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308th Issue of Tax Connect

308th Issue of Tax Connect

July 24, 2021 in Income Tax Compliance

Tax Calendar

Due date Form/Return/Challan Reporting Period Description
30th July 2021 Form-27 D April to June 2021 Quarterly issuance of Certificate of collection of tax at source (TCS)
31st July 2021  Form No. 24Q April to June 2021 Quarterly Statement of deduction of tax at source (TDS) on salary u/s 192 for the quarter ending June 2021.
31st July 2021  Form No. 27Q April to June 2021 Quarterly Statement of deduction of tax at source (TDS) in respect of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident for the quarter ending June 2021
31st July 2021  Form No. 26Q April to June 2021 Quarterly Statement of deduction of tax at source (TDS) in respect of all other deductees for the quarter ending June 2021.
31ST July. 2021 ITNS-280 Deposit of Income Tax – Self-assessment tax
31st July. 2021  26QAA April to June 2021 Quarterly return of non -deduction at source by a banking company from interest on deposit in respect of the quarter ending

 

Income Tax

 

Press Release

 

CBDT Grants Further Relaxation In Electronic Filing Of Income Tax Forms 15CA/15CB:

 

OUR COMMENTS: As per the Income-tax Act, 1961, there is a requirement to furnish Form 15CA/15CB electronically. Presently, taxpayers upload the Form 15CA, along with the Chartered Accountant Certificate in Form 15CB, wherever applicable, on the e-filing portal, before submitting the copy to the authorized dealer for any foreign remittance.

In view of the difficulties reported by taxpayers in electronic filing of Income Tax Forms 15CA/15CB on the portal wwwdotincometaxdotgovdotin, it had earlier been decided by CBDT that taxpayers could submit Forms 15CA/15CB in manual format to the authorized dealer till 15th July 2021.

It has now been decided to extend the aforesaid date to 15th August 2021. In view thereof, taxpayers can now submit the said Forms in manual format to the authorized dealers till 15th August 2021. Authorized dealers are advised to accept such Forms till 15th August 2021 for the purpose of foreign remittances. A facility will be provided on the new e-filing portal to upload these forms at a later date for the purpose of generation of the Document Identification Number.

Notification

CBDT Vide Notification 2/21, Dated 20 July 2021 Allocated Areas Of Jurisdiction Among The Competent Authorities

OUR COMMENTS: The Central Government is pleased to allocate the following areas of jurisdiction among the Competent Authorities authorized under sub-section (1) of section 5 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976) for the purpose of the said Act:

S.

No.

Name of Competent Authority Jurisdiction
1. Competent Authority, Kolkata All the cases referred by Income Tax Authorities* exercising the powers and performing the functions under the Prohibition of Benami Property Transactions Act, 1988 having headquarters at Kolkata, Bhubaneshwar, Patna, Guwahati.

 

* The territorial area-wise jurisdiction of the respective Income Tax Authorities in this regard will be the same as provided for in CBDT Notification No 40/2017/F. No. 173/429/2016-ITA-I dated 18-05-2017 [S.O. 1621(E)] published in Part II, Section 3, Sub-section (ii) of the Gazette of India, Extraordinary. The work performed by the Competent Authorities authorized under sub-section (1) of section 5 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976) in the exercise of powers conferred under section 7 of the Prohibition of Benami Property Transactions Act 1988 will be in addition to the work already being performed by the Competent Authorities.

[For further details please refer to the notification]

GST

Case Law

Naggaraj Anooradha Vs The State Tax Officer (Circle) Koyambedu (C) No. 4/109, Chennai Bangalore Dated 8th July 2021

BRIEF: According to the Madras High Court the petitioner has made a claim for refund of Input Tax, in respect of which a deficiency memo had been raised by respondent calling for documents in support of the claim – An e-application for refund was once again filed – A SCN was issued proposing rejection of refund stating that there was a mismatch between the export value and the net ITC when compared to monthly returns – The case of the petitioner is that two invoices relating to the month of March 2020 had been inadvertently omitted to be taken into account and this would account for mismatch – The impugned order is non-speaking – In fact, there is a column available for reasons on the basis of which the claim has been either accepted or rejected – However, this column in the impugned order is conspicuously blank and no reasons have been adduced for the rejection of the request – Bearing in mind the violation of principles of natural justice, the impugned order of rejection is set aside.

OUR COMMENTS: The petitioner challenges the order dated 22.07.2020 rejecting its request for a refund. The petitioner is a registered assessee on the files of the State Tax Officer/sole respondent under the Goods and Services Tax Act, 2017 (in short ‘Act’). The petitioner has made a claim for refund of Input Tax, in respect of which a deficiency memo had been raised by the respondent on 15.06.2020 calling for documents in support of the claim. An e-application for refund was once again filed on 16.06.2020. This was followed by a show-cause notice dated 25.06.2020 proposing rejection of refund stating that there was a mismatch between the export value and the net ITC when compared to monthly returns. The petitioner has responded to the show-cause notice to vide reply dated 07.07.2020 enclosing copies of the export invoice, inward supply bills, and bank realization statements. The case of the petitioner appears to be that two invoices relating to the month of March 2020 had been inadvertently omitted to be taken into account and this would account for the mismatch. Had a personal hearing been afforded to the petitioner prior to adjudication of the request for a refund, this point would have been explained. However, since the impugned order has come to be passed without affording an opportunity for personal hearing, this point has not been put forth to the respondent for consideration effectively. Moreover, the impugned order is non-speaking. In fact, there is a column available for reasons on the basis of which the claim has been either accepted or rejected. However, this column in the impugned order is conspicuously blank and no reasons have been adduced for the rejection of the request. Bearing in mind the violation of principles of natural justice, the impugned order of rejection is set aside. The petitioner will appear before the respondent on Monday, the 19th of July, 2021 at 10.30 a.m. without expecting any further notice in this regard. After hearing the petitioner, the respondent shall pass an order of adjudication on the request of refund, de novo within a period of four (4) weeks from the date of personal hearing, in accordance with the law. This Writ Petition is disposed of as above. No costs. Connected Miscellaneous Petitions are closed

[In favour of the petitioner].

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308th Issue of Tax Connect.

307th Issue of Tax Connect

307th Issue of Tax Connect

July 17, 2021 in Income Tax Compliance

Tax Calendar

Due date Form/Return/Challan Reporting Period Description
18th July 2021 CMP-08 April to June 2021 Quarterly return for a registered person opting for composition levy
20th July 2021 GSTR – 5A June 2021 OIDAR – Details of supplies of online information and database access or retrieval services by a person located outside India made to non-taxable persons in India
20th July 2021 GSTR – 5  June 2021 Return by a non-resident taxable person
20th July 2021 GSTR 3B June 2021 Simple GSTR return for the month of June 2021 (for Assesses having turnover exceeding 5 Cr. or opted to file monthly return)
22nd July 2021 & 24th July 2021 GSTR 3B April to June 2021 Simple GSTR return for the Quarter (April – June), 2021 (Opted for Quarterly filing as per QRMP Scheme)

 

Income Tax

Notification

CBDT Notified The Rules Further To Amend The Income-Tax Rules, 1962 Vide Notification Dated 77/2021 Dated 7th July 2021.

Our Comments: In the Income-tax Rules, 1962, new Rule 8AC has been inserted as under: “Rule 8AC: Computation of short term capital gains and written down value under section 50 where depreciation on goodwill has been obtained.

(1) For the purposes of the proviso to section 50, the written down value of the block of the asset and short term capital gains, if any, for the previous year relevant to the assessment year commencing on the 1st day of April 2021 shall be determined in accordance with this rule.

(2) Where the goodwill of the business or profession was the only asset or one of the assets in the block of asset “intangible” for which depreciation was obtained by the assessee in the assessment year beginning on the 1st day of April, 2020, the written down value of this block of an asset for the previous year relevant to the assessment year commencing on the 1st day of April, 2021 shall be determined in accordance with the provisions of item (ii) of sub-clause (c) of clause (6) of section 43.

(3) Where the reduction under sub-item (B) of the item (ii) of sub-clause (c) of clause (6) of section 43, for the previous year relevant to the assessment year commencing on the 1st day of April 2021, exceeds the aggregate of the following amounts, namely:-

(i) the written down value of the block of assets at the beginning of the previous year relevant to the assessment year commencing on the 1st day of April 2021 without giving effect to reduction under sub-item (B) of the item (ii) of sub-clause (c) of clause (6) of section 43; and

(ii) the actual cost of any asset falling within the block of assets “intangible”, other than goodwill, acquired during the previous year relevant to the assessment year commencing on the 1st day of April 2021, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets.

