TMI Tax Updates - e-Newsletter
February 10, 2022
Case Laws in this Newsletter:
Articles
By: Anuj Bansal
Summary: The proposed substitution of Section 38 under the CGST Act in the Budget 2022-23 aims to eliminate the two-way communication process in GST return filing. It introduces an auto-generated statement that communicates details of inward supplies and input tax credit (ITC) to recipients. This change restricts ITC claims based on supplier compliance, affecting recipients who must ensure their suppliers meet tax obligations. Critics argue this shift places undue responsibility on recipients and contradicts established legal positions that protect genuine ITC claims. The proposal may lead to increased litigation and challenges the principles of natural justice, potentially impacting business operations and compliance burdens.
By: Bimal jain
Summary: The Punjab and Haryana High Court ruled that GST authorities cannot detain goods in transit solely for non-payment of tax by another party in the supply chain if the goods are accompanied by the required documents. The court emphasized that a taxpayer cannot be held liable for tax evasion without direct intent or action linked to such evasion. The court also noted that wrongful claims of Input Tax Credit (ITC) might be bona fide and do not necessarily imply intent to evade tax. The court directed the release of the detained goods, reinforcing that detention without appropriate orders is impermissible.
News
Summary: The logistics sector's contribution to GDP is not currently compiled, but sector-wise Gross Value Added for railways, road, water, and air transport, as well as storage and services incidental to transport, is provided for the past three years. The government has approved the PM Gati Shakti National Master Plan to enhance multimodal connectivity to economic zones. This plan aims to integrate infrastructure projects, eliminate gaps, and facilitate seamless movement of people and goods. It is expected to boost productivity, economic growth, and development by creating an integrated national network of transportation and logistics, promoting efficiency, and providing employment opportunities.
Summary: Foreign Direct Investment (FDI) inflows into India have risen from US$ 45.15 billion in 2014-15 to US$ 81.97 billion in 2020-21, totaling US$ 339.55 billion over the past five years. The Indian government has implemented an investor-friendly policy allowing 100% FDI in most sectors via the Automatic route, with ongoing reviews and reforms in areas like Insurance, Defence, and Telecom. These investments enhance domestic investments, industrial development, and employment, while introducing international practices and technologies that boost skill development, export promotion, and economic competitiveness, contributing to the country's overall economic growth.
Summary: The growth rate of the core sector in the country increased by 3.4% in November 2021 compared to the previous year, with an overall growth rate of 12.6% for April-December 2021. The core sector significantly impacts the Index of Industrial Production. The government has launched initiatives like PM Gati Shakti for integrated infrastructure planning, alongside measures such as the National Infrastructure Pipeline and Production Linked Incentive Scheme. The Union Budget 2022-23 allocated Rs. 7.50 lakh crore for capital expenditure, a 35.4% increase from the previous year. The Economic Survey 2021-22 estimates a 9.2% GDP growth and 12.5% manufacturing growth for 2021-22.
Summary: The Central Government is implementing the principle of Minimum Government - Maximum Governance by reducing public interaction with authorities and promoting online access to information. The Ministry of MSME provides scheme details through its web portals and conducts awareness programs via seminars and meetings. Efforts are underway to streamline compliance processes across Ministries and States to benefit MSMEs and Startups. Special Economic Zones offer single window clearance and dedicated Customs support for expedited export and domestic approvals. Export Oriented Units also benefit from quick clearance and a two-day process for Domestic Tariff Area sales, as per existing policies.
Summary: The Competition Commission of India (CCI) issued a cease and desist order against a truck union operating in the Sanu Mines area of Jaisalmer, Rajasthan, for violating the Competition Act, 2002. The union was found to have restricted CJ Darcl Logistics Ltd from using its own vehicles for transportation, mandating the use of union vehicles at higher rates, and threatening the logistics company's personnel. The CCI determined that the union engaged in anti-competitive practices by fixing transportation prices and controlling service provisions. The union and its chairman were ordered to stop these practices.
Notifications
DGFT
1.
