GST Not Includible in Presumptive Income u/s 44B: ITAT Deletes Addition on Shipping Company [Read Order]

The Income Tax Appellate Tribunal (ITAT) Bench Mumbai has held that the Goods and Services Tax (GST) collected by a non resident shipping company cannot be added to the gross receipts for the purpose of determining presumptive income under Section 44B of the Income Tax Act, 1961. The Tribunal accordingly deleted the addition of ₹8.34 crore made by the Assessing Officer.

The Bench comprising Sandeep Singh Karhail (Judicial Member) and Om Prakash Kant (Accountant Member) ruled in favor of the assessee by holding that GST is a statutory tax collected on behalf of the Government and does not have the character of income.

The Bench also held that only specified amounts can be taken into account for the purpose of determining presumptive income under Section 44B(2) of the IncomeTax Act, 1961.

The assessee Oriental Overseas Ltd. a shipping company based in Hong Kong that operates internationally filed its return claiming income under the presumptive taxation system of Section 44B.

However,during the assessment process the Assessing Officer observed that GST on ancillary charges was not included in the gross receipts and accordingly added ₹8.34 Crore to the income as a part of the turnover. The Dispute Resolution Panel (DRP) upheld this addition.

The assessee argued that GST is not a charge for the carriage of goods but a statutory levy that has been collected in a fiduciary capacity. The assessee relied on the rulings of the Tribunal in its own case for earlier years that had consistently held that service tax is not included in presumptive income. The Revenue took the position that GST is a part of aggregate receipts and hence included in presumptive income under Section 44B.

The Tribunal pointed out that section 44B is a special provision with a non-obstante clause and the computation of the amount is strictly in respect of the amount relating to the carriage of goods or passengers. The tribunal also held that it cannot include GST as it would amount to tax on tax and cannot be allowed as well as the decisions in respect of exclusion of service tax are applicable to GST as well.

Accordingly, the Tribunal allowed the appeal by deleting the addition.

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