Section 80IA(7)- Filing of audit report along with return not mandatoryby CA Sandeep Kanoi |
Contimeters Electrical Pvt. Ltd 317 ITR 249 (Del)- Tribunal had arrived at the correct conclusion that the requirement of filing of audit report along with the return was not mandatory but directory and that if the audit report was filed at any time before the framing of the assessment, the requirement of section 80IA(7) would […]
Government notifies Rules for new Indian Accounting Standardsby CA Sandeep Kanoi |
The Ministry of Corporate Affairs vide Notification dated February 16, 2015 has issued the Companies (Indian Accounting Standards) Rules, 2015, thereby notifying Roadmap for applicability of Indian Accounting Standards (Ind AS) for compliance by the class of companies specified in the said Rules.
Government notifies Rules for new Indian Accounting Standards
The Ministry of Corporate Affairs vide Notification dated February 16, 2015 has issued the Companies (Indian Accounting Standards) Rules, 2015, thereby notifying Roadmap for applicability of Indian Accounting Standards (Ind AS) for compliance by the class of companies specified in the said Rules.
Following companies shall comply with the Ind AS for the accounting periods beginning on or after April 1, 2016, with the comparatives for the periods ending on March 31, 2016, or thereafter:
- Companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of Rs. 500 crore or more;
- Companies other than those covered above and having net worth of Rs. 500 crore or more;
- Holding, subsidiary, joint venture or associate companies of above companies
These norms which are converged with the International Financial Reporting Standards (IFRS), shall be applicable on a voluntary basis for period starting April 1, 2015 and would become mandatory from April 1, 2017, for companies whose equity
and/ or debt securities are listed or are in the process of being listed within India or outside, having a net worth of less than Rs. 500 crore.
Other companies that are unlisted and having a net worth of Rs. 250 crore or more but less than Rs. 500 crore also would have to start implementing Ind AS from April 1, 2017.
Companies not required to follow Ind AS shall continue to comply with Accounting Standards as prescribed in Companies (Accounting Standards) Rules, 2006.
Pre-deposit has to be waived off if Assessee's case is a good/ strong prima facie case covered by a binding precedentby CA Sandeep Kanoi |
Shukla & Brothers (the Appellant) is a proprietorship firm registered under Service tax under the category of 'Construction Work'. However, under some confusion and misguidance, the Appellant was issued registration under ST-2 in the category of 'Civil Structure Construction Work'. The Appellant claimed that the services provided are of maintenance/ sanitation services provided at factory premises of clients, which does not fall within the Service tax net.
Pre-deposit has to be waived off if Assessee's case is a good/ strong prima facie case covered by a binding precedent
Shukla & Brothers Vs. Customs, Excise & Service Tax Appellate Tribunal [(2015) 54 taxmann.com 182(Allahabad)]
Shukla & Brothers (the Appellant) is a proprietorship firm registered under Service tax under the category of 'Construction Work'. However, under some confusion and misguidance, the Appellant was issued registration under ST-2 in the category of 'Civil Structure Construction Work'. The Appellant claimed that the services provided are of maintenance/ sanitation services provided at factory premises of clients, which does not fall within the Service tax net.
Thereafter, the Show Cause Notice was issued to the Appellant demanding the alleged amount of Service tax along with interest and penalties, which was further confirmed by the Adjudicating Authority. Being aggrieved, the Appellant filed an appeal before the ld. Commissioner (Appeals) but the same was rejected.
Thereafter, the Appellant filed an appeal before the Hon'ble CESTAT, Delhi. The Hon'ble Tribunal vide a non-speaking Order dated February 26, 2013 (Impugned Order) ordered pre-deposit
of 40% of the demand under Section 35F of the Central Excise Act, 1944 made applicable to the Finance Act, 1994 (the Finance Act) vide Section 83 thereof. Later vide Order dated April 11, 2013, the Hon'ble Tribunal dismissed the appeal filed by the Appellant for non-compliance of condition of pre-deposit. Being aggrieved, the Appellant filed an appeal before the Hon'ble High Court of Allahabad.
The Hon'ble High Court of Allahabad held as follows:
- It has been a uniform view of various Courts that while considering provisions of pre-deposit of duty and penalty, the Authority concerned has to examine the question as to whether the Assessee has a good prima facie case so as to justify the dispensation of requirement of pre-deposit.
