ST - Commercial Training - Appellant providing computer training but certificate was issued by State Board - as per definition only exclusion is to an Institute which issues certificates recognized by law - Demand upheld: CESTAT
By TIOL News Service
MUMBAI, APR 25, 2014: TWO appeals have been filed - one against a confirmed demand and the other against rejection of a refund claim.
Brief facts of the case are that SCNs were issued to the appellants raising demand of service tax on the ground that the appellants are providing commercial training and coaching services. For the period July, 2004 to March, 2005 the appellants paid service tax as per the direction of the Revenue and subsequently filed a refund claim on the ground that theywere not providing any taxable service. Since this refund has been rejected by the lower authorities the appellant is before the CESTAT. There is also another appeal, as mentioned, against an order confirming a ST demand on the same issue.
It is submitted that the appellants are an Institute providing computer training which is recognized by Maharashtra State Board of Vocational Examination and hence excluded from the purview of taxable services. They rely upon the certificate issued by the Maharashtra State Board of Vocational Examination and which is counter-signed by the appellants. Inasmuch as the appellants were providing training course which is recognized by law, the demand is not sustainable, submitted the appellant. They place reliance on the decision of Delhi High Court in Indian Institute of Aircraft Engineering vs. UOI - 2013-TIOL-430-HC-DEL-ST to support of their contention.
The Revenue representative submitted that the appellants are not issuing any certificate which is recognized by law and hence they are liable for service tax.
The Bench adverted to the definition of 'Commercial training or coaching centre' and observed that the appellants were providing training but are not issuing any certificate; thatthe certificate is issued by Maharashtra State Board of Vocational Examination and as per the definition the only exclusion is in respect of institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law.
It was further observed that in the case of Indian Institute of Aircraft Engineering the Institute was issuing certificate to the trainees which is approved by the Directorate General of Civil Aviation and in those circumstances, the Delhi High Court had held that the said appellants were not providing any taxable service under "commercial training & coaching centre". Inasmuch as since the facts of the present case were different, the ratio of the said decision would not be applicable and, therefore, there is no merit in the contention of the appellants that the appellants are not providing any taxable service, the Bench held. The demand was upheld.
However, noting that the appellants were under the bonafide belief that the institution is recognized by Maharashtra State Board of Vocational Examination and hence are not liable to pay ST, the Tribunal, by taking cognizance of the provisions of section 80 of FA, 1994 set aside the penalties imposed u/s 76 & 78 of the FA, 1994.
As regards the appeal against the rejection of refund claim, the Bench observed that since the appellants are held liable to pay ST for the taxable services rendered, the said appeal is without any merit and hence dismissed.
The appeals were disposed of.
In passing: Countersigned (v) - endorsed, indorsed, signed, corroborated, certified…
(See 2014-TIOL-636-CESTAT-MUM)
Income Tax
Whether any disallowance u/s 40A(2) is warranted even assessee proves higher payment of salary to one of its key employees running critical business operations - NO: High Court
THE assessee, a limited company, is mainly engaged in the business of contract and working for National Highway Authority of India on contract basis and the assessee gets work order after submission of tenders. It was claimed by the assessee that it was maintaining regular and proper books of accounts supported by material and relevant records and accounts were also audited by a CA. During assessment, AO desired the assessee to explain the nature and source of payment debited on account of job work charges to the extent of Rs.2,51,80,655/- and particularly of three sub-contractors to whom substantial payments had been made.
The issues before the Bench are - Whether any disallowance u/s 40A(2) is warranted even the assessee proves the higher payment of salary to one of its key employees running critical business operations; Whether such disallowance can be made even if it is pointed out that the individual assessee has paid higher taxes on such income in its individual return of income; Whether payments made to sub contractors by way of account payee cheques, can be disallowed merely on the basis that the amount is excessive and Whether amount disallowed after considering all the material facts and circumstances by the Tribunal, can be altered by the High Court without any cogent basis. And the verdict goes against the Revenue.
Income tax - Whether if assessee is notified entity and its assets & properties are attached by Special Court, it is still liable to pay interest under Ss 234A, B & C - YES: Bombay HC
By TIOL News Service
MUMBAI, APR 25, 2014: THE issues before the Bench are - Whether if the assessee is a notified entity and its assets and properties are attached by a Special Court, it is still liable to pay interest under Ss 234A, B & C and Whether merely because certain aspects were not considered or that relevant provisions were not brought to the notice of the Court, it is enough to ignore and brush aside a binding precedent. And the verdict goes in favour of the assessee.
