AMIT BAJAJ ADVOCATE

Punjab Government has promuglated an Ordinance dated 17-08-2011 vide Notification No. 33-Leg/2011 whereby proviso to section 8(1) and section 62(5) of Punjab VAT Act, 2005 have been amended. Proviso to Section 8(1) deals with rate of tax on declared goods whereas section 62(5) deals with pre-deposit of 25% before entertaining of any appeal under PVAT Act, 2005.

Punjab VAT Tribunal in an very important case namely Saguna Industries Vs.State of Punjab has observed  that there is no need to deposit 25% of demand u/s 62(5) of Punjab VAT Act, 2005 before entertaining appeal in cases of time-barred assessments. It is to be noted hereby that section 62(5) of Punjab VAT Act, 2005 provides that 25% of total tax, penalty and interest must be deposited before the appeal is being entertained.

Challan Correction Mechanism
Under OLTAS (On Line Tax Accounting System), the physical challans of all Direct Tax payments received from the deductors / taxpayers are digitized on daily basis by the collecting banks and the data transmitted to TIN (Tax Information Network) through link cell. At present, the banks are permitted to correct data relating to three fields only i.e. amount, major head code and name. The other errors can be corrected only by the assessing officers.

Punjab VAT Tribunal has held in a very important case namely Malkeet Trading Company, Jalalbad Vs State of Punjab(2011) 17 STM (JS) 153 that Input Tax Credit to purchasing dealer cannot be denied merely on the ground of an affidavit by the selling dealer to the effect that he has not made any sales to the purchasing dealer, without giving an opportunity to purchasing dealer of cross examining the deponent-selling dealer.

Power of inspection, search, seizure can be easily found to be in every taxation law. The purpose of these powers is always to detect any tax evasion on the part of dealers but these powers are always ancilliary to the power of collection of tax of the State and are provided only for the proper collection of tax. While exercising these powers one must keep in mind the objects of such powers.

Here the Power of inspection of accounts, search and seizure under the Punjab VAT Act, 2005 have been discussed. The powers of inspection, impounding of documents, search and seizure have been provided under section 46 of  Punjab VAT Act, 2005.

The implementation of the Direct Taxes Code appears set to miss its deadline once again.

The Direct Taxes Code (DTC) Bill, introduced in Parliament on August 30 last year, proposes to replace the 50-year-old Income Tax Act.

Initially proposed to come into force from April 2011, the code’s deadline had been extended to April 2012 as the draft Bill was referred to a Parliamentary standing committee.

Time limit of assessment year 2007-08 cases of certain dealers has been enhanced to six years by Excise and Taxation Department, Punjab. Ussualy time limit for assessment is three years unless extended by Commissioner. The opportunity of being heard to contest such extension order has been provided by a public notice being displayed on the official website of the Department. The question is whether such alternative service of public notice on the website is valid in view of Rule 86 of PVAT Rules, 2005 (which deals with manner of service of notice), especially when all the dealers may not be computer/internet literate.

Faced with sluggish industrial growth and its impact on revenue collections, the government today said it would step up “surveys” to maintain the tax buoyancy. 

“We are trying to maintain (tax) buoyancy by enhancing/strengthening the tax collecting machinery; by bringing more people through surveys and other information within the tax net...”, Finance Minister Pranab Mukherjee said in the Lok Sabha. 

Karnataka High Court has held in an important case namely Bell Ceramics Ltd. Vs DCCT that if the purchaser of goods issuing C forms has ceased to exist at the time of issuing C forms and such fact is not known to the seller of such goods claiming concessional rate of CST on the basis of such C forms then no disallowance of such concessional rate can be made to the seller on this ground.

Delhi High Court in an important case namely Ashok Chadha V Income Tax officer decided on 05/07/2011 has held that stree dhan in the form of jewellary received during the span of 25 years cannot be said to be unexplained investment u/s 69A of Income Tax Act, 1961. It is a normal custom for woman to receive jeweller in the form of "stree dhan" or on other occasions such as birth of child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal.

The applicant, a company based in Scotland sold shares of Cairns India Limited to Petronas Corporation Intl. Limited for a consideration of USD 241,426,379 in off-market-mode and not through a recognized stock exchange. The assessee filed an application for advance ruling claiming that it was entitled to the benefit of the Proviso to s. 112 (1) and liable to pay tax at 10% of the capital gains. The Revenue resisted the plea on the ground that the benefit of the Proviso to s. 112 was available only to assessees who were eligible to the benefit of indexation in the second proviso to s. 48 and as the assessee was not eligible for indexation, it could not claim the benefit of the lower rate of tax in the Proviso to s. 112. HELD upholding the Revenue’s plea: