2021-TIOL-831-HC-MAD-GST
DMR Constructions Vs ACCT
GST - Petitioners challenge the notices issued by the respondent, Commercial Tax Authorities proposing the denial of transition of credit in respect of Tax Deducted at Source (TDS) in terms of Section 13 of the Tamil Nadu Value Added Tax Act, 2006 in 10 cases, and orders confirming the aforesaid proposals, in 13 cases - Factual position is that all petitioners, in the era of TNVAT, have accumulated credit of TDS and have also been permitted to carry forward the same from year to year - The petitioners sought transition of the accumulated TDS into their respective accounts for set off against output tax - GST liabilities but the same has been denied, therefore, the impugned petitions.
Held:
++ There is no doubt and it is also not the case of the revenue that 'TDS', whether collected under the nomenclature of 'amount', 'deposit' or 'tax' is with the full blessing and authority of the law. [para 13]
++ Article 265 states that no amount may be collected sans the authority of law. Thus, when a payer deducts any amount from out of the amounts payable to a payee/ contractee , it is with the full authority of the law. The purpose of such deduction is to facilitate advance payment of tax. This is clear from the fact that whatever is deducted is immediately credited to the account of deductee and is automatically reflected as tax credit. [para 16]
++ The purpose of Section 13 [of the TNVAT Act, 2006] is to facilitate an advance collection of tax. The concept of an advance tax is not alien to revenue laws and tax deduction/tax collection was envisaged to facilitate certainty in collection of tax and a spread over of tax liability over the year, so that an assessee is not mulcted with an enormous liability towards the close of the year. The destination of the tax deducted is towards defraying tax liability only. [para 18]
++ Section 13(4) which says that the amount deducted and deposited under Section 13(2) will be adjusted by the Assessing Authority towards tax liability of the dealer, both under Section 5 or Section 6 and shall constitute good and sufficient discharge of such liability. [para 21]
++ The argument that at the time of deduction, the amount (for want of a better word) is 'deposit', when adjusted, it assumes the nature of 'tax', when carried forward, it bears the character of 'credit' and when refunded, it bears the character of an 'amount' would result in a distorted and imbalanced interpretation of the provisions of the Act and scheme set out thereunder. [para 27]
++ Any deduction made towards anticipated tax liability would assume the character of tax and will not change or fluctuate depending on whether it is held as credit or whether it is an adjustment against tax liability. To attribute such fluctuating character to an amount would distort the scheme of taxation and cause much difficulty in the interpretation on the various ancillary provisions. The interpretation of the provision must be such that it lends itself to certainty in its conclusion. [para 28]
++ As held by the Supreme Court in Amrit Banaspati any amount of procedural wrangles, difficulties and inefficiencies in the manner of working and administration, cannot justify interpretation of a provision in one way and not another. A provision would have to be interpreted on the strength of the object and reasons for which it was inserted and bearing in mind the overall scheme of the Act. [para 30]
++ Section 140 of the Act talks of carrying forward of the credit of 'VAT' and Entry Tax under the existing law, defined under Section 2(48) of the TNGST Act to mean any law, notification, order, rule or regulation relating to levy and collection of duty or tax on goods or services made prior to the commencement of the TNGST. Since the amount collected/deducted has been captured in the returns of turnover filed under the erstwhile TNVAT regime, Bench accepts the stand of the petitioners to the effect that such amounts would stand included for the purposes of transition under Section 140. [para 31]
++ Impugned orders are set aside, and the petitioners held to be entitled to transition TDS under the TNVAT Act in terms of Section 140 of the TNGST 2017. [para 36]
- Petitions allowed :MADRAS HIGH COURT
2021-TIOL-13-AAAR-GST
Macro Media Digital Imaging Pvt Ltd
GST - AAR held that Printing of content provided by the recipient on the PVC materials of the applicant and supply of printed trade advertising material to the recipient is a Composite supply and 'supply of service of printing' is the principal supply; that such services are classifiable under SAC 998912 and tax rate is @18% during the period from 1st July 2017 to 13.10.2017 and thereafter @12% - Aggrieved by this order of the AAR, appellant is in appeal before the AAAR.
Held:
++ it is evident that the Purchase Order is issued for 'Printing' the 'Copyrighted Digital Content of the client' in the desired material. The material blanks' owned by the appellant are transferred to the client as Trade Advertisement material' after undertaking Printing of the Content of the client on the blanks.
++ The appellant is vested with and undertakes the printing of the content, the copyright of which rests with the recipient and the copyright always rests only with the client and the appellant do not have any propriety rights to the content.
++ The content is never owned by the appellant, while the property in 'blanks' held by the appellant, on printing of the received content is transferred to the client. Thus the appellant does not have the whole propriety right on the final product-trade advertisement material' supplied by them to their clients.
++ In such a situation, applying the ratio of the decisions cited, AAAR holds that in the case at hand, in the execution of the printing contract, the property held by the appellant in blanks stands transferred as 'Trade Advertisement Material' and, therefore, the activity is a contract for work or service only and not a contract of sale of goods. [para 8.3]
++ Once it is held that the activity is a contract for work or service wherein there is also transfer of property in goods incidentally then it is a composite supply as per Section 8 of the GST Act.
++ On going through the Purchase Order, write-up giving the scope of the appellant, it is evident that the client desires the print of the content in a particular media and the contract with the appellant is not for the materials they own.
++ Trade Advertisement Material' is produced by printing the digital content in the required quality of the client on the blanks of the appellant; Printing is the main activity of the appellant and requirement of the client in the supply. Thus, the activity of Printing of the content is the principal supply during which the property held by the appellant in the media of such print gets transferred to their client incidentally. For these reasons AAAR does not agree with the contention of the appellant that the supply of Trade advertisement material' is the principal supply and therefore, even if the supply is considered as a composite supply, the 'Principal supply' is 'supply of goods', i.e., Trade advertisement material, and do not find any reason to deviate from the findings of the Lower Authority in this context. [para 8.4]
++ No reason to interfere with the Order of the Advance Ruling Authority in this matter. [para 9]
- Appeal dismissed :AAAR
