TMI Tax Updates - e-Newsletter
March 12, 2022
Case Laws in this Newsletter:
Articles
By: Salil Arora and Garvesh Kabra
Summary: The Financial Action Task Force (FATF) amended Recommendation 24 to enhance transparency in beneficial ownership of legal entities, aiming to combat money laundering and terrorist financing. These changes, adopted after extensive deliberations, require countries to maintain accurate and updated ownership information and share it internationally as needed. India, already proactive in targeting shell companies and enforcing the Prevention of Money Laundering Act, faces challenges in international cooperation and processing claims related to physical shares. The amendments emphasize the need for effective international collaboration and address issues like bearer shares and nominee arrangements to prevent misuse.
By: Dr. Sanjiv Agarwal
Summary: The article discusses the concept of a "proper officer" under the Goods and Services Tax (GST) laws in India, as defined in Section 2(91) of the CGST Act, 2017. A proper officer is either the Commissioner or a central tax officer assigned specific functions by the Commissioner. The article highlights judicial interpretations, emphasizing that proper officers can include officers from SGST or UTGST appointed for IGST functions, subject to government notifications. It reviews relevant court cases, such as M/S MAA GEETA TRADERS and YASHO INDUSTRIES LIMITED, which address jurisdiction and delegation of powers under the CGST Act.
News
Summary: The Goods and Services Tax (GST) Registration Application GST REG-01 has undergone enhancements to its user interface, particularly in the address fields. A map tile with a drag-and-drop feature allows users to pinpoint their exact location, automatically filling in address details. Address fields are now interconnected, enabling auto-fill of macro-level entries like State and District based on the PIN code. Suggestive dropdowns aid in selecting the correct address fields, minimizing errors. Additionally, latitude and longitude details are auto-populated based on the user's address entries, providing a more streamlined and error-free registration process.
Summary: The Deputy Governor of the Reserve Bank of India addressed the IMC Chamber of Commerce and Industry, highlighting challenges in the global economy due to quantitative tightening and geopolitical tensions. He noted the impact of these factors on financial markets, inflation, and growth, drawing parallels with the 2013 taper tantrum. The speech emphasized India's economic resilience, citing improved external sector indicators, robust foreign exchange reserves, and strong export performance. However, concerns remain over inflation, particularly due to rising crude prices. The address underscored the need for cautious monetary policy and fiscal strategies to navigate current uncertainties.
Summary: India and Canada have agreed to re-launch negotiations for the Comprehensive Economic Partnership Agreement (CEPA) to enhance bilateral trade. During their fifth Ministerial Dialogue on Trade Investment, both nations discussed an Interim Agreement or Early Progress Trade Agreement (EPTA) to achieve early commercial benefits. The discussions included commitments on goods, services, and other trade-related areas. The countries also addressed bilateral trade issues, including pest risk management and market access for agricultural goods. They emphasized collaboration in pharmaceuticals, rare earth minerals, and other sectors, highlighting the importance of strong people-to-people ties in strengthening economic partnerships.
Summary: India and Canada concluded their fifth Ministerial Dialogue on Trade and Investment, emphasizing their strong economic relationship and plans to enhance bilateral trade. The ministers noted a 12% growth in bilateral trade in 2021 and highlighted the potential for increased services trade and foreign direct investment. They agreed to re-launch negotiations for a Comprehensive Economic Partnership Agreement and consider an interim Early Progress Trade Agreement. Discussions included market access for agricultural products, supply chain resilience, and cooperation in sectors like public health, tourism, and urban development. Both countries aim to strengthen ties through enhanced partnerships and cooperation across various sectors.
Notifications
GST - States
1.
38/2021-State Tax - dated
27-1-2022
-
Chhattisgarh 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 Chhattisgarh Goods and Services Tax (Eighth Amendment) Rules, 2021
Summary: The Government of Chhattisgarh has issued Notification No. 38/2021-State Tax, dated January 27, 2022, to enforce specific provisions of the Chhattisgarh Goods and Services Tax (Eighth Amendment) Rules, 2021. The provisions include sub-rule (2), sub-rule (3), clause (i) of sub-rule (6), and sub-rule (7) of rule 2. These provisions are effective from January 1, 2022. This notification follows the earlier Notification No. 35/2021-State Tax, published in the Chhattisgarh Gazette on November 11, 2021. The order is issued by the Principal Secretary in the name of the Governor of Chhattisgarh.
2.
