november 2020 ernakulam branch€¦ · of digital accounting and assurance board ccm manu agarw-al,...

NEWSLETTER

ERNAKULAM BRANCH OF SOUTHERN INDIA REGIOANL COUNCIL (SIRC) OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI)

November 2020

Issue No: 115Vol: IX

CONTENTS

2

853

Chairman’s Message

Judicial Decisions on Direct TaxesJudicial Decisions on Indirect TaxesBranch Activity

CA. Atul Kumar Gupta, Hon’ble President of ICAI , Chief Guest, addressimg Faculty Development Workshop, organized by Ernakulam Branch of ICAI jointly with School of Managmenet and Business

Studies, Mahatma Gandhi University, Kottayam for commerce faculty members of colleges.

November 2020 NEWSLETTER

Ernakulam Branch of SIRC of ICAIErnakulam Branch of SIRC of ICAI2

Chairman’sMessageChairman’sMessageDear Professional Collogues,

Some people are beyond words could ever describe them. Late Dr APJ Abdul Kalam was one such person. Recently, I came across a small incident happened in the life of Late Dr APJ Abdul Kalam. As the President, Dr. Kalam was entitled to invite any two people as the “Presidential Guests” to the Raj Bhavan of Kerala during his first visit to Trivandrum. He had spent a significant amount of time as a scientist in Trivandrum and guess who he invited? A roadside cobbler who was quite close to Dr. Kalam during his time in Kerala; and an owner of a very small hotel where Dr. Kalam used to have his meals. This gesture was more than enough to show his level of simplicity. Leaders like Dr APJ Abdul Kalam motivate, uplift and inspire all of us during challenging times like what we face now. But whatever the challenges or circumstances and whatever you do, it is essential we keep moving and keep going.

‘ABCD of Technology’ and ‘Faculty Development Workshop on Accounting Standards’ were the two important programme of October which were highly appreciated by the participants. ABCD of Technology was a 3 Day refresher course organized by Digital Accounting and Assurance Board and hosted by the Branch. This year, under the able leadership of our President CA Atul Kumar Gupta, ICAI has made a quantum jump, pushing digital technology in every sphere of our professional service. In line with ICAI policy, we felt that our members should also change with the changing world and technologies, imbibing dig-ital technologies in building up our professional service. With this intend, to equip the members with the latest technological developments, the refresher course on Digital Accounting was organised. The topics were carefully chosen and experts in the field took sessions. It was a well-received and appreci-ated 3 Day Refresher course empowering the members with all the latest developments in Digital Technology. I place on record the support and guidance received from the Chairman of Digital Accounting And Assurance Board CCM Manu Agarw-al, CCM Babu Abraham Kallivayalil and Digital Accounting and Assurance Board for all the support and guidance in organising and conducting the refresher course. More details of the pro-gramme are given elsewhere in this newsletter along with other CPE programme conducted during the month.

As part of our continuing public outreach programme, the Fac-ulty Development Workshop on Accounting Standards were organised by the branch. It was organised for the commerce faculties of Universities in Kerala. It was intended to make the commerce faculties become aware of various Accounting

Standards issued by ICAI and to help them impart the knowl-edge to the commerce students. The programme was sup-ported by the Accounting Standards Board of ICAI and it was jointly organised with MG University of Kerala. 347 Commerce Faculties from Kerala and other outside Universities attended the 4 Day workshop. The Vice Chancellor of MG University Dr Sabu Thomas inaugurated the workshop in the presence of our President CA Atul Kumar Gupta and CCM CA Babu Abraham Kallivayalil. Eminent faculties on Accounting Standards enlight-ened the participants on various accounting standards of ICAI. ASB Chairman CA M P Vijayakumar was the Chief Guest of valedictory session. Everyone of the participants appreciat-ed the programme. I have no words to express our profound thanks to ASB Chairman CCM CA M P Vijayakumar, CCM Babu Abraham Kallivayalil and Accounting Standards Board for all the support and guidance given to us in organising and conducting the programme. More details of the programme are given elsewhere in this newsletter.

On October 2nd, to commemorate the 150th Birth Anniversary of Mahatma Gandhi, to spread the message of Government’s flagship programme - Sarva Shiksha Abhiyan (SSA), we dis-tributed stationary kit (comprising of a folder, notebook, pencil, sharpener, eraser, pen, pencil, colour pencil, colouring book) to the underprivileged students of primary and upper primary children in the socially backward area.

To help the students and to conduct the CA exams in a more safe and secure environment during Covid-19, as per the direc-tions of Exam Department, the branch took all efforts to identify and add 11 more new exam centres to the available 3 exam centres, taking the total exam centres under the branch to 14 this year. Three of the new exam centres were in Idukki District and 8 of the new exam centres were in Ernakulam District.

October was again a busy month, with varied cpe programme, public outreach programme, students activities, study class, online coaching classes, csr programme and other activities.

Looking forward to present you with more variety programme and activities in the next month.

Stay Safe and Healthy.

With warm regards and love

CA Roy VargheseChairman, ICAI Ernakulam Branch.

