The Central Board of Excise and Customs (CBEC) recently issued a circular regarding abolition Mate receipts. However, the circular clarifies that the issuing of Mate receipt would continue in case of non-contained export cargo. The decision is on recommendation of the Committee under the Chairmanship of Director General of Shipping.
Issuance of mate receipt would serve as a documentary evidence of cargo loaded on the vessel and also date of sailing. It is issued by Captain or mate of the vessel and endorsed along with the Shipping Bill by the Customs Officer in the Docks. This document is also insisted by the Shipping Companies for issuance of Bill of Lading.
“It is observed that the Mate’s receipt used to serve multifarious purpose mainly ensure that the export container is loaded on the vessel. It also provides the date of sailing. Hwever, since the advent of automation of Customs procedures, message exchange systems, manual issuance of mate recipt in the case of containerized cargo has become redundant. Moreover, disbursal of drawback is done only after the EGM has been filed at the gateway port. In view of the changed business workflow, need for issuance of mate receipt is no more there. Board has, therefore, decided that Customs Houses should no more insist for issuance of mate receipt in the case of containerized cargo. However, in respect of non-contained export cargo, like bulk cargo etc, the practice of issuing f Mates receipt would continue.”
Read the full text of the circular here.
Recently, the division bench of the Patna High Court held that the income earned by the assessee from letting out a commercial complex must be treated as his business income. The Court, based on several judicial decisions, expressed a view that the said income constitutes “income from house property.”
In the instant case, the assessee-Firm had constructed a commercial complex and had derived rental income from the same. The assessee furnished the income tax returns for the relevant assessment year by showing the same as its “business income.”. However, the assessing authority had rejected the returns and disallowed the assessee’s claim by pointing out that the said income is liable to be treated as its “income from house property.”
Before the High Court, the appellant-assessee relied upon the decisions in Chennai Properties & Investment Ltd and rayala Corporations Pvt Ltd, and submitted that in case an assessee drawing rental income from a building constructed for earning income, is the business income of the assessee.
Accepting the contention of the assessee in the light of the above precedents, the Court emphasized that the income from letting out the commercial complex is the business income of the assessee.
Read the full text of the Judgment below.
In a recent ruling, the single bench of the Madras High Court quashed the Orders passed by the VAT Authorities reversing Input Tax on ground that selling dealer has not paid taxes/selling dealers registration certificates have been cancelled. The Court, relying upon its earlier decisions, reiterated that the order cannot be sustained on the above reasons.
The main issue raised before the Court was that whether the purchasing dealers can be held liable for non-payment of tax by the selling dealers on account of retrospective cancellation of their registration certificates.
The Court noticed that the issue is squarely covered by the decision of the same Court in a recent case in JINSASAN DISTRIBUTORS v. COMMERCIAL TAX OFFICER (CT), CHINTADRIPET ASSESSMENT CIRCLE,CHENNAI [(2013) 59 VST 256 (Mad)], in which it was held that the retrospective cancellation of the registration certificates issued to the selling dealers cannot affect theright of the petitioners/assessees, who have paid the tax on the basis of the invoices and thereafter claimed the benefit under section 19 of the TNVAT Act, 2006.
Referring to a catena of decisions, the Court further observed that IPTcannot be reversed on ground that the seller has not paid the tax.
Read the full text of the Judgment below.
H.C.Arora, a senior Advocate of the Punjab & Haryana High Court, filed a Public Interest Litigation before the Court seeking invalidation of s. 13A of the Income Tax Act and 29-C of the Representation of the Peoples Act, 1951 claiming that these provisions discriminates the parties and other tax payers. The Court will hear the matter on Monday.
As per s. 13A of the Act, the political parties can accept donations or contributions upto Rs. 20,000/= from any person, without requiring to maintain the accounts, or maintaining the names and addresses of such donors. In the litigation, it is stated that the section entitles the political parties to collect endless amount through such so called small donations upto Rs.20000/- from any person.
As per the Reports submitted by the Association for Democratic Reforms, funds of national Political parties comprise such donations upto 51% of their total fund collection during Financial Year 2014-2015. The political parties are extended benefit of exemption of this income from unaudited donations, also from payment of income tax.
