TMI Tax Updates - e-Newsletter
March 29, 2023
Case Laws in this Newsletter:
Articles
By: Rajeev Jain
Summary: The article outlines essential GST compliance tasks for the financial year-end 2022-2023. It emphasizes the need for meticulous attention to both personal and vendor compliance, suggesting the use of technology, internal controls, and staff training. Key tasks include filing applications for LUT, opting for composition schemes, tracking export proceeds, and ensuring accurate documentation and reconciliation of GST returns, invoices, and credits. It also highlights the importance of verifying input tax credits, compliance with ISD provisions, and analyzing GST implications on various expenses. Amendments to GST returns are permissible until November 30, 2023.
By: Vivek Jalan
Summary: The MOOWR Scheme allows manufacturers in India to import raw materials and capital goods without immediate duty payment, enhancing cost-effectiveness by saving 1% to 3% on costs. If these imports are used for exports, the duty is waived entirely. Duties are payable only if goods are sold domestically. The scheme simplifies processes through a single application for bonded facility licensing and manufacturing permissions. It provides a competitive advantage by deferring duty payments, thus saving interest costs. Compliance includes maintaining digital records, executing a bond, and submitting monthly returns, with no minimum export or domestic clearance obligations.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The process for filing an application for an advance ruling on the GST portal involves logging in, selecting the application type, and ensuring the fee is deposited. Applicants must fill out and upload the necessary forms and documents, selecting the relevant business activities. Once submitted, the application is reviewed by the Authority for Advance Ruling, which may admit or reject it. If admitted, a hearing is scheduled, and the application status is updated accordingly. The Authority may issue orders or refer the case to the Appellate Authority if there is a difference of opinion. Rectification of orders is possible within six months if errors are found, and void proceedings can be initiated in cases of fraud or misrepresentation.
By: Bimal jain
Summary: The Income Tax Appellate Tribunal (ITAT) in Chennai upheld the Appellate Authority's decision to delete a penalty imposed on a taxpayer for failing to get accounts audited on time as required by Section 271B of the Income Tax Act. The taxpayer, facing severe business losses and financial distress, filed the tax audit report late. The ITAT found that the taxpayer had a reasonable cause for the delay, as their business was severely affected, leading to a standstill and auctioning of properties. Consequently, the penalty of INR 1,50,000 was deemed unsustainable, and the decision to remove it was upheld.
By: Bimal jain
Summary: The Allahabad High Court ruled that the Revenue Department's order against a petitioner was invalid due to the lack of a personal hearing opportunity, even though the petitioner had declined this option in response to a Show Cause Notice. The court emphasized that under Section 75(4) of the Central Goods and Services Tax Act, 2017, it is mandatory for the assessing authority to provide a hearing opportunity before making an adverse decision. The court set aside the previous order and directed the Revenue Department to issue a fresh notice, ensuring compliance with the principles of natural justice.
News
Summary: The Goods and Services Tax (GST) collection in India saw a 15% year-on-year increase in December for the fiscal year 2022-23 compared to the previous year. The Union Minister of State for Finance reported that the monthly GST revenue exceeded 1.4 lakh crore for 11 consecutive months during this fiscal year. The data shows consistent growth in GST collections month by month, with significant increases observed in each month compared to the corresponding months of the previous fiscal year.
Summary: Japan has extended its Official Development Assistance to India, involving three major projects. The Patna Metro Rail Construction Project receives JPY 98.612 billion, aimed at addressing traffic demand and enhancing the urban environment. The Forest and Biodiversity Conservation Project in West Bengal, with JPY 9.308 billion, focuses on climate change adaptation and ecosystem restoration. The Rajasthan Water Sector Livelihood Improvement Project, receiving JPY 18.894 billion, aims to enhance agricultural productivity and gender inclusion. These initiatives reflect the ongoing economic cooperation and strategic partnership between India and Japan, which has been evolving since 1958.
Summary: The Securities and Exchange Board of India (SEBI) is investigating the share dealings of 58 companies for potential violations of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. These investigations focus on market manipulation and related unfair trade practices. This information was disclosed by the Union Minister of State for Finance in a written response to a query in the Rajya Sabha. The Minister also clarified that SEBI does not identify shell companies.
Summary: The direct tax collected from the transfer of Virtual Digital Assets (VDA) in India, through tax deducted at source under section 194S of the Income-tax Act, 1961, amounted to Rs. 157.9 crore for the fiscal year 2022-23 up to March 20, 2023. This information was provided by a Union Minister of State for Finance in a written response to the Rajya Sabha. Although crypto assets remain unregulated, transactions are governed by laws such as the Prevention of Money Laundering Act, 2002, and the Income-Tax Act, 1961. The Financial Stability Board notes that crypto market activities are mainly speculative with limited real economy links.
