TMI Tax Updates - e-Newsletter
December 30, 2017
Case Laws in this Newsletter:
Articles
By: Dr. Sanjiv Agarwal
Summary: The article discusses recent clarifications in the Goods and Services Tax (GST) framework, covering e-way bills, advance rulings, anti-profiteering measures, refund claims, and the supply of artwork by artists. E-way bills must be generated for the movement of taxable goods exceeding 50,000, with specific exemptions. Advance rulings can be filed manually due to the absence of an online utility. Anti-profiteering measures protect consumers by ensuring fair pricing. Refund claims can also be filed manually, particularly for inverted duty structures and deemed exports. Artworks supplied by artists to galleries are taxed only upon actual sale, not when sent for exhibition.
News
Summary: A manufacturer not registered in excise cannot take deemed transitional credit for goods without duty-paying documents as per Section 140 of the CGST Act. If GST is filed under the wrong head, a manual refund procedure will be issued, or the amount can be used for future tax liabilities. An unregistered vendor with a turnover under INR 20 lakh can supply services to SEZ Developers/Units. Tax payment is not required on receipt of advance for goods. The deadline for filing ITC-04 for July-September 2017 is December 30, 2017, and ITC-06 for July 2017 is December 31, 2017. Input Tax Credit cannot be claimed for goods that are lost, stolen, or destroyed.
Summary: A scheme of budgetary support has been initiated for eligible industrial units in the North Eastern region and Himalayan states, providing financial assistance equivalent to the central share of the cash component of CGST and IGST paid. Notified by the Department of Industrial Policy and Promotion, the scheme covers 58% of the central tax and 29% of the integrated tax paid. Eligible units must manually register to claim support, with funds disbursed through the PFMS platform. Application procedures were detailed in circulars issued by CBEC in November 2017.
Summary: The Central Board of Excise Customs has amended the tariff values for various goods under the Customs Act, 1962. The updated values include Crude Palm Oil at $660 per metric tonne, RBD Palm Oil at $694, and Crude Palmolein at $709. Crude Soyabean Oil is set at $813, while Brass Scrap is valued at $3642. Poppy seeds and Areca nuts are priced at $2576 and $3948, respectively. For precious metals, gold is valued at $415 per 10 grams and silver at $539 per kilogram. These changes are effective as per the revised notification from the Ministry of Finance.
Summary: The Government of India raised Rs. 14,500 crore through the Bharat-22 Exchange Traded Fund (ETF), launched to benefit long-term and retail investors by allowing participation in equity stocks of government-run companies for stable returns. The New Fund Offer was available from November 14 to 17, 2017, as part of the government's disinvestment program, offering a 3% discount to investors. The ETF invests in 22 companies from the S&P BSE Bharat 22 Index, including Central Public Sector Enterprises, Strategic Holdings of the Specified Undertaking of Unit Trust of India, and Public Sector Banks, aiming to mirror the index's returns.
Summary: The Central Statistics Office reported GDP growth rates of 7.5%, 8.0%, and 7.1% for 2014-15, 2015-16, and 2016-17, respectively. In 2017-18, GDP growth was 5.7% in Q1 and 6.3% in Q2. The slowdown in 2016-17 was due to factors like reduced investment and credit growth. Despite this, India was the fastest growing major economy in 2016. The government has implemented initiatives to boost growth, including infrastructure development, bank recapitalization, tax reforms, and the Goods and Services Tax. These measures aim to enhance economic activities and ease of doing business.
Summary: The Direct Benefit Transfer (DBT) scheme is a significant government reform aimed at improving benefit delivery through Information Communication Technology. Currently, 400 schemes across 56 Ministries and Departments are being implemented under DBT. These schemes are executed by State Governments, which maintain detailed records. The initiative focuses on accurately targeting beneficiaries, ensuring timely benefit distribution, and reducing fraud by eliminating duplicate and ghost beneficiaries. This information was provided by a government official in response to a question in the Lok Sabha.