Mr. Arora said that these provisions are against public policy inherent under the concept of free and fair elections. These provisions are otherwise also arbitrary and discriminatory vis a vis other tax payers, who have to give details of every penny of their investments for getting any tax exemptions, rebates or reliefs. Besides, these provisions protect black money deposited in the accounts of political parties.
In a recent circular, the Central Board of Direct Taxes (CBDT) clarified that the premium paid by the firm on the keyman insurance policy of a partner is an admissible expenditure under section 37 of the Income Tax Act, 1961.
As per the CBDT Circular 18.02.1998, the premium paid on the keyman insurance policy is allowable as expenditure under the Act. However, there was a debate on the premium paid by the firm on the keyman insurance policy of a partner. The Officers frequently disallowed the same by observing that the same is not incurred for the purpose of business.
However, various High Courts, in their decisions, held that the same is allowable as business expenditure. Recently, the Punjab & Hariyana High Court,in the case of M/s Ramesh Steels, has clarified the same.
It is in the light of the High Court decisions, the CBDT has now confirmed that the premium paid by the firm on the keyman insurance policy of a partner is deductible from the total income of the Firm.
The circular states, “it is a settled position that in case of a Firm, premium paid by the Firm on the Keyman Insurance Policy of a partner, to safeguard the Firm against a disruption of the business, is an admissible expenditure under section 37 of the Income Tax Act.”
Read the full text of the circular below.
The Union Cabinet chaired by the Prime Minister Narendra Modi has approved the ratification and entry into force of the third Protocol to the Convention between India and New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (Convention). The Protocol was signed on 26th October, 2016.
The Protocol will stimulate the flow of exchange of information between India and New Zealand for tax purposes which will help curb tax evasion and tax avoidance. It will also enable assistance in collection of tax revenue claims between both countries.
Article 26 on ‘Exchange of Information’ of the existing Convention has been replaced with a new Article in the Protocol which is in line with the international standard for exchange of information.
A new Article on ‘Assistance on Collection of Taxes’ has been added in the Protocol.
The Protocol shall enter into force on the date of notification of completion of the procedures required by the respective laws of the two countries for entry into force of the Protocol.
Background:
The Central Government is authorized under section 90 of the Income Tax Act, 1961 to enter into an Agreement with a foreign country or specified territory for exchange of information and recovery of income tax for the prevention of evasion or avoidance of income-tax chargeable under the Income-tax Act, 1961. The Convention came into force on 3rd December, 1986. The Convention was amended in 1997 through a First Protocol and in 2000 through a Second Protocol. Subsequently, India proposed to further amend the Convention through a Third Protocol to update the Exchange of Information Article as per the international standard and to insert an Article on Assistance in the Collection of taxes. Accordingly, negotiations were entered into with New Zealand and agreement was reached on both the Articles of the Third Protocol.
The Central Board of Direct Taxes (CBDT) has entered into four more unilateral Advance Pricing Agreements (APAs) on 22nd and 23rd November, 2016. Some of these agreements also have a “Rollback” provision in them.
With these four signings, the total number of APAs entered into by the CBDT has reached 115. This includes 7 bilateral APAs and 108 Unilateral APAs till date. During the current financial year, a total of 51 APAs (4 bilateral APAs and 47 unilateral APAs) have been entered into so far.
The four APAs signed over the last two days pertain to various sectors of the economy like pharmaceuticals, Information Technology and construction. The international transactions covered in these agreements include software development Services, IT enabled Services (BPOs), Engineering Design Services, Contract R&D Services and Marketing Support Services.
The APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014. The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance. Since its inception, the APA scheme has evinced a lot of interest from taxpayers and that has resulted in more than 700 applications (both unilateral and bilateral) being filed in just four years.
The progress of the APA Scheme strengthens the Government’s mission of fostering a non-adversarial tax regime. The approach and functioning of the officers in the APA teams have been appreciated and acknowledged by the industry in India and abroad. The CBDT expects more APAs to be concluded and signed in the near future.