(4) Without prejudice to the provisions of sub-rule (3) and section 55, where the goodwill of the business or profession was the only asset in the block of asset “intangible” for which depreciation was obtained by the assessee in the assessment year beginning on the 1st day of April, 2020, and the block of an asset ceases to exist on account of there being no further asset acquired during the previous year relevant to the assessment year commencing on the 1st day of April 2021 in that block, there will not be any capital gains or loss on account of the block of an asset having ceased to exist.

(5) The capital gains or loss on the transfer of goodwill, during the previous years relevant to the assessment year 2021-22 or subsequent assessment years, shall be determined in accordance with the provisions of section 48, section 49, and clause (a) of sub-section (2) of section 55.”

[For further details please refer to the notification].

Related Topic:
308th Issue of Tax Connect

GST

Case Law

M/s Radha Krishan Industries Versus State Of Himachal Pradesh & Ors.- Hon’ble Supreme Court- Provisional Attachment

Brief: It is evident that the expression ‘adjudicating authority does not include among other authorities, the Commissioner. In the present case, the narration of facts indicates that on 21 October 2020, the Commissioner had in the exercise of his powers under Section 5(3) made a delegation inter alia to the Joint Commissioner of State Taxes and Excise in respect of the powers vested under Section 83(1). The Joint Commissioner, in other words, was exercising the powers which are vested in the Commissioner under Section 83(1) to order a provisional attachment in pursuance of the delegation exercised on 21 October 2020.

OUR COMMENTS: The Joint Commissioner while ordering a provisional attachment under section 83 was acting as a delegate of the Commissioner in pursuance of the delegation effected under Section 5(3) and an appeal against the order of provisional attachment was not available under Section 107 (1). The writ petition before the High Court under Article 226 of the Constitution challenging the order of provisional attachment was maintainable. The High Court has erred in dismissing the writ petition on the ground that it was not maintainable. The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled. The exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. Before ordering a provisional attachment the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any and that therefore, it is necessary so to do for the purpose of protecting the interest of the government revenue. The expression “necessary so to do for protecting the government revenue” implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment. The formation of an opinion by the Commissioner under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting the interest of the government revenue.

There has been a breach of the mandatory requirement of Rule 159(5) and the Commissioner was clearly misconceived in law in coming into the conclusion that he had discretion on whether or not to grant an opportunity of being heard. The Commissioner is duty-bound to deal with the objections to the attachment by passing a reasoned order which must be communicated to the taxable person whose property is attached. A final order having been passed under Section 74(9), the proceedings under Section 74 are no longer pending as a result of which the provisional attachment must come to an end; and. The appellant having filed an appeal against the order under section 74(9), the provisions of sub-Sections 6 and 7 of Section 107 will come into operation in regard to the payment of the tax and stay on the recovery of the balance as stipulated in those provisions, pending the disposal of the appeal.

[In favour of the petitioner].

Read & Download the Full Copy in pdf:

307th Issue of Tax Connect

306th Issue of Tax Connect

306th Issue of Tax Connect

July 10, 2021 in Income Tax Compliance

Tax Calendar

Due date Form/Return/Challan Reporting Period Description
11th July 2021 GSTR-1 June 2021 For the month of June 2021 ( For other than taxpayers under the QRMP scheme)
13th July 2021 GSTR-1 June 2021 For April to June 2021 (who opted QRMP)
13th July 2021 GSTR-6 June 2021 Filing of return by Input Service Distributors for the Month June 2021
15th July 2021 27EQ June 2021 Quarterly Statement of TCS for the quarter ending June 2021
15th July 2021 24Q, 26Q, and 27Q June 2021 Quarterly Statement of TDS for the quarter ended on March 2021
15th July 2021 Form 64C June 2021 Statement to be furnished by Alternative Investment Fund (AIF) to units holders in respect of income distributed during the previous year 2020-21

 

Income Tax

Notification

CBDT, Directorate Of Income Tax (Systems) Notified Compliance Check Functionality For Section 206AB & 206CCA Vide Notification No. 01 Of 2021, Dated 22nd June 2021.

Our Comments: Director General of Income-tax (Systems), New Delhi shall be the specified income-tax authority for furnishing information to the “Tax Deductor/Tax Collector”, having registered in the reporting portal of the Project Insight through valid TAN, to identify the ‘Specified Persons’ for the purposes of section 206AB and 206CCA of the Act through the functionality “Compliance Check for Section 206AB & 206CCA”. Income Tax Department has released a new functionality “Compliance Check for Section 206AB & 206CCA” to facilitate tax deductors/collectors to verify if a person is a “Specified Person” as per section 206AB & 206 CCA. This functionality is made available through (report.insight.gov.in) of the Income-tax Department. Kindly refer to CBDT Circular No. 11 of 2021 dated 21.06.2021 regarding the use of functionality under section 206AB and 206CCA of the Income-tax Act, 1961. For any further assistance, Tax Deductors & Collectors can refer to Quick Reference Guide on Compliance Check for Section 206AB & 206CCA and Frequently Asked Questions (FAQ) available under the “Resources” section of Reporting Portal. They can also navigate to the “Help” section of Reporting Portal for submitting queries or to get a call back from the Customer Care Team of the Income-tax Department. Customer Care Team of Income-tax Department can also be reached by calling on its Toll-Free number 1800 103 4215 for any assistance.

[For further details please refer to the Notification].

Notification

CBDT Notified Income Tax Amendment (18th Amendment), Rules, 2021 Vide Notification No. 76/2021 Dated 02-07-2021

Our Comments: Sub-rule (5) to Rule 8AA of the Income-tax Rules, 1962 has been inserted.

Related Topic:
308th Issue of Tax Connect

Rule 8AA(5): In case of the amount which is chargeable to income-tax as income of specified entity under section 45 (4) under the head “Capital gains”,-

(i) the amount or a part of it shall be deemed to be from the transfer of short term capital asset if itis attributed to,-

(a) the capital asset which is short term capital asset at the time of taxation of amount under section 45(4); or;

(b) capital asset forming part of a block of asset; or

(c) capital asset being a self-generated asset and self-generated goodwill as defined in clause (ii) of Explanation 1 to section 45(4). ; and

Related Topic:
307th Issue of Tax Connect

(ii) the amount or a part of it shall be deemed to be from the transfer of long term capital asset or assets if it is attributed to the capital asset which is not covered by clause (i) and is a long term capital asset at the time of taxation of amount under section 45(4).

Further, Rule 8AB has been newly inserted into Income-tax Rules, 1962 regarding Attribution of income taxable under sub-section (4) of section 45 to the capital assets remaining with the specified entity, under section 48. Furthermore, Form No. 5C in terms of Rule 8AB has been inserted for Details of the amount attributed to capital asset remaining with the specified entity.

[For further details please refer to the circular]

Read & Download the full copy in pdf:

306th Issue of Tax Connect

Facing Block Credit Under GST Rule 86A & Notices for GSTR 2A & 3B Mismatch.

Facing Block Credit Under GST Rule 86A & Notices for GSTR 2A & 3B Mismatch

July 7, 2021 in GST Compliances

Introduction-

Taxpayers throughout the country are receiving multiple notices which pertain to blocking of input tax credit invoking rule 86(A) of the CGST rules 2017. In many instances notices are also not received by the taxpayers and the fact only comes to notice when one goes to file the return and it is seen that the input tax credits are blocked. Across multiple High courts, this Rule 86(A) and these notices are being contested. The current article will discuss relating to the legal backdrop of rule 86(A) and if a notice is received under rule 86(A), what are the arguments that can be provided in support against such notices and blocked input tax credits as discussed here. Moreover, the defence mechanism in case of a notice for a difference between GSTR-2A and GSTR-3B are also discussed.

GUJ HC: M/s MILI ENTERPRISE Vs UNION OF INDIA

The Hon’ble Gujarat High Court had previously in December 2020, put forward their concerns regarding the vide ambit of Rule 86A. The High Court again in the matter of M/s MILI ENTERPRISE vs UNION OF INDIA issued notices to the Government observing that the department should at least provide the reason for blocking the input tax credit and it should be specified in a notice under rule 86(A). Moreover, the rule itself has a provision stating that the department should have a reason to believe that there is an input tax credit that was availed fraudulently or there is an ineligible input tax credit that has been availed by the taxpayer before taking the step of blocking of an input tax credit. The Hon’ble High Court held that even if the powers are exercised under Rule 86(A) of the CGST Rules, 2017, then also the concerned authority is required to give reasons for blocking the credits in the credit ledger of the petitioner and thereby issue notice.

KAR HC- M/s ARYAN TRADE LINK Vs THE UNION OF INDIA

The Hon’ble High Court of Karnataka in the matter M/s ARYAN TRADE LINK vs THE UNION OF INDIA has quashed a notice and blocking of input tax credit under rule 86A whereby the credit was blocked for more than one year. Rule 86A does not empower the department to block the credit for more than one year and they are bound to unblock it even if the assessment has not taken place or got completed within one year.

