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Showing 101 to 120 of 844 Records
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2020 (7) TMI 745
Maintainability of appeal - low tax effect - HELD THAT:- As learned counsel rightly contends, this appeal of the Revenue is no longer maintainable in view of the recent CBDT Circular No. 17 of 2019 dated 08.08.2019. The mandatory limit for cases in which Revenue can challenge the relief granted by the CIT(A) now stands enhanced to ₹ 50 lakhs. This concession granted by the Central Board of Direct Taxes (CBDT) is retrospective in effect inasmuch as it applies to all pending appeals as well. In view of the above position, the appeal of the Revenue is no longer maintainable and must be dismissed as such.
On re-verification at the end of the Assessing Officer it comes out that the tax effect of more than ₹ 50 lakhs is being involved in the appeal or the appeal falls within the exemption clause of the Circular, then the Revenue will be at liberty to file Miscellaneous Application to recall the Tribunal order. The application should be filed within time limit prescribed in the Act.
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2020 (7) TMI 744
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt - existence of debt and dispute or not - HELD THAT:- This Bench has no doubt that the Corporate Debtor M/s. Katara Spinning Mills Limited had a total debt of ₹ 23.90 crores and also defaulted on OTS-2018 and OTS-2019 schemes - the Bench concludes that the nature of Debt is a “Financial Debt” as defined under section 5 (8) of the Code. It has also been established that there is a “Default” as defined under section 3 (12) of the Code on the part of the Debtor. The two essential requirements, i.e. existence of ‘debt’ and ‘default’, for admission of a petition under section 7 of the I&B Code, have been met in this case.
Petition admitted - moratorium declared.
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2020 (7) TMI 743
Continuation of proceedings after the end of the assessment year - section 29(6) of UP VAT Act - HELD THAT:- When the First Appeal was being heard and the applicant's case was that no proceeding against him could be continued as per section 29(6) of the Act, then a complete stay of the recovery ought to have been there.
Under such circumstances, it is being provided that while the First Appeal would be heard and decided within a period of four months from the date of presentation of this order, the disputed demand as was being made by the Department shall remain stayed for a period of four months or till the disposal of the First Appeal, whichever is earlier.
Revision disposed off.
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2020 (7) TMI 742
Disallowance of claim of set-off of “B/f unabsorbed Short Term Capital Loss against the current year’s income from Short Term Capital Gain - claim of the assessee is not tenable in view of the fact that in his statement recorded u/s 132(4), the assessee has not claimed the adjustment of brought forward loss on account of the short term capital gain declared - whether or not, the brought forward short term capital loss which has been duly allowed by the department in the earlier years is eligible to be set off against the short term capital gains of the current year declared by the assessee ? - HELD THAT:- We find that the assessee has filed the computation of income correctly. The computation filed is as per the scheme of computation provided in the Income Tax Act. The provisions of Section 74 clearly provides for set off of short term capital losses which can be allowed to be carried forward and set off against income, if any, under the head “capital gains” assessable for the assessment year in respect of any other capital asset.
The statute confers carry forward and set off of losses hence the same cannot be denied in the absence of any specific provisions or conditions laid down in the same statute to disallow such benefits. It is a fact on record that the short term capital loss which has been incurred in the assessment year 2007-08 and the same has been allowed by the revenue to be carried forward till the assessment year 2010-11, hence, the same cannot be disallowed to be set off against the short term capital gain earned by the assessee during the assessment year 2011-12. Appeal of the assessee is allowed.
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2020 (7) TMI 741
Imposition of a pre-deposit in appellate proceedings before the DRAT - Section 18(1) of the SARFAESI Act - HELD THAT:- Upon examining Section 18(1), it is found that the first proviso indicates that different fees would be prescribed for filing of appeals by borrowers and by persons other than borrowers. This proviso has been inserted because an appeal under Section 18 may be filed by any aggrieved person. By way of illustration, a lessee, a person, other than the borrower, claiming title over the mortgaged/charged property, or any any other person affected by the measures under Section 13(4) of the SARFAESI Act could be an aggrieved person. Thus, such aggrieved persons are not always borrowers. Consequently, the second proviso regarding pre-deposit applies only when the appellant is a borrower.
