TMI Tax Updates - e-Newsletter
December 24, 2016
Case Laws in this Newsletter:
Articles
By: Sanjeev Singhal
Summary: Under the revised GST law, small taxpayers can opt for a composition tax scheme instead of the regular tax on goods, provided they are not solely service providers. The scheme simplifies compliance by allowing eligible registered taxable persons (RTP) with an aggregate turnover not exceeding 50 lakh to pay a reduced tax rate. However, it excludes service providers, interstate suppliers, certain manufacturers, and those using e-commerce platforms. All RTPs under the same PAN must opt for the scheme collectively. Participants cannot collect tax from recipients or claim input tax credits. The scheme requires quarterly and annual returns, and eligibility is strictly monitored.
By: CA Akash Phophalia
Summary: The article discusses the admissibility of Cenvat credit for service tax paid before registration under the Cenvat Credit Rules, 2004. It clarifies that registration is not a prerequisite for availing Cenvat credit on input services. Various court rulings, including those by the Chennai Tribunal and Karnataka High Court, have upheld that non-registration does not invalidate the right to claim Cenvat credit if the services qualify as input services. The article urges the excise and customs board to clarify this stance to prevent unnecessary litigation and suggests that registration is a procedural formality, not a barrier to credit eligibility.
By: Tarun Agarwalla
Summary: The Model GST Law introduces a composition scheme for small businesses with an annual turnover not exceeding 50 lakhs, offering reduced compliance requirements and simplified tax payments. This scheme is primarily beneficial for B2C transactions and excludes service providers, inter-state suppliers, and certain manufacturers. Businesses must register as taxable persons to opt for the scheme, which applies on an all-India PAN basis. The composition levy is set at a minimum of 2.5% for manufacturers and 1% for others, without eligibility for input tax credit. Transitional provisions address eligibility changes, impacting sectors like construction and works contracts.
By: Pradeep Jain
Summary: The revised GST law simplifies job work procedures by removing the requirement for Commissioner approval to send goods for job work, allowing registered persons to send inputs or capital goods without tax payment under certain conditions. The time limits for job work have been extended to one year for inputs and three years for capital goods. If goods are not returned within these periods, they are deemed supplied, requiring GST payment. New provisions clarify tax liabilities for waste and scrap generated during job work, allowing job workers to supply waste directly if registered, or the principal if not.
News
Summary: The Government of India will launch the Lucky Grahak Yojana for consumers and Digi-Dhan Vyapar Yojana for merchants on December 25, 2016, to promote digital payments. These initiatives aim to encourage higher usage of digital transactions by offering incentives, with winners selected daily and weekly until April 14, 2017. The launch will feature a draw by key government ministers and will occur in 100 cities, accompanied by a Digi-Dhan Mela to facilitate digital payment adoption. The schemes, managed by the National Payments Corporation of India, require transactions via RuPay Cards, USSD, UPI, and AEPS.
Summary: The 5th Session of the India-Kazakhstan Joint Working Group on Trade and Economic Cooperation took place in New Delhi, focusing on enhancing bilateral trade and economic relations. Discussions included the feasibility of a Free Trade Agreement between the Eurasian Economic Union and India, with hopes to start formal negotiations in early 2017. The meeting also addressed the International North-South Transport Corridor and encouraged Indian use of the Kazakhstan-Turkmenistan-Iran railway. Both parties explored investment opportunities in various sectors, including oil, gas, and mining. Additionally, India requested Kazakhstan to liberalize its visa regime for Indian citizens.
Summary: Rule 114E of the Income-tax Rules, 1962, effective from April 1, 2016, mandates individuals subject to audit under section 44AB of the Income-tax Act, 1961, to report financial transactions involving cash payments exceeding two lakh rupees for goods or services. Clarifications were sought on whether such transactions needed aggregation for reporting. The Central Board of Direct Taxes amended the norms, specifying that aggregation is not required; reporting is necessary for each transaction exceeding the specified cash payment threshold. This amendment was formalized through Notification No. 91/2016 on October 6, 2016.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 67.9117 on December 23, 2016, slightly down from Rs. 67.9136 on December 22, 2016. The exchange rates for other currencies against the Rupee were also provided: the Euro was at Rs. 70.9474, the British Pound at Rs. 83.4839, and 100 Japanese Yen at Rs. 57.88 on December 23, 2016. These rates are based on the US Dollar reference rate and the middle rates of cross-currency quotes. The Special Drawing Rights (SDR) to Rupee rate will also be determined based on this reference rate.
Summary: The Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016, initiated on December 17, 2016, allows declarations until March 31, 2017. Payments for tax, surcharge, and penalty under this scheme are to be made using challan ITNS-287, and deposits are to be made in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. Until December 30, 2016, payments could be made using old demonetized Rs. 500 and Rs. 1000 notes. Notifications related to PMGKY are available on the Income Tax Department's website.
Notifications
Income Tax
1.
120/2016 - dated
21-12-2016
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IT
Income-tax (35th Amendment) Rules, 2016
Summary: The Income-tax (35th Amendment) Rules, 2016, issued by the Central Government, amend the Income-tax Rules, 1962, under the authority of section 285BA and section 295 of the Income-tax Act, 1961. Effective retrospectively from August 7, 2015, these amendments modify specific clauses in rule 114F. Changes include substituting certain sub-clause references within clauses (g) and (h) of the rule's Explanation, affecting the categorization of retirement or pension funds. The notification assures that the retrospective application will not adversely affect any parties.
Highlights / Catch Notes
Income Tax
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High Court Dismisses Petition Filed After Two Years of Silence on Jurisdiction, Post Section 153A Notice.
Case-Laws - HC : Assessment u/s 153A - assessee has not challenged the authority of the jurisdiction fairly for a period of more than two years and it is only after the notice U/s.153-A issued, this writ petition has been filed - petition dismissed - HC
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Taxpayer Penalized for Unexplained Cash Deposits u/s 271(1)(c) of Income Tax Act; Explanation Rejected as Not Bona Fide.
Case-Laws - AT : Penalty u/s 271(1)(c) - unexplained cash deposits - the explanation offered by the assessee is not bonafide and the said explanation was rightly rejected by the authorities below. - AT
Customs
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Second-hand Goods Valuation Requires Individual Assessment Due to Variations in Use and Condition; No Universal Value Application.
Case-Laws - AT : Enhancement of value of imports - Every second hand goods varies from each other depending upon the duration of use, manner of use and condition of the machine therefore price of one second hand goods cannot be applied to other second hand goods without ascertaining the physical parameter of both the machine - AT
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Appellants Misdeclare Value of Imports, Face Confiscation Under Customs Regulations for Suppression of Actual Value.
Case-Laws - AT : Mis-declaration of value of imported goods - Since the appellants deliberately suppressed the value by mis-declaring, the goods were liable for confiscation. - AT
Corporate Law
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NCLT Holds Jurisdiction Over Matters Transferred u/ss 163 and 219 of Previous Companies Act.
Case-Laws - Tri : NCLT has jurisdiction to deal with the transferred matter filed under Sections 163 & 219 of the old Act - Tri
Central Excise
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Buyer Denied Refund as Exemption Was Not Claimed by Manufacturer; Conditional Exemption Invalid for Refund Claim.
Case-Laws - AT : Refund claim - the manufacturer did not claim exemption, whereas the appellant, the customer claims refund on the basis of exemption notification - Where the exemption was conditional one, buyer cannot claim refund on the pretext of exemption - AT
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