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TMI Blog2022 (8) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... ly contention of the assessee is that it has not debited this amount in the profit and loss account but directly taken to the balance-sheet. This modus operandi of the assessee is not acceptable as the GST is part and partial of the sales and turnover of the assessee and it has to be shown as part of the inventory / closing stock. The assessee is required to maintain the books of accounts as per the accounting standards which are notified in the official gazette from time to time as per section 145 of the Act. The method of accounting is required to be regularly followed by the assessee. Even as per the provisions of section 145A, the valuation of the purchase and sales of goods and services and sale of inventory shall be adjusted to include the amount of duty, cess or fee actually paid or incurred by the assessee. Hence, the contention of the assessee that it has not claimed any deduction on account of GST by taking the same directly to the balance-sheet and not taking through the profit and loss account is not acceptable. The assessee cannot be permitted to adopt a modus operandi and giving an accounting treatment to the GST without passing through the profit and loss accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame ground. Now again the learned counsel for the assessee sought adjournment on the ground that he needs more time to prepare the case as he has returned from Haj tour. 3. Having considered the past conduct of the assessee seeking adjournment of hearing, one more opportunity was granted to the assessee and the appeal was again fixed for today i.e. 23.08.2022. Nobody has appeared on behalf of the assessee and therefore, the Bench proposes to hear and dispose of this appeal ex parte. 4. The solitary issue arises in this appeal of the assessee is regarding disallowance made by the Assessing Officer under section 43B on account of non deposit of GST before the due date of filing of return of income under section 139(1) of the Act. The assessee has contended before the authorities below that the assessee has not claimed the deduction of GST in the profit and loss account and therefore, no disallowance can be made under section 43B of the Act. 5. On the other hand, learned DR has submitted that the assessee has bye-passed the profit and loss account and directly taken the GST amount to the balance-sheet which is not permissible. He has further submitted that the GST is a part a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of GST by taking the same directly to the balance-sheet and not taking through the profit and loss account is not acceptable. The assessee cannot be permitted to adopt a modus operandi and giving an accounting treatment to the GST without passing through the profit and loss account to circumvent the provisions of section 43B. The CIT(A) has considered this issue in para 5 to 6.3 as under:- 5. FINDINGS AND DETERMINATION: I have carefully gone through the Grounds of appeal, the findings of AO on each such Grounds of appeal raised by the assessee and the written submissions uploaded by the assessee in support of the Grounds of appeal. 6. All the Grounds involve only one solitary issue, that is AO's action of disallowing u/s 43B, the unpaid GST liability of Rs. 22,21,501/- to the credit of Central Govt, the said liability not being paid to the credit of Central Govt. before the due date of filing ITR u/s 139(1) of I.T. Act. 6.1. The issue involved is that as on the closing day of F.Y. under consideration, there was an unpaid GST liability existing in the balance sheet of the assessee, amounting to Rs. 2221.501/-. The said GST liability remained unpaid ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. it was decided that where the assessee had credited sales tax collection and debited sale tax payment in a separate sales tax account that would not rendered the provision of section 43(b), hence the aforesaid section is inapplicable. The assessee has also relied on the judgements in the case of S.Govind Raja Reddiar Vs ITO (1986) 19 TTD (Coch) 177 and also Sri Kakollu subba Rao Co. Vs. Union of India (1988) 71 CTR (AP) 34. 6.3. DECISION: (I) On identical facts, as are involved in the present appeal, Hon'ble ITAT, COCHIN BENCH, COCHIN, in the case of M/s. Kunnel Engineers Contractors (P) Ltd. decided in I.T.A. No. 653/Coch/2019 04/Coch/2020 vide its judgement dated 19.05.2020, has decided the issue in favour of revenue and against the assessee. The only difference in that, in that case the issue was of SERVICE-TAX while in the present case of the assessee the issue is of GST . The decision granted by Hon'ble ITAT is reproduced as under: 4. We have heard the rival submissions and perused the record. In this case, the assessee has collected an amount of Rs. Rs.3,52,69,463/- for the assessment year 2012-13 and Rs.2,42,72,852/- for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even up-to the date of filing of the return of income and, thus, by not including this amount in its service, it had clearly made a claim indirectly. As rightly highlighted by the CIT(A), the assessee's plea that sales-tax was different from service tax cannot be accepted in the present circumstance as what the assessee was a firm of Chartered Accountants is selling is services and not goods, so the tax applicable is service tax which stands on the same bracket as sales tax in terms of services rendered as sales tax holds for goods sold. We have also observed that the AO had pointed out that the said amount has been included as business receipts in its TDS Certificates and as such, the same should have been included in its receipts. This has not been precisely done by the assessee. The case laws relied on by the assessee is dealt with as under: (1) ACIT v. Real Image Media Technologies (P) Ltd. (ITAT Chennai): 7.2.1 The assessee was running a recording and dubbing studio, production of advertisement, films and television serials etc., as well as in software development. The amount of service tax included in bills issued but not received. Accordingly, the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned with the disallowance of deduction by invoking the provisions of section 43B of the Act. The Hon'ble Delhi High Court was not considering the issue whether the service tax collected and the remaining unpaid till the due date of furnishing of the return forms the part of the total income for the current year. (iii) DCIT v Manish M Chheda 29 SOT 138 - Mumbai ITAT 7.2.3 In the above case, the Hon'ble Mumbai Tribunal was considering the applicability of section 28(iv) of the 1 T Act. In the instant case, it is an admitted fact that during the course of assessee's profession, a sum of Rs.29,60,000/- was realised/collected as service tax payable and the same is not capital receipt. The moment