The word “borrower” is defined in such a manner as to include a guarantor. This stands to reason inasmuch as a guarantor's liability is co-extensive with that of the principal debtor under Section 128 of the Indian Contract Act, 1872. Under the second proviso to Section 18(1) of the SARFAESI Act, a borrower is required to pre-deposit 50% of the amount of the debt due from him either as claimed by the secured creditor or as determined by the DRT, whichever is less. The third proviso empowers the DRAT to reduce the pre-deposit to an amount not less than 25% of the debt for reasons to be recorded in writing.
The pre-deposit provision (the second and third proviso) in Section 18 is applicable only to borrowers, as defined in the SARFAESI Act. In addition, the DRAT is vested with the discretion to reduce such pre-deposit to not less than 25% of the debt. Hence, the provision cannot be said to be arbitrary, onerous or unreasonable. Mr. Subramaniyan had also contended that his appeal before the DRAT was in respect of the dismissal of an application under Section 5 of the Limitation Act and, therefore, the order of the DRT should not be construed as an order under Section 17 of the SARFAESI Act - Once the Section 5 application is rejected, it is tantamount to a rejection by the DRT of the Section 17 application and a refusal to interfere with the measures taken by the secured creditor under Section 13(4).
Thereafter, the only statutory recourse available to the borrower is to appeal under Section 18 to the DRAT, which functions as an appellate forum and not as a court of first instance - there are no reason to strike or even read down Section 18(1) of the SARFAESI Act and the second proviso thereto - petition dismissed.
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2020 (7) TMI 740
Interpretation of Section 65B of the Indian Evidence Act, 1872 - election of the present Appellant, namely, Shri Arjun Panditrao Khotkar to the Maharashtra State Legislative Assembly for the term commencing November, 2014 - presentation of the nomination papers - entirety of the case before the High Court had revolved around four sets of nomination papers that had been filed by the RC. It was the case of the present Respondents that each set of nomination papers suffered from defects of a substantial nature and that, therefore, all four sets of nomination papers, having been improperly accepted by the Returning Officer of the Election Commission, one Smt. Mutha, (RO), the election of the RC be declared void.
HELD THAT:- The major jurisdictions of the world have come to terms with the change of times and the development of technology and fine-tuned their legislations. Therefore, it is the need of the hour that there is a relook at Section 65B of the Indian Evidence Act, introduced 20 years ago, by Act 21 of 2000, and which has created a huge judicial turmoil, with the law swinging from one extreme to the other in the past 15 years from STATE (NCT. OF DELHI) VERSUS NAVJOT SANDHU @ AFSAN GURU [2005 (8) TMI 663 - SUPREME COURT] to ANVAR P.V VERSUS P.K. BASHEER AND OTHERS [2014 (9) TMI 1007 - SUPREME COURT] to Tomaso Bruno [2015 (1) TMI 1307 - SUPREME COURT] to SONU @ AMAR VERSUS STATE OF HARYANA [2017 (7) TMI 1366 - SUPREME COURT] to Shafhi Mohammad [2018 (1) TMI 1402 - SUPREME COURT].
Appeals dismissed.
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2020 (7) TMI 739
Playing Cards - legal or not - case of the prosecution is that the complainant, on his rounds along with two other Constables on 05.06.2020, around 06.30 pm, near Kaduthula Junction, found the petitioner and four others playing cards near a thorny bush and therefore, he arrested the accused, recovered the cards and money and registered the case for the offence under Section 12 of the Act - HELD THAT:- Though the issue in the present case on hand is pertaining to playing of cards in a private place, since in the status report filed by the Assistant Inspector General of Police on behalf of the Director General of Police, it has been stated that at present, there is no rule to regulate and license such online skill games, based on a query posed by this Court while admitting this petition, this Court is inclined to discuss the issue in detail - The gaming industry in India is undergoing a dramatic transition, not only in terms of its audience, but also in terms of the modes of participation and engagement. Gambling Laws in India prohibit betting or wagering and any act which is intended to aid or facilitate the same. For the purpose of regulating gaming in India, most of the Indian legislations differentiate between “games of skill” and “games of chance”. Gaming / Gambling, being a State Subject, India has laws which differ from State to State. Therefore, what is permitted in one State, may be an offence in another.