November 2020NEWSLETTER

Ernakulam Branch of SIRC of ICAI 3

BRANCH ACTIVITIES October 2020VIRTUAL CPE SEMINARSThe branch has organized 6 Virtual CPE Meetings and one Virtual Refresher Course on Digital Technologies (ABCD of Technology) in the month of October, 2020. The Refresher Course on Digital Technologies was inaugurated by CA. Manu Agrawal, Chairman, Digital Accounting and Assurance Board of ICAI. The topic on “Impact of Artificial Intelligence and Digitization on Accounting and Auditing”, “Digital competency maturity mod-el for professional accounting firms – assessing digital competence”, “Fundamentals of blockchain – disruption in the field of accounting and way ahead for SMPs” “ Fraud risks in Digital World – Tools and Tips” and “use of excel in Tax Audit” were deliberated at the course. CA Manu Agrawal, Chairman Digital Accounting and Assurance Board of ICAI, CA Dayaniwas Sharma, Vice Chairman Digital Accounting and Assurance Board of ICAI, CA. Anand P Jangid, Bengaluru, Shri Niraj Agarwal, Cyber Security Expert and CA M.S. Mehta, Saharanpur were the resource persons at the course.

Other Virtual CPE MeetingsMeeting on “Implications of FCRA 2020 to NGO’s and related aspects” was organised on 16th October, 2020. CA. Dr. M. Kandasami, Chennai was the speaker. On 17th October,, 2020 a meeting on “New Labour Codes with special emphasis on ESI, PF, Bonus, Gratuity and Shops and Commercial Establishments Act” was organised in which Adv. C. B. Mukundan, Thrissur, Adv. Little Treesa and Adv. Binitha Mukundan were the speakers. Meeting on the topic “ Analysis of Companies (Amendment) Act, 2020” was organised on 19th October, 2020 . Dr. P.V.S. Jagan Mohan Rao, Immediate Past President SAFA and Past President ICSI were the speaker. Another meeting was organized on 21st October, 2020 on “Commonly found Non-Compliances / Errors in Form No. 3CA/3CB/3CD Tax Audit Report under Section 44AB of the Income Tax Act, 1961” and the speaker was CA. Pramod Jain, Vice Chairman, Direct Taxes Committee of ICAI. Meeting on “Latest changes in TDS & TCS relating to AY’s 2020-2021 & 2021-2022 was organized on 23rd October, 2020. CA. T. G. Suresh from Chennai was the speaker.

CA Manu Agrawal

CA. Pramod Jain

CA. Dr. M. Kandasami

Dr. P.V.S. Jagan Mohan Rao

CA. T. G. Suresh

Adv. C. B. Mukundan Adv. Little Treesa Adv. Binitha Mukundan

CA Dayaniwas Sharma CA. Anand P Jangid Shri Niraj Agarwal CA M.S. Mehta

OTHER ACTIVITIESDistribution of Kits (Notebook, Pencil, Eraser, Sharpener, Pen in a folder) to the students of underprivileged students of primary classes

On 2nd October, 2020, to commemorate, 150th Birth Anniver-sary of Gandhiji and as per the directions received from the of-fice of the Hon’ble President to spread the message of Govern-ment’s flagship programme - Sarva Shiksha Abhiyan (SSA) we have distributed stationary kit (comprising of a folder, notebook, pencil, sharpener, eraser , pen, pencil, colour pencil, colouring book) to the underprivileged students of primary and upper pri-mary children in the socially backward area. CA. Roy Varghese, Chairman, CA. Renjith R Warrier, Vice Chairman and CA. Jose K V, Secretary were present to support this noble initiative.



Exposure Draft on ‘Guidance Note on Accrual basis of Accounting’The comments on the Exposure Draft of the ‘Guidance Note on Accrual Basis of Accounting’ was submitted to the Research Com-mittee of ICAI on 15th October, 2020.

Faculty Development Workshop on Accounting StandardsFaculty Development Workshop on Accounting Standards was organized jointly with Ernakulam Branch of ICAI School of Manag-menet and Business Studies, Mahatma Gandhi University, Kottayam for commerce faculty members of colleges affiliated to Mahatma Gandhi University and other universities in the state of Kerala, from 27th October to 30th October with the support of Accounting Standards Board of ICAI. CA. Atul Kumar Gupta, Hon’ble President of ICAI was the Chief Guest. CA. Nihar Niranjan Jambusaria, Hon’ble Vice President of ICAI was the Guest of Honour. Prof. Dr. Sabu Thomas, Hon’ble Vice Chancellor, M.G University inaugurated the workshop. Dr. E. Sulaiman, Director, School of Management and Business Studies, M G University, CA. Babu Abraham Kallivayalil, Central Council Member of ICAI addressed at the inaugural session. CA. Jomon K George, Past Chairman and Member, SIRC of ICAI gave an introduction, objective and overview of Accounting Standards in India and International . CA. Vinod Balachandran, CA. Asif Arfath Mohammed, CA. Parveen Kumar and CA. Sreevats Gopalakrishnan took the session in Accounting Standards. CA. M P Vijay Kumar, Chairman, Accounting Standards Board of ICAI addressed at the valedictory session. 347 faculy members from South India attended the workshop. This is the first time in the history of branch that a faculty development workshop on Accounting Standards was con-ducted covering all the Accounting Standards for the commerce ffaculty members of Universities.

