TMI Tax Updates - e-Newsletter
June 2, 2018
Case Laws in this Newsletter:
News
Summary: In May 2018, the total gross GST revenue collected amounted to Rs. 94,016 crore, surpassing the previous financial year's monthly average of Rs. 89,885 crore. This included Rs. 15,866 crore from CGST, Rs. 21,691 crore from SGST, Rs. 49,120 crore from IGST (Rs. 24,447 crore from imports), and Rs. 7,339 crore from Cess (Rs. 854 crore from imports). The Central and State Governments earned Rs. 28,797 crore and Rs. 34,020 crore, respectively, after settlement. Although revenue was lower than the previous month due to year-end effects, Rs. 6,696 crore was released to states as GST compensation for March 2018, totaling Rs. 47,844 crore for FY 2017-18.
Summary: India has signed its first Mutual Recognition Agreement (MRA) in Nursing with Singapore, marking a significant achievement for Indian healthcare providers. The agreement allows Singapore to recognize seven Indian nursing institutions, facilitating institutional access to international markets. This development is expected to pave the way for India to establish similar agreements with other countries. Additionally, during Prime Minister Narendra Modi's state visit, India and Singapore concluded the second review of their Comprehensive Economic Cooperation Agreement (CECA), addressing unresolved issues since 2010 and agreeing to expand tariff concessions and liberalize trade rules to enhance bilateral trade.
Summary: The Commerce Ministry is establishing an integrated logistics division to support exporters by reducing shipment costs. The Minister of State for Commerce and Industry encouraged exporters to build on the previous year's USD 76 billion exports despite global economic challenges. The Commerce Secretary urged engineering exporters to eliminate the USD 16 billion trade deficit by exploring new markets and becoming leaders in specific sub-sectors. Although Indian engineering exports have grown, they represent only 1.2% of global exports compared to China's 12.3%. The EEPC India Chairman highlighted issues like GST refunds and rising raw material costs, and has proposed solutions to the government.
Summary: The Union Government of India reported total receipts of Rs. 71,450 crore for April 2018, representing 3.93% of the Budget Estimates for the financial year 2018-19. This includes Rs. 57,533 crore in net tax revenue, Rs. 13,124 crore in non-tax revenue, and Rs. 793 crore in non-debt capital receipts. The government transferred Rs. 55,789 crore to state governments as tax devolution, Rs. 7,611 crore more than the previous year. Total expenditure was Rs. 2,23,417 crore, with Rs. 1,76,714 crore on revenue account and Rs. 46,703 crore on capital account. Revenue expenditure included Rs. 15,618 crore for interest payments and Rs. 58,136 crore for major subsidies.
Summary: The Union Government of India reported provisional accounts for the financial year 2017-18, with total receipts of Rs. 15,51,004 crore, representing 95.57% of the revised estimate. This includes Rs. 12,42,662 crore from tax revenue, Rs. 1,92,523 crore from non-tax revenue, and Rs. 1,15,819 crore from non-debt capital receipts. The government transferred Rs. 6,73,005 crore to state governments as tax devolution, an increase of Rs. 65,005 crore from the previous year. Total expenditure was Rs. 21,42,667 crore, with Rs. 18,78,963 crore on revenue account and Rs. 2,63,704 crore on capital account. Interest payments accounted for Rs. 5,29,243 crore, and major subsidies were Rs. 1,91,110 crore.
Summary: A seminar on Water and Sanitation in Pune emphasized the need for new technologies to address sanitation and solid waste management in India. The event highlighted the insufficient sewage treatment capacity in Indian cities and advocated for decentralized solutions and private sector participation. Experts called for a holistic approach, public awareness, and policy changes, including user charges for water and institutional reforms. Successful models from Manila and Nagpur were discussed, emphasizing recycling and waste segregation. The seminar, organized by the Indian Ministry of Finance, aimed to leverage the Asian Infrastructure Investment Bank's platform for infrastructure development in India.
Summary: The Government of India has introduced the Income Tax Informants Reward Scheme, 2018, to encourage public participation in uncovering black money and reducing tax evasion. This scheme offers rewards up to Rs. 50 lakh for information on significant tax evasion within India, and up to Rs. 5 crore for information on undisclosed foreign income and assets. The scheme, which supersedes the 2007 version, ensures confidentiality for informants and is open to foreigners. Information must be submitted in a prescribed manner to designated officers. The scheme aims to attract informants with substantial rewards, particularly for foreign asset disclosures.