When the menace of lottery was at its peak, sucking the blood and life of several families, the Government of Tamil Nadu, in the year 2003, has taken a rigid stand, with an iron hand and banned the sale of all lotteries, including online, within the territory of the State, by passing the Government Order in G.O.Ms.No.20 Home (Courts II) Department dated 08.01.2003. This Government Order, though challenged before the Courts of law, still holds the field. By virtue of this order, the Government has thus prevented the suicidal deaths, who have not only lost their hard earned money but also their family peace and reputation, in the State - Similarly, when the menace of charging exorbitant interest, by way of 'daily vatti', 'hourly vatti', 'kandhu vatti', 'meter vatti', 'vattiku vatti', was in its prime, the Government of Tamil Nadu, in the year 2003, has enacted Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, thereby, wiped the tears of the affected people at large.
This Court hopes and trusts that this Government shall take note of the present alarming situation and pass suitable legislation, thereby, regulating and controlling such online gaming through license, of course, keeping in mind the law of the land as well as the judicial precedents in this regard. This Court is not against the virtual games, but, the anguish of this Court is that there should be a regulatory body to monitor and regulate the legal gaming activities, be it in the real world or the virtual world. Needless to say that if the Government intends to pass a legislation in this regard, all the stakeholders should be put in notice and their views should be ascertained - Since this Court is exercising power under Section 482 Cr.P.C., with the above suggestions, this Court refrains from observing any further, leaving it to the Government.
Criminal Original Petition is allowed.
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2020 (7) TMI 738
Violation of principles of natural justice - Validity of assessment order - TNVAT Act - non-production of various documents - HELD THAT:- Ms. Dhanamadhiri was directed to produce the records to establish service of notice upon the petitioner prior to completion of assessment - while confirming that she is unable to produce the records, since the assessment files are in Tiruppur, she states, on instructions, that the notices do not appear to have been sent by Registered Post/Speed Post, but only via ordinary post. She would thus fairly state that another opportunity of hearing may be extended to the petitioner to ensure adherence to the principles of natural justice.
The respondent is directed to redo the assessment and complete the same on merits and in accordance with law - Petition allowed by way of remand.
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2020 (7) TMI 737
Recovery of arrears of GST due - assessment year 2018-2019 (November 2018 to March 2019) - HELD THAT:- The petitioner, who is an assessee under the GST Act, is not disputing his liability to tax, or the quantum thereof, for the period in question. It only seeks an instalment facility to pay the admitted tax, together with interest thereon, in view of the financial difficulties faced by it during the Covid pandemic situation, when its business has come to a total standstill.
During the pendency of this Writ Petition, the petitioner has established its bonafides by effecting a payment of ₹ 4 lakhs towards the tax liability for the period 2018-2019. It is also relevant to note that, as of today, there is no demand against the petitioner for the unpaid tax amount. Under the circumstances, since the petitioner is not disputing his liability, and wishes to put a quietus to the matter, it is deemed appropriate to direct the respondent to accept the belated return filed by the petitioner for the period November 2018 to March 2019, without insisting on payment of the admitted tax declared therein - The respondents shall adjust the amount of ₹ 4 Lakhs paid by the petitioner during the pendency of this writ petition, towards the admitted tax liability, and thereafter permit him to discharge the balance tax liability, inclusive of any interest and late fee thereon, in equal successive monthly instalments commencing from 25th August 2020 and culminating on 25th March, 2021.
Petition disposed off.
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2020 (7) TMI 736
Principles of natural justice - allegation that the concerned Judicial Magistrate did not apply his judicial mind at the time of passing the summoning order against the applicant as the impugned summoning order has been passed in five lines based on proforma - HELD THAT:- The use of proforma in passing the judicial order is not proper and the order of summoning the applicant has been passed without application of judicial mind, which is substantiated by the fact that neither the facts of the case nor any finding or reason have been mentioned in the summoning order.
