Income Tax Appellate Tribunal - Chandigarh
Dy. Commissioner Of Income Tax, Shimla vs M/S H.P.Excise & Taxation Technical ... on 30 November, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH 'A', CHANDIGARH
BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND
Dr.B.R.R.KUMAR, ACCOUNTANT MEMBER
ITA Nos. 436 to 441/Chd/2017
Assessment Years: 2007-08 to 2011-12 & 2013-14
H.P. Excise & Taxation Technical Vs. Dy. CI T
Service Agency, Block No. 22 Circle
SDA Complex, Kasumati Shimla
Shimla
ITA Nos. 517 to 522/Chd/2017
Assessment Years: 2007-08 to 2011-12 & 2013-14
Dy. CI T Vs. H.P. Excise & Taxation Technical
Circle Service Agency, Block No. 22
Shimla SDA Complex, Kasumati
Shimla
PAN No. ABDFS2990P
(Assessee) (Respondent)
Assessee By : Shri. Vishal Mohan
Revenue By : Shri. Ravi Sarangal
Date of hearing : 26/09/2017
Date of Pronouncement : 30/11/2017
ORDER
PER BENCH:
All the above appeals have been filed by the Assessee and the Revenue against the separate order of Ld. CIT(A)-Shimla, H.P.
1. (a) Assessee has raised the following grounds in ITA No. 436/CHD/2017 for the AY 2007-08:
1. That in the facts and circumstances of the Ld. CIT(A) is not justified in upholding the reopening of the case under section 147 of the Income Tax Act, 1961.
2. That in the facts and circumstances of the case the Ld. CIT(A) is not justified upholding the addition of Rs. 64,20,238/-, made to the taxable income of the assessee treating the alleged income over expenditure to be the income of the assessee appellant.
Fact of the mater is that the surplus if any belongs to the government and as such is not the income of the assessee appellant.
3. That in the facts and circumstances of the case the Ld. CIT(A) is not justified in not adjudicating ground No.4.
4. That the order of the Ld. CIT(A) is bad in law and facts.
(b)Revenue has raised the following grounds in ITA No. 517/CHD/2017 for the AY 2007- 08:
1. On the facts and in the circumstances the Ld. CIT(A) is not justified in deleting the additions of Rs. 3137184/- made by A.O. which was paid to the Govt. as per the bye laws of the assessee society and holding the as non taxable.
2. It is prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. restored.
(c) Assessee has raised the following grounds in ITA No. 437/CHD/2017 for the AY 2008-09:
1. That in the facts and circumstances of the Ld. CIT(A) is not justified in upholding the reopening of the case under section 147 read with section 148 of the Income Tax Act, 1961.
2. That in the facts and circumstances of the case the Ld. CIT(A) is not justified upholding the addition of Rs. 64,05,556/-, made to the taxable income of the assessee treating the alleged income over expenditure to be the income of the assessee appellant. Fact of the mater is that the surplus if any belongs to the government and as such is not the income of the assessee appellant.
3. That in the facts and circumstances of the case the Ld. CIT(A) is not justified in not adjudicating ground No.4.
4. That the order of the Ld. CIT(A) is bad in law and facts.
(d) Revenue has raised the following grounds in ITA No. 518/CHD/2017 for the AY 2008-09:
1. On the facts and in the circumstances the Ld. CIT(A) is not justified in deleting the additions of Rs. 34,92,358/- made by A.O. which was paid to the Govt. as per the bye laws of the assessee society and holding the as non taxable.
2. It is prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. restored.
(e) Assessee has raised the following grounds in ITA No. 438/CHD/2017 for the AY 2009-10:
1. That in the facts and circumstances of the Ld. CIT(A) is not justified in upholding the reopening of the case under section 147 read with section 148 of the Income Tax Act, 1961.
2. That in the facts and circumstances of the case the Ld. CIT(A) is not justified upholding the addition of Rs. 61,71585/-, made to the taxable income of the assessee treating the alleged income over expenditure to be the income of the assessee appellant.
Fact of the mater is that the surplus if any belongs to the government and as such is not the income of the assessee appellant.
3. That in the facts and circumstances of the case the Ld. CIT(A) is not justified in not adjudicating ground No.4.
4. That the order of the Ld. CIT(A) is bad in law and facts.
(f) Revenue has raised the following grounds in ITA No. 519/CHD/2017 for the AY 2009-10:
21. On the facts and in the circumstances the Ld. CIT(A) is not justified in deleting the additions of Rs. 36,61,130/- made by A.O. which was paid to the Govt. as per the bye laws of the assessee society and holding the as non taxable.
2. It is prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. restored.
(g) Assessee has raised the following grounds in ITA No. 439/CHD/2017 for the AY 2010-11:
1. That in the facts and circumstances of the Ld. CIT(A) is not justified in upholding the reopening of the case under section 147 read with section 148 of the Income Tax Act, 1961.
2. That in the facts and circumstances of the case the Ld. CIT(A) is not justified upholding the addition of Rs. 12937365/-, made to the taxable income of the assessee treating the alleged income over expenditure to be the income of the assessee appellant.
Fact of the mater is that the surplus if any belongs to the government and as such is not the income of the assessee appellant.
3. That in the facts and circumstances of the case the Ld. CIT(A) is not justified in not adjudicating ground No.4.
4. That the order of the Ld. CIT(A) is bad in law and facts.
(h) Revenue has raised the following grounds in ITA No. 520/CHD/2017 for the AY 2010-11:
1. On the facts and in the circumstances the Ld. CIT(A) is not justified in deleting the additions of Rs. 85,27,214/- made by A.O. which was paid to the Govt. as per the bye laws of the assessee society and holding the as non taxable.
2. It is prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. restored.
(i) Assessee has raised the following grounds in ITA No. 440/CHD/2017 for the AY 2011-12:
1. That in the facts and circumstances of the Ld. CIT(A) is not justified in upholding the reopening of the case under section 147 read with section 148 of the Income Tax Act, 1961.
2. That in the facts and circumstances of the case the Ld. CIT(A) is not justified upholding the addition of Rs. 23027546/-, made to the taxable income of the assessee treating the alleged income over expenditure to be the income of the assessee appellant.
Fact of the mater is that the surplus if any belongs to the government and as such is not the income of the assessee appellant.
3. That the order of the Ld. CIT(A) is bad in law and facts.
(j) Revenue has raised the following grounds in ITA No. 521/CHD/2017 for the AY 2011-12:
1. On the facts and in the circumstances the Ld. CIT(A) is not justified in deleting the additions of Rs. 89,42,065/- made by A.O. which was paid to the Govt. as per the bye laws of the assessee society and holding the as non taxable.