Three draft GST related Laws – Model Goods & Service Tax; Integrated Goods and Service Tax (IGST) and Goods & Service Tax (Compensation to the States for loss of Revenue) were discussed at length for two days on 21st – 22nd November, 2016 in the Officers’ Level Meeting of the States and Centre held in national capital. Number of issues were resolved during the two day meeting. However, the States desired some more time to internally deliberate on revised draft of the Laws within their respective State(s).
Another Meeting of the Law Sub-Committee comprising of the officers of the States and the Centre has been now scheduled for 25th November, 2016 in Delhi in order to finalise the draft GST related Laws before placing them before the GST Council.
Therefore, the GST Council Meeting scheduled for 25th November, 2016 has been rescheduled on 2nd-3rd December, 2016.
In a recent ruling, the Allahabad High Court observed that the UP VAT authorities has jurisdiction to assess Dominos Pizza Overseas Franchising in respect of Royalty received. While dismissing the writ petition filed by the Company, the Court observed that though the petitioners contended that the franchise agreement between petitioner and JFL was executed outside India, the place of contract is actually in India as per the provisions of Indian Contract Act.
Coming to the facts of the case, the Petitioners M/ S Dominos Pizza Overseas Franchising, denied their VAT liability in respect of royalty amount received from M/s Jubilant Foodworks Ltd as per the as per the Franchise Agreement between these two parties for the purpose of developing and operating Dominos Pizza Stores and to grant sub franchise of Dominos Pizza Stores in India, Nepal, Bangladesh and Srilanka. The case of the Department was that JFL is using trademark of petitioner, therefore, Royalty paid by it on sale of manufactured goods is taxable under U.P. Value Added Tax Act, 2008. The order was impugned by the petitioners before the High Court.
The petitioners contended that the incidence of tax is on ‘dealer’ and levy of tax is, “sale and purchase of goods”. Term ‘dealer’ is defined under Section 2(h) of VAT Act, 2008 which includes any person who carries on business of transfer of right to use any goods for any purpose (whether or not for a specified period) for cash or for deferred payment or other valuable consideration in State of U.P. It is said that only when transfer of right to use any goods is subjected in State of U.P., the same is taxable and not otherwise.Therefore, according to the petitioners, the VAT officer has no jurisdiction to levy tax on transaction executed outside India since agreement between petitioner and JFL was executed outside India.
While determining the place of contract, the Court observed that “In the present case there is no averment regarding mode of communication adopted by petitioner communicating its acceptance. There is not even a whisper as to how and in what manner communication of acceptance was made. In absence of any specific pleading so as to attract exceptions with regard to communication, we have no option but to hold that acceptance will be completed only when it is communicated to offer or and that communication would be at a place where from offer was made. That be so,the agreement can be said to become a concluded contract and executed when it is communicated to Proposer/ Offer or at NOIDA where from offer was made. The ultimate result would be that the very foundation of argument that taxing authorities in Uttar Pradesh had no jurisdiction, disappears and vanishes. It cannot thus be said that impugned orders are patently without jurisdiction.”
Read the full text of the Judgment below.
The Delhi High Court today issued a notice to the ministries of Coal and Law requiring their response with regard to the refund claim of Jindal power ltd. Recently, the Company had approached the High Court challenging the provisions of the Coal Mines Act, as per which the additional levy taking part in the coal auction is mandatory. The petitioners further sought for refund of around Rs 1185 crore paid by them as additional levy as per the Act. The government
The company contended that the government cannot impose any such levy without first adjudicating the issue and sought that the provisions in the Act which provided for such levy be declared ultra vires of the Constitution.
In the said petition, the company also assailed a 2012-13 report of Comptroller and Auditor General (CAG) to the extent it calculated that there was a net gain of Rs 295 per metric tonne (PMT) of coal to allottees who operated the blocks. The CAG report had also estimated a financial gain of Rs 1.86 lakh crore to prior private allottees.
According to the petitioners, it was allocated Gare Palma IV/2 and IV/3 blocks at Raigarh in Chhattisgarh to meet its requirement for running a 1000 mega watt power plant there. In the year 2014, the Supreme Court had cancelled allocation of 214 coal blocks, including those of the petitoners. However, the petitioners, under protest, paid the entire amount.