The impugned order dated 27th February, 2019 is cryptic and is set aside - application allowed.
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2020 (7) TMI 735
Maintainability of application - appropriate forum - High Court or Supreme Court - Issue involving determination of rate of Service Tax.
HELD THAT:- Connect with Tax Appeal No.2332 of 2010 - Let both the appeals be listed on 20.07.2020.
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2020 (7) TMI 734
Issues: Application for various interim reliefs in a corporate insolvency resolution process.
Analysis:
The Tribunal, comprising Hon'ble Mr. Madan Bhalchandra Gosavi, Member (Judicial) and Hon'ble Mr. Virendra Kumar Gupta, Member (Technical), heard various interim applications (IAs) in the corporate insolvency resolution process. Learned Senior Counsel Mr. Navin Pahwa represented the Resolution Professional (RP), while Mr. Mihir Thakore appeared for the Successful Resolution Applicant, and Mr. Sourabh Soparkar represented Enorcon Gmbh. The National Company Law Appellate Tribunal (NCLAT) directed the Authority to expedite the disposal of the application, leading to an adjournment of the matter to 03.08.2020 for further hearing. The Tribunal's focus was on addressing the interim reliefs sought during the insolvency resolution process, emphasizing the need for expeditious resolution as directed by the NCLAT. The legal representatives for the RP and the Successful Resolution Applicant played pivotal roles in presenting their arguments before the Tribunal. The involvement of Enorcon Gmbh through its legal counsel added another dimension to the proceedings, highlighting the complexity of the case. The adjournment to the next hearing date indicated the Tribunal's commitment to ensuring a thorough and timely resolution of the matter in line with the NCLAT's directives.
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2020 (7) TMI 733
Termination of Power Purchase Agreement - CIRP Process - Going Concern - HELD THAT:- List the matter in the third week of September, 2020.
I.A. No.9682/2020 is permitted to be withdrawn with liberty to take appropriate steps in accordance with law.
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2020 (7) TMI 732
Withdrawal of resolution plan which was submitted before this Tribunal after approval of the COC - HELD THAT:- The NCLT has no jurisdiction to permit withdrawal of the resolution plan which has been placed before the authority with due approval of the COC. Notwithstanding this fact, it has been pointed out by the Counsel for the COC that another matter is subjudiced before the Hon'ble Supreme Court in which inter-alia a similar request has been made.
It will not be appropriate for this Tribunal to deal with an issue which is already subjudiced before the Hon'ble Supreme Court - Application dismissed.
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2020 (7) TMI 731
Whether the document Ex.P6 required registration as by way of said document the interest in immovable property worth more than ₹ 100/was transferred in favour of the plaintiff?
HELD THAT:- The High Court committed manifest error in interfering with and in particular reversing the well considered decision of the first appellate Court, which had justly concluded that document dated 10.3.1988 executed between the parties was merely a memorandum of settlement, and it did not require registration. It must follow that the relief claimed by the plaintiff in the suit, as granted by the first appellate Court ought not to have been interfered with by the High Court and more so, in a casual manner, as adverted to earlier.
Having said that, it is unnecessary to examine the alternative plea taken by the plaintiff to grant decree as prayed on the ground of having become owner by adverse possession. For the completion of record, we may mention that in fact, the trial Court had found that the possession of the plaintiff was only permissive possession and that finding has not been disturbed by the first appellate Court. In such a case, it is doubtful that the plaintiff can be heard to pursue relief, as prayed on the basis of his alternative plea of adverse possession.
Impugned judgment and decree of the High Court is set aside - Appeal allowed.
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2020 (7) TMI 730
Deduction u/s 10B - set off of brought forward unabsorbed depreciation - deduction u/s 10B is to be allowed without considering the depreciation loss, when it was held in the case of Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] that the deduction u/s 10B is to be allowed while computing the gross total income of the eligible undertaking under Chapter -IV of the Income Tax Act? - unabsorbed depreciation loss of Section 10B unit cannot be set off against other incomes - HELD THAT:- Issue involved in this appeal is covered by the decision in the assessee's own case in [2020 (3) TMI 814 - MADRAS HIGH COURT] by which, the assessee's appeal was allowed and the substantial questions of law were answered in favour of the assessee.
