TMI Tax Updates - e-Newsletter
November 29, 2017
Case Laws in this Newsletter:
TMI SMS
Articles
By: Srinivasan Krishnamachari
Summary: The article discusses the complexities of applying the Goods and Services Tax (GST) to the renting of immovable property in India when both the supplier and recipient are located outside India. The primary issue is determining the place of supply under the Integrated Goods and Services Tax (IGST) Act, specifically sections 12 and 13, which typically address domestic and international transactions, respectively. The article explores whether such transactions fall under GST's purview, given that the property is in India but both parties are abroad. It suggests that a liberal interpretation of section 13 is necessary, potentially requiring the supplier to register in India. The article highlights the ambiguity and potential for litigation in such cases, emphasizing the need for clearer legislative guidance.
News
Summary: The government has appointed a senior official as the first Chairman of the National Anti-profiteering Authority under the Goods and Services Tax (GST). This follows the Cabinet's approval for creating the Authority, which aims to ensure that GST benefits are passed on to consumers through price reductions. The Chairman will be supported by four Technical Members, appointed by a high-level Selection Committee. The Authority will address consumer complaints about price reductions not being implemented and has the power to enforce price adjustments, impose penalties, or cancel GST registrations. The Authority will operate from New Delhi and is set for a two-year term.
Summary: A total of Rs. 83,346 crores was collected under GST for October 2017, with collections received by November 27, 2017. There are 95.9 lakh registered taxpayers, including 15.1 lakh composition dealers. States collected Rs. 87,238 crores in SGST for August to November 2017, with Rs. 31,821 crores and Rs. 13,882 crores released for settlements in previous months. Compensation of Rs. 10,806 crores and Rs. 13,695 crores was provided for revenue shortfalls. The Centre's CGST income was Rs. 58,556 crores, with additional transfers from IGST. Revenue gaps are attributed to transition credits and reduced tax incidence. A total of 58.7 lakh GSTR 3B returns were filed for July to October 2017.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 64.4206 on November 28, 2017, a decrease from Rs. 64.6948 on November 27, 2017. Consequently, the exchange rates for other currencies against the Rupee were adjusted: the Euro was Rs. 76.6992, the British Pound was Rs. 85.8469, and 100 Japanese Yen was Rs. 57.94. These rates are derived from the US Dollar reference rate and cross-currency quotes. The SDR-Rupee rate will also be determined based on this reference rate.
Summary: The Income Tax department will begin assessing individuals who deposited suspicious amounts in banks post-demonetisation but have not filed income tax returns. The Central Board of Direct Taxes has directed notices to be served by December 31, with assessments starting in late January. This action is part of Operation Clean Money, targeting 18 lakh assessees who deposited substantial cash during demonetisation. Notices will be issued under section 142(1) of the IT Act. The department has already conducted numerous searches and surveys, uncovering significant amounts of undisclosed income and black money. The initiative aims to ensure proper tax compliance post-demonetisation.
Summary: The Government of India has established the Fifteenth Finance Commission, effective from November 27, 2017, with the President's approval. The Commission, led by a former Member of Parliament, will provide recommendations for the period starting April 1, 2020. It includes former government secretaries and academic professionals as members, with a designated secretary. The Commission's terms of reference have been officially notified.
Summary: Shri Shaktikanta Das, the former Secretary of the Department of Economic Affairs, has been appointed as India's G20 Sherpa for the Development Track until December 31, 2018. The G20 comprises two tracks: the Finance Track, managed by the Secretary (Economic Affairs) as India's Deputy, and the Development Track, coordinated by the Sherpa. The Department of Economic Affairs will support the Sherpa in this role.
Notifications
Customs
1.
90/2017 - dated
27-11-2017
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Cus
Amendment in Notification No. 56/2000-Customs, dated the 5th May, 2000
Summary: The Government of India has issued Notification No. 90/2017-Customs, amending Notification No. 56/2000-Customs dated May 5, 2000. The amendments involve changes to the wording and timeframes specified in the original notification. Specifically, "paragraph 4A.8" is replaced with "paragraph 4.45" in the opening paragraph, and the timeframe "120 days" is changed to "90 days" in the second proviso. These changes are made under the authority of the Customs Act, 1962, and are deemed necessary in the public interest.
