Customs, Excise and Service Tax Appellate Tribunal

South Eastern Coalfields Limited vs. Commissioner of Central Excise& Service Tax

MANU/CE/0056/2024

29.02.2024

Service Tax

Demand cannot be confirmed by comparing the ST -3 returns with balance sheet figures, in the absence of any evidence to the contrary

In facts of the present case, in the course of an audit by the Audit Commissionerate, the figures of ST-3 Returns filed during the period April 2015 to June 2017 was compared with some specific ledger account balances appearing in the Trial Balance for the period April 2015 to June 2017.

Based on such comparative figures as appearing in the Trial Balance and ST-3 returns, the Revenue authorities held that, the difference in the two set of figures represent the value of taxable services on which due service tax has not been paid. A demand of Rs. 11,36,80,999 was proposed in the Show Cause Notice. The Adjudicating Authority remanded the matter for further verification to the Range Office and thereafter confirmed the demand of Rs. 8,92,567 plus applicable interest and equivalent penalty under Section 78 of the Finance Act, 1994.

The issue before present Tribunal is whether the difference in the figures found in the Trial Balance as compared to the figures declared in the ST-3 returns amounts to prima-facie short payment of service tax, and whether the invocation of extended period of limitation and imposition of penalties is correct.

It is a settled principle of law that, service tax can be levied only when there is clear identification of a service provider, service recipient and consideration paid for the same. In the absence of any such evidence of the service recipient and the service provided, service tax cannot be demanded and confirmed. It is not open for the Department to raise demands on the basis of other statutory returns or balance sheets without proving that such service has been rendered by the appellant and consideration thereof has been received.

The Tribunal in a catena of decisions has held that it is well settled law that, no demand can be confirmed by comparing the ST -3 returns with balance sheet figures, in the absence of any evidence to the contrary that income in the balance sheet, if excess, reflects the provision of taxable service. As it is the Revenue authorities who have made the allegations of on payment of tax, and as such, the onus to prove the said allegation lies with them to substantiate the allegations. In the case of Principal Commissioner, CGST vs. SBI Life Insurance Company Limited, the Tribunal held that demand/penalty on the basis of difference between ST-3 Returns and Income tax returns of any period, without further examination to establish that the difference is on account consideration received towards discharge of services, cannot be sustained.

Further, it is a fact on record that, the Appellant was filing his ST-3 returns regularly. The Department did not raise any query or seek any clarification from the Appellant. Thereafter, merely on the basis of audit observation as per the figures of Trial Balance, the Revenue, cannot, at this stage allege suppression. Accordingly, the impugned order cannot be sustained and is set aside. Appeal allowed.

Tags : Demand Confirmation Legality

Share :

Top

Supreme Court

Bharti Cellular Limited Vs. Assistant Commissioner of Income Tax and Ors. (Neutral Citation: 2024 INSC 148)

MANU/SC/0144/2024

28.02.2024

Direct Taxation

Assessee would not be under a legal obligation to deduct tax at source on the income/profit component in payments received by distributors/franchisees from third parties/customers

The issue relates to the liability to deduct tax at source under Section 194-H of the Income Tax Act, 1961 on the amount which, as per the Revenue, is a commission payable to an agent by the Assessees under the franchise/ distributorship agreement between the Assessees and the franchisees/distributors. As per the Assessees, neither are they paying a commission or brokerage to the franchisees/distributors, nor are the franchisees/distributors their agents. The High Courts of Delhi and Calcutta have held that, the Assessees were liable to deduct tax at source Under Section 194-H of the Act, whereas the High Courts of Rajasthan, Karnataka and Bombay have held that Section 194-H of the Act is not attracted to the circumstances under consideration.

Section 194-H of the Act fixes the liability to deduct tax at source on the 'person responsible to pay' - and the liability to deduct tax at source arises when the income is credited or paid by the person responsible for paying. The expression "direct or indirect" used in Explanation (i) to Section 194-H of the Act is no doubt meant to ensure that "the person responsible for paying" does not dodge the obligation to deduct tax at source, even when the payment is indirectly made by the principal-payer to the agent- payee. However, deduction of tax at source in terms of Section 194-H of the Act is not to be extended and widened in ambit to apply to genuine business transactions, where the Assessee is not the person responsible for paying or crediting income.

In the present case, the Assessees neither pay nor credit any income to the person with whom he has contracted. Explanation (i) to Section 194-H of the Act, by using the word "indirectly", does not regulate or curtail the manner in which the Assessee can conduct business and enter into commercial relationships. Neither does the word "indirectly" create an obligation where the main provision does not apply.

