Bombay High Court question claim of the State that it is business friendly.

[CA DEV KUMAR KOTHARI]

2019 (10) TMI 50 - BOMBAY HIGH COURT  CARGOCARE LOGISTICS (INDIA) PVT. LTD. VERSUS THE UNION OF INDIA AND ORS in WRIT PETITION NO. 9353 OF 2019 Dated: - 27 September 2019

And interim order:

2019 (9) TMI 838 - BOMBAY HIGH COURT CARGOCARE LOGISTICS (INDIA) PRIVATE LIMITED VERSUS THE UNION OF INDIA AND OTHERS WRIT PETITION NO. 9353 OF 2019 Dated: - 13 September 2019

 

General:

Tax authorities are generally in habit of denying any claim which gives a benefit to taxpayer. We have seen attitude like disallow claim when it is claimed and allow claim when it is not claimed in context of allowance for depreciation under provisions of Income-tax act, 1961. In fact , a some cases assesse did not claim depreciation but tax authorities insisted to allow depreciation. Matter went up to the Supreme Court and honorable Supreme Court held that claim for depreciation is a privilege and it is at option of assesse to claim or not. After that an explanation has been inserted in S. 32 with an intention to force depreciation allowance, even if assesse do not want to claim the same.

This shows that even at legislative level, attitude is not different, the provisions are made to deny benefit without considering significant in overall context of revenue collection.

Reason for such thigs happening that in tax laws, generally intention and prejudices of tax authorities prevails instead of legislative intent in real sense.

Authors question in proceedings:

Many time author inserts question in replies and submissions before tax authorities on behalf of clients on following lines:

         Is it ease of doing business and business friendly atmosphere which government claims?

        Is it in accordance with claims on websites of department?

         Is it taxpayer / user friendly?

        Does tax authorities have any regard and respect for taxes paid by taxpayer directly and indirectly?

We notice that for petty sums tax authorities  make allegations and try to charge

 Taxpayers on doubts and describe or level  bogus documents, bogus claims, bogus purchases, bogus gains etc.

Such questions are posed for reasons like  tax authorities are in habit of doubting tax payer, asking irrelevant questions, asking documents which are already on records, making high pitched assessment and pressing for recovery etc.       

High Court also questions similarly:

In case of Cargocare Logistics(supra.) Bombay High Court had also raised similar questions vide paragraph 4 of the order dated 27.09.2019 which is reproduced below with highlights added by author:

          4. In fact passing such contrary orders, only seems to suggest that the entire adjudication proceedings are a mere farce. The attitude of the Revenue even at the level of the Commissioner is that the demand has to be confirmed and the relief if any, the party has to obtain from Appellate Authorities. This attitude brings to a naught to claim of the State that it is business friendly.

About orders under consideration:

In Writ Petition honorable High Court was considering two contrary orders of authorities as summarized below:

1. The order dated 28 February 2019 passed by the Commissioner of Central Tax & GST, Thane holds that service tax on freight is a taxable service.

Therefore he confirms the recovery of an amount of ₹ 2.36 crores as Service Tax.

2.   In order dated 18 March 2019 the Commissioner of GST, Mumbai (East) held that the freight charges are an exempted service. As a  result the Petitioners  are not entitled to Cenvat Credits of ₹ 11.37 crores and confirmed the demand on that basis.

The Court observed that the revenue can obviously be right only on one of two counts and not on both counts i.e. either the impugned order dated 28 February 2019 is correct or the impugned order dated 18 March 2019 is correct.

This shows that as and when human intervention is involved, tax authorities are tip toed to harass tax payers.

Discussions to this article

[Ganeshan Kalyani]

Truly said. The tax authorities doubts all the taxpayers and ask lot of documents in proceedings. Tax authorities behold the tax payer as "wrong". They presume that turnover declared and tax paid is incorrect and ask for huge details. Even the Large Taxpayer are treated the same. This belief of the tax authority that tax payers are compliant must go away. Obviously this task is not easy as the illmind people are also there in the world. Taking incorrect ITC, paying tax at low rate etc should be stopped by the tax payer. A team work between the tax payer and the tax authority must be established to amicably run the business and tax administration.

[Ganeshan Kalyani]

Please read as "non-compliant" instead of "complaint "

[Ganeshan Kalyani]

Sir, your write-up is too good. Your analysis on the subject is deep. Thorough reading, comparing and analyzing the impact is integral part of your write-up. Thanks for sharing the article with us.