DIRECT TAXES UPDATES

Recent circulars/ notifications/ rules/ clarifications/News

♦ Government extends time for payment under VSV (Vivad Se Vishwas Scheme) to 30.06.2021 including timelines for assessment (Notification No. 39/2021-Income Tax/S.O. 1704(E)& Notification No. 38/2021-Income Tax/S.O. 1703(E) dated 27/04/2021)

♦ CBDT vide Notification No. 37/2021-Income Tax Dated: 26th April, 2021 amends rule 2DB which deals with Other conditions to be satisfied by the pension fund and substitutes Form No. 10BBA (Notification No. 37/2021-Income Tax/G.S.R. 291(E) dated 26/04/2021)

♦ CBDT notifies Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Interest income (Notification No. 2 of 2021-DGIT dated 20/04/2021)

♦ CBDT notifies Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Dividend income (Notification No. 1 of 2021-DGIT dated 20/04/2021)

♦ CBDT notifies new Provisions of DTAA between India & Iran (Notification No. 29/2021-Income-tax [S.O. 1442(E).] dated 01/04/2021)

♦ CBDT issues New reporting requirements in Form 3CD (Notification No. 28/2021 [G.S.R. 246(E).] dated 01/04/2021)

Income Tax Compliance calendar – May 2021

Things to remember
Due Date Particulars
7th May 2021 Due date for deposit of Tax deducted/collected for the month of April, 2021. 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
15th May 2021 Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of March, 2021

-Due date for issue of TDS Certificate for tax deducted under Section 194-IB in the month of March, 2021

-Due date for issue of TDS Certificate for tax deducted under Section 194M in the month of March, 2021

-Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of April, 2021 has been paid without the production of a Challan

-Quarterly statement of TCS deposited for the quarter ending March 31, 2021

-Due date for furnishing statement in Form no. 3BB by a stock exchange in respect of transactions in which client codes have been modified after registering in the system for the month of April, 2021

30th May 2021 -Submission of a statement (in Form No. 49C) by non-resident having a liaison office in India for the financial year 2020-21

-Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA in the month of April, 2021

-Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194M in the month of April, 2021

-Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194-IB in the month of April, 2021

-Issue of TCS certificates for the 4th Quarter of the Financial Year 2020-21

-Return of tax deduction from contributions paid by the trustees of an approved superannuation fund

-Application for allotment of PAN in case of non-individual resident person, which enters into a financial transaction of Rs. 2,50,000 or more during FY 2020-21 and hasn’t been allotted any PAN

-Application for allotment of PAN in case of person being managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person referred to in Rule 114(3)(v) or any person competent to act on behalf of the person referred to in Rule 114(3)(v) and who hasn’t allotted any PAN

Important cases decided

♦ No addition for Transfer Pricing Adjustment related to Specified Domestic Transaction (Sobha City Vs ACIT (ITAT Bangalore)

♦ Salary for services rendered in Foreign Countries cannot be taxed in India for non-production of TRC (Tax residency Certificate) (Sri Vamsee Krishna Kundurthi Vs ITO (International Taxation) (ITAT Hyderabad))

♦ DTAA exemption cannot be denied merely for non-availability of Tax residency Certificate (Ranjit Kumar Vuppu Vs ITO (ITAT Hyderabad)

♦ Exchange difference as on date of Balance sheet is allowable (HSBC Electronic Data Processing India P Ltd Vs ACIT (ITAT Hyderabad)

♦ Issuance of notice under section 143(2) is not mandatory for completing search Assesment (B. Kubendran Vs DCIT (Madras High Court))

♦ Assessment order passed against amalgamated company is without jurisdiction (Teleperformance Global Services Private Limited Vs Acit (Bombay High Court)

♦ Foreign currency is not a commodity for section 43(5) of Income Tax Act (ACIT Vs M/s. Lifestyle International (P) Limited (ITAT Bangalore)

♦ No disallowance can be made merely for investment in Penny Stock (Shri Kamal Kishore Soni Hyderabad Vs ITO (ITAT Hyderabad)

INDIRECT TAXES UPDATES

GST

GST Compliance Calendar – Returns to be filed in the M/O May 2021

GST Return Form Name Filing Period Due Dates in May2021
GSTR-1 (Outward return) Monthly (April 2021) 11th May 2021
GSTR 3B (Tax summary return) April ‘2021 20th May 2021 (In case Aggregate turnover more  than or equal to Rs 5 crore in the previous Year)

22nd/24thMay 2021 (in case Aggregate turnover less than or equal to Rs 5 crore in the previous financial year registered in X /Y category respectively.