Summary: The Government of India introduced the Benami Transactions Informants Reward Scheme, 2018, to combat black money and tax evasion. This initiative encourages individuals to report benami transactions and properties, where assets are held in another's name to conceal ownership. Informants can receive up to Rs. One crore for providing specific information to the Income Tax Department. The scheme ensures confidentiality for informants, including foreigners, and aims to enhance public participation in identifying and addressing tax evasion. Information about the scheme is accessible at Income Tax offices and the department's official website.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 67.1840 on June 1, 2018, compared to Rs. 67.4526 on May 31, 2018. Consequently, the exchange rates for the Euro, British Pound, and Japanese Yen against the Rupee were adjusted. On June 1, 2018, the rates were 1 Euro at Rs. 78.4104, 1 British Pound at Rs. 89.1397, and 100 Japanese Yen at Rs. 61.56. These rates are derived from the US Dollar reference rate and cross-currency quotes. The SDR-Rupee rate will also be determined based on this reference rate.
Summary: The Competition Commission of India (CCI) concluded two cases of bid rigging in tenders by Pune Municipal Corporation for waste processing plants. The cases involved collusion in tenders from financial years 2013-14 and 2014-15. Penalties were imposed on four firms: Saara Traders Pvt. Ltd., Ecoman Enviro Solutions Pvt. Ltd., Fortified Security Solutions, and Raghunath Industry Pvt. Ltd., based on their average turnover. Individual penalties were also levied on officials from Saara, Ecoman, and Raghunath. Saara received a 50% penalty reduction due to cooperation. No additional penalty was imposed for the 2014-15 tender due to prior penalties.
Summary: The Central Board of Indirect Taxes and Customs has amended the tariff values for various commodities under the Customs Act, 1962. The changes affect crude palm oil, RBD palm oil, crude palmolein, RBD palmolein, crude soybean oil, brass scrap, poppy seeds, areca nuts, gold, and silver. The new tariff values are specified in US dollars per metric tonne or per unit, with crude palm oil set at $658 per metric tonne and gold at $419 per 10 grams. These adjustments are part of an amendment to a 2001 notification by the Ministry of Finance.
Summary: A two-day seminar on 'Water and Sanitation' in Pune, Maharashtra, emphasized the need for a holistic and integrated approach to water and sanitation management in India. Hosted by the Ministry of Finance with partners like RIS, AIIB, and FICCI, the event featured discussions on efficient water management, sanitation infrastructure, and financing issues. Experts highlighted the success of India's Swachh Bharat Mission, which has significantly reduced open defecation. The Government's Swajal project aims to empower rural communities with sustainable drinking water solutions. Challenges include low cost recovery in urban water utilities and the need for proper pricing and subsidies.
Notifications
Customs
1.
47/2018 - dated
31-5-2018
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg
Summary: The Government of India, through the Central Board of Indirect Taxes and Customs, has issued Notification No. 47/2018-CUSTOMS (N.T.) dated 31st May 2018, amending the tariff values for various goods. The revised tariff values are specified for items including crude palm oil, RBD palm oil, crude palmolein, RBD palmolein, crude soybean oil, brass scrap, poppy seeds, gold, silver, and areca nuts. The notification substitutes the existing tables with new ones outlining the updated tariff values in US dollars per metric tonne or per specified units for these goods, effective under the Customs Act, 1962.
Highlights / Catch Notes
GST
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Printing Customer Content on Photographic Paper Classified as Service Under SAC 9989, 12% GST Applies.
Case-Laws - AAR : Classification of supply - Activity of Printing content supplied by the customers on photographic paper - Activity is in the nature of supply of service - classifiable under SAC 9989 and taxable at 12% - AAR
Income Tax
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Reseller agreement found to establish principal-to-principal relationship, not principal-agent; no Permanent Establishment in India.
Case-Laws - AAR : PE in India or not - Reseller Agreement does not create a principal-agent relationship between the Applicant and the Reseller - their relationship is on a principal-to-principal basis - applicant does not create a Permanent Establishment in India. - AAR
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AAR Clarifies TDS Liability: Automated Solutions Without Human Intervention Aren't Technical Services u/s 195 of Income Tax Act.