An independent contractor is free from control on the part of his employer, and is only subject to the terms of his contract. But an agent is not completely free from control, and the relationship to the extent of tasks entrusted by the principal to the agent is fiduciary. Dependent contractors work for themselves, even when they are employed for the purpose of creating contractual relations with the third persons. An independent contractor is not required to render accounts of the business, as it belongs to him and not his employer.

The term 'agent' should be restricted to one who has the power of affecting the legal position of his principal by the making of contracts, or the disposition of the principal's property; viz. an independent contractor who may, incidentally, also affect the legal position of his principal in other ways. It is in the restricted sense in which the term agent is used in Explanation (i) to Section 194-H of the Act.

Assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194-H of the Act is not applicable to the facts and circumstances of this case. Accordingly, the appeals filed by the Assessee - cellular mobile service providers, challenging the judgments of the High Courts of Delhi and Calcutta are allowed and these judgments are set aside. The appeals filed by the Revenue challenging the judgments of High Courts of Rajasthan, Karnataka and Bombay are dismissed.

Tags : TDS Liability Payment

Share :

Top

Income Tax Appellate Tribunal

Hindustan Aqua Ltd., New Delhi vs DCIT

MANU/ID/0273/2024

28.02.2024

Direct Taxation

Unadjusted business loss of a particular year would be eligible to be carried forward to subsequent assessment years and for set off also

The appeal arises out of the order of the Commissioner of Income Tax (Appeals). The only issue to be decided in this appeal is as to whether the learned CIT(A) was justified in confirming the action of the Assessing Officer in not allowing the set off of brought forward loss of Asst Year 2005-16 in the sum of Rs 12,53,378 in the facts and circumstances of the instant case.

It is evident that the assessee had indeed had assessed business loss of Rs 12,53,378 in Assessment Year 2005-2006. This loss was admittedly not set off with the business income by the assessee in Assessment Years 2008-2009 and 2009-2010. But that does not mean that the assessee would not be eligible for set off of the said business loss with future business income.

As per the provisions of Section 72 of the Income Tax Act, 1961 (IT Act), the unadjusted business loss of a particular year would be eligible to be carried forward to subsequent assessment years and the same would be eligible for set off against the business income of subsequent assessment years. Hence as per Section 72 of the Act, the assessee had indeed set off the brought forward business loss of Rs 12,53,378 pertaining to Asst Year 2005-06 with the business income of Asst Year 2010-11 which is within the 8 years time limit provided in the statute. Hence, the lower authorities grossly erred in not following the provisions of the Act in the correct perspective and had denied the legitimate deduction to the assessee.

The Assessing Officer is directed to allow the set off of brought forward business loss of Rs 12,53,378 pertaining to Asst Year 2005-06 with the business income of the year under consideration. Appeal of the assessee is allowed.

Tags : Set off Business income Eligibility

Share :

Top

High Court of Bombay

Chetan and Ors. Vs. The State of Maharashtra and Ors. (Neutral Citation: 2024:BHC-AS:9242-DB)

MANU/MH/1186/2024

27.02.2024

Property

Owner cannot be deprived of his rights to the property after the statutory period has expired

By present Petition under Article 226 of the Constitution of India, 1950, the Petitioners seek a writ of mandamus directing the Respondent No.1 to issue a notification in the Official Gazette as per Section 127(2) of the Maharashtra Regional and Town Planning Act, 1966 ("MRTP Act") that, the reservation for a 'Stadium' on the Petitioners' land has lapsed and the said land is available to the Petitioners to develop.

If the land reserved for any purpose specified in any plan under the MRTP Act is not acquired by agreement as provided under Section 127 then the reservation, allotment or designation shall be deemed to have lapsed and the land shall be deemed to be released from such reservation and shall become available to the owner for the purpose of development.

In the present case, the Respondents have not denied the stated facts. It is apparent that almost 20 years have lapsed since the reservation was sanctioned. As held in Girnar Traders vs. State of Maharashtra and Ors., an owner cannot be deprived of his rights to the property after the statutory period has expired. In the present case too, it is admitted that no steps were taken to acquire the land as contemplated under Section 126 of the MRTP Act.

No steps as contemplated in law have been taken till date. The property cannot be held under reservation without acquisition in perpetuity. The owner cannot be denied the right to enjoy the fruits of development or compensation. The Respondents have clearly failed in performing their duty. Reservation bearing site has lapsed and the said land is available to Petitioner for the purpose of development or otherwise, as is permissible. The State is directed to issue a notification under Section 127(2) of the MRTP Act and publish the same in official Gazette with respect to lapsing of reservation.