Facts of the case
The assessee is a company. It was submitted on behalf of the assessee that the only issue involved in this appeal was not covered by the Judgment of the Division Bench of HC 2012-TIOL-243-HC-MUM-IT. This Judgment was relied upon and it was submitted that the point was covered by the same in favour of the Revenue. It was also submitted that both the questions were answered in favour of the Revenue and the Tribunal's order was set aside. It was further submitted that the Division Bench rendering the judgment in "Divine Holdings Pvt.Ltd." had failed to consider several judgments of SC and the orders of HC taking a view that when the assets and properties of the assessee were attached by operation of Statute, then, liability to pay tax will not arise. There was nothing by which the assessee can be said to be in default enabling the Department to levy interest on the assessee. It was submitted that the properties being statutorily attached and permission to deal with the same was sought from the Special Court but the same was rejected, that the assessee was prevented from discharging the liability, if any, to pay the advance tax. Thus, this was a case where an act of the Court had caused prejudice to the assessee.
Held that,
++ we are unable accept any of these contentions for the simple reason that a detailed judgment has been delivered by the Division Bench of this Court in the case "Divine Holdings Pvt.Ltd. It was held that the questions of law framed by it are required to be answered by holding that the Tribunal has erred in taking a view that the assessee being a notified person under the Special Court (Trial of Offences relating to Transaction in Securities) Act,1992 is not liable to pay interest under Section 234A, 234B and 234C. Thus, the interest is chargeable and merely because the assets and properties are attached, does not mean that the liability to pay interest will not arise. Once such is the binding judgment of a co-ordinate Bench, then, we cannot ignore it on a spacious plea that the Division Bench did not consider the arguments of the nature canvassed before us by Mr.Toprani. Equally, some aspects of the controversy were not noticed in detail including judgments and orders of the Supreme Court and this Court on the point, is the submission which will not enable us to ignore the binding judgment. We have seen the order passed by the Supreme Court, a copy of which has been annexed in the compilation (Exh.G) page 177 and 178. This is an order passed in Civil Appeal no.7572 of 1999 (C.I.T. Vs. The Custodian) with Civil Appeal no.1175 of 2002 dated 13.2.2002. That is an order passed which does not decide any controversy much less concerning the legal provisions, namely, Sections 234A to 234C. The order, a copy of which has been annexed as (Exh.T) page 390-391, at best can be said to be an order applying to a specific assessee which was unable to comply with the requirement of predeposit of the amount demanded and interest thereon. The Judgment in the case of "Commissioner of Income Tax Vs. Emilio Ruiz Berdejo and others 2009-TIOL-642-HC-MUM-IT" also will not assist the Assessee before us. That is distinguishable on facts;
++ such orders do not enable us to brush aside the binding judgment of the Division Bench in the case "Divine Holdings Pvt.Ltd." We can ignore a binding judgment only if it is Per incuriam. Equally in another judgment of SC in the case of "Director of Settlements, A.P. & Ors. Vs. M.R.Apparao & Anr." reported in "AIR 2002 SC 1598", it is held by the SC that merely because certain aspects were not considered or that relevant provisions were not brought to the notice of the Court, is not enough to ignore and brush aside a binding precedent. It is clear that the judgment in the case of "Divine Holdings Pvt.Ltd." is binding on us. The judicial discipline, therefore, requires that we follow it even if the assessee may term the same as erroneous. The remedy of correcting a erroneous judgment and order is to file an appeal challenging it and, then, convince the Appeal Court in exercise of such appellate power to quash or reverse such judgment. So long as the judgment holds the field, it will not be possible for us to ignore and brush aside the same, more so when the judgment in the case of "Divine Holdings Pvt.Ltd." decides identical controversy and deals with the same question of law. For the aforesaid reasons, we are of the opinion that the controversy in two appeals is covered by the judgment in the case of "Divine Holdings Pvt.Ltd." The appeals are, therefore, allowed accordingly. The judgment and order of the Tribunal is quashed and set aside.
(See 2014-TIOL-566-HC-MUM-IT)
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