Further, the Authority must exercise its discretion to dispense with such requirement particularly in a case where the Assessee satisfies the Appellate Authority that his case is squarely covered by the decision of a competent court binding on it and in such cases, asking the appellant to deposit the duty demanded and the penalty levied would cause undue hardship to the Appellant – Hindustan Ferro & Industries Ltd. Vs. CESTAT [2006 (205) ELT 153 (All)]; B.P.L. Sanyo Utilities &Appliances Ltd. Vs. Union of India [1999 (108) E.L.T. 621]; Andhra
Civil Construction Co. Vs. CEGAT [1992 (58) E.L.T. 184]; J.N. Chemical (P.) Ltd. Vs. CEGAT [1991 (53) E.L.T. 543].
- For a good or strong prima facie case, it is not necessary for the Assessee to satisfy the Tribunal that his case is full proof and is bound to succeed. Strong prima facie case would mean that the case is an arguable one and fit for trial, or prima facie covered by a binding precedent. In such a situation, the Tribunal is under a legal obligation to consider the application of waiver taking into account the undue hardship which would require examination of prima facie case, on merits;
- The Impugned Order, running into six lines and directing the Appellant to deposit 40% of the demand is sans any reason and as such is cryptic.
Therefore, the Hon'ble High Court set aside the Impugned Order and the matter was remitted back to the Hon'ble CESTAT, Delhi for re-determine the issue and passing fresh orders on the applications for waiver of the condition of pre-deposit and the appeal itself thereafter.
Our Comments: Important to note changes brought in by the Finance (No. 2) Act, 2014
Effective from August 6, 2014, the Finance (No. 2) Act, 2014 substituted new Section 35F of the Central Excise Act, 1944 which is also applicable for Service tax vide Section 83 of the Finance Act, 1994 and for Customs vide Section 129E of the Customs Act, 1962 prescribing a mandatory fixed pre-deposit of:
a) 7.5% of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, for filing of appeal before the Commissioner(Appeals) or the Tribunal at the first stage; and
b) 10% of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, for filing second stage appeal before the Tribunal.
However, the amount of pre-deposit payable is subjected to a ceiling of Rs 10 Crore.
The said amendment has done away with the requirement of filing stay applications for waiver of pre-deposit. However, it is to be noted that all pending appeals/ stay applications would be governed by the statutory provisions prevailing at the time of filing such appeals/ stay applications.
Now, even though the above stated judgment of the Hon'ble High Court of Allahabad pertains to the period prior to August 6, 2014, the moot question still remains as to whether the Assessee is required to make mandatory pre-deposit under the new provisions even when his/her case is covered by a binding precedent. Hope that the Board may come out with some clarification in this regard.
- See more at: Pre-deposit has to be waived off if Assessee's case is a good/ strong prima facie case covered by a binding precedent
The Hon'ble CESTAT, Ahmedabad, relying on the decision in the Meghmani Dyes case, held that if prescribed Returns are filed by Assessee giving correct information, then extended period of limitation cannot be invoked. In the instant case also, prescribed ST-3 Returns were duly filed by the Appellant giving correct information and differential tax payable was apparent from the figures furnished by the Appellant.
No extended period if demand arose out of correct figures shown in ST-3 Returns
Central Warehousing Corporation Vs. Commissioner of Service Tax, Ahmedabad [(2015)54 taxmann.com 209 (Ahmedabad – CESTAT)]
In the instant case, Central Warehousing Corporation (the Appellant) filed an appeal before the Hon'ble CESTAT, Ahmedabad against the Order of the Ld. Commissioner (Appeals) wherein demand of Rs. 6,18,946/- was confirmed against the Appellant by invoking extended period of limitation under Section 73 of the Finance Act, 1994 (the Finance Act).
The Appellant submitted that the aforesaid demand was raised as per CERA objection on the basis of short payment of Service tax shown in Service Tax Returns (ST-3 Returns) filed by the Appellant. Accordingly, when proper duty calculations were shown in the ST-3 Returns, extended period is not invokable. The Appellant relied upon the following cases in support of his contentions:
- Aneja Construction (India) Ltd.CST [Final Order No. A/1262/2012 – WZB, dated 9-8-2012]
- Commissioner Vs. Meghmani Dyes & Intermediates Ltd. [2013 (288) E.L.T 514 (Guj)] ("Meghmani Dyes case")
- Bhansali Engg. Polymers Ltd. Vs. CCE [2008 (232) ELT 561 (Tri. Delhi)]
- Johnson Mattey chemical India P. Ltd. Vs. CCE [Final Order No. 50323 of 2014, dated 22-1-2014]
However, the Revenue argued that the extended period is rightly applicable in the present case because the Appellant failed to give details/ information that short payment made in a particular month was made good in the next month's Service tax payment.