Summary: The linking of Aadhaar with bank accounts, including Jan Dhan accounts, facilitates direct subsidy transfers from government ministries and departments to beneficiaries. As of December 2017, 82.47 crore out of 106.41 crore bank accounts were linked with Aadhaar, including 22.58 crore out of 30.76 crore Pradhan Mantri Jan Dhan Yojana accounts. This integration has reportedly saved Rs. 57,029 crore by March 2017 through the elimination of ghost beneficiaries in various schemes like PAHAL, the public distribution system, MGNREGS, and NSAP. This information was disclosed by a government official in a parliamentary session.
Summary: Operation Clean Money, initiated on January 31, 2017, aimed to foster a tax-compliant society post-demonetisation by analyzing cash deposit data to identify potential tax evasion. The Income Tax Department identified approximately 1.79 million individuals for verification. An online verification system allowed taxpayers to explain discrepancies without visiting tax offices, resulting in responses from nearly 1.1 million individuals. High-risk cases were monitored through an internal portal. A dedicated website was launched for public engagement and education. Data analytics were employed to match tax returns with cash deposits to identify high-risk cases for further investigation.
Summary: The Government of India's financial report up to November 2017 shows total receipts of Rs. 8,66,710 crore, representing 54.2% of the budget estimates for the fiscal year 2017-18. This includes Rs. 6,99,392 crore in net tax revenue, Rs. 1,05,469 crore in non-tax revenue, and Rs. 61,849 crore in non-debt capital receipts, which comprise loan recoveries and PSU disinvestment. The government transferred Rs. 3,85,286 crore to state governments as tax devolution. Total expenditure reached Rs. 14,78,815 crore, with Rs. 12,94,700 crore on revenue account and Rs. 1,84,115 crore on capital account, including significant allocations for interest payments and major subsidies.
Summary: The Secretary of the Department of Commerce launched EEPC India's e-catalogue in New Delhi, aiming to enhance the country's engineering exports through the 'Brand India' initiative. The e-catalogue focuses on medical devices, textile machinery, electrical machinery, and pumps and valves, and is accessible on various devices. It includes features like Advanced Search and company profile downloads. The initiative seeks to serve as a model for other export councils and will be supported by kiosks at global engineering exhibitions. The EEPC India Chairman highlighted the potential of textile engineering to become a major global manufacturing hub.
Summary: The Central Board of Direct Taxes (CBDT) signed three Advance Pricing Agreements (APAs) in December 2017, including two Unilateral and one Bilateral with the United Kingdom, bringing the total to 189 APAs. These agreements involve the Electronics, Coal, and Insurance sectors, covering transactions like Software Development Services and IT-enabled Services. Introduced in 2012, the APA scheme aims to provide certainty in transfer pricing by pre-setting international transaction prices. This initiative is part of the government's effort to create a non-adversarial tax environment, enhancing India's business climate and gaining national and international recognition for addressing complex transfer pricing issues.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 63.9273 on December 29, 2017, down from Rs. 64.1716 on December 28, 2017. Corresponding exchange rates for other currencies against the Rupee were also adjusted: the Euro was at Rs. 76.3867, the British Pound at Rs. 86.0653, and 100 Japanese Yen at Rs. 56.72 on December 29, 2017. These rates are determined based on the US Dollar reference rate and cross-currency quotes. The Special Drawing Rights (SDR) to Rupee rate will also be based on this reference rate.
Summary: The Ministry of Finance has warned against investing in virtual currencies (VCs) like Bitcoin, likening them to Ponzi schemes due to their speculative nature and lack of intrinsic value or asset backing. The government highlights the risks of investment bubbles, potential for hacking, and use in illegal activities. VCs are not recognized as legal tender or currencies by the government or the Reserve Bank of India, and no licenses have been issued for exchanges or intermediaries. Investors are urged to exercise caution, as VCs lack regulatory protection in India, and transactions are at the user's own risk.