The company opposed the figure of Rs 295 PMT calculated as net gain by CAG, alleging that the report of the auditing body “fails to show any intelligible differentia of coal alloted or nature of mines”.
The petition further claims that the CAG audit was carried out without any direction from the President, Governor or Administrator, as required under the law and sought that the report be declared as unlawful and ultra vires.
The decision of demonetization has largely affected the public life. India has lost around 86% of its monetary base in a single day. The common people are facing problems due to the limit of withdrawal which has not been kept at a higher level.
In order to give the people a small relief, the Government has decided to waive service tax online ticket booking through IRCTC from tomorrow to December 31st. Another objective of this decision is to encourage cashless transaction in the wake of demonetization exercise.
Service tax will not be levied on tickets booked through the IRCTC website from November 23 to December 31, reportedly said a senior Railway Ministry official.
Currently, Rs 20 is levied as service tax on Sleeper and Rs 40 on AC classes for booking tickets through IRCTC. The decision would definitely make railway journey more cheaper.
A total number of 64,275* declarants have made declaration of undisclosed income of Rs.65,250* crore under the Income Declaration Scheme, 2016. (*Provisional). Under the Income Declaration Scheme, 2016 the amount of tax, surcharge and penalty is payable in three instalments. The notified date for payment of first installment is 30th November, 2016. Hence, the quantum of tax collected as part of the Scheme cannot be quantified at this stage.
Government has taken several measures, by way of policy initiatives and enforcement action, to curb black money. Such measures include –
(i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former Judges of Hon’ble Supreme Court.
(ii) Enactment of ‘The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015’ to specifically deal with the issue of black money stashed away abroad. The Act inter alia provides stringent provisions for concealment penalties (equal to three times the amount of tax payable) and contains stringent provision for prosecution.
(iii) Constitution of Multi-Agency Group (MAG) consisting of officers of Central Board of Direct Taxes (CBDT), Reserve Bank of India (RBI), Enforcement Directorate (ED) and Financial Intelligence Unit (FIU) for investigation of recent revelations in Panama paper leaks.
(iv) Proactively engaging with foreign governments with a view to facilitate and enhance the exchange of information under Double Taxation Avoidance Agreements (DTAAs)/Tax Information Exchange Agreements (TIEAs)/ Multilateral Conventions.
(v) Joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI) and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA).
(vi) Renegotiation of DTAAs with other countries to bring the Article on Exchange of Information to International Standards and expanding India’s treaty network by signing new DTAAs and TIEAs with many jurisdictions to facilitate the exchange of information and to bring transparency.
(vii) Enabling attachment and confiscation of property equivalent in value held within the country where the property/proceeds of crime is taken or held outside the country by amending the Prevention of Money Laundering Act, 2002 through the Finance Act, 2015.
(viii) Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of Benami property and provide for prosecution. The provisions of the amended Prohibition of Benami Property Transaction Act, 1988 have come into effect from 01.11.2016.
(ix) Initiation of the information technology based ‘Project Insight’ by the Income Tax Department for strengthening the non-intrusive information driven approach for improving tax compliance and effective utilization of available information.
(x) Withdrawal of Rs.500 and Rs.1000 denominations of Bank Notes of the existing series issued by Reserve Bank of India vide Notification No.2652 [S.O.3407(E)] dated 08.11.2016.
(xi) Amendment of Rule 114B of the Income-tax Rules to mandate quoting of PAN, for transactions of sale or purchase of goods or services of any nature above Rs.2 Lakh.
This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Rajya Sabha today.
Fighting the menace of Black Money stashed in offshore accounts has been a key priority area for the present Government. To further this goal, Mr. Sushil Chandra, Chairman, CBDT signed the‘Joint Declaration’ on behalf of India while Mr. Gilles Roduit, Deputy Chief of Mission of Swiss Embassy in India, signed on behalf of Switzerland, for the implementation of Automatic Exchange of Information (AEOI) between India and Switzerland here today.
