Tax Weekly Roundup: November 18 - November 24, 2024
Kapil Dhyani
25 Nov 2024 6:25 PM IST
SUPREME COURT Mobile Towers & Pre-Fabricated Buildings Moveable Properties, Qualify As 'Capital Goods' For CENVAT Credit : Supreme Court Case title: M/S BHARTI AIRTEL LTD. v. THE COMMISSIONER OF CENTRAL EXCISE, PUNE Case no.: CIVIL APPEAL NOS. 10409-10410 OF 2014 The Supreme Court in a recent decision held that mobile service providers (MSPs) could avail the benefit of...
SUPREME COURT
Case title: M/S BHARTI AIRTEL LTD. v. THE COMMISSIONER OF CENTRAL EXCISE, PUNE
Case no.: CIVIL APPEAL NOS. 10409-10410 OF 2014
The Supreme Court in a recent decision held that mobile service providers (MSPs) could avail the benefit of Central Value Added Tax/CENVAT Credit over excise duties paid on items such as mobile towers and prefabricated buildings.
The bench of Justice BV Nagarathna and Justice N Kotiswar Singh observed that since mobile towers and PFBs could be detached and relocated, they qualified as movable properties and accessories in enhancing the functionality of the mobile service antenna attached on top of the tower. Thus, the items qualified as 'capital goods' or 'inputs' which were indispensable to provide effective mobile services (output) and MSPs can get a credit set-off on these items.
HIGH COURTS
Allahabad HC
Case title: M/S Batra Henlay Cables v. State Of U.P. and 2 Others
Case no.: WRIT TAX No. - 1927 of 2024
The Allahabad High Court has dismissed a writ petition claiming exemption from payment of road tax on an electric vehicle purchased from Jammu.
The Court also found substance in State's argument that part of revenue is lost when vehicle is purchased from outside the State and therefore, it held, “instead of making it open-ended exemption, the State is well within its power to impose the condition of purchase of vehicle within the State.”
Bombay HC
Case Title: Anita Agarwal vs. Union of India
Case no.: Writ Petition No. 1474 of 2023
The Bombay High Court recently clarified that an exporter (Petitioner) is entitled to interest u/s 56 of the CGST Act for the period starting from the expiry of 60 days from the date of filing the shipping bill up to the date of grant of refund, although during the interregnum, the exporter's name was red flagged on the Customs' portal.
The High Court held so while considering the prayer for interest on delayed payment of refund of tax as per Section 56 of the CGST Act, 2017.
Case Title: Apollo Tyres vs. Union of India
Case no.: Writ Petition No. 15498 of 2024
The Bombay High Court recently clarified that writ courts shall not trench upon an alternate remedy provided by statute (Income tax Act) for granting any relief, by assuming jurisdiction under Article 226 of the Constitution.
Similarly, writ courts shall not act as a court of appeal against the decision of the lower court or Tribunals, to correct errors of fact, observed the Division Bench of Justice M. S. Sonak and Justice Jitendra Jain.
Case Title: B.V. Jewels vs. Union of India
Case Number: Writ Petition No. 2423 of 2024
The Bombay High Court ruled that the demand for interest u/s 28AA of the Customs Act raised for non-payment of demand, within three months of raising the demand, is properly tenable on the part of the Customs Authority.
Interest u/s 28AA is automatic, when there is a default or delay in payment of duty, added the Court.
Case Title: Oberoi Constructions vs. Union of India
Case Number: Writ Petition (L) No. 33260 of 2023
The Bombay High Court held that circumstances in which the appeals require some percentage of the demanded tax to be pre-deposited, do not render the appellate remedies any less efficacious. The High Court held so while considering an issue as to whether the demands are covered under the exemption notification or the notification providing for nil rate of taxes.
The Division Bench of Justice M S Sonak and Justice Jitendra Jain observed that the practice of instituting petitions bypassing the statutory remedies only to avoid a pre-deposit cannot be encouraged.
Case Title: Delphi World Money vs. Union of India
Case Number: Writ Petition No. 28914 of 2024
Observing that provisional acknowledgement automatically generated on Department portal shows that the requisite pre-deposit has been made, the Bombay High Court held that the Assessee had duly complied with the necessary pre-deposit required u/s 107(6) of the CGST Act.
The Division Bench of Justice M.S Sonak and Justice Jitendra Jain observed that in a similar matter in Bytedance (India) Technology Pvt Ltd vs. UOI [W.P (L) No.23724 of 2024], it was held by this court that “On the amount of pre-deposit, there is enough evidence annexed to the petition that the sum has been deposited and even the receipt is annexed to the petition. Therefore, to say that there is no pre-deposit in the impugned order is incorrect”.
