DIRECT TAXES UPDATES

Recent circulars/ notifications/ rules/ clarifications/News

♦ Government issues clarification regarding short deduction of TDS / TCS due to increase in rates of Surcharge by Finance Act 2019. (Circular no. 8/2020 dated 13th April 2020)Recent circulars/ notifications/ rules/ clarifications/News

♦ Government issues clarification regarding selection of option under section 115 BAC related to concessional rate of tax subject to the condition that income shall be computed without specified exemption or deduction, set off of loss and additional depreciation (Circular C1 of 2020 dated 13th April 2020)

♦ Government issued a notification for extension of all TDS /TCS returns filing dates which fall during the period March 20, 2020 to June 29, 2020 (Circular no. NSDL/ TIN/ 2020/ 006 dated 20th April 2020)

♦ Government issued 55 FAQ on Direct Tax Vivad se Vishaws Act, 2020 (Circular no. 9/2020 dated 22nd April 2020)

♦ CBDT issued a notification for deferment of requirements under clause 30C and clause 44 of form 3CD related to GST and GAAR reporting (Circular no. 10/2020 dated 24th April 2020)

♦ CBDT issued notification to allow donations to PM cares fund through employer to be allowed in Form 16 (Notification no. F. no. 178 /7/2020- ITA-I dated 9th April 2020)

♦ Order has been passed to extend the validity of Form 15G & 15H for the financial 2019-20 to 30.06.2020 to mitigate hardships to small taxpayers (Order no. F.No. 275/ 25/2020- IT (B) dated 3rd April 2020)

♦ CBDT issues clarifications on Certificates for lower rate / Nil TDS/TCS certificate (Order no. F.no. 275/25/2029 – IT(B) dated 9th April 2020)

Income Tax Compliance calendar – May 2020-

All the TDS /TCS due dates which fall during the period March 20, 2020 have been extended to June 29, 2020

Things to remember
  • Due date for deposit of Tax deducted/collected for the month of April, 2020. However, all sum deducted/ collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan
  • Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of March, 2020
  • Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of March, 2020
  • Due date for issue of TDS Certificate for tax deducted under section 194M in the month of March, 2020
  • Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of April, 2020 has been paid without the production of a challan
  • Quarterly statement of TCS deposited for the quarter ending March 31, 2020
  • Due date for furnishing statement in Form no. 3BB by a stock exchange in respect of transactions in which client codes been modified after registering in the system for the month of April, 2020
  • Submission of a statement (in Form No. 49C) by non-resident having a liaison office in India for the financial year 2019-20​
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA in the month of April, 2020
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194M in the month of April, 2020​
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IB in the month of April, 2020
  • Quarterly statement of TDS deposited for the quarter ending March 31, 2020

Important cases decided

Supreme court upheld the constitutional validity of section 43B(f) of income tax Act i.e. deduction is available only on actual payment of leave to the credit of employee. (Union of India & ors. Vs. Exide Industries Ltd & Anr.)

Withdrawal of orders by the department to give the assesse the opportunity to reply to show cause notices. (BT India (P) Ltd. Vs. ITO)

INDIRECT TAXES UPDATES

GST

  • GST Compliance Calendar – Returns for the M/O April 2020 to be filed in May 2020
Return Original  Date Revised Date
GSTR-1 Outward supply for the month of April  2020 11th May 2020 30th June 2020
GSTR-5 Non-resident foreign taxpayers return for the month of April  h 2020 20th May 2020
GSTR-6 Input service distributor for the month of April    2020 13th May 2020
GSTR-7 Tax Deducted at Source for April    2020 10th May l 2020
GSTR-8 Tax Collected at Source by e-commerce operator for April    2020 10th May 2020
GSTR-3B Summary return tax payment for the month of April    2020 20th May 2020
Annual Return For the F.Y. 2018-19 30th June 2020 notified through notification 15/2020 CGST

Concession in filing GSTR3B (Tax deposit) returns for the months of Feb to April 2020

Annual Turnover Tax period Due Date Concession
More than 5 Crores Feb’20 March’20 Option to file returns by last week of June’20 with interest but without penalty or late fee
March’20 April’20
April’20 May’20
Up to  5 Crores Feb’20 22/24 March’20 Option to file returns by last week of June’20 No interest ,penalty and   late fee would be charged
March’20 22/24 April’20
April’20 22/24 May’20

(Refer Notification No. 31/2020- Central Tax, Notification No. 32/2020- Central Tax, notification No. 35/2020- Central Tax and Circular No. 136/06/2020, all dated April 3, 2020)

GSTR-3B for May 2020 Last date extended: GSTR-3B for the month of May 2020 can be filed by 27-06-2020 by tax payers having an aggregate turnover of more than Rupees 5 crore in     the previous financial year. However, taxpayers having aggregate turnover less than Rupees 5 crore can file this return by 12th or 14th of July, depending upon the State in which they have their principal place of business. Broadly these taxpayers in southern and western States must file this return by 12-07-2020 while such taxpayers in Northern and Eastern part of India have to file GSTR-3B by 14-07-2020. (Notification No. 36/2020-Central Tax, dated 03-04-2020)

