TMI Tax Updates - e-Newsletter
February 16, 2022
Case Laws in this Newsletter:
Articles
By: Dr. Sanjiv Agarwal
Summary: Section 64 of the Central Goods and Services Tax (CGST) Act, 2017, allows for summary assessment in specific cases to protect revenue interests. A proper officer, with prior approval from an Additional or Joint Commissioner, can assess tax liability based on evidence without notifying the taxpayer if a delay might harm revenue interests. If the liable party is unidentifiable, the person in charge of goods is deemed responsible. Summary assessments can be withdrawn if deemed erroneous, leading to proceedings under sections 73 or 74 for unpaid or short-paid taxes. Prior approval and evidence are mandatory for initiating such assessments.
News
Summary: The NITI Aayog Fintech month, which began on February 7, 2022, is a pioneering initiative aimed at fostering collaboration among regulators, fintech professionals, industry leaders, startups, and developers. The event focuses on creating an OPEN ecosystem, promoting co-innovation, and enhancing financial inclusion through models like Account Aggregator. The first week featured virtual inaugurations, fireside chats, and panel discussions on topics like digital payments, the impact of the Union Budget on fintech, and the democratization of financial services. Upcoming sessions will explore investment and insurance landscapes, culminating in a major fintech hackathon to encourage innovation.
Summary: India's exports in January 2022 reached USD 61.41 billion, marking a 36.76% increase compared to the previous year and a 38.90% rise from January 2020. Imports were USD 67.76 billion, growing 30.54% from the previous year. The trade balance showed a deficit of USD 6.35 billion. For the April-January 2021-22 period, exports totaled USD 545.71 billion, up 37.68% from the previous year, while imports were USD 616.91 billion, a 54.35% increase. The trade deficit was USD 71.19 billion. Non-petroleum and non-gems jewelry exports and imports also saw significant growth. Services exports and imports increased notably, with a trade balance of USD 11.07 billion in January 2022.
Summary: The Deputy Governor of the Reserve Bank of India delivered a keynote address assessing cryptocurrencies and their implications for the financial system. He argued that cryptocurrencies, while technologically innovative, pose significant risks to financial stability, monetary policy, and economic sovereignty. Cryptocurrencies lack intrinsic value, are not financial assets, and are akin to speculative schemes. Their decentralized and anonymous nature could undermine government control, financial integrity, and facilitate illegal activities. The address concluded that banning cryptocurrencies might be the most prudent choice for India, as regulation alone may not effectively address these concerns.
Summary: The Government of India, after reviewing its cash position and consulting with the Reserve Bank of India, has decided to cancel the auction of dated securities that was scheduled for February 18, 2022. This decision pertains to the issuance calendar for Government of India Dated Securities for the second half of the current financial year, initially outlined on September 27, 2021.
Notifications
Customs
1.
8/2022 - dated
14-2-2022
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ADD
Seeks to extend the Anti-Dumping Duty (ADD) on imports of "Aluminium foil of thickness ranging from 5.5 micron to 80 micron" originating in or exported from People's Republic of China, imposed vide Notification No. 23/2017-Customs (ADD), dated 16th May, 2017, till 15th June, 2022.
Summary: The Ministry of Finance in India has issued Notification No. 8/2022-Customs (ADD) to extend the anti-dumping duty on aluminium foil imports, with thickness ranging from 5.5 to 80 microns, originating from or exported by China. This duty, initially imposed by Notification No. 23/2017-Customs (ADD) dated May 16, 2017, will now remain effective until June 15, 2022, unless revoked or amended earlier. The extension follows a review initiated by the designated authority as per the Customs Tariff Act, 1975, to determine the continuation of this duty.
GST - States
2.
15/2021 – State Tax (Rate) - dated
2-2-2022
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Jharkhand SGST
Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017
Summary: The Government of Jharkhand has amended Notification No. 11/2017-State Tax (Rate) dated June 29, 2017, under the Jharkhand Goods and Services Tax Act, 2017. Effective January 1, 2022, changes include modifications in the description of services and conditions in the notification's table. Specifically, references to "Governmental Authority or a Government Entity" have been removed, now only mentioning "Union territory or a local authority." Additionally, an exception for services related to dyeing or printing of textiles has been added under the Customs Tariff Act. These amendments were made in the public interest based on Council recommendations.
Circulars / Instructions / Orders
SEBI
1.
