Committee to simplify provisions of the Income Tax Act set up with tenure of one year under the Chairmanship of Justice R.V. Easwar(Retd). Two Chartered Accountants Mukesh Patel and Vinod Jain are also part of the committee. Committee aims to identify the provisions which are leading to litigation due to different interpretations, provisions which aim at ease of doing business, identify the areas of simplification in light of existing jurisprudence. To suggest alternatives to the areas to bring certainty in tax laws.Sub Groups can be formed by the committee. First batch of recommendations to be received till 31-01-2016.

As per section 44 of the Punjab Vat Act, every person required to keep and maintain account books or other records, shall retain them until the expiry of six years after the end of the year to which these relate or for such further period as may be required or until the assessment becomes final, which ever is later. Since every person is required to make self assessment of tax u/s 26(1) and since if no notice u/s 29(2) is issued for 2008-09 till 31-03-2015, then assessee can not be expected to retain books beyond 31-03-2015 under the provisions of the law. However at present assessment notices u/s 29(2) for assessment year 2008-09 are being issued in abundance by the excise and taxation department in the month of October for assessments getting time barred till 20-11-2015. In theses notices all enquiries relating to mismatches with regard to books and other evidences requiring substantiation with books are being called for. Such an action does not appear to be in harmony with the provision of the law inspite post amendmend the provisons of section 29(4) and is resulting genuine hardship to the Vat dealers

As per Rule 12(7) of CST Rules , F form is required to be furnished with in three months after the end of period to which declaration releates. However proviso to Rule 12(7) empowers the assessing authority to condone the delay in case the dealer was prevented by sufficient cause to file the declarations. Rule 40(2) of PVAT Rules requiring to furnish declaration forms under CST along with Vat 20 does not override proviso to Section 12(7). Hence the officer can not refuse to accept the Forms without assigning reasons . Supreme Court Judgement in Hyderabad Abestos Cemnent Production Ltd (1994) 4 PHT 440(SC) followed in Bajaj Consumer Care Limited 52 PHT 34(PVT) [18-05-2015]

Failure to furnish H forms shall result in return being incorrect or incomplete and shall invite interest from from the date tax was due or the return is incomplete or incorrect and not from the date of assessment- Zeon Life Sciences Ltd. 52 PHT 29 (2015)[15-07-2015]

Education is not business . Held by Supreme Court in AIR 1963 SC 1873 in University of Delhi vs Ram Nath.

Charging of nominal fee against pamphlets supplied to devotees by Sai Baba Trust of Shirdi was held to be not a business activity and hence not exigible to sales tax- Sai Baba Publication Fund 126 STC 288

Selling of unserviceable items was held not business by supreme Court in Port of Madras 114 STC 520.

Meals being supplied in a hostel to the scholars, visitors, guest faculty etc. can not be exigible to sales tax where main activity is academics- as per Allahabad High Court in IIT Kanpur 38 STC 428; Scholars home Senior Secondary School 42 VST 530; Swadeshi Cotton Mills 15 STC 505.

Held by Supreme Court in A.M. Ansari 38 STC 577 that where main activity is not business, the incidental activity can not be held to be business. [Para 4]– Lawrence School Sanawar (2015) 52 PHT 24 (HPTT)

To constitute the business , the words “carrying on”[carried on in section 2(c) of PVAT] requires something more than merely buying selling or buying. Whether a person carries on business in a particular commodity depends upon volume, frequency, continuity and regularity of transactions of sale and purchase and the transactions must ordinarily be entered into with profit motive. Where main activity of school is to impart education the incidental activity of providing uniform can not be held to be business [Para 4] – Lawrence School Sanawar (2015) 52 PHT 24 (HPTT)

Interest can not be levied in case of classification disputes regarding rate of tax and such dispute shall be resolved only in assessment. Following EID Parry (2005) 141 STC 12(SC) ; J.K. Synthetics (1994) 4 PHT 450 (SC) ; Hindustan Aluminium (2002) Vol. 127 – Kishan Chand & Bros 52 PHT 19 (HPTT) holding that Khair wood is not same as timber.

The assessee deposited the amount of tax in pursuance of demand raised by assessing authority. The appeal of the dealer was accepted by Vat Tribunal after gap of 12 years from the date of deposit of tax and matter remanded to decide the case afresh. The assessing authority decided the matter afresh. However interest was allowed only for 4 months. The assessee went in appeal before DETC and Tribunal but was unsuccessful. The High Court however adjudicating the matter in the favor of the assessee promulgated that interest to be allowed from the date of deposit of tax.- Haryana Vanaspati & General Mill (2015) 52 PHT 1 [07-08-2015] followed Sonu Rice Mills STI 2000 PB&HN 13; Sagar Moto Compnay 4PHT 753(P&H) distinguishing Khem Ram Devi Sahai 23 PHT 330 (P&H); Saurabh Kumar & Bros. 127 STC 556(P&H) , where in the petitioner restricted his right to claim interest on refund. SC decision in ITC Limited 2005 13 SCC 689, upholding allowance of interest on refund of predeposit as per draft circular without producing draft circular held not applicable. Rule 40 of PVAT Act allows interest @ 6% from date of application till date of grant of refund does not deal with refunds arising out of Court Orders

The assessee deposited the amount of tax in pursuance of demand raised by assessing authority. The appeal of the dealer was accepted by Vat Tribunal after gap of 12 years from the date of deposit of tax and matter remanded to decide the case afresh. The assessing authority decided the matter afresh. However interest was allowed only for 4 months. The assessee went in appeal before DETC and Tribunal but was unsuccessful. The High Court however adjudicating the matter in the favor of the assessee promulgated that interest to be allowed from the date of deposit of tax.- Haryana Vanaspati & General Mill (2015) 52 PHT 1 [07-08-2015] followed Sonu Rice Mills STI 2000 PB&HN 13; Sagar Moto Compnay 4PHT 753(P&H) distinguishing Khem Ram Devi Sahai 23 PHT 330 (P&H); Saurabh Kumar & Bros. 127 STC 556(P&H) , where in the petitioner restricted his right to claim interest on refund. SC decision in ITC Limited 2005 13 SCC 689, upholding allowance of interest on refund of predeposit as per draft circular without producing draft circular held not applicable. Rule 40 of PVAT Act allows interest @ 6% from date of application till date of grant of refund does not deal with refunds arising out of Court Orders

The assessee, a works conractor, filed an application for refund for the year 2014-15. Department proceeded to assess him for earlier years and issued assessment notices but did not respond to the refund application. The assessee filed a writ prtition. P&H High Court directed to process the refund application with in one month and grant refund with in next two weeks. – M/s. Lakhwinder Singh Tung Builders CWP No. 21828 of 2015 pronounced on 12-10-2015