Tuesday, 19 September 2017

HC : Reiterates statutory-mechanism; Releasing detained goods on 50% demand discharge &

HC sets aside Single Judge Bench order, finds direction to release detained goods on payment of 50% of demand and execution of simple bond contrary to provisions of Section 129 of Central GST Act / Kerala GST Ordinance r/w Rule 140 of CGST Rules; Notes that goods were detained by Revenue on ground that documents accompanying them had no nexus with actual goods under transport; Observes that Section 129 provides for detention, seizure and release of goods and conveyances in transit, whereby goods may be released provisionally upon execution of bond and furnishing of security in prescribed manner or on payment of applicable tax, interest and penalty in terms of Section 67(6); Hence, when statute itself provides a mechanism for adjudication following detention of goods including provisional release thereof, a deviation therefrom cannot be ordered, holds HC; However, taking note of Rule 140 obliging dealer to produce goods upon demand, and considering the inconvenience and prejudice likely to be caused on account of delay, HC emphasizes the necessity of an expeditious adjudication even in cases where goods are released provisionally : Kerala HC 

HC : Reverses ITAT; Contracts receipts, not JV-company's income, but diversion by overriding title

Jammu and Kashmir HC reverses ITAT order and rules in favour of assessee (a JV company) for AY 2005-06, railway contract receipts of over Rs. 12 cr. not income of assessee, but diversion of income by overriding title;  Assessee (a joint venture between two companies) was formed for construction of railway tunnels, HC notes that assessee was formed only for the purposes of submission of tender and that the contract was not executed by assessee, but by JV members, and contract was merely allotted in assessee’s  name;  Further, noting that the contract receipts of over Rs. 12 cr. were allocated to the JV partners  (in the ratio of 97:3), HC holds no income accrued to assessee as there was diversion of income by overriding title, extensively relies on SC ruling in Sitaldas Tirathdas;  Remarks that “neither amount would have been received by the assessee from the northern railways for no work performed by it nor it could be stated that the assessee has performed any activity but still the income has accrued.”; Separately, HC rules that the amount allocated / distributed to JV partners could not be disallowed u/s. 40(a)(ia), holds Finance Act, 2012 amendment inserting proviso to Sec. 40(a)(ia) [stating that once tax is paid by payee, deductor cannot be treated as assessee-in-default] is retrospective in nature, also cites CBDT circular on allocation of revenues in consortium arrangements:HC 

CESTAT : CENVAT credit availment towards manufacturing cannot debar exemption for factory space

CESTAT extends service tax exemption to manufacturer under Notification No. 6/2005-ST in respect of renting of open space within factory, finding no violation of any conditions stipulated therein with respect to non-availment of CENVAT credit; Observes that assessee had neither received / used any capital goods at the premises rented out nor utilized inputs / input services and no credit thereto was availed; Hence, all conditions thereunder stood complied with by assessee; Holds that availment of CENVAT credit in respect of inputs, input services and capital goods only in relation to manufacturing activity does not debar assessee from availing exemption under said Notification for service of renting of immovable property; Stating that activity in manufacturing unit and service related to immovable property are two distinct activities, CESTAT concludes that assessee is not liable to pay any service tax  : Mumbai CESTAT