Summary: India has secured a USD 40 million loan from the World Bank for the U.P. Pro-Poor Tourism Development Project. The agreement was signed by representatives from the Indian government and the World Bank. The project, with a total budget of USD 57.14 million, aims to enhance tourism benefits for local communities in Uttar Pradesh, focusing on areas like Agra, Mathura, Vrindavan, Barsana, and Govardhan. The initiative, spanning five years, seeks to deliver significant social, economic, and environmental advantages by supporting local communities and entrepreneurs near key tourist and pilgrimage sites.
Notifications
Customs
1.
120/2017 - dated
29-12-2017
-
Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut,Gold and Silver
Summary: The Government of India, through the Central Board of Excise and Customs, issued Notification No. 120/2017 on December 29, 2017, amending the earlier notification No. 36/2001-Customs (N.T.). This amendment revises the tariff values for various goods, including edible oils, brass scrap, poppy seeds, gold, silver, and areca nuts. The updated tariff values are specified in three tables, with crude palm oil set at $660 per metric tonne, crude soybean oil at $813 per metric tonne, brass scrap at $3642 per metric tonne, gold at $415 per 10 grams, silver at $539 per kilogram, and areca nuts at $3948 per metric tonne.
GST
2.
75/2017 - dated
29-12-2017
-
CGST
The Central Goods and Services Tax (Fourteenth Amendment) Rules, 2017.
Summary: The Central Goods and Services Tax (Fourteenth Amendment) Rules, 2017, introduces several amendments to the existing GST rules. Key changes include the addition of sub-rules in rules 17 and 19 regarding the Unique Identity Number and application amendments, respectively. Rule 89 is updated to provide a formula for refunding input tax credit on zero-rated supplies. Amendments to rules 95 and 96 address refund applications and conditions for integrated tax refunds. New forms, such as GST REG-10, GSTR-11, and GST RFD-10, are introduced or revised to streamline registration and refund processes for foreign suppliers and specialized agencies. These changes aim to enhance clarity and efficiency in GST administration.
3.
74/2017 - dated
29-12-2017
-
CGST
Notifies the date from which E-Way Bill Rules shall come into force
Summary: The Government of India, through the Ministry of Finance's Department of Revenue and the Central Board of Excise and Customs, issued Notification No. 74/2017 on December 29, 2017. This notification, under the Central Goods and Services Tax Act, 2017, designates February 1, 2018, as the effective date for implementing specific provisions of Notification No. 27/2017 - Central Tax. These provisions were initially published on August 30, 2017. The notification was later rescinded by Notification No. 11/2018, dated February 2, 2018.
4.
73/2017 - dated
29-12-2017
-
CGST
Waives the late fee payable for failure to furnish the return in FORM GSTR-4
Summary: The Government of India, through the Ministry of Finance, has issued a notification waiving late fees for registered persons who fail to submit their GSTR-4 returns by the due date. The waiver applies to fees exceeding 25 rupees per day, and 10 rupees per day if no central tax is payable. Specific periods, such as July 2017 to March 2020, and financial years 2019-20 to 2021-22, are covered under this waiver if returns are filed within designated windows. Additional provisions apply to certain financial years and regions, such as the Union Territory of Ladakh, with varying conditions on fee waivers.
5.
72/2017 - dated
29-12-2017
-
CGST
Extends the due dates for monthly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of more than ₹ 1.5 crores
Summary: The Government of India, through Notification No. 72/2017 - Central Tax dated December 29, 2017, has extended the deadlines for taxpayers with an aggregate turnover exceeding 1.5 crore rupees to submit FORM GSTR-1. The revised deadlines for furnishing details of outward supplies are as follows: July-November 2017 by January 10, 2018; December 2017 by February 10, 2018; January 2018 by March 10, 2018; February 2018 by April 10, 2018; and March 2018 by May 10, 2018. Further extensions for returns under sections 38 and 39 will be announced later.
6.
71/2017 - dated
29-12-2017
-
CGST
Extends the due dates for quarterly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of upto ₹ 1.5 crore
Summary: The Government of India, through Notification No. 71/2017 - Central Tax, extends the deadlines for taxpayers with an aggregate turnover of up to 1.5 crore rupees to file their quarterly FORM GSTR-1 returns. For the quarter of July to September 2017, the deadline is extended to January 10, 2018; for October to December 2017, to February 15, 2018; and for January to March 2018, to April 30, 2018. This notification supersedes the previous Notification No. 57/2017 and details the special procedure for furnishing details of outward supplies. Further extensions will be announced in the Official Gazette.
