TMI Blog2018 (5) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial Member And Shri L.P. Sahu, Accountant Member For The Assessee : Sh. Rakesh Gupta, Advocate, Sh. Somil Agarwal, Advocate For The Revenue : Ms. Ashima Neb, Sr. DR ORDER Per L.P. Sahu, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A)-I, Gurgaon dated 12.09.2017 for the assessment year 2013-14 on the following grounds : 1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of ₹ 85,26,467/- on account of service tax payable u/s 43B and that too by recording incorrect facts and findings and without appreciating/considering the submissions and. evidences filed during the course of appellate proceedings. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of ₹ 85.26,467/- on account of service tax payable u/s 43B is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds. 2. From the above two grounds, it is clear that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of filing the return of income, then such expenditure can be disallowed. It was submitted that the service tax received from the service recipients are separately credited and it has been used for the purpose of availing reverse charge mechanism under the Service Tax Rules and credit for duty paid on capital goods. He further submitted that the assessee has paid service tax in a sum of ₹ 30,83,457/- before due date of filing the return. The Service Tax Department has also conducted a Service Tax audit also. He further submitted that the assessee is entitled to take Cenvat Credit on the service tax received for the purpose of utilization for duty paid on the purchase of capital goods. He also reiterated the submissions made before the ld. CIT(A) and relied on some cases. The assessee has also filed two paper books. He also relied on the decision of ITAT in Macro Nirman Pvt. Ltd. vs. ITO (ITA No.2105/Del./2013 dated 27.04.2015). 5. On the other hand, the ld. DR relied on the orders of the lower authorities and submitted that the assessee is a limited company registered under the Companies Act and it has not applied proper method of accounting as per section 145 and section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, notwithstanding any right arising as a consequence to such payments. Sub-clause (b) talks of interest received by the assessee on compensation or enhanced compensation, which is not relatable to the issue before us. The aforesaid provisions of section 145A of the Act have been substituted by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010. Prior to its substitution, which was inserted by the Finance (No.2) Act, 1998 w.e.f. 01.04.1999, the section provided the provision relatable to the valuation of purchase and sale of goods and inventory, for the purpose of determining the income chargeable under the head profits and gains of business or profession and no clause (b) was provided i.e. in respect of income received by the assessee on compensation or on enhanced compensation. In view of the amended provisions of the Act, which came into effect from 01.04.1999 for valuing the purchases and sales of goods and also for valuing the inventory, while determining the income chargeable under the head profits and gains of business or profession, it has been provided that the said valuation would be in accordance with the method of accounting regularly employed by the assessee i.e. either m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who get such final products manufactured on his behalf, on job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker. (2) (a) The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year: Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year. Provided further that the CENVAT credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, in respect of capital goods shall be allowed immediately on receipt of the capital goods in the factory of a manufacturer. Provided also that where an assessee is eligible to avail of the exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service. (b) The CENVAT credit shall also be allowed in respect of jigs, fixtures, moulds and dies sent by a manufacturer of final products to,- (i) another manufacturer for the production of goods; or (ii)a job worker for the production of goods on his behalf, according to his specifications. (6) The Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government. (3) Where any amount is required to be paid to the credit of the Central Government under sub-section (1) or sub-section (2) and the same has not been so paid, the Central Excise Officer shall serve, on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government. (4) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub- section (3), determine the amount due from such person, not being in excess of the amount specified in the notice, and thereupon such person shall pay the amount so determined. (5) The amount paid to the credit of the Central Government under sub-section (1) or subsection (2) or sub-section (4), shall be adjusted against the service tax payable by the person on finalisation of assessment or any other proceeding for determination of service tax relating to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f taxable service, the point of taxation shall be the date of receipt of each such advance. 13. After considering the above provisions, it is clear that the assessee has to pay service tax within due date as set out under the above provisions either by way of cash/cheque or by way of availing CENVAT credit as per Rules as stated above, but the assessee did not do so. The liability of service tax had also arisen as per the point of Taxation Rules, as stated above. 14. Now, we have to examine the case of the assessee in the light of the above provisions. During the impugned year, the assessee has credit balance of service tax payable as on 31.03.2013 of ₹ 1,16,09,924/- which was to be paid upto 31.03.2013 by the assessee, but he did not pay. Further, the assessee had paid a sum of ₹ 30,83,457/- before filing of IT return. As per section 43B(a), the above outstanding payment was to be paid upto the date of filing of return of income. As per method of accounting, the assessee has also not included the service tax received by him in the turnover. In fact, the assessee was legally obliged to declare its turnover inclusive of service tax received. The assessee cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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