Case-Laws - AAR : TDS liability u/s 195 - Income accrued in India - fees for technical services - thus Solutions provided by the Applicant without human intervention cannot be treated as provision of technical services - AAR
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No Penalty for TDS Delay: Reasonable Cause Accepted u/s 271C, Assessee Spared From Penalty.
Case-Laws - AT : Penalty u/s 271C - delay in depositing TDS - there was reasonable cause on part of assessee for the default in remittance of tax deducted at source into the Government account on time - No penalty - AT
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Valuation of Land Under Litigation Must Reflect Actual Status, Not Cost or Market Price, Despite Defects.
Case-Laws - AT : Valuation of closing stock of land - change in method of valuation - land under litigation/encroachment - cannot be valued at the cost or prevailing market price, rather its value would be very less due to defects and deficiency of not available to the assessee for immediate use neither be valued at nil - thus value is to be determined on the basis of the actual status - AT
Customs
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High Court directs tribunal to independently decide on DRI officers' authority for show cause notices, ignoring Mangali Impex case precedent.
Case-Laws - HC : Jurisdiction of the officer of DRI to issue show cause notice - whether or not officers of the DRI could have issued show cause notice? - HC directed the tribunal to adjudicate the matter on merit without being influenced by the decision in the case of Mangali Impex.
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FEMA Violations Alone Aren't Enough to Trigger Customs Act Provisions; Requires Additional Criteria Under FEMA 1999.
Case-Laws - AT : An offence under FEMA does not automatically result in invocation of provisions of customs Act. Thus the Act of buying and selling of foreign exchange in violation of FEMA, 1999, rules, regulation and guidelines issued under FEMA is not by itself sufficient to invoke charges under Customs Act.
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Water Supply Project Gains Registration, Benefits from Notification 14/2004-Cus, Reducing Custom Duty Demand on Imports.
Case-Laws - AT : Grant of registration for the project - Classification - custom duty demand - Project import - Since the project is classifiable as ‘Water Supply Project’ the benefit of the notification 14/2004-Cus will also be available.
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Human Hair Imports Duty-Free If Conditions Met; Substantial Benefits Shouldn't Be Denied Over Procedures.
Case-Laws - AT : Import of Human Hair - exemption from duty - If the intended purposes of these notifications, including the prescribed value addition etc. is complied with and there are no allegations of misuse or diversion of the imported goods, the larger substantive benefits of the notification should not be denied for a procedural requirement. - AT
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Exemption Granted for Asphalt Hot Mixing Plant Import; Departmental Panel's Report Rejected as They Lacked Technical Expertise.
Case-Laws - AT : Eligibility for exemption - Import of Asphalt Hot Mixing Plant - electronically controlled plant or electrically controlled plant - the departmental panel is not the authorised technical expert to conduct the test of the plant - report of the departmental panel cannot be accepted - benefit of exemption allowed. - AT
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Importing Personal Effects Without IEC Code is Valid; No Procedural Flaw Identified.
Case-Laws - AT : Failure to obtain import-export code (IEC Code) - there being no bar on imports of personal effects against bill of entry and without separate code, there is no flaw in the procedure for import. - AT
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Water Supply Project Approved for Registration Despite Appellants' Non-Involvement in Import Contract Under Relevant Regulations.
Case-Laws - AT : Grant of registration for the project - project relating to Water Supply project - The Project can be registered under the regulation by the Appellants even if the appellants are not a direct party to import contract. - AT
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Projects Moving Water Classified as Water Supply, Not Irrigation, Impacting Customs and Tax Compliance Obligations.
Case-Laws - AT : Classification of project - Difference between irrigation project and water supply project - movement and lifting of water from one point to another cannot be called an irrigation project but it can only be called a Water Supply project in that sense - AT
Service Tax
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Tribunal Limits Service Tax Demand to Normal Period, Rectifies Mistake in Show Cause Notice Scope.
Case-Laws - AT : Rectification of mistake - scope of SCN - Tribunal allowed the ROM application and set aside the demand beyond the normal period of limitation wherein demand was confirmed for the entire period in the original order.
Central Excise
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"Twelve Calendar Months" Means Full Months, Not 365 Days: Legal Interpretation Explained.
Case-Laws - AT : The expression 'twelve calendar months' would encompass exactly twelve months with any part of month computed as a month. Such expression cannot extend to 365 days which is used for reckoning term of one year.
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