, treatment, disposal and other environmental protection services."

5% GST Payable On GTA Services Availed For Transporting Cotton Seed: Punjab AAR

Applicant's Name: Ahuja Industries

The Punjab Authority of Advance Ruling (AAR) has ruled that the 5% GST is chargeable on goods transport agency (GTA) services availed by the applicant for transporting cotton seed (Banaula) provided that the credit of input tax charged on goods and services used in supplying the service has not been taken, else 12% GST is applicable.

The two-member bench of Varindra Kaur and Viraj Shyamkarn Tidke has observed that Cotton Seed (Banaula) is not eligible for exemption from payment of GST on GTA services.

Commercial Vehicle Body Building On Chassis Supplied By The Customer Is A Supply Of Service, Attracts 18% GST: Kerala AAR

Applicant's Name: Puthusserikudy Thankappan Santosh

The Kerala Authority of Advance Ruling (AAR) has ruled that commercial vehicle body building on chassis supplied by the customer is a supply of service.

The two-member bench of S.L. Sreeparvathy and Abraham Renn S. has observed that commercial vehicle body building on chassis supplied by the customer attracts 18% GST.

GST Payable On Value Of Free Diesel Filled By Service Recipient In Vehicle: Uttarakhand AAR

Applicant's Name: Gurjinder Singh Sandhu

The Uttarakhand Authority of Advance Ruling (AAR) has ruled that when the transaction value of the goods transport agency (GTA) service is added to the free value of diesel, the value of free diesel filled by the service recipient in the vehicle(s) provided by the applicant will be subject to GST.

The two-member bench of Anurag Mishra and Rameshwar Meena has observed that the input, i.e., fuel, to run and operate the vehicle, provided free of cost by the recipient of the service, for transportation of goods, shall form part of the value of supply in view of Section 15 of the CGST Act, 2017. The cost of the input has to be paid by the supplier of services but incurred by the recipient, as for the purpose of the levy of GST, the cost of all the inputs, whether provided free of cost or not, has to be included in the value of supply.

Works contract services provided to Malabar Cancer Centre Attracts 18% GST: Kerala AAR

Applicant's Name: Uralungal Labour Contract Co-operative Society Ltd

The Kerala Authority of Advance Ruling (AAR) has held that work contract services provided to Malabar Cancer Centre attract 18% GST with effect from 01.01.2022.

The two-member bench of S.L. Sreeparvathy and Abraham Renn S. has observed that Malabar Cancer Centre is a society established by the State Government with 100 per cent participation by way of equity or control, to carry out the function of public health, a function entrusted to a municipality as well as a panchayat under Article 243W and Article 243G, respectively, of the Constitution and accordingly falls within the definition of governmental authority.