Summary: The Central Bureau of Narcotics (CBN) in New Delhi dismantled a major drug syndicate operating across the city, targeting high-profile parties. Acting on specific intelligence, a joint team from Delhi and Gwalior apprehended two foreign nationals with commercial quantities of MDMA and cocaine concealed in their clothing. Subsequent searches at three locations in Chattarpur, Delhi, led to the seizure of additional narcotics, including MDMA, Ecstasy pills, cocaine, and other substances. Three scooters used for distribution were also confiscated. The arrested individuals, from Nigeria and C^ote d'Ivoire, face charges under the NDPS Act, 1985, with further investigations underway.
Summary: The Economic Survey 2022-23 projects India's real GDP to grow at 6.5% in 2023-24, as reported by the Union Minister of State for Finance in the Rajya Sabha. The World Bank forecasts a slightly higher growth rate of 6.6% for the same period. The Minister noted that past growth rate estimates have typically aligned with actual figures, except during exceptional circumstances such as the global financial crisis and the COVID-19 pandemic.
Summary: The outstanding balance of the 8.20% PLI GOI Special Security 2023 is due for repayment at par on March 28, 2023, with no interest accruing beyond this date. If a holiday is declared on the repayment day under the Negotiable Instruments Act, 1881, repayment will occur on the preceding working day. Payments will be made to registered holders via pay order or electronic bank transfer, provided bank details are submitted in advance. In the absence of electronic payment details, holders can submit securities at designated offices for repayment. Detailed procedures are available at these paying offices.
Summary: The Government of India has extended the deadline for linking PAN with Aadhaar to June 30, 2023, allowing taxpayers additional time to comply without facing penalties. Under the Income-tax Act, individuals with a PAN as of July 1, 2017, must link it to their Aadhaar. Failure to do so by July 1, 2023, will render the PAN inoperative, affecting refunds and increasing TDS and TCS rates. The PAN can be reactivated within 30 days upon linking and paying a fee. Exemptions apply to certain individuals, including non-residents and senior citizens over 80 years. Over 51 crore PANs have been linked to Aadhaar so far.
Summary: Under India's G20 Presidency, an Expert Group on Strengthening Multilateral Development Banks (MDBs) has been established. The group's objectives include creating a roadmap for an updated MDB ecosystem suitable for the 21st century, evaluating funding needs for sustainable development goals (SDGs) and transboundary challenges, and enhancing MDB coordination. The group is co-convened by a former Harvard University president and a former Chairperson of India's Fifteenth Finance Commission, with members from various global economic and financial institutions. The group will present its findings to the Indian G20 Presidency by June 30, 2023.
Summary: The Competition Commission of India has approved the acquisition of additional shares in NSPIRA Management Services Private Limited by three individuals, collectively known as the Acquirers. They will acquire 18.23% of NSPIRA's share capital from NHPEA Minerva Holding BV and 2.24% from Banyantree Growth Capital II, LLC. The Acquirers already hold 79.48% of NSPIRA's shares. NSPIRA, established in 2013, provides management services to educational institutions primarily associated with the Narayana Group. The services include administrative support, content development, exam and admission management, IT solutions, and more. A detailed order from the CCI is forthcoming.
Summary: The Competition Commission of India has approved the acquisition of shares in JM Baxi Ports and Logistics Limited by HL Terminal Holding B.V., a subsidiary of Hapag Lloyd Aktiengesellschaft. HL Terminal Holding B.V., a newly formed strategic investment entity, will manage Hapag Lloyd's port terminal business. Hapag Lloyd, based in Germany, specializes in global maritime transport services. JM Baxi Ports and Logistics, the target company, operates in India, providing container terminal services, multipurpose terminal operations, inland container depots, and logistics services, including rail transport. A detailed order from the CCI is forthcoming.
Summary: The government is leveraging data analytics, big data, and AI/ML to enhance tax administration, making it more efficient and taxpayer-friendly. The Union Minister of State for Finance highlighted the use of these technologies to identify fiscal risks and suspicious patterns in Customs and GST. The ADVAIT project, launched by the Central Board for Indirect Taxes and Customs, aims to boost revenue and expand the taxpayer base through advanced analytics. Similarly, the Central Board for Direct Taxes employs these technologies to identify high-risk tax evasion cases, prompt tax payments, and detect mismatches in tax returns, enhancing overall compliance and efficiency.
