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TMI Blog2018 (5) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... yable u/s 43B is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds. 2. From the above two grounds, it is clear that the assessee has raised the only issue of disallowance of Rs. 85,26,467/- on account of service tax payable u/s. 43B which has also been confirmed by the ld. CIT(A).The brief facts of thecase are that the assessee is engaged in the building and construction industries with a solid reputation at the forefront of quality, safety and environment management. The assessee filed return declaring income at Rs. 3,69,73,797/- on 05.10.2013. The case was selected for scrutiny through CASS and statutory notices were issued to the assessee. The books of account were produced in the assessment proceedings along with bills and vouchers. The ld. Assessing Officer observed that the assessee has received service tax to the tune of Rs. 1,16,09,924/-, out of which the assessee had deposited a sum of Rs. 30,83,457/- before filing of return of income in the impugned year. The balance of Rs. 85,26,467/- was not paid by the assessee before filing the return as per Annexure-VI of the audit report. The Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities and submitted that the assessee is a limited company registered under the Companies Act and it has not applied proper method of accounting as per section 145 and section 145A of the Income-tax Act, 1961. He also referred to section 43B and as per section 43B(a) "any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force". He submitted that the assessee should have paid the service tax lying in the books as payable as per provisions of the IT Act, otherwise the unpaid amount lying in the books of account shall be taxed in the impugned year. The ld. DR submitted that the case laws relied by the ld. AR are not applicable in the present case due to different facts. 6. After hearing both the sides and perusing the entire material available on record, we observe that there is a credit balance of Rs. 1,16,09,924/- at the end of the year towards expenses payable. The assessee submitted that it is service tax liability, which arose due to crediting the service tax received from the service recipients. The assessee has challenged before us, the disallowance ofRs.85,26,467/- disallowed u/s. 43B of the Act. We obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness or profession, it has been provided that the said valuation would be in accordance with the method of accounting regularly employed by the assessee i.e. either mercantile or cash. Further, adjustment is to be made to include the amount of any tax, duties, cess or fees, by whatever name called, actually paid or incurred by the assessee to bring the goods to the place of its location and condition, as on the valuation date. In other words, where any expenditure is actually paid or incurred by the assessee by way of any tax, duties, cess or fees, by whatever name called, then adjustment is to be made both in the valuation of purchase and sale of goods and also in the valuation of inventory to include the aforesaid amounts while determining the income chargeable under head profits and gains of business or profession. The assessee has separately accounted for the service tax collected is also the indirect part of turnover because it is received along with turnover. The assessee has not shown any invoice raised by him before us as per service tax Rules, which is mandatory for the service provider to issue invoice to the service recipient. He has also not produced any evidence reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of the capital goods in the factory of a manufacturer. Provided also that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the CENVAT credit in respect of capital goods received by such assessee shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year. Explanation.- For the removal of doubts, it is hereby clarified that an assessee shall be "eligible" if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year computed in the manner specified in the said notification did not exceed rupees four hundred lakhs. (b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of the manufacturer of the final products who has sent the input or partially processed inputs outside his factory to a job-worker may, by an order, which shall be valid for a financial year, in respect of removal of such input or partially processed input, and subject to such conditions as he may impose in the interest of revenue including the manner in which duty, if leviable, is to be paid, allow final products to be cleared from the premises of the job-worker. (7) The CENVAT credit in respect of input service shall be allowed, on or after the day which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in rule 9. 9. As per Rule 6(1) of the Service Tax Rules, 1994, in case of company, service tax is to be paid on a monthly basis by 5th of the following month (in case of e-payment, by 6th of the month immediately following the respective month). However, the payment for the month of March is required to be made by 31st of March itself. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment or any other proceeding for determination of service tax relating to the taxable service referred to in sub-section (1). (6) Where any surplus amount is left after the adjustment under sub-section (5), such amount shall either be credited to the Consumer Welfare Fund referred to in section 12C of the Central Excise Act, 1944 or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of section 11B of the said Act and such person may make an application under that section in such cases within six months from the date of the public notice to be issued by the Central Excise Officer for the refund of such surplus amount.] 12. We further observe that the point of taxation as per Rule 3 of Point of Taxation Rules, 2011 is as under : RULE 3. Determination of point of taxation. - (Notification No. 18/2011- ST dt. 01.03.2011 as amended). For the purposes of these rules, unless otherwise provided, point of taxation shall be,- (a) the time when the invoice for the service provided or agreed to be provided is issued : Provided that where the invoice is not issued within the time period specified in rule 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x received. The assessee cannot be exonerated from its liability by saying that he accounted for the service tax received separately. Since the assessee did not pay service tax as contemplated u/s. 43B(a) and as per above provisions of Service Tax Act within the stipulated time, therefore, the ld. CIT(A) has rightly disallowed the same u/s. 43B of the IT Act. The case laws relied by the assessee are based on different footings as in all the decisions it was held that Service Tax was not at all payable because the service Tax was not received from the customer. The law prevailing at that particular time was that Service Tax was to be paid to the Government only when Service Tax is received from the service receiver to the service provider. Subsequently, there is change in the law which provides that Service Tax is to be deposited by the service provider even if service tax is not paid by the service receiver to the service provider. Therefore, in all those decisions it was held that service tax outstanding is hit by the provisions of Section 43B of the Income Tax Act. 1961. Due to the change in the law now those decisions does not help to the assessee. Moreover, the assessee has fil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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