Relief   measures due to COVID-19– Clarifications: In case of an advance under service     contract which subsequently gets cancelled, the supplier can issue a credit note under Section 34 and adjust tax liability where invoice was issued before supply of service. Taxpayer may apply for refund as excess payment of tax, if there is no output liability and in case where the supplier had issued only receipt voucher for advance. Similar procedure also needs to be followed in case of sales return after issuance of invoice. The Circular also clarifies that as per Notification No. 35/2020-Central Tax, the time limit for filing of LUT for the year 2020-21 shall stand extended to 30-06-2020 and hence the taxpayer can continue to make the supply without payment of tax under LUT provided that the FORM GST RFD-11 for 2020-21 is furnished by 30-06-2020

Further, in respect of TDS, it has been clarified that the due date for furnishing of return in FORM GSTR-7 along with deposit of TDS falling during the period 30-03-2020 to 29-06-2020 has been extended till 30-06-2020. It may be noted that interest under Section 50 will not be leviable if TDS is deposited by 30-06-2020. The Circular also clarifies that due date for filing an application for refund falling during the period 20-03-2020 to 29-06-2020 has been extended till 30-06-2020. (Circular No. 137/07/2020- GST, dated 13-04-2020)

Cases Law

Exchange rate of imported goods applicable for goods supplied in India against payment in foreign currency: Uttarakhand AAR has held that the value of goods supplied in India, where the billing is done in foreign currency, has to be determined under Rule 34 of the Central Goods and Services Tax Rules, 2017. The Authority also held that the rate of exchange for imported goods and not export goods, as notified by CBIC under Section 14 of the Customs Act, 1962 shall be applicable. The AAR in this regard observed that the foreign currency price in the contract was to cover the imported content of the material used for setting up power station in India, where in the company made foreign currency payment for import of goods and claimed foreign currency from customers. ( Bharat Heavy Electricals Ltd. – 2020 VIL 80 AAR)

Service rendered by Director to company for which consideration paid in any head, liable to GST: Rajasthan AAR has held that the services rendered by the Directors to the company for which consideration is paid to them in any head is liable to GST under RCM under Sl. No. 6 of the Notification No. 13/2017-Central Tax (Rate).The Authority  observed that the consideration paid to the Directors by the applicant was against the supply of services provided by them to the company and the same was not covered under clause (1) of the Schedule III to the CGST Act, 2017 as the Directors were not the employee of the company. It was also held that situation will remain the same even if a Director is a part-time Director in other company as well. The applicant was paying salary to the Directors against the services provided by them to the company and was deducting TDS on their salary with PF laws being also applicable. (Clay Craft India Pvt. Ltd. -2020 VIL 86 AAR)

ITC on goods/ services procured for installation of certain plants or machinery when not available: Karnataka AAAR has upheld the AAR ruling denying ITC against purchase of goods or services used for installation of chillers, air handling unit, list, escalator, travellator, water treatment plant, sewage treatment plant, high speed diesel yard, mechanical car park, surveillance systems, DG sets, transformers, electrical wiring and fixture, fire-fighting and water management     pump system, in the shopping mall under construction. The AAAR observed that in respect of few of the items, assessee had not submitted information as to how the items were getting embedded to earth, and in respect of others no information was furnished as to who was doing the installation. In respect of water treatment plant, sewage treatment plant, DG set and transformer, ITC was denied as they formed part of the civil structure of the immovable property. It may be noted that the AAAR however, observed that the word “or” in Section 17(5)(d) of the CGST Act could be read as “and” since it appears to give effect to the intention of the legislature to allow ITC on the construction of plant and/ or machinery. (Tarun Realtors Pvt. Ltd. – 2020-VIL-17-AAAR)

Customs

Ventilators, PPE, masks and COVID-19 testing kits Exemption from BCD and health cess: In light of the COVID-19 health crisis, the CBIC has exempted the import of respiration apparatus (ventilators), personal protection equipment, face and surgical masks, and COVID-19 testing kits from the whole of BCD and health cess. Inputs required for the manufacture of these products have also been exempted from the whole of BCD and health cess, subject to the importer following the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. (Notification No. 20/2020-Cus., dated 09-04-2020 issued for this purpose will remain in force till September 30, 2020)

Advance Authorisation, EPCG and EOUs – Extension of exemption from IGST and Compensation Cess: CBIC has extended the exemption from payment of IGST and compensation cess till 31-03-2021 on the imports of capital goods in respect of the Export Promotion Capital Goods Scheme and import of inputs under the Advance Authorisation scheme Similarly, exemption from payment of IGST and

compensation cess has also been extended till 31-03-2021 on imports by EOUs in terms of Notification No. 52/2003-Cus. Notifications Nos. 16/2020-Cus., dated 24-03-2020 and Notification No. 18/2020-Cus., dated 30-03-2020 have been issued for this purpose. It may also be noted that the Foreign Trade Policy has also been amended in this regard by DGFT (Notification No. 57/2015-2020, dated 31-03-2020)

