· For the A.Y. 1991-92, the company filed returns under the State Act. However, the assessment proceedings in relation to the above period, i.e. A.Y. 1991-92 was completed in the year 1996 and an assessment order dated 24.01.1996 was passed by the assessing authority.
· After the assessment proceedings, an audit team of the Auditor General, Bihar, audited the assessment order dated 24.01.1996 and found that the dealer was wrongly allowed exemption of Rs. 3,12,47,916/-, and the said fact was conveyed to the assessing authority.
· On 28.09.2000, the assessee company was served a show cause notice for the taxability of the amount of Rs.3,12,47,916/-, which was wrongly exempted from being taxed under the provision of the State Act.
· After affording an opportunity of hearing to the appellant-Company, a re-assessment order dated 27.02.2006 was passed. Being aggrieved by the re-assessment order dated 27.02.2006, the appellant-Company preferred a writ petition before the High Court, which was dismissed, and thus, the appellant-Company has preferred this appeal by way of special leave.
· The issue for consideration before the Apex Court was whether an 'audit objection' can be construed as 'information' within the meaning of Section 19 of the State Act, based on which the assessing officer was satisfied that reasonable grounds exist to believe that any part of the turnover of the appellant-Company had escaped assessment under Section 19 of the State Act.
· The Court observed that there are catena of judgments of the Apex Court holding that assessment proceedings can be reopened if the audit objection points out the factual information already available in the records and that it was overlooked or not taken into consideration. Similarly, if audit points out some information or facts available outside the record or any arithmetical mistake, assessment can be re-opened.
· The Hon’ble Court held that the audit objections were well within the parameters of being construed as 'information' for the purpose of section 19 of the State Act, however, the Court was of the clear view that on the basis of information received and only if the assessing officer was satisfied that reasonable ground exists to believe, then in that case only the power of the assessing authority extends to re-opening of assessment.
For further reading, refer the attachment.
v Under the GST, the taxable event in general is supply. However, under GST, the taxability has been deferred till the time of supply. The time of supply is the point of taxation, when the liability to pay GST arises.
· General Rule –
Time of supply shall be the earliest of the following:
(a) If goods are required to be removed - Date of removal of goods
Otherwise - Date on which goods are made available
(b) Date of Invoice
(c) Date of Payment
(d) Date of receipt shown by recipient in its books of accounts
- Continuous Supply of Goods –
(a) If successive payments or successive statement of accounts are prepared; date of expiry of period to which the statement or payment relates
(b) Otherwise; date of invoice or date of receipt of payment, whichever is earlier
- Reverse Charge –
Time of supply shall be the earliest of the following:
(a) Date of receipt of goods
(b) Date of payment
(c) Date of receipt of invoice
(d) Date of debit in books of accounts
- Goods sent or taken on approval –
Time of supply shall be the earliest of the following:
(a) Date on which supply has taken place
(b) 6 months from the date of removal
- Residuary clause –
(a) If periodical return is filed - Last date of return
(b) Otherwise - Date of payment of CGST / SGST
v Further, the date of payment has to be considered as the earliest of the following:
- Date of payment as per books of accounts
- Date on which payment is debited / credited in bank account
v Also, the date of removal has to be considered as follows:
- Date of dispatch by supplier or by the person acting on behalf of the supplier
- Date of collection of goods by recipient or by the person acting on behalf of the recipient
· Following transaction will be treated as supply for the levy of GST, even if supply is made without consideration:
(i) Permanent transfer / disposal of business assets
(ii) Temporary application of business assets for private or non-business use
(iii) Services put to a private or non-business use
(iv)Assets retained after deregistration
(v) Supply of goods and / or services by a taxable person to another taxable or non-taxable person in the course or furtherance of business
· Free samples distributed will also be treated as supply of goods.
· Inter-state supplies between two branches / units of an assessee will also be liable for GST.
· Intra-state supplies between two registered business verticals of an assessee will also be liable for GST.
· It is to be noted that there is no levy of GST on capital assets transferred without consideration, as this would lead to double burden, as in that case the input credit taken on such capital assets will also be reversed.
· In the latest news, four-tier GST rate structure of 5, 12, 18, 28 percent has been announced by the GST Council.
· Zero-tax rate will be applied to 50 percent of items in CPI basket (consumer products), including food grains used by common man.
· 5% duty will be levied on mass consumption items used by common people. Further, two Standard Rates of 12% and 18% will be there in GST.
· Items which are currently taxed at 30-31 percent (excise plus VAT) will be taxed at 28 percent.Furthermore, additional revenue from highest tax slab is to be used to keep essential use items at 5% and transferring common items to 18%.