CHG: M/s BHARAT ALUMINIUM COMPANY LIMITED Vs UNION OF INDIA AND OTHERS

M/S BHARAT ALUMINIUM COMPANY LIMITED contested blocking of input tax credit due to the mismatch of GSTR 2A and GSTR 3B. It has also been seen that the honourable Madras High Court in the matter of DY BEATHEL ENTERPRISES had directed that the department cannot approach the recipient directly and ask them to reverse the input tax credit. The credit availed in case of GSTR 2A and GSTR 3B match can be reversed only in exceptional circumstances like when the supplier is missing, the supplier has closed down his business or the supplier is found to be non-existent or bankrupt. An extensive video on the same topic is present in our u-tube channel whereby the discussion on the above matter was done critically. The press release of the 27th GST Council Meeting dated 4th May 2018 also proposes the same. Hence, directly the department cannot come to the bona fide recipient to reverse the input tax credit. Notice has been issued by the Honourable High Court of Chhattisgarh in the matter.

CAL- MRS REALTY PRIVATE LTD & ANR. Vs UNION OF INDIA & ORS

The Calcutta High Court in the matter of MRS REALTY PRIVATE LTD has issued a notice to the Centre as well as The State Government in a writ petition where the vires of Rule 86A was also challenged and it was also prayed to read down section 16(2)(c) of The CGST Act. As per this Section, the input tax credit is disallowed when the tax relating to a transaction is not paid to the government. Keeping the above legal position in mind, in case of a notice under rule 86A is received, it has to be contested on multiple grounds which is discussed as follows

sample Notice Blocking ITC availed

Facing Block Credit Under GST Rule 86A & Notices for GSTR 2A & 3B Mismatch

Extract of Rule 86A

(1) The officer … not below the rank of an AC… having reasons to believe on the following grounds that credit of ITC is fraudulently availed or is ineligible may block ITC –

a) ITC has been availed on invoices, etc –

i. issued by a person who has been found non-existent or not .. conducting .. business registered place

ii. without receipt of goods or services or

b) ITC has been availed on the strength of any document, the tax charged on which has not been paid to the Govt; or

c) The supplier is found non-existent or

d) The recipient does not possess the document …

Related Topic:
Multi Disciplinary Partnership Firms allowed from now on. CAs can have partnership with CMAs and CSs.

Defences on a/c of Rule 86A being irregularly implemented-

1. From the email received, where no reason to invoke Rule 86A of CGST Rules 2017 is specified, the same has to be contested. It should be stated that the department should have reason to believe that a fraudulent or end ineligible ITC has been availed. Just due to a prima-facie mismatch in ITC availed in GSTR3B vis-à-vis ITC available in GSTR2A, if ITC has been blocked, the same may also be contested as per the case laws cited above.

2. If the Conditions laid down u/r 86A are not satisfied, the same may be contested in the case.

3. It may be mentioned that in case of any doubt, the same could have been asked by means of a notice under any section for assessment of tax liability rather than blocking ITC which can cause financial hardship to the taxpayer.

4. The ‘Doctrine of impossible performance’ and ‘doctrine of reading down’ as laid down in Arise India Case (Apex Court) may be argued.

In ‘Arise India Limited and other v. Commissioner Of Trade & Taxes, Delhi And others’ – SC held that the expression dealer or class of dealers occurring in Section 9 (2) (g) of the DVAT Act should be interpreted as not including a purchasing dealer who has bona fide entered into purchase transactions with validly registered selling dealers who have issued tax invoices and where there is no mismatch of the transactions in Annexures 2A and 2B. Unless the expression dealer or class of dealers in Section 9 (2) (g) is read down in the above manner, the entire provision would have to be held to be violative of Article 14 of the Constitution.

5. Arguments may be put forward on principles laid down in DY Beathel Enterprises (Mad HC) Case and Press Note dated 4th May 2018

6. Arguments may be put forward on the basis of Sec 42(3) of The CGST Act. The section states that the department has to go to both the recipient and the supplier in case of a mismatch of GSTR 2A and 3B. The word ‘both’ in section 42(3) is relevant and hence the department cannot only come to only the recipient and ask for input tax reversal which was upheld by the order of the Madras High Court whereby the court stated that the suppliers should be interrogated before coming to the recipient.

7. The detailed reason for such differences should be explained and justified in the submission and relief should be prayed.

8. Moreover, the Govt of Kerala wide circular 4/2021 has laid down a standard operating procedure for blocking input tax credit. The important points in the circular with the SOP for blocking of input tax credit are

Related Topic:
Allahabad HC Order in the case of M/s Jindal Pipes Limited Versus The State Of U.P.

1. That the taxpayers should be intimated before blocking the input tax credit and without intimation, the ITC cannot be blocked by the department

2. That in case the taxpayer represents against the blocking of the input tax credit, then within 15 days, such representations have to be disposed of by the department.

3. Lastly, the blocking of input tax credit should be used as an emergency provision only and should not be used as an alternative for issuing show-cause notices and assessing the case.

The blocking of the input tax credit would be contested a long way going forward, as we have first observed around 6 to 7 months back, that vide power given in the hands of the authorities and if the powers are used more frequently than desired, then it might cause real financial hardships to the assesses. Hence let us wait and watch how the litigation for rule 86A goes forward!

 

Facing Block Credit Under GST Rule 86A & Notices for GSTR 2A & 3B Mismatch

Monthly End to End Indirect Taxes Updates

Monthly End to End Indirect Taxes Updates

July 7, 2021 in GST Compliances

Facing Blocked ITC

 

CAL- MRS REALTY PRIVATE LTD & ANR. Vs UNION OF INDIA & ORS

GST – Petition challenging the constitutional validity of Rule 86A of the CGST Rules and reading down of Section 16(2)(c) of the CGST Act

HELD – Serve Notices to both Centre & State Govt.

In ‘Arise India Limited and other v. Commissioner Of Trade & Taxes, Delhi And others’ – SC held that the expression dealer or class of dealers occurring in Section 9 (2) (g) of the DVAT Act should be interpreted as not including a purchasing dealer who has bona fide entered into purchase transactions with validly registered selling dealers who have issued tax invoices and where there is no mismatch of the transactions in Annexures 2A and 2B. Unless the expression dealer or class of dealers in Section 9 (2) (g) is read down in the above manner, the entire provision would have to be held to be violative of Article 14 of the Constitution.

GUJ: M/s MILI ENTERPRISE Vs UNION OF INDIA

No notice served or the reasons for blocking the credit under Rule 86A provided

– HELD – Even if the powers are exercised under Rule 86(A) of the CGST Rules, 2017, then also, the concerned authority is required to give reasons for blocking the credits in the credit ledger of the petitioner – issue notice

KAR – M/s ARYAN TRADE LINK Vs THE UNION OF INDIA

Related Topic:
Interim restraining order against Sec 194N (TDS provision on cash withdrawal )

GST – Rule 86A(3) – Petitioner challenge the blocking of electronic credit ledger and its continuance beyond one year – expiry period of blocking of electronic credit ledger –

HELD – ..the action of the respondents in continuing the blocking of electronic credit ledger is set aside and orders and restoring credit to the electronic credit ledger to be made forthwith – writ petition is allowed

Monthly End to End Indirect Taxes Updates

…Rule 86A

 

(1) The officer … not below the rank of an AC… having reasons to believe on the following grounds that credit of ITC is fraudulently availed or is ineligible may block ITC –

a) ITC has been availed on invoices, etc –

i. issued by a person who has been found non-existent or not .. conducting .. business registered place

ii. without receipt of goods or services or

b) ITC has been availed on the strength of any document, the tax charged on which has not been paid to the Govt; or

c) The recipient is found non-existent or

d) The recipient does not possess the document

Read & Download the full copy in pdf:

 

Monthly End to End Indirect Taxes Updates

305th issue of Tax Connect

July 3, 2021 in Income Tax Compliance

Tax Calendar

Due date Form/Return/Challan Reporting Period Description
7th July 2021 Form No. 27C Submission of declaration for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.
7th July 2021 Form No. Challan Form ITNS 281 April 2021- June 2021 Quarterly payment of TDS for payments u/s 192, 194A, 194D, or 194H with the prior approval of the Joint Commissioner
7th July 2021  Challan Form ITNS 281 June 2021 Monthly payment of TDS on all types of payments (Except in the case where amounted is credited in the Month of March 31)
7th July 2021 Challan Form ITNS 281 June 2021 Monthly payment of TCS u/s 206C (other than government assessee)
7th July 2021  Form No.26QB Payment on transfer of certain immovable property other than agricultural land
10th July 2021 GSTR – 1 May 2018 Details of outward supplies of goods or services [Filing of Return to be regular For the Month of May 2018 onward

 

Income Tax

Circular

Circular No 12 of 2021 – States Extension Of Time Limits Of Certain Compliances To Provide Relief To Taxpayers In View Of The Severe Pandemic.