2. It is prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. restored.3
(k) Assessee has raised the following grounds in ITA No. 441/CHD/2017 for the AY 2013-14:
1. That in the facts and circumstances of the case the Ld. CIT(A) is not justified upholding the addition of Rs. 40182373/-, made to the taxable income of the assessee treating the alleged income over expenditure to be the income of the assessee appellant.
Fact of the mater is that the surplus if any belongs to the government and as such is not the income of the assessee appellant.
2. That the order of the Ld. CIT(A) is bad in law and facts.
(l) Revenue has raised the following grounds in ITA No. 522/CHD/2017 for the AY 2013-14:
1. On the facts and in the circumstances the Ld. CIT(A) is not justified in deleting the additions of Rs. 1,11,95,627/- made by A.O. which was paid to the Govt. as per the bye laws of the assessee society and holding the as non taxable.
3. Identical effective grounds have been raised by the Assessee and also by the Revenue in all their appeals for the all the Assessment years 2007-08 to 2011-12 and for the Assessment Year 2013-14.
4. Since the issue of the income taxable in Assessee as well as the Revenue appeals are the same, we are taking up ITA No. 436/CHD/2017 of the assessee & ITA No. 517/Chd/2017 of the Revenue as the lead cases wherein following grounds have been raised :
5. That in the facts and circumstances of the case the Ld. CIT(A) is not justified upholding the addition of Rs. 64,20,238/-, made to the taxable income of the assessee treating the alleged income over expenditure to be the income of the assessee assessee. Fact of the mater is that the surplus if any belongs to the government and as such is not the income of the assessee appellant ( ITA No. 436/CHD/2017 of the assessee)
6. On the facts and in the circumstances the Ld. CIT(A) is not justified in deleting the additions of Rs. 31,37,184/- made by A.O. which was paid to the Govt. as per the bye laws of the assessee society and holding the as non taxable (ITA No. 517/Chd/2017 of the revenue) Further the assessee has taken the issue of reopening at ground no. 1 for the Assessment Years 2007-08 to 2011-12.
2. That in the facts and circumstances of the Ld. CIT(A) is not justified in upholding the reopening of the case under section 147 of the Income Tax Act, 1961.
5. Firstly we shall deal with the issue of reopening for the Assessment Years 2007-08 to 2011-12 .
46. Brief facts of the case are that the assessee is a society, registered under the Society Registration Act,1860 on 27.08.2002. The application of the assessee for registration under section 12AA of the Income Tax 1961 was rejected on 29/11/2013 by CIT(A) Shimla, holding that the activities carried on by the society were not for the benefit of general public utility but was for providing infrastructure facilities to State Government (Excise & Taxation Dept.). The assessee was preparing income and expenditure statement and was showing the surplus of income over expenditure in its returns.
7. Since the registration under section 12AA was rejected, the Assessing Officer issued notice on 08/01/2014 under section 148 r.w.s 147 of the Income Tax Act, 1961 for taxing the excess of income over expenditure of the amount of Rs. 64,20,238/-, Rs. 64,05,556/ -, Rs. 61,71,585/- and Rs. 1,29,37,365/- for the assessment year 2007-08, 2008-09, 2009-10 & 2010-11 respectively. The assessee has filed objection to the issue of notice under section 148 on 26/10/2014 which have been duly addressed by the Assessing Officer on 17/12/2014. The assessee was asked to furnish the details of the society and the generation of funds to run the society. The assessee was supplied with copy of the reasons recoded for re- opening the cases. The assessee recasted the income and expenditure statements and filed returns at NIL income by debiting the surplus as 'other expenses payable'.
8. Furtherance to the proceedings, the assessee replied on 21/12/2014 that only the real income as defined under section 2(31) of the Income Tax Act 1961 needs to be assessed as laid down by the Hon'ble High Court of Andhra Pradesh 174 ITR 682 and since, no real income has accrued to the assessee, no taxability lies with the assessee society.
9. The Assessing Officer after rebutting the explanation of the assessee held that the assessee's income would be taxable as the assessee has not granted registration under section 12AA and made addition on the following two grounds.
1. An amount of Rs. 64,20,238/- was added to the income of the assessee as the excess of income over expenditure.
2. An amount of Rs. 31,57,184/- which was deposited with the Treasury holding that this expenditure was not related to the business activity of the 5 assessee but only diversion of the real income of the society to the State Government.
10. Before the Ld. CIT(A), the assessee objected to issuance of Section 148 and contested the reopening on the grounds that the assessee had no taxable income in view of the clauses laid down in the memorandum of association of the assessee society and also keeping in view the fact that entire excess of income over the expenditure belongs to State Government.
11. The Ld. CIT(A) upheld the action of Assessing Officer so far as the section 148 is concerned relying on the judgment of Apex Court in case of ITO Vs. Lakhmani Mewal Dass [1976] 3 SCC 757 and decision of High Court of HP in the case of Ankita Deposits & Advances (P) Ltd. Vs. CIT [2010] 193 Taxman 36 (HP). The Ld. CIT(A) further held that the Assessing Officer has duly recorded the reasons after due application of mind and complied with all the provisions of the Act. The Ld. CIT(A) also held that since the assessee has shown the surplus of income over expenditure in the income and expenditure statement and the fact that the assessee's registration under section 12AA has been rejected by the authorities the Assessing Officer had reason to believe that the income has escaped assessment.
12. Before us, the Ld. AR argued vehemently that there is no application of mind by the Assessing Officer and relied on the submissions made before the Ld. CIT(A).
13. The Ld. DR relied upon the order of the Ld. CIT (A).
14. We have perused the matter and found out that the Assessing Officer has rightly issued notice under section 148 owing to rejection of registration under section 12AA and by recording an appropriate reason. The reasons were also duly supplied to the assessee as per the assessee's request. Since the action of the Assessing Officer in consonance with the Act and procedures we decline to interfere with the order of the Ld. CIT(A) confirming the action of issuing the notice under section 148.
15. The appeal of the assessee on this ground is dismissed.
616. The second ground relates to the taxability of the surplus income over expenditure to be the income of the assessee.
17. During the assessment proceedings the Assessing Officer after rebutting the explanation of the assessee held that the assessee's income would be taxable as the assessee has not granted registration under section 12AA and made addition on the following two grounds.
1. An amount of Rs. 64,20,238/- was added to the income of the assessee as the excess of income over expenditure.
2. An amount of Rs. 31,57,184/- which was deposited with the Treasury holding that this expenditure was not related to the business activity of the assessee but only diversion of the real income of the society to the State Government.
18. Aggrieved the assessee file appeal before the Ld. CIT(A). The Ld. CIT(A) after going through the activities of the assessee society held that the 20% amount of the fee collected which has been paid upfront to the State Government be not treated as income of the assessee as this amount has been paid to the State Treasury and also held that the remaining 80% amount of the fee collected which partook the character of income which the assessee had the freedom to apply for the objectives of the society be treated as income of the assessee.
