Recovery Of Inadmissible Pre GST CENVAT Credit Must Proceed Under Earlier Tax Laws: GSTAT Thane

The Goods and Services Tax Appellate Tribunal (GSTAT), Thane Bench, has recently clarified that GST authorities cannot use Section 74 of the Central Goods and Services Tax (CGST) Act to question tax credits that businesses earned before GST came into force and later carried forward into the GST system. Section 74 allows tax authorities to recover tax where they allege fraud, suppression of facts or wilful misstatement. The tribunal held that this provision cannot be used to determine whether...

Payment Gateway Charges Paid By MakeMyTrip To Banks Are Not Commission, Not Liable For TDS: ITAT Delhi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue's appeal against MakeMyTrip India Pvt. Ltd., holding that payment gateway charges paid to banks are fees for banking services and not commission or brokerage. Upholding the Commissioner (Appeals)' order deleting the disallowance, the tribunal followed the Delhi High Court's ruling in MakeMyTrip's own case and observed, "Respectfully following the decision of the Hon'ble Jurisdictional High Court, we hold that...

Skoda's Technical Know-How Licence To Indian Unit Not Consulting Engineer Service: CESTAT Mumbai

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate tribunal (CESTAT) has held that Skoda Auto Volkswagen India Pvt. Ltd.'s licence to use technical know-how, technical documentation, and trademarks from its Czech parent company did not amount to a "Consulting Engineer Service" under the Finance Act, 1994. The bench observed that the arrangement was merely a licence to use pre-existing intellectual property and not a contract for engineering advice or consultancy.Judicial Member...

CESTAT Bangalore Allows ACC CENVAT Credit On Fly Ash Transport And Pond Maintenance Services

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore has ruled in favour of ACC Ltd., holding that the cement manufacturer cannot be denied CENVAT credit on services used to maintain a fly ash pond and transport fly ash to its factory merely because those services were rendered outside the factory premises.It noted that the services were used to bring an essential raw material to the factory for manufacturing and threfore outside taxability. "We find that admittedly there...

Excess Quantity, Enhanced Value Alone Don't Establish Misdeclaration Under Customs Act: CESTAT Mumbai

The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that finding excess imported goods during examination, even when their assessable value is enhanced, does not by itself establish misdeclaration under the Customs Act, 1962. Technical Member M.M. Parthiban observed that the department had produced no evidence to show the importer had ordered or suppressed the excess quantity of goods, and held that confiscation, redemption fine and penalty could not be...

LIC Not Liable To Pay Service Tax On Premiums Retained After Policy Lapse: CESTAT Mumbai

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the Life Insurance Corporation of India (LIC) is not liable to pay service tax on premiums retained after insurance policies lapse or are repudiated. It held that retaining such amounts does not amount to a taxable service of "agreeing to tolerate an act" under Section 66E(e) of the Finance Act, 1994.A coram of Judicial Member S.K. Mohanty and Technical Member M.M. Parthiban observed that there was...

Coal Beneficiation Not Taxable As Business Auxiliary Service Before June 1, 2007: CESTAT Delhi

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has recently held that beneficiation and washing of coal could not be taxed under the category of Business Auxiliary Service for the period prior to June 1, 2007. Relying on an earlier case involving the taxpayer beore it, the tribunal ruled, "In that circumstance, reliance has been placed in appellant's own case for the earlier case(supra), we hold that the activity of beneficiation/ washing of coal does not fall under...

Bombay High Court Rejects IT Appeals Over Search Assessment Based On Regular Books Instead Of Search Material

The Bombay High Court has dismissed two appeals filed by the Income Tax Department, upholding an Income Tax Appellate Tribunal order that deleted additions made to a company's completed income tax assessments after finding they were not based on incriminating material recovered during a search. The court found that no substantial question of law arose for consideration. A division bench of Justice G.S. Kulkarni and Justice Aarti Sathe agreed with the tribunal that the Assessing Officer had...

HCL's Corporate Guarantees For Overseas Subsidiaries Attract Transfer Pricing Provisions: Delhi ITAT

The Delhi Bench of the Income Tax Appellate Tribunal has held that corporate guarantees issued by HCL Technologies Ltd. to its step-down overseas subsidiaries amount to indirect financing and therefore qualify as international transactions requiring transfer pricing benchmarking. Rejecting the Transfer Pricing Officer's reliance on commercial bank guarantee rates with an additional 200-basis-point mark-up, the tribunal held that an arm's length guarantee commission of 0.50% was appropriate. ...

NBFC's VCF Investment Profits Not Service Taxable Though Clubbed With Management Fees: CESTAT Kolkata

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently reiterated that the nomenclature used in an assessee's books of account cannot determine whether a transaction is liable to service tax.Holding that the Revenue had failed to establish that profits earned by an NBFC from investing in a Venture Capital Fund were consideration for a taxable service, the bench observed, "The revenue has relied upon the accounting nomenclature to confirm the demand on the...

IOCL Can't Retain Security Deposit For Alleged VAT Loss Without Contractual Basis: Karnataka High Court

The Karnataka High Court on 8 July held that a contractee cannot retain a contractor's security deposit indefinitely to recover an alleged VAT-related loss unless it proves a contractual breach, actual loss suffered, and its right under the contract to recover the amount. A Division Bench comprising Chief Justice Vibhu Bakhru and Justice K.S. Hemalekha allowed the appeal filed by BSR Infratech India, set aside the Commercial Court's judgment upholding Indian Oil Corporation's deduction, and...

Delhi ITAT Holds AMP Spend Can't Be TP Transaction Without AE Understanding, Follows Sony India Ruling

On 30 July, the New Delhi Income Tax Appellate Tribunal (ITAT) held that AMP expenditure incurred by an Indian entity cannot be treated as an international transaction for transfer pricing purposes without any agreement, arrangement or understanding with its associated enterprise (AE), following the Delhi High Court's ruling in Sony India Pvt. Ltd. v. ACIT. A Bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Manish Agarwal held that the issue of whether AMP expenditure...