16/2021 – State Tax (Rate) - dated
19-1-2022
-
Chhattisgarh SGST
Amendment in Notification No. 12/2017–State Tax (Rate) dated 28th June, 2017
Summary: The Government of Chhattisgarh has issued Notification No. 16/2021 amending Notification No. 12/2017-State Tax (Rate) under the Chhattisgarh Goods and Services Tax Act, 2017. The amendments involve changes to the description of services in the notification's table. Specifically, the words "or a Governmental authority or a Government Entity" are removed from serial numbers 3 and 3A. Additionally, new provisions are added to serial numbers 15 and 17, stating that certain services supplied through an electronic commerce operator are not applicable under specified conditions. These amendments are effective from January 1, 2022.
3.
15/2021 – State Tax (Rate) - dated
19-1-2022
-
Chhattisgarh SGST
Amendment in Notification No. 11/2017–State Tax (Rate) dated 28th June, 2017
Summary: The Government of Chhattisgarh has issued an amendment to Notification No. 11/2017-State Tax (Rate) under the Chhattisgarh Goods and Services Tax Act, 2017. Effective from January 1, 2022, the amendment alters the description of services in the notification. Specifically, it replaces references to "Union territory, a local authority, a Governmental Authority or a Government Entity" with "Union territory or a local authority" for certain service items. Additionally, it omits certain conditions and adds an exception for services related to dyeing or printing of textiles in the description of service under serial number 26.
4.
14/2021 – State Tax (Rate) - dated
19-1-2022
-
Chhattisgarh SGST
Amendment in Notification No. 01/2017–State Tax (Rate) dated 29th June, 2017
Summary: The Government of Chhattisgarh has amended Notification No. 01/2017-State Tax (Rate) under the Chhattisgarh Goods and Services Tax Act, 2017. The changes involve modifications to tax rates and classifications of various textile products. In Schedule I, several serial numbers and entries have been removed. Schedule II sees the omission of certain entries and the addition of new ones related to woven fabrics and synthetic materials. Changes in Schedule III include the removal of specific entries. These amendments are effective from January 1, 2022, as per the order issued by the Principal Secretary.
5.
13/2021 – State Tax (Rate) - dated
19-1-2022
-
Chhattisgarh SGST
Amendment in Notification No. 1/2017–State Tax (Rate), dated the 28th June, 2017
Summary: The Government of Chhattisgarh has issued an amendment to Notification No. 1/2017-State Tax (Rate) under the Chhattisgarh Goods and Services Tax Act, 2017. Effective from October 27, 2021, the amendment involves changes to tax rates in the notification dated June 28, 2017. Specifically, item S. No. 243 in Schedule II, which had a 6% rate, is omitted, and in Schedule III, the phrase "in respect of Information Technology software" is removed from S. No. 452P, which had a 9% rate. This amendment follows the recommendations of the GST Council.
6.
56/2020–State Tax - dated
10-3-2022
-
Delhi SGST
Amendment in Notification No. 46/2020- State Tax, dated the 8th July, 2021
Summary: The notification amends Notification No. 46/2020-State Tax dated July 8, 2021, under the Delhi Goods and Services Tax Act, 2017. The amendment changes the dates mentioned in the first paragraph of the original notification. The date "29th day of June, 2020" is replaced with "30th day of August, 2020," and "30th day of June, 2020" is replaced with "31st day of August, 2020." This amendment takes effect retroactively from June 27, 2020, as ordered by the Lt. Governor of the National Capital Territory of Delhi.
7.
33/2021– State Tax - dated
10-3-2022
-
Delhi SGST
Amendment in Notification No. 76/2018– State Tax, dated the 3rd September, 2019
Summary: The notification issued by the Finance Department of Delhi on March 10, 2022, amends a previous notification (No. 76/2018) concerning the Delhi Goods and Services Tax Act, 2017. The amendment, authorized by the Lt. Governor of Delhi based on the Council's recommendations, changes the dates in the ninth and tenth provisos from "31st day of August, 2021" to "30th day of November, 2021." This modification is part of ongoing updates to the original notification published on September 3, 2019, which was last amended on November 23, 2021.
8.
11/2021– State Tax (Rate) - dated
10-3-2022
-
Delhi SGST
Amendment in Notification No. 39/2017-State Tax (Rate), dated the 27th November, 2017
Summary: The Lieutenant Governor of the National Capital Territory of Delhi, under the authority of the Delhi Goods and Services Tax Act, 2017, has amended Notification No. 39/2017-State Tax (Rate) dated November 27, 2017. The amendment modifies the description of goods in the table of the original notification, specifically replacing "food preparations" with "goods" for items intended for free distribution to economically weaker sections and fortified rice kernel supply for government-approved schemes. This change is effective from October 1, 2021.