19. Aggrieved with the order of the Ld. CIT(A), the assessee filed appeal against the confirmation of the 80% of amount of the fee collected by the assessee and the Revenue has filed appeal against the deletion of the 20% of amount of fee collected. Since the issue involved in the appeal of the Assessee and the Revenue pertains to the taxability of the fees collected and paid by the assessee to the Govt. Treasury the issue is dealt in its entirety.
20. Before us, the Ld. AR relied on the submissions made before the Ld. CIT(A) while the Ld. DR relied on the order of the CIT(A), the order of the Assessing Officer and also argued that the authorities which were created by the Government are not Government Authorities. In that sense he argued that the assessee which was a creation of the Government cannot be treated as Government perse.
21. To deal with this issue, the memorandum of association of the society, the 7 functions performed by the society, the management, the sources of revenue for the society, the expenditure incurred, and how the surplus was utilized, whether the surplus was transferred to the Government account or not are to be examined in detail in order to determine whether the surplus can be treated as income taxable in the hands of the assessee or not.
22. Brief facts of the case are that the assessee is a society registered with Registrar of societies vide No. 140/2004, dated 23/08/2004. The assessee society is manning all the multi purpose barriers in the state of Himachal Pradesh and in respect of all goods which cross the barrier to come into Himachal or which go out of Himachal the same are to be declared at the multi purpose barrier as per the provision of Sec 34 of the H.P. VAT Act, 2005 read with the H.P. VAT Rules of, 2005. Against the said declarations a form bearing No. ST XXVI-A is issued to the person declaring the goods. Till the year 2009 a user fee of Rs.5 per form was charged by the assessee society and which was enhanced to Rs.10 as per the letter dated 18/05/2009. As per the clauses of 8.2 of the bye laws of the memorandum the assessee used to deposit. Rs.1 Per declaration with the State Treasury prior to 2009 which was enhanced to Rs.2 Per declaration after 2009. The objects of the society as enumerated in the memorandum of association are reproduced as under-
To facilitate the general public dealers canying goods and crossing the , barriers established by the State Govt, and also to diffuse awareness amongst the general public dealers about the Sales Tax laws.
To utilize the information technology for deeper systematic reforms in tax administration by creation of a separate entity property geared to provide supportive role to the Department in creation of data-bank (dealer wise/commodity wise, Circle wise and Barrier wise), in transmission of information and establishment of client server environment.
To back up the computerization requirement of the Department of Excise and Taxation Department and for this purpose develop infrastructure therefore both in terms of software as well as hardware.
To facilitate adoption of STXXVI-A form in a computer friendly format and generate funds by rendering this services to the dealers so as to make it is a self sustaining activity.
To carry out all such activities as are envisaged in section 20 of the Society Registration Act, 1860, which are in the interest of society.
To derive optimum benefits from fully networked computerization in terms of providing computerized functioning of Multi-purpose Barriers, issuance of computerized receipts, on-line networking to facilitate sharing of date between all officers/assessing authorities in the Department and develop other related infrastructures incidental thereto.
8The Society shall for this purpose, generate receipts in lieu of providing these services at the Multi purposes Barriers, and utilize the same to fulfill the objectives of the Society.
23. The details of the background of the society, the functional requirement the operational model, the accounting structure and ultimate payment to the exchequer of the Government is examined.
24. The complete details of the Governing body, organizational structure, funds and operation of accounts are enumerated as under:
RULES AND REGULATIONS OF THE SOCIETY EXCISE AND TAXATION TECHNICAL SERVICE AGENCY,H.P.
1. SHORT TITLE These Rules and regulations may be called the Rules and Regulations of the Excise and Taxation Technical Service Agency, Himachal Pradesh (hereinafter called the "Rules").
2.INTERPRETATION Unless it is inconsistent with the subject or context:
THE "Society" means the "EXCISE AND TAXATION
TECHNICAL. SERVICE AGENCY, HIMACHAL
PRADESH,"
'Corpus of funds" means the amount generated pursuant to issuance of computerized STXXVI-A form at the Barrier(s)/services rendered.
"Month" means Calendar month.
"Year" means the period commencing from the 1st April and ending with 31st march of the Calendar year.
"In writing" means including printing, lithography and typewriting:-:
"Department" means the Excise & Taxation Department H.P
3.MEMBERS For the purpose of registration of the Society, the number member is declared to be seven, but the Society may at ai time increase the number.
4.ORGANISATI0NAL STRUCTURE The Society shall have two tier structure as under:
i) Governing Body.
ii) Executive committee.
5.GOVERNING BODY
The Governing Body shall consists of the following seven members including the Chairman and the Member Secretary:
1. Principal Secretary, Excise and Taxation, H.P. Govt. Chairman
2. Secretary(Fin.) /Director Public Enterprises and Institutional Finance H.P.Govt. Member 9
3. Commissioner, Excise &Taxation, H.P. Member
4. Managing Director, Electronic Dev. Corporation, H.P. Member
5. Technical Director/ Principal System Analyst, National Informatics Centre. HP,Shimla-2. Member
6. Additional Commissioner, Excise & Taxation (hqr) Member 7 Dy. Controller(F&A) Excise & Taxation Department,H.P. Member-Secy.
1. All the above official members shall be the ex-officio members of the governing Body.
4. The Governing Body shall be empowered to co-opt a maximum of two members to act as experts on the subject, if required.
5. The Chairman shall preside over the meeting of the Governing Body .In his absence, the members present shall elect a Chairman for the meeting.
6. Not less than fifteen clear days notice of every meeting of the Governing Body shall be given to each members at his address.
7. The Governing Body shall meet at least two times every year.
8. Two third members of the Governing Body present shall constitute the quorum at any meeting of Governing Body.
9. Each member of the Governing Body, except the co-opted members if any, including the Chairman shall have one vote and majority decision shall prevail. In case of equality of votes on any question, the Chairman shall have the casting vote.^
10.The Governing Body shall carry out the following functions:-
a. To carry out the objectives of the Society as set forth in the Memorandum of Association of the Society.
b. To manage the affairs and hinds of the Society and exercise all powers of the Society in accordance with rules of the Society.
c To prescribe rates/tees for the services provided to- the
merchants/traders/ contractors/ manufacturers/ dealers/
industrialists. /
d. To approve the Annual Action Plan/Annua! Budget and list
of activities submitted by the Executive Committee of the
Society and periodically monitor the same.
e. To acquire for the Society assets., moveable or immovable,
which are necessary and incidental for the purpose on such terms and conditions, as it may deem fit, including-by way of purchase or entering into agreements (MOUs).10
f. To invest fund that may be required/acquired by the Society on such terms and conditions as may be deemed advisable in the interest of the Society.
g. To approve the appointment of Auditor for the purpose of carrying out the audit of accounts of the Society annually and certification of accounts so prepared on such terms and conditions as may be deemed necessary.
h. To approve the Annual Accounts which shall consists of Receipt and Payment Account, Income and Expenditure Accounts and Balance Sheet of the Society.
i. To contract professionals and outsource the activities as may be necessary to carry out the objects of the Society and discharge its obligations as may be considered appropriate.
j. Such contractual engagements as stated above, should not exceed a duration of 6 months and a contractual agreement should be signed between the Collaborating Agency and the authorized signatory of the Executive Committee.