FORTHCOMING PROGRAMMES IN THE MONTH OF NOVEMBER, 2020Date and Time Topic Speaker04-11-2020

(3 pm to 5 pm)

Virtual CPE Meeting on Abuse of Power by Assessing Officers and remedies to

Tax Practitioners & Miscellaneous useful tips for Tax Practitioners

Adv Pavan Ved,

Commissioner of Income Tax (Retd)

10-11-2020

(3 pm to 5 pm)

Webinar on New Challenges on Registration under Section 12 AB, Returns and

Assessment of Charitable and Religious Trusts / Institutions under the Income

Tax Act, 1961

CA. P.J Johney

11-11-2020

5.30 pm to 7.30 pm

Members Study Circle Meeting on Emerging Professional Opportunities under

IBCCA. Raju P.K

16-11-2020 to 25-11-2020 Navaratna – All Kerala Virtual CPE Conference

STUDENTS ACTIVITIES Online classes were arranged for students due to the outbreak of Coronavirus – Covid – 19 : In view of the outbreak of Coronavirus – Covid – 19 throughout the country ICAI the branch, we have arranged online classes for the students of Intermediate Direct Entry students for November, 2021 through google meet app.

CA. Nihar Niranjan JambusariaHon’ble Vice President of ICAI

Prof. Dr. Sabu Thomas Hon’ble Vice Chancellor, M.G University

CA. Babu Abraham Kallivayalil CA. Jomon K.George

CA. Vinod Balachandran CA. Asif Arfath Mohammed CA. Parveen Kumar CA. Sreevats Gopalakrishnan



Direct Tax

Statute: Income Tax ActSec.2(24) – Principles for mutuality exemption Decision in favour of : RevenueTitle : Yum! Restaurants Marketing Private Ltd vs CIT

Citation: 424 ITR 630 SCBench: Supreme Court of India

In order to qualify as a mutual concern, the contributors to the common fund either acquire a right to participate in the surplus or an entitlement to get back the remaining pro-portion of their respective contributions. The raison d’etre behind the refund of surplus to the contributors or manda-tory utilisation thereof in the subsequent assessment year is to reduce their burden of contribution in the next year proportionate to the surplus remaining from the previous year. Thus, the fulfilment of this condition becomes es-sential.

The doctrine of mutuality, in principle, entails that there should not be any profit earning motive, either directly or indirectly. The third test of mutuality requires that the pur-ported mutual operations must be marked by an impossi-bility of profits.

The exemption granted to a mutual concern is premised on the assumption that the concern is being run for the mutual benefit of the contributors and the contributions made by the members ought to be directed in that direc-tion.

The doctrine of mutuality bestows a special status to qual-ify for exemption from tax liability. It is a settled proposition of law that exemptions are to be put to strict interpretation.Since these principles were not adhered to in the case of

the appellant, the claim of mutuality is rejected

Statute: Income Tax ActExtension of limitation period Decision in favour of : Directions

Title : Cognisance for extension of limitation, in ReCitation: 424 ITR 314 SC

Bench: Supreme Court of India

Taking suo motu notice of the situation arising out of the challenge faced by the country on account of the covid-19 virus and resultant difficulties that might be faced by liti-gants across the country in filing their petitions, applica-tions, suits or appeals and all other proceedings within the period of limitation prescribed under the general law of limitation or under special laws (both Central or State) and to obviate such difficulties and to ensure that lawyers and litigants do not have to come physically to file such proceedings in respective courts or Tribunals across the country including the Supreme Court, the Supreme Court, in exercise of power under article 142 read with article 141 of the Constitution of India , ordered that irrespective of the limitation prescribed under the general law or special laws, whether condonable or not, the period of limitation in all such proceedings, shall stand extended with effect from March 15, 2020 till further orders to be passed by the Supreme Court. The court declared that this order would be binding within the meaning of article 141 on all courts, Tribunals and authorities.

Statute: Income Tax ActSec.32(1)(iia) – Digital content is not software Decision in favour of : Revenue

Title : Pentamedia Graphics Ltd vs DCIT

Reported Judicial Decisions

CA. P.M. Veeramani FCA

In view of the nationwide lockdown, printed copies of the magazines were not available and hence this edition is prepared based on the data available online



Citation: 80 ITR Trib 555Bench: ITAT Chennai

Digital content developed by assesse is a copyrighted ma-terial stored in a computer and used by the assesse in different films. It cannot be categorized as computer soft-ware eligible for higher depreciation of 60% but was an intangible asset which was eligible for depreciation @25%

Statute: Income Tax Act Sec.37 – Expenditure on technical knowhow Decision in favour of : Assessee

Title : PCIT vs Grasim Industries LtdCitation: 424 ITR 236

Bench: Bombay HC

Section 32(1)(ii) enabled assesse to claim depreciation on listed intangible assets, in the absence of which, the assesse would not be entitled to such depreciation. This provision , however, could not be pressed into service to examine whether certain expenditure for acquisition of technical knowhow or similar intangible asset was revenue or capital expenditure.

Statute: Income Tax ActSec.37 – Legal expenses of directors Decision in favour of : Assessee

Title : National Refinery Private Ltd vs ACITCitation: 424 ITR 267

Bench: Bombay HC

Legal expenses incurred to defend the directors and shareholders in individual capacities in respect of com-plaints filed by another group of shareholders is not for the purposes of the business of the company and hence not allowable as expenditure

Statute: Income Tax Act Sec.68 – When penalty dropped, addition does not survive Decision in favour of : Assessee

Title : Basir Ahmed Sisodiya vs ITOCitation: 424 ITR 1 SC


Where the penalty under section 271(1)(c ) against the addition made under 68 is dropped by CIT(A) based on the evidence for the credit furnished during appeal , then it amounts to the factual basis on which the addition was made is not surviving and hence the addition is not sus-tainable

Statute: Income Tax ActSec.80IA(4) – Contracts with local bodiesDecision in favour of : Assessee

Title : PCIT vs V.A.Tech Wabag Private LimitedCitation: 424 ITR 105

Bench: Madras HC

Assessee entered into contracts with local bodies or mu-nicipal bodies for undertaking contract works for develop-ing the infrastructure-sewage system, it was directly enti-

tled to the benefit of deductions under section 80-IA(4) of the Income-tax Act, 1961 .

