TMI Tax Updates - e-Newsletter
March 18, 2023
Case Laws in this Newsletter:
Articles
By: Estartup India
Summary: Every registered taxpayer must file a GST Return, with GST-3B being a crucial form used to report and remit GST obligations. GSTR-3B is a summary report of all inward and outward supplies that must be filed for each tax period. Small taxpayers with annual turnovers below Rs. 5 crores can opt for quarterly filing under the QRMP scheme. Exemptions from filing include businesses under the Composition Scheme, Input Service Distributors, and certain other entities. Penalties for late filing include a daily fee and interest on unpaid taxes. Filing involves completing Form GSTR-3B online and verifying it using digital methods.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The High Court ruled that refund applications for input tax credit cannot be denied based on mere suspicion without substantial evidence. The petitioner sought refunds for input tax credit related to exported goods, which were initially denied due to allegations against their supplier, Shruti Exports, for issuing fake invoices. Despite the supplier's alleged involvement in fraudulent activities, the court found no evidence that the petitioner failed to receive or pay for the goods. The court emphasized that the petitioner is not responsible for investigating their supplier's affairs. Consequently, the court ordered the authorities to process the refund applications, while allowing future actions if new evidence emerges.
By: Bimal jain
Summary: The Madras High Court permitted an assessee to submit an additional reply to a Show Cause Notice (SCN) issued by the Revenue Department due to non-payment of tax under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The court held that allowing the additional reply would not prejudice the Revenue Department. It directed the department to consider the assessee's reply on its merits, provide a fair hearing, and follow natural justice principles before passing fresh orders. The court also instructed the department to refrain from coercive actions against the assessee until final orders are issued.
By: Bimal jain
Summary: The Madras High Court ruled that a writ petition challenging a Show Cause Notice (SCN) for reversal of Input Tax Credit (ITC) is premature if filed before the final order is passed. The petitioner, having received an SCN due to a tax mismatch, argued that the supplier's tax payment failure should not affect them. Despite providing a detailed reply, the petitioner faced another notice. The court held that since no final order was issued, the petition is not maintainable and directed the Revenue Department to consider the petitioner's reply on its merits and in accordance with the law.
News
Summary: The second meeting of the Startup20 Engagement Group, under India's G20 Presidency, will occur in Gangtok, Sikkim on March 18-19, 2023. Delegates from G20 countries, multilateral organizations, and the Indian startup ecosystem will attend. The meeting aims to advance the agenda set in the initial meeting in Hyderabad, focusing on three taskforces: Foundation and Alliances, Finance, and Inclusion and Sustainability. These taskforces will work on harmonizing global startup definitions, increasing access to capital, and supporting diverse entrepreneurs. The event will include policy discussions, startup showcases, and cultural visits, aiming to produce a Policy Communique and a Global Innovation Centre.
Summary: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) is set to commemorate its 40th anniversary, with key figures including a Supreme Court judge and the Chief Justice of Delhi High Court attending. The event will feature discussions on technology in tribunals and tribunal experiences. CESTAT, established in 1982, has expanded from its Principal Bench in Delhi to eight regional benches. Recent improvements include virtual hearings during the pandemic and timely online order publications. The Tribunal Reforms Act, 2021, has further amended relevant laws, enhancing CESTAT's operational framework and efficiency.
Notifications
Companies Law
1.
S.O. 1242 (E) - dated
15-3-2023
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Co. Law
Special Court for the purposes of providing speedy trial of offences punishable with imprisonment of two years or more - words and figures “Additional Judicial Commissioner-III” in place of the words “Additional Judicial Commissioner” - Amendment in Notification No. S.O. 2099 (E), dated the 5th May, 2022
Summary: The Central Government, with the concurrence of the Chief Justice of Jharkhand, has amended a previous notification under the Companies Act, 2013. The amendment involves substituting the designation "Additional Judicial Commissioner" with "Additional Judicial Commissioner-III" in the notification S.O. 2099 (E) dated May 5, 2022. This change is intended for the Special Court responsible for the speedy trial of offenses punishable with imprisonment of two years or more. The amendment was issued by the Ministry of Corporate Affairs and published in the Gazette of India on March 15, 2023.
Customs
2.
15/2023 - dated
16-3-2023
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Cus (NT)
Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession of the Notification No. 12/2023-Customs(N.T.), dated 2nd March, 2023
Summary: The Government of India, through the Ministry of Finance and the Central Board of Indirect Taxes and Customs, issued Notification No. 15/2023 on March 16, 2023, superseding an earlier notification dated March 2, 2023. This notification sets the exchange rates for converting specified foreign currencies into Indian rupees for imported and exported goods, effective March 17, 2023. The rates are detailed in two schedules: Schedule I lists rates for individual foreign currencies, and Schedule II provides rates for 100 units of certain currencies. The notification is applicable under Section 14 of the Customs Act, 1962.