9.
10/2021– State Tax (Rate) - dated
10-3-2022
-
Delhi SGST
Amendment in Notification No. 4/2017-State Tax (Rate), dated the 30th June, 2017
Summary: The notification amends Notification No. 4/2017-State Tax (Rate) dated June 30, 2017, under the Delhi Goods and Services Tax Act, 2017. Issued by the Lt. Governor of Delhi, it introduces a new entry, 3A, in the tax rate table. This entry covers specific essential oils other than citrus fruits, including those of peppermint and various mints like spearmint, water mint, horsemint, and bergamot. The amendment applies to both registered and unregistered persons. The notification is part of ongoing updates to the original state tax regulations published in the Gazette of Delhi.
10.
08/2021–State Tax (Rate) - dated
10-3-2022
-
Delhi SGST
Amendment in Notification No. 01/2017-State Tax (Rate), dated the 30th June, 2017
Summary: The notification amends the Delhi Goods and Services Tax (GST) rates under Notification No. 01/2017-State Tax (Rate), effective from October 1, 2021. Key changes include adjustments in tax rates for various goods across different schedules. In Schedule I (2.5%), items like tamarind seeds and bio-diesel for blending are updated. Schedule II (6%) revises entries for bio-diesel and renewable energy devices. Schedule III (9%) adds entries for various ores, concentrates, and printed materials. Schedule IV (14%) introduces carbonated fruit beverages. These amendments are enacted by the Lt. Governor of Delhi based on Council recommendations.
11.
07/2021– State Tax (Rate) - dated
10-3-2022
-
Delhi SGST
Amendment in Notification No. 12/2017- State Tax (Rate), dated the 30th June, 2017
Summary: The notification amends the Delhi Goods and Services Tax Act, 2017, specifically the Notification No. 12/2017-State Tax (Rate) dated June 30, 2017. Key amendments include inserting "12AB" alongside "12AA" in several serial numbers, adding provisions for services related to the AFC Women's Asia Cup 2022, and updating dates from 2021 to 2022. It also introduces a new entry for services granting National Permits for goods carriages and specifies conditions for tax exemptions. The changes are effective from October 1, 2021, and were enacted by the Lt. Governor of Delhi.
12.
05/2021–State Tax - dated
10-3-2022
-
Delhi SGST
Amendment in Notification No. 13/2020 – State Tax, dated the 31st March, 2021
Summary: The notification amends Notification No. 13/2020 - State Tax dated March 31, 2021, under the Delhi Goods and Services Tax Rules, 2017. Effective April 1, 2021, the amendment changes the monetary threshold from "one hundred crore rupees" to "fifty crore rupees." This change is issued by the Lieutenant Governor of the National Capital Territory of Delhi, based on the Council's recommendations. The amendment is documented under Notification No. 05/2021-State Tax, dated March 10, 2022, and is published in the Gazette of Delhi.
Highlights / Catch Notes
GST
-
High Court Overturns Cancellation of Firm's Registration Due to Lack of Specific Charges by Respondent Authority.
Case-Laws - HC : Revocation of cancellation of Registration - bogus firm or not - by merely describing the assessee firm “bogus”, the respondent authority did not make known to the assessee the exact charge that was being levelled against the assessee. Correspondingly, the respondent authority deprived the assessee of the necessary opportunity to rebut the charge - It is equally remarkable to note that the Appeal Authority also chose to consider the matter on merits. - Order set aside - HC
-
Personal Hearing Mandatory Before Adverse Decision u/s 75(4) of CGST/UPGST Act 2017-Authority Must Provide Without Request.
Case-Laws - HC : Opportunity of personal hearing is mandatory u/s 75(4) of the CGST/UPGST Act 2017 or not - where an adverse decision is contemplated against the person, such a person even need not to request for opportunity of personal hearing and it is mandatory for the authority concerned to afford opportunity of personal hearing before passing an order adverse to such person. - HC
-
High Court Rules Undated GST Notice Invalid for Violating Natural Justice by Not Allowing Adequate Response Time.
Case-Laws - HC : Issuance of undated notice under Section 73(1) of the C.G.S.T/ U.P.G.S.T. Act, 2017 - reasonable time to the petitioner to submit his reply to the show cause notice granted or not - non-compliance of principles of natural justice renders the impugned order to be unsustainable. - HC
-
Assessment Invalid: No Mandatory Notice Issued u/s 74(1) of GST Act, Only DRC-01A Provided.