GSTR 5A (online information & data access) April ‘2021 20thMay 2021
GSTR 05 (by non-taxable resident persons ) April’2021 20thMay021
GSTR 06 (ISD) April’2021 13thMay 2021
GSTR 07 (TDS) April’2021 10thMay 2021
GSTR 08 (TCS) April2021 10thMay2021

Dynamic QR Code for B2C supplies – Penalty for non-compliance waived till 30 June 2021: Waiver of penalty for non-compliance of the Dynamic QR Code provisions has been extended for the period from 1 December 2020 till 30 June 2021, subject to the condition that the person liable to impleme nt such code complies from 1 July 2021. It may be noted that earlier penalty was waived for such non-compliance for the period from 1 December 2020 to 31 March 2021, subject to the condition that the said person complies from 1 April 2021. Notification No. 89/2020-Central Tax, dated 29 November 2020 has been amended for this purpose. (Notification No. 6/2021-Central Tax, dated 30th March 2021.

Cases Law

Section 74(5) not a statutory sanction for amount collected prior to final determination of liability: The Madras High Court has allowed a writ petition filed seeking refund of the payments made on the day of investigation and on subsequent days. The petitioner had contended that the payments were not voluntary as required under Section 74(5) of CGST Act but were made under coercion. The Court observed that Section 74(5) and 74(6) provide an opportunity for the assessee or the revenue to ascertain proper amount of tax, interest and penalty with acceptance by the proper officer even before the issuance of show cause notice. The Court was of the view that assessee merely signing a statement, admitting tax liability under stress of investigation, and making payments on the basis of such statement cannot lead to self-ascertainment. Relying on the decision of Clear Trip Pvt. Ltd. v. UOI [2016 VIL 794 BOM ST] and guidelines formulated in the case of Bhumi Associate v. Union of India [2021 VIL 117 GUJ], the Court allowed the refund of the amount collected through DRC-03 before determination of liability. (Shrinandhidhall Mills India Private Limited v. Senior Intelligence Officer – 2021 VIL 271 MAD)

Recovery of interest on delayed payment of tax – Form DRC-07 and not DRC-01 to be issued: Relying upon Section 50 of the CGST Act, 2017 read with Rule 142(1)(a) of the CGST Rules, 2017, the Gujarat High Court has held that DRC-01 cannot be issued for recovery of the amount towards interest on delayed payment of tax. It noted that according to Section 75(12), if there is any amount of interest payable on tax and which had remained unpaid, the same must be recovered under the provisions of Section 79. Further, relying on Rule 142(5), the Court held that the notice should have been issued in Form GST DRC 07 and should specify the amount of tax, interest and penalty payable by the person chargeable with tax. The impugned order issued in GST DRC 01 was hence ordered to be quashed. (Rajkamal Builder Infrastructure Private Limited v. Union of India – 2021 VIL 240 GUJ)

Mere existence of some discrepancies cannot lead to conclusion of undisclosed turnover: The Allahabad High Court has held that once the revenue authority accepted, even if impliedly, that the transaction were covered by regular invoices and those details had been uploaded on the web portal by issuing e-way bills, merely because there existed certain discrepancies, the transaction cannot be said to be one falling under the category of undisclosed turnover. The Court was of the view that to hold that there was discrepancy in the account is different and lighter charge than to hold that the assessee had not disclosed or concealed part of its turnover. The High Court also noted that the invoice is a primary evidence of the transaction and that unless the revenue authority disputes its genuineness, it cannot be lightly overlooked. (Jai Maa Jwalamukhi Iron Scrap Supplier v. State of Uttar Pradesh – Judgement dated 17 March 2021)

Debit note is always connected to invoice – Amendment in Section 16(4) not material: The Gujarat AAR has held that just because the words ‘invoice relating to such’ connected to ‘debit note pertains’ was omitted by the Finance Act, 2020, it does not mean that the relation of the debit note with the invoice has been cut off. The AAR was of the view that the omission does Act, 2017. Relying on the definition of ‘debit note’, Section 34(3) and the particulars to be provided in a debit note, it held that irrespective of the amendment, the fact remains that a debit note is always connected to the invoice and issued in relation to change in value of an invoice. The Input Tax Credit (based on debit notes) was hence denied on limitation. [In RE: I-Tech Plast India Pvt. Ltd. – 2021 VIL 205 AAR]

Customs

India-Japan CEPA – Deeper tariff concessions notified: Effective rate of duty on certain imports from Japan under the India-Japan Comprehensive Economic Partnership Agreement has been reduced to ‘zero’, except for all goods covered under Tariff Item 84082020 and sub-heading 870840 of the Customs Tariff. Notification No. 69/2011-Cus. has been amended for this purpose by Notification No. 20/2021-Cus, dated 30 March 2021 with effect from 1 April 2021.