Statute: Income Tax ActSec.80IB – Making of poultry feedsDecision in favour of : Assessee

Title : PCIT vs Sona Vets Private LtdCitation: 424 ITR 387

Bench: Calcutta HC

Poultry feed was not merely rice bran or maize or vitamins or minerals but a mixture of all in calculated proportions through a process involving mills and manufacturing by the use of machinery which ran on electricity and where the end product being the pellet was wholly different from each of the ingredients and resulted in a product which was commercially different and distinct as a commodity so that it could not be considered as any of the original com-modities which were used as ingredients. The assessee which was producing poultry feed was entitled to the spe-cial deduction under section 80-IB.

Statute: Income Tax ActSec.143(1A) – Additional tax for incorrect claimDecision in favour of : Assessee

Title : Rajasthan State Electricity Board vs DCITCitation: 424 ITR 704 SC


It was due to a bona fide mistake and oversight that the assessee claimed 100 per cent. depreciation instead of 75 per cent. Even after reduction of 25 per cent. depreciation the return was one of loss. In claiming 100 per cent. depre-ciation the assessee claimed that there was no intention to evade tax and the claim was only a bona fide mistake. The object of section 143(1A) was the prevention of eva-sion of tax. The Memorandum Explaining the Provisions of the Finance Bill stated that the object was to persuade assessees to file Income-tax returns carefully to avoid mis-takes. The Commissioner in deciding the revision petition had not made any observation that the claim to 100 per cent. depreciation was with intent to evade payment of tax lawfully payable by the assessee. The mechanical appli-cation of section 143(1A) in the facts of the present case was uncalled for.

Statute: Income Tax ActSec.143(3) – Convertion of limited scrutinyDecision in favour of : Assessee

Title : Dev Milk Foods Private Ltd vs Addl CITCitation: 81 ITR Trib 178

Bench: ITAT Delhi

There was no cogent material mentioned by the Assessing Officer which enabled him to have reached the conclusion that the assessee’s case was a fit case for conversion from limited scrutiny to complete scrutiny. There was no direct nexus brought on record by the Assessing Officer in the proposal and, therefore, the proposal for converting the limited scrutiny to complete scrutiny was merely aimed at making fishing enquiries. The Principal Commissioner had accorded the approval in a mechanical manner which



was in clear violation of the Instruction No. 20 of 2015 [2] .Thus the conversion of the case from limited scrutiny to complete scrutiny could not be upheld. When the Depart-ment has set down a standard for itself, the Department is bound by that standard and cannot act with discrimination.

Statute: Income Tax ActSec.220 – Prior charge by creditorDecision in favour of : Assessee

Title : Connect well Industries Private Ltd vs UOICitation: 424 ITR 18 SC


As the charge over the property was created much prior to the issuance of notice under rule 2 of Schedule II to the Act by the Tax Recovery Officer, the Corporation was directed to issue a “no-objection” certificate to the appellant. The Tax Recovery Officer was restrained from enforcing the at-tachment order dated June 17, 2003. Sovereign debt does not get precedence over an existing charge Decision of the Bombay High Court reversed.

Statute: Income Tax ActSec.226(3) – Recovery without due noticeDecision in favour of : AssesseeTitle : Andoorkonam Service Co-operative Bank Ltd vs

ITOCitation: 424 ITR 283

Bench: Kerala HC

The recovery from the bank had been done in a manner depriving the interest of the assessee and without follow-ing the guidelines which ought to have been followed in the matter of garnishee attachment and recovery. The recovery was effected on the same day when the notice was issued to the garnishee, that too within 2 days of the amount having become due. Mere forwarding of a copy of the notice, after effecting recovery, would not in any way serve the object underlying the legislative intent in intro-ducing clause (iii) of section 226(3) , especially because the Department ought to have considered the pendency of the appeal. However, since the amount had already been collected against the existing demand, release of the amount was not directed, unless the assessee furnished bank guarantee for the entire amount.

Statute: Income Tax AcSec.260 – Writ against assessment orderDecision in favour of : Assessee

Title : Engineeering Professional Co Private Ltd vs DCIT

Citation: 424 ITR 253Bench: Gujarat HC

When a statutory forum was created by law for the redres-sal of grievance, a writ petition should not be entertained ignoring the statutory dispensation. But this would not ap-ply if the court is convinced that on the fact of it, the order of the assessing officer was not sustainable in law.