54/2015-2020 - dated
9-2-2022
-
FTP
Notification of ITC (HS), 2022- Schedule-1 (Import Policy)
Summary: The notification from the Directorate General of Foreign Trade (DGFT) announces the implementation of the Indian Trade Classification (Harmonised System) 2022 (ITC (HS) 2022) in alignment with the Finance Act 2021. The import policy for drones is updated, prohibiting the import of drones in Completely-Built-Up (CBU), Semi-knocked-down (SKD), or Completely-Knocked-down (CKD) forms, except for government, educational, R&D, and defense purposes, which require authorization. Import of drone components is free. The notification includes amendments to various chapters and sections of the ITC (HS) codes, detailing changes in policy conditions, item descriptions, and import restrictions.
GST - States
2.
40/2021-State Tax - dated
31-1-2022
-
Himachal Pradesh SGST
Himachal Pradesh Goods and Services Tax (Tenth Amendment) Rules, 2021.
Summary: The Himachal Pradesh Goods and Services Tax (Tenth Amendment) Rules, 2021, effective from January 1, 2022, introduce several changes to the Himachal Pradesh GST Rules, 2017. Key amendments include modifications to rules concerning input tax credit, annual returns, and reconciliation statements. The rules also address the recovery of penalties through the sale of detained goods, procedures for auctioning such goods, and the disposal of sale proceeds. Changes to forms related to the attachment and auction of goods are also outlined. The amendments aim to streamline tax processes and enhance compliance under the Himachal Pradesh GST framework.
3.
39/2021-State Tax - dated
31-1-2022
-
Himachal Pradesh SGST
Seeks to bring in force provisions of Sections 2, 3 and 7 to 15 of the Himachal Pradesh Goods and Services Tax (Amendment) Act, 2021
Summary: The notification issued by the State Taxes and Excise Department of Himachal Pradesh announces the enforcement of specific sections of the Himachal Pradesh Goods and Services Tax (Amendment) Act, 2021. Sections 2, 3, and 7 to 15 of the Act are set to be effective from January 1, 2022. This decision is made under the authority granted by sub-section (2) of Section 1 of the Act and is officially ordered by the Governor of Himachal Pradesh. The notification is signed by the Additional Chief Secretary of State Taxes and Excise.
4.
38/2021-State Tax - dated
31-1-2022
-
Himachal Pradesh SGST
Seeks to bring in force provisions of sub-rule (2), sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the Himachal Pradesh Goods and Services Tax (Eighth Amendment) Rules, 2021
Summary: The notification from the State Taxes and Excise Department of Himachal Pradesh announces the enforcement of specific provisions from the Himachal Pradesh Goods and Services Tax (Eighth Amendment) Rules, 2021. These include sub-rule (2), sub-rule (3), clause (i) of sub-rule (6), and sub-rule (7) of rule 2. The effective date for these provisions is set as January 1, 2022. This decision is authorized by the Governor of Himachal Pradesh and documented under notification number 38/2021-State Tax, dated January 31, 2022.
5.
37/2021-State Tax - dated
31-1-2022
-
Himachal Pradesh SGST
Himachal Pradesh and Services Tax (Ninth Amendment) Rules, 2021.
Summary: The Himachal Pradesh Goods and Services Tax (Ninth Amendment) Rules, 2021, were enacted under the authority of Section 164 of the Himachal Pradesh GST Act, 2017. Effective from November 30, 2021, the amendment extends the duration specified in Rule 137 from four to five years. Additionally, modifications to FORM GST DRC-03 include new language and categories for tax ascertained through FORM GST DRC-01A, addressing various tax-related activities such as audits, inspections, and mismatches between specific GST forms. The changes were formalized by the state's Excise and Taxation Department and published in the Official Gazette.
6.