Summary: The SWAMIH Fund, backed by the Indian government, has delivered over 22,500 homes as of March 17, 2023, with a funding allocation of Rs 2,646.57 crore. The fund targets stalled mid-income and affordable housing projects across India, focusing on those with at least 90% of their Floor Space Index dedicated to affordable or mid-income units. Eligible projects must be RERA-registered, have incurred at least 30% of project costs, and require last-mile funding. The Ministry of Finance regularly reviews the fund's performance and receives updates from its Investment Manager.
Notifications
Customs
1.
17/2023 - dated
27-3-2023
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Cus (NT)
Customs airports — Appointment for specified purposes - Seeks to amend Notification No. 61/94-Customs (N.T.) dated the 21st November, 1994
Summary: Notification No. 17/2023-Customs (N.T.) dated March 27, 2023, issued by the Central Board of Indirect Taxes and Customs, amends Notification No. 61/94-Customs (N.T.) from November 21, 1994. The amendment concerns the State of Goa, where the entry for 'Dabolim' in the Table is modified to '(a) Dabolim'. Additionally, a new entry '(b) Mopa' is added, specifying that Mopa Airport is designated for the unloading of imported goods and the loading of export goods or any class of such goods.
GST - States
2.
15/2022-State Tax (Rate) - dated
27-3-2023
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Delhi SGST
Amendment in Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017
Summary: The notification amends Notification No. 12/2017-State Tax (Rate) under the Delhi Goods and Services Tax Act, 2017. Effective from January 1, 2023, it introduces an explanation under entry S. No. 12, clarifying that the exemption applies to services involving the renting of residential dwellings to registered persons who are proprietors renting for personal residence, not for their business. Additionally, entry S. No. 23A and its related entries are omitted. The amendment is issued by the authority of the Lieutenant Governor of the National Capital Territory of Delhi.
Income Tax
3.
15/2023 - dated
28-3-2023
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IT
Income-tax (Fourth Amendment) Rules, 2023
Summary: The Income-tax (Fourth Amendment) Rules, 2023, effective from April 1, 2023, amend the Income-tax Rules, 1962, specifically Rule 114AAA. Individuals with a permanent account number (PAN) as of July 1, 2017, must link their Aadhaar number by March 31, 2022. Failure to do so renders the PAN inoperative, subjecting individuals to fees and higher tax rates under sections 206AA and 206CC. If linked after March 31, 2022, the PAN becomes operative within 30 days post-intimation. The Principal Director General of Income-tax (Systems) will determine the verification procedures for PAN status.
Circulars / Instructions / Orders
SEBI
1.
SEBI/HO/IMD/IMD-I POD1/P/CIR/2023/47 - dated
28-3-2023
Nomination for Mutual Fund Unit Holders – Extension of timelines
Summary: The Securities and Exchange Board of India (SEBI) has extended the deadline for mutual fund unit holders to provide or opt out of nomination from March 31, 2023, to September 30, 2023. This decision follows feedback from market participants. Asset Management Companies (AMCs) and Registrar and Transfer Agents (RTAs) are instructed to remind unit holders to comply with this requirement through fortnightly emails and SMS. Other provisions from the previous SEBI circulars remain unchanged. This extension aims to protect investor interests and ensure regulatory compliance in the securities market.
2.
SEBI/HO/MRD/MRD-POD-2/P/CIR/2023/41 - dated
27-3-2023
Amendment to Securities Lending Scheme, 1997
Summary: The Securities and Exchange Board of India (SEBI) has amended the Securities Lending Scheme, 1997, effective April 1, 2023. The amendment mandates that all fees, penalties, and recoveries be paid digitally, eliminating the option for payment via demand drafts. Approved intermediaries must now use direct credit methods such as NEFT, RTGS, IMPS, or SEBI's online payment gateway. Stock exchanges and clearing corporations are required to update their systems and notify their members of these changes. This amendment aims to enhance investor protection and promote the securities market's development and regulation.
3.
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/42 - dated
27-3-2023
Nomination for Eligible Trading and Demat Accounts – Extension of timelines for existing account holders
Summary: The Securities and Exchange Board of India (SEBI) has extended the deadline for existing trading and demat account holders to update their nomination details to September 30, 2023. Originally set for March 31, 2023, this extension follows stakeholder feedback. Account holders must either provide nomination details or declare opting out to avoid account freezing. Stock brokers and depository participants are required to remind clients bi-weekly via email and SMS. All other provisions from previous circulars remain unchanged. Exchanges and depositories must amend relevant regulations and report monthly on compliance efforts starting May 2023.