the service tax is realised, it becomes payable to the Govt. account and if it is not paid, it partakes the character of income of the assessee, since the assessee could utilise this amount in any manner whatsoever, there is no restriction placed on its utilisation. This is amply clear from the TDS certificate furnished by the assessee and also the credit appearing in the assessee's bank account. Therefore, to arrive at the professional income, the service tax realized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the place of its location and condition, as on the date of valuation. As per the explanation under the said clause, it is pointed out that for the purpose of this section, any tax, duties, cess or fees, by whatever name called, under any law for the time being in force, shall include all such payments, notwithstanding any right arising as a consequence to such payments. Sub-clause (b) talks of interest received by the assessee on compensation or enhanced compensation, which is not relatable to the issue before us. The aforesaid provisions of section 145A of the Act have been substituted by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010. Prior to its substitution, which was inserted by the Finance (No.2) Act, 1998 w.e.f. 01.04.1999, the section provided the provision relatable to the valuation of purchase and sale of goods and inventory, for the purpose of determining the income chargeable under the head profits and gains of business or profession and no clause '(b) was provided i.e. in respect of income received by the assessee on compensation or on enhanced compensation. In view of the amended provisions of the Act, which came into effect from 01.04.1999 for valuing the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service: Provided that in respect of final products, namely, articles of jewellery falling under heading 7113 of the First Schedule to the Excise Tariff Act, the CENVAT credit of duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who get such final products manufactured on his behalf, on job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker. (2) (a) The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year: Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year. Provided further that the CENVAT credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning, or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service. (b) The CENVAT credit shall also be allowed in respect of jigs, fixtures, moulds and dies sent by a manufacturer of final products to,- (i) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or the rules made there under from the recipient of taxable service in any manner as representing service tax, shall forthwith pay the amount so collected to the credit of the Central Government. (2) Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government. (3) Where any amount is required to be paid to the credit of the Central Government under sub-section (1) or sub-section (2) and the same has not been so paid, the Central Excise Officer shall serve, on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government. (4) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom the notice is served under subsection (3), determine the amount due from such person, not being in excess of the amount specified in the notice, and thereupon such person shall pay the amount so determined. (5) The amount pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provider of taxable service, shall be determined in accordance with the provisions of clause (a). Explanation - For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance. 13. After considering the above provisions, it is clear that the assessee has to pay service tax within due date as set out under the above provisions either by way of cash/cheque or by way of availing CENVAT credit as per Rules as stated above, but the assessee did not do so. The liability of service tax had also arisen as per the point of Taxation Rules, as stated above. 14. Now, we have to examine the case of the assessee in the light of the above provisions. During the impugned year, the assessee has credit balance of service tax payable as on 31.03.2013 of Rs. 1, 16,09,924/- which was to be paid up to 31.03.2013 by the assessee, but he did not pay. Further, the assessee had paid a sum of Rs.30,83,457/- before filing of IT return. As per section 43B(a), the above outstanding payment was to be paid up to the date of filing of ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the assessment years is allowed. (ii) In the above referred decision of Hon'ble ITAT, Cochin Bench, Cochin, in the case of M/s. Kunnel Engineers Contractors (P) Ltd, the assessee has collected an amount of Rs. Rs.3.52,69,463/- for the assessment year 2012-13 and Rs.2.42,72,852/- for the assessment year 2014-15 as service tax and not remitted the same to the Government exchequer, before the due date of filing of the return of income. Hon'ble ITAT first examined the applicability of provisions of s.43B on service tax and observed that the said issue was considered by the co-ordinate Bench of the ITAT, Hyderabad Benches in the case of M/s. Bartronics India Ltd. v. ACIT [ITA No.2188 and 2189/Hyd/2011 vide order dated 31.05.2012 where it was held that the provisions of section 43B, are very much covered u/s 43B of the I.T. Act. It was held that the provisions of section 43B of the Act is very clear and it states that 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 , therefore, even the service tax is liability which covers u/s 43B of the Act and non-payment of the same within the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on by the assessee in the written submissions, none of the judgments are of jurisdictional ITAT or High Court (Assessee being resident of Uttar Pradesh). Besides, the judgment relied upon by the assessee, delivered by ITAT, Cochin Bench, in the case of S.Govind Raja Reddiar Vs ITO, reported in 19 TTD (Coch) 177, the said judgment was delivered in 1986. Besides the copy of any of the judgements have also not been provided by the assessee. As against it, judgment of Hon'ble ITAT, Cochin Bench, Cochin in the case of M/s. Kunnel Engineers Contractors (P) Ltd as referred above, was delivered only very recently in year 2020 (judgment dated 19.05.2020). The said view of Hon'ble ITAT, Cochin Bench, Cochin is supported by several other judicial authorities, including the judgment delivered by Hon'ble ITAT. Bangalore in the case of M/s. Jain Christopher v DCIT in ITA No.855/Bang/2012 - order dated 12.04.2013, as well as the judgment delivered by Hon'ble ITAT, Delhi in the case of M/s. Hemkunt Infratech (P) Ltd. v. DCIT [ITA No.6683/DeI/2017 - order dated 23.03.2018. 7. The CIT(A) has followed and referred various decisions of this Tribunal as well as decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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