OUR COMMENTS: Central Board of Direct Taxes, provided relaxation in respect of the following compliances as under:

Related Topic:
15 Reasons Why We Should File an ITR

  1. Objections to Dispute Resolution Panel (DRP) and Assessing Officer under section 144C of the Act, for which the last date of filing under that Section is 18 June 2021 or thereafter, may be filed within the time provided in that Section or by 31st August 2021, whichever is later.
  2. The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21, as extended to 30th June 2021 vide Circular No.9 of 2021, may be furnished on or before 15 July 2021.
  3. The Certificate of Tax Deducted at Source to the employee by 15th June, as extended to 15th July, vide Circular No.9 of 2021, maybe furnished on or before 31st July 2021;
  4. The Statement of Income paid or credited by an investment fund required to be furnished on or before 15th June 2021, as extended to 30th June, maybe furnished on or before 15th July 2021.
  5. The Statement of Income paid or credited by an investment fund to its unit holder for the Previous Year 2020-21, required to be furnished on or before 30th June 2021, as extended to 15th July 2021 vide Circular No.9 of 2021, maybe furnished on or before 31st July 2021;
  6. The application under Section 10(23C), 12AB, 35(1)(ii)/(iia)/(iii) and 80G of the Act in Form No. 10A/ Form No.10AB, for registration/ provisional registration/ intimation/ approval/ provisional approval of Trusts/ Institutions/ Research Associations etc. may be made on or before 31st August, 2021.
  7. The compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase, construction, or such other action, by whatever name called, for the purpose of claiming any exemption under the provisions contained in Section 54 to 54GB of the Act, may be completed on or before 30th September 2021.
  8. The Quarterly Statement furnished by an authorized dealer in respect of remittances made for the quarter ending on 30th June 2021, required to be furnished on or before 15th July 2021, maybe furnished on or before 31st July 2021;
  9. The Equalization Levy Statement in Form No. 1 for the Financial Year 2020-21, which is required to be filed on or before 30th June 2021, maybe furnished on or before 31st July 2021:
  10. The Annual Statement required to be furnished which is required to be filed on or before 29th June 2021, maybe furnished on or before 31st July 2021;
  11. Uploading of the declarations received from recipients which are required to be uploaded on or before 15th July 2021, maybe uploaded by 31st August 2021:
  12. Exercising of option under sub-section (1) of Section 245M of the Act in Form No. 34BB which is required to be exercised on or before 27th June 2021 may be exercised on or before 31st July 2021.

Related Topic:
Online filing of AEO T2 and AEO T3 applications: CBIC

[For further details please refer to the circular].

GST

 

Notification

Notification No. 28/2021-Central Tax  Dated: 30th June 2021- Applicability Of B2C Dynamic Qr Code Provisions Extended To 30.09.2021

OUR COMMENTS: CBIC vide notification no 28/2021 dated 30.06.2021 extended applicability of B2C dynamic QR code provisions to 30.09.2021 instead of from July 1, 2021.

[For further details please refer to the notification]

Circular

Circular No. 155/11/2021-Gst Dated The 17th June 2021- Gst Rate On Laterals/Parts Of Sprinklers Or Drip Irrigation System

OUR COMMENTS: Laterals/parts to be used solely or principally with sprinklers or drip irrigation systems, which are classifiable under heading 8424, would attract a GST of 12%, even if supplied separately. However, any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN, shall attract GST as applicable to the respective heading.

[For further details please refer to the circular]

Circular

Circular No. 154/10/2021-Gst Dated The 17th June 2021- Gst On Service Supplied By State Govt. To Their Undertakings Or PSUS By Way Of Guaranteeing Loans Taken By Them.

OUR COMMENTS: It has been clarified that guaranteeing of loans by Central or State Government for their undertaking or PSU is specifically exempt under said entry no. 34A of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017.

Related Topic:
307th Issue of Tax Connect

[For further details please refer to the circular]

Circular

Circular No. 153/09/2021-Dated 17th June 2021 – Gst On Milling Of Wheat Into Flour Or Paddy Into Rice For Distribution By State Governments Under PDS

OUR COMMENTS: Public Distribution specifically figures at entry 28 of the 11th Schedule to the constitution, which lists the activities that may be entrusted to a Panchayat under Article 243G of the Constitution. Hence, said entry No. 3A would apply to the composite supply of milling of wheat and fortification thereof by miller, or of paddy into rice, provided that value of goods supplied in such composite supply (goods used for fortification, packing material, etc) does not exceed 25% of the value of composite supply.

In case the supply of service by way of milling of wheat into flour or of paddy into rice is not eligible for exemption under Sl. No. 3 A of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 for the reason that value of goods supply in such a composite supply exceeds 25%, then the applicable GST rate would be 5% if such composite supply is provided to a registered person, being a job work service (entry No. 26 of notification No. 11/2017- Central Tax (Rate) dated 28.06.2017).

[For further details please refer to the circular]

Read & Download the full copy in pdf:

305th issue of Tax Connect

304th Issue of Tax Connect

304th Issue of Tax Connect

June 26, 2021 in Income Tax Compliance

Tax Calendar

 

Due date Form/Return/Challan Reporting Period Description
30th June 2021 Form 26QB May 2021 Challan-cum-statement in respect of tax deducted under section 194-IA.
30th June 2021 Form 26QC May 2021 Challan-cum-statement in respect of tax deducted under section 194-IB.
30th June 2021 Form 26QD May 2021 challan-cum-statement in respect of tax deducted under Section 194M.
30th June 2021   Form: 26QAA May 2021 Quarterly return of non -deduction at source by a banking company from interest on deposit in respect of the quarter ending
30th June 2021 FY 2020-21 Linking of Aadhar with PAN
30th June 2021 Form 61A FY 2020-21 Taxpayers who are required to file Statement of Specified Financial Transactions ( SFT )

 

Income Tax

Circular

Circular No. 11/2021, Dated 21st June 2021 Circular Regarding Use Of Functionality Under Section 206ab And 206cca Of The Income-Tax Act, 1961

Our Comments: Referring to Circular No. 11 of the Year 2021 issued by CBDT. We would discuss some of the bullet points given under point no. 3 titled as “logic of the functionality” of the above-mentioned circular.

1. “During the financial year 2021-22, no new names are added to the list of specified persons. This is a taxpayer-friendly measure to reduce the burden on tax deductor and collector of checking PANs of non-specified person more than once during the financial year.”

Related Topic:
306th Issue of Tax Connect

Consider the following example:

In the situation given above, a person will not be considered as a “Specified Person” as of 01/04/2021, if he has filed a return for FY 2018-19 by that date. But immediately on 01/10/2021 (when due date 30/09/2021 will expire to file a return for FY 2020-21), he must have to be declared as a “Specified Person”.

How such relaxation can be given by CBDT which is not looking consistent with the legal provisions contained in sub-section (1) and (3) of sections 206AB and Section 206CCA?

2. If any specified person files a valid return of income (filed & verified) for the assessment year 2019-20 or 2020-21 during the financial year 2021-22, his name would be removed from the list of specified persons. This would be done on the date of filing of the valid return of income during the financial year 2021-22

Now, suppose a case where the return of income is filed for FY 2018-19 (AY 2019-20) during FY 2021-22 on 01/10/2021 [suppose in response to notice issued under 142(1)]. But the same person has not filed a return of income for both FY 2019-20 and FY 2020-21, so as of 01/10/2021, he must be continued to be classified as a “Specified Person”.

Related Topic:
308th Issue of Tax Connect

Financial Year 139(1) Limit Expired Return filed?
FY 2021-22
FY 2020-21 No No
FY 2019-20 Yes No
FY 2018-19 Yes Yes

 

  1. Further, to calculate the aggregate amount of TDS/TCS (Rs. 50,000 or more), obviously, their system would fetch the data from Form No. 26AS. Now what to do if someone erroneously enters our PAN in his TDS/TCS return and we get an erroneous credit in our Form No. 26AS.

Thus, it is quite clear from the above-mentioned points that matters of the above-mentioned circular must be again considered for proper modification and if needed, the amendment should also be brought into relevant sections of the Income Tax Act, 1961 also.

[For further details please refer to the circular].

GST

Circular

Circular No. 156/12/2021-GST- CBEC-20/16/38/2020 –GST, Clarification In Respect Of Applicability Of Dynamic Quick Response (Qr) Code On B2C Invoices And Compliance Of Notification 14/2020- Central Tax Dated 21st March 2020

Our Comments: Clarification has been issued on applicability of Dynamic Quick Response (QR) Code on B2C (Registered person to unregistered Customer) invoices and compliance of notification 14/2020-Central Tax, dated 21st March 2020 as amended.