11. The Governing Body shall constitute an Executive Committee and delegate to it such powers and functions, as it may consider fit.
10. All business discussed or decided at a meeting of the Governing Body shall be recorded in a proceeding book, which shall be signed by the Chairman of The meeting and the members present.
4. EXECUTIVE COMMITTEE The Governing Body shall constitute an Executive Committee for the efficient management of the functioning of the Society.
1. The Executive Committee shall comprise of" the f o l l o w i n g members:
1 Commissioner, Excise & Taxation, H.P. Chairman 2 Addl. / Joint Secretary (Fin.) Govt. of H.P. Member 3 Additional Commissioner (Admn), Excise & Member Taxation 4 Additional Commissioner (TRU), Excise & Member Taxation 5 Asst. Excise & Taxation Commissioner, Solan Member 6 Asstt. Excise & Taxation Commissioner, Kangra Member 7 Asstt. Excise & Taxation Commissioner, Bilaspur Member 8 Asstt. Excise & Taxation Commissioner, Nahan Member 11 9 Dy. Controller (F&A), Excise & Taxation Member- Secy Department, H.P.
2.The Executive Committee shall be responsible for:
1. The implementation of the decisions taken by the Governing Body.
2. Preparing proposals for activities to be taken up by the Society and submitting the same to the Governing Body for approval.
3. Maintenance of assets, both moveable and immovable of the Society.
4. Maintenance of records related to assets of the Society and preparation of monthly cash-account, Trial balance, periodical reports and annual accounts (Receipt and Payment Accounts, Income and Expenditure Account and Balance-Sheet) etc.
5. The Executive Committee shall not be empowered to enter into any contractual agreement or to create any financial obligation of recurring nature or otherwise without the specific and prior approval of the Governing Body.
3. The Executive Committee shall meet at least once in every quarter to take stocks of the activities of the Society.
4. It shall keep record of all such meetings in the prescribed format and send minutes of such meetings to the Governing Body. [FUNDS OF THE SOCIETY There shall be a Corpus of Funds into which shall be credited the following amount:
i) Amount collected pursuant to issuance of
computerized S.T.XXVI-A form at
Barrier(s)/services rendered.
ii) Interest receipt.
8. ACCOUNT OF ST XXVI-A FORM
1. The computer generated ST XXVI-A form bearing serial number shall be issued at the Barrier(s) and the E.T.O/ In charge Barrier shall maintain proper account of the said forms under the supervision of concerned Assistant Excise and Taxation Commissioner of the District.
2. E.T.O/ In charge Barrier will deposit Rs. 1/- oer form(out of the amount of Rs.5/- per form as at present or as per rates prescribed from time to time in respect of computerized ST-XXM-A form/services rendered)/ in the relevant receipt head of the Department as per practice hitherto fore.
3. The balance amount after depositing Rs. l/-per form will be credited to the Funds of the Society and deposited on day to day basis in a Saving Bank Account to be opened in respect of each barrier(s) i with the nearest Scheduled Bank/' Cooperative Bank.
4. Keeping in view the requirement of the funds, the Executive Committee can authorize the Assistant Excise and Taxation Officer/In charge Barrier concerned to invest the amount in excess of their requirement in Short Term deposit lest there be any loss of interest.
5. Notwithstanding any thing contained above, the amount collected shall be availahle fox-being utilized in the entire State for the purpose set out and as per approval of the Governing Body.12
9. OPERATION OF ACCOUNT
1. The Saving Bank Account shall be operated under the joint signatures of Assistant Excise and Taxation Commissioner of the District concerned and the respective In charge of the Barrier. However, day to day deposit into the 'Corpus of funds' including maintenance of accounts(Cash Book, ledgers and allied records) shall be the responsibility of In charge of the Barrier concerned.
10.OBJECT OF EXPENDITURE
1. From out of the Corpus of fund, the expenditure for the specified purposes as indicated hereunder shall be met out at the level of concerned Assistant Excise and Taxation Commissioner/Incharge Barrier after observing all codal formalities.
i) Cost of two part pre pria.ed computer stationery al
the rates to be approved by the Commissioner,
Excise and Taxation.
ii) Cost of consumables for data storage and printing.
iii) Electricity charges.
iv) Expenditure for carrying out the data entry work
at the rates as approved by the Governing Board.
v) Cost of computer hardware as approved by the
Governing board.
Expenditure on items as at Sr. No.10.1(iv) and 10.1(v) ibid and other than that not mentioned above but which are considered incidental for the purpose of the objects shall be made only with the explicit and prior approval of the Governing Body.
2. After meeting the expenses towards the objectives for the approved purposes listed above and accounting for the liabilities accrued and projected, the surplus amount, if anyshall be deposited in the receipt head 0040-Sales Tax on yearly basis on approval of the Governing Body.
11. STORE/STOCK ACCOUNT
1. A separate account of fixed assets acquired out of the Corpus of Fund shall be maintained at the level of Barrier In charge and stock verification carried out annually by the concerned Assistant Excise and Taxation Commissioner.
12. ACCOUNT OF CONSUMABLES I. Consumable items purchased out of the Corpus of fund shall also be accounted for as to its receipt ,disposal and balance at the level of concerned Barrier In charge.
13.ACCOUNTS AND AUDIT
1. The Assistant Excise and Taxation Commissioner of the -concerned Districts shall maintain such account and other records connected with accounts in such form or manner as may be directed by the Chairman. Executive Committee.
2 The Society shall prepare and submit returns and statements as the Chairman, Executive Committee may from time to time specify.
3. The proprietary audit of the accounts of the Corpus of Funds shall be carried out by the Internal Finance Wing of the Department who shall also be compiling the final account which shall be got certified from the Chartered Accountant appointed by the Governing Body on such terms and conditions as it may deem fit and auditor's report shall be placed before the Governing Body annually.
14.ANNUAL REPORT 13 Draft Annual Report on the working of the Society shall be prepared by the Executive Committee, and shall be placed before the Governing Body for consideration and approval. Copies of the approved Annual Plan shall be supplied to the members of the Society and other concerned.
15.MISCELLANEOUS
1. No addition, alteration or amendment shall be made to the Rules and Regulations of the Society in force, except by a resolutions passed at a meeting of the Governing Body by a two third majority of the members present.