Statute: Income Tax ActSec.271(1)(c ) – Income disclosed in survey

Decision in favour of : AssesseeTitle : PCIT vs Yamunaji Corporation

Citation: 424 ITR 369 Bench: Gujarat HC

The Tribunal had not erred in deleting the penalty levied under section 271(1)(c) on account of on-money receipts pursuant to survey conducted under section 133A before the closing date of accounts and filing of return of income .The Tribunal proceeded on the principle of law that when the assessee had disclosed the amount during the survey action under section 133A and the amount was disclosed in the return of income filed under section 139(1) , there could not be any order of penalty under section 271(1)(c)

Statute: Income Tax ActSec.271B – Failure to obtain tax audit reportDecision in favour of : RevenueTitle : Peroorkada Service Co-operative Bank Ltd vs ITO

Citation: 424 ITR 422Bench: Kerala HC

The fact that the audit of the assessee was conducted un-der the provisions of the Co-operative Societies Act would not be sufficient. Even assuming (without admitting) that the furnishing of a report of the audit conducted by the competent auditor stipulated under the Co-operative Soci-eties Act would be sufficient compliance with the first limb of the second proviso, it was evident that the further report by an accountant, as mandated to be furnished in form 3CD, was not furnished by the assessee .. The levy of pen-alty under section 271B was justified.

Statute: Income Tax ActSec.276C(1) – Compounding fee to be based on tax sought to be evadedDecision in favour of : Assessee

Title : Mehta Laboratories vs PCITCitation: 424 ITR 405

Bench: Gujarat HC

Compounding of offence under section 276C(1) would be permissible on payment of 100 per cent. of the tax sought to be evaded and not 100 per cent. of the amount sought to be evaded by the assessee.

Statute: Income Tax Act80G – CSR expenditure eligibleDecision in favour of : Assesssee

Title : First American India Private Ltd vs ACITCitation: 80 ITR Trib 538

Bench: Bangalore

Payment forming part of Corporate Social Responsibility would not form part of profit and loss account. The assesse could not be denied the deduction under section 80G in respect of an amount which was considered in computing total taxable income. If the deduction is denied it would lead to double disallowance. The expenditure which qual-ifies for deduction under section 80G may be verified by AO and deduction allowed.



RECENT ADVANCE RULINGS UNDER GOODS AND SERVICES TAXJUDICIAL DECISIONS ON INDIRECT TAXES

Indirect Tax

CA.P.J.Johney FCA

A. RECENT ADVANCE RULINGS UNDER GST

Statute: Goods and Service Tax Decision in favour of: Department

Title: Vedant Synergy Pvt. Ltd,, In ReJ. P. Meena and Hemant Jain (Members)

Citation: [2020] 79 GSTR 267 (AAR)Bench/Court: AAR Rajasthan

Goods and Services Tax-Classification- Rate of Tax-Ap-plicant Applied for Bidding In RFP “RFP for Selection of an SI to Implement and Maintain Software VC Up to Gram Panchayat Government offices” Issued By Centre for E-Governance, Government of Karnataka- Will Sup-ply Central MCU and Other Equipment In High Availabil-ity Mode, 7000 Nos. of Client Licenses, Speaker Type 1 (1000 Locations), Camera Type 1 (1000 Locations),Etc. and Services Like Supply of 2 Nos. of VC Engineers for 60 Months, Supply of 2 Nos. of Helpdesk Engineers for 60 Months and AMC and O & M Support for Five Years On All Supplied Goods-Goods Not of Immovable In Nature-Supply of Services In Conjunction With Supply of Goods-Composite Supply and Not Works Contract Service-Principal Supply of Whole Supply Video Con-ference Software/Solution- Falls Under HSN 998316 to Notification No. 11/2017-Central Tax (Rate), Dated June 28, 2017 (Amended From Time to Time)-Rate of GST 1s 18 Per Cent. (SGST Nine Per Cent. + CGST Nine Per Cent.)-Central Goods and Services Tax Act (12 of 2017)-Rajasthan Goods and Services Tax Act


Title: Randox Laboratories India Private LimitedHarish Dharnia , Ravi Prasad M.P

Citation: [2020] 79 GSTR 321 (AAR) Bench/Court: AAR Karnataka

Goods and Services Tax-Liability-Rate of Tax- Business of Trading of Medical Diagnostic Reagents and Diag-nostic Equipment-Reagent Rental Placement Contracts (RRC) and Part Reagent Rental Placement Contracts (PRC)-Applicant Liable to Pay GST On Machines/Equipments Given to Customers Under PRC Model But Not Liable Under RRC Model-Supply of Reagents Along With Machine Rental Services In Both RRC and PRC Contract A Separate Supply Independent of Ma-chine Rental Services Supplied, If any-Rate of Tax for Supply of Rental Service of Equipments Nine Per Cent. CGST and Nine Per Cent. KGST- Value On Which GST to Be Paid and Time of Supply (A) In Case of RRC Mod-el (I) for Supply of Reagents At Time of Supply of Re-agents On Transaction Value, (Ii) for Supply of Services In Nature of “An Act Agreeing to Obligation to Refrain From an Act, or to tolerate an Act or A Situation, or to Do an Act” for Which A Consideration Is Received At Time of Supply of Such Services On Transaction Value,(B) In Case of PRC Model (I) for Supply of Rental Services In Equipments At Time of Supply of Equipments On Amount of Non-Refundable Payment Received or In-voiced, (Ii) for Supply of Reagents At Time of Supply of Reagents On Transaction Value, (Iii) for Supply of Services In Nature of “An Act Agreeing to Obligation to Refrain From an Act, or to tolerate an Act or A Situation, or to Do an Act” for Which A Consideration I5 Received At Time of Supply of Such Services On Transaction Val-ue- Applicant Eligible for Input Tax Credit On Purchase.