As a result, it will now be possible for India to receive from September, 2019 onwards, the financial information of accounts held by Indian residents in Switzerland for 2018 and subsequent years, on an automatic basis.
The Government auditor CAG today said that the Income Tax Department has granted irregular benefits to the infrastructure companies without verification, which resulted in resulted in a loss of 4500 crores to the Revenue.
“Central Board of Direct Taxes (CBDT) did not have any established mechanism to assess the impact of revenue foregone on account of deductions under Section 80 IA of the Income Tax Act on the economy and industrial growth of the country”
The CAG has revealed the list of companies who availed this benefits. Reportedly, Rs 1,766.74 crore tax benefit availed by Reliance Ports & Terminals Ltd for construction of captive jetties at Port Sikka in Bihar. JSW Energy (Rs 340 crore), Reliance Infrastructure (Rs 51.88 crore), Tata Power (Rs 36.99 crore) and Gujarat Fluro Chemicals (Rs 22.75 crore) are the other companies in the list.
“There is no existing system to ascertain from the sponsoring ministries as to whether the tax holidays have had the desired impact on the growth of the economy,” CAG said. According to it, in the absence of such a mechanism it is difficult to the auditor to ascertain whether the very purpose of tax holidays has been achieved.
CAG, in its performance audit of the Revenue Department, mentioned that CBDT may evolve a mechanism for proper linkage between tax benefit allowed by the I-T department with the actual investment made by the assessee to assess the impact of tax holiday. The government provides tax holiday to companies under Section 80 IA for deduction in respect of profits and gains of companies engaged in infrastructure development at 100 per cent for a certain period.This is with an aim to encourage investment in infrastructure.The report which is based on test audit conducted by CAG between 2012-13 and 2014-15, is currently tabled in the Parliament.
In the cases of HSBC overseas bank accounts, tax demand of about Rs.5377 crore was raised till 31st March 2016, which includes demand in protective assessments.
Information regarding 628 Indian persons holding bank accounts in HSBC bank in Switzerland was obtained from the Government of France under Double Taxation Avoidance Convention (DTAC) between India and France in 2011. Appropriate action has been taken in these cases which include enquiries, investigations, assessments, levy of penalty and filing of prosecution complaints before criminal courts, wherever applicable. As a result of systematic investigations in the cases of HSBC overseas bank accounts, undisclosed income of about Rs.8200 crore (including protective assessments in some cases) was brought to tax till 31st March 2016 in 398 cases. Tax demand of about Rs.5377 crore has been raised in these cases. Besides, concealment penalty of Rs.1282 crore was levied in 159 cases and 164 criminal prosecution complaints were filed in 75 cases till 31st March 2016.
Action against tax evasion/black money, including in respect of black money stashed away abroad, is an on-going process. Such action under direct tax laws includes searches, surveys, enquiries, assessment of income, levy of penalties and filing of prosecution complaints before criminal courts, wherever applicable.
Recognizing various limitations under the existing legislation [Income-tax Act, 1961, etc.], the Government enacted ‘The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015’ to specifically and effectively tackle the issue of black money stashed away abroad. This has, inter alia, provided for more stringent provisions of penalties and prosecutions in respect of black money stashed away abroad. Further, under this law, for the first time the offence of wilful attempt to evade tax, etc. in relation to undisclosed foreign income/assets has been made a Scheduled Offence for the purposes of the Prevention of Money-laundering Act, 2002. This enables attachment and confiscation of the proceeds of crime of wilful attempt to evade such tax, etc., eventually leading to recovery of such undisclosed foreign income and assets/black money stashed away abroad. The new law came into force w.e.f. 01.07.2015.
