The Supreme Court held that gas regulating measuring equipment installed at customers’ sites is taxable service. The Supreme Court observed that Section 65(105)(zzzzj) of the Finance Act 1994 provides for taxability of supply of tangible goods for use, without transferring right of possession and effective control over such goods, as a ‘taxable service’. The three judge bench upheld the view of the Adjudicating Authority in concluding that the buyer of gas was as interested as the seller in ensuring and verifying the correct quantity of the gas supplied through the instrumentality of the measurement equipment and the pipelines. In concluding remarks bench noted that “the role of regulating pressure and ensuring the safety of supply of gas performed by the measurement equipment is an essential aspect for the ‘use’ of the consumer. The SKID equipment fulfils the description in Section 65(105)(zzzzj) of a taxable service: service in relation to “tangible goods” where the recipient of the service has use (without possession or effective control) of the goods,”. 6: Principles on determination of value of Excisable goods Case Title: The Commissioner of Central Excise, Customs and Service Tax, Calicut vs. M/s CERA Boards and Doors, Kannur, Kerala, AIR ONLINE 2020 SC 690 Coram: Chief Justice S.A. Bobde, Justice A. S. Bopanna and Justice V. Ramasubramanian
The Supreme Court laid down detailed principles to keep in mind while determining the value of the Excisable Goods. The appeals were disposed of by the Supreme Court, confirming the impugned orders of CESTAT setting aside the Order in Original passed by the Adjudicating Authorities and remanding the matters back for re-adjudication. The bench while disposing of the appeal directed the Adjudicating Authorities to conduct hearings, afford adequate opportunities to the parties and pass orders in original as early as possible. 7: Individuals must deduct TDS on payments to contractors even in the absence of a contract Case Title: Shree Choudhary Transport Company Vs Income Tax Officer,AIR ONLINE 2020 SC 665 Coram: JusticeA.M. Khanwilkar and Justice Dinesh Maheshwari The Supreme Court held that the individuals must deduct TDS on payments to contractors even in the absence of a contract. The division bench of A.M. Khanwilkar and Justice Dinesh Maheshwari, while upholding the orders of AO, CIT(A) and the ITAT, held that truck operators/owners answered to the description of “sub-contractor” for carrying out the whole or part of the work undertaken by the contractor (i.e., the appellant) for the purpose of Section 194C(2) of the Act. The court remarked that “If a particular truck was not engaged, there existed no contract but, when any truck got engaged for the purpose of execution of the work undertaken by the appellant and freight charges were payable to its operator/owner upon execution of the work, i.e., transportation of the goods, all the essentials of making a contract existed; and, as aforesaid, the said truck operator/owner became a subcontractor for the purpose of the work in question,” 8: Double Tax Avoidance Treaty Mumbai project office of Samsung Heavy Industries not a 'Permanent Establishment' Case Title: Director of Income Tax vs M/s Samsung Heavy Industries, AIR ONLINE 2020 SC 647 Coram: Justice R. F. Nariman, Justice Navin Sinha and Justice B.R. Gavai The Supreme Court while quashing the order of the ITAT, held that the office of Samsung Heavy Industries at Mumbai, India which is established merely for the sake of communication is not covered under the character of Permanent Establishment (PE) under India-Korea Double Taxation Avoidance Agreement (DTAA). The three-judge bench of Justice R. F. Nariman, Justice Navin Sinha and Justice B.R. Gavai concluded that no permanent establishment has been set up within the meaning of Article 5(1) of the Double Taxation Avoidance Agreement (DTAA), as the Mumbai Project Office cannot be said to be a fixed place. 9: Excess of Income over Expenditure in the Hands of Company is Taxable
Case Title:Yum ! Restaurants (Marketing) Private Limited vs Commissioner of Income Tax, Delhi, AIR ONLINE 2020 SC 557 Coram: Justice A.M. Khanwilkar and Justice Dinesh Maheshwari The Supreme Court of India held that excess of income over expenditure in the hands of a company is taxable. The imposition of liability by the Assessing Officer was upheld by the Commissioner of Income Tax (Appeals) on the ground of taint of commerciality in the activities undertaken by the assessee company, which was further confirmed by the Tribunal, wherein the essential ingredients of the doctrine of mutuality were found to be missing. The division bench consisting of Justice A.M. Khanwilkar and Justice Dinesh Maheshwari upheld the impugned order passed by the High court and stated, “the questions posed for our consideration stand answered against the appellant (assessee company) and in favor of the Revenue and the appeal stands disposed of upholding the impugned judgment with the liberty to the appellant to pursue the remedy of rectification, as per law. There shall be no order as to costs. Pending interlocutory applications, if any, shall also stand disposed of.” 10: UAE Exchange can’t be Taxed through It’s Liaison Office in India as it does not constitute ‘Permanent Establishment’. Case Title: Union of India & Anr. vs. U.A.E. Exchange Centre, AIR ONLINE 2020 SC 537 Coram: Justice A.M Khanwilkar and Justice Ajay Rastogi The Supreme Court has granted relief to UAE Exchange by holding that its liaison office in India would not constitute a “Permanent Establishment” for the purpose of taxing the former as per the provisions of the Income Tax Act, 1961 and the relevant Double Taxation Avoidance Agreements (DTAAs). The bench comprising Justice A.M Khanwilkar and Justice Ajay Rastogi held that levying of tax from a UAE Company in India, when no trading, commercial or industrial activities took place is against Double Taxation Avoidance Agreement (DTAA), signed between India and UAE. 11: Lifted RBI Circular that curbed Crypto-currencies In India Case Title: Internet and Mobile Association of India vs. Reserve Bank of India Coram:Justices R F Nariman, Aniruddha Bose, and V Ramasubramanian The Supreme Court has set aside Reserve bank of India’s (RBI) 2018 Circular on the ground of "proportionality" which had restricted banks from dealing with crypto-currency such as bitcoins. The petition against the RBI curbs was filed by the Internet and Mobile Association of India (IAMAI) questioning the powers of the RBI to impose such a ban since the crypto-currency wasn’t a “currency” in the legal sense. IAMAI had insisted that crypto-currencies were more like a commodity. The bench observed in its 180 page order that "when the consistent stand of RBI is that they have not banned VCs (virtual currencies) and when the Government of India is unable to take a call despite several committees coming up with several proposals including two draft bills, both of which advocated exactly opposite positions, it is not possible for us to hold that the impugned measure is proportionate.” 12: Allowed filling of revise GST Tran-1 either electronically or manually. Case Title: Union of India vs. Adfert Technologies Pvt. Ltd, SLP No. 4408/2020 Coram: Justice D.Y. Chandrachud and Justice Sanjiv Khanna The Supreme Court of India has upheld the Punjab and Haryana High Court order directing the GST Department to Re-Open the facility to file or revise GST Tran-1 either electronically or manually. The Punjab and Haryana High Court had directed the Goods and Services (GST) department to file or revise Tran-1 either electronically or manually. The Supreme Court observed that The Hon’ble Punjab & Haryana HC passed a very reasoned ruling in the matter, observing as under:
- GST is an electronic system-based tax regime and most of the people in India are not very conversant with such electronic mechanisms.
- Accrued unutilized credits are a vested right of the Petitioners and cannot be taken away as such by the Respondents just on account of procedural or technical grounds.