of Equipment for Use In RRC/PRC Contracts-Central Goods and Services Tax Act (12 of 2017) Karnataka Goods and Services Tax Act (27 of 2017).Statute: Goods and Service Tax Decision in favour of: Department

Title: Parmod Kumar Singala,J. P. Meena and Hemant Jain (Members)

Citation: [2020] 78 GSTR 30 (AAR)Bench/Court: AAR Rajasthan

Goods and Services Tax-Input-Tax Credit- Packing Ma-terials- Manufacture and Production of Loose Cotton, Cotton Seeds, Cotton Seed Oil (All Taxable At 5 Per Cent.) and By-Product Cotton Seed Oil-Cake (Taxable At Nil Rate) From Raw Cotton (Narma)-Applicant to Re-verse Amount of Credit Attributable to Supply of Cotton Seed Oil Cake As Per Provisions and Procedure Pre-scribed -Provision of Apportionment of Input-Tax Cred-it Under Section 17 Applicable On By-Product Cotton Seed Oil-Cake- Raw Cotton Purchased By Applicant From Agriculturist and Tax At Five Per Cent. Paid Under Reverse Charge Mechanism By Him- Input-Tax Cred-it On Raw Cotton Restricted to So Much of Input Tax Attributable to Taxable Supplies Including Zero Rated Supplies--Plastic Bags (Bardana) Exclusively Used for Packing of Cotton Seed Oil-Cake-Applicant to Reverse Input-Tax Credit On Plastic Bags (Bardana)-Question Whether Applicant Has to Reverse Input-Tax Credit for Periods of 2017-18, 2018-19 As Per Rule of Cgst Rules, 2017-Not Covered Under Section 95(A) of Gst -No Ruling Given On This Issue- Rajasthan Goods and Service Tax Act (9 of 2017), Ss. 16, 17(2), 95(A)-Central Goods and Services Tax Act (12 of 2017), Ss. 16, 17(2), 95(A)-Rajasthan Goods and Services Tax Rules, 2017, R. 42-Central Goods and Services Rules, 2017, R. 42. B.JUDICIAL DECISIONS ON INDIRECT TAXES

Statute: Goods and Service Tax Decision in favour of: DepartmentTitle: Dadhichi Iron and Steel Pvt. Ltd V Chhattis-

garh G. S. T. and OthersP. Sam Koshy J.

Citation: [2020] 78 GSTR1 (Chhattisgarh) Bench/Court: In The Chhattisgarh High Court

Goods and Services Tax-offences and Prosecution - Ini-tial Issuance of Show-Cause Notice In Respect of In-tra-State Transactions Using Fake and Bogus Invoices for Availing of Ineligible Input-Tax Credit-Secret Infor-mation Received and Further Investigation Pursuant to Raid At Assessee and Other Related Premises Reveal-ing That Magnitude of offence Far More Serious That Assessee Making False and Bogus Transactions and Il-legally Availing of Input-Tax Credit for Which It Was Not Eligible Clear Distinction Between Proceeding for De-

mand of Tax Evaded and Investigation By Intelligence Wing In Respect of An offence Committed Using Bogus and Fake Invoices Illegally Availing of Input Tax Credit Central Goods and Services Act (12 of 2017),S.6(2)(1)(B).

Statute: Goods and Service Tax Decision in favour of: (Directions)

Title: Watermelon Management Services Private Limited Vs Commissioner, Central Tax, Gst Delhi

(East) AnotherManmohan and Sanjeev Narula Jj.

Citation: [2020] 78 GSTR 238 (Delhi) Bench/Court: Delhi High Court

Goods and Services Tax-Recovery of Tax-Provision-al Attachment- Investigations Revealing Large-Scale Wrongful Availment of Input-Tax Credit-Proceedings Handed Over to Directorate General of Goods and Ser-vices Tax Intelligence-Writ Petition Challenging Legality of Provisional Attachment of Bank Account After Hand-ing Over of Proceedings-Serious Allegation Levelled Against Assessee- Directions to Directorate General T0 Conclude Investigation Within Three Months and to As-sessee Co-Operate In Investigation-Central Goods and Service Tax Act (12 of 2017), Ss. 70. 83.

Statute: Sales Tax Decision in favour of: DepartmentTitle: Super Recording Co. Ltd. Vs Commercial Tax officer, Anna Salai III Assessment Circle, Chennai

Senthilkumar Ramamoorthy J.

Citation: [2020] 78 GSTR 95 (Mad) Bench/Court: In The Madras High Court

Sales Tax- Reassessment- Limitation-Change of Law-Under “Amended Law Limitation Reckoned From Date of Original Assessment Order As Against End of Year to Which Assessment Relates Earlier Law- Where Notice Issued Before Expiry of Limitation Un-der Pre-Amended Section Reassessment Within Time Even Under Pre-Amended Law - Where Original As-sessment Orders Passed After Amendment Came Into force Amended Law Applicable and Reassessment Not Barred By Limitation- Where Amendment Came Into force Before Expiry of Limitation Under Existing Law-New Law Applies and Reassessment Within Limitation Tamil Nadu General Sales Tax Act (1 of 1959), S. 16(1) (Before and After Amendment With Effect From July 1, 2002).

Statute: Value Added TaxDecision in favour of: Assessee

Title: Aalayam Traders Vs. Appellate Assistant Comissioner (CT)

Dr. Vineet Kothari and C. V. Karthikeyan Jj.