In addition to the above, the Government has taken several measures to effectively tackle the issue of black money, particularly black money stashed away abroad. Such measures include policy-level initiatives, more effective enforcement action on the ground, putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration of information and its mining through increasing use of information technology. Recent major initiatives in this regard include – (i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former Judges of Hon’ble Supreme Court, (ii) Constitution of Multi-Agency Group (MAG) consisting of officers of Central Board of Direct Taxes (CBDT), Reserve Bank of India (RBI), Enforcement Directorate (ED) and Financial Intelligence Unit (FIU) for investigation of recent revelations in Panama paper leaks, (iii) Proactively engaging with foreign governments with a view to facilitate and enhance the exchange of information under Double Taxation Avoidance Agreements (DTAAs)/Tax Information Exchange Agreements (TIEAs)/Multilateral Conventions, (iv) According high priority to the cases involving black money stashed away abroad for investigation and other follow-up actions including prosecutions in appropriate cases, (v) While focusing upon non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest for credible deterrence against tax evasion/black money, (vi) Proactively furthering global efforts to combat tax evasion/black money, inter alia, by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI) and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA), (vii) Renegotiation of DTAAs with other countries to bring the Article on Exchange of Information to International Standards and expanding India’s treaty network by signing new DTAAs and TIEAs with many jurisdictions to facilitate the exchange of information and to bring transparency, (viii) Enabling attachment and confiscation of property equivalent in value held within the country where the property/ proceeds of crime is taken or held outside the country by amending the Prevention of Money-laundering Act, 2002 through the Finance Act, 2015, (ix) Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of Benami property and provide for prosecution, (x) Initiation of the information technology based ‘Project Insight’ by the Income Tax Department for strengthening the non-intrusive information driven approach for improving tax compliance and effective utilization of available information.
This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Rajya Sabha today.
In a big relief to Anil Ambani led Reliance Communications, Supreme Court of India on Monday has dismissed Income Tax Department’s Special Leave Petition on Rs. 4800 crore tax liability treating the proceeds as “unexplained cash credits”.
“We find no reason to entertain this special leave petition, which is, accordingly, dismissed” the two judge bench comprising of Justice Kurian Joseph and Justice Rohinton F Nariman observed in the order.
Reliance Communications had appealed against the IT Department order before the Income Tax Appellate Tribunal in which the order was upheld. later, Bombay High Court had allowed the appeal.
Read the full text of the order below.
In a recent ruling, the Chennai CESTAT observed that fund is allowable on CENVAT credit on input services utilised for manufacture of goods at nil rate of duty supplied to the SEZ.
In the instant case, the assessee approached the CESTAT raising a question that whether they are eligible to refund in respect of the CENVAT credit availed on the input services utilised for manufacture of goods at nil rate of duty supplied to the SEZ as well as exported. The appellants contended that their case falls within the ambit of exception provided under Rule 6(6) of the CENVAT Credit Rules, 2004. The goods supplied to SEZ come in par with the export of goods. Therefore it was submitted that, once the goods are not liable to tax, if otherwise attempted to be taxed denying CENVAT credit to be refunded, the cost of the goods shall undergo revision upward and will result in export of taxes which is not permitted in international trade practice.
The Revenue, on the other hand, contended that the assessee is not entitled to refund since supply to SEZ at nil rate of duty does not ipso facto makes goods exempted goods.
While allowing the appeal, the Judicial Member observed “There is an exception provided in sub rule (6) of Rule 6 of CENVAT Credit Rules, 2004 to the application of sub-rule (1) to (4) thereof. Clearances made to SEZ are not governed by the denial provision. Appellants submission is therefore certainly correct to say that any attempt to deny the refund of input credit shall make the services or goods exported costlier and will amount to export or deemed export of taxes which is not permitted in international trade practice as well as supply to SEZ domestically. Therefore, denial of refund to the appellant by the application of Rule 5 of CENVAT Credit Rules, 2004 is not reasonable, for which, the order of the authority below is set aside and appeal is allowed. The authority below granting refund shall act in accordance with law looking to the law on limitation, if any, applicable.”
Read the full text of the order below.
The division bench of the Madras High Court, in a recent decision, held that export sales are outside the ambit of section 3(4) of the Tamil Nadu General Sales Tax Act, 1959.