22/2021(Rate) GST/SIKKIM - dated
31-12-2021
-
Sikkim SGST
Seeks to supersede notification 15/2021 – State Tax (Rate), dated the 18th November, 2021 and amend Notification No 11/2017- State Tax (Rate), dated the 28th June, 2017
Summary: The Government of Sikkim has issued Notification No. 22/2021 to amend Notification No. 11/2017, superseding Notification No. 15/2021. Effective January 1, 2022, the amendments involve changes in the description of services in the notification's table. Specifically, the terms "Union territory, a local authority, a Governmental Authority or a Government Entity" are replaced with "Union territory or a local authority" in certain items. Additionally, conditions related to specific items are omitted. This action is taken under the Sikkim Goods and Services Tax Act, 2017, in the public interest and on the Council's recommendations.
7.
21/2021(Rate) GST/SIKKIM - dated
31-12-2021
-
Sikkim SGST
Seeks to supersede notification 14/2021-State Tax (Rate), dated the 18th November, 2021 and amend Notification No 01/2017- State Tax (Rate), dated the 28th June, 2017.
Summary: The Government of Sikkim has issued a notification amending the State Tax (Rate) under the Sikkim Goods and Services Tax Act, 2017. This amendment supersedes the previous notification No. 14/2021-State Tax (Rate) dated November 18, 2021, and modifies Notification No. 01/2017-State Tax (Rate) dated June 28, 2017. The changes include the omission of serial number 225 from Schedule I (2.5%) and the addition of serial number 171A1 in Schedule II (6%) for footwear with a sale value not exceeding Rs. 1000 per pair. The amendment takes effect on January 1, 2022.
8.
20/2021(Rate) GST/SIKKIM - dated
28-12-2021
-
Sikkim SGST
Amendment in Notification No. 21/2018-State Tax (Rate), dated the 26th July, 2018
Summary: The Government of Sikkim has amended Notification No. 21/2018-State Tax (Rate) dated July 26, 2018, under the Sikkim Goods and Services Tax Act, 2017. The amendments involve changes in the TABLE of the original notification, specifically substituting the entry "4414" for S. No. 4 and "7419 80" for S. No. 29. These changes will take effect on January 1, 2022, as per the authority granted by section 11 of the Sikkim GST Act, 2017, following recommendations from the Council.
Circulars / Instructions / Orders
SEBI
1.
SEBI/HO/DDHS/DDHS_Div3/P/CIR/2022/16 - dated
9-2-2022
Conversion of Private Unlisted InvIT into Private Listed InvIT
Summary: The circular issued by SEBI outlines the process for converting a Private Unlisted Infrastructure Investment Trust (InvIT) into a Private Listed InvIT. It specifies that such conversion can occur through private placement of units via fresh issuance or an offer for sale, following compliance with Chapter IV of the InvIT Regulations. The document details conditions for issuance, including asset compliance, disclosure obligations, and approval from unit holders. It also addresses conditions for the offer for sale, minimum sponsor contribution, restrictions on unit transferability, maximum investor subscription, and necessary disclosures in placement memorandums. This conversion requires adherence to the InvIT Regulations and SEBI guidelines.
2.
SEBI/HO/DDHS/DDHS_Div3/P/CIR/2022/15 - dated
9-2-2022
Framework for conversion of Private Listed InvIT into Public InvIT
Summary: The circular issued by SEBI outlines the framework for converting a Private Listed Infrastructure Investment Trust (InvIT) into a Public InvIT. It specifies that a Private Listed InvIT can transition to a Public InvIT by making a public issue of units, either through a fresh issue or an offer for sale, adhering to the SEBI (Infrastructure Investment Trusts) Regulations, 2014. The circular details conditions for issuance, offer for sale, sponsor contribution, and restrictions on transferability of units. It mandates compliance with disclosure requirements and sets a maximum subscription limit for investors. The circular is issued under the authority of SEBI and is available on its website.
GST - States
3.
12039/154/2021 - dated
7-2-2022
Clarification on certain refund related issues
Summary: The Andhra Pradesh Commercial Taxes Department issued clarifications on refund-related issues under the APGST Act. It was clarified that the time limit for filing refund applications does not apply to refunds of excess balances in electronic cash ledgers. Certification under Rule 89 is not required for such refunds due to the non-applicability of the unjust enrichment clause. TDS/TCS amounts credited to electronic cash ledgers can be refunded as excess balances. For deemed export supplies, the relevant date for refund claims is the date the supplier files the return. The circular encourages issuing trade notices to publicize these clarifications.