India-Mauritius CECPA effective from 1 April 2021 – Rules of Origin and tariff notification notified: The CBIC has notified the Customs Tariff (Determination of Origin of Goods under Comprehensive Economic Cooperation and Partnership Agreement between the Republic of India and the Republic of Mauritius) Rules, 2021. These rules have come into force from 1 April 2021 and will govern the preferential rate of duty for import of goods from Mauritius to India Notification No. 38/2021-Cus (N.T.), dated 31 March 2021 has been issued for the purpose. Further, Notification No. 25/2021-Cus., dated 31 March 2021 provides for effective rate of duty for specified imports originating from Mauritius

Cases Law

Bill of Entry amendment in manual form when ICES portal not supports such amendment: In a case involving erroneous mention of GSTIN in the Bill of Entry, the Madras High Court has allowed manual correction. The Petitioner’s request for amendment of GSTN in Bill of entry as per Section 149 of the Customs Act was earlier rejected by the Custom authorities due to the reason that once the data is transmitted to GSTN, ICES would not be able to amend the details. The petitioner was unable to claim the input tax credit in respect of IGST paid on such imports. Relying upon Section 149, the court allowed making amendment in Bill of Entry after relevant documentary evidences are placed to prove the plea of erroneous mention of GSTN numbers in Bill of entry. The Court further stated that it is incumbent upon the authorities to ensure the technology is kept up to date and to put in place measures to facilitate seamless exchange of data. The Court directed that till such mechanism is placed, the amendment of such documents must be considered manually (Hindustan Unilever Limited Vs Union of India (Madras High Court); W.P. No. 34627 of 2019; 05/03/2021)

Refund not deniable for delay in filing when vital documents seized by DRI: The Madras High Court has held that the application for refund of Special Additional Duty (SAD) cannot be rejected based on the limitation period as prescribed under the relevant notification when the vital documents itself including the Bills of Entry were seized by Directorate of Revenue Intelligence. Accordingly, the High Court remanded back the matter to pass a fresh order of refund of amounts paid by the petitioner at time of import, if the petitioner has otherwise satisfied other requirements of the Notification No. 102/2007-Cus as amended by Notification No. 93/2008-Cus. (Kaamdaa Impex Vs Commissioner of Customs (Madras High Court); W.P. No. 24269 of 2019; 16/03/2021)

Excise & Service Tax

Cenvat credit available on workmen compensation insurance policy – Assessee and not the workmen being the actual beneficiary: The Larger Bench of the CESTAT has held that the workmen compensation insurance policy takenby the assessee-manufacturer under the provisions of the Workmen Compensation Act, 1923 is not excluded by clause (C) of Rule 2(l) of the Cenvat Credit Rules, 2004. Relying upon the Madras High Court decision which had overruled the CESTAT Order in the case of Ganesan Builders Ltd., the Larger Bench held that the view expressed by the Tribunal in its decision in the case of Hydus Technologies India lays down the correct position in law. It observed that the workmen were not the beneficiaries of the policy but it was the assessee and therefore, the benefit of the insurance flowed directly to the assesse themselves and not to individual employees. It noted that the insurance covered the liability of the assessee against any potential claim under Sections 3 and 4 of the Workmen Compensation Act. (Dharti Dredging and Infrastructure Ltd Vs Commissioner of Central Tax (CESTAT Hyderabad); Service Tax Appeal No. 30531 of 2018; 01/04/2021)

*****

CMA Rakesh Bhalla | 9779010685 | [email protected]

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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2 Comments

  1. m v sreenivas says:

    you have not considered , as we understand that gstr1 for aprill 2021 can be filed till 26th may 2021 and gstr3b can be filed till June 5th 2021.
    kindly respond.
    Thanking you

    1. CMA Rakesh Bhalla says:

      the light of COVID-19 situation, the Government has relaxed certain compliances under the Goods and Services Tax (‘GST’) Laws. We have mentioned the important ones in the ensuing paragraphs.

      A. Relaxation under Rule 36(4) of the CGST Rules

      · For the tax period April and May 2021, the restriction of 5 percent specified under Rule 36(4) shall be calculated on the cumulative basis.

      · In simple words, taxpayers can avail full ITC based on their books for the month of April 2021. However, while filing GSTR-3B for May 2021, the computation under Rule 36(4) shall be made for both the months.

      B. Relaxation in filing of returns, forms, late fee, interest

      GSTR-3B and GSTR-1 [Taxpayers having turnover more than ₹ 5 Crores in preceding FY]

      Form
      Due Date
      Relaxation
      GSTR-3B for March 2021
      20.04.2021
      · No late fee till May 5, 2021
      · 9 percent interest till May 5, 2021
      · 18 percent interest post May 5, 2021
      GSTR-3B for April 2021
      20.05.2021
      · No late fee till June 4, 2021
      · 9 percent interest till June 4, 2021
      · 18 percent interest post June 4, 2021
      GSTR-1 for April 2021
      11.05.2021
      · Due date extended to May 26, 2021

      FORM ITC-04

      ITC-04 for Last Quarter 2020-21
      25.04.2021
      Due date extended to May 31, 2021

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