GST - States
2.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/057 - dated
26-10-2017
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Nagaland SGST
The Nagaland Goods and Services Tax (Tenth Amendment) Rules, 2017.
Summary: The Nagaland Goods and Services Tax (Tenth Amendment) Rules, 2017, effective immediately, amend the Nagaland GST Rules, 2017. Changes include a substitution in rule 89, allowing either the recipient or supplier of deemed export supplies to file for refunds if the recipient does not claim input tax credit and provides an undertaking. Rule 96A is amended to allow the Commissioner to extend the period for certain actions. Additionally, modifications are made to FORM GST RFD-01, updating "Statement-2" for exports of services with tax payment and "Statement-4" for supplies to SEZ units or developers.
3.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/056 - dated
26-10-2017
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Nagaland SGST
The Nagaland Goods and Services Tax (Ninth Amendment) Rules, 2017.
Summary: The Nagaland Goods and Services Tax (Ninth Amendment) Rules, 2017, effective immediately, introduce several changes to the Nagaland GST Rules, 2017. Key amendments include the substitution of sub-rule (3A) in rule 3, allowing certain registered persons to opt for tax payment under section 10 by filing FORM GST CMP-02 by March 31, 2018. Rule 46A allows a single invoice-cum-bill for taxable and exempt supplies. Changes in rules 54 and 62 adjust invoicing terms and tax return requirements. Updates to FORMs GST CMP-02, GSTR-1, GSTR-1A, and GSTR-4 are also specified, including new instructions and table substitutions.
4.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/043 - dated
26-10-2017
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Nagaland SGST
Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) E dated the 30th June, 2017
Summary: The Government of Nagaland has issued amendments to the notification F.NO.FIN/REV-3/GST/1/08 (Pt-1) dated June 30, 2017, under the Nagaland Goods and Services Tax Act, 2017. The amendments include the addition of serial numbers 122A and 150 in the schedule, covering Duty Credit Scrips and supply of goods by a government entity to various government bodies against grants. A new clause defines "Government Entity" as an authority or body with significant government participation. Additionally, a proviso in Annexure I requires an affidavit from brand owners foregoing rights when different from those packing goods.
5.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/042 - dated
26-10-2017
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Nagaland SGST
Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) D dated the 30th June, 2017.
Summary: The Government of Nagaland has issued amendments to its notification under the Nagaland Goods and Services Tax Act, 2017. These amendments involve changes to various schedules that outline tax rates for different goods. Key changes include the addition of new items such as dried mangoes, khakhra, and e-waste to specific tax schedules, adjustments to existing entries, and the removal of certain items. The amendments also provide clarification on brand name claims, requiring affidavits for voluntary forfeiture of enforceable rights. These modifications aim to streamline tax categorization and compliance under the state's GST framework.
6.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/040 - dated
26-10-2017
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Nagaland SGST
Amendment in Notification No F.NO.FIN/REV3/GST/1/(Pt-1) N ,30th June,2017 - Exempt supply of Services.
Summary: The Government of Nagaland has amended its notification dated 30th June 2017, under the Nagaland Goods and Services Tax Act, 2017. Key changes include updating the definition of "governmental authority" to include various government entities and inserting new entries in the exemption list for services. These include services by a government entity to governmental bodies, services by goods transport agencies to unregistered persons, and services granting access to roads or bridges. Additionally, the definition of "Governmental Authority" and "Government Entity" has been revised to include entities with significant government participation established by legislation or government.
7.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/037 - dated
26-10-2017
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Nagaland SGST
The Nagaland Goods and Services Tax (Eighth Amendment) Rules, 2017.