1. Any person, who has procured a Unique Identity Number (UIN) shall not come within the domain of “registered person” as per the definition of the registered person that is provided in section 2(94) of the CGST Act 2017. Hence, any invoice issued to the above-mentioned person possessing a Unique Identity Number shall be considered as an invoice issued for a Business to Consumer supply and shall also be required to obey the requirement of the Dynamic QR Code.

2. In the cases where the payment has been collected by some person who is authenticated by the supplier on his/ her behalf, the UPI ID of the said person may be provided in the Dynamic Quick Response (QR) Code, in place of the UPI ID of the supplier.

However, The Board said that wherever an invoice has been issued to a recipient located outside India, for supplying services, for which the place of supply is located in India. And this has been done as per the provisions of IGST Act 2017, and moreover, the payment has been received by the supplier in foreign currency, through RBI approved channel, the said invoice might be issued without having a Dynamic QR Code, consequentially such dynamic QR code cannot be used by the recipient who is located outside India for making payment to the supplier.

Related Topic:
Complete Guide on SFT “Specified Financial Transaction”

3. In cases, where the invoice number is unavailable at the time of the digital display of dynamic QR code specifically in the case of over-the-counter sales. In addition, the invoice number and invoices are generated after receipt of payment, the unique order ID/ unique sales reference number, which is uniquely linked to the invoice issued for the said transaction, may be provided in the Dynamic QR Code for digital display, as long as the details of such unique order ID/ sales reference number linkage with the invoice are available on the processing system of the merchant/ supplier and the cross-reference of such payment along with unique order ID/ sales reference number are also provided on the invoice.

The Board has also made a clarification that the purpose of dynamic QR Codes is to make it possible for the recipient/ customer to scan and pay the required amount to be made to the merchant/ supplier in respect of the said supply.

[For further details please refer to the circular]

Customs

Circular

RBI/2021-22/56 A. P. (DIR SERIES) Circular No. 07 June 17, 2021, Liberalised Remittance Scheme For Resident Individuals – Reporting

Our Comments: The Reserve Bank of India (RBI) on June 17, 2021, has issued a circular for Reporting of Liberalised Remittance Scheme for Resident Individuals.

It has now been decided that Authorised Dealer Category-I (AD Category-I) shall collect the data in respect of the number of applications received and the total amount remitted under the Liberalised Remittance Scheme (the Scheme) through the XBRL system instead of the ORFS.

Authorized Dealer Category-I (AD Category-I) banks shall upload the requisite information on the XBRL system on or before the fifth of the succeeding month from July 01, 2021, onwards. The XBRL site can be accessed through URL https://xbrldotrbidotorgdotin/orfsxbrl. User ids are being issued separately. In case no data is to be furnished, AD banks shall upload ‘nil’ figures.

The attention of all Authorised Dealer Category – I (AD Category – I) banks is invited to A. P. (DIR Series) Circular No. 106 dated May 23, 2013, in terms of which, AD Category – I Banks were required to upload the data in respect of a number of applications received and the total amount remitted under the Liberalised Remittance Scheme (the Scheme) on Online Return Filing System (ORFS).

It has now been decided to collect this information through the XBRL system instead of the ORFS.

Accordingly, AD Category – I banks shall upload the requisite information on the XBRL system on or before the fifth of the succeeding month from July 01, 2021, onwards. The XBRL site can be accessed through URL https://xbrldotrbidotorgdotin/orfsxbrl. User ids are being issued separately. In case no data is to be furnished, AD banks shall upload ‘nil’ figures.

The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

[For further details please refer to the circular]

CRCL Module – Forwarding Of Samples Using Electronic Test Memo To CRCL And Other Revenue Laboratories Instruction No. 14/2021-Customs, F. No. 401/243/2016-Cus III Dated June 21st, 2021

Our Comments: The salient features of the CRCL module are as follows:

i. Customs Officers will be able to select the CRCL/other Revenue Laboratory using the ‘Lab Code’ on the basis of directories incorporated therein and generate a Test Memo for sending a sample to the said laboratory.

ii. The option of recording the drawal of samples by the Shed Examiner is also provided.

iii. Post physical receipt of the sample by the laboratory concerned, it would be accepted under acknowledgment to the Customs officer and verified to assess whether the sample is adequate for testing. If the sample is not considered adequate for testing, a return memo would be sent back to the Customs officer along with the reason for non-acceptance. The grounds for return/rejection of a test sample could be on account of improper packing, missing/ tampering Instruction No. 14/2021-Customs with seals, insufficient quantity, non-receipt of requisite technical documents or nonobservance of other test parameters, etc.

iv. If the sample is in order and is considered adequate for testing, it is allocated to any one of the Chemical Examiners in the said laboratory.

v. The date of receipt of the sample at the laboratory is provided in the system. There is also a provision of a ‘suspend queue’ to indicate reasons for delay or suspension of testing, for any reason.

vi. Post testing of the sample, the module provides the facility to enter the respective Import/Export Test Report in the system.

vii. The Customs Officer at the site would be able to view the Test Report electronically in ICES and take further action.

viii. Specific MIS reports would enable the monitoring of the pendency and time taken for sending of the Test Report by the laboratory.

4. As stated above, the use of the CRCL module is aimed at leveraging technology for bringing efficiency, transparency, and reduction in the cost of compliance for the trade-in regard to the sampling process, which impacts the clearance of import/export goods. The said module would also help in better monitoring of the sampling process for faster processing at all levels.

5. Accordingly, all field formations are hereby advised to mandatorily make use of the CRCL module to forward Test Memos for testing of samples to CRCL and other Revenue Laboratories from 01.07.2021 onwards. CRCL and other Revenue Laboratories shall not accept samples unless the Test Memo has been transmitted electronically on the CRCL module. In other words, the laboratories will not accept samples based on paper Test Memos from this date onwards. DG Systems will be separately issuing a detailed advisory on the use of the CRCL module.

6. While the use of the CRCL module is being made mandatory with effect from 01.07.2021, in case of any unforeseen systems issue/glitch that prevents the use of the said module, the sample can be accepted based on paper Test Memo, provided this is sent with the due approval of the Additional/ Joint Commissioner of Customs of the concerned field formation. This relaxation is being made so as not to hold up any clearance of import/export goods, in the event of a rare circumstance.

7. Difficulties, if any, in implementation of this instruction may be brought to the notice of the Board.

[For further details please refer to the circular]

Case Law

Kerneos Indai Aluminate Technologies Private Limited Versus Union Of India Through Its Secretary Ministry Of Commerce And Industry (Department For Promotion Of Industry And Internal Trade) And Four Others

Brief: Refusal to issue customs clearance to the High Alumina Refractory Cement imported – demand for production of BIS certificate for the goods imported by the petitioners

Our Comments: The Hon’ble High Court of Andhra Pradesh held that according to the scheme of the BIS Act and its Rules, the Bureau of Indian Standards is a National Standard Body having the technical expertise to establish national standards for goods or articles, process, system or service, etc. and it by itself has no power to enforce the implementation. On the other hand, the standards fixed under Section 10 by the Bureau, have to be notified by the Central Government and thereafter, if it considers that the standards established in respect of goods and articles mentioned in Section 14 or Section 16 shall require compulsory conformity, the Central Government shall make legislation or issue-specific order in that regard.

Notification dated 14.05.2018 was issued in terms of Rule 7(1)(b) of the Bureau of Indian Standards Rules, 1987. Under Rule 7(1)(a), the Bureau is obligated to establish Indian standards in relation to any article or process and it can amend, revise or cancel the standards so established. As per Rule 7(1)(b), all standards, their revisions, amendments, and cancellations shall be established by notification in the Official Gazette. So, in terms of Rule 7(1)(b), the standard earlier established in the year 2011 for IS:15895:2011 HARC was revised on 09.05.2018 and the same was notified in the Official Gazette by the Central Government. As per Rule 7(7)(b), this establishment of the standard is only voluntary to make it available to the public, but its conformity is not mandatory unless it is referred to in legislation or so pronounced by a specific order of the Government.

As rightly contended by the learned senior counsel for the petitioners, the respondents have not produced such a legislation or Gazette notification issued by the Central Government mandating that the standard established by BIS for IS:15895:2018 shall be compulsorily followed. Hence, the notification dated 14.05.2018 will not advance the contention of the respondents. For the same reason, another contention of the respondents that the standard specification notification issued by BIS should be deemed to be part of Appendix III of Import Policy, and thereby, the import of HARC shall be supported by BIS certification cannot be accepted.

The respondent authorities are not legally justified in demanding the production of a BIS certificate for the goods imported by the petitioners in both the writ petitions – Petition allowed.