The Hon'ble CESTAT, Ahmedabad, relying on the decision in the Meghmani Dyes case, held that if prescribed Returns are filed by Assessee giving correct information, then extended period of limitation cannot be invoked. In the instant case also, prescribed ST-3 Returns were duly filed by the Appellant giving correct information and differential tax payable was apparent from the figures furnished by the Appellant.
Accordingly, the Appellant cannot be held to have suppressed any information with intention to evade payment of Service tax and thus, extended period cannot be invoked. Therefore, the demand raised on the Appellant is time-barred.
ALLAHABAD, FEB 25, 2015: THE issue before the Bench is - Whether before the provisions of Section 158BD are invoked against a person other than the person whose premises have been searched u/s 132 or documents and other assets have been requisitioned u/s 132A, the conditions precedent have to be satisfied. And the assessee's writ is allowed.
Facts of the case
On 2nd May, 1998, three persons namely Shri Mahesh Kumar Khandelwal, Shri Vijay Kumar Soni and Shri Phool Raj Singh were going on a Rickshaw to board the Prayagraj Express Train for going to Delhi. They were detained by the police and a total sum of Rs. 17,00,000/- was recovered from their possession. On interrogation, all the three persons stated that the money belongs to the assessee i.e. Anil Kumar Chaddha alias Guddu, who in reply to the query by the police stated that the cash belonged to the Firm M/s. Chaddha & Others. Finally, the matter was referred to the Income Tax Department, who had issued a notice u/s 158BC in the name of the assessee and made the addition being undisclosed income alongwith the income of Rs. 1,11,700/- disclosed by the assessee in his return. Finally, the undisclosed income of Rs. 18,11,700/- was taxed in the hands of the assessee. On appeal, CIT(A) confirmed the addition made by AO, but the Tribunal had deleted the addition by observing that no search warrant was issued u/s 132 in the name of the assessee. So, no notice can be issued in the name of the assessee u/s 158BC.
Held that,
++ from the record, it appears that the police recovered a sum of Rs. 17,00,000/- from the possession of three persons. It is evident that there was no search warrant in the name of the assessee nor assets were requisitioned from the assessee. Therefore, the provisions of Section 158BC is not applicable in the instant case. Further, no warrant or requisition was issued either in the name of the Firm or the assessee. In the instant case, at the best the seized amount might have been added in the hands of the assessee u/s 158BD. An opportunity was provided by this Court to the Department to produce the original records, but the Department expressed its inability to produce the records as stated by Senior Counsel of the Department. It may be mentioned that Section 158BC and Section 158BD are not identical, both have the different purposes. The SC in the case of Manish Maheshwari vs. ACIT and Another 2007-TIOL-24-SC-IT observed that before the provisions of Section 158BD are invoked against a person other than the person whose premises have been searched u/s 132 or documents and other assets have been requisitioned under Section 132A, the conditions precedent have to be satisfied;
++ in the instant case Rs. 17,00,000/- were requisitioned from the S.H.O. Kotwali, Allahabad u/s 132A, which was seized from three persons. Therefore, the provision of Section 158BD is applicable in the instant case, but the same was not applied by the Department. The assessment was framed after issuing notice under Section 158BC which is not applicable in the instant case, since the assessee was neither searched nor assets were requisitioned from him u/s 132A. Further, there were no warrant of authorization in the name of the assessee. In view of the above discussion and by considering the totality of the facts and circumstances of the case, it appears that no substantial question of law is emerging from the impugned order. When it is so, then we find no reason to interfere with the impugned order passed by the Tribunal, the same is hereby sustained alongwith the reasons mentioned therein. In the result, the appeal filed by the Department is dismissed. In the writ petition, the assessee has made the request for issue a writ order or direction in the nature of Mandamus commanding the respondents to refund forthwith the cash of Rs. 17,00,000/- seized on 2nd May, 1998 alongwith the interest. After considering the rival submissions, it is evident that the addition in the hands of the assessee has been deleted by the Tribunal as well as by this Court. The petitioner's application for refund is pending consideration before the authority concerned. We accordingly direct the authority to decide the application within a period of four months from the date of production of certified copy of this order, the writ petition filed by the assessee is accordingly disposed of.
(See 2015-TIOL-465-HC-ALL-IT)
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