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2020 (7) TMI 729
Long Term Capital Loss on transfer of Government Securities - applying cost inflation index on transfer of assessee’s government securities - HELD THAT:- As decided in own case [2019 (12) TMI 958 - ITAT KOLKATA] we note that as per Section 2(42A) expression 'security’ shall have meaning assigned to Clause 11 of Securities Contracts Regulation Act, 1956 which includes government securities. The facts of this case are squarely applicable to the present case of the assessee.
Respectfully following the judgment of Sundararn Finance Limited [2017 (7) TMI 661 - ITAT CHENNAI] we note that it is abundantly clear that Government Securities are entitled to Indexation Benefits. Therefore, we note that Government Securities are different from Bond and Debenture for the purpose of the 3rd proviso to Sec. 48 of the Act (4th proviso after amendment) and therefore the benefit of indexation should be granted to the assessee on the redemption of these Government Securities. - Decided in favour of assessee.
Set off of brought forward long term capital loss against the short term capital gain computed u/s 50 - HELD THAT:- Assessee’s long term capital loss in issue arose on sale / transfer of the relevant block of assets i.e. its that building only. It had also claimed depreciation thereupon in the preceding assessment years. Its computation of the consequential capital gains came to be covered u/s 50 resulting in short term capital loss as a special provision arising on sale of depreciable assets. The Revenue’s only plea during the course of hearing is that such capital gains or loss; which are computed u/s 50 of the Act are not eligible for set off against long term capital gains brought forward. We find no merit in the Revenue’s instant stand.
Hon'ble Bombay high court’s decision in Commissioner of Income Tax vs. Ace Builders [2005 (3) TMI 36 - BOMBAY HIGH COURT] as upheld in V.S.Dempo Company Ltd. [2016 (10) TMI 62 - SUPREME COURT] holds that the impugned deeming fiction treating long term capital gains / losses as short once are applicable in specified circumstances only u/s 50 of the Act. And also that they are very much eligible for all other deduction provisions under the Act - Such capital gains are very much entitled to be set off against the brought forward long term capital loss as held on unabsorbed depreciation. We see no reason to interfere with the CIT(A)’s findings accepting assessee’s set off claim therefore. The Revenue fails in the instant second substantive ground.
Disallowance u/s 14A r.w. Rule 8D(2)(ii) & (iii) - HELD THAT:- This tribunal’s co-ordinate bench decisions right from assessment year(s) 2008-09 to 2010-11, 2013-14 and 2015-16 have consistently held that the impugned proportionate interest disallowance does not apply in case of interest free funds having been invested in exempt income yielding investments. We also reiterate that this assessee has rather earned exempt interest income as well (supra). We therefore go by judicial consistency to affirm the CIT(A)’s appellate order under challenge.
The Revenue’s case is not is no different qua the third head of administrative expenditure as well since the CIT(A) has only directed the Assessing Officer to compute the same after considering the exempt income yielding investment only as per this tribunal’s order in RIE Agro Ltd. vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA]as upheld in jurisdictional high court [2013 (12) TMI 1517 - CALCUTTA HIGH COURT] - We thus reject the Revenue’s instant third substantive ground as well.
Disallowance u/Sec.40(a)(ia) - assessee’s failure in deducting TDS on payments made to various parties - HELD THAT:- As from a perusal of the case file as well as in CIT(A)’s appellate order’s detailed discussion that the assessee’s impugned payments pertain to either outright purchases of raw material or without involving any contractual relationship nor they exceeds amounts exceeding threshold limit of ₹30,000/- for deducting TDS. This tribunal’s co-ordinate bench decision in assessment year 2013-14 [2019 (12) TMI 1281 - ITAT KOLKATA] has declined the Revenue’s similar argument as well. We thus adopt judicial consistency qua this issue in absence of any distinction on facts or law pinpoint as Revenue’s behest.