Circulars / Instructions / Orders
SEBI
1.
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/37 - dated
16-3-2023
Common and simplified norms for processing investor’s service requests by RTAs and norms for furnishing PAN, KYC details and Nomination
Summary: The circular issued by SEBI outlines simplified norms for processing investor service requests by Registrars to an Issue and Share Transfer Agents (RTAs) and mandates the furnishing of PAN, KYC details, and nomination for holders of physical securities in listed companies. Effective from April 1, 2023, it requires investors to provide PAN, contact details, bank account information, and specimen signatures. Folios lacking these details will be frozen, with restrictions on transactions until compliance. The circular also specifies procedures for document submission, attestation, and timelines for processing requests. It emphasizes electronic communication for queries and complaints and mandates RTAs to update contact information and comply with these norms to enhance investor convenience in the securities market.
Highlights / Catch Notes
GST
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Court Orders Release of Perishable Goods Within 48 Hours Due to Unique Case Circumstances.
Case-Laws - HC : Seeking release of goods alongwith vehicle - having regard to the perishable nature of the subject goods involved in the present petition, in the peculiar / special facts and circumstances of the instant case, the respondents are directed to release the Conveyance along with the goods contained therein in favour of the petitioner, within a period of 48 hours - HC
Income Tax
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High Court: Circulars Can Retroactively Classify Share Sale Gains as Investment or Business Profits, Impacting Tax Liabilities.
Case-Laws - HC : Gain on sale of shares - long-term capital gain or profits and gains of business - distinction between “investment” and “stock-in-trade” - the circulars can be referred to by the assessee and they being at least partially beneficial to the assessee has to be held to be retrospectively applicable in so far as the instructions/clarifications which enure in favour of the assessee’s. - HC
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High Court Rules Assessment Order Invalid for Non-Existent Amalgamated Company; Cannot Be Corrected or Appealed.
Case-Laws - HC : Validity of Assessment u/s 144B - Amalgamated company - once assessment order is passed against non-existing company, there would be no cure, even for filing of the appeal. Once it is found that the assessment is framed, in the instant case, in the name of the non-existing company, as held hereinabove, that surely does not remain the procedural irregularity, which can be cured under the provision of section 292B - The assessment framed in the name of the existing company requires to be quashed. - HC
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PCIT Highlights LTCG and Advance Payment Errors; Assessing Officer's Oversight u/s 142(1) Leads to Section 263 Revision Order.
Case-Laws - AT : Revision u/s 263 - the defects noticed by the ld. PCIT in respect of computation of LTCG and advance payment received - No question has been asked on the above aspects and no reply was given by the assessee. Even under section 142(1) of the Act, the Assessing Officer has not issued any questionnaire in respect of LTCG and advance payments received - Revision order sustained - AT
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Section 147: Reopening Assessments Needs Tangible Link Between Material and Belief of Escaped Income, Not Just Investigation Info.
Case-Laws - AT : Reopening of assessment u/s 147 - Reasons to believe - When the AO has not created any link between tangible material and the formation of reason to believe that income had escaped assessment, then, the information received from Investigation Wing cannot be said to be tangible material per se without further inquiry being undertaken by the AO. - AT
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Payment Link and IPLC Charges Not Classified as Royalties; Deemed Reimbursements and Non-Taxable for Assessee.
Case-Laws - AT : Royalty - Payment link charges / IPLC charges - there is no transfer of the right to use, either to the assessee or to CIS. The assessee has merely procured a service and provided the same to CIS, no part of equipment was leased out to CIS. Even otherwise, the payment is in the nature of reimbursement of expenses and accordingly not taxable in the hands of the assessee. - AT
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Transfer Pricing Adjustment Upheld for Technical Expert's Salary Expenses in AE Deputation Case.
Case-Laws - AT : TP Adjustment - Recover of salary expenses - benefit to the assessee with the deputation of technical expert - DRP has mentioned that the deputation of the technical expert can only be for a definite purpose to benefit the AE and benefit from the expertise and productivity of these experts while depriving the assessee of their services. - order of DRP sustained - AT
Customs
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High Court Dismisses Revenue's Appeal; Tribunal Orders Return of Betel Nuts, No Evidence of Smuggling Found.
Case-Laws - HC : Smuggling - Betel nuts (foreign Origin goods) - the Tribunal came to the conclusion that the department has failed to establish that the said goods are smuggled goods. The respondent in claimed ownership of the seized goods and prayed for a direction to return the goods to him and the Tribunal analysed the documents and directed return of the goods - The entire case is fully factual and, no substantial question of law arises for consideration - Revenue appeal dismissed - HC
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Adjudicating authority to assess provisional release of dyed polyester for re-export within one month; revenue protection measures allowed.
