TMI Tax Updates - e-Newsletter
August 14, 2017
Case Laws in this Newsletter:
Articles
By: KIRTIKUMAR PUROHIT
Summary: The article discusses issues with claiming Input Tax Credit (ITC) under the Goods and Services Tax (GST) framework in India. It highlights the government's timeline for filing GSTR-3B returns and the challenges faced by registered businesses in claiming ITC due to the unavailability of the trans-1 form on the GSTN network. This has led to a double taxation burden, affecting trade and the government's credibility. Businesses are advised to ensure ITC claims are accurate and consider legal action if unresolved by August 20, 2017.
News
Summary: A recent press release discusses the implementation of Tax Deducted at Source (TDS) under the Goods and Services Tax (GST) framework. This mechanism is designed to streamline tax collection by deducting tax at the point of transaction. The TDS system is expected to enhance compliance and ensure timely revenue collection for the government. The announcement highlights the importance of this measure in improving the efficiency of the GST system and facilitating better tax administration.
Summary: The former Reserve Bank Governor stated that the GST rollout in India has been smooth with minimal impact on GDP growth, viewing it as an extension of VAT. He acknowledged initial challenges but noted that the transition has been largely successful. He also highlighted the rising non-performing assets (NPAs) in banks, which are affecting their profitability and credit flow, describing it as a twin balance sheet problem. He emphasized the need for asset restructuring and penalizing wilful defaulters. He projected that India needs an annual growth rate of 8-9% to achieve a per capita GDP of USD 8,000 by 2030.
Summary: The Draft Companies (Cost Records and Audit) Amendment Rules, 2017, was announced on August 12, 2017. This amendment pertains to the cost records and audit regulations for companies, aiming to update and streamline existing rules. The announcement was made through a press release by the relevant governmental body, highlighting changes intended to enhance compliance and transparency in corporate financial practices. The amendment is part of ongoing efforts to refine regulatory frameworks governing corporate operations.
Summary: The Government of India's Ministry of Corporate Affairs is seeking public comments on the Draft Companies (Cost Records and Audit) Amendment Rules, 2017, which aim to align cost records with financial records following the implementation of Indian Accounting Standards (IndAS). The draft rules propose changes in areas such as material costs, employee costs, utilities, and depreciation, among others, to ensure consistency. Stakeholders are encouraged to submit suggestions by August 26, 2017, via email, with specific formatting requirements for submissions. The amendments also address the treatment of subsidies, grants, and incentives in cost calculations.
Notifications
Customs
1.
71/2017 - dated
11-8-2017
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Cus
Seeks to further amend notification No.50/2017-Customs dated the 30th June, 2017
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 71/2017-Customs to amend Notification No. 50/2017-Customs dated June 30, 2017. Under the authority of the Customs Act, 1962, the amendments adjust the customs duty rates for certain items. Specifically, the duty rate for serial number 57 is increased from 7.5% to 15%, for serial number 61 from 12.5% to 17.5%, and for serial number 65 from 15% to 25%. These changes are deemed necessary in the public interest.
2.
9/2017-Customs (N.T./CAA/DRI) - dated
11-8-2017
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Cus (NT)
Appointment of Common Adjudicating Authority by DGRI
Summary: The Directorate of Revenue Intelligence (DRI) has appointed a Common Adjudicating Authority (CAA) to handle specific customs cases as per Notification No. 9/2017-Customs (N.T./CAA/DRI) dated August 11, 2017. This appointment follows earlier notifications and amendments under the Customs Act, 1962. The CAA is tasked with adjudicating show cause notices issued to various entities, including businesses and individuals, across multiple locations in India. The notification lists the noticees, corresponding show cause notice numbers, and the designated adjudicating authorities for each case, ensuring streamlined adjudication processes.
3.
8/2017-Customs (N.T./CAA/DRI) - dated
11-8-2017
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Cus (NT)
Appointment of Common Adjudicating Authority by DGRI
Summary: The Directorate of Revenue Intelligence (DRI) has appointed a Common Adjudicating Authority for various customs cases involving multiple companies. The notification lists several companies and individuals, along with their respective show cause notice numbers and dates. It specifies the current adjudicating authorities and appoints new ones for each case, aiming to streamline the adjudication process. The appointed authorities include Joint/Additional Commissioners and Principal Commissioners of Customs at various locations such as Mumbai, Delhi, Bangalore, Chennai, and others. This appointment is pursuant to earlier notifications under the Customs Act, 1962.