· The rates, discussed at a meeting of the GST Council, oversee plans to introduce the national sales tax next spring, and are steeper than the rates of 6, 12, 18 and 26 percent earlier proposed by the government.
Assessee imported ship for the purpose of breaking and challenged the levy of additional duty of customs (equal to excise duty) on the ground that the activity of ship breaking is exempt from duty of excise. Division bench of the High Court allowed the exemption and against which the department preferred appeal before the Supreme court.
Hon’ble Supreme Court agreeing with the view of the High Court and relying on the decision of the Supreme Court in the case of Hyderabad Industries Limited v. Union of India held that where no excise duty is payable and the product manufactured in India is exempted from excise duty, import of such goods would not attract the levy of additional duty of customs.
The appellant has established a network of branches and subsidiary companies at different locations outside the country. The branches of the appellant act as salary disbursers of the staff deputed from India to client locations besides carrying out other assigned activities. The salaries so disbursed, as well as other expenses of the running the branch, are met from the coffers of the appellant. Payments made by customers are also received in branches and transmitted to the head office after netting the expenses incurred by the branch. Revenue initiated proceedings and also confirmed the demand service tax on the payments made by the appellant to branch by entertaining a view that the branches are rendering services to its head office in India.
On appeal the Tribunal set aside the demand of service tax on the basis of the following findings:
- Section 66A(2) which provides that the branch outside India is permanent establishment in such territory, cannot be interpreted to mean the branch and the head office as two commercial entities;
- A branch, by its very nature, cannot survive without resources assigned by the head office. The activity of the head office and branch are thus inextricably enmeshed. The employees of the branch are without doubt, the employees of the company;
- Merely because there is a branch and that branch has, in some way, contributed to the activities of the appellant-assessee in discharging its conractual obligations, the definiton of 'business auxiliary service' in section 65(19) of Finance Act, 1994 may not apply; and
- Transfer of funds to the branch is nothing but reimbursement and taxing of transfer of funds which is not contemplated by Finance Act, 1994.
Assessee challenged the recovery threats of the service tax department to recover the service tax and arrest the responsible officers for non-payment without following the procedure of issuing show cause notice and adjudicating the dues.
In this background, the High Court held that any recovery by coercive measures is straightway impermissible unless the investigation results into issuance of a show cause notice, an opportunity to the Petitioner to resist the demand, adjudication thereof by reasoned order and protective remedies such as appeals.
Further, Court also held that the Petitioners do not dispute the department’s right to investigate in accordance with law. The petitioners have already attended the office of the covered Respondents and once the statement of the Petitioners was recorded goes without saying that on further summons being issued and on called upon to attend the Officers of the Respondents, they will attend and co-operate in these investigations by producing all the documents and answering the requisite queries, subject, of course, to their rights in law. It is only when these investigations, conclude that the authorities would be in a position to take a decision whether to launch any prosecution. Without completing the process of investigation, no arrest could be permissible.
As per Section 66D of Finance Act, 1994 as amended by Finance Act, 2012 services provided by government or local authority are not chargeable to service tax, subject to following exceptions:-
· services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;
· services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
· transport of goods or passengers; or
· support services, other than services covered under clauses (i) to (iii) above, provided to business entities;
As per the recent service tax laws, support services provided by the government or local authority to business entity are taxable without any threshold limit. Moreover these services are also covered under the ambit of 100% reverse charge meaning thereby service recipient is liable to pay service tax to government.
In order to provide relief to service recipient, the government has inserted entry No. 48 vide Notification No. 25/2012. Notification hereby provides that where any services provided by government or local authority to any business entity, whose turnover is less than Rs. 10 Lakh in preceding previous year are not chargeable to service tax.
This notification is effective from 01 April, 2016.
*Notification No. 07/2016 dated 18th February 2016
The Government of India has notified a rate of 0.5% for Swacch Bharat Cess applicable on all services on which service tax is leviable. The Cess comes into effect from November 15, 2015. The cess and service tax are to be charged and collected separately. No credit of the cess shall be available.
Department of Trade and Taxes has made compliance on the dealers who have claimed refund in their returns for the tax period 3rd and/or 4th Quarters, 2013-14 are required to furnish details of statutory forms/declarations in support of their concessional sales in Form 9 online. Further, all the dealers who have claimed refund on account of export out of India in these tax periods are required to submit details of e-BRC for the respective export consignment. The details are to be furnished to VATO (Operations) by 30/06/2014 so that the claims can be processed.