Customs clearance Acceptance of undertakings in lieu of bonds: In order to expedite the Customs clearance of goods during the COVID-19 pandemic, the CBIC has relaxed the requirement to submit bonds prescribed under Section 18, Section 59 and Section 143, and under notifications issued under Section 25 of the Customs Act, 1962, subject to compliance of certain specified conditions. The aforesaid relaxation will be available to the Government, Public Sector Undertakings, actual user importer, Authorised Economic Operators, Status Holders and importers availing warehouse facility in terms of Section 59 of the Customs Act. The relaxation will be available against submission of an undertaking having same contents as those of a prescribed bond. According to Circular No. 17/2020-Cus., dated 3-4-2020 read with Circular No. 21/2020-Cus., dated 21-4-2020, the requirement for submission of bonds has been relaxed till 15-04-2020. However, the undertaking should be duly replaced with a proper bond by 30-05-2020. This will be subject to review by the Board at the end of the lockdown period.

Paperless customs  clearance facility launched: In order to expedite the customs clearance process, the CBIC has decided to enable electronic communication of PDF based final Electronic Out of Charge (eOoC) copy of Bill of Entry and e-Gatepass to the importers/Customs Brokers. In accordance with this paperless facility, the electronic copy of final eOoC and eGatepass will be emailed to the concerned Customs Broker and/or importer once the Out of Charge is granted. the eGatepass copy will be used by the Gate Officer or the Custodian to allow physical exit of the imported goods from the Customs area. , The said facility come into effect from 15-04-2020.  (Circular No. 19/2020-Cus., dated 13-04-2020)

One-time condonation under EPCG Scheme -Extension till 31-03-2021: In October 2017, the DGFT had issued Public Notices granting one-time condonation for obtaining block-wise extension of export obligation, obtaining extension in export obligation period and condonation of delay in submission of installation certificate under the EPCG Scheme. The validity of the timelines was extended from time to time. The DGFT has now further extended the timelines till 31-03-2021. (Public Notice No. 01/2015-20, dated 07-04-2020)

Cases law

Revocation of Customs Broker licence -Doctrine of waiver applicable where limitation period is voluntarily foregone: In the instant case, it was specifically agreed by the Customs Broker/Licensee that the period to be consumed for keeping the file in abeyance as per its request, would be reduced from the overall limitation period of 90 days. The Madras High Court though held that the time limit of 90 days to pass an order of revocation of licence of customs broker is mandatory and must be strictly followed, it was of the view that if the concerned party is ready to forgo the limitation issue out of necessity by a written agreement, the doctrine of ‘waiver’ or doctrine of ‘acquiescence’ can be invoked. Department’s appeal was allowed observing that after the licensee’s act of relinquishment of right, department need not be insisted to adhere to time schedule under Regulation 20(7) of CBLR, 2013. (Principal Commissioner v. Sea Queen Shipping Services Pvt. Ltd. – 2020 TIOL 600 HC MAD CUS)

Date of filing of bill of entry is not date of import: CESTAT Ahmedabad has held that when the goods enter into territorial water of India that is the stage of completion of import into India and not the date of filling of bill of entry. In a case where dispute involved possession of licence on date of import, the Tribunal also observed that though in the Foreign Trade Policy the date of reckoning the import is given as per the date of bill of lading but the import gets completed only when goods enter into India. The matter was however remanded to verify whether the importer possessed the licence on the date of import. (Radhe Exim Pvt. Ltd. v. Commissioner – 2020 TIOL 555 CESTAT AHM)

Excise & Service Tax

Cenvat credit of duty paid in excess as per final assessment, admissible: CESTAT Ahmedabad has upheld the Commissioner (A) Order allowing Cenvat credit of the duty paid on  provisionally assessed bill of entry in a case where the final assessment revealed that less duty was payable. The Tribunal in this regard relied upon number of case law and observed that it is settled that even though certain amount of excise duty/service tax is not payable as per law but the manufacturer/service provider pays it, Cenvat Credit cannot be denied at the recipient end only on the ground that the same was not payable by the manufacturer/service provider. (Commissioner v. Hindalco Industries Ltd. – 2020 TIOL 563 CESTAT AHM)

Discount given for non-provision of certain service to foreign buyer not liable under BAS: In a case where the assessee had exported goods to sister concern who in turn had sold them to buyers there, with the foreign importer being responsible for providing after sales services, CESTAT Delhi has held that the discount given in consideration for non-provision of warranty and after sales services by the Indian exporter, was not liable to service tax under BAS. Deliberating upon provisions of the agreement, the Tribunal was of the view that the foreign importer was not rendering after sales service on behalf of the exporter-assessee  towards provision of any service. (Man Trucks India Pvt. Ltd. v. Commissioner – 2020 VIL 180 CESTAT Delhi)

With Warm Regards & Jai Hind

CMA Rakesh Bhalla – 9779010685 – nancybhalla@yahoo.com

Information Source – M/s LKS, CBIC.gov.in., various internet websites including Income tax website, Dailyhunt, Deloitte, livemint.com,  related links and various notifications, circulars, orders, press releases and other sources-many thanks to all.

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