GST - States
4.
KA.NI.-2-941/XI-9(42)/17 - dated
14-7-2017
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Uttar Pradesh SGST
THE UTTAR PRADESH GOODS AND SERVICES TAX (SECOND AMENDMENT) RULES, 2017
Summary: The Uttar Pradesh Goods and Services Tax (Second Amendment) Rules, 2017, effective from July 1, 2017, introduce several amendments to the existing GST rules. Key changes include modifications to rules 44 and 96, the introduction of rule 96A concerning refunds on exports, and amendments to rules 117 and 119. New chapters on inspection, search, seizure, demands, recovery, and offences have been added, detailing procedures for handling seized goods, recovering dues, and compounding offences. Additionally, amendments to GST-RFD forms are specified, reflecting updates in procedural documentation for GST-related processes.
5.
KA.NI.-2-865/XI-9(47)/17 - dated
2-7-2017
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Uttar Pradesh SGST
Amendments in the Notification No.KA.NI-2-836/XI-9(47)/17-U.P. dated 30th June, 2017.
Summary: The notification amends a previous order under the Uttar Pradesh Goods and Services Tax Act, 2017. In Schedule I, a new tax rate of 2.5% is introduced for specific mineral or chemical fertilizers, including nitrogenous, phosphatic, potassic, and those containing combinations of nitrogen, phosphorus, and potassium, provided they are not clearly intended for non-fertilizer use. In Schedule II, serial numbers 66 to 69 and their associated entries are removed, which previously had a tax rate of 6%. These amendments are effective retroactively from July 1, 2017.
6.
KA.NI.-2-819/XI-9(42)/17 - dated
28-6-2017
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Uttar Pradesh SGST
The Uttar Pradesh Goods and Services Tax Rules, 2017
Summary: The Uttar Pradesh Goods and Services Tax Rules, 2017, effective from June 29, 2017, outline procedures for GST registration, composition levy, and compliance for businesses in Uttar Pradesh. Key provisions include the process for opting for composition levy, conditions and restrictions for eligibility, and the procedure for registration, including for non-resident taxable persons and those supplying online information services. The rules also address the amendment and cancellation of registration, physical verification of business premises, and authentication methods for electronic submissions. The document specifies tax rates for different categories under the composition scheme and mandates the display of registration certificates and GST Identification Numbers.
7.
510(i)/2017 - dated
29-6-2017
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Uttarakhand SGST
Uttarakhand Goods and Services Tax (Amendment) Rules 2017
Summary: The Uttarakhand Goods and Services Tax (Amendment) Rules, 2017, effective from June 22, 2017, introduce several modifications to the original 2017 rules. Key changes include the substitution of terms related to digital signatures with "duly signed or verified through electronic verification code" in various rules. Amendments also address the issuance of invoices without supply, compliance with section 171, and adjustments to registration procedures, including automatic registration if not processed within 15 days. Additionally, updates are made to forms GST CMP-04, GST CMP-07, GST REG-12, and REG-25, altering specific terms and deadlines.
8.
508/2017 - dated
28-6-2017
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Uttarakhand SGST
Uttarakhand Goods and Services Tax Rules, 2017
Summary: The Uttarakhand Goods and Services Tax Rules, 2017, were issued on June 28, 2017, under notification number 508/2017. These rules pertain to the implementation and regulation of the State Goods and Services Tax (SGST) in Uttarakhand, aligning with the broader GST framework established across India. The specific provisions and guidelines for the administration of SGST within the state, ensuring compliance with the national GST structure.
9.
04–C.T./GST - dated
8-8-2017
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West Bengal SGST
Date for filing of GSTR-3B
Summary: The Commissioner of State Tax, Government of West Bengal, issued a notification under the West Bengal Goods and Services Tax Rules, 2017, specifying the deadlines for filing GSTR-3B returns. For July 2017, the return must be filed by August 20, 2017, and for August 2017, by September 20, 2017. This notification, based on the recommendations of the Council and under the authority of the relevant GST rules and ordinance, became effective on August 8, 2017.