In the instant case, the appellant-assessee are manufacturer and exporter of Shoes and Shoe uppers in Tamil Nadu. In the process of manufacture, it purchases the necessary materials availing concessional rate of tax as provided for under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959. As per s. 3(4) of the Act, where a dealer, after availing the concessional rate of tax under sub-section (3), does not sell the goods so manufactured, but dispatches them to a place outside the State either by branch transfer, or by transfer to an agent, for sale, or for disposal in any other manner, except as a direct result of sale or purchase in the course of inter-state trade or commerce, is required to pay in addition to the concessional rate of tax paid under sub-section (3), tax at one percent on the value of the goods so purchased.The assessing Officer imposed tax on the assessee by invoking the above provision. On appeal, the appellate authorities upheld the same.
In the instant case, the assessee approached the Court raising a question that, “whether the Tribunal is justified in drawing its impugned finding sustaining the tax levy by interpreting / understanding the word “sell” in Sec. 3(4), by interpolating the phrase “sale in the State” into it when it is not in the Statute, which amounts to rewriting the law by the Revenue?”
The division bench comprising of Justice Nooty Ramamohana Rao and Justice Anita Sumanth noticed the decision in the case of Tube Investments of India Ltd., vs. State of Tamil Nadu reported in (2010) 36 VST 67 (Mad), in which it was held that Section 3(4) of the Act will have no application to export sales. We are in complete agreement with the reasons assigned by the Division Bench in Tube Investments of India Limited and subscribe to the same reason.
Relying on the decision, the Court held that the sales effected by the petitioner by way of export sub-section (4) of Section 3 of the Act would not get attracted.
Read the full text of the Judgment below.
To further support farmers for the current Rabi crop, the Government has decided to allow farmers to purchase seeds with the old high denomination banknotes of Rs.500 from the Centres, Units or Outlets belonging to the Central or State Governments, PSUs, National or State Seeds Corporations, Central or State Agricultural Universities and the ICAR, on production of proof of identity.
In order to further support farmers for the current Rabi crop, the Government has decided to allow farmers to purchase seeds with the old high denomination bank notes of Rs.500 from the Centres, Units or Outlets belonging to the Central or State Governments, Public Sector Undertakings, National or State Seeds Corporations, Central or State Agricultural Universities and the Indian Council of Agricultural Research (ICAR), on production of proof of identity.
This is in addition to the decision taken earlier for making cash available with the farmers by permitting them to draw up to Rs.25,000 per week from their KYC compliant accounts subject to the normal loan limits and conditions apart from the other facilities announced on 17.11.2016.
The Government is committed to ensure that the farmers are suitably facilitated during the Rabi season.
In a recent ruling, the Rajasthan High Court, Jaipur Bench confirmed the levy of tax and interest on the assessee, a manufacturer of oil and held that the benefit under Sales Tax Incentive Scheme, 1989 is not available to such Manufactures.
In the instant case, the respondent-assessee, who is engaged in the manufacture of oil, contended that they are eligible for the benefit under Sales Tax Incentive Scheme 1989. However, the assessing Officer, relying upon the decision of the Supreme Court in State of Rajasthan & Another v. Gopal Oil Mills & Another, pointed out that the benefit of the scheme is not available to the assessee after 4.4.1994.Accordingly, tax along with interest was imposed on the assessee. On appeal, the adjudicating authorities decided in favour of the assessee. Therefore the Revenue approached the High Court on appeal.
The assessee urged that the Tax Board allowed similar petitions in the case of CTO, Beawar v. Vimal Oil Industries, Kekri 4 Sales Tax Today 2631, Gopal Oil Mill v. Assistant Commissioner, Bharatpur 35 RTJS 263 and M/s. Singhania Oil Mill, Khairthal v. Assistant Commissioner, Special Circle, Alwar [Appeal No.557/2002/Alwar, and the said orders of the Tax Board allowing the claim of assessee attained finality and were not challenged before this court. He thus contended that once the view attained finality on identical case, the same cannot be re-agitated.
Justice Jainendra Kumar Ranka noticed the apex Court decision in the case of State of Rajasthan v. Gopal Oil Mills (supra), it was held that the benefit of the said scheme is available to the assessee only till 4.04.1994.
While quashing the orders of the appellate authorities, the High court held that the benefit is only available upto 4.4.1994 and not later on, and since in the instant cases, admittedly the assessment years involved are of 1995-96 on-wards, therefore, no benefit was available to the respondent assessees. The Court emphasized that once the apex court has held that benefits are available upto 4.4.1994, no other authority could have taken any other view.