2. In case the Society is wound up or dissolved, the assets acquired by the Society and remaining after clearing of all debts and liabilities, shall not vest in the members of the society.
3. The Addl.Excise and Taxation Commissioner,(Hqrs)' Dy.Controller, (Finance and Accounts) of this department, shall be the authorized signatories to sign for and on behalf of this society.
4. All the provisions of the Socities Registration Act, 1860 shall apply to the Excise and Taxation Technical Service Agency.
This is to certify that the above is a Certified Copy of the Rules and Regulations of the Excise and Taxation Technical Service Agency.
14MEMORANDUM OF ASSSOCIATION H.P.EXCJSE AND TAXATION TECHNICAL SERVICE AGENCY 1 Name The name of the Society will be H.P. Excise and Taxation Technical Service Agency.
2 Registered The registered office of the Society will be at Shimla in the State of Himachal Pradesh.
3 Address of the Registered Office The address of registered office of the Society will be as under:
Excise and Taxation Technical Service Agency, Block No. 30, S.D.A. Complex, Kasumpti, Shimla- 171009, Himachal Pradesh 3.1 The area of operation of the Society shall be the State of Himachal Pradesh 4 Objectives The objectives of the society shall be:
* To facilitate the general public / dealers carrying goods and crossing the barriers established by the State Govt. and also to diffuse awareness amongst the general public/dealers about the sales tax laws.
* * To utilize the information technology for deeper systematic reforms in tax administration by creation of a separate entity properly geared to provide supportive role to the Department in creation of data-bank(dealer wise/commodity wise, Circle wise avid Barrier wise),in transmission of information and establishment of client server environment. * To back up the computerization requirement of the Department of Excise & Taxation Department and for this purpose develop infrastructure therefore both in terms of software as well as hardware.
* To facilitate adoption of STXXVI -A form in a computer friendly format and generate funds by rendering this services to the dealers so as to make it a self sustaining activity.
* To carry out all such activities as are envisaged in section 20 of the Society Registration Act, 18 50,which are in the interest of society.
* To derive optimum benefits from Fully networked computerization in terms of providing computerized functioning of Multi-purpose Barriers, issuance of computerized receipts, on-line networking to facilitate sharing of data between all Offices/Assessing Authorities in t h e Department and develop other related infrastructures incidental thereto. The Society shall for this purpose, generate receipts in lieu of providing these services at the Multi Purposes Barriers, and utilize the same to fulfill the objectives of the Society.
And in furtherance of the above objectives:
i) Develop, create, manage and maintain infrastructure for providing such services.
Pursuant to the aforesaid objects, the Society will use / have control over the assets created by it and will also:
i) Draw, accept, make, endorse, discount and deposit cheques and other negotiable instruments.
ii) Impose and recover fees and charges for the services rendered by it.
iii) Utilize and deal with moneys credited to the Society as approved by the Governing Body.15
iv) Take assistance from or collaborate with other institutions of State/Central Govt. e.g. N.I.C; State Infrastructure Board; R.E.C; APTECH and Sidhi Vinayak etc. for purposes of developing computerization infrastructure at designated barriers.
v) Purchase, hire, take on lease, exchange or otherwise acquire a property moveable or immovable, which may be necessary or convenient for the purpose of the Society and construct, alter and /or maintain such buildings and works as may be necessary for carrying out the objects of the Society.
vi) Make rules and bye-laws for the smooth conduct of the affairs of the Society and add to, amend, vary or rescind them from time to time.
vii) To do all such other things as the Society may
consider necessary, incidental or conducive for the
attainment of the above objectives.
The names, addresses, designations and occupations of the members of the first Governing Body, who shall hold office till a Governing Body is duly constituted under the Bye-laws of the Society are as under:
1. Sh. T.G.Negi, IAS, Principal Secretary, Excise and Taxation, HP.
2. Sh. Anil Kumar Khachi IAS, Secretary(Finance) / Director Public Enterprises and Institutional FinanceJH.P. 3 Sh. Narinder Chauhan IAS, Commissioner, Excise and Taxation, H.P.
4. Sh. K.K. Gupta IFS, Managing Director, Electronic Dev. Corporation, H.P.
5. Sh. Ajay Singh Cbahal, Principal System Analyst, National Informatics Centre, HP,Shimla-2.
6. Sh. A.S.Rathor HAS, Additional Commissioner, E&T,(Admn.)
7. Sh. Gian Raita Dy. ControIIer(F&A) Excise «& Taxation Department,H.P.
25. The Ld. AR further argued and submitted that, on going through the entire Rules and Regulation the important points to determine the issue at hand can be summarized which have been detailed below:
The assessee-society was registered under the Society Registration Act,1860 on 27.08.2002. The object of the Society so incorporated in the memorandum of of association inter-alia includes the followings:-
"To facilitate the general public/dealers carrying goods and crossing the barriers established by the State Govt, and also to diffuse awareness amongst the general public/dealers about the sales tax laws.
To utilise the information technology for deeper systematic reforms in tax administration by creation of a separate entity properly geared to provide supportive role to the Department in creation of data bank 16 (dealer wise/commodity wise. Circle wise and Barrier wise), in transmission of information and establishment of client server environment.
To back up the computerization requirement of the Department of Excise & Taxation Department and for this purpose develop infrastructure therefore both in terms of software as well as hardware.
To facilitate adoption of STXXVI-A form in a computer friendly format and generate funds by rendering this services to the dealers so as to make it a self sustaining activity.
To earn out all such activities as are envisaged in section 20 of the Society Registration Act 1860, which are in the interest of society.
To derive optimum benefits from fully networked computerization in terms of providing computerized functioning of Multi-purpose Barriers, issuance of computerized receipts, on line networking to facilitate sharing of data between all Offices/Assessing Authorities in the Department and develop other related infrastructures incidental thereto. The Society shall for this purpose, generate receipts in lieu of providing these services at. the Multi-purposes Barriers, and utilize the same to fulfill the objectives of the Society.
And in furtherance of the above objectives:
i) Develop, create, manage and maintain infrastructure for providing such services."
b). That primary funds of the Society were 10 be augmented by collecting statutory levy as per Section 34 of the H.P. VAT Act read with rules 61 and 62 of the H.P VAT Rules in respect of declaration to be made by the dealers coming in or going out of the State of Himachal Pradesh in form ST-XXVI-A as per para-8 of the bye-laws. Initially cost of per declaration as per the rules set by the Government of Himachal Pradesh was Rs.5/- and upon the collection of the same Rs.l/- was immediately to go to the Govt, and thereafter by virtue of bye- laws being 10.2 after meeting out expenditure remaining amount had to be transferred to the State government in sales tax head. Para-8 and 10.2 of the bye- laws are being reproduced infra for your kind perusal and read) reference:-
"8. ACCOUNT OF ST XXV1-A FORM
1. The computer generated STXXVI-A form bearing serial number shall be issued at the Barrier(s) and the E.T.O/In charge Barrier shall maintain proper account of the said forms under the supervision of concerned Assistant Excise and Taxation Commissioner of the District.
