TMI Tax Updates - e-Newsletter
June 1, 2018
Case Laws in this Newsletter:
Articles
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The article discusses the implications of the Insolvency and Bankruptcy Code, 2016 regarding the continuation of essential services during the moratorium period in a corporate insolvency resolution process. It highlights a case where a resolution professional sought to prevent the disconnection of electricity to a corporate debtor due to nonpayment, arguing that electricity is an essential service under the Code. The Adjudicating Authority ruled that the moratorium protects the corporate debtor from such disconnections, emphasizing that the Code's provisions override those of the Electricity Act, 2003, ensuring the debtor remains operational during insolvency proceedings.
News
Summary: The e-Way Bill system for intra-State movement of goods is being implemented in Chhattisgarh, Goa, Jammu & Kashmir, Mizoram, Odisha, Punjab, Tamil Nadu, and West Bengal, following its successful rollout for inter-State goods movement on April 1, 2018. By May 30, 2018, over 63 million e-Way Bills were generated, including more than 20 million for intra-State movements. The system will be nationwide by June 3, 2018, with Tamil Nadu and West Bengal joining on June 2 and 3, respectively. Businesses are advised to familiarize themselves with e-Way Bill rules to prevent issues and can seek guidance from tax authorities.
Summary: The Government of India and the World Bank have signed a $500 million loan agreement to fund the Pradhan Mantri Gram Sadak Yojana Rural Roads Project, focusing on building 7,000 km of climate-resilient roads, with 3,500 km using green technologies. The project, supported by the World Bank since 2004, aims to improve rural connectivity, benefiting millions by providing access to all-weather roads. It emphasizes climate-resilient construction, using environmentally optimized designs and materials, and aims to create employment opportunities for women. The loan has a 3-year grace period and a 10-year maturity, aiming to reduce greenhouse gas emissions and enhance road maintenance.
Summary: The Finance Commission, led by its Chairman, emphasized that the Terms of Reference (TOR) do not restrict its ability to assign appropriate weight to various variables for resource devolution, balancing equity and efficiency. During its visit to Kerala, the Commission acknowledged the state's progress in per capita income and human development but noted challenges like high debt-to-GDP ratio and fiscal deficits. Kerala's government proposed an alternative devolution formula based on population and highlighted the need for revenue deficit grants and compensation for forest conservation. The Commission appreciated Kerala's presentations and will consider these inputs in its final recommendations by October 2019.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 67.4526 on May 31, 2018, down from Rs. 67.6288 on May 30, 2018. Based on this, the exchange rates for the Euro, British Pound, and Japanese Yen against the Rupee were updated. On May 31, 2018, the rates were 1 Euro at Rs. 78.7914, 1 British Pound at Rs. 89.7929, and 100 Japanese Yen at Rs. 62.04. The Special Drawing Rights (SDR) to Rupee rate is derived from this reference rate.
Summary: The keynote address at the NPCI National Payments Excellence Awards highlighted India's advancements in retail payment systems, emphasizing the role of the National Payments Corporation of India (NPCI) in fostering innovation. Since its inception in 2009, NPCI has developed various systems like UPI, RuPay, and Aadhaar-enabled payments, enhancing accessibility and convenience. The address underscored the importance of availability, efficiency, convenience, safety, security, and adaptability in payment systems. Challenges such as digital connectivity and consumer awareness were noted, with a call for improved grievance redressal mechanisms. The speech concluded with optimism for the future of India's payment systems.
Notifications
GST
1.
25/2018 - dated
31-5-2018
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CGST
Seeks to extend the due date for filing of FORM GSTR-6 for the months from July, 2017 till June, 2018
Summary: The Government of India, through the Ministry of Finance and the Central Board of Indirect Taxes and Customs, issued Notification No. 25/2018 on May 31, 2018. This notification extends the deadline for Input Service Distributors to file FORM GSTR-6 for the period from July 2017 to June 2018. The new deadline is set for July 31, 2018. This extension is made under the authority of the Central Goods and Services Tax Act, 2017, and supersedes the previous notification No. 19/2018, except for actions completed prior to this supersession.
GST - States
2.
31 - dated
21-5-2018
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Puducherry SGST
Waives the late fee payable under section 47 of the said Act for failure to furnish the return in FORM GSTR-3B
Summary: The Government of Puducherry, under the authority of section 128 of the Puducherry Goods and Services Tax Act, 2017, has waived the late fee under section 47 for failing to submit the return in FORM GSTR-3B on time for the months from October 2017 to April 2018. This waiver applies to registered persons who submitted but did not file their FORM GST TRAN-1 by December 27, 2017. To qualify, these individuals must have filed FORM GST TRAN-1 by May 10, 2018, and the GSTR-3B returns by May 31, 2018.
3.