Tags : Reservation Land Expiry

Share :

Top

High Court of Bombay

Narhari Vithalrao Dahe Vs. Sudam Gangaram Dahe (Neutral Citation: 2024:BHC-AUG:4109)

MANU/MH/1205/2024

27.02.2024

Banking

Once doubt regarding loan transaction creeps in, benefit goes to accused

In present matter, case was filed by present Appellant setting up a case that, out of friendly relations and due to financial need he gave loan of Rs.50,000 to the accused. Accused undertook to repay the same. However, even on persistent demand, amount was not repaid. Finally, accused issued cheque drawn on his banker, but on its representation it was dishonoured. Therefore, as required under law, legal notice was dispatched, the same was received and even replied by accused, but he failed to repay the cheque amount within stipulated period, and therefore, proceedings under Section 138 of Negotiable Instrument Act, 1881 were instituted.

Appellant submitted that, learned trial court acquitted the accused taking hyper technical view regarding non mention of exact month in which loan was said to be borrowed and accepted. That, such hyper technical and pedantic view adopted by learned trial Judge is not permissible, more particularly, when all necessary ingredients for attracting offence were made out.

It is imperative for complainant to establish his own case so as to invoke initial presumption as available under Sections 118 and 139 of NI Act. Law is fairly settled that, once accused is shown to have received legal demand notice, then defence is expected to offer explanation and rebut the presumption available under law.

When very essentials for attracting charge under Section 138 of NI Act are missing and once doubt regarding loan transaction creeps in, benefit goes to accused. Resultantly, it cannot be said that learned trial court has adopted hyper technical view. Proceedings like NI Act are distinct than other proceedings. All essential ingredients are required to be met for proving the complaint. Here, it has not so happened. Essence of proving very transaction is patently missing.

Though there is cheque under signature of accused, it is substantiated and demonstrated that it was towards loan transaction between Dnyanoba and Kuber Finance. Apart from documents at Exh.39 to 43, particulars and agreement of loan are also placed on record. DW1 is an independent witness. There is no reason for him to take side of accused. Complainant having failed to establish very transaction of loan by adducing cogent and reliable evidence, no fault can be found in the judgment and order of trial court. No legally enforceable debt is proved at the end of accused. Therefore, there is no merit in the appeal. Appeal dismissed.

Tags : Chequebounce Acquittal Legality

Share :

Top

Supreme Court

Mohammed Khalid And Another vs. State of Telangana (Neutral Citation: 2024 INSC 158)

MANU/SC/0154/2024

01.03.2024

Narcotics

Confession of an accused recorded by a Police Officer is not admissible as evidence

Present appeals take exception to the final impugned judgment passed by the High Court rejecting the Criminal Appeal preferred by the appellants assailing the judgment passed by the trial Court. Trial Court, convicted the Appellants for the offence punishable under Section 8(c) read with Section 20(b)(ii)(c) of the Narcotic Drugs and Psychotropic Substances Act, 1985( ‘NDPS Act’)

Admittedly, no proceedings under Section 52A of the NDPS Act were undertaken by the Investigating Officer PW-5 for preparing an inventory and obtaining samples in presence of the jurisdictional Magistrate. In this view of the matter, the FSL report is nothing but a waste paper and cannot be read in evidence. The accused A-3 and A-4 were not arrested at the spot. The offence under Section 20(b)(ii)(c) deals with production, manufacture, possession, sale, purchase, transport, import or export of cannabis. It is not the case of the prosecution that the accused A-3 and A-4 were found in possession of ganja. The highest case of the prosecution which too is not substantiated by any admissible or tangible evidence is that these two accused had conspired sale/purchase of ganja with A-1 and A-2. The entire case of the prosecution as against these two accused is based on the interrogation notes of A-1 and A-2.

Further, it is trite that, confession of an accused recorded by a Police Officer is not admissible in evidence as the same is hit by Section 25 of the Evidence Act, 1872. Neither the trial Court nor the High Court adverted to this fatal flaw in the prosecution case and proceeded to convict A-3 and A-4 in a sheerly mechanical manner without there being on iota of evidence on record of the case so as to hold them guilty.

The prosecution has miserably failed to prove the charges against the accused. The evidence of the police witnesses is full of contradictions and is thoroughly unconvincing. The conviction of the accused appellants as recorded by the trial Court and affirmed by the High Court is illegal on the face of record and suffers from highest degree of perversity. The judgment passed by the High Court affirming the judgment of the trial Court convicting and sentencing the accused appellants for the charge under Section 8(c) read with 20(b)(ii)(c) of the NDPS Act is quashed and set aside. The appellants are acquitted of all the charges. Appeals allowed.

Tags : Conviction Evidence Credibility

Share :