10.
03–C.T./GST - dated
8-8-2017
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West Bengal SGST
Time period for filing of details in FORM GSTR-3
Summary: The Commissioner of State Tax in West Bengal, under the authority granted by the West Bengal Goods and Services Tax Ordinance, 2017, has extended the deadlines for filing returns in FORM GSTR-3. For July 2017, the filing period is extended to September 11-15, 2017, and for August 2017, to September 26-30, 2017. This notification takes effect from August 8, 2017.
11.
02–C.T./GST - dated
8-8-2017
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West Bengal SGST
Time period for filing of details of inward supplies in FORM GSTR-2
Summary: The Commissioner of State Tax in West Bengal has extended the deadline for filing details of inward supplies in FORM GSTR-2 for July and August 2017. For July 2017, the filing period is now from September 6th to 10th, 2017, and for August 2017, it is from September 21st to 25th, 2017. This extension is authorized under the West Bengal Goods and Services Tax Ordinance, 2017, and is effective from August 8, 2017.
12.
01–C.T./GST - dated
8-8-2017
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West Bengal SGST
Time period for filing of details of outward supplies in FORM GSTR-1
Summary: The Commissioner of State Tax, Government of West Bengal, has issued a notification extending the deadline for filing details of outward supplies in FORM GSTR-1 under the West Bengal Goods and Services Tax Ordinance, 2017. For the month of July 2017, the filing period is extended to September 1-5, 2017, and for August 2017, it is extended to September 16-20, 2017. This notification is effective from August 8, 2017, as per the powers granted by the relevant sections of the Ordinance.
13.
1385-F.T. - dated
1-8-2017
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West Bengal SGST
The West Bengal Goods and Services Tax (Fourth Amendment) Rules, 2017.
Summary: The West Bengal Goods and Services Tax (Fourth Amendment) Rules, 2017, effective from August 1, 2017, introduce several amendments to the existing GST rules. Key changes include extending the deadline for certain compliance requirements to September 30, 2017, revising the rules for currency exchange rates for taxable goods and services, and modifying invoicing requirements for exports. Amendments also address the filing process for GST returns, including the introduction of FORM GSTR-3B, and updates to various rules and forms to correct terminology and align with accounting principles. These changes aim to streamline GST compliance and reporting processes in West Bengal.
SEZ
14.
S.O. 2553(E) - dated
2-8-2017
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SEZ
Central Government de-notifies an area of 905.21 hectares at Atchutapuram and Rambilli Mandals, Visakhapatnam District in the State of Andhra Pradesh of Special Economic Zone (SEZ)
Summary: The Central Government has de-notified an area of 905.21 hectares from the Special Economic Zone (SEZ) at Atchutapuram and Rambilli Mandals in Visakhapatnam District, Andhra Pradesh. This decision, approved by the Andhra Pradesh Industrial Infrastructure Corporation Limited and supported by the State Government and the Development Commissioner, reduces the SEZ's total area to 1300.82 hectares. The de-notified land comprises various survey numbers across multiple villages, as detailed in the notification. This action is in accordance with the Special Economic Zones Act, 2005, and the related rules.
Circulars / Instructions / Orders
GST - States
1.
No. 05/WBGST/PRO/17-18 - dated
22-6-2017
Notification of Facilitation Centres
Summary: The Government of West Bengal has issued an order under the West Bengal Goods and Services Tax Rules, 2017, establishing 230 Facilitation Centres across various districts for the implementation of the West Bengal Goods and Services Tax Ordinance, 2017. This order, effective from June 22, 2017, lists the districts, trade names, addresses, contact information, and email addresses of the centers. These centers are intended to assist in the administration and facilitation of GST-related activities within the state.
2.