Circulars / Instructions / Orders
GST
1.
26/26/2017 - dated
29-12-2017
Filing of Returns under GST- regarding
Summary: The circular addresses the filing of GST returns, following decisions made by the GST Council in November 2017. It clarifies return filing dates for different turnover brackets, emphasizing monthly filing of FORM GSTR-3B and the option for quarterly filing of FORM GSTR-1 for businesses with turnover up to Rs. 1.5 Crore. Late fees for GSTR-3B filing are reduced for October 2017 onwards. Errors in GSTR-3B can be rectified in subsequent filings, but adjustments cannot include negative entries. Editing of GSTR-3B is allowed before offsetting liabilities. The circular also calls for trade notices to disseminate this information.
Customs
2.
46 /2017 - dated
26-12-2017
Subject:- Sale of goods and display of prices at duty free shops in Indian currency – amendment of circular 31/2016 - Customs dated 6th July 2016 – Reg.
Summary: The circular amends previous guidelines regarding sales and pricing at duty-free shops in India. It allows passengers to make payments in Indian Rupees (INR) using credit or debit cards at duty-free shops without converting foreign currency. Duty-free shops must display prices in INR only. There is a payment limit of Rs. 25,000 for incoming passengers using INR cards at arrival halls, but no limit for outgoing passengers at departure halls. Shops must ensure that passengers are not charged in foreign currency when using INR cards. Any issues with implementing these changes should be reported to the customs office.
3.
47 /2017 - dated
26-12-2017
Subject:- Implementing Electronic Sealing for Containers by exporters under selfsealing procedure by Circular Nos. 26/2017-Cus dated 01.07.2017, 36/2017-Cus dated 28.08.2017, 37/2017-Cus dated 20.09.2017, 41/2017-Cus dated 30.10.2017 and 44/2017- Cus dated 18.11.2017 – Reg.
Summary: The circular addresses the implementation of electronic sealing (e-sealing) for containers by exporters under the self-sealing procedure. Initially, the e-sealing procedure is voluntary until March 1, 2018, for exporters with RFID e-seals at approved premises. From March 1, 2018, it becomes mandatory for exporters with self-sealing permissions at specified ports and inland container depots (ICDs). From April 1, 2018, the e-sealing requirement extends to all other ports and ICDs. Exporters who have already adopted the e-sealing procedure may continue, and those with officer-supervised stuffing will maintain this facility until e-sealing becomes mandatory. Any difficulties in implementation should be reported to the customs office.
Highlights / Catch Notes
GST
-
Amendment to Rule 96: Exporters under Deemed Export Scheme cannot claim IGST refund on export goods or services.
Act-Rules : Restriction of refund - Recipient of goods under Deemed export scheme or under payment of tax @0.1% IGST (or @0.05 % CGST + @0.05 SGST) for use in export shall not be allowed to pay IGST on export goods or services and claim refund of IGST so paid. - Rule 96 amended - See Sub-Rule (9)
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Amended Rule 95 aims to streamline GST refund processes for eligible individuals, ensuring timely and accurate reimbursements.
Act-Rules : Refund of tax to certain persons - Rule 95 as amended
-
Rule 89 Amended: Refunds for Input Tax Credit on Zero-Rated Supplies, Including Deemed Exports, Now Covered by Sub-Rule 4B.
Act-Rules : Refund of input tax credit - zero-rated supply of goods or services or both - Even the cases, where person supplying on Deemed export basis has paid the tax @0.1% IGST (or @0.05 % CGST + @0.05 SGST) refund shall be allowed - Rule 89 amended - See Sub-Rule 4B
-
Amended Rule 89: Refund Eligibility for Zero-Rated Supply and Deemed Export Goods Recipients Expanded.