Case-Laws - HC : Validity of Show cause notice (SCN) u/s 74 - Under Section 74(1) notice is an independent notice to be issued in DRC-01, whereas the notice under Section 74(5) was to be issued in DRC- 01A. Herein the case in hand, admittedly DRC-01A was issued, thereafter straightaway the respondent revenue proceeded to pass the impugned assessment order - notice under Section 74(1) of the Act, which is also mandatory to be issued before passing the impugned order of assessment has not been issued in this case. In the absence of any such notice, the proceedings, which is culminated in the order of assessment, which is impugned herein, is, no doubt, vitiated. - HC
-
Input Tax Credit Denied for Demo Vehicles Used as Capital Goods, Not for Straightforward Resale or Supply.
Case-Laws - AAAR : Input tax credit - Capital Goods (demo cars) - The Demo Vehicles received by the Appellant have never been received with the intent to simply 'further supply/ sell' as such. Input Tax Credit on these vehicles, thus, cannot be allowed - AAAR
-
Input Tax Credit Denied on IGST and Cess for Cars Used in Business Activities, Not for Resale or Supply.
Case-Laws - AAAR : Input tax credit - Stock transfer - IGST and Compensation Cess paid on receipt of cars (on stock transfer basis) for use in relation to specified business activities - it appears that the BMW Vehicles received by the Appellant under stock transfer have never been received with the intent to simply 'further supply of such motor vehicles/'sell as such'. Input Tax Credit on these vehicles, thus, cannot be allowed. - AAAR
-
Poultry crates classified under Chapter 8436 for GST, subject to 18% tax rate. Debate resolved between Chapters 84 and 39.
Case-Laws - AAR : Classification of services - product poultry crate - goods falling under chapter 84 or chapter 39 or some other classification - appropriate classification of poultry crates - The said equipments are a necessity in a poultry set up and are covered under Chapter 8436 - Liable to GST @18% - AAR
-
AAR Decides Naphtha, Water, and Power Transactions Don't Qualify as 'Job Work' Under GST Regulations.
Case-Laws - AAR : Classification of services - Job-Work or not - sending of Naphtha, DM water, Power, Cooling water, service water and instrument air by the Applicant to Praxair and receiving back of Hydrogen gas. Nitrogen gas and HP steam - activities being undertaken do not qualify for 'Job Work' - AAR
Income Tax
-
Re-assessment notices u/s 148 of the Income Tax Act quashed; new proceedings allowed under Finance Act 2021.
Case-Laws - HC : Validity of the re-assessment proceedings initiated against the individual petitioners - Explanations A(a)(ii)/A(b) to the notifications dated March 31, 2021 and April 27, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are, therefore, bad in law and null void. All the impugned notices under section 148 of the Income Tax, 1961 are quashed with liberty to the assessing officers concerned to initiate fresh re-assessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021 and after making compliance of the formalities as required by the law. - HC
-
Court Rules Petitioner Not Liable for TDS u/s 195; No Payment Made to THL, No Deduction Required.
Case-Laws - HC : TDS u/s 195 - assessee in default as per Section 201(1) - As Section 195 is applicable only to a person who is responsible for paying to deduct tax at the time of credit to the account of the payee or at the time of payment and petitioner did not make any payment to THL, there is no obligation on petitioner to deduct tax at source. Respondent’s arguments that petitioner had made payment through IMAHI is also not acceptable because there is no evidence that petitioner made any payment through IMAHI. The Section is applicable to a person who is responsible for paying. - HC
-
Tax Deductions Allowed for Octroi Expenses: Liabilities Settled Before Filing Returns for FYs 2011-12 and 2012-13.
Case-Laws - AT : Disallowance on account of payment of octroi expenses - There is no dispute that the entire liability was discharged before filing return of income for the year under consideration. On perusal of the facts, we are of the considered opinion that since the liability of F.Ys. 2011-12 and 2012-13 crystallized during the Assessment Year under consideration, the same has to be allowed. - AT
-
Principal Commissioner Confirms Section 263 Action: Interest on Tax Refund Incorrectly Included in Section 36(1)(viii) Deduction.
Case-Laws - AT : Revisional powers u/s 263 with respect to the deduction claimed u/s 36 (1) (viii) - With respect to the inclusion of interest on income tax refund considered both by the assessee as well as by the learned assessing officer as part of long-term finance income of the assessee, the assessee itself agreed that there is an error and it should not have been included in the long-term finance income of the assessee. - the action of the learned principal Commissioner of income tax u/s 263 of the act is confirmed to that extent only. - AT
-
PCIT Revises AO's Limited Scrutiny for Insufficient Inquiry on Labor and Wages; Decision Against Assessee u/s 263.
