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Tuesday, 19 March 2019

No coercive action against payee if payer failed to deposit TDS collection with Govt.: HC


Pushkar Prabhat Chandra Jain v. Union of India - [2019] 103 taxmann.com 106 (Bombay)

The petitioner had sold an immovable property for Rs. 9 crores. The purchasers made a net payment of Rs. 8 crores 91 lakhs to the petitioner after deducting tax at source at 1 per cent of the payment in terms of section 194-IA.The petitioner filed the return of income and claimed credit of TDS of Rs. 10.71 lakhs. 

The Income-tax department noticed that only an amount of Rs. 1.71 lakh was deposited and thus demand of Rs. 10.36 lakhs was raised against the petitioner comprised of the principal tax and interest payable thereon.

The Bombay High Court held that section 205 carries the caption 'Bar against direct demand on assessee'. The section provides that where tax is deducted at the source under the provisions of Chapter XVII, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.

It is always open for the department and in fact the Act contains sufficient provisions, to make coercive recovery of such unpaid tax from the payer whose primary responsibility is to deposit the same with the Government.If the payer after deducting the tax fails to deposit it in the Government account, measures can always be initiated only against such payers.

Thursday, 14 March 2019

Penalty imposed by GST Dept. for not displaying board outside business premises

Clarification on various doubts related to treatment of sales promotion schemes under GST vide Circular No. 92/11/2019-GST Dated 7th March 2019


1. Free samples and gifts: - 

It is clarified that samples which are supplied free of cost, without any consideration, do not qualify as "supply" under GST, except where the activity falls within the ambit of Schedule I of the said Act.

It is Further clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration


2. Buy one get one free offer:-

It can at best be treated as supplying two goods for the price of one. 

Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of section 8 of the said Act. 

It is also clarified that ITC shall be available to the supplier for the inputs, input services and capital goods used in relation to supply of goods or services or both as part of such offers.


3. Discounts including 'Buy more, save more' offers and Volume Discount At Year End Or at Periodic Interval- 

i. It is clarified that discounts offered by the suppliers to customers (including staggered discount under "Buy more, save more" scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply.

Provided they satisfy the parameters laid down in sub-section (3) of section 15 of the said Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document (s) issued by the supplier. 

Installing & Maintaining Surveillance system to be treated as composite supply of works contract under GST

Allied Digital Services Ltd. In re - [2019] 103 taxmann.com 123 (AAR - MAHARASHTRA)

    The dealer has entered into agreement with Government of Maharashtra to set-up comprehensive CCTV based surveillance system on 28.10.2013 for development, implementation and maintenance of the system for the city of Pune and Pimpri-Chinchwad. 

The issues before authority are –whether there is a liability to pay GST on the amount received post- GST for supply of services as per contract executed prior to GST implementation and if the amount is held to be taxable, then at what rate tax should be paid?   

To answer both the questions it is necessary to determine the nature of activity carried out by the applicant. 

The liability of the contractor-applicant does not end with supply of goods but it extends to the successful testing, commissioning and maintenance of the system. 

The set-up of a comprehensive CCTV based city surveillance system for the city does result into installation/commissioning of immovable property wherein transfer of property in goods is involved in the execution of the contract and, thus, the 'Surveillance Project' is a works contract as defined in Sub-Section 119 of Section 2 of the GST Act and the supply of services as per 6(a) of Schedule II of the GST Act and, therefore, the amount received for the supply of services post -GST is taxable under the provisions of GST Act.   

The activity of the applicant is a composite supply of Works Contract, not being original work which is covered under Notification 11/2017 dated 28.06.2017 as amended by Notification No. 1/2018 dated 25.01.2018 and would attract 18% GST (9% each of CGST and MGST)
Secured creditor under SARFAESI Act would have priority over rights of Govt. in respect of mortgaged properties

Bank of Baroda v. Deputy Director, Directorate of Enforcement, Mumbai - [2019] 103 taxmann.com 30 ((PMLA-AT), NEW DELHI)