2. E.T.O/ln charge barrier will deposit Rs.l/- per form (out of the amount of Rs.5/- per form as at present or as per rates prescribed from time to time in respect of computerized ST-XXVI-A form/services rendered)/ in the relevant receipt head of the Department as per practice hitherto fore.
3. The balance amount after depositing Rs. 1 - per form will be credited to the Funds of the Society and deposited on day to day basis in a Saving Bank Account lo be opened in respect of each barrier(s) with the nearest Schedule Bank / Cooperative Bank.
4. Keeping in view the requirement of the funds, the Executive Committee can authorize the Assistant Excise and Taxation Officer / In Charge Barrier concerned to invest the amount in excess of their requirement in Short Term Deposit test there be any loss of interest.
5. Notwithstanding any thing contained above, the amount collected shall be available for being utilized in the entire State for the purposes set out and as" per approval of the Governing Body., 17 10.2 After meeting the expenses towards the objectives for the approved purposes listed above and accounting for the liabilities accrued and projected, the surplus amount, if any, shall be deposited in the receipt head 0040 Sales Tax on yearly basis on approval of the Governing Body."
26. In order to examine the functioning of the society vis-à-vis H.P. VAT Act 2005, the relevant provisions of H.P. VAT Act pertaining to establishment or barriers and inspection of goods in transit are examined. The provisions are as under:
Section 34(1) of the VAT Act 2005 mainly deals with establishment of the check post and their management in section 34(2).
Establishment of check posts or barriers and inspection of goods in transit.
(1) If, with view to preventing or checking evasion of tax under this Act, the State Government considers it necessary so to do, it may, by notification direct the establishment of a check post or the erection of a barrier or both at such places as may be notified.
(2) The owner or person in-charge of a goods carriage or vessel shall carry with him a goods carriage record, a trip sheet or a log book, as the case may be, and a tax invoice or a bill of sale or a delivery note containing such particulars as may be prescribed, in respect of such goods, meant for the purpose of business, and produce the same before an officer in-charge of a check post or barrier or any other officer not below the rank of an Excise and Taxation Inspector checking the vehicle or vessel at any place.
(2-A) The owner or the person-in-charge of a goods vehicle or vessel entering the limits of the State or leaving the State limits shall, for the purposes of this section, only pass through and stop at the nearest check post or barrier, failing which such owner or person-in-charge shall be liable to pay a penalty, to be imposed by any officer referred to in sub-section (2) equal to ten percentum of the value of goods or ten thousand rupees whichever is greater and such penalty shall be in addition to any other penalty provided for in this section.
(3) At every check post or barrier or at any other place when so required by any officer referred to in sub-section (2), the driver or any other person-in-charge of the [goods carriage] or vessel, shall stop the vehicle or vessel, as the case may be, and keep it stationary as long as may reasonably be necessary, and allow the officer-in-charge of the check post or barrier or the aforesaid officer to examine the contents in the vehicle or vessel and inspect all records relating to the goods carried which are in the possession of such driver or other person-in- charge, who shall also furnish such other information as may be required by the aforesaid officer, and if considered necessary such officer may also search the [goods carriage] or vessel and the driver or other person-in-charge of the vehicle or vessel or of the goods.
(4) The owner or person-in-charge of a goods carriage or vessel entering the limits of State or leaving the State limits shall also give in triplicate a declaration (generated electronically or otherwise) containing such particulars of goods carried in such vehicle or vessel, as the case may be, before the officer-in-charge of the check post or barrier and shall produce the copy of the said declaration duly verified and returned to him by the said officer or before any other officer referred to in sub-section (2) at the time of checking under this section:
Provided that where a goods carriage or vessel bound for any place outside the State passes through the State, the owner or person-in-charge of such vehicle or vessel shall furnish, in duplicate, to the officer-in-charge of the check post or barrier of his entry into the State a declaration in the prescribed form and obtain from him a copy duly verified. The owner or person in-charge of the goods 18 carriage or vessel, as the case may be, shall deliver within seventy two hours the said copy to the officer-in-charge of the check post or barrier at the point of its exit from the State, failing which he shall be liable to pay a penalty to be imposed by the officer-in-charge of the check post or barrier of the entry equal to fifty percentum Provided further that where the goods carried by such vehicle are, after their entry into the State, transported outside the State by any other vehicle or conveyance, the burden of proving that the goods have actually moved out of the State, shall lie on the owner or person-in-charge of the vehicle or vessel;
Provided further that no penalty shall be imposed unless the person concerned has been given a reasonable opportunity of being heard.
(5) At every station of transport of goods, bus stand or any other station or place of loading or unloading of goods, other than a rail head or a Post Office, when so required by the Commissioner, or any person appointed to assist him under sub-
section (1) of section 3, the driver or the owner of goods carriage or the employee of a transport company or goods booking agency shall produce for examination transport receipt and all other documents and account books concerning the goods carried, transported, loaded, unloaded, consigned or received for transport (maintained by him in the prescribed manner). The Commissioner or the person so appointed shall, for the purpose of examining that such transport receipts or other documents or account books are in respect of the goods carried, transported, loaded, unloaded, or consigned or received for transport, have the powers to break open any package or packages of such goods.
(6) If the officer-in-charge of the check post or barrier or other officer as mentioned in sub-section (2) has reasons to suspect that the goods under transport are meant for business and are not covered by proper and genuine documents as mentioned in subsection (2) or sub-section (4), as the case may be, or that the person transporting the goods is attempting to evade payment of tax due under this Act, he may, for reasons to be recorded in writing and after hearing the said person, but subject to pervious approval of the Excise and Taxation Officer Incharge of the barrier order the unloading or detention of the goods, for such period as may reasonably be necessary and shall allow the same to be transported only on the owner of goods or his representative or the driver or other person in-charge of the goods carriage or vessel on behalf of the owner of the goods, furnishing to his satisfaction a security in the form of cash or bank guarantee or bank draft, equal to twenty-five percentum of the value of the goods.
Provided that where any goods are detained a report shall be made immediately and in any case within twenty four hours of the detention of the goods by the officer detaining the goods to the Assistant Excise and Taxation Commissioner incharge of the District or the Excise and Taxation Officer incharge of the District or barrier, as the case may be, seeking the latter's permission for the detention of the goods for a period exceeding twenty-four hours, as and when so required and if no intimation to the contrary is received from the latter the former may assume that his proposal has been accepted.
