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    Summary of GST Decisions

     

    1. Delhi High Court in Vallabh Textiles[1] - Payments made during Investigation having no colour of voluntariness, should be refunded to the assessee, since they are collected without following procedure of law:

    A search was carried out by the tax authorities on the petitioner from 16th February to 17th February 2022. During the course of search, the petitioner has paid tax amounting approximately to Rs 1.8 Crore. The said payments were made between 01:28 AM to 07:03 AM on 17th February 2022. The petitioner stated that the said payments were not made voluntarily but only on the coercion of the tax authorities. The tax authorities contend that since payments were made vide DRC-03 challans, the allegation of coercion is an afterthought.

    The Court after going through the submissions made by both the parties, has stated that Rule 142(1A) of CT Rules[2] clearly provides that the proper officer has to issue DRC-04 acknowledging the payment of tax made by person and in the facts it is clear that although the payments were made in DRC-03, no document has been placed by revenue (tax authorities) that they have accepted the payment. Hence, the stand taken by the revenue that the payments are voluntary payments and not out of coercion is required to be set aside. Further, the court stated the fact that the said taxes were paid in the early morning hours during search also indicate the payment is out of coercion.

    The Court stated that the tax authorities have violated instructions in Instruction No 01/2022-23 dated 25.05.22 issued by CBIC (dealing with the subject of deposit of tax during the course of search, inspection or investigation) and has not adopted the principles laid by Gujarat High Court in Bhumi Associate vs Union of India (MANU/GJ/0174/2021). In Bhumi Associate (supra), it was clearly stated that there should not be any tax payment during the search. Even if it is voluntary payment, the same should be after the closure of search. The Court stated that the said guidelines were violated and accordingly asked the tax authorities to refund the tax along with interest.  

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    All About Recognized Provident Fund, Approved Superannuation Fund and Gratuity Fund - Part I

    Contribution to recognized provident fund (‘RPF’) and/or approved superannuation fund (‘ASF’) are the most popular saving options being selected by the employees across the industries.

    In addition to the above, it is very common that the employer makes payment to employee as gratuity. This is because, various tax deductions are available to the employer and the employee under the ITA[1] in respect of above payments.

    In this article, we shall discuss the concept of RPF in detail from the perspective of ITA. Other two, namely ASF and Gratuity Fund will be covered in the subsequent parts.

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    Revaluation of Assets of Partnership Firm  – ‘Transfer’ under Section 45(4) – SC upholds Bombay HC Judgment in A N Naik Associates & Others

    The Supreme Court in the matter of Mansukh Dyeing and Printing Mills[1] has upheld the judgment of Bombay High Court in the AN Naik Associates & Others[2], which has interpreted the term ‘otherwise’ appearing in Section 45(4) of ITA[3] to include the instances of retirement of partners.

    Before getting into the facts in the matter of Mansukh Dyeing and Printing Mills (supra), let us set us the context. The provisions of Section 45(4) were introduced through Finance Act, 1987. The said section stipulates that profits or gains arising from transfer of capital asset by way of distribution of capital assets on the dissolution of a firm or otherwise, shall be chargeable to tax as income of the firm of the previous year in which such transfer took place and for the purposes of Section 48, the fair market value of the asset as on the date of such transfer shall be the deemed to be full value of consideration.

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    SC in Sansera Engineering Limited – Rebate vs Refund – Implications under GST Laws

    The Supreme Court in the M/s Sansera Engineering Limited[1] has concluded the long outstanding issue of distinction between the refund and rebate under the erstwhile indirect taxation laws. The assessee tried to distinguish rebate from refund, since there was no specific time limit mentioned for rebate. Before dealing with the said judgment and its implications under the GST laws, a brief background on the thin line of distinction between refund and rebate is sina qua non.

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