[Decided in favor of petitioner]

304th Issue of Tax Connect

302nd Issue of Tax Connect

302nd Issue of Tax Connect

June 12, 2021 in Income Tax Compliance

Tax Calendar

Due date Form/Return/Challan Reporting Period Description
13th June 2021 GSTR-6 May 2021 Due Date for furnishing summary of Outward and Inward Supplies for Taxpayers registered as Input Service Distributor
14th June 2021 Form 16B April 2021 The due date for issue of TDS Certificate for tax deducted under section 194-IA, Section 194-IB, and Section 194M
15th June 2021 Form 24G May 2021 The due date for furnishing by an office of the Government where TDS/TCS has been paid without the production of a challan
15th June 2021 Form 24G May 2021 The Due Date for furnishing of Form 24G has been extended from June 15, 2021, to June 30, 2021, vide Circular no. 9/2021, dated 20-05-2021
15th June 2021 Form 16 Jan-Mar 2021 Due Date for Quarterly TDS certificates (in respect of tax deducted for payments other than salary) for the quarter ending March 31, 2021
15th June 2021 ITNS-280 FY 2021-22 Due Date for the First installment of advance tax for all assessee
15th June 2021 Form 16 F.Y.2020-21 Certificate of tax deducted at source to employees in respect of salary paid and tax deducted.

The due date for the issue of a certificate of TDS in respect to tax deducted from the salary paid during the Financial Year 2020-21 has been extended from June 15, 2021, to July 15, 2021, vide Circular no. 9/2021, dated 20-05-2021

15th June 2021 64D FY 2020-21 Furnishing of the statement (in Form No. 64D) of income paid or credited by an investment fund to its unit holder.

The due date for furnishing of statement in Form no. 64D has been extended from June 15, 2021, to June 30, 2021, vide Circular no. 9/2021, dated 20-05-2021

15th June 2021 ESI/ECR PF Challan May 2021 Due Date for Payment of ESI/PF

 

Income Tax

Case Law

Sanjay Aggarwal V/s National Faceless Assessment Centre Delhi-2021 [Delhi High Court]

Brief: Return was processed under Section 143(1) – Infraction of the statutory scheme encapsulated in Section 144B

OUR COMMENTS: In the present case, Delhi High Court held that a careful perusal of clause (vii) of Section 144B (7) would show that liberty has been given to the assessee, if his/her income is varied, to seek a personal hearing in the matter. Therefore, the usage of the word ‘may’, to our minds, cannot absolve the respondent/revenue from the obligation cast upon it, to consider the request made for grant of personal hearing. Besides this, under sub-clause (h) of Section 144B (7)(xii) read with Section 144B (7) (viii), the respondent/revenue has been given the power to frame standards, procedures, and processes for approving the request made for according to personal hearing to an assessee who makes a request qua the same.

In several matters, It has been asked the counsels for the revenue as to, whether any standards, procedures, and processes have been framed for dealing with such requests. The response, which we have got from the standing counsels including Mr. Chandra, is that to the best of their knowledge, no such standards, procedures as also processes have been framed, as yet.

Conclusion – As incumbent upon the respondent/revenue to accord a personal hearing to the petitioner. As noted above, several requests had been made for a personal hearing by the petitioner, none of which were dealt with by the respondent/revenue. The net impact of this infraction would be that the impugned orders will have to be set aside. It is ordered accordingly.

Related Topic:
307th Issue of Tax Connect

This brings us to Mr. Chandra’s submission that; the respondent/ revenue should be allowed to proceed afresh in the matter, in accordance with the law. To our minds, if the law permits the respondent/revenue to take further steps in the matter, the Court, at this stage, need not make any observations in that regard. If and when such steps are taken, and there is a grievance, the petitioner can take recourse to the relevant provisions of the Act. Hence, the case is decided in favour of the petitioner.

[In favour of the petitioner]

GST

Case Law

Bangalore Turf Club Limited And Mysore Race Club Limited Versus The State Of Karnataka-2021 [Karnataka High Court]

Brief: Levy of GST on gross amount – constitutional validity of Rule 31A(3) – carrying on the business of a race club, which includes layout and preparing any land for running of horse races, steeplechases of races of any other kind – entire bet amount received by the totalisator – Validity of amendments dated 25-01-2018 which inserted Rule 31A(3) to the CGST Rules.

OUR COMMENTS: In the present case, the Karnataka High Court has quashed the Union government’s rules to tax the whole of the betting amount in Bangalore Turf Club and Mysore Race Club Ltd.

A bench headed by Justice M Nagaprasanna gave the direction after hearing a petition by the two clubs, challenging the rules to bring the entire betting amount into the ambit of the Goods and Services Tax (GST) regime. The amendments inserting Rule.

The Hon’ble high court stated that betting is neither in the course of a business nor in furtherance of the business of the Petitioner for the purposes of the CGST Act as the Petitioner hold the amount received in the totalisator for a brief period in its fiduciary capacity for which it receives consideration in form of commission and once the race is over the money is distributed to the winners of the stake. Thus, the entire money held by the totalisator cannot be construed as a consideration in terms of Section 2(31) of the CGST Act. Noted that, Rule 31A(3) of the CGST Rules/ KGST Rules make the Petitioner a ‘supplier’ of bets but the Petitioner is not the supplier of bets and therefore, cannot be held liable to pay tax under the CGST Act. The service or supply that the Petitioner do is only of totalisator component. The Petitioner does not supply bets to the punters.

Held that GST cannot be levied on the entire bet amount received in the as it would take away the principle that tax can only be levied on consideration received under the CGST Act. The Court compared it to a stockbroker or a travel agent; both of whom are liable to pay GST only on the income i.e., the commission that they earn and not on all the monies that pass through them.

The totalisator is brought under a taxable event without it being so defined under the Act nor power being conferred in terms of the charging section which renders the Rule being made beyond the provisions of the Act. The same follows to the impugned KSGST Rules which are identical to the impugned CGST Rules. Therefore, Rule 31A(3) which does not conform to the provisions of the Act will have to be held ultra vires the enabling Act and consequently opens itself for being struck down.

Finally, the court held that the Petitioner is liable for payment of GST on the commission received for the services rendered through the totalisator and not on the total amount collected in the totalisator.

[In favour of the petitioner]

Read & download the full Copy in pdf:

302nd Issue of Tax Connect.

301st Issue of Tax Connect

301st Issue of Tax Connect

June 5, 2021 in Income Tax Compliance

Tax Calendar

Due date Form/Return/Challan Reporting Period Description
07th June 2021 ITNS 281 May 2021 Due Date for Payment of TDS on all types of payments
07th June 2021 ITNS-281 May 2021 Due Date for payment of TCS u/s 206C (other than Government Assessee)
07th June 2021 Form 27C The last date of submission of declaration i.e., for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax
07th June 2021 Form 15G/15H Last date of Submission of a copy of declaration forms received from deductee by the deductor for non-deduction of TDS under section 197A before the Chief Commissioner or Commissioner
07th June 2021 Form 26QB Due Date for Payment on transfer of certain immovable property other than agricultural land
11th June 2021

(Extended to 26th June 2021)

GSTR-1 May 2021 Due Date for furnishing details of Outward Supplies for all the monthly taxpayers (not covered under QRMP Scheme)

 

Income Tax

Case Law

M/S. RAO COMPUTERS CONSULTANTS PVT. LTD., VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX (OSD), CIRCLE5 (1) (1), BANGALORE-2021 [KARNATAKA HIGH COURT]

Brief: Disallowed the expenditure incurred wholly and exclusively for the purposes of the business of complex commercial letting out services and receipts on account of sale of software technical services being merger.

OUR COMMENTS: In the present case, the petitioner has earned income from letting out of the building along with other amenities in the industrial park. Further, authorities have treated the business income derived from complex commercial activities of letting out buildings along with the other amenities in an industrial park partly as income from house property and partly as income from other sources. Disallowed the expenditure incurred wholly and exclusively for the purposes of the business of complex commercial letting out services. Karnataka High Court held that as decided in VELANKANI INFORMATION SYSTEMS (P.) LTD. [2013 (8) TMI 113 – KARNATAKA HIGH COURT]. What is the intention behind the lease and secondly what are facilities given along with the buildings and documents executed in respect of each of them is to be seen. Thirdly, it is to be found out whether it is inseparable or not. If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying out the complex commercial activity and getting rental income therefrom, then such a rental income falls under the heading of “Profits and gains of business or profession”. In fact, any other interpretation would defeat the very object of introduction of section 80-IA as well as the scheme which is framed by the Government for the development of industrial parks in the country. In that view of the matter, the finding recorded by the appellate authority as well as the Tribunal is in accordance with law and does not suffer from any legal infirmity which calls for interference.