Educational cess disallowance u/s 40(a)(ii) - Addition made in the course of assessment and deleted in the lower appellate proceedings - HELD THAT:- We notice that hon'ble Bombay high court’s decision in Sesa Goa Limited [2020 (3) TMI 347 - BOMBAY HIGH COURT]as well as in Chambal Fertilisers and Chemicals Ltd. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] hold that the clinching expression “cess” does not form part of sec. 40(a)(ii) of the Act so as be disallowed. We adopt the very reasoning mutatis mutandis hold the CIT(A)’s appellate action deleting the impugned addition - Revenue’s appeal is dismissed.
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2020 (7) TMI 728
Penalty u/s 271(1)(c) - whether for concealment of particulars of income or furnishing of inaccurate particulars of income? - Long Term Capital Gain earned on sale of agricultural land which was jointly held in equal share with his brother Sunil Sharma - HELD THAT:- AO has not clearly mentioned the limb, on the basis of which, penalty was proposed to be imposed. AO in assessment order or penalty notices did not specify the limb under which the penalty was initiated and simply issued a pre-printed notice without striking off the unnecessary portions of the notice.
If the AO was of the view that the assessee has concealed the income or furnishing inaccurate particulars of income then he should have deleted or not mentioned the other limb for imposition of penalty i.e. concealing the particulars of income. The above act of the AO clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind.
With regard to the merits of the penalty so levied, we find that it was an inadvertent human error while taking the costs of acquisition at the time of computation of capital gain. It was a bonafide and unintentional mistake which was rectified during the course of assessment itself - In case of Price Water House Coopers P. Ltd. [2012 (9) TMI 775 - SUPREME COURT] held that ‘ the assessee should have been careful but in absence of due care in a case did not mean that assessee was guilty of either furnishing inaccurate particulars or attempting to conceal the income. Thus no penalty can be levied for a bona fide/inadvertent/human error’.
Hon'ble M.P. High Court in case of CIT vs. SKY Auto Products Pvt. Ltd. [2004 (4) TMI 28 - MADHYA PRADESH HIGH COURT] held that where the assessee, a new businessman claimed depreciation for the full year in the first year of starting production though he was entitled only to fractional depreciation, it was a case of bonafide mistake on the part of the assessee. Such a ground cannot be a good ground for imposition of penalty u/s 271(1)(c).
Hon'ble Supreme Court in the case of M/s. K.C. Builders vs. ACIT [2004 (1) TMI 7 - SUPREME COURT] held that mere omission from the return of an item of receipt does neither amount to be concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In the view of the above there was neither concealment nor the assessee furnished the inaccurate particulars of income. - Decided in favour of assessee.
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2020 (7) TMI 727
Validity of assessment order - demand of differential duty - classification of imported goods - fruit juice based drink - appealable order or not - HELD THAT:- As it appears that the order impugned is an appealable one, involves adjudication of factual matters and concerns revenue of the government, it would be appropriate to direct the petitioner to prefer appeal before the appellate authority in accordance with law.
In the event the petitioner deposits the Bank Guarantee in terms of the order dated 17th June, 2020, the respondent authority shall release the goods of the petitioner, without prejudice to the rights and contentions of the parties in the appeal within three working days from the date of furnishing the Bank Guarantee - petitioner also raises a claim for damages on account of the illegal act on the part of the respondents. The prayer of the petitioner for damages shall be left open to be decided by the appropriate court, as and when the petitioner prefers application in connection with the same.
Petition disposed off.
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2020 (7) TMI 726
Refund of ITC in case of inverted duty structure - Not allowing refund of unutilized input tax credit relatable to input services - Validity of amended Rule 89(5) of the CGST Rule, 2017 - Circular no.79/53/2018-GST dated 31.12.2018 - HELD THAT:- Rule 89(5) and more particularly explanation (a) thereof, provides that Net Input Tax Credit shall mean “input tax credit” availed on “inputs” during the relevant period other than the “input tax credit” availed for which refund is claimed under sub-rule (4A) or (4B) or both. Therefore, the grievance of the petitioner is that only the “inputs” is referred to in explanation (a) to sub-rule 5 of Rule 89 of CGST Rules 2017 and therefore, “input tax credit” on “input services” are not eligible for calculation of the amount of refund by applying Rule 89(5). Thus, it results into violation of provision of sub-section 3 of Section 54 of the CGST Act, 2017, which entitles any registered person to claim refund of “any” unutilised input tax credit. Sub-clause (ii) of the proviso to sub-section 3 of Section 54 negates the claim of refund of unutilized input tax credit other than where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, except supplies of goods or services or both as may be notified by the Government on the recommendations of the GST Council.