4.
SEBI/HO/AFD/P/CIR/2023/043 - dated
27-3-2023
Streamlining the onboarding process of FPIs
Summary: The Securities and Exchange Board of India (SEBI) has issued a circular to streamline the onboarding process for Foreign Portfolio Investors (FPIs). Key amendments include allowing FPIs to submit scanned copies of application forms and documents for registration, using digital signatures, and certifying document copies via authorized bank officials through the SWIFT mechanism. Additionally, the verification of Permanent Account Numbers (PAN) can be done through the Common Application Form (CAF) module on depository websites. FPIs can now submit a unique investor group ID instead of detailed group constituent information. The circular mandates immediate implementation and modifies certain timelines for consistency with FPI regulations.
DGFT
5.
Trade Notice No. 27/2022-2023 - dated
28-3-2023
Extension of Date for mandatory electronic filing of Non-Preferential Certificate of Origin (CoO) through the Common Digital Platform to 31st December 2023
Summary: The Directorate General of Foreign Trade has extended the deadline for mandatory electronic filing of Non-Preferential Certificates of Origin through the Common Digital Platform to 31st December 2023. Until this date, exporters and issuing agencies can choose between the online system and the existing manual process. The extension allows more time for transition and adaptation to the e-CoO Platform. Issuing agencies are encouraged to inform and guide exporters on the registration and application process for the online system. This decision has been approved by the competent authority and aims to facilitate smoother adoption of the digital platform.
Customs
6.
Instruction No. 12/2023 - dated
27-3-2023
Demarcation of the role of Central Intelligence Unit (CIU) in a Custom House in relation to anti-smuggling work
Summary: The circular outlines the demarcation of roles between the Central Intelligence Unit (CIU) and the Special Intelligence and Investigation Unit (SIIB) in handling anti-smuggling cases within Custom Houses. The CIU is tasked with cases involving a vigilance aspect, such as personnel misconduct or foul play, while the SIIB handles cases without such aspects. If a case initially assessed by one unit is found to involve the other's purview, it should be transferred accordingly. Custom Houses lacking a CIU are advised to establish one, and the CIU should be supervised by a Principal Commissioner or Commissioner.
Highlights / Catch Notes
GST
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Court Remands Case for Reassessment; Petitioner to Get Fair Chance to Defend Against Confiscation and Penalty.
Case-Laws - HC : Confiscation of goods alongwith the conveyance - levy of penalty - It amounted to breach of principles of natural justice resulting into denial of reasonable opportunity to the petitioner to defend in the proceedings - proceedings are remanded to the competent authority of the respondents, which shall decide the subject matter afresh after giving opportunity to the petitioner to defend his case. - HC
Income Tax
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Supreme Court clarifies limitation period for block assessments under Income Tax Act Sections 158BC & 158BE, based on last Panchnama.
Case-Laws - SC : Block assessment u/s 158BC/158BE - Period of limitation - If the submission on behalf of the respective assessees that the date of the last authorization is to be considered for the purpose of starting point of limitation of two years, in that case, the entire object and purpose of Explanation 2 to Section 158BE would be frustrated. - the view taken by the High Court that the date of the Panchnama last drawn would be the relevant date for considering the period of limitation of two years and not the last date of authorization, we are in complete agreement with the view taken by the High Court. - SC
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Section 147 Notices for 2013-14 and 2014-15 Assessments Are Time-Barred, Cannot Be Issued Under Amended Provisions.
Case-Laws - HC : Reopening of assessment u/s 147 - Validity of order u/s 148A - all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. - HC
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Assessing Officer Must Act Fairly u/s 68 & 115BBE; Arbitrary Actions Deemed Erroneous Without Adequate Justification.
Case-Laws - AT : Addition u/s 68 r.w.s. 115BBE - AO is required to act fairly as reasonable person and not arbitrarily capriciously. The assessment should have been made based on the adequate material and it should stand on its own leg. AO without examining any parties to whom the goods are sold by the assessee, came to conclusion that the sales are not genuine, without even rejecting the books of account which is in our opinion is erroneous - AT
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Salary Payments Unpaid: No TDS u/s 192; Assessing Officer Wrong to Add u/s 40(a)(ia.
Case-Laws - AT : TDS u/s 192 - payment of remuneration - No deduction at source is contemplated u/s 192 in cases where a payment towards salary has accrued but is not made - AO was not justified in making addition u/s 40(a)(ia) - AT
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Taxpayer Files Second Appeal Due to CIT(A)'s Mechanical Order, Faces Financial Loss and Mental Distress.