Case-Laws - AT : Provisional release of the goods for the purpose of re-export only - dyed polyester with modified twill - The adjudicating authority is directed to consider the request of the importer-appellant for provisional release of the goods for re-export only within a period of one month from the date of receipt of this order, subject to reasonable conditions, if necessary, for safeguarding the revenue. - AT
FEMA
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Court Declares Foreign Investment Petition Academic Due to Lack of Current Investment in Air Asia Joint Venture Case.
Case-Laws - HC : Foreign Direct Investment Policy - permit foreign investment by a foreign airline - PIL against approving M/s Air Asia Investment Ltd. (a Malaysian Company) to incorporate a new Joint Venture Company with foreign equity of 49% amounting to USD 15 Million and the balance 51% equity share was to be held in the ratio of 30% by M/s Tata Sons Ltd. and 21% by M/s Telestra Trade Pvt. Ltd. - In view of the fact that there is no foreign investment as of today, the prayers made in the writ petition have become purely academic. - HC
Indian Laws
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Dissolution in CIRP Doesn't Nullify Section 138 NI Act Proceedings; Personal Liability of Signatories Remains Intact.
Case-Laws - SC : Dishonor of Cheque - CIRP - dissolution of company as per resolution plan - where the proceedings under Section 138 of the NI Act had already commenced with the Magistrate taking cognizance upon the complaint and during the pendency, the company gets dissolved, the signatories/directors cannot escape from their penal liability under Section 138 of the NI Act by citing its dissolution. What is dissolved, is only the company, not the personal penal liability of the accused covered under Section 141 of the NI Act. - SC
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Cheque Dishonor Case u/s 138 Settled: Parties Reach Compromise Agreement and Offence Compounded.
Case-Laws - HC : Dishonor of Cheque - insufficient funds - compounding of offences - Since in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has compromised the matter with the respondent-complainant vide Compromise Deed - the parties are permitted to get the matter compounded in light of the compromise arrived inter se them. - HC
Service Tax
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Service Tax Petition on Irrigation Charges Dismissed; Alternative Remedy Available Through Statutory Appeal Process.
Case-Laws - HC : Maintainability of petition - alternative and efficacious remedy of appeal - Levy of Service Tax - amount paid by the Petitioner to the State of Maharashtra for irrigation restoration charges - the Petitioner has the option to file a statutory appeal to the Appellate Tribunal where the Petitioner can present all of its contentions. There is no reason why the Petitioner cannot avail of the statutory remedy of appeal - HC
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Translation Services Tax Case: No Fraud or Suppression Found, Extended Limitation Period Not Justified Due to Revenue-Neutral Impact.
Case-Laws - AT : Extended period of limitation - Non-payment of service tax - translation services received by the appellant from the various individuals - when the tax is paid under reverse charge mechanism, the appellant would be entitled to avail credit of the same, which invariably leads to a revenue neutral situation. Thus, there is no scope to allege fraud, suppression, etc., to invoke the extended period of limitation for non-payment of tax. - AT
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Hospital Wins Case: No Service Tax on Doctors' Contracts, Joint Benefit Recognized, Demand Set Aside.
Case-Laws - AT : Levy of service tax - business auxiliary service - appellant engages professional/doctors/ consultants on contractual basis - the arrangement was for joint benefit of both the parties with shared obligations, responsibilities and benefits and, therefore, no service was provided by the hospital to the doctors. - Demand set aside - AT
Central Excise
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Appeal's validity challenged: Review order signed separately by two commissioners lacks unified opinion u/s 35B(2) of Central Excise Act.
Case-Laws - AT : Maintainability of the appeal - validity of review order was signed separately by the two members of the Committee of Commissioners - It is submitted that the review order is bad as there is no formation of opinion in terms of section 35B(2) of CEA - Tribunal while acting as an appellate authority has no jurisdiction to strike down a decision taken by the Committee of Commissioners on the administrative side - AT
VAT
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Court Upholds Legality of Property Attachments for Dealer; Supports Revenue's Compliance with Assessment Order Service Rules.
Case-Laws - SC : Lifting of attachment on properties - right to service of assessment orders - As a regular dealer, it had filed returns not only for AY 2005-06 to 2008-09 but also later periods (i.e., AY 2009-10 and 2010-11) - The revenue however, pointed out to the High Court, that the representations never alleged that assessment orders were not served and that the attachments were therefore not compliant with provision of law. - Decided in favor of revenue - SC
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Court Upholds Tribunal's Order: Review u/s 36(6) of TNGST Act Valid Despite New Facts Emerging Later.
Case-Laws - HC : Validity of order of tribunal in Review Appeal - Denial of benefit which was allowed earlier - Power to Review - Therefore, this Court holds that the Review by the Tribunal in exercise of the power under Section 36(6) of TNGST Act is maintainable, since important facts has come to light after verification of CST files and it was not been brought to the notice of the Tribunal when the earlier order dated came to be passed. - HC
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