Citation: [2020] 78 GSTR 5] (Mad) Bench/Court: In The Madras High Court

Value Added Tax- Entries In Schedule-“Savouries Sepa-rately Indicated As Generic Term In Notification- Potato Chips Sold In Brand Name of “Lays” or “Cheetos”, “Salty Balls” or “Kurkure”-Fall Within Generic Term “Savou-ries”- “Porridge” -Oats Sold Under Branded Name “Quakers Oats” -Fall Under “Porridge” -Puducherry Val-ue Added Tax Act (9 of 2007),Ss.24(2),30(2),31; Sch. III, Entry 99, Sch. Iv, Para A-Notification G. O. Ms. No. 25/F2/2013 Dated July 31, 2013 .Interpretation of Taxing Statutes Entries In Schedule “Common Parlance Test-If Two Views Possible That Which Favours Subject to Be Preferred.

Statute: Goods and Service Tax Decision in favour of: Assessee

Title: Aman Motor Vs Union of India and OthersVipin Sanghi and Sanjeev Narula j

Citation: [2020] 178 GSTR 421 Delhi)Bench/Court: In the Delhi High Court

Goods and Services Tax-Transition Period-Transition ofCredit of Excise Duty-Petitioner Unable to Submit Dec-laration In form Tran-1 On GST Portal Even After Last Extension Up to December 27, 2017 On Account of Failure of System to Accept Information On Common Portal- Request to Reopen form Tran-1Petitioner Asked to Await Further Notifications By De-partment - Writ Petition - Direction to Respondents to Either Open Online Portal to Enable Petitioner to File form Tran-1 Electronically, or to Accept It Manually On or Before December 9, 2019- Central Goods and Ser-vices Tax Act (12 of 9017), S. 140(3).

Statute: Value Added TaxDecision in favour of: Department

Title: Alliance Infrastructure Projects (P) Ltd. Vs Commercial Tax officer (Audit)-4.5,Koramangala,

Bengaluru and AnotherMrs. S. Sujatha J.

Citation: [2020] 79 GSTR 145 (Karn)Bench/Court: In The Karnataka High Court

Value Added Tax-Reassessment-Limitation-Order of Reassessment Dated January 16, 2010 Under Sec-tion 39(1) By Assessing Authority for Tax Periods April, 2007 to September, 2007- Appeals By Petitioner Al-lowed Vide Order Dated May 31, 2010 By First Ap-pellate Authority-Suo Mottu Revision Proceedings Ini-tiated and Dropped On June 13, 2012 By Revisional Authority-Commissioner Setting Aside Orders By First Appellate Authority and Revisional Authority Remitting Matter to Assessing Authority toredo Assessment De

Novo for April and May, 2007 By Order Dated July 17, 2014 When Period of Limitation Starts Running-Sub-sequent Order of Reassessment Dated May 30, 2018, Not Barred By Limitation As Direction Issued By Com-missioner to Do Fresh Assessment Not Within Purview of Section 40(3)-Karnataka “Value Added Tax Act, 2003 (32 of 2004), Ss. 39(1), 40(1), (3), 64(1), (2).

Statute: Goods and Service Tax Decision in favour of: Assessee

Title: Asiad Paints Limited V Union of India and Others

Mrs. S. Sujatha J

Citation: [2020] 79 GSTR 40 (Karn)Bench/Court: In The Karnataka High Court Goods and Services Tax-Input-Tax Credit- Transitional Provisions- Extension of Time to File form Tran-1-In-ability of Assessee to File form Before December 31, 2019-Direction to Department to Permit Assessee. to File or Revise form Tran-I Electronically or Manually On or Before December 2019-Central Goods and Services Tax Act (12 of 2017),-Ss. 140, 142, 172-Central Goods and Services Tax Rules, 2017, r.117(1a).

Statute: Value Added Tax Decision in favour of: Assessee

Title: Bundelkhand Health Care Vs State of U. P. and Others

Bharati Sapru and Piyush Agrawal JJ.

Citation: [2020] 79 GSTR 150 (Al)Bench/Court: In The Allahabad High Court

Value Added Tax-Rate of Tax-Entries In Schedule- Deal-er a Distributor of Company Manufacturing, Inter Alia, Pesticides-High Courts, On Petitions Filed By Manufac-turer Holding That Harpic and Mortein Coil Were Taxable As “Insecticides /Pesticides” and “Disinfectant” -Special Leave Petition From One High Court Dismissed By Su-preme Court-Matter Settled and No Diffe-rent View Per-missible- Reassessment to Bring Items to Tax Under Residuary Entry-Not Permissible-Uttar Pradesh Value Added Tax Act (5 of 2008), Sch. Ii, Parr A, Entry 20, Sch. V.

Statute: Sales TaxDecision in favour of: Assessee Title: Iqbal tools Syndicate (Tax Case Nos. 6 and 7

of 2016) (2) I. T. S-tooling (P) Ltd. (Tax Case No. 8 of 2016)

V State of Tamil NaduT. S. Sivagnanam and Mrs. V. Bhavani Subbaroyan Jj.

