Tag Archives: assessment

Levy and Collection of Tax – Distinction Between

In Peekay Re-Rolling Mills (P) Ltd. v. CST, it was held thus:
“What is important to note is that the expression”levy” would include “assessment”, though it would not include “collection”. This being the case, it is clear that the expression “primarily leviable upon the lessor” makes it clear that the lessor should be the person upon whom levy takes place-in the sense that “assessment” has to be of such person. “Levy”, in all cases of indirect taxes, is never upon an individual-it is upon a specific aspect of what is sought to be taxed. Therefore, when the expression “primarily leviable” is used in relation to a person and not an activity, it has reference to the assessee upon whom the assessment is made under the Act. Thus construed, it is clear that, the person liable to pay the tax is only the service provider and not the recipient of the service. Union of India v. Bengal Shrachi Housing Development Ltd., (2018) 1SCC 311.

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Provisional Assessment under Section 126 of the Electricity Act

Sub-section (1) of Section 126 of the 2003 Act provides that if on an inspection, the Assessing Authority comes to the conclusion that consumer has indulged in unauthorized use of Electricity, the Assessing Officer shall provisionally assess to the best of his judgment, the electricity charges payable by such person or by any person benefited by such use. Therefore, the condition precedent to the provisional assessment under Section 126(1) is a conclusion by the Assessing Officer that the person concerned is indulged with unauthorized use of electricity. Such satisfaction cannot be permitted to be recorded on the mere vagaries of the Assessing Officer unless a fair opportunity of hearing in defense before the said authority is provided.
It is well settled that principles of natural justice, unless excluded by the act in question or by necessary implication cannot be held to be inapplicable to the charge like unauthorized use of electric energy, which may, in some cases, also amount to investigation under Section 135 of the Act. Shishir Jain v. Paschimanchal Vidyut Vitran Nigam Ltd., 2017 (3) AWC 3084.

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Rebate of Tax

Rebate as defined in the New International Webster’s Pocket Dictionary and Bloomsbury Concise English Dictionary is “discount”, to allow as a deduction from a gross amount. It is a discount repaid to the payer. Rebate as defined in Corpus Juris Secundum, Vol. 52 CJ, P. 1189 is “The etymological or dictionary meaning of the term includes any discount or deduction from a stipulated payment, but handed back to the payer after he has paid the stipulated sum, even when such discount or deduction is equally applied to all from whom such payment is demandable.”
Rebate is though ex hypothesi in the nature of subsidy and other incentives given by the Government but conceptually rebate of tax and incentives are different and it needs to be explained in reference to the purpose and nature of such rebate of tax introduced by the Legislature. The claim for rebate need not necessarily be handed back to the payer after he has paid the stipulated sum, it can also be paid in advance of payment. It is nothing but a remission or a payment back or it is sometimes spoken of as a discount or a drawback.
Rebate as defined in Estate of Bernard H. Stauffer v. Commissioner of Internal Revenue, 48 TC 277 (1967), means abatement, discount, credit, refund or any other kind of repayment. Rebates have been normally used as justifiable incentives given by the Government to stimulate small industries or newly established industries. But to understand rebate of tax as rebate per se would be a misnomer. Rebate of tax is the rebate on rate of tax and is essentially the arithmetic of rate. The term “rate” is often used in the sense of standard or measure. It is the tax imposed at a certain measure or standard on the total turnover of the goods. Rate, in other words is the relation between the taxable turnover and the tax charged.
Rebate of tax or exemption is distinguished from non-imposition or non-liability in A.V. Fernandez v. State of Kerala, AIR 1957 SC 657, wherein the court held:
“In rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed.” State of Uttar Pradesh and Others v. Jaiprakash Associates Limted, (2014) 4 SCC 720.

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Unauthorised Use of Energy – Assessment of

In a recent judgment of the Allahabad High Court in Sanjay Rizvi v. Managing Director, Kanpur Electricity Supply Co., and others, decided on April 20, 2012, it was held as under:

Before issuing an assessment notice, the authority must record it’s conclusion that the person concerned or any other person benefited has used electricity unauthorisedly in terms as defined in Explanation (b) to Section 126 of the Electricity Act, 2003. Though the 2003 Act does not provide that Assessing Officer has to provide opportunity of hearing at the stage of recording of the conclusion, however, it does not simultaneously prohibit the same. No person can come to the conclusion of unauthorised use of electricity suo motu without giving an opportunity to the concerned person as deprivation will amount to violation of principles of natural justice.

A perusal of clause 6.8 (a) (i), (ii), (iv) and (v) of the U.P.  Electricity Supply Code, 2005,  on inspection of the premises by the Assessing Officer, if it is found that some irregularities constituting unauthorized use of electricity have been committed, the Assessing Officer shall prepare a report at the site giving details thereof and will hand over the copy of such report to the consumer or his representative. The emphasis is that prima facie conclusion recorded by the Assessing Officer should be communicated to the consumer. Clause 6.8 (b) (ii) shows that the notice shall require the consumer to give his objections against the charges and provisional assessment. Clause 6.8 (c) (i) provides that opportunity of personal hearing shall also be given and thereafter the Assessing Officer shall pass a speaking order specifically disclosing whether unauthorized use of energy is established or not and where it is so determined the quantum of amount which the consumer has to pay, i.e., assessment shall be made by him. Thus, Clause 6.8 provides a detailed procedure in which the assessment would have to be made by the Assessing Officer.

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