SEBI/HO/CDMRD/DMP/P/CIR/2022/18 - dated
14-2-2022
Trading features pertaining to the Electronic Gold Receipts (EGR) segment
Summary: The Securities and Exchange Board of India (SEBI) issued a circular detailing the trading features for the Electronic Gold Receipts (EGR) segment, following the framework approved in September 2021. EGRs are now classified as securities, enabling the operationalization of a Gold Exchange. The circular outlines guidelines on trade timings, transaction charges, call auctions, block and bulk deals, price bands, investor protection funds, and the requirement for Unique Client Codes (UCC). Stock exchanges must amend their regulations accordingly and ensure compliance. The circular aims to protect investor interests and promote market development, effective immediately.
2.
SEBI/HO/CDMRD/DMP/P/CIR/2022/19 - dated
14-2-2022
Standard Operating Guidelines for the Vault Managers and Depositories - Electronic Gold Receipts (EGR) segment
Summary: The Securities and Exchange Board of India (SEBI) issued guidelines for Vault Managers and Depositories in the Electronic Gold Receipts (EGR) segment to ensure compliance and effective implementation of regulations. Vault Managers must maintain a financial security deposit and adhere to corporate governance standards, infrastructure requirements, and insurance coverage. They must also ensure reconciliation between physical gold and electronic records, manage storage charges, and have procedures for default in payments, safety, and security. The guidelines include processes for depositing gold, creating EGRs, withdrawing gold, and extinguishing EGRs, with specific cut-off times and error rectification procedures. Vault Managers and Depositories must maintain records and have a grievance redressal mechanism.
DGFT
3.
Trade Notice No. 34/2021-22 - dated
15-2-2022
Issuance of Replenishment Authorisation as per Para 4.35 and 4.36 of Foreign Trade Policy (FTP) from new online IT Module w.e.f. 21.02.2022
Summary: The Directorate General of Foreign Trade (DGFT) has launched a new online IT module for electronic, paperless applications for Replenishment Authorization for Gems and Consumables, effective from February 21, 2022, as per Paragraphs 4.35 and 4.36 of the Foreign Trade Policy. Applicants can submit their applications through the DGFT website. Applications submitted before this date via the legacy system will still be processed through the old system. For assistance, applicants can access the Help Manual and FAQs on the DGFT website or contact the DGFT Helpdesk through various channels. Approval has been granted by the Competent Authority.
Highlights / Catch Notes
GST
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APSRTC's Bus Leasing to State's Public Transport Division Exempt from GST, Confirms Appellate Authority for Advance Ruling.
Case-Laws - AAAR : Exemption from GST or not - transaction of hiring/leasing of buses by the APSRTC to the Public Transport Division (PTD) of Government of Andhra Pradesh - In the instant case, the PTD, the state government department which is running this service shall by definition be termed as the 'State Transport undertaking'. - Benefit of exemption from GST is available - AAAR
Income Tax
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Court Clarifies TDS Deduction on Loans: Holding Companies Not Required to Deduct TDS on Loans to Subsidiaries u/s 194A.
Case-Laws - AT : TDS u/s 194A - TDS on deemed dividend - loan advanced by the assessee company to the other group companies - Even if, the appellant company hold 100% shares in these companies the deemed dividend would arise when these companies give loans to the appellant holding company and not other way around when holding company gives loan to subsidiary company. Thus, we find the observation made hereinabove by the ITO(TDS) is not on the correct proposition of law. - Law does not expect the payer company to deduct TDS when the payment is made to a non-shareholder. - AT
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Income Tax Act Section 263: Pr. CIT's claim against AO's order lacks proof, deemed fiction inapplicable.
Case-Laws - AT : Revision u/s 263 by CIT - Second Pr. CIT find the order of Second AO erroneous for lack of enquiry - Scope of doctrine of merger - The Ld. Pr. CIT has made a bald statement that the AO’s assessment order attracts Explanation 2(c) u/s. 263 of the Act. However, he failed to spell out in his impugned order how the action of AO while framing the assessment order is not in accordance to any order, direction or instruction issued by the Board under section 119 of the Act. So, the deeming fiction as envisaged in Explanation (2) u/s. 263 of the Act cannot be used to interfere with the order of AO. - AT
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Revisional Order on Second Issue Barred by Limitation u/s 263(2); Principal Commissioner's Action Unsustainable.
Case-Laws - AT : Revision u/s 263 - Period of limitation - the limitation prescribed under section 263(2) would run from original assessment in respect of issue alien to reasons recorded. Thus, when seen qua the original assessment, the revisional order on the second issue is clearly barred by limitation. The action of the PCIT on the second issue thus cannot be countenanced. - AT
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Reassessment u/s 147 Deemed Invalid Due to Lack of New Evidence and Mere Change of Opinion.