4.
TRADE CIRCULAR No. 01/2022 - dated
31-1-2022
GST on service supplied by restaurants through e-commerce operators
Summary: The circular from the West Bengal Directorate of Commercial Taxes addresses the GST implications for restaurant services provided through e-commerce operators (ECOs). Effective January 1, 2022, ECOs are responsible for paying GST on such services under section 9(5) of the WBGST Act, 2017, eliminating the need to collect TCS for these services. ECOs are not required to obtain separate registration for restaurant services, and they must pay GST in cash without utilizing input tax credit. Invoices for restaurant services must be issued by the ECO, and these services should be reported in GSTR-3B and GSTR-1 returns accordingly.
Highlights / Catch Notes
GST
-
Appellate Authority Overturns GSTIN Cancellation; Prior Orders Set Aside, Invalidating Previous Decisions Since Registration Date.
Case-Laws - HC : Cancellation of GSTIN of petitioner, with effect from the date of registration of GSTIN - The Appellate Authority has passed a clear and cogent order dated 5th April, 2021 where it was held that impugned order of rejection of application for revocation of cancellation of registration dated 24.11.2020 and order for cancellation of registration dated 15.09.2020 are set aside -This Court is of the view that the reliance of the respondents on the order dated 5th August, 2020 is misconceived. - HC
-
Court Declines to Intervene in Goods Detention; Urges Petitioner to Use Remedy u/s 107 CGST/SGST Act 2017.
Case-Laws - HC : Detention of goods - It is trite law that this Court cannot, in exercise of its jurisdiction under Article 226 of the Constitution of India enter into issues that falls within the realm of disputed facts. Further, petitioner has an alternative and efficacious remedy under Section 107 of the CGST/SGST Act 2017 and hence it will not be subjected to any prejudice also. - HC
Income Tax
-
Income Tax Officer's Jurisdiction Upheld: Section 143(2) Notice Issuance Valid; Section 292BB Can't Correct Procedural Errors.
Case-Laws - HC : ITO Jurisdiction over the assessee to issue notice u/s 143(2) - rectifiable error u/s 292BB - As in the case on hand, the revenue sought to take coverage under Section 292BB of the Act which was rejected on the ground that the very foundation of the jurisdiction of the assessing officer was on the issuance of notice under Section 143(2) and the same having been complied with, the revenue cannot take shelter under the provisions of Section 292BB - HC
-
High Court Upholds Tribunal Decision: Unregistered Development Agreements Have No Legal Effect u/s 53A, Income Tax Act, 1961.
Case-Laws - HC : Addition of consideration received on Transfer of land for Development - if the development agreement is not registered, it shall have no effect in law for the purposes of Section 53A which bodily stood incorporated in Section 2(47)(v) of the Income Tax Act, 1961. Thus, the Tribunal was right in allowing the assessee’s appeal and granting the relief sought for - HC
-
No Penalty for Honest Taxpayer: Voluntary Disclosure of Agricultural Land Sale Income Saves Assessee from Tax Penalty.
Case-Laws - AT : Penalty u/s 271(1)(c) - Explanation is bonafide is, we find, supported by the fact that during assessment proceedings the assessee, realizing his mistake even before detection by the Revenue, returned the same to tax. - The assessee having disclosed all particulars of his income from sale of agricultural land, having furnished a bonafide explanation for not returning the same to tax and having surrendered the said income suo moto before detection by the Revenue, we agree with the Ld.CIT(A) that the assessee cannot be said to have furnished inaccurate particulars of income so as to levy penalty u/s 271(1)(c) - AT
-
Court Interprets TDS Rules: Taxpayers Can Use Accountant's Certificate for Relief u/s 194C and 40(a)(ia).