Case-Laws - AT : Revision u/s 263 by CIT - limited scrutiny case -It is not a case where the ld. PCIT has set-aside the assessment order rather he has examined these transactions and has carried out broad analysis of the ledger account so submitted by the assessee company and has come to a conclusion that the AO has failed to carry out adequate and proper enquiries which he should have conducted in respect of labour and wages payable. - Decided against assessee. - AT
-
Loan Write-Offs for Farmers: Evaluating Bad Debts for Tax Purposes Requires Transaction Analysis to Determine Legal Eligibility.
Case-Laws - AT : Bad debts - Writing off of Loan to farmers - The treatment of the write-offs of such loans would then have to be viewed probably as bad debts, though this may not be treated as our decision on the issue. What is necessary therefore for adjudicating the issue of eligibility to claim of write off of principal loan amount is the nature of the transaction resulting in the loan being granted to farmers. It is only thereafter it can be decided as to whether the assessee is eligible to claim write off of the same as per law and under which provision - AT
-
AO's Use of Post-Search Profit Margins Unwarranted in Undisclosed Income Case; Original Calculations Were Accepted by Tax Officials.
Case-Laws - AT : Undisclosed income - gross profit margin on unaccounted sales - It is quite possible that the assessee was able to generate more profit post search period depending upon the quality of blocks. Hence it may not be correct on the part of the AO to consider the post search period results for determining the gross profit margin of unaccounted sales despite the fact that the gross profit margin worked out by the assessee has been accepted by the search officials, i.e., another wing of the income tax department. Hence, what the AO has done is to substitute one estimation with another one, which is not warranted in the facts of the present case. - AT
Customs
-
Appeal dismissed for failing to meet section 129E of Customs Act 1962 pre-deposit requirement; waiver application denied.
Case-Laws - AT : Non-compliance with the pre-deposit - section 129E of the Customs Act 1962 - As the statutory requirement stipulated under section 129E of the Customs Act has not been satisfied and the application for waiver of deposit has been rejected, the appeal stands dismissed. - AT
Service Tax
-
Tribunal Confirms Laying Cables Under Roads, Railways Not Taxable Under Finance Act, 1994 Per CBEC Circular.
Case-Laws - HC : Commercial or Industrial Constructions Services - With respect to activity conducted by the assessee, CBEC circular referred to and relied upon by the Tribunal is specific. By virtue of Clause 2 and 8 of the paragraph 3 of the said circular, the activity of laying cables under or alongside roads and alongside railway tracks was clearly opined to be not taxable under the Finance Act, 1994. That view had been formed by the highest administrative authority under the Finance Act, 1994, namely - Central Board of Indirect Taxes and Customs. The Tribunal has not erred in applying that Circular and deleting the proposed demand of service tax liability. - HC
Central Excise
-
CENVAT Credit Allowed for Capital Goods When Production Becomes Dutiable, Clarifies Rule 6(4) of Cenvat Credit Rules 2004.
Case-Laws - AT : Recovery of CENVAT Credit - capital goods - availability of credit when the production started become dutiable - even if the goods per se were exempted during the receipt and installation of the capital goods but if the said capital goods were not put to use for manufacture of any exempted goods it cannot be said that the said capital goods were used exclusively for manufacture of exempted goods in terms of Rule 6(4) of Cenvat Credit Rules, 2004. - AT
-
CENVAT Credit Denial Overturned: No Evidence of Suppression Found; Services Used for Existing Plant, Not New Projects.
Case-Laws - AT : CENVAT Credit - Extended period of limitation - Technical Testing and Analysis - there is nothing found which can substantiate the allegation of the department about wilful suppression. Learned Counsel have taken me through various invoices during the period in issue, which have been placed on record. From the perusal of the said invoices also it is clear that the services were availed for the existing plant at Rajariyawas and not for any new or proposed plant. - Credit cannot be denied - AT
VAT
-
Tribunal Validates Stock Suppression Findings on Groundnut, Limits Revision to Actual Amount; High Court Upholds Decision.
Case-Laws - HC : Revision of assessment - stock difference in respect of groundnut and groundnut kernal - The Tribunal was of the view that inasmuch as the suppression is proved by the recorded evidence, the same is warranted, however, restricted to the actual suppression and is accordingly, modified. There are no fault with the finding of the Tribunal in this regard - HC
9911796707