Act-Rules : Refund of input tax credit - zero-rated supply of goods or services or both - Even the recipient of Deemed Export Goods shall be eligible for refund - Rule 89 amended - See Sub-Rule 4A
-
GST Rule 89 Amended: New Conditions for Input Tax Credit Refunds on Zero-Rated Supplies Explained in Sub-Rule 4.
Act-Rules : Refund of input tax credit in case of zero-rated supply of goods or services or both - Rule 89 amended - See Sub-Rule 4
-
GST Registration Amendments Not Retroactive Without Permission: Rule 19, Sub-Rule 1A Clarifies FORM GST REG-14 Submission Date.
Act-Rules : Amendment of registration shall not be be effective from a date earlier than the date of submission of the application in FORM GST REG-14, except with specific permission - Rule 19 as amended - - See Sub-Rule 1A
-
Amended Rule 17: Unique Identity Numbers Now Valid Across India for GST Taxation Purposes.
Act-Rules : Unique Identity Number assigned to to certain special entities shall be applicable to the territory of India - Rule 17 as amended - See Sub-Rule 1A
-
New Circular Highlights Penalties for Late GST Returns, Stresses Timely Filing and Simplified Compliance Process for Taxpayers.
Circulars : Filing of Returns under GST- regarding
-
GST Rules Updated: Streamlined Registration, Return Filing, and Input Tax Credit Procedures in Latest Amendment.
Notifications : The Central Goods and Services Tax (Fourteenth Amendment) Rules, 2017
-
E-Way Bill Rules for GST to Launch on February 1, 2018, Streamlining Interstate Goods Movement.
Notifications : Notifies the date (1st day of February, 2018) from which E-Way Bill Rules shall come into force
-
Partial Late Fee Waiver for FORM GSTR-4 Submission Under GST: Eases Financial Burden on Taxpayers.
Notifications : Partially waiver of the late fee payable for failure to furnish the return in FORM GSTR-4
-
Monthly GSTR-1 Submission Deadline Extended for Taxpayers with Over Rs. 1.5 Crore Turnover.
Notifications : Extends the due dates for monthly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of more than ₹ 1.5 crores
-
Quarterly FORM GSTR-1 Submission Deadlines Extended for Taxpayers with Turnover Up to Rs. 1.5 Crore.
Notifications : Extends the due dates for quarterly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of upto ₹ 1.5 crore
-
Budget Support for CGST and IGST to Boost Industry in North East and Himalayan States.
News : Scheme of budgetary support for cash component of CGST and IGST for eligible industrial units for residual period in States of North Eastern region and Himalayan states
Customs
-
Duty-Free Shops in India Must Display Prices in Indian Currency to Enhance Transparency and Compliance.
Circulars : Subject:- Sale of goods and display of prices at duty free shops in Indian currency – amendment of circular 31/2016 - Customs dated 6th July 2016
Indian Laws
-
CBDT Advances APA Program with Three New Agreements Signed in December 2017.
News : Indian Advance Pricing Agreement regime moves forward with signing of three APAs by CBDT in December, 2017
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Tariff Value Updates for Commodities: Crude Palm Oil, Soybean Oil, Gold, Silver, and More Impacting Trade Strategies.
News : Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
Service Tax
-
Revenue's Interpretation Leads to VCES Application Rejection; No Substantial Misdeclaration Found; Acknowledged Tax Liability Unchallenged.
Case-Laws - AT : Rejection of VCES application - The Revenue has only taken a different interpretation as far as the classification of services. This cannot tantamount to substantial misdeclaration - tax liability accepted in the VCES by the appellant is not being interfered - AT
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Tribunal Upholds Rejection of VCES Application, Citing Activation of First Proviso to Section 106(1) of Finance Act.
Case-Laws - AT : Voluntary Compliance Encouragement Scheme (VCES) - rejection of the application - Appellant submitted that, merely because the appellant had been issued with a notice for the earlier period, would not mean that the First Proviso to subsection (1) of Section 106 of the Finance Act, would come into operation - tribunal rejected the contention.
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