Karnataka High Court held that a substantial question of law has been answered by the Supreme Court in ‘PEERLESS GENERAL FINANCE AND INVESTMENT COMPANY LTD. [2019 (7) TMI 880 – SUPREME COURT]. The order passed insofar as it pertains to Assessment Year 2010-11 is hereby quashed. Hence, the Revenue appeal has been dismissed.

[In favour of the assessee]

Notifications

Various Relaxations And Extension Of Due Date Announced By CBIC

OUR COMMENTS: The Ministry of Finance, Government of India, Central Board of Indirect Taxes and Customs vide Notification No. 16/2021-CGST to 26/2021-CGST dated 01.06.2021 has notified the following:

● Section 112 of the Finance Act providing for retrospective amendment in Section 50 of the CGST Act related to levy of interest has been notified. As per the notification, the Central Government hereby appoints the 1st day of June 2021, as the date on which the provisions of section 112 of the said Act shall come into force.

● Extension of Due Date for GSTR-1 for the month of May 2021 by 15 days for all the taxpayers.

● Provided Relief by lowering an interest rate for a specified time for tax periods March 2021 to May 2021.

● Rationalization of late fee for delay in filing of return in FORM GSTR-3B, to provide conditional waiver of late fee for delay in filing FORM GSTR-3B from July 2017 to April 2021 and to provide a waiver of late fees for late filing of return in FORM GSTR-3B for specified taxpayers and specified tax periods.

● Rationalization of late fee for delay in furnishing of the statement of outward supplies in FORM GSTR-1.

● Rationalization of late fee for delay in filing of return in FORM GSTR-4.

● Rationalization of late fee for delay in filing of return in FORM GSTR-7.

● Amendment in Notification no. 13/2020-Central Tax to exclude government departments and local authorities from the requirement of issuance of e-invoice.

● Amendment in Notification No. 14/2021-Central Tax in order to extend the due date of compliances which fall during the period from “15.04.2021 to 29.06.2021” till 30.06.2021.

● Extension of Due Date for filing FORM GSTR-4 for the financial year 2020-21 to 31.07.2021.

● Extension of Due Date for furnishing of FORM ITC-04 for Jan-March, 2021 (Quarterly) to 30.06.2021.

[For further details please refer to the notifications]

Circulars

Investment Limits For Foreign Portfolio Investors (FPI) In Government Securities

OUR COMMENTS: The Reserve bank of India, Government of India vide Circular No. 05/2021-22/44-RBI dated 31.05.2021 has specified the Investment limits for Foreign Portfolio Investors (FPI) in Government Securities: Medium Term Framework (MTF) for the FY 2021-22. The limits of investments are mentioned hereunder:

a. The limits for FPI investment in Government securities (G-secs) and State Development Loans (SDLs) shall remain unchanged at 6% and 2% respectively, of outstanding stocks of securities for FY 2021-22.

b. As hitherto, all investments by eligible investors in the ‘specified securities’ shall be reckoned under the Fully Accessible Route (FAR) in terms of A.P. (DIR Series) Circular No. 25 dated March 30, 2020.

c. The allocation of incremental changes in the G-sec limit (in absolute terms) over the two sub-categories – ‘General’ and ‘Long-term’ – shall be retained at 50:50 for FY 2021-22.

d. The entire increase in limits for SDLs (in absolute terms) has been added to the ‘General’ sub-category of SDLs.

Related Topic:
307th Issue of Tax Connect

[For further details please refer to the Circular]

Margin Payment For Transactions In Government Securities By Foreign Portfolio Investors

OUR COMMENTS: The Reserve bank of India, Government of India vide Circular No. 06/2021-22/48-RBI dated 04.06.2021 has decided to allow banks in India having an Authorised Dealer Category-1 licence under FEMA, 1999 to lend to Foreign Portfolio Investors (FPIs) in accordance with their credit risk management frameworks for the purpose of placing margins with CCIL in respect of settlement of transactions involving Government Securities (including Treasury Bills and State Development Loans) by the FPIs.

[For further details please refer to the Circular]

Read & Download the full copy in pdf:

301st Issue of Tax Connect

Tax Connect’s Analysis of Notifications To Give Effect To The Recommendations of 43rd GST Council Meeting Held On 28th May 2021

Tax Connect’s Analysis of Notifications To Give Effect To The Recommendations of 43rd GST Council Meeting Held On 28th May 2021

June 4, 2021 in GST Compliances

1. Relating To Real Estate –

Notification No. 02/2021 – Central Tax (Rate) & Notification No. 03/2021 – Central Tax (Rate)

In the 43rd Meeting of The GST Council, it was recommended to allow credit to landowners in joint development agreements even before the completion certificate is received. 

Notifications No. 02/2021 – Central Tax (Rate) & 03/2021 – Central Tax (Rate) Amends Notification No.06/2019- Central Tax (Rate) and Notification No.011/2017 to give effect to the recommendation. They provide that the developer promotor shall be allowed to pay GST relating to such apartments even at any time before the issuance of the completion certificate. Consequently, relief is provided to the Landowner promoters who can now utilize the credit of GST charged to them by developer promoters in respect of such apartments that are subsequently sold by the landowner promoters and on which GST is paid. 

Related Topic:
Government notifies the draft of Drone Rules, 2021

Nowadays, most of the Development in real estate is done on the basis of the Joint Development Agreement (JDA) wherein the Landowner transfers the Right of Development of land to the Developer and gets few constructed flats from the developers in return. Now, let’s take an example –

  • A JDA is entered into in 2021
  • The Landowner enters into an agreement for the sale of his flat under construction in 2022. 
  • The developer completes the construction and gets the completion certificate in 2025. 

Related Topic:
Rajasthan VAT Amnesty Scheme Notification

As per the earlier provisions, the landowner was required to charge and pay the GST to the Government in 2022 when he enters into the agreement for sale. However, the developer was required to charge the GST to the landowner only in 2025, i.e. before the issue of the completion certificate. This created a timing difference and a consequent loss of ITC for the landowner. While the landowner paid the GST in cash in 2022, he received the Credit for the GST only in 2025 when he had no GST payable at all. Therefore, the GST paid by the landowner to the developer became a cost to him and increased the cost of the flat by up to 5%.

Now, this timing difference is sought to be taken care of wherein the landowner and the developer have an option to get into back-to-back contracts where the developer can also pay the GST to the Government in 2022 only and consequently the landowner will get the Credit for the GST. However, it needs to be noted that the developer would only do this in case the landowner pays the GST Component immediately, and hence there is no cash flow impact on him.

Related Topic:

Suspension of Registration is Worse than Cancellation and cannot be kept Hanging.

2. Other Changes as in Notification No. 02/2021 – Central Tax (Rate)

GST on MRO (Maintenance, Repair, and Operations) services in respect of ships/vessels are reduced to 5% (from 18%). In Sch I, Sl 25(ib) in N No 11/2017 Central tax (Rate) the following entry has been inserted –

(3) (4) (5)
“(ib) Maintenance, repair or overhaul services in respect of ships and other vessels, their engines and other components or parts. 2.5 -“

 

Other Change for MRO services in respect of ships/vessels – 

Notification No. 03/2021 – Integrated Tax

The place of supply of services For Supply of maintenance, repair, or overhaul service in respect of ships and other vessels, their engines, and other components or parts supplied to a person for use in the course or furtherance of business shall be the location of the recipient of service.

Hence in the case of the foreign recipient of services by a Business, this would result in the services from India being categorized as ‘exports’.

3. Notification No. 01/2021 – Central Tax (Rate):

The GST rate on Diethylcarbamazine (DEC) tablets has been reduced to 5% (from 12%) by insertion in Sch 1 (Sl.No 180 read with List 1 Entry 231)

4. NOTIFICATION No. 27/2021 – Central Tax – Changes to Rules relating to Rule 36(4), filing of returns by OTP Mode by Companies & Time for filing IFF for May 2021

 

Rule 26 Filing of returns by Companies Till 31st August 2021 Option for filing of returns using EVC instead of DSC by Companies
Rule 36(4) Application of rule 36(4) Periods April, May and June 2021 Cumulative application of rule 36(4) in the return for the period June 2021
Rule 59(2) IFF May 2021 Due date extended till 28th June 2021

 

5. NOTIFICATION No. 24/2021 – Central Tax – Regarding the Extensions

 

Exceptions  Compliance Tax Period Relaxation
Exceptions to Time Extensions –

 

  • Chapter IV of CGST Act related to time and place of supply;
  • Sub-section (3) of Section 10 related to composition levy;
  • Sections 25 – Procedure for registration;
  • Section 27 – Special provisions relating to CTP & NRTP;
  • Section 31 – Tax Invoice;
  • Section 37 – Furnishing details of outward supplies;
  • Section 47 – Levy of late fee;
  • Section 50 – Interest on delayed payment of tax;
  • Section 69 – Power to arrest;
  • Section 90 – Liability of partners of firm to pay tax;
  • Section 122 – Penalty for certain offences;
  • Section 129 – Detention, seizure and release of goods and conveyance in transit;
  • Section 39, except sub-section (3), (4) and (5) related to TDS deductors, ISD and NRTPs;
  • Section 68 related to inspection of goods in movement, in so far as e-way bill is concerned; and
  • rules made under the provisions specified above.
The time limit for completion of various actions, by any authority or by any person, under the GST Act, which falls during the period from 15 April 2021 to 29 June 2021.