(7) The officer detaining the goods shall record the statement, if any, given by the owner of the goods or his representative or the driver or other person-in-charge of the goods carriage or vessel and shall require him to produce proper and genuine documents as referred to in sub-section (2) or sub-section (4), as the case may be, before him in his office on a specified date on which date the officer shall submit the proceeding along with the connected records to such officer as may be authorised in that behalf by the State Government for conducting necessary enquiry in the matter. The said officer shall, before conducting the enquiry, serve a notice on the owner of the goods and give him an opportunity of being heard and if, after the enquiry, such officer finds that there has been an attempt to evade the tax due under this Act, he shall, by order, impose on the owner of the goods a penalty equal to twenty-five 19 percentum of the value of the goods and in case he finds otherwise, shall order the release of the goods.
(8) If the owner of the goods or his representative or the driver or other person-in-charge of the goods carriage or vessel does not furnish security or does not execute the bond as required by sub- section (6) within ten days from the date of detaining the goods or goods carriage or vessel, the officer referred to in that sub- section may order further detention of the goods and in the event of the owner of the goods not paying the penalty imposed under sub-section (7) within twenty days from the date of the order imposing the penalty, the goods detained shall be made liable to be sold by the officer, who imposed the penalty, for the realisation of the penalty by public auction as may be prescribed . If the goods detained are of a perishable nature or subject to speedy or natural decay or when the expenses of keeping them in custody are likely to exceed their value the officer -in-charge of the check post or barrier or any other officer referred to in sub-section (2), as the case may be, shall immediately sell such goods or otherwise dispose them of. The sale proceeds shall be deposited in the Government treasury and the owner of the goods shall be entitled to only the balance amount of sale proceeds after deducting the expenses and other incidental charges incurred in detaining and disposing of the goods.
(9) The officer detaining the goods shall issue to the owner of the goods or his representative or the driver or the person-in -charge of the goods carriage or vessel receipt specifying the description and quantity of the goods so detained and obtain an acknowledgement from such person or if such person refuses to give an acknowledgment, record the fact of refusal in the presence of the two witnesses.
(10) If the order of detention of goods under sub-section (6) or of imposition of penalty under sub-section (7) or sub-section (8) is in the meantime set aside or modified in appeal or other proceedings, the Officer detaining the goods and imposing the penalty, as the case may be, shall also pass consequential orders for giving effect to the orders in such appeal or other proceedings as the case may be.
(11) No dealer or any person, including a carrier of goods or agent of a transport company or booking agency acting on behalf of a dealer, shall take delivery of, or transport, from any vessel, station, airport or any other place, whether of similar nature or otherwise, any consignment of goods other than personal luggage or goods for personal consumption, the sale or purchase of which is taxable under this Act, except in accordance with such conditions as may be prescribed with a view to ensuring that there is no evasion of the tax imposed by or under this Act:
Provided that no place which is a railhead or post-office shall be so notified by the State Government.
(12) Where any person incharge in goods carriage or vessel or any other transporter fails to give information as required under subsection (2) about the consignor or consignee of the goods, within such time as may be required by the Officer-Incharge of the check post or barrier or other officer as mentioned in sub-
section (2), or transports the goods without documents or with ingenuine documents, [or presents bills for declaration at the barrier without the consignment purported to be transported under those bills] any officer not below the rank of Excise and Taxation Officer checking the goods shall, after affording such owner or person incharge or such transporter a reasonable opportunity of being heard, direct him to pay by way of penalty, equal to ten percentum of the value of such goods.] 20 Provided that the owner or the person-in-charge of goods vehicle or vessel leaving, 1"or entering" the State limits and who has furnished full declaration of goods carried in vehicle in Form VAT XXVI-A electronically through the official web-site of the department shall not be required to stop the vehicle or vessel, for the purpose of this section, at the check-post or barrier; Provided further that the officer-in-charge of the check-post or barrier or any other officer not below the rank of Excise and Taxation Inspector posted at the check-post or barrier, if considers necessary, may stop the vehicle or vessel for the purpose of this section, the owner or the person-in-charge of the vehicle or vessel shall stop it and keep it stationary as long as may reasonably be necessary, failing which such owner or person-in-charge shall be liable to pay penalty to be imposed by such officer equal to ten percentum of the value of goods or ten thousand rupees whichever is higher.
Central Act No. 59 of 1988Explanation-- I.-In this section the expression 'goods carriage' has the same meaning as is assigned to it in clause (14) of section 2 of the Motor Vehicles Act, 1988.
Explanation-- II.- For the purposes of sub-section (2), the goods meant for the purposes of personal consumption shall not be construed as meant for the purposes of business.
Explanation-- III.- For purposes of sub-section (7), service of notice on the representative of the owner or the driver or other person-in-charge of the goods carriage or vessel shall be deemed to be a valid service on the owner of the goods.
Registration and submission of returns by carrier of goods and agent of transport companies.
35. (1) For carrying out the purposes of section 34, every carrier of goods, agent of transport company and booking agency having a place of business in the State of Himachal Pradesh and transporting or clearing or forwarding goods on behalf of a dealer, shall be required to obtain a certificate of registration, in the prescribed manner, from the Assessing Authority of the area in which it has a place of business, on payment of such fee as may be prescribed and on furnishing of a security to the satisfaction of the said Authority in the manner as may be prescribed.
(2) Every agency, referred to in sub-section (1), shall submit to the Assessing Authority such returns of the goods transported, cleared or forwarded by it, by such dates and in such manner as may be prescribed.
27. From the reading of Rules and Regulations of the assessee society, Memorandum of Association of the society, and HP VAT Act 2005 the following points emerged:
The assessee-society was registered under the Society Registration Act,1860 on 27.08.2002. The object of the Society so incorporated in the memorandum of of association inter-alia includes the followings:-
"To facilitate the general public/dealers carrying goods and crossing the barriers established by the State Govt, and also to diffuse awareness amongst the general public/dealers about the sales tax laws.
To utilise the information technology for deeper systematic reforms in tax administration by creation of a separate entity properly geared to provide supportive role to the Department in creation of data bank 21 (dealer wise/commodity wise. Circle wise and Barrier wise), in transmission of information and establishment of client server environment.
To back up the computerization requirement of the Department of Excise & Taxation Department and for this purpose develop infrastructure therefore both in terms of software as well as hardware.
To facilitate adoption of STXXVI-A form in a computer friendly format and generate funds by rendering this services to the dealers so as to make it a self sustaining activity.
To earn out all such activities as are envisaged in section 20 of the Society Registration Act 1860, which are in the interest of society.
To derive optimum benefits from fully networked computerization in terms of providing computerized functioning of Multi-purpose Barriers, issuance of computerized receipts, on line networking to facilitate sharing of data between all Offices/Assessing Authorities in the Department and develop other related infrastructures incidental thereto. The Society shall for this purpose, generate receipts in lieu of providing these services at. the Multi-purposes Barriers, and utilize the same to fulfill the objectives of the Society.
