9911796707
TMI Blog2024 (4) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Scheme. 4. The undisputed facts of the present case are, the petitioner is a Works Contractor. It was subjected to audit proceedings by the Central Excise Department for the financial year 2014-15. Discrepancies were noted by the audit party indicating short payment of service tax. On such objections being successively raised, the petitioner discharged or admitted to discharge its liability during the ongoing audit. Evidence in that regard has been brought on record by means of Annexure-1 to the writ petition issued by the Deputy Commissioner, Circle-I, Central Excise and Service Tax, Meerut dated 15.7.2019. In that, amongst others, it is specifically recorded that the petitioner agreed with the view of the audit party and deposited service tax of Rs. 501414/- vide challans dated 11.12.2018, 1.3.2019 and 7.5.2019. The petitioner further agreed to deposit interest and penalty. Similar admissions of the petitioner (to discharge the service tax liability in terms of the audit objection) were recorded prior to the cut-off date under the Scheme, i.e. 30.06.2019. Recital to that effect is clearly contained in the said communication dated 15.7.2019 issued by the Deputy Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount with respect to which the petitioner filed its declaration under Section 125 of the Scheme, was admitted to the petitioner before the audit party well before the cut-off date 30.06.2019. Insofar as the revenue has failed to refute or dispute the contentions of the petitioner made in that regard, in face of the record (referred to above) that fact stands established. 7. As to the law and the effect that it may cause, we may note Section 125(1)(e) reads as below: "125. (1) All persons shall be eligible to make a declaration under this Scheme except the following, namely: (e) who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019." 8. Section 121(r) reads as below: "121. In this scheme, unless the context otherwise requires- (r) "quantified", with its cognate expression, means a written communication of the amount of duty payable under the indirect tax enactment. " 9. On the strength of the above statutory provisions, the declaration made by the petitioner was rejected by the impugned order. It has been thus reasoned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no longer res integra that a Circular issued by CBIC, here under Section 133 (1) of the Scheme would bind the Revenue Authorities insofar as it is beneficial to the assessee/declarant. In UCO Bank Ltd. vs. CIT (1999) 4 SCC 599, an issue arose as to the binding effect of circulars issued by CBIT under the Income Tax Act, 1961. There with respect to the scope and binding effect of such circulars, it was observed as below: "9. Under Section 145 of the Income-tax Act, 1961, income chargeable under the head "profits and gains of business or profession or income from other sources" shall be computed in accordance with the method of accounting regularly employed by the assessee; provided that in a case where the accounts are correct and complete but the method employed is such that in the opinion of the Income- tax Officer, the income cannot properly be deduced therefrom, the computation shall be made in such manner and on such basis as the Income-tax Officer may determine. In the present case the method employed is entirely for a proper determination of income. 10. For this same reason, and to aid proper determination of income, the Central Board of Direct Taxes had issued Circular N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his extent." The same circular has also further clarified that upto assessment year 1978- 79 the taxability of interest on doubtful debts credited to suspense account will be decided in the light of the Board's earlier circular dated 6.10.1952 as the said circular was withdrawn only in June, 1978. The new procedure under the circular of 9th of October, 1984 will be applicable for and from the assessment year 1979-80. All pending disputes on the issue should be settled in the light of these instructions. Therefore, upto the assessment year 1978-79, the Central Board of Direct Taxes' circular of 6th October, 1952 would be applicable; while from the assessment year 1979-80, the Central Board of Direct Taxes' circular of 9th of October, 1984 is made applicable. In the present case, the assessment was made on the basis of the Central Board of Direct Taxes circular of 9th of October, 1984, since the assessment pertains to assessment year 1981-82 to which the circular of 6th October, 1984 is applicable. 11. What is the status of these circulars? Section 119(1) of the Income-tax Act, 1961 provides that, "The Central Board of Direct Taxes may, from time to time, issue such ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuing circulars binding on the taxing authorities. 12. The question whether interest earned, on what have come to be known as "sticky" loans, can be considered as income or not until actual realization, is a question which may arise before several income tax officers exercising jurisdiction in different parts of the country. Under the accounting practice, interest which is transferred to the suspense account and not brought to the profit and loss account of the company is not treated as income. The question whether in a given case such "accrual" of interest is doubtful or not, may also be problematic. If, therefore, the Board has considered it necessary to lay down a general test for deciding what is a doubtful debt, and directed that all income tax officers should treat such amounts as not forming part of the income of the assessee until realized, this direction by way of a circular cannot be considered as travelling beyond the powers of the Board under Section 119 of the Income Tax Act. Such a circular is binding under Section 119. The circular of 9th of October, 1984, therefore, provides a test for recognising whether a claim for interest can be treated as a doubtful claim u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per administration of the provisions of Section 12(1B) and the court did not look upon this circular as being in conflict with Section 12(1B)." 15. In Paper Products Ltd. Vs. Commissioner of Central Excise (1999) 7 SCC 84, in the context of similar provisions with respect of issuance of circulars contained in section 37-B of the Central Excise Act 1944, it was observed as below: "4. The question for our consideration in these appeals is : What is the true nature and effect of the circulars issued by the Board in exercise of its power under section 37B of the Central Excise Act, 1944 ? This question is no more res integra in view of the various judgments of this court. This court in a catena of decisions has held that the circulars issued under section 37B of the said act are binding on the department and the department cannot be permitted to take a stand contrary to the instructions issued by the Board. These judgments have also held that the position may be different with regard to an assessee who can contest the validity or legality of such instructions but so far as the department is concerned, such right is not available. (see Collector of Central Excise v. Usha Martin Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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