On confirming the order of the Assessing authority levying tax and interest on the assessee, the Court said “that the interest is leviable, if the dealer or a person commits default in making payment of any amount of tax leviable or payable, and admittedly the tax has not paid on or after 4.4.1994 by the assessees and, therefore, in my view the tax having not been paid the interest was certainly leviable and has rightly been levied by the AO. The judgments relied upon by the learned counsel for the respondents referred to above, are not applicable and distinguishable as all assessments are later than the cut off date, 4.4.1994, and at-least after 4.4.1994 the tax was leviable and once tax was leviable interest being automatic was rightly charged/levied by the AO.”
Read the full text of the Judgment below.
In a recent decision, the division bench of the Kerala High Court held that he power vested on the officer to impose penalty u/s 47(6) of the KVAT Act is not absolute and the officer cannot impose maximum penalty in all cases. The Court was considering a Writ appeal preferred by the Revenue against the order of the Single bench who reduced the penalty imposed on the assessee under the said section. While upholding the order of the Single bench, the Court emphasized that it is a settled provision of law that the power to impose penalty being quasi judicial in its effect and ambit, will, therefore, have to be exercised with great circumspection and that the quantum of penalty imposed should depend upon the gravity of the offence.
In the instant case, the Intelligence Officer detained the vehicle of the assessee on the allegation that it did not have the requisite documents under Section 46 of the Kerala Value Added Tax Act. Accordingly, the officer imposed a penalty of two-times of tax alleged to be evaded by the assessee u/s 47(6) of the KVAT Act. The first appellate authority confirmed the order. On second appeal, the Appellate Tribunal that in the absence of any positive material evidencing that the vehicle was brought to Kerala not for sale or transfer,imposition of penalty was not legally sustainable.
Referring to the decision in the case, Sudhi v.Intelligence Officer, Agricultural Income-tax and Sales Tax, the Court observed that a penalty can be levied only if there is fraudulent or other blame-worthy or objectionable conduct on the side of the assessee.
Regarding the power of the Single judge of the High Court in determining and reducing the quantum of penalty by analyzing the relevant facts of the case, it was held that “in the event there are sufficient reasons to show that the Assessing Officer and the other authorities had not considered the relevant materials and have not considered all the issues that are imperative for consideration in the facts and circumstances of the case and if the respondent was able to establish that his conduct was not fraudulent and that his omissions are not so grave so as to attract the maximum penalty, then it would be permissible, as has been done by the learned single Judge, to reduce the penalty even below the alleged amount of tax.”
With regard to the power vested on the officer to impose penalty, the bench comprising of Justice Thottathil B Radhakrishnan and Justice Devan Ramachandran observed that “It is perspicuous that Section 47(6) of the Act authorises the Officer concerned to impose a penalty not exceeding twice the amount of tax, but does not, in any manner, impose an obligation upon such Officer to impose the maximum penalty always. The discretion to impose penalty subject to a maximum of twice the amount of tax obviously gives to the Officer the power to impose such quantum as is warranted in the facts and circumstances of each case. The section does not prescribe a minimum quantum of penalty to be imposed but only mandates that the penalty so imposed would not exceed twice the amount of tax. It is, therefore, axiomatic that the Officers concerned are under a statutory obligation to exercise the discretion vested with them under the Statute in a manner that would answer the tests of fairness and appropriateness based on the culpability of the assessee as has been determined by due process.”
“A reading of Section 47(6) ineluctably leads to a conclusion that imposition of penalty can be based only on the establishment of guilt on the part of the assessee in attempting to evade tax. It is, therefore, axiomatic that once the intention to evade tax is established, penalty is to be imposed. The only question is how the discretion regarding the quantum has to be exercised. The Assessing Officer and the Appellate Authorities entered into the findings based on the guilt of the respondent and therefore, imposed the maximum penalty. However, the circumstances that would obviously mitigate the suspicion that was created against the respondent were not considered in its proper perspective.”
Read the full text of the Judgment below.