Summary: The Government of Nagaland has issued the Eighth Amendment to the Nagaland Goods and Services Tax Rules, 2017, under the authority of section 164 of the Nagaland GST Act, 2017. Key amendments include extending the deadline in rule 24, sub-rule (4) from "30th September" to "31st October" and modifying the time frame references in rules 118, 119, and 120 to align with rule 117 or as extended by the Commissioner. Additionally, rule 120A introduces a marginal heading for revising FORM GST TRAN-1, and changes in FORM GST REG-29 include updated headings and terminology.
8.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/036 - dated
26-10-2017
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Nagaland SGST
Amendment in Notification No F.NO.FIN/REV3/GST/1/(Pt-1) N,30th June,2017 - Exempting supply of services associated with transit cargo to Nepal and Bhutan.
Summary: The Government of Nagaland has amended its notification dated 30th June 2017, under the Nagaland Goods and Services Tax Act, 2017. This amendment, effective 26th October 2017, exempts the supply of services associated with transit cargo to Nepal and Bhutan from GST. This decision, made in the public interest and based on the Council's recommendations, adds a new entry, "9B," to the existing notification, specifying that services related to transit cargo to these landlocked countries will incur no GST.
9.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/480 - dated
27-9-2017
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Nagaland SGST
Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) N dated the 30th June, 2017, and F.NO.FIN/REV-3/GST/1/08 (Pt-1)/426 dated 22nd August, 2017
Summary: The Government of Nagaland has amended its previous GST notifications from June and August 2017. These amendments, made under the Nagaland Goods and Services Tax Act, 2017, involve changes to the classification of services provided to governmental bodies. Specifically, the amendments redefine item (vi) in the notification table to include services related to construction, erection, and maintenance of structures for non-commercial use, educational, clinical, art or cultural establishments, and residential complexes for specific uses. Additionally, a new category for construction services not covered by previous classifications has been introduced.
10.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/477 - dated
27-9-2017
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Nagaland SGST
The Nagaland Goods and Services Tax (Seventh Amendment) Rules, 2017.
Summary: The Nagaland Goods and Services Tax (Seventh Amendment) Rules, 2017, issued by the Nagaland Finance Department, amends the Nagaland GST Rules, 2017. Key changes include allowing provisional registrants to opt for tax payment under section 10 from October 1, 2017, by filing electronically. Rule 120A permits revision of FORM GST TRAN-1 submissions. Amendments to rules 122, 124, 127, and 138 address technical member salaries, appointment terminations, performance reporting, and e-way bill requirements for inter-state transport. Changes to forms GST TRAN-1 and GSTR-4 reflect updates on tax credits and supply classifications. These rules are effective from various dates in 2017.
11.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/476 - dated
27-9-2017
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Nagaland SGST
Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) E, dated the 30th June, 2017
Summary: The Government of Nagaland has amended its notification dated June 30, 2017, under the Nagaland Goods and Services Tax Act, 2017. The amendments involve changes to the classification of goods based on their packaging and brand name status. Specific serial numbers in the notification have been updated to include conditions for items packaged in unit containers with registered brand names or those with actionable claims. New entries have been added for cotton seed oil cake, khadi fabric, clay idols, and other items. Definitions for "brand name" and "registered brand name" have been clarified, and annexures detailing conditions and a list of indigenous musical instruments have been included.
12.
F.NO.FIN/REV-3/GST/1/08 (Pt-1)/474 - dated
27-9-2017
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Nagaland SGST
Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) D dated the 30th June, 2017.
Summary: The Government of Nagaland issued amendments to Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) "D" dated June 30, 2017, under the Nagaland Goods and Services Tax Act, 2017. The amendments involve changes in tax rates and classifications for various goods across multiple schedules. These include modifications to the definitions and conditions for goods bearing brand names, the inclusion of new items like walnuts, tamarind, and roasted gram, and adjustments in tax rates for items such as agarbatti, corduroy fabrics, and computer monitors. An annexure details the process for foregoing actionable claims on brand names.
Indian Laws
13.