Case-Laws - AT : Erroneous order of CIT(A) - we find that the impugned order has been passed by the CIT(A) mechanically without application of mind which has forced the assessee to file this second appeal and suffered financial loss on account of appeal fee of Rs. 10,000/- and the litigation expenditure including the counsel fees etc., as well as mental agony and suffering therefore, this Bench takes a serious view of the matter regarding the callous approach of the CIT(A) while passing the impugned order. - AT
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No TDS Required on External Development Charges to HUDA, Says CIT(A), Section 40(a)(ia) Not Applicable.
Case-Laws - AT : Addition u/s 40(a)(ia) - Non deduction of TDS - Since the assessee’s claim that expenses were not debited to P&L account is correct, ld. CIT (A) held that there is no question of disallowance of expenses - no TDS is required to be deducted on payments made to HUDA for EDC - AT
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Assessing Officer's decision on unsold flats' ALV upheld; Section 263 revision deemed inappropriate per CBDT Circular.
Case-Laws - AT : Revision u/s 263 - AO has discharged his dual role as an investigator as well as adjudicator. As noted he has examined the relevant facts of unsold flats as well as decision not to determine ALV is in line with the CBDT Circular dated 15.02.2018 and therefore his decision cannot be held to be erroneous as well as prejudicial to the revenue. - AT
Customs
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High Court Upholds Customs Decision Denying SAD Exemption for Rock Phosphate Import Without FCO Permission.
Case-Laws - HC : Eligibility for SAD exemption - It is admitted by the importer that no permission obtained under FCO, since the product 'rock phosphate' imported does not require such permission being not within the specification for rock phosphate to be qualified as 'fertiliser' under FCO. - It is well settled principle of law that in case of exemptions, law should be strictly interpreted and liberal interpretation detrimental to revenue is not advocated. - The order of the Customes Department declining to grant SAD exemption is upheld - HC
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High Court Clarifies Burden of Proof in Smuggling Cases: Statement Must Be Reiterated u/s 138B(1) for Validity.
Case-Laws - AT : Smuggling - burden to prove - When any statement is recorded under Section 108, it has been clarified by the High Court that when a person who has earlier given the statement before the Gazetted Officer should reiterate the same before the Adjudicating Authority in terms of Section 138B(1). Then only the Adjudicating Authority should admit the same as an evidence. - Once the Appellant is able to provide such documentary evidence, the burden of proving that the goods are of a foreign origin falls on the Department, which has not been done by them in the present case. - AT
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12V SMPS and components not eligible for duty exemption; not considered parts of IFWT per notification.
Case-Laws - AT : Benefit of exemption from duty - 12V SMPS consisting of Main PCB, lightening protector, DC/AC cables, fuse/fuse holders and others - SMPS is not a part of IFWT. The goods imported cannot be considered as accessory as these parts are not used to increase the effectiveness or convenience of IFWT. It is thus held that the goods imported are neither parts nor accessories of IFWT and therefore cannot avail the benefit of notification. - AT
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Customs broker license revocation challenged; cross-examination request dismissal under Regulations 22(7) & 20(1) impacts credibility. Case reopened.
Case-Laws - AT : Revocation of Customs broker licence - dismissal of request for cross-examination - regulation 22(7) and 20(1) of Customs House Agents Licensing Regulations (CHALR), 2004 - such cavalier dismissal of request for cross-examination affects the credibility of the disagreement memo - matter restored back - AT
Service Tax
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Service Tax not applicable under reverse charge for software available in India, per Section 66A and Rule 3(ii).
Case-Laws - AT : Levy of Service Tax - reverse charge mechanism - to say that the software was available in India, with the appellant and hence the provision of service was from India only, as observed by the Adjudicating Authority, runs counter to the demand of Service Tax under reverse charge mechanism within the meaning of Section 66A ibid. read with Rule 3 (ii) of the Taxation of Services Rules ibid. - the appellant could not have been fastened with the Service Tax liability under management, maintenance or repair service - AT
Central Excise
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Court Supports CENVAT Credit Recovery for Double Duty Payment on Inputs, Aligns with CENVAT Scheme Principles.
Case-Laws - HC : Recovery of CENVAT Credit - It is a case of double payment of duty on same inputs. The payment of duty twice is not disputed, thus, it would be unfair and against the scheme of CENVAT to deny credit of said duty. - HC
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