Citation: [2020] 79 GSTR 211 (Mad) Bench/Court: In the Madras High Court



Sales Tax-Rectification of Mistake-Not A Power of Re-view Notices Pursuant to Inspection Proposing to Dis-allow Exemption On Sales to 100 Per Cent. Export Oriented Units- Assessing officer Finding Documents Produced By Dealer In Order and Allowing Exemp-tion-No Mistake Calling for Rectification-Revision of Assessment Without Jurisdiction- Tamil Nadu General Sales Tax Act (1 of 1959), S. 55.Sales Tax-Exemption-Sale to 100 Per Cent Export Ori-entUnits-Consumables-Carbide Tip Inserts-Carbide Tip Inserts Self Destructive While Fitted to Machinery and Used for Cutting-Become Useless After Losing Utility-to Be Treated As Consumable Goods and Entitled to Ex-emption-G. O. Ms. No. 528 Dated November 21, 1997.

Statute: Sales TaxDecision in favour of: AssesseeTitle: ACC Limited Vs Assistant Commissioner (CT)

LTU , Begumpet Division Hyderabad and OthersM. S. Ramachandra Rao and T. Amarnath Goud Jj.

Citation: [2020] 79 GSTR 219 (Telagana)Bench/Court: In The Telangana High Court Sales Tax-Refund- Withholding of Refund-“Want of Cross-Verification Details” -Not Ground Mentioned In Provision for Withholding Refund Due to Dealer-andhra Pradesh General Sales Tax Act (6 of 1957), S. 33c.

Sales Tax-Refund-Withholding of Refund - Department Admitting That Dealer Had Paid Tax By Demand Drafts Pursuant to Demand Notice- Delivery of Demand Drafts Complete In Terms of Rules-Handing Over of Demand Draft Amounted to Payment In Cash and Discharged Dealer of Its Obligations- Department Cannot Take Ad-vantage of Lapse In Presenting Demand Drafts toBank-Withholding of Refund By Department On Ground ThatChallans Were Not Traceable and Cross Verification Not Possible-Not Valid Reason to Withhold Refund ~ Con-stitution. of India, Arts. 14,19 265 300a-andhra Pradesh General Sales Tax Act (6 of 1957).Ss.33 to 33f.


Title: Material Recycling Association of India Vs Union of India and Others

J. B. Pardiwala and Bhargav D. Karia Jj.

Citation: (2020] 79 GSTR 232 (Guj)Bench/Court: In The Gujarat High Court

Goods and Services Tax-Legislative Powers-Parlia-ment-Integrated Goods and Services Tax-Intermedi-ary-Place of Supply of Services-Is Location of Supplier of Services In Case of Intermediary Services-Provision

Valid- Intermediary Only Broker Who Arranges and Fa-cilitates Supply of Goods or Services or Both-Cannot Be Considered Exporter of Services- Association of Recy-cling Industries Engaged In Manufacture of Metals and Castings-Members of Association Acting As Agents for Scrap Recycling Companies Based Outside India and Facilitating Sale of Recycled Scrap Goods for foreign Principals In India and Other Countries- Department to Consider Representation -Integrated Goods and Ser-vices Tax Act (13 of 2017), Ss. 2(6), (13), 8(1), 13(8)(B), 16(1)-Central Goods and Services Tax Act (12 of 2017), S. 2(93)-Constitution of India, Arts. 14, 19,226,265,286.

Statute: Goods and Service Tax Decision in favour of: AssesseeTitle : SKH Sheet Metals Components Vs Union of

India and OthersManmohan and Sanjeev Narula J.

Citation: [2020] 79 GSTR 7 (Delhi)Bench/Court: In The Delhi High Court

Goods and Services –Input Tax Credit –Transitional Provisions-Time Limit for filing form TRAN -1- Con-sistent extension of time for filing in case of technical Glitches-No provision prescribing consequences for failure to file within time limit –Time Limit to be taken as directory –Not Limited to technical Glitches only –Extension applies to genuine cases of Human error –Central Goods and services Tax Act (12 of 2017) ,s. 140 Central Goods and services Rules 2017, r .117.

Statute: Goods and Service Tax Decision in favour of:Department

Title: Nelco limited vs union of India and othersNitin Jamdar and M. S. Karnik, JJ.

Citation: [2020] 79 GSTR 52 (Bom)Bench/Court: In The Bombay High Court

Goods and Services Tax-Input-Tax Credit-Transitional Provsions - Time-Limit for Filing form Tran-1 - Rule Pre-scribing Time-Limit-Not Ultra Vires Act-Rule Traceable to Power Conferred Under Section 164(2)-Time-Limit Neither Arbitrary Nor Unreasonable- Availment of In-put-Tax Credit Not A Right But A Concession Attached With Conditions for Its Exercise Within Time Limit- Ex-tension of Time In Case of “Technical Difficulties” -Not Discriminatory - Meaning of “Technical Difficulties” -Not to Be Construed Broadly- Examination of System Log to Ascertain Existence of Technical Difficulties On Com-mon Portal Not Arbitrary-No Such Evidence In Case of Assessee-No Direction Can Be Issued –Central Goods and Services Tax Act (12 of 2017) Ss. 140 ,164-Central Goods and Services Tax Rules 2017.R.117-Constitu-tion of India Art. 14.



E-Newsletter Published by CA.Roy Varghese, Chairman, Ernakulam Branch of SIRC of ICAI , ‘ICAI Bhawan’,, Diwan’s Road, Ernakulam, kochi - 682016 Phone: 0484- 2362027. Email: [email protected]. Website: www.ernakulam-icai.org Editor: CA.Roy Varghese, Chairman, Ernakulam Branch of SIRC of ICAI