No. 10(1)-B(S)/2016 - S.O. 3755(E) - dated
27-11-2017
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Indian Law
Constitute Fifteenth Finance Commission
Summary: The President of India constituted the Fifteenth Finance Commission, chaired by a former Member of Parliament and former Secretary to the Government of India, with four additional members. The Commission is tasked with recommending the distribution of tax proceeds between the Union and States, principles for grants-in-aid, and measures to enhance State resources. It will review fiscal status and recommend a fiscal consolidation roadmap. The Commission will consider various factors, including GST impact, and propose performance-based incentives for States. It will also examine disaster management financing and a potential separate funding mechanism for defense and internal security. The report is due by November 30, 2019.
Circulars / Instructions / Orders
Customs
1.
47/2017 - dated
27-11-2017
Drawing of samples for the purpose of grant of drawback
Summary: The circular issued by the Central Board of Excise & Customs rescinds previous circulars related to the drawing of samples for granting drawbacks. It aims to facilitate trade and improve business efficiency by allowing customs officers to determine the necessity of sampling based on risk criteria. Sampling should only occur when intelligence or suspicion of misuse arises, and cases should be resolved within thirty days. The circular emphasizes the importance of regular monitoring by senior officials and instructs the issuance of public notices and standing orders for guidance. Any challenges encountered should be reported to the Board.
Central Excise
2.
1060/9/2017 - dated
27-11-2017
Procedure for manual disbursal of budgetary support under Goods and Service Tax Regime to the units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim - reg.
Summary: The circular outlines the procedure for manual disbursal of budgetary support to units in Jammu & Kashmir, Uttarakhand, Himachal Pradesh, and the North East, including Sikkim, under the GST regime. Previously, these units benefited from Central Excise duty exemptions. With GST, no such exemptions exist, prompting the government to offer budgetary support through refunds of CGST and IGST. Eligible units must register and apply for support quarterly. The process involves manual registration, application submission, and verification by tax officials, with funds disbursed via the PFMS platform. The scheme is administered by the Department of Industrial Policy and Promotion.
Highlights / Catch Notes
Income Tax
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Supreme Court Reaffirms Retrospective Application of Instruction No.3 of 2011 for Income Tax Appeals with Two Caveats.
Case-Laws - SC : Monetary limit for filing appeal - retrospective implementation of Instruction No.3 of 2011 dated 9.2.2011 - SC reiterate its earlier order - circular may be applied for pending cases subject to two caveats.
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Penalty u/s 271B: Reasonable Cause for Non-Audit Due to ICAI Guidelines and Turnover Disclosure Method.
Case-Laws - AT : Penalty u/s 271B - determination of turnover - reasonable cause for not getting its accounts audited u/s 44AB - the belief of the assessee about the non applicability of provisions of section 44AB based on such method of disclosure as adopted by it following guidelines of ICAI was a bona fide belief. - AT
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Company's False Land Depreciation Claim Deemed Willful Tax Evasion, Not Accounting Error, Auditors and Directors Involved.
Case-Laws - HC : Wilful attempt to evade tax, etc. - Punishable offence - False claim of depreciation on land - the same is scrutinized, firstly, by the auditors of the company. Secondly, by the directors of the company before endorsing their signatures on the final Balance Sheet. Therefore, it cannot be considered as a mere accounting mistake - HC
Customs
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Importer Retains EPCG License Benefits Despite Initial Notification Lapse; Proof of Installation Saves the Day.
Case-Laws - AT : Violation of conditions for import of goods against EPCG licnece - failure to intimate the department after installation - since the importer submitted the proof of installation, benefit of notification cannot be denied. - AT
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Court Declines to Direct Decision in Anti-Dumping Duty Case, Citing Clarity of Rule 12 of Customs Tariff Rules.
Case-Laws - HC : Proceedings to levy Anti-dumping duty - Exclusion of the party from the proceedings - the rules are clear, especially Rule 12 of the Customs Tariff Rules and there is no necessity for this Court to issue any direction to the first respondent to decide the matter in a particular manner nor it would be right in doing so - HC
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