No. 06/WBGST/PRO/17-18 - dated
22-6-2017
Adjudicating authorities under the West Bengal Goods and Services Tax Ordinance, 2017
Summary: The Commissioner of State Tax, West Bengal, under the authority of the West Bengal Goods and Services Tax Ordinance, 2017, has designated various officials, including the Special Commissioner, Additional Commissioner, Senior Joint Commissioner, Joint Commissioner, Deputy Commissioner, and State Tax Officer, as adjudicating authorities. These officials are empowered to issue orders or decisions under the Ordinance within their respective jurisdictions. This authorization is effective from June 22, 2017.
3.
No. 01/WBGST/PRO/17-18 - dated
21-6-2017
Jurisdiction of Officers in Circles
Summary: The order specifies that, under the West Bengal Goods and Services Tax Ordinance, 2017, the Senior Joint Commissioner, Joint Commissioner, Deputy Commissioner, State Tax Officer, and Assistant State Tax Officer are authorized to exercise jurisdiction within their designated circles. This directive, issued by the Commissioner of State Tax, West Bengal, is effective from June 22, 2017.
4.
No. 02/WBGST/PRO/17-18 - dated
21-6-2017
Jurisdiction of Officers in Charges
Summary: The order issued by the Directorate of Commercial Taxes, Government of West Bengal, specifies the jurisdiction of tax officers under the West Bengal Goods and Services Tax Ordinance, 2017. It designates that the Joint Commissioner, Deputy Commissioner, State Tax Officer, and Assistant State Tax Officer will exercise jurisdiction within their respective charges. This directive is effective from June 22, 2017, as authorized by the Commissioner of State Tax, West Bengal.
5.
No. 03/WBGST/PRO/17-18 - dated
21-6-2017
Delegation of powers by the Commissioner
Summary: The Commissioner of State Tax, West Bengal, has delegated specific powers under the West Bengal Goods and Services Tax Ordinance, 2017, to designated officers. These powers include handling composition levy provisions, registration procedures, extending registration validity for casual or non-resident taxable persons, and managing applications for registration amendments. Additionally, the delegated officers have authority to cancel or revoke registration certificates. The officers specified for these tasks include the Senior Joint Commissioner, Joint Commissioner, Deputy Commissioner, and State Tax Officer. This delegation is effective from June 22, 2017, and must be exercised within the officers' respective jurisdictions.
6.
No. 04/WBGST/PRO/17-18 - dated
21-6-2017
Central Registration Unit
Summary: The Commissioner of State Tax in West Bengal, under the West Bengal Goods and Services Tax Ordinance, 2017, has designated officials including the Additional Commissioner, Senior Joint Commissioner, Joint Commissioner, Deputy Commissioner, State Tax Officer, and Assistant State Tax Officer within the Central Registration Unit of the Commercial Taxes Directorate. These officials are tasked with handling registration matters under the ordinance and its rules, with jurisdiction covering the entire state of West Bengal unless specified otherwise. This directive is effective from June 22, 2017.
GST
7.
5/5/2017 - dated
11-8-2017
Clarification on issues related to furnishing of Bond/Letter of Undertaking for Exports–Reg.
Summary: The circular addresses issues related to the furnishing of Bonds or Letters of Undertaking (LUT) for exports under GST. It clarifies eligibility criteria for exporters to use LUTs, requiring a minimum foreign inward remittance of 10% of export turnover or at least Rs. one crore in the previous financial year. It also outlines the process for acceptance of LUTs/Bonds, treatment of CT-1 forms, transactions with EOUs, and remittances in Indian Rupees. The circular emphasizes liberal implementation of bank guarantees and specifies the jurisdictional authority for accepting LUTs/Bonds. It reiterates that the instructions apply to exports from July 1, 2017.
DGFT
8.
TRADE NOTICE NO. 13/(2015-2020) - dated
11-8-2017
Implementation of Notification No. 19 dated 5.8.2017- reg.
Summary: The Directorate General of Foreign Trade has issued a trade notice regarding the implementation of Notification No. 19, dated August 5, 2017, which amends the import policy for Pigeon Peas/Toor Dal. The import policy has been changed to "restricted," with an annual quota of 2 lakh metric tons. However, this quota has already been met for the current fiscal year, negating the need for further import procedures. Imports backed by irrevocable Letters of Credit opened before August 5, 2017, and registered with the relevant authorities are still permitted. No new authorizations will be issued under the current Foreign Trade Policy.