Case-Laws - HC : Reopening of assessment u/s 147 - change of opinion - The impugned notice and the consequent action is legally unsustainable as the Revenue fails to satisfy the twin tests. Firstly, there is no assertion, much less material to indicate, that the income escaped assessment on account of failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment, and, secondly, the reasons recorded by the Assessing Officer should not fall within the ambit of “mere change of opinion” on the very same material. - HC
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Appellant's Rent Claim Denied as Revenue Expenditure u/s 37 Due to Insufficient Business Purpose Documentation.
Case-Laws - AT : Disallowance of rent - allowable revenue expenditure u/s 37 or not? - In this case the appellant has not filed any documents to establish that the expenditure was incurred wholly and exclusively for the purpose of business of the expenditure. The burden of proof is on appellant. Appellant failed to discharge the same. - AT
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Tax Deduction for Hotel Development: Section 35AD(5)(aa) Case Remanded for Reassessment Due to Approval Delays.
Case-Laws - AT : Deduction u/s.35 AD(5)(aa) - whole of capital expenditure incurred for purpose of development of hotel claimed - We restore the issue to file of the Assessing Officer and direct the A.O. to examine claim of the assessee in light of arguments of the assessee that there was no fault from their side in getting approval from competent authority. In case, the Assessing Officer finds that there is a delay from competent authority side in granting approval, then the Assessing Officer is directed to allow claim of deduction u/s. 35AD of the Act, in respect of expenditure incurred for specified business - AT
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Section 69A Additions Deleted: No Evidence of Hawala Transactions or Unsecured Loans Found in Company's Books or Searches.
Case-Laws - AT : Additions towards Hawala Transaction u/s. 69A - As against such alleged hawala transactions, no fresh unsecured loans have been found credited in the books of account of the assessee company for the subject assessment years. We also find that no such document or material was found or seized during the course of the search pertaining to the earlier years from which it could have been inferred that the assessee company was involved in such scrupulous activities. We also note that the AO has not conducted any independent enquiry to unearth and correlate the contents of the mobile messages with the financial affairs of the assessee company. - Additions deleted - AT
IBC
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Special Courts Jurisdiction Defined for Offences Under Insolvency Code and Companies Act 2013, Section 435(2)(b.
Case-Laws - HC : Jurisdiction to entertain the complaint filed by the respondents - which class of Special Courts, created by Companies Act (amendment) 2017, is empowered to try the offences under the I.B. Code? - it is clear that Special Court comprising of a Metropolitan Magistrate “Issue Process”, under Section ”, under Section or Judicial Magistrate First Class is to try “Issue Process”, under Section other offences”, under Section. The phrase other offences contained in section 435 (2) (b), “Issue Process”, under Section ”, under Section in contradistinction to section 435 (2) (a) of CA 2013, would include (1) offences under the I.B. Code, and (2) offences under the CA 2013 but carrying punishment of imprisonment of less than two years. - HC
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PMLA Proceedings Override IBC During CIRP for Provisional Attachment of Crime Proceeds, Tribunal Confirms Alignment with UN Resolutions.
Case-Laws - AT : Proceedings under PMLA while CIRP is in process - Provisional Attachment of the Properties - In fact, ‘The Prevention of Money Laundering Act, 2002’ is to fulfill our Country’s obligation in adhering to the United Nations Resolutions and in regard to Assets/Properties being the ‘Proceeds of Crime’, it takes a ‘primacy and precedence’ over the ‘Insolvency and Bankruptcy Code, 2016’ which promotes “Resolution’ as its objective over Liquidation in the considered opinion of this ‘Tribunal’. - AT
Central Excise
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Tribunal Rules Dolachar Should Be Classified Under Chapter Heading 2701.00 Similar to Coal, Not as Waste Item.
Case-Laws - AT : Classification of goods - dolachar or coalchar - waste item - classifiable under Chapter Heading 2619 of the First Schedule to the Central Excise Tariff Act or not - The issue already stands decided by this Tribunal - the product is akin to coal and accordingly is to be classified under 2701.00. - AT
VAT
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Court of Appeal Intervenes Only if Judgment Proven Wrong in VAT and Sales Tax Assessment Order Case.
Case-Laws - HC : Restoration of assessment order - it is settled law that “a court of appeal interferes not when the judgment under attack is not right, but only when it is shown to be wrong”. - HC
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