9/2018 - dated
21-5-2018
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Telangana SGST
Amendment in Notification No. 4/2018, dt. 29-03-2018
Summary: The Telangana Commercial Taxes Department has issued an amendment to Notification No. 4/2018, dated March 29, 2018, under TGST Notification No. 9/2018, effective May 21, 2018. This amendment, made under the authority of Section 168 of the Telangana Goods and Services Tax Act, 2017, and Rule 61(5) of the Telangana GST Rules, 2017, changes the deadline in the notification's table from "20th May, 2018" to "22nd May, 2018." The amendment is effective immediately.
4.
F.1-11 (91)-TAX/GST/2018/4194-263 - dated
23-5-2018
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Tripura SGST
Notified regarding waiver of late fee for failure to furnish return in Form GSTR-3B
Summary: The Government of Tripura, under the authority of the Tripura State Goods and Services Tax Act, 2017, has waived the late fee for registered persons who failed to file their GSTR-3B returns on time for the months from October 2017 to April 2018. This waiver applies to those who submitted their GST TRAN-1 declaration by December 27, 2017, filed the declaration by May 10, 2018, and completed their GSTR-3B returns by May 31, 2018. This decision was made following the recommendations of the GST Council.
Circulars / Instructions / Orders
GST - States
1.
05/2018 - dated
2-5-2018
Setting up of an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal-reg.
Summary: The Government of Tripura has established an IT Grievance Redressal Mechanism to address taxpayer grievances arising from technical issues on the GST Portal. This initiative follows the Central Board of Excise & Customs' Circular No. 39/13/2018-GST, dated April 3, 2018. The mechanism is set up under the authority of Section 168 of the Tripura State Goods and Services Tax Act, 2017, ensuring uniform implementation of the Act. Tax officials are instructed to inform taxpayers within their jurisdiction about this redressal mechanism. The relevant circular is enclosed for reference.
Customs
2.
13/2018 - dated
30-5-2018
Revised instruction for stuffing and sealing of reefer containers- reg.
Summary: The circular outlines revised procedures for the stuffing and sealing of reefer containers with perishable goods. Due to the lack of temperature-controlled examination facilities at ports, exporters can now request supervised stuffing and sealing in the presence of Customs officials to prevent spoilage. Exporters must apply to the jurisdictional Customs Commissioner, who will authorize the process if necessary. The procedure requires advance notice and involves RFID e-seals. The Customs Commissioner will monitor compliance, and exceptions to the examination process may occur based on specific intelligence or discrepancies. Existing self-sealing procedures remain for non-perishable goods.
Highlights / Catch Notes
GST
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Health Services by Applicant Qualify as Health Care Under GST Provisions for Tax Exemption Benefits.
Case-Laws - AAR : Health care services - GST Provisions - Applicant providing the services of diagnosis, pre & post counseling! therapy and prevention of diseases by providing tests that are sophisticated and relevant, hence they qualify to be health care services - AAR
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Healthcare Services Intra-State Supply Exempt from Central Tax per SL.No.74, Notification No. 12/2017-Central Tax (Rate.
Case-Laws - AAR : GST on Health care services - intra-state supply of Health care services attract NIL rate of central tax as per SL.No.74 of the Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 - AAR
Income Tax
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High Court Orders Tax Department to Address Premature FDR Withdrawal Compensation Claim by Petitioner.
Case-Laws - HC : Seeking compensation from the Income Tax Department - Loss of interest due to premature withdrawal of the FDRs and retention of money by the respondents - HC directed the department to consider and respond to the letters of the petitioner.
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Court Allows Delay Condonation for Revision Application u/s 264 of Income Tax Act; Petitioner Can Explain Delay.
Case-Laws - HC : Condoantion of delay in filing an application for Revision u/s 264 - there is a clear provision for condoning the delay - thus the right of revision could be avoided by allowing the petitioner to file additional statement explaining such delay - HC
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Court Upholds Reopening of Assessment over Black Money Conversion via Share Capital with Kolkata Paper Companies Involved.
Case-Laws - HC : Validity of reopening of assessment - it used to take accommodation entires of the share capital/share premium etc., in various years from the various Kolkata based paper companies to convert its black money into white - report of Inspector and information received from the Investigation Wing, Kolkata were co-related to each other. - reassessment proceedings confirmed - HC
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Court Rules Dividend Income Exempt Under Sec 11; Not Taxable at Maximum Rate Despite Sec 13(1)(d) Violation.
Case-Laws - HC : Exemption u/s 11 - Contravention of Section 13(1)(d) - Since dividend income is exempt, no income remains taxable at Maximum Marginal rate - HC
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Mumbai AO's Reassessment Void Due to Lack of Jurisdiction and Unserved Notice u/s 148.
Case-Laws - AT : Reopening of assessment - Jurisdiction of AO - AO, Mumbai who has issued the notice u/s 148 was not having jurisdiction as only AO, Dehradun was having the jurisdiction as per Notification, even the notice issued by AO, Mumbai was never served upon the assessee - entire reopening proceedings and consequent reassessment is void ab initio - AT
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Interest from SBI short-term deposits not eligible for deduction under Income Tax Act Section 80P(2)(a)(i).
