Late Deposit of Employees contribution of PF but before due date of Filing Income Tax Return: ITAT

The Income Tax Appellate Tribunal (ITAT), Mumbai bench consisting of Prashant Maharishi, Accountant Member and Kavitha Rajagopal, Judicial Member set aside disallowance made by Assessing Officer (AO) on the ground that late deposit of employees contribution of PF but before the due date of filing of return of income.

The assessee, Global Waste Management Cell Pvt. Ltd. made a company engaged in the business of transportation of solid waste management. For Assessment Year 2017-18, it filed its return of income at Rs.4,38,53,460/-. The above return was processed and the order of intimation under section 143(1) of the income tax Act, 1961 by Central Processing Centre, Bangalore disallowing the employees’ contribution of Rs.2,94,92,315/- under section 36 (1) (va) of the Act due to late remittance. The assessee preferred before the National Faceless Centre, wherein the above disallowance was confirmed. The Commissioner of Income Tax (CIT) referred to the relevant statutory provisions and CBDT, and also the amendment by the Finance Act, 2021, which clarified the above position. Further, the decision of the Hon’ble Kerala High Court in the case of CIT vs. M/s. Merchem ltd. was also followed. Hence, the disallowance made by CPC was confirmed by the CIT.

The Tribunal said “We find that though there is an inconsistency in the details submitted in form number 3 CD by the assessee of the due date as prescribed in respective provident fund law now assessee is claiming that such due date for payment should be the due date of filing of the return of income, which is also supported by the decision of the jurisdictional High Court, we find that such adjustment cannot be made by the central processing unit. Thus, in the present case, the initiation of adjustment by invoking the provisions of Section 143 (1) (iv) was proper but the adjustment in view of the decision of the honourable jurisdictional High Court covering the issue in favour of the assessee is not proper.

Change of Opinion of Court in Subsequent matter would not give any Leverage to Appellants to Reopen

The division bench of Jammu and Kashmir and Ladakh High Court has held that a change of opinion of the court in the subsequent matter would not give any leverage to appellants to reopen decisions that have attained finality.

The Government of India with the avowed object of encouraging commercial activity for setting up manufacturing units in industrially backward areas came out with a policy of granting tax exemptions to the newly set up manufacturing units for a period of 10 years from the date of the commencement of business. Based on Notification No. 56/2002 in the State of J&K, new industrial units were entitled to a hundred percent excise duty exemption for a period of 10 years from the date of commencement of production. It provided that the assessee would be entitled to a refund of duty paid other than duty paid by way of utilization of CENVAT credit.

The government levied Education Cess and Secondary and Higher Education Cess by virtue of the Finance Act No. 2/2004 and 22/2007 respectively and in connection with the goods manufactured or produced. The Finance Acts themselves provide that said cess would be a duty of excise at the rate of 2 % and 1 % respectively calculated on the aggregate of all duties of excise which are leviable and collected by the Central Government under the provisions of the Act or under any law for the time being in force.

Regarding the dispute whether the duties of excise leviable and collected under the Act alone is to be refunded or Education Cess and Secondary & Higher Education Cess which are leviable and collected under the Finance Acts are also to be refunded in view of the exemption, the Supreme Court in SRD Nutrients Pvt. Ltd held that the Education Cess and the Secondary & Higher Education Cess levied on the excise duty partakes the character of excise duty itself. On the basis of the above judgment CESTAT by the impugned orders in appeals held that the assesses are entitled to refund of Education cess and Secondary & Higher Education Cess.

Later a judgment was rendered by the Supreme Court in Unicorn Industries taking a contrary view on the subject that the appellant decided to file appeals. The commissioner, filed an appeal u/s 35 G of the Central Excise Act, 1944, against the orders of CESTAT, setting aside the orders passed by the Commissioner (Appeals) and the Adjudicating Authority and directing for the refund of the Education Cess and Secondary & Higher Education Cess to the assessee, M/s Narbada Industries.

The High Court observed that the assessee has got the benefit of refund lawfully under the prevailing law, they cannot be directed to refund the same merely on the basis of a change of opinion. Therefore, the appeals for the sole purpose to seek return of the amounts refunded in view of the decision of SRD Nutrients on the change of opinion subsequently are meaningless. If such an action is permitted, it will open Pandora’s box and the lis between the parties which had attained finality will never come to an end. This would be against the public policy which envisages providing quiet us to litigation at some stage.

The Coram of has held that “we find no merit in these appeals and the same is dismissed, first for the reason, they are barred by limitation, secondly, they are not maintainable and, lastly, the change of opinion of the court in a subsequent matter of another party would not give any leverage to the appellants to reopen the decisions which have attained finality”.

Place of Supply of Service must be Outside India to attract Definition of Export u/s 2(6) of IGST: A

The Maharashtra Appellate Authority for Advance Ruling has held that place of supply of service for which the incentive received would be outside India to attract the definition of Export u/s 2(6) of IGST,2017.

The Appellant is a GST registered person in Maharashtra and is a reseller of Intel products which they purchase from various Distributors of Intel Inside US LLC (IIU) have entered into an agreement with IIUL under the Intel Authorized Components Supplier Program (IACSP) about a non-binding Plan of Record Target (POR Target) to which the Applicant will earn certain incentives as a percentage of performance to quarterly goal on eligible Intel products.

The Appellant contended that the incentives received are post procurement of goods and such discounts are directly linked to invoices, hence they cannot be considered as a taxable supply. Further stated that the Incentives are not a consideration for the supply of any product and claimed that this supply would qualify as an export service defined under sec 2(6) of IGST Act.

It was contended that the appellant who was the supplier of service is located in India and the recipient is located outside India, thereby attractable to all conditions of export of service is satisfied in the transaction. It was stated by the appellant that the transaction as an export and claimed the Zero-rated Supplies.

The appellant authority observed that under Section 13 (3) (a) the services supplied in respect of goods are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services to provide the services, The appellant authority viewed that the marketing services are provided in respect of goods which are made physically available by the recipient of services to the supplier of marketing services to provide the services.

MAAR comprising Shri. Rajiv Magoo, Member Central Tax and Shri. T. R. Ramnani, Member State Tax, has observed that the place of provision of services is the location of the appellant who was the supplier of services, which was in India and held that the impugned supply does not qualify as export of services as per Section 13 (3) (a).