Case-Laws - AT : TDS u/s 194C read with section 40(a)(ia) - the legislator provided relaxation to the assessee by inserting the 2nd proviso to section 40(a)(ia) on account of failure to deduct if it fulfill the condition prescribed under proviso to section 201(1) of the Act i.e. furnishing a certificate from accountant in from 26A. To our understanding the duty cast on the assessee cannot be transferred to revenue. If such burden transferred to revenue then the importance of provision of tax deduction at source will be of no relevance. Therefore the alternate contention of the assessee is dismissed. Hence the ground of appeal of the assessee is partly allowed. - AT
-
Penalty u/s 271(1)(b) Overturned Due to Incorrect Address and Communication Errors by Assessing Officer.
Case-Laws - AT : Levy of penalty u/s 271(1)(b) - non appearance before the Assessing Officer - AO kept an issuing notices on the wrong address even when the first notice was not served due to wrong address. All these series of facts shows that there was a mis-communication at the end of the AO about the address and also not mentioning the husband’s name of the assessee which resulted in non serving of the notice since she resided in village - no justification in the action of the AO in initiating and levying penalty u/s 271(1)(b). - AT
-
Section 68 Update: Share Application Money Verified by Inspectors; Assessee Provides Sufficient Evidence to Fulfill Onus.
Case-Laws - AT : Addition u/s 68 - addition on account of share application money - The identity of the above share applicants was also independently verified by the inspectors during the course of re-assessment proceedings. Notices u/s 133(6) of the Act were issued to the above share applicants which were duly replied to by the share applicants. So far as the share application money received from remaining companies is concerned, we find that the assessee filed ample documentary evidences which discharged the primary onus cast upon it u/s 68 - AT
Customs
-
Tribunal Rules Regulation 17 of C.B.L.R., 2018 as Directory; Insufficient Evidence on IEC Lending Under Regulation 11(d), 2013.
Case-Laws - HC : The provisions of Regulation 17 of the C.B.L.R., 2018 is required to be considered as directory and not mandatory - having regard to the finding of fact recorded by the Tribunal to the effect that the department has failed to provide sufficient evidence to show that the respondent had lent the IEC without proper verification and thereby he had violated Regulation 11(d) of C.B.L.R., 2013, the substantial question of law No.4 becomes only academical in the present case, because the respondent cannot be held guilty on the merits of the case for want of sufficient evidence as recorded by the Tribunal. - HC
-
Undervaluation of Imports: Authorities Must Justify Rejecting Declared Value and Explain New Valuation per Customs Valuation Rules, 2007.
Case-Laws - AT : Undervaluation of imported goods - Once the goods are assessed and cleared, there was no reason for rejecting the declared value and redetermining the same following the CVR, 2007 sequentially. First of all, the declared transaction value needs to be rejected and the value requires to be redetermined in terms of CVR, 2007, and it was incumbent upon the investigation and the adjudicating authority to show reasons for rejection of the declared assessable value and the results as to how the price adopted for rejecting the value is determined. This is a settled principle of valuation as held by this Tribunal as well as various Courts. - AT
-
Exemption on Edible Oil Imports Under Notification No. 89/2005-Cus Upheld; Additional Duty and Interest Demand Rejected.
Case-Laws - AT : Benefit of Notification NO. 89/2005-Cus - edible oil - DEPB scheme - The appellant would be entitled to get benefit of the exemption notification for the entire quantity of the goods imported in the Ex- bond Bills of Entry which are the subject matter of these two appeals. As half the duty has already been paid in cash and debit in respect of the remaining half has already been made in the DEPB account, the demand of duty and interest cannot be sustained. - AT
-
Restricted Goods Can Be Cleared for Home Use with Fine and Penalty, Per Foreign Trade Act & Customs Act Section 125.
Case-Laws - AT : Valuation of imported goods - The Foreign Trade Act and the Section 125 of the Customs Act does not make any bar from redemption of such restricted goods imported without authorization on payment of duty on retail market value and there is distinction between what is prohibited and what is restricted. In those circumstances, the goods cannot be held absolutely confiscated or cannot be restricted for clearance for home consumption, hence, the imported goods are allowed to be cleared for home consumption on payment of redemption fine and penalty. - AT
9911796707