The provision of section 7 provides that “scope of supply” includes all forms of supply of goods or services. Therefore, for the purpose of calculation of refund of accumulated “input tax credit” of “input services” and “capital goods” arising on account of inverted duty structure is not included into “inputs” which is explained by the Circular No. 79/53/2018-GST dated 31.12.2018, wherein it is stated that the intent of law is not to allow refund of tax paid on “input services” as part of unutilised “input tax credit”. Therefore, it is required to consider whether the refund of unutilised input tax credit arising due to inverted duty structure can be denied or not.
Section 66 levies service tax at a particular rate on the value of taxable services. Section 67 (1) makes the provisions of the section subject to the provisions of Chapter V, which includes Section 66. This is a clear mandate that the value of taxable services for charging service tax has to be in consonance with Section 66 which levies a tax only on the taxable service and nothing else. There is thus in built mechanism to ensure that only the taxable service shall be evaluated under the provisions of 67 - Rule 5 (1) of the Rules runs counter and is repugnant to Sections 66 and 67 of the Act and to that extent it is ultra vires. It purports to tax not what is due from the service provider under the charging Section, but it seeks to extract something more from him by including in the valuation of the taxable service the other expenditure and costs which are incurred by the service provider “in the course of providing taxable service”. What is brought to charge under the relevant Sections is only the consideration for the taxable service. By including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld.
By prescribing the formula in Sub-rule 5 of Rule 89 of the CGGST Rules,2017 to exclude refund of tax paid on “input service” as part of the refund of unutilised input tax credit is contrary to the provisions of Sub-section 3 of Section 54 of the CGST Act,2017 which provides for claim of refund of “any unutilised input tax credit” - as per provision of sub-section 3 of Section 54 of the CGST Act,2017, the legislature has provided that registered person may claim refund of “any unutilised input tax”, therefore, by way of Rule 89(5)of the CGST Rules,2017, such claim of the refund cannot be restricted only to “input” excluding the “input services” from the purview of “Input tax credit”. Moreover, clause (ii) of proviso to Sub-section 3 of Section 54 also refers to both supply of goods or services and not only supply of goods as per amended Rule 89(5) of the CGST, Rules 2017.
In view of the above analysis of the provisions of the Act and Rules keeping in mind scheme and object of the CGST Act, the intent of the Government by framing the Rule restricting the statutory provision cannot be the intent of law as interpreted in the Circular No.79/53/2018GST dated 31.12.2018 to deny the registered person refund of tax paid on “input services’ as part of refund of unutilised input tax credit.
Explanation (a) to Rule 89(5) which denies the refund of “unutilised input tax” paid on “input services” as part of “input tax credit” accumulated on account of inverted duty structure is ultra vires the provision of Section 54(3) of the CGST Act, 2017.
Explanation (a) to the Rule 89(5) is read down to the extent that Explanation (a) which defines “Net Input Tax Credit’ means “input tax credit” only. The said explanation (a) of Rule 89(5) of the CGST Rules is held to be contrary to the provisions of Section 54(3) of the CGST Act. In fact the Net ITC should mean “input tax credit” availed on “inputs” and “input services” as defined under the Act - respondents are therefore, directed to allow the claim of the refund made by the petitioners considering the unutilised input tax credit of “input services” as part of the “net input tax credit” (Net ITC) for the purpose of calculation of the refund of the claim as per Rule 89(5) of the CGST Rules,2017 for claiming refund under Sub-section 3 of Section 54 CGST Act,2017.
Petition allowed.
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9911796707