This would include a time limit for completion or compliance for the purposes of –

(a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called; or

(b) filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called.

15 April 2021 to 29 June 2021 extended up to 30 June, 2021, subject to some exceptions.

NOTE: Wherever the timelines for actions have been extended by the Hon’ble Supreme Court, the same would apply*

 

6. NOTIFICATION No. 26/2021 – Central Tax –

Compliance Tax Period Relaxation
FORM GST ITC-04 QE March 2021 Due date extended till 30th June 2021

 

7. NOTIFICATION No. 16/2021 – Central Tax

SEC 112 OF THE FA 2021 HAS BEEN IMPLEMENTED W.E.F. 1ST JUNE 2021: INTEREST ON NET CASH BASIS W.E.F. 01.07.2017: RETROSPECTIVE AMENDMENT IN SECTION 50 OF THE CGST ACT

Interest under GST has been a widely litigated matter. When a taxpayer pays GST, he is entitled to get the Credit of ITC and he pays the balance in cash. It was very clear under Section 49 of The CGST Act itself that interest would be charged on the delayed payment on the cash portion only. However, the GST departments across the Country charged interest on even the ITC Credit portion available to the taxpayer and already paid to the Government. 

This matter will now be finally settled now by notification of the proviso under Section 50(1) as inserted by the Budget 2021. This will expectedly lay to rest all such litigation on Interest under GST.

 

8. NOTIFICATION No. 17/2021 – Central Tax

GSTR-1 Due Date for May 2021 is extended till 26th June 2021

9. NOTIFICATION No. 18/2021 – Central Tax & 18/2021 – Central Tax

Relaxation to taxpayers in the filing of monthly/Quarterly return in Form GSTR-3B:

 

Sl.
No.
Tax Period Class of taxpayer

(Based on Annual Aggregate Turnover)

Due date of filing Reduced Rate of Interest Waiver of late fee till
First 15 days from the due date Next 15 days Next 15 days Next 15 days From 61st day onwards
1 March 2021 > Rs. 5 Cr. 20th April 9% 18% 18% 18% 18% 5th May 2021
Up to Rs. 5 Cr 20th April Nil 9% 9% 9% 18% 20th June 2021
2 April 2021 > Rs. 5 Cr. 20th May 9% 18% 18% 18% 18% 4th June 2021
Up to Rs. 5 Cr 20th May Nil 9% 9% 18% 18% 5th July 2021
3 May 2021 > Rs. 5 Cr. 20th June 9% 18% 18% 18% 18% 5th July 2021
Up to Rs. 5 Cr 20th June Nil 9% 18% 18% 18% 20th July 2021

 

10. NOTIFICATION No. 20/2021 – Central Tax, 21/2021 – Central Tax & 22/2021 – Central Tax

Implements GST Amnesty Scheme as follows –

Rationalization of the late fee imposed under section 47 of the CGST Act (applicable for prospective tax periods):

Category Late Fee/return Return
For NIL returns Maximum of Rs. 500/-(CGST+SGST) GSTR 3B/GSTR1
For other than NIL returns

(Annual Aggregate Turnover in a preceding year up to Rs 1.5 crore)

Maximum of Rs. 2,000/-(CGST+SGST)
For other than NIL returns

(Annual Aggregate Turnover in the preceding year between Rs 1.5 crore to Rs 5 crore)

Maximum of Rs. 5,000/-(CGST+SGST)
For other than NIL returns

(Annual Aggregate Turnover in the preceding year above Rs 5 crores)

Maximum of Rs. 10,000/-(CGST+SGST)
For NIL returns Maximum of Rs. 500/-(CGST+SGST) FORM GSTR-4 by composition taxpayers
For other than NIL returns Maximum of Rs. 2,000/-(CGST+SGST) FORM GSTR-4 by composition taxpayers
For TDS returns  Rs.50/- per day (CGST+SGST) and to be capped to a maximum of Rs 2000 (CGST+SGST) FORM GSTR-7 (TDS Return)

 

11. NOTIFICATION No. 23/2021 – Central Tax –

Exempts a government department and a local authority also from the persons liable to generate E-Invoice

12. NOTIFICATION No. 25/2021 – Central Tax –

Compliance Tax Period Relaxation
Furnishing the statement in CMP-08 by composition dealer QE March 202 NIL interest for the first 15 days from the due date. Reduced rate of 9% for further 45 days

 

MORE CIRCULARS OR ORDERS OR NOTIFICATIONS ARE AWAITED RELATING TO

1. ANNUAL RETURN & RECONCILIATION FORMS –

The Forms GSTR 9 & GSTR 9C for FY 2020-21 would be notified very soon without the area for CA Certification it seems. Some changes may also be made in the new Forms which need to be analyzed by Trade & Industry and implemented. Since this time the GSTR 9 & GSTR 9C need to be self-certified by CFO/Tax Head/Management, the responsibility on the management increases.

It is pertinent to mention that filing the GST Annual Forms is the last opportunity for the taxpayers to rectify any mistakes during the year and the same should be dealt with accordingly. Also, any inconsistency in filing Form GSTR 9 & GSTR 9C may result in notices from GST Data Analytics Directorate. Hence large taxpayers may need to get a voluntary GST Audit done before filing the GSTR 9 & GSTR 9C.

2. Exemption from IGST been given up to 31.08.2021 for the following goods, if imported on a payment basis, for donating to the government or on the recommendation of state authority to any relief agency or even “free of cost” for free distribution:

  • medical oxygen, 
  • oxygen concentrators and 
  • other oxygen storage and transportation equipment, 
  • certain diagnostic markers test kits and 
  • COVID-19 vaccines, etc.
  • Amphotericin B

3. Leviability of IGST on repair value of goods re-imported after repairs to be laid down soon

4. GST rate of 12% to apply on parts of sprinklers/drip irrigation systems falling under tariff heading 8424 (nozzle/laterals) to apply even if these are sold separately.

Refer to Circular No. 81/55/2018-GST Dated, 31st December 2018 which clarified that the term “sprinklers”, in the said entry 195B of the Schedule II to notification No. 1/2017- Central Tax (Rate), dated 28.06.207 covers ‘sprinkler irrigation system’. sprinkler system consisting of nozzles, lateral and other components would attract 12% GST rate’

5. RELIEF TO MILL OWNERS PERFORMING JOB WORK FOR PUBLIC DISTRIBUTION SYSTEM – 

Supply of service by way of milling of wheat/paddy into flour (fortified with minerals etc. by millers or otherwise)/rice to Government/ local authority etc. for distribution of such flour or rice under PDS is exempt from GST if the value of goods in such composite supply does not exceed 25%. Otherwise, such services would attract GST at the rate of 5% if supplied to any person registered in GST, including a person registered for payment of TDS.

It is to be noted that massive search operations were conducted by DGGI in West Bengal on Flour Mill Owners challenging the GST Rate to be applied. It is important now to see whether the amendment is prospective or retrospective. 

6. Services supplied to an educational institution including Anganwadi (which provide pre-school education also), by way of serving of food including mid- day meals under any midday meals scheme, sponsored by Government is exempt from levy of GST irrespective of funding of such supplies from government grants or corporate donations.

Earlier such institutions run by corporate donations were not considered as exempt.

7. Services provided by way of examination including entrance examination, where the fee is charged for such examinations, by National Board of Examination (NBE), or similar Central or State Educational Boards, and input services relating thereto are exempt from GST.

8. GST is payable on annuity payments received as deferred payment for construction of the road. The benefit of the exemption is for such annuities which are paid for the service by way of access to a road or a bridge.

9. Services supplied to a Government Entity by way of construction of a rope-way attract GST at the rate of 18%.

10. Services supplied by Govt. to its undertaking/PSU by way of guaranteeing loans taken by such entity from banks and financial institutions is exempt from GST.

11. The CGST Act and Rules would be amended so as to remove the GSTR-2 & GSTR-3 related provisions so that GSTR 3B and GSTR 1 would be the return filing system only.

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Tax Connect’s Analysis of Notifications To Give Effect To The Recommendations of 43rd GST Council Meeting Held On 28th May 2021.