Highlights / Catch Notes
Income Tax
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Police Seized Cash; Income Tax Department Didn't Use Section 132A Powers, Police Can't Withhold Cash.
Case-Laws - HC : Seizure of the cash by the police authorities - failure of the Income Tax department exercise requisition powers u/s 132A - When no such requisition was made, the police authority had no business to withhold the cash - HC
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Court Upholds Bank's Right to Recover Unpaid Dues from Secured Asset, Prioritizing Over Revenue Claims in Tax Recovery.
Case-Laws - HC : Tax Recovery proceedings - priority over other dues / secured creditors - the Revenue cannot prevent the petitioner-bank as a secured creditor from realizing its unpaid dues through sale of secured asset. - HC
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Exemption Denial u/s 143(1) Contested Due to Missing Section 12AA Registration; Adjustment Exceeds Permissible Scope.
Case-Laws - AT : Validity of intimation / adjustment u/s 143(1) - Exemption u/s 11A denied - Registration no. u/s 12AA was not mentioned in the ITR - Since the adjustment made by the AO is debatable, which requires verification from the assessment records, adjustment made by the revenue in the intimation u/s 143(1) is beyond the scope of section 143(1)
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Tax Deduction Allowed u/s 54F: Under-Construction Property Not Counted as Additional Residential House.
Case-Laws - AT : Deduction u/s 54F - satisfaction of relevant conditions - owning more than one house - another house was under construction and it cannot be said as another residential house owned by the assessee - exemption allowed.
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CIT-(A) Exceeded Authority: Should Have Requested Remand Report from TPO, Ensuring Fair Hearing for Assessee.
Case-Laws - AT : TPA - CIT-(A) was not empowered to restore the issue to the file of the TPO for deciding afresh. He should have called for a remand report from the TPO and should have decided the issue after providing opportunity of being heard to the assessee. However, due to mistake on the part of the Ld. CIT-(A), the assessee cannot be allowed to suffer the justice
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Bank Guarantee Commission Income Recognized Over Duration; No Extra Income Beyond Deferred Recognition.
Case-Laws - AT : Accrual of income - Deferred Bank Guarantee Commission - he commission income arising from the guarantee given on behalf of the customer has been recognized by the assessee over the life of the bank guarantee. - No addition.
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Assessing Officer Can Add Income if Evidence Lacking, But Must Avoid Multiple Additions on Same Account.
Case-Laws - AT : Rejecting of claim of loss - ad-hoc estimation of income - AO is allowed to make additions for want of evidences and the same should be fair and reasonable. - AO should avoid multiple additions on any account.
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Income Tax Act Section 263 Order Upheld for Unexplained Investments and Lack of Penalty u/s 271(1)(c.
Case-Laws - AT : Revision u/s 263 - unexplained investments - non-initiation of penalty u/s u/s 271(1)(c) of the Act render the order erroneous and prejudicial to the interest of the revenue and upheld the revision u/s 263
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Income from Selling Flowering Plants via Tissue Culture Deemed Agricultural, Exempt u/s 10(1) of Income Tax Act.
Case-Laws - AT : Claim of exemption u/s.10(1) - agricultural nature of the income earned out of the sale of the flowering plants developed out of imported mother plants in Tissue Culture Laboratory - AO directed to exclude the said income from the total income
Corporate Law
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SEBI's Move to Investigate 331 Companies as Shell Companies Faces Legal Challenge; Stay on Two Firms' Label.
Case-Laws - AT : Suspected to be the shell companies - investigation in respect of 331 companies by SEBI - the impugned communication issued by SEBI on the basis that the appellants (two companies) are ‘suspected shell companies’ deserves to be stayed.
Central Excise
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Dispute Over Vehicle Classification Under Central Excise Tariff Act: Tractors vs. Goods Transport Vehicles, Impacting Excise Duties.
Case-Laws - AT : Classification under Chapter Subheading No.8701.90 or under Chapter 8704.20 of Central Excise Tariff Act, 1985? - allegation that, the motor vehicles is used for transport of goods and not meant for agricultural use or engineering work. - whether or not designed to carry any load - to be classified as tractors
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