Works contract executed for SEZ units cannot have zero rating benefitby CA Sandeep Kanoi |
Works contract executed for SEZ units cannot have the benefit of zero rating since goods transferred by a contractor are neither exported as such or used in the manufacture of other goods which are exported Tulsyan Nec Limited Vs. The Assistant Commissioner (CT) [ 2015 (2) TMI 564 - MADRAS HIGH COURT] Tulsyan Nec Limited […]
Works contract executed for SEZ units cannot have zero rating benefit
Works contract executed for SEZ units cannot have the benefit of zero rating since goods transferred by a contractor are neither exported as such or used in the manufacture of other goods which are exported
Tulsyan Nec Limited Vs. The Assistant Commissioner (CT) [ 2015 (2) TMI 564 – MADRAS HIGH COURT]
Tulsyan Nec Limited (the Petitioner) was engaged in the manufacture of High Tensile Fasteners, Gear Shifters etc., and its factory was located in Special Economic Zone (SEZ). The Petitioner was awarded contracts for construction of their factory building and related infrastructure in SEZ. The Petitioner inter alia contended that in terms of Section 18(1)(ii) of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act), sale of goods to any registered dealer located in SEZ is zero rated sale, if such registered dealer has been authorised to establish such unit by the authority specified by the Central Government in this behalf and shall be entitled for Input tax credit or refund of the amount of tax paid on the purchase of goods specified in the First schedule including Capital Goods.
While on the other hand, the Revenue contended reversal of Input tax credit on the basis of the Circular No. 9 of 2013, dated July 24, 2013 ("the Circular") issued by Commissioner of Commercial Taxes, Chepauk, Chennai stating that sale of goods, involved in the execution of Works contract, to any other registered dealer located in SEZ in the State is not zero rated sale, as the goods are not exported as such or consumed or used in the manufacture of other goods that are exported, as required under Section 18(2) of the TNVAT Act. Consequently relying upon the Circular, the Assessing Officer issued an Assessment Order to reverse the Input tax credit availed as the transaction involved is not a zero rated sale and imposed penalty. Being aggrieved, the Petitioner challenged the Circular and the Assessment Order by filing Writ Petition before the Hon'ble High Court of Madras.
The Hon'ble Madras High Court interalia held as under:
- Zero rated sale as defined under Section 2(44) of the TNVAT Act means sale of any goods on which no tax is payable, but credit for the Input tax related to that sale is admissible;
- To be considered as a zero rated sale and to be eligible for Input tax credit or refund, the sale transaction should fall within any of the three clauses of Section 18(1) of the TNVAT Act;
- Section 18(2) the TNVAT Act has to be read along with Section 18(1) thereof. Hence, the Petitioners contention that Section 18(2) of the TNVAT Act will not apply to Section 18(1)(ii) thereof is not sustainable as it amounts to inserting a new provision to the statute when the statute does not contemplate of such situation/ contingency;
- In terms of Rule 22 of the Central Special Economic Zones Rules 2006, grant of exemption, drawbacks and concession to the entrepreneur or Developer shall be subject to conditions contained therein. Therefore, the scheme of the Central Special Economic Zones Act, 2005; Tamil Nadu Special Economic Zones Act, 2005 and the Rules made thereunder makes it clear that benefit is intended to the SEZ unit for the authorised operations which essentially is the export activity for which approval has been granted;
- In the case of Kerala State Cooperative Marketing Federation Vs. CIT, reported in [1998 (5) TMI 6 – SUPREME COURT], wherein the Hon'ble Supreme Court pointed out that while interpreting statutory provision, attention should be given to the setting in which the provision occurs and regard must be had to the language of an entire group of connected provisions which may form an integral whole;
- It is a settled rule of interpretation that in a taxing statue one has to look merely what is clearly stated, there is no room for any intendment, there is no equity about tax, there is no presumption as to tax, nothing is to be read in, nothing is to be implied and one can only look fairly to the language used.
Thus, the Hon'ble High Court upheld the validity of the Circular stating that Works contract executed for SEZ units cannot have the benefit of zero rating since goods transferred by a contractor are neither exported as such or used in the manufacture of other goods which are exported, as not being ultra vires to the provisions of the TNVAT Act and not violative of Article 14 of the Constitution of India
The fact that NECL could seek refund of the tax paid as per the State Government Order G.O.Ms. No. 609 dated May 29, 2006, issued in terms of Section 15(1) of the AP VAT Act, will not absolve KPCL of their statutory obligation to deduct TDS; |
Contractee liable to deduct and Pay TDS on Works contract despite possible refund claim by contractor
The fact that the contractor could seek refund of the tax paid did not absolve the contractee of their statutory obligation to deduct and pay TDS on Works contract
Krishnapatnam Port Company Ltd. Vs. The Govt. of AP., rep. by its Principal Secretary (Revenue) (CT), Hyderabad & Ors.[ 2015 (2) TMI 472 – Andhra Pradesh High Court]
Krishnapatnam Port Company Ltd.(the Petitioner or KPCL) was engaged in the business of construction and development of the Krishnapatnam Deep Water Port in Nellore District, and in providing necessary infrastructural facilities for handling port operations thereat. By virtue of State concession contract dated September 17, 2004 (the Agreement), the Petitioner was granted construction and infrastructure activities of the Port for, and on behalf of, the State of Andhra Pradesh. In terms of the Agreement, the relationship between the State of Andhra Pradesh and KPCL was that of a principal and an agent. Further, Clause 3.16 of the Agreement specifically provided exemption from Sales Tax (VAT from 2005 onwards) on all Inputs and sales, if any, deemed. Further, Sales tax was totally exempt on all Inputs, required for construction of the Port, for the purpose of the project construction throughout.
