1.    JT. C. I. T., MUMBAI VS. M/S ROLTA INDIA LTD.,  Civil Appeal No.135 of 2011, Order Dated 07/01/2011, HON’BLE SUPREME COURT OF INDIA

Whether interest under Section 234B can be charged on the tax calculated on book profits under Section 115JA? In other words, whether advance tax was at all payable on book profits under Section 115JA?

Held by Hon’ble Supreme Court of India that Interest under Section 234B is charged on the tax calculated on book profits under Section 115JA.

Section 115JB, with which we are concerned, is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under Section 115JB, it was liable to pay interest under Sections 234B and 234C of the Act. Thus, it can be concluded that interest under Sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB.

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2.   [Contribution by  CA. Amarpal and contributor is available at email-id : amar.p.ca1@gmail.com ] 

Association of Leasing and Financial services companies

Vs.

UOI and Ors (2010) (235) CTR (521) SC

Subject:  Constitutional Validity of services tax on financial leasing services

Issue:

As per article 366(29A) of the constitution, the hire purchase and leasing is a sale transaction which is liable to state sales tax under Entry 54, List  II, it is not open to the parliament to levy service tax on same transaction under Entry 97, List I.

Judgement (Conclusion):

Service tax imposed by section 66 of the Finance Act, 1994 on the value of taxable services referred to in section 65(105)(zm), read with section 65(12) of the said Act, insofar as it relates to financial leasing services including equipment leasing and hire-purchase is within the legislative competence of the Parliament under Entry 97, List I of the Seventh Schedule to the Constitution. 

Ratio of the Decision:When one reads Entry 97 of List I, read with article 246(1), it confers exclusive power first, to make laws in respect of matters specified in Entries 1 to 96 in List I and, secondly, it confers the residuary power of making laws by Entry 97. Article 248 does not provide for any express powers of the Parliament but only for its residuary power. 

Merely because for valuation purposes inter alia ‘finance/interest charges’ are taken into account and merely because service tax is imposed on financial services with reference to ‘hiring/interest’ charges, the impugned tax does not cease to be service tax and nor does it become tax on hire-purchase/leasing transactions under article 366(29A), read with Entry 54, List II. Thus, while the State Legislature is competent to impose tax on ‘sale’ by legislation relatable to Entry 54 of List II of the Seventh Schedule, tax on the aspect of the services’, vendor not being relatable to any entry in the State List, would be within the legislative competence of the Parliament under article 248 read with Entry 97 of List I of the Seventh Schedule to the Constitution.

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