Case-Laws - AT : Deduction u/s 80P(2)(a)(i) - Interest income earned by the assessee from the short term deposits made with the State Bank of India is not eligible for deduction u/s 80P(2)(a)(i) - AT
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Indian Airline Services' Income Classified as Business Income Under Article 8 of India-Netherlands DTAA.
Case-Laws - AT : Business income - activities carried out by the assessee company by rendering technical handling services to the other airlines in India and has certainly connected with its activity of transportation by way of operating the aircraft - Covered by Article 8 of DTAA between India Netherlands DTAA - AT
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Assessing Officer Must Obtain Valuation Report for Fair Market Value Claims Under Income Tax Act Section 50C(2.
Case-Laws - AT : Determination of fair market value u/s 50C(2) - If the assessee has made a specific claim before the AO, then AO is under legal obligation to call for the valuation report failing which assessment order is not valid and justified. - AT
Service Tax
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Service Tax Evasion Confirmed: Assessee Suppressed Advertising Service Value, Extended Limitation Period Applied for Unpaid Taxes.
Case-Laws - AT : Extended period of limitation - Non-payment of service tax - advertising services - the assessee has definitely suppressed the value of taxable services rendered and evaded paying service tax in full knowledge that their services are taxable - demand confirmed - AT
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Appellant's Abatement Claim on Cenvat Credit for Restaurant and Accommodation Services Meets Non-Availment Requirement per Notification No. 1/2006-ST.
Case-Laws - AT : Claim of benefit of Abatement while availing Cenvat Credit - restaurant and short term accommodation services - the appellant has followed the proportionate method for availment of credit on common input services - the reversal of credit satisfies the requirement of non availment of credit laid down in the Notification No. 1/2006-ST - AT
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CENVAT Credit Denial Overturned: Cranes and Excavators Deemed Input Services u/r 2(l) of CENVAT Credit Rules.
Case-Laws - AT : CENVAT credit - service tax paid on hiring of Cranes, Hydra Cranes, Excavators etc. - denial of credit on the ground that these items are not capital goods as they are ‘Motor Vehicles’ - credit cannot be denied since the availment of Cenvat Credit based upon definition of input services under Rule 2(l) of CCR - AT
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Extended Demand Period for CENVAT Credit Not Justified by Differing Audit Opinions; No Fact Suppression Found.
Case-Laws - AT : CENVAT credit - invoking extended period for demand - different view of the second audit party could not claim suppression of facts for invoking extended period for demand. - AT
Central Excise
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Denial of Refund for Unutilized CENVAT Credit Due to No Exports in Claimed Quarter.
Case-Laws - AT : Refund of unutilized CENVAT credit - accumulated CENVAT credit of service tax paid on input service used for manufacture and export of final products - export has not happened during the quarter for which the refund has been claim - Refund denied - AT
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CENVAT Credit Allowed for Inputs in Electricity Generation On-Site; Not Applicable for Wheeled-Out Surplus Electricity.
Case-Laws - AT : CENVAT credit - electricity produced in the factory premises and consumed for production of excisable goods, assessee is entitled to avail Cenvat credit on inputs used for generation of electricity or steam and not if surplus electricity is wheeled out - AT
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Court Rules on Cenvat Credit Reversal for Inputs in Goods Destroyed by Fire; Examines Liability Under Unforeseen Events.
Case-Laws - AT : Reversal of Cenvat Credit - semi finished goods and intermediate goods destroyed during fire accident - demands raised of reversal of Cenvat Credit on the inputs confirmed - AT
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Service Tax Demand on Assessee Invalid as Transporters Already Paid Under Reverse Charge Mechanism.
Case-Laws - AT : Service tax liability raised under reverse charges mechanism - discharge of service tax liability is done by transporters themselves thus again demanding the service tax from the appellant assessee seems to be totally wrong proposition of law - demand of service tax not sustainable. - AT
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Excise Duty Exemption Applies: By-Products from Unwanted Material Removal Not Considered Manufacturing Under Notification 89/95-CE.
Case-Laws - AT : Duty of excise on clearance of dutiable by-products - removal of unwanted materials resulting in products like gums, waxes and fatty acid with odour cannot be called as a process of manufacture - benefit of Notification 89/95-CE dated 18/02/1995 allowed - AT
VAT
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Forcible Collection of Post-Dated Cheques Prohibited Without Assessment Order; Simultaneous Stock Attachment Also Not Allowed.
Case-Laws - HC : Attachment orders - Forcibly collection of post-dated cheques - without any order of assessment or without initiation of assessment proceedings - The Department cannot retain the cheques, seek realization thereof while still attaching the petitioner’s stock. - HC
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