KPCL entrusted the work of the Port construction to its holding company Navayuga Engineering Company Limited (NECL) on engineering, procurement and construction (EPC) basis for an agreed amount. The Department alleged that KPCL had deducted tax at source (TDS) from the bills of NECL but has not paid the same to the Government and accordingly confirmed demand of TDS of Rs. 92,98,03,154/- along with interest in terms of Section 22(2) read with Section 22(4) of the Andhra Pradesh Value Added Tax Act, 2005 ("AP VAT Act").
Being aggrieved, the Petitioner filed a Writ Petition before the Hon'ble High Court of Andhra Pradesh submitting that by virtue of the conditions in the Agreement, the Government of Andhra Pradesh undertook to forego revenue streams from the project, such as exemption from Sales tax on all the Inputs required for project construction and that the KPCL had not recovered any tax from the Contractor which can be verified from the records and the running account bills.
The Hon'ble High Court of Andhra Pradesh held as under:
- NECL was liable to pay tax under the AP VAT Act for execution of the Works contract of construction of the Port. Further, KPCL was statutorily obligated, under Section 22(3) of the AP VAT Act, to deduct TDS from the running account bills of NECL, and remit the deducted tax amount to the Government;
- The fact that NECL could seek refund of the tax paid as per the State Government Order G.O.Ms. No. 609 dated May 29, 2006, issued in terms of Section 15(1) of the AP VAT Act, will not absolve KPCL of their statutory obligation to deduct TDS;
- Section 15(1) of the AP VAT Act merely enables the State Government, if it is necessary to do so in the public interest, to provide by way of Notification, for grant of refund of the tax paid to any person on the purchases effected by him and specified in the said Notification. Even on a notification being issued under Section 15(1) of the AP VAT Act, the contractee is statutorily obligated, under Section 22(3) thereof, to deduct TDS from the running account bills of the contractor, and the contractor is entitled, thereafter, to claim refund;
- Hence, if a statute has conferred a power to do an act, and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any manner other than the one prescribed;
- The AP VAT Act does not empower the Government to grant exemption but only enables it to grant refund, the doctrine of promissory estoppel cannot be invoked to compel the Government of Andhra Pradesh to carry out a promise contrary to the provisions of the AP VAT Act;
- The Petitioner suppressed the fact that KPCL having deducted tax at source from the running account bills of NECL, have made false statements on oath before the Court that there is no deduction of TDS from NECL. Further, KPCL by resorting to such dishonest means, secured interim stay of all further proceedings and have thereby avoided remitting the TDS deducted from the running account bills of NECL, to the Government. The undeserved benefit and advantage obtained by KPCL, by abusing the judicial process, must be neutralized;
- The Petitioner abused the process of the Court by making a false statements on oath, hence is liable to pay exemplary costs of Rs. 75,000/- to the Commissioner, Commercial Taxes within three weeks from the date of receipt of a copy of the Order of the Court, failing which the Commissioner can recover the same in accordance with law.
The Hon'ble High Court dismissed the appeal in favour of the Department and held that the fact NECL could seek refund of the tax paid did not absolve KPCL of their statutory obligation to deduct TDS on Works contract.
PFA
MCA introduces Form GNL-4 for filing addendum for rectification of defects or incompleteness |
MCA vide notification dated 24th February, 2015 has made amendment in Companies (Registration Offices and Fees) Rules, 2014 through Companies (Registration Offices and Fees) Amendment Rules, 2015 and the text of the said amendment is reproduced as below:- In the Companies (Registration Offices and Fees) Rules, 2014,- In rule 10, after sub-rule (6), the following sub-rule shall be inserted, namely:- "7. Any further information or documents called for, in respect of application or e- form or document filed electronically with the Ministry of Corporate Affairs shall be furnished in form No. GNL4 as an addendum" |
- Feb
- 24
- 2015
Companies (Declaration and Payment of Dividend) (Amendment) Rules, 2015
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
Date- 24th February, 2015
G.S.R.. (E) .— In exercise of the powers conferred under sub-section (1) of section 123 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Declaration and Payment of Dividend) Rules, 2014, namely:-
1. (1) These rules may be called the Companies (Declaration and Payment of Dividend) (Amendment) Rules, 2015.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Declaration and Payment of Dividend) Amendment Rules, 2014, published in the Gazette of India, Extraordinary, Part 11, Section 3, Sub-section (1) vide G.S.R. 397(E), dated the 12th June, 2014, after the words "AMARDEEP SINGH BHATIA, Jt. Secy.", the following Foot Note shall be inserted, namely:-
"Foot Note. - The principal rules were published in the Gazette of India, Extraordinary, Part H, Section 3, Sub-section (i), vide number G.S.R. 241(E), dated the 31st March, 2014.".
[F. No. 1/31/2013-CL-V-Part]
(AMARDEEP SINGH BHATIA)
Joint Secretary to the Govt. of India
Note. – The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i), vide number G.S.R. 241(E), dated the 31st March, 2014 and was subsequently amended by notification number G.S.R. 397 (E), dated the 12th June, 2014.
Offences for which punishment for fraud prescribed U/s. 447 of Companies Act, 2013by CA Sandeep Kanoi |
Section 447 – Punishment for Fraud: Any person who is found to be guilty of fraud- Imprisonment for a term which shall not be less than 6 months but which may extend to 10 years and Fine - Not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. If the fraud in question involves public interest - Term of imprisonment shall not be less than 3 years
PFA
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