Case title: Esjaypee Impex vs. Union of India
Case no.: Writ Petition No. 3793 of 2024
The Bombay High Court ruled that when the Revenue Dept. did not allege any malice on the part of Assessee in the context of disposal of the proceedings, then inaction on the part of Adjudicating Authority to dispose of the proceedings cannot be attributed to Assessees.
Finding that the Authority had passed the final order after a lapse of more than 16 years from the date of CESTAT's order, the Division Bench of Justice Ashwin D. Bhobe and Justice M.S Sonak observed that such inordinate delay in the conclusion of show cause notice will surely prejudice the petitioners.
Case Title: Grasim Industries vs. Chief Commissioner of Income Tax
Case Number: Writ Petition (LODG.) No. 17982 of 2024
The Bombay High Court recently clarified that the Chief Commissioner of Income Tax ought to have addressed the issues/justification as flagged by the taxpayer in supporting its case for grant of waiver of interest u/s 234C.
Such approach of Chief Commissioner of Income Tax would show non-application of mind to the material contentions raised by the petitioner/ assessee, added the Court.
Delhi HC
Case title: M/S Akash Garments India Pvt Ltd v. Union Of India & Anr.
Case no.: W.P.(C) 5892/2024
The Delhi High Court has reiterated that the GST Department must record reasons that weigh on it to propose retrospective cancellation of an assessee's registration.
Citing absence of such reasons in the case at hand, the division bench of Justices Yashwant Varma and Dharmesh Sharma said cancellation of Petitioner's GST registration would stand only from the date of issuance of the Show Cause Notice.
Case title: Himanshu Garg v. Assistant Commissioner Of Income Tax, Circle-36 (1)
Case no.: ITA 548/2024
The Delhi High Court has refused to interfere with an ITAT order declining capital gain exemption under Section 54F of the Income Tax Act, 1961 with respect to a property described as “makaan” (house) in the registered sale deed but in actuality having a brick kiln construction.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma said, “The AO had, on inspection, found that there was brick-kiln on the property in question. Photographs of the same were placed on record and have been reproduced by the learned ITAT in the impugned order.”
Case title: Vivo Mobile India Private Limited v. Customs Authority For Advance Rulings & Anr
Case no.: CUSAA 24/2024
The Delhi High Court has held that it is not the technology which is used in the product that decides its HSN classification under the Customs Tariff Heading (CTH) for the purposes of Customs Tariff Act, 1975.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma held that it is rather the product, which may be created using a particular technology, which decides the HSN classification.
Case title: Shri Pawan Kumar Jaggi v. ACIT Central Circle-25 New Delhi
Case no.: ITA 2/2023
The Delhi High Court has made it clear that it cannot fault the estimation of an Assessing Officer regarding the quantum of deposits made by an assessee in an undisclosed foreign bank, when the latter himself fails to produce the account statement.
“Counsel for the Assessee also concedes that in the absence of the Assessee producing the relevant material, the AO was well within his right to make an estimate bearing in mind the income profile of the Assessee. We find it difficult to accept that any interference with the estimation of the deposit made in the bank account, are called for in the absence of Assessee producing his own bank account statement,” a division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma held in the 'peculiar' facts of the case.
Case title: Sandeep Hooda v. Pr. Commissioner Of Income Tax-7, Delhi & Anr.
Case no.: ITA 450/2024
Putting together a structure of plywood sheets cannot be construed as constructing a residential house,” the Delhi High Court has held.
It thus upheld an ITAT order which disallowed capital gains exemption to the appellant-assessee under Section 54 of the Income Tax Act, 1961 on the ground that a mere 'makeshift' structure was raised in the name of residential house.
Case title: Sequential Technology International India Pvt. Ltd.(Formerly Known As Omniglob Information Technologies(India)Pvt.Ltd) v. Addl. CIT, Spcl.Range-7,
Case no.: ITA 34/2020
The Delhi High Court recently directed a Transfer Pricing Officer (TPO) to determine afresh the inclusion of a comparable entity with respect to an assessee, this time taking into consideration the latter's objections on 'functional dissimilarity' of the two.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma ruled, “Assessee's contention that E4e Healthcare is functionally dissimilar to the assessee and therefore, could not be included as a comparable, has not been considered by any authority…Accordingly, the matter is restored before the learned TPO, to the limited extent, to examine the inclusion of E4e Healthcare as a comparable entity.”
Case title: Pr. Commissioner Of Income Tax -7, Delhi v. Naveen Kumar Gupta
Case no.: ITA 401/2022
The Delhi High Court has held that Section 153C of the Income Tax Act, 1961 does not by itself preclude an Assessing Officer from reopening assessments under Section 147/148 of the Act, on the basis of information found during a search conducted under Section 132 or requisition made under Section 132A of Act in respect of another person.
However, it clarified that the jurisdiction under Section 147 will stand barred when the AO decides to proceed under Section 153C. It reasoned that the Act does not contemplate parallel assessment proceedings.
Case title: The Pr. Commissioner Of Income Tax-6 v. Nucleus Steel Pvt. Ltd.
Case no.: ITA 978/2018
The Delhi High Court has made it clear that once an assessee offers explanation about nature and source of a credit transaction standing in its books, the burden of proof to show that such explanation is unsatisfactory shifts on the Assessing Officer.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma further held that in evaluating the transaction so explained by the assessee, the AO cannot examine the commercial viability of such transaction.
Gauhati HC
Case title: M/S Chayanika Handloom Products And Anr v. State Of Assam And 12 Ors
Case No.: WP(C)/4258/2024
The Gauhati High Court has held that the words “Turnover” and “Income Tax Return” are different and exemption to a bidder from submitting the former in a tender process would not exempt it from furnishing the ITR, for the prescribed years.
“The primary purpose of reporting Annual Turnover is to provide a clear picture of a company's revenue-generating capacity. It is often a critical criterion for assessing a bidder's financial strength in tender applications. An Income Tax Return serves to comply with tax obligations and inform the government about the taxpayer's financial status, ensuring accurate taxation based on total income,” Justice Michael Zothankhuma held.
Kerala HC
Case Title: M/s Knowell Realtors India Pvt. Ltd. v. Assistant Commissioner of Income Tax
Case Number: I.T.A.NO.38 OF 2023
The Kerala High Court has stated that income from the sale of immovable properties is to be treated as 'capital gains,' not 'business income' for taxation purposes.
The Division Bench of Justices A.K. Jayasankaran Nambiar and K.V. Jayakumar observed that “the requirement of ensuring uniformity and consistency in tax assessments cannot be overlooked, especially while categorizing the nature of the activity carried on by an assessee to earn its income for the purposes of taxation.”
Case Title: Baiju George v. Commissioner Of Goods And Service Taxes Department
Case Number: WP(C) NO. 33866 OF 2024
The Kerala High Court stated that the medical condition cited by the assessee is not sufficient grounds to justify condoning a four-year delay in filing the appeal.
The Bench of Justice Gopinath P. observed that “the assessee has not made out any ground for grant of relief in the writ petition. Admittedly, the assessee filed appeals against the orders only in the month of February 2024 i.e., four years after the date on which the orders against which the appeal was sought to be filed had been issued.”
Case Title: The Assistant Commissioner Of State Tax v. Bhima Jewellery And Diamonds P. Ltd.
Case Number: WA NO. 1652 OF 2020
The Kerala High Court stated that the department cannot reopen an assessment that has already been settled by issuing a fresh notice if the period of limitation had expired before the date of the amendment extending the timeline for reopening.
The Division Bench of Justices A.K. Jayasankaran Nambiar and K.V. Jayakumar observed that “…….no doubt, in those cases where the erstwhile period of limitation of five years had already expired before the date of the amendment of Section 25(1) in 2017, the Revenue would not be permitted to re-open assessments that had been settled, through a fresh notice issued thereafter invoking the six-year period of limitation.”
Telangana HC
Case title: Babulal Jain vs The Income Tax Officer
Case no.: ITTA No. 319 of 2007
The Telangana High Court has held that for purposes of taxation, “accumulated profits” of a company are to be calculated after adjusting depreciation as per the Income Tax Act, 1961.
In ruling so, a division bench of Chief Justice Alok Aradhe and Justice J. Sreenivas Rao cited two rulings of the Bombay High Court which held that “depreciation as granted in accordance with the rates prescribed by the Income-tax Act would have to be deducted for ascertaining the accumulated profits.”
Case title: The Commissioner Of Income Tax-III Hyderabad v. M/s. Satiofi Healthcare India Private Limited
Case no.: INCOME TAX TRIBUNAL APPEAL No.138 of 2007
The Telangana High Court has held that the amount received by the developer of Hepatitis-B vaccine, under a co-marketing agreement with PFIZER Company, is a capital receipt not liable to tax.
A division bench of Chief Justice Alok Aradhe and Justice J. Sreenivas Rao reasoned that the developer-assessee's right to promote, market, distribute or sell the vaccine or a new competitive product to a third party was taken away under the agreement.
TRIBUNALS
Case Title: M/s Ambuja Cements Limited v. Commissioner (Appeals), Central Goods & Service Tax, Central Excise
Case Number: EXCISE APPEAL NO. 51427 OF 2022
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the assessee is entitled to CENVAT credit of the service tax paid on the goods transport agency (GTA) services received by the assessee to transport the goods from its factory to the buyer's premises sold on FOR (free on road) destination basis.
The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that ““place of removal” shifts to the buyer's premises and the assessee is entitled to CENVAT credit of the service tax paid on GTA services availed to transport the goods to the buyer's premises.”