And in furtherance of the above objectives:
i) Develop, create, manage and maintain infrastructure for providing such services."
b). That primary funds of the Society were 10 be augmented by collecting statutory levy as per Section 34 of the H.P. VAT Act read with rules 61 and 62 of the H.P VAT Rules in respect of declaration to be made by the dealers coming in or going out of the State of Himachal Pradesh in form ST-XXVI-A as per para-8 of the bye-laws. Initially cost of per declaration as per the rules set by the Government of Himachal Pradesh was Rs.5/- and upon the collection of the same Rs.l/- was immediately to go to the Govt, and thereafter by virtue of bye- laws being 10.2 after meeting out expenditure remaining amount had to be transferred to the State government in sales tax head. Para-8 and 10.2 of the bye- laws are being reproduced infra for your kind perusal and read) reference:-
"8. ACCOUNT OF ST XXV1-A FORM
5. The computer generated STXXVI-A form bearing serial number shall be issued at the Barrier(s) and the E.T.O/In charge Barrier shall maintain proper account of the said forms under the supervision of concerned Assistant Excise and Taxation Commissioner of the District.
6. E.T.O/ln charge barrier will deposit Rs.l/- per form (out of the amount of Rs.5/- per form as at present or as per rates prescribed from time to time in respect of computerized ST-XXVI-A form/services rendered)/ in the relevant receipt head of the Department as per practice hitherto fore.
7. The balance amount after depositing Rs. 1 - per form will be credited to the Funds of the Society and deposited on day to day basis in a Saving Bank Account lo be opened in respect of each barrier(s) with the nearest Schedule Bank / Cooperative Bank.
8. Keeping in view the requirement of the funds, the Executive Committee can authorize the Assistant Excise and Taxation Officer / In Charge Barrier concerned to invest the amount in excess of their requirement in Short Term Deposit test there be any loss of interest.
5. Notwithstanding any thing contained above, the amount collected shall be available for being utilized in the entire State for the purposes set out and as" per approval of the Governing Body., 22 10.2 After meeting the expenses towards the objectives for the approved purposes listed above and accounting for the liabilities accrued and projected, the surplus amount, if any, shall be deposited in the receipt head 0040 Sales Tax on yearly basis on approval of the Governing Body."
28. On a comprehensive examination of the purpose of registering the society in the name of H.P. Excise and Taxation Technical Service Agency , the organizational structure and conducting of its functions, Rules & Regulations of the society, Receipts & Payment Account of the society, details of the collections on account of tax and amounts paid to Government, relevant provisions of H.P. VAT Act 2005, Establishment of Check Posts of Barrier and inspection of goods in transit, the following points emerged as under :
1. The checkpost or barriers and inspection of goods in transit were established as per the HP VAT Act 2005.
2. The Assessee Society was floated to look after the affairs and tax collection at the check post and barriers.
3. The governing body of the Assessee Society consists of Chairman and six members along with a member secretary who are all from the excise and taxation department except a Technical Director from NIC and MD of Electronic Development Corporation who mainly aid in providing required information technology inputs.
4. The executive committee of the Assessee Society comprise of 8 members along with one Member Secretary who are all officials of Excise and Taxation Department.
5. The Assessee Society is involved in collection and deposit of receipts from STXXVI-A Forms.
6. Out of the collected amount 20% is paid immediately to the Government.
7. The remaining amount is kept in the short term deposits.
8. The surplus amount shall be deposited in the receipt head 0040-Sales Tax Account on yearly basis.
9. The accounts are audited by the IFU of the Sales Tax Department which will compile the final account the Additional Excise and Taxation Commissioner(Head Quarter) is the Authorized Signatory.
29. With this background the financial affairs of the assessee society are examined. The income & expenditure statement for the AY 2007-08 are as under:
23 2430. During the hearing before us the assessee has submitted the details of payment of 20% of collections which have been directly deposited into the Government Treasury. The Ld. CIT(A) has also accepted the contention of the assessee that 20% of the fees collected was paid upfront to the Government is not an income.
31. The assessee has also submitted the details of payment of remaining 80% of the balance amount after incurring a expenditure which have been duly deposited in to the Government account. Thus, taking the balance 80% amount excluding the expenditure out of the ambit of taxation. The following table gives the details of amounts paid into the Government account.
A.Y Total 20% directly 80% Balance Expenditure in Remaining Date of Deposit Amount Collection deposited into Amt. A.Y Balance into Govt.
Govt. Treasury Head 2007-08 158,80,343.00 31,57,184.00 127,23,159.00 66,58,547.00 60,1,4,612.00 2008-09 174,12,279.00 34,92,358.00 139,19,921.00 87,52,053.00 51,67,868.00 15-06-2006 20,00,000.00 2009-10 183,06,002.00 36,61,130.00 146,44,872.00 122,02,345.00 24,42,527.00 2010-11 393,43,565.00 85,27,214.00 308,16,351.00 148,64,340.00 159,5 2,011.00 2011-12 446,87,418.00 89,42,065.00 357,45,353.00 163,54,105.00 193,91,248.00 2013-14 653,01,701.00 111,70,027.00 541,31,674.00 163,21,261.00 378, 10,413.00 TOTAL 2009,31,308.00 389,49,978.00 1619,81,330.00 751,52,651.00 868,28,679.00 13-02-2014 620,72,946.00 09- 1 2 - 2014 300,00,000.00
32. Thus, after going through the entire affairs of the assessee we hold that the surplus of income over expenditure also belongs to the Government which has been duly deposited in the state exchequer cannot be the income of the assessee.
33. Before us the assessee has submitted statement reflecting the payment of balance amount of the 80% of the fee collected has also been paid to the Treasury of the State Government.
34. The Assessing Officer is hereby directed to examine the Challans paid by the assessee into the Government account under the receipt head 0040 Sales Tax Account as submitted by the assessee and give due benefit for the amounts paid into the Government exchequer.
35. Ground No. 3 relates to non adjudication of Ground No. 4 filed before the Ld. CIT(A). The Ground No. 4 inter alia reads asunder:
" That in the facts and circumstances of the case the Ld. Assessing Officer is not justified in assessing the appellant as it is not a person defined under the Income Tax Act, 1961."25
36. Before us no arguments have been taken by the assessee pertaining to this ground. Hence, this ground of appeal is being dismissed.
37. As a result the appeals of the assessee are partly allowed and the appeals of the Revenue are dismissed.
Order pronounced in the Open Court on 30/11/2017.
Sd/- Sd/- (DIVA SINGH) (B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 30/11/2017 AG
Copy to: